Having studied in multiple universities I’ve always been a bit concerned that many fields of study do not ask students rather basic questions such as what the impacts of their proposed policy changes will be while students complete case studies. An easy way to highlight this is through a simplified current example with DHL (The goal here is not to address all of the issues with the changes and the strike, but to simplify a managerial decision for learning purposes).
A decision was made to improve on-time deliveries. Sounds absolutely wonderful – higher on-time deliveries to report to the public makes for wonderful advertising and should improve customer satisfaction. The decision made was however, to simply inform the delivery personnel that they must first deliver newly received packages, instead of following a model focused on first in, first out. The outcome being a clear improvement in on-time deliveries.
For the delivery personnel, who report needing to deliver 193 packages on average per day – Focus.de reported in December 2014 that the average was 100 to120 packages per 5 to 6 hour shift –, the change in metrics being measured drastically changes their entire approach. Now if the new packages are to be delivered first, what happens to a package that couldn’t be delivered on the scheduled date (illness, lacking motivation to work extra hours, high package day or some other reason)? Correct, the non-on-time deliveries have to wait for a “slow day”, as once they are not delivered on-time the package is not measured in the metric.
The question for the consumer, and in the end the online retailers as well, should be if that slow day will ever come and how much stress will be encountered in the meantime. Maintaining a good relationship with your delivery personnel and sending Christmas gifts now is advisable (The number of packages sent prior to Christmas is known to increase 50 to 70 per cent per 5 to 6 hour shift, according to Focus.de).
Reactions from front-line staff to policy changes are to follow the new rules and this often means avoiding what management was hoping for. Steven Kerr addressed this in the “Academy of Management Journal” in 1975! The amazing point is, as alluded to above, that there is rather minimal mention of it within universities, and it also seems that consultancies focused on management – despite all of their efforts to create knowledge management systems – also don’t seem to comprehend it. This is one reason why it is included in my Management of Organizations classes as mandated reading. It would be most embarrassing to me as an instructor if one of my graduates did not fully consider the front line response to their newly imposed metrics.
So, how could this then happen at a company such as DHL? Were frontline employees, those who know their work best, not consulted prior to policy change? Is the answer in-breeding in managerial thought? Is it based upon the good old boy network of former McKinsey consultants, as some websites claim (McKinsey and DHL seem to have some strong connections, and the CEO, along with a few other board members, previously held positions as McKinsey consultants). Or, does it, as Steven Kerr outlined, lie in what the consultancies are really trying to achieve – more billable hours. Consultants never want to make the hiring manager look bad for fear of losing employment and will therefore go along with many poor decisions – just look up Arthur Anderson and Enron for an extreme example. Or, is it an issue in applying theory to practice?
Now, I must clarify that I have simplified the problem based upon limited sources available due to the currentness of the events. But an issue still stands: a functioning feedback loop along with solid business basics and solid leadership would not permit such changes in metrics to reach the light of day. Everyone makes mistakes, it is natural, however, when no one has the power or is too fearful to speak up or doesn’t identify errors in changes prior to the roll-out of such metrics, something is clearly wrong.
When students ask about enrolling in the Munich Business School MBA program, I try to drive home the importance of business basics, ethics, and practical focus that is emphasized at MBS. The case above highlights decision making errors that we work on keeping our graduates from making.
In the end, if your DHL Paket doesn’t arrive on-time – you now know why, newly implemented metrics. Until then, do learn management basics, it is never too late!
