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Communications management

It's a truism that organizations with more than one level of management suffer from communications problems. This interferes with almost any measure of the organization, as well as with any corrective actions. Thus any management effort must begin and end with communication.

If those communications are effective, the organization will be better managed.

The basic trick is to assure that both the managers and workers have access to the same information. In this way, theoretically, they will be able to agree on the tasks to improve the organization, and everyone will work together in a better-coordinated way. In practice, the same incentives have to applied to managers and workers, as well, or else they develop different goals, negating the effect of the shared information.

One of the simplest practical ways of implementing communications management is to provide a simple, hierarchical bidirectional communication method, and a simple incentive.

One of the simplest such communication methods is to have every employee with e-mail compose a report once a week. The report has what they did last week, what they plan to do next week, what problems they have, and any information that might help a large group of people in the organization; and try to limit it to a page or two. This report goes to their manager. The manager composes a summary and sends it to his manager. At the top, the CEO supervises an overall summary that goes to the board of directors. Then, the CEO sends the board's summary down to all of his subordinates. Each subordinate appends their summary, and sends the whole thing down, etc.

Eventually, every employee with e-mail receives a long e-mail containing the summaries from every level of management. Reading it is not required. In practice, curious, ambitious employees (those most likely to innovate) read it, and task-centered employees do not.

The results can be astounding. At Printronix (NASDAQ PTNX), a $100M manufacturing organization with five levels of management, this was applied starting in 1990. Within a week, the perennial grumbles about "bad communication" ceased. By 1994 the organization had reduced total floorspace by 40% (eventually 75%), had "found" $100m of cash, reduced backlog from 3 months to 3.5 weeks, reduced product development time (for computer printers, a complex product) from three years to six months, and doubled produce service life (greatly reducing the total cost of ownership of their product). This was achieved by a series of employee-initated, management-led activities: adoption of just-in-time manufacturing, statistical process control, corrections of product weaknesses, and a cross-product "printer architecture" permitting development of "design modules" that could be mixed and matched for niche markets.

All of the programs arose via the reporting structure, which made them visible to upper management, who could then support the ones that made sense.

Another cross-hierarchical system with similar traits arose at Warburg's Bank. According to Jacques Attali's biography, Warburg used a sheet of one-to-four-line summaries of each possible new loan, on a few sheets that were copied through the entire bank each day. It spanned the entire hierarchy, and anyone with comments was asked to bring them. Warburg's grew from 16,000 pounds, to 4 billions of pounds under management in less than forty years.