Managing People In A Lean Environment: The Power Of Informal Controls And Effective Management Of Company Culture

Abstract

This short case at a high tech company in the Midwest, illustrates some important principles for managing people focusing more on informal, rather than formal controls.  Lean Thinking advocates reducing waste, and continuously improving (Womack & Jones, 2003).  When a company shifts paradigms from traditional management to Lean management, the culture of the company transforms in many ways.  Traditional, formal methods of controlling employee behavior often involve a lot of non-value-add labor and cost, at the same time, they are not effective.  They are seemingly based on the attitude that employees are unprofessional, cannot develop internalized standards of behavior or understand the “big picture” of why it is in their own best interests to maintain high standards.  Analysis of this incident is useful for students of Lean management, in helping them see the power of informal controls embedded in the company culture.