ESOPs and Kaizen

We have heard of more ESOP companies using "kaizen" management. It can be a great fit for employee ownership companies. For those of you who have been afraid to ask just what someone means by this at the latest cocktail party you attended, here is a brief explanation:

Kaizen is a continuous improvement process first developed in Japan but now used worldwide. One of its distinguishing features is that it involves all employees, a good fit for employee ownership companies. Kaizen has six core concepts:

1. standardize an operation;
2. measure the standardized operation (cycle times or quality standards in manufacturing; customer service processes for a retailer, etc.);
3. gauge measurements against requirements for profits, productivity, or whatever other critical number is being used;
4. get employees involved in finding innovative ways to improve performance;
5. standardize the new, improved operations; and
6. continue the cycle repeatedly.

A kaizen blitz is an intensive process over a few to several days to address a problem or seek a new opportunity.

In most companies, management defines the standards and employee teams then work to improve on them, often through small changes made continuously. In employee ownership companies, however, employee teams may themselves set the standards. A major part of the process is the mapping of the work process, often visually. Employees are usually asked first to brainstorm lots of ideas before the teams start to discuss them to agree on a new approach.