Business opts for zero tolerance

Zero tolerance - the policing method that dramatically reduced crime in New York - is now being used to improve the performance of UK companies.

In a paper titled Broken Windows, James Wilson argues that high-crime neighbourhoods are not plagued with drug dealing and drive-by shootings from the outset, but begin with the toleration of disorderliness such as drunks slumped on the sidewalk or graffiti. This untended behaviour gives a powerful message that "no-one cares" and, therefore, that the apparent cost of committing more serious crime is lessened. Soon, panhandlers and muggers move in and the neighbourhood descends in a spiral. "If a window in a building is broken and left unrepaired, all the rest of the windows will soon be broken," he says.

Following an initiative by Mayor Rudolph Giuliani, former New York Police Commissioner William Bratton first introduced zero tolerance by telling his officers to respond to every offence, no matter how petty, and instituting a blitz against turnstile jumpers and graffiti artists on the subway. Under him, the city's murder rate fell to its lowest level in 30 years, car theft was halved and violent crime on New York's underground was cut by two-thirds.

Similarly, corporate managers send out thousands of small messages every day. A broken coffee machine left unrepaired or a small production problem that is put up with will send the same message as a broken window - a message that is far more powerful than anything that emanates from the official communications channels. It subliminally says, "no one cares about this".

A business can be transformed by zero tolerance, even though it may seem that management time is being spent on small problems. Thousands of rigorously managed small improvements will lead to a big turn-around. Large improvements should be tackled too, but the additive affect of many small changes should not be underestimated - not just for the financial gain, but also for the cultural change that is engendered.

A recent turn-around in a British manufacturing company with around pounds 200m turnover illustrates the philosophy. In just 18 months, with little or no capital spend, a loss of pounds 290,000 a week was turned into a profit of pounds 270,000 a week.

Zero tolerance management is not for the faint-hearted. The methodology is focused, uses rigorous analysis and, when well managed, gathers a juggernaut-like momentum. Costs, benefits and risks are analysed for every improvement no matter how small. Improvements are then implemented by project managers who measure progress daily. Savings are independently validated to check that they are both real and sustainable.

Zero tolerance management, however, is not a new approach to draconian measures in the work place. Zero tolerance policing was successful as much for its vision of which areas of crime to target as it was for its implementation.

The mix of skills required includes not only traditional business improvement, but also the ability to diagnose the fundamental problems with the corporate psychology that lead to the current position in the first place.

This is why so many other corporate improvement techniques such as business process re-engineering have had some failures. Their approach was too mechanistic and only looked at changing ways of doing things, rather than seeking to change the cultural issues leading up to the current position. Zero tolerance management can transform a company because it not only changes what we do around here, but more importantly the way that we do it.

Ian Shaw, associate director of business advisers Danson Ltd, can be contacted on: 01625 628060.