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Lean Labor Sharpens Your Customer Focus, Eliminates Waste

By Kerry Cole

Purpose, process, and people. They are the three pillars of the Lean Labor process improvement method that will be featured this year as part of the American Payroll Association's (APA) new Lean Payroll program.

The Lean Payroll program is designed to help payroll departments add value while eliminating inefficiencies. Lean Labor thought processes inspire companies to look for improvements in ways that have not been considered before. Even mature organizations with highly efficient processes can realize significant gains. Lean Labor follows a process without respect to the functional organization of a company. It uses the neutral eyes of the customer to identify opportunities for improving a process, eliminating the well-meaning but costly localized improvements that benefit one department at the cost of another. Its three pillars are:

  • Purpose—The reason the organization exists
  • Process—The method an organization uses to add value to its products and services
  • People—The people who participate and improve the process

As employees of internal departments, HR and payroll professionals may be wondering if they are considered wasteful themselves. Definitions of Lean were created when Lean was completely focused on production operations in manufacturing. As Lean has been adopted into the back office of many industries, the definitions have evolved. The less appealing but commonly known term is necessary waste. This means that while the activity does not directly contribute to customer value, it is a necessary activity for the ongoing operation of the organization. Another way of looking at this is that the customer is an internal one. In this case, the employee is your customer and your objective is to deliver a high-quality product using the least amount of resources possible.

Lean Labor’s History

Lean is growing in popularity. It is the culmination of the many improvements to manufacturing processes that started with Henry Ford. Ford, in 1913, integrated an entire production system to produce the famous Model T automobile. The production of the Model T was efficient because there were no changeovers in production. The production line was optimized for a single type of car— one model, one color.

In the late 1940s, as customers demanded more variety in cars, Toyota recognized there were ways to maintain similar efficiencies in production while offering more choices to their customers. Toyota began creating the tools and techniques to improve production and change from a “push” to a “pull” philosophy where they built cars based on current demand rather than on forecasts. As these ideas matured, they became the basis of the Toyota Production System (TPS). Disciples of TPS maintain the same philosophy today, believing that it is the people who can improve an organization and everything else is a tool to support those efforts.

Lean Labor Payroll Applications

In 2010, a Compensation Data Manufacturing survey on salaries and benefits showed that nearly 70% of the 1,100 organizations surveyed implemented Lean practices in their operations. Because these techniques apply to all processes, Lean continues to gain popularity as it spreads to other industries such as healthcare and financial services.

Lean thought processes inspire companies to look for improvements that are often never considered. What is unique about Lean is that Lean follows a process without respect to the functional organization. It uses the neutral eyes of the customer to identify opportunities for improving the process, eliminating the well-meaning, but costly localized improvements that benefit one department at the cost of another.

Expanding on the foundations of Lean Labor, principles include:

  • Production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful and thus a target for elimination.
  • Center on preserving value with less work.
  • Viewing the entire process to understand the dependencies of changes made in one operation on the next operation.

The Lean Payroll program was developed by the following leading experts:

  • Gregg Gordon is the author of Lean Labor: A Survival Guide for Companies Facing Global Competition. He specializes in helping organizations develop competitive advantages through their workforce.
  • Martin Armstrong, CPP, DBA, is Vice President of Payroll Shared Services for Time Warner Cable. He has implemented many of the Lean Labor concepts in different industries using the Lean Labor tools, leading to award-winning results.

This interactive program will help you review your business processes, identify methods to empower your team, help other departments understand their responsibility in eliminating wasteful tasks, as well as help you become a dynamic leader. After completion of all of the workshops, attendees will receive a certificate of completion.

Lean Payroll Debuts at Fall Forum

APA’s Fall Forum 2016, September 21-23 at the Mirage Hotel in Las Vegas, will help payroll professionals improve their leadership skills while taking their organizations to new levels of operational efficiency. Fall Forum offers real-world solutions on the road to world-class performance and is geared toward payroll executives, supervisors, managers, and those who aspire to move up the corporate ladder. Fall Forum participants can learn what makes the world’s top payroll organizations successful, all while earning up to 14.5 RCHs, 19 RCHs for those attending the Lean Payroll track.

This year’s Fall Forum features more global workshops, including:

  • Creating an Effective Expat Policy
  • Global Equity Compliance
  • Developing a Global Payroll Budget—Identifying Implementation and Operational Costs
  • The Global Automation Cycle, It’s Not Just Finance Anymore

Michelle Clawson, CPP, of Driscoll's Strawberry Associates, summed it up this way:

“Fall Forum is a more intimate learning experience. It’s quieter and more focused on leadership and best practices.”