Making the Case for Quality

Turn Around or Shut Down

How an Indian Organization Used Self-directed Teams
to Save a Failing Business Unit
In 2007, the CEO of Trident
Group changed how the
companys chemical unit
would report its financial
results, a decision that
revealed the unit was missing
revenue projections by
more than 90 percent.
With just a year to transform
the failing chemical unit,
the unit head formed an
improvement team to analyze
performance metrics and
find a solution. The team
learned the units employees
portrayed signs of low
morale which, according to
international research firms,
can impact profitability.
The head of the chemical
unit explored the concept of
self-directed teams, which
are highly trained groups of
employees responsible for work
with minimal management
supervision. While it was an
unconventional approach,
the unit head recognized
self-directed teams can
promote process alignment,
customer-centeredness and
employee empowerment.
Nine months after implementing
self-directed teams, the units
overall process score increased
from 13 percent to 65
percent, which resulted in a
70 percent increase in revenue
and $3.4 million saved.
At a Glance . . .
If a business unit isnt making money, many organizations assume that more involvement from
management is needed to lead the team to profitability. After all, managements role is essentially
to help employees achieve the organizations goals. But when an Indian conglomerate learned that
one of its business units was in the redand to its surprise, had been for many yearsit found
that the traditional management approach might be killing the money tree instead of providing it
the nurturing it needs.
About Trident Group
Trident Group, a conglomerate in Punjab, India, is involved in the paper, textiles, yarn, chemical,
energy, and IT industries. With businesses spanning across more than 75 countries, Trident Group is
a $1 billion USD enterprise that employs more than 10,000 individuals, and is an indirect employer
of 20,000 people.
Recent awards that Trident Group received include the Golden Peacock Environmental Management
Award, the JCPenney Innovation Award, the Best Supplier of the Year Quality Award from
IKEA, the Institute of Company Secretaries of India National Award for Excellence in Corporate
Governance, and multiple supplier awards from Wal-Mart Stores Inc.
Restructuring Revealed the Truth
For many years, the paper and chemical units operated independent of each other and reported finan-
cial results together in profitability statements and balance sheets. In 2007, the CEO divided the
paper and chemical units into standalone entities and required each to do its own financial reporting.
It soon became clear that the chemical unit had been in trouble for years, as it had been piggy-
backing on the profitability of the paper unit. Between April 2007 and September 2007, the
chemical unit brought in a mere $2.8 million toward its $28.62 million projected revenue. The
news was so shocking that the management team toyed with the idea of closing the chemical
units doors altogether.
The CEO, however, didnt want to turn his back on the failing unit just yetpartly due to sentimental
reasons, and partly due to its earning potential. The chemical business was the first unit established
by the organization in 1986. As it grew, the chemical business kept the organization financially afloat.
The CEO gave the head of the chemical unit an ultimatumturn around or shut down.
by Sumeet Kumar
May 2013
ASQ www.asq.org Page 1 of 4
Do or Die
Given 12 months to transform the chemical unit, and the
freedom to do so by any means necessary, the business head
quickly enlisted the help of a project team to dive into perfor-
mance metrics and scour research for a solution.
The team collected data on three key dimensions: customers,
employees, and internal process capability of the chemical unit.
Data revealed that the overall customer satisfaction score was
a healthy 72 percent; however, the employee satisfaction score
was at a grim 51 percent and the overall process performance
score was a dismal 13 percent.
The business head observed that with the possibility of unem-
ployment looming overhead, morale had sunk to very low levels
among the units 71 employees. Research from Fleming &
Asplund and the Gallup Organization has suggested that engaged
employees drive profitable business outcomes. It was strategi-
cally decided that the primary area of focus in the chemical
business would be to improve the people score. That, inturn,
would boost efficiency and hopefully recover losses.
The chemical unit head felt a high-magnitude approach was needed.
During this time in India, the concept of self-directed teams was
being promoted by local consulting firms. For most organizations,
this way of doing business was a hard sell and it demanded a radical
shift in thinking. As the chemical unit head explored the approach,
he realized it stood on a sound foundation of organizational pro-
cess alignment and customer-centeredness. He also recognized it
includes lean thinking, a distributed leadership model, and people
management through empowerment.
Hands-free Management
A self-directed team is a highly trained group of employees
responsible for working under minimal management supervi-
sion. These teams are different from most others in that they often
have more resources at their disposal, a broader range of cross-
functional skills, greater decision-making authority, and better
access to information. Self-directed teams are equipped to conduct
planning, set priorities, coordinate with others when necessary,
assess the state of processes, and take corrective action.
A 22-step road map to people excellence under the name
Acknowledge, Qualify, Transform, and Embrace (AQTE

, which
is pronounced equity), is illustrated in Figure 1. This approach
was developed by the business head to deploy the new work sys-
tem. It breaks down the concept of self-directed teams into four
ASQ www.asq.org Page 2 of 4
Figure 1: Acknowledge, Qualify, Transform, and Embrace (AQTE)

Acknowledge Qualify Transform Embrace

Acknowledge linkage
between organizational
strategy and role
of Human Sigma
1
Identify gaps in customer, process,
and people scores
5
Reorganize people in teams
to suit redefned processes
12
Reevaluate physical and
IT infrastructure requirements
16
Identify resources required to create
value at value convergence points
8
Defne/redefne processes in line
with customer request
9
Map current skill levels
for operatives and
competencies for nonoperatives
10
Identify customer segments
6
Prepare location plan for identifed members
13
Communication and change management 3 4
Identify value convergence points
7
Develop position description and authority matrix
14
Defne service levels between teams
15
Develop PMS for new structure
17
Identify skill and competency gaps
11
Prepare deployment
charter
2
Administer self-tracking
system to manage
value and CPP score
21
Establish knowledge
management system
22
Devise criteria for reward,
recognition, and growth
18
Facilitate training and development for members
19
Establish leadership development process
20
PMS = Process management system
CPP = Customer process people
ASQ www.asq.org Page 3 of 4
phases, which are shown in Figure 2. It also includes the principles of Human Sigma, a
process for improving and reducing variability in employee and customer engagement.
AQTE discards a function-based structure (FBS) and replaces it with a process-based
structure (PBS). Most organizations have a traditional FBS, which is hierarchal and rid-
den with silos, giving employees little opportunity to gain knowledge outside of their
specialty areas. A PBS is supported by a flatter organizational structure. Because this
structure emphasizes working toward a common goal, there is more collaboration among
teams, fewer silos, and more engagement.
Fostering Accountability, Relationships, and Transparency
The workforce was arranged into four cross-functional teams called business units (BUs)
in both upstream and downstream operations along the value chain. Supervisors on the
shop floor would be replaced by a teamelected leader, who was empowered to make
all decisions in his or her BU during a shift. Team-elected leaders would operate for a
specified termanywhere between one month to three months, depending upon what
the team feels is appropriateand everyone on the team would receive a chance to lead.
Workers who were supervisors in the former structure were either placed in a BU or they
were transferred to the newly formed Center of Excellence (COE), which also included
one representative from each business unit. Some supervisors left the company on their
own terms because they did not agree with the self-directed teams concept.
Most functions handled by other
departments were transferred to each
BU so each was nearly self-sufficient.
Examples include human resources,
IT, and supply chain management.
Additional measures were taken to
improve the people score and support
staff in this new way of doing busi-
ness, including:
Employees received training to
broaden their skills and expertise.
Performance-based monetary
incentives were offered for teams
and individuals.
The installation of visual boards
to monitor team performance
during shifts.
Stronger sales efforts so that BUs
sold what was being produced in
the required quantities.
A focus on the root cause of the
problem and the process instead of
placing blame on individuals.
Empowering employees to
experiment with new ways to
complete old tasks.
The CEO assured staff members
that they would be placed in a
different area of the organization
if the self-directed teams approach
failed and the chemical business
was shut down.
Employees underwent a compre-
hensive training program that was
facilitated by the COE. First, skills
needed in each BU were identified.
Then, each employees mastery of
technical skills was assessed and
ranked among seven levelslevel
one being basic, and level seven
being expert. Not surprisingly, most
employees ranked highly in skills
related to their core area and lower
in skills they didnt routinely use.
Based on the skills and expertise level
required in a particular BU, employees
received additional training to better
support their team. Once an employee
acquired a new skill and demonstrated
independent use, a percentage of their
salary was permanently increased.
A
Acknowledge the role of Human Sigma in realizing organizations vision.
Q
Qualify the gaps in meeting customer and process requirements.
T
Transform people processes to unleash the power of Human Sigma.
E
Embrace the learnings for sustained growth.
Figure 2: Phases in forming self-directed teams
Qualifying the Opportunity: As-is customer process people (CPP) scores
Y axis
X axis
51%
13%
72%
People score
C
u
s
t
o
m
e
r

s
c
o
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e
P
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Y axis
Z axis
People and customer scores are derived
from responses received on the surveys
conducted using Gallup framework
Process score is derived from economic
value add (EVA%), i.e., PBIT/capital
employed WACC%
PBIT = profit before interest and tax
WACC = weighted average cost of capital
ASQ www.asq.org Page 4 of 4
Since a self-directed team culture depends on accountability, functional
relationships, and transparency to be successful, training sessions focused
on the development of soft skills, mentormentee relationships, knowledge
transfer, and leadership.
Waiting for a Shift
The initial results were not promising and the chemical unit lost more
money than before implementing AQTE. Processes were not stabilized
and morale was still low. As time passed, the teams became stronger and
trust in the system grew. The results began to shift in the ninth month.
After deploying AQTE, 90 percent of the work done inside each BU was
completed without any assistance from supervisors. Each business unit
formed became self-sufficient and performed activities that helped real-
ize targeted gains. For the first time, data and knowledge flowed freely
instead of being limited to the privileged few.
The people score jumped from 51 percent to 67 percent and the customer
score increased marginally from 72 per cent to 78 percent. However, the
breakthrough was in the overall process score, which went from 13 per-
cent to 65 percent. This resulted in a net margin of 8 percent, a revenue
increase of more than 70percent, and savings delivered to the tune of
$3.4 million.
Project Management Matters
Keeping key stakeholders engaged and maintaining close watch on the
project timeline was instrumental in the projects success. In addition to
bottom-line improvements, the chemical unit enjoyed several intangible
benefits, such as less employee turnover, reduced absenteeism, better utili-
zation of manpower, and a more nimble and skilled workforce.
The CEO was so pleased with the results that he made duplicating the
approach in the yarn business a strategic priority.
The chemical unit continues to thrive. The CEO has
invested in additional infrastructure to expand the
chemical units manufacturing capacity and to pro-
duce even higher grades of chemicals.
For More Information
Learn about lean at asq.org/knowledge-center/lean/
index.html.
Explore the different types of teams at asq.org/
learn-about-quality/teams/overview/overview.html.
Read another case study by Sumeet Kumar
entitled, Six Hospitals Combat Regional
Emergency Department Congestion With Lean,
at asq.org/2012/11/lean/emergency-department-
congestion.pdf.
About the Author
Sumeet Kumar is a mechanical engineer, MBA, a certi-
fied Lean Six Sigma Black Belt and Project Management
Professional with 17 years of experience in the automotive,
fast food, chemicals, consumer durables, and healthcare
industries. Sumeet, who has copyrighted a customer rela-
tionship management (CRM) model, leverages domain
expertise, technology, and knowledge in performance excel-
lence models to stimulate new business growth, increase
revenue and profit, and reduce overhead. Sumeet is the
director of quality performance at North Bay Regional
Health Centre located in northeast Ontario, Canada. In
his previous job at Vancouver Coastal Health in British
Columbia, Canada, Sumeet helped spread lean culture and
promote operational excellence across eight hospitals that
provide mental health and addiction services. Recently, he
presented his paper at some of the leading international
conferences on combating congestion in emergency depart-
ments and improving patient flow across six hospitals under
Vancouver Coastal Health. He formerly served Trident
Group as vice president and quality deployment leader and
led a team of 17 Black Belts and 25 Green Belts as he built
an infrastructure to support cultural change. He is credited
by the CEO for being instrumental in turning around a fail-
ing business unit to a net margin of 8 percent, increasing
revenues by more than 70 percent, and delivering savings of
$3.4 million.
Acknowledgments
Paras Surana: Project Black Belt
Pramil Pal: Production Manager
Amardeep Singh: HR Manager
Sanjeev Banga: Sales and Marketing Manager
Rajesh Garg: Procurement & Supply Chain Manager
Ajai Dyal: Consulting advisor on Self Directed Team
methodology
Vibhu Bhatia: Executive Assistant to Business Head
Turnaround: Project benefit
Y axis
X axis
51%
67%
65%
13%
72%
78%
People score
P
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Y axis
Z axis