Lean service operations with HR practices incorporated
An insurance company streamlined its process of reviewing insurance claims by employing lean tools and techniques. Implementing lean practices allowed the in-house reviewing team to extract tremendous amount of waste from the process and scale up reviewing claims from 5000 to 10000 claims per month. The in-house team also reduced the amount of overtime that was previously required to clear backlog. They allocated time to continuously improve their processes and develop staff capabilities.
These improvements were not possible without the involvement and engagement of the people who were working directly with the reviewing process. Therefore, lean service operations fail without the deployment of HR practices. This article provides a perspective on incorporating HR practices into lean service operations. It highlights six HR practices as being of significant relevance for lean practitioners and how these practices help with lean service operations.
Lean service operations
Services are policies, practices, and procedures for the delivery of products or experiences to customers. While the nature of a service dictates its reliance on human resources, services generally depend on people to be delivered. Service processes therefore depend on the skills, knowledge, expertise and experience of a workforce. Lean service operations, on the other hand, is the application of lean manufacturing tools and techniques (such as 5S, Kaizen, SMED, Andon, Kanban, JIT, Jidoka, Hoshin Kanri, Heijunka, Gemba, PDCA) in service processes.
In recent years, the application of lean in service delivery has attracted increased excitement. A current discussion is about the role of HR practices in orienting the human element of lean service operations. The human element is particularly important in a context where service delivery is labour intensive and employees own the knowledge of service delivery processes. Their knowledge is critical in improving service delivery processes using lean tools and techniques.
Transition to lean requires looking into and managing the human behaviour that creates waste using HR practices. Lean service operations also requires flexibility of the workforce in an organisation. Without engaging colleagues who own service delivery processes, an organisation falls short of successfully implementing and sustaining lean-led service operations. An awareness of relevant HR practices is therefore a key success factor of lean service operations.
HR practices and lean service operations
Lean service operations are people centred and people driven. However, organisations are generally tactical and reactive when dealing with the human element of lean service operations. They frequently focus on lean tools and techniques, thus overlooking the human element. They might train employees on lean tools but ignore the use of a set of HR practices to build a continuous improvement culture. Proper management of the human element of lean helps with dealing with employee resistance, promoting participation and training employees in lean knowledge. A bottom-up approach in improving service processes necessitates the use of HR practices to manage and orient the workforce to support lean practices.
HR practices are therefore vital in creating a lean-oriented service culture. They are the activities that draw in, develop, impact and maintain individuals who form the workforce of the organisation. Recent research suggests that the HR practices deemed to be integral to a lean service initiative by lean practitioners are:
HR planning
The three elements of HR planning are capacity planning, role profiling, and succession planning. Capacity planning optimises the size of a workforce and how it is distributed across teams. It empowers team-level managers to understand and plan the essential human resources to meet customer service demands. It maps out workload expectations and the capabilities among the available workforce to fulfil workload requirements, allowing the movement of surplus workers across teams.
Role profiling ensures that skills of the workforce are relevant to lean service requirements. Lean-specific roles, such as continuous improvement lead and lean sustainability consultant, can also be defined to help embed lean principles in service processes. These roles can have lean-specific responsibilities in directing an organisational lean maturation journey.
Succession planning ensures a plan is in place for the loss of key employees to sustain lean service activities. It can be employed to identify individuals with lean expertise to take over lean-focused roles as they become available through staff attrition.
Selective recruitment
Lean-oriented managers are generally charged with selecting candidates. The weighting attributed to technical knowledge vs lean knowledge depends upon the role being recruited for. Consequently, lean know-how is not necessarily the only deciding factor. The best candidates with appropriate technical skills, if they lack specific lean know-how, can be recruited, and then enrolled in lean-related training. However, for lean-specific roles, the selection decisions are based on prior exposure to lean practices in terms of technical knowledge, attitude to change, and disposition towards lean service.
Extensive training
Having a training strategy sets an expectation that everyone builds upon lean-related knowledge and skills. Organisations are advised to invest in lean-specific training initiatives such as continuous improvement techniques. Cross training and upskilling also enables greater management flexibility to redeploy staff across an organisation. While training equips employees with required skills, it also has the potential to achieve employee commitment and get people on the lean journey. Employees enrolled in lean-related training can also shift to an alternative career path and take on roles as lean consultants, practitioners, experts and serving on improvement action teams.
Performance appraisal, recognition, and reward
Setting an individual lean-oriented performance target is used to facilitate ongoing individual performance improvement. Where gaps are identified between individual performance and targets, training initiatives, such as coaching, can be employed to good effect. Reward and recognition tactics need to go beyond the contractual reward of payment to support lean service operations. This might include a bonus scheme whereby employees are rewarded for fulfilling lean-related performance indicators, highlighting individuals’ efforts on noticeboards, issuing certificates, awarding extra days of annual leave. Reward and recognition mechanisms that organisations employ must send a cultural message that pro-lean behaviours are valued.
Teamworking
Employees are placed in teams to work on lean projects, an environment for committed and peer-supported problem-solving. Specialized teams such as lean improvement action teams can be formed to provide lean consultancy and training services, thus assisting managers in embedding lean within their teams. While team managers oversee the human resources of their teams, assistant team managers remove operational bottlenecks and ensure the smooth flow of service processes and the workplace coaches manage and improve work quality.
Employee participation
Central to employee participation are effective communication practices and a strategic decision to ease managerial control, allowing employees to exert influence over their work. However, a both/and approach is necessary to deal with any tension that exists between empowering employees to improve service quality yet insisting upon standardised service delivery.
Furthermore, in a unionised environment, lean managers might consider negotiating with recognised unions over lean-informed changes to working practices to avoid organised employee resistance. An effective approach in such negotiations is an offer to trial lean processes before they are formally adopted. Creating a sense of urgency, that lean is the way forward to keep a company competitive and ongoing employment protected, is another method to achieve the buy-in of employees to lean service operations.
These HR practices allow organisations to get the most out of everyone in successfully implementing lean service operations. An effective lean service operation therefore cannot be delivered without a strong core of effective people management practices.
About the author
Dr Araz Zirar is Lecturer in Management at Huddersfield Business School, University of Huddersfield. His current research interests include utilising HR practices to support lean service operations and the application of Artificial Intelligence in Human Resource Management.
References
Raja Sreedharan, V., Balagopalan, A., Murale, V., & Arunprasad, P. (2020). Synergising Lean Six Sigma with human resource practices: Evidence from literature arena. Total Quality Management and Business Excellence, 31(5–6), 636–653. Scopus. https://doi.org/10.1080/14783363.2018.1439374
Sgarbossa, F., Grosse, E. H., Neumann, W. P., Battini, D., & Glock, C. H. (2020). Human factors in production and logistics systems of the future. Annual Reviews in Control, 49, 295–305. https://doi.org/10.1016/j.arcontrol.2020.04.007
Wickramasinghe, V., & Wickramasinghe, G. L. D. (2020). Effects of HRM practices, lean production practices and lean duration on performance. The International Journal of Human Resource Management, 31(11), 1467–1512. https://doi.org/10.1080/09585192.2017.1407954
Yogui, R. (2020, January 23). Extracting waste from our process. Case Studies. https://planet-lean.com/lean-services-insurance-claims/
Zirar, A., Trusson, C., & Choudhary, A. (2020). Towards a high-performance HR bundle process for lean service operations. International Journal of Quality & Reliability Management, ahead-of-print(ahead-of-print). https://doi.org/10.1108/IJQRM-10-2019-0330
