Part I This article starts out by describing the issues the Rainbarrel company faced a year ago before they employed Hiram Phillips. Rainbarrel was fat and happy according to Hiram. Although they had the potential for greatness, the lack of discipline held them back. As Hiram suspected he had done great improvements with Rainbarrel’s numbers. He was able to reduce labor cost and lower cost as a result of higher productivity. Hiram was even able to increase the number of calls the customer service representatives were taking each day by 50% and reduce their call time from 6 minutes a call to 4 minutes a call without incurring any capital costs.
Another improvement Hiram was able to make was an increase in on-time shipments which was something the company was not watching before Hiram. The percentage of on-time shipments has gone up over the past six months and currently is 92%. By creating a new policy that commissions would be at actual purchase price instead of full price when discounts were used, Hiram was able to reduce cost reduction by 50%. The larger point Hiram wanted to point out in his presentation was that straightforward rules and rewards will drive superior performance.
When Hiram listened to the presenter before him he learned that negative effects his changes has caused for the company. He has been learning how the workers have learned ways around the rules that only make the numbers look good but cause other problems. One problem noted was how quickly the phone calls go with the customer service representatives, but in order to keep up with the goals the reps have to talk fast so they can take their next call. They are sacrificing handling customer issue on the first call so their number of calls will increase, but most of the calls they are taking are repeat callers. Hiram is left contemplating what he will actually say in his presentation