The 25/25 Rule: Get better, don’t yield to weaknesses

A lot of the methods of business have been on my mind lately due to the work I’m putting into a new book I’m working on called the Gunfighter’s Guide to Business. In it there is a chapter on the International Journal of Production Research’s 25/25 rule and it is just another example of how the private sector is always trying to improve themselves so that they can make more money and stay relevant longer in a business environment. Yet government at any level never does and it shows in what their final products are. We joke about how inefficient government is, and people do desire jobs in the government sectors because performance standards are not part of the vocabulary, but it doesn’t take an accountant to realize that for every hour worked in a to heavy government environment that it is costing the taxpayer a tremendous amount of money because something like the 25/25 rule is not being utilized, and its very disingenuous to everyone forced to contribute to the madness through the tyranny of the IRS.

The 25/25 rule essentially states that you take the 25% of your business portfolio and not focus on it so that you can give attention to all your top customers. The effort was created to attempt to give more focus on organizational support for the best of your customers and requires a judgement call. The rule also assumes that there is always another 25% of your company portfolio that can be improved with cutting out non-value-added tasks. Can you imagine a school board meeting where such a conversation would take place? The teacher’s union which really runs all public schools would be up in arms and protesting in seconds, since the goal of any employee run management is to be as inefficient as possible so that the bar of expectations cannot be lowered, just ever inflated so that the “collective” is not pressured too much in any task. That is problem number one.

Yet even in relation to the private sector I think the 25/25 rule doesn’t go nearly far enough and is a very disrespectful way to treat customers if they don’t happen to be in that upper tier of a company’s portfolio. It’s not their fault that you as a business have focus problems and need to find ways to internally prioritize effort. While I do agree that there is always 25% of an organization that could almost always be eliminated in unnecessary process flow and streamlined operations, I also think that the task of every organization is that they need to get 25% better on their portfolios, not to ignore 25% of their current load so they can focus on their best and most important customers. A top-level organization is always doing that and getting better so that they can show off their capacity to handle pressure for future state growth opportunities.

What I find happening in organizations using the 25/25 rule is that its giving bad management another tier of excuses to use until they are forced to look in the mirror and admit what a bunch of losers they are. The intent of the 25% portfolio reduction is to manage overbooked businesses with a steadier workflow, with the notion that its better late than never getting it at all. To me this is reprehensible thinking and is the nature of that particular chapter in my book. The difference between the East and the West is that winning matters and some of the parameters of western thinking that determine victory is speed and accuracy—the drive thru window with everything in the bag that you ordered—the first time through. We want it fast and we want it accurate. This whole 25/25 rule had me thinking of the bullwhip competitions that I’ve been in over the years where you are supposed to be 7’ from the five targets in the Speed and Accuracy competitions. You are timed how quickly you can use a 6’ bullwhip to crack out the ten targets. For every miss, there is a 5 second penalty. Learning to do that competitive event is a good way to step beyond the 25/25 rule and instead to focus on improving yourself by 25% not passing along your inability to some down the line customer.

We see it all the time, we’re picking up some food at a drive thru, the restaurant is obviously understaffed for the level of business they have and lines are wrapped around the building with everyone waiting on their food. Additionally, the people who don’t want to wait in that long line go inside to order at the counter, hoping to step around the mess. But standard practice in every fast food restaurant is to use that 25/25 rule to deal with such carnage, and the first thing that goes is worrying about the dining room because it is the drive thru windows that have the timers on them and is how they are measured as a successful business. Such a place could be said to have a capacity problem and the managers will blame their high call-off rates and blame the weak condition of their employees as the reason for their victimized status.

I would argue that the capacity constraints are not in the machinery, since most fast food restaurants are built to do the business, its in the high turnover and generally unreliable nature of the employees they hire that causes all the problems. I find the fault in the managers who have such a bad staff that calls off too much, or the kind of people they hired to begin with, in not determining at the interview that their employees might turn in to unreliable employees, and that the management culture allowed the employees to call off often without consequences which is why restaurants sometimes are slammed and unprepared to deal with their customer bases. Hiring the right kind of people through the interview process then developing those people through proper management practices is the key to successful staffing which then solves the capacity challenges that are not related to the equipment itself.

The 25/25 rule tends to give bad management the excuse to hide behind this measurement system and give them a victimized status to explain away their failure. “My employees called off, so I couldn’t successfully handle the customer demands.” Yet it was the reason all their employees called off that the management system didn’t deal with, which is why there is a problem in the first place. The company should focus instead on having a 25% increase in hiring efficiency where their new employees have better attendance. Or the drive thru window workers get 25% faster than the less experienced newbs. Or that you can run the whole operation with 25% less people. Those should be the targets and people who do things like that bullwhip competition that I mentioned understand that process because it simply wouldn’t be permissible to complain that the competition was too hard and that they didn’t have the speed and accuracy to compete. That is the nature of my new book, is to change the thinking about these kinds of things from a victimized status to a proactive one. If you want to do something, don’t blame the conditions. Get better, and acquire the skills needed for success.

Of course, the obvious hatred for President Trump by protectors of the status quo, the government employees who have been sucking off the system hiding behind a lack of standards reviews, or the government labor unions who have their own rules, such as a 99/99 rule. Unions are only willing to give 1% toward performance review, or a process improvement. They aren’t willing to sign up for any performance expectations because they don’t want the bar set where their lazy employees have to live up to. While that makes for a nice job for them where they get paid whether or not they actually do anything, the benefit to the end use customer is us, in that they cost too much money. At least with President Trump a part of our government is starting to think more like the private sector, and that’s the way it should always have been.

Rich Hoffman
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