YPO.org
   

Creating a Lean Culture of Accountability

For 14 years, Rehrig Pacific, a manufacturer and servicer of sustainable and reusable packaging and containers, has maintained a continuous journey of lean improvement. With seven manufacturing plants and eight service centers in the United States, and one manufacturing plant in Mexico, the company employs more than 1,900 people. Rehrig Pacific’s culture of service and innovation has led to a strong portfolio of intellectual property that makes it a market leader in North America. Globally, these strengths have led to numerous licensing opportunities. But this has not always been the case.

When YPO member Will Rehrig took over the family business in 2005, as the fourth generation to lead the century-old firm, Rehrig Pacific had an abundance of talented people and a steady demand from customers, but they were making simple, repeated operational mistakes.

“We had to get better at providing value to customers. You’ll always have competitors but value is where you are going to truly win in the marketplace,” explains Rehrig. After a low profit fiscal year in 2002, Rehrig set a transformative course to improve the execution of value to customers.

Jumping in: Applying an accountability management system

Refining Rehrig’s lean management journey included going back to square one, examining and identifying the company’s core values and drafting their vision statement. “It seems like a simple thing to do but aligning work with strategy is important,” he says. Quoting Henry David Thoreau, Rehrig Pacific’s Director of Manufacturing, Adam Santa, says, “It’s not enough to be busy — so are the ants — the question is what are we busy about? What is it you are trying to accomplish? You have to define what people in your organization have to do every day to get the work done. Your company’s vision and strategy becomes the real-time work output that equals results.”

Rehrig and his team began with the end in mind when mapping out their strategy. Work must support what the company does (mission); who they are and how they operate (values); and where do they want to go (vision). “The strategy then must be translated into goals and objectives and then lastly, we can define the work,” says Rehrig, “and these goals and objectives can be unique to the department or branch of the company.” Rehrig’s company values take in mind employees and focus on family, service, growth as well as encouraging innovation or the “intrapreneur” in his workforce. “It’s important to empower the people in your organization to dream and create. It’s essential to innovation.”

Rehrig’s systematic approach begins with defining who you are and what you want to become. This is the backbone of creating an accountable management system in an organization. Once this is defined, he explains, your team then can get off and running to begin developing the key accountabilities that ensure the right work gets done to become successful. In addition to key accountabilities, key elements of the Rehrig Management System include lean tools such as:

  • Work standards: Defining how work gets done or what is expected
  • Visual controls: Something that monitors actual vs. expected
  • Leader standard work: Your personal accountability document, the link between standard and visual controls
  • Feedback accountability process: Monitoring and measuring system, the mangers’ link to their processes.
  • A3: The tool used to address the gaps and create and improve standards

The word that strikes fear

Though simple in theory, key accountabilities have a profoundly positive impact on an organization’s overall accountable management system, tracking actions, and results to provide actionable data and information. “The way we presented this to our workforce was to explain that a key accountability is a mutual agreement between them and their boss, of exactly what it is they are responsible for at work,” says Jeff Hentges, Rehrig Pacific’s Vice President of Operations. “Key accountabilities are the most important task assignments and general responsibilities given to an employee that account for about 80 percent of output.”

For Rehrig’s employees, accountabilities provide clarity so they understand what their work is and how it connects with the company’s goals. Role and work clarity also ensures the right work is cascaded throughout the organization, providing alignment from one plant to the next. “Key accountabilities are for all employees, as they flow from the president to the front line,” says Rehrig. “We’ve worked hard to change the mindset that ‘accountability’ is not a bad word. Being accountable doesn’t mean an employee is getting fired or punished. It ensures that gaps and speed bumps in a process can be identified and we can quickly remedy them.”

Rehrig Pacific now holds quarterly and yearly accountabilities discussions between associates and managers to help employees refine them as well as provide visibility on progress and outcomes. Every facility uses visual tools such as a plant scorecard, work breakdown visual charts and simple work process charts so everyone is on the same page as to what work had to be done, how long it was taking to complete the work and the success or failure associated with the workflow.

Improving over time

Strengthening Rehrig Pacific’s accountability system is the A3 Method, a problem-solving tool that generates new standards and is used to consistently improve processes over time. “A3 provides the method to generate solutions that address the lack of or relative weakness of standards,” Andrew Ressler, Director of Quality, explains. In a nutshell, A3 helps:

  • Clarify the problem (always a question)
  • Break down the problem
  • Set an ideal future
  • Determine the root causes
  • Brainstorm and select countermeasures
  • Implement the countermeasures
  • Define and test success
  • Standardize successful processes

Hentges admits that conversion to a lean management system did not come without some bumps in the road. “Sometimes you have to lower the water to find the rocks.”

“It takes a personal commitment from the leaders, but overall, it helped fight the chaos so we could climb the stairs.” During the process, management put into place a process focused on aligning the measurement systems, including adding incentive plans, production bonuses and “facility of the year” qualifications for meeting key accountabilities.

Overall, Rehrig believes the time invested in adopting the lean manufacturing and accountable management process was well worth it. The program helped management understand the benefits and advantages gained in cost reduction, production efficiency, design implementation and process management, and to see how these outcomes positively impact employee morale and customer retention.

“Our strategy now determines our goals. Our goals define our work and key accountabilities ensures the right work gets done,” Rehrig says.

After beginning a lean manufacturing approach seven years ago, Rehrig Pacific has evolved tools and methods that now deliver stunning efficiency and generate significant benefits in cost, production and accountability within, and across all their corporate sites.

“Our vision has become real for every person in the company.”

Learn about joining YPO

An award-winning writer and communications advisor to CEOs, Mary has had the pleasure of telling the engaging stories of some of the most influential young business leaders across the globe. Mary is the content creation manager at YPO.