COMPANY: Aluminum Company of America CORPORATE ADDRESS: 1501 Alcoa Building Pittsburgh, Pennsylvania 15219 PLANT/BRANCH ADDRESS: 300 S. Hall Road Alcoa, Tennessee 37701 SIZE (employees): 1,950 UNION(S): United Steelworkers of America INDUSTRY: Primary aluminum and rolled stock SIC CODE: 3334 NEAREST METRO AREA/MILES: Knoxville, TN (12 miles) CONGRESSIONAL DISTRICT: TN-02 SECTOR: Private OWNERSHIP: Publicly traded corporation. Stock symbol -- AA. Stock listed on the New York, Basel, Brussels, Frankfurt, Geneva, Lausanne, London, and Zurich exchanges and traded (not listed) on the Boston, Midwest, Philadelphia, Pacific and Cincinnati stock exchanges. CEO/PRESIDENT: Paul O'Neill Chairman and CEO 1501 Alcoa Building Pittsburgh, PA 15219 CONTACTS: Leonard Stinnett Human Resources Manager Alcoa 300 South Hall Road Alcoa, Tennessee 37701 (615) 977-3040 Tom Moore President, Steelworkers Local 309 P.O. Box 657 Alcoa, Tennessee 37701 (615) 982-8142 DATE: December 15, 1994 COMPANY DESCRIPTION: The Aluminum Company of America (ALCOA) is one of the largest producers of primary aluminum and aluminum products in the world. ALCOA developed the earliest technology for the production of primary aluminum. The company was founded in Pittsburgh in 1888 as the Pittsburgh Reduction Company. In 1907, the company adopted its present title. It is an international corporation and employs almost 65,000 people throughout its worldwide operations. ALCOA has aluminum and chemical facilities in Arkansas, Tennessee, Florida, Georgia, Texas, Louisiana and six foreign countries; smelting plants in Indiana, New York, North Carolina, Tennessee, Texas, Washington, and three foreign countries; aluminum fabricating facilities in Arizona, California, Louisiana, Maryland, North Carolina, Georgia, Indiana, Pennsylvania, Tennessee, and seven foreign countries, and non-aluminum products in Indiana, Mississippi, and four foreign countries. Annual revenues are over $10 billion. The production workers in the Alcoa, TN, plant have been represented by the United Steelworkers of America, Local 309, for almost fifty years. TRAINING AND CONTINUOUS LEARNING: Training is a major activity at the Alcoa, TN, plant. The plant has an ongoing apprenticeship program and trains all of its skilled craft and maintenance workers through the apprenticeship program. The Company has an educational resource center that offers employees training in everything from remedial reading and mathematics to courses that are part of a technical degree program at a nearby technical college. There is continuous training on-site in a wide variety of production-related areas such as statistical process control, problem solving, etc. The Company utilizes both its in-house staff and outside consultants to present this training. All of the training provided is designed in-house by ALCOA employees, with help from educators from Pellissippi State College. The Company has a tuition refund program that pays college tuition for employees who take courses that lead to a degree or certification. The Company has a training staff to assist the various departments in assessing their training needs and determining training strategies. Overall, employees at ALCOA spend between 5 and 8 percent of their time in training. EMPLOYEE PARTICIPATION: Employees in some of the areas in the plant are organized into work teams that have virtual control of many functions that are traditionally identified with management in other organizations. The goal is to significantly reduce the need for direct supervision throughout the operations. In some cases, the work teams have no direct supervision but are led by a lead person who acts as a team leader. The team leader is rotated among team members so that leadership opportunities are shared and leadership abilities are widely developed within the workforce. In some areas in the plant, the traditional time clock has been eliminated. The work teams, in some areas, have a wide area of authority to make product and process decisions. In a continuous process operation, frequent decisions are required. Within preset parameters, decisions regarding work and work processes are left to the production workforce, with supervisors acting as coaches and providing technical support. Teams, however, make no hiring or firing decisions. The work teams have the opportunity to meet with customers and suppliers. The Company sends teams that include production workers to the premises of its customers and has customers visit the plant. During these visits, customers and the workers making their product have an opportunity for direct contact and discussions. The same is true of suppliers of raw materials, machinery, etc. The Company is in the process of flattening its organization and is pushing decisions downward in the organization. When present plans are fully implemented, two of the traditional layers of management will have been eliminated and the responsibilities of management will have been redefined. ALCOA puts a great deal of emphasis on safety. Joint union- management safety teams are very active and get involved very early in decisions that have safety implications, such as the purchase and installation of new machinery and equipment, safety implications of process changes, etc. The safety record of the Company and this plant have dramatically improved in recent years and Alcoa's safety record is among the very best in American industry. Alcoa also employs ad hoc teams to investigate and devise solutions to specific problems. For example, four separate teams were established to help the company implement a new materials handling process. ACCESS TO INFORMATION: Employees in this plant receive a continuous stream of information on financial conditions, process performance, status of marketing plans etc. This Company intends to have a very open internal communications process that encourages information flow upward, downward, and laterally. It is in the process of installing video monitors in break areas throughout the plant to provide up-to-date information on a twenty-four hour basis. There are regularly published plant and company communications that cover a wide variety of topics of interest to employees. In addition, there are many departmental and work group meetings of all types. Conducting these meetings is considered a responsibility of departments and work areas. The Company conducts regular employee surveys and considers this an important and confidential feedback mechanism for employee concerns. ORGANIZATIONAL STRUCTURE: The organizational structure in the Alcoa, TN plant is undergoing transformation from a typically hierarchial organization to one that is flatter. Decision making responsibility and authority is being moved toward the shop floor as the self managed work teams proliferate. When the transformation is complete, there will be two fewer layers of management between the production worker and the works manager. Close relationships with both suppliers and customers are maintained. As noted above, employees are empowered to meet with both customers and suppliers on an ongoing basis. ALSO suppliers and customers are constantly brought into the plant and ALCOA employees often tour the facilities of customers and suppliers. EMPLOYMENT SECURITY: The American aluminum industry and the Alcoa corporation have been buffeted by the same economic and competitive forces that have impacted much of the rest of American industry. Very recently the most recent impact was provided by extensive exports of primary aluminum by the former Soviet Union. In the last ten years, the Alcoa plant has undertaken an extensive modernization of its processes and equipment (approximately $800 million has been spent on this effort). The result has been a significant restructuring of the operation and significantly reduced labor requirements. During this period, the Company has attempted to cushion the blow of downsizing by offering retirement incentives, outplacement services, transfer and retraining opportunities, etc. Despite its best efforts, there are still significant numbers of employees on layoff. Under the collective bargaining contract, employees whose jobs become redundant may, by virtue of seniority, bump into other areas. These employees are entitled to training to bring their skills into line with the job demands. SUPPORTIVE WORK ENVIRONMENT: The company has established many of the usual benefits for employees such as employee assistance programs, civil rights programs, health care benefits, etc. In addition, emphasis is placed on employee safety and health and a number of joint committees have been established to increase safety and health at the plant. PRODUCT/SERVICE QUALITY: The company is meeting the challenge of the marketplace in providing a high level of quality and service to its customers. Because the company competes in a world market, ongoing quality improvement and a quality reputation are vital. The ALCOA plant is a state-of-the-art rolling mill and quality products are an expected output. The establishment of teams which include production workers has served to emphasize the need to not only serve, but to anticipate customer needs. The Company promotes direct contact and consultation between customers and the work teams that produce for that customer. The Company has the capability to tailor alloys and to developo physical characteristics of roll products to meet the customers needs. The plant is presently pursuing ISO 9000 certification and expects to be certified as ISO 9002 compliant. COMPENSATION LINKED TO PERFORMANCE: Within the labor agreement, there is a wage structure of the traditional type. In addition, the company has a plant-wide gainsharing system. This system is not tied to profits (since aluminum prices, and consequently profitability, are subject to significant fluctuations). The system is instead tied to measures critical to the success of the operations, such as quality, cost and safety. Thus, excellent performance in the plant will trigger the bonus payment system even if the marketplace is temporarily depressed. WORKER-MANAGEMENT RELATIONS: The Alcoa plant offers an example of a mature plant with traditional union-management relations developing a relationship that meets the new competitive needs of the 1990s. The Union and company have established a large number of joint committees to anticipate and work on problems before they become serious. STRATEGIC INTEGRATION OF BUSINESS: The human resource function is important in the plant and is an active part of the overall strategic planning activity that foresees future needs and opportunities and the human resources impacts and needs of technological improvements. The Alcoa, TN, plant is highly computerized, employing more than 1,000 microcomputers connected to a local area network. In turn, the Tennessee plant is connected to other ALCOA facilities through a wide-area network. REMARKS: ACCOMPLISHMENTS/AWARDS: SERVICE PROVIDERS: Alcoa uses the local state college and its faculty (Pellissippi State) as consultants in designing training programs and delivering some these programs. REFERENCES: Inglesby, Tom, "Bringing the Past into the Future," Manufacturing Systems, February 1993, pages 34-37. ------------------------------------------------------------------- COMPANY: Ames Rubber Corporation CORPORATE ADDRESS: 2347 Ames Boulevard Hamburg, New Jersey 07419 PLANT ADDRESS: SIZE (employees): 425 UNION(S): Non-union INDUSTRY: Rubber products and office machine components SIC CODE: 3069 NEAREST METRO AREA/MILES: Newark (45 miles) CONGRESSIONAL DISTRICT: NJ-05 SECTOR: Private OWNERSHIP: Private PRESIDENT/CEO: Joel Marvil Ames Rubber Corp. 2347 Ames Blvd. Hamburg, N.J. 07419 CONTACTS: Bob Kenna Personnel Director Ames Rubber Corp. 2347 Ames Boulevard Hamburg, NJ 07419 (201) 827-9101 Charles A. Roberts VP, Total Quality Ames Rubber Corp. 2347 Ames Boulevard Hamburg, NJ 07419 (201) 209-3200 Fax: (201) 827-8893 DATE: 11/15/94 COMPANY DESCRIPTION: Founded in 1949, Ames Rubber Company is a family owned, closely- held company located in Hamburg, New Jersey. Ames manufactures rubber rollers for office machines and specialized parts used to protect the transaxle of front wheel drive vehicles. Ames has become the world's leading manufacturer of rollers for mid to large sized copiers and has annual sales of $45 - $50 million. TRAINING AND CONTINUOUS LEARNING: Ames provides it's employees with extensive training in such areas as statistical process control, quality techniques, management and leadership skills, and communication skills. Employees are also instructed in "Pareto analysis ", which enables each employee to separate the vital few from the trivial many. Each new employee receives an initial 24 hrs. of Quality training followed by 40 hours of training on an annual basis. The first major obstacle Ames faced was the realization that a considerable amount of Ames staff lacked proficiency in basic reading and math skills. In cooperation with Sussex County Community College, Ames offers their employees a three tier education improvement plan geared towards making the employee a more productive member to the company as well as society. The first of the three tiers, which offers basic courses in remedial math and basic literacy, can be taken during work time. The Second tier intermediary classes prepare employees for the third tier which gives employees the opportunity to obtain their High School Equivalency Certificate (GED). Ames also offers a tuition assistance program in which enables employees to take college credit classes towards any degree up to a Masters with 100 percent reimbursement from the company upon completion. EMPLOYEE INVOLVEMENT/PARTICIPATION: All employees at Ames Rubber Inc. participate in monthly "involvement group" where corporate information is exchanged and at which employees discuss product quality, compensation, safety, and new ways to improve the efficiency and workings of Ames' daily activities. Involvement group members rotate the meeting roles of leader, secretary, scribe, facilitator, and timekeeper at each meeting. Meetings last approximately one hour and any problems that are identified for improvement are passed on to task teams. Task teams meet to develop solutions to problems. ACCESS TO INFORMATION: Employees at Ames are able to monitor both the company and specific divisions profits and costs. A monthly financial sheet is posted to inform the employees of the company position, and a financial statement is also made available twice each fiscal year. ORGANIZATIONAL STRUCTURE: Ames has a traditional hierarchical structure, but has developed an open door policy with regards to employee suggestions and ideas. EMPLOYMENT SECURITY: Fluctuations in employment needs have been taken care of through attrition or temporary workforce. Employee turnover has dropped from over 80 percent to under 7 percent due to the combined benefits of training and profit sharing programs implemented. SUPPORTIVE WORK ENVIRONMENT: Ames attempts to promote an egalitarian teamwork philosophy and thus each employee is called a "Teammate" to accentuate this idea. The company has taken great caution in making its plants some of the cleanest plants in the rubber industry, and each employee is taught to take great pride in their workplace. Safety committees, made up of employees from all areas of the company, were set up to ensure safety throughout the workplace by meeting and exceeding required OSHA standards. Safety presentations on a wide variety of subjects are given to employees. Ames' three production facilities are also involved in head to head competition in which the facility maintaining the safest workplace can receive an annual bonus of up to $100 per employee. Ames promotes safety by posting signs in the production areas to let employees know how long there facility has been accident free. Accidents have been on a downward shift for the last 5 years. Mandatory drug testing, a part of the selection process at Ames, promotes a safer work environment. Teammate participation in the above mentioned groups allow the opportunity to suggest improvements in areas ranging from compensation to safety. Employees exiting the company are interviewed concerning their reasons to gain improvement ideas. PRODUCT/SERVICE QUALITY: In 1987, Ames announced a program entitled "Excellence through Total Quality" designed to promote a common vision for all employees - Total Quality. To implement the process,seventeen thousand training hours were delivered to ensure that each employee understood and was committed to the mission of becoming a Total Quality company. A steering team was formed to develop the TQ process. This team developed a strategy which included two important features of Ames total quality training: The Quality Improvement Process (QIP) and the Problem-Solving Process (PSP). The Quality Improvement Process is a nine-step process involved in identifying and satisfying customer requirements. The Problem- Solving Process is a six step process designed to help employees recognize the best solution to a problem. A quarterly meeting is held to review short- and long-term goals. Ames is committed to it's customer service. All of the products are designed-to-order to meet customer specifications. Ames offers a refund to customers for prototypes that do not meet the customers' expected standards. Ames also maintains close contact with its customers and suppliers through the company's continuous Supplier / Customer involvement program. All employees participate in an "involvement group" meetings to brainstorm and present new ideas. Ideas are then passed on to smaller task groups which meet on a weekly basis to develop problem solving strategies, and to implement new ideas. Involvement group ideas have saved the company $3 million over the last 5 years, and averaged roughly $2,700 per employee in 1993. Manufacturing times of some products have been cut from 4 weeks to just 1 week. One team redesigned a basic production process which saves Ames 600,000 per year. Ames has also reduced it's supplier base from 42 to 19, by selecting companies whose quality performance averages at least 99 percent. This emphasis on quality management has enabled Ames to cut its number of quality inspectors by 50 percent, with inspectors focusing on the inspection of incoming parts. Ames has also reduced the number of defective parts to customers from 33,000 parts per million to just 50 parts per million. COMPENSATION LINKED TO PERFORMANCE: Profit sharing has been a very effective means of motivation for Ames employees, as can be attested by the profit results. A profit hurdle is set each month as a goal for all employees to attempt to achieve. Any profits above this hurdle are placed in a pool to be distributed twice yearly, in July (summer vacation), and in December (Christmas). Involvement groups, task teams, or individuals may be recognized for suggestions which benefit the company. The most prestigious award is the Presidents Award which is awarded annually. Additionally, employees receives a general increase annually to adjust for cost of living and are eligible for merit pay increase on the anniversary date of their employment. ACCOMPLISHMENTS/AWARDS: Ames Rubber Inc. has managed to continuously increase its revenue over the past 5 years to $50 million annually. Productivity, measured by sales per teammate has increased by 48 percent between 1989 and 1992. Ames has received a number of awards and recognition, the most coveted being the 1993 Malcolm Baldrige Quality Award for small businesses. Ames' Chairman, President and CEO, Joel Marvil, has been named " Man of the Year" by the Rubber Manufacturers of America. REFERENCES: Schroer, Judith. 1993. "Ames Rubber met Xerox quality challenge" USA Today, 10/20/93, NIST. 1993. "1993 Award Winner"- Malcolm Baldrige National Quality Award Winner, Gaithersburg, Md. ------------------------------------------------------------------- COMPANY: Aqualon CORPORATE ADDRESS: Hercules Inc. P.O. Box 15417 Wilmington, Delaware 19850 PLANT/BRANCH ADDRESS: Aqualon-Hercules 1 Mill Street Kenedy, Texas 78119 SIZE (employees): 82 UNION(S): American Federation of Grain Millers INDUSTRY: Water soluble polymers SIC CODE: 2899 NEAREST METRO AREA/MILES: San Antonio, TX (60 miles) CONGRESSIONAL DISTRICT: TX-15 SECTOR: P OWNERSHIP: Subsidiary of Hercules, Inc. CONTACTS: Dickie Custer Employee Relations Manager Aqualon-Hercules 1 Mill Street Kenedy, TX 78119 1-800-292-3445 Lee Hext President Local 257 American Federation of Grain Millers Aqualon-Hercules 1 Mill Street Kenedy, TX 78119 1-800-292-3445 Oscar Danmier Aqualon-Hercules/AFGM Local 257 1 Mill Street Kenedy, TX 78119 1-800-292-3445 DATE: 2/14/95 COMPANY DESCRIPTION: The Aqualon-Hercules plant in Kenedy, Texas manufactures water soluble polymers, made from the Guar plant which is imported from Pakistan and India. The Kenedy plant has total employment of 82 people. The plant produces 20 million pounds of polymers per year, primarily for the oil and gas market. The plant was originally built as a General Mills facility in the 1950s, and was later sold to the Henkel Corporation. The water soluble division later merged with Hercules, Inc. to form Aqualon and created the Aqualon division. The Henkel share of the plant was later bought out by Hercules. In the 1960s, the plant was unionized and today the Aqualon employees belong to Local 257 of the American Federation of Grain Millers. TRAINING AND CONTINUOUS LEARNING: Plant and union officials estimate that approximately 15 percent of employee time is spent in training and development activities, most of which is accomplished as on-the-job training. Two staff people at the 82-person plant have a dedicated function as trainers. Over the past year, the union has played a more active role in the plant's training and development program. Many union members today serve as trainers, and with certain training courses such as fire training, the union administers and conducts all the training. The Kenedy plant offers full tuition reimbursement to employees who participate in outside educational and training classes. EMPLOYEE PARTICIPATION: Self-directed work teams have full responsibility for running plant operations without supervision. The teams make all decisions regarding scheduling of work, time card approvals, disbursement of checks, and fire and accident reports. Through regular team meetings, team members are consulted about all major plant projects. No project can be approved without the consent of the work teams. Team members fully participate in equipment changes and new technology decisions. During team meetings, Aqualon engineers listen to team members to get their ideas for making technology and equipment improvements. Team members also regularly visit other work sites to test new equipment. Major plant decisions, including financial decisions and decisions regarding layoffs, are made by a Plant Steering Committee which is made of roughly equal numbers of management and union representatives. Union representatives are involved not only in decisions regarding layoffs of production workers, but also layoffs of management and support personnel as well. The president of the local union also is a member of a corporate strategy team that makes decisions regarding business strategy, pricing, and sales of the company's Guar-based products. ACCESS TO INFORMATION: All Aqualon employees have e-mail accounts and access to computer terminals on the shop floor, through which they can access the minutes of plant steering team meetings and receive any financial information for the plant. All financial information is available to employees. At team meetings, team members also get regular updates on plant financial and operating information. ORGANIZATIONAL STRUCTURE: In response to fluctuating sales from the declining gas and oil market, the Aqualon Kenedy plant was reorganized in 1991 in an effort to make the plant more productive and prevent a potential shut-down. A joint team was formed by Aqualon management, with input from the local union, to review business conditions and operating practices and develop a comprehensive plan for continuous improvement. The team was comprised of four plant management representatives and four members selected by the union. For three months, the team met continuously offsite, and eventually produced the Improved Operating Plan (IOP) , which called for self-directed work teams as well as the development of a plant steering team composed of both management and union personnel. The plant steering team, comprised of members of the Kenedy support staff group, the local union president, and three union members, makes all financial and layoff decisions. A separate business team, comprised of production team members, acts as an implementation team, makes project and financial decisions, addresses team conflicts, discipline issues, production problems, personnel assignments, scheduling conflicts, and support team needs (i.e. environmental, safety), and focuses on customer concerns and needs. The Improved Operating Plan realigned plant personnel into two primary teams, the Basic Guar Team and the Derivatives Team, focused around the plant's product alignment. Today, the Derivatives group is comprised of three self-directed work teams, while the Guar group consists of one main self-directed team. Originally, team leaders were union members with greatest seniority, but now team members take turns as leaders. Extra pay provided to the team leader is now distributed equally among the team. The self-directed work teams have all responsibility for running the plant. As stated in the most recent labor contract, "the goal of the Kenedy work force is to consist of work teams, which will be self managed and cooperate jointly with each other and management in performing the following activities and any additional duties as may be jointly developed: manufacturing quality product to schedule; assisting in the budgeting process and performing to budget; housekeeping; improving employee safety and health; maintenance of equipment; material and inventory control; participate in training and provide training for others; manpower scheduling; minimizing absenteeism; discipline; obtain supplies; keep records; understand and support the team concept; assist in constructive evaluation of individual performance; maintain proficiency in required job skills; and assist in hiring and filling openings within the team." EMPLOYMENT SECURITY: Because of increased competition from foreign imports, the Kenedy plant recently experienced layoffs of 6 positions in September, 1994: four union production workers and two support staff workers. Layoff decisions, like all plant decisions, are made with joint union and management participation. Union members even participate in all decision making regarding layoffs of non-union management and support staff. Plant and union officials indicate that such joint cooperation has allowed for the maintenance of a strong labor/management partnership, despite the real threat of layoffs. The plant's layoff policy is spelled out in the labor contract. The contract states, "In the event of a layoff, department seniority shall first apply and then plant seniority with respect to all employees. The practice will be to first ask for volunteers. If sufficient volunteers are not obtained, employees having the longest department seniority will be retained. The employees not qualifying for retention within the department shall be entitled to exercise their plant seniority. Employees with the shortest plant seniority will be laid off, if possible." Outplacement services are provided to those employees subject to involuntary layoffs. Employees on involuntary layoff status continue to accrue seniority and retain recall rights for eighteen calendar months following the layoff. SUPPORTIVE WORK ENVIRONMENT: The plant has a safety steering committee comprised of both management and labor representatives, and employees from each of the different work areas. Members of the team devised the plant's safety program, and they receive additional safety training and instruction. The safety team members serve as experts to the plant's various work teams, and they are responsible for safety investigations, reports, and discipline. Because of the dangerous chemicals used in some of the plant's production process, all employees receive special training in chemical safety issues. The plant's attention to safety has paid off. OSHA TRR ratings which once hovered in the 4 to 7 range, last year were between 1 and 2, indicating a dramatic decrease in both lost-time and total accidents. The Kenedy plant was recognized by the parent company, Hercules, Inc., as having the fewest number of work hours without a lost-time accident. The plant operates on a flex-time basis, and all scheduling decisions are made directly by the teams, which enables to be able to deal with family issues and emergencies. Everyone in the plant recently participated in a full-day diversity training program. PRODUCT/SERVICE QUALITY: The Kenedy plant recently received ISO 9002 certification. During efforts to achieve certification, the plant was reorganized around self-managed work teams and all supervision positions were eliminated. In preparing for the certification process, this reorganization meant that the plant's operators had to write the procedure manuals on which the certification was based. ISO certification is basically a check to see if operators follow the specifications spelled out in the approved procedures. Since operators were heavily involved in writing the procedure manuals and followed their own self-designed methods, the plant passed the ISO certification during their first examination, a feat accomplished by only 5 percent of organizations that apply for ISO certification. COMPENSATION LINKED TO PERFORMANCE: Production operators receive base salaries based on salary levels set by negotiations at the plant, corporate, and international union level. All Kenedy employees also participate in the Kenedy Variable Merit Plan. As spelled out in the labor contract, "Merit increases may be given once per year and may be paid as a lump sum or as a combination of lump sum and increase in base salary." The amount of the merit increase is based upon business performance and the accomplishment of established annual goals. The plant steering team is responsible for recommending the annual goals, and the amount of the merit increase is approved by the Aqualon management. The annual goal is a combination of factors that include meeting specific targets with regard to Return on Capital, quality, safety, and environmental efforts. In 1993, a banner year for the plant, every employee received a merit payout of 4.4 percent of their salary (the maximum salary percentage payout) plus an extra $1200 payout bonus. Bonuses were not given for 1994 because the plant failed to meet its return on capital goal, mainly due to lower sales as a result of higher prices and increased import pressure. Because the plant did meet all its operating goals, however, each employee was given a $500 bonus. In addition to the merit pay plan, the Kenedy plant also has a pay-for-skills program. Unlike other plants where employees receive extra pay for achieving broad skills in a number of different work areas, the Kenedy plan is based on certifications that workers have achieved advanced expertise in their own specific work areas. Experienced senior operators perform evaluations for skill level certifications, which lead to increased base pay for operators. WORKER-MANAGEMENT RELATIONS: Local 257 of the American Federation of Grain Millers at Kenedy Aqualon was partly responsible for initiating the plant reorganization and other work changes which enabled the plant to make significant improvements in its competitive position. In 1990, faced with significant financial losses and layoffs at the plant, local union leaders approached a corporate official about a possible plant reorganization. The corporate official commented that he knew many of the operators with 30 years experience had the "equivalent of a Ph.D.," but that they were not being listened to by management. This led to the Improved Operating Plan, which was jointly produced by a union/management team, a plant steering committee comprised of both union and plant representatives, and the work reorganization around self-directed work teams without supervisors. Since that time, labor-management relations at the plant have been extremely cooperative. The Employee Relations Coordinator at the plant is a former union official who was instrumental in initiating the work reorganization. In early 1994, the plant participated in a three-day future search conference, designed to assess the state of the plant, examine strengths and deficiencies of the labor/management relationship, and explore possibilities and develop strategies and action plans for a preferred future. The collective bargaining process began shortly after the conference on May 31, 1994, and concluded only seven working days later with the signing of a new three-year labor contract that was reduced from 50 to seven pages. Negotiations were based on an interest-based model, where issues were presented not as positions, but rather as solutions to be worked out by everyone. The current trust and understanding that exists between management and workers at the plant is demonstrated in the language of the contract which is flexible, oriented to the future, and is focused on shared values. An example is the language dealing with the resolution of employee problems that states: "In the event that a misunderstanding or complaint arises under this agreement, an earnest effort shall be made to settle the matter promptly. There is no limit on the nature of issues which may be referred to this process by employees, the union or the company. The process will be used to advance positive ideas as well as to examine perceived wrongs. The only qualifications are that the affected person(s) certify the issue as a responsible one of genuine concern and thereafter participate first hand in its resolution in the following manner: Step 1.A conference between the employee and a union representative. Step 2.A conference between the employee and a management representative (union representative present at the employee's discretion). Step 3.If no settlement is reached the complaint shall be reduced to writing and presented to a member of management within ten (10) working days of the occurrence of the incident. An effort will then be made to resolve the issue locally through the principles of interest negotiations and issue analysis. Step 4.If not resolved within three (3) months of being referred to Step 3, the issue is automatically referred to arbitration." STRATEGIC INTEGRATION OF BUSINESS: Design criteria in the Kenedy plant reorganization were focused on three main areas: people, work teams, and management. Work was designed so that people contributed ideas, were fair, honest, and trustworthy, demonstrated pride and ownership, and were customer/community focused. Work teams were designed to respect and value other team members, and be flexible and goal-oriented with multi-skilled members. The management function at the plant was designed to eliminate barriers, provide training and development, recognize performance, act as a resource for the work teams, allow decision making at the lowest possible level, and promote union and management cooperation. REMARKS: Plant and union officials have jointly presented at the Ecology of Work Conference in Dublin, Ireland and Detroit, Michigan. ACCOMPLISHMENTS/AWARDS: The labor-management team that designed the Improved Operating Plan set as a minimum goal to achieve a 16 percent return on capital (ROC) by 1996. Within a year of the new work redesign around self-directed work teams, however, the plant achieved a 20 percent return on capital. Furthermore, the non-conforming products level was reduced to 1 percent, and employees discovered a way to salvage 1 million pounds of product devalued as reject, saving the plant over $1 million. Recently the plant has faced harder times, as a result of increased pressure from foreign imports. In 1994, the plant experienced a return on capital of only 2.8 percent. Plant officials estimate, however, that the work redesign actually enabled the plant to achieve a positive ROC figure, which resulted in profits over $200,000 for the year, compared to losses of $6 million which they estimated would have occurred without the new work redesign. SERVICE PROVIDERS: The future search conference which led into the 1994 collective bargaining was conducted by Kevin Boyle of Boyle & Associates of Corvallis, Oregon. Plant and union officials also point to Barry Macy, Director of the Texas Center for Productivity and Quality of Work Life at the College of Business Administration at Texas Tech University, as an instrumental consultant in the plant's work redesign efforts. In addition, Richard Torstrick of South River, New Jersey, a former internal consultant for Hercules, Inc., is noted for his help in developing the structure of the plant's self-directed work teams. Also, both plant and union officials point to the research and advice of Janice Klein, a professor at the Sloan School of Management at the Massachusetts Institute of Technology in Cambridge, Massachusetts, as being instrumental in the design of the plant's pay-for-skills program. They also note their joint participation in The Ecology of Work Conferences (contact Tom Chase, 603/942-8190), co-sponsored by the NTL Institute and the Organization Development Network, as having a positive impact on their partnership efforts. REFERENCES: ------------------------------------------------------------------- COMPANY: Ashton Photo CORPORATE ADDRESS: 625 Hawthorne Ave, SE P.O. Box 14190 Salem, Oregon 97309-5305 PLANT/BRANCH ADDRESS: SIZE (employees): Avg employment - 105 (90 minimum to 160 maximal due to seasonal employment). UNION(S): non-union INDUSTRY: Photo finishing SIC CODE: 3829 NEAREST METRO AREA/MILES: Portland, OR (45 miles) CONGRESSIONAL DISTRICT: OR-05 SECTOR: Private OWNERSHIP: Private CONTACTS: Steve Ashton Chief Executive Officer Ashton Photo 625 Hawthorne Ave., SE P.O. Box 14190 Salem, OR 97309-5305 Alan F. White Director Ashton Photo 625 Hawthorne Ave., SE P.O. Box 14190 Salem, OR 97309-5305 Phone:503/399-1900 Fax:503/399-1503 DATE: 4/21/94 COMPANY DESCRIPTION: Ashton Photo is a high-volume producer of photo prints for professional photographers, including weddings, family portraits, product advertisement photos, church directories, school pictures, and athletic teams. The company processes approximately 25,000 negatives per week from around the world, and had 4.4 million in sales in 1993, 97 percent from out-of- state photographers. It is the largest volume photo printer in the state of Oregon. Ashton pioneered the display of youth sports photos as if they were on magazine covers or bubble-gum trading cards. TRAINING AND CONTINUOUS LEARNING: Group leaders and experienced operators at Ashton are responsible for teaching work techniques which can range from chemical processes to customer service and shipping and packaging. The training at Ashton is focused around employees teaching each other new skills and on-the-job training. Through Ashton's pay- for-knowledge system, employees are rewarded in their wages for the new skills they acquire. Employees rate themselves on their proficiency in performing relevant skills, with the higher ratings given to the ability to teach others. Company officials estimate that employees spend 10 to 15 percent of their work time training. EMPLOYEE PARTICIPATION: To encourage employee participation, Ashton's physical building is literally a workplace without walls and employees are allowed to go anyplace they wish within the building. A large fish tank was placed next to the President's office in order to draw people in for discussions. All meetings at Ashton are open and workers are encouraged to attend and participate. Worker suggestions are solicited through an "idea lottery," in which weekly winners receive cash or other types of rewards. ACCESS TO INFORMATION: Ashton posts its weekly financial statements outside the employee lunchroom. Teams are also given weekly profit-and-loss reports on their output from the previous week. Ashton has been recognized by Inc. magazine for its innovative employee handbook, used as a communication device with charts detailing the social contract and roles of the employee and employer. ORGANIZATIONAL STRUCTURE: In 1985, Ashton Photo changed its production system to a team- based management approach. There are currently 16 teams of up to nine persons each, accountable directly to customers for the work they produce and package for shipping. Each of the company's three major product lines has a divisional manager who supports the teams in handling product orders, and in serving as a "barrier buster" to resolve issues that come up in weekly obstacle meetings. Teams set their own work schedules, and employee evaluations are team-based. If an employee does not have strong support from his or her team peers, they are unlikely to receive a raise. EMPLOYMENT SECURITY: The Ashton work force is subject to seasonal reductions due to the large seasonal-based demand in the photo industry. Employment at the company can fluctuate anywhere from a minimum of 90 to a maximum of 160. Seasonal layoffs are primarily based on the accumulated skills acquired by employees, not seniority. Individual team leaders rank employees on criteria of skill, experience, and the ability to work in a team environment, and these rankings are referred to when seasonal work force reductions are required. Company officials report they would like to end the seasonal work force reductions, and are working to find demand balancing counter-cyclical markets to retain a larger proportion of the work force throughout the year. SUPPORTIVE WORK ENVIRONMENT: Ashton employees set their own hours within their work teams, and employees with children can choose to work earlier or later hours to meet family demands. Each employee has a key to the Ashton facility and can arrange their work schedules to accommodate personal needs with the objectives of their team. Ashton is planning to build basketball and volleyball courts, and paths located by a nearby stream, for employees to enjoy during their breaks. Showers were built in Ashton restrooms for employees that wish to recreate during the day. The company has a recreation room for employees that they use for recreation or in case of illness. The best office in the building, dubbed the "vanilla office," is not designated for any particular person. Workers can arrange to claim the office for a day of their own use. Ashton employees are encouraged to write "recognition notes" commending their co-workers for outstanding performances. The notes are read aloud at general staff meetings. Also at the staff meeting, a lottery-based drawing is held which gives cash and prize awards for suggestion/recognition ideas. Ashton's new facility, opened last year, provided for a number of safety improvements including better lighting, ventilation, and equipment arrangement. PRODUCT/SERVICE QUALITY: Ashton has a strong relationship with its primary raw material suppliers. Through this cooperative working relationship, Ashton provides their suppliers with "best possible" estimates of raw material demand and seasonal fluctuation, and the suppliers in turn provide just-in-time deliveries which prevents the accumulation of inventory. Through the implementation of new technology systems, Ashton has reduced its cycle times approximately 30 to 50 percent. The new system only allows individual jobs to be loaded on a production line at any one time. Consequently, problems must be worked through before moving on to a new job, which decreases the overall amount of nonvalue-added production time per product. Ashton employees were highly involved in implementing and collecting data on the new system. COMPENSATION LINKED TO PERFORMANCE: Ashton Photo has an employee stock ownership program as well as a 401(k) tax-deferred savings plan. Approximately 11 percent of Ashton stock is held through the ESOP program. An incentive program allocates 1 percent of photo processing sales to be divided among hourly workers each month. Ashton has an innovative pay-for-knowledge program that promotes continuous learning. Each job skill at Ashton has points assigned to it, and employees achieve additional points for achieving above-average expertise at certain tasks. An employee's wage range is based on the number of skill points accumulated, with additional points gained for the ability to teach others certain skills. At least once a year during performance reviews, employees rate themselves on each skill ranging from 1, "basic" skill, to 5, "expert." There are between 200 to 300 skills that Ashton employees can be recognized for through the skill-based pay system. WORKER-MANAGEMENT RELATIONS: STRATEGIC INTEGRATION OF BUSINESS: Ashton's organizational strategy is focused around self-managing work teams. Work teams answer directly to customers, and are responsible for training, personnel and production decisions, and setting their own work schedules, REMARKS: Ashton CEO, Steve Ashton, was featured on the cover of March 1994 edition of Inc. Magazine. ACCOMPLISHMENTS/AWARDS: Since 1985 when Ashton originated the team-based management structure, worker productivity has increased 60 percent and continues to rise an average of 7.5 to 8 percent per year. Between 1989 and 1993, customer growth increased 22 percent and volume growth grew at 25 percent. In 1993, Ashton Photo was named by Inc. magazine as one of the best small companies to work for in America. It was also one of more than 90 case studies of Oregon companies in the book, Confessions of Empowering Organizations, published in 1991 by the Association for Quality and Participation. SERVICE PROVIDERS: Many of the manufacturing systems at Ashton Photo were based on the work of consultant, Richard Schonberger, author of World Class Manufacturing. REFERENCES: Ehrenfeld, Tom. 1993. "Best compensation: Cashing in." Inc. July 1993, 69-70. Hill, Jim. 1993. "Making Work Worthwhile," The Sunday Oregonian, Oct. 10, 1993, K1, K5. Inc., 1993. "The (Handbook) Handbook," November 1993, 57-64. Redburn, Ray. 1991. Confessions of Empowering Organizations: Who's Doing It and How. Cincinnati, Ohio: Association for Quality and Participation. Spring, Katherine. 1993. "Photo Company Works as A Team," Statesman Journal, Salem, Oregon, July 31, 1993, p. 6D. ------------------------------------------------------------------- COMPANY: AT&T Corp. Atlanta Service Center CORPORATE ADDRESS: 295 North Maple Avenue Basking Ridge, New Jersey 07920 PLANT/BRANCH ADDRESS: 5885 Fulton Industrial Boulevard Atlanta, Georgia 30378 SIZE (employees): 401 UNION(S): Communications Workers of America Local 3295 INDUSTRY: Telephone remanufacturing and repair SIC CODE: 7629 NEAREST METRO AREA/MILES: Atlanta (0 miles) CONGRESSIONAL DISTRICT: GA-05 SECTOR: Private OWNERSHIP: AT&T is publicly owned and traded. Stock Listing - T Stock is listed on the New York, Boston, Philadelphia, Chicago, Pacific and Cincinnati Stock Exchanges. CHIEF EXECUTIVE OFFICER: Mr. Robert E. Allen Chairman and CEO AT&T Corp. 295 North Maple Avenue Basking Ridge, NJ 07920 CONTACTS: Ms. Chris Cole Repair Director AT&T Corp. Atlanta Service Center 5885 Fulton Industrial Boulevard Atlanta, GA 30378 (404) 346-4035 Fax: (404) 346-4201 Ms. Gerrie Penn Production Manager AT&T Corp. Atlanta Service Center 5885 Fulton Industrial Boulevard Atlanta, GA 30378 (404) 346-4279 Fax: (404) 346-4201 Mr. Larry McCloud President Local 3295 Communications Workers of America P.O. Box 43550 Atlanta, GA 30336 (404) 346-4043 Fax: (404) 346-4274 DATE: 07/21/94 COMPANY DESCRIPTION: AT&T Corporation was incorporated in New York in 1885 as the American Telephone and Telegraph Company. The company developed an extensive nationwide system of long-distance telephone lines, and, in exchange for stock, acquired extension stock interests in nearly all principal telephone companies in the U.S. In 1982, the company agreed to divest itself of its local telephone companies, after an anti-trust suit was brought against it by the U.S. Department of Justice. In 1984, the stock of the 22 telephone operating subsidiaries were transferred to seven Regional Bell Operating Companies. In June, 1994, the company adopted its present title. The company is involved in the provision to customers of products, services, and systems for the movement and management of information. In 1993, the company had revenues of $67 billion and net income of $3.9 billion. AT&T Corp. and its various divisions employ over 300,000 worldwide. TRAINING AND CONTINUOUS LEARNING: The Atlanta Service Center has an extensive, two-pronged approach to employee training and continuous learning. In the late 1980s and early 1990s, both management and labor realized that the only way to save jobs at this facility was to become competitive in the global market. Both parties realized that this meant relying more and more on their skilled employees. Nationally, this realization lead to the establishment of The Alliance. At the Atlanta Service Center, the Alliance agreement resulted in the establishment of "Project Genesis." Under this program, AT&T and the Communications Workers of America (CWA) work with Kennesaw Community College to provide employees with skills and jobs training to prepare them for changes in the AT&T workplace or for jobs outside of AT&T. Under "Project Genesis," employees are given the opportunity to attend additional training both on their own time or on company time. Training opportunities on company time must be related to the job. All courses are held on the company's premises in a newly constructed area that provides two additional classrooms, providing separate areas for computer and video-based learning. Each employee has been presented the opportunity to undergo a six-hour education and aspirations evaluation and assessment. Although this assessment is voluntary, over 75 percent of the employees eligible have either gone through the assessment or have signed up to take it. The parties expect that all employees will take advantage of the opportunity. "Project Genesis" has contracted with Kennesaw Community College for a full-time instructor to be placed at the plant to perform the assessments and help design training programs. The second prong of the plant's training program is designed around the Education Team, a self-directed work team. This team is geared to providing interpersonal and personal skills training, as opposed to technical skills training. The Education Team designs all of the in-house training and identifies new training needs. In establishing the Education Team, AT&T and the CWA benchmarked a number of other companies' training programs. All Education Team members are associates from the shop floor. The team members were brought on-line and trained in train-the- trainer courses. Through the two-pronged approach, associates undergo a both wide-ranging and intensive training. The company and the union business plan targets each associate to receive over 30 hours of formal training alone (classroom) annually, while the average amount of training taken is 48-52 hours annually. On-the-job training was not documented. The actual hours spent in training are much greater than the 40 hours budgeted annually. A Methods Team has been established to provide training to associates when they move between teams. As an example of the commitment to training, presently, 10 associates are undergoing electrical training on company time. This training will take three weeks (120 hours) and plans are being drafted to offer the course to a second set of associates. EMPLOYEE PARTICIPATION: Beginning in 1992, the Atlanta Service Center began to redesign its jobs and workflows around self-directed work teams. Each team in the plant is organized around a specific product or group of products. The teams range in membership from five associates to 20 associates. The team-based system was designed totally in- house by associates and managers. Team leaders are selected for designated work teams. The role of the team leader is to coordinate movement of personnel, and interface with production and performance managers for the everyday needs of the business. Each team also has a set of coordinators who have responsibilities for coordinating different aspects of the production/repair process. There are five coordinators: cost, production, safety, employee relations/education and quality. These coordinators are selected by team members based on experience. On smaller teams, coordinators may fill more than one position. Teams are allowed to implement change in the work processes as they see fit. They are expected to coordinate across teams if changes in a process will have impacts on other teams or in other areas. Based upon needed production levels, teams are responsible for balancing work and manpower loads. If a team will be overstaffed or understaffed for a period of time, the Leader approaches other teams to determine whether there is a need for a temporary fill- in or if there are surplus associates able to fill in. These manpower shifts are handled completely by the CWA local through a job bidding process. All associates can bid on open jobs and move between teams. All coordinators receive training relevant to their production areas through training modules prepared by the Education Team. Education Coordinators are expected to identify any changes needed in the training modules and work with the Training Team to redesign training. Education and training needs are determined by the teams themselves. The training and cost coordinators work together to determine the training available in light of cost and time figures and production schedules. Formal disciplinary actions are outside of team responsibilities. However, because the workforce at the plant is an older workforce, there are very few disciplinary problems, most of which deal with absenteeism. ACCESS TO INFORMATION: Because of the self-directed team structure, a large amount of information shared with the associates. Production managers and coordinators meet every week to discuss customer commitments. This information is transmitted back to the teams to enable them to schedule their work. All financial information is also shared with all associates. Costs and operational data are packaged into a monthly financial package that is given to the cost and production coordinators. These coordinators are expected to share and interpret the information with team members. The financials are broken down by section, product, and attendance so that each team can observe its impact on the overall business. The cost and production coordinators have all been trained in interpreting data essential to their operation. ORGANIZATIONAL STRUCTURE: Because of the use of self-directed work teams, the Atlanta Service Center has been able to flatten its organizational structure somewhat. Prior to the introduction of work teams, the Center already had a relatively flat structure (three levels). Since the introduction of the team-based system, the first-level supervisory level has been eliminated. Leaders and Coordinators now perform the tasks once carried out by supervisors. Where there were once 40 people in supervisory positions, only nine remain and they are no longer supervisors. The reduction was achieved with no layoffs, but by attrition. Supervisors were moved out of first-level positions and into other positions, such as coordinators, performance managers, and new business managers. Coupled with its flat organizational structure, the plant has implemented just-in-time production systems in many areas of its facility. Each associate has been trained in JIT procedures. Additionally, the facility is requiring more and more of its suppliers to become ISO 9000 certified. AT&T-Atlanta also works closely with its customers, both internal and external. Teams coordinators deal directly with the customer to develop production plans and ensure quality levels. EMPLOYMENT SECURITY: Although there is no formal employment security program, both AT&T and the CWA work together to design solutions to maintaining employment levels. When the first-level supervisory positions were eliminated, some supervisors became new business coordinators. This move has helped AT&T-Atlanta create added demand and save some jobs. In May, 1994, AT&T-Atlanta faced a 70-person surplus. Rather than laying off 70 associates, management and the union worked together to design a voluntary retirement incentive package. This package attracted enough retirees to avoid layoffs. In general, the facility has attempted to address the problem of surplus employees by relying on attrition before considering the necessity of layoffs. In the long-run, AT&T-Atlanta has tried to grow the business to save jobs. SUPPORTIVE WORK ENVIRONMENT: Although not on flexitime, the Atlanta plant operates its shifts four days per week (Monday through Thursday) for ten hours per day. Within this time, teams have some leeway to schedule their start and finish times. This allows teams to make allowances for team members' needs. To help improve associates' safety and health, a joint Safety Committee has been formed. The Committee, made up of representatives from the associates and management, investigates hazards and accidents and makes recommendations for improvements. Under the national contract, both maternity and paternity leave are provided. There is also child care referral and child care leave. The company and union hold one or two health fairs annually. There is an on-site nurse, and a self-test blood pressure machine available for all associates. Employees may take a course in CPR. This course is free and there is a goal to have at least 20 percent of employees certified in CPR at all times. In order to help AT&T-Atlanta cope with its diversified workforce, a Diversity Council has recently been established. There is one representative from each work area in the plant. The committee is tasked to broaden awareness and create an appreciation from various groups drawn together from across the United States. PRODUCT/SERVICE QUALITY: The Atlanta Service Center has introduced a number of the philosophies and programs found in Total Quality Management programs. Associates have been trained and are being trained in such techniques as problem solving, statistical process control, and the use of Pareto charts. On the line, if a quality problem is noticed, the team has the responsibility for stopping the line until the problem can be worked out. One of the self-directed work teams is a Quality Team that has the responsibility for ensuring product quality. Additionally, there is a quality staff of two that performs sampling and testing of products. The Service Center is also designing and documenting its quality system to enable it to obtain ISO 9000 certification. COMPENSATION LINKED TO PERFORMANCE: Plant associates are compensated under a traditional hourly wage system. WORKER-MANAGEMENT RELATIONS: The AT&T-CWA relationship can be characterized by one word-- trust. Collective bargaining has, in the past, been carried out at the national level. However, the company and local plan to bargain outside of the national framework when the 1995 bargaining negotiations begin. This bargaining is expected to take place in an informal, interest-based atmosphere and will be geared to supporting the work teams. In addition, as part of the atmosphere of trust, union officials feel free to sit in on any meeting being held in the plant, regardless of the topic. STRATEGIC INTEGRATION OF BUSINESS: Overall, the union is a full partner in setting strategic goals for the facility. Each Monday morning, a Leadership Team made up of representatives from management and union officials meets to discuss the previous week's achievements, what's planned for the coming period, and the goals for the future. REMARKS/AWARDS ACCOMPLISHMENTS: SERVICE PROVIDERS: Kennesaw Community College REFERENCES: ------------------------------------------------------------------- COMPANY: Baldor Electric Company CORPORATE ADDRESS: 5711 R.S. Boreham, Jr. Street Fort Smith, Arkansas 72902 PLANT/BRANCH ADDRESS: SIZE (employees): 3,100 UNION(S): non-union INDUSTRY: Electric motors and drives SIC CODE: 3621 NEAREST METRO AREA/MILES: Fort Smith, Arkansas (0 miles) CONGRESSIONAL DISTRICT: AR-03 SECTOR: Private OWNERSHIP: Publicly-owned Stock abbreviation-BEZ Listed on New York Stock Exchange CONTACTS: Roland S. Boreham, Jr. Chairman Baldor Electric 5711 R.S. Boreham, Jr. Street Fort Smith, AR 72902 (501) 646-4711 DATE: 10/12/94 COMPANY DESCRIPTION: Company designs and produces industrial electric motors of various sizes, and adjustable speed drives. Principal plants are located in Arkansas (2), Missouri (2), Mississippi, Oklahoma (2), South Carolina, Minnesota, Washington, and Munich, Germany. Company was founded in 1920. In 1993, Baldor had net sales of $356 million, and net income of $19.4 million. TRAINING AND CONTINUOUS LEARNING: Baldor invests heavily in ongoing training and education for its employees and customers. At any one time, there are between 30 and 40 training projects happening and each employee receives training. Training offerings include both soft and technical skills, from basic literacy through computer-skills training. Baldor sponsors training seminars for customers at its headquarters in Fort Smith, Arkansas. Over 1,000 attend each year. The basis of the training is Baldor's basic literacy training. The literacy training program began in the late 1980s when Baldor began implementation of a formal total quality program and found that some of its employees could not read or write well enough to complete the original course. Baldor consulted with East Mississippi College to design a literacy course and hired a full- time educational coordinator. Baldor continues to work with area community colleges to supply training and educational programs to their workers. As part of the effort, Baldor tested all of their employees for literacy skills and found that some tested below an eighth-grade level. Because of the training provided, nearly all of these employees are now above this level. In Baldor's St. Louis plant, nearly 100 tested below the eighth-grade level (out of 300). Theses 100 were required to enroll in two 16-week courses. After the first course, 65 out of the 100 had passed the literacy test and were excused from the second course. After the second course, only seven of the remaining 35 did not pass. Four of these seven went into private tutoring and passed, and two retired. Because of the success of this program, similar programs are being established at Baldor's other plants, in conjunction with area community colleges. Coupled with the programs designed to get all employees to eighth grade literacy levels, Baldor also rewrote its literature, instruction manuals and other materials to the eighth grade level. As one means to ensure this level of writing, Baldor instituted a writing course aimed at making written material easier to understand. Many of the courses taught throughout Baldor are designed and taught by community college teachers and employees in tandem. Employees are also in the process of designing and teaching five courses built around Baldor's philosophy of the factors that determine value in the customer mind. Baldor defines this concept as its Value Formula, written as Vp = Qp * Sp/C * T. Each course is designed by a volunteer team of employees and three of the five curricula have already been designed and provided. The remaining two courses are still being designed and will be given to all employees when the last employee has completed course three. Employees have also provided with job cross-training. Baldor has an open bidding system in which any employee with minimum qualification s can bid on an open job. Selected employees are provided with elementary job training and then when they move to the floor, are given on-the-job training to help them become more accomplished. This provides Baldor employees the freedom to move within the company and provides Baldor with a flexible workstaff. All of Baldor's training is job- or customer-related, however, this requirement is defined very broadly. Tuition reimbursement is provided for outside education on an 80/20 company/employee basis. Baldor has built training classrooms on site. For example, at its Columbus, Mississippi site, Baldor built a $150,000 facility equipped with classrooms, computers, and learning software dedicated to continuing education. Teachers at these classrooms are brought in from area community colleges and adult educational programs. EMPLOYEE PARTICIPATION: Baldor employees participate on a number of ad hoc and permanent teams. At any one time, there are over 200 teams operating. Joint Action Teams (ad hoc teams) can be formed by any employee when a problem or improvement is identified. These teams meet until the improvement is implemented or the problem solved. Although formal meetings are kept to minimum (i.e., there are no weekly meetings), employees on work and ad hoc teams meet when necessary. When problems occur on the line, the work team meets then and there to come up with solutions. There is also a suggestion system called the "Bounty Hunt" which provides small prizes for recognition. Some of the suggestions arising from this program are given to an ad hoc team (that includes the suggestor) for investigation. ACCESS TO INFORMATION: Information is shared throughout the company. Baldor believes that it is necessary for employees to understand how they impact the company's results before they can make improvements. Included in the information shared are the company's financials (sales, profits, etc.), and quality and production numbers. Any employee can ask to see the books at any time. Financial training was provided to employees to help them understand the data presented. The company also distributes financial data and information via newsletter. There is one corporate newsletter put out at headquarters and one local newsletter run by the employees at each location. ORGANIZATIONAL STRUCTURE: The production system at Baldor has always been based around the team concept. Most of these teams are informal and have tended to be self-selected. More recently, supervisors have adopted the role of supervisors and facilitators. This has enabled Baldor to reduce the number of management layers to the point where there are now three layers separating the President and CEO from the shop floor employee (vice-president, plant manager, and supervisor). This is down three layers. Baldor was one of the first companies to use a flexible manufacturing system. In 1987, Baldor structured its process around product flow, using computers to schedule production. Since 1987, the process has allowed Baldor to move from monthly product scheduling to scheduling by shift. Although Electronic Data Interchange is not used to accept orders, all of Baldor's pricing, inventory, and delivery information is available to customers via an electronic network. All factories and sales offices are hooked to this network. Baldor works closely with its customers and suppliers. Baldor employees visit both customers and suppliers on an ongoing basis and host customers and suppliers almost daily. Large suppliers are visited at least once per year and all suppliers are informally graded. Baldor has been able to reduce its number of suppliers and create partnerships with those remaining. Baldor is also working more closely with customers and suppliers to institute just-in-time production systems. Baldor also supplies training on new, improved and redesigned products to its customers. Each course also includes Baldor employees. The company feels that the interaction between the customer and employees that occurs at these classes is invaluable in meeting customers' needs. Employees from Baldor return from these classes with new ideas from the customers, an appreciation for how Baldor products are used, and added respect for the customer. Nearly 1,000 customer employees and 800 Baldor employees attend these classes yearly. EMPLOYMENT SECURITY: Although there is no guarantee of employment security, Baldor does everything it can to avoid layoffs. Its largest plant has not had a layoff in 32 years. SUPPORTIVE WORK ENVIRONMENT: Baldor provides financial assistance to its employees out of an emergency fund. Baldor self-insures it health benefits, with the exception of catastrophic health insurance. Employees have full coverage and there is no limit on catastrophic benefits. Baldor's safety and health programs are tied in with its employee participation and training programs. There is a high level of safety training which is carried out continuously. Many of the ad hoc and permanent teams have identified safety and health issues as a subject for ongoing problem solving. PRODUCT/SERVICE QUALITY: All of Baldor's programs help support the company's goal of providing customers the highest quality. COMPENSATION LINKED TO PERFORMANCE: In addition to its traditional hourly wage, Baldor has a deferred profit sharing plan. The profit sharing plan has been in effect for 30 years and is based on a simple formula. Twelve percent of before tax profits are put into the profit sharing pool. At the end of the year, the entire pool is shared with employees based upon the employee's compensation level. This payout is contributed to a tax-deferred trust fund in which all employees are fully vested. Employees may choose from different investment programs (one of which is Baldor stock). All employees who have been with the company for two or more years participate in this program. There is also a stock purchase plan, separate from the profit sharing, which is open to all employees. Between the profit sharing plan and the stock purchase plan, employees own about 10 percent of the company. WORKER-MANAGEMENT RELATIONS: N/A STRATEGIC INTEGRATION OF BUSINESS: The human resources manager is a member of the short- and long- term strategic planning committee. This ensures that human resources will remain an integral part of Baldor's continued operations. Baldor employs some of the latest technology in its field, in terms of process and tools. Baldor holds the copyright on the term "flexible flow manufacturing" and was one of the first companies to identify flexible manufacturing as a competitive advantage and to implement it. Both customers and employees have participated in the design and selection of the technology used at Baldor. Baldor also considers research and development as a strategic advantage. In the 1980s, in the face of increased competition, Baldor expanded investments in R&D as a means of broadening its product line. The firm also increased its capital investments and investments in process improvements. REMARKS: ACCOMPLISHMENTS/AWARDS: In November of 1990, Baldor was given the President's E-Star Award for Exports by the U.S. Department of Commerce. Fortune magazine, in 1993, named Baldor as on the 50 stocks to buy now. In November, 1992, Business Week magazine named Baldor as the company to benchmark in the area of flexible manufacturing. SERVICE PROVIDERS: Baldor has used, and continues to use, community colleges and adult educational programs as consultants and service deliverers. REFERENCES: Benson, Tracy, "Empowerment: There's That Word Again," Industry Week, May 6, 1991, pages 44+. "Desperately Seeking the Baldrige," Distribution, August 1991, pages 94+. Ireland, H. Duane, Michael A. Hitt, and James Skivington, "Managing R&D in Diversified Companies," Research Technology Management, July-August,1990, pages 37-42. Mraz, Stephen J., 'Teaching the Write Stuff," Machine Design, September 10, 1992, pages 12, 14. Mraz, Stephen J., "Teaching Workers the Three Rs is Good for the Bottom Line," Machine Design, January 24, 1991, pages 25-27. "25 Who Help the U.S. Win," Fortune, Special Issue, Spring/Summer, 1991. "Project Literacy," ABC-TV Public Service Announcement. "The Three R's on the Shop Floor," Fortune, Spring, 1990. ------------------------------------------------------------------- COMPANY: Belden A E C CORPORATE ADDRESS: 7701 Forsyth Boulevard Suite 800 St. Louis, Missouri 63105 PLANT/BRANCH ADDRESS: 32 Hunter Street Apple Creek, Ohio 44606 SIZE (employees): 160 employees UNION(S): Non-union INDUSTRY: Electrical equipment and supplies SIC CODE: 3699 NEAREST METRO AREA/MILES: Akron, Ohio (30 miles) Wooster, Ohio (8 miles) CONGRESSIONAL DISTRICT: OH-04 SECTOR: Private OWNERSHIP: Public; NYSE-BWC CEO: C. Baker Cunningham Chairman, President and CEO Belden A E C 7701 Forsyth Boulevard Suite 800 St. Louis, MO 63105 CONTACTS: Mary Bogner Human Resource Manager Belden A E C 32 Hunter Street Apple Creek, OH 44606 (216) 698-6200 DATE: 04/05/95 COMPANY DESCRIPTION: Belden - American Electric Cordsets (AEC) designs, manufactures, and sells electrical cords for appliances, medical and scientific equipment, lawn and garden tools, and others. Annual sales are approximately $12.7 million. There was an increase of 30 percent in sales within the last four years at the Apple Creek Ohio plant. There are additional plants in Apple Creek, Ohio and Hermosillo, Mexico with sales offices in Bensenville, Illinois, and Indianapolis, Indiana. On March 23, 1995 AEC was sold to Belden Inc. of St. Louis, Missouri, a manufacturer of wire, cable, and cord products for electronic and electrical markets. Currently, the Apple Creek, Ohio plant employs 160 people. By December 1995, management hopes to increase hiring by 25 percent, with a projected total of 200 employees. TRAINING AND CONTINUOUS LEARNING: In the summer of 1990, The Ohio State Agricultural Technical Institute (ATI) had sent questionnaires to area businesses to gauge interest in a pilot program they were offering. American Electric Cordsets was chosen to participate in the development of the new program. American Electric Cordsets formally established a workforce development program called the Skills Transfer Enhancement Program (STEP) for its employees during September of 1991. Employees expressed a strong interest in having the training program. Nearly 40 percent of all employees elected to participate in the first STEP class. The company utilized an on- site classroom and the company conference room in which to conduct the training and one-on-one sessions between the instructor and the participant. STEP's focus is improving on-the-job skills that are currently being used. Through a functional context approach, actual workplace materials, such as shop sheets, procedures, SPC quality training, and machinery are used. Problem-solving, equipment troubleshooting, and working with figures, written information, and operational data are emphasized. Another important aspect of the STEP Program is development of communication and life skills, such as working in teams, enhancing critical thinking abilities, stress management, and TQM training. A variety of employees enroll in the STEP program, from assemblers to office workers. Participation in STEP is voluntary and confidential. There is a high level (80 percent) of worker participation in the program. A complete employee assessment and task analysis was conducted prior to curriculum development to insure that the level of design and instruction would adequately meet the needs of all employees. The assessment included surveys, questionnaires, a reading comprehension test, a math skills test, and a writing sample. The task analysis consisted of a videotape in which the curriculum designer interviewed competent workers performing their jobs. The designer then reviewed the tape to completely break down each task and skill required. Another aspect of the Step is the Custom Training Plan (CTP). With the STEP instructor, employees design their own CTPs that cover their learning goals and target dates for completion. This document leaves room for changes and updates. Workers may progress at their own pace. Classes are held under a flexible schedule to meet the needs of all workers. Generally, classes meet twice a week for two hours for ten weeks. Workers are paid for one-half the training time. The STEP Class includes reading comprehension, basic mathematics, writing skills, team building, stress management, mechanical and electrical training, and interpersonal communication skills. Additional course offerings include TQM and other quality training, Statistical Process Control (SPC), and managerial and supervisory training. Training providers are in two separate categories. American Electric Cordsets managers and supervisors teach employees about day-to-day things they would need to know around the plant, such as Statistical Process Control, filling out orders and shop sheets, safety, and operation of machinery. OSU/ATI instructors train employees in team-building, TQM, communication skills, and reading, writing, and math. If a worker should decide to pursue outside training sessions, American Electric Cordsets will pay for tuition and books for those courses that are directly related to the employee's job. Generally, employees at American Electric Cordsets work independently within their own Departments on various tasks. However, when anyone is "caught up" on their responsibilities, they are free to assist in another department, if that department happens to be short-staffed for that particular day. The STEP Program's structure of general education allows each employee to be trained in all aspects of plant operations and the operations within all Department levels. In this way, it is easier to transfer skills from one Department to another on short notice. Another benefit of the Program is that it encourages teamwork between employees. EMPLOYEE PARTICIPATION: Employees of American Electric Cordsets, regardless of level or position, communicate with each other about production processes that are flowing smoothly, any problems, or new ideas to improve work flow. Employees (usually one person to a Department) are elected to serve on one of several company committees. Individuals are chosen based on who would do the best job of representing employees' concerns. Should the individual accept the assignment, his or her term usually lasts one year--longer if the person is doing well and would like to continue doing it. These committees meet whenever there is a need. One such committee is the STEP Committee, which is made up of the Plant Manager, Site Coordinator, two Department Managers, and two employees who represent worker concerns about the program. An Inventory Management Team controls the amount of end products being created during the production process. During the ISO 9002 certification, the entire workforce pitched in to prepare for it. Other Committees include: the Handbook and Policy Committee (eight people); the Safety Committee (eight people); and the Steering Committee--Quality and Production Process (15 people). Evaluations are scheduled annually and semiannually. The employer and employee sit down and complete the evaluation form together. The employee's strengths and weaknesses are discussed, allowing for each person's viewpoints. Goals are set by the employee and reviewed at the next evaluation. ACCESS TO INFORMATION: The company is a public company listed on the New York Stock Exchange (NYSE-BWC). There is a great deal of general information-sharing among all employees. For the past three years, the company has used a Suggestion Box. This is an anonymous way of letting management know about work- related matters in the plant, suggestions for improvement, and general comments. At each Monday morning meeting of the Plant Manager and Supervisors, the contents of the Box are reviewed. If an item has merit, management will look into or begin to make the change. Quarterly plant-wide meetings give everyone in the company a chance to keep up to date on the status of the company, customers, suppliers, and related matters. The bulletin boards around the company provide another way for employees to keep in touch with what is going on. Production schedules and results, appreciation letters from customers, announcements, and related items are posted there. ORGANIZATIONAL STRUCTURE: American Electric Cordsets' organizational structure is relatively traditional. The Plant Manager and General Manager are the first tier, supervisors and managers are on the next, and then other employees within the various departments. There are eleven Departments within the plant. They are: Office, Maintenance, Receiving, Shipping, Cutting, Molding, Quality Control, Repairs, Terminals, Testing, and Supervisors. Efforts are being made to flatten the organizational structure. Each employee is responsible for their own workload, supplies, and quality control for their part of the job on the line, Employees are also free to assist anyone else who needs it. The General Manager, Assistant Plant Manager, and Supervisors are constantly on the floor answering questions, helping to solve problems, and providing general guidance. Employees do not need to go through channels to get questions answered. They can go directly to the supervisor or manager involved. Communication is very open. American Electric Cordsets conducts training sessions for its suppliers regarding the company's procedures and expectations. One procedure is just-in-time inventory. The company has a Supplier Certification Program. The General Manager and Assistant Plant Manager travel to their suppliers, taking with them a 30-page audit. They complete the forms as they look at the supplier's processes. The supplier must meet certification to maintain supplier status with AEC. EMPLOYMENT SECURITY: The company has not had to deal with downsizing; in fact, hiring increased 40 percent in the last four years. SUPPORTIVE WORK ENVIRONMENT: American Electric Cordsets offers employees a standard benefits package that includes health insurance with a dental and prescription rider, life insurance, vacation based on time and service, holiday pay, and a 401 (k) plan. Compared to other businesses in the region, American Electric Cordsets has implemented a flexible schedule. The plant runs two shifts per day. An employee must work one of these shifts. If an employee has to make adjustments in his or her shift on a certain day due to an uncontrollable situation, he or she must notify the supervisor in advance and make up the time. For employees with children, a list of community child care resources is available on request. A Safety Team is in place at the plant to keep track of difficulties and correct any problems. Safety is the responsibility of everyone. American Electric Cordsets provides on-site flu shots to employees. For other wellness programs, seminars, and fitness classes, American Electric Cordsets works with Wooster Community Hospital's Healthworks program. The Hospital's health tips quarterly newsletter is routinely posted on company bulletin boards. Employees who may be dealing with substance abuse may take part in the Hospital's treatment program. These employees may be granted leave during the day to attend. American Electric Cordsets has also sponsored local community events, such as United Way, Corporate Challenge, bowling, and softball. PRODUCT/SERVICE QUALITY: American Electric Cordsets is ISO 9002 certified. Their rate of error for one particular customer is 67 parts per million. The in-house rating is 216 parts per million. Workers have been trained in and utilize the principles of Total Quality Management. By taking personal responsibility and using a "team approach," everyone assures that products are in good condition and that processes are running smoothly. Statistical process control is also used. The Human Resource Manager tracks productivity levels. Customers measure quality through the level of satisfaction with American Electric Cordsets products. Rather than completing lengthy questionnaires, customers will call the General Manager to give feedback, or they will write letters. COMPENSATION LINKED TO PERFORMANCE: In January, 1995, American Electric Cordsets implemented a new pay-merit increase system based on an employee's annual and semi- annual performance evaluations. Before that, pay raises were based on seniority. An example of a merit increase might be an additional rate of 25 cents per hour, in addition to the employee's regular salary. The actual amount of this increase is negotiable between the supervisor and employee. The supervisor might compliment an outstanding worker on his or her performance and say: "Here is what I think you deserve. How do you feel about that?" Then it would be up to the employee to convince the supervisor that his or her work should be valued at a higher rate, if applicable. WORKER-MANAGEMENT RELATIONS: N/A STRATEGIC INTEGRATION OF BUSINESS: American Electric Cordsets has implemented a bar code system for their product shipments. This results in increased efficiency for customers. In fact, customers have reported that the bar code makes the packaging information easier to read. The Company hopes to implement a bar code system for their supplies within the next year. The new system makes it easier to track where everything is in the assembly process, allowing employees to process orders more quickly. REMARKS: ACCOMPLISHMENTS/AWARDS: When STEP was first implemented, monitoring three months before and three months after instruction measured effectiveness in various areas. Absenteeism decreased 14 percent. Work performance increased by 74 percent, according to supervisors. Average production efficiency increased by almost 4 percent. By comparison, there were decreases in the percentage of rejected materials, percentage of defects found, and scrap. American Electric Cordsets won the 1991 Governor's Workplace Literacy Award. American Electric Cordsets was a 1992 Labor Investing For Tomorrow (LIFT) Award Nominee. American Electric Cordsets has also won numerous Excellent Supplier Awards. SERVICE PROVIDERS: Ohio State University's Agricultural Technical Institute provides curriculum design and instruction for the STEP Program of American Electric Cordsets. American Electric Cordsets utilizes the Healthworks Program at Wooster Community Hospital for its various wellness seminars, exercise programs, and substance abuse treatment programs. American Electric Cordsets contacts the Ohio Bureau of Employment Services about job listings and employment-related workshops. The Company also uses the Ohio Bureau of Worker's Compensation, Division of Safety and Hygiene's, library to obtain safety videos for classes on the subject. REFERENCES: ------------------------------------------------------------------- COMPANY: Robert Bosch Corp. CORPORATE ADDRESS: Stuttgart, Germany PLANT/BRANCH ADDRESS: 8101 Dorchester Road Charleston, South Carolina 29418 SIZE (employees): 1,675 UNION(S): Non-union INDUSTRY: Fuel injectors and anti-lock braking systems SIC CODE: 3714 NEAREST METRO AREA/MILES: Charleston, SC (0 miles) CONGRESSIONAL DISTRICT: SC-01 SECTOR: Private OWNERSHIP: Fully owned by Robert Bosch Corp., Germany. CONTACTS: Quincy Holmes Unit Manager of Human Resources 101 Dorchester Road Charleston, SC 20418 (803)760-7360 DATE: 3/1/95 COMPANY DESCRIPTION: Robert Bosch Corp., of Germany is an international producer of a wide range of automotive parts and sub-assemblies. Twenty years ago, Robert Bosch Corp. established the Charleston, South Carolina plant, which is now one of the largest producers of fuel injection and anti-lock braking systems in the world. Its primary customers are U.S. automobile assembly plants. The Charleston plant is fully owned by the multi-billion dollar parent company. TRAINING AND CONTINUOUS LEARNING: Extensive training opportunities are available for employees at Robert Bosch. These opportunities range from mandatory pre- employment training, to internal apprenticeship programs, to tuition reimbursement for attending local colleges or technical institutes. Potential employees must go through an intensive nine week pre- employment training program. In this program, workers receive both "hard" and "soft" skills training. All job applicants must complete the training program before being considered for a job. Workers who complete the program are not guaranteed employment, but will likely receive it. Robert Bosch offers an apprenticeship program for employees who qualify based on passing a series of tests including: knowledge and skills, math, manual dexterity, interviews, and a physical exam including a drug test. The apprenticeship positions are filled by workers already in the company, as well as local high school graduates. Once a worker is accepted into the program, he or she then embarks upon a two and-a-half year apprenticeship training program. This program is based upon a model used by Robert Bosch of Germany. The apprenticeship training program consists of eight hours of classroom instruction per week at Trident Technical College. At Trident the apprentices learn math, drafting, machine shop theory, human relations, materials, physicals, numerical and computer numerical control, technical report writing, hydraulics, electricity, pneumatics, and statistical process control. The remaining thirty-two hours of the week consist of practical learning on the floor of the training department. Throughout the two and-a-half year program, the apprentices gradually learn more and more advanced skills, utilizing classroom and practical experiences. Apprentices are rotated through each department and learn all of the skills necessary to perform any job in the plant. Group projects and interpersonal skills are stressed to prepare workers for self-managing work teams. In most classes, 90 percent of the apprentices pass and graduate to journeyman status. It is emphasized upon graduation that this is not an ending of a training period, but rather, the beginning of a career. Graduates of the apprenticeship program can expect significant increases in pay. Workers attending courses at local colleges and technical schools, whether job related or not, are fully reimbursed for tuition, books, and other expenses. Employees attending courses in order to attain mandatory skill levels are paid for the time they are in class, as well as the reimbursement for tuition, etc. A minimum grade of "C" is required for tuition reimbursement. In a typical year, the Charleston plant spends $593,000, or 3 percent of payroll on employee training. Temporary employees, making up 10 percent of the workforce, have access to training opportunities as well. Each employee spends approximately 100 hours per year in training activities while on paid time. There is extensive cross-training of employees in order to achieve mastery of a family of production techniques. EMPLOYEE PARTICIPATION: Every employee at Robert Bosch is a member of a self-managed work team. These teams are organized by product line. Team members rotate among each of the various jobs on the team. While all workers are responsible for quality control, one member of each team is designated head of quality matters. This person acts as the team leader. Employees have contact with customers daily and are empowered to make decisions and solve problems as they arise. These contacts include exchange programs consisting of team members visiting customer and supplier premises, while representatives of customers and suppliers visit the Charleston premises to consult with team members. Teams meet daily to discuss production and quality issues. Employees are empowered to implement immediate process improvement or elimination of non-value adding activities. Employees may make these changes without consulting management up to a cost of $100,000. ACCESS TO INFORMATION: There are various communication channels in the Charleston plant. Teams meet once a week to exchange information and discuss important issues. Ten to fifteen minute briefings consisting of the work teams, the team leaders, and managers, are held each morning. A weekly newsletter is circulated throughout the plant with the goal of keeping workers up-to-date on issues of concern to the company. Talks are given by the company vice-presidents once-a- month to groups of employees chosen by management. Computers have been installed in various areas of the plant for all employees to use to gain information. Financial, costs, equipment, and tooling are all examples of information that employees may attain from the computer stations. Employees are trained in how to use the computers, and in how to understand the information pertinent to their product line. The company stresses upward communication rather than management talking down to employees. ORGANIZATIONAL STRUCTURE: Production at the Charleston plant is organized by product line. All workers in each product line are members of a work team. There is a separate work team for each product line. The plant is in the process of flattening its structure and plans to reduce to four layers of authority and three pay levels; two being semi- skilled and one being high-skilled. Workers are trained to perform all duties within their work team. This flexibility contributes to the success of the plant's efforts to flatten its structure. The Charleston plant has been certified as a preferred supplier by its customers. The plant has its own 10 step certification process for its suppliers as well. In this way, it assures the quality of its raw materials. EMPLOYMENT SECURITY: The Charleston plant has not had any layoffs since a low-scale, temporary cutback in 1990. The presence of a large number of temporary employees acts as a buffer for the full-time workforce. These temporary employees will be let go before full-timers when the cyclical nature of the industry decreases production requirements. In the past, the plant has utilized both shorter work weeks and job sharing when a decline in orders has reduced necessary output. Management maintains that if there are problems in the future, it will implement these policies before layoffs. SUPPORTIVE WORK ENVIRONMENT: Robert Bosch of Charleston has an extensive employee wellness program that includes on-site aerobics, walking, and medical screening. Each employee over the age of forty gets a complete annual physical exam at the expense of the company. The company is in the process of securing building permits to build a recreation center adjacent to the plant. The plant has negotiated reduced rates with three child-care providers in the immediate vicinity of the plant. These services are highly utilized by employees. The plant has an extensive affirmative action program. It currently has a workforce that is 44 percent female. The plant actively recruits workers with handicaps and disabilities. These people are trained through local vocational rehab centers. The Charleston plant has won the South Carolina Governor's Award for Employment of the Handicapped. PRODUCT/SERVICE QUALITY: Robert Bosch Corp. of Charleston makes use of TQM teams and Quality Circles. These on-going teams are made up of employees who volunteer to participate. There are presently 35 Quality teams which address different areas of the plant. The plant has a formal benchmarking task force that seeks information from and about world-class quality organizations. The task force is composed of engineers, production workers, and others who are interested in the benchmarking effort. The plant is itself a recipient of visits and requests for information from other organizations interested in benchmarking. Employees at Robert Bosch have daily contact with customers. This contact includes gaining feedback as to the quality of the plant's products and services. Employees are empowered to stop the line or make changes if a problem with workmanship or quality is discovered. The plant utilizes Statistical Process Control to monitor quality. Every employee including clerical workers has had six hours of training on SPC. The plant uses full-charted SPC to gather production information. This information is collected and used every day, and on every shift, to check process quality. COMPENSATION LINKED TO PERFORMANCE: Presently, the plant's pay system resembles a traditional structure. The plant is currently studying and designing an "at risk" compensation system which is expected to be implemented in the near future. Workers completing the apprenticeship training program receive significant increases in pay. These workers leave the program with a variety of skills and are compensated for this increased skill level. WORKER-MANAGEMENT RELATIONS: N/A STRATEGIC INTEGRATION OF BUSINESS: The human resources function is integrated into the overall strategic planning function of the plant. The HR department is an integral part of the strategic business plan, and the planning process. The HR department is not looked upon as overhead, but rather as part of the total management group. REMARKS: The Charleston plant expects to be the world's largest manufacturer of fuel injection systems. It no longer is satisfied with being a top manufacturer in the U.S., but is setting its sights on becoming world class. The plant expects to accomplish this goal through its focus on employees and customer satisfaction. ACCOMPLISHMENTS/AWARDS: The Robert Bosch Corp. Charleston plant has received the highest quality supplier designation from its automotive customers, including Ford's Q-1 Award. The plant has received recognition by the Department of Labor of the State of South Carolina for its apprenticeship and handicapped employment practices. It has received the Governor's Award for Employing the Handicapped. The plant has in the past received the designation of "Employer of the Year," in South Carolina. SERVICE PROVIDERS: Trident Technical College assists Bosch in fulfilling its training needs. Trident supplies teachers and classrooms exclusively for Bosch workers. Bosch-developed classes are taught to its workers as well as more traditional courses. REFERENCES: Vasilash, Gary S. "Where Training is a Way of Life." Production, June 1990, 60-64. Vasilash, Gary S. "A Look at Germany with a Glance at Japan." Production, September 1991, 34-36. ------------------------------------------------------------------- COMPANY: Brogan & Partners Advertising/Public Relations CORPORATE ADDRESS: 2000 Fisher Building Detroit, Michigan 48202 PLANT/BRANCH ADDRESS: N/A SIZE (employees): 36; seven additional contract workers UNION(S): N/A INDUSTRY: Advertising/public relations SIC CODE: 7311, 8743 NEAREST METRO AREA/MILES: Detroit, MI (0 miles) CONGRESSIONAL DISTRICT: MI-13 SECTOR: Private OWNERSHIP: Privately held CONTACTS: Marcie Brogan Managing Partner Brogan & Partners 2000 Fisher Building Detroit, MI 48202 (313) 874-8555 (313) 874-8575 FAX: (313) 874-8539 or (313)-874-8565 DATE: 01/13/95 COMPANY DESCRIPTION: Brogan & Partners is a communications firm offering advertising, public relations and promotional services. It was incorporated in 1984 by Marcie Brogan. The company's clients include the Michigan Travel Bureau, Genesys Health System, Allnet Long Distance, Arthur Andersen & Co./Detroit, and other local, Michigan, and Midwest companies. Brogan & Partners has capitalized billings of up to $20 million. TRAINING AND CONTINUOUS LEARNING: The employees at Brogan & Partners have ample opportunities for educational development. Since the company offers integrated services to clients, cross-training is important. Employees are cross-trained by each other as well as by touring the suppliers and vendors the company currently uses to become well versed in their procedures and requirements. These establishments include printers, editing houses, graphic design studios, direct mail houses, and radio and television stations. Representatives from each of these companies have also conducted internal seminars for Brogan & Partners. There are no formalized, written agreements to make this training relationship happen. Continued positive relations between the company and its suppliers have brought it about. The company pays for employees to attend seminars, training sessions to improve skills or to learn new disciplines. For example, employees have gone to Media School, to Leadership Skills programs, such as interactive communicating, and direct marketing sessions. The company has also sponsored internal seminars on various aspects of the profession. There is an internal track of courses for account service people which PR and promotional account managers and all interns are encouraged to attend. For many new hires, the company pays for a 16-week, 3-hours-a-week advertising course at Detroit's Adcraft Club and Midland's Northwood University. The company also encourages employees to further their formal education. Workers can be flexible in their choice of a college program, whether undergraduate or graduate. They can study marketing, advertising, public relations, communications, psychology, and related fields. The tuition reimbursement program states that Brogan & Partners will pay for 50% of an employee's course if an A is earned. If the final course grade is a C, 25% is paid. For a D or F, nothing is paid. Textbooks, supplies, and related expenses are paid by the employee. Brogan & Partners prefers these courses to be taken at night so that daily work responsibilities continue uninterrupted. EMPLOYEE INVOLVEMENT/EMPOWERMENT: Brogan & Partners has moved to an autonomous, team-based work environment, which they have been using since May, 1994. These Teams are: Advertising (13 people); Public Affairs (2 people); Public Relations (8 people); Targeted Marketing (9 people); and Support (11 people who provide administrative, new business, media buying, and broadcast production services to all Teams.) Each Team is organized around a specific group of clients, and that Team provides the specific services the client needs. If a client served by one Team needs additional help in another area, someone from another Team assists. Each Team has a Team Leader who sets the Team's goals, priorities, profit expectations; encourages performance and productivity, and maintains quality standards. The Team Leader evaluates Team members. Each person on the Team completes an annual self-evaluation. In meetings with the Team Leader, each person discusses both evaluations. ACCESS TO INFORMATION: The specifics of company projects are always shared with employees at monthly all-agency meetings where people can voice their opinions and questions, and keep abreast of all company activities. In addition, each Team has a Monday morning meeting to review every job of that week. There are also "hallway meetings," where groups of people spontaneously gather to solve problems and discuss strategy. Status sheets keep employees informed about the progress of the agency's projects. A newsletter, "B&P: Usable Tips, Trends, and How-To's," is available for everyone--employees and clients alike. In January 1995, a written plan for sharing financial information was put in place. The new plan expands on the current practice of sharing general financial information with all who handle accounts. Now all employees will be aware of their respective Team's dollar goals and will be updated at monthly meetings on how they are doing versus objectives. While individual salaries will remain confidential, each Team will be aware of its total compensation (salaries, freelance, benefits, payroll taxes) as well as its total operating expenses (rent, supplies, equipment, phones, etc.) plus its prorated share of Support Team services. Each Team will be able to see on a monthly basis what their expenses are versus what income has been generated by each client. They will then see if they are meeting their expected 30 percenty profit goal. If they are not, the Team as a whole must solve the problem. Quality of product and of client servicing are just as important as profitability. This is analyzed by the five partners at their monthly meetings, and at biweekly one-on-one lunch meetings with Marcie Brogan. Any glitches or problems are communicated to the Teams. ORGANIZATIONAL STRUCTURE: Brogan & Partners' structure is relatively horizontal. Each partner leads one of the five Teams. The Teams work autonomously for the most part, with Marcie Brogan setting quarterly standards and profit goals. The agency's partners made the decision to move to a formal team-based environment after reading Reengineering the Corporation by Michael Hammer and James Champy. With 36 full-time employees, the company was small enough for everyone to work together to bring about the desired changes speedily. Reaction to the transition has been positive. In fact, the company brought in a consultant to assist them in completing the work team process. After reviewing their process, the consultant felt that they did not need his services. EMPLOYMENT SECURITY: Given the vulnerability of the advertising and public relations field to economic fluctuations, Brogan & Partners cannot guarantee employment security for the staff. Salaries are the major expense and must be in direct proportion to income. If the company loses income, an effort will be made to reassign employees to more prosperous Teams. If that is not possible, people have to be let go--a painful process for all concerned. Partners do provide leads for new opportunities through informal networks. Many times, Team members will volunteer to work with the person being let go to "soften the blow." SUPPORTIVE WORK ENVIRONMENT: Brogan & Partners does not distinguish between vacation and sick days in order to accommodate family situations. An employee earns 5 days off after 6 months on the job. After the first year, employees have 7 mandatory holidays off, and 14 additional days off. After 5 years, an employee earns a total of 26 days and holidays off. Employees may design flexible schedules with their Team Leaders. There is no formal system in place. As long as the work of the agency gets done, an employee may integrate his or her outside activities within the workday. However, it is up to that individual's Team to approve the flextime plan. The company has had "Take Our Daughters to Work Day" before it was a national concept. Partners and employees have long brought their children to the office as an emergency alternative to day care, or as a learning experience for the child. Maternity, paternity, and adoption leave programs are available. These are extremely informal, unwritten policies that vary by seniority. There is no prescribed amount of time off in these situations. Other benefits include 75 percent employer-paid health insurance, life insurance, disability insurance, and a 401(k) plan and a cafeteria plan that allows employees to set aside pre-tax dollars for child care and health-related expenses. In the future, some employees may have to look at eldercare resources. The company is taking a closer look at this issue. As one of the top women-owned and managed firms in the Detroit area, women feel very comfortable interviewing with this company. The current staff makeup is 60% women; 40% men. Brogan & Partners is also committed to hiring minorities, particularly African-Americans. The agency has an internship program with two local schools--Detroit Northwest High School and Catherine Ferguson Academy. The latter is a specialized school for teen mothers and fathers and their babies, providing day care and the chance to finish high school, prepare for employment, college, and family life choices. The company sponsors an intern per quarter from each school. Internships are also offered to college students. Staff members also participate in career events at local colleges, and have served as mentors for college students. At the worksite, interns are mentored by virtually everyone on staff. For a new employee, the "buddy system" is used to integrate that person into the agency. Orientation handbooks are also provided for new hires. Work safety is important to all Brogan & Partners employees. They have had local police and building security in to conduct seminars on "street smarts," theft prevention, and other topics. After late nights at work, employees leave the building in groups for added protection or are escorted to their cars by security personnel. A quarterly half-day employee "Mystery Trip" boosts morale and is an informal method of internal networking. On that day, the office closes down for 3 hours midday so that everyone can enjoy the event. Recent excursions include the Motown museum, a Canadian casino, and a $50.00 per person shopping spree. The company also has a summer party at a partner's home and a winter holiday party. Spouses, friends, and significant others also attend these events. Part of the agency's mission is to have an "enthused, energized workplace that maximizes morale." Each Team Leader finds ways to reward members for quality work--an on-the- spot cash bonus, time off, or a gift. Annual employee awards are given for creativity, client servicing, and individual progress. The company strongly supports employee participation in wellness programs, including exercise classes, weight control, and smoking cessation. If the employee successfully completes the program and maintains its results for six months, the cost of that program is reimbursed. If an employee uses the workout room in the building regularly, the $25.00-a-year fee is paid by Brogan & Partners. PRODUCT/SERVICE QUALITY: Creative quality is ensured by hiring quality creative people, by making quality products part of the agency mission, stance, pitch, and persona. It is constantly monitored by Marcie Brogan and each partner using national and industry norms. No work is presented or produced without a partner's authorization. Work is entered in national competitions to see how it measures up. Results of advertising and PR production are also monitored by establishing specific objectives for each project--e.g. specific sales increase or awareness increase or number of phone calls or responses. Service quality is promoted by hiring people with a passion for servicing clients responsively and responsibly. Each client contact person is monitored by a Team Leader and must follow a set of procedures that help ensure clear communications about objectives, strategy, budget and timing. Periodic meetings with clients to get their feedback on products is another way of measuring quality. COMPENSATION LINKED TO PERFORMANCE: In January, 1995, a "pay-for-skills" plan was put in place. Traditionally, Brogan & Partners has compensated employees for acquiring skills that have expanded their professional effectiveness. But now bonuses and raises will be partly based on the number of skills they possess in communications disciplines. The more skills, the higher the compensation, and the "full-service agency" concept is even more developed. "Associates" are people within Brogan & Partners who go the extra mile on a continuous basis. These individuals are entitled to an annual bonus of up to 15 percent of their yearly salary. Bonus percentages are based on gross income and net profit. WORKER-MANAGEMENT RELATIONS: Worker relationships are generally very positive. Traditionally, when a disagreement arose, it was the responsibility of the people involved to settle it. Since moving to a team-based environment, worker conflicts have declined. STRATEGIC INTEGRATION OF BUSINESS: The partners develop the five-year-plan for the company. It is examined quarterly and updated annually by the partners. At the beginning of the year, the plan is reaffirmed or changed and shared with Team members. A computer network will soon be available. Brogan & Partners currently relies on several computer systems. Media is managed with a peer-to-peer PC network, while creative work is produced on Macs, networked through an Ethernet system. The financial operations run on a Xenix-based multi-user system. In addition, individual 389/486 PC's are used throughout the company. Brogan & Partners is also a part of the Internet. In 1995, technology is a priority for Brogan & Partners. A technology plan, an essential part of the company's reengineering, is currently in the planning stage. As the new plan is implemented, the Mac and IBM networks will be merged into a more efficient system, capable of running the latest versions of the most technologically advanced software packages. The ultimate goal is to have the company as paperless and integrated as possible. Each employee, including those who work from home, will have a computer, phone, and fax. First, Teams will be networked, and then the Teams will be hooked up electronically. REMARKS: The company is very aware of environmental issues. They practice recycling, and recommend recycled products to their clients. ACCOMPLISHMENTS/AWARDS: A+ FINALIST. (National award from the American Association of Adcraft Agencies) ADDY. Best of Show. Golds, Silvers locally and regionally ATHENA. (For best nationally in newspaper) BPAA AWARDS. (For business-to-business advertising) Golds, Silvers CADDY. (Detroit's major award show) Golds, Silvers, Best of Category CANNES. Finalist CLIO. Recognitions COMMUNITY ACTION NETWORK. (For public service advertising nationally) First place DANDY. (For effective car dealer advertising) EFFIE. (For advertising effectiveness) EMMY. (For excellence in television advertising) HEALTHCARE ADVERTISING AWARD. Best of Show. National Golds, Silvers. INTERNATIONAL FESTIVAL OF NEW YORK. Silvers, Bronzes MERCURY. (National Radio Competition) Medalist MOBIUS. National firsts and seconds RETAIL ADVERTISING CONFERENCE. National Golds, Silvers TELLY. (For television commercials) Platinums, Bronzes TOUCHSTONE. (For effective hospital advertising) Golds, Silvers ADCRAFT PM AWARD OF EXCELLENCE. DETROIT AD WOMAN OF THE YEAR AWARD. DETROIT AGENCY MANAGER OF THE YEAR AWARD. 10 MOST INFLUENTIAL AD PEOPLE OF THE DECADE. (Adweek Midwest) "WORKPLACE OF TOMORROW" AWARD. (Women's Economic Club, Detroit) DETROIT'S 100 POWERS AND PERSONALITIES. (Book listing) BUSINESS WOMAN OF THE YEAR AWARD. (Professional Women's Association) PRESIDENTIAL PRIVATE SECTOR INITIATIVE AWARD. DISTINGUISHED WOMAN AWARD. (Northwood University) SERVICE PROVIDERS: Brogan & Partners used the consulting services of the Agency Management Group of Pittsburgh, PA. Contact: Jeff Burkel, President. The company also received guidance from Hammer and Champy's Reengineering the Corporation. REFERENCES: ------------------------------------------------------------------- COMPANY: Budd Company, Stamping and Frame Division CORPORATE ADDRESS: P.O. Box 2601 3155 West Big Beaver Road Troy, Michigan 48007-2601 PLANT/BRANCH ADDRESS: 2450 Hunting Park Avenue Philadelphia, Pennsylvania 19132 SIZE (employees): 1,800 UNION(S): United Automobile Workers INDUSTRY: Automotive parts SIC CODE: 3465, 3499, 3711 NEAREST METRO AREA/MILES: Philadelphia (0 miles) CONGRESSIONAL DISTRICT: PA-02 SECTOR: P OWNERSHIP: Private, wholly-owned subsidiary of Thyssen AG (Germany). CHIEF EXECUTIVE OFFICER: Siegfried Buschmann CEO and Chairman of the Board Budd Company P.O. Box 2601 Troy, MI 48084 (313) 643-3500 CONTACTS: Al Kovach Vice-President Stamping and Frame Division Budd Company 2450 Hunting Park Avenue Philadelphia, PA 19132 Phone:(215) 221-7372 Fax:(215) 221-7420 Robert Duffy President Local 813 United Automobile Workers 2334 West Hunting Park Avenue Philadelphia, PA 19132 Phone: (215) 228-2033 Fax:N/A DATE: 05/18/94 COMPANY DESCRIPTION: The Budd Company (Budd) is a leading automotive manufacturer and one of the top automotive suppliers in the United States. The company has over 20 manufacturing and assembly facilities and produces components for General Motors, Ford Chrysler and other Original Equipment Manufacturers (OEMs). The company was founded in 1912 as the Edward G. Budd Manufacturing Company. Company headquarters were moved from Philadelphia, Pennsylvania, to Troy, Michigan, in 1972. Budd was purchased by Thyssen AG, a German industrial company, in 1978. In 1993, the company had sales of $1.5 billion and employed 9,000. TRAINING AND CONTINUOUS LEARNING: To support the work team system, employees on the shop floor are cross-trained. Training is provided in knowledge and values skills. Knowledge skills are those skills which apply to the job, while value skills are related to such areas as team building and personal skills. All employees have been through SPC training. When the Division implemented the work team process, a group of shop floor and management employees were provided team training. After these employees were trained, they, in turn, provided training to the rest of the workforce. Every three months, all employees are provided an additional four hours of team building/personal training. There is also a traditional apprenticeship program at the Philadelphia plant. EMPLOYEE PARTICIPATION: Employees are formed into problem solving teams, some of which are multidisciplinary and cross-functional, having the responsibility for their own work. Each team is headed by a team leader elected from within the team. The team leader cannot be a supervisor or shop steward, but is a union member. The teams have responsibility for all aspects of work, with the exception of discipline. Teams conduct their own meetings, and minutes of the meetings are forwarded, by e-mail, to the union and other members. The team system was designed by a Joint Planning Committee, composed of the local union president, bargaining committee chairman, bargaining committee members, and plant managers. All decisions in the establishment of the process were made on a consensus decision-making basis. The planning committee is still in existence and has the responsibility for overseeing the process. ACCESS TO INFORMATION: ORGANIZATIONAL STRUCTURE: The press shop has been redesigned into four zones, and the zones are divided in teams of approximately 10 members each. This design was implemented to avoid the problem of team meetings (weekly, one-hour meetings) shutting down the entire factory. EMPLOYMENT SECURITY: Both the company and the union feel that the best job security is a successful, profitable plant. SUPPORTIVE WORK ENVIRONMENT: PRODUCT/SERVICE QUALITY: Budd has been deemed a top quality supplier to the automotive industry. The company is attempting to eliminate quality inspection and is putting the responsibility for quality on the worker and their teams. The quality inspection function has been downsized and is now a quality assurance function, responsible for auditing the quality function. Training in SPC has been provided, and employees are being trained to look for defects. COMPENSATION LINKED TO PERFORMANCE: Traditional compensation systems. Health care benefits are negotiated in the contract and consist of a traditional Blue Cross/Blue Shield plan and an HMO. WORKER-MANAGEMENT RELATIONS: The restructured work organization has been incorporated into the collective bargaining contract, the latest of which is in effect until October, 1995. STRATEGIC INTEGRATION OF BUSINESS: Budd is working with both its customers and suppliers to produce higher quality goods. Budd has instituted a certified supplier process that measures suppliers based on quality. Once a supplier is certified for the first time, that supplier then self-certifies. REMARKS/AWARDS Budd Automotive is a preferred supplier for the American auto industry, having won Ford, GM, and Chrysler's highest quality awards. The move to self-directed teams was presaged by a pilot program called the Phoenix Program. This program was implemented in a newly built facility at the Hunting Park address that produces parts for the Ford Taurus. At the Phoenix facility, the number of job classifications was reduced to nine, a modified pay incentive system was implemented, and self-directed work teams were started. Since that time, the pilot project has expanded to the rest of the Philadelphia facility. ACCOMPLISHMENTS: Awarded Ford's Q-1, Chrysler's Gold Pentastar, and GM's mark of Excellence quality ratings. SERVICE PROVIDERS: REFERENCES: ------------------------------------------------------------------- COMPANY: Chaparral Steel Co. CORPORATE ADDRESS: 300 Ward Rd. Midlothian, Texas 76065 PLANT/BRANCH ADDRESS: SIZE (employees): 934 UNION(S): Non-union INDUSTRY: Medium-sized steel products SIC CODE: 3312 NEAREST METRO AREA/MILES: Dallas/Ft. Worth (30 miles) CONGRESSIONAL DISTRICT: TX-06 SECTOR: P OWNERSHIP: Public NYSE - CSM CHIEF EXECUTIVE: Gordon E. Forward, CEO Chaparral Steel Co. 300 Ward Rd. Midlothian, TX 76065 CONTACTS: Dennis Beach Vice President-Administration Chaparral Steel Co. 300 Ward Rd. Midlothian, TX 76065 (214) 775-8241 DATE: 12/16/94 COMPANY DESCRIPTION: Chaparral Steel Co., a subsidiary of Texas Industries, Inc., was incorporated in 1973 as a joint venture between Texas Industries and Co-Steel, Inc. Chaparral operates on a mini-mill principle manufacturing hot-rolled carbon steel products such as beams, bar-quality steel, structural shapes, and reinforcing bars for sale to a variety of industries which include construction, automotive, railroad, defense, mobile home, and appliances. Chaparral markets its products all over North America and has also exported to Asia and Europe. Total sales for 1993 were slightly over $418 million. TRAINING AND CONTINUOUS LEARNING: Chaparral invests heavily in the continuing education of all of its employees, from front-line people to the CEO. Chaparral demonstrated its dedication to continuous learning by establishing a 3 and 1/2 year program registered by the U.S. Department of Labor's Bureau of Apprenticeship and Training, Manpower Administration, and the Texas State Technical College. At any one time, approximately 85 percent of Chaparral employees are enlisted in some type of class with course topics ranging from electronics to Spanish. Chaparral utilizes a variety of means to facilitate their continuous education program. In addition to an on-site teaching location staffed by outside professionals and/or Chaparral experts, employees can attend off-site seminars and courses sponsored by universities and technical institutions. Chaparral reimburses all tuition costs for job and business-related courses. Employee cross-training is conducted so that job classifications can be broadened, giving workers more responsibilities and input into the development and production of their products. For example, production workers do a variety of the maintenance tasks on their own equipment. EMPLOYEE PARTICIPATION: Employee participation is promoted through the use of cross- training and broadened job classifications. Traditional research and development departments have been removed from the company structure so that front-line employees can have more direct input into the manufacturing process. Chaparral has also implemented self-managing work teams in order to reduce the number of foremen and further promote employee involvement by allowing workers to determine what materials and equipment are necessary to accomplish any given task. Although Chaparral has a sales department, all of its employees are considered to be sales people and are empowered to address questions or comments from customers. ACCESS TO INFORMATION: Chaparral openly shares its financial information with its employees by publishing quarterly figures. In addition, each department receives separate operating statements every month. Chaparral provides its employees with the resources to interpret the financial information through classes and organized meetings with financial managers which are convened to answer any questions concerning statements. ORGANIZATIONAL STRUCTURE: Chaparral maintains a relatively flat organization with only four levels of management. Because of its structure, communication among different levels of employees is more easily conducted. Workers at the production and maintenance levels participate with supervisors and managers in determining organization-wide goals. Even the architectural design of Chaparral promotes a total egalitarian viewpoint of organizational structure. Everyone in the company shares a common parking lot where there are no reserved spaces. In order to facilitate informal interaction, employees must walk through the Human Resources Department twice a day, once in the morning and once in the afternoon, in order to get to their lockers which are located in the same building as the executive offices. Meeting rooms utilized by production personnel are more lavishly decorated and equipped than the executive board room. EMPLOYMENT SECURITY: Chaparral has a no-layoff policy which it maintains through the cross-utilization of its employees. In 1982, Chaparral began construction of a second mill. By utilizing current employees with construction experience to help build the new mill, Chaparral avoided any layoffs that may have been caused by the cost of the project. Chaparral's average turnover rate is approximately 5 percent, which can be attributed in part to a thorough selection process, consisting of pre-employment testing and multiple interviews. Not only does Chaparral conduct a comprehensive screening of prospective applicants, but it gives current employees an opportunity to talk with them. This allows Chaparral workers to have input concerning selection decisions, and it also provides an opportunity for the applicants to decide if they are a good match with Chaparral using a Realistic Job Preview. SUPPORTIVE WORK ENVIRONMENT: Chaparral makes it a point to emphasize safety practices and health programs as part of its continuous education process through courses which teach CPR and other health and safety related issues. In terms of work schedules, no employee at Chaparral punches a time clock and everyone is able to set his or her own lunch hour. Chaparral employs a "no-fault" approach to absenteeism, and does not have a paid sick leave arrangement since all employees are salaried. The motivation to come to work everyday is left in the hands of the employees and they have responded favorably with a daily absence rate of less than one percent. The architectural design at Chaparral promotes an egalitarian relationship between managers and workers by facilitating frequent and informal interaction between all employees. Although there is no formal employee suggestion system at Chaparral, everyone is encouraged to share new ideas and discuss the feasibility of innovative concepts. PRODUCT/SERVICE QUALITY: Employees are dedicated to providing quality customer service as evidenced by the fact that all workers, from the CEO to the receptionists, have business cards that they can give to customers to promote interaction. In addition, Chaparral periodically surveys its customers to identify their concerns and listen to their comments. Chaparral stays on the leading edge of technology and innovation by benchmarking other companies. First-line supervisors are sent on sabbaticals around the world, where they can learn about new work practices and technologies from academic institutions and leaders of industry. Product quality is one of Chaparral's highest concerns. Through its continuing education program, Chaparral vigorously educates all of its front-line workers in Statistical Process Control and other quality techniques so that quality management can be conducted at the floor-level, where problems are solved before they become too large. COMPENSATION LINKED TO PERFORMANCE: Every employee at Chaparral is salaried, and no two employees receive the same pay even though they may be doing identical jobs. Salary increases are based on a model that focuses on how well employees do their jobs, versatility of skills, and training credits earned through the company's continuous education program. Employees must demonstrate knowledge of skills through tests given by the company in order to receive pay increases. In addition to its pay-for-skills program, Chaparral has an employee profit sharing program where employees receive 8-1/2 percent of the gross profit before taxes. Approximately sixty- two percent of Chaparral employees own stock in the company, which is financed through payroll deductions. WORKER-MANAGEMENT RELATIONS: N/A STRATEGIC INTEGRATION OF BUSINESS: By focusing on the continuing education of its employees, Chaparral is able to integrate innovative technology with the abilities of its workers. For example, employees developed a patent-pending method of manufacturing wide-flange steel beams with just 8 to 12 passes through its system as compared to traditional means which require 50. Because they send all levels of employees on benchmarking projects around the world, Chaparral ensures that knowledge of technological innovations and productive workplace practices are shared directly throughout the company. REMARKS: Chaparral CEO Gordon E. Forward was Iron Age magazine's Steelmaker of the Year in 1992. ACCOMPLISHMENTS/AWARDS: In 1989, Chaparral was awarded the Japanese Industrial Standard certification on its general structural steel products, becoming the first U.S. steel company and only the second company outside Japan given that recognition. Chaparral has achieved record production rates of 1.4 hours of labor per ton, as compared to an average 2.4 hours required for other steel mini-mills. Chaparral is the only steel company of its type to be certified by the AIME (American Institute of Mining, Metallurgical, and Petroleum Engineers) to manufacture its products for nuclear applications. SERVICE PROVIDERS: REFERENCES: Forward, Gordon E., Dennis E. Beach, David A. Gray, and James Campbell Quick. 1991. "Mentofacturing: A Vision for American Industrial Excellence." Academy of Management Executive 5:32-44. Garvin, David A. 1993. "Building a Learning Organization." Harvard Business Review (July-August):79-91. Leonard-Barton, Dorothy. 1992. "The Factory as a Learning Laboratory." Sloan Management Review (Fall):23-38. McManus, George J. 1992. "Beaming With Pride." Iron Age (August):13-17. ------------------------------------------------------------------- COMPANY: Childress Buick Company CORPORATE ADDRESS: 2223 West Camelback Road Phoenix, Arizona 85015 PLANT/BRANCH ADDRESS: SIZE (employees): 105 UNION(S): non-union INDUSTRY: Auto sales and repair SIC CODE: 5511 NEAREST METRO AREA/MILES: Phoenix, Arizona (0 miles) CONGRESSIONAL DISTRICT: AZ-0 SECTOR: Private OWNERSHIP: Privately held CONTACTS: George R. "Rusty" Childress President Childress Buick Company 2223 West Camelback Road Phoenix, AZ 85015 (602) 249-1133 DATE: 11/08/94 COMPANY DESCRIPTION: Childress Buick opened in 1960 and moved to a newly built showroom and repair facility in Phoenix in 1974. Childress is a privately-held company with 105 employees, selling and servicing automobiles. The dealership is organized into six departments: the New Car Department, the Used Car Department, the Service Department, the Body Shop Department, the Parts Department, and the Finance Department. Childress Buick competes against seven other Buick and 80 non-Buick car dealers in the Phoenix area. TRAINING AND CONTINUOUS LEARNING: The vast majority of all employees have received extensive training in their fields. The majority of Childress' mechanical repair people have at least one diploma from the Automotive Service Excellence organization, a nationally recognized training organization, and all mechanics have been certified by the organization. All body repair mechanics are certified by I-CAR (Inter-Industry Conference on Auto Collision Repair). This training is paid for by Childress. In addition, employees earn their average salary while attending this training. Car salespeople have attended numerous career-oriented schools, seminars, and conferences. All employees in all departments regularly attend training seminars and company-sponsored group training functions. All new employees undergo a five-week orientation training course. At this training, they are issued a manual, "Creating Service Excellence - The Childress Buick Employee Manual for Quality Customer Care," which is a skill building training manual (158 pages). The manual outlines the skills necessary to maximize the employee's contributions and supports personal growth through education in the following areas: anger diffusion, complaint resolution, telephone techniques, stress management, time management, goal setting, problem solving, empowerment, behavior modification, performance standards, and other subjects. All new employees spend one-half day every Monday working in other departments. Continuous education is promoted through the establishment of a resource library with over 400 titles. Additionally, Childress tapes and replays programs transmitted over its automotive satellite down link. At least one video program daily that aligns with he quality process is taped and distributed to department managers for their review and replay. In all, video transmissions on four different subjects supporting the continuous education philosophy are transmitted each day. Outside speakers are brought in to address employees as party of Childress' "Food for Thought" program. In total, the company spends over $50,000 yearly to train its employees ($500 per employee). EMPLOYEE PARTICIPATION: There is a formal suggestion program called the Suggestion Connection. Suggestion cards are distributed in the monthly newsletter and each new employee is given three cards at orientation. Each suggestion includes three items: the present method of operations, the suggested improvement and the expected advantages. The Quality Council evaluates all suggestions and picks the best one each quarter, with the winner receiving $100. All suggestions are acted upon. Current suggestions are published in the newsletter and a database is kept of all open suggestions, tracking the suggestion itself and its current disposition. The Quality Council is composed of the Dealer, the department managers and the customer service representative. This team has evolved into a steering committee whose function is to oversee the quality process. The Quality Council guides the Team Quality and ad hoc groups and monitors the success and implementation of initiatives. There are at any one time eight to ten Team Quality employee participation groups, with a goal to have 100 percent of the dealer's employees in a Team Quality group. The purpose of these cross-functional groups is to identify, analyze, and develop cost-effective customer-focused solutions to problems. Team study others who perform operations well (benchmark, including site visits), pilot solutions, and standardize the solution if it works. Teams may be either finite (if they have a set project to investigate) or infinite (if the team members continue to identify new problems and issues). Formal Idea Sessions are held in the departments. Staff members are expected to attend the meeting prepared to share ideas about a particular subject. The session is formulated as a brainstorming meeting. ACCESS TO INFORMATION: The entire organization is linked by mainframe. Current business and trends may be viewed, and if necessary acted upon, by department managers at any time. The system also produces a daily operating control report each morning, reflecting the company's positions based on business through the previous day and the company's relative standing comparing actual figures to monthly projections. All employees with computer terminals receive an electronic newsletter, Dealer Direct, via e-mail. All other employees receive a hard copy of the newsletter. The newsletter is designed to help improve awareness and integration of quality values at all levels. Key customer performance indicators are posted in two areas within the dealership. These indicators act as visual references that can be referred to as meetings are held, and track trend results comparing Childress to other area dealers. The company also holds "Donuts and Dialogue" meetings. These are employee open forum meetings at which managers are encouraged to answer any questions regarding operations. The company has a monthly employee newsletter, Squeaks and Rattles, that focuses on quality issues. The newsletter includes a section called "By the Numbers" that presents such data as CSO, Quality Plus, and AAA customer satisfaction results and new car sales volume. ORGANIZATIONAL STRUCTURE: Although Childress Buick has little input or control over the product it sells (new Buick automobiles), the company stays in constant contact with its two major suppliers (Buick Motor Division of General Motors and the General Motors Parts Division), offering ideas and suggestions on product and service improvements. Other, incidental suppliers are required to meet acceptable standards and align with Childress' mission of being Customer Driven and Committed to Excellence. EMPLOYMENT SECURITY: Because of its size and the cyclical nature of its industry, Childress does not have an employment security program. SUPPORTIVE WORK ENVIRONMENT: As part of its caring corporate culture, Childress provides its employees with a wide range of employee-friendly and supportive programs. The company sponsors social events (i.e, a yearly company picnic) for its employees, maintains an employee wellness program, offers a 401(k) plan with a 3 percent of salary match, provides for employee choice of health care provider (HMO or planned provider), and offers five sick days per year. To help gauge and ensure employee satisfaction, Childress surveys its employees using one of three opinion surveys. The Employee Satisfaction Survey is given to all employees, the Variable Satisfaction Survey is given to sales personnel and asks questions related only to sales, and the Fixed Satisfaction Survey is used in the service department only. All surveys have essay questions as well as 1 to 5 ratings in the areas of: communications, teamwork, participation, work environment, goals and standards, and employee motivation. When an employee leaves Childress, the dealer performs exit interviews which are used to determine how the dealership can be improved for the remaining employees. PRODUCT/SERVICE QUALITY: Childress Buick places an emphasis on its service quality, following Total Quality Management principles and focusing on building a productive corporate culture, gaining the commitment of employees, building teamwork, and managing the people and processes. Quality teams are in place throughout the facility, guided by a quality council. Childress makes every effort to ensure cross-department cooperation. A series of cross-functional teams have been established to improve quality and service and to ensure that the corporate vision is followed. Each month, a cross-function al managers team meets to evaluate progress on preventive action measures, study key performance indicator trends and comparisons to benchmarks, use problem solving and brainstorming techniques, compare forecasted to actual results, and make decisions based on operational and customer-related data. A cross-functional Quality Council meets monthly to define quality, develop systems, collect and analyze data, identify opportunities, educate and train the organization, and oversee the celebration of quality. The Quality Council is composed of the Dealer, managers of the departments, and the customer service representative. Quality team meetings are held weekly. The purpose of these meetings is to identify, analyze, and develop cost-effective solutions to workplace problems. Monthly departmental meetings are also held in areas of the facility. At these meetings, area employees and managers discuss satisfaction ratings, quality, procedures, improvement ideas, and many other topics. To ensure that quality and customer service remain priorities, all meetings are facilitated by the Dealer (Rusty Childress). In addition, Childress participates in a "20 Group" meeting three times yearly. At these meetings, twenty successful dealers from across the nation meet for a three-day benchmarking session and information received at this meeting is disseminated to all department managers. Customer suggestion forms are collated, tabulated and entered into a database, allowing problems and complaints to be tracked. These suggestions are used in various quality meetings throughout Childress. Company has designed a performance checklist that is used as a self-assessment tool to monitor progress in department quality efforts. This checklist is based on the Baldrige Award criteria. The Buick "Best in Class" checklist is also used as a quality audit. Additionally, Childress Buick uses a wide range of customer survey instruments to measure and maintain quality. In addition to the Customer Satisfaction Index, Childress uses a Quality Plus phone survey that indexes responses to a phone survey at the fifth week of ownership; an Arizona Automobile Association questionnaire left with all Body Shop and Service customers; a four-week and four-month courtesy call from Childress' full-time customer service representative to check on satisfaction; a five- year follow-up from the salesperson; quarterly customer satisfaction survey cards included in Childress' customer newsletter; a customer suggestion box at the showroom; a Buyers' Appreciation Night (held for new car buyers monthly) questionnaire; Childress Buick brochure questionnaire included in all promotional brochures; follow-up calls from sales managers to all unsold prospects within 48 hours; Body Shop surveys sent to customers by three insurance companies whose customers have had work done at Childress; and a Customer Service Care phone contact which contacts customers at personalized maintenance schedule times. Each of the feedback mechanisms are used in Childress' ongoing benchmarking process. The benchmarking process includes: 1) identifying critical success factors; 2) researching appropriate companies for comparison; 3) monitoring and analyzing performance gaps; 4) determining the root cause of any gaps; 5) selecting best practices and modifying the company's environment; and, 6) experimenting on a small scale. COMPENSATION LINKED TO PERFORMANCE: In order to promote quality and inter-departmental cooperation, managers are rewarded for cooperating with their working partner department(s). Managers participate in a bonus compensation program which ties bonuses to net growth and/or sales. Eighty percent of the employees at Childress are on a commission compensation system. Employees may win recognition for their efforts through a number of monetary reward programs, such as salesman of the month or employees of the year and employee of the month. WORKER-MANAGEMENT RELATIONS: N/A STRATEGIC INTEGRATION OF BUSINESS: All managers are involved in strategic quality planning. This has included designing the corporate mission statement, planning for its use, and continually assessing its usefulness and effectiveness. REMARKS: Childress Buick is extremely community-oriented. Among its programs are car loans to high schools and civic events; sponsorship of free public events; special tours of the dealership; contributions of time and money to various civic organizations; and sponsorship of complementary full-day seminars on all aspects of quality. ACCOMPLISHMENTS/AWARDS: Childress Buick has been named by Buick Motor Division of General Motors Corp. as a "Best in Class" award winner two years straight. For calendar year 1992, the Childress Buick Customer Satisfaction Index (compiled by Buick Motor Division) was number one in the Los Angeles zone (out of 62 Buick dealers) and was ranked number one nationally for all Buick dealers selling more than 500 new cars. The quality efforts have resulted in Childress being named as one of Buick's Select Sixty dealerships for the past 17 years, the only dealership so honored. In 1993, Childress won the Arizona State Pioneer Award for quality (patterned after the Malcolm Baldrige National Quality Award). SERVICE PROVIDERS: REFERENCES: Childress Buick, Arizona Quality Award Application, Childress Buick, June 1993, 22 pages. "Childress Buick Company--The Pioneer Award 1993 recipient," Arizona Governor's Award for Quality, Phoenix, AZ, 1993. Finegan, Jay, "People Power," Inc., July 1993, pages 623. ------------------------------------------------------------------- COMPANY: Chrysler Corporation CORPORATE ADDRESS: 12000 Chrysler Drive Highland Park, MI 48288-0001 PLANT/BRANCH ADDRESS: SIZE (employees): 128,000 UNION(S): United Automobile Workers (UAW), International Union of Electrical Workers (IUE) INDUSTRY: Automobiles SIC CODE: 3711 NEAREST METRO AREA/MILES: Detroit, Michigan (10 miles) CONGRESSIONAL DISTRICT: MI-01 SECTOR: Private OWNERSHIP: Publicly owned. Stock ticker symbol -- C. Listed on the New York, Philadelphia, Pacific, Midwest, Montreal, Toronto, London, Paris, Geneva, Basel, Frankfurt, Berlin, Munich, Amsterdam, Luxembourg, Vienna, Tokyo, and Zurich stock exchanges. Traded on the Boston and Cincinnati stock exchanges. CEO/PRESIDENT: Robert Eaton Chairman and CEO Chrysler Corporation 12000 Chrysler Drive Highland Park, MI 48288-0001 CONTACTS: James J. Palmer Manager, Union Relations Chrysler Corporation CIMS 416-28-21 12000 Chrysler Drive Highland Park, MI 48288-0001 (313) 956-0598 Joan Patterson Co-Director, UAW UAW-Chrysler National Training Center 2211 East Jefferson Detroit, MI 48207 (313) 567-3300 DATE: 02/28/95 COMPANY DESCRIPTION: Chrysler Corporation is the third largest manufacturer of automobiles and trucks in the U.S. market. Company also imports cars and trucks made by foreign manufacturers for sale under the Chrysler nameplate. Company also provides consumer and business financial services. Chrysler Corporation was originally incorporated in June, 1926 and acquired the entire holdings of Maxwell Motor Company (which was incorporated in 1921 as a successor to the Maxwell Motor Company and Charmers Motor Corp.). In 1928, Chrysler acquired all assets of Dodge Brothers (originally incorporated in 1925). In 1987, Chrysler acquired the assets of the American Motors Corporation. Chrysler owns plants, depots, and warehouses throughout the United States, Mexico, and Canada. Operating revenues for the company in 1993 were $42 billion and net income, after taxes and depreciation, was $2.415 billion. TRAINING AND CONTINUOUS LEARNING: Chrysler has three training tracks available to employees: the UAW-Chrysler National Training Center, available to members of the United Automobile Workers union; plant and depot level training programs available to all other employees; and executive and management training. To support this training, Chrysler is committed to spending more than one billion dollars from 1994 to 2000 on various types of employee training. Much of this training will be geared to improving teamwork skills. The National Training Center (NTC) is co-operated and directed by the UAW and the company. The Center, which was established in 1985, is operated out of a fund established in the national collective bargaining contract. Funding for the program is provided on two levels: nationally, Chrysler contributes $0.05/hour worked, plus an additional amount up to $5.00/hour worked for overtime; locally, $0.10 per hour worked for use in local plants or for certain, nationally-approved projects/activities. Employees who are represented by the United Automobile Workers are eligible for programs offered by the NTC. In addition, dependents are eligible for some of the programs offered. The NTC has three main goals: 1) to provide opportunities for Chrysler-UAW members to attain maximum personal growth; 2) to assist workers in acquiring knowledge, skills, and abilities; and, 3) to assist displaced employees in obtaining meaningful and productive employment. To achieve these three goals, the NTC is responsible for administering a wide range of programs, consisting of technical, interpersonal, and supportive training programs. There are over 40 different programs now administered by the NTC. For example, the Center offers basic skills training, computer awareness training, new technology training, and interpersonal skills training. There is also a tuition reimbursement program which provides financial support for employees who are completing high school, pursuing higher degrees, or are acquiring technical/vocation skills. Funds under the program are provided in advance of coursework. Instruction provided by the NTC takes place in many forums. The Center itself holds courses in the Auburn Hills facility, as well as at specific sites. Classes are also taught using satellite technology, in which interactive, video-based instruction is broadcast into the NTC's Regional Training Centers. Approximately 50-60 hours of instruction per week are offered via the distance learning program. Depending upon the course, instruction may be on the company's time or the employee's time. The NTC is administered by a six-member National Joint Activities Board, which is headed by co-chairman, one each from the UAW and Chrysler, and meets quarterly. This Board sets guidelines and policies, allocates funding, and monitors the program's expenditures. The Board also coordinates the activities of the NTC, evaluates and audits performance and results of joint activities, and integrates these activities with Chrysler's corporate structure and business decisions. The staff of the NTC is composed of equal numbers of UAW and Chrysler representatives, with the co-directors named by the co- chairman of the Joint Activities Board. The NTC represents the Board is coordinating and evaluating activities, establishing and monitoring budgets, progress and performance, and developing guidelines,procedures, operational information; establishing pilot programs; coordinating requests to the Board; and providing staff and professional support. There is also a measure of local autonomy. Each facility has a Local Joint Training Committee which implements programs most fitting to the plant's particular needs. The Local Committees are comprised of the local president, chairman of the shop committee, chairman of the salaried unit, the plant manager and the personnel manager (or designated representatives). These committees are responsible for marketing the programs, evaluating requests and approving expenditures for local programs, and developing the local programs and submitting them to the NTC for approval. All vendor selection is subject to the final approval of the NTC. The NTC has two satellite training centers and six regional training centers that have teleconferencing and distance learning facilities. For employees of Chrysler who are not UAW-represented, training is left to the discretion of the individual plant/depot. Training for these employees is funded out of local plant funds. Salaried and executive training is provided under the auspices of the corporate director for training. This training, however, is inter-related with training provided by the National Training Center. EMPLOYEE PARTICIPATION: Chrysler has implemented a number of avenues for employee participation for its hourly employees. Beginning in 1986 and 1987, Chrysler and the UAW negotiated "Modern operating Agreements" covering six plants and "Progressive Operating Agreements covering a large number of the remaining plants. The agreements are similar in many ways. The MOAs are built on six key principles: elimination of many superficial barriers (i.e., neckties and timeclocks); the Capability Progression Pay system; reduced job classifications; elimination of entrenched, inefficient practices; reduction in the number of supervisors and union representatives; and teamwork. Under both the MOAs and the POAs, the UAW agreed to reduce the number of job classifications. At some of the plants, the original number of classifications was over 100. In MOA plants, the classifications have been reduced to three non-skilled job classes and between four and eight skilled classifications. In POA plants, there are now normally from 12-15 non-skilled and 7- 10 skilled classifications. Employees working under these reduced classification programs in MOA plants are paid under a pay-for-knowledge program (Chrysler's Capability Progression Pay system). Work at the MOA plants is now organized around self-directed work teams. Employees on these teams are now responsible for assigning work, monitoring performance, scheduling overtime, and training team members. All MOA plants have an identical list of 20 team duties for which the teams are responsible. Each team elects its own coordinator from the hourly ranks who is responsible for coordinating the activities of the team. In most MOA plants, however, teams have been established only for production employees, and not for the skilled trade employees. Each MOA plant has a Policy Council which sets guidelines under the MOA, a Local Steering Committee, and an Operating Council. There are also two MOA facilitators at the National level (one each from management and the UAW) who are tasked with helping plants implement MOA training and integrate MOA philosophy into the day-to-day operations. POA plants operate under many of the same tenets as MOA plants. POA plants, however, are not organized around self-directed work teams, do not have Capability Progression Pay and do not require the high level of union-management commitment of the MOAs. ACCESS TO INFORMATION: Access to information takes many forms within Chrysler. The National Training Center widely markets its offerings through a number of vehicles: the Tuition Reimbursement Program produces a flyer geared solely toward the program; the NTC published a bi- monthly newsletter, press conferences are held to announce new offerings, and every program has a video tape. The corporation itself shares as much information as can be shared competitively. The levels and depths of information shared depends, in a large part, on the plant itself. For example, to support its gainsharing program, the Dayton plant shares all of its financial data with employees. The overall goal throughout the corporation is make employees aware of why decision are made. To help support this, representatives from the national union are informed continuously of the company's competitive position. Various methods are used to impart the information, including an annual meeting, regular roundtable meetings, and satellite television. Located at the National Training Center, Chrysler has a satellite television network over which it broadcasts updates. Closed circuit television is in place at many plants, and there are numerous weekly newsletter and bulletin boards throughout the corporation. ORGANIZATIONAL STRUCTURE: Chrysler has moved to flatten its organization and empower various groups of employees. Because of the programs to empower employees, Chrysler reduced its salaried management staff by 20 percent, from 1992 to 1994. The ratio of salaried to hourly employees has increased from 1:25 to 1:48. The ratio of supervisors to hourly employees in assembly plants has increased form 1:25 to 1:55 or 1:60, with some plants approaching 1:100. Additionally, the number of supervisory layers in an assembly plant has dropped from six to three and the number of corporate layers from vice-president to assembly plant has been decreased from eight to six. Another method of creating greater interaction between divisions and reduce the reporting hierarchy was the creation of platform teams. These teams consist of 850-1,000 representatives from various disciplines within the company (product planning, design, product engineering, manufacturing engineering, and procurement and supply) and who focus on bringing a single car or truck line to market. There are presently five platform teams: small cars, large cars, minivans, Jeep vehicles, and pickup trucks. These teams also incorporate representatives of downstream disciplines when needed and much earlier in the process than before. Included on these team are representatives of suppliers who will provide their specific expertise to the areas which they have responsibility for. Funding for the teams is controlled by a governing body, eliminating the need to make presentations or approach top management for financial approvals. Teams are empowered to make all product-related decisions. Company-related decisions are made at the Vice-President level. The cross-functional design teams ("platform" teams) are housed in the Chrysler Technology Center, located in Auburn Hills, Michigan. The Center houses approximately 7,000 employees on a 504-acre site. Included at the center are training rooms, a pilot manufacturing plant, a paint shop, a 1.8 mile test track, five scientific test facilities, a wind tunnel, an electromagnetic comparability lab, environmental chambers, and an engine and transmission test facility. By creating the platform teams and the infrastructure to support them, driveable vehicles will be able to be built more than 20 months prior to production, enabling team members to identify potential problems earlier. As an adjunct to the cross-functional design teams, Chrysler has encouraged the formation of "Tech Clubs," an internal informal network. Tech Clubs address issues which are common to the platform teams and facilitate the sharing of information across team boundaries, reducing duplication of effort. Teams meet informally, with no set agenda. Chrysler not only includes its suppliers in the design of its new products, but also encourages its suppliers to suggest design or procedural changes to existing products through its "Supplier Cost Reduction Effort" (SCORE). For example, when Chrysler was designing its LH platform cars, suppliers made over 4,000 suggestions saving $156 million. Suppliers are rewarded for their efforts through long-term contracts of from three to five years. To support its just-in-time production system, Chrysler holds quarterly conferences with its 15 top suppliers. At these meetings, Chrysler and the suppliers share information related to their ongoing business. In addition, Chrysler, in support of its continuous improvement process, has developed a system of workshops for its suppliers. Chrysler employees are made available to suppliers to help them implement a Kaizen or continuous improvement system, to remove waste from the process. Cost savings which arise from the program are shared between the suppliers and Chrysler so that both parties benefit. One advantage of the closer partnerships with its suppliers is that Chrysler has been able to reduce the number of suppliers to 750-800, and is still working to reduce that number even further. Those suppliers that remain have found themselves becoming more competitive, cost-effective, and productive. EMPLOYMENT SECURITY: Employment security for UAW members is written into the contract. Chrysler and the UAW have established a job bank under which any employee who suffers non-volume related job loss (e.g., outsourcing due to factors such as technology and/or quality) on layoff is guaranteed 100 percent of his/her pay. This fund does not cover employees idled off due to production scheduling down time, who are laid off and receive 95 percent of take home pay through Supplemental Unemployment Benefits and unemployment compensation. Employees affected by new technologies or production improvements are moved into the job bank and receive training to qualify them to move into other job categories. An overall goal of the corporation and the union is to achieve any downsizings necessary through attrition. One means of achieving employment security is through the Sourcing program established between the UAW and Chrysler. Under this program, the UAW is involved in the sourcing decision-making process with the goal of restoring union jobs previously outsourced to non-UAW-represented locations. There is a dislocated worker assistance program which provides displaced workers assistance in securing a position within the corporation, or, when that is not possible, provide training directed at finding the employee a position outside the company. Training under this program is geared to providing the dislocated employee with job seeking and work-related skills. The training includes such components as: outreach, orientation, enrollment, job search workshops, job clubs, job seeking, skills training, and job placement. SUPPORTIVE WORK ENVIRONMENT: The work environment has been changed to become more egalitarian. Traditional management perquisites have been eliminated, such as reserved parking places, neckties, and private dining rooms. As part of its supportive work environment, Chrysler and the UAW have negotiated a number of fringe benefits. In UAW-represented plants, the corporation makes available funding at the rate of $0.04/hour worked to support Joint National and Local health and safety initiatives. These activities are administered and supervised by appointed representatives of the company and the UAW. Chrysler and the UAW have established a joint Child/Elder Care program designed to assist employees in locating and obtaining quality child and elder care services. Through this program, employees may use a telephone-based referral service to find quality child and elder care options in their area. In addition, the Chrysler-Huntsville, Alabama plant has recently opened a pilot Child Development Center. The Employee Assistance Program is geared to providing employees a framework under which they may seek professional counseling, treatment, or other assistance to address personal issues. The EAP also seeks to encourage, educate and help employees pursue more healthy lifestyles. To help promote healthy lifestyles, a wellness program has been implemented. This program provides information and promotes positive health practices by addressing such issues as smoking, high blood pressure, cholesterol, weight control, exercise, and nutrition. Financial planning and post-retirement planning is also provided to employees. The goal is to provide guidance to employees in helping them prepare for life after retirement. Included are such topics as: retirement vs. work lifestyles, health awareness, interpersonal relationships, leisure time activities, living arrangements, legal considerations, financial planning, retirement income benefits, social security benefits, and medical and insurance benefits. Chrysler and the UAW have established a multicultural program designed to give employees an appreciation and understanding of the diversity of the Chrysler workforce, to improve communications, and to enhance work relationships. PRODUCT/SERVICE QUALITY: Beginning in 1980, Chrysler began its Product Quality Improvement program and in 1987, began fusing its various programs, including SPC and QIP, into one program in order to unify these programs. The QIP is administered at the National level by the Partnership National Committee and at the local level by chartered Product Quality Improvement Partnerships. Chrysler, in conjunction with the other two major U.S. auto manufacturers, has begun to commonize its quality system around a rating system based in part on Chrysler's Supplier Quality Assurance, Ford's Q101, and GM's Targets for Excellence quality programs. The new quality measurement system will be aligned with ISO 9000 criteria and registered quality auditors may be used to conduct assessments of suppliers' quality systems. Chrysler has begun the process of changing dealership relations with customers to stress customer satisfaction. Under Chrysler "Customer One" program, in 1993 and 1994, the company spent a total of $60 million training more than 50,000 dealership employees in the U.S. in modern customer-handling and satisfaction techniques. In addition, dealer incentives are tied not only to sales performance, but also to customer satisfaction surveys. Chrysler surveys customers twice to determine their satisfaction: once to measure sales satisfaction, the second time, a few months after purchase, to measure service satisfaction. These satisfaction surveys are used as a basis in determining dealer bonuses. Benchmarking techniques are also used extensively. At one point, a Production Systems Team, that included a representative of the UAW-Chrysler Department, visited and benchmarked plants throughout the world, with the intent of identifying best practices that Chrysler might adapt. COMPENSATION LINKED TO PERFORMANCE: Chrysler introduced performance-based pay at its Dayton Thermal Products Plant in 1988 and, in 1993, at its Evart, Michigan, glass plant. At both plants, employees receive bonuses when savings are accrued from a baseline measure based on cost accounts. Only those cost accounts over which the people have control are used in the bonus configuration. All savings are shared 50/50 between the company and the employees and the bonus payout is based on time present, rewarding employees for showing up at work. Once a bonus payout is determined, the employee earns from 0 percent to 100 percent of the bonus, based on attendance. Any funds left over due to employees who earn less than 100 percent are redistributed through the payout, so that the entire 50 percent of the savings are distributed. As noted, plants operating under the MOAs have instituted a pay for knowledge program, entitled Capability Progression Pay. The CPP formula pays an individual for his/her ability to perform a variety of tasks, rather than for the task being performed. Most plants are also covered by a corporate profit-sharing plan that is based on the company's financial performance. In 1993, the profit sharing plan paid out a bonus of approximately 10 percent of pay. WORKER-MANAGEMENT RELATIONS: Employee-management relations at Chrysler have improved greatly. These relationships are still evolving, but both sides are working to improve the relationship. Product sourcing, as at the other "Big Three" companies, is a continuing issue that receives much attention. Chrysler and the UAW, however, have been able to handle product sourcing issues without work stoppages. Represented employees who have disputes with the company or its policies have access to a contractually covered dispute resolution process which is designed in the traditional, step process. Non-represented employees have an alternative dispute resolution procedure that allows them to settle disputes outside of a courtroom. As part of the cooperative atmosphere being engendered at Chrysler, the UAW and the company have established the Union- Company Awareness Program. This program is designed to provide all UAW-represented employees with information regarding the long historical relationship between the UAW and Chrysler, summarize crucial issues addressed and resolved and focus on future needs. STRATEGIC INTEGRATION OF BUSINESS: As one means of ensuring that new technologies are used correctly, Chrysler and the UAW have established to New Technology Program. The mission of this program is to provide quality, appropriate training so that employees will be capable of performing new or changed work due to new technologies. The program tracks the development of new technology, reviews various matters of concern relative to the introduction of new technology, and identifies and provides the specialized training needed. REMARKS: ACCOMPLISHMENTS/AWARDS: In 1992, Chrysler was awarded the first Concurrent Engineering Award, presented by Machine Design magazine for experiencing the most dramatic improvements from the concurrent engineering method of product design. SERVICE PROVIDERS: Kepner-Tregoe, a consulting firm, was retained to assist in the planning and implementation phases of the MOA project at some plants. Kepner-Tregoe performed the training of all management and union representatives in the plants, as well as volunteers who trained other members of the plant staff. In addition, consultants from George Washington University in Washington, DC, were retained to assist in the implementation of the MOAs. REFERENCES: Bamford, James, "Driving America to Tiers," Financial World, November 8, 1994, pp. 24-7. "The Changing Culture at Chrysler and its Dayton Thermal Products Plant," unpublished, 1994 Productivity Forum Roundtable, Orlando, Florida, May 17-19, 1994, 37 pp. Klier, Thomas H., "How Lean Manufacturing Changes the Way We Understand the Manufacturing Sector," Economic Perspectives, Federal Reserve Bank of Chicago. McElroy, John and Gerry Kobe, "The Second Coming of Chrysler," Automotive Industries, January, 1992, pp. 18-23. Moskal, Brian, "Chrysler Polishes the Creative Wheel," Industry Week, May 16, 1992, pp. 40-2. "National Skill Development and Training Center, Chrysler-UAW," A Report of the Conferences on Joint Labor & Management Sponsored Work-Based Education Programs: The New Tools of the Trade, Carnegie-Mellon University and the U.S. Department of Labor, Pittsburgh, PA, July 1990 & 1991, pp. 7-13. Vasilash, Gary S., "Chrysler Gets Serious About Success," Production, January 1992, pp. 58-61. ------------------------------------------------------------------- COMPANY: Chrysler Corporation New Castle Machining & Forge CORPORATE ADDRESS: 12000 Chrysler Drive Highland Park, Michigan 48288-0001 PLANT/BRANCH ADDRESS: 1817 "I" Street New Castle, Indiana 47362-2992 SIZE (employees): 1,200 UNION(S): United Automobile Workers, International Association of Machinists, United Plant Guard Workers of America INDUSTRY: Automotive parts SIC CODE: 3714, 3713 NEAREST METRO AREA/MILES: Indianapolis, IN (40 miles) Muncie, IN (20 miles) CONGRESSIONAL DISTRICT: IN-02 SECTOR: Private OWNERSHIP: Publicly held and traded. Stock Abbreviation--C Stock exchanges: New York, Philadelphia, Pacific, Midwest, Montreal, Toronto, International SE London, Paris, Geneva, Basel, Frankfurt, Berlin, Munich, Amsterdam, Luxembourg, Vienna, Tokyo, and Zurich. Also traded on the Boston and Cincinnati Stock exchanges. CEO/PRESIDENT: Robert Eaton Chairman and CEO Chrysler Corporation 12000 Chrysler Drive Highland Park, MI 48288-0001 CONTACTS: William H. Ruback Personnel Manager New Castle Machining and Forge Component Operations Chrysler Corporation 1817 "I" Street New Castle, IN 47362-2993 William Lee President Local 371 United Automobile Workers 201 North Main Street New Castle, IN 47362 (317) 529-6631 DATE: 11/08/94 COMPANY DESCRIPTION: Chrysler Corporation is the third largest manufacturer of automobiles and trucks in the United States. The company was incorporated in 1925 by Walter P. Chrysler, and acquired, in full, the entire property and assets of Maxwell Motor Corporation, which was incorporated in 1921 as a successor to Maxwell Motor Co. and Chalmers Motor Co. In 1928, acquired the assets of Dodge Corporation, which became a division of Chrysler. In 1987, acquired the assets of the American Motors Corp. Chrysler Corporation employs 128,000 worldwide. Chrysler's principal plants, depots and warehouses are located in the U.S. and Canada, with other plants located worldwide. In 1993, Chrysler had total vehicle unit (car and truck) sales of 2,475,000. Chrysler's 1993 revenues totaled $42.3 billion and the company had net income of $2.415 billion. The Chrysler-New Castle plant produces a variety of machined and forged parts for the Chrysler Corporation. The plant was built in 1907 by Maxwell-Briscoe Motors and is the only surviving plant of the original eight plants that became Chrysler in 1925. Production and maintenance workers are represented by the United Automobile Workers, Local 371, which has over 1,000 members at the plant. Local 371 represents an additional 60 salaried employees at the plant (who are not part of the Modern Operating Agreement). Fourteen employees are represented by the Plant Guard union, and 30 diesinkers are represented by the International Association of Machinists. Employment at the plant has fluctuated from 3,500 in the 1970s to a low of almost 500 in the early 1980s. Recently, employment has stabilized at its present level of 1,200. Chrysler-New Castle is the largest employer in New Castle, Indiana. TRAINING AND CONTINUOUS LEARNING: Training at Chrysler's New Castle plant is an ongoing process. Beginning in 1988, with the implementation of the Modern Operating Agreement signed by Chrysler and the UAW, training has continued in both technical and interpersonal skills. Originally, training was developed by Kepner-Tregoe, a consulting firm. As an example of the ongoing nature of the training provided, all employees at New castle recently completed 24 hours of additional training in problem solving and team skills. Modern Operating Agreement (MOA) training at New Castle is coordinated through and with the Chrysler-UAW National Training and Development Center in Detroit. The Center provides train- the-trainer courses and helps develop train-the-trainer specifically for New Castle. These courses are given in both Detroit (at the Center) and in New Castle. Most of the MOA training provided to employees is on-site. The trainers for the courses are usually volunteers from the shop floor who attend the train-the-trainer courses provided. All employees at New Castle received 130 hours of training initially and have averaged an additional 30 hours annually of both interpersonal or technical skills. Some of the interpersonal skills training provided includes roles of employees and the participative style of interaction. As skilled trades classifications were combined and reduced to eight, in addition to the interpersonal skills training, all skilled trades employees participated in cross trades training of varying degrees. Most of this training was coordinated through the New Castle Area Vocation School and the Indiana Vocational and Technical Training College. Chrysler has constructed a training site (the H.E. Zachary Memorial Training Center, named after the UAW president who helped implement the first MOA) at the New Castle plant, consisting of three regular size classrooms and one large classroom, and costing over $200,000. This Center is funded jointly by Chrysler and the UAW. The New Castle Area Vocational School maintains an on-site computer lab that serves the training center. The computer lab has 12 computers and provides basic computer skills training for all employees, retirees, spouses and has been used to train ninth grade students from the School District. There is also a "latchkey" training program in place for disadvantages children. This program provides afterschool training and shows the students how the training and technology is actually used on the shop floor. Basic skills training is provided to employees on an as-needed, confidential basis. Results from this basic skills training have shown a 200 percent better than forecast result. The literacy program was originally established through a Federal grant and is now funded by the local school system under its adult basic education program. Additionally, a $250,000 grant from the state of Indiana was recently awarded to New Castle to teach employees how to use new technologies and a $200,000 grant was awarded for 1995. Coupled with New Castle pay-for-knowledge program is an on-the- job training program. Additionally, the skilled trades provide on-the-job training across job descriptions. This training is tracked to determine who's training who and to identify the competencies that New Castle can draw upon when needed. An overarching philosophy is that training is the key to the success of the Modern Operating Agreements. So much so that at all times, someone, somewhere is being trained. In addition to the in-house training provided, there is also a tuition reimbursement program. Under this program, employees receive up to $5,000 per year for job-relate training taken on their own time. The wide variety of training provided, both directly through Chrysler/UAW and the tuition reimbursement program encourages families to continue lifelong learning. Since 1988, Chrysler-New Castle has spent over $40 million on training. EMPLOYEE PARTICIPATION: Under the Modern Operating Agreement, signed in 1986, New Castle was one of six plants to implement the programs called for in the MOA. Under the MOA, employees at the plant are organized around self-directed work teams. Original team composition was carried out jointly by both Chrysler and UAW representatives, rather than by industrial engineers. The teams are composed of from six to 25 members each and perform all the tasks within their work areas or may be in their purview under the production process or Capability Progression Plan (pay-for-knowledge compensation). Each team elects a team coordinator who is an hourly employee from the team. It is expected that the role of Team Coordinator will rotate among the team members, and elections are held periodically. Team coordinators receive an extra $0.10 per hour upon their election. A team coordinator who completes all the team leader training and satisfactorily performs all the duties receives and extra $0.15 per hour (for a total of an extra $0.25 hourly). When at least 75 percent of the team satisfactorily performs all 20 team duties and meets team objectives, the team coordinator receives an extra $.25 per hour (for a total of an extra $.50 hourly). All employees can earn additional monies per hour for their personal skills and knowledge as verified by their team and advisor. At Level 1, a team member receives an extra $.10/hour for learning 50 percent of the jobs on the team. At Level 2, the team member receives an additional $.16/hour for knowing all the jobs on the team. At Level 3, the team member receives an additional $.11/hour for knowing 100 percent of the jobs on the team and 50 percent of the jobs on another team. The Team Coordinator has fifteen different duties: take attendance and schedule replacements, develop a daily production strategy, monitor SPC charts, coordinate production counts, coordinate information from the quality auditor, coordinate daily salvage and repair activities, coordinate training of new employees and assist in implementing daily line-up, communicate and report tooling and maintenance problems, fill out proper time sheets and records, keep overtime records, coordinate the team's vacation schedule, coordinate with other teams, coordinate the team's Capability Progression Plan, conduct team meetings, and assist the team in accomplishing its goals. Both the employees on the teams and the teams themselves have specific duties and responsibilities. Teams members are expected to: participate in the team concept, attend work regularly, produce quality work, practice defect prevention, conform to job requirements, follow safety procedures, communicate problems, keep work ares clean, improve their skills and share knowledge, and constantly strive to improve the operation. Team duties include: participate in daily audits, process salvage, assist in the development of work assignments, correct minor and report major tooling and maintenance problems, provide input regarding production standards, assist in methods planning, monitor and control performance, adhere to plant safety rules, monitor and report attendance, equalize overtime and keep equalization records, support and help train team members, maintain a clean area, problem solve, schedule vacations, coordinate with other teams, be aware of and adhere to EEO guidelines, assist in employee counseling, administer the Capability Progression Plan (pay-for-knowledge compensation), and seek technical assistance where required. Teams are expected to meet regularly to resolve various production, quality and maintenance problems. Although attendance at these meetings is voluntary, all team members are bound by the decisions made at these meetings. The entire process is guided by a joint labor-management steering committee. There are also six MOA facilitators, drawn from the hourly and management ranks (two for each shift) who coordinate the MOA activities on a daily basis and act as links from the shop floor to management. One area where teams do not assume management responsibility is for employee discipline. However, in many cases, informal peer pressure is coming to bear, and fewer formal problems are being reported. In conjunction with the MOA, an egalitarian work place has been established. Under this new structure, privileged parking lots and cafeterias have been eliminated, time clocks have been removed, there is a no necktie policy, recreation and wellness programs are offered, training programs are attended by both management employees, and enhanced communication is promoted. ACCESS TO INFORMATION: As part of the MOA, Chrysler-New Castle management agreed to open its books to employees. Employees were provided training in accounting procedures and how to read financial statements. Financial data is reviewed weekly by team coordinators in their formal meeting and the information is brought back to the team and discussed. Included in this weekly discussion are scrap reports, quality and productivity figures, plan versus actual budget analysis, and other key issues affecting the plant and employees. The union president is welcome to sit in on any meeting anytime (including those meetings normally attended only by management). Chrysler-New Castle has also established an in-house television network. Through this network, which reaches down to the shop floor, employees receive daily updates on production and financial measures. There is an in-house news broadcast using in-house employees. Video for the network is produced on-site at New Castle's video studio. There is a quarterly Town Hall Meeting which is led by the plant manager and the union president. At this meeting, employees may discuss and question quarterly goals and objectives. Two newsletters are published: a quarterly newspaper published by the plant and a monthly newsletter published by the local union. various types of information are published in both. There are also a number of bulletin boards throughout the plant used for information sharing. ORGANIZATIONAL STRUCTURE: Under the MOA and due to the additional responsibilities taken on by the teams, both management and the union realized that there was less need for the traditional corporate structure. This resulted in a formal removal of layers, both corporate and union. Supervisors were made team advisors and the number of teams per advisor was increased. As teams matured, less direct supervision was required. Presently, there are 24 supervisors, approximately one-third the original number. No supervisors were laid-off. The reduction was carried out by attrition, promotion, and returning some supervisors to the workforce. Additionally, the number of committeemen was reduced and the ratio of hourly employees to chief stewards was increased. Team advisors are now expected to be resources, consultants, communicators, coaches, and a human relations person. The MOA has also resulted in the elimination of one level of management, the general foreman. A number of staff jobs have also been eliminated as cross-training has been extended into these areas. Team members in the staff areas are accepting greater responsibility, allowing for this reduction. Overall, managers are making fewer day-to-day decisions. All employees' work roles are being redesigned and rearranged. With the redesign of work roles, the number of job classifications has been reduced. The change in structure has extended to relations with Chrysler- New Castle suppliers and customers. Both suppliers and customers are now involved in New Castle's ongoing quality improvement efforts and initiatives. New Castle uses the Chrysler Quality Assurance supplier certification process, and since they supply only to Chrysler, are certified under the same process. In supplying to Chrysler, if New Castle does not attain and maintain its certification, Chrysler will buy outside the corporate structure. As such, New Castle must continually compete on the basis of cost and quality. As part of its overall quality efforts, New Castle has implemented a just-in-time production system, and also supplies to customers who are on a JIT system. At any one time, there are no more than two days' inventory at the plant. Supplies from certified suppliers receive no incoming inspection and in many cases are delivered straight to the floor. To help coordinate the various production components under JIT, New Castle has implemented an Electronic Data Interchange order system, with both suppliers and customers. EMPLOYMENT SECURITY: Under the MOA, no employee may be laid-off due to increases in productivity or quality. If an employee is laid-off due to economic reasons, the processes in the national contract with regard to seniority and bumping rights are followed. Presently, the workforce is stable, and there was hiring at the plant for the first time since 1976. There is a guaranteed manning level agreed to between the union and management and personnel levels cannot fall below this level. The personnel levels are calculated by adding the actual number of employees working at the plant and the number of employees in the Job Bank (which was established under the Chrysler/UAW National Contract). There has not been any employee in the Job Bank for over two years. Both management and the union feel that the best way to guarantee employment at New Castle is to grow the business. As such, they have bid on a number of core auto components that are not traditionally manufactured at the plant, and have recently won large orders from Chrysler (mainly based on cost and quality). SUPPORTIVE WORK ENVIRONMENT: As the average employee age at New Castle is 48, there is little demand for a wide range of work/family supportive programs, such as child care. Among the programs offered are retirement seminars, deferred pay and payroll deduction savings programs, and investment classes, all to help employees plan for retirement. Safety committees have been established to help New Castle improve shopfloor safety and health. There is a union and management administered Safety and Health Committee, an Ergonomics Committee, and each work team has a safety representative. PRODUCT/SERVICE QUALITY: As noted, New Castle must adhere to the Chrysler product quality certification process. Because of this, great emphasis is placed on production of a quality product at a competitive cost. Quality improvement is created through a series of ad hoc product launch and problem solving teams. These teams are empowered to identify and solve quality-related issues. The improvements can be made anywhere in the system, running the gamut from tools used to process change. All work teams include a quality technician. Statistical process control methods are used extensively by the work teams and all employees who must use SPC receive training. Recently, intensity in SPC training has been increased. This training is run by a bargaining-unit employee (from the salaried unit). Chrysler-New Castle constantly performs benchmarking activities for all aspects of the production process. For example, before implementing the facilitator system under the MOA, at least three other companies using facilitators were benchmarked. In addition, Chrysler-New Castle constantly hosts benchmarking tours from other companies. COMPENSATION LINKED TO PERFORMANCE: There is a pay-for-knowledge compensation program (entitled Capability pay Progression) that rewards employees for job knowledge and acceptable performance of operations. Under this system, an employee's rate of pay is determined by the number of different operations in which the employee can demonstrate proficiency. When an employee learns 50 percent of the job skills on his team, he is given a raise. Another raise is provided at 100 percent of team job skills. At that point, the employee can switch teams and attain additional levels of skills and pay. There is no requirement that an employee must progress through the pay blocks. Under the CPP, there are three different employee classifications (from the lowest of Technician III to Technician I). Within each classification, there are four pay levels. There is also a corporate Profit Sharing plan which rewards all Chrysler employees with a bonus payout based on annual Chrysler profit levels. WORKER-MANAGEMENT RELATIONS: Since the signing of the MOA, worker-management relations have improved dramatically. As an example of this improvement, some training programs and meetings which both union and management members attend are held at the union hall. At one time, management was not welcome at the hall. As a measurement of the improved relations, grievances at the plant have declined from over 800 in 1985 to approximately 30-40 yearly. Because of the improved relationship, union and management can now concentrate more on growing the business, providing a successful plant and a stable workforce. STRATEGIC INTEGRATION OF BUSINESS: Chrysler-New Castle has implemented a number of advanced manufacturing technologies. CNC Machining Centers have increased the flexibility of New Castle to meet machining and prototype production. Parts are tested using a non-destructive testing station. A coordinate measuring system has been installed which can measure dimensional characteristics of components to within .0002 inches of accuracy. Numerous other electronic gauges are used in the production process. There is no in-process inspection department. REMARKS: ACCOMPLISHMENTS/AWARDS: Chrysler-New Castle and UAW Local 371 were named recipients of the Indiana Vocational Education Partnership Award for Excellence for their ongoing involvement with New Castle High School. Chrysler-New Castle was awarded the U.S. Senate Productivity Award in 1991. Also in 1991, New Castle won the Chrysler Power Train Operations Quality Council Award. Financially, the plant is more successful. From 1986 to 1993, sales increased from $148 million to $250 million and net income changed from a $5 million deficit to a profit. Absenteeism at the plant (in 1993) was down to 2.8 percent, one of the lowest rates in the corporation. Because of the plant's success, corporate management has made capital investments of $100 million through 1994 and has committed an additional $100 million through 1996. There has also been a 22 percent decrease in work-related injuries. The quality programs instituted, such as the Product Quality improvement and SPC programs, have cut customer defects and warranty claims by 87 percent from 1991-1994, with defects measured in parts per million.. SERVICE PROVIDERS: Kepner-Tregoe, consultants, were used to design the self-directed work teams and provide initial teambuilding training. REFERENCES: Chrysler Motors Corporation New Castle Plant: Task Forces--Role Clarifications and Monitoring Methods, Chrysler Corporation, New Castle, IN, handbook. Filler, Tom, "Miracle on 'I' Street," Outlook, Vol. 5, No. 2, February/March, 1`993, pages 14-17. Lienert, Anita, "Forging a New Partnership," Management Review, Col. 83, No. 10, October 1994, pages 39-43. New Castle Machining & Forge, Chrysler Corporation, New Castle, IN, brochure. Tobia, Peter and Shari Johnson, "Chrysler Harnesses Brainpower," Industry Week, September 21, 1992, pages 16-20. ------------------------------------------------------------------- COMPANY: Cin-Made Corporation CORPORATE ADDRESS: 1780 Dreman Avenue Cincinnati, Ohio PLANT/BRANCH ADDRESS: SIZE (employees): 45 UNION(S): United Paperworkers International Union INDUSTRY: Specialized packaging SIC CODE: 2655, 2653 NEAREST METRO AREA/MILES: Cincinnati (0 miles) CONGRESSIONAL DISTRICT: OH-01 SECTOR: P OWNERSHIP: Private CONTACTS: Robert Frey President The Cin-Made Corporation 1780 Dreman Avenue Cincinnati, OH 45223 (513) 681-3600 Joyce Bell President Local 989 United Paperworkers International Union The Cin-Made Corporation 1780 Dreman Avenue Cincinnati, OH 45223 (513) 681-3600 DATE: 12/12/94 COMPANY DESCRIPTION: The Cin-Made Corporation is a small, specialized packaging company located in an economic development zone in Cincinnati, Ohio. The company, which was founded in 1902, manufactures paper-based composite cans and tubes in a wide variety of custom designed packages, with a special emphasis in teas, cookies, and the home garden and agricultural industries. In the past two years, Cin-Made has spun-off two new companies, Molded Pulp Products, which manufactures environmentally responsible molded fiber, and DorPak, a manufacturer of a new type of paper box. Cin-Made had total sales of $3.5 million in 1993. TRAINING AND CONTINUOUS LEARNING: Cin-Made provides an extensive offering of training opportunities, which have included courses in statistical process control (SPC), reading of financial statements, pricing and costing, leadership, and strategic planning. Employees also receive a great deal of on-the-job skills training which emphasizes cross-training in multiple skills. Approximately, 3/4 of the training is accomplished using in-house resources, with the remaining 1/4 through off-site courses. Through the company's Employee Education Program, Cin-Made pays employee tuition for a variety of outside training programs including trade school courses, leadership courses, and labor- management training programs. For Cin-Made workers pursuing degree programs, the company pays up to 100 percent of educational costs dependent on the achievement of a satisfactory course grade. Cin-Made's president and owner, Robert Frey, also places a heavy emphasis on informal learning opportunities, and regularly circulates articles and books throughout the work force. EMPLOYEE PARTICIPATION: In attempting to recreate the Cin-Made workplace, Cin-Made president and owner, Robert Frey, made a formal declaration in 1985 that "employee participation will play an essential role in management." Today, Cin-Made is a high involvement workplace where employees are empowered to schedule their own hours, layoffs and recalls, purchase raw materials, approve all new hires and management hires, and schedule and manage temporary workers used to cover seasonal work fluctuations. Hourly employees also lead and manage the company's safety committee, merit pay committee, and "On Time Delivery Program." The unionized work force is also closely involved in all strategic planning decisions, including the recent decisions to spin-off two new companies. ACCESS TO INFORMATION: Cin-Made has a variety of ways in which the company shares both financial and operating information with employees. The company's president holds monthly "state-of-the-business talks" where company financial information is shared, and business plans are discussed. Workers also have the opportunity to ask questions regarding the business. The company's plant manager also conducts weekly meetings with employees, and regularly brings in representatives from the accounting department to discuss the financial aspects of the company. All financial information regarding the company is open to the employees and the union. Another way in which employees receive regular information on the state of the business, is through the bills of materials posted on every order on the shop floor. Each bill of material contains information about particular orders, including the selling price and profit margin, and using this information, Cin-Made workers can keep up with the status of the business on a daily basis. Every operating unit at Cin-Made collectively keeps daily track of scrap, productivity, and quality. ORGANIZATIONAL STRUCTURE: Cin-Made has a very flat organizational structure, with one plant manager who serves as the only form of management in all three Cin-Made plants. Designated "lead workers," consensually selected by the employee personnel committee and Cin-Made management, lead specific work areas. Cin-Made employees are cross-trained, so that all aspects of every job, including the plant manager, can be performed by someone else within the company. EMPLOYMENT SECURITY: Cin-Made provides no formal employment security guarantees, but works toward a goal of employment security in theory, through the creation of a competitive company. The company has experienced no layoffs in the past two years. Given the seasonal demand for Cin-Made products, which are heavily focused toward the home gardening and agricultural markets, the company makes extensive use of temporary employees. The temporary employees are interviewed, hired, and managed by the company's regular unionized hourly work force. SUPPORTIVE WORK ENVIRONMENT: Cin-Made has a flexible workplace, designed to give workers lots of freedom. Workers have the authority to leave early and take personal time off from work if they need. Cin-Made has a Safety Committee that is managed and led by hourly employees. The Safety Committee has a budget for safety promotions and training, much of which is conducted with the help of the Ohio Bureau of Workmans Compensation, Division of Safety and Hygiene. The company has a monthly safety promotion, in addition to monthly readings and quizzes on safety and health. All Cin-Made employees are fully empowered to shut down the production line at any time to correct for safety problems, and the company also sponsors regular audits and self-inspections to recognize potential safety hazards. In the last five years, while the company's safety incident rates have remained the same, their severity has greatly decreased, as the company's workmen's compensation severity rating has declined from plus 74 percent to minus 44 percent over the last five years. PRODUCT/SERVICE QUALITY: Cin-Made employees are trained in statistical process control (SPC), and the company has taken the "Deming pledge" to improve quality through the ongoing measurement and charting of results against statistically based limits. With the company's employee run "On Time Delivery Program," hourly employees meet on a daily basis with office employees to track orders, assign delivery dates, and keep production schedules balanced. As a result of the program, on time deliveries have increased from 74 to 98 percent. Cin-Made hourly employees often meet with customers to discuss quality issues. COMPENSATION LINKED TO PERFORMANCE: Thirty-five percent of Cin-Made's pretax profits is distributed to workers in the form of profit sharing -- 18 percent goes to the hourly work force, and 17 percent goes to managers and white- collar workers. Three times a year, each employee receives a check for an equal share of the pretax profits from the previous fiscal year, which ends on June 30th. Through the profit sharing program, Cin-Made employees in recent years have received profit sharing bonuses equal to approximately 36 percent of their annual wages, which averages out to approximately $4,000 per hourly employee per year. Cin-Made also has a skill-based merit pay system that is jointly administered by the company and the union. Through the program, more than 95 percent of Cin-Made employees have been rewarded with additional compensation for acquiring skill competencies above and beyond the basic skill level. WORKER-MANAGEMENT RELATIONS: Worker-management relations at Cin-Made have turned almost 180 degrees in the past ten years. In September 1984, Cin-Made was embroiled in a strike with Local 989 of the United Paperworkers International Union, after the new ownership of the company demanded a 25 percent wage cut. Today, ten years later, Local 989 president, Joyce Bell, states that Cin-Made employees "could not ask for a better place to work." What turned things around at Cin-Made was active building of trust and respect between the owner, Bob Frey, and the union. In resolving the 1984 strike, the union agreed to a 12.5 percent wage cut, 9 percent of which was restored by the second year of the contract, and significant profit sharing which has resulted in yearly payouts of approximately $4,000 per worker per year. Cin-Made management points to profit sharing as a key element in the company's cooperative relations with the union, as it puts both the company and the union in the same boat with the same interests. New management practices, focused on worker involvement and self-direction, have also played a major role in the growing cooperation between the company and the union. In some cases, former managers who clung to the traditional adversarial model had to be let go by the company, and union officials point to current Cin-Made plant manager, Tim Daniel, as a key element in the continuing cooperative relations between the company and the union. Since joining the company, he has eliminated the absenteeism point system in favor of an honor system, and implemented a more flexible work schedule consisting of four 9 hour days and one four hour day. Recent negotiations between the company and the union have been very smooth, and last September the company and union agreed to an amendment of their labor contract in only seven hours time. The amendment agrees to a self-directed work force, with work teams, and an easing out of the traditional "bid" system which will allow Cin-Made employees to perform multiple jobs as long there is agreement between both the management and the union. The area vice president for the Paperworkers often mentions to other companies that they need to negotiate on terms similar to those at Cin-Made. There have been no grievances at Cin-Made in several years. STRATEGIC INTEGRATION OF BUSINESS: In an effort to overcome the severe adversarial labor relations at Cin-Made, and create a high performance work environment, company president, Robert Frey, formally pronounced in 1989: I do not choose to own a company that has an adversarial relationship with its employees. Employee participation will play an essential role in management. REMARKS: ACCOMPLISHMENTS/AWARDS: Between 1985 and 1992, Cin-Made's sales per employee increased from $41,000 to $103,000. The company expects an 80 percent increase in profit levels in 1994. Cin-Made and the United Paperworkers International Union presented at the Conference on the Future of the American Workplace, sponsored by the Departments of Labor and Commerce. Over the past two years, the company has received a great deal of recognition, including profiles by ABC News and mentions in several books and publications. Cin-Made was recently recognized as one of the "innovative 50's," one of the 50 most innovative manufacturing leaders in the nation as deemed by an advisory board sponsored by the publication, Managing Automation. SERVICE PROVIDERS: Cin-Made officials point to the Ohio Bureau of Workmans Compensation as a tremendous resource to the company's safety programs, and to the Cincinnati Employers Association as a valuable training resource. The book, Thriving on Chaos, by Tom Peters was widely read throughout the Cin-Made work force, and has been referred to by Cin-Made president, Robert Frey, as "the management bible for Cin-Made." REFERENCES: Frey, Robert. 1992. "Empowerment or Else." Harvard Business Review, September-October, 1993, 80-94. ------------------------------------------------------------------- COMPANY: Connor Formed Metal Products CORPORATE ADDRESS: 221 Main Street Suite 920 San Francisco, California 94105 PLANT/BRANCH ADDRESS: SIZE (employees): 250 UNION(S): non-union INDUSTRY: precision metal products (stampings, springs,wire forms, assemblies) SIC CODE: 346 NEAREST METRO AREA/MILES: San Francisco, CA CONGRESSIONAL DISTRICT: CA-06 SECTOR: Private OWNERSHIP: Private, Employee Stock Ownership (42 percent) CONTACTS: Robert Sloss President Connor Formed Metal Products 221 Main Street Suite 920 San Francisco, CA 94105 Michael Quarrey Vice President Human Resources & Quality Connor Formed Metal Products 221 Main Street Suite 920 San Francisco, CA 94105 415/777-5277 DATE: 5/20/94 COMPANY DESCRIPTION: Connor Formed Metal Products is a family-owned manufacturer of metal stampings, springs, wire forms, and assemblies founded in the 1800's. It is headquartered in San Francisco and has manufacturing facilities in Dallas, Los Angeles, Eugene, Oregon, and San Jose, California. Connor has grown from $16 million in sales in 1989 to $28.7 million in 1993. Connor's 1993 sales represent a 21 percent increase over the previous year, and projected sales for 1994 are $35 million. Connor's overseas exports to Asian countries have grown from a base of $0 in 1990, to an expected $5 million in 1994. TRAINING AND CONTINUOUS LEARNING: Connor provides extensive employee training in such areas as communications, problem solving, teams, blueprints and measurement, and statistical process control (SPC). Every Connor employee goes through SPC training, and during the last year and a half, 75 Connor employees have participated in 3 day "people skills" training seminars. Connor has 7 certified facilitators on staff who received training through the Connor program. Connor's goal is for everyone in the company to participate in an average of 1 to 2 hours of training per week. As of 1993, every plant or division has a full-time human resources person/trainer. All plant training programs are scheduled to expand in 1994. In 1993, the Portland facility started "Connor University Northwest." Instructors from Oregon community colleges teach two hour classes per week in shop, math, blueprint reading, measuring instruments, statistical process control, problem solving, team skills, and understanding financial statements. All employees are expected to attend the weekly training sessions. Connor facilities will periodically close shop to show and discuss important films and documentaries. To help its employees understand regularly provided company financial data, Connor sends employees to the "Accounting Game," a nationally recognized program that teaches people how to read income statements and balance sheets. EMPLOYEE PARTICIPATION: Connor is recognized in publications and business school case studies for its computerized Employee Information System that has been referred to as "arguably the most employee-empowering information system in the country." In contrast to Management Information Systems, the Connor system has terminals set up throughout the plants and office areas which provide employees with detailed cost and production data for every product. Employees can enter in comments in a notes section, and based on one employee's suggestion, the system has a unique "hold" feature which enables an employee to stop a job for any reason until a particular problem is addressed by engineering and the shop. Connor employees are also extensively involved in efforts to modify and redesign the system's software. Connor employees participate in cross-functional improvement teams, both within the plants and between the plants, dealing with a variety of issues. In 1993, employees representing all Connor divisions were involved in developing company performance measurements in a variety of areas including quality, delivery, cost and supplier performance, as well as safety, employee morale, and training. Every Connor employee is expected to participate in finding ways to improve scores on these measures. Non-management employees who will be working directly with new hires, participate in the interviewing process and have a say in hiring decisions. ACCESS TO INFORMATION: Connor sends a monthly newsletter to the homes of all its employees that provides information about the company's financial and operating performance, as well as strategic plans. Each issue provides detailed updates of monthly and year-to-date sales, expenses, profits and cash-flow. Connor's employee owners also receive stockholders' annual reports, detailed statements of their personal Connor stock holdings, and reports on the investments and performance of the ESOP fund in general. Within each plant there are various programs designed for the exchange of information, including a "lunch with the boss" program. Connor's President, Bob Sloss, also conducts several employee meetings every year in each division to answer questions, and explain the company's performance and financial plans. ORGANIZATIONAL STRUCTURE: Connor is a fairly traditionally structured manufacturing organization. Teams are used for the introduction of new processes and products, and for generating improvement ideas. EMPLOYMENT SECURITY: As much as 10 percent of Connor employees are temporary. Connor has a policy that no person can serve as a temporary worker for more than six months. After the end of six months, temporary workers are either made permanent or laid off. SUPPORTIVE WORK ENVIRONMENT: Based on responses to employee surveys, Connor worked in 1992 to improve its health insurance program by increasing the number of doctors available, providing employees individual attention to sign up with employees, and developing a system with its insurance provider to expedite payment of claims. Connor's efforts resulted in a significant improvement in employee satisfaction with the health plan. In 1993, Connor's Dallas division began a major safety initiative after an employee accidentally severed the tip of her finger. The plant established an active safety committee, conducted detailed safety audits with speedy corrective action for problems, and created a quarterly cash bonus pay-out based on no accidents. PRODUCT/SERVICE QUALITY: Within each of the four divisions, cross-functional teams are established, generally at the beginning of new projects, for the purpose of designing quality into the manufacturing process. In 1992, inter-divisional teams were established to address improvement in five different areas: inter-plant sales, ISO 9000, engineering, world-class customers, and international. There are four to six members on each team with participants from all the different plants. Names of team members are printed in the company newsletter so that any member can be contacted for information or to offer a suggestion. To promote customer service, production employees regularly meet with customers who visit the plant, and are periodically sent to customer facilities to learn about special needs. COMPENSATION LINKED TO PERFORMANCE: Through an employee stock ownership plan (ESOP), Connor employees own 42 percent of the company. A typical employee, who has been with the plan for the full seven years of its existence, has stock worth $52,000. According to an employee survey, more Connor employees reported that they felt like owners of the company in 1993 than ever before. Connor also has a cash bonus program based on the profit performance at each plant. Bonuses are paid out quarterly and typically amount to one to two weeks worth of additional salary per quarter. WORKER-MANAGEMENT RELATIONS: STRATEGIC INTEGRATION OF BUSINESS: REMARKS: ACCOMPLISHMENTS/AWARDS: In 1991, a survey by the Spring Manufacturers Institute reported that Connor is substantially more profitable than the average for companies its size in the same industry. Between 1985 (when Connor's ESOP was established) and 1993, Connor's stock value has tripled. In 1993, Connor's sales grew by 21 percent, new orders increased 34 percent, and the company's profit on operations rose 21 percent to a record $2.8 million. By involving employees and providing them with information through the company's Employee Information System, employees have been enabled to make many suggestions which have paid off for the company's bottom line. Late jobs have declined from 10 percent to 1 percent of backlog; quality scores from many customers are near perfection; recurring defective product problems have fallen by 10 percent; and sales per employee have increased almost 20 percent. Connor Formed Metal Products was profiled by Inc. magazine in 1992 as one of the best small companies to work for in America. Connor is also profiled as a case study for the Harvard Business School. SERVICE PROVIDERS: As an employee owned company, Connor has depended heavily on the National Center for Employee Ownership, headquartered in San Francisco, California, as an information resource. Connor's "people skills" training programs are developed based on courses provided by Development Dimensions International (DDI) (headquartered in Pittsburgh, PA), and its stress management courses are provided by Focal Point (located in Bolinas, CA). Connor sends employees to the "Accounting Game," a seminar program designed to teach accounting and financial measures to people without a financial background. The Accounting Game is sponsored by Educational Discoveries located in Boulder, Colorado. REFERENCES: Case, John. 1991. "The Knowledge Factory." Inc., October 1991, 54-59. Rosen, Corey. 1994. "Connor Formed Metal Products: Ownership and participation work far better together than either do alone." Target, 10 (1), 9-15. Young, Karen M. 1993. Theory O: Creating an Ownership Style of Management. Oakland, CA: The National Center for Employee Ownership. ------------------------------------------------------------------- COMPANY: Corning, Inc. CORPORATE ADDRESS: Riverfront Park Corning, New York 14831 PLANT/BRANCH ADDRESS: SIZE (employees): 39,200 UNION(S): American Flint Glass Workers Union (AFGWU) INDUSTRY: Manufacturer of fiber optics, plastic, pyrex, aluminum, glass cookware, video glass, and displays SIC CODE: 3229; 3365 NEAREST METRO AREA/MILES: New York, NY (250 miles) CONGRESSIONAL DISTRICT: NY-34 SECTOR: Private OWNERSHIP: Public NYSE - GLW CHIEF EXECUTIVE: James R. Houghton Chairman and CEO Corning, Inc. One Riverfront Plaza Corning, NY 14831 CONTACTS: Gary K. Emmick Vice President Employee Relations Corning Inc. Human Resources Division One Riverfront Plaza, HQ-E1 Corning, NY 14831-0001 (607) 974-8900 Richard Aiken National Representative American Flint Glass Workers Union 523 Powderhouse Road Corning, NY 14830 (607) 962-5569 DATE: 10/18/94 COMPANY DESCRIPTION: Corning is the number one maker of optical fiber in the world, with 50 percent of the U.S. market. In addition, it is one of the leading medical test labs. Corning has also developed a major presence in the communications field as a manufacturer of flat-panel displays, liquid crystal glass, and projection television lenses, in addition to its manufacture of optical fiber. The company may be most recognized for its houseware products, that include such brand names as Pyrex, Revere Ware, Corning Ware, and Corelle. In total, Corning produces more than 60,000 types of products with 45 manufacturing plants in eight different countries, and 62 lab service facilities in 10 countries. Corning had total sales of just over $4 billion in 1993, ranking it 129th in the nation in total sales. TRAINING AND CONTINUOUS LEARNING: Corning has been recognized as one of the best companies for employee training in the United States. In 1992, Corning spent 3.9 percent of its payroll on training, and Corning employees averaged 92 hours, or approximately 2 1/2 weeks, of training time. Shortly after assuming the helm of the corporation in 1983, Corning CEO, Jamie Houghton, mandated that all Corning units would begin building toward a 1992 goal of workers spending 5 percent of their time on training. In 1987, the company began tracking hours spent in training as a percentage of hours worked for each business unit, and by 1992, the company basically reached its goal, falling only a few tenths of a percentage short of the overall 5 percent goal. Some plants where work redesign efforts were more extensive had training levels much higher than 5 percent of work time, while more traditional plants fell short of the 5 percent goal. To respond to the 1983 CEO mandate, which coincided with company cutbacks that resulted in a 33 percent reduction in the training budget, Corning's training and education department pursued a number of strategies to increase the impact of training. These strategies included partnerships with training service providers to provide individual skills training. For example, a partnership with the College Center of the Finger Lakes (CCFL) enabled the company to transfer approximately 60 courses to the Corning, NY-based non-profit institution. Through this partnership, each training department could arrange for individual training using Corning's internal communications systems. By transferring the operations of individual skills-based training to partner organizations, Corning's training and education department placed greater emphasis on the development of high impact training courses to drive fundamental change in the company. One such training program was Partnerships in the Workplace, designed to help workers make the transition from a traditional manufacturing setting to high performance work systems. In addition, the company overhauled its four-year apprentice program, by increasing standards and requiring apprentice candidates to take college-level academic courses. Today, training efforts are totally managed by CCFL for over 250 courses available to Corning employees. The company has also strengthened and decentralized training and development functions in each Corning facility. Since the partnership with the American Flint Glass Workers Union in 1989, the plant training departments have also been staffed by bargaining unit employees. These bargaining unit employees work with individuals and teams at Corning to help them assess their training needs and provide training. At one Corning plant, more than 20 bargaining unit employees work part-time as trainers for other employees. Corning has also outsourced much of its training functions to partner organizations. In the Corning Valley region, the College Center of the Finger Lakes has assumed the role of the major provider of training to Corning employees. EMPLOYEE PARTICIPATION: Employee participation is a key element of Corning's 1989 partnership agreement with the American Flint Glass Workers Union. Two of the six "essential values" of this partnership include "recognition of the rights of workers to participate in decisions that affect their working lives," and "encouragement for individual creativity and participation to maximize the human potential." The organizational structure of the Corning manufacturing plants helps to ensure extensive employee participation and empowerment. Employee autonomy is encouraged through the extensive use of self-directed work teams, and employees have opportunity for participation in decision making through joint labor/management committees that exist in each plant. In almost all Corning facilities, employees play an active role in the hiring process, by participating in employee interviews, and providing input regarding who are the most qualified candidates to hire. ACCESS TO INFORMATION: Full access to information is a key element of Corning's 1989 Partnership with the American Flint Glass Workers Union. Almost every Corning facility has a newspaper which provides detailed facts about business performance. Union leaders and plant management meet on at least a monthly basis, and together plant management and the union leadership make quarterly joint presentations to all plant employees regarding business performance and the status of the partnership. Almost every facility also has a large display board with information about goals that relate to the GOALsharing bonus program such as customer service, quality, process yields and product cost. Union officials report that information sharing between managers and workers is two to three times better than before the 1989 Partnership agreement, and that some factory workers know more about business today than many managers knew five years ago. ORGANIZATIONAL STRUCTURE: Corning officials point out that work redesign efforts have progressed at varying rates in each Corning facility. Facilities such as the Corning's Blacksburg, Virginia facility and the Specialty Cellular Ceramics plant near Corning, NY are leaders in high performance work redesign. Other Corning plants represent a mixture of different types of structures, ranting from traditional methods of work organization to pockets of redesigned team-based work systems. At the high performance plants, flatter layers of management exist. Where there were once 5 traditional management layers in each Corning plant, many of the more progressive Corning facilities have only 2 to 3 layers of management. In most Corning facilities, work is being reorganized around work teams. The structure of the teams varies on a plant-by-plant basis. Some plants have self-directed teams, with team leadership determined by team members, while other plants have team leaders appointed by management. The company has made an effort to restrict the size of the work teams, as they have learned that if teams are allowed to become too large (more than 16-18 workers), they become less effective. EMPLOYMENT SECURITY: While new Corning workers often experience temporary layoffs during their first few years of employment, the number of layoffs has stabilized in recent years. Of the 2,900 company employees in the Corning Valley, only approximately 20 are currently on layoff status at the time of this writing. Corning's 1989 Partnership with the AFGWU states the objective "to use attrition to protect employees from layoffs directly resulting from changes brought about by their involvement in quality or partnership activities, exclusive of layoffs resulting from changes in business." The Partnership agreement also stated that any hourly employee affected by a plant closing "will be given preferential consideration for a new hire vacancy in another AFGWU plant provided the employee meets the same hiring qualifications which that plant applies to other new hires." The partnership document also called for at least six weeks prior notice before layoffs. The company has not been able to achieve the six week goal, but has improved from initial one-week notifications in 1989, to four-week layoff notifications today. Commitment by the union and company to the concept of employment security was exhibited in 1988, when the company announced the possibility of having to close the Corning Fallbrook facility due to its deteriorating profit margin. The union offered to participate in the salvage of the business, and a joint/union management team redesigned the plant's business processes. Together, the joint team, known as the "Navigators," redesigned work processes, reestablished job structures, and reduced the number of product lines, which greatly increased the plant's profit margin and salvaged the workers' jobs. Today, the Fallbrook facility is actively vying for new business. SUPPORTIVE WORK ENVIRONMENT: Corning is recognized as one of the most "family friendly" companies in the United States. In 1994, it was named one of the "100 Best Companies for Working Mothers" by Working Mother magazine, and it has been recognized as one of four U.S. companies with the most comprehensive work/family programs by the Families and Work Institute. Corning pays for more than one third the costs of two child care facilities in Corning, NY, as well as a child care facility in Oneoneta, NY where there is a major Corning manufacturing facility. The company plans to open a fourth child care center this year in Elmira, NY. Corning allows for flexible work schedules, and has a 20-week parental leave policy. In 1993, Corning signed a contract with the American Flint Glass Workers Union creating six part-time positions to specifically help union members deal with work/life balance issues. In 1987, Corning began a major effort to eliminate racial or gender barriers to promotion, after a study indicated that high turnover among women and minorities was costing the company a minimum of $3.5 million per year. Salaried employees are now required to attend race and gender sensitivity training, and the company is extending the training to unionized production workers as well. Annual review ratings for Corning managers take account of efforts to promote the advancement of women and minorities in the company. To make Corning, New York, the hometown of Corning's headquarters and many of its plants, more hospitable to minorities, the company influenced the local cable television service to add Black Entertainment Television (BET) to its local service, and it also assisted the school district in recruiting more minority teachers. As a result of Corning's efforts to promote diversity in its workplace, turnover rates for female employees decreased from 16.2 percent in 1987 to 5.4 percent in 1992. Turnover among African-American employees declined from 15.3 percent in 1987 to 10.2 percent in 1992. In 1992, women accounted for 12.7 percent of managerial positions, and African-Americans accounted for 4.8 percent, an increase from 5 and 2 percent respectively before the company's diversity programs were started in 1987. Corning is ahead of glass industry norms in terms of safety, but the company is not satisfied with its safety performance and is striving for improvement. Through the goal sharing compensation system, and increased employee involvement, safety at Corning has modestly improved during the last five years. All Corning facilities also have joint labor-management safety committees which work to continuously improve safety in the plants. To improve its plant safety, Corning is benchmarking one of its joint-ventures, Dow Corning, the chemical manufacturer, which is recognized as a national safety leader. PRODUCT/SERVICE QUALITY: In October, 1983, Corning began a major focus on total quality when the company's new CEO pointed to quality as a key objective of the corporation. Corning began implementation of its quality process in 1984, with programs focusing on quality awareness and quality skills training for all employees. In 1986, the American Flint Glass Workers Union pushed for full participation in the quality process, which was a major force in the company's total quality efforts. Corning's formal partnership with the AFGWU in 1989, was a major milestone in the push to higher quality, with the creation of high performance work systems and the incorporation of employee involvement for continuous quality improvements. Coinciding with the Partnership in 1989 was a push for "World Class Quality" which set three long-term target goals for the company to be achieved by 1992: 1) for each employee to spend five percent of time worked in training; 2) to reduce errors that prevented the attainment of quality by 90 percent; and 3) to ensure that all new products or services met customer requirements and were equal to or better than the product being replaced on the first day of customer delivery. To improve the quality indicators, the company implemented a a four-part strategy as part of the World Class Quality Program. Each staff and business unit was assessed using the Malcolm Baldrige National Quality Award criteria, and each unit was responsible for developing a strategy for achieving the quality requirements necessary for the success of the business. Also, each unit was responsible for describing the who, what, and when of quality in it annual plan submissions. The key part of the strategy, however, was the establishment of Key Results Indicators (KRI), which are specific performance measures for each business unit designed to measure "customer deliverables," internal processes, and customer satisfaction. There are 261 KRIs reported, 21 (8 percent) of which are based on employee satisfaction. Besides the employee satisfaction measures which are reported in percentages, all other KRI measures are expressed in terms of parts per million. Such delineation encourages continuous improvement efforts. Goal sharing goals for the company's variable pay plan are typically derived from the KRI indicators. Reporting requirements for each KRI call for a one page progress report that states the category and title of measure, a description of what is measured and why, a goal for achievement by 1995, and a current status of the KRI goal. Each one-page report includes a graphical chart diagramming the history, current status, and goal for achievement. Over 100 of the 1995 KRI goals have already been updated as a result of their accomplishment. COMPENSATION LINKED TO PERFORMANCE: A goal sharing (gainsharing) bonus plan was initiated in part of the union-management partnership with the American Flint Glass Workers Union. A joint labor-management committee in each plant sets the formula goals, or criteria for payout, and this decision is forwarded to a joint committee of corporate and union national staff for approval. Bonus or gainsharing formulas in each plant typically encompass criteria of customer satisfaction, on-time deliveries, percentage of defects, and safety. Bonus payouts occur every February, based on previous year performance. Seventy-five percent of the bonus payout is based on plant goal attainment, while 25 percent is based on overall company results. Maximum allowed bonus payouts as a percentage of pay have climbed from 2.5 percent in 1991, and 7.5 percent in 1992, to 10 percent today as part of a "ramp-up" process in the development of the variable pay system. There are also two plans at Corning through which employees are able to purchase Corning stock. One is an employee stock purchase plan, through which employees can purchase Corning stock at 85 percent of market price, either at the lower of the beginning or ending prices each quarter. Corning's investment or 401K plan provides a 2.5 percent company match for employee investments of 5 percent earnings. Through these two types of stock purchasing plans, employee ownership of Corning has grown to almost 5 percent in recent years. Many Corning plants also have a pay-for-knowledge system, through which a percentage of employee pay is determined by skills attained. WORKER-MANAGEMENT RELATIONS: The partnership between Corning and the American Flint Glass Workers Union is recognized as a national labor relations model. The partnership, spelled out in the January, 1989 joint company/union publication, A Partnership in the Workplace, formally initiated a joint union/management effort to begin development of high performance work systems in each Corning facility. The cooperative working relationship between the union and management predates the formal partnership by many years, but previous efforts were primarily limited to conditions of work negotiated as part of traditional labor agreements. Poor company performance and significant loss of membership during the 1980s, however, caused both the company and union to realize the need for a formal partnership focused on work redesign. Between 1972 and 1989, 40 Corning facilities were closed or sold, and AFGWU membership declined 35 percent in the 1980s alone. These developments spurred the 1989 Partnership agreement, spelled out in a joint union/management document, often referred to as the "gray book." The objectives stated for the partnership are to "improve the competitive advantage of Corning's manufacturing plants as well as the financial and job security of the employees." The Partnership agreement called for six essential values: a) recognition of the rights of workers to participate in decisions that affect their working lives; b) acknowledgement of the worth of all individuals and their right to be treated with dignity and respect; c) recognition that workers are a valuable resource, in mind as well as body and that such resources should be preserved; d) an atmosphere within the plants of trust and openness in a work environment free of arbitrary and authoritarian attitudes; e) encouragement for individual creativity and participation to maximize the human potential; and f) provision of avenues for individual growth and development within the workplace and the Company. To implement these essential values, the partnership agreement called for the establishment of joint labor/management steering committees in each plant, and stated formal objectives to promote employment security. As a result of the partnership, employee grievances have declined substantially and the union is a proactive partner in helping the company achieve its business goals. Union leaders, for instance, now play an important role in preventing disciplinary problems before they get out of hand. When management becomes aware of a bargaining unit employee that is beginning to have problems, they quickly inform the union leadership. The union leadership then discusses the situation with the employee, and when necessary, works directly with employees to prevent future problems. STRATEGIC INTEGRATION OF BUSINESS: Partnership, like that with the American Flint Glass Workers Union, is a major corporate strategy for Corning. Over 50 percent of the company's profits come from 23 different joint ventures. REMARKS: Corning receives so many requests from other companies desiring information about Corning's work practices, that it schedules four days per year when representatives of other companies can visit Corning. ACCOMPLISHMENTS/AWARDS: While Corning has not been able to tease out the effect of the partnership agreement or high-performance work design on operational performance, company officials point to data which indicate that one of the most progressive high-performance Corning plants, in Blacksburg, VA, significantly out performs other similar Corning facilities. Another Corning plant in Greenville, OH has been able to achieve clear improvements in yields through a combination of labor/management partnership, work redesign, and a reduction of manufacturing complexity. Corning has been named one of "The 100 Best Companies to Work for in America" as well as one of the "100 Best Companies for Working Mothers." In 1994, Corning ranked 13th on the list of "America's Most Admired Corporations" by Fortune magazine. SERVICE PROVIDERS: In the Corning Valley region of New York, which is the major employment center for Corning, Inc., most individual skills-based training has been outsourced to the College Center of the Finger Lakes (CCFL), a not-for-profit organization established in the 1960's to make college-level courses available to Corning area residents. REFERENCES: A Partnership in the Workplace. 1989. Corning, Inc. and American Flint Glass Workers Union. Galen, Michelle. 1993. "Work & Family." Business Week, June 28, 1993, 80-88. Garrity, Norman E. "People, Partnership, and Productivity." PI Quality, Fourth Quarter, 1991, 15-19. Hammonds, Kenneth H. 1991. "Corning's Class Act." Business Week, May 13, 1991, 68-72. Henkoff, Ronald. 1993. "Companies that Train Best." Fortune, March 22, 1993, 62-75. Lang, Sarah. 1991. "Corning's Blueprint for Training in the 90s." Training, July 1991, 33-36. Levering, Robert, & Moskowitz, Milton. 1993. The 100 Best Companies to Work for in America. New York: Doubleday Currency. Luther, David B. 1993. "Advanced TQM: Measurements, Missteps, and Progress Through Key Result Indicators at Corning." National Productivity Review, Winter 1992/1993, 23-36. Moskowitz, Milton, & Townsend, Carol. 1994. "The 100 Best Companies for Working Mothers." Working Mother, October, 1994, 21-68 ------------------------------------------------------------------- COMPANY: Davis Vision, Inc. CORPORATE ADDRESS: 159 Express Street Plainview, New York 11803 PLANT/BRANCH ADDRESS: SIZE (employees): 250 UNION(S): United Optical Workers Local 408, IUE INDUSTRY: Managed vision care provider SIC CODE: 3851 NEAREST METRO AREA/MILES: Manhattan (30 miles) CONGRESSIONAL DISTRICT: NY-04 SECTOR: P OWNERSHIP: Family-owned CHIEF EXECUTIVE OFFICER: Lawrence Davis Chairman and CEO Davis Vision, Inc. 159 Express Street Plainview, NY 11803 CONTACTS: Michael O'Connor General and Total Quality Manager Davis Vision, Inc. 159 Express Street Plainview, NY 11803 (516) 932-9500 Hugo Jimenez Shop Steward United Optical Workers, Local 408 Davis Vision, Inc. 159 Express Street Plainview, NY 11803 (516) 932-9500 DATE: 02/07/95 COMPANY DESCRIPTION: Davis Vision, Inc. is the nation's leading managed vision care provider. Davis Vision's 250 associates provide services and products nationally, through a network of nearly 4,000 participating doctors. Davis Vision services municipalities, union trust funds, insurance companies, corporations, and managed health care providers. The company covers 4 million people in 48 states and the District of Columbia. The corporate headquarters and central laboratory facility for Davis Vision are located in Plainview, New York, with an advanced claims processing center in Schenectady, New York. Davis Optical, which is a subsidiary of Davis Vision, provides vision care services through six retail locations on Long Island. As a component to comprehensive health care benefit packages, the Davis Vision program encompasses three fundamental elements: eye examination, fabrication, and administration. Davis Vision contracts with private ophthalmologists and optometrists to provide examinations and dispense eyeglasses and contact lenses at discounted fees. These eye care specialists are selected and monitored through a Professional Credentialing Committee which reviews licensure; special certification; equipment; malpractice history and coverage; appointment scheduling; and educational and professional background. At the central laboratory in Plainview, Davis Vision processes in excess of 9,000 custom pairs of eyeglasses per week. The fabrication process includes order entry, materials management, lens surfacing and finishing, and assembly and shipping with integrated process control points. The last element of the Davis Vision program is advanced claims processing services through its administrative center in Schenectady. Davis Vision has developed its own trademarked software, CompuVisionTM, which can adapt to a wide range of customer needs in plan design and reporting requirements. CompuVisionTM and a number of supporting internal and external systems including Digital Vision, Inc. (an optical laboratory software package) allow access to a myriad of data elements concerned with program administration, claims adjudication, provider relations, customer satisfaction, costing, order entry, material control, fabrication, job tracking, and shipping. TRAINING AND CONTINUOUS LEARNING: All associates receive eight days of extensive company orientation and cross-training where they are introduced to every department in the plant. The purpose of the orientation is to expose the associates to Davis Vision's products and services; operations; procedures and protocols; and corporate culture and philosophy. Throughout the orientation process and for the first three months of association, each new associate is assigned a mentor to facilitate the assimilation process. After the orientation phase of the program, associates are given extensive on-the-job training in their respective departments. In addition, considerable time is devoted to quality issues and cross-training by having associates work in each directly-related business unit. Customer-contact associates receive 38 percent more external customer training than their peers, because of an added emphasis on customer delight. Additional training programs include phone skills, customer relations, customer advocacy, and challenge solving. Davis Vision also provides its associates with what it calls "Quality-of Life" training. A variety of internal classes are offered to associates to help them improve in areas applicable outside of their work environment. Some examples of courses offered include: sign language, defensive driving, computer skills, CPR, and many others. All of these courses are offered free of cost to Davis Vision associates and some have even been granted overtime compensation for attending courses on personal time. "The Day in the Life" program at Davis Vision allows associates to spend an entire day learning about the functions and responsibilities of any job in the company, including management positions. Once an associate expresses an interest in becoming familiar with a specific job, coordination is done to facilitate the request. Davis Vision offers tuition reimbursement to any associate who enrolls in a business-related course outside of the company. If an associate receives a grade of "B+" or better, Davis Vision will pay for not only the tuition, but also the course books and materials. Davis Vision associates can utilize local colleges and educational associations through the tuition reimbursement program. Sales associates receive effectiveness training through the Dale Carnegie Institute or through graduate or undergraduate universities. Following the completion of any training, associates are required to rate the value of the course. A second evaluation is conducted after ninety days to determine its effectiveness in day-to-day operation. Training feedback forms are reviewed by supervisors and unit managers, who can then recommend program revision when appropriate. All associates at Davis Vision have the opportunity to attend professional, educational, and trade conferences which they feel will provide information that facilitates process improvement. Davis Vision sponsors conference participation by providing time off, reimbursement of travel expenses, and membership fees for attendance, with the understanding that the associates will present a written summary of the event to share with the entire organization. In 1992, 100 percent of Davis Vision associates received training in new associate orientation and basic quality tools, 39 percent received training in specialized skills, and 13 percent received training in advanced quality skills. The average number of hours that associates spent participating in training programs was 38. ASSOCIATE PARTICIPATION: Davis Vision's associates were directly involved with the design of their corporate headquarters, which encompasses fabrication, customer service, inventory, quality assurance, communications, client services, and executive and support functions. Each department was allowed to create their own floor plan following the allocation of space. Additionally, representatives from each department participated in planning the general layout of the building to facilitate a quality work environment, associate comfort, and efficient use. The Davis Vision building encourages high executive profile and closer interaction between associates and senior executives. All associates and executives share a common lunch room, which promotes informal communication and the celebration of company achievements. The Floating Associate Program enables associates to participate in departmental team meetings without being formally invited. In addition, associates are encouraged to take the initiative in responding to customer service issues, without fear of penalty. This process has allowed over 90 percent of all frame and lens returns to be resolved at the departmental level. Key indicators are used to evaluate the level of associate empowerment. Associate surveys are utilized as well as measures of turnover, team involvement, number of associate suggestions, average length of association, and training participation. In 1992, Davis Vision reported 100 percent associate involvement in 188 departmental quality meetings and 17 quality improvement teams. Additionally, 442 associate suggestions were submitted with an implementation rate of 39 percent. ACCESS TO INFORMATION: Davis Vision publishes its own company newsletter, The Spectacle, which provides information on business developments that involve the organization, survey results, and special recognition to company and individual accomplishments. Frequent interaction between senior level executives and all associates provides the opportunity for information sharing in many areas. Senior executives make themselves available by conducting a daily walk-through of production and support staff departments. Through cross-functional teams, associates are provided with operating information and are actively involved in the development of strategic quality planning. In addition, departmental meetings involving managers and associates are held to disseminate information in areas related to quarterly performance and production costs. ORGANIZATIONAL STRUCTURE: Davis Vision's Quality Team Process coordinates the efforts of senior executives with those of other associates. The Senior Executive Committee (SEC) functions as the equivalent of a Quality Steering Committee and is comprised of top-level executives. The primary functions of the SEC are strategic planning and continuous quality improvement. The Quality Management Team (QMT) includes SEC members and operational managers. In addition, the QMT utilizes ad hoc members, such as consultants and suppliers, when necessary. The QMT meets every month to review its primary responsibilities, which are: quality assessment, quality related problem solving, and quality strategic planning. Two additional cross-functional teams have been created to decentralize the decision-making process. The Management Quality Team (MQT) and the Supervisory Quality Team (SQT) are comprised of executives, managers, supervisors, and associates. The MQT and SQT were designed specifically to provide associates at all levels legitimate input into decision-making processes. The MQT and SQT meet monthly with managers and supervisors to review performance and achievement of quality goals. Following the review and reassessment, additional resources may be allocated or adjustments in standards and goals may be made. The status regarding quality improvements are reported to the QMT, both informally (daily) and formally (monthly), at which time strategic goals are created and sent to the SEC for formalization. No strategic goal is implemented until there is consensus by all participating teams on their appropriateness and potential effects. The value that Davis Vision places on flattened reporting levels can be seen in many ways. Every senior executive makes a daily walk-through of production and staff departments to follow up on the attainment of quality goals and to interact with associates regarding areas of concern. During the course of the year Richard Davis, Davis Vision's President and COO, conducts a one- on-one meeting with every associate, either in person or by telephone. This practice, called "The President's Circle," provides associates with the opportunity to make suggestions as well as highlight some of their personal accomplishments. In all departments, managers are purposely located at central points and operate openly, without offices. It is important to know that the function of the department manager is to manage the framework within which the department operates, and not the associates in the department. The organizational structure at Davis Vision allows for the formation of partnerships with its vendors and suppliers to ensure compliance with the standards of the American National Standards Institute (ANSI), Food and Drug Administration (FDA) requirements and the achievement of internal and external benchmark goals. Davis Vision has entered into cooperative programs with twenty eight suppliers, representing 100 percent of the major companies from whom materials and services are purchased. Additionally, a number of these companies have agreed to participate as ad hoc members of the Quality Management Team. EMPLOYMENT SECURITY: Davis Vision has never had a layoff in 28 years. A variety of different measures have been implemented to eliminate the threat of downsizing. In some instances, Associates have agreed to cut their number of hours from 40 to 35 per week so that all jobs could be preserved. Associates are also cross-trained on every job in the plant, so that when restructuring is necessary, they can be transferred into other departments. In the past, Davis Vision has moved associates into areas that it had previously been sub-contracting to outside sources. This not only helped maintain jobs, but it also eliminated the cost of sub-contracting certain functions. Normal attrition rates are also relied on to maintain necessary associate levels. SUPPORTIVE WORK ENVIRONMENT: Davis Vision custom-designed its fabricating and administrative facility to provide a work environment with the inclusion of such factors as efficiency, health, safety, associate satisfaction, and ergonomics. Associate involvement with the design process included lighting, furniture, work stations, color schemes, and work flow patterns. Materials, sample chairs, fabrics, stations, and lights were evaluated with substantial associate input. Davis Vision maintains a very family-friendly work environment. Time cards have been done away with, and flex-time programs have eliminated the need for rigid scheduling of work shifts. All laboratory associates are granted unlimited sick leave and are allowed to schedule their vacation time. Associates also receive an extra day off for their birthdays. Associates are encouraged to provide continuous feedback on programs which contribute to the improvement of a supportive environment at Davis Vision. Programs which have been implemented following suggestions by associates include: family and parental leave, educational leave, corporate supported health club membership, CPR/First Aid Training (bilingual), library resources, and corporate sponsored daycare. Work at home programs have also been developed to provide on-line terminals for associates who are unable to return to work following pregnancy or illness. These associates are able to respond to customer service calls and inquiries, claims processing, and clerical functions. Programs have been implemented to facilitate awareness of cultural issues and obstacles facing physically-challenged associates. Courses offered have included sign-language and English and Spanish as second languages. Additionally, managers and supervisors are encouraged to learn to speak Spanish and French to support communication efforts. Davis Vision has established partnerships with a number of organizations for the hiring and training of the physically challenged, including: The Rochester Institute of Technology for the Hearing Impaired, Lutheran Friends of the Deaf, and the New York State Department of Labor, Job Service and Training Division. Through meetings with managers and senior executives and the use of the corporate-wide open door policy, associates experiencing personal or family problems may seek assistance. When internal personnel are unable to provide the necessary support, financial aid is available as is an associate program for professional help. This includes payment for individual counseling, alcohol or substance abuse programs, and family counseling. The Safety Committee meets every month to ensure that programs are effectively implemented. Prevention-based programs such as instruction in lifting techniques, materials handling, and proper use of tools; updated and modern equipment; and careful documentation were created to promote safety issues. Davis Vision has experienced only one minor work-related injury in the last ten years. PRODUCT/SERVICE QUALITY: As early as 1977, Davis Vision has invested in various forms of Total Quality Management and continuous quality improvement. The Senior Executive Committee (SEC), which is the equivalent of a Quality Steering Committee, was implemented in the early years. The SEC was comprised of executive personnel who addressed quality issues that affected all levels of the organization. This team provided the impetus for the development of the Quality Management Team (QMT) which includes SEC members plus operational managers. In order to ensure the quality of the services provided through their network of eye care professionals, Davis Vision has implemented stringent requirements. The Professional Standards and Practices Committee (PSPC), which reports to the QMT, meets semi-annually to determine clinical standards of practice, evaluate conformance with existing protocols, and set policy. A subset of the PSPC serves as the Professional Credentialing Committee (PCC) which reviews all provider applications for compliance with pre-determined objective criteria, including licensure, certification, malpractice history, and coverage. In addition to an initial credentialing process, ongoing quality assurance procedures include on-site visits, daily contacts with office staff, and bi-directional communication and feedback. Special measures are also employed to assess product quality. State licensed opticians from the State College of Optometry in New York perform weekly on-site quality audits of all fabrication processes including inventory, work in progress, and final products. Custom printing of eyeglass cases and warranties with the "sponsor" logo ensure they receive credit for providing the benefit. Davis Vision offers a one year unconditional warranty on the quality of all its products. In the fabrication process, preventive quality assurance measurements confirm the accuracy of the machine controlled parameters. Lens edgers are preventatively maintained to preclude defects. Grinding wheels are regularly replaced or redressed prior to noticeable defects being produced. Selected measures are also conducted to assure process control and include daily calibration of all fabrication equipment; frame tracers, lensometers, chemical hardeners, lens clocks, calipers, and auto lens analyzers. In addition to the preventive maintenance schedule for each major piece of equipment, scheduled on-site visits are made by vendor service technicians who provide any critical reconditioning or re-calibration. These vendors also offer design suggestions in work flow processing and fabrication techniques. Every manager at Davis Vision is required to benchmark at least two companies every six months. Associates are also involved in the process. Benchmarking teams have traveled both nationally and internationally resulting in the integration world-class technology into its manufacturing processes. Davis Vision has utilized many different methods to benchmark, including surveys; collaboration at trade groups and associations; clearinghouse consortiums; and one-on-one discussions with specific organizations which have similar business practices. In order to offer maximum customer satisfaction, Davis Vision has numerous services. Examples include a 24 hour toll-free access for all plan users to request information, register complaints, or report difficulty with receiving benefits; an unconditional warranty against breakage of plain eyeglasses; the issuance of replacement service vouchers when a patient records dissatisfaction with the examination procedure or outcome given by a Davis Vision provider; and overnight shipping to the provider or to the patient's home to satisfy timeliness issues. These and other processes and special benefits are extended to clients throughout the provider, fabrication, and claims processing services. Retention rates for client groups have remained at 100 percent, and Davis Vision has never lost a client due to dissatisfaction of quality or service. Davis Vision regularly assesses quality at the supplier level using measures such as delivery time, percentage of back orders, and reject rates. From 1991 to 1992, the overall reject rate for frame and stock lens suppliers has remained at 1-2 percent or below. On-time performance for major suppliers has increased through supplier partnerships. Approximately 98.5 percent of all orders were filled from stock in 1992 and only 1 out of 140 orders was delayed because of critical shortages (back orders). In 1992, Davis Vision established the Quality Performance Award, which recognizes outstanding suppliers determined by a supplier rating system. The award winner receives a plaque, recognition through trade publications and if possible, increased volume business. COMPENSATION LINKED TO PERFORMANCE: Davis Vision utilizes an aggressive salary structure, comprehensive health care benefits, a profit-sharing 401k retirement plan, and performance benefits. Compensation is tied to performance on an individual and company- wide basis. During the semi-annual review process, every associate evaluates themselves in a number of key categories. Salary increases and bonuses are awarded based on the results of the review. In 1991, 100 percent of bargaining unit members received either a bonus or salary increase in excess of contracted amounts. Many departments at Davis Vision have implemented work teams where minimum job assignments are determined for each work day. Once a team accomplishes all of its responsibilities, team members are allowed to go home. Regardless of the actual length of their work day, associates receive credit for eight hours. But, teams can take on additional assignments and earn bonus pay. Once a team is satisfied with the number of extra jobs that it completes, the additional wages are divided evenly among all of the team members. The COTS program empowers managers and supervisors to make "Cash on the Spot" awards of $10 to $100 for exceptional performance. Alternatively, tickets to sporting events and cultural events are awarded. In 1992, 135 COTS awards totaling $2,750 were given out to associates. In 1994, 262 COTS awards were presented reaching a total value of $6,550. The Associate of the Month award is determined by associates who rate their peers on the following criteria: top performance, innovative ideas, most improvement, special effort to provide customer satisfaction, and education and training accomplishments. The award includes an oversize pair of eyeglasses which is hung over the associate's work space for associate and visitor recognition; a monetary award; preferential parking in a designated "Associate of the Month" spot; posting of the associate's name on the Associate of the Month board, and a feature article with picture in The Spectacle. Every associate at Davis Vision is provided with business cards, and the company has developed an innovative way to tie this in with its compensation system. Associates are encouraged to give their business cards to anyone who is interested in purchasing a pair of eyeglasses or related products. If this person takes the business card to any of Davis Vision's six retail stores, he or she will receive a 20 percent discount, and the associate is awarded a monetary bonus determined by the amount of the purchase. Reward programs are subject to bi-directional communication and open discussion. Associates are asked to make recommendations on improving salaries, bonuses, performance measures, and recognition programs through an associate survey. WORKER-MANAGEMENT RELATIONS: Davis Vision maintains a close relationship with all of its associates. In its corporate history, Davis Vision has never suffered a strike or work stoppage, and has not had a grievance filed in the last 11 years. All contracts have been settled within specified time limits and have included annual salary increases. As a testimony to their positive relationship, in 1990 Davis Vision CEO Lawrence Davis was selected to serve as co- chairman for the Pension and Health Fund of the United Optical Workers, Local #408, IUE. Davis Vision's labor-management relationship has been further enhanced by having labor representatives involved in quality value setting and monitoring activities. The shop steward and business agent also serve as ad hoc members of the Quality Management Team. STRATEGIC INTEGRATION OF BUSINESS: Cross-functional teams facilitate associate involvement in the development of Davis Vision's strategic plans. Utilizing a feedback loop, the Senior Executive Committee and the Quality Management Team can work in coordination with the efforts of the Management Quality Teams and Supervisory Quality Teams to ensure that human resources issues are addressed in the creation process of company goals. Planning is conducted on a departmental, unit, and company-wide basis and ultimately consolidated into an overall business plan, which is reviewed by the Senior Executive Committee and presented for the Chairman's approval at the Annual Planning Conference. Once the overall business plan is approved, it is reviewed by affected units and implementation plans are initiated. The utilization of innovative technology helps Davis Vision maintain its quality standards. A prime example of this is its proprietary software CompuVisionTM, which combines a data gathering module with claims processing and fabrication functions. CompuVisionTM contains numerous algorithms to verify the accuracy of associate data entry and prevent errors from propagating through any part of the system. REMARKS: Davis Vision is the official eyecare provider to the New York Islanders hockey team and the New York Mets baseball team. Davis Vision is actively involved in community and charitable activities. The company has sponsored events such as softball tournaments, participation in health fairs, and children's activities through local school districts. Also, Davis Vision provides free eyecare for residents of the Ronald McDonald House and their families. ACCOMPLISHMENTS/AWARDS: In 1993, Davis Vision was presented with the New York State Governor's Excelsior "Quality at Work" Award, which is modeled after the Malcolm Baldrige National Quality Award. Although the Excelsior Award may be granted to two organizations in three different sectors, Davis Vision was the only winner among 1993's 18 applicants. Davis Vision's rating is the highest mark since the Excelsior Award was established. Davis Vision has a 99.8 percent retention rate among panel doctors, which is 100 percent after being adjusted for death and retirement. SERVICE PROVIDERS: The quality program at Davis Vision was implemented primarily through internal support and resources, but the company does make use of outside service providers to maintain their standards and commitment to quality. State licensed opticians from the State College of Optometry in New York perform weekly on-site quality audits of all fabrication processes. Davis Vision has also utilized the services of the Rochester Institute of Technology for the Hearing Impaired, Lutheran Friends of the Deaf, and the New York State Department of Labor, Job Service and Training Division to facilitate its diversity programs. REFERENCES: Blair, Adam. 1993. "Davis Vision Builds Business on Product Savvy." Vision Monday (August 23). Henry, Jacqueline. 1993. "Davis Vision Wins NY Excelsior Award." The Economic Times of Long Island (May 28). ------------------------------------------------------------------- COMPANY: Eaton Corporation Engine Components Organization CORPORATE ADDRESS: 1111 Superior Avenue Cleveland, Ohio 44114 PLANT/BRANCH ADDRESS: 700 Luicks Lane Belmond, Iowa 50421 SIZE (employees): 600 UNION(S): non-union INDUSTRY: Engine valves/lifters SIC CODE: 3174 NEAREST METRO AREA/MILES: Mason City, Iowa (45 miles) CONGRESSIONAL DISTRICT: IA-05 SECTOR: Private OWNERSHIP: Publicly-owned corporation. Stock symbol - ETN. Listed on New York, Boston, Pacific and Philadelphia Stock Exchanges. CONTACTS Steven Schrage Team Facilitator Eaton Corporation 700 Luicks Lane Belmond, IA 50421 (515) 444-3535 ext. 239 DATE: 08/01/94 COMPANY DESCRIPTION: Company was originally formed in New Jersey in 1920 and manufactured heavy-duty truck axles. In 1923, the company moved to Cleveland in order to be closer to the auto manufacturers and began diversifying. Through acquisitions and diversification, the company now also manufactures relays and industrial controls, motor controls, counters and devices, and computer accessories. In 1993, the company had total sales of $3.8 billion and employed 38,000. Worldwide, Eaton has 154 plants. Eaton Corporation, Belmond, Iowa, opened in April, 1981, with a salaried workforce with no bells, whistles or time cards to punch. The Belmond plant manufactures engine valves and lifters for a variety of customers and applications. Most sales come from heavy-duty engine manufacturers--those making engines for trucks, heavy equipment, aircraft, power generation, and other applications. TRAINING AND CONTINUOUS LEARNING: New employees receive 40 hours of classroom training before they are assigned to a work area. Items covered in this training include: blue print reading, hazardous material communications, lockout-tagout training, safety training, on-the-job observation, gage training, valve manufacturing and process explanation, introduction to quality and SPC. When new employees arrive in their assigned department, they receive department orientation which consists of: machine safety training, machine operation training, and hazardous material communication Part 2 training. The employee goes through a competency check list to assure complete understanding of his/her assigned process. Continuous learning programs are offered in partnership with local technical schools and colleges. Classes are held at the plant with instructors coming in to teach or the employees attend class on-campus. Various programs are offered, such as emergency medical technician, first responder, bachelors degrees, and masters degrees, to name a few. To encourage advanced education, the company has an education reimbursement program for all active employees. EMPLOYEE PARTICIPATION: Quality circles were organized in the early 1980s with department supervisors leading the circles. These circles had limited success as they were management-led and there wasn't any employee "ownership" of the problems addressed. To solve this problem, the circles evolved into Quality Improvement Teams. A Steering Committee was formed by employees who provided guidance and information to the teams. The teams were led by supervisors, and in some cases employees, who were trained in leadership functions such as leading teams and conducting successful meetings. Projects that teams worked on were quality related in which there was some degree of success. In 1986, the Quality Steering Committee changed its name to Continuous Improvement Team (CIT). This reflected items the teams were addressing. Not only quality items were being addressed, but also various subjects such as: the teams' work areas, product flow, and safety. Additional training was provided for the CIT's, such Zenger-Miller problem solving tools and techniques, Ford Motor Company team-oriented problem solving, and participating in successful meetings. Eaton employees now serve on a multitude of committees, such as the Wellness Committee, Safety Committee, Volunteer Fire Brigade, Gainsharing Committee, Cafeteria Committee, and Waste Reduction Committee. In May, 1990, a pilot self-managed work team process was started in a newly-formed department. This process was facilitated slowly, as Eaton realized early in the process that there was no blue print to follow, just suggestions. Teams receive communication and administrative training before they make decisions affecting the department. A self-managed steering committee was formed to provide guidance and establish a general structure or guidelines for the production teams to follow. The committee consists of the plant manager, product line managers, the human resource manager, team facilitator, and an equal number of team members and facilitators. As of June 1994, 49 percent of production employees were in the self-managed process, with a goal of 100 percent by year's end. ACCESS TO INFORMATION: A daily cost history report is distributed to all facilitators (supervisors) or teams. This report details expenses generated by the department the previous day, month-to-date totals, year- to-date totals, and previous year's expenses to compare against. Team, members and facilitators attend bi-weekly facilitator meetings in which plant performance, product quality, and customer delivery (internal and external) are discussed. The items discussed are covered in department mini-meetings or team pre-shift meetings. The plant manager holds bi-monthly round-table meetings with small groups of team members. In these meetings, items such as plant performance, plant profitability, team members' concerns, and the cost of total quality are discussed. In addition all- employee meetings are held every quarter, with everyone in the plant attending. ORGANIZATIONAL STRUCTURE: As the Eaton-Belmond plant evolves into self-managed work teams, the plant's organizational structure is changing from a pyramid- type structure to an inverted pyramid structure with some layers removed. The plant has changed from traditional management to a more streamlined system. The plant superintendent and general foreman positions have been eliminated. The plant has been divided into production areas, with one being high volume lines and the other low volume lines. Each area has support persons assigned to them (maintenance, engineering,m quality, etc.). The teams have a facilitator (supervisor) assigned to them. The facilitator may have more than one team. The facilitator and team report to the product line manager who, in turn, reports to the plant manager. Teams are organized under four "circles": quality, safety, communication, and production. Team members rotate through the circles and the tasks assigned to them every two to four weeks, depending on the team. As the teams are signed off on tasks and complete the required evaluation/verification procedure, they are authorized to make additional administrative, process, and quality decisions. EMPLOYMENT SECURITY: SUPPORTIVE WORK ENVIRONMENT: PRODUCT/SERVICE QUALITY: Eaton-Belmond started the SPC process in the middle-1980's to ensure a quality product for its customers. With the use of the SPC process, continuous improvement teams, self-managed teams, and close relationships with customers, Eaton has been able to capture 80-85 percent of the heavy duty market. COMPENSATION LINKED TO PERFORMANCE: Several programs are available for employees to invest in. With the Share Purchase Program, employees receive up to $1 in for each $1 invested in matching funds per quarter. There are also several mutual funds to invest in. A program called A.S.A.P. (Avenues for Suggestions and Proposals) awards the suggestor points for ideas, after they have been implemented, on improving process flow, saving supplies, improving cycle times, and improving quality, etc. The Eaton gainsharing program rewards Belmond employees on a percentage basis of their total earnings for staying below a certain, pre-set percentage of the costs which they are able to control. When a self-managed work team achieves the criteria for attaining a new level, the team is awarded an increase in pay. This is over and above the A.S.A.P. and gainsharing programs, and any general increase. WORKER-MANAGEMENT RELATIONS: N/A STRATEGIC INTEGRATION OF BUSINESS: The Eaton Corporation philosophy emphasizes "Excellence through People" to integrate business practices. The Gainsharing Committee is made up of employees across all three shifts. They make the decisions as to how payouts will be disbursed: either quarterly or semi-annually. The Cafeteria Committee decides which vendor will be hired to serve meals at the plant on a round-the-clock basis. Self-managed work teams work with support groups on work are improvements. Team members participate in new or rebuilt equipment run-offs and have the last say as to whether a piece of equipment is accepted or rejected. Interview teams make the final decision on the hiring of new employee. Team members meet with customers and accompany them on plant tours. After proper training, team members make quality decisions. REMARKS: ACCOMPLISHMENTS/AWARDS: In 1994, Eaton-Belmond was one of four (out of 154) plant worldwide selected to receive the Eaton Quality Award. The Malcolm Baldrige Award criteria is used to determine which plants receive this award. Numerous customers have recognized Eaton- Belmond for its quality and service: Ford Motor Company Certified supplier Textron LycomingCertified supplier Caterpillar, Inc.Certified supplier Cummins EngineCertified supplier Detroit DieselCertified supplier series 60 Chrysler Corp.Pentastar Award No single program is responsible for the strides made at Eaton- Belmond. Eaton notes that it takes many individual's ideas joined together to work as a team, no matter what the project is. Some accomplishments to date include: days-on-hand inventory has dropped from 54 days in 1992 to 25 days as of June, 1994; one production department has delivered over two million defect free parts to a customer 100 percent on time; a CIT (Continuous Improvement Team) saved over $40,000 in parts per year by using a different part; another CIT saved $12,500 per year by eliminating a process. SERVICE PROVIDERS: REFERENCES: ------------------------------------------------------------------- COMPANY: Fastener Industries CORPORATE ADDRESS: 1 Berea Commons #208 Berea, Ohio 44017 PLANT/BRANCH ADDRESS: SIZE (employees): 180 UNION(S): non-union INDUSTRY: weld fasteners; metal working industry SIC CODE: 3452 NEAREST METRO AREA/MILES: Cleveland, Ohio (10 miles) CONGRESSIONAL DISTRICT: OH-20 SECTOR: private OWNERSHIP: Employee Stock Ownership Plan CONTACTS: Richard Biernacki Chief Executive Officer 1 Berea Commons Suite 208 Berea, OH 44017 (216) 243-0200 DATE: 10/28/94 COMPANY DESCRIPTION: Fastener Industries was founded in 1905 as the Ohio Nut and Bolt Company. The company, which manufactures weld fasteners and replacement parts, was purchased in 1979 by its employees. It is now one of the oldest ESOP's in Ohio. In 1987 Fastener acquired the subsidiary H. Joseph Industries, which immediately adopted the ESOP plan of the Fastener employees. In 1993, the company had sales of $22 million with $25 million in sales expected in 1994. TRAINING AND CONTINUOUS LEARNING: There is no formal training program at Fastener Industries. Training is done on-the-job and is tailored by the plant manager with specific parameters depending on the job. Many of the employees participate in off-site training to learn more about employee ownership programs. The company also encourages outside educational programs for its employees. Many enroll in approved business or trade courses which are paid for by the company. EMPLOYEE PARTICIPATION: As an ESOP company, Fastener has a five member employee committee that administers the ESOP program. The highlight of employee participation at Fastener is the election of board members. The five members who make up the corporate board of directors are elected by the employee owners every other year. These positions are contested, with as many as eighteen people vying for seats. An outside director has never been elected although it is possible. After election, the board holds an organizational meeting to name the corporate officers who are responsible for managing the company. ACCESS TO INFORMATION: At the annual meeting, the presidential report and year end financial report are given by CEO Richard Biernacki. Each employee receives a certified financial statement that is identical to the statement received by the board of directors. Following these reports is a question and answer session that allows employees to voice any questions or concerns. Also, quarterly financial reports are distributed and monthly sales are posted. Perhaps the most beneficial plan that Fastener has implemented are the semi-annual roundtable discussions. These include twelve to fifteen employee-owners from different departments who have the opportunity to ask any questions or present any problems to CEO Richard Biernacki. These discussions have no agenda, rather the agenda belongs to the employees. Department managers also hold informal feedback and problem solving-type meetings periodically. These often lead to one-on-one discussions between the President and managers or employees. Both the employees and managers have found that this informal system works as a useful feedback mechanism. ORGANIZATIONAL STRUCTURE: The organizational structure of Fastener Industries is relatively flat. The corporate office is very small, made up of only four members: the CEO, Vice-President, Treasurer, and Corporate Secretary. There are six managers who report to the President. Although there is a great deal of employee participation, the traditional lines of authority still exist. The supervisor is still ultimately responsible in the decision making; however, they listen a lot, are very open to input, and generally get a lot of help from the entire workforce. EMPLOYMENT SECURITY: Fastener Industries has never had a layoff, nor have they had to cut hours. When the company did not have enough work for all of its employees, they were assigned other jobs that needed to be performed, such as maintenance work. SUPPORTIVE WORK ENVIRONMENT: Most often employees at Fastener Industries are hired at entry level positions and promotions are filled from within the company. PRODUCT/SERVICE QUALITY: Parts do not move from one department to another, but rather they are made from beginning to end by each employee. This method ties into ownership because the employee is able to see the finished product. Fastener maintains larger than usual inventory because they have found that they can fill a void when suppliers that use a "just- in-time" inventory system are unable to meet demand. COMPENSATION LINKED TO PERFORMANCE: Prior to the adoption of the ESOP in 1980, the employees operated under a profit sharing program that was established sixteen years ago. Each employee was given the opportunity to transfer their funds to the new ESOP account. With additional financing from the bank, the $3.1 million transferred from the profit sharing program was used to purchase the company. All full-time employees with one month service are eligible for the ESOP. This offers full voting privileges and immediate 100 percent vesting. Fastener employees with profit-sharing accounts equivalent to $30,000 at the time of the employee buyout, now have ESOP accounts of approximately $400,000. Employees at Fastener Industries are compensated in two ways in addition to their salary. First, employees receive money through a bonus plan. This bonus is determined at the discretion of the board and is based on yearly profits. In the recent past this bonus has amounted to up to one month's salary. This cash bonus is distributed in two payments one on June 15, and the other on December 15. Secondly, as part of the ESOP program the profits are given back to the owners through cash-dividends. Stock is distributed annually based on salary so new employees become owners. Employees have been receiving between three and a half and four percent value of their stock in dividends. WORKER-MANAGEMENT RELATIONS: N/A STRATEGIC INTEGRATION OF BUSINESS: REMARKS: ACCOMPLISHMENTS/AWARDS: Since adopting the ESOP program, Fastener sales have grown from $7.9 million in 1979 to $22 million in 1993. In the past year alone, Fastener stock has increased by 37.6 percent. Since 1979, the stock value of the company has increased from $3.1 million to $27 million. SERVICE PROVIDERS: REFERENCES: ------------------------------------------------------------------- COMPANY: Fel-Pro, Inc. CORPORATE ADDRESS: 7450 McCormick Boulevard Skokie, Illinois 60076 PLANT/BRANCH ADDRESS: SIZE (employees): 1,700 UNION(S): non-union INDUSTRY: Automotive sealing products SIC CODE: 3053 NEAREST METRO AREA/MILES: Chicago, IL (10 miles) CONGRESSIONAL DISTRICT: IL-09 SECTOR: Private OWNERSHIP: Private, family-owned CEO: Kenneth Lehman Co-Chairman and CEO Fel-Pro, Inc. 7450 McCormick Boulevard Skokie, IL 60076 David Weinberg Co-Chairman and CEO Fel-Pro, Inc. 7450 McCormick Boulevard Skokie, IL 60076 CONTACTS: Amy Schuman Director, Organization Development Fel-Pro, Inc. 7450 McCormick Boulevard Skokie, IL 60076 (708) 674-7701 ext. 2579 Fax: (708) 674-5816 DATE: 09/22/94 COMPANY DESCRIPTION: Fel-Pro is a family-owned business that began in 1918 as Felt Products Manufacturing Company, a manufacturer of felt washers and gaskets for Ford Motor Company. The company is still owned by the same family and is now the largest single supplier of gaskets in the world. The company also makes sealants, adhesives, lubricants , and elastomeric products. The present site for Fel-Pro's headquarters was purchased in 1952 and in 1958, five separate Chicago operations were consolidated in Skokie. Subsidiaries of Fel-Pro include Phillips Gasket,located in Hemet, California; Berrick Industries in Huntington Beach, California; and Power Components, Ltd. located in Walston-on-Thames, England, near London. TRAINING AND CONTINUOUS LEARNING: Fel-Pro provides a number of avenues for continuous training and education. The company has a tuition reimbursement program under which Fel-Pro pays 100 percent of tuition, up to $3,000 per year, when a course has been completed with a passing grade for undergraduate studies and $6,500 per year for graduate courses. Employees receiving a masters degree get a $1,000 award, and employees receiving their GED get $100. Fel-Pro has a number of professional development courses, ongoing continuous improvement programs, and Quality Training. Members of quality improvement teams receive problem solving training. Team leaders are given leadership training to help them run more effective meetings. Quality training has a number of levels, beginning with what does quality mean. All employees receive this basic level of training. Fel-Pro established a train-the-trainer system to teach this level. The second level of quality training includes the technical quality training, such as problem solving and statistical process control. When Fel-Pro began to implement work teams, all employees received team launch training (two days) to get the teams started. The concept behind Fel-Pro's training programs is "Just-in-Time" training in which employees receive training as they need, rather than in an ongoing, laid out fashion. Team members identify their own training needs. All training is designed around job materials, ensuring that training is not only timely, but relevant. Fel-Pro also provides basic skills training. Over $300,000 has been spent on this basic training with the goal of getting all employees to at least a sixth-grade level. Working with "The Center: Workplace Division" (formerly the Northwest Education Consortium), Fel-Pro has designed a custom basic skills training program. All employees in the plant are assessed and qualified employees attend a series of two-hour training courses. To help support the quality training program, Fel-Pro applied for and received government grants to provide English as a Second Language and basic math training. All the basic skills training has been provided on company time. In all, each employee receives on average over a week of training (40 hours) yearly. Fel-Pro maintains a resource library stocked with books and audio and video tapes on a wide range of subjects available to all employees. EMPLOYEE PARTICIPATION: One means of employee involvement is the "Employee Forum," which began in 1952. Representatives from each department are elected by the employees. These representatives meet monthly with top management to make workers' views known, offer suggestions, and register complaints. This Forum ensures that all employee concerns, no matter how small, are heard and resolved. The Forum reviews topics ranging from how to stimulate productivity to what type of mustard is served in the cafeteria. Beginning in 1984, quality circles (called "Winners Circles") were implemented. Approximately 25 percent of employees from all levels of the organization were involved in these groups. Winners Circles recommended solutions to problems, over 99 percent of which were approved. Employees who sat on these Circles were trained to identify problems and use basic problem solving tools. These circles, however, have been phased out as Fel-Pro has implemented self-directed work teams. Because of the need for continuous improvement, more active problem solving than once weekly was needed. The self-directed teams are expected to improve the process on an on-going basis. The amount of discretion and responsibility that a team accepts is basically left up to team members. In 1980, a "Continuous Improvement Committee" was established to review employee improvement suggestions. Nearly 3,000 suggestions are reviewed each year, of which about one-half are implemented. ACCESS TO INFORMATION: Fel-Pro uses employee information sharing to inform both employees and management about ongoing concerns. In addition to the Forums, the two Co-Chairmen meet with employees once a quarter. Once a month, Fel-Pro sponsors a Quality Education day in which an employee or team speaks about quality issues. Each year, a Quality Fair is held. An employee newsletter is also published which includes information on quality team successes, changes in operations, and customer news. ORGANIZATIONAL STRUCTURE: Fel-Pro is implementing work cells in which autonomous work teams are responsible for producing products from beginning to end. Team members all have multiple functions and Fel-Pro has been able to consolidate functions from across departments into one work area. When the team concept is fully implemented, Fel-Pro expects to have an extremely flat structure, the ultimate structure being: employees - team leader - unit leader - vice president. Fel-Pro works closely with its customers when designing parts for new engines. Fel-Pro assembles cross-functional design teams that include specialists from sales, product engineering, materials and chemical engineering, tool and process engineering, manufacturing, and quality departments. This team works closely with the customer. These teams involve Fel-Pro's suppliers in the process to ensure a continuous quality flow. Fel-Pro has close relationships with its suppliers. Fel-Pro employees work with suppliers and suppliers' suppliers to ensure that a quality product is received by Fel-Pro, visiting the suppliers to help identify and solve problems. By working closely with suppliers and creating relationships, Fel-Pro has been able to reduce the number of suppliers. Fel-Pro has also provided suppliers with the same quality training it provides its own employees. EMPLOYMENT SECURITY: Fel-Pro maintains a no-layoff tradition. When competitive pressures force a realignment of operations, employees receive a one-year advance notice of displacement. During this time, the affected employees are trained to fill other positions. To date, Fel-Pro has never had a downsizing or a layoff. SUPPORTIVE WORK ENVIRONMENT: Fel-Pro is well known for its family- and worker-friendly policies, having been named as one of the top 100 Best Companies for working mothers six years out of nine that Working Mother magazine has published its list and for the majority of these years, Fel-Pro was named as a Ten Best company. Health benefits at Fel-Pro include major medical, dental, vision and hearing coverage. In addition, there are in-plant physical fitness facilities with professional supervision available to the employees. Fel-Pro offers employees leave for taking care of a sick child. Expectant mothers get maternity leave (up to ten weeks with half to full pay). There is a family leave program that allows employees to take up to 13 weeks off without pay for family reasons (during this time full benefits are maintained). Parents who adopt receive $5,000 in adoption assistance. Fel-Pro operates a 250-acre ranch offering a supervised summer day camp for employees' children ages 7 to 12. There is an on- site day care center. Fel-Pro offers a tuition reimbursement plan that can be used by employees for special training and study. Employees' children have access to a college scholarship grants program (up to $3,300 per year). For those who need it, professional legal, psychological and income tax counsel is available. Employees receive a one-day's pay bonus for birthdays, employment anniversaries, and pre-vacation, holiday and special-day gifts, and Christmas bonuses. Special checks are given to employees on weddings, high school graduations, and the arrival of a new baby. Fel-Pro is also heavily involved in community activities. Since 1973, Fel-Pro has engaged a resident sculptor who utilizes the company's scrap and raw materials, as well as manufacturing process, to create sculptures, mobiles, and other works of art. Fel-Pro artworks are displayed at community and trade functions, throughout company facilities, and at customers' sites. Fel-Pro also founded the Fel-Pro Better Neighborhood Fund, which has sponsored hundreds of projects in churches, day care centers, and other local organizations to help enrich neighborhoods. The Fel-Pro Mecklenburger Foundation makes charitable contributions to metropolitan causes and social service agencies. The company also offers a Matching Gift program matching employees' contributions to charitable organizations. PRODUCT/SERVICE QUALITY: An atmosphere of quality is found throughout the company. Fel- Pro's employees are heavily involved in Statistical Process Control (SPC) and the company strives to design quality assurance into its products during the developmental stage. In the 1980s, Fel-Pro began a formal total quality program. The implementation of the formal program began with the owners personally benchmarking other companies. The owners also became involved in training, lending support to the continuous education and training effort, making the commitment top down. Fel-Pro also established four common objectives to help drive the quality process: quality, timeliness, innovation, and waste elimination. By implementing the quality program and building in quality, Fel-Pro has eliminated 98 percent of its quality inspection department. The remaining quality inspectors are used to inspect incoming supplies from overseas suppliers and fulfill any other specific customer requirements. Fel-Pro constantly surveys its customers and its customers' customers to ensure customer satisfaction and needs. This allows Fel-Pro to not only measure quality, but also perceptions. As one example, Fel-Pro has maintained an Installers' Council, to which installers from all over the country have been invited to discuss problems and concerns. COMPENSATION LINKED TO PERFORMANCE: Fel-Pro has a deferred company profit-sharing plan, helping employees plan for retirement. There are two bonus programs which employees are eligible. The first establishes a target bonus as a percentage of salary and is linked to company performance. Company performance is measured as a return on sales and cash generated. The second bonus is a team-based bonus. Team members can earn an extra 2 percent of salary when they meet goals based on a quarterly return. WORKER-MANAGEMENT RELATIONS: In its history, there has never been a work stoppage at Fel-Pro. STRATEGIC INTEGRATION OF BUSINESS: Fel-Pro recognizes that the use of robotics offers a high degree of manufacturing technology. Engineering, production, and quality personnel work together to identify area where robotics are best suited. Fel-Pro also uses CAD/CAM, computer-directed lasers, finite element analysis, and automated vehicle guidance systems. REMARKS: The idea of a family company is supported throughout the organization. More than 50 percent of employees have relatives working at the company and more than 100 married couples work at Fel-Pro. Fel-Pro has an unusually low turnover and absenteeism rate that it attributes to its range of family-friendly benefits. ACCOMPLISHMENTS/AWARDS: In 1982, the Department of Commerce awarded Fel-Pro its "E" award for substantial export sales increases over a sustained period of years. Fel-Pro has also won recognition from a number of its customers: the Cummins Engine Preferred Quality Suppliers Certification, the Detroit Diesel Series 60 Supplier Award, the Ford Q1 Preferred Quality Award, the General Motors Mark of Excellence and Spear #1 (Supplier Performance Evaluation and Reporting) Awards, Harley-Davidson Long Term Partner Award, and Mack Trucks Pedigreed Supplier Award. Fel-Pro has been cited in both Working Mother magazine and The 100 Best Companies to Work for in America for its family-friendly programs. Additionally, Fel-Pro was named as one of the top ten worker-friendly companies in the 100 Best Companies to Work for in America and as one of the top ten companies in Working Mother magazine the majority of the times their list has been published. In 1980, Industry Week magazine awarded Fel-Pro its Excellence in Management Award for implementing and maintaining sound labor- management relations. In 1992, Fel-Pro was given the Dively Award by the John F. Kennedy School of Government, Harvard Univeristy, for corporate public initiative and has also been awarded the Benjamin Botwinick Prize by Columbia Business School for business ethics. SERVICE PROVIDERS: REFERENCES: "At Fel-Pro Quality is Invisible...And Produces Results," Commitment Plus, Vol. 9, No. 4, February, 1994, pages 1-4. Fel-Pro, Fel-Pro Day Care Center, Fel-Pro, Inc., Skokie, IL, undated, 6 pages. Fel-Pro, Fel-Pro Fact Finder: A Guide to Our Corporate Family, Fel-Pro, Inc., Skokie, IL, 1984, 4 pages. Fel-Pro, Fel-Pro Quality Process Handbook, Fel-Pro, Inc., Skokie, IL, 1989, 74 pages. Fel-Pro, Fel-Pro: Portrait of a Corporate Family, Fel-Pro, Inc., Skokie, IL, 1990, 20 pages. Fel-Pro, Fel-Pro: Where Sealing is A Science, Fel-Pro, Inc., Skokie, IL, 1987, 14 pages. Fel-Pro, Fel-Pro Work, Family & Life Benefits, Fel-Pro, Inc., Skokie, IL, July 1994, 8 pages. Mitchell, Liz, "Outrageous Investment in Employees Yields loyalty and Profitability in Turbulent Market," On Achieving Excellence, July 1993, pages 2-4. Moskowitz, Milton and Carol Townsend, "100 Best Companies for Working Mothers," Working Mother, October 1992, reprint. University of Chicago, Added Benefits: The Link Between Family Responsive Policies and Job Performance, University of Chicago, 1993, 12 pages. Zemelman, Susan, "Fel-Pro: A Corporate-Family Success Story," Training Today, undated, 3 pages. ------------------------------------------------------------------- COMPANY: Foldcraft Company CORPORATE ADDRESS: 615 Centennial Drive Kenyon, Minnesota 55946 PLANT/BRANCH ADDRESS: SIZE (employees): 275 UNION(S): non-union INDUSTRY: Furniture manufacturing (restaurant and institutional service seats and tables) SIC CODE: 2531 NEAREST METRO AREA/MILES: Minneapolis (55 miles) Rochester (40 miles) CONGRESSIONAL DISTRICT: MN-01 SECTOR: P OWNERSHIP: Employee stock ownership (100 percent) CHIEF EXECUTIVE: Stephen C. Sheppard Chief Executive Officer Foldcraft Company 615 Centennial Drive Kenyon, MN 55946 CONTACTS: Dorothy Erickson Vice President of Human Resources Foldcraft Company 615 Centennial Drive Kenyon, MN 55946 (507) 789-8230 DATE: 7/12/94 COMPANY DESCRIPTION: Foldcraft Company is a designer, manufacturer, and marketer of seating, tables, and related millwork for restaurants, cafeterias and public eating areas. The company grew from a one man woodworking shop in 1947, to a company of 275 employees with sales of $20 million in 1993. It is today one of the larger manufacturers in this industry. TRAINING AND CONTINUOUS LEARNING: Foldcraft encourages extensive formal, on-the-job, and outside training for its employees. All employees receive 20 hours of quality training during their first year of employment, focusing on areas such as measurement, team building, problem solving, and quality tools. Formal in-house training classes are offered in areas such as computers, interpersonal skills, blueprint reading, CPR, problem solving, statistical process control, and grammar. Employees are also eligible to receive either full or partial tuition reimbursement for training, seminars, and educational classes they participate in outside of the company. Work units hold weekly, or bi-weekly unit meetings, up to half the time of which is devoted to training in a particular safety topic such as lockout/tagout procedures, fire, and electrical safety, etc. The company also has a very unique financial training program designed to support the company's open-book management philosophy. Through four one-hour training sessions, employees learn how to manage and understand financial information using the analogy of an imaginary chocolate chip cookie company. Approximately 100 of the company's 270 employees have voluntarily participated in the training program, and the company has plans for all employees to participate in the training. To support employee personal development, Foldcraft sponsors 9 day trips for employees to visit third world countries through its Cross Boundaries Program. Up to 2 employees per month are eligible for the trips, which are paid for by the company. The goal of the trips is to create awareness of third world issues, and upon returning, employees are required to share their experiences through such methods as videos, forums, talks, and photo presentations. Approximately 30 Foldcraft employees have participated in the trips through the Cross Boundaries Program. EMPLOYEE PARTICIPATION: Foldcraft has a unique employee participation program which dates back to a management initiated Work Simplification Process started in the 1980s. Through the program, operators could submit improvement ideas to management. The submissions had a 98 percent approval rate, and groups were often formed to implement approved suggestions. The improvement suggestions, as well as reasons in case of rejections, were published in the company newsletter. As part of Foldcraft's Quality Improvement Process (QIP), started in the early 1990s, the Work Simplification Process was replaced by two new initiatives: the Problem Alert/Removal (PAR) System and the Corrective Action (CA) Process. Through PAR, employees with ideas for improvements, or issues which need to be resolved, can fill out PAR forms (available throughout the company) and submit them to their managers. A copy of the submission is then passed on to the company's PAR team, which consists of management, staff, and hourly workers. A PAR team member sponsors the submission by following up with the submitter and the manager until the suggestion or issue is resolved. Managers are given an allotted time for resolving the submission within the department, and both the manager and the submitter have to sign an agreement that the corrective action was accepted. Approximately 80 to 90 percent of the issues are resolved within the manager/department level, and most within 90 days of the submission. Submissions not resolved at the department level, or within the specified time period, progress to the next stage, the Corrective Action Process. At this point, the team member who sponsors the project puts together a CA Problem-Solving Team, generally composed of the submitter, the manager, and others judged valuable in dealing with the problem. The team interviews both the submitter and the manager, and logs information about the submission, and its actions, on a Corrective Action Form. The resolution is reviewed by the submitter and the manager, and all participants in the process are given formal company recognition. ACCESS TO INFORMATION: Foldcraft has a variety of mechanisms by which financial and operating data is shared directly with employees. Daily reports showing booked and shipped sales are posted prominently throughout the company. The company also has a bonus system based on profitability, and weekly updates on profitability are posted where workers can monitor performance on a regular basis. About the only financial information not shared with everyone at the company is individual salary information Every week, company managers have a meeting where the weekly financial figures are compiled. They build an income statement depicting the expected results for that month, and this information is shared with Foldcraft workers during regularly scheduled unit meetings. There is also a monthly ESOP meeting where financial and performance data is reported, as well as sales predictions. To encourage upward communication, Foldcraft has employee surveys, as well as monthly luncheon meetings, called "Brown Bag Summits," where randomly selected groups of employees meet with the President of the company to discuss company issues. ORGANIZATIONAL STRUCTURE: Foldcraft currently has a fairly traditional organizational structure. There are approximately 15 different work divisions, or units at the company, each with their own manager. Lead operators report to the managers. The managers in turn report to one of five divisional vice presidents, who report to the chief operating officer, who in turn reports directly to the chief executive officer. Foldcraft is beginning to implement work cells or self-directed work teams. The existing teams are currently led by the lead operators, but plans call for the team members to eventually share the leadership role. EMPLOYMENT SECURITY: Foldcraft does not havee resolved within an allotted time, go to the Corrective Action Process, where a team is created to resolve the problem. COMPENSATION LINKED TO PERFORMANCE: Foldcraft has two types of variable pay plans, an employee stock ownership program (ESOP), which promotes long-term sharing of rewards with employees, and an incentive/bonus program to encourage the short-term tie-in between performance and pay. Foldcraft employees are eligible for the ESOP after one year of employment. Through the ESOP, employees are annually allocated company stock proportional to a certain percentage of their annual pay. The stock allocation can vary from year to year, but has consistently been approximately 25 percent of total compensation. Employees can recoup their stock either upon retirement, or when they leave the company. An employee-led group, the Foldcraft Ownership Enrichment Group (OEG), works to find new ways to encourage employee commitment to employee ownership. The group sponsors monthly employee ESOP meetings, ESOP Employee Ownership Week activities, and special projects such as seeking employee commitment to work in a thrift shop for aid to citizens of Third World nations. Foldcraft's short-term variable pay plan is a profit-based bonus system where 50 percent of profits, above a specific target level, are paid out quarterly based on grade level. The bonus payouts are also contingent on employees achieving a minimum level of individual performance. WORKER-MANAGEMENT RELATIONS: N/A STRATEGIC INTEGRATION OF BUSINESS: Foldcraft lists "becoming one of the best employers in the nation," as one of its key company goals. Foldcraft uses the companies and criteria listed in the book, The 100 Best Companies to Work for in America, by Robert Levering and Milton Moskowitz, as benchmarks. Employees are surveyed to determine how the company measures up in specific categories. REMARKS: Foldcraft Company is recognized as a global good citizen. It donates an average of 10 percent of pretax profits to charitable causes in the Third World. Because of its efforts, Foldcraft received one of seven America Corporate Conscience Awards in 1991, and Foldcraft's founder, Harold Nielson, was named Goodhue County Citizen of the Year in 1992. Shirley Bauer, a tool inventory attendant at Foldcraft, was named national "Employee Owner of the Year" in 1993 by the ESOP Association. A member of Foldcraft resolved within an allotted time, go to the Corrective Action Process, where a team is created to resolve the problem. ACCOMPLISHMENTS/AWARDS: Foldcraft was named Minnesota ESOP Company of the Year in 1994 by the Minnesota chapter of the ESOP Association. In 1991, the company was named Small Business of the Year by the Minnesota business publication, Successful Business. SERVICE PROVIDERS: Company officials list both the ESOP Association (headquartered in Washington, DC), and the National Center for Employee Ownership (headquartered in Oakland, CA) as important sources of information and technical assistance. REFERENCES: Cronin, Michael P. 1994. "Like Cookie, Like Company." Inc., May 1994. Peters, Tom. 1994. The Tom Peters Seminar. New York, NY: Vintage Books, pp. 79-80. Peters, Tom. 1993. "Employee-Owners Lend Personal Expertise to Company Operations." On Achieving Excellence, December, 1993. Young, Karen M. 1993. Theory O: Creating an Ownership Style of Management. Oakland, CA: The National Center for Employee Ownership. ------------------------------------------------------------------- COMPANY: The Foxboro Company Intelligent Automation Facility CORPORATE ADDRESS: 33 Commercial Street Foxboro, Massachusetts 02035 PLANT/BRANCH ADDRESS: 70 Mechanic Street Foxboro, Massachusetts 02035 SIZE (employees): 225 UNION(S): non-union INDUSTRY: Intelligent automation process controls SIC CODE: 3823 NEAREST METRO AREA/MILES: Boston, MA (35 miles) CONGRESSIONAL DISTRICT: MA-03 SECTOR: Private OWNERSHIP: Wholly-owned subsidiary of Siebe, PLC of Great Britain. CEO/PRESIDENT: Dr. George Sarney CEO and President The Foxboro Company 33 Commercial Street Foxboro, MA 02035 CONTACTS Deborah L. Kumpf Senior Production Manager The Foxboro Company C41-1B 33 Commercial Street Foxboro, MA 02035 (508) 549-3530 David Gilmore Director of Corporate Communications The Foxboro Company B52-1B 33 Commercial Street Foxboro, MA 02035 (508) 549-6250 DATE: 11/4/94 COMPANY DESCRIPTION: The Foxboro Company is a leading supplier of Intelligent Automation products and related services for industrial control applications. The company was founded in 1908 and was purchased in 1990 by Siebe, PLC. Headquarters for the company are in Foxboro, MA, and the company has 4,500 employees worldwide. Products are manufactured in three plants: the Neponset facility in Foxboro manufactures pneumatic and electronic measurement instrumentation; the Highland facility in East Bridgewater, MA, manufactures controllers and analytical instrumentation; and the Cocasset facility in Foxboro produces Intelligent Automation process controls. The Intelligent Automation facility was built in 1986, and is a 75,000 square foot facility building programmable automation control equipment. The facility currently employs 215. The facility assembles, tests and ships all components of the product. The organization is structured into active commodity groups, based around the volume and expertise of each area. TRAINING AND CONTINUOUS LEARNING: Foxboro offers a number of training opportunities, including training in statistical process control, just-in-time production methods, zero inventory, continuous flow manufacturing, and a variety of other subjects. In 1989, Foxboro contracted with Qualtec Quality Services to provide training in Total Quality Management methods and structures. This led to the launching of Foxboro's first formal quality improvement program. Under the quality program, employees receive up to a full week of quality training. Team leaders receive an additional week of training, and facilitators receive three weeks of training. The Qualtec training began with awareness training, focusing employees on the company-wide TQM effort and encouraging involvement. Further training emphasizes building skills in leadership, communication, team building, relationship building, listening, basic quality tools, problem solving techniques, and customer service. Training is conducted by a combination of managers, facilitators, team leaders, and area coordinators, all of whom have been certified. All training courses, teachers, and course materials are evaluated and the evaluations are used to make modifications and corrections to the training. Further training, as teams move through the problem solving process, is identified by team members. A wide range of technical training courses is also provided. The Foxboro I/A facility has a World Class College consisting of a variety of TQM and Process technique courses, taught by the plant manager and his staff. Each semester, between 12 and 15 courses are taught. Courses offered range from technical to software applications, theoretical to "soft skills," including JIT techniques, zero inventories, ISO 9001, cost accounting, and synchronous manufacturing. Over 55 percent of I/A employees have taken advantage of this voluntary training. Classes are taught after hours and many of the courses are made available to other organizations affiliated or associated with I/A. In total, I/A's employees took over 4,000 hours of formal, documented training in 1991 and 1992 and had an additional 3,000 hours in 1993. Additionally, many employees benefit from undocumented on-the-job training as a result of the employee involvement and strong hands-on management approach. There is a tuition reimbursement/college education program available to all employees. This program reimburses employees for degree and non-degree training related to their job. Foxboro partners with area colleges, such as Bridgewater State College, to offer courses geared toward Foxboro employees. EMPLOYEE PARTICIPATION: Foxboro operates under the belief that each and every supplier/customer relationship must be optimized, including relationships between internal suppliers and customers. To this end, Foxboro promotes an environment of total employee involvement. All I/A Manufacturing employees are organized into teams and take part in the continuous improvement process. Natural work cell teams are organized by process area and include all employees in that process. Teams are led by a section leader who is responsible for scheduling and staffing and helps to resolve quality or materials issues. Every employee has the responsibility to detect substandard quality and immediately go to the source, either internal or external, for correction. Quality Improvement Teams consist of from five to seven employees. Teams use a seven-step structured problem solving process that utilizes the statistical and analytical tools they have been trained in and follows a storyboard approach. World Class Manufacturing Deployment Teams utilize quality improvement tools to achieve continuous improvement in quality, cost and speed. They are assigned specific goals and are encouraged to spot waste and opportunities for improvements and cost reductions. The teams consist of employees from all areas of the facility. Foxboro has also established Product Defect Champions who keep close contact with internal and external quality. These Champions monitor the quality data system for trends, problems, and site-specific failures. The information is presented during weekly meetings to representatives from other areas and actions on the trends is taken care of in these meetings through assignment of problem solving to individuals and World Class Manufacturing Deployment Teams. A number of Fast Acting SPC Teams have been established as an alternative to traditional statistical process control. These teams are comprised of a cross-functional group of four or five employees from each of the key processes in a product line flow. They meet daily to feed quality and defect and other quality information forward and backward along the process. All teams generally meet for one hour weekly, with assignments completed outside meetings. The teams are directed by one of the plant management staff who is always available to the team for consultation, direction, and facilitation. ACCESS TO INFORMATION: Each morning, twenty-five people from all aspects of plant operations meet to discuss what's going on in the plant and where are the potential problems that need to be addressed. Weekly one-hour meetings are held between all I/A supervisors and all or groups of employees. Both good and bad news is shared. Questions, concerns and ideas from these meetings are written up and forwarded to the appropriate Plant or department manager for action. Quarterly managers' meetings and all-employee meetings are held. The President and his staff, or the Plant Manager, share the business picture--good and bad news, current and future financials, and employee recognition awards for performance, attendance and service. Employees may question the managers. Formal written communications regarding quality and key product issues are distributed periodically to all employees. There is also Foxboro's Dedicated to Excellence formal newsletter dedicated to TQM, recognition of individual efforts, and other newsletters that are used to convey information. There are also monthly "Birthday Coffee Sessions" held, where all employees whose birthdays fall during the month meet with their respective Plant Staff manager for refreshments and open discussion on any subject. Foxboro feels that this provides a forum for cross-departmental introduction and idea exchange. ORGANIZATIONAL STRUCTURE: In designing the original plant, Foxboro never established levels of management structure and departmental boundaries. One example of this is the use of cross-functional design teams. Process Engineering, Design Engineering, Test Engineering, and Purchasing are involved in new product designs from conceptualization to production. High speed prototyping is performed right at the facility and both customers and suppliers are involved in the design process very early. Foxboro has created close relationships with many of its suppliers. There is a vendor certification process and a Just- in-Time II process. Suppliers become certified only after received materials are audited for quality until there is a history that demonstrates that they can be certified to the ship- to-stock program. Parts on the ship-to-stock program undergo random audits to insure continued quality. Contracts with vendors typically run for two years and purchase orders are open. There is no warehouse as such. Incoming supplies are shipped directly to the point of production. Supplier partnerships are created by a Foxboro Supplier Alliance Council, made up of the plant material managers, corporate quality assurance, Corporate Business Quality, and chaired by the corporate purchasing group. Partnerships are formed based on quality, trust, and mutual responsibility with the intent of improving supplier quality, enhancing flexibility, reducing lead time, creating a total cost reduction, and supporting concurrent development activities. As a result of the efforts of this group, the number of suppliers has been reduced six-fold. The plant manager meets regularly with suppliers to explain the system Foxboro operates and what the company expects in terms of cost, quality, and speed. Foxboro has also established a number of close relationships with its customers. Customer Partnership Programs are established by customers and the sales force, and supports customers' various TQM techniques and structures. In 1991, Foxboro established its Customer Friend program, under which one Foxboro employee adopts a customer and follows through with all problems the customer may encounter. The program now encompasses over 30 customer sites throughout the USA and the world. A number of other programs are used to solicit customer input: customer product surveys, customer conferences (several per year), customer action requests (a formal process for customers to submit requests for enhancements or identify problems), regular customer meetings by the Customer Services Marketing personnel, regular audits of Foxboro by customers, internal and external customer satisfaction surveys, trade shows, user groups, on-site testing, and environmental assessments of customer sites. Customers and suppliers are constantly given tours of the facility that facilitate two-way conversation. For the top suppliers, joint business teams meet regularly, alternating between Foxboro and supplier locations. Additionally, Foxboro has established a Customer Training Institute that provides product training to both customers and Foxboro employees. EMPLOYMENT SECURITY: Given the global nature of Foxboro's business and the continual improvement in efficiency, Foxboro does not guarantee lifetime employment security. Foxboro does strive to ensure that all employees are employable through continual training, education and development. The last layoff at Foxboro's I/A facility occurred in 1991, and since that time, reductions in staff numbers have occurred solely through attrition. Foxboro's Job Opportunities Program allows employees to apply for internal positions (based on qualification and performance) and be considered before outside applicants. SUPPORTIVE WORK ENVIRONMENT: In addition to its quality improvement processes, Foxboro is committed to employee well-being. Foxboro has established a health and safety program under the direction of a corporate safety director. Safety committees exist at the plant and review all safety issues. The committee does routine audits and recommends safety equipment and modifications to the work place and tools to reduce injury potential. A comprehensive Workers Compensation Program has been established to provide post-injury response to help injured employees return to work. There is a nucleus of trained and certified first aiders. There are a number of wellness programs coordinated by the medical department, including cholesterol screening, blood pressure testing, and diabetes and cancer detection. A licensed psychologist is retained under the Employee Assistance Program who is available to all employees needing counseling. Career counseling is provided by Human Resource Department staff. Foxboro offers a dependent care withholding plan in which employees can save up to $5,000 in pre-tax earnings annually. On an individual basis, employees, working with their supervisor, can work on a flextime basis. A number of social activities are sponsored by the company, including sports leagues, discount tickets to a variety of activities, and a number of clubs. PRODUCT/SERVICE QUALITY: Foxboro uses benchmarking to seek out and apply best practices. Even before the facility was built, benchmarking trips were made to world class electronic manufacturing companies. Foxboro evaluated these companies' practices for inclusion in the I/A facility layout. Since that time, numerous trips have been made to see processes and ideas in place at other locations. Foxboro also provides benchmarking opportunities for its suppliers, customers, and other companies. The facility is totally committed to continuous improvement, striving to be the best through customer satisfaction and continually improving profitability. This is accomplished by focusing on three areas: quality, speed, and cost. All programs initiated fall under one of the three categories. Foxboro's I/A facility has been certified as being ISO 9001 compliant, and was one of the first in the U.S. to be so certified. Additionally, Foxboro I/A is also one of the first to be recertified after three years of compliance. Beginning in 1987, The Foxboro Company implemented a formal Total Quality Management program throughout its organization, arising from a request by one of its customers. Foxboro contracted with Qualtec (a subsidiary of Florida Power and Light) to provide the background and training for the program. The TQM program is overseen through two levels: a Quality Council composed of members from the President's direct staff and chaired by the President; and a Corporate Business Quality function, headed by the Director of Corporate Business Quality and reporting to the President. The function of the Quality Council is to set strategic direction for the TQM program and to provide constancy. The Corporate Business Quality function helps evolve the TQM/improvement process and support each organization as they deploy TQM activities. COMPENSATION LINKED TO PERFORMANCE: Foxboro I/A employees are covered under a pay for performance compensation system. All employees, regardless of level, are eligible for merit increases based upon performance. The company has a requirement that all employees receive a formal, written appraisal yearly in support of the pay for performance system. Sales employees are further rewarded under a program that provides rewards for meeting or exceeding sales targets and senior management is rewarded under a management Achievement Plan for meeting goals and objectives. WORKER-MANAGEMENT RELATIONS: N/A STRATEGIC INTEGRATION OF BUSINESS: Foxboro integrates its concern for human resources through all aspects of its corporate vision and mission. Foxboro's philosophy is that people are integral to the products and processes and that employees must be included in all strategic decisions. This is reflected in the idea that Quality, Cost, and Speed are attained through People. Every two-three years, Foxboro I/A rewrites its Policy Deployment Manual. This manual is a laundry list of strategic goals and objectives (usually 150-80) related to Quality, Cost, and Speed. Goals enumerated in the manual are assigned to teams with definite time frames for completion. Starting with Foxboro's vision and goals, this manual is compiled and then continually updated through on-going brainstorming sessions which include employees from throughout I/A. Because of this process, the manual is continually adapting to the forces affecting Foxboro and its employees. Foxboro has implemented full computer integration for the entire facility, integrating all business systems on one network. This has created a paperless facility, resulting in significant cost savings and minimizing the need for clerical help. In many cases, entire transactions are automated and may trigger other transactions across the network. Foxboro also uses bar coding to track products through the production process, which also helps eliminate paperwork. All of the work centers are just-in-time scheduled via a daily (paperless) sales order demand system. As there are over 850 products, lot sizes are small (from 1 to 30 units), resulting in a strict no set-up philosophy where possible. Computer Integrated Manufacturing (CIM) is used extensively. The CIM system was designed by both the Corporate Information Systems (CIS) and Manufacturing departments working very closely. CIM integrates all business functions as a seamless entity and the entire system spans the globe, connecting plants, sales, and service offices in over 20 countries. Foxboro I/A also integrates quality data collection with ongoing employee duties through its automated Quality Data System. Data is entered directly into the system by operators performing other required transactions and is uploaded throughout the day. Uploads are input into the system at night and updated quality data is available every morning for review and corrective action. Overall, the QDS contains a complete history of all shippable units and their subassemblies. REMARKS: Foxboro I/A bases its improvement processes around three philosophies, all intertwined: QUALITY--providing the highest quality hardware in their marketplace; SPEED--to develop a capability of responding the fastest to customer demands within their marketplace; COST--to develop the minimum cost structure for the functionality provided within the marketplace. The emphasis on employability carries over to Foxboro's cooperation with local educational institutes. Even though not all students coming out of school will work with Foxboro, many will work with suppliers and customers. As such, Foxboro works with local K-12 schools, community colleges and private institutes to provide a lifelong learning process. ACCOMPLISHMENTS/AWARDS: Among the results garnered by Foxboro I/A are: drastically increased inventory turns; a 38 percent floor space decrease; an internal defect rate improvement; lower scrap; almost complete employee involvement; lowered lead times; lower cycle times; and dramatic productivity improvement. Foxboro I/A has won a number of awards for its programs. In 1991, the facility was certified to ISO 9001 standards. In 1992, the I/A facility won the Massachusetts Quality Award (based on Baldrige Award criteria), and was named one of Industry Week magazine's "Ten Best" plants. In 1993, Foxboro I/A was awarded the CASA/SME LEAD award for Computer Integrated Manufacturing excellence. SERVICE PROVIDERS: The Total Quality Management program was established through a contract with Qualtec (a subsidiary of Florida Power and Light). Qualtec provided training in quality subjects and helped design the TQM program. The workers compensation program is supported through a contract with Lynch Ryan and Associates, who have designed training programs in ergonomics, accident investigation, machine maintenance, and other related subjects. REFERENCES: Collier, J.C., "A Competitive Edge through TQM," Quality, August, 1992,pages Q12-Q13. Cook, Brian M., "Foxboro," Industry Week, October 19, 1992, pages 45, 47. Foxboro Company, The, Shingo Prize for Excellence in Manufacturing--The Foxboro Company, Intelligent Automation Manufacturing Division: Achievement Report 1994-95 Application, The Foxboro Company, Foxboro, MA, October 1994. Rabbitt, John T. and Peter A. Bergh, The ISO 9000 Book: A Global Competitor's Guide to Compliance and Certification, AMACOM, New York, NY, 1993. Sheridan, John H., "Lessons from the Best," Industry Week, February 15, 1993, pages 54-63. Vasilash, Gary S., "Foxboro," Production, October 1992, pages 64- 67. ------------------------------------------------------------------- COMPANY: GE Fanuc Automation CORPORATE ADDRESS: Route 29 P.O. Box 8106 Charlottesville, Virginia 22906 PLANT/BRANCH ADDRESS: SIZE (employees): 1,500 employees worldwide (1,200 in North America [1,000 in Charlottesville], 300 overseas) UNION(S): non-union INDUSTRY: Programmable automation SIC CODE: 357 NEAREST METRO AREA/MILES: Charlottesville, VA (10 miles) CONGRESSIONAL DISTRICT: VA-07 SECTOR: Private OWNERSHIP: Public (joint venture) CHIEF EXECUTIVE: Robert Collins Chief Executive Officer GE Fanuc Automation P.O. Box 8106 Charlottesville, VA 22906 CONTACTS: Donald C. Borwhat, Jr. Senior Vice President Human Resources and Public Relations GE Fanuc Automation North America, Inc. P.O. Box 8106 Charlottesville, CA 22906 (804) 978-5109 Cheryl L. Platte Specialist Human Resources - Employee Involvement Programs GE Fanuc Automation North American, Inc. P.O. Box 8106 Charlottesville, VA 229006 (804) 978-5184 DATE: 8/16/94 COMPANY DESCRIPTION: GE Fanuc Automation is a 50/50 global joint venture formed in January 1987 between the General Electric Corporation and FANUC LTD of Japan, with sales of approximately $350 million. The Charlottesville facility is the world headquarters for GE Fanuc. The North American Operations is 60 percent owned by General Electric and 40 percent by Fanuc. GE Fanuc also has operating subsidiaries in North America, Europe, and a significant business presence in the Asian Pacific and South American countries. The Charlottesville facility designs, manufactures and sells programmable logic controllers (PLC), and assembles some of the computerized numerical controllers (CNCs) produced in Japan. Together with the FANUC LTD, GE Fanuc is the largest automation producer in the world. TRAINING AND CONTINUOUS LEARNING: GE Fanuc places a strong emphasis on training through both its formal training programs offered at 12 major training centers, and continuing education programs offered at community colleges and universities. Approximately, 85 percent of the Charlottesville production workers are classified as either a CR 7 or a CR 9 employee. All employees are multi-skilled, with CR 7 classification requiring skill at 20 jobs, and CR 9 classification requiring skill at an additional 15 jobs. Production employees rotate through the pool of jobs and are cross-trained. Training for multi-skilling is provided by team developers, on-the-job cross-training, or community college classes. Employees are encouraged to continue their education and GE Fanuc has a tuition refund program that pays a significant proportion of employees' higher education costs including books and materials. GE Fanuc has also invested heavily in its "Work-out" or continuous improvement training, with more than $350,000 invested in continuous improvement training over two year period, and more than $500,000 invested overall to date. EMPLOYEE PARTICIPATION: Employee participation is encouraged through the company's continuous improvement efforts which are modeled after the GE "Work-out" process. Through Work-out, employees are encouraged to review the elements and processes of their jobs and to determine if they add value, meet the needs of GE Fanuc customers, and support the company's mission statement. If they do not, employees bring this to the attention of their coaches and request that these elements be eliminated from their job. GE Fanuc employees discovered that approximately 30 percent of the reports, approvals, meetings, measurements that previously existed at the company were unnecessary and detracted from productivity. Another important element of GE Fanuc's Work-out process includes a "Best Practices" component where GE Fanuc employees (including production associates) visit high performance work organizations to learn from their experiences. These visits entail studying process improvements, lessons learned, and asset deployment in manufacturing to find areas for future productivity improvements. GE and GE Fanuc have visited over 100 companies, and share this "best practice" information with the entire GE business at an annual "Best Practices" meeting at GE's Management Development Center in Crotonville, N.Y. GE Fanuc employees also participate in cross-functional improvement teams designed to eliminate inefficiencies and suggest improvements for specific areas of the company. There are more than 100 teams among GE Fanuc's Office Associates, that are formed each year to tackle specific problems. For GE Fanuc Production Associates, employee involvement is formalized through a "High Involvement Work Force" (HIWF) initiative where teams of production workers meet on a weekly basis to discuss opportunities for quality, cost, and cycle time continuous improvement. ACCESS TO INFORMATION: GE Fanuc holds Operations Review meetings once a month, where all the employees of GE Fanuc meet in the company auditorium to participate in an open forum where the CEO and his senior staff provide reports and explanations regarding the company's financial status, sales, orders, quality, customer satisfaction, delivery performance, inventory turns, and the employee profit sharing pool. The last 30 minutes of the one hour meeting is dedicated to questions and answers. During the question answer period, employees can either question the CEO and the senior staff directly, or through previously submitted question on index cards. Two years ago, GE Fanuc sponsored an "Understand the Numbers" training program, as a result of employee comments that they did not understand the financials presented at the Operations Review meetings. Since that time, company officials report that employee information requests have increased in both quantity and substance, as employees now feel that they have a stake in the business, that they share in its financial success, and that their ideas are being acted upon. Production work teams at GE Fanuc can request anyone, from the CEO on down, to sit-in and provide information at their team meetings. This "open door" policy has resulted in improvements at all levels of the company. Managers report that the quality of employee decision making has improved, now that all employees have access to company data and understand it. ORGANIZATIONAL STRUCTURE: Work at GE Fanuc is organized around teams. As part of the High Involvement Work Force initiative, all production workers work in production teams charged with specific aspects of the production process. There are 60 teams with an average size of about 10 people each. Each team is required to meet at least one hour a week in specially designed meeting rooms away from the main production area to discuss how to achieve their goals and eliminate unnecessary work processes. Each team has one of three priority goals: quality, cost reduction, or cycle time reduction. There are three key team roles: facilitator, production communicator, and administrative coordinator. The facilitator runs the meetings; the production coordinator schedules and controls production in the work area; and the administrative coordinator handles communications between different teams and shifts, as well as team paperwork such as time cards and meeting minutes. Every six months, the teams can vote to change the team roles. Office workers at GE Fanuc participate in cross-functional improvement teams to improve particular work processes. EMPLOYMENT SECURITY: GE Fanuc is a growing company, having added approximately 150 workers since opening its doors in 1987. GE Fanuc recognizes the value of their employees, and the critical role they have played in improving the company's financial position, and they have committed to their employees that no one will lose their job as a result of the work-out process. When work-out was introduced, the CEO and senior staff made the commitment that when GE Fanuc workers identified parts of their job that were unnecessary or did not add value, the company would do one of three things: 1) add new responsibilities to their existing job; 2) move the employee to another comparable job for which they are qualified; or 3) train them to perform a new job. Employees are guaranteed that their pay will not be negatively impacted by participating in the work-out process. As a leading automation producer, GE Fanuc is also a state-of- the-art user of automation in their manufacturing processes. The impact on the workforce is considered when new automation is introduced, with appropriate employee training and reallocation of duties when necessary. As a result, no GE Fanuc worker has ever lost a job to automation. SUPPORTIVE WORK ENVIRONMENT: Through the results of a team project and recommendation, GE Fanuc provides flex time opportunities where workers can adjust their work hours, in cooperation with their teammates, as long as they work certain core hours. GE Fanuc allows employees to work temporary part-time schedules to meet family care needs, provides two paid cultural holidays, allows up to 20 paid personal and sick days, and provide for tuition refund and educational leaves of absence to complete degree requirements. GE Fanuc also offers a Work and Family Care Resource Program (providing information and referrals on child care, school services, adoption, and elder care), a Work and Family Seminar Series, and a Dual Career Services Program to help spouses of GE Fanuc employees find jobs after relocation. A fitness facility is currently being added to go along with already established outdoor athletic areas. PRODUCT/SERVICE QUALITY: GE Fanuc focuses on quality through its continuous improvement process. Production team members can select quality as one of three possible priority goals, which they focus on in weekly team meetings. Quality, delivery, cost, and customer satisfaction all receive considerable attention from GE Fanuc employees. GE Fanuc was the first company in the United States registered to the ISO 9001 standard in June 1991. GE Fanuc works in partnership with its suppliers, sharing product scheduling and forecasting information through electronic data interchange transmission of MRP data. Employees of GE Fanuc suppliers often participate in GE Fanuc training programs. GE Fanuc holds work-out meetings and works in partnership with its customers and suppliers to identify ways they can all work together to improve forecasting, electronic data interchanges, cost, delivery, and quality. Company officials report that the meeting have been very successful and resulted in millions of dollars in savings. COMPENSATION LINKED TO PERFORMANCE: All GE Fanuc employees are paid well in excess of the Charlottesville community averages, and participate in a profit sharing program which last year paid 2.9 percent of annual salary (approximately one week's wages). Employees monitor their profit sharing performance monthly at the Operations Reviews meeting where profits are displayed and profit sharing payouts are estimated. The company also has a substantial rewards and recognition program, through which GE Fanuc employees are recognized for their job performance. These rewards range from non-monetary peer recognition, on-the-spot awards, a dinner for two worth $150, all the way to the CEO Award that was $20,000 the last time it was presented. Several production teams have received $1,000 cash awards for significant performance, as well as smaller cash awards, t-shirts, etc. WORKER-MANAGEMENT RELATIONS: STRATEGIC INTEGRATION OF BUSINESS: GE Fanuc's work practices are strategically integrated through the company's Work-out, or continuous improvement process, which fosters employee involvement and constant attention to the elimination of waste and inefficiency. REMARKS: GE Fanuc uses its high performance workplace practices as a selling point for its products. GE Fanuc human resources staff and other employees often participate in sales calls, where they describe the companies innovative workplace practices. Customers and potential customers frequently meet with HIWF teams that are responsible for making their products. This fosters confidence in the company among customers, and many customers as GE Fanuc to consult with them in adopting similar workplace practices. GE Fanuc is recognized as a model workplace for the entire GE Fanuc Corporation, and last year hosted a "High Involvement Work Force" best practices meeting in Crotonville, NY, that was attended by other GE businesses. GE Fanuc is active in environmental stewardship, and for ahead of EPA goals in eliminating the use of 1, 1, 1 trichloroethane and methylene chloride. ACCOMPLISHMENTS/AWARDS: GE Fanuc was named as one of "America's Best Plants" by Industry Week magazine in 1992. The company also received the Electronics Factory Automation Award in 1991, and the Second Annual Manufacturing Excellence Award from Automation magazine in 1992. GE Fanuc has also been a Senate State Productivity finalist for the past three years, and is registered to the ISO 9001 standard, the most comprehensive and stringent of all ISO 9000 standards. Over the last decade, GE Fanuc has reduced its manufacturing costs by almost 40 percent. The company's continuous improvement process has resulted in improved morale, a 52 percent reduction in organizational reporting levels, and a 30 percent reduction in bureaucracy (approvals, reports, and meetings). Production improvements include $10 million reduction in costs, a 50 percent reduction in inventories creating cost savings of $34 million, and a reduction of delivery cycles from 16 weeks to 4 weeks. Other benefits from the continuous improvement program include a 74 percent reduction in the time from development to the introduction of new products, implemented suggestions for flex- time and cross-functional training programs, and the suggestion by one work team which resulted in $150,000 in scrap and rework savings. SERVICE PROVIDERS: REFERENCES: Kempfer, Lisa. 1992. "Profile of Excellence." Computer-Aided Engineering, October, 1992, 35-36. Manji, James F. 1992. "Manufacturing Excellence Awards: Our Six Winners." Controls & Systems, January 1992, 28-44. Spitz, S. Leonard. 1991. "GE Fanuc Wins Factory Automation Award." Electronics Packaging and Production, February 1991. Teresko, John. 1992. "America's Best Plants." Industry Week. October, 19, 1992, 50-51. ------------------------------------------------------------------- COMPANY: General Tool and Supply Company CORPORATE ADDRESS: 2705 N.W. Nicolai Street Portland, Oregon 97210 PLANT/BRANCH ADDRESS: SIZE (employees): 85 UNION(S): non-union INDUSTRY: Industrial supply distribution SIC CODE: 5084 NEAREST METRO AREA/MILES: Portland, OR (0 miles) CONGRESSIONAL DISTRICT: OR-01 SECTOR: Private OWNERSHIP: Privately owned, family operated business CONTACTS: Georgann Benziger Quality Coordinator and Training Manager General Tool and Supply 2705 NW Nicolai Street Portland, OR 97210-1818 (503) 226-3411 DATE: 7/13/94 COMPANY DESCRIPTION: General Tool and Supply is an 85-employee industrial supply company with annual sales approaching $25 million. This family- owned company was founded in 1927. It has grown to become one of the largest distributors of industrial supplies in the Northwest. Sales growth over the past two years has been almost 30 percent. TRAINING AND CONTINUOUS LEARNING: Maintaining an environment that supports personal growth and continuous learning is a core value of the company's Quality Business Plan. In the first three months of employment with General, all employees are trained in quality concepts. After their initial training, employees may suggest seminars, classes, and other types of further training. If the budget can support it, permission is given, and the training occurs on company time. Employees are encouraged to "keep the saw sharpened." Examples of topics for recent training programs are regulatory compliance, transportation of hazardous materials, safety in the workplace, right to know, and personal development and motivation. A great deal of computer training occurs at General as well. General maintains a tuition reimbursement plan. Employees must earn a "C" or better in order to receive reimbursement. Classes are often taken at the local community college. When employees have personal needs, such as quitting smoking or help with financial management, General tries to accommodate them by allowing their training to coincide with that particular problem. A library is located on the worksite so the employees may borrow books or videos on various training and quality topics. General maintains 50 percent of their training in-house. In 1993, each employee received twenty-five hours of training. EMPLOYEE PARTICIPATION: General Tool has been involved in a formal quality improvement process since 1986. Early Quality Improvement Teams with rotating leadership met to solve procedural discrepancies companywide. This format continued until 1989 when a steering committee was formed to oversee the introduction of SPC into the improvement process, and teams were restructured into functional groups with middle managers as team leaders. The mission of those teams was to flowchart processes in their work areas and streamline processes in order to eliminate waste. When processes were encountered that crossed functional boundaries, internal customers and suppliers were invited into the groups to work out any problems and the resulting flowcharts were posted for comment from the whole company. An outgrowth of this approach was the realization that while some processes such as those in accounting were served well by flowcharting techniques, those involved in selling and customer service often involved emotional labor that could not be contained in a flowchart, and that some attempts to standardize service could sometimes undermine empowerment. Currently General Tool uses volunteer cross-functional task forces and ad-hoc corrective action teams for problem-solving. The size and scope of decisions made by these groups range from capital investment to employee benefit programs to what kinds of snacks should be sold in vending machines. Task force teams function in the areas of innovation and planning as well as the traditional problem solving venues. The task force teams include management on bigger and riskier issues, but have a lot of authority on smaller topics where management is not present. They make decisions based on the good of the company, and management approvals decisions based on budgetary constraints. Teams have full authority over such areas as community involvement and workplace ergonomics. Current and recent task force missions have resulted in the selection and purchase of a new phone system, the changeover of the 401(K) stock investment portfolio options, the development of warehouse software for batch picking multiple orders using bar code scanners, the development of a catastrophic emergency plan, an On-Time Delivery computer module, an open house for 2,000 guests, etc. When the company decided to move to a new location, every employee had the opportunity to make suggestions for the layout of the new facility. In terms of individual empowerment, employees are allowed to make decisions involving $100 or less without permission in order to fix small problems with customers. Each department is in charge of its own budget, and must account for expenses once a month. In addition, employees are highly involved in company sponsored employee originated community outreach projects, funded through cook-offs, bake sales, ice cream socials, and walks for charity. End of year "best employee" awards used to be a part of GTS, but through employee surveys, it was found that people were unhappy with this practice, as it promoted internal competition, and discouraged the runners up. The employees felt that ranking was not an important part of the culture. A "Process Improvement" or "P.I." box is situated next to suggestion forms picturing Sherlock Holmes, in order to encourage the employees to act as "private eyes" in finding ways to improve work life and processes. General receives four to five suggestions a month, approximately two times the national rate. When offered, the suggestions are put into a standardized format, and given to the steering committee for evaluation. One time per quarter the suggestions are voted upon, and the people behind the best three receive small monetary awards. The company has made major capital investments based on employees' suggestions, e.g., the purchase of a computer graphics system to enable the production of catalogs in house and the installation of a new phone system. At the end of each year, all the suggestions received in that year, implemented or not, are put into a box, and drawings for vacations and other prizes are held. The company has also made extensive use of employee surveys in determining approaches to sensitive issues such as communication, performance, and reward practices that undermine teamwork. Employee councils with rotating membership of three employees assist in the management and planning process for both Inside and Outside sales. Anyone needing to create a venue for problem solving or planning may call a meeting without any hindering protocol. ACCESS TO INFORMATION: All employees have access to a daily report of sales activities. The inside sales manager provides a graph relaying company finances. A monthly newsletter available to all employees also details this information. This newsletter includes comparative information going back for the past four years on sales figures, activity levels, productivity measures, and error rates as well as service levels to major accounts. The company publishes a Who's Who of employees detailing employee supplied professional and personal details. The company has a message function in the mainframe computer called NEWS, which is open to everyone to send messages to the entire company on a daily basis. A communication corridor lined with bulletin boards covers Process Changes, meeting minutes and schedules, staff meeting notes, and employee generated notices. Too much information can also be a problem, as GTS has learned. Currently General is in the process of reorganizing into teams with smaller foci, as employees were receiving too much information to sort adequately. The first staff meeting of each month is open to anyone, and the CEO has an open door policy. ORGANIZATIONAL STRUCTURE: General Tool is working to redesign its internal operations around customer centered teams, referred to as business units. Traditionally it has been product driven within the sales area, organizing departments around technical expertise needs; however, with the recognition that today's successful distributor is being called upon to serve markets of one, General Tool has chosen to examine its structure in light of customer service requirements, technical expertise being only one of them. Many customers wanting their orders handled differently from the norm has added tremendous complexity to order processing. GTS is exploring restructuring the company around customer teams that will handle every process from sales generation to order picking and delivery. Teams will also include purchasing responsibility for the product lines for which a team's customer group is the main consumer. The blueprint for the final structure has not yet emerged from planning meetings, but there is general agreement that the aim is to shorten the distance between the customer and service providers. EMPLOYMENT SECURITY: The goal of General Tool, in terms of its employees, is to be the most productive with the amount of employees already employed. They do not look to lay off employees in order to become more efficient. General is very picky with regard to who is hired, and new employees who last through the three month training period are relatively safe in their employment. In fact, the average number of years of employment at General Tool is ten years. For many, General has been their first and only job. The company pays a $300 finders fee to anyone recommending a new employee who passes his or her first ninety day probation period on the theory that good people recommend good people. The Outside and Inside Sales staff represent almost 400 years of experience in the industry. Through recent meetings it has been decided that no layoffs should occur at General as a result of reorganization. To combat turnover in lower paid positions, one goal of reorganization is more lateral movement with workers becoming multi-skilled. This way the workers will receive a greater base of experience. SUPPORTIVE WORK ENVIRONMENT: This family-owned and operated business feels the need to promote family-friendly issues as a top priority. A number of employees work on a flex-time schedule, and a growing number of them work out of their homes. There is a Cafeteria Plan using pre-tax dollars to fund such items as group health insurance plans and day care expenses. The company funds a Walking Team and subsidizes participation in organized sports such as bowling and basketball; the company provides a recreation budget annually which allows any employee to apply for funds for any healthful group activity attended by five or more employees. The company sponsors an active Safety Committee, CPR Team, Hazardous Materials Task Force, and an Emergency Plan Task Force. The company prides itself on being a good neighbor to the community at large, with employees actively involved in environmental and charitable causes such as Stop-Oregon-Litter- and Vandalism and Habitat for Humanity PRODUCT/SERVICE QUALITY: General Tool began its Quality Process in 1986, with the formation of cross-functional Quality Improvement Teams aimed at removing error sources. These early quality circles remained in place until early 1989, when the company developed a quality process based on management by fact. At present, process analysis and employee participation are standard operating procedure. Through the various evolutions of method, the dedication to Quality as a corporate value has remained constant. As a distributor General must compete on service and on the quality of the product it sells. Management is well-versed in Deming philosophy. Seven Quality Improvement Teams ranging form Leadership and Planning to "How Are We Doing?" are responsible to manage the company in a way that makes "what we say" consistent with "what we do." TCCT's, or total customer contact teams are a form of quality control special to General Tool. The idea behind these teams is that if General wishes to provide customers with more than generic "service," it must maintain a customer feedback network that is proactive, not reactive. General Tool's aim is to customize its approach to customer needs in the critical areas of management, procuring, warehousing, and accounting by having employees in each of these areas get to know the people who receive their work at the customer's workplace. Therefore someone from General's warehouse may meet with someone from the customer's receiving department, someone from accounts receivable may meet with someone from payables, someone from inside sales with purchasing, and so forth. Surveys covering the concerns of these areas are sent out to customer contacts ahead of time and used as foci for face-to-face discussions between General employees and customer contacts at the customer's worksite. Needs thus uncovered are translated into service improvements at General. An example of the success of this program which has made a more personal relationship between General and one of its clients involves styrofoam peanuts. In the past General had packed its product in styrofoam peanuts for this firm, but up[on delivery the peanuts would fly all over the workshop floor and get into the machines. Through the communication that the TCCT provides, this small problem was identified and quickly mended, securing a more concrete and friendly relationship between General Tool and that particular company. The company monitors its performance to the standard of zero defects in three formal ways: Errors that are corrected before they reach the customer are documented by an on-line quality control stop in the mainframe computer; errors which result in credits which are collated and reported through a PC error source analysis program; and anecdotal problems and critical customer incidents that are brought to light through less formal means, that might be otherwise missed. A special feature of service at General Tool revolves around its System Contract customers, customized partnering arrangements which provide streamlines sole source just in time purchasing for MRD items. These cost-plus evergreen contract customers are encouraged to audit General Tool factory invoices semi-annually to ensure that the company is charging them correctly. The overall service level standard to Systems Accounts is 95 percent (19 out of every 20 items is shipped complete within 24 hours) and performance is reported monthly to each Systems Contract customer. COMPENSATION LINKED TO PERFORMANCE: General Tool is on the way to a more comprehensive system of pay for performance. At present it is working with a consultant to sort through the various performance-based compensation issues. WORKER-MANAGEMENT RELATIONS: N/A STRATEGIC INTEGRATION OF BUSINESS: The company has placed an emphasis on integrating its customers' needs with the service GTS provides. For example, some customers' procurement processes were flowcharted by GTS and streamlined to reduce waste and speed up the process. This has created a long-term relationship between GTS and its main customers. GTS likes to believe that management and workers focus as much on relationships as on tasks. General would like to make itself the best place to work, and then the best place to buy, in order to create more humanistic relations. General believes that it is a market driven company catering to the individual needs of its customers by cultivating unique relationships; behind this ability lies the belief that in a service industry its people may be the only competitive edge a business can develop. REMARKS: General Tool has based their business plan on Baldrige criteria. ACCOMPLISHMENTS/AWARDS: The 1993 accuracy rate for all measured internal processes was 99.36 percent. Returns due to internal error rank less than 2/10 of one percent. General Tools' President, Bill Derville, has earned the honor of Distributor of the Year by his peers through Industrial Distribution magazine. SERVICE PROVIDERS: REFERENCES: ------------------------------------------------------------------- COMPANY: Georgetown Steel Corporation CORPORATE ADDRESS: P.O. Box 619 Georgetown, SC 29442 PLANT/BRANCH ADDRESS: SIZE (employees): 747 (584 are production and maintenance employees) UNION(S): United Steelworkers of America Local 7898 INDUSTRY: Steel wire rod for the spring, fastener, tire cord, wire, and cable industries SIC CODE: 3312 NEAREST METRO AREA/MILES: Charleston, South Carolina (60 miles) CONGRESSIONAL DISTRICT: SC-01 SECTOR: Private OWNERSHIP: Privately owned CEO: Don B. Daily Georgetown Steel Corporation P.O. Box 619 Georgetown, SC 01442 CONTACTS: George C. White Director of Industrial Relations Georgetown Steel Corp. P.O. Box 619 Georgetown, SC 29442 (803) 546-2525 ext. 222 James Sanderson President, United Steelworkers of America Local 7898 P.O. Box 619 Georgetown, SC 29442 (803) 546-2525 ext. 108 DATE: 04/10/95 COMPANY DESCRIPTION: Georgetown Steel Corporation was founded in 1969 and is a producer of steel wire rod. Its customers include a wide range of American industries, with the largest being the tire industry. The wire rod Georgetown produces can be drawn into material for steel-belted radial tires and tire beads. The company has an annual capacity of one million tons. Georgetown uses a technically sophisticated production process and has the only direct reduction process operation in the continental United States. The mill receives high grade iron ores from a variety of foreign sources. The plant recycles ferrous scrap for use as raw material in its conventional electric furnaces along with direct reduced iron. Georgetown had $293 million in sales last year. TRAINING AND CONTINUOUS LEARNING: Georgetown Steel offers a series of training opportunities for its workers. These opportunities include an apprenticeship program, a basic skills training program called "New Horizons," cross training, training in Statistical Process Control, and team building. The company has a federally-approved, four-year apprenticeship program. This program will supply the company with its high- skilled labor force. In addition to the common apprenticeable crafts, the company established the first hydraulic maintenance apprenticeship program in America. There were 180 employees who participated in the apprenticeship program and received their Journeyman Certification. The training is split between classroom work provided locally by the technical college, and on- the-job experience. The college faculty surveys employees and their supervisors in order to determine training needs, and then tailors course curriculum to meet those needs. There is a program at Georgetown Steel called "New Horizons." This program allows employees to upgrade their basic skills in such areas as mathematics, reading, writing, and time management. The learning materials in this program are designed around actual job requirements. Over one-third of the mill employees have signed up for one or more aspects of the New Horizons program. Time spent in the classroom while in the program is considered paid work time. Employees receive their normal wage rate while training in the New Horizons program. Training in this program remains on-site; teachers in the New Horizons program remain at the plant as full-time trainers. These trainers are obtained from the Horry-Georgetown Technical College. Georgetown Steel received a grant from the U.S. Department of Education for the hiring and retention of these on-site trainers. The Company has a 100 percent tuition reimbursement program for any employee who completes a job-related course and receives a grade of "C" or better. The Company has trained over 50 people in SPC techniques and has two hourly employees who are SPC technicians. Craft workers cross-train in order to learn all necessary skills within their discipline. In this way, workers are able to perform more duties, and be more flexible as the need arises. Workers do not have to rely on others to do certain tasks that they can now do themselves. For example, maintenance workers learn welding techniques so that they can make repairs on machines which would previously have required the assistance of a welder. EMPLOYEE PARTICIPATION: In 1987, the Company began efforts to increase employee participation in the mill. A consultant was retained for an extensive period of time, and assisted in training all employees in the techniques of team building. Skills taught included consensus decision making, brainstorming, problem solving, and effective group processes. The mill presently makes use of two types of teams: natural work teams and cross-functional teams. Natural work teams are organized around work functions in the mill; more specifically around the common bond of a process or specific piece of equipment (i.e., the rolling mill or continuous caster). The leader of the natural teams is in most cases the nominal supervisor of the area in which the team is functioning. Sometimes team members emerge as the informal leader. These leaders are encouraged to take an active role in heading the team. The second type of team, the cross-functional team, is in reality an ad hoc task force. These teams are formed as individual problems arise. The team then tackles this particular problem and is disbanded only after completion of the task for which it was created. This type of team is established in one of two ways. If an employee or group of employees identifies a problem that needs to be resolved, they organize themselves into a team on a voluntary basis and appoint a leader. The other method by which these teams are established is if management identifies a problem it would like to have solved. Management asks for employees to volunteer to be on a team to address the problem. The leader of this team is appointed by the team members, as in the other type. Both the natural and cross-functional teams have significant autonomy. Small changes are emphasized and can be implemented without managerial consultation. There is no limit to the size of changes that can be made, as long as they meet the requirements of the capital appropriations approval process. Employees have suggested changes as large as the purchase of a helpful piece of machinery which cost a half million dollars. The Company purchased the machine. There is a mill-wide steering committee (called the Joint Continuous Improvement Team). This team consists of members of the union leadership, hourly employees, and management on a 1-to- 1 labor/management ratio. This committee keeps track of and helps plan the functioning of the other types of teams. The company and union have jointly established a program called the Plant Safety Captains. This program utilizes joint safety teams for each shift crew which meets with the company president, safety director, and union representatives every Friday. This committee has contributed to the establishment of an exemplary safety record. Every quarter, teams of eight employees visit customers in order to view the results of their production efforts. Employees gain information as to the quality of the final product, customer needs, and any changes in the product or service that customers require. In this way, employees act as liaisons between customers and the company. Another example of employee participation at Georgetown is in regard to the recent purchase of a $20 million piece of equipment. While the equipment was in the process of construction by the European supplier, a team containing hourly workers visited the site to determine control layout, catwalk location, and other important considerations. Georgetown has identified the fact that its employees have significant knowledge regarding the production system, and that their input is crucial in sustaining high performance work. ACCESS TO INFORMATION: A quarterly publication highlighting events of importance to workers, and the company, is circulated throughout the plant. In this publication, the president of the company discusses the state of the business and what expectations there are for the near future, and provides a general review of overall plant operations. Financial data, orders, and market performance are detailed in this publication. There is also a weekly newsletter which details the previous week's performance in regard to safety, quality, and customer focus (what problems if any that customers are having). ORGANIZATIONAL STRUCTURE: Georgetown Steel has a flat organizational structure. There are only three organizational layers separating the president of the company from workers on the mill floor. The Georgetown plant is located on a particularly compact site. The lack of space necessitates very tight inventory control and raw material delivery schedules. The company has extensive contact with suppliers and customers through employee site visits. Groups of eight employees visit suppliers and customers for information exchange purposes. Representatives of suppliers and customers visit Georgetown for similar reasons. Information and feedback collected is used to make changes in quality and the production or distribution processes. In this way, Georgetown maintains a close relationship with its suppliers and customers. EMPLOYMENT SECURITY: Employment in the mill has been quite stable over the last seven or eight years. There have not been any layoffs since 1983. The turnover rate at Georgetown is only 2.1 percent per year. Management contends that in the case of a future financial downturn, it will implement job sharing and work sharing programs before considering layoffs. In the past, the company has shortened work weeks in order to retain its total work force. Hours were reduced to 32 per week instead of the usual 40, and layoffs were completely avoided. In this way, the company gives employees a sense of security and increased morale. SUPPORTIVE WORK ENVIRONMENT: Georgetown Steel offers a comprehensive employee assistance program. The company has contracted with a local service provider. Free counseling is made available to employees for a variety of problems; financial, substance abuse, disciplinary, marriage, children, and others. Employees avidly make use of this opportunity as can be seen in the number of hours of counseling utilized; approximately 85 hours per month. Each employee receives an annual wellness medical screening examination. This examination includes: testing for colon cancer, measurement of blood pressure and cholesterol, health risk evaluations, and fitness profiles, among others. Employees who enter a stop smoking program are assisted with counseling as well as with 50 percent of the costs of the program classes, and partial reimbursement for smoke ending patches. The company has also negotiated a preferred, group rate at a nearby health club thus making memberships affordable for workers. PRODUCT/SERVICE QUALITY: Georgetown Steel engages in benchmarking of leading firms in order to gain insight into new technologies and high performance work processes. The Georgetown mill in turn, is the destination of benchmarking teams from other steel and steel-using industries. Teams made up of eight employees visit customer sites in order to collect information that is integrated into the statistical process and quality control programs. The company employs a full-time customer service metallurgist for the purpose of answering questions relating to product quality. The Company recently received ISO 9002 certification. COMPENSATION LINKED TO PERFORMANCE: Georgetown Steel utilizes a series of compensation programs. There is a bonus system based on the mill meeting specific production and quality goals. In recent years, the incentive payment plan has yielded additional payments of between twenty and thirty percent on the typical worker's paycheck. In addition to the incentive payment system, there is a profit sharing plan that is based on financial and marketplace performance. WORKER-MANAGEMENT RELATIONS: Georgetown Steel has had contractual relations with the United Steelworkers of America for many years. Until six years ago, labor relations at Georgetown Steel were of a traditionally adversarial nature, typical of that time period in the U.S. The labor relations climate at Georgetown has been radically transformed into one with cooperative relationships, and characterized by extensive sharing of information and joint decision making processes. These mutual efforts include union leadership as well as rank and file workers as part of a problem solving and decision making mechanism. There are few matters of interest to the work force or union that are not the subject of extensive joint efforts. The company strives to show respect for the union and settles as many disputes as possible outside of the grievance procedure. The union is treated as another department in the company. All company financial information is shared with the union as well as with employees each month. All major changes in the company, including financial aspects, are explained and discussed with the union and workers before being implemented. The typical measures of good union-company relations, such as the number of grievances, arbitrations, etc., demonstrate the quality of this relationship. STRATEGIC INTEGRATION OF BUSINESS: The human resource function is integrated into the company's strategic planning. Planning for the numbers and types of skills needed, the type of training to be provided, and the utilization of human resources is a central part of the company's preparation for the future. In every decision, the impact on people is the first consideration. The human resources department participates in the Annual Plan, as well as all long range strategic planning. REMARKS: This is a small mill in a mature industry which requires sophisticated technology and an advanced labor relations climate. The mill achieved its present position through a concentrated effort on the part of the company and union to break out of the old-style adversarial relationship. Their accomplishment is evidence of the changes that can be made when there is a determined effort based on mutual trust, shared responsibility, and communication. ACCOMPLISHMENTS/AWARDS: The mill has received numerous awards recognizing its training and safety programs. This plant now holds the world record for the continuous sequence casting of 310 heats. The previous record of 214 heats was held by a Japanese mill. SERVICE PROVIDERS: Horry-Georgetown Technical College 2050 Highway 501 Conway, SC 29526 The Miller Consulting Group Inc. 5600 Glenridge Drive Suite 275 Atlanta, GA 30342 Georgetown Alcohol and Drug Abuse Commission 1423 Winyah Street Georgetown, SC 29440 REFERENCES: ------------------------------------------------------------------- COMPANY: Granite Rock Company CORPORATE ADDRESS: P.O. Box 50001 Watsonville, California 95077-5001 PLANT/BRANCH ADDRESS: SIZE (employees): 400 UNION(S): International Union of Operating Engineers International Brotherhood of Teamsters Laborers' International Union of North America International Association of Machinists International Brotherhood of Electrical Workers INDUSTRY: Wholesale distributor of construction material and mining of dimension stone SIC CODE: 5032, 1411 NEAREST METRO AREA/MILES: San Francisco, CA CONGRESSIONAL DISTRICT: CA-16 SECTOR: P OWNERSHIP: Private CHIEF EXECUTIVE: Bruce Woolpert Chief Executive Officer Granite Rock Company P.O. Box 50001 Watsonville, CA 95077 CONTACTS: Shirley Ow Director of Human Resources Granite Rock Company P.O. Box 50001 Watsonville, CA 95077 (408) 724-5611 David Daneluz Business Manager Local 216, Teamsters 1103 Airport Blvd. South San Francisco, CA 94080 (415) 761-3577 Max Spurgeon District Representative International Union of Operating Engineers 760 Emory Street San Jose, CA 95126 (408) 295-8788 DATE: 11/15/94 COMPANY DESCRIPTION: Granite Rock Company is the largest American-owned and operated construction materials supplier in Northern California. The company was founded in 1900, and today operates in 15 different locations in a six-county area of Northern California ranging from San Francisco to Monterey. Granite Rock produces rock, sand, and gravel aggregates; ready-mix concrete; asphalt; road treatments; and recycled road-base material. The company also retails building materials made by other manufacturers and runs a highway paving operation, called Pavex Construction Company, that specializes in road construction and restoration projects, and supplies cement treated and roller compacted concrete. Most of Granite Rock's major competitors are firms owned by multi- national construction-material companies. In 1993, Granite Rock Company had sales of $100 million. TRAINING AND CONTINUOUS LEARNING: Granite Rock employees averaged 32 hours of training in 1993 at an average cost of $1,850 per employee (exclusive of safety training). Granite Rock's investment in employee training is approximately three times more than the mining industry average, and 13 times more than the construction industry average. The cornerstone of Granite Rock's training efforts is the company's unique career development program, called the Individual Professional Development Plan (IPDP). Approximately 85 percent of the Granite Rock work force participates in the plan, which is voluntary for bargaining unit employees, and mandatory for salaried employees. In carrying out the program, a Granite Rock employee and his or her supervisor both complete an IPDP form each year. The form includes an outline of the worker's job responsibilities, a review of results based on the previous IPDP, identification of the worker's exceptional job strengths, and a development plan outline for the coming year. After each filling out the IPDP independently, the worker and his or her supervisor confer to develop a rough draft of the worker's development plan. The supervisor then takes the development plan to a roundtable meeting with members of the executive meeting (including the CEO), which are scheduled approximately 15 times throughout the year. Through the roundtables, supervisors are able to obtain advice on ways their employees can meet their development objectives. The roundtables also provide an avenue by which the executive committee can assess the organization's skill base, and determine particular areas which need addressing in the company's training program. Following the roundtable, workers and their supervisors discuss the recommendation and develop a final agreement which lists the worker's development objectives for the year, and delineates specific steps for meeting these objectives. The final agreement also includes measurement methods including specified development steps and demonstrations of knowledge. In 1992, Granite Rock employees achieved 88 percent of their IPDP goals. The IPDP process serves as the springboard for the company's training plans. Each year, Granite Rock offers an extensive array of training opportunities on-site at what it refers to as "Graniterock University." Most of the courses offered are the direct result of needs identified by the IPDP process. Courses offered at the university generally fall into one of five categories: quality-process skills; maintenance skills; sales and service skills; product knowledge and technical skills; and classes on health, wellness, and personal growth. Many of the courses are conducted by Granite Rock employees, in addition to courses taught by outside experts, and suppliers. The company also covers expenses for outside training courses, including travel expenses, meals and lodging, and employee wages for a minimum of four hours and a maximum of eight hours. Granite Rock publishes a listing and ratings of available courses from associations with an affiliation with the company, in a weekly company newsletter called Tuesday Facts. The company will also pay for all college courses taken by employees, as long as the employee achieves a "C" grade in the course. Granite Rock officials attribute annual savings of $2 million in workers' compensation premiums to the company's investment in training. Granite Rock's CEO also notes that after the company increased its investment in employee training, its customer service (which Granite Rock is renowned for today) performance increased. EMPLOYEE PARTICIPATION: There is wide employee involvement in decision making at Granite Rock Company. Employees participate in teams responsible for both equipment purchases and plant renovations. Company officials note that employees tend to be much more careful about spending money than even managers, because they typically look for the fundamental equipment features that will improve the performance of the job. Teams of employees participate in benchmarking activities, and visit other companies to learn about new equipment and processes. They also participate in hiring decisions. People who will potentially report to a person under consideration for hiring, have the opportunity to interview all candidates, and make recommendations to the hiring manager who ultimately makes the final decision. All managers at Granite Rock maintain an open-door policy, including the CEO, who also makes his home phone number available to employees. The company annually surveys all employees in 14 different categories, and then publishes the results along with interpretations of the surveys, and suggested directions for improvement. Based on suggestions from the surveys, task forces are then created to examine problems and implement solutions. ACCESS TO INFORMATION: Granite Rock Company has two newsletters for employees. A weekly newsletter, called Tuesday Facts, is sent by Fax to each of Granite Rock's 15 branches every Tuesday and shared with employees. The weekly newsletter contains updated information about the different branches, new employees, operating results, the business economy, as well as the company's training schedule. Every quarter, a more elaborate newsletter, called RockTalk, containing more detailed articles is sent to the home of each employee. Employees and executive staff at Granite Rock also share information with one another through the company's unique Recognition Days Program. Once per year, executive staff members together with workers from various Granite Rock sites, visit each branch of the company to learn how things have been going. During the day, they typically tour facilities, view workers' innovations to promote customer service, quality, and efficiency, and take rides with drivers to view operations. At the end of the day, a Recognition Days dinner is held. Granite Rock's CEO typically follows up the visits by producing a memo listing the accomplishments and innovations noted during the visit, which is in turn shared with the employees of the branch site. During the 1987 Recognition Days, there were 60 non-management directed improvements reported by employees, and in 1993, that number increased to 593. ORGANIZATIONAL STRUCTURE: Since Granite Rock began its quality initiatives in 1987, it has also decreased the management levels and flattened the organizational hierarchy. The company depends heavily on work teams, and employees and managers typically form teams to meet various purposes. At one point, Granite Rock formed ten Corporate Quality Teams, which were cross-functional employee teams created to examine specific issues identified as needing attention within the company. In a similar vein, employees routinely form project-quality teams, which address specific quality problems and then disband. Task forces are also created to make company improvements in areas identified by Granite Rock annual employee surveys as needing attention. At the time of this profile, there were approximately 50 different teams at Granite Rock in a company with only 400 employees. At any one time, there have been as many as 100 different active teams at Granite Rock. Most employees participate in at least one team. EMPLOYMENT SECURITY: Granite Rock has not had a layoff since 1982. Employment has remained fairly stable in recent years, or in fact has declined slightly with significant increases in company productivity. To prevent layoffs, the company has depended on attrition as a form of downsizing. SUPPORTIVE WORK ENVIRONMENT: A special seminar on family development is typically offered as part of the Granite Rock training program, and in the past, has included both spouses, and children of employees as participants. Granite Rock encourages its employees to actively involve themselves with schools in the area. To enable employees to effectively participate in their children's education, the company has a Family-School-Business Partnership program, which allows any employee to take up to four hours off per year for parent-teacher conferences. Granite Rock also participates in the Adopt-a-School program, and Granite Rock employees have often gone to high schools and elementary schools in the area to teach students about safety. Safety is one of Granite Rock's nine corporate objectives, with the objective "to operate all Granite Rock facilities with safety as the primary goal. Meeting schedules or production volume is secondary." Granite Rock's safety performance is twice as good as the industry average, which has resulted in millions of dollars in savings for the company. Still, the company's 1993 employee survey indicated that Granite Rock workers were frustrated with the level of consideration given by managers to their safety suggestions. This resulted in the development of a safety task force made up of a cross-section of employees from throughout the company. The team task force reviewed the company's safety program, and developed and published a new safety program for 1994. In part, because of Granite Rock's extensive investments in employee training, the company today depends primarily on promotion-from-within to fill most positions. In 1987, only 24 percent of open positions at the company were filled by internal candidates, but the percentage has steadily grown to approximately 65 percent today. The company's greater dependence on internal promotions is also a reflection of strengthened company policies to promote internal promotion. Granite Rock posts all open positions, including those filled by collective- bargaining workers, for 10 days prior to the start of any outside recruiting efforts. The company also encourages internal promotion through its Try-A-Job Program, through which employees have the opportunity to spend a day learning about a job before they apply for it. PRODUCT/SERVICE QUALITY: Granite Rock Company started a Total Quality Program in 1985, which emphasizes satisfying two types of customers, the contractors who typically make purchasing decisions, and the end- product users who ultimately pay for the construction made with Granite Rock materials. The company has made large investments in computer-controlled processing equipment, and practices extensive use of statistical process control to ensure quality. Many Granite Rock employees are trained in statistical process control, root-cause analysis, and problem-solving methods. In the early stages of Granite Rock's quality initiatives, the company outlined corporate objectives for the next decade, with an ultimate goal of achieving a 10 percent lead over its nearest competitor for each indicator of customer satisfaction. The company sets annual improvement targets, and these targets are translated into goals for each branch and division for use in the development of their implementation plans. There are ten multi- functional Corporate Quality Teams that oversee and help align improvement efforts across divisions and throughout the entire organization. Granite Rock places heavy emphasis on measurement to ensure high levels of quality and customer service. In 1993, the company had 66 baseline goals which were the specific action areas which the company measured itself against to determine performance. One form of measurement for which Granite Rock is well recognized is the company's customer surveys. Granite Rock's Report Cards, or annual customer surveys, ask buyers to rate the company in comparison to its competitors. Every three to four years, the company surveys each customer in a more in-depth fashion to gather more detailed information about customer needs and wants. To ensure customer satisfaction, the company implemented the Granite Rock Short-Pay Method, through which customers can discount from the price of their invoices, the costs of any Granite Rock products or services that they feel are unsatisfactory. COMPENSATION LINKED TO PERFORMANCE: Granite Rock Company has a formal cash incentive recognition program. The company's Incentive Recognition Awards recognizes employees with cash awards for accomplishments and continuous improvements in any of Granite Rock's nine corporate objectives. Granite Rock's executive committee at year-end privately hands out cash awards to employees ranging from $100 to several thousand dollars. Approximately 35 percent of the Granite Rock work force, or 130 people, received cash awards through the Incentive Recognition program in 1993. The granting of awards has increased steadily since the initiation of the program in 1987, when only 15 percent of employees received awards. WORKER-MANAGEMENT RELATIONS: Approximately 250 of Granite Rock's 500 employees are members of five different labor unions. There are 15 different labor contracts that cover the unionized work force at Granite Rock. The Teamsters and Operating Engineers represent employees at the company's operating branches, while all five unions represent employees at the company's Wilson Quarry. Both company and union officials point to a cooperative relationship between Granite Rock and the different unions, and one union official refers to Granite Rock's training practices as a model for other companies. Granite Rock negotiates new labor contracts every three years. One union representative who works with Granite Rock indicates that labor negotiations with Granite Rock are typically relatively smooth, and that the company gives reasoned explanations for its contract aims. He also points out that the company lives up to its agreements, stated in the labor contract. Because of its investment in its work force, Granite Rock negotiated greater flexibility in its labor contract with the Teamsters than is usual. The Teamsters agreed to relax the traditional "hiring hall" requirements for Granite Rock because of the company's internal promotion policies. STRATEGIC INTEGRATION OF BUSINESS: One of Granite Rock's nine corporate objectives focuses specifically on people (the other eight include safety, customer satisfaction and service, production efficiency, financial performance and growth, community commitment, management, profit, and product quality assurance). The company's people objective is "to provide an environment in which workers gain a sense of satisfaction and accomplishment from achievements, to recognize individual and team accomplishments, and to reward people based upon contributions and job performance." Granite Rock's "management" objective points to the company's empowering work environment. The company's objective is "to foster initiative, creativity and commitment by allowing the individual greater freedom of action (in deciding how to do a job) in attaining well-defined objectives (the goals set by management)." The use of new innovative technology is also a key part of Granite Rock's strategy, as the company's Arthur R. Wilson Quarry is one of the most advanced aggregate production facilities in the entire nation. In response to customer concerns over rising trucking costs, Granite Rock developed GraniteXpress, a construction industry equivalent to an automated teller machine. Using this automated system, a truck driver inserts the equivalent of a credit card into a terminal, punches in the type and amount of aggregate desired, and then goes to the company's loading facility where the truck is accurately filled over an electronic scale. The system is available, 24 hours a day, seven days a week, and has reduced the amount of time a trucker has to spend at the quarry from 24 to 9 minutes. REMARKS: Several Granite Rock employees have benefitted uniquely through the company's Individual Professional Development Plan program. Through this program, employees diagnosed with dyslexia have received company-sponsored help and training and have learned to read. ACCOMPLISHMENTS/AWARDS: During the last seven years, Granite Rock's market share has increased 88 percent, in spite of the fact that it charges a 6 percent premium for concrete and asphalt because of the company's superior quality and customer service. The company's concrete products consistently exceed industry performance specifications by 100 times, and the quality variability of some of its products has decreased to six-sigma level (3.4 errors per one million units). The company's productivity has increased to the point where revenue earned per employee is approximately 30 percent above the national industry average, and its on-time delivery standard has increased from 68 to 95 percent. Granite Rock Company won the 1992 Malcolm Baldrige National Quality Award in the small business category. It is also a 1994 recipient of the Personnel Journal Optimas award in the Competitive Advantage Category. SERVICE PROVIDERS: Granite Rock Company points to the criteria for the Malcolm Baldrige National Quality Award, sponsored by the U.S. Department of Commerce, as having had a significant impact on the company's quality initiatives. Granite Rock Company was a 1992 winner of the Baldrige Award, which disqualified the company from applying for the award for the following five years. However, because of the value of the criteria and the application process, Granite Rock has continued with the application process, and in 1993, hired former Baldrige examiners to score the company based on the Baldrige criteria. REFERENCES: Anfuso, Dawn. 1994. "Self-directed Skills Building Drives Quality." Personnel Journal, April 1994, 84-93. Austin, Nancy K. 1993. "Where Employee Training Works." Working Woman, May 1993. 23-24 Barrier, Michael. 1994. "Learning The Meaning of Measurement." Nation's Business, June 1994, 72-74 Case, John. 1992. "The Change Masters." Inc., March 1992, 58-70. Kendrick, John J. 1993. "Granite Rock Co." Quality, January 1993, 31. Malcolm Baldrige National Quality Award: Profiles of Winners, 1988-1993. Gaithersburg, MD: NIST. Personnel Journal. 1994. "Staying a Stone's Throw Ahead of Competition." January 1994, p. 56. Personnel Journal. 1993. "Well-designed HR policies Improve TQM Initiatives." August 1993, p. 48N. Setzer, Steven W. 1993. "Firm's Total Quality Ritual Pays Off." ENR, February 8, 1993, p. 31. Training & Development. 1993. "Taking Training for Granite." February 1993, 7-8. Triplett, Tim. 1994. "Satisfaction is Nothing They Take for Granted." Marketing News, 6-7. Welles, Edward O. 1991. "How're We Doing?" Inc., May 1991, 80-83. ------------------------------------------------------------------- COMPANY: Herman Miller, Inc. CORPORATE ADDRESS: 855 East Main Avenue Zeeland, Michigan 49464-0302 PLANT/BRANCH ADDRESS: SIZE (employees): 5600 UNION(S): non-union INDUSTRY: Office furniture SIC CODE: 5021 NEAREST METRO AREA/MILES: Grand Rapids, Michigan (25 mi) CONGRESSIONAL DISTRICT: MI-09 SECTOR: Private OWNERSHIP: Publicly-Owned Ticker-MLHR Listed on NASDAQ CONTACTS: Craig Schrotenboer Vice President for People Herman Miller, Inc. 855 East Main Avenue Zeeland, MI 49464-0302 (616) 654-8775 DATE: 08/16/94 COMPANY DESCRIPTION: Herman Miller, Inc. is engaged primarily in the manufacture and sale of furniture systems, products, and related services principally for offices and, to a lesser extent, for health care facilities and other uses. Through research and design, the company seeks to develop innovative solutions to real problems in working and healing environments. Net sales of $50 million in 1976 grew to $255 million in 1981; net sales in 1993 were $855.7 million. TRAINING AND CONTINUOUS LEARNING: Herman Miller, Inc. uses a combination of on-the-job and classroom training. The trend is towards more experiential training at the workplace. Currently the formal classroom curriculum represents approximately 20 percent of all training. Minimum skill requirements are insured, as well as classes in SPC, TQM, interpersonal skills, decision-making structure, listening, and the organizational atmosphere at Herman Miller, which has been moving towards the interpersonal and away from the hierarchical. Herman Miller maintains a tuition reimbursement program. A request form is filled out and reviewed by the individual work team leader in order to establish a tie between the potential class and the furtherance of the company. Somewhere between 12 and 15 percent of Herman Miller employees use the reimbursement system, which was established some 15 to 20 years ago. Cross-training is a part of Herman Miller, but mostly on the manufacturing side. In the knowledge worker arena, cross- functional work teams move towards a more relational existence with less barriers and classifications. The manufacturing cross- training is aided by 'virtual reality' strategy sessions in which employees are able to see the prospective future of the company. Employees view the organizational needs in order to maintain a competitive advantage. Teams are then created and aligned around new strategic initiatives. That breadth and depth of knowledge is an important part of Herman Miller's organizational structure. EMPLOYEE PARTICIPATION: Since as early as 1950, Herman Miller, Inc. has based its healthy work environment on the Scanlon Plan. This plan can be broken down into four different parts: 1) Identity; the employee have the right to know what is the right job and how to do that job right, as well as the important goals of the company. 2) Participation; employees have a voice in decision-making and the opportunity to influence management. 3) Equity; among the employees, stockholders and customers. 4) Competence; in that all employees have a fair chance at achieving their personal potential. Work teams at Herman Miller consist of from six to 45 or 50 workers, depending on the nature of the work or responsibilities. The smaller groups tend to come from the knowledge side of the workplace, where the jobs and responsibilities are much more complex, and work is done in a more integrated manner. On the manufacturing side where work is more alike and repetitive, bigger groups are formed to solve general problems. These work teams are on their way to becoming more self-directed. Currently some of the teams determine their own budgets and make decisions on such key issues as compensation and discipline. These more independent groups are headed by facilitators and coaches as opposed to traditional managers. Most work teams, however, are currently able to recommend resources on their own. Performance appraisals at Herman Miller are a combination of manager and peer reviews. Some reviews are closer to 360 degrees where customers, work team leaders, and peers all combine to perform appraisals. This process is used in approximately one third of work teams. These are done more often in the office, and less in direct production. Work team leaders are also evaluated by their employees. Annual "Renewal Surveys" are given to employees in order to receive feedback in the areas of behaviors between employees and work team leaders, compensation satisfaction, how well the company knows its customers, and quality, among others. The questionnaire is approximately 120 questions in length and takes the employees between 30 and 45 minutes to complete. Results of the survey, administered and monitored by the People Department, go directly to Senior Management. At this time corrective action plans are developed in areas which fall below expectations. Specific initiatives are launched by teams made up of employees from a diagonal slice in all departments involved. Herman Miller's suggestion office is a part of the People Department. One segment of the training at Herman Miller revolves around the suggestion office. Employees are trained in how to use the office and in completing an actual suggestion. The forms for writing a suggestion are available at all information kiosks at Herman Miller. The suggestions that help with cost savings are noted, and employees with 10 or more accepted suggestions or those who save the company $100,000 in implemented cost savings are invited into an idea club. Herman Miller saves an average of $8-12 million per year. This money is not given directly to the employee who makes the suggestion, but is divided among all of the employees, as Herman Miller believes that the whole team, not just one individual is capable of enhancing the company. Well over 50 percent of the suggestions made are implemented. Herman Miller tries to continuously improve and respond immediately, so as not to lose credibility with regard to the suggestion office. ACCESS TO INFORMATION: A large system of internal communications is part of Herman Miller's information system. Business realities and issues help to make up the identity part of the Scanlon Plan. All employees know the challenges that Herman Miller faces on a daily basis. Information is shared in a variety of ways, although newsletters and meetings are two of the most popular means of relaying such information. A monthly business review is used to show employees where Herman Miller stands with regard to performance. Product and service quality, stocks, suggestions, and cost savings are among those areas discussed. A video is shown at the monthly business review meeting to all work team leaders, who then take the information back to their departments, where it is further discussed. ORGANIZATIONAL STRUCTURE: Herman Miller is moving towards a flatter organizational structure. It hopes to pull in appropriate groups in order to solve specific problems as they arise. Herman Miller's CEO has 35 people reporting to him instead of the smaller number that is seen at most other companies. These 35 people are not, however, a decision making body. They are more of an informational forum in order to set strategic direction and prioritize future work. This information is then disseminated through more traditional functional groups who solve the given problems. If there is not previously a group in place, a new one is established. It would be difficult to find an organizational chart at Herman Miller, as clustering and regrouping are every day practices. Overall, Herman Miller prides itself on being an adaptable, relational organization. EMPLOYMENT SECURITY: Herman Miller realizes that in this changing global economy, employment security is not something that can be guaranteed, however, their record is very impressive in this regard. Only two periods in the history of Herman Miller have seen layoffs, and even those two times saw very small impacts on employment. Each of these occurrences showed only 10 to 15 employees of the approximately 5,400 were laid off. Herman Miller does believe it can promise each of its employees an increase in knowledge, and skill level, in order for them to become more valuable to Herman Miller or to any other outside employer. In the event of layoffs, Herman Miller provides its employees with outplacement support. Resume development and career exploration are just two areas where Herman Miller helps outgoing employees. While most other organizations maintain golden parachutes for high executives in the event of a hostile takeover, Herman Miller includes all employees with a silver parachute program. This provides all employees with an assessment of their skills and capabilities, career counseling, placement, compensation, and continuance for a certain period of time depending on seniority. SUPPORTIVE WORK ENVIRONMENT: Employee Assistance Programs are available to Herman Miller's employees. These include local phone networks in order to deal with emotional support. A clinical psychologist is available for the employees. There is support through the benefit plan, where employees receive six psychological visits before dipping into their benefit plan, while Herman Miller pays for 80 percent of the costs. EAP's at Herman Miller are preventative as well as educational. Flexible and alternative work hours are a part of Herman Miller's attempt to make work easy for its employees. Job sharing, flextime, and a small amount of telecommuting (currently around 5 percent) help to make up the options for employees. Keeping a balance between work and family is important in the culture of Herman Miller. Vacations are encouraged, and employees are even able to purchase extra weeks of vacation. Another support comes in the form of flex credit for eldercare and dependent care. Herman Miller maintains programs for wellness and stress management. Community support is encouraged, and Herman Miller itself is involved in local mentoring programs. Herman Miller, Inc., which maintains a non-smoking workplace, also provides pre- retirement counseling for its employees. PRODUCT/SERVICE QUALITY: Herman Miller is ISO 9000 certified, and maintains quality manuals at all work stations. The ISO 9000 format is built into Herman Miller training, and all employees are versed in SPC 6- Sigma. Continuous improvement and process mapping are taught as well. Quality targets are set after management review. COMPENSATION LINKED TO PERFORMANCE: After becoming a public corporation in 1970, the company instituted a PAYSOP Program in 1983 that enables every full-time employee with at least one year of service to be a shareholder in the company. This practice promotes an increased sense of accountability and responsibility for all employees. Thirty percent of employees take advantage of this opportunity, and are able to purchase stock at 85 percent of its market price. A gainsharing program through the Scanlon Plan at Herman Miller is based on customer service, profitability, asset utilization and cost savings. In second quarter, 1994, employees earned 6.3 percent of gross salary for the past three months. The average bonus is approximately nine percent, and has no cap. For example, one quarter it was as high as 37 percent. Executives' shares are based upon the salaries of middle management, not their own, in order to tone down their shares. The actual bonuses are distributed as checks entitled, "Our Earned Share." A profit-sharing program is based upon contributions made by employees and the company from net profits. Company contributions to employees are based on an individual's compensation and length of service. Employees are eligible to withdraw funds when their employment terminates by retirement or separation. As mentioned before, employees' suggestions that result in cost savings are distributed evenly amongst the employees. This is because of a concern of unhealthy internal competition over ideas, and has proven successful. WORKER-MANAGEMENT RELATIONS: N/A STRATEGIC INTEGRATION OF BUSINESS: Herman Miller was one of the first companies to promote most of these employee-oriented practices. The Scanlon Plan has been in place since 1950, and is well-ingrained into the corporate culture. Herman Miller is happy with the results and has many awards to show for its efforts. REMARKS: Herman Miller can also be cited for linking the pay of its CEO to that of its employees. Currently, the CEO is not allowed to be paid 20 times more than the average employee. ACCOMPLISHMENTS/AWARDS: Herman Miller was named one of the 100 Best Companies to Work for in America by Robert Levering, Milton Moskowitz, and Michael Katz. Savvy magazine cited Herman Miller as an outstanding place for women to work. Working Woman magazine cited Herman Miller as one of the 85 best companies for working mothers. Herman Miller was awarded "Best Practice Company" by Financial World magazine in 1991. In 1986 and 1989 Herman Miller was listed among Fortune magazine's top 10 most-admired of all companies in the United States. Carl Bertelsmann Prize given in 1989 by the German Bertelsmann Foundation for expanding the concept of employee ownership--the first US company honored. Business Ethic magazine's 1989 Excellence in Ethics award for expanding the concept of employee ownership. National Association of Suggestion Systems 1989 and 1990 Organizational Group Award for the Highest Savings per 100 Eligible Employees Ratio. SERVICE PROVIDERS: REFERENCES: Nelson-Horchler, Joani. 1991. "The Magic of Herman Miller." Industry Week, February 18, 1991. Calminiti, Susan, 1992. "The Payoff From a Good Reputation." Fortune, February 10, 1992. Mitchell, Jacqueline. 1992. "Herman Miller Links Worker-CEO Pay." Wall Street Journal, May 7, 1992 Johnston, Robert. 1991. "Herman Miller, Inc.: Employees as Owners." High Performance Workforce: Corporate Human Resource Success Stories. Washington, DC: National Association of Manufacturers. ------------------------------------------------------------------- COMPANY: Hunt Wesson (wholly owned subsidiary of ConAgra Corporation) CORPORATE ADDRESS: One ConAgra Drive Omaha, Nebraska 68102-5001 PLANT/BRANCH ADDRESS: P.O. Box 1759 Memphis, Tennessee 38101 SIZE (employees): 200 UNION(S): United Food and Commercial Workers, Local 515 INDUSTRY: Vegetable oils SIC CODE: 2079 NEAREST METRO AREA/MILES: Memphis, Tennessee (0 miles) CONGRESSIONAL DISTRICT: TN-09 SECTOR: Private OWNERSHIP: Subsidiary of ConAgra Corp. ConAgra ticker symbol - CAG. ConmAgra stock is listed on the New York Stock Exchange and traded on the Boston Stock Exchange. CONTACTS: Mr. Ray Carroll Plant Manager Hunt Wesson 1351 Williams P.O. Box 1759 Memphis, TN 38101 (901) 726-6929 Mr. John Canada President United Food and Commercial Workers Local 515 4549 South 3rd St. Memphis, TN 38103 (901) 785-4300 DATE: 01/10/95 COMPANY DESCRIPTION: Hunt Wesson is the largest producer of edible vegetable oils in the United States. The parent company (ConAgra) is one of the largest processors of agricultural products in the world. The Memphis plant receives unrefined vegetable oils from crushing plants and refines them into edible oils for human consumption, marketing them under the brand name Wesson. The plant ships over 14 million cases of vegetable oil annually to retail grocery stores and institutional establishment (hospitals and restaurants). The workforce is made up of 140 union members and 60 managers and staff. TRAINING AND CONTINUOUS LEARNING: The Company provides employees the opportunity to attend numerous colleges, trade and technical schools in the Memphis area and has a tuition reimbursement program. The Company views virtually any learning activity as being in some sense job related and consequently reimburses college and technical school tuition in a very broad range of disciplines. To date, no request for training or tuition reimbursement has been rejected on the basis that it is not job related. A passing grade is required. The plant budgets for approximately fourteen days per year for each employee to participate in training. There is extensive on the job training designed to cross train workers and enable them to become multi-skilled. The plant is organized into work teams and these teams identify training needs and takes steps to meet them. Skill requirements are tied directly to departmental and team standards and all team members are required to meet minimum effectiveness levels. Before introducing Hunt-Wesson's New Work System, all 200 employees attended three weeks of training on the new work systems, business concepts, and hands-on team skills. Team advisors and union stewards received additional training. EMPLOYEE PARTICIPATION: The plant is organized along a "New Work System Design." Employees have been organized into self-directed work teams. Teams take responsibility for their performance in areas including: safety, production, quality, on-time delivery, sanitation, and materials, to name a few. Each employee is expected to learn each of the jobs on his/her team and rotate among them. After proper training, team members also have input into all aspect of the hiring process, from setting criteria to making final recommendations, although managers make the final hiring decision. Teams are led by an hourly employees serving as coordinators and performing many of the functions traditionally associated with management; scheduling of jobs, workers, etc. Teams usually have more than one coordinator at a time, taking responsibility for different team activities. Team members rotate through the job of coordinator on a regular basis to give each employee a chance to learn about the business while taking advantage of his or her unique talents. Former supervisors now act as Team Advisors, performing long- range business and developmental needs. The Advisors also supply leadership, support, training and expertise to the team. Management gives the work force the production requirements which depend on marketing, and the work force, led by coordinators, schedule the work. The operations coordinator takes care of the minute by minute requirements that may arise on the production floor. There is also a quality control coordinator, a sanitation and safety coordinator, and a training coordinator. There is a 16-member plant-wide labor-management advisory committee containing equal membership from Union and Company leadership. Included on this Committee are department heads, front-line supervisors, union officials and rank-and-file employees. This Advisory Committee was originally established in 1989 with the dual purpose of repairing the strained relationship between the union and management and to achieve long-term success. This committee sets broad guidelines for the overall operation of the plant and has a longer time perspective that the departmental committees. Thus, the day to day running of the plant is largely in the hands of the work force, with management assuring that they have the necessary materials and supplies to fulfill production needs. The short term focus has been delegated to the plant work force. There are four departments in the plant. Each department has a committee containing both production workers and managers. The coordinators are members of these committees, which are responsible for overall department operations and policy. Among other responsibilities, the departmental committees establish performance standards for the teams and hold them accountable for meeting these standards. In addition, each department has a training and certification committee responsible for setting training standards, developing materials, managing training and certification activities, and approving pay increases. When needed, ad hoc plant committees are formed to address issues. These committees may address such issues as pay, training, and safety. ACCESS TO INFORMATION: The plant operates on the basis of the philosophy that employees can more effectively know what to do on the job if they have a great deal of information about the business and their role in making it successful. Plant advisory committee members get regular updates on business results and prospects. This information is then disseminated to the work force in team meetings. There is a monthly newsletter that goes to all employees. In general, information sharing is one of the key underlying principles of doing business in the Memphis plant. ORGANIZATIONAL STRUCTURE: The organization is flat. There are only three functional layers with persons who previously would have been designated as supervisors now fulfilling the function of staff advisors. The work teams report directly to the departmental manager, who in turn reports directly to the plant manager. Activities within the plant are organized into two business unit (processing and packaging). These units have the responsibility for achieving business results. Consistent with this structure, support activities such as maintenance and quality control act as suppliers, with the production units acting as their customers. Representatives from these two function sit on production teams and departmental training committees. The organizational structure has allowed Hunt-Wesson to decentralize responsibility to the lowest possible unit in the plant (where the work is being performed) and to establish broad responsibility for the success of the plant, rather than the narrow responsibility found in traditionally organized workplaces. The plant has developed very close relationships with suppliers and customers. Suppliers' employees visit the Hunt-Wesson plant and customers and suppliers receive visits from worker teams from the plant. The plant schedules the delivery of raw materials (the unrefined vegetable oils from crushing plants) to minimize on-site storage (just-in-time delivery), and further schedules production and packaging so as to minimize inventories of finished product. In the last five years, the measure "inventory turns" has improved 260 percent. EMPLOYMENT SECURITY: In 1992, an agreement to implement the new work system led to the elimination of approximately 15 percent of the workforce. These employees were mostly part-time employees, working 6-7 months per year. The remaining union employees were offered guaranteed year-round employment security. Labor savings from the layoff were applied towards higher wages and additional skills training. The company has not had a layoff since it has implemented the new work system and operate as a team based operation. The high degree of job security that has been provided has greatly reduced turnover and the associated costs of hiring and training new employees. SUPPORTIVE WORK ENVIRONMENT: The plant has an employee assistance program of the conventional type which is part of medical insurance plan. The certification program established explicitly requires departments to provide assistance or alternative assignments to employees with disabilities. PRODUCT/SERVICE QUALITY: In the highly competitive edible oils industry, consistent high quality is necessary for survival. As such, a process of continual improvement (CI) has been implemented, and CI being a fundamental goal of the self-directed work teams. A four-part Total Quality Management process has been implemented that focuses team efforts on related activities: Standardization, Conformance, Compliance, and Improvement. Processes continue to be standardized, with departments developing operating manuals, establishing procedures to collect and chart data, and using statistical controls to measure outputs and guide decision-making. COMPENSATION LINKED TO PERFORMANCE: The plant has a pay for skills program which encourages employees to broaden their skills. Jobs are broken down into skill blocks which are primarily job specific. As a result of the pay-for- skills programs, employees may earn up to 20 percent more than the standard rates prior to the plan's implementation. WORKER-MANAGEMENT RELATIONS: Union-Management relations in this plant can be described as a cooperative partnership. They have gone from traditional (with the usual adversarial character) to one in which the paries actively rely on each other. A work stoppage in 1988 was a critical event that caused both parties to recognize their common survival needs. The joint labor management plant advisory committee has contractual authority to make mid-term changes in the collective bargaining agreement as it deems them needed. The 1993 negotiations were conducted in a way that had many of the characteristics of problem solving and interest-based negotiations. The agreement has a simplified grievance procedure which has many of the characteristics of a problem solving process rather than a grievance procedure of the conventional type. Overall, the goal of the labor-management relationship is to be partners in the continued success of the plant. Both parties have made an explicit commitment to provide: quality goods and services to customers, healthy profits to the corporation, good working conditions and living standards to the employees, and to be a responsible members of the community. A structured problem solving model has been implemented to handle all grievances, conflicts, and discipline. The process is based on early intervention through one-on-one discussions and a team- based approach. When the teams are unable to solve the problem, managers and union officials step in. Only discharge and occasional items of contract interpretation ever reach the grievance stage. STRATEGIC INTEGRATION OF BUSINESS: REMARKS: ACCOMPLISHMENTS/AWARDS: In 1994, this plant was awarded the Commissioner of Labor Excellence in Employee-Employer Relations Award for the State of Tennessee. From 1988 to 1994, the Hunt-Memphis plant achieved a number of results demonstrating the success of the Partnership. Productivity, cost efficiency, inventory turns, yields (measured by both waste and downgraded product) have all increased and energy usage has decreased. Additionally, human resources measurements such as absenteeism, turnover, grievances, and safety measurements such as lost time accidents and light duty days, have all improved. SERVICE PROVIDERS: restructuring Associates Inc. of Washington, DC, was used to help implement the new work systems. REFERENCES: ------------------------------------------------------------------- COMPANY: Johnsonville Foods Inc. CORPORATE ADDRESS: P.O. Box 786 Sheboygan, Wisconsin 53082 SIZE (employees): 725 UNION(S): Non-union INDUSTRY: Specialty sausage manufacturer SIC CODE: 2011 NEAREST METRO AREA/MILES: Milwaukee, Wisconsin (50 miles) CONGRESSIONAL DISTRICT: WI-08 SECTOR: P OWNERSHIP: Private CHIEF EXECUTIVE OFFICER: Ralph C. Stayer Chief Executive Officer P.O. Box 786 Sheboygan, WI 53082 CONTACTS: Leah Glaub Member Services Coordinator P.O. Box 786 Sheboygan, WI 53082 (414) 459-1190 Debbie McFarlane Member Services Coordinator P.O. Box 786 Sheboygan, WI 53082 (414) 459-1190 Shane Bennin Asst. Plant Coordinator P.O. Box 906 Sheboygan Falls, WI 53085 Dane Gudex Environmental and Safety Coordinator P.O. Box 906 Sheboygan Falls, WI 53085 Elaine Crawford Office Manager Leadership Dynamics P.O. Box 786 Sheboygan, WI 53082 (414) 459-6800 DATE: 04/24/95 COMPANY DESCRIPTION: Johnsonville Sausage was founded in 1945 and comprised a few retail stores with sales of about $1 million. In 1968, Ralph Stayer, Johnsonville's current CEO, took control of the manufacturing and wholesale sides of the company with the blessings of his parents, the original founders. By 1982 sales reached $15 million, which was up 150 percent from 1977. Despite this dramatic increase in sales, Ralph Stayer saw the importance of focusing the efforts of both management and workers on methods of continuous improvement. Following an internal survey that revealed a general non-committal attitude of employees, Mr. Stayer mailed each individual worker a $200 check along with a six-page letter that outlined a plan to foster employees' loyalty and commitment to Johnsonville. The company, which is now called Johnsonville Foods Inc., has been using a number of longstanding programs which have contributed to a major shift in worker attitudes and performance. Employees, who are called "members," are now involved in major decisions related to their jobs and are provided with numerous opportunities to enhance themselves both professionally and personally. Johnsonville has implemented a pay-for-performance system for all members, and a regular pool of profits is divided among them. From 1982, when Johnsonville initiated many of its innovative human resource programs, to 1990, sales went from $15 million to an estimated $130 million and productivity increased between 200 and 300 percent. Projected sales for the 1995 fiscal year ending October 31 are expected to reach $165 million. TRAINING AND CONTINUOUS LEARNING: Johnsonville does not have a traditional training program. Instead of a training department, they have a member-development department that focuses not only on job-related skills training, but also on the continuous education of each member. Johnsonville has established four different funds from which members can utilize resources to help them and their families expand their educational opportunities. The self-development fund provides each member with $100 yearly to spend on any educational material or course that they choose. The only criteria is that the course or material provide a learning opportunity for the member. The money can be used for books on sausage making, computer classes, or even magazines about hunting. The member-development department also has a resource library with a vast collection of books, audio-tapes, videotapes, and magazines on many different subjects. Individuals can check out materials just like in a library, and new resources are added upon member requests. Johnsonville also offers its members a continuing education fund. This fund provides tuition support to members who are interested in pursuing higher education. $2,000 a year is given to members who are working towards an undergraduate degree, and $4,000 for those pursuing a master's degree. A separate scholarship fund also offers tuition assistance to spouses and other family members of Johnsonville employees. Many of its members are interested in becoming computer literate, so Johnsonville has established a purchasing fund for personal computers. Members who buy a personal computer can take advantage of an interest- free loan from Johnsonville, which is deducted from their paychecks. An in-house computer lab provides the resources for Johnsonville to teach its employees the basics of computer operation. Johnsonville also has a corporate account at an outside firm where members can go for additional computer literacy training. Participating members receive corporate discounts for the class and can use funds from their self- development accounts to pay the remaining costs. In terms of basic skill training, team "coaches" are given that responsibility. Coaches are trained on how to provide new employees with the needed skills that are necessary in order to perform the numerous functions within a team. Johnsonville also partners with local colleges and technical schools to provide skills training to its members. A pilot program has recently been implemented that uses interactive video training through laser discs. Members are able to take technical courses and a full GED program at their own pace. Lastly, Johnsonville has begun to use distance learning techniques such as having classes broadcasted directly to their plant locations. Out of 12 training units, all but four of the units are available directly on-site. Johnsonville is continuously redesigning its training programs to adapt to the needs and priorities of the company. In addition, new resources are constantly being utilized in training modules and the Johnsonville resource library. EMPLOYEE PARTICIPATION: Multi-disciplinary work teams are frequently utilized, giving all members substantial input into the decision-making process. Johnsonville teams have a high level of autonomy, taking responsibility for areas that were once handled by supervisors and middle managers like recruiting, hiring, training, and firing. Based upon the goal or task that needs to be accomplished, teams are organized with members from various backgrounds. For example, a team writing a business and marketing plan for a product line could be composed of members from the production, customer service, research and development, and sales and accounting departments. No one member has more authority over the group than another; rather, individuals are challenged to come up with ideas and prove their benefits to the other team members. Johnsonville's multi-disciplinary teams serve another purpose: they help members understand the bigger picture at the company and the interdependence between different jobs. ACCESS TO INFORMATION: Johnsonville shares all operating and financial information with its employees. Plant coordinators conduct monthly meetings where members are presented with business data and performance information. Electronic-mail is also available as a means to share information. Representatives from Johnsonville's financial team are readily available to work one-on-one with individual members in order to help them interpret shared information. ORGANIZATIONAL STRUCTURE: The word "hierarchy" is not used at Johnsonville. There are no functional departments or product groups; Johnsonville uses member-driven teams which focus on employee involvement in the decision-making process. The three primary teams which make up Johnsonville's organizational structure are the product-to-market team, the sales and marketing team, and support services. Representatives from the three teams coordinate with each other to set the company's strategic goals. EMPLOYMENT SECURITY: Johnsonville has not had a problem with downsizing or restructuring in recent years. In 1990 when a team-based structure was being reemphasized at the company, Johnsonville did offer separation packages to employees who did not feel comfortable with the changes being made. This not only provided financial assistance to those employees who voluntarily left the company, but it helped to establish a core group of workers who would be dedicated to the change process which Johnsonville proposed at the time. SUPPORTIVE WORK ENVIRONMENT: Plant-wide safety teams comprised of voluntary members meet approximately once every two weeks to discuss safety issues, ergonomics issues, and regulatory health standards. OSHA compliance is also stressed in training sessions, where members are educated on the various jobs in the plant and what standards are applicable to them. Awards are given to all members at Johnsonville when plant-wide safety goals are achieved. In dealing with ergonomics issues, members have the opportunity to provide substantial input. Front-line representatives are actively involved in the layouts of various departments, as well as the integration of new equipment. Johnsonville sends members who will be directly affected by new equipment to suppliers so that they are involved in the entire process, all the way up to the purchasing phase. PRODUCT/SERVICE QUALITY: Johnsonville invests heavily in benchmarking projects, and teams are encouraged to visit other companies to learn about new developments in their industry. Johnsonville also has special quality control programs to help them maintain federal standards in the handling of their various products. As part of their continuous improvement process, Johnsonville plants chart key business areas monthly in order to identify trends in production costs and expenditures. Any area below 98.5 percent of its expected value is red-circled and methods of improvement are addressed. COMPENSATION LINKED TO PERFORMANCE: Johnsonville uses a pay-for-performance system that was created by an hourly compensation team. Each of the approximately 80 positions in the plant is comprised of result blocks of up to 15 separate criteria. Most positions at the company are comprised of two to three blocks, but some jobs have as many as five blocks which are completed in succession. The criteria that make up the blocks represent competencies and skills which are necessary for the job. In order to receive compensation for acquired skills, members must demonstrate their proficiency for the result blocks. When members are ready to be evaluated, they must first fill out a form which identifies their title and team, as well as the result block that is to be evaluated. The form is passed on to the members' supervisor, who is called the "coach." The coach and the individual member then get together and select a peer- evaluation team made up of people who work closely with the person and who have completed the result block themselves. Usually, the peer-review team is made up of four to five people including the coach. For each criteria in the block, the team uses a number of different measures to evaluate proficiency such as written quizzes and timed demonstrations. In addition to its pay-for-performance system, Johnsonville offers its members a 401(k) plan and a monthly, company-wide bonus system. The bonus plan, which is called Great Performance Shares (GPS), was developed by a cross-functional team of about 35 members. The plan itself relies on a great deal of employee involvement and peer review. The program begins with all teams in the company writing six-month contracts which state their goals and the methods they anticipate using to achieve them. The criteria for the established goals are that they promote: a noticeably better product, outstanding financial results, outstanding customer service, and outstanding people. In addition, the six-month contract includes professional development goals to ensure that members are challenging themselves to improve their own personal development. To help members focus and prioritize their goals, they write their own individual contracts at the beginning of every month which outlines how they intend to contribute to the month's goals and the six-month contract. After writing their individual contract, members choose three internal customers (people affected by the members' work) to serve as a peer-review team. Through Johnsonville's electronic bulletin board, individual contracts are sent to the peer-review team so that they can be aware of what the member wants to accomplish in that month. Contacts are also posted on a company-wide bulletin board, so that members have a chance to comment on the performance of any co-worker. At the end of every month, teams are awarded bonuses based on Johnsonville's performance. Within the different teams, members are given the responsibility of distributing the awards based on each individual's contribution to the teams' goals and the fulfillment of individual contracts. All members have a target bonus for the year which makes up 10 to 25 percent of their base pay. The target bonus is set so that members can measure their performance against pre-established dollar amounts. Currently, Johnsonville distributes 28 percent of it pretax profit to its teams each month for the accomplishment of pre- established goals. The allocation of bonuses can vary between hourly and salaried workers. In the 1994 fiscal year, Johnsonville estimated that its hourly workers who were given the full GPS bonus earned an extra $3,750 apiece and salaried workers had the potential to earn an additional 25 percent of their pay. STRATEGIC INTEGRATION OF BUSINESS: Members on the front-line of the plant have substantial input into the machines and new technologies in which the company invests. A team consisting of a plant engineer, maintenance representative, and a member from the front-line are usually sent to different companies to evaluate potential new equipment. Team members are also involved in training their peers on new equipment brought into the plant. Members at Johnsonville are involved in overseeing areas of business and financial performance. For example, in one Johnsonville plant, every full-time person on the second-shift is responsible for a specific business-related area. In monthly meetings, members give 10 minute reports on the status of their respective areas in order to identify potential process improvements. There are a total of 15 different areas which are reviewed, including things like packaging expense results, packaging yields, stuffing expense reports, TQC for stuffing, and an overall plant expense report. Potential problem areas and methods for process improvement are identified so that they can be incorporated into members' monthly performance contracts. REMARKS: Johnsonville CEO Ralph Stayer offers services to other companies through Leadership Dynamics, a private consulting group located at the Johnsonville headquarters. ACCOMPLISHMENTS/AWARDS: REFERENCES: Blanchard, Marjorie. 1989. "Motivating People to Top Performance." Executive Excellence (June). Brokaw, Leslie, and Curtis Hartman. 1990. "Managing the Journey." Inc. (November):45-54. Honold, Linda. 1991. "The Power of Learning at Johnsonville Foods." Training (April):55-58. Lee, Chris. 1990. "Beyond Teamwork." Training (June):25-32. Lublin, JoAnn S. April 12, 1995. "My Colleague, My Boss." The Wall Street Journal, R4, R12. Peters Talbott, Shannon. 1994. "Peer Review Drives Compensation at Johnsonville." Personnel Journal (October):126-132. ------------------------------------------------------------------- COMPANY: KomTek CORPORATE ADDRESS: 40 Rockdale Street Worcester, Massachusetts 01606 PLANT/BRANCH ADDRESS: SIZE (employees): 200 UNION(S): United Steelworkers of America Local 2936 INDUSTRY: Metal forgings and castings SIC CODE: 3462 NEAREST METRO AREA/MILES: Worcester, MA (0 miles) CONGRESSIONAL DISTRICT: MA-03 SECTOR: Private OWNERSHIP: Privately-owned, subsidiary of Kervick Enterprises, Inc. CEO Robert B. Kervick President Kervick Enterprises, Inc. 40 Rockdale Street Worcester, MA 01606 CONTACTS: Paul Kiesling Plant Manager KomTek 40 Rockdale Street Worcester, MA 01606 (508) 853-4500 Philip Lincoln Bargaining Committee Chairman United Steelworkers of America Local 2936 400 Washington Street Auburn, MA 01501 (508) 832-5827 DATE: 10/03/94 COMPANY DESCRIPTION: KomTek, a subsidiary of Kervick Enterprises, Inc., makes orthopedic implants for the health care industry, small metal parts for the commercial and military gas turbine industry, and fittings and valves for the power generation industry. Employees at the plant are represented by Local 2936 of the United Steelworkers of America, which also represents employees at over a dozen other companies the Worcester area. TRAINING AND CONTINUOUS LEARNING: KomTek provides a wide range of training to its employees, ranging from technical and job skills training to training in the "softer," interpersonal skills. Each employee, on average, receives 100 hours in training annually, based on the employee and identified needs. Most training is provided after hours and is done by inside trainers. Technical training includes such subjects as Hazardous Materials training, safety training and job skills training. Job skills training is organized based upon the skills needed within each work group. The group leader guides trainees through each step of the training and each individual gets reviewed for competency for each step of the training before moving to the next step. The competency-based training is designed around the system of combined job classifications which has been established. The single-classification system resulted in the need for cross- training. The USWA believes that the single- classification/multi-skilled jobs system is necessary for company prosperity. KomTek uses training to support its improvement processes. All employees have been trained in Kaizen and Continuous Improvement techniques. The Continuous Improvement training consisted of from 10-20 hours per employees. To support the participation system, employees have received problem solving training (including fishbone charts, Pareto charts, and collecting and analyzing data). EMPLOYEE PARTICIPATION: There are a number of different formats utilized to allow for employee participation. Ad hoc teams are formed when specific problems are identified. Using the problem solving skills received through training, employee serving on these ad hoc teams identify, investigate, and solve problems. Within the plants, crews are organized into work teams which, on a continuous basis, perform statistical process control, organizes work, and solves problems. Special teams are formed to review all incoming jobs. These teams examine the design to identify problems with the design in terms of manufacturability and quality, and identify changes that could be made to solve these problems. The team works with the customer both to ensure a quality product and to help the customer identify changes that could produce a better end product. On a job-by-job basis, KomTek employees work the customer's engineers to discuss what KomTek needs changed in order to produce a better part. Overseeing the entire employee participation system is a Quality Council, composed of union, management, and employee representatives. The mission of this Council is to guide the employee participation/quality process and to cascade learnings to work groups and ad hoc groups. The Council bases its guidance on four cornerstones: Delivery, Cost, Quality, and Safety. The Council also has approval authority over any purchase proposed by a work team or ad hoc group over $1,000. The team or group must present a payback justification for the purchase. The group making the purchase is also empowered to identify the supplier proposed. Contact with this supplier is by the employees making the purchase and all information is shared with these employees to enhance the purchase decision. Both KomTek and the USWA feel that the processes employed have allowed employees to move from a system of "checking their brains at the door" to one which allows them to use their full range of abilities. ACCESS TO INFORMATION: Monthly meetings are held with all employees. At these meetings, financial information regarding the company is shared. This financial information is discussed in terms of problems and goals faced by the company and how the company is meeting goals. Employees have received training in financial reporting in order to help them better understand the financial data being shared. In addition to the monthly meetings, there are a number of other avenues used for information sharing. There is a monthly newsletter published by a joint labor-management committee. This newsletter is essentially edit-free, with everything printed short of personal attacks on people. There are numerous bulletin boards throughout the facility which contain information on departmental and safety issues. Statistical process control charts are also posted at all work locations. Complete information regarding the production process is posted on these charts, enabling a sharing of information between shifts. Finally, there is a plant-wide e-mail system located on the company's DEC computer which allows access to all information by employees and management. This system also allows for contact between employees and management via the electronic mail facility. ORGANIZATIONAL STRUCTURE: KomTek is a flat organization that aims to become even flatter. Very little attention is paid to titles and more attention is paid to the responsibilities of the person. Communication between levels is very open, to the point where the owner/president and those underneath him have their offices on the shop or office floor. Using the natural attrition rate, KomTek has lowered the ratio of supervisors to employees. In the Forge Shop, for instance, where there were once five to six supervisors, there are now only two. Overall, management personnel make up only about fifteen percent of the company's workforce. As a result of the flattening of the organization, bargaining unit employees have continually taken on new responsibilities, to the point now where there will be discussions between the union and management revolving around these responsibilities. KomTek and its employees work very closely with both their customers and suppliers. Both new and old customers are brought into the shop to talk directly with employees. The employees are expected to be honest in discussing not only KomTek's strengths, but also its weaknesses. In addition to this on-the-floor contact, employees also maintain constant interaction with customers. Employees work with customers to improve both work scheduling and other aspects of customer satisfaction. KomTek's suppliers are expected to supply KomTek with statistical process control charts and data. This requirement allows KomTek to reduce inspection of incoming supplies. In addition, KomTek employees and its suppliers continually visit each other to ensure ongoing quality improvement and communications. KomTek employees do a large amount of the actual procurement of supplies. EMPLOYMENT SECURITY: Over the past few years, the bargaining unit at KomTek has grown from 40 to 160. Supervisory positions which have been reduced have been cut by attrition. A recent downsizing was by lay off. During this lay off, the union had input into identifying where cutbacks would be made. These cutbacks were based on need, with the actual lay offs based on seniority and qualifications. From this experience, both the company and union learned that they needed to identify necessary skills. The company, however, found that lay offs don't necessarily work and that in the future, the company will try to avoid downsizings whenever possible. Plans include increasing training to enhance skills during slow periods, rather than lay offs. The company also tries to hire unemployed/downsized employees from other area firms. Because the local is an amalgamated local with members from several area firms, identifying skilled, unemployed workers is facilitated. SUPPORTIVE WORK ENVIRONMENT: Because of its size, KomTek has not been able to implement a wide range of family-friendly programs. The company sponsors and/or coordinates a number of social events, such as a company picnics and outings. Additionally, the company is actively involved in a number of community programs and issues. For instance, the KomTek and its employees were the driving force behind an effort to get a municipal swimming pool reopened for area residents. KomTek sponsors an Employee Assistance Program which uses an "800" number and a private corporation to provide services to employees. To date, the EAP has been used mainly for emotional and family crises. PRODUCT/SERVICE QUALITY: As noted, KomTek is very quality oriented. In addition to the Quality Council which oversees the quality and employee participation process, employees can stop the production line whenever a quality problem is identified. The company uses its visits and tours as a means of informally benchmarking its processes and results with against other companies. Because KomTek still has internally identified areas that need improvement, it is working on these areas first, before comparing itself. COMPENSATION LINKED TO PERFORMANCE: Because of physical constraints and layouts, most jobs at the plant require cross-functional job skills. In conjunction with this necessity, a limited skill-based pay system has been established which rewards employees as they learn new skills. Each job includes three to four progression steps requiring reviews to ensure that the employee has achieved the skills necessary. WORKER-MANAGEMENT RELATIONS: Overall, the relationship between the union and management has moved well away from the traditional, adversarial relationship. Although both parties admit there is still progress to be made, more open and honest communications have been achieved. During the last series of negotiations, important issues were put up front and meetings were constructive, without much of the posturing that typically is involved in contract negotiations. Collective bargaining between the USWA and KomTek has seen a transfer of three principles from the participatory relationship on the shop-floor to the collective bargaining arena: fairness, what's best for company, and truthfulness. STRATEGIC INTEGRATION OF BUSINESS: KomTek is in an industry which has had stable technology for 50 years and expects hat the technology will remain stable for the foreseeable future. Hence, technology strategy is not a high priority. KomTek has developed 3-, 5-, and 10-year plans, and bases its marketing around these plans. Additionally, strategic plans take, as their cornerstones, the four basic elements of the quality process: delivery, cost, safety and quality. REMARKS: ACCOMPLISHMENTS/AWARDS: Because of its employee participation process, which includes a formal safety and health committee, KomTek has decreased its injury severity rate by over 50 percent. Numerous safety awards have also been awarded to KomTek because of this process. The union bargaining committee chairman, Mr. Phil Lincoln, is one of the most active safety advocates and was recently presented with an award for his involvement. Finally, KomTek expects to apply and be approved for the Occupational Safety and Health Administration's Voluntary Protection Program, which will allow KomTek to self-audit its safety record. KomTek has also been awarded a number of "Supplier of the Year" awards by its customers. SERVICE PROVIDERS: REFERENCES: Donker, Peter, "The Drive for Excellence," The Worcester Telegram and Gazette, undated. ------------------------------------------------------------------- COMPANY: Link Manufacturing CORPORATE ADDRESS: P.O. Box 68 Sioux Center, Iowa 51250 PLANT/BRANCH ADDRESS: SIZE (employees): 60 UNION(S): non-union INDUSTRY: Truck Components SIC CODE: 3714 NEAREST METRO AREA/MILES: Sioux City, Iowa (45 miles) Sioux Falls, South Dakota (45 miles) CONGRESSIONAL DISTRICT: IA-06 SECTOR: Private OWNERSHIP: Private CONTACTS: Dennis Michels General Manager Link Manufacturing, LTD P.O. Box 68 Sioux Center, Iowa 51250 (712) 722-4874 DATE: 05/05/94 COMPANY DESCRIPTION: This 60-employee company makes components for heavy trucks. The company is one of the few small companies in northwest Iowa with a formal TQM program. TRAINING AND CONTINUOUS LEARNING: To begin the TQM program, all employees were given training in TQM techniques. Since the initial training, all employees are being provided with training in team problem solving and team building. The company also has as tuition reimbursement program, as well as a company library available to all employees. EMPLOYEE PARTICIPATION: The company has instituted ad hoc teams that are made up of 5-7 members who work on specific problems and issues. Problems were identified by surveying employees. Over 60 problems/issues were identified and prioritized. The top dozen were the first projects tackled by the teams and the remaining are being addressed. The program is overseen by a five-person management team called the Quality Guidance Team. ACCESS TO INFORMATION: Company provides information to employees through a number of media. The company publishes an employee newsletter which it uses to disseminate information. The company holds all-staff meetings which are addressed by management. At these meetings, attendees discuss various topics such as business volumes, market development, customer feedback, quality goals, and corporate goals and missions. The company also has two bulletin boards, one for on-going activities and the second for quality related activities, such as team and suggestion program activities. ORGANIZATIONAL STRUCTURE: Each production team has a working key operator position which takes the place of the direct supervisor. The leader acts as a facilitator coach and has started to become involved in performance appraisal activities. EMPLOYMENT SECURITY: SUPPORTIVE WORK ENVIRONMENT: Company has recently begun a wellness program. The first round of activities has been employee health screenings for blood pressure, cholesterol, etc. A second round of screenings for employees' families is planned. PRODUCT/SERVICE QUALITY: As noted, the company has established a formal Total Quality Management program designed to increase product quality. COMPENSATION LINKED TO PERFORMANCE: Employees are compensated hourly and also by a production bonus system. This bonus system is based on team output. The program has paid out on a consistent basis for three years. Managers have a profit incentive bonus built into their compensation program. WORKER-MANAGEMENT RELATIONS: STRATEGIC INTEGRATION OF BUSINESS: The company has a supplier certification program. Link has opened lines of communication with their suppliers. Buying decisions now take into account the company's philosophical approach to vendor relationships which is more long-term and not based solely on price. The company is also implementing a Just- in-Time production system. REMARKS/AWARDS ACCOMPLISHMENTS: SERVICE PROVIDERS: To begin the TQM program, Link brought in a local TQM consultant to teach Deming concepts to upper management. The company then brought in CorrecTrak, a TQM consultant, for a management seminar and purchased a video series from the company. This video series has been used in-house to teach TQM concepts to the workforce. REFERENCES: Barrier, Michael, "Quality Via Satellite," Nation's Business, December 1993, pages 71-72. ------------------------------------------------------------------- COMPANY: L-S Electro-Galvanizing Company (a subsidiary of LTV Steel) CORPORATE ADDRESS: 3100 East 45th Street Cleveland, Ohio 44127 PLANT/BRANCH ADDRESS: SIZE (employees): UNION(S): United Steelworkers of America Local 9126 INDUSTRY: Steel SIC CODE: 5051 NEAREST METRO AREA/MILES: Cleveland, Ohio (0 miles) CONGRESSIONAL DISTRICT: OH-11 SECTOR: Private OWNERSHIP: Private a joint venture between LTV Steel and Sumitomo Metal Industries CONTACTS: Cal Tinsley Plant Manager L-S Electro-Galvanizing Co. 3100 East 45th Street Cleveland, Ohio 44127 (216) 429-7198 Thomas J. Zidek Union President Local 9126 United Steelworkers of America 3100 East 45th Street Cleveland, Ohio 44127 (216) 429-7198 DATE: 08/16/94 COMPANY DESCRIPTION: L-S Electro-Galvanizing Company (L-SE) is a $158 million joint venture of LTV Steel (60 percent) and Sumitomo Metal Industries of Kashima, Japan (40 percent). It was formed in the early 1980's to meet the expanded requirement by the auto industry for rust-proof external body parts. Thus evolved the new process of electro-plating, as opposed to hot dipped galvanizing. SMI in Japan had already developed the technology and had a thirteen year old facility. The product is a twenty ton coil of electroplated, zinc-coated steel. The coil is fed through an 890-foot electro-galvanizing line where steel is coated with zinc and other chemicals, re- coiled and packaged for shipment to the customer. The L-SE plant utilizes a unique management structure within a five-shift continuously running plant. TRAINING AND CONTINUOUS LEARNING: When the plant first opened, the employees were hired six months in advance in order to be trained as "process technicians." This training included technical as well as management and interpersonal skills in order to enable the employees to work successfully in a team environment. The workers are salaried, and offered the opportunity to acquire additional skills at any time under a pay for knowledge system. Training costs are estimated at ten to twelve percent of payroll. An estimated 85 percent of all training is on the job training, while the remaining 15 percent is done in the classroom. New employees are trained for three weeks before they obtain "process technician" status. EMPLOYEE PARTICIPATION: Employees participated in the original design of work stations, the compensation system, and other personnel policies. Today management is working towards a greater scope of employee participation, so that areas such as hiring can be completely run by the employees themselves. Employees are invited to participate on committees while working at L-SE. Committees exist for a wide range of issues including safety and health, pay and progression, gainsharing, and customer concern. The decisions made by the committees are subject to the approval of management, but as the managerial skills of the employees increase, there is greater reliance on the decision of the committees themselves. ACCESS TO INFORMATION: Employees are given full access to the financial information of L-SE in team meetings. During these meetings profit and loss statements are reviewed, forecasts are made and compared to the Annual Operating Plan, and variances are identified and discussed. ORGANIZATIONAL STRUCTURE: L-SE is attempting to promote a flatter organizational structure. Process Coordinators who are less restricted than traditional supervisors and have more responsibility manage the work floor. They head communications between management the crew. Process Coordinators also deal with absenteeism and performance appraisals. Missing from L-SE is the traditional line of progression, with preferential treatment for workers with more seniority. Under the pay for skills program, any worker has the ability to acquire any new skills. The only time seniority is used is in the case of deciding who should have the first priority in the training process. That is, those employees with the most seniority are allowed to take advantage of extra training before the rest of the employees, though every employee does have the opportunity for advancement. EMPLOYMENT SECURITY: To this date there have been no layoffs at L-SE. During heavy times extra workers are contracted. All workers are given training in maintenance and operating skills, so there is not a separate, lower tier of workers who are laid off. In the event of a layoff, L-SE promises in its contract to supplement other aid in order to assure the employee a full salary for the first six months of the lay-off. For the next six months the laid off employee receives a guaranteed sixty percent of salary, and if the employee is studying at an accredited school in order to better prepare himself or herself for the workforce, an additional six months at 60 percent is given as well. SUPPORTIVE WORK ENVIRONMENT: The committees attempt to ensure the satisfaction of employees at L-SE. The Safety Committee promotes a safe workplace, as well as providing first aid and CPR training to employees. The Committee also promotes a Safety Awareness Program, and each crew has a Safety Rep. The employees at L-SE have been allowed to create a unique work schedule in order to free up days during the week. A system including working two full weekends and having three days off has been implemented so that the employees are able to maintain four- and five-day work weeks. PRODUCT/SERVICE QUALITY: One of L-SE's committees is called the Integrated Process Control Committee, which oversees the continuous integration of new and improved processes on the line after analyzing and reviewing variables in the electro-galvanizing process. L-SE also uses monthly customer surveys to keep up with the needs of their customers. The gainsharing program is linked with customer satisfaction. COMPENSATION LINKED TO PERFORMANCE: Total salary (100 percent) is comprised of a fixed base salary (66 percent) and a variable pay for knowledge salary (34 percent). The pay for knowledge system was created jointly by a committee of bargaining unit and management employees. The system increases an employee's salary as he/she acquires new blocks of skills. These skills may be acquired at any time. Even after the employee has obtained the highest skill and pay level, which may be as soon as four years after hire, he or she is able to take advantage of the training available in order to brush up on newer current skills and "stay sharp." A gainsharing program recognizes the significant contribution that can be made by the employees at L-SE to the success of the operation. Payout is based on performance against goals mutually developed and agreed to by the gainsharing committee. Determinants and goals are reviewed and revised by the committee every six months to support the philosophy of continuous improvement. The gainsharing program can provide up to 25 percent of an employee's pay. Additionally there is a profit sharing system which provides up to 5 percent of gross pay and is set by the labor contract. WORKER-MANAGEMENT RELATIONS: L-SE enjoys an excellent relationship with its union, the United Steelworkers of America. Many of the aspects mentioned above are included in the union contract. The union agrees that there still are problems, but relations are far better than average. Formal contract grievances are rare at L-SE. There have been only seven grievances since 1986 when L-SE was started. Traditional labor contracts which contain formal grievance procedures do not exist at L-SE. Overtime and work schedules, which are areas of the labor contract that often cause disagreements, are not part of the contract at L-SE. Since employees at L-SE create their own schedules and overtime assignments, this problem has been cut to a minimum. STRATEGIC INTEGRATION OF BUSINESS: REMARKS: ACCOMPLISHMENTS/AWARDS: As a result of L-SE's emphasis on quality, overall customer complaints have decreased from four percent of shipments to .3 percent in January of 1994. Productivity has increased 240 percent since 1988 as well. Among the awards L-SE has obtained are Ford Q-1, GM Mark of Excellence, Quality Cup Award from USA Today, and 33 Metal Magazine's "TOP Operation and Plant" Award. L-SE maintains full ISO 9002 Certification. SERVICE PROVIDERS: REFERENCES: Powell, Cash Jr. "L-S Electro-Galvanizing: Factory Without Walls," Target Volume 10, Number 4. July/August,1994. Fisher, Ben. "A Case Study of the L-SE Company" The H. John Heinz III School of Public Policy and Management, Carnegie Mellon University, October, 1992. ------------------------------------------------------------------- COMPANY: Metaltech CORPORATE ADDRESS: 2400 2nd Avenue Pittsburgh, Pennsylvania 15219 PLANT/BRANCH ADDRESS: SIZE (employees): 85 UNION(S): non-union INDUSTRY: Galvanized steel SIC CODE: 3479 NEAREST METRO AREA/MILES: Pittsburgh, PA (0 miles) CONGRESSIONAL DISTRICT: PA-14 SECTOR: Private OWNERSHIP: Privately held partnership CEO: G. Watts Humphrey, Jr. Chairman and CEO Metaltech 2400 2nd Avenue Pittsburgh, PA 15219 CONTACTS: Peter Stringi Plant Manager Metaltech 2400 2nd Avenue Pittsburgh, PA 15219 (412) 391-0483 DATE: 09/01/94 COMPANY DESCRIPTION: Metaltech, which was formed in 1984, produces coated steel coils. The company employs approximately 85 people. There is a sister plant located in Turtle Creek, PA. TRAINING AND CONTINUOUS LEARNING: Although there is no formal year-to-year budget for training, Metaltech provides a large amount of training and educational opportunities for its employees. Training provided runs the gamut from informal, on-the-job training to formal classroom and computer-based training. Metaltech uses its varied training and educational opportunities as a means of empowering its employees. All employees from the shop floor up are offered equal access to all training. For example, all employees can participate in computer-programming training as a means of furthering their careers while enhancing their usefulness and contributions to the firm. On-the-job training, carried out by one employee teaching another, is used as a means to ensure that employees are cross- trained, resulting in Metaltech having back-up operators for all phases of production. Additionally, vendors of new equipment are used to provide training to employees when the equipment is installed. Formal training is composed of both technical and soft skills. Employees have been trained in team building skills, such as group problem solving and communications. EMPLOYEE PARTICIPATION: Production at the facility is designed around teams. The facility is operated on a seven-day, twenty-four hour basis, requiring four crews of approximately 12-15 employees each. Each shift is organized as a work team. These work teams are self- directed, with no supervisor. There is a team leader who is chosen by management. This team leader is a non-exempt employee who is a working member of the team. When team leaders need to be replaced, they have typically been replaced by an employee who has acted in the leader role on a temporary basis (i.e., filling in when the team leader is on vacation. This allows Metaltech to ensure that transitions are smooth. The teams include all employees on the shift in the factory, from operations to maintenance. The teams themselves determine how to meet the shifts production needs, which are set by the scheduling department based on orders. The team is expected to schedule their production based on need and non-controllable issues (such as availability of assets). Teams, in coordination with other shifts, may make improvements to the process when improvements or issues are identified. If the change is radical and will affect all teams or other areas of the plant, the problem is presented to the team leader and an ad hoc team may be formed to investigate and solve the issue. These ad hoc problem solving teams are an outgrowth of permanent problem solving teams established when the plant was opened. As noted, all employees have been trained in problem solving skills and are expected to apply these techniques both in the self- directed work teams and when serving on ad hoc problem solving teams. Problems for which ad hoc teams are formed are identified at all levels of the organizations. The hiring process includes employee input in the selection process. All new applicants must undergo a skills test which ascertains their present level of technical skills and how they would fit into the work system. Applicants that pass the skills test are interviewed by the operations manager and at least one team leader. New hires are then brought into the company on a temporary/probationary period. During the probationary period, team members are expected to provide feedback to the team leader. At the end of the period, usually 90 days, a decision is made, based on work records and employee input, on whether to make the employee a regular member of the workforce. ACCESS TO INFORMATION: Metaltech distributes information a number of ways. First, there is a monthly newsletter which is designed, written and operated by employee volunteers. The contents of the newsletter include company operating and social news. There is a monthly meeting held at the plant between management and the crews in which management shares and discusses the status of the company, in terms of markets, finances, etc. Each team also holds a monthly meeting to discuss work and problems. ORGANIZATIONAL STRUCTURE: Metaltech has a very flat organizational structure. From work team to partnership council, there are only three levels (work team-managers--partnership council). Company management is very conscious of not "unflattening" the company structure. The organization maintains very close relationships with both its suppliers and its customers. Metaltech holds regular (usually quarterly) meetings with its suppliers to discuss service and quality matters. Less formal weekly meetings are held to discuss ongoing quality issues. Vendors are also rated on Metaltech's Vendor Performance Report. Metaltech also has brought customers into the plant to explore quality and service issues and to help improve the products. On a number of occasions, employees have been sent to suppliers to work with them to improve quality. Metaltech employs a lean inventory system. Inventories of suppliers usually contain less than one week's supply. EMPLOYMENT SECURITY: Metaltech has not laid off an employee since its founding. There is a salary continuation policy which maintains an employee's salary for up to six months (depending upon company service) if they were to be laid off. This policy has been used when an employee has needed an extended period of absence. SUPPORTIVE WORK ENVIRONMENT: Prior to the passage of the Family and Medical Leave Act, Metaltech provided paid maternity leave under its salary continuation program. Metaltech has a very strong employee safety and health program. The company is a participant in the OSHA Exemption program, allowing the company to avoid unplanned inspections because of its safety record. Each year, the company's safety is audited by an outside agency, which, when Metaltech passes, recommends to OSHA that the company remain exempt. The company has maintained this exemption throughout its participation in the program. As part of its safety and health program, there is a Safety Committee, certified by the state of Pennsylvania, that meets monthly. The Committee is composed of both employees and management, all of whom volunteer to serve. The Committee investigates and recommends solutions to safety problems and issues. Coupled with the safety program is a system of rewards for employees who make recommendations or changes which improve the safety of the plant. Because of the nature of production at the plant, shop floor employees work set shifts. Office employees, which make up about 25 percent of all employees, are on a flextime schedule. Medical and health insurance coverage is available to 100 percent of the work force. Coverage under the medical plan includes a wellness program that provides for periodic health screenings and health improvement programs. Metaltech has a tuition reimbursement program which will pay for courses for all employees. Parameters on the program are liberal, covering any course in which the skills learned or acquired might be useful to the organization at some time, not necessarily immediately. For example, a maintenance employee could be reimbursed for learning computer programming, which would enhance Metaltech's flexibility by providing it with an additional programmer. PRODUCT/SERVICE QUALITY: The manufacturing process is highly controlled. Quality is process-driven and quality is ensured by ongoing sampling and testing. Various monitors and sensors are used throughout the process to ensure that the process is within tolerances, helping to ensure a quality product. Monitoring is performed by the shop employees and there are no quality assurance inspectors. COMPENSATION LINKED TO PERFORMANCE: Metaltech has two compensation systems which reward employees for performance. The profit sharing program pays a yearly bonus to all employees. A portion of year-end profits are put into the bonus pool and each employee receives an equal share, regardless of salary or level. Metaltech's variable bonus plan is a monthly bonus calculated on operating performance. The variable bonus is paid when efficiency (speed of line), quality, line delays, and safety all beat a threshold level. The bonus is shared as a percent of pay. Each employee receives the same percent, but because of varying pay levels, may not receive the same dollar amount. WORKER-MANAGEMENT RELATIONS: Because of the size of the plant and the organizational structure, disputes are handled in an informal manner. The company maintains an "open-door" policy, allowing any employee to talk to any manager. STRATEGIC INTEGRATION OF BUSINESS: Because human resources functions are handled by the plant manager and the general partner-administrator, when strategic management plans are made, human resources elements are taken into account in long term planning. Metaltech is active in industry trade groups and uses this venue as a means of identifying and staying current in new technologies. Additionally, many of Metaltech's suppliers are also competitors and continual contact with these companies as suppliers allows Metaltech to identify promising new technologies. REMARKS: When Metaltech was formed in 1984, the company worked with the Pennsylvania Job Service to identify employees to hire. Many of these new employees (between one-third and one-half) were dislocated steelworkers who were already highly skilled. ACCOMPLISHMENTS/AWARDS: Because of its quality, Metaltech has been named "Supplier of the Year" on various occasions by its customers. Metaltech has repeatedly won exemption from OSHA inspections because of its safety processes and programs. SERVICE PROVIDERS: Much of the programs and processes implemented at Metaltech have been designed in-house. Some training in computers has been provided by Executrain, a training consultant. REFERENCES: ------------------------------------------------------------------- COMPANY: Miller Brewing Company Trenton Brewery CORPORATE ADDRESS: 3939 West Highland Blvd. Milwaukee, Wisconsin 53208 PLANT/BRANCH ADDRESS: P.O. Box 168 Trenton, Ohio 45067 SIZE (employees): 500 employees (100 salaried, 400 bargaining unit) UNION(S): United Auto Workers INDUSTRY: Malt beverages SIC CODE: 2082 NEAREST METRO AREA/MILES: Dayton, Ohio (40 miles) Cincinnati, Ohio (40 miles) CONGRESSIONAL DISTRICT: OH-08 SECTOR: P OWNERSHIP: Subsidiary - Phillip Morris Companies, Inc. CHIEF EXECUTIVE: Leonard J. Goldstein CEO and President Miller Brewing Company 3939 West Highland Blvd. Milwaukee, WI 53208 CONTACTS: Daniel E. Rick Human Resources Team Manager P.O. Box 168 Trenton, OH 45067 (513) 844-4692 William A. "Red" Green Chairman, Shop Committee UAW Local 2308 P.O. Box 168 Trenton, OH 45067 (513) 844-4010 DATE: 1/17/95 COMPANY DESCRIPTION: Miller Brewing Company is the second largest brewing company in the United States with sales of more than $4 billion annually. The company is a subsidiary of the Phillip Morris Companies. Miller's Trenton, Ohio facility was originally completed in 1981, but mothballed until the 1990s due to declining beer sales. With the introduction of Miller Genuine Draft, one of the most popular beers in the country, Miller's fortunes bounced back and plans were made at the end of the 80's to open the Trenton facility as the "brewery of the future." A planning and design team, drawn from Miller employees from around the country, created a comprehensive organization and design document which was presented to Miller executives in 1990, and called for a plant operated by self-directed work teams in an organization structure characterized by flat management hierarchies. There were more than 50,000 applicants for the first 175 positions hired when the plant began operations in 1991. Six months after the plant opened its doors, Trenton employees voted in the United Auto Workers as their representatives. TRAINING AND CONTINUOUS LEARNING: Employees at the Trenton plant receive an extensive amount of training, which has averaged approximately 80 hours per employee per year over the plant's four years of existence. The plant's values statement says that "skills development, personal growth and increased business knowledge are essential components of the Trenton philosophy and critical to the success of the Trenton Brewery." New Trenton employees receive three weeks of orientation training consisting of introductions to the Trenton team philosophy and world-class manufacturing concepts. The three-week orientation training is followed by seven to eight weeks of technical training. Miller employees have opportunities for ongoing training, through programs provided both at the plant and corporate level. The plant's self-directed work teams can also request special training programs for particular needs. The Trenton Brewery has a tuition reimbursement program for outside training and education courses. To qualify, employees must receive a C or satisfactory grade. EMPLOYEE PARTICIPATION: As a greenfield site, designed to be the "brewery of the future, "the Trenton Brewery was created to "empower people as partners." The plant is managed by self-directed work teams with the collective responsibility for managing the plant. The teams are responsible for entire processes, not just steps in the process which is common in most traditional production facilities. At daily team meetings, team members make shift assignments and decide on the frequency of rotating assignments. The teams are extensively involved in decision making regarding personnel and scheduling. There are no permanent team leaders, but instead the teams are managed by a "STAR point system," a team-based performance management system where each point symbolizes a particular area of responsibility: productivity/maintenance, personnel, administrative, quality, and safety. Representatives are elected by the teams to monitor the specific STAR areas, and coordinate activities with other teams. The employees serving as STAR representatives are typically rotated every twelve to eighteen months. The STAR concept provides a framework for the teams to manage themselves. The performance management system is team-based in that the team practices in designing and assumes specific responsibilities for tracking, monitoring, coordinating, and improving performance. The team designs the system of measures, goals, and feedback and then uses it to manage their own performance. ACCESS TO INFORMATION: Employees at the Trenton Brewery receive financial and operating information on a continual basis. Communications at the brewery are designed so that production workers have as much information as the plant manager. Every Trenton employee has their own electronic mail account, and via personal computers placed on the shop floor, they receive daily information on safety, quality and production. Every morning, a representative from each team attends a 15- minute General Information Meeting and a thirty-minute Production Update Meeting. All team members attend a one-hour Team Meeting, held every day prior to the start of each shift, and all Star Point Representatives from each team participate in bi-weekly Star Point Meetings. Every week, all plant personnel attend a Wednesday Communication Meeting. Once per month, the plant manager meets with all employees at each shift at the weekly Communication Meeting to review the financial and operating status of the plant. Every year, all Trenton employees and managers meet off-site for a one-day plant conference. Temporary workers run the plant's essential utilities for the day, and speakers are brought in to address the conference. Past speakers have included Douglas Fraser and Irving Bluestone, both former leaders of the United Auto Workers, and Martin Manley, former Assistant Secretary of the Department of Labor's Office of the American Workplace. Trenton Brewery employees also receive information through video meetings. Each operating team has its own work room, complete with at television monitor. The plant has numerous other communication vehicles including a quarterly newsletter, bulletin boards, and interoffice correspondence (mailings). ORGANIZATIONAL STRUCTURE: The Trenton Brewery has a relatively flat organizational structure. While most traditional breweries have four management layers between the plant manager and hourly employees, at Trenton there are only two. The production process is organized around the plant's more than thirty self-directed work teams. Team sizes range from six to 24 employees, and the teams are responsible for whole processes including brewing, packaging, and distribution. The teams are managed through a STAR point system, where each of the five points of the star symbolize a different area of responsibility that different team members coordinate (administration, personnel, productivity/maintenance, quality and safety). Through consensus decision making, the teams decide representatives and alternates who monitor their teams for the different star point areas, and coordinate with other teams. The representatives serve from twelve to eighteen months terms, and they meet with other team representatives every two weeks. Team managers within the plant serve as resources and training coordinators for as many as three self-directed work teams. EMPLOYMENT SECURITY: The Trenton Brewery has experienced no layoffs nor downsizings in the plant's four year existence. There is a Job Stability Clause in the labor contract which specifies the plant's work design, which features no lines of demarcation and no written job descriptions. This flexible work design enables the plant to maintain a lean operation and guard against employment surpluses. The Job Stability Clause allows for the use of temporary workers during peak employment periods, and redeployment of work teams for tasks currently subcontracted. SUPPORTIVE WORK ENVIRONMENT: The Trenton Brewery places great emphasis on employee safety, which is pointed out in the plant's values statement: "We are valued employees and believe that nothing we do is worth getting hurt." Safety is one of the four areas of concentration in the plant's Star point performance management system. Every two weeks, Star point safety representatives from each work team meet to coordinate safety improvements within the teams and the plant. Also, once per month, there is a joint meeting between the plant manager, staff and safety coordinators, and the bargaining unit to discuss and review the plant's safety numbers, and jointly discuss action plans. Until very recently, the Trenton Brewery had the best safety record in the entire Miller Corporation, and the plant received an award for being number two in the nation for safety among small brewers. (The plant is now considered a large brewery). The Trenton Brewery promotes the well-being of its employees through an Employee Assistance Program which provides a full gamut of medical, psychological, and substance abuse counselling, as well as outsource references. The plant provides fitness facilities including exercise and weight equipment, running ares, and locker rooms with showers. The Trenton Brewery also places great emphasis on work and family life, stating in the values objectives that "We believe the success of the Trenton Brewery is dependent upon the full participation and commitment of every team member. Family support is the key to accomplishment of this objective. Therefore, we strive to integrate work and family obligations throughout all aspects of plant operations." Team members at Miller have the ultimate flexibility, as the bargaining unit employees determine all work scheduling including overtime, downtime, alternative scheduling, and shift rotation. The Trenton Brewery also promotes diversity as a "basic value," which is "utilized to gain a sustainable competitive advantage." The Trenton Brewery actively attempts to recruit people from different cultural backgrounds. The plant's values state that "We will create and maintain a workplace free of harassment and intimidation in order that we each may maximize our personal development and contributions to the success of the Trenton Brewery." PRODUCT/SERVICE QUALITY: The Trenton Brewery has no formal quality programs, as plant officials point out that quality is built into everything the brewery does. The objective at Trenton Brewery is to hire the right people, and provide them with the resources and support to produce a quality product. COMPENSATION LINKED TO PERFORMANCE: The Trenton Brewery has a fairly traditional compensation system. The starting wages for technicians is $20 per hour, and technicians earn an average salary of $57,000, with considerable overtime due to team and plantwide meetings. Trenton technicians fall into two different job classifications, production technicians and maintenance technicians. Maintenance technicians earn an extra 70 cents per hour, and to qualify for the advanced classification, production technicians must demonstrate advanced electrical or mechanical knowledge on a test. All production technicians are eligible to pursue the advanced certification, and they typically acquire the necessary skills through outside courses which are supported by the plant's tuition reimbursement program. All salaried employees at the plant participate in a Phillip Morris profit sharing program. (Miller Brewing is a unit of Phillip Morris). WORKER-MANAGEMENT RELATIONS: Labor-management relations at Trenton Brewery are highlighted by a partnership in which both parties work together to maintain mutual trust and respect. As a greenfield site, pegged by Miller Brewing to be the "brewery of the future," an attempt was made from the outset to overcome traditional adversarial labor- management relations. This has resulted in the successful partnership between the Trenton Brewery and Local 2308 of the United Auto Workers, where both parties take joint responsibility to work together for the success of the organization and the well-being of Trenton Brewery workers. A union representative attends and actively participates in the plant manager's twice weekly staff meeting, and labor management cooperation is promoted by an inherently open atmosphere with continual interaction between local union and plant officials. As opposed to a formal grievance procedure, Trenton Brewery has an innovative three-step dispute resolution process. At the first step, individuals take their problems up with their team. Problems that can not be resolved at the team level go to a Policy Review Committee, composed of technicians (brewery workers), team managers and the local union Vice President. The Policy Review Committee has the option of either resolving the dispute, or passing it back to the team for resolution. Problems not resolved at the Policy Review Committee can go to the Plant Review Committee, composed of bargaining unit members, a representative of the plant manager's staff, and a representative of the International Union. (Issues involving employee disciplinary actions automatically go to the Plant Review Committee). In the past eight years, no more than eight issues have gone all the way to the Plant Review Committee level. Problems not resolved through the three-step dispute resolution process would go to binding arbitration, but in the history of the brewery, there has never been an issue that has gone to the arbitration level. Labor negotiations are primarily handled at the corporate and international union level. On September 15, 1994, the Trenton employees agreed to a second three-year contract. Cooperative labor-management relations at the Trenton Brewery have been so successful, that the brewery receives a constant stream of visitors, including international visitors from China, Japan, Australia, Canada, and Europe. STRATEGIC INTEGRATION OF BUSINESS: The Trenton Brewery has a mission statement "to produce the highest quality products in a safe environment at the lowest cost while effectively satisfying customer requirements," and a vision statement that "the Trenton Brewery will by recognized as the best and will continuously improve." REMARKS: The Trenton Brewery had 55,000 applicants for the first 175 technician positions at the brewery. The plant used a combination orientation/selection procedure to select new team members with demonstrated abilities for teamwork, consensus decision making, and working in a team environment. ACCOMPLISHMENTS/AWARDS: The biggest measure of Miller Trenton's success is that in a relatively flat beer market, the plant's production in its four years of existence has grown from 0 barrels to over 7 million barrels. The plant has grown to eight fully operational beer and can lines, with a 3-shift operation keg line. The Trenton plant's labor productivity is 40 percent greater than in any other Miller brewing facility. SERVICE PROVIDERS: Plant officials point to two consulting organizations as having a significant impact on the plant's operations: PDS, Inc. of Clearwater, Florida, which provided early consultation in the development of the plant's team-based work environment; and Development Dimensions International (DDI) of Pittsburgh which helped design the employee selection process and performance management system. REFERENCES: Wellins, Richard S., Byham, William C., and Dixon, George R. (1994). Inside Teams: How 20 World-Class Organizations are Winning Through Teamwork. San Francisco: Jossey-Bass. ------------------------------------------------------------------- COMPANY: Monsanto Corporation CORPORATE ADDRESS: 800 North Lindbergh Avenue Saint Louis, Missouri 631676 PLANT/BRANCH ADDRESS: P.O. Box 473 Muscatine, Iowa 52761 SIZE (employees): 550 UNION(S): non-union INDUSTRY: Herbicides/Plastics SIC CODE: 2821 NEAREST METRO AREA/MILES: Davenport, Iowa (30 miles) Iowa City, Iowa (30 miles) CONGRESSIONAL DISTRICT: IA-01 SECTOR: Private OWNERSHIP: Public, Symbol MTC Traded on New York, Boston, Cincinnati, Midwest, Pacific and Philadelphia Stock Exchanges CHIEF EXECUTIVE OFFICER: Richard J. Mahoney CEO and Chairman of the Board Monsanto Corporation 800 North Lindbergh Boulevard Saint Louis, MO 63167-0002 (314) 694-1000 CONTACTS: LeAnne McMahon Human Resources Representative Monsanto Corporation P.O. Box 473 Muscatine, IA 52761 (319) 263-0093 DATE: 05/02/94 COMPANY DESCRIPTION: Monsanto is engaged in the world-wide manufacture and sale of a widely diversified line of chemicals and agriculture products, prescription pharmaceuticals, sweeteners, industrial process control equipment, and man-made fibers and plastics. The company was incorporated in 1933 as Monsanto Chemical Company, successor to Monsanto Chemical Works, founded in 1901. The present title was adopted in 1964. The company's principal facilities are in California, Iowa, Missouri, North Carolina, Louisiana, Alabama, Texas, Michigan, South Carolina, Florida, Georgia, New Jersey, Illinois, Massachusetts, Idaho, Ohio, Maryland, Pennsylvania, West Virginia, Connecticut, Puerto Rico, and eight foreign countries. The company employs 39,000. In 1993, Monsanto had sales of $7.7 billion. TRAINING AND CONTINUOUS LEARNING: Employees are receiving cross-training and each employee will eventually be able to perform all the tasks on the team. Monsanto has a tuition reimbursement plan. Employees attending college for a degree receive 75 percent of their tuition from the company. Upon completion of the degree, Monsanto reimburses the remaining 25 percent. EMPLOYEE PARTICIPATION: Paramount in this implementation of high-performance is an emphasis on employee safety. All areas within the plant are involved in safety programs. Safety teams meet monthly to address issues. These teams are empowered to make changes to improve safety. Employees are required to fill out Time/Safety cards which are used to report safety issues. Negative issues are brought addressed by the safety teams. All employees have been through safety training and also must complete a monthly safety questionnaire. ACCESS TO INFORMATION: Employees have been given business training to help them realize how their jobs impact on quality, cost reduction, etc. Employees also receive monthly/quarterly financial, quality, and cost performance figures. The plant manager has regularly scheduled meetings (approximately every 1 1/2 to 2 months) with small (15- 20) groups of employees to share financial status and safety figures and to answer questions. ORGANIZATIONAL STRUCTURE: The company has begun the implementation of autonomous work teams. One level of supervision has been eliminated and the responsibilities of this supervisory level are being blended into the teams' responsibilities. EMPLOYMENT SECURITY: The plant has never had a lay-off. The company uses a small cadre of temporary contract employees to buffer the core workforce. This contingent workforce allows the plant to adjust employment levels to changes in demand without laying off permanent employees. SUPPORTIVE WORK ENVIRONMENT: To help employees balance their work and family needs, both flextime and part-time schedules have been introduced. Expectant mothers receive eight weeks of maternity leave with disability pay. Extended maternity leave can be taken as leave without pay. Monsanto also provides family leave of up to one year for employees to care for sick dependents. For the first three months of the leave, the employee is guaranteed his or her own job back. After this period of time and up to one year, the employee is guaranteed a position in the company. PRODUCT/SERVICE QUALITY: A quality mind-set is being ingrained as part of the corporate culture. Quality training, such as SPC, has been provided to groups of employees. Product testing is performed throughout the production process, not just on finished goods, to ensure that product quality remains high. Suppliers are expected to maintain high quality and are qualified based on quality levels. COMPENSATION LINKED TO PERFORMANCE: The pay system is being redesigned to align compensation practices with the team culture. WORKER-MANAGEMENT RELATIONS: N/A STRATEGIC INTEGRATION OF BUSINESS: REMARKS/AWARDS ACCOMPLISHMENTS: SERVICE PROVIDERS: REFERENCES: ------------------------------------------------------------------- COMPANY: Motorola, Inc. CORPORATE ADDRESS: 1303 East Algonquin Road Schaumburg, Illinois 60196 PLANT/BRANCH ADDRESS: SIZE (employees): 134,000 worldwide UNION(S): non-union INDUSTRY: Electronics, semiconductors computers, wireless communications SIC CODE: 3663, 3674, 3571, 3679 NEAREST METRO AREA/MILES: Chicago, IL (30 miles) CONGRESSIONAL DISTRICT: IL-06 SECTOR: P OWNERSHIP: Public NYSE-MOT CHIEF EXECUTIVE: Gary L. Tooker Vice Chairman and Chief Executive Officer Motorola, Inc. 1303 East Algonquin Road Schaumburg, IL 60196 CONTACTS: James D. Burge Corporate Vice President and Director of Government Affairs - Human Resources Motorola, Inc. Government Relations Office 1350 I Street, N.W. Suite 400 Washington, DC 20005 (202) 371-6900 DATE: 02/27/95 COMPANY DESCRIPTION: Motorola is one of the world's leading providers of wireless communications and electronic equipment, systems, components and services for worldwide markets. Major equipment businesses include cellular telephone, two-way radio, paging and data communications, semiconductors, personal communications, automotive, defense, and space electronics, and computers. Millions of consumer products, communication devices, and computers are powered by Motorola semiconductors. Approximately 54 percent of Motorola's total sales are in wireless communications, and 31 percent are in semiconductors. The company was founded by Paul V. Galvin in 1928 in Chicago, Illinois as the Galvin Manufacturing Company. As Motorola, the company has grown to a 134,000 employee company with $22 billion in sales in 1994. Between 1989 and 1994, Motorola's overall employment has grown by 27 percent. Approximately, 56 percent (67,000 employees) of Motorola employees are employed in the U.S., at 25 major locations. Motorola's major U.S. employment centers include its headquarters and production facilities in Schaumburg, Illinois, and production facilities in Phoenix, Arizona, Austin, Texas, and Boynton Beach and Plantation, Florida. TRAINING AND CONTINUOUS LEARNING: Motorola has been recognized as an American company that "trains best" (Fortune, March 22, 1993). In 1994, Motorola invested $134 million to train all its employees worldwide. Every Motorola employee receives a minimum of 40 hours of training per year, and employees at many Motorola businesses receive more than twice that amount. Motorola invests approximately 3 percent of payroll on direct employee training, and approximately 6 percent when accounting for time away from the job. Approximately 40 percent of employee training at Motorola is focused on quality. Motorola is well-recognized for Motorola University, the company's training and education center, headquartered in Schaumburg, Illinois, with 14 branches around the world. Motorola U. has an annual budget of more than $120 million, and a broad range of services and classes, including alternative learning technologies. Course offerings, which range from computers and advanced engineering topics, to critical thinking and problem solving, are developed by Motorola instructional designers. There are more than 700 full-time training instructors currently working at Motorola. Motorola University is segmented into competency centers, similar to academic departments within traditional universities, that are staffed by both instructional designers and technical experts. In addition to supporting Motorola's internal training needs, Motorola University makes available training programs and courses at cost to Motorola customers and vendors. Last year, Motorola sold approximately $10 million worth of training services to other companies and organizations. Within the Motorola Corporation, Motorola University is set up to compete as an independent training service provider, with Motorola business units given the flexibility to choose non-Motorola U. courses and programs that meet their training needs. All Motorola University training programs are evaluated on a continuous basis. Training participants complete customer satisfaction evaluations at the completion of each training session, and in selected courses, participant learning is also measured. Motorola University also solicits evaluations from both participants and their managers after training to determine the effectiveness of training transfer from the classroom to the job. All of these evaluation measures are used, in addition to information from instructors, to determine the effectiveness of program offerings, and for regular revision and updating of courses based on the evaluation results. Motorola's largest training facility is the Galvin Center for Continuing Education in Schaumburg, Illinois. In addition to classrooms and the administrative offices for Motorola University and the Lake Forest Graduate School of Management, the Galvin Center houses six advanced training laboratories, including a portable Programmable Automation Literacy Laboratory equipped with tabletop educational workstations, and a manufacturing laboratory consisting of a flexible assembly line utilizing industrial automation equipment and a factory control system. As a corporation, Motorola places emphasis on both training and education, which company officials point out is the difference between the how and why. In many cases, Motorola has taken the additional step of building the "why" into its skill development programs. As an example, based on the principle that you are knowledgeable on a subject only when you can teach others, many production operators have served as Skills Center Instructors for eighteen month periods. Company officials point out that such rotations help production operators develop instructor, team- building, and problem-solving skills which are passed back to the manufacturing floor. In addition to course offerings available through Motorola University, employees can pursue outside job-related educational courses for which they receive tuition reimbursement. Motorola insists that community colleges who provide basic skills education, do so in the context of the workplace and focus on the "why" as part of the ongoing educational process. As a company, Motorola believes strongly in the value of its investments in employee training and education. One study of a Motorola business unit in the mid-1980's indicated a greater than $30 return-on-investment for each dollar invested in employee training and education. As a result of the recognized bottom- line value of investing in training, Motorola expects to announce that it will soon increase its minimum requirement of training per employee from 40 hours per week to 48 hours per week. EMPLOYEE PARTICIPATION: An emphasis on employee empowerment and the use of work teams -- a key part of Motorola's significant efforts to improve quality - - has greatly increased employee involvement in organizational decision making. Most of Motorola's production facilities are organized around work teams, through which individuals are empowered to schedule their own work, make purchasing decisions, utilize statistical process control to improve quality, and shut down the production line in the case of quality defects. There are numerous ad-hoc teams throughout the company that temporarily exist to solve specific quality problems and work with vendors. Motorola estimates that in 1994, the improvements and suggestions of the various teams resulted in over $2 billion in documented savings for the company. ACCESS TO INFORMATION: Motorola attempts to share as much financial and operating information as possible with associates (i.e., Motorola employees) at all levels of the organization. Most business operations hold monthly reviews to inform all associates about how the organization is performing. Courses offered through Motorola University provide employees with the business skills and knowledge necessary to understand company financial information. At one of Motorola's cellular phone manufacturing facilities, a large bulletin board displays the number of associates that have taken business classes through Motorola University or at the local community college. ORGANIZATIONAL STRUCTURE: All of Mororola's operations are highly decentralized. Different business operations are structured as sectors or groups, depending on their size. Currently the company has four sectors: Semiconductor Products Sector, the General Systems Sector, the Land Products Sector, and the Messaging, Information and Media Sector. There are two groups: the Government and Systems Technology Group, and the Automotive, Energy and Controls Group. Within each of the business sectors and groups, there has been a concerted effort to reduce the levels of management hierarchy. This has resulted in a flatter overall organizational structure at Motorola in recent years. Work at most of the Motorola business units and production facilities is organized around empowered work teams. By last count, there were over 5,000 documented work teams throughout the worldwide Motorola organization. The structure of the teams varies by location, and can include work teams structured around product lines and ad-hoc quality improvement teams. Motorola estimates that the work teams produced over $2 billion in documented savings in 1994 alone. Motorola has a well-recognized supplier partnership program that enables the company to "make the vendor's truck Motorola's stock room." In 1982, Motorola created its "Partnership for Growth" program designed to improve communications with suppliers and share mutual growth opportunities. A key facet of Motorola's supplier partnership program is the Motorola Supplier Institute at Motorola University. The program helps suppliers obtain the training and assistance necessary to meet Motorola's strict quality requirements. In addition to bringing its suppliers on-site for training, Motorola also provides its suppliers with access to training materials developed for Motorola's employees. Motorola sponsors a "Train- the-Trainer" program that prepares suppliers to teach the licensed material. Another facet of Motorola's supplier partnership program is the use of quarterly supplier surveys, called the Supplier Perceptions Measurement, to evaluate Motorola's own performance as a customer. The confidential surveys provide the company with practical insights for improving Motorola's purchasing and supplier management process. Motorola requires all its supplier to upgrade their production systems and apply for the Malcolm Baldrige National Quality Award, or risk losing their contracts. EMPLOYMENT SECURITY: As a growing company, one at which overall employment has grown 27 percent since 1989, there have been few if any involuntary layoffs in recent years. Some Motorola business units have experienced downsizing as a result of defense industry cutbacks, but this has been achieved primarily through voluntary separations. Motorola has a stated policy that associates with more than ten years of company service, referred to as "Service Club" members, can not lose their jobs due to economic reasons. This policy applies to approximately one-third of the Motorola workforce. Any associates with over 10 years of service that are terminated for cause must have their cases reviewed by the Chief Executive Officer. Motorola has taken a number of different steps to "level load" its operations and create buffers to prevent employment swings resulting from business fluctuations, including managed amounts of sub-contracting and overtime. In the past, the company has also worked with the states of Texas, Arizona, and Florida to create opportunities for shared workers' unemployment compensation, enabling Motorola facilities to maintain full employment with limited work schedules, while employees draw limited unemployment compensation. SUPPORTIVE WORK ENVIRONMENT: With respect to safety performance, Motorola officials point out that accident frequency and severity rates at most of its business units run at 50 percent of national industry averages. The company points to its active participation in the Occupational Safety and Health Administration's Voluntary Protection Program (VPP) as a major impetus for getting every one at every level of the company to assume responsibility for the company's safety performance. Two Motorola sites in Texas have been STAR award sites through the VPP program, and two more Motorola sites in Illinois are becoming prepared for similar certification. Motorola is well-recognized for its work and family initiatives, which include an on-site child care center in Libertyville, Illinois, and sponsorship of a near-site center in Boynton Beach, Florida. The company employs a full-time work/family coordinator, and a has a number of flexible work programs including work-at-home, job sharing, flextime, and compressed work weeks. The company also provides up to $2,000 in adoption aid, and has after-school, summer, and holiday programs for children of employees. Motorola plans to open two new on-site child care centers in response to a survey of 15,000 Motorola employees that indicated that employees "rank child care centers at or near work as one of their top desires." Motorola is also recognized for its commitment to workforce diversity and equal opportunity, and was presented with the Secretary of Labor's Opportunity 2000 Award in 1994. The company has set a goal of achieving "strategic parity" by the year 2000, which will be reached when gender/racial proportions at all levels of the company are equal to the availability in the labor force. To achieve this goal, reports are required on diversity goal achievement for each business unit during Organizational Development Management Reviews conducted with the Chief Executive Officer. As part of the reviews, diversity goal attainment is treated in the exact same way as quality goal attainment. Evidence of Motorola's diversity achievements is indicated by the fact that the company now has 22 female officers, compared to only two when the strategic parity program was started. PRODUCT/SERVICE QUALITY: Motorola was a pioneer of the quality movement, as evidenced by the fact that it was one of the original winners of the Malcolm Baldrige National Quality Award in 1988. Motorola's focus on total quality started in the late 1970's under the leadership of former CEO Bob Galvin. In 1981, Motorola's quality efforts officially began when the company's operating committee asked every business unit to improve quality by ten times within the next five years. Business units were left to choose the measurement systems for tracking this goal, and the methods by which improvements would be made. An integral part of Motorola's quality efforts was a simultaneous focus on employee training and education including the declaration that the company would spend no less than 1.5 percent of payroll on training, and that all employees would be required to participate in no less than 40 hours of training each year. The company also created the Motorola Training and Education Center (MTEC), the forerunner of Motorola University. By 1986, the company declared victory in the quest for ten-fold quality improvements, but benchmarking of Asian rivals indicated that Motorola's foreign competitors were achieving greater levels of quality than even Motorola. Consequently, in January 1987, Motorola declared its well-known objective of achieving "six- sigma" quality by the year 1992, a goal equivalent to no more than 3.4 defects per million tasks. Along the way to six-sigma, the company also declared goals of achieving another tenfold improvement in quality by the start of 1989, and a 100-fold improvement by 1991. A number of specific initiatives played an instrumental role in Motorola's quality efforts at this time, and were forerunners of many of the company's current policies and programs. One initiative was a significant emphasis on employee participation and empowerment which was manifest in the company's Participatory Management Program (PMP). As part of this systematic approach to greater employee involvement, employees participated in PMP teams, usually organized by function, to continually assess their work processes and make improvements to reduce work defects. Another key element in Motorola's quality efforts was a focus on Management by Metric, with the adoption of common measurements for monitoring quality improvements. Other key areas of focus included significant efforts to reduce total cycle-time, an initiative focused on product and manufacturing leadership to integrate production and product development disciplines through simultaneous engineering, and a focus on profit improvement to invest in resources to increase long-term customer satisfaction and profits. After initiating the six-sigma quality thrust in 1986, total productivity increased 126 percent in seven years with producing over $4.6 billion in savings. In 1993 alone, Motorola estimates that it saved over $1.4 billion in manufacturing costs as a direct result of the quality improvements initiated since 1986. Company data indicates that there is still a potential $1 billion in savings in non-manufacturing costs. While the company as an average has yet to reach the six-sigma level, most of Motorola's products are at 5.5 sigma quality level and continuing to improve. In 1992, the company adopted a new set of continuous improvement goals which include ten-fold defect reduction every two years, ten-fold cycle time reduction within five years, and customer satisfaction indices in each Motorola business. COMPENSATION LINKED TO PERFORMANCE: Motorola has changed its employee compensation system from one of traditional time-in-grade pay to a skill-based pay system. At Motorola production facilities, there is one broad pay range which is based on certification of measurable skill competencies. The number of possible skill levels is dependent on the business unit and work process, and certification is based on skill assessments professionally designed by psychometric experts. Company officials point out that the change to skill-based pay has enhanced the company's flexibility through the development of multiple competencies within the workforce. In addition to base pay, merit pay also plays a role in each associates overall competitive weekly compensation. Merit pay levels are dictated by business performance, and increasingly decisions regarding individual payouts of merit pay are being turned over to the work teams. The teams make the decisions regarding the criteria for allocation of merit pay. Company officials indicate that most teams start out with merit pay criteria that is 80 percent based on individual factors and 20 percent on team performance factors. They generally tend to progress to a 50-50 split, which is the maximum split allowed by the company, to insure that at least 50 percent of merit pay is based on individual performance. Merit pay is zero-based, meaning that the allocation of merit pay in one period is not predicated on previous allocations. Motorola managers indicate that the criteria for merit pay allocation decisions determined by work teams typically mirror the same criteria prescribed by managers. On top of base and merit pay, Motorola provides for a bonus based on return on net assets (RONA). For employees in particular business units to be eligible for the RONA bonus, the corporation as a whole must achieve an 11 percent return on net assets, and the business unit as well must exceed a specific RONA gate. The average payout from the bonus incentive is approximately 10 percent of base pay per year, but it can and has reached as much as 40 percent of base pay in particular business units. Before settling on the RONA bonus incentive plan, Motorola had tried a variety of different gainsharing approaches. The company determined, however, that top managers are primarily judged on return on net assets, and that return on net asset was a concept that well-trained employees could understand and be judged on as well. Company officials believe that this incentive program has contributed to an increased focus on making the most effective use of company assets. WORKER-MANAGEMENT RELATIONS: STRATEGIC INTEGRATION OF BUSINESS: Motorola lists as its fundamental objective, Total Customer Satisfaction. To achieve this fundamental objective, the company operates under a framework of key beliefs, goals, and initiatives. Key beliefs include conducting business with uncompromising integrity and constant respect for people. Company goals are to develop "best in class" people, marketing, technology, manufacturing, service and products -- including hardware, software, and systems; increase global market share; and provide superior financial results. Motorola's key initiatives are to produce products and service to a Six Sigma (99.9997% defect free), reduce total cycle time in all activities, lead in the areas of product, manufacturing and the environment, to improve profitability, and provide a creative, cooperative workplace, with empowerment for all. REMARKS: Each year, Motorola sponsors a worldwide Total Customer Satisfaction Team Competition, culminating in year-end gala presentation and awards ceremony for Motorola's top performing teams. During 1993, more than 4,300 teams composed of over 45,000 employees of Motorola, its customers, and its suppliers, participated in Total Customer Satisfaction events within Motorola. ACCOMPLISHMENTS/AWARDS: Motorola estimates that because of its commitment to quality, cost and service to the customer, the company saved more than $4.6 billion in the seven years preceding 1993. Between 1989 and 1994, Motorola's total sales grew 131 percent from $9.6 billion to $22.2 billion, and sales per associate increased 82 percent from $92,300 to $168,000. Between just the years 1993 and 1994, the company's sales increased 31 percent and earnings increased from $1.02 billion in 1993 to $1.56 billion in 1994. Motorola estimates that in 1994 alone, teams of Motorola workers produced over $2 billion in documented cost savings. The benefit of Motorola's investment in its workers, and use of high- performance work systems, is further evidenced by the recent achievements of some of its work teams and specific business units. At a Motorola cellular telephone factory in the Chicago suburbs, teams of associates helped reduce the cycle time involved in producing a telephone from 4.5 weeks to one hour, and improved quality ten times. In another Motorola business, factory production operators and supervisors, working together, reorganized and reduced existing work space while simultaneously achieving a five-fold increase in production. At still another Motorola facility, a team of empowered associates reduced production costs by $340,000 per year. Motorola was a winner of the first Malcolm Baldrige National Quality Award in 1988. It has also been recognized as one of the "100 Best Companies to Work for In America," by authors Robert Levering and Milton Moskowitz. In 1994, Motorola received the Secretary's Opportunity 2000 Award from the U.S. Department of Labor, in recognition of the company's commitment to diversity and equal employment opportunity. Also in 1994, the company was named one of the "100 Best Companies for Working Mothers" by Working Mother Magazine . SERVICE PROVIDERS: Motorola officials point to the company's participation in the Malcolm Baldrige National Quality Award, sponsored by the National Institute of Standards and Technology at the U.S. Department of Commerce, as having a profound impact on the company's quality efforts. Motorola requires all vendors to apply for the Baldrige Award, and company officials point out that the Baldrige criteria provide a system and structure for communicating quality goals and ideals to its suppliers. REFERENCES: Avishai, Bernard, and Taylor, William. 1989. "Customers Drive a Technology-Driven Company: An Interview with George Fisher." Harvard Business Review, November-December 1989, 106-114. Barra, Ralph. "Motorola's Approach to Quality." Journal for Quality and Participation, 12 (1), 46-50. Bergstrom, Robin P. 1991. "You Go Flat Out." Production, November 1991, 38-40. Economist. 1992. "Future Perfect." January 4, 1992, p. 61. Henkoff, Ronald. 1994. "Companies that Train Best." Fortune, March 22, 1994, 62-75. Hunt, V. Daniel. 1992. Quality in America: How to Implement a Competitive Quality Program. Homewood, IL: Business One Irwin. Kelly, Kevin. 1994. "Motorola: Training for the Millenium." Business Week, March 28, 1994, 162. Levering, Robert, and Moskowitz, Milton. 1993. The 100 Best Companies to Work For In America. New York: Currency Doubleday. Moskowitz, Milton, and Townsend, Carol. "100 Best Companies for Working Mothers: 9th Annual Survey," Working Mother, October 1994. Thierren, Lois. 1991. "Going for the Glory." Business Week, Special edition on quality, 60-61. Thierren, Lois. 1988. "Motorola Sends Its Work Force Back to School." Business Week, June 6, 1988, 80-81. Thierren, Lois. 1989. "The Rival Japan Respects." Business Week, November 13, 1989. Waterman, Robert H. 1994. What America Does Right: Learning from Companies That Put People First. New York: W.H. Norton & Company. Wiggenhorn, William. 1990. "Motorola U: When Training Becomes an Education." Harvard Business Review, July-August 1990, 71-82. ------------------------------------------------------------------- COMPANY: New United Motor Manufacturing, Inc. (NUMMI) CORPORATE ADDRESS: 45500 Fremont Boulevard Fremont, California 94538 PLANT/BRANCH ADDRESS: SIZE (employees): 4,400 UNION(S): United Auto Workers (UAW) INDUSTRY: Automobile SIC CODE: 3711 NEAREST METRO AREA/MILES: San Francisco (35 miles) CONGRESSIONAL DISTRICT: CA-10 SECTOR: P OWNERSHIP: Joint venture between General Motors Corporation and the Toyota Motor Corporation CONTACTS: Michael J. Damer Manager/Community Relations General Affairs New United Motor Manufacturing 45500 Fremont Boulevard Fremont, CA 94538 (510) 498-5763 Charles Curry President Local 2244 United Automobile Workers 45201 Fremont Boulevard Fremont, CA 94538 (510) 657-0800 DATE: 10/11/94 COMPANY DESCRIPTION: New United Motor Manufacturing, Inc. (NUMMI) is the only automobile plant in the state of California. It is operated as a joint venture between the General Motors Corporation and the Toyota Motor Corporation. Automobile production at the NUMMI facility began in 1984. Between 1984 and 1988, NUMMI produced the Chevrolet Nova, and between 1986 and 1988 the Toyota Corolla FX. Today, NUMMI produces the Chevrolet Geo Prizm, the Toyota Corolla sedan and the Toyota pickup truck. The NUMMI plant is 60 acres with 3.7 million square feet of covered space. The plant has the capacity to produce approximately 220,000 passenger cars and 125,000 pickup trucks per year. Daily production varies, but the percentage of cars produced for General Motors by NUMMI is approximately 40 percent, with 60 percent of production for Toyota. NUMMI is recognized as an outstanding "natural experiment" demonstrating the benefits of high-performance work organization and cooperative labor-relations. The current NUMMI facility was once solely a General Motors facility (GM Fremont), that had been described by one GM manager as the "worst plant in the world." In 1982, GM Fremont closed its doors. NUMMI began production at the old GM Fremont facility in 1984, with the same union leadership and approximately 85 percent of the work force comprised of former GM Fremont employees. Within two years, NUMMI was more productive than any other General Motors plant and had quality that rivalled its sister Toyota plant in Japan. TRAINING AND CONTINUOUS LEARNING: At NUMMI's start-up in 1984, approximately 240 production workers and union representatives travelled to Japan, in groups of 32, for three weeks of classroom and on-the-job training. The program provided the trainees with an in-depth introduction to the Toyota Production System. Upon their return, these 240 production workers and union representatives formed the core group of trainers for all newly-hired production workers. Together, the union and management cooperated in the development of the training and orientation program for all new hires, and several union representatives took full-time assignments in NUMMI's Human Resources Department to work on training and orientation. Each new NUMMI team member participated in a three- day assessment center and a five-day orientation program. Overall during the start-up phase, each team member received hundreds of hours of classroom and on-the-job training. NUMMI's extensive investments in employee training continue today. The company has a training and development department which offers a wide variety of courses to NUMMI employees. For the majority of line workers, however, the major training vehicle at NUMMI is on-the-job training. Each team leader is responsible for training a new member of the team in the multiple skills required to participate as a production team member. All team members receive training in problem solving techniques, and are trained to look at problems as opportunities to make the manufacturing process more efficient and cost-effective. For NUMMI line workers wishing to become team leaders, there is a special 10-class course required before promotion consideration. Each class lasts two hours, and the classes cover a variety of topics including team building and communications. The classes are offered after-hours on employee time. EMPLOYEE INVOLVEMENT: Production work at NUMMI is organized around a team system. Through this system, team members are encouraged to make decisions on their own, particularly decisions that directly affect their area or their team A major emphasis at NUMMI is kaizen, a Japanese word meaning continuous improvement. Each NUMMI team member has the responsibility to increase his or her productivity and efficiency, and in doing so, team members are taught to continuously search for ways to improve operations and achieve lower costs, and higher quality and productivity. The kaizen philosophy attempts to eliminate any but the minimum amount of equipment, labor, materials, and parts necessary for production. Kaizen is often referred to as the cornerstone of NUMMI, and is used in every aspect of the company to improve operations. NUMMI has a formal suggestion program, through which team members have received small monetary rewards for their improvement suggestions. After the first four years of operation, over 70 percent of the team members had participated annually in the suggestion program, contributing an average of approximately 6 suggestions per employee. In 1991, NUMMI workers made more than 10,000 suggestions and more than 80 percent were implemented. ACCESS TO INFORMATION: NUMMI requires every group (composed of 3 to 4 teams) to meet twice monthly, one meeting focused on safety, and the other specifically dedicated to broad informational sharing between workers and managers. Because NUMMI is the joint venture of two major corporations, GM and Toyota, there is relatively little financial information shared with employees. Besides the monthly meetings, there is also an all employee meeting at the beginning of the year for each of the two shifts of workers at NUMMI. The purpose of the yearly meeting is to discuss goals and objectives of the coming year, and to review the results of the previous year. In addition, there is a similar all-employee meeting, held once per year, designed specifically to discuss quality issues. Another avenue for information sharing at NUMMI is "open town forums," where the president and executive vice presidents of the company meet quarterly with employees to discuss issues of employee concern at regularly scheduled luncheons. ORGANIZATIONAL STRUCTURE: Work at NUMMI is organized around a team structure which exists throughout the company. Each team is responsible for performing company objectives in areas such as quality, production, and safety. The teams generally consist of six to eight team members and are headed by an hourly team leader. Contributing to the team concept at NUMMI is the relatively few number of job classifications that exist within the company. Compared to the predecessor GM Fremont facility where there were over 80 production work classifications, NUMMI was set up with only one classification. NUMMI also has only two skilled trades classifications, general maintenance and tool-and-die, compared to the more than eighteen skilled trades classifications at GM Fremont. NUMMI has a relationship with its suppliers based on mutual trust and respect, which contributes to the company's just-in-time production system. The Purchasing Department serves as the principal communication link between NUMMI and its suppliers, with employees from Quality Control and Production Control departments encouraged to work with suppliers as well. NUMMI buyers are expected to visit each supplier's production facility twice yearly, and submit a written report overviewing the supplier's process flow charts, manpower levels, problems and opportunities, as well as a list of suggested improvements. NUMMI executives and executives of supplier companies meet on a regular basis through a yearly NUMMI-sponsored General Supplier Conference, visits by NUMMI executives to supplier sites, and visits by supplier executives to the NUMMI facility. Hourly production team members also often visit with suppliers to assist in solving problems. NUMMI's just-in-time inventory system ensures that suppliers and NUMMI production areas provide the right parts at exactly the right time and in the right amount at every step of the production process. The major control tool of the just-in-time production system is kanban. Kanban is a card-based replenishment system designed to control production quantities in every step of the production process. When a particular part needs replenishing, a kanban card connected with the part is passed on triggering actions by suppliers or internal parts suppliers. EMPLOYMENT SECURITY: NUMMI has a no-layoff policy that was first adopted as part of the 1985 collective bargaining agreement with the UAW. As stated in the 1985 agreement, "the Company agrees that it will not layoff employees unless compelled to do so by severe economic conditions that threaten the long term viability of the Company. The Company will take affirmative measures before laying off any employees, including such measures as the reduction of salaries of its officers and management, assigning previously subcontracted work to bargaining unit employees capable of performing this work, seeking voluntary layoffs, and other cost saving measures." In exchange for the commitment to avoid layoffs, the contract exempted NUMMI from contributing to GM's Supplemental Unemployment Benefits program, that assures 95 percent of pay until retirement to GM workers laid off with ten years or more of seniority. NUMMI's no-layoff policy was tested in 1988, when the production line was operating at only 58.6 percent of capacity due to sluggish sales of the NUMMI produced car, the Nova. Living up to its pledge of no layoffs, NUMMI team members not needed for direct production jobs were assigned to training or special continuous improvement assignments within the plant in preparation for a new production model. SUPPORTIVE WORK ENVIRONMENT: NUMMI's human relations philosophy is based on four stated cornerstones: mutual trust and respect; teamwork and the team concept; equity and fair treatment; and employee involvement. NUMMI has an egalitarian-based work environment where executives and production workers share similar perks and privileges, such as a common cafeteria and parking lot. PRODUCT/SERVICE QUALITY: Jidoka, the Toyota quality principle, is the basis for quality assurance at NUMMI. This philosophy states that quality should be assured in the production process and that no defective parts are allowed to go from one manufacturing process to the next. Team members that see problems or spot defective parts are required to quickly correct the problem if possible, and if quick rectifications are not possible, stop the production line. To encourage quick rectification of problems, the company promotes visual control, which is a tool enabling team members to effectively monitor work flow and the performance of process machinery and equipment. One of the main devices to warn group leaders of production problems is the andon signboard, which is an electronic board that lights up to show the current state of operations, and provides alerts to any problem areas. To prevent quality problems from occurring, NUMMI also uses poka-yoke, which are simply sensor devices on machines that identify malfunctions and ensure foolproof production. Poka-yoke is designed to be used as a backup in the case of human error. COMPENSATION LINKED TO PERFORMANCE: NUMMI provides incentive bonuses to employees through its PIPS (Product Improvement Performance) program, which provides annual bonuses for quality and productivity up to a maximum of $1,900 per employee per year. The bonuses are calculated based on the company's productivity figures, the J.D. Powers survey, and two internal quality audits. Each employee in the bargaining unit receives the same annual bonus. Compensation at NUMMI tends to follow the national UAW contract. WORKER-MANAGEMENT RELATIONS: In September of 1983, General Motors and Toyota signed a Letter of Intent with the United Auto Workers regarding NUMMI that basically recognized the UAW as the bargaining representative, and stated that NUMMI would hire a majority of the work force from the laid off workers from the GM Fremont facility, and that it would pay prevailing U.S. auto industry wages and benefits. The basic philosophy set forth in the Letter of Intent was to build a relationship based on mutual respect and trust between the Union and the Joint Venture partners. In June 1985, Local 2244 of the United Auto Workers and NUMMI signed a collective bargaining agreement designed to build on the philosophies of the initial Letter of Intent. The contract contained a number of innovative concepts, which formed the basis for subsequent contracts signed in 1991, and most recently, in August of 1994. The contract provided the UAW with a full complement of 15 full- time representatives as well as 67 union coordinators in the plant. The contract also provided a job security clause that was the strongest in the automobile industry, and required advance consultation with the union on relevant business issues, and company and union review of mitigating circumstances prior to employee suspension or discharge. The contract also prescribed non-confrontational problem-resolution procedures based on discussion and consensus, round table communications among all company and union leaders in all areas, minimum job classifications to provide work flexibility, and a flexible attendance policy that places trust in team members to be at work. The contract also contained a "no strike" provision over production and safety standards, and allowed team members to stop the production line. In August of 1994, NUMMI and the United Auto Workers reached a new four-year labor agreement, which carried over the major provisions and cooperative relationship of the previous contracts. STRATEGIC INTEGRATION OF BUSINESS: Work at NUMMI is organized based on the Toyota Production System or "lean production system." The system is an integrated approach to production that utilizes existing labor, materials, and facilities as efficiently as possible. A key philosophy of the system is that quality should be assured in the production process itself and that no defects can be overlooked or passed on. Inherent in this system is the "full utilization of workers' abilities," and that team members are to be treated with consideration, respect, and as professionals. The type of production system used at NUMMI has been described as one which combines employee involvement and continuous improvement processes, with efforts to standardize work consistent with Tayloristic or scientific management. Similar to Tayloristic job design, each job at NUMMI is organized based on specified sequences or procedures to ensure that the job is always done in the most efficient way. A major difference between NUMMI's production system and traditional scientific management work systems, however, is that NUMMI team members rather than industrial engineers are responsible for setting the work standards, and continuously improving the job standards for maximum efficiency. The GM Fremont plant had 82 industrial engineers, while there are no industrial engineers at NUMMI. In order to keep production costs low, NUMMI uses production leveling in an attempt to produce no more vehicles and parts than can be sold. Production leveling at NUMMI creates a consistent production volume that averages the highest and lowest variations in orders received. By using production leveling, NUMMI is able to secure the effects of the just-in-time schedule and maintain employment stability. REMARKS: ACCOMPLISHMENTS/AWARDS: The accomplishments of NUMMI are best illustrated in comparison to the performance of its predecessor, GM Fremont. When GM Fremont closed in 1982, its quality and productivity were rated near the bottom of the entire General Motors system, absenteeism averaged approximately 25 percent, and there were 700 outstanding grievances. At the same physical facility, with the same union leadership, and relatively the same technology and work force, NUMMI within two years of start-up became the most productive auto assembly plant in the United States. The quality of cars produced at NUMMI was rated in the highest category of both domestic and foreign autos by consumers and in internal GM audits. In the first four years of operation, there were only 30 employee grievances, absenteeism averaged only 2.5 percent, and personnel turnover was only 6 to 8 percent. NUMMI's significant achievements continue today. In the most recent 1994 J.D. Power customer satisfaction ratings, the three types of autos produced at NUMMI, the Toyota Pickup, the Geo Prizm, and the Toyota Corolla, were ranked second, fourth, and seventeenth respectively. SERVICE PROVIDERS: REFERENCES: Adler, Paul S. 1993. "The Learning Bureaucracy: New United Motor Manufacturing, Inc." Research in Organizational Behavior, 15, 111-194. Adler, Paul S. 1993. "Time-and-Motion Regained." Harvard Business Review, January-February 1993, 97-108. Adler, Paul S. & Cole, Robert E. 1993. "Designed for Learning: A Tale of Two Auto Plants." Sloan Management Review, Spring 1993, 85-94. New United Motor Manufacturing, Inc.: A Joint Venture Between General Motors Corporation and Toyota Motor Corporation. 1993. Fremont, CA: NUMMI. ------------------------------------------------------------------- COMPANY: One Valley Bank of Clarksburg (Subsidiary of One Valley Bancorp) CORPORATE ADDRESS: P.O. Box 1793 Charleston, West Virginia 25326 PLANT/BRANCH ADDRESS: P.O. Box 1510 Fourth & Main Streets Clarksburg, West Virginia 26301 SIZE (employees): 130 employees in 8 branches UNION(S): Non-union INDUSTRY: Banking, Finance SIC CODE: 6022 NEAREST METRO AREA/MILES: Pittsburgh, PA (110 miles) CONGRESSIONAL DISTRICT: WV-01 SECTOR: Private OWNERSHIP: Public NASDAQ OVWV CONTACTS: Larry F. Mazza President & Chief Executive Officer One Valley Bank of Clarksburg P.O. Box 1510 Fourth & Main Streets Clarksburg, WV 26301 (304) 624-5521 FAX: (304) 622-3902 Sharon F. Amiet Administrative Officer & Service Driver One Valley Bank of Clarksburg P.O. Box 1510 Fourth & Main Streets Clarksburg, WV 26301 (304) 624-5521, Ext. 280 FAX: (304) 622-3902 DATE: 02/01/95 COMPANY DESCRIPTION: In 1994, Empire National Bank merged with One Valley Bancorp, forming One Valley Bank of Clarksburg (OVB/Clarksburg). OVB/Clarksburg is a full-service lending institution. One hundred and thirty (130) employees serve in eight locations in a two-county area. OVB/Clarksburg has assets of $265 million. The holding company is in Charleston, and other bank locations include: Oak Hill, Summersville, Huntington, Martinsburg, Fairmont, Morgantown, Moundsville, Ronceverte, and Princeton. TRAINING AND CONTINUOUS LEARNING: OVB/Clarksburg operates an on-site Leadership Development Academy (LDA) where associates (employees) can expand their educational horizons. Each associate is expected and encouraged to develop and pursue their career and learning paths. All associates are required to earn 10 credits per year, with one course in Product Knowledge, and one course relating to their specific duties. Supervisors and Officers have the same training breakdowns, but they must complete 40 credits per year. Generally, LDA one-credit courses are overviews of the subject matter. Two-credit courses are more specialized, and are hands- on. Three-credit courses are designed by teams, and provide associates an opportunity to teach courses. LDA course offerings are grouped under the following headings: Goals, Team-Building, Communication, Continuous Quality Improvement (CQI), Supervisory Education, Personal Growth, Technical Skills, Performance Compensation, and Compliance Issues. A certified security officer at OVB/Clarksburg conducts an hour-long security seminar for new hires that covers what to do in case of a robbery or similar dangerous situation. Four times a year, this training is repeated for everyone, with any updates that may have occurred. This course is also videotaped, and any associate who may have missed the seminar can view the tape and still get credit for the course. External computer courses are also available. Some computer- based learning is available. The Leadership Development Academy has a computer workstation where associates can brush up on WordPerfect or Lotus skills by using the tutorials for both packages. OVB/Clarksburg is also hooked up to the American Financial Skylink Network, a subsidiary of the American Banking Association. This service allows the Bank to videotape the latest programs on topics in the field. Associates may earn one credit for each program viewed. Programs available are posted on the company bulletin board each month. Associates are trained through orientation classes, informal meetings, and, along with guidance from their supervisors, studying and using handbooks on their specific positions. The handbooks contain everything someone would need to know to be successful in that particular position. In addition to LDA courses, cross-training of associates is accomplished through the Knowledge Index, a grid system listing all the jobs available within a department or team. As each associate takes on new responsibilities or skills, he or she records them on the Knowledge Index form. Quarterly "employee switch days" allow all associates to be trained in jobs outside their departments. Associates wishing to pursue more job-related courses or degree programs in business may enroll in any one of three local colleges. OVB/Clarksburg will pay most tuition costs. If an associate enrolls in an external course, they must be prepared to teach that course to other associates. To allow associates to learn more about Performance Compensation, the Leadership Development Academy offers a series of courses. Topics consist of an overview of the process, a course in how to read financial statements, ROA, ROE, and high performance, and the Referral and Sales Report. Performance Compensation is listed in a later section. In 1994, $619.00 per associate was spent on training. In 1993, $1,485 per associate was spent. A course was not offered during the second year, which accounts for the difference in the figures. EMPLOYEE INVOLVEMENT/EMPOWERMENT: All associates at OVB/Clarksburg have a business card, no matter what positions they hold. This contributes to an overall feeling that every job is worthwhile, and that everyone is making viable contributions to the Bank. In addition, the business card is free advertising for the Bank. As each new associate is hired, he or she is given a Franklin planner and voice mail. Bank philosophy encourages the belief that everyone, at every level, has goals. Through working in teams and making individual suggestions for improvement, associates are empowered. Each Team, with a Facilitator assisting the Team Leader, is built around a specific bank service or employee program, such as Home Equity Loans, Loan Processing, HealthTrack, or the Leadership Development Academy. Most Teams meet early in the morning so as not to interfere with serving customers later in the day. The teams analyze the procedures that are going well, and the ones that are not as effective as they could be. Together, Team members develop solutions and further refine effective practices. Associates are selected to be on teams based on their area of expertise. Some associates may be asked to serve; others volunteer. ACCESS TO INFORMATION: Work results are communicated through a monthly tri-fold. Objective measures of results are used to calculate incentives. The OVB Stargazer, the quality newsletter, publishes "thanks for a job well done" items from workers' peers, positive and negative customer comments, and brief motivational articles and cartoons. In addition, all one-credit courses at the Leadership Development Academy--whether they deal with team building, company philosophy and programs, products, and so on--come under "information sharing." Voice mail is used daily to keep everyone up to date on what is happening. Monthly "Ask Mazza" sessions are open, informal opportunities for eight to ten associates to ask the president about anything going on at OVB/Clarksburg--questions or ideas about procedures, rumors floating around, and general information. Associates are frequently approached to see if they have anything to "ask Mazza." From this information gathering, associates are invited to the meetings. There are also monthly Department meetings that associates from other branches attend through telephone hookup. ORGANIZATIONAL STRUCTURE: The current structure of OVB/Clarksburg places the bank's Officers at the top, managers at the next level, and Associates at the next. This is a fairly traditional setup; however, much emphasis is placed on working in teams. When it is time for evaluations, associates are rated by their respective supervisors. In addition, each associate completes a team evaluation for his or her work team, and also has to complete a self-evaluation. EMPLOYMENT SECURITY: OVB/Clarksburg cannot guarantee job security to associates. Even with the 1994 merger, the company has not had to deal with downsizing. In order to prevent layoffs, OVB/Clarksburg plans to continue to grow in size and profits. SUPPORTIVE WORK ENVIRONMENT: Overall, company morale is very high, inspiring friendliness and support for one another and their clients. The Bank has a benefits program and a "cafeteria plan" for insurance. Award-winning HealthTrack, OVB/Clarksburg's wellness program, promotes healthy choices for employees, including classes in quitting smoking, nutritious cooking, and low-impact aerobics. Many courses are taught on-site in conjunction with the Leadership Development Academy. HealthTrack also maintains a list of child care providers in the area. The Bank also promotes better choices by replacing "junk food" machines with machines that dispense fruit, juices, and other healthful snacks. In terms of personal safety for workers, everyone looks out for each other. When employees work late, they will walk to their cars in groups. In 1994, OVB/Clarksburg sponsored a self-defense course at the local YMCA, which many associates attended. To learn what to do in on-the-job dangerous situations (robbery, bomb threat, etc.) especially in the lobby or front desk areas, associates attend a seminar taught by the Bank's certified security officer. To show appreciation for associates' efforts, OVB/Clarksburg has these programs: special-recognition days, "Five-Star Salutes" and "Star of the Month" for outstanding qualities and efforts. Associates may be nominated by anyone in the Bank. New associates are assigned a "buddy" within their department the first month on the job. The buddy answers the new person's questions, accompanies him or her to meetings, and provides general support. The President also meets one-on-one with newly hired associates during their orientation. This meeting usually lasts for an hour. He is usually the first person they will speak with. OVB/Clarksburg associates are also active in the community. Many are active on various Boards of Directors, charities, and programs. As an institution, OVB/Clarksburg has contributed to the United Way and March of Dimes, winning a GOLD award and the Bankers Trophy (seven years in a row), respectively. The Bank's wellness leaders have assisted five Clarksburg-area companies with their wellness programs, and they have consulted with ten established programs in other parts of the country. OVB/Clarksburg provides the annual Senior Health Fair in the community, and sponsors an annual sports banquet to honor high school sports achievers. PRODUCT/SERVICE QUALITY: In 1991, One Valley Bancorp launched its Continuous Quality Improvement (CQI) program. CQI was prompted by the Bank Administration Institute's Employee Opinion Survey, in which OVB/Clarksburg scored lower than their peer group average in all the BAI Survey categories. To implement CQI, OVB/Clarksburg organized a task force of managers and non-managers to share ideas and decide on a direction. In 1992, the Bank's Service Quality Team (SQT) was formed, with representatives from all bank areas. The SQT focuses on service quality, employee recognition, and CQI effectiveness. This Team sets quality standards for internal and external services, administers surveys, and provides updates. OVB/Clarksburg associate facilitators were trained by outside consultants in team-building, facilitation and brainstorming to assist team leaders as they continue to work with their groups. The number of CQI Teams depend on how many projects are going on at once. Currently, there are nine. Many of the reported quality improvement suggestions that would involve changing a process become CQI Teams. Other quality suggestions leave room for associates to change themselves. The CQI process helped to cut mortgage processing time from 60 to 23 days, reduce loan processing time for car dealers from one day to 16 minutes, and increase installment lending 158 percent in the main office. Above all, CQI achieved more and better communication with customers and better cooperation with and from vendors, or "external associates." At OVB/Clarksburg, each associate has the "responsibility to exceed authority" when the situation warrants, e.g., transferring money for a client, assisting a co-worker, and so on. Each person is expected to make suggestions and improvements. "Just Do It!" is the Bank's motto. OVB/Clarksburg has a 24-hour response time for handling customer complaints, also known as "quality challenges." Every associate has the responsibility to respond to a customer complaint by the end of the business day. If the associate handling the call cannot assist the customer, it is that person's responsibility to refer them to an appropriate associate and follow up, or to call the customer back if that was promised. OVB/Clarksburg's external associates include automobile dealers, appraisers, pest inspectors, surveyors, closing attorneys, and insurance agents. It is very important to the Bank to know how well they are providing services to these groups. A number of methods are used to measure the services provided. Written surveys about quality of service and process improvements are sent to car dealers. They complete them and return them to the Bank. The lending officer who handles car loans will frequently call the dealers to follow up on their comments. Many of the changes that have been made to the car-loan process have come from these surveys. Similar surveys are sent to other external associates. The President and Administrative Officer follow up on these responses by telephone. Periodically, the Bank will hold separate focus groups for pest inspectors, surveyors, appraisers, and insurance agents. This is an opportunity for everyone to brainstorm OVB/Clarksburg's strengths in providing services and suggestions for improvement. The Bank prefers to speak one-on-one with attorneys when discussing quality of service. When evaluating customer service quality, OVB/Clarksburg uses surveys, mystery shopping scores, and focus groups to measure satisfaction. The bank regularly communicates with its customers through written surveys to see how well clients are being served. There are several types of customer surveys: Open Account, Consumer Loan, Commercial Loan, and Residential Loan. These surveys include a letter to customers from the Bank President, and a handwritten personal note at the bottom of each. OVB/Clarksburg sends each person who responded a thank-you postcard. The Bank has a 55 percent success rate with these surveys. Associates feel that the human touch contributes to the high rating. OVB/Clarksburg has used focus groups for Customer and Residential Loans and "mature market" concerns. Groups of ten to twelve people gather in a room and are asked specific questions about their banking requirements. An outside professional leads the people through the questions. In this way, OVB/Clarksburg learns what would be most helpful to customers. COMPENSATION LINKED TO PERFORMANCE: OVB/Clarksburg has implemented a performance compensation system emphasizing Quality, Growth, Profit, and Productivity. Bank management and associates set target profit goals for each of these areas. As each of these are exceeded, the totals go into a bonus pool and are paid out based on Team performance. WORKER-MANAGEMENT RELATIONS: N/A STRATEGIC INTEGRATION OF BUSINESS: OVB/Clarksburg frequently holds Strategic Planning meetings. Bank officers will make plans and set goals, and then ask for feedback from associates. Together, they decide on the Bank's goals for the future. OVB/Clarksburg uses voice mail, and everyone is connected via the computer LAN. Associates recently expressed an interest in using more state-of-the-art computer technology on the job. A consultant was brought in to assess the situation, and a technology plan will be prepared and implemented. As part of these changes, OVB/Clarksburg is offering an employee interest- free loan program to go toward purchasing a computer. REMARKS: The star symbol is used frequently at OVB/Clarksburg for The OVB Stargazer, the Leadership Development Academy catalog, HealthTrack literature, and other items. The logo inspires the idea that everyone can shine, contribute something, and has the power to be successful. ACCOMPLISHMENTS/AWARDS: OVB/Clarksburg has received the following accolades: *1994 National Organizational Excellence Award (service category), Association for Quality and Participation (AQP), for involving employees in quality improvements. OVB/Clarksburg is the first bank to win this national award. *Finalist, 1994 USA Today/Rochester Institute of Technology College Quality Cup Awards competition, for lending team's accomplishments. In four months, OVB cut its car-dealer-loan- application processing time from one day to just 16 minutes; in one year (March 1993 to March 1994), OVB/Clarksburg expanded its main-office installment-lending portfolio 158 percent. *1993 Prevention Prize, Prevention magazine, for achievement in preventive medicine and wellness. *1992 Well Workplace Gold Award, Wellness Council of America, as one of the best wellness programs in the nation. *1993: One of top five wellness programs in the U.S., National Association of Governors (3,000 programs considered). As a result of the Continuous Quality Improvement program: *From 12/91 to 12/93, Return on Assets increased 30 percent. As of June 30, 1994, it was 1.40 percent. In that same two-year period, Return on Equity grew 72 percent. By June 30, 1994, Return on Equity was 16.75 percent. Assets expanded 25 percent, and profits jumped 109 percent. *From December 1991 to December 1993, employee turnover dropped 48 percent, and productivity increased by 24 percent. Profit per full-time equivalent employee increased by a dramatic 72 percent. *In general, customer service improved greatly. In 1992, 75 percent of OVB's new customers indicated that service quality and timeliness "exceeded expectations." A year later, 95 percent said OVB exceeded expectations. In June of 1994, OVB/Clarksburg ranked #1 among six area competitors in the bank's mystery- shopping survey. SERVICE PROVIDERS: Management consultant Finna Bjarnadottir, Ph.D., of LEAD Consulting helped OVB/Clarksburg develop its CQI methods. OVB/Clarksburg also used Bill Fromm's book Ten Commandments of Business and How to Break Them: Secrets for Improving Employee Morale, Enhancing Customer Service, Increasing Company Profits While Having More Fun Than You Ever Thought You Could Have at Work (Putnam Publishing Group, 1991) as a guide. REFERENCES: Mazza, Larry F. "Quality: the Name of the Game When Performance Counts." Bank Management: Strategic Insight for Bankers, September/October 1994. Stories for Success: Winning Strategies in Quality and Participation. Cincinnati, OH: Association for Quality and Participation, 1994. ------------------------------------------------------------------- COMPANY: Phelps County Bank CORPORATE ADDRESS: P.O. Box 1068 Rolla, Missouri 65401 PLANT/BRANCH ADDRESS: SIZE (employees): 55 UNION(S): non-union INDUSTRY: commercial bank SIC CODE: 602 NEAREST METRO AREA/MILES: St. Louis (100) Springfield (110) CONGRESSIONAL DISTRICT: MO-08 SECTOR: Private OWNERSHIP: Employee stock owned (100 percent) CONTACTS: Emma Lou Brent Chief Executive Officer Phelps County Bank P.O. Box 1068 Rolla, MO 65401 (314) 364-5202 DATE: 7/08/94 COMPANY DESCRIPTION: Phelps County Bank (PCB) is a small town bank started in 1963, and located in the foothills of the Ozarks in Rolla, Missouri. Phelps County Bank is a $100 million-asset institution and between 1990 and 1993 had an average return on assets of 1.33 percent and an average return on equity of 18.21 percent. The bank services a population of approximately 35,000, including the neighboring town of St. James and the nearby campus of the University of Missouri at Rolla. The majority of Phelps County Bank's employees work at the bank's main office at the corner of 8th and Pine Streets in downtown Rolla. The rest of the employees work at one of three branch locations: a drive-in bank located at the outskirts of Rolla, and branch offices at the university and in St. James. Phelps County Bank is the leading financial institution in Rolla, with its competition mainly from banks affiliated with statewide bank holding companies. Compared to its competition, Phelps County Bank's prices are slightly higher, and its product line more limited, so the bank competes on customer service as its formula for staying ahead. A recent comparison of Phelps County Bank with its peer competitors indicated that PCB had 21 percent higher personnel costs, but also 23 percent higher return on assets. TRAINING AND CONTINUOUS LEARNING: Because of her vision that community banks in the future will require knowledgeable bankers as their strategic edge in market differentiation, Phelps County Bank's CEO, Emma Lou Brent, has instituted a wide variety of training programs for bank employees. Given that there has been no turnover at PCB in the last three years, training is regarded as more of an incremental process than a program at PCB. Most training programs are designed to build on those that have come before. The first major training course, started in the mid-1980's, was a Dale Carnegie course designed to give employees the foundation of personal skills they needed to function in a new working environment, and to be assertive in asking for the things they needed. Next, PCB orchestrated the development of a program at a local vocational school to teach fundamental banking classes offered by the American Institute of Banking. Because these classes were typically only offered in larger cities with greater demand, PCB recruited its major competitors to join them in supporting the training program. Through the program, 13 non- officers at PCB have received general banking degrees and 11 have received other specialist degrees. Approximately 15 to 18 PCB employees are enrolled in the program's classes at any one time. After spearheading the AIB classes, PCB brought in university professors from Southern Illinois University to teach a 13-week course in problem solving. Through the problem solving program, employees were taught brainstorming and other problem solving skills, as well as cost analysis, research skills, and proposal presentation. Weekly staff meetings were also redesigned into employee training sessions, in which each department was responsible for teaching an hour long session once a month about their products and services, including a special class session on the Employee Stock Ownership Program. To support its weekly learning initiatives, Phelps County Bank sponsored a year-end "Jeopardy" contest with paid vacation time serving as a prize. Today, PCB is a veritable "learning organization" providing a variety of training, educational and informational opportunities for employees. All employees are trained in selling techniques, and last year, the bank also instituted a program designed to teach all employees how the bank makes money and how these earnings are allocated (i.e, salaries, building expense, capital additions, FDIC insurance, retained earnings, etc.). The training program helps employees understand the various ways income can be increased or costs decreased and also the importance of building capital reserves for future growth and expansion. In 1994, 18 PCB employees completed a financial planning class, and the bank provides training on bank regulatory practices through self-paced computer tutorials. It also has a satellite hook-up to Skylink, through which it receives a weekly two hour informational course from the American Banking Association. All PCB employees are cross-trained so that any job can be performed by at least 3 other employees. The bank has an on-site library, and reimburses employees for books they buy and donate to the library, as well as outside educational expenses. To encourage employees to learn computer skills, the bank provides four-year interest free loans for personal computer purchases. EMPLOYEE PARTICIPATION: Phelps County Bank's initial experiences with employee involvement began in 1989, when a problem solving team was created by the bank's executive committee to develop a method for generating and evaluating employee suggestions for problem solving. Six non-management employees were appointed to serve three-year staggered terms, and the committee named itself the "Problem-Busters. The committee initiated the placing of suggestion boxes in various bank locations, and met once a month to discuss anonymous suggestions or problems presented by employees, as well as their own ideas. Every employee idea was evaluated by the committee, and sent to the bank's executive committee with a recommendation. Almost all recommended ideas were approved. When actions were approved, the problem-busters solicited approximately 3 to 5 volunteers to work on ad hoc committees for the implementation of the solutions. The Problem-Busters Committee has been recently phased out by PCB, as the bank believes it has met the objective of having all employees actively involved in participating in problem solving. Employees have been fully trained and are encouraged to solve problems, and propose and implement solutions. ACCESS TO INFORMATION: Phelps County Bank shares full financial information with all employees, except personal salary information. The company keeps an extensive database of banking industry data, and comparative ratios are fully available to employees. Company financial information is provided to employees at departmental meetings, and is also accessible by computer. ORGANIZATIONAL STRUCTURE: Phelps County Bank has a flat organizational structure, with a management committee consisting of the top four senior managers in the bank. Beyond that, there are no supervisors, and all departments function as self-managing teams. Team members are all cross-trained so that there are at least 2 or 3 people who can perform each job at the bank. The teams select their own team leaders on a rotating basis, with the teams deciding when the rotation should occur. EMPLOYMENT SECURITY: Phelps County Bank has never had a layoff. There has also been no turnover at the bank in approximately the last three years. During the 1980's, in periods when PCB had more employees than work, the bank avoided layoffs through job sharing and attrition. SUPPORTIVE WORK ENVIRONMENT: Like the banking industry in general, employment at Phelps County Bank is approximately 85 to 90 percent female. Recognizing the home pressures faced by female employees working for a high commitment organization that requires major time commitments, Brent has attempted to foster spousal support by sponsoring an annual shareholder dinner involving employees and their families. At the meeting, spouses are given detailed information regarding how ownership of the bank is financially benefiting their family. As a result, Brent reports that employee spouses have become some of their best "word-of-mouth" sales people. PCB has a mentoring program for new employees to provide personal training and assist in acclimation to the bank's culture. Employee volunteers serve as "buddies" for the new hires. Buddies take new employees to lunch at bank expense on their first day of employment, and they agree to spend 30 minutes with the new employee every two weeks (either in person or by phone) during the employee's first six months of employment. PRODUCT/SERVICE QUALITY: PCB is recognized for its outstanding service, which it promotes both informally through its service-oriented culture, and formally through specific workplace practices. The rule at PCB is that the first employee presented with a problem by a customer is the "owner" of the problem, and they are responsible for staying in contact with the customer until the problem is resolved. The bank opens at five minutes to nine in the morning, and closes five minutes after three, and customer service representatives are trained to help people who need special assistance after closing. PCB newspaper ads carry both the home and work phone numbers of lending officers, and customers are encouraged to call at night or on weekends with emergencies. New account customers and borrowers are sent customer service surveys in an attempt to monitor customer service for continuous improvement. In 1991, Phelps County Bank started a Customer Service Committee, which was an appointed committee of customer service representatives recognized for their outstanding customer service. The committee spent four months drafting a customer service program and informational manual designed to promote customer service which "exceeds customer's expectations." Included are bank guidelines for customer service as well as error resolution flow charts. PCB also uses its computer system as an informational source to promote customer service. Employees are required to use electronic mail to report on any problem reported by a customer, with information on the name of the customer, the nature of the problem, and the way in which the problem was resolved. The reports are called Error Alert Responses, and given the tag name "EARs." The bank reports that the EAR system provides a number of benefits, not the least of which is the opportunity to learn from mistakes. It also alerts employees to customers who may need special attention. COMPENSATION LINKED TO PERFORMANCE: Phelps County Bank pays wages that are more than 20 percent above market rate for comparable banks in the area. Phelps County Bank is 100 percent employee owned, and is one of the few majority employee owned banks in the United States. Approximately 90 percent of employees are vested in the plan, with typical balances greater than $70,000. At the end of 1993, 17 employees had ESOP balances greater than $100,000. The value of an ESOP account for a PCB employee making $18,000 per year, including stock appreciation and bank contributions, has been increasing on average approximately $7,000 per year over the last several years. Phelps County Bank's ESOP is a leveraged ESOP, meaning that all of the banks stock was purchased with commercial or other loans, and is held in escrow until the loans are repaid. The bank makes a yearly contribution to the ESOP (not exceeding 25 percent of total bank payroll) used to pay principal and interest on the loan. Payment of the principal results in stock being released for credit to individual employee accounts, with allocations to each employee account based on individual wages as a percentage of payroll. Employees become fully vested in the plan after seven years, in increments of 20 percent vesting starting during the third year of employment. Employees receive either lump sum payouts at retirement, or over a five year period if the bank's cash flow does not permit a one-time buyout. CEO, Emma Lou Brent, has been instrumental in the development of the ESOP program since it was started in 1980. In 1987, she developed an ESOP manual, and started a ten week ESOP class, and two ESOP committees. One committee oversees the finances and administration of the ESOP, and the other serves a "cheerleading" role to keep employees aware of and interested in employee ownership, and to serve as an informational source for employees regarding employee ownership. A 1988 employee survey indicated that over 50 percent of PCB employees reported they did not understand the Employee Stock Ownership Plan. After starting the ESOP committee, less than 10 percent of employees reported that they did not understand the ESOP in a similar survey conducted in 1993. To teach employees about the ESOP program, PCB sponsors a 10-hour training course which is mandatory for all ESOP committee members. Phelps County Bank also has an incentive-compensation plan designed to focus monthly attention on key performance variables such as loan delinquency. Employees are also provided with financial awards for new ideas, with the best idea of the year given $1,500. Employee recognition is also a part of PCB's reward structure. In 1993, the bank sponsored a promotion called "You Bet We Can Can-can," where customers were invited to provide stories of instances in which PCB employees went out of their way to help. Each month, a different story was highlighted, and both the customer and the employee received a free dinner for two. Over the course of the promotion, the bank received hundreds of story nominations. WORKER-MANAGEMENT RELATIONS: N/A STRATEGIC INTEGRATION OF BUSINESS: Ownership of one's job is the strategic crux for the work practices at Phelps County Bank. Bank officials report that every employee at PCB is expected to be a good banker, and employees lead the way in promoting these high expectations. REMARKS: Phelps County Bank was referred to by writer, John Case, in a January 1994 Inc. magazine article, as the "friendliest, most service-oriented bank" he had ever seen. ACCOMPLISHMENTS/AWARDS: In 1993, Phelps County Bank was recognized as one of the best small employers in America by Inc. magazine. Between 1980 and 1990, Phelps County Bank's stock increased 411 percent (approximately double that of its closest competitor) and it captured over 50 percent of new loan growth in its retail area. In 1992 alone, the bank's stock appreciated 19 percent. Between 1989 and 1993, Phelps County Bank's total overhead per million dollars of assets per day decreased from $93 to $90, and its net income increased from $34 per million dollars of assets per day to $45. Since starting its employee stock ownership plan in 1980, Phelps County Bank has moved from third place in its market to first in terms of both assets and deposits held, passing the subsidiaries of the two largest bank holding companies in Missouri. Since 1986, the bank's assets have grown an average of 8.1 percent per year. SERVICE PROVIDERS: For training services, PCB credits the Rolla Technical Institute and the American Banking Association (headquartered in Washington, DC) as major service providers. PCB uses banking courses provided by the American Institute of Banking, the educational arm of the American Banking Association (ABA), as well as a weekly informational satellite feed from the ABA. The Selling Edge, located in Cleveland, Ohio, provided the sales training program which PCB used to identify customer needs. Also, faculty members from Southern Illinois University in Carbondale, IL were enlisted to provide the problem solving training course. REFERENCES: Case, John. 1994. "Total Customer Service." Inc., January 1994, 52-61. Ehrenfeld, Tom. 1993. "Cashing In." Inc., July 1993, 69-70. Inc. 1993. "Fostering Support from Spouses." June 1993, p. 35. Young, Karen M. 1993. Theory O: Creating an Ownership Style of Management. Oakland, CA: The National Center for Employee Ownership. ------------------------------------------------------------------- COMPANY: Picker International CORPORATE ADDRESS: 595 Miner Road Highland Heights, Ohio 44143 PLANT/BRANCH ADDRESS: SIZE (employees): 4,400 UNION(S): Partially unionized (see division) INDUSTRY: Medical imaging SIC CODE: 3845 NEAREST METRO AREA/MILES: Cleveland, Ohio (10 miles) CONGRESSIONAL DISTRICT: OH-19 SECTOR: Private OWNERSHIP: Wholly-owned subsidiary of General Electric, Ltd. of Great Britain CEO/PRESIDENT: Cary J. Nolan President and CEO Picker International 595 Miner Road Highland Heights, OH 44143 CONTACTS: Dr. Donald Plante Vice-President -- Quality and Technology Picker International 595 Miner Road Highland Heights, OH 44143 (216) 473-3767 DATE: 10/24/94 COMPANY DESCRIPTION: Picker International was founded by Robert Picker in 1914. It was sold to C.I.T. financial Corporation in 1958, who was acquired by RCA in 1980. RCA, not wanting to be in the diagnostic medical imaging business, sold Picker to the General Electric Company, Ltd. of Great Britain in 1981. Picker manufacturers medical imaging equipment [Computer Tomography (CT), X-Ray, Nuclear Medicine and Magnetic Resonance Imaging (MRI), distributes radiological supplies and services a large worldwide equipment installed base. In 1993, Picker had sales of over $1 billion while employing approximately 4,400 employees in the U.S. TRAINING AND CONTINUOUS LEARNING: Picker uses its training programs as a base for its overall quality programs and vision. All employees have received a mandatory four-day quality training course all new hires are put through a three-day version of the training. Each day of the course centers around a different topic (all related to quality): 1) quality awareness, 2) a ten-step Continuous Quality Improvement Process (CQIP), 3) team dynamics (such as problem solving, conduct of meetings and interpersonal skills), and 4) a six-step Picker Problem Solving Process (PPSP). The six-step problem solving process is based upon the Xerox six-step process, which Picker benchmarked and adapted for its own use. A train- the-trainer system was established to enable Picker to provide the training program completely in-house. Beyond the initial four days of training, managers receive a fifth day of training on process management. There is a sixth day of training also mandatory for all employees called the Measuring Up Workshop that is designed to tie the quality process together. This course includes examination of the Picker quality values, the role of measurement in the quality process, and instruction on how to utilize quality tools effectively. A company sponsored Picker Quality Institute conducts additional quality-related courses over Fall and Spring semesters. The Quality Institute offers a broad range of courses to all employees. The courses are voluntary. Most of the courses are custom designed based upon the request of teams, plant employees or management, or division management. Picker also provides ongoing management training through its Picker Management Institute. Among the courses offered are leadership, facilitator, and human resource development training. For the most part, these courses are voluntary. Depending upon the division, there is a high level of technical, job-related training. Each division identifies and provides its own, unique technical training courses. For example, the sales division has the Sales Career Institute, which provides intensive sales negotiations training. Much of the training provided through the divisions and by corporation staff is designed and provided using internal trainers. The company also used the Zenger-Miller training extensively for Organizational Development and Human Resource Development. At its Service Division (located in Highland Heights), Picker has built a modern training center, including classrooms and a video facility. Because of the proximity to headquarters of the Service Division, corporate trainers are able to use the facility to provide video training courses to field and divisional staff. Throughout Picker, not only is training provided mostly by Picker employees, but is provided on-site at Picker facilities. Picker's field organization is organized into eight international regions; headquarter's staff and internally certified trainers conduct training at field locations. Picker also has a tuition reimbursement program which provides 85 percent reimbursement for all employees attaining a "C" or better grade. EMPLOYEE PARTICIPATION: In 1990, Picker began a formal program entitled Quality Driven Leadership. This program is based on three principles: customer satisfaction, 100 percent employee involvement, and continuous improvement. The idea of employee involvement has evolved to the concept of employee empowerment. Managers commission teams to produce products and services, to solve problems and to improve business processes. Teams that create products or services use the ten-step Continuous Quality Improvement Process (CQIP). Teams that solve problem use the six-step PPSP problem-solving process. Business Process improvement is approached as a problem to be solved for which PPSP is used in a prescribed manner. QDL teams typically are 'empowered' to carry through to implementation. At any point in time there are over 500 teams throughout Picker, with each team having typically four to eight members. After their project is completed, these teams are decommissioned by the managers that commissioned them. Each team has a team leader or co-leaders chosen by the team members. Team membership is based on including those employees that the team needs to complete its mission. If a person has specific skills or talents that are needed by a team, he or she is assigned to the team. As such, employees may serve on more than one team at a time. Additionally, because membership on a team is predicated on needed skills and talents, teams may or may not include a supervisor as a team member. Process Management Teams involve managers more than QDL teams of other types, because 'managing the horizontal organization' is regarded as a management responsibility. Within established policy, these teams are empowered to carry to completion, to commission QDL teams, and to change operating rules of business processes. Presently, there are over 40 Process Management Teams established. At the top level, there is a Steering Committee. This steering committee was created from the existing infrastructure of QDL managers and oversees the QDL process. Various divisions within Picker have established work level self-directed work teams. Each division is empowered to design their own organizational structure, with corporate guidance. Also, some divisions have implemented various forms of concurrent engineering, using cross functional design teams, although these efforts are still in the embryonic stages. Additionally, some corporate functions and the field service staff have begun implementing self-directed work teams. ACCESS TO INFORMATION: In conjunction with its Quality Driven Leadership process, Picker shares large amounts of nonfinancial measurements with its employees. Picker has developed a measurement scorecard which is publicized widely (although some of the proprietary information is transmitted orally only). This scorecard measures such items as the cost of quality, research and development effectiveness, and the number of engineering changes. The goal is to understand how the key stakeholders (shareholders, employees, management) are being served and to measure how well critical business processes are performing. The scorecard is compiled through ongoing surveys and consists of 22 measurements. The idea behind the scorecard is to supplement traditional financial reporting and measurement and to improve Picker's non-financial measurement culture. ORGANIZATIONAL STRUCTURE: Picker is organized around Strategic Business Units that manufacture products which are sold through direct and indirect sales channels and serviced primarily by Picker's own Service Organization. All Divisions are supported by a central corporate staff. Operating units are given autonomy to create and implement internal organizational designs (within corporate guidelines), including the use of work teams. Overall, Picker has a traditional organizational structure with as much as seven layers from the CEO. Having Sales and Service units separate from the operating SBUs is intended to provide strong customer focus through the 'channels' while also providing for strong product focus through the SBUs, with integration of the two supported by corporate functions. Picker has recently begun targeting its supplier base as an area for quality improvement and cost cutting. The company has begun to work with suppliers to improve incoming quality. Many of the QDL teams have supplier representatives sitting on them as full members. Picker is also entering into partnerships with its customers. Because of its main business field (medical equipment) Picker products must necessarily be of high quality. Picker is subject to FDA audit to Good Manufacturing Practices and all its key manufacturing sites are certified to the ISO 9001 International Standard for Quality Management Systems. Picker's partnerships with its customers extend down to the Quality Driven Leadership process. Picker QDL teams collaborate with many of its customers in creating higher quality goods. Three QDL teams have customer representatives on them as full members. While just-in-time practices are evident in some of Picker's operations, because customers themselves have long lead times before being ready to receive, install, and operate complex medical imaging equipment, product delivery lead time reduction is not a priority. Some of Picker's division have implemented Kanban systems to improve production lead times, to reduce inventories and to increase immunity to large forecast variations inherent in the business. EMPLOYMENT SECURITY: Picker does not have a formal redeployment policy, i.e., a commitment to redeploy employees the improve themselves out of a job, although best efforts are conducted to do that. Because of the growth of Picker's business, there has not been a significant problem to date with redundancy. Personnel levels are managed on a division-by-division basis, by the divisions themselves. To date, the majority of reductions in staff have been handled through attrition and company growth. SUPPORTIVE WORK ENVIRONMENT: On a corporate basis, Picker has not implemented a wide range of family/work supportive programs. Divisions have the responsibility for these programs. In some divisions, flexitime has been implemented and in most divisions, managers and supervisors have been granted tremendous discretion and flexibility in dealing with these issues. Picker does have a corporate employee assistance program which provides psychological counseling and other special help for employees. Because Picker facilities primarily perform assembly operations, there have been few health and safety concerns. PRODUCT/SERVICE QUALITY: In 1990, Picker began a formal Total Quality Management program geared to continuous improvement, called Quality Driven Leadership. Problems and issues which are raised under the TQM program are fed through the Quality Driven Leadership teams for investigation, solutions, and implementation. QDL is based on improvements in three areas: the worker level, where problems are solved and products and services created; the business process level, where problems associated with business processes are solved (managing the 'horizontal' organization); and the organizational level, where issues related to organizing, strategy setting, decision making, planning, management style, et cetera are resolved. Picker started in 1990 with a Xerox-based employee involvement program, moved into business process improvement in 1992 based on the IBM process improvement model and is now working to address organizational level issues. Picker continuously measures quality through a number of metrics. A Product Quality Index is disseminated to Picker staff via the measurement scorecard. Included in this index are scores on both service and product quality. Customer satisfaction (actually dis-satisfaction) is surveyed on a sample basis monthly and comprehensively every other year. On the off year, Picker surveys its competition's customers to provide a benchmark scale against which to measure itself. Picker has also begun to promote the use of statistical process control (SPC). One site already uses it quite broadly, however, most sites continue to use team-driven problem solving tools such as Pareto analysis. Other types of quality control are used throughout Picker's divisions. SBUs typically conduct focus group sessions with customer to identify additional issues not covered by the customer survey. One division has begun using Quality Function Deployment. At the organization level, Picker is also encourages the use of benchmarking as a tool to improve processes, especially where re-engineering is occurring. COMPENSATION LINKED TO PERFORMANCE: There are a couple of dozen different special compensation systems in use throughout the company. For example, at Picker's Charlotte, North Carolina plant, management has implemented a gainsharing program based on published productivity measures. But for the most part, rank and file employees are on a merit system, salespersons are on base plus commission, and managers are incentivized through various bonus schemes. WORKER-MANAGEMENT RELATIONS: Union-management relations are carried out on either a plant or divisional basis where there is a union. For example, at its division in Germany, Picker cooperates with the Works Council to implement its TQM program. STRATEGIC INTEGRATION OF BUSINESS: Picker has a Year 2000 strategic plan which was developed using a problem solving method to identify strategic issues facing the company and then derive strategies to address these issues. This approach inherently integrates the company's Strategic Quality Plan with strategic planning. Seventeen strategies have been identified to address thirteen separate strategic issues. Overall, these seventeen individual strategies are organized into five grand strategies. Human Resources issues and quality issues are addressed in a number of the strategies. REMARKS: Picker believes that it is on the cutting edge in many of its divisional practices. For instance, its Information Services division has implemented information networks across field locations to link the field units in real time with headquarters. Electronic documentation has been introduced in some areas of Picker with the goal of creating an entirely paperless office. The Health Care Products division has implemented Electronic Data Interchange (EDI) with customers electronic ordering. The pursuit of self-directed work teams in a field environment is also on the leading edge. ACCOMPLISHMENTS/AWARDS: Most of the Quality Action Teams are contributing incremental improvements, but many teams have contributed benefits that have saved Picker in excess of $100,000 in annual costs. In 1991, for example, an Action Team from the X-Ray business unit contributed an idea that reduced product installation costs by several hundreds of thousands of dollars yearly. This team won Picker's annual President's Award for quality. SERVICE PROVIDERS: REFERENCES: Plante, Donald, "TQM: A top-Down Deployed, Bottom-Up Implemented TQM Model," GEC Review, Vol. 8, No. 1, 1992, pages 28-39. ------------------------------------------------------------------- COMPANY: Picker International, Inc. Computed Tomography Division CORPORATE ADDRESS: 595 Miner Road Highland Heights, Ohio 44143 PLANT/BRANCH ADDRESS: 595 Miner Road Highland Heights, Ohio 44143 SIZE (Employees): 300 UNION(S): Non-Union INDUSTRY: Medical Imaging Equipment SIC CODE: 3845 NEAREST METRO AREA/MILES: Cleveland, Ohio (10 miles) CONGRESSIONAL DISTRICT: OH-19 SECTOR: Private OWNERSHIP: Wholly-owned subsidiary of General Electric, Ltd. (GEC) of Great Britain CEO/PRESIDENT: Cary J. Nolan President and CEO Picker International, Inc. 595 Miner Road Highland Heights, Ohio 44143 CONTACTS: George W. Gotschall Total Quality Management Manager CT Division Picker International, Inc. 595 Miner Road Highland Heights, Ohio 44143 (216) 473-2533 DATE: 01/09/95 COMPANY DESCRIPTION: Picker International was founded in 1915 and subsequently acquired by General Electric, Ltd. of Great Britain in 1981. Picker manufacturers health care equipment, mainly medical imaging equipment such as computer tomography imaging equipment (CT scans). In 1993, Picker had sales of over $1 billion while employing approximately 4,400 employees in the U.S. The Computed Tomography Division employs 80 at its manufacturing plant in Eastlake, Ohio, 275 at headquarters in Highland Heights, 25 at a software development facility in St. David, Pennsylvania and 40 at various domestic sales and service offices. TRAINING AND CONTINUOUS LEARNING: Training at Picker begins with a mandatory three-day course for all new employees. Each day of the course centers around a different topic (all related to quality): 1) quality awareness, and the Picker quality improvement process, 2) team dynamics (such as problem solving and interpersonal skills), and 3) the six-step problem solving process. The six-step problem solving process is based upon the Xerox six-step process, which Picker benchmarked and adapted for its own use. After adapting the Xerox process, a train-the-trainer system was established to enable Picker to provide the training program completely in- house. All training provided to CT Division employees is based on teamwork, communication, development, and leadership. This provides employees with a common language and base of knowledge from which to communicate. There are three general areas that training falls into: management, productivity, and quality. Employees are provided with a wide range of "soft skills" training, such as: Picker's "Measuring Up" training, which delivers team leader training under the "Quality Driven Leadership" process; and principles of work and measuring work. The CT Division also makes full use of the Picker Management and Quality Institutes, which provide in-house training in a variety of skills. Much of the division's training is provided in-house, by Picker trainers, unless it is determined that an outside agency can provide the training more effectively and efficiently. Most of the in-house training courses are also developed in-house, although there have been instances of Picker trainers going outside the company to "train-the-trainer" courses. In-house designed training is developed to meet the needs and goals of the company and its employees. Picker CT Division has developed a number of ad hoc relationships with community colleges and associations and are able to use these relationships to identify training opportunities. In-house training is usually done on-site. The CT Division has a number of dual use conference/class rooms and each classroom has access to a video cassette recorder and some have computers. There is a video link between the Highland Heights site and the St. Davids, PA, site allowing for video conferencing and training. Employees also receive technical/job skills training. Employees are cross-trained among the three main production areas, and this cross-training is used to support the "promote from within" policy of the division. Picker CT also has a tuition reimbursement program that is available to all employees for job related courses. On average, each employee receives between one and two weeks of training each year on a variety of technical, skills enhancement and career enhancement topics. EMPLOYEE PARTICIPATION: Employee participation is based on the Quality Driven Leadership process that has been implemented throughout the corporation. From a formal process, a dual-track employee participation process has emerged. The original process was designed around commissioned problem solving teams. These teams were commissioned by management based upon requests from employees to form teams. The goal behind the commissioning process was to allow for some order in the continuous improvement process. Management encourages the formation of teams to address issues and problems. Twice monthly, general management staff meet to review commissioning requests. Teams are commissioned if the problem is aligned with division goals and objectives. The general management staff also provides guidance as to the output expected from the team and requires a timeline for resolution of the issue or problem. Teams are allowed to implement solutions if the change is within these original boundaries and may go outside the team to bring in needed resources or involve the affected areas. Recently, a more informal process has arisen in which uncommissioned teams now address issues related to quality improvement and customer satisfaction on their own. These teams address issues in the same manner as the commissioned teams, using either the Picker six-step problem solving model or the ten-step continuous improvement model, but coordinate within their own department the activities necessary to satisfy the customer. The make-up of the problem solving teams (both commissioned and non-commissioned) is ad hoc, involving the people within the process being investigated. This may or may not include the supervisor. Teams attempt to involve not only those affected at the workplace, but also representatives of the affected customer. Most teams have six or fewer members. Each team has a leader who acts as the point of contact and is designated by the team. The leader can change depending upon the direction of the team. On the manufacturing shop floor (Eastlake), natural work teams have been established that are essentially self-managing. The establishment of these teams has changed supervisors' roles to that of coach or facilitator. Each team has a designated team leader who acts as the point of contact. These work teams decide on any changes to the work process and make improvements to the process. They also can help improve the product itself and are expected to investigate all aspects of improving both the products and processes. Team members rotate through the jobs, although two of the product areas (console and support) have only two work team members each. On the gantry team, which is the largest, members rotate through the jobs every three months. An employee's next assignment of the team is determined through a drawing, reducing the possibility of a team member being assigned to the same job for a number of rotations. Training for these jobs occurs mostly through on-the-job training, with the exception being when new software is implemented. When new software is part of the product design, formal classes are conducted so everyone is familiar with the new features and functions. New employees are provided with two weeks of training or until the new employee and co-workers feel comfortable that the employee has learned the job. This system acts as an informal certification system for all employees. ACCESS TO INFORMATION: Picker and the CT Division provide a number of forums and avenues for information sharing. Each year, there is an "All Hands" meeting at which fiscal and financial data is shared and the next year's goals are announced and discussed. On a quarterly basis, each department holds a similar meeting to discuss past performance and future goals. Some departments have begun to implement more frequent meetings. Although there has been no formal financial training provided, at the meetings, the financial statements are discussed on a line- by-line basis, with an explanation given of each line item and what the figures mean. Questions are encouraged and answered. In the manufacturing plant, a weekly meeting is held in which the state of the division is discussed. Topics include the build schedule for the coming week, financial and quality data. The CT Division has its own newsletter that is used to share information. The Division has also begun to use the e-mail system to disseminate information. Anyone with access to a terminal has potential access to e-mail and terminals are being installed on the shop floor to widen access to e-mail. ORGANIZATIONAL STRUCTURE: With the exception of the Engineering Department, which still has a fairly traditional management structure, the CT Division in particular, and Picker International in general, has a flat organizational structure. Within the division, there are 2-2 1/2 levels of hierarchy from the operations manager to the shop floor (counting the team leader). The number of levels is down from four and has resulted from the increased empowerment that employees now have. Engineering still has approximately four levels, although the department is investigating ways of eliminating some of these levels. In a number of cases, both internal and external suppliers and the ultimate customer have been added to the problem solving teams. This has resulted in a number of closer relationships between the CT Division and its suppliers and customers. Overall, the CT Division has about 80 suppliers, of which 20 have extremely close relationships with Picker. These partnerships have resulted in long-term (three years) contracts, and are based on the use of quarterly business reports, yearly audits, and tight communications. Picker has established a formal supplier certification program, that grew out of its ISO 9001 certification. Suppliers are divided into three categories or classes, ranging from critical parts to off-the-shelf parts to general use purchases (paint, calibration equipment etc.). Class 1 certified suppliers work with Picker to provide "dock to stock" shipments in which incoming supplies are delivered almost directly to the shop floor without inspection when needed. Where possible, just-in-time production has been coupled with the "dock-to-stock" process, although the long lead time of orders for the equipment made lends itself more readily to long-term forecasting. Tied in to the JIT process is a Kanban demand pull production card system. The close relationships extend to Picker's customers also. Almost every workday one of Picker's customer groups are touring the Eastlake plant and meeting with employees. Picker uses a number of concurrent engineering/design teams to produce new and improved products. Members of these teams are taken from all parts of the division, including service, manufacturing, and marketing. The teams are entitled Product Business Management Teams (PBMTs). EMPLOYMENT SECURITY: Picker does not have a formal employment security program. Informally, Picker's vision is that if the company continues to improve its products and product line, the company will grow and provide employment security. Training programs and continuing education emphasis are intended to ensure that employees are very employable. In the 1990's there has been one downsizing in the CT Division, affecting approximately 5 percent of the workforce. The affect of the downsizing was ameliorated through attrition and early retirement offers. Employees who were involuntarily released were offered outplacement service and facilities. SUPPORTIVE WORK ENVIRONMENT: Many of Picker's supportive work programs are informal. The Human Resource department works with individual employees to create flexible hours of work. There is an exercise facility at the Miner Road location. The company sponsors a number of extracurricular activities, has a wellness program, and sponsors an environmental program. Employees have access to an Employee Assistance program. A number of the ad hoc problem solving committees have been established to investigate safety and health concerns. There are designated individuals who have responsibility for the ongoing safety and health of the workforce. PRODUCT/SERVICE QUALITY: Picker's CT Division has been certified as ISO 9001 compliant. In 1990, Picker began a formal Total Quality Management program geared to continuous improvement, called Quality Driven Leadership, which has been implemented at the CT Division. Problems and issues which are raised under the TQM program are fed through the Quality Driven Leadership teams for investigation, solutions, and implementation. Customers are surveyed on a regular basis. These surveys are coordinated through the service department and the results are passed to the operating teams. A Customer Response Team meets every other week to discuss specific problems. This team has the authority to commission ad hoc problem solving teams to investigate issues and problems and implement solutions. Benchmarking is performed on an ad hoc basis, depending upon the issue. Picker has recently been involved in benchmarking with both IBM and 3M. Polaroid and Videojet have recently benchmarked several of Picker's processes. The CT Division works with its sister companies to provide a base of knowledge throughout Picker. Measurement of quality is based mostly on trend data, as opposed to longitudinal slice data. Teams use Pareto analysis, trend graphs, histograms, and statistical process control when problem solving. COMPENSATION LINKED TO PERFORMANCE: The CT Division employs a traditional merit salary plan. Employees may receive rewards for saving the company money and there are management awards for attaining specific goals or extraordinary efforts. WORKER-MANAGEMENT RELATIONS; N/A STRATEGIC INTEGRATION OF BUSINESS: The quality process and the human resource function are tightly locked together. Objectives are identified and tools, techniques and strategies are developed to reach these objectives. The Human Resources Manager attends the bi-weekly Steering Committee meetings. REMARKS: ACCOMPLISHMENTS/AWARDS: SERVICE PROVIDERS: REFERENCES: McKenna, Joseph F., "Coach Lets His Team Play the Game," Industry Week, May 4, 1992, pages 12, 16. ------------------------------------------------------------------- COMPANY: Plumley Companies, Inc. CORPORATE ADDRESS: 100 Plumley Dr. Paris, Tennessee 38242 PLANT/BRANCH ADDRESS: SIZE (employees): 1,400 UNION(S): non-union INDUSTRY: Manufacturing: hose, tubing, extrusions for home, industry and auto applications SIC CODE: 3069, 3052 NEAREST METRO AREA/MILES: Nashville (125 miles) CONGRESSIONAL DISTRICT: TN-08 SECTOR: Private OWNERSHIP: Private CONTACTS: Priscilla Lemons Vice-President of Human Resources Plumley Companies 100 Plumley Dr. Paris, TN 38242 (901) 642-5582 DATE: 08/10/94 COMPANY DESCRIPTION: Plumley Companies, Inc. is a leading manufacturer of rubber hose, tubing, and extrusions for home, industry and automotive applications. This family-owned company is a certified supplier for General Motors, Toyota, Nissan, Ford, and Chrysler. Plumley Companies oversees seven manufacturing plants in western Tennessee and northern Mississippi, together employing 1,400 people. In 1993, Plumley had sales of $67 million. TRAINING AND CONTINUOUS LEARNING: Out of an initial SPC course grew an extensive employee education program. Employees needing remedial education go through a basic skills program which includes reading, writing and arithmetic. Plumley has developed a General Education Development (GED) high school equivalency program for its employees. This program includes classes such as metric rule measurement, advanced math, basic computer instruction, rubber technology, and courses in the German and Japanese languages. In addition, those employees wishing to further their education at a college level are fully reimbursed by Plumley for those courses that are passed with a grade of C or higher. Workers at Plumley receive two weeks of initial on-the-job training. The company requires all of its employees to take a two-hour orientation course and a SPC course, plus any others as needed to enhance skills used in their particular work. Employees may later qualify to take professional certification tests by having an appropriate mix of time on the job and academic degrees. The two main categories for employee certification are the Certified Quality Engineer (CQE) and the Certified Quality Technician (CQT). In addition to SPC training, workers at Plumley undergo Kaizen (continuous improvement) training. They take courses in such areas as process improvement and design of new experiments. Employees at Plumley average approximately 108 hours of training a year. EMPLOYEE PARTICIPATION: Employees are formed into self-directed Kaizen (continuous improvement) teams that are fully authorized to evaluate company processes and make the necessary improvements. Although these teams do not hire their own employees, they are fully involved in making organizational decisions designed to improve the quality of their product. ACCESS TO INFORMATION: Employees at Plumley receive most of their information about the company at quarterly meetings held by the President, Tom Dalton. It is here that employees have an opportunity to ask any questions or raise any concerns that they may have. At this meeting, they also receive a quarterly newsletter, which highlights a feedback sheet containing responses to those concerns raised in the last meeting. In addition, employees also receive a newsletter delivered to their homes once a month. In this newsletter, all information of interest to employees concerning the company, its suppliers, and customers is made available. ORGANIZATIONAL STRUCTURE: Plumley is a relatively traditionally structured manufacturing organization. Kaizen supervisors facilitate each team in developing new products and processes, and in introducing new quality improvement ideas. EMPLOYMENT SECURITY: During slack periods of demand, Plumley utilizes an attrition system in which management asks for volunteers to take leave for a short period of time. Then when demand picks up again, these workers may return to the plant. Plumley's last layoff occurred in 1987. SUPPORTIVE WORK ENVIRONMENT: Plumley provides flexible working hours for those employees requesting special work times. Plumley developed a peer grievance review group that helps to resolve employees' complaints. This group works with the employee until the conflict is resolved. This group also has full authority to reverse firing decisions if it feels that this person should stay with the company. About 1/4 of all decisions are reversed by the peer review group. PRODUCT/SERVICE QUALITY: Plumley employs two quality engineers to use benchmarking techniques within the rubber industry. Customer surveys are provided by Plumley in order to improve the quality of their products. Plumley regularly brings customers into their plant in order to discuss better methods of providing exactly what the customer wants. Plumley maintains an extensive computer package that custom designs products for individual customers. COMPENSATION LINKED TO PERFORMANCE: Workers at Plumley may earn extra money by participating in a gainsharing plan. Each quarter new goals are set. The goals are broken down into four categories: quality parts per million, lower waste, higher safety, and number of hours saved on team activities. Workers may earn up to $1.20 an hour extra after meeting all of the goals. Any employee who passes the Certified Quality Engineer examination receives an immediate pay raise of $100 a month, and the increase is permanent as long as certification is maintained. Employees also receive a one-time $500 bonus upon passing the Certified Quality Technician or Certified Professional Secretary examinations. WORKER-MANAGEMENT RELATIONS: STRATEGIC INTEGRATION OF BUSINESS: REMARKS: ACCOMPLISHMENTS/AWARDS: Plumley Companies has received many automotive awards, including GM's Mark of Excellence, Toyota's Certificate of Achievement, Nissan's Quality Master, Chrysler's Quality Excellence Award, and Ford's Q1 award. Plumley is also recognized as having one of the lowest defect rates in the industry, as low as 13 per million. This helped them win Tennessee's Quality Award in 1993. SERVICE PROVIDERS: The employee certification program is run by the American Society for Quality Control in Milwaukee, Wisconsin. REFERENCES: Mangelsdorf, Martha E. 1993. "Ground-Zero Training," Inc., February 1993, pages 82-93. Mangelsdorf, Martha E. 1991. "Making It," Inc., October 1991, pages 20-24. Verespej, Michael. 1991. "No Empowerment Without Education," Industry Week, April 1, 1991, pages 28-29. ------------------------------------------------------------------- COMPANY: Prospect Associates, Ltd. CORPORATE ADDRESS: 1801 Rockville Pike Suite 500 Rockville, Maryland 20852 PLANT/BRANCH ADDRESS: SIZE (employees): 150 UNION(S): non-union INDUSTRY:Services: Health sciences information and communications consulting firm. SIC CODE: 8742 NEAREST METRO AREA/MILES: Washington (20 miles) CONGRESSIONAL DISTRICT: MD-08 SECTOR: Private OWNERSHIP: Private CONTACTS: Laura Henderson Chief Executive Officer/ President Prospect Associates, Ltd. 1801 Rockville Pike Suite 500 Rockville, MD 20852 (301) 468-6555 Cede Johnson Director Human Resource Services 1801 Rockville Pike Suite 500 Rockville, MD 20852 (301) 468-6555 DATE: 09/12/94 COMPANY DESCRIPTION: Prospect Associates, Ltd. is a health sciences information and communications consulting firm. This Rockville, Maryland-based company was founded in 1979 by Laura Henderson. From its beginnings, Prospect has grown from a small company with a start up fund of $30,000 to a company with 150 employees and annual sales beyond the $10 million mark. Prospect provides technical, analytical, and communications support to help its clients fight the nation's foremost health problems. Prospect provides its services to both private and government agencies, such as the National Institute of Health (NIH). Government contracts account for 90 percent of sales. In 1989 Prospect received a $10.7 million dollar contract from the NIH, and they continue to receive significant rewards of NIH contracts. TRAINING AND CONTINUOUS LEARNING: Prospect offers an orientation program once quarterly to every new employee about the company's history, values, and goals. Prospect has no formal technical training program because all the people that enter the company are already trained experts and skilled-professionals in the health and health-related fields. Of the training that does occur, 95 percent is in-house. Employees at Prospect primarily learn by on-the-job training, coaching, and mentoring. Prospect does offer voluntary employee training in areas such as; communications, problem solving, finance, company policy, diversity, work teams, computers, professional skills, and career development. Prospect also offers "open houses", which are creative ways in which employees explain what they do in their job. Employees at Prospect are encouraged to "soar" by educating themselves in many areas of the company, therefore broadening the scope of their jobs. Workers who do broaden their jobs by acquiring multiple skills are regarded as tremendous assets to the company. Prospect also has a reimbursement plan for employees attending college for a degree or taking additional related courses. EMPLOYEE PARTICIPATION: Prospect employees are encouraged to actively generate ideas and market them. Suggestions that employees may have can be brought to the company's "employee advisory committee", which listens to the suggestions and opinions of employees, and then recommends what should be done about particular issues or areas of concern. This committee is comprised of employees and managers. Employees at this company are also included in large decisions such as the choice of health care plans. Prospect's employees are organized in multiple autonomous work teams, with employees involved with numerous projects at a time. This leadership position in the team is assumed by the person who is best suited to lead that particular project. Thus there is a "roving leadership" at Prospect which encourages employees to find their own niche and go about their business without worrying about hierarchy. The appraisal system at Prospect is described as "employee oriented". Prospect requires all of its employees to do a self- assessment, where every employee makes recommendations on their performance and salary. Prospect believes that self-assessment is important for employee participation in and contribution to her/his Performance Review. Next a "Peer Input Team" gives supervisors diverse views of an employee's performance and contributions. This "Peer Input Team" addresses employee performance across various roles and situations that are characteristic of Prospect's culture. Team members each offer different perspectives of the employee because of their different relationships to the employee. The team can be made up of those who have the following relationship to the employee: leadership role to the employee, internal client of the employee, those who are led or directed by the employee, and those who have similar responsibilities as the employee. Employees nominate up to five people for her/his team. The employee's supervisor selects the final team of up to five people. In the end this team must include at least one of those people that the employee nominated. The team and the input are kept anonymous. The last review, the corporate review, determines how the employee has performed, and what salary he or she deserves. This innovative system of appraisal has proved to be beneficial at Prospect. The company reports that employees are much happier with their salaries because they have participated so thoroughly in the assessment. ACCESS TO INFORMATION: Prospect shares its financial and operational information with its employees through semi-annual full staff meetings, bulletins, and the employee advisory committee (see employee participation). There is an "open door" policy at Prospect. All employees are encouraged to ask questions about anything of concern. Employees constantly receive feedback about their questions, suggestions, and problems. ORGANIZATIONAL STRUCTURE: Prospect has a relatively flat hierarchy. Departments are constantly forming and reforming because of the rapid changes in technology. Current departments include: corporate, analytical, conferences, services, publications, Science and Health Information Resource Services Communications, and private sector business development. Work is generally accomplished in autonomous work teams, supervised by a matrix style of management, where groups are lead by a leader and this leader is supervised by management. However, the responsibilities of the supervisory level are being blended into the team's responsibilities. The company refers to its organizational structure as a spider web, where everyone is connected at different levels. EMPLOYMENT SECURITY: Prospect has only had only one or two jobs eliminated due to layoffs in 13 years. The only real downsizing that occurred at Prospect was at the very initial stages of the company's development. At that time, the company downsized through attrition. Prospect has no stated policy regarding employment security, but the company feels that it is a growing family and it will go to great measures to protect each of its members. This was demonstrated in the early 1980's with the start of a new presidential administration, when the company was between two and three years old. At that time the company indicated that the government put everything on hold until the new administration initiated its policies. Several contracts were already under way with the government, but the government cut the distribution of money through the contract. In order to save the company, all employees were furloughed. Then everyone was put on a part-time schedule, and eventually some employees were temporarily laid- off. During that time, Prospect helped its employees find other temporary work and eventually the company managed to bring back all but one employee. SUPPORTIVE WORK ENVIRONMENT: Prospect can be described as a "lifestyle friendly' company. In order to help employees balance both their work and family, part- time, flextime, and telecommuting have been introduced. Every employee picks her or his own hours within operational constraint. The only exception to this is the administrative assistants who have to work set hours. Part-time workers make up 15 percent of the workforce. Many employees are available for "casual intermittent" employment. These people are called in when a situation calls for their temporary employment. Prospect provides family leave to care for sick family members. This leave is not restricted to sick children, but also includes spouses, parents, and any other family members that need care. This company also provides an on staff librarian to all of its employees with free health related reference information. Prospect Associates also has an employee assistance program. This program has family counseling, training, and management consultations. PRODUCT/SERVICE QUALITY: A quality mind-set is ingrained as part of the corporate culture at Prospect. Prospect has a relationship-based orientation with its clients. The company meets with clients on a quarterly basis to discuss progress and to ensure satisfaction as well as quality. Prospect employees use an interdisciplinary approach to quality, where every employee is responsible for catching mistakes. The interdisciplinary approach also allows different departments to offer their expertise to each other in order to ensure total quality. Departments interact on a regular basis in order to enhance communication. COMPENSATION LINKED TO PERFORMANCE: Prospect offers its employees year-end merit bonuses from its bonus pool and a 401(k) savings plan. Currently , 100 percent of the stock is owned by the company president, but the company is trying to implement an employee stock ownership program through its 401(k) plan. Prospect may provide staff with flexibilities or opportunities that meet an employee's unique needs and/or special interests. Examples of this type of compensation are: seminar attendance, requested developmental or special assignments, job redesign/enhancement, and paid professional memberships. WORKER-MANAGEMENT RELATIONS: N/A STRATEGIC INTEGRATION OF BUSINESS: Laura Henderson, the owner and CEO of Prospect Associates, believes that human resources play a key strategic role at Prospect. Prospect feels it gets the best and brightest employees because of its worker friendly policies and the nature of the business. Employees at Prospect are "stretched" toward their full abilities. The company reports that projects that would require five years of work at another firm are squeezed into three years at Prospect. Laura Henderson feels that a large part of what Prospect is selling are the brains and abilities of its employees. REMARKS: Prospect has a very innovative employee volunteer program which encourages all of its employees to go out and work in the community. Employees report receiving much fulfillment from participation in the program. ACCOMPLISHMENTS/REWARDS: Prospect Associates, Ltd. was recognized by Inc. magazine to be one of the best thirty-nine growing small companies to work for in America in 1993. In 1988 Prospect Associates was presented the Maryland Award for Economic Excellence for outstanding contributions to economic development in the state of Maryland. This award expressed appreciation to Prospect Associates, Ltd. for its holistic approach to management, creating an autonomous atmosphere to enhance employee challenges, and for its significant growth and commitment to the state of Maryland. Prospect has been named as one of Washington's top 25 women-owned business' by the Washington Business Journal. Prospect has also been recognized by Working Women, Venture, and Cosmopolitan magazines. SERVICE PROVIDERS: REFERENCES: Fenn, Donna. 1993. "Bottom's Up." Inc., July 1993, 58-59. Fenn, Donna. 1986. "Want to Grow? Try Delegating the Job." Working Women, May 1986, 47-49. Nelton, Sharon. 1993. "A Flexible Style of Management." Nation's Business, December 1993, 24-25. ------------------------------------------------------------------- COMPANY: Quaker Oats Co. CORPORATE ADDRESS: P.O. Box 9001 Chicago, Illinois 60604 PLANT/BRANCH ADDRESS: 1703 East Voorhees St. Danville, Illinois 61832 SIZE (employees): 500 UNION(S): American Federation of Grain Millers (AFGM), Local #347 INDUSTRY: Cereal breakfast foods and granola bars SIC CODE: 2043 NEAREST METRO AREA/MILES: Champaign, IL (35 miles) CONGRESSIONAL DISTRICT: IL-19 SECTOR: P OWNERSHIP: Public NYSE - OAT CHIEF EXECUTIVE OFFICER: William D. Smithburg CEO, President, Chairman of the Board P.O. Box 9001 Chicago, IL 60604 CONTACTS: Steve Brunner Plant Manager 1703 East Voorhees St. Danville, IL 61832 (217) 443-8602 Rob Takamoto Manager, Employee & Community Relations 1703 East Voorhees St. Danville, IL 61832 (217) 443-8619 Sammy Rhea Union President American Federation of Grain Millers Local #347 1703 East Voorhees St. Danville, IL 61832 Union Office: 17 East Main St. Danville, IL 61832 (217) 443-6690 John Pigg Recording Secretary American Federation of Grain Millers Local #347 1703 East Voorhees St. Danville, IL 61832 Union Office: 17 East Main St. Danville, IL 61832 (217) 443-6690 Larry Jackson General President American Federation of Grain Millers 4949 Olson Memorial Highway Minneapolis, MN 55422 (612) 545-0211 DATE: 04/13/95 COMPANY DESCRIPTION: The Quaker Oats plant in Danville, IL, which was opened in 1969, is one of four cereal-making facilities that Quaker Oats operates. The Danville plant produces approximately 85 different products, including hot cereals, ready-to-eat cereals, and granola bars. In the past, Quaker Oats operated within a traditional framework where employees were not encouraged to make suggestions or get involved in areas outside of their own departments. In 1991, faced with the possibility of a plant closing, Quaker Oats began to focus on ways to improve the company through a cooperative effort between management and labor. A team of 26 elected and appointed leadership representatives, comprised of representatives from the union executive committee, chief stewards, business unit managers, and staff managers, were brought together to identify possible ways to improve Quaker Oats' operations and company culture. Four days were spent on learning how to write a company vision, while the next three days were spent working specifically on a vision for the Quaker Oats Danville facility. Once a draft for the new Quaker Oats' vision was created, each of the 26 team members met with 20 selected employees to share ideas and obtain feedback from all employees in the plant. Quaker Oats' vision has been the cornerstone on which all other improvements have been made. A cooperative relationship is now stressed, where employees are viewed as assets and are given legitimate input into the company's continuous improvement process. TRAINING AND CONTINUOUS LEARNING: Five years ago, Quaker Oats spent $15,000 on employee training. Today, as it strives to become high-performance, the company allocates approximately $750,000 for its training programs. "Quaker University" is a corporate-driven initiative which provides employees with the skills and technical training that they need to perform their jobs, as well as helping them understand aspects of a high-performance organization. Classes are conducted either on-site or in Chicago, and focus on supply- chain objectives, such as meeting customer needs and market research, in addition to components of the high-performance organization, like leadership skills and team building. Quaker Oats' workers also have the opportunity to become trainers themselves. In the "Train-the-Trainer" program, employees are instructed on how to teach their peers in a certification program. Internal trainers are paid an additional $.50 an hour to teach classes to their co-workers (which includes both the planning and the teaching of the courses). Quaker Oats has also partnered with the University of Illinois to improve their training programs. In order to help employees more readily identify necessary skills, jobs are broken down into individual components and responsibilities. In addition, the University of Illinois has assisted Quaker Oats in developing self-assessment tools which make employees more aware of skill acquisition. Quaker Oats invests in the continuing education of each of its employees by offering 100 percent tuition reimbursement for business related classes, as well as an in-house GED program. Employee participation in the GED program, which is done half on company time and half on personal time, is paid for by the company. EMPLOYEE PARTICIPATION: Quaker Oats encourages its employees to critically evaluate their jobs and suggest process improvements throughout the plant. Employees are organized into core teams which are centered around distinct production processes. Within each core team, members evaluate their jobs and suggest areas of process and performance improvements. Working together with the Business Team, resources are allocated for suggested methods of improvement. Each member of a core team is responsible for knowing all of the components of the core process, so that he or she can perform the necessary duties. The "Engineering Your Own Project" program allows workers to submit proposals for projects which they think can have a positive impact on the performance of the company. Engineers and Business Team Leaders collaborate with employees to provide the necessary resources and skills training to accomplish project goals. ACCESS TO INFORMATION: Quaker Oats provides its employees with full disclosure of financial information. Front-Line Leaders conduct meetings where they disseminate information for their core teams, so that employees are fully aware of company costs and expenditures. The company also has weekly meetings which focus on Quaker Oats' Key Performance Indicators (KPIs). KPIs are objectives developed by Quaker Oats' Business Team, and are at the center of all of the company's continuous improvement efforts. Approximately 75 percent of Quaker Oats' employees buy stock on a regular basis, and the company distributes quarterly statistics and annual reports. Employees are also trained on things like how to calculate investments and rates of return. ORGANIZATIONAL STRUCTURE: The Danville Quaker Oats facility has implemented what it calls its "Business Team Structure," which is comprised of three areas: core teams, functional support resources, and team leadership. The Business Team concept at Quaker Oats is based on the principle that legitimately involving and empowering individuals in key operating decisions builds commitment and dedication to the organization. Each business team in the plant has three or four core teams which are organized around distinct production processes. The core teams are made up of production associates and are led by Front-Line Leaders (FLLs). Members of the core teams are cross- trained so that they understand all aspects of their core process. Each individual team oversees improvement processes within their own core functions, and makes suggestions in meeting the needs of upstream and downstream processes within the business team. Utilizing the core team process, workers are given a great deal of responsibility with regards to process improvement. Team members are expected to understand each job in the core process, predicted results from the core process, and be able to suggest ways in which to improve the core process. Core team members work with Quaker's leadership team to identify problem areas and suggest potential solutions and methods of implementation. Front-Line Leaders are an important resource in early team development. As the core team develops, workers begin to take on more responsibility in terms of daily decision-making and the team leaders' responsibilities shift to process/product improvement, facilitation of worker skills, and the busting of barriers. Team stewards and other volunteers work with FLLs in the development of core team objectives and process improvements. These employees are responsible for ensuring that the core teams operate within contractual/regulatory guidelines. The team structure at Quaker enables employees to work in a cooperative and proactive manner to resolve employee issues, before they become grievances, thus minimizing the use of the grievance procedure. Functional Support Resources provide the Business Team with the means to operate as an independent enterprise, so that it can achieve its goals without having to deal with multiple layers of management. Functional Support Resource team members are experts in their respective fields who provide technical assistance to the Business Team. These employees are responsible for remaining abreast of innovative technologies and corporate functional initiatives. The Business Unit Leadership Team is comprised of the Business Unit Manager, the Functional Support Manager, the Chief Steward, and an Executive Board Member. The Business Unit Manager oversees the actions of the Business Team with regards to cost, quality, customer service, scheduling, safety, employee development/relations, and team maturity. The responsibilities of the Support Manager include facilitating the technical development of team members and integrating support resources with the objectives of the Business Team. The Chief Steward works closely with the Business Unit Manager to build cooperative partnerships between workers and management and communicate business information to team members. The Executive Board member acts as a liaison to the rest of the Executive Board by keeping them informed about business/employee relations trends as well as broader union issues. EMPLOYMENT SECURITY: Quaker Oats states in its formalized "Guiding Principles" that people are its most valuable resource and that providing for job security is one of its top priorities. Quaker Oats has not had a layoff in 52 months, and is the only Quaker Oats facility to have achieved that standard. In order to move away from layoffs in down periods of business, Quaker Oats developed a special project classification. Ad hoc teams, such as product development and safety teams, created from employee suggestions are utilized to offer additional opportunities for people to contribute to the company. As long as the proposed projects can be shown to add value to the key stakeholders of the Quaker Oats' vision, the plant leadership team will provide employees with full support. SUPPORTIVE WORK ENVIRONMENT: Although a centralized staff creates the scheduling framework for employees, members of core teams are able to use shift-trading and flex-time to arrange their schedules to meet both personal and occupational responsibilities. Employees can also buy additional vacation time, giving them the opportunity to attain up to six weeks of annual paid leave. In order to provide for day care services, dependant-care accounts are available to Quaker Oats' employees. Safety issues are a major priority at Quaker Oats. A full-time safety manager and a safety steering committee conduct hour long safety meetings for all employees. A plant-wide ergonomics committee has also been created to oversee ergonomics issues. A rotating full-time safety specialist, which is staffed by production associates, also provides needed resources and serves as a commitment by the company to involve all employees. PRODUCT/SERVICE QUALITY: Quaker Oats' formalized TQM process pushes the responsibility for quality control down to the production level. Workers are trained on Statistical Process Control and specification conformance, and are given the authority to stop the production line at any time to further inspect an item. Production employees are also involved in benchmarking trips to other facilities where they have the opportunity to identify innovative process improvements. COMPENSATION LINKED TO PERFORMANCE: Quaker Oats and the AFGM have established a pay-for-performance system where employees can receive additional compensation for meeting pre-established standards. In each of four areas, Quality, Safety, Waste Control, and Productivity, employee groups have determined objective standards upon which all workers are evaluated. Business Teams that meet or positively exceed standards of excellence in the four categories receive an increase in compensation. Also, the company and AFGM recently established a change accelerator reward program which will reinforce key business and employee achievements to more quickly transform the company to high-performance. Quaker Oats also uses non-monetary awards programs to highlight exemplary performance. The "Right Stuff" awards program recognizes employees who go beyond their normal responsibilities and contribute something "extra" to the company. Employees nominate their peers for "Right Stuff" awards to express appreciation for exceptional work. WORKER-MANAGEMENT RELATIONS: Although Quaker Oats suffered a strike in 1988 where the union filed unfair labor charges against the company with the National Labor Relations Board, the relationship between labor and management is now one of mutual respect. Quaker Oats and AFGM 347 have recently won numerous awards which highlight their exceptional labor-management relations. The International Union of the American Federation of Grain Millers created a guide outlining policies and guidelines for a cooperative labor- management relationship. This book was used heavily by the Danville Quaker Oats plant in its drive to become a high- performance organization. Faced with the possibility of a plant closing, a team of 26 elected and appointed people, made up of representatives from the union executive committee, chief stewards, business unit managers, and staff managers came together to create the vision and guiding principles for the Quaker Oats Danville facility in 1991. The Danville plant's vision has been the framework upon which all other operational improvements have been made. It stresses a cooperative labor-management relationship that provides the opportunity for all employees to contribute to the overall improvement of the plant. In order to create an open and trusting environment, management provides full disclosure of all benefits and changes to the union before contract negotiations take place. In addition, ratification bonuses are included if a settlement can be reached. Quaker Oats and AFGM 347 have settled two contracts in a row early. This benefits both the needs of the business and the employees. STRATEGIC INTEGRATION OF BUSINESS: To help reduce company expenditures, Quaker Oats uses a form of EVA (Economic Value Added). EVA is a measurement of a firm's profitability which takes into account the total cost of an operation's capital. Capital is considered to be items such as computers and machines, plus working capital, like cash, inventories, and receivables. EVA can be broken down into a company's after-tax operating profit minus the total annual cost of capital. Quaker Oats utilizes a form of EVA called controllable earnings, which has produced large savings. By minimizing working capital and paying a capital charge in the internal accounts for stocks of raw materials and finished goods, Quaker Oats has been able to reduce inventories from $15 million to $9 million. REMARKS: ACCOMPLISHMENTS/AWARDS: The Quaker Oats Danville plant was selected as the 1994 Industry of the Year winner by the Danville Area Economic Development Corporation. The Danville plant was selected out of eight nominations for the award, which is based on the following criteria: business growth, quality improvements, employee/labor relations, problem solving capabilities, and community involvement. The nomination for the award was submitted by Quaker's Joint Leadership Team, which includes both union and management representatives. The Quaker Danville plant previously won the Industry of the Year Award in 1991. The Federal Mediation and Conciliation Service (FMCS) recognized the Quaker Oats Danville plant at its Seventh Annual Labor/Management Conference in 1994. More specifically, Quaker Oats was praised by the Bureau of National Affairs for its negotiations of a new contract which improved wages and benefits, ensured operational flexibility, provided for employee stability, and created a plan to facilitate employee ownership. In 1995, Quaker Oats and AFGM 347 were awarded the Labor- Management Partners recognition plaque by the Illinois Department of Commerce and Community Affairs. Quaker Oats was one of four winners chosen from a field of 30 Illinois companies. The award recognizes companies where labor and management have worked cooperatively to improve operations. SERVICE PROVIDERS: The University of Illinois has been providing Quaker Oats with assistance in the development of its training programs by breaking down jobs into core components and developing self- assessment tools. The Belgard Group has also been cited as assisting Quaker Oats in developing their high-performance organization. The Danville Area Community College has provided educational resources to meet the company's continuous needs to upgrade the skills of its employees. REFERENCES: The Grain Millers' Role in Creating Labor/Management Partnerships For New Work Systems: A Statement of Policy and Guidelines for Local Unions. Minneapolis, MN: American Federation of Grain Millers, AFL-CIO, CLC. Tully, Shawn. 1993. "The Real Key to Creating Wealth." Fortune (September 20):38-50. ------------------------------------------------------------------- COMPANY: Reflexite Corporation CORPORATE ADDRESS: 120 Darling Drive Avon, Connecticut 06001 PLANT/BRANCH ADDRESS: SIZE (employees): 350 (Worldwide) UNION(S): Non-union INDUSTRY: Retroflective materials SIC CODE: 3081 NEAREST METRO AREA/MILES: Hartford, CT (30 miles) CONGRESSIONAL DISTRICT: CT-06 SECTOR: P OWNERSHIP: ESOP CHIEF EXECUTIVE OFFICER: Cecil Ursprung Chief Executive Officer 120 Darling Drive Avon, CT 06001 CONTACTS: David Edgar Vice President, Human Resources 120 Darling Drive Avon, CT 06001 (203) 676-7103 DATE: 04/05/95 COMPANY DESCRIPTION: The Rowland Development Corporation was founded in 1970 by Hugh and Bill Rowland, and became the Reflexite Corporation in 1975. Reflexite is a $50 million manufacturer of retroflective materials, which reflect light back to its source. The goods that Reflexite manufactures are used for reflective materials on products like highway signs and barricades, life preservers, and fire fighting equipment. In 1985, Reflexite implemented an Employee Stock Ownership Plan (ESOP) to provide liquidity for the founders and a vehicle to reward employees for their contributions to the company. Since 1986, Reflexite has seen a large increase in its sales, workforce size, profits, and stock price. Reflexite has established itself both domestically and internationally with facilities in the United States, Canada, Mexico, England, Denmark, and Germany. TRAINING AND CONTINUOUS LEARNING: All new employees at Reflexite are trained in a number of core courses which introduce them to the company's history and aspects of the ESOP. Reflexite has also recently begun a Reflexite Learning Center, where employees are taught an in-house curriculum. Courses are given by both internal and external trainers, and focus on essential skills training needed to perform jobs in the plant. Special courses on quality methods, technology, marketing, and team building are also offered to employees. Reflexite employees are given the opportunity to expand their own educational opportunities. 100 percent tuition reimbursement is available to those employees who enroll in career-related classes outside of the company. English, literacy, and communications courses taught by teachers from local community colleges are available to Reflexite workers, as well. Reflexite educates all of its employees on how to interpret financial statements through specialized training courses so that they can fully understand the company's ESOP and bonus programs. Every month, the company provides the employees with an owner's report which details items such as operating statements and expenditures. EMPLOYEE PARTICIPATION: Reflexite has developed a system to allow employees to have substantial input into the processes surrounding their jobs. The Employee-Assistance Request form (EARS) was created by a cross- functional team that was given the task of developing a feedback loop to ensure that all employee suggestions were addressed. Employees are encouraged to critically evaluate their jobs and related processes so that problem areas and methods of improvement can be identified. Through the EARS system, problems are documented with detailing things like how much scrap is wasted or the amount of downtime caused by the problems. Whenever an employee identifies a problem, he or she fills out an EARS form, which are located throughout the plant, and turns it in to the EARS coordinator. The EARS coordinator, which is not a full-time position, is selected by the Quality Improvement Team. Within 24 hours, an action leader is assigned to the individual who made the request. The action leader is typically someone who has a working knowledge of the area in which the problem is occurring. Together, the action leader and the employee complete an EARS Investigation Form to fully document identified problems and areas of concern. For complicated problems, cross-functional teams are created to help develop solutions. Also documented is the Price of Nonconformance (PONC). The PONC is a method of quantifying the cost of the problem area and includes the frequency of the problem, the amount of wasted material caused by the problem, and the effect that it has on others' work. The PONC is also part of Reflexite's quality process. All employees are trained on PONC charting in order to create a high awareness of company expenditures. Large charts show the PONC of each functional area, which are calculated by the finance department. Once an action plan is developed to remedy the problem situation, resources are allocated to the appropriate individuals. All resolved problems are followed up by both the EARS coordinator and the employee who initiated the EARS process. If the problem still exists, the EARS request form is sent back through the process. Progress reports of all EARS requests are posted throughout the company, giving every employee the opportunity to suggest solutions. Two weeks after closure of an EARS' file, top managers are given a copy of the file so that they can review it and provide personal recognition to the originator of the request. This helps to promote more informal interaction between management representatives and other Reflexite employees. Reflexite has recently created a certificate of appreciation that is given out at company-wide meetings and EARS contributions are also recorded in employees' annual-review folders. One of the greatest testaments to the value that Reflexite places in employee involvement is that all of the company's employee- owners were presented with Inc. magazine's Entrepreneur of the Year award in 1992. Reflexite also promotes employee ownership on its company letterhead that reads "An ESOP company...where employees are owners" and through numbered inspection cards that workers place in packaged material which identify them as Reflexite co-owners. At the annual meeting, which is usually held the same day as the company picnic, employees, like shareholders in any other company, vote for the Board of Directors. ACCESS TO INFORMATION: Reflexite makes it a point to provide full disclosure of operating information to its employees because of its ESOP and monthly bonus program. Reflexite holds quarterly plant meetings where employees are provided with information detailing the company's financial performance and priorities. In addition, bulletin boards and other handouts report monthly figures and owners' bonus calculations, a weekly graph of backlog orders is distributed, and the president conducts a monthly meeting with ten randomly chosen employees to discuss operational issues. Every Reflexite employee is trained on how to interpret the financial information pertaining to the company's ESOP and monthly bonus program in the orientation process. Team leaders have been delegated much of the responsibility for providing information to the employees. Team leaders go over all of the previous month's financial and bonus information with the finance manager before it its distributed. Then, each individual team leader meets with his or her respective team to review the information and answer any questions. ORGANIZATIONAL STRUCTURE: Reflexite's senior management team is made up of the CEO and president, vice president of human resources, vice president of technology, vice president of finance, and GM of manufacturing. Each member of the senior management team has different responsibilities to oversee within the company. The Reflexite North America facility has recently implemented self-regulating work teams. Each team is able to nominate its team leader, who reports directly to the operations manager. Other cross-functional teams are utilized for project committees and ad hoc task forces. One example would be a cross-functional team organized to handle an Employee-Assistance Request form (EARS). EMPLOYMENT SECURITY: Reflexite utilized a creative layoff avoidance plan in 1991 which not only saved jobs and money, but also helped to build a mutual trust between workers and management. Due to a number of economic factors, Reflexite found its sales in 1991 to be off an estimated 40 percent from projected earnings. Faced with the threat of having to downsize in order to compensate for the loss in sales, Reflexite implemented a number of measures to avoid even a single layoff. First, all salaries were cut by either five percent, seven percent, or ten percent, depending on the amount of one's salary. Top management personnel took a 10 percent cut in salary. Second, the plant closed one weekday a month. Third, Reflexite created a program where employees could take voluntary, unpaid leave for anywhere from two weeks to five months, while maintaining full benefits and unemployment compensation. Reflexite also worked out an agreement between the local unemployment office so that the company would be responsible for filing all of the necessary forms for participating employees. In addition, all employees who took the voluntary leave-of- absence maintained their seniority and owners' bonus rights, and had a guaranteed return date to the company when they would recover under full benefits. About 90 employees participated in the voluntary leave-of-absence program which saved the company over $400,000 in payroll costs. The combination of the voluntary leave program and the salary cuts produced a 17 percent budget savings. Other cost-saving measures that Reflexite took included cuts in manufacturing, administrative, and general expenses and a postponement in a planned facility expansion. Reflexite's "Business Downturn Grid" is a four-stage plan outlining the company's course of action during a period of slow business. The Grid outlines what actions Reflexite will take before resorting to layoffs. The premise behind the Grid is to provide all employees with full disclosure of each stage and the symptoms that would trigger a particular course of action. Layoffs occur at the fourth and final stage, and are only used as a last resort. SUPPORTIVE WORK ENVIRONMENT: Reflexite works closely with insurance companies to develop programs to promote employee safety and related issues. All employees receive basic safety training and monthly safety meetings are conducted by people from various work teams. Reflexite also offers courses which teach employees about preventive care and methods such as proper lifting techniques. Flex-time is used at Reflexite, where employees are able to set their own work hours depending on the needs of both external customers and other members of their respective teams. At the Rochester and New Britain facilities, casual dress is the norm promoting an informal atmosphere between Reflexite employees. PRODUCT/SERVICE QUALITY: All Reflexite locations have a Quality Improvement Team (QIT) which oversees the company's 14-step quality process. The six- to eight-person team is cross-functional and is not represented by any senior management personnel. It is the QIT that chooses the EARS coordinator in each Reflexite facility. Reflexite has pushed quality control down to the front-line level, and all employees are trained on quality techniques such as Statistical Process Control. Reflexite has both four-week and ten-week classes to teach employees about quality methods, with periodic refresher courses. COMPENSATION LINKED TO PERFORMANCE: Reflexite has utilized its compensation system to attract highly- skilled workers and retain them. Reflexite describes its compensation system on a four quadrant grid, which is divided into: base pay, benefits, perks, and incentive pay. Base pay and perks at Reflexite are considered to be modest, while the benefit package is above average, and incentive pay is outstanding. Using a combination of cash and stock bonuses in its incentive pay, Reflexite employees have the opportunity to establish legitimate ownership in the company. Employees are able to obtain stock through stock options and ESOP allocation, which is determined by employees' salary and length of employment with the company. In addition, all employee shareholders get a monthly "owner's bonus" which is a percentage of the company's operating profit divvied up by shares and can participate in a 401(k) plan. 42 percent of the company stock is held by the ESOP, while 25 percent is owned by over 90 other employees who purchased stock outside of the ESOP. Reflexite also uses some informal methods of rewarding its employees. At the Reflexite North America division, peers nominate each other for the Go The Extra Mile Club. Winners receive plaques and other recognition. The company also likes to recognize employees by putting their picture on a company bulletin board when they do something extra. STRATEGIC INTEGRATION OF BUSINESS: Reflexite utilizes an in-house technical development capability where company engineers and technicians can design new technologies to manufacture Reflexite's prismatic material. R&D specialists are able to generate numerous proprietary process improvements which are necessary to keep Reflexite on the cutting-edge of new technology. One key element is that Reflexite is able to retain employees who acquire years of experience and knowledge that is directly applicable to the development of Reflexite's technology. Because the development process takes place in-house, the company is able to conduct test runs and samples, giving employees a chance to provide feedback. REMARKS: Reflexite's customers include NASA and the United States Coast Guard. ACCOMPLISHMENTS/AWARDS: In 1992, Reflexite's employee-owners were named "Entrepreneur of the Year" by Inc. magazine, Ernst & Young, and Merrill Lynch. REFERENCES: Case, John. 1992. "Collective Effort." Inc. (January):32-43. Eisman, Regina. 1994. "Who's the Boss?" Incentive (October):22- 25. Lammers, Teri. 1993. "The Effective Employee-Feedback System." Inc. (February):109-111. Young, Karen. 1993. Theory O: Creating an Ownership Style of Management. Oakland, CA: The National Center for Employee Ownership. ------------------------------------------------------------------- COMPANY: Remmele Engineering CORPORATE ADDRESS: 10 Old Highway 8 New Brighton, Minnesota 55112 PLANT/BRANCH ADDRESS: SIZE (employees): 430 UNION(S): non-union INDUSTRY: Industrial machinery SIC CODE: 3599 NEAREST METRO AREA/MILES: St. Paul (10 miles) CONGRESSIONAL DISTRICT: MN-04 SECTOR: Private OWNERSHIP: Private CHIEF EXECUTIVE: Thomas Moore President & CEO Remmele Engineering 10 Old Highway 8 New Brighton, MN 55112 CONTACTS: Michael Bates Director of Human Resources Remmele Engineering 10 Old Highway 8 New Brighton, MN 55112 (612) 635-4100 DATE: 11/07/94 COMPANY DESCRIPTION: Remmele Engineering is a manufacturing job shop specializing in precision machining and the design and assembly of factory automation equipment. The company was founded 45 years ago by Fred Remmele, a German-born tool-and-die maker. Today, Remmele Engineering consists of five different factories, all located in the Twin Cities area. Three of the Remmele plants are traditional machining job shops, one Remmele plant produces sophisticated manufacturing automation, and the fifth is a large volume production machining facility. In 1993, Remmele had sales of $60 million. TRAINING AND CONTINUOUS LEARNING: Remmele is recognized for its significant investments in employee training. The company points to a conservative estimate of more than 3 percent of payroll invested on training each year. Remmele is widely recognized for its apprenticeship program, which serves as the primary training vehicle for machinists working at the company's three traditional job shops, and the company's automation facility. The Remmele apprenticeship program was started in the mid-1960's by Remmele founder, Fred Remmele, a master machinist who learned his trade in the German apprentice system. At one time there were 70 apprentices working at Remmele, which was more apprentices than in the entire state of Minnesota at that time. Today, there are 20 apprentices participating in the company's program. Remmele's apprentice system is a traditional trades apprenticeship, and participants are only recruited from graduates of two-year technical schools in the Midwest. During the first two and a half years of the apprenticeship, participants take part in six month rotations at each of Remmele's five plants, where they receive training in different machining skills. They then work for the next one and a half years under the supervision of a master machinist, and during the entire apprenticeship program, they progress through a long checklist of skills that they are required to develop. Over the last eleven years of the National Tooling & Machining Association's National Apprentice Contest, Remmele apprentices have placed first four times, second twice, and third once. At its production facility, the workplace for more than 100 Remmele employees, Remmele also has an extensive training program that supports the company's work cells and Focused Factory manufacturing strategy. All Remmele production employees take a core curriculum of classes that include statistical process control (SPC), problem-solving, safety, interaction (communication skills), metrics, six sigma quality practices, preventive maintenance, and an overall overview of the Focused Factory approach to manufacturing. These required courses typically take between 90 and 109 hours of employee time to complete. Another course in Remmele's core curriculum is a "train the trainee" course, designed to be a practical guide to learning in both classroom, and structured on-the-job settings. In addition to its core courses, Remmele also offers six review course that include basic math, basic manufacturing, basic measurement, introduction to machine controls, print reading and English as a Second Language (ESL). Remmele also offers 17 elective courses including leadership communication, advanced problem-solving, computer-aided design (CAD), and toolmaking. The company pays up-front for the costs of tuition and books for outside courses taken by employees at universities, community colleges, and vocational and technical schools. Remmele places a high value on cross-training, and much of the training that Remmele employees receive is on-the-job. On-the- job training at Remmele is structured, and all OJT trainers are required to take a "train the trainer" course. EMPLOYEE PARTICIPATION: Through the company's Focused Factory production strategy, work cells composed of a team of employees are dedicated to a particular product line for a particular customer. As a result, Remmele employees have regular contacts with customers, and make purchasing and production scheduling decisions. Remmele employees also participate in capital investment decisions, and the company regularly sends employees to the International Machine Tool Show to learn about the latest machining technologies. ACCESS TO INFORMATION: Remmele Engineering practices sharing all financial information with employees on a regular basis. There are three basic ways in which Remmele shares information with employees. First is the company's profit sharing program, through which employees receive detailed information every six months on the company's financial status. A second format is through monthly plant meetings which feature information on Remmele operational and financial performance. Finally, because individual work cells at Remmele basically operate as independent business units, they are intimately involved in knowing the profits and operating expenses of the product lines they manage. ORGANIZATIONAL STRUCTURE: Through Remmele's Focused Factory approach, the company's production facility is organized around work cells that are intended to operate as independent business units. Work cells vary in size depending on the work requirements of the particular product line being managed. They are led by supervisors who typically have responsibility for multiple work cells. Employee members of the work cells regularly interact with their customers, and are responsible for quality, and scheduling and purchasing decisions. At Remmele's traditional job shop facilities, journeymen machinists typically operate as independent craftsmen, responsible for making one-time or batch quantity parts orders for specific customers. EMPLOYMENT SECURITY: Remmele Engineering is committed to employee security. The company operates as a lean manufacturer. It attempts to achieve stability in its work force by using high amounts of overtime during good times, and reducing work week hours during lean times to avoid layoffs. Annual employee attitude surveys ask employees if they believe this is a strategy they should continue. The company reports that inevitably over 90 percent of the work force says yes through the surveys. SUPPORTIVE WORK ENVIRONMENT: Safety is highly emphasized at Remmele, and in fact is the first element of every employee's performance review. Work cell team meetings regularly include reports on safety statistics. PRODUCT/SERVICE QUALITY: Quality has been a major emphasis at Remmele for many years, but in addition, the company started a formal quality program in 1991 based on the teachings of Joseph Juran. More recently, Remmele began to pursue ISO certification in all its facilities, and two Remmele plants recently became ISO certified COMPENSATION LINKED TO PERFORMANCE: A profit-sharing program was started by Remmele founder, Fred Remmele, in the mid 1950's. Today through the profit-sharing program, Remmele employees share 15 percent of pre-tax profits every six months. Profits are paid out as a percentage of pay. The first three percent of profits go to pay a defined company contribution to the employee retirement plan. Profits in addition to the three percent retirement contribution are distributed to employees as cash, or they can defer the money into 401(K) plans. Over the last five years, profit sharing payouts have averaged approximately 7 1/2 percent of base pay. In addition to the profit sharing program, Remmele employees every 90 days are evaluated for merit pay increases, which are premised on a demonstration of skills. WORKER-MANAGEMENT RELATIONS: STRATEGIC INTEGRATION OF BUSINESS: The many elements of Remmele's high performance work practices are encompassed under the company's Focused Factory strategy. Focused Factory actually began as a strategic company initiative in 1983 to make everyone in the company more aware of the needs of the customer. The strategy is embodied at the company's production facilities where work cells operate as independent business units, responsible for meeting the needs of a particular customer's product line. Investment, both in people and technology, is a major emphasis of Remmele. Remmele understands that what it is selling to its customers is solutions to manufacturing problems, not particular products. Therefore, the company depends on a highly skilled work force to provide those solutions, and therefore invests heavily in employee training and the technology tools they need to create solutions. REMARKS: Remmele Engineering places so such stock in the competitive advantage of investing in its people that the company's human resources department operates without an annual training budget. Instead, the company expects the human resources department to provide functions, such as training, whenever and wherever it is needed. ACCOMPLISHMENTS/AWARDS: Since 1977, Remmele's annual revenues have increased from $10 million to $70 million. The company has a minimal turnover rate of only 5 to 6 percent per year. Remmele was recently given the Aegis Excellence Award, which is the highest form of vendor recognition bestowed by Martin Marietta and the United States Navy. SERVICE PROVIDERS: Remmele points to the two-year technical colleges in Minnesota, Wisconsin, and the entire midwestern area as outstanding source providers of new employees who become highly skilled journeyman level machinists. Company officials also acknowledge two Twin Cities area organizations, HRD Resource Group, Inc. and the Professional Development Group (Pro Group), as having regularly worked with the company to assess training and development needs, and implement training programs. REFERENCES: Bernstein, Aaron. 1992. "Teaching Business How to Train." Business Week, Special Issue, Reinventing America 1992, Filipczak, Bob. 1994. "Remmele Engineering: If It Ain't Broke..." Training, May 1994, 42-48. Huber, Robert F. 1992. "Team(s) Work!" Production, May 1992, 52-55. McKenna, Joseph F. 1992. "Fred Remmele's Investment, Bill Saul's Crusade." ------------------------------------------------------------------- COMPANY: Republic Engineered Steels Inc. CORPORATE ADDRESS: 410 Oberlin Rd. S.W. Massillon, Ohio 44647 PLANT/BRANCH ADDRESS: SIZE (employees): 5,000 UNION(S): United Steelworkers of America (USWA) INDUSTRY: Manufactures carbon, alloy, and specialty steels SIC CODE: 3325 NEAREST METRO AREA/MILES: Cleveland (50 miles) CONGRESSIONAL DISTRICT: OH-16 SECTOR: P OWNERSHIP: ESOP CHIEF EXECUTIVE: Russell Maier, President and CEO Republic Engineered Steels Inc. 410 Oberlin Rd. S.W. Massillon, OH 44647 CONTACTS: Harold Kelly, Executive Vice President Republic Engineered Steels Inc. 410 Oberlin Rd. S.W. Massillon, OH 44647 (216) 837-7045 David Borell, Union President, USWA Local 1124 Republic Engineered Steels Inc. 1303 9th Street S.W. Massillon, OH 44647 (216) 832-5051 Mike Millsap, Union President, USWA Local 3069 Republic Engineered Steels, Inc. 4000 East 7th Ave. Gary, IN 46403 (219) 939-3402 DATE: 02/07/95 COMPANY DESCRIPTION: Republic Engineered Steels, Inc. was founded in November 1989 when the LTV Steel Bar Division of the LTV Corporation was purchased by its employees through an Employee Stock Ownership Program (ESOP) initiated by the United Steelworkers of America (USWA) and the company's management. A 20-person coalition consisting of representatives from both labor and management was formed to negotiate for the purchase of the company. Republic is the largest domestic producer of specialty carbon, alloy and stainless steel bars which are used to manufacture items such as axles, spindles, bearings, and high-strength fasteners. They serve a variety of major markets including the automotive, forging, service-center, agricultural, and off- highway machinery industries. Republic now has ten plants in six different states with its corporate headquarters located in Massillon, Ohio. Republic's total sales for the 1994 fiscal year was approximately $750 million. TRAINING AND CONTINUOUS LEARNING: Republic provides training and other educational opportunities for its employees dealing with aspects of both the ESOP and the overall goals of the company. In their ESOP Education Program, which is sometimes termed "Economics 101," courses are offered to all employees, including the CEO. Some examples of topics covered include: how to read a profit and loss statement; discussion of common versus preferred stock; and a primer on Republic's operations. All employees are trained on company time for one hour every six weeks. The Northeast Ohio Employee Ownership Center located at Kent State University helped Republic develop their $3.5 million ESOP Education Program. The Center trained a core group of 50 Republic employees, both hourly and salaried, to teach their peers about different aspects of the ESOP and the company. Republic not only educates its employees on the financial and business aspects of the company, but it also invests in their continuing education and skills-training. Republic offers courses in topics ranging from problem-solving methods to Statistical Process Control in order to provide its workers with the skills and knowledge to develop more efficient ways to do their jobs. Republic invests $4 million a year on training programs, which amounts to approximately two percent of its payroll. EMPLOYEE PARTICIPATION: The H-1 Committee was created in order to ensure that the change process at Republic provided the opportunity for every employee to contribute to the success of the company. The name of the committee is derived from a section in the labor contract that outlines a cooperative management style after the 1989 buyout. The H-1 Committee is made up of 21 people consisting of top company executives; union presidents and vice-presidents; the plant managers; and salaried representatives. In 1991, Republic created the "Target 80" project, which was implemented to help the company save $80 million by utilizing employee suggestions on ways to reduce production costs and eliminate waste. Although the goal of $80 million was not reached, the program was a great success and saved over $50 million annually in expenditures. Republic has recently implemented a "Target 60" project which is designed to save the company an additional $60 million in waste and production costs by using employee suggestions, but with an added perk. Every time the company reaches a predetermined dollar amount in savings, all Republic employees will receive a pay increase. If Republic is able to reach its goal of $60 million saved, every worker will have received a pay increase of up to $3, which represents approximately 50 percent of the total savings generated. In July 1993, Republic opened a new plant in Gary, Indiana where the work system was created by a joint design team of management officials, union leaders, and hourly workers. Self-directed work teams were implemented in the plant, limiting the need for direct supervisors. Three hourly workers serve as team leaders and provide resources for technical assistance. All new hires at the Gary plant are decided on by both labor and management representatives. At the end of December, 1994, Republic acquired a stainless and specialty steels plant in Baltimore, Maryland, where a similar work system is being installed. ACCESS TO INFORMATION: Republic openly shares financial information with its employees. Every six weeks, in hour-long sessions called "ESOP Education" employees are instructed on how to read corporate balance sheets and income statements. Republic workers, from the CEO down, learn about the value of the customer, business planning, capital planning, and the firm's ownership structure. In addition, the sessions identify current issues in the steel industry so that employees gain an understanding of Republic's standing in the industry. Recorded minutes from Republic's four H-1 meeting levels (crew, department, plant, and corporate) are accessible to all employees. ORGANIZATIONAL STRUCTURE: The management style at Republic is made up of four meeting levels which address methods to improve product quality, cost, operations, maintenance, quality of work life, and safety and financial performance. The levels are labeled as: crew, department, plant, and corporate. Each level conducts its own meeting, but designated representatives report information back and forth so that issues which cannot be resolved at one meeting are passed to the next level up for discussion and possible resolution. Crews are functional groups which meet for 15-30 minutes a week in order to address problems and generate ideas. Crew members can attend department meetings if they wish to pursue unresolved issues or problems. Department meetings are co-led by the department head and a union representative every week and last no more than one hour. These meetings are open to anyone in the department. Issues addressed at this level usually consist of topics that could not be handled at the crew level. Plant meetings are held weekly to address issues of plant-wide interest. The plant manager and local union president run these meetings, with department heads and union stewards in attendance. Corporate meetings are monthly half-day meetings. Senior management representatives, senior labor people, and plant managers attend these meetings to discuss business performance. Continuous and capital improvement projects are also reviewed at this level. The H-1 Committee meets once a month to review issues from all of the other meetings to ensure that the process is proceeding the way it is intended to work. The minutes from every meeting are made available to the employees so that there is total disclosure of discussed information. EMPLOYMENT SECURITY: Republic has instituted an employment security guarantee for salary employees that was approved by the board of directors in December 1991. In accordance with the June 1, 1993 labor agreement, union employees have a provision that guarantees an opportunity for 40 hours of work each week once a process known as "Functional Analysis" is satisfactorily completed in Republic's largest plant. Advances in technology in the steel industry have created a need to increase production and in some instances reduce man power requirements. To the extent possible, Republic hopes to use attrition to accomplish needed reductions. Functional analysis is a process conducted by joint salary and union facilitators with department or work area representatives to identify and eliminate waste while redesigning the work for the greatest possible efficiency. SUPPORTIVE WORK ENVIRONMENT: As stated in its Corporate Values Statement all Republic employees "have the opportunity to achieve their full potential through involvement, participation, and personal initiative." Republic has fully implemented the Family Leave Act and offers flexible work hours. Republic has initiated a drug and alcohol program in the work place and offers a comprehensive safety awareness program that includes ergonomics evaluation of work areas and light duty assignments that help injured workers return to full employment. Annual Health Fairs are held in the company to promote personal fitness and wellness programs. Weekly safety meetings are held throughout the company, supplemented by a variety of other safety initiatives. PRODUCT/SERVICE QUALITY: In order to improve quality by integrating the talents of its employees with innovative technologies, Republic installed a $12 million Quality Verification Line (QVL) which is the first fully integrated world class steel bar inspection facility in the United States. This state-of-the-art facility incorporates a master control computer, straightener, non-destructive testing units, and automatic packaging equipment. The QVL assures defect free bar products to customers and also provides a diagnostic tool for providing valuable data for upstream process improvement. One benefit from the QVL is that the added costs of processing material outside of the company has been eliminated. The second benefit is the consolidation of finishing operations in the 12 inch mill area. Lastly, the QVL has provided employees with the means to trace any defect back to its initial source, so that it can be identified and eliminated from the production process. On April 15, 1994, Republic broke ground for a $165 million continuous cast direct billet mill complex that will provide the highest quality specialty steels available in the marketplace. When fully operational, Republic will continuously cast up to 70 percent of all the steel it makes. Steel will move from a liquid state into blooms, then immediately reheated and rolled into billets in one continuous process. It will be the only process of its kind in the United States. COMPENSATION LINKED TO PERFORMANCE: In 1989, Republic employees purchased the company through a leveraged Employee Stock Ownership Program (ESOP). Both the common stock ESOP and the preferred stock plan are qualified benefit plans governed by the Employee Retirement Income Security Act (ERISA), legislation regulating pension plans, and U.S. Department of Labor regulations. In its recently implemented "Target 60" project, Republic hopes to achieve $60 million in structural savings using employee suggestions. Worker pay increases occur as a result of a specified amount in cost savings being attained. When the project was initiated, employees were advanced a $1.00 an hour wage increase. As Republic reaches $20 million toward the goal, that amount will be rolled in for benefit purposes. After achieving the first $20 million in savings, employees will be advanced another $.50 per hour for each of the next subsequent $10 million savings increments ($20M, $30M, & $40M) and are then advanced another $.25 per hour for each of the next two $5 million saving increments ($50M & $55M). Once the "Target 60" goal is reached, employees' pay rates will increase by up to $3.00 per hour. This represents approximately 50 percent of the total savings generated. In the first quarter following the realization of the full "Target 60" program, Republic will implement a profit sharing plan consisting of fifteen percent of adjusted pre-tax income, which is defined as pre-tax income before ESOP contribution, plus depreciation and amortization, pension and other post-employment expenses, and cash expenses for retiree medical and pension programs and cash dividends paid on preferred stock. Adjusted pre-tax income will exclude unusual, extraordinary, one-time or similar charges, gains or losses. Payout will be on a quarterly basis. At Republic's new Gary plant, a pay-for skills program has been created. All workers are given the opportunity to learn every job in the plant, and pay rates are increased each time a new skill is acquired. In order to facilitate skill acquisition, new Republic employees spend four weeks in classroom training sessions. WORKER-MANAGEMENT RELATIONS: Republic created the "H-1 Process" to ensure that labor and management work in a cooperative manner to promote the best interests of the employees and the company as a whole. A 21- person "H-1 Committee" consisting of top company executives, union leaders, plant managers, and salaried representatives oversees the functioning of Republic's H-1 management system and its four management levels. STRATEGIC INTEGRATION OF BUSINESS: Republic is continuously incorporating the ideas and suggestions of its employees into the production process as demonstrated by its "Target 80" and "Target 60" programs. In order to facilitate and promote suggestions, Republic invests heavily in the continuing education of its employees so that they have the knowledge and resources to critically evaluate their jobs. Republic also stays on the leading-edge of innovative technology in the steel market. Its $12 million Quality Verification Line (QVL) is one example of how Republic integrates the skills of its workers with new technologies. REMARKS: Republic President and CEO Russell Maier wrote "Training: What's In It For Me?" which can be found in the January (1995) issue of American Workplace, the official newsletter for the Office of the American Workplace. ACCOMPLISHMENTS/AWARDS: In 1991, Republic was awarded both the General Motors "Mark of Excellence" award and the LIFT (Labor Investing for Tomorrow) award from the U.S. Department of Labor. Republic was a 1991 winner of Control & Systems Manufacturing Excellence Award. Republic has recently earned quality achievement awards from Ford, Caterpillar, Honda of America, and other customers. SERVICE PROVIDERS: The Northeast Ohio Employee Ownership Center at Kent State University helped Republic develop its ESOP Education Program by acting as a consultant and trainer for the core employees who were chosen to instruct their peers in the various courses. Currently, the Northeast Ohio Employee Ownership Center is still playing a key role in the ESOP Education Program by consulting on matters relating to course materials. REFERENCES: Eisman, Regina. 1992. "A Democratic Republic." Incentive (February):49-57. Maier, Russell. 1994. "Training: What's In It For Me?" American Workplace 3 (January):1-2. Manji, James F. 1992. "Manufacturing Excellence Awards: Our Six Winners." Control & Systems (January):36-39. National Association of Manufacturers. 1994. The Smart Workplace: Developing High-Performance Work Systems. ------------------------------------------------------------------- COMPANY: Rhino Foods CORPORATE ADDRESS: 79 Industrial Parkway Burlington, Vermont 05401 PLANT/BRANCH ADDRESS: SIZE (employees): 62 UNION(S): non-union INDUSTRY: Specialty frozen desserts SIC CODE: 2024, 2051, 2052 NEAREST METRO AREA/MILES: Burlington (0 miles) CONGRESSIONAL DISTRICT: VT-at large SECTOR: Private OWNERSHIP: Private CHIEF EXECUTIVE: Ted Castle Chief Executive Officer Rhino Foods 79 Industrial Parkway Burlington, VT 05401 CONTACTS: Marlene Dailey Director of Human Resources Rhino Foods 79 Industrial Parkway Burlington, VT 05401 1-800-639-3350 DATE: 10/06/94 COMPANY DESCRIPTION: Rhino Foods is a specialty frozen dessert, ice cream novelty, and ice cream ingredient manufacturer. The company is based on partnerships with regional and national distributors and major North American food producers and marketers. Their customers include Ben and Jerry's Ice Cream, Loblaw's International Merchants, Weight Watchers Food Company, and Bruegger's Bagel Bakeries, for whom they make such diverse products and ingredients as cookie doughs for ice cream and frozen yogurt, brownie and cookie batters for franchise operations, and low-fat cheesecake formulations. Products which carry the Rhino label include Vermont Velvet Cheesecake, Cheesecake Cookie, Rhino's Cookie Doughs and Brownie Batters, Chessters, and Cookie Dough Add-Ins for ice cream, yogurt, and ice milk. The company has grown from 13 employees and sales of $890,000 in 1990, to a 60- employee company with sales of $6 million in 1993. TRAINING AND CONTINUOUS LEARNING: Training is receiving increased focus at Rhino Foods, resulting from a needs evaluation at an all-employee "shared vision" meeting which listed training as one of the most important issues for the company. Training at Rhino Foods currently occurs in four areas: 1) job-specific training, 2) communications skills training, 3) supervisory training sessions, and 4) special event training. Job specific training is becoming more formalized at the company. For the production bakers who comprise the largest job grouping at Rhino, supervisors keep lists of tasks needed for the jobs, and technologies to be mastered. Through on-the-job training and partnering with experienced bakers, new production bakers acquire the needed skills. The importance of communications training is also receiving increased attention at Rhino. The company recently sponsored two internal training sessions focused on team building and interpersonal communications. A unique training format at the company is "Rhino Days," when the production line is shut down and everyone in the company participates in special all-day training programs. Rhino Days are designed to focus attention on the priorities and values of the company. Most recently, Rhino employees participated in all day sessions focused on the theme of "personal responsibility." EMPLOYEE PARTICIPATION: Rhino Foods is described by employees as a participative workplace, where workers are included in decisions and asked to provide input. An example of the company's participative environment is its Hiring Committee, made up of employee representatives of each department, responsible for making the company's hiring decisions. Another example is Rhino's temporary "Break-even Project," designed to positively impact Rhino's yearly performance through employee suggestions. Because Rhino had not yet reached some of its financial goals, they recently asked everyone in the company to provide specific ideas and suggestions on ways to positively impact on the company's performance. All employees receive feedback on the suggestions they make, and whenever possible, employees who make suggestions are involved in their implementation when the suggestions are adopted. The program has only been in operation for one month, but it has already produced 140 ideas resulting in $45,000 in improvements. Because of these impressive results, company officials expect the program to outlive its current mandate and become an on-going program. ACCESS TO INFORMATION: Employee access to financial and operating information is provided through Rhino Foods' Game of Business, or "The Game" as it is called. "The Game" represents an attempt to turn business into a fun and involving game with teams and players, winners and losers. One team is made up of all the Rhino employees, while the opponent is the company's business expenses. Points are defined as the money coming in and going out. The game always begins on the first day of each month and ends on the last, so it is played 12 times per year. The goal of the game is to bring in business while reducing expenses, which requires that all players know and understand the costs involved in producing high quality products. To keep score, the company's books are open to all employees, and the "Game" results are calculated and displayed on a scorecard which is updated and displayed daily. The scorecard provides information about the company's daily production "sales," operating expenses, and bonus calculation. An educational workshop is provided to all employees on how to understand the Daily Scorecard. Progress information on performance is provided during quarter, half time, and post game talks, which are held during bi-weekly all-employee meetings. Employees are also encouraged to ask questions so that they can more fully understand the numbers on the Scorecard and where they originate. The incentive to play and win the game is profit-sharing which is tied into game results. If the company achieves at least six percent net profit after taxes, the game is won, and the victory is celebrated in the form of bonus checks distributed to all employees in equal amounts. If the six percent net profit goal is not reached, the game is lost and there are no bonuses for the month. ORGANIZATIONAL STRUCTURE: Rhino's organizational structure promotes both accountability and involvement. This is accomplished through clear assignment of accounting responsibility, combined with active company-wide involvement in inter-departmental cross-functional teams. For example, Rhino Foods has a Quality Assurance Manager accountable for quality at the company, but he is supported by a Quality Assurance Task Force composed of employee volunteers who work to make quality a part of everyone's job. EMPLOYMENT SECURITY: Rhino Foods is well-known for its Employee Exchange Program (EEP),a creative alternative approach to layoffs. In the spring of 1993, Rhino Foods faced a threat to jobs created by simultaneous increases in efficiency and an unexpected drop in orders. Eschewing layoffs as a solution, the company president asked for worker volunteers to develop a solution. This resulted in the 26-employee Overcapacity Task Force, which after a three week period, developed the Employee Exchange Program. As part of the solution to employment overcapacity, Rhino employees have worked at community service projects while being paid by the company. Through the Employee Exchange Program, Rhino workers work at companies in the Burlington area that have temporary employment demand. Participating companies in Rhino's Employee Exchange Program must be able to train Rhino's employees easily; experience seasonal fluctuations in staffing; have a business philosophy, and policies and practices, similar to Rhino's; be located in reasonable proximity to Rhino and its employees; and have a similar rate of pay. The number of Rhino employees participating in the program is determined by the company's schedule requirements, sales, and labor projections. To date, all Rhino employee participants have been volunteers, and they are required to go through interviews at the alternate site. The interview allows the participating site to control who they are hiring, gives the employees the opportunity to see where they will be working, and establishes a working rapport. The exchanges are designed to be short -- six weeks or less, with possible renewals of one week at a time. The employees are provided the same or a better rate of pay by participating in the program. If the participating company pays less, Rhino picks up the difference, while the employee keeps the difference if the participating company pays more. Because the volunteers continue to be Rhino employees, Rhino is responsible for covering the participating employees' unemployment and workers' compensation. Rhino has chosen to continue payment on short and long-term disability, as well as medical and dental insurance, for employees participating in the exchange program. Participating employees also maintain their seniority, and continue to accrue profit-sharing shares. Participating companies in the Rhino Employee Exchange Program have included Gardener's Supply Co. and Ben & Jerry's Homemade, Inc., both of Burlington and Waterbury, VT respectively. Rhino has had recent discussions with participating companies regarding the temporary use of their employees at Rhino through the exchange program. SUPPORTIVE WORK ENVIRONMENT: Stated in Rhino Foods' Employee Principle, "Rhino Foods declares that it is a vehicle for its people to get what they WANT." To enact this goal, the company has a program called WANTS that pairs each employee with trained WANTS coordinators. The WANTS coordinators help the employees identify personal desires and provide counselling to help employees achieve their personal desires upon which they are willing to take action. For example, an employee may have a WANT of owning his or her own business. The WANTS coordinator would work with the employee to help facilitate making that personal desire a reality. Employees have also developed plans for achieving personal development goals, such as becoming more effective public speakers. Through the program, each employee is allowed to take one hour of work time per quarter to think about, envision, or take action on their WANTS, whether they be professional or personal. The WANTs coordinators are volunteer Rhino employees who have received training focused on empowering people to do things for themselves. In addition, the WANTS coordinators meet on a regular basis for ongoing education and support. Employees have four formal WANTS meetings per year, lasting anywhere from 30 to 60 minutes. The meetings are mandatory, but employees determine for themselves how actively they participate in the program. In its company principles, Rhino Foods also stresses the value of employee families, which is demonstrated through a number of work/family programs. Rhino has a Rhino Cares Committee, a group of employees that meet on a weekly basis to oversee programs for employees, and community groups such as the Boys and Girls Club and Vermont Youth Conservation Corp. In 1994, Childhelp USA honored Rhino Foods for its efforts to better the lives of Vermont's children and families. Rhino's Employee Assistance Program is available to both Rhino employees and their families. Employees and their families can receive personal counseling through the program, as well as referrals for financial and legal counseling. In 1992, Rhino sponsored a 15-week Nurturing Program for Parents and Children, which is a well-known national program designed to build in family members an ability to care for themselves and others. The program, which was available to all Rhino employees on a voluntary basis, was the first of its kind sponsored by a business organization. To promote safety at the company, Rhino Foods has an inter- departmental safety committee. PRODUCT/SERVICE QUALITY: Quality is decentralized at Rhino Foods, and viewed to be a part of everybody's job. While there is a Quality Assurance Coordinator accountable for the company's quality, he is supported by a Quality Assurance Task Force, composed of volunteer Rhino employees who promote quality assurance among all employees. COMPENSATION LINKED TO PERFORMANCE: Rhino Foods variable pay system is based on three different compensation programs, one in which rewards are distributed equally based on monthly company performance, another where profits are shared based on tenure with the company, and a third which rewards employees based on individual performance. Through its "Game of Business," Rhino employees receive 20 percent of net profits each month distributed equally among all employees, if the company achieves its monthly goal of attaining six percent net profit after taxes. Monthly profit-sharing checks have been as much as $200 per person. The company also has another bonus program distributed every six months based on length of service with the company. Employees accumulate "shares" based on their tenure. Six-month profit sharing payouts are in turn paid out based on accumulated "shares." Finally, Rhino's Individual Contribution Pay program provides bonuses based on individual performance as determined by employee contribution and goal statement ratings. WORKER-MANAGEMENT RELATIONS: STRATEGIC INTEGRATION OF BUSINESS: Rhino's Foods' Employee Principle, one of four main principles of the company, states that: "The employees and families of Rhino Foods are its greatest asset. The company's relationship with its employees is founded upon a climate of mutual trust and respect within an environment for listening and personal expression. Rhino Foods declares that it is a vehicle for its people to get what they WANT." This vision emphasizes the company's focus on encouraging employees to both envision what they want, and take the responsibility to accomplish those visions. Company officials believe this creates a workplace of successful individuals, which accumulates into a successful organization. REMARKS: Rhino Foods donates time, product and money to its external community through two programs called "Rhino Cares" and "Doughnators." Rhino Cares is a group of employees who champion projects and coordinate community involvement. It conducts truckload sales of the company's "Baker's Seconds" with a percentage of the profit from each sale donated to non-profit organizations. The Doughnators Committee handles donations requests for product, money, time and facilities. These two programs demonstrate Rhino's commitment to its outside community, one of its four business principles. ACCOMPLISHMENTS/AWARDS: Rhino Foods won the 1994 Blue Chip Enterprise Award from the U.S. Chamber of Commerce, and was a finalist in both 1993 and 1994 for the Ernst & Young Entrepreneurial Company of the Year. In 1992, Rhino Foods was awarded the SBA's Vermont Small Business of the Year Award, and Rhino CEO, Ted Castle, was recognized as Vermont's Small Business Person of the Year. In 1992, Rhino Foods was also recognized as one of the "Best Small Companies to Work For" by Inc. Magazine. SERVICE PROVIDERS: The communications/teamwork training sessions at Rhino Foods in part based on the Personal Profile System of the DISC Dimensions of Behavior, published by the Carlson Learning Company in Minneapolis, Minnesota. Company officials report that the company's work environment has been impacted by a number of books, multiple copies of which have been bought by the company, shared among the employees, and discussed during staff meetings. Influential books have included The Seven Habits of Highly Effective People by Stephen Covey, Zapp! by William Byham, and The Fifth Discipline by Peter Senge. REFERENCES: "Co(mpany)-Creating Solutions to Overcapacity in Staffing." Rhino Foods publication. Burlington, VT. D&B Reports. 1993. "Holding Business Accountable." November/December 1993. "History of the WANTS Process at Rhino." Rhino Foods Publication. Burlington, VT. Inc. 1992. "The Best Small Companies to Work For." November, 1992. Maynard, Roberta. 1994. "A Creative Alternative to Company Downsizing." Nation's Business, January 1994. Ray, Chris. 1993. "Rhino Workers Get A Say In Business." The Burlington Free Press, November 29, 1993. Ray, Chris. 1993. "Fair Rate of Exchange." The Burlington Free Press, Dec. 17, 1993. Success. 1994. "The Virtual Work Force." March, 1994. ------------------------------------------------------------------- COMPANY: Rosenbluth International CORPORATE ADDRESS: 2401 Walnut Street Philadelphia, Pennsylvania 19103 PLANT ADDRESS: SIZE (employees): 3000 UNION(S): non-union INDUSTRY: Travel SIC CODE: 4724 NEAREST METRO AREA/MILES: Philadelphia, PA (0 miles) CONGRESSIONAL DISTRICT: PA- SECTOR: Private OWNERSHIP: Private CEO/President: Hal Rosenbluth CEO Rosenbluth International 2401 Walnut Street Philadelphia, PA 19103-4390 CONTACTS: Cecily Carel Dir. of Human Resources Rosenbluth International 2401 Walnut St. Philadelphia, PA 19103~4390 (215) 977-4734 Angie Matese Quality Consultant Rosenbluth International 2401 Walnut St. Philadelphia, PA 19103-4390 (215) 977-4334 Frank Hoffman Director of Learning/Training Rosenbluth International 2401 Walnut St. Philadelphia, PA 19103-4390 (215) 977-4301 Richard Yates Corporate Communications Rosenbluth International 8th Floor 2401 Walnut St. Philadelphia, PA 19103-4390 (215) 977-4859 (215) 977-4026 (FAX) DATE: 12/94 COMPANY DESCRIPTION: With $2.5 billion in annual sales in the U.S., more than 3,000 associates and locations worldwide, Rosenbluth International is the third largest travel management company in the world. Founded in 1892 and recognized as a leader in information management technology, Rosenbluth continues to develop innovative proprietary systems and software products which enable it to provide highly-personalized service to its clients. The privately-held company, headquartered in Philadelphia, PA, offers comprehensive corporate, leisure, and meeting travel services. TRAINING AND CONTINUOUS LEARNING: Newly hired Travel Sales Associates (TSA) are flown to Philadelphia where they are given a two day orientation in order to familiarize each employee with Rosenbluth's history, values, beliefs, structure, goals and overall corporate culture. They are then involved in an intensive six to eight week training program before they ever deal with a client. The program incorporates problem solving techniques, sales techniques, and product knowledge which employees become familiar with through role-playing. TSA's account for almost half of all employees within Rosenbluth. Virtually all workers at Rosenbluth are involved in a cross-training program so they can obtain a picture of the entire company by performing other associates' jobs. This is an important component to the success of the company since most of Rosenbluth's promotions take place internally. Rosenbluth International develops 90 percent of its training programs from within the company in order to keep the programs culturally consistent. Outside training sources are occasionally brought in for short periods of time but this is primarily done at the leader levels. Rosenbluth customizes many of its programs to fit the needs of different clients, individual business units, and leader needs. These programs are developed according to recommendations, but the company generally takes a proactive approach to developing its programs by focusing on the performance levels of individual business units. While Rosenbluth International believes in continuous learning of all associates, the programs developed for each business unit depend upon the needs of each one. Learning plans are individualized so that each employee sets his/her own goals in conjunction with the strategic objectives of the business. Individual development plans are formed by each employee on an annual basis. The plans include the associate's specific goals for performance, development, and ultimately career goals. Each employee then meets with his/her supervisor to discuss these goals and to create a plan of action to achieve them. Rosenbluth offers varying levels of leadership programs ranging from Pre-Leadership programs, designed for associates who aspire to go further within the company, to programs specifically designed to keep V.P.'s and directors up to date on leading edge concepts. Quality training is also a major focus both during the orientation and in a continuous learning capacity. Though Rosenbluth offers no formalized tuition reimbursement program, it does encourage all employees to continue their education, and relevant classes may be approved for reimbursement on an individual basis. EMPLOYEE PARTICIPATION: Rosenbluth International has in recent years made an effort to empower each and every employee in the company in an effort to provide a better service to their clients. Employees are surveyed on a monthly basis as to suggestions they might have to improve any and all areas of the company. Rosenbluth also developed what is called the "Happiness Barometer", which is a systematic approach to measuring staff morale. Two times a year CEO, Hal Rosenbluth spends a day with 18 random associates. A written survey is also administered and the final result of the information found is disbursed around the company. One example of an outcome of this approach is the company's 401(k) plan was introduced in response to specific employee concerns. Employees also meet on an as need basis in intra or inter-departmental teams to discuss strategy planning. Volunteers from any level are given an opportunity to present ideas to the CEO personally. The CEO also has a hotline set up to reach him directly for suggestions or criticisms. Travel sales associates (TSA) are trained in how to deal with customer service problems without having to seek higher approval, and make quick autonomous customer service responses that were previously not possible under the previous traditional system. They are expected to make the decisions that previously required approval from at least one person higher in the organization, if not two. They operate under their own authority, with an absolute minimum of supervision. Employees at all levels including the CEO are given a "360 degree review" by their peers, leaders, and clients in an effort to obtain a true understanding of their performance. This is an anonymous review and has proven to be constructive and honest. Employees also prepare their own review, both leaders and front line employees, and then the two reviews are compared. The reviews are then used in the appraisal process which determines any career or salary changes for each employee. ACCESS TO INFORMATION: "Keep in Touch" is a newsletter which is available to all of Rosenbluth's employees on a monthly basis. The newsletter updates employees about any changes taking place departmentally or company-wide. "The Associate", a quarterly newspaper, informs employees about Rosenbluth's strategy and provides various company updates. It also has a people page which spotlights specific employees or departments that have made exceptional contributions to the company. Rosenbluth maintains an "open door policy" on most meetings so employees can keep abreast of the company's overall strategy. Rosenbluth also has an "associate of the day" program in which any employee has the opportunity to spend a day with a chosen senior executive and observe his or her work (including the CEO). Voice Mail and E-mail are two of the main lines of communication that Rosenbluth successfully utilizes. When the CEO has an important goals meeting he invites employees to attend the 'Thought Theater" auditorium where he discusses upcoming goals and obstacles Rosenbluth may face. If something was missed through the company's other means of communication, the CEO can also write a letter to employees and mail it with their checks to assure that they receive it ORGANIZATIONAL STRUCTURE: In the past few years Rosenbluth International has made an effort to empower its lower level employees by providing them with the skills that middle managers previously had. Consequently, the company cut the number of management levels for individual departments from five to just three levels. This is in part due to the company empowering and giving responsibilities to the front line sales agents. These employees work in teams (inter and intra departmental) to decide for themselves what needs improvement. Interdepartmental teams are comprised of associates who hold similar jobs and are therefore more familiar with solving the problems within their area. Intradepartmental teams incorporate associates who hold different jobs in different areas. They meet on an as-need basis. EMPLOYMENT SECURITY: "Lifetime Employment Ability" is an important theme which Rosenbluth promotes to its associates. Rosenbluth International tries to equip its associates with the qualities and skills necessary to go anywhere and be successful. In June of 1994, Rosenbluth downsized as a result of restructuring. The company let go of 3.5 percent of its employees. The downsizing occurred through voluntary means when possible. Rosenbluth offered the associates who were let go out placement counseling to assist them with the job search process. However, since the original layoffs, roughly a quarter of those employees have been re-hired. Rosenbluth has one of the lowest employee turnover rates in the industry. The company's turnover rate is 12 percent while the industry as a whole averages between thirty and fifty percent. SUPPORTIVE WORK ENVIRONMENT: "Associate" is the name that Rosenbluth uses when speaking about their employees in an effort to let their employees know that they are valuable. The Family Responsibility Day policy (FRD) is just one example of the many things that Rosenbluth does to promote healthy work/family relationships. Each employee receives six days a year which he or she can take off for anything from illness to PTA meetings without explanation. Employees who do not use any of these days in a calendar year receive a bonus payment. Fam-time is another way in which Rosenbluth promotes family relationships. Reservation agents often receive free or, more typically, substantially discounted travel opportunities from airlines, hotels, and other travel suppliers who want the agents to promote their products. These trips are then put in a pool to be offered to employees based on seniority. Employees are given paid time off for the Fam trips ranging from five days for new employees and up to 15 days for senior employees. These days are given in addition to the associate's regular vacation days. Rosenbluth also holds, on a bi-annual basis, an event called "Live the Spirit" weekend. All associates are invited to Philadelphia for the weekend where they reaffirm their belief in the Rosenbluth philosophy by having a good time with CEO, Hal Rosenbluth, and their fellow associates. This is a relaxing weekend filled with events which have nothing to do with work. This is followed in August by Associate Appreciation Month during which they hold events such as "Hawaiian Shirt Gonzo Friday" and "Hoagie Day". Although some employees are not eligible for the Family Medical Leave Act, Rosenbluth offers these employees the same opportunities and benefits. Rosenbluth also offers programs such as stress management seminars, work/ personal life, and rape prevention awareness. Through Carelink, Rosenbluth offers childcare and eldercare information and referral services to employees. They also offer the services of a psychologist who is available to offer assistance to any associate in need. Rosenbluth deals with ergonomic issues, some as simple as offering five prong chairs which are able to be set to an associate's preference. The company prides itself in keeping a clean work environment, and teaches associates how to deal with issues such as risk management and personal safety. Free vision testing is also offered to employees once a year. In an effort to avoid such problems as carpal tunnel syndrome, desktops and/or chairs may be raised or lowered for maximum comfort. PRODUCT/SERVICE QUALITY: Total Quality Management (TQM) is the philosophy that Rosenbluth fosters in all its employees from the day they are hired and through continuous participation. Their quality initiative is "to make quality a way of life in service delivery". They do this by meeting or exceeding the employees' expectations, measuring performance, and having employees continually improve and streamline their work processes. In 1990 Rosenbluth developed the quality initiative and all employees were given a two day course in which they learned the philosophy behind the initiative. It is now part of the company's orientation training session. Employees are trained to use quality tools such as the Pareto Chart, brainstorming, Process Flow Diagrams, Control Charts, and Team Building. As part of the initiative, quality teams were created to provide continuous learning opportunities. There are monthly meetings between natural work teams ( similar positions ) and Cross- functional Work Teams (representatives from various areas). These teams are involved in identifying and solving problems on an as-need basis. The groups who are identified to solve problems fill out a Charter form describing the objective, time frame, etc. Quality Advisors are available to any team that needs help solving a problem. There are 200 Quality Advisors in the field who work with quality teams. Clients are surveyed on a quarterly basis and employees are surveyed monthly to obtain information regarding improvement ideas. Each division is tracked along with the company overall in order to see where the company is losing customers or receiving complaints. Employees are also tracked to see how long it takes them to answer calls and to see how their clients are responding to their service. Rosenbluth has been a leader in providing quality service by staying ahead of their competition through technology and other tactical moves. Rosenbluth was the first travel management company to develop its own accounting and client reporting system, in order to provide its clients detailed reports on how their companies are spending their travel money. Rosenbluth has also rented out booths in airports with high traffic where Rosenbluth representatives are available to deal with any questions or problems that may arise. Rosenbluth is partners with companies and organizations in benchmarking including AT&T, Federal Express, Department of Labor, and United Airlines. COMPENSATION LINKED TO PERFORMANCE: In 1991 Rosenbluth initiated a pay program for the reservation agents called "pay for quality" in which associates receive a monthly bonus based upon the percentage of error free reservations. The average pay for reservation agents increased 32 percent and as a result of the program it raised some agents' pay to levels higher than their leader's. The program was a financial success because costs dropped 4 percent as a result of fewer errors and lower employee turnover. The reservation agents are also judged by other factors such as how quickly a call is picked up and how many clients they are losing or gaining per pay period. Leaders are also compensated on an annual basis by looking at how well their particular division and the company as a whole has performed during the year. This is a seven level pay plan which takes into consideration the company's profitability and their individual performance. STRATEGIC INTEGRATION OF BUSINESS: President & CEO, Hal Rosenbluth, is the author of The Customer Comes Second. The book explains the Rosenbluth philosophy that putting the needs of associates first, provides in turn outstanding customer service. ACCOMPLISHMENTS/AWARDS: Rosenbluth has received a number of honors and awards. It was recognized as "Service Company of the Year" by author and excellence expert, Tom Peters and was named One of the Ten Best Companies to Work for in America by Robert Levering and Milton Moskowitz in their book, The 100 Best Companies to Work for in America. It is also recognized as having one of the Ten Best Training Programs in America, and was one of the CIO-100 companies recognized for Customer Service. SERVICE PROVIDERS: Rosenbluth International is a member of The International Benchmarking Clearinghouse Database. Dr. Michael Freidman, Psychologist - Philadelphia, PA REFERENCES: Austin, Nancy, "Wacky Management Ideas That Work" Working Woman, November 1991, 42-44 Holzman, David, "When Workers Run The show" Working Woman, August 1993, 38-41, 72-74 Levering and Moskowitz. 1993. The 100 Best Companies to Work for in America, Doubleday Publishing, New York, NY, 1993. ------------------------------------------------------------------- COMPANY: Sandstrom Products Company CORPORATE ADDRESS: 224 Main Street Port Byron, Illinois 61255 SIZE (employees): 40 UNION(S): Non-union INDUSTRY: Paints and Chemicals SIC CODE: 2400 NEAREST METRO AREA/MILES: Davenport, Iowa (5 miles) CONGRESSIONAL DISTRICT: IA-01 SECTOR: Private OWNERSHIP: Private CONTACTS: Rick Hartstock President Sandstrom Products Company 224 Main St. Port Byron, IL 61255 (309) 823-2121 DATE: 12/15/94 COMPANY DESCRIPTION: Sandstrom Products Company, founded in 1946, is a formulator of chemical compounds sold in both the U.S. and overseas. Jim Sandstrom is the second generation owner of this company located near the banks of the Mississippi. In 1991, Jim Sandstrom retired from the small business, and is currently in the process of selling it to two former employees, Rick Hartstock, now President, Jim Morrison, controller. The company has a participative work culture that has given Sandstrom Products consistently higher earnings each year for the last five years. In 1993 this company with only 40 employees enjoyed sales in excess of $7.0 million. TRAINING AND CONTINUOUS LEARNING: All new Sandstrom employees receive a half day philosophy orientation in which they are taught the basic ideals and beliefs which the company tries to promote in it's workplace. Every new employee also participates in an intense three-day training program focusing on safety issues in the plant. Whether the new employee will work in the office, lab, or plant, all new employees work in the plant on the production floor for two weeks so that they are able to understand the company's operations from the ground up. Sandstrom tries to provide a continuous learning environment by basing wage scales on achieved competency levels "Sandstrom is looking for employees who are generalists, not specialists" says Rick Hartstock, President. Sandstrom earmarks approximately $1000 annually per employee to be specifically spent on cross training opportunities for employees who desire to become competent in other work areas. Employees who take advantage of this offer are then rewarded for their extra responsibilities by receiving a higher pay level. Employees at Sandstrom receive training in a number of diverse areas. This includes a training program in how to run meetings more effectively, which enables Sandstrom employees to accomplish their meeting objectives in a shorter period of time. This innovative training program focused on meeting practices has enabled the company to cut some meeting times from an hour down to fifteen minutes. Sandstrom has relied on a variety of outside partners in developing its training programs, including a local community college (Blackhawk) and Ford Motor Company. Ford provided the company with a decision making training program. Sandstrom tries to promote learning outside of the workplace by offering a tuition reimbursement program to all employees wishing to continue their education, whether it is relevant to their work or not. One hundred percent of the tuition cost will be reimbursed upon completion of the course with a grade of B or better. EMPLOYEE PARTICIPATION: In 1991 Sandstrom Products surveyed all employees regarding their greatest desires in the workplace, which were revealed to be greater employee autonomy and increased pay incentives. As a result, a dozen employee-led teams were created to deal with various issue areas. Some of these teams include a plant equipment team which decides what equipment is needed and the most cost effective means to attain it; a profit planning team, which develops the operating budget; and a social team, which plans employee social gatherings. All but two of the employees at Sandstrom are involved on at least one team. Today, Sandstrom teams, made up solely of employees, are responsible for determining the organizations's needs, and solutions to these needs. Each employee-led team annually prioritizes the improvements desired by the team in written format (charters), called a "Wish Lists". The teams are given annual budget parameters in which they attempt to incorporate as many of the these wishes as they can effectively perform. Any new needs to be addressed are done so at a weekly meeting in which the President and fourteen other employees from various sectors meet. These meetings deal with any new issues that may arise, and are designed to keep abreast of any customer satisfaction problems. Employee ideas have saved the company money, and have made the employees accountable for many of the decisions made. An employee-led pay team developed the existing pay structure based on a specified budget allowance. Despite the fact that the pay structure was designed by employees, the pay scale has never reached more than 85% of the allocated monies. Another example of the team success at Sandstrom, is that the plant capital-equipment team which figured out a way to repair old machinery with $1200 worth of parts, saving the company $30,000 in machinery replacement costs. The company's current president believes that Sandstrom Products has been able to promote team-based success by giving their employees autonomy, and by added employee motivation derived through a gainsharing program that integrates both company and the employee interests. Employees at Sandstrom are active participants in the employee appraisal process. Employees are rated on a 100 point scale with twelve measures by five of their peers. These peer merit reviews are instrumental in determining differences in individual pay levels. ACCESS TO INFORMATION: At the end of each month, all financial data is first made available to the employee-led profit planning team. This team reviews and analyzes the financial data to determine possible cost cutting measures. The first week of each month, a 35 page financial update is published and then made available to all employees at a meeting in which they receive their paychecks. After enacting a new gainsharing program, Sandstrom management soon realized that they would have to make the financial information available to all employees to ensure the trusting atmosphere that they desired. They also realized, however, that many of the employees could not decipher the meaning of the financial statements. Consequently, at meetings held consecutively over an eight week period, the employees received lessons in how to understand spreadsheets and financial information. Any information not addressed at the meeting was dealt with in group meetings held every Monday with the President and fourteen employees. These employees were then responsible for disseminating all of the information to the other plant employees. Today, Sandstrom Products provides each employee with extensive training and access to a computer. Many of the company's programs and procedures, such as statistical process control and on-time shipping records, are designed to enable employees to monitor daily performance in a variety of operational activities. ORGANIZATIONAL STRUCTURE: In the past few years Sandstrom has managed to cut their older, more traditional hierarchical structure down to only a three level system. This has resulted from a need for enhanced communication between the company's employee-led teams. These teams are made up of employees from all sectors of the company. EMPLOYMENT SECURITY: Although Sandstrom has no formal employee security contract, the employees have developed a "What If ?" plan to deal with threats of downsizing and layoffs. According to the employee developed plan, the company would first terminate any temporary help. The second step would be to decrease the hours of all employees across the board. A final measure would be to ask for voluntary days off from employees. This would all take place before any layoffs of permanent employees would occur. The last employee layoffs at Sandstrom Products occurred in 1989. The layoffs primarily impacted the company's sales force, as the company trimmed its work force from 66 people to it's current employment of 40. The company offered affected employees outplacement consulting services, and assisted in finding employment for all employees released from the company in. SUPPORTIVE WORK ENVIRONMENT: Sandstrom employees have a flexible work arrangement as a result or and employee-designed flex-time program. Each employee is expected to work designated hours, but they are informed in advance regarding large orders , or days that they can not miss. During the slower seasons, the employees can switch back to a four day - ten hour shifts to have more time with their families. Sandstrom Products attempts to provide its employees with a safe environment by meeting and exceeding all safety requirements. The company has taken advantage of a free program offered by the state of Illinois, which audited the plant with regards to OSHA requirements. Based on the audit, the company had fourteen recommendations to improve safety, and Sandstrom complied with all recommendation within a year. All Sandstrom employees are provided with safety training and the proper safety equipment (shoes, uniforms, goggles). In response to concerns about washing at home their uniforms dirtied with chemicals, the company now provides the employees with a clean uniform every day at the company's cost. Sandstrom has a no smoking policy for all it's employees because of the flammable materials that are used on the job. To give employees an incentive to quit smoking, the company will finance any therapeutic process which will help the employees quit the smoking habit. Sandstrom Products also offers it's employees triple the amount of physicals required under OSHA standards, and the company pays 100 percent of the costs. PRODUCT/SERVICE QUALITY: Sandstrom focuses on quality needs by identifying their customers needs. This is accomplished by an informal quarterly written survey of each of their customers. A formal meeting with the customer is also held on an annual basis to discuss satisfaction with Sandstrom products. Sandstrom also provides a pamphlet to companies explaining the company's quality beliefs, and defines what customers should expect of their service. Customers are given the phone number of all the employees directly related to their receiving the product (sales, lab employees, and the any group involved in the manufacturing of the product). "Customers rarely want to speak to the salesperson after the day they have signed the contract with Sandstrom, they want to speak to the person in the lab who is responsible for creating the customer's specifically designed product" says Sandstrom president, Rick Hartstock. All customers are given a twenty-four hour number of the employees responsible for their product, so that they can call and ask questions at any time. An example of the outstanding service provided by Sandstrom employees, occurred once when a customer took advantage of the twenty-four hour service by calling in the middle of the night with an emergency order needed the next morning. In response, the employees responsible for the customer's product came to the plant, and met the rush order by staying up all night to prepare the order. Many current Sandstrom customers have a certain standard which must be met in order for their product to be purchased. Sandstrom Products has in turn defined quality expectations for all of their suppliers in an attempt to maintain the quality from the ground up. There is an employee led "Quality assurance team" specifically designated to define any problems which have been brought about through the customer surveys, or employee suggestions. This team is responsible for finding the most cost effective solution to a problem before suggesting a solution to the management. Statistical Process control has also been implemented at the company. Employees are versed in various PC software designed to create graphs and charts providing statistical analysis on actual processes. Sandstrom employees have received quality training from various other companies with proven quality programs. One example is a quality program developed by Ford Motor, Co., one of Sandstrom's customers, called Q8. As a result of the partnership, Ford has made people available to Sandstrom to train them in quality techniques. Sandstrom developed many of their ideas by benchmarking Johnsonville Foods, a meat packaging plant in Sheboygan, Wisconsin, during their period of culture change. Sandstrom Products is in the process of applying for ISO 9000 certification, in an effort to improve their current processes. COMPENSATION LINKED TO PERFORMANCE: Sandstrom employees receive 25 percent of the overall pretax income placed into a gainsharing fund paid on a monthly basis. This fund is divided among employees based upon a peer merit review. The review consists of a 100-point scale and based upon 12 measures that the company considers crucial. These measures can range from safety and punctuality, to employee involvement. Employees are ranked from one to forty each quarter according to the data received, and higher rankings qualify an employee for a specific percentage of the gainsharing pool. The higher the ranking, the more money an individual can receive. The numbers are posted on a bulletin board to let each employee know what part of the gainsharing pool he or she will receive at the end of each month. This gainsharing program, designed by an employee team, has been a great success, and has had a 27-month profitable run for employees. Sandstrom Products also offers a pay-for-knowledge system, designed by the employees, in which employees that learn another job will receive a higher hourly wage. As mentioned in the training section, Sandstrom allots $1000 per employee to be spent specifically on this cross-training. Employees need to become proficient at the skill and meet certain exacting standards to receive pay increases from cross training. REMARKS: ACCOMPLISHMENTS/AWARDS: Sandstrom Products has been awarded the preferred source status by Colt Industries. SERVICE PROVIDERS: Blackhawk Community College has been worked closely with Sandstrom Product in the development and provision of training programs. Ford Motor Company has also partnered with Sandstrom Products in providing the company with quality and decision making training. Johnsonville Foods, located in Sheybogan, WI, was benchmarked by the company on various issues ranging from quality to team involvement. REFERENCES: Case, John. 1993. HEY MANAGERS: GET OUT OF THE WAY, The Boston Globe, October 6, 1993 ------------------------------------------------------------------- COMPANY: Sears Manufacturing Company CORPORATE ADDRESS: 1718 South Concord Davenport, Iowa 52802 PLANT/BRANCH ADDRESS: SIZE (employees): 500 UNION(S): United Automobile Workers Local 1896 INDUSTRY: Formed vehicle seating SIC CODE: 3999 NEAREST METRO AREA/MILES: Davenport, Iowa (0 miles) CONGRESSIONAL DISTRICT: IA-01 SECTOR: Private OWNERSHIP: Privately held CEO/PRESIDENT: I. Weir Sears, Jr. President Sears Manufacturing Company P.O. Box 3667 Davenport, IA 52802 CONTACTS: Dennis Anderson Vice-President of Human Resources Sears Manufacturing Company 1718 South Concord Davenport, IA 52802 (319) 383-2881 David Schradar President Local 1896 United Automobile Workers 3102 Rockingham Road Davenport, IA (319) 322-4114 or (319) 383-2881 DATE: 08/24/96 COMPANY DESCRIPTION: Sears Manufacturing is a privately-held firm manufacturing formed vehicle seats for the agriculture, industrial, construction and automotive industry. The company, which was formed in 1855, employs over 500 workers and had 1993 sales of approximately $50 million. TRAINING AND CONTINUOUS LEARNING: Sears spends between one and two percent of its payroll budget on training. Training is provided in both soft and hard skills. Sears works mainly with two providers (Eastern Iowa Community College and the Quad Cities Labor-Management Association) to develop and provide this training. Training used is both custom- designed and off-the-shelf, depending upon the specific needs of Sears. Training is also provided through technical and professional organizations. Among the soft skills training provided is team building skills, communications skills, listening skills, and consensus building skills. Technical (or hard) skills training includes blue print reading, basic/remedial training leading to a GED, SPC, robotics, and set-up and operations training. More recently, Sears has begun to provide more cross-training to employees on a voluntary, on-the-job basis. This training is provided after a need is identified. Provision of training and courses is driven by the employees and their supervisors on an as-needed basis. If the employee or supervisor identifies a need, the company provides for the training. Training must be job related for employees. Salaried employees have access to a job-related tuition reimbursement program. EMPLOYEE PARTICIPATION: Employees at Sears participate in two ways. First, there is a Corrective Action Form which employees may fill out when they identify a quality problem. A two-person committee made up of the production and engineering managers route the suggestion to the correct department for follow-up and are charged with ensuring that the department handles the suggestion and provides feedback to the employee. The employee must sign off on all corrections or solutions arising from their suggestions and no problem is considered solved until the employee actually signs off. In some cases, the employee has the authority to make the change or implement the solution, depending upon the project or solution. Some tooling employees are authorized to spend up to $5,000 on solutions and changes. Ad hoc problem solving teams are formed when an improvement is identified. In some cases, employees are taken off their regular job and assigned to these teams on a full-time basis. Among the tasks assigned to these teams are: setting up and designing test procedures, tooling from design through implementation, capability studies, and revisions (both blue print and new products). Employees were also involved in designing and documenting the standard operating procedures and procedures manual. There is also a suggestion system which is coordinated by an Industrial Engineer. Employees identify improvements to the processes. Successful suggestions are recognized through monetary rewards. Additionally, employees and designers collaborate to make tool standards. Employees work with tool suppliers and ensure that no tool is purchased that does not meet these standards. ACCESS TO INFORMATION: Information sharing began in 1983 during collective bargaining negotiations when I. Weir Sears, president of the company, opened the books to the union. Operational data is shared widely with all employees. Included in this data is information related to quality (rework and returns), sales levels and minimum goals, health care costs, and work costs. Because the company is privately held, it does not share financial data. Data is shared in weekly/biweekly meetings between supervisors and the production teams. Supervisors receive the data from the accounting and human resource departments and then transmit it to the teams. Data is also posted on bulletin boards in the cafeteria. ORGANIZATIONAL STRUCTURE: Sears has a flattened hierarchy, with only four layers from CEO/President to the shop floor employees (CEO-Department Heads- Supervisors-Employees). Production on the shop floor is organized into teams around specific products, although production is assembly-line based. In many cases, supervisor's roles have evolved into that of being an expeditor, with the function of ensuring that the necessary resources are available to the employees. With this evolvement, vertical integration of processes and functions is being slowly introduced. Teams can change production processes either solely, or with outside approval, depending upon the extent of the change. Changes which would affect product design, manufacturability, or other work teams need to be approved. Changes which affect only the team's work processes can be made by the team. Other employees (such as industrial engineers) can be brought into the change process by the team. Teams meet on an ad hoc basis, when problems or possible improvements are identified. When a new product is conceived, notices requesting volunteers to serve on a product team are posted. Once the product team is formed, product engineers work with the employees on the team to identify errors or problems in the workplace layout and design, from prototype right through production of the final product. The employees on the product team become members of the production team. Sears is currently piloting a self-directed work team with plans to expand teams throughout the plant if the pilot is successful. Members of the pilot program are receiving training in operating an autonomous team. Sears Manufacturing maintains close relationships with both its suppliers and customers. There is a vendor certification program, under which Sears hopes to eliminate all inspection of incoming supplies. Designated employees work with vendors on a one-to-one basis to ensure that incoming quality continually improves and that process improvements are transmitted between the partners. For example, a representative from the sheet metal department worked with a vendor to help set up the vendor's presses to ensure better quality and costs. Sears also undertakes a formal customer audit to ensure that its products are meeting the needs of its customers. Sears continuously measures warranty costs and return rates and transmits problems identified to the correct work team or department (i.e., industrial engineering). Sears maintains daily contacts with its major customers and works jointly with its customers when designing new products. When problems are identified, wage, quality and assembly personnel are sent to the customer's site to help correct problems. In many cases, the assemblers meet and interact with major customer purchasing agents. In a number of areas in the plant, Just-in-Time production systems have been installed, with varying success. EMPLOYMENT SECURITY: Sears Manufacturing does not have a formal employment security program. If layoffs were to occur, they would be governed by contract procedures. Since 1993, Sears has grown from just under 400 employees to over 500. A cautious approach to hiring has resulted in an unstated employment security policy where the company fills fewer jobs than could be created, lowering the possibility of cutbacks if demand were to decrease. SUPPORTIVE WORK ENVIRONMENT: Sears funds an Employee Assistance Program (EAP) through an area hospital. The EAP provides free counseling for all employees; including family, crisis, and financial counseling and child care referral. The EAP was jointly designed by a steering committee of five salaried and five hourly employees in 1988. Sears also has two labor-management safety committees, made up of an equal number of representatives from labor and management. The Safety Committee meets monthly and focuses on OSHA requirements and training. The Ergonomics Committee also meets monthly, focusing on safety and job design incorporating ergonomic principles. Training for Ergonomic Committee members was provided through a local rehabilitation service provider. The contract calls for health benefits to be funded on an 80/20 company/employee basis. The benefits cover virtually everything except eyeglasses and are coupled with limited dental benefits. PRODUCT/SERVICE QUALITY: As noted, Sears works very closely with both its suppliers and customers to ensure production of a quality product. Sears is certified as being compliant to ISO 9001 levels. Sears received ISO 9001 certification on its first try (over 60 percent fail their first attempt). The ISO 9001 quality manual was mostly compiled and written by the employees themselves. While there is no formal total quality management program, employees have been trained in statistical process control and use this training on an everyday basis. COMPENSATION LINKED TO PERFORMANCE: Sears has a standard hourly pay system coupled with a piecework incentive plan. The incentive plan rewards employees for producing over and above production rates established by a timestudy WORKER-MANAGEMENT RELATIONS: Labor-management relations at the plant have been good, having improved over time. Since 1974, when the union was certified, only one grievance has gone to arbitration. Dispute resolution is driven by the contract in a standard grievance procedure, although both parties try to resolve disputes at the earliest possible point in an informal manner. The company and the union have used informal interest-based bargaining procedures in most of their contract negotiations, focusing on issues of concern and reaching mutually satisfactory outcomes. The exception to this is usually in the economic clauses of the contract where a more traditional relationship exists. Although there is no formal, contract-driven union involvement in the overall employee participation/work structure process, the union is involved in identifying areas for cross-training and generally supports the company's efforts. STRATEGIC INTEGRATION OF BUSINESS: The company employs a number of cutting-edge technologies, which it supports with its employee training programs. Sears has installed a 3-dimensional computer-aided design system, advanced robotics systems, and a ride simulator that tests prototypes and products under simulated conditions. REMARKS: ACCOMPLISHMENTS/AWARDS: Sears has received quality awards from all its major customers, including Ford, Caterpillar, John Deere, Freightliner, and J.I. Case. In addition, the company was presented with the Bi-State Literacy Council award for its GED program. Sears and Local 1896 have accomplished several feats, including: scrap reduction of 90 percent; elimination of 93 percent of design changes required after production set-up; increased sales per employee from $75,000 to $125,000; and a large drop in absenteeism. SERVICE PROVIDERS: Many of the programs installed at Sears were developed in-house. Training programs have been provided and developed in conjunction with the Eastern Iowa Community College and the Quad Cities Labor-Management Association. The Ergonomic Committee worked with the Work Fitness Center to videotape employees' jobs and actions for observation and improvement. Sears also worked with the Iowa Department of Natural Resources to install a successful waste reduction program REFERENCES: "Sears, UAW: Employee Involvement = quality, $$$, jobs," Iowa Workplace, Number 1, July-August 1994. ------------------------------------------------------------------- COMPANY: Southwest Airlines Co. CORPORATE ADDRESS: P.O. Box 36611 Dallas, Texas 75235 PLANT/BRANCH ADDRESS: SIZE (employees): 15,200 UNION(S): International Brotherhood of Teamsters (IBT) International Association of Machinists and Aerospace Workers (IAM) Transportation Workers Union (TWU) Southwest Airline Pilots Association (SWALPA) Ramp Operations and Provisioning Association (ROPA) INDUSTRY: Commercial airline SIC CODE: 4512 NEAREST METRO AREA/MILES: Dallas (0 miles) CONGRESSIONAL DISTRICT: TX-05 SECTOR: P OWNERSHIP: Publicly traded (NYSE LUV) CHIEF EXECUTIVE: Herb Kelleher Chief Executive Officer Southwest Airlines P.O. Box 36611 Dallas, TX 75235 CONTACTS: Libby Sartain Director of Benefits and Compensation Southwest Airlines P.O. Box 36611 Dallas, TX 75235 (214) 904-4561 Tom Burnette President/Business Manager Teamsters Local 19 223 Wood Street Grapevine, TX 76051 (817) 481-4580 Tom Higginbotham General Chairman District Lodge 142 International Association of Machinists 400 NE 32nd Street Kansas City, MO 64116 (816) 452-6646 Paul Gaynor International Vice President Transport Workers Union (TWU) 3171-A S. 129th East Avenue Suite 363 Tulsa, OK 74134 (800) 946-4646 PIN 1103914 DATE: 7/14/94 COMPANY DESCRIPTION: Southwest Airlines is the 6th largest airline in the United States, flying to 41 cities in 19 states across America. Southwest was founded in 1971 as a low-cost regional air carrier serving markets in the state of Texas. In 1993, Southwest had sales of $2.3 billion which is an increase of 36.3 percent over 1992, and a net profit of $169.5 million representing an increase of 63.7 percent over the previous year. Southwest flies short- haul, point-to-point direct flights to "close-in" airports. Southwest has a fleet of 176 planes, which is one of the most modern fleets in the industry with the average plane only 7.3 years old. Southwest flies only one type of aircraft, the Boeing 737, which contributes to both higher safety and easier maintenance. According to 1991 statistics comparing Southwest with the airline industry in general, Southwest flies more passengers per employee (2,318 vs. 848) and has the fewest number of employees per aircraft (79 vs. 131). TRAINING AND CONTINUOUS LEARNING: Every major work area at Southwest Airlines (i.e., mechanics, in- flight, customer service, operations, provisioning, reservations) has its own training department which provides training for technical skills. Technical training for all new employees lasts anywhere from two to six weeks, depending on the department. Southwest pays for all new hire training, and guarantees employment at the completion of training, which is not necessarily the case with all major carriers. All departments have annual recurrent training programs, and every employee at Southwest (including pilots) is required each year to take a course in customer care training. Training cost per employee (outside of wages paid to employees during training) range from a low of $144 per employee per year in 1993 in the reservations department, to $1,634 for ground operations. As part of Southwest's people department, a number of specialized courses are offered to Southwest employees and managers through Southwest's "University for People." These include courses on customer service, team building, decision making, employee relations, performance appraisal, communications, stress management, safety, and career development. The "university" also has a "new hire celebration," which is a one day course on the history, culture, and workplace practices at Southwest; a half dozen courses in leadership development, including CORE, a 3 1/2 day training program for all prospective managers on the Southwest principles of leadership; and a course on understanding financial terms for non-financial people. Southwest's "University for People" courses are offered in Dallas, Phoenix, and Chicago. EMPLOYEE PARTICIPATION: In 1987, Southwest started a formal suggestion system called "Together We Make It Great," where employees worked on seven- member teams to develop money saving ideas. Ideas were forwarded to an evaluation committee composed of middle- and upper- management, and this committee determined which ideas to recommend to managers for approval. Teams whose ideas were approved and implemented received credits which could be redeemed for merchandise from a company-sponsored warehouse. Southwest recently disbanded this formal program, but still has a very strong informal process by which employees contribute new ideas. Every employee with an idea is encouraged to write the CEO or Executive Vice President for Customers. All letters are researched and answered. The company reports that they have received many valuable employee suggestions this way. The senior leadership team (vice-presidents and directors) visit each Southwest location at least once a year specifically to gather employee feedback. Southwest employees are involved in decision making through numerous committees across the company, which make decisions on a variety of issues ranging from redesign of benefit plans to new uniform selection. ACCESS TO INFORMATION: Southwest employees have a variety of avenues for accessing information on company financial and operating results including monthly newsletters, weekly updates, and quarterly company news videos. Profit sharing updates are provided both quarterly and yearly. Remarks from quarterly company leadership meetings are taped and shared with employees. ORGANIZATIONAL STRUCTURE: Southwest is a company which puts little emphasis on its formal organizational structure. It is characterized by a number of joint worker/management committees which serve a major decision- making function within the company. EMPLOYMENT SECURITY: Southwest Airlines has never had a layoff. During 1992 when many airlines were laying off employees, Southwest was actually adding employees to its payroll at a rate of 200 new employees per month. Despite Southwest's recent employment growth, it is still operated as a very lean organization, with the fewest number of employees per aircraft, and the most passengers per employee compared to the rest of the airline industry. Herb Kelleher, Southwest's CEO, is fond of saying that the company is managed in the good times as if it was in the bad times. This means that Southwest tries to avoid great increases in employment capacity during the good times, which the company says helps it insure against layoffs when the economy slackens. Southwest does not use temporary workers at its airport sites, but a number of temporaries are used at the company's headquarters in Dallas. The company reports that it gets many applications from people who know they want to work at Southwest Airlines, but are not exactly sure what they want to do. The company often uses temporary employment to cycle such people through different types of jobs. SUPPORTIVE WORK ENVIRONMENT: A positive characteristic of Southwest Airlines, cited by both managers and union representatives, is the lack of formality within the entire company. Individualism is encouraged and both managers and workers are recognized for their sense of humor. The company has promoted its unique culture through such events as regular parking lot cook-outs. A Culture Committee, comprised of both workers and managers, is charged with perpetuating the unique Southwest culture during recent periods of rapid company growth. The airline industry in general tends to provide very flexible work arrangements for employees, and because of this, there are few special programs at Southwest to provide flex-time or special work/family programs. The 85 percent of Southwest employees under union contract can trade shifts with one another, and some of the departments at company headquarters in Dallas have flex- time and job sharing programs. Southwest pays particular interest to safety issues. Workers Comp, Safety, and Loss Control Representatives visit each location to promote safety. Each Southwest location is also encouraged to have its own safety coordinator and committee. Two recently opened reservations centers in Houston and Albuquerque are pointed to by union representatives as ergonomic models. PRODUCT/SERVICE QUALITY: Southwest Airlines has received the highest customer service ratings in the airline industry over the past two years. All Southwest employees receive mandatory customer service training every year. The company also has various award and recognition programs which recognize Southwest employees for their exceptional customer service. COMPENSATION LINKED TO PERFORMANCE: Southwest Airlines has an employee profit sharing plan which was the first in the airline industry. Annual profit sharing bonuses have typically ranged from 4 to 8 percent of base pay for each employee. 1993 was a very good year for Southwest, with employees receiving 10.5 percent of base pay in profit sharing. The June 1994 market value of the profit sharing plan was $447,694,039. Through the profit sharing plan, employees have a number of investment options including the purchase of Southwest stock. Approximately 87 percent of employee benefits accrued through the plan have been invested in Southwest stock, and as a result, employees own approximately 9 percent of the company's outstanding stock. Employees can recoup their profit sharing investments upon retirement, or when they leave the company. Several of the original mechanics, and many of the company's pilots, have retired from Southwest Airlines as millionaires, and a number of Southwest employees with 20 years experience now have profit sharing accounts in the range of $600,000 to $700,000. Southwest Airlines also has a 401(K) plan, with company matches negotiated by collective bargaining agreements, as well as a stock purchase plan where employees can buy Southwest stock at a 10 percent discount. The average salary at Southwest Airlines is $36,490, and the company pays an average of $11,824 per employee in non-government required benefits. WORKER-MANAGEMENT RELATIONS: Approximately 85 to 90 percent of the Southwest employees are members of labor unions. Southwest Airlines is noted for its cooperative labor-management relations, with only one strike in company history which occurred more than ten years ago. It has been called by one union representative as a "blueprint of a model employer," while another union representative reports that Southwest is the only company he works with where the union is actually considered a part of the team, and a positive force for the company. Southwest does not have a formal labor relations department, and labor representatives work directly through departmental vice- presidents. Union representatives report that company managers are willing listeners to employee problems, and in many cases, approach union stewards during the infancy of new idea development to get their input. Southwest's cooperative labor-management relationship has promoted a work environment free of rigid work rules. Southwest airline pilots, for example, are often found cleaning the aircraft and providing other maintenance assistance between flights. STRATEGIC INTEGRATION OF BUSINESS: A Harvard Business School case study on Southwest Airlines notes that the company has differentiated itself "through its focus on service, operations, cost control, marketing, its people, and its corporate culture." REMARKS: Southwest has announced plans to begin long-haul routes, which will compete with other carriers that have copied Southwest's strategy of point-to-point delivery service. ACCOMPLISHMENTS/AWARDS: Southwest Airlines has been recognized as one of the "10 Best Companies to Work for in America" by authors Robert Levering and Milton Moskowitz. Southwest's annual turnover rate is only 3 to 4 percent, the lowest in the airline industry. For the period between 1972 and 1992, Southwest's stock prices have the highest percentage returns for all stocks (21,775 percent). Southwest was the only American airline to have an operating profit in 1992, and it is the industry leader in net income for the past three years. For the past two years, Southwest Airlines has captured the Department of Transportation's "triple crown," as the airline carrier with the most on-time flights, the best baggage handling, and the highest customer satisfaction. For 1993, Southwest had the second lowest costs per available seat mile in the entire airline industry which is a key performance indicant. Southwest employees can turn around a plane at the gate in an average of only 15 to 20 minutes, compared to an hour average for most other major carriers. Southwest planes generally fly more than 10 flights per day, which is more than twice the industry average. Southwest is also the only airline which has never had a major accident. SERVICE PROVIDERS: REFERENCES: Butler, Charles. 1993. "Herb, The Love Bug." Incentive. November 1993, 52-53. Eisman, Regina. 1990. "Earning Their Wings." Incentive, January 1990, 18-20. Jones, Del. 1993. "Discounter Intimidates Competitors." USA Today. June 8, 1993, p. 1B-2B. Labich, Kenneth. 1994. "Is Herb Kelleher America's Best CEO." Fortune, May 2, 1994, 44-52. Levering, Robert & Moskowitz, Milton. 1993. The 100 Best Companies to Work for in America. New York: Currency Doubleday. Pfeffer, Jeffrey. 1994. Competitive Advantage Through People: Unleashing the Power of the Work Force. Boston: Harvard Business School Press. Quick, James Campbell. 199?. "Crafting an Organizational Culture: Herb's Hand at Southwest Airlines." Organizational Dynamics. Teitelbaum, Richard S. 1992. "Where Service Flies Right." Fortune, 115-116. Welles, Edward O. 1992. "Captain Marvel." Inc., January 1992, 44- 47. ------------------------------------------------------------------- COMPANY: Springfield ReManufacturing Corp. CORPORATE ADDRESS: 3055 East Division Springfield, Missouri 65802 PLANT/BRANCH ADDRESS: SIZE (employees): 800 UNION(S): non-union INDUSTRY: remanufacturer of engines and engine components SIC CODE: 3599, 3523, 3519 NEAREST METRO AREA/MILES: Springfield (0 miles) St. Louis ( 200 miles) CONGRESSIONAL DISTRICT: MO-07 SECTOR: P OWNERSHIP: Private, ESOP (31 percent) CHIEF EXECUTIVE: John P. (Jack) Stack President and CEO Springfield ReManufacturing Corp. 3055 East Division Springfield, MO 65802 CONTACTS: Dennis Sheppard General Counsel Springfield ReManufacturing Corp. 3055 East Division Springfield, MO 65802 (417) 831-7706 Fax: (417) 831-4260 DATE: 11/14/94 COMPANY DESCRIPTION: As a remanufacturer of engines and engine components, Springfield ReManufacturing Corp. (SRC) rebuilds worn-out engines from cars, bulldozers, and eighteen-wheel trucks. The company was originally a division of International Harvester that was facing extinction during tough economic times in the 1980s. To prevent the loss of the 120 jobs at the company, a group of 13 managers, led by current SRC CEO, Jack Stack, bought the company from International Harvester in 1983 and turned it into an employee- owned business in one of the most leveraged corporate buy-outs in American history. After visiting more than 50 financial institutions, the group acquired a loan at an 18 percent interest rate, which left the company with monthly payments of $133,500. In its first year, SRC lost $60,488, but by 1986 the company had pretax profits of $2.7 million a year, which represented a 7 percent return on sales. Today, Springfield Remanufacturing is an 800 employee company with twelve divisions and 18 locations. The company had sales of $85 million in 1993. TRAINING AND CONTINUOUS LEARNING: Springfield ReManufacturing categorizes its training into skills training and business competency training. Skills training is viewed as training which is unlikely to be portable. In other words, it is highly specific to the remanufacturing work conducted at SRC, but unlikely to be transferrable to other work settings. Skills training at SRC can require anywhere from only a few hours for some skills, to 90 days for more advanced skills. Skills training practices at SRC are fairly decentralized, depending on the division of the company. At the company's automotive division, skills training is more formalized, with a week-long training program required for all new employees. During this program, trainees are supervised as they completely take apart an automobile engine and then reassemble it. In other SRC divisions, skills training is fairly informal, occurring primarily as on-the-job training. Business competency training receives major emphasis at Springfield Remanufacturing, and in fact, the company has received international acclaim for its training programs to teach employees how to read income statements and balance sheets, and to think like business owners. In 1993, more than half of employee training at Springfield ReManufacturing was dedicated to business competency. Much of this training is encompassed in what the company refers to as The Great Game of Business, an open-book management system designed to provide employees with the fundamentals of business education, and then encouragement to pay attention to bottom-line company performance in an interesting game-like atmosphere. When new employees start at SRC, they are told that 70 percent of their job involves engine disassembly, maintenance, or other tasks spelled out in their job descriptions, while 30 percent involves learning how to make a profit, generate cash, and create a stronger balance sheet. As an introduction to the Great Game of Business, all employees are required to participate in a 4- hour training program in which as part of a small group, they proceed through a workbook on business fundamentals. Through this unique training program, employees are introduced to a fictional yo-yo company, and during the course of the training, learn about concepts such as after-tax profits, retained earnings, standard costs, liquidity, equity and debt load. They are also taught to read the company's income statement, cash-flow report and balance sheet. Increased training in business fundamentals continues during the next few years for employees, as they become more involved in The Great Game of Business. Company officials note that it takes at least two years of fundamental business training, before the company begins to see a significant return for its training investment. In addition to its skills training and business competency training, SRC also has a tuition reimbursement program. SRC employees are eligible to receive full reimbursement for any classes they take that are either job-related, or necessary for the completion of a degree. EMPLOYEE PARTICIPATION: As a result of SRC's business competency training, open-book management system, and an open-door management policy, the company is characterized by extensive employee involvement. This involvement is best indicated by the more than half dozen different employee-run businesses that have spun off from SRC as a result of employee ideas. Employees at SRC are encouraged to speak up with new ideas and innovations, and in several instances, this has resulted in new business ventures for both the employees and the company. In most cases, when employees approach SRC management with business venture ideas, they are asked to prepare a business plan detailing the project, a task which most SRC employees are able to accomplish due to their advanced business training. For ideas that both the employees and the company elect to go forward with, SRC essentially operates as a "bank" for the new ideas, by providing venture capital in the employee-run business in return for an equity position in the company. In one particular instance, an SRC employee innovation in remanufacturing oil coolers (using the rudimentary tools of a pizza oven and continuous water flow from a nearby creek), together with SRC financial backing, resulted in the development of a 50 employee company with $5 million in annual sales, and a current fair market value of $1.5 million. Springfield Remanufacturing owns 72 percent of the equity in the company, while the employees own 28 percent. SRC officials point out that encouragement of employee start-up companies, enables the company to branch out into other areas, while protecting the company's core competency of engine remanufacturing. SRC officials also point to the company-held belief that if they did not provide opportunities and outlets for entrepreneurs within the company, they would lose these valuable employees. Therefore, the company provides capital and coaching to help SRC employees achieve success in becoming entrepreneurs. ACCESS TO INFORMATION: Springfield ReManufacturing is a pioneering company in the use of open-book management systems. Based on a sports analogy, SRC's open-book management system operates on the belief that in order for employees to demonstrate interest in playing the game, they have to be able to follow the action by watching the scoreboard. Consequently, SRC actively promotes "following the action," through weekly, disciplined company-wide discussions of the "scoreboard," which is composed of the company's income statement, cash-flow report, and balance sheet. Every Monday, the construction of a scoreboard is started as workers throughout the company provide the weekly dollar figures for the creation of summary financial statements covering all business activities. Every Wednesday of each week, representatives from all areas of the company gather in what is referred to as the "Great Huddle," to report and forecast the results, examine and discuss key projected variances from the company's business forecast, and develop action plans and contingencies to correct the deviations. The Great Huddle typically lasts 90 minutes, and is open to all employees, as well as company outsiders who are attending the Great Game of Business program. Designees from each business area attend the Huddle to report their weekly numbers. Many departments rotate weekly designees for the Huddle to promote learning and build-in experience. Following the Great Huddle, Huddle participants hold weekly "chalk talks" with departments and divisions in all company locations. Within 48 hours of the Wednesday "Huddle" meeting, all SRC employees are to have had the opportunity to review and discuss the company's weekly financial numbers and other information relative to the company. ORGANIZATIONAL STRUCTURE: Springfield ReManufacturing is actually a company with three divisions and ten subsidiary companies. The company has a decentralized philosophy and believes that no two companies should be structured identically. Therefore, they try not to superimpose a specific work structure on any operating units. The company does stress that all divisions and subsidiaries follow certain underlying processes, however, which include weekly forecast and informational meetings, giving all employees a financial stake in the business, and having a process for budget forecasting. EMPLOYMENT SECURITY: Springfield ReManufacturing has never had a single layoff. SRC's reluctance to lay people off was demonstrated early in the company's history when it lost a single contract which at the time, represented 40 percent of the company's business. Rather than laying off workers, SRC managers and workers committed themselves to diversifying the company, and within one year of losing the contract, they had increased the number of engines types produced from 5 to 90. SUPPORTIVE WORK ENVIRONMENT: At the company's start-up in 1983, SRC officials sponsored numerous events to generate pride in the company and instill teamwork, such as fishing and baseball tournaments, sports teams, family picnics, and community charity projects. The company had a "major event" every month of the year. Today, the company still sponsors numerous community-based activities, but where they were once started by managers as part of a turnaround strategy, most of the numerous activities today are instigated by workers and fostered by the company's culture of active community involvement. Employee health and safety receives major emphasis at Springfield ReManufacturing. Three years ago, SRC had a .67 workers' compensation experience modification rating, which indicated a safety record, 1/3 better than the industry standard (1.00). The company's accident rate, and experience modification rating began climbing shortly thereafter, however, at the same time that its health insurance rates were increasing 20 percent per year. With the higher rates and worsening safety record, the company calculated that its workers compensation costs would double every 36 months. To control the burgeoning costs, SRC officials stressed that more would have to be done regarding safety than the company's use of employee safety committees. SRC made safety a rallying cry for the company, and a key objective for every employee. To further control health costs, the company also decided to self-insure. To raise safety awareness, everyone in the company received training and education, particularly focused on the costs of accidents to everyone as employee owners. As a result of these efforts, industrial lost time accidents have decreased several hundred percent, and many plants have gone for more than a year without a lost time accident. One SRC facility recently achieved one million hours without a lost time accident. To celebrate, the company sponsored an all- day celebration with door prizes, games, etc. As a result of almost $100,000 in health insurance cost savings on its 1992 health insurance premium, SRC opened a fitness/wellness center and hired a part-time personal trainer in the Spring of 1992. Using the center, employees and their families can undergo a health and fitness evaluation, and receive instruction on exercise programs, geared to individual strength and exercise needs. The center is also used to rehabilitate any job related injury. PRODUCT/SERVICE QUALITY: Springfield ReManufacturing takes an integrated approach to encouraging quality and customer service. While most SRC employees have been trained in statistical process control, and the company has a number of specific quality efforts, quality and customer service are seen as means to an end, not ends in themselves. The company fosters quality and customer service through its open-book management system, which encourages workers to think like owners, and look for avenues for continuous quality and service improvements. COMPENSATION LINKED TO PERFORMANCE: Under the "great game" philosophy, SRC stresses that in order for employees to be interested in playing the game, they have to have a stake in the outcome. Consequently, SRC has two types of compensation systems linked to company performance: an Employee Stock Ownership Plan (ESOP) and a gainsharing bonus program. Through the ESOP, SRC employees today own 31 percent of the company. The ESOP is operated similarly to a profit sharing plan, where every year, the Board of Directors makes a contribution to the ESOP. In 1993, SRC also instituted a 401(k) plan for the purpose of enabling employees to balance their portfolios. As a result, the Board of Directors directed 20 percent of the 1993 annual contribution to the 401(k) plan and the remaining to the ESOP. Upon leaving the company, employees have the option of taking the current value of their ESOP shares, or keeping their investment in the company and not recouping the value of their shares until after a certain period of time. SRC also has a gainsharing bonus program to focus employee attention on identified areas of weakness, as indicated by the company's financial statements. Each year, employees are involved in identifying two measurable, monetarily quantifiable indicators of vulnerability, which then become goal points for the bonus program. In past years, these indicators have been such things as inventory accuracy and current ratio (ratio of current assets to liabilities). Through the gainsharing program, a "bounty" is placed on the two critical goals, and the bonus plan is designed to release accelerating amounts of opportunity throughout the fiscal year. In the first quarter, 10 percent of total gainsharing opportunity is released based on year-to-date results, and unrealized payouts are rolled over to the second quarter. In the second quarter, another 20 percent is eligible to be released, and in the third quarter, thirty percent is eligible to be released along with any unrealized payouts to date. If going into the fourth quarter, year-to-date results have produced no payouts in the preceding quarters, employees can still realize the full bonus if they achieve exceptional fourth quarter results. The payouts through the gainsharing bonus program typically are between 13 and 18 percent of base pay. SRC purposefully avoids sales commissions, merit pay increases, small-group incentives, special executive compensation plans or any types of arrangements that "lets an individual or faction strike a separate deal." Company officials believe that such compensation techniques "create barriers and conflicts of interest that can undermine the total team effort." WORKER-MANAGEMENT RELATIONS: STRATEGIC INTEGRATION OF BUSINESS: Springfield ReManufacturing operates under a number of laws, principles, etc., but it has one fundamental guiding principle: When you appeal to the highest level of thinking, you get the highest level of performance. A key business strategy of SRC, which promotes high levels of employee involvement, is business forecasting. Approximately six months before the beginning of a new fiscal year, SRC's sales force drafts detailed monthly revenue forecasts which are reviewed, discussed and refined by everyone in the company. Once the forecast is settled upon, SRC employees submit what they see as the expenses and cash investments needed by individuals and groups within the company to meet the projections of the forecast. The overall expenses are then refined to allow for a 15 percent year-to-year sales growth. Such consistent growth, along with the company's strong balance sheet position, drives up the company's price-to-earnings ratio and thus creates wealth for SRC employees. The business forecasting method promotes employee ownership and accountability for every line item of the company's financial statement, as every employee has the opportunity to participate in the company-wide planning process that creates the yearly financial plans. Employee goals and standards for the year are then derived from these financial plans. REMARKS: The success of SRC's open-book management system is indicated by the existence of an SRC subsidiary, The Great Game of Business, which teaches other companies how to operate based on an open- book management philosophy. The company sponsors 10 on-site seminars per year, with approximately 40 to 50 people attending each seminar. The seminars are in great demand, and often feature international participants. In addition, for the past two years, Springfield ReManufacturing has sponsored an annual conference called, The Gathering of the Games, which is an opportunity for managers and workers to gather to learn from companies that have achieved success through the open-book management system. Approximately 250 people attended the event in 1994. Springfield ReManufacturing's "Great Game of Business" philosophy and achievements is spelled out in the popular Doubleday/Currency published book, The Great Game of Business, by Jack Stack. ACCOMPLISHMENTS/AWARDS: The significant accomplishments of Springfield Remanufacturing are best indicated by the health of the company's balance sheet. Since the company was bought out from International Harvester in 1983, its debt-to-equity ratio has improved from 89:1 to 1.58:1. Between 1983 and 1994, the value of the company's stock increased from 10 cents to $22.50, an increase of 22,500 percent in ten years. The company has also added more than 550 full-time career positions, and grown to include three major divisions and ten offshoot companies. Springfield ReManufacturing has been recognized as one of the "100 Best Companies to Work for in America," by authors, Robert Levering and Milton Moskowitz. In 1993, the company received a Business Enterprise Award, given to individuals and businesses selected as models of business social activism. In 1992, SRC received the 4th Annual Business Ethics Award for Excellence in Ethics. SERVICE PROVIDERS: REFERENCES: Burlingham, Bo. 1989. "Being the Boss." Inc., October 1989, 49- 65. Greer, Olen L., Olson, Stevan K., & Callison, Marty. "The Key to Real Teamwork: Understanding the Numbers." Management Accounting, May 1992, 39-44. Lough, David A., & Mackay, Drew. 1994. "A Testimonial from Springfield ReManufacturing Corp. CEO Jack Stack: Motivating People Through the Income Statement and Balance Sheet." ACA Journal, Autumn, 1994, 104-111. O'Brien, Timothy L. 1993. "Company Wins Workers' Loyalty by Opening Its Books." The Wall Street Journal. Rhodes, Lucien, & Amend, Patricia. 1986. "The Turnaround." Inc., August 1986.Stack, Jack. 1992. The Great Game of Business. New York: Doubleday/Currency. Stack, Jack. 1992. "The Great Game of Business." Inc., June 1992, 53-62. Stack, Jack. 1994. "Springfield Remanufacturing Bought the Company and Learned To Play the Game of Open-Book Management." National Productivity Review, Winter 1993/94, 39-51. ------------------------------------------------------------------- COMPANY: Starbucks Coffee Company CORPORATE ADDRESS: P.O. Box 34067 Seattle, Washington 98124 PLANT/BRANCH ADDRESS: SIZE (employees): 9,000 UNION(S): Non-union INDUSTRY: Importer, roaster, and retailer of specialty coffee beans SIC CODE: 2095 NEAREST METRO AREA/MILES: Seattle, Washington (0 miles) CONGRESSIONAL DISTRICT: WA-01, WA-07 SECTOR: P OWNERSHIP: Public NASDAQ - Sbux CHIEF EXECUTIVE OFFICER: Howard Schultz CEO and Chairman of the Board P.O. Box 34067 Seattle, WA 98124 CONTACTS: Sharon Elliott Senior Vice President, Human Resources P.O. Box 34067 Seattle, WA 98124 (206) 447-1575 Bradley Honeycutt Director of Total Pay P.O. Box 34067 Seattle, WA 98124 (206) 447-1575 DATE: 03/02/95 COMPANY DESCRIPTION: In 1971 Starbucks Coffee Company opened its first store in Pike Place, Seattle's landmark fish market. In what began as a mere coffee bean seller, Starbucks has become the largest specialty coffee roaster and retailer in North America. In addition to its stores which specialize in fresh-brewed coffees and Italian-style espresso beverages, Starbucks sells coffee-making equipment, accessories, pastries, and confections. A specialty sales group services a wholesale club, a national bookstore chain, a specialty department store, restaurants, and institutions, as well as a national direct mail-order business. Starbucks' CEO and President Howard Schultz bought the company in 1987 and together with Starbucks' employees, who are referred to as "partners," have expanded the company into a more than 500-store business. Currently, Starbucks employs over 9,000 people, and serves more than 2 million customers a week. Its net sales this fiscal year totaled $285 million, which is up from $176 million the year before. Over the past three years, sales, on the average, have grown 65 percent annually, while net income has jumped 70 to 100 percent a year. TRAINING AND CONTINUOUS LEARNING: All partners at Starbucks go through 24 hours of classroom training at company training centers located in each region and market that Starbucks serves. Course topics include customer service, retail skills, and coffee brewing methods, where partners learn how steam milk properly, pour the perfect espresso shot (18- to 23- seconds), and efficiently scoop coffee beans from a bin into a paper bag. At the various centers, classes are taught by training managers, specialists, and district managers who have not only completed the classes themselves but have also worked in retail for two months. Starbucks even has a certification process so that interested partners can become training instructors. Management trainees participate in 8 weeks of classes with titles like "Coffee Knowledge 101." Workshops dealing with topics such as performance appraisal, shifting paradigms, recruitment, and project management can be utilized on an as-needed basis. Starbucks provides its district managers with the resources to create workshops that address certain skills or topics they feel would be beneficial to the partners in their area. Starbucks also sponsors participation in outside professional seminars and workshops for its partners. EMPLOYEE PARTICIPATION: Starbucks' partners are actively involved in various functions throughout the company. In the roasting plants, Starbucks has recently implemented work teams to handle specific tasks. Plant managers and supervisors organize teams according to the specific job or objective that needs to be accomplished. Although the managers oversee the initial functioning of the team, partners are encouraged to become actively involved in the group's decision-making process. Starbucks also has a "Mission Review Team" made up of partners throughout the country. The purpose of this group is to review the consistency between Starbucks' operations and its mission statement of providing quality service and products. Senior management representatives conduct open forums every quarter in different regions of the country. The purpose of the forums is to give partners a chance to share ideas and suggestions with senior management. At the forums, partners are given descriptive financial information regarding the business performance of Starbucks, as well as reports on its stock-option plan, which is called "Bean Stock." Suggestions can also be written to company executives, and every letter that is signed receives a response. Starbucks uses cross-functional teams consisting of supervisors and partners when making hiring decisions at various levels. All members of the team have input into the selection process, offering their views on the applicants' compatibility with Starbucks' expectations. Starbucks' partners are also actively involved in the performance appraisal process. When evaluating partners, managers gather information using both peer reviews and self-assessment, and then meet individually with each partner to discuss performance. ACCESS TO INFORMATION: Every quarter, open forums are held in various regions of the country. Senior management officials meet with partners to discuss a broad range of topics, including financial information, expansion plans, environmental issues, and other key items in that particular region. All Starbucks' partners are eligible for a stock-option plan, called "Bean Stock," making it vital to educate and inform them on the benefits and performance of the program. Starbucks distributes annual Bean Stock reports to its partners as well as providing them with a Benefits Help-Line that they can call when they have questions about the plan. Issues dealing with the Bean Stock plan are also specifically addressed at the quarterly open forums, giving partners the chance to meet individually with senior executives, and in the company newsletter. Starbucks utilizes different forms of media to share information with its partners. The Pinnacle is Starbucks own newsletter that highlights company performance and the activities of individual partners throughout the company. Starbucks hopes to take advantage of innovative technologies by using videos and tele- conferencing to help them share information between partners in the near future. ORGANIZATIONAL STRUCTURE: Starbucks maintains a relatively flat organizational structure, allowing for employee involvement through the utilization of cross-functional work teams in the strategic planning processes. The primary governing body at Starbucks is comprised of the Office of the Chairman and the Board of Directors which receives substantial input from other senior level executives including the senior vice president of human resources. In addition to this group, a steering committee comprised of the heads of each functional area meet monthly to discuss corporate issues. EMPLOYMENT SECURITY: Because of the rapid expansion of Starbucks, company restructuring has not been an issue. New stores are opening at a rate of three to five every week, all of them being company owned. By the year 2000, Starbucks hopes to have 1,500 stores in the United States. It has also initiated an international division and has partnered with Pepsi to develop an iced beverage that it hopes to make available in the summer of 1995. While the turnover rate in the retail industry averages between 150 percent to 400 percent, Starbucks averages only about 65 percent. SUPPORTIVE WORK ENVIRONMENT: Starbucks was on the leading edge when they gave all of its employees, even its part-time staff, full health-care benefits in 1987. The benefits package becomes available after 90 days for those partners who work 20 hours a week or more. The health insurance costs employees $375 per year, and it pays for 90-100 percent of their medical costs with a $10 copay. There is no fee for dental insurance, which covers cleanings and x-rays at 100 percent. The plan covers basic services, such as fillings, at 80 percent and all major dental work, such as root canals or bridges, at 50 percent. Disability and life insurance are also included in the Starbucks' benefits package. In 1990, following an employee survey that listed vision care and preventive care as the two highest priorities, Starbucks implemented additional benefits. Vision care is covered at 100 percent up to $70 toward lenses every year and frames every other year. Preventive care, which was added to health insurance, provides for things such as annual physicals, flu shots, and well-baby care. Starbucks offers all of its partners the opportunity to join a 401(k) plan after one year with the company. Starbucks matches partners' contributions at 25 cents on the dollar. All partners also receive vacation time, two personal days off per year, price discounts for Starbucks' numerous products, and a free pound of Starbucks' coffee each week. Starbucks has a new Partner Relations Director who will be addressing family-friendly workplace issues. Some programs that Starbucks has already implemented are workout and lactation rooms, an Employee Assistance Program which includes a toll-free counseling hot line, dependent-care reimbursement accounts for partners, and a recognition program. PRODUCT/SERVICE QUALITY: Because superior customer service is one of the cornerstones upon which Starbucks was built, training programs frequently address ways that partners can increase the value of the company through customer service. Not only are partners instructed on customer skills, but they are also taught how to present Starbucks' products in a way that maximizes their quality. Customer value is also reflected in Starbucks' marketing strategy. Starbucks purposely opens new stores near old ones in order to cut lines and waiting. An outside third party called the "Snap Shot Team" sends representatives to each Starbucks' store to evaluate and provide feedback on the quality of customer service. In addition, customer comment cards are readily available at all Starbucks' locations. Starbucks prides itself on the quality of its coffee products. They buy only the top quality coffee beans and roast them in- house. Less than two hours after roasting the beans, they are sealed in vacuum packs and any beans that go unsold for seven days after the bag is opened are donated to charity. COMPENSATION LINKED TO PERFORMANCE: Employee ownership had been a longstanding dream of Starbucks' CEO Howard Schultz since he purchased the company in 1987. In December of 1990, an internal development team began the process of creating a stock-option plan which would give partners more involvement and stake in the company. Using information collected from other organizations and business libraries, the team created the "Bean Stock" plan, which was implemented in 1991. By offering the plan to all partners unilaterally, Starbucks became the first private company to offer stock options to both full-time and part-time employees. The plan allows those partners who have been employed six months, and who work 20 hours per week or longer, eligible for stock options. When the company distributes options each January, eligible individuals receive awards based on their annual salaries, the grant price of the stock, and the profitability of Starbucks. The options vest at 20 percent a year for five years and partners may exercise or exchange their vested shares at grant prices. In addition, every partner receives a new stock-option award every year, and a new vesting period begins. In the first year that Bean Stock was offered, the company exceeded its profit goal by 20 percent. The board then responded by raising the percentage of salaries for stock options from 10 percent to 12 percent. To help partners communicate the intricacies of Bean Stock, Starbucks "grand-open forum and sparkling cider toast for announcement" enlisted the aid of the consulting group Towers Perrin. The initial literature, which cost $30,000, contained charts and illustrations that explained the program and how the worth of the options can increase through time. The brochure also contained a glossary of terms such as stock, stock option, vesting, and grant price. Starbucks continuously offers assistance to its partners in order to answer questions about the Bean Stock plan. A regular Bean Stock report is distributed which focuses on technical aspects of the plan. Starbucks also has a Benefits Help-Line, which partners can call to answer their questions about Bean Stock. Starbucks incorporates discussion of Bean Stock into their quarterly open forums, which are held in each region. These forums provide partners with the opportunity to directly interact with senior management personnel on topics dealing with finances and profitability. Innovative award programs help Starbucks motivate its partners and encourage team spirit. The "Bravo Award" program allows partners to nominate their co-workers for helping to generate savings, increase sales, or improve the quality of customer service. Nominated partners receive a Bravo certificate and a pin that they can wear to work. A manager of the quarter is chosen in each region, and winners receive a plaque and a Starbucks' briefcase. The criteria for the award include such things as customer service, clean stores, and employee- development skills. The manager of the year wins a trip to a coffee-producing country. STRATEGIC INTEGRATION OF BUSINESS: In order to attract and maintain quality employees, Starbucks actively integrates its human resources practices into its strategic planning. By offering all of its partners a comprehensive benefits package and providing them with substantial training opportunities, Starbucks is able to develop an affinity with its partners. In addition, the senior vice president of human resources plays a key role in the development of the company's strategic goals. Starbucks has also found ways to utilize innovative technologies to make its business more productive. The company has integrated a computer network that links various Starbucks' locations around the country. The PC-based point-of-sale system allows managers to carefully track sales and relay them to the corporate headquarters in Seattle. Using the system, Starbucks can more readily spot regional buying trends. REMARKS: Starbucks is North America's leading corporate sponsor of CARE, the international aid and relief organization. Since 1992, Starbucks has funded the publication Pied Cow, a children's literary magazine in Kenya. The magazine, which provides information on personal health and sanitation, environmental issues, and the prevention of AIDS, is distributed to each of Kenya's more than 14,000 primary schools. The Starbucks partnership with CARE has also helped to develop community clean water and sanitation systems in Guatemala and Indonesia and has provided aid to the coffee-growing region of the Zege Peninsula on Lake Tana in Ethiopia. Starbucks has implemented many environment-friendly programs to encourage the reduction of wastes, and the reusing and recycling of its materials. Starbucks offers a $.10 discount off every beverage served to customers who provide their own cup and for each pound of coffee sold to those re-using a Starbucks' bag. All printed materials at Starbucks are produced on recycled papers using only soy-based inks. Starbucks even has an Environmental Director who oversees the "Green Teams," which meet quarterly to address ways that Starbucks can positively contribute to environmental issues. Each Starbucks store contributes to community development by adopting a local charity to receive donations of coffee. Whole bean coffees are given just seven days in the bins before they are passed on to community charity organizations and events. ACCOMPLISHMENTS/AWARDS: Starbucks' benefits won an award of merit in 1994 from the International Association of Business Communications. SERVICE PROVIDERS: Starbucks utilized the services of the consulting firm Towers Perrin to develop educational materials which help partners understand the various facets of the Bean Stock plan. The literature, which cost $30,000 to create, consists of a three- page, fold-out brochure containing charts and illustrations that help explain the program and how the worth of the options can grow through time. The last page of the brochure includes a glossary of terms, such as stock, stock option, vesting, and grant price. Because of the communications package, Towers Perrin was presented with an Excellence in Employee Communications award by the International Association of Business Communications. REFERENCES: Brammer, Rhonda. 1994. "Grounds for Caution." Barron's (August 15):20. Ehrenfeld, Tom. 1993. "Best Training: School's In." Inc. (July):65-66. Gunsch, Dawn. 1992. "Benefits Leverage Hiring and Retention Efforts." Personnel Journal (November):90-97. Rounds, Kate. 1993. "Corporate Spotlight: Starbucks Coffee." Incentive (July):22-23. Rothman, Matt. 1993. "Into the Black." Inc. (January):59-65. Witchel, Alex. 1994. "By Way of Canarsie, One Large Hot Cup of Business Strategy." The New York Times (December 14):C1,C8. Jones Yang, Dori. 1994. "The Starbucks Enterprise Shifts Into Warp Speed." Business Week (October 24):76-78. ------------------------------------------------------------------- COMPANY: United Electric Controls Co. CORPORATE ADDRESS: P.O. Box 9143 180 Dexter Avenue Watertown, Massachusetts 02272-9143 PLANT/BRANCH ADDRESS: SIZE (employees): 325 UNION(S): non-union INDUSTRY: Measuring and controlling devices SIC CODE: 3829 NEAREST METRO AREA/MILES: Boston, MA (10 miles) CONGRESSIONAL DISTRICT: MA-08 SECTOR: P OWNERSHIP: Privately held. CEO: Robert Reis CEO United Electric Controls Co. P.O. Box 9143 Watertown, MA 02272 CONTACTS: Frederick Ritzau Vice-President of Human Resources United Electric Controls Co. P.O. Box 9143 180 Dexter Avenue Watertown, MA 02272 (617) 926-1000 DATE: 09/06/94 COMPANY DESCRIPTION: United Electric Controls is a family-owned maker of industrial sensors and controls, with over three dozen brands comprising millions of specifications. The company employs approximately 385 workers, with 325 at its main Watertown, MA, plant, approximately 50 employed at a plant in Milford, CT, and more at sales offices around the world. The firm, which was founded in 1931, has sales of approximately $35 million. TRAINING AND CONTINUOUS LEARNING: One of the main philosophies of United Electric (UE) is the idea of "continuous improvement through education and learning." This philosophy helps guide the actions of the company and its employees. UE provides a varied learning environment for its employees, with courses and training provided through both in- house education and training seminars. The training covers both technical skills and interpersonal, "soft" skills. In addition, all employees are eligible for external training on a fully cost- reimbursable basis. The reimbursement program covers the cost of both books and the course and may be either directly job related or more generally career related. Nearly 15 percent of the workforce takes advantage of this program at any one time. Much of the training is provided during work hours, enabling employees who might otherwise not have access to attend. Because of UE's size, much of the training is provided by other employees who have been through a train-the-trainer course. Employees who provide the training on-site also help design the training course. Because UE employs a diverse workforce, basic skills training in reading and writing and an English as a Second Language course are provided. These courses are offered during work hours and were originally funded under a grant from the Governor's discretionary funds. Each employee's performance appraisal includes an assessment of training needs and the development of a training and education plan when required. UE has established a Resource Center which is the hub of its continuous improvement process. The Resource Center maintains a library of books (nearly 600), cassettes, and videos which are available to all employees. The Center also helps to identify, with the employee, courses and training to meet job and career goals. Center staff is researching self-paced, computer-based training programs. UE is part of a group that recently won a Department of Labor grant to fund a learning consortium. Fifteen local small manufacturers have been organized to swap training curricula and training. By leveraging resources, the group, and UE, is able to bring in outside experts and trainers and to lend out in-house trainers. UE also uses conferences and seminars to informally train employees. UE promotes these activities as an opportunity for employees from all levels of the company to speak at conferences and seminars. This enables UE to provide a learning experience for all levels of employees through attendance at outside events the company might not be able to afford otherwise. The Resource Center helps the employee with his/her presentation. EMPLOYEE PARTICIPATION: The learning and training process is used to support the employee participation programs at UE which contributes to the continuous improvement philosophy. The participation processes implemented at UE allows everyone to play a role in the company's improvement. The Valued Ideas Program (VIP) grew out of an employee suggestion system. The VIP allows employees to earn awards through the involvement process and supports the Valued Employee Program that allows workers to become involved in activities such as problem solving groups and committees. Under the VIP, employees with ideas for improvement submit a one-page form with the idea to an immediate supervisor. If it is something the supervisor and employee can implement, it's developed immediately. More complex ideas go to an eight-member committee that evaluates the idea for usefulness. Under the VIP, all ideas, not just those associated with cost savings, get evaluated. Employees whose ideas are implemented receive five chances in a monthly drawing in which cash and other prizes are awarded. Employees whose ideas cannot be implemented receive one chance. Employees can also establish Action Centers, that investigate and implement solutions to problems. Any employee can start a Center and that person then selects the other members of the team. Good ideas can be implemented without management approval and only an informal review to ensure that the idea meets budgetary constraints. These Action Centers generally last several weeks. Employees who have ideas go to the Resource Center, which assist them in putting together the team and ensuring that needed resources are provided, including the necessary human resources (i.e., manufacturing engineers and purchasing department representatives). Up to 100 Action Centers are formed yearly. There are also three permanent committees that employees can volunteer for: the Occupational Safety and Health Team, the Total Employee Involvement Team, and the Human Resources Policies and Practices team. The Occupational Safety and Health Team, which is chaired by the company's industrial health nurse, evaluates any safety-related suggestions and creates policies and procedures in regard to safety. The Total Employee Involvement team is charged with maximizing employee involvement in the Valued Ideas and Valued Employee programs. The Human Resources Policies and Practices team is charged with investigating such topics as new compensation and reward systems and programs. These committees grew out of a process in the Human Resources Department that was geared to moving functions out of the department when nearly half of its staff left voluntarily at one time. Employees, through the formation of an Action Center, are engaged in the hiring process. Action Center members are given training in designing hiring criteria and skills identification. New applicants are given a self-assessment package (which varies by job and is designed by the Action center). The team scores the package and interviews applicants, making recommendations for hiring. ACCESS TO INFORMATION: All minutes of the Action Center meetings are kept on a computer in the Resource Center and may be accessed by anybody. Minutes are also printed out and posted on a bulletin board and copies of the minutes are sent to senior management on a weekly basis. Even thought UE is a private, family-held firm, information sharing has constantly increased. Each year, senior management designs the business plan for the coming year and extending 3-5 years out. This plan is translated into a one page matrix in which long-term goals are laid out, leading to the improvement priority issues, and then the one year goals. Each January, the CEO, armed with the business plan matrix, meets with all employees to review the past year and to present the new plan. The company then holds a training session to explore how each department can contribute to meeting the goals laid out in the business plan. Each month, the company posts the numbers on profits, production, sales, and inventory on a percentage-comparison basis. Although actual numbers are kept confidential, employees can see and are informed as to how the company did in respect to the percent of goal reached. At the plant, a lighted display (designed by an employee and submitted as a Valued Idea) graphically illustrates the results. There is also a company newsletter which is published completely by employees and contains the financial information. This newsletter contains information ranging from how the plant and company are performing to social pieces. At one time, the newsletter was written by the marketing department, but surveys showed that nobody read it. An employee team (which produces the newsletter now) was established to redo the newsletter, changing it from a glossy to a xeroxed newsletter that is read by all employees. One last means of information sharing is what the company calls their 5-15 reports. Each manager is encouraged to compile a report outlining what was completed, what needs to be done, the best idea, and other pertinent information. The reason for the name is that the report must be able to be written in 15 minutes and read in 5 minutes. The report is posted on the bulletin board for all to read. ORGANIZATIONAL STRUCTURE: The factory floor has been reorganized in work cells. Employees within each work cell work as informal work teams, and each employee builds an entire product. This arrangement has allowed UE to eliminate a number of supervisory positions. Where there were once 15 supervisors, there are now 4 production managers. The company has become much flatter overall. In addition to eliminating supervisors, UE has eliminated a number of other layers, going from approximately 10 layers to three (employees- production manager-vice president). EMPLOYMENT SECURITY: The company has had three downsizings since 1986 in addition to the flattening of the organization. The company's philosophy is to avoid layoffs whenever possible and to protect the front-line employees the most, since they are the value-added component of production. In the first two downsizings, the company was able to keep layoffs to a minimum (ten each) by reallocating people to other areas, relying on attrition. The second downsizing also avoided layoffs by providing early retirement incentives for some employees, and by relying attrition and reallocation. In neither of the first two downsizings were front-line employees affected. The third downsizing, which matched the hierarchical restructuring, was somewhat larger (30 employees). Production supervisors whose jobs were eliminated were allowed to return to the line without loss of pay. The company also offered early retirement and used attrition to reduce the negative effects. Both management and front-line employees who were laid off received equal benefits. The process used during downsizings was developed by an employee team for the first occurrence. Included are outplacement services, such as resumes and career planning. The company also works closely with the state to get maximum benefits for employees and also extends the company's educational benefits for one year to help affected employees with retraining. SUPPORTIVE WORK ENVIRONMENT: As noted, UE has implemented a permanent Occupational Safety and Health Committee. This Committee is made of volunteers from a cross-section of the facility and includes the occupational health nurse. This committee oversees all health and safety issues, audits, and safety tours. Once a month, the committee meets with the company's president. UE has a company-sponsored health services department staffed by a full-time nurse. A physician also comes in once a week to respond to employees' health needs. The health department also arranges for wellness programs, including seminars, diet workshops, aerobics classes, health screenings, and flu shots. In addition, the company holds an annual health and wellness fair for all employees. The overall impact of these benefits includes lower workers' compensation costs. UE has been able to reduce its compensation insurance premiums from 70 percent over the state average to 30- 40 percent below the average. PRODUCT/SERVICE QUALITY: UE is presently working on ISO 9000 certification and expects to have its initial audit completed in December 1994/January 1995. The company established twenty employee teams (one for each standard) to investigate and implement ISO 9000 documentation processes. UE considers quality to be a key part of the continuous improvement effort. Under this effort, the people building the product are responsible for the product's quality. This has enabled UE to eliminate the job of quality inspector. UE has a supplier certification program and works with its suppliers to establish long-term partnerships. Based on these long-term, sound relationships, UE is also reducing its supplier base. Certified suppliers are selected using a performance rating system and team visits. Under the rating system, 60 percent depends on quality, 30 percent on delivery and 10 percent on service, with an emphasis on total cost, not low price. By considering its suppliers and customers as partners in productivity, UE is able to establish better relationships. This has lead to an increase in the number of facility tours requested (500-600 visitors yearly). All tours are lead by front-line employees. These tours also act as informal benchmarking opportunities. Because of the demand, only suppliers and customers are given tours, unless there is reciprocation on the part of the firm requesting the tour. For example, one large manufacturer requested a tour and as reciprocation, put on a seminar regarding its highly- effective problem solving methods. UE puts on a two-day program/workshop for its suppliers and customers on reliable methods for improving an organization. This program includes a facility tour and a trade show during the middle of the second day in which both suppliers and customers set up booths and UE employees can see where supplies come from and where finished products go. UE has installed a just-in-time production system based on the Toyota production system. The inventory reduction and control system is paperless and based on the Japanese Kanban technique. The system has reduced inventories of some parts by up to 90 percent. To support the JIT system, UE installed a ship-to-stock program eliminating inspection and reducing lead time and split shipments. COMPENSATION LINKED TO PERFORMANCE: All full-time (more than 30 hours) UE employees are salaried. There are no time clocks and workers are paid a full-scheduled day whether they are there or not. This system has resulted in a drop in absenteeism. Each year, UE usually has about 40 employees (about 12 percent of the workforce) with perfect attendance. To help bolster the all-salaried compensation system, UE has implemented a gainsharing program and is developing a pay-for- skills compensation programs. WORKER-MANAGEMENT RELATIONS: Even though there is no union, UE has implemented a step procedure for the resolution of disputes. This process allows a dispute to be taken to the company president. Because of UE's open door policy which allows for informal dispute resolution, the procedure has not been used since the late 1980s. STRATEGIC INTEGRATION OF BUSINESS: The human resources manager is a part of the senior management team and has input into the development of the strategic goals of the company. Some time ago, the human resources function was redesigned to make it a more company-wide function. Many traditional human resource functions are now handled by either Action Centers or permanent committees and the role of the vice- president for human resources is more support for long-term planning and strategies. REMARKS: ACCOMPLISHMENTS/AWARDS: In 1990, United Electric won the Shingo Prize for Manufacturing Excellence in the small business category. The prize is given annually to a manufacturer with demonstrated excellence in productivity and quality improvement. UE has also been named as a Best Manufacturer by the U.S. Department of the Navy and has been named a certified supplier by a number of its clients. It is also a member of the Qualified Vendor Program sponsored by the Defense General Supply Center in Richmond, Virginia. UE's Workplace Education program was the focus of a plant visit by First Lady Barbara Bush in 1991, and was the recipient of the 1994 Massachusetts Workplace Education Initiative Quality Partnership Award. SERVICE PROVIDERS: Because of its size, UE has tried to develop its own programs. On a number of occasions, the company has brought in authors of books to talk to staff. For its seminars, UE has used Productivity, Inc. to help develop topics and contents. The company also participates in various public/private partnerships such as the Massachusetts Manufacturing Partnership and the New England Suppliers Institute. REFERENCES: Gunsch, Dawn, "Award Programs at Work," Personnel Journal, September 1991, pages 85-89. Gunsch, Dawn, "Employees Team Up with HR," Personnel Journal, October 1991, pages 68, 70-71. Hamilton, Bruce E., "Maintaining a Tradition of Quality and Service by Breaking a Tradition of Large Lot Manufacturing," National Productivity Review, Vol. 9, No. 1, Winter 1989/90. Hyatt, Joshua, "Ideas at Work," Inc., May 1991, Pages 59-60+. Productivity, Inc., "Adult Literacy," TEI Newsletter, May 1990, Vol. 3, No. 4, pages 1-3. Sheridan, John H., "'Action Centers' Spur Shingo Prize Winner," Industry Week, May 21, 1990, page 80. Sheridan, John H., "Careers on the Line," Industry Week, September 16, 1991, pages 29-30. U.S. Department of the Navy, Report of Survey Conducted at United Electric Controls Company, Watertown, Massachusetts, Best Manufacturing Program, Washington, DC, June 1991, 11 pages. ------------------------------------------------------------------- COMPANY: Wainwright Industries, Inc. CORPORATE ADDRESS: P.O. Box 640 17 Cermak Boulevard Saint Peters, Missouri 63376 PLANT/BRANCH ADDRESS: SIZE (employees): 185 UNION(S): non-union INDUSTRY: Automotive and aerospace components SIC CODE: 3469 NEAREST METRO AREA/MILES: Saint Louis, MO (15 miles) CONGRESSIONAL DISTRICT: MO-09 SECTOR: Private OWNERSHIP: Privately-held, family-owned CONTACT A. Donald Wainwright Chief Executive Officer Wainwright Industries P.O. Box 640 St. Peters, MO 63376 (314) 278-5850 Fax: (314) 278-8806 Michael Simms Plant Manager Wainwright Industries P.O. Box 640 St. Peters, MO 63376 (314) 278-5850 Fax: (314) 278-8806 DATE: 07/07/94 COMPANY DESCRIPTION: Wainwright Industries was founded in 1947, producing components for internal combustion engines. The company has expanded into the production of precision parts and assembled systems. The company occupies a 110,000 square foot facility in St. Peters, MO, and two smaller satellite facilities. Wainwright employees a total of 185 associates and has annual sales of approximately $20 million. TRAINING AND CONTINUOUS LEARNING: Each new associate undergoes a two-week orientation training program. The orientation includes an introduction into the philosophical and historical viewpoints of the company. The new associate also learns about the company's quality and customer satisfaction processes and the metrics involved in these processes. The second phase of the orientation is specific training in such areas as Statistical Process Control and hazardous materials communications. The new associate also receives on-the-job orientation training. Over the course of the first three months, new associates have three meetings with the company's chairman, Mr. D. Wainwright. At these meetings, Mr. Wainwright discusses the company's culture and business model. All operators are cross-trained, based upon a certification process. The goal of the process is to ensure job knowledge, documentation of each operator's level of training, and recognition. In order to achieve certification, an associate must pass a test. The certification and test are based upon training manuals for each internal operation that were designed by the associates themselves. The certification procedure and cross-training improves flexibility, allowing for greater latitude in job rotation and staffing. For 1994, Wainwright will spend in excess of 7 percent of payroll on associate training. The company stresses that training and education are preparation for advancement. In 1992, a basic skills inventory for every associate was conducted and a training program was tailored to each individual's needs. After the basic training was accomplished, standard training, such as SPC and safety, was conducted. Over time, new training in basic values and communications skills has been added. Wainwright has entered into partnership with three local schools to conduct most of its in-house trainingnities for waste minimization are identified and processes and packaging altered. This meeting is chaired by the Project Coordinator and a representative of the customer attends, if possible. If a customer representative cannot attend, the meeting is held via conference call. As elsewhere noted, suppliers are an integral part of this process. From this planning process, a standard operating procedure is produced that is the basis for the operator certification procedure. The Wainwright workplace is egalitarian, with all employees wearing the same uniform, eating in the same cafeteria, and parking in the same parking lot. ACCESS TO INFORMATION: Senior management at Wainwright are actively involved in communicating the principles of total quality management, both internally and externally. The company's business plan goals, performance to plan, financial results, and future goals are all posted and freely shared with all associates. The business strategic plan is shared with all associates and feedback from associates is built into the plan. Wainwright is presently designing a training program for its associates that will teach them how to interpret and read business results. Presently, training is being provided to the supervisory level and this training will be given to all associates. Company data is linked to five key strategic indicators: safety, internal customer satisfaction, external customer satisfaction, Six Sigma quality, and business performance. Under this system, all business processes are designed with safety and internal customer satisfaction indicators as a foundation. External customer requirements and feedback are then evaluated to generate process improvement and positive six sigma quality indicator trends. Process improvement is then integrated with business performance trends. All financial and quality results are posted in "Mission Control," a room set aside for activities related to the company's quality initiatives. Additionally, all employees have access to all financial data within 24 hours after its accuracy has been verified by the accounting department. ORGANIZATIONAL STRUCTURE: Wainwright Industries has established a synchronous just-in-time (JIT) manufacturing system for automotive assembly centers. As a result of these and other improvements in the manufacturing and customer servicing functions, the assembly center has been able to reduce in-house inventory from five days to two hours, while improving workflow and reducing costs. In conjunction with its JIT program, Wainwright has also pursued supplier and parts certification from its customers. In order to build on the abilities of its suppliers, Wainwright has implemented a number of long-term relationships that allow the company to work actively to ensure continuous improvement. Wainwright's supplier evaluation and certification process identifies and develops preferred supplier partners throughout the company's operations. Suppliers are a permanent and active part of Wainwright's various teams. These long-term partnerships coupled with supplier expertise has lowered costs, improved productivity, furthered waste minimization, and allowed the development of more environmentally benign products to be used by Wainwright. Meetings are held monthly with suppliers. At these meetings, company plans and supplier performance are discusses, along with upcoming production requirements, new projects, and ideas for improvements in quality, delivery and cost. Wainwright's organization is built upon a set of quality values and expectations in which the culture fosters trust and belief in the worth and contributions of all associates. EMPLOYMENT SECURITY: The company has a policy of not laying off associates, Surplus associates are retrained and redeployed elsewhere, eliminating any threat to job security and enhancing associate skill development. To help ensure employment security, Wainwright has utilized temporary help agencies to fill specific needs of limited duration. The most talented of these temporary employees are selected for permanent openings when they arise. SUPPORTIVE WORK ENVIRONMENT: Wainwright is committed to employee safety. In 1993, the company received the Excellence in Safety award from its workers' compensation insurance carrier. To qualify, Wainwright had an accident rate less than 50 percent of its SIC industry average. Additionally, Wainwright was one the first Missouri companies to qualify for state certification of its safety process. Wainwright's safety process links to its associate involvement process. For any accident which requires first aid, the supervisor of the area hosts a meeting of the World Class Workers Compensation Team within twenty-four hours of the accident. The team reviews the investigation, studies the accident, and assigns root cause for a corrective action plan. Accidents are recreated on video and shown to associates as a proactive process to avoid similar incidents. All business processes are developed with key safety indicators as the foundation. Processes requiring repetitive motion are evaluated for possible automation and/or integrated within the a job rotation system. The company maintains a tuition reimbursement program which reimburses associates up to 100 percent of their tuition and books for approved plans of study. The company makes a range of services and programs available to all associates. Included is an Employee Assistance program with counseling, family picnics, parties, picture sessions, open houses, smoking cessation classes, first aid and CPR training, basic skills training, recreational activities, health club membership contributions, and purchase discount plans. PRODUCT/SERVICE QUALITY: In 1981, Wainwright began implementing quality programs with the introduction of Statistical Process Control (SPC). Wainwright developed a unique information and analysis center. At this center, each customer's satisfaction is documented with a plaque, a current monthly satisfaction rating, and a red or green flag indicating status regarding targets. Additionally, customer satisfaction data is displayed along with key quality and operation data. The formal quality process uses an eight step problem solving process that provides verification of corrective action results and integration into the process flow and control plan. The internal and external customer rating systems provide weekly feedback. COMPENSATION LINKED TO PERFORMANCE: The entire staff organization is salaried. All appraisals are linked to the company's business plan and model. Team members' performance to plan is recognized on both an individual and group basis. All references to good, bad, or value-based performance descriptions have been eliminated. Raises are based on the certification process. Associates are provided with a career path, allowing them to know ahead of time what their raise will be, based upon successful achievement of certification. To date, 60 percent of all associates have been promoted at least once. Compensation and benefit levels nationally are studied to ensure that Wainwright associates are recompensed at competitive levels. Associates are involved through the shop council in the review and evaluation of health carer and other benefit options. A team of associates from all company departments undertook the research, interviewed the companies, and selected the funds for the company 401(k) plan. There is also a profit sharing plan that pays out 15 percent of profits to all associates. Each associate from the President to the newest associate receives exactly the same share. Because profits and net income are measures included in the Key Quality Indicators, the company feels that the profit sharing plan links the success of the company to the employees' wages. WORKER-MANAGEMENT RELATIONS: STRATEGIC INTEGRATION OF BUSINESS: The company uses a number of advanced technologies, including computer-aided design, computer-aided manufacturing, and computer-aided testing, all integrated into its just-in-time and synchronous production systems. In all areas of its customer and supplier relationships, Wainwright associates are involved. The company involves whoever would be the appropriate contact within the company, regardless of their position. Wainwright actively benchmarks itself against best-in-class companies. Company representatives have visited with and attended presentations by 14 of the 17 Baldrige Award winners from 1988-1992. A strategic planning group identifies non- Baldrige benchmarking opportunities. REMARKS/AWARDS ACCOMPLISHMENTS/AWARDS: Wainwright has achieved the Mark of Excellence from General Motors, the Q-1 Preferred Quality Award from Ford Motor, the Quality Performance Award from IBM-Rochester, and the bronze level of Supplier Certification from McDonnell Douglas. From 1990 to 1993, the company experienced a 35 percent increase in its gross profit margins and a nine-fold decrease in workers' compensation costs. The goal of six sigma quality is being pursued, with one custocarer and other benefit options. A team of associates from all company departments undertook the research, interviewed the companies, and selected the funds for the company 401(k) plan. There is also a profit sharing plan that pays out 15 percent of profits to all associates. Each associate from the President to the newest associate receives exactly the same share. Because profits and net income are measures included in the Key Quality Indicators, the company feels that the profit sharing plan links the success of the company to the employees' wages. WORKER-MANAGEMENT RELATIONS: STRATEGIC INTEGRATION OF BUSINESS: The company uses a number of advanced technologies, including computer-aided design, computer-aided manufacturing, and computer-aided testing, all integrated into its just-in-time and synchronous production systems. In all areas of its customer and supplier relationships, Wainwright associates are involved. The company involves whoever would be the appropriate contact within the company, regardless of their position. Wainwright actively benchmarks itself against best-in-class companies. Company representatives have visited with and attended presentations by 14 of the 17 Baldrige Award winners from 1988-1992. A strategic planning group identifies non- Baldrige benchmarking opportunities. REMARKS/AWARDS ACCOMPLISHMENTS/AWARDS: Wainwright has achieved the Mark of Excellence from General Motors, the Q-1 Preferred Quality Award from Ford Motor, the Quality Performance Award from IBM-Rochester, and the bronze level of Supplier Certification from McDonnell Douglas. From 1990 to 1993, the company experienced a 35 percent increase in its gross profit margins and a nine-fold decrease in workers' compensation costs. The goal of six sigma quality is being pursued, with one customer having received over 20,000,000 precision parts without a single defect. Wainwright was one of the recipients of the 1994 Malcolm Baldrige National Quality Award. SERVICE PROVIDERS: REFERENCES: Wainwright Industries, Inc.: 1993 Missouri Quality Award Winner, Application Summary, Missouri Quality Award, Jefferson City, MO, 1994. Wainwright Industries, Inc.: 1993 Award Winner, Missouri Quality Award, Jefferson City, MO, 1994. Wainwright Industries, Inc.: Malcolm Baldrige National Quality Award Application, Wainwright Industries, Inc. St. Peters, MO, March, 1994. ------------------------------------------------------------------- COMPANY: Web Industries, Inc. CORPORATE ADDRESS: 1700 West Park Drive Westborough, Massachusetts 01581 PLANT/BRANCH ADDRESS: SIZE (employees): 240 UNION(S): non-union INDUSTRY: Materials converter (slitting, traverse winding, sheeting, and printing/coating of plastic film, paper, paperboard, fabrics, and copper and aluminum foils) SIC CODE: 2679 NEAREST METRO AREA/MILES: Boston (20 miles) CONGRESSIONAL DISTRICT: MA-05 SECTOR: Private OWNERSHIP: Private, ESOP CONTACTS: Donald J. Romine President Executive Offices Web Industries, Inc. 1700 West Park Drive Westborough, MA 01581 Charles R. Edmunson Vice President of Manufacturing Executive Offices 1700 West Park Drive Westborough, MA 01581 (508) 898-2988 DATE: 5/26/94 COMPANY DESCRIPTION: Web Industries was founded in 1969 by Robert Fulton, and today has manufacturing plants in Framingham, Massachusetts, Indianapolis, Indiana, Atlanta, Georgia, Dallas, Texas, and both Woodstock and Killingly, Connecticut. Web is a manufacturer and service provider to industry, specializing in the slitting, sheeting, and printing of flexible materials such as printing paper, packaging film, nonwoven fabrics, and thin-gauge aluminum. Web's products include teartapes used to open packages of chewing gum and playing cards, leader tape used in video cassettes, and binder tape used in telephone cables. TRAINING AND CONTINUOUS LEARNING: Web has developed a recognized twenty-module training program for new hires that covers a variety of issues ranging from teamwork, safety, and constant improvement, to employee stock ownership, benefits, and company culture and history. The training consists of twenty one-hour sessions, taught once a day by employees from all parts of the company. Company officials point out that because front-line employees are so involved in the hiring process, they are effective trainers because they have a vested interest in seeing that new people understand the orientation/training process and do well in their jobs. Training is designed to be more group discussion than presentations during the last week of the orientation training, and students are asked for input and suggestions about how to improve the program. Web is also recognized for its employee reading groups, where employees meet once a week to read and discuss books on business and other related topics on company time. The meetings lend themselves to open discussion of topics which might be perceived as threatening in another situation. Web's founder, Robert Fulton, believes the book discussions have played a major role in the company's positive change efforts. Web is in the process of systematizing its operator training and quality training programs, through a program it refers to as Total Quality Ownership. Web is also planning for the creation of personal development plans for each employee in the company. After working with employees to determine their personal development goals, the company will attempt to set up learning experiences specific to those individual goals, ranging from job swaps and customer visits, to specific educational programs. EMPLOYEE PARTICIPATION: Employee participation is fostered at Web through both the employee ownership culture and the team-based organizational structure. By promoting employee ownership, Web employees are motivated to be entrepreneurial and take actions which will result in simultaneous company and personal benefit. By working in self-directed work teams, Web employees are empowered to act without having to seek managerial approval. ACCESS TO INFORMATION: Each operating unit or plant is set up as a complete business that is provided with a detailed income statement every month by Web headquarters in Westborough. Every month, the production line at each plant is stopped and workers and managers together go through the plant's profit and loss statement line by line. The average time for these informational meetings is approximately one hour. Web employees also have access to monthly forecasts and daily financial updates. Since the ESOP was established in 1985, Web has made a practice of "annual visits with the president." During annual visits to each Web facility, the company president sits down with each employee to go over the company's income statement, and personally present employees with their annual ESOP Account Statements. Corporate officers visit each Web facility every quarter to make a presentation about one of the topics on Web's culture chart, "Growth Through Ownership." Topics include: 1) participating as owners; 2) competing in our economic system; 3) pleasing our customers; 4) producing the highest quality; 5) learning our business; 6) building our team; and 7) growing as people. ORGANIZATIONAL STRUCTURE: Web is in the process of implementing self-directed work teams in all five of its manufacturing plants. The most advanced in this process is the Framingham plant, where all employees work as members of a self-directed work team. The teams vary in size from 4 to 15 workers, and they are organized around specific work processes (i.e., paper slitting). The teams are responsible for scheduling work order sequences, and coordinating job responsibilities and special work hours. The teams are led by a coordinator selected by management from the production ranks. In the future, Web plans for new coordinators to be selected by the teams. EMPLOYMENT SECURITY: Web has not had a layoff in over 15 years. The only layoffs at Web came at the very initial stages in the company's development when most of the work was performed for a single account. Web has no stated policy regarding employment security, but the company feels that its relationship between its employees is much deeper than what can be stated in a contract. While company officials note it is possible to be fired, they point out that they are very reluctant to fire anyone after they have been brought into the Web community. Consequently, Web works closely with troubled employees to prevent possible employment severances. SUPPORTIVE WORK ENVIRONMENT: PRODUCT/SERVICE QUALITY: Web is active in benchmarking efforts, and Web employees regularly visit high performance work sites to discover new ways to improve operations. Front-line employees also play a prominent role in Web presentations to other companies. Web considers certain companies as learning partners (i.e., Phelps County Bank, Reflexite, Stone Construction Equipment Company, United Electric Controls) with which they regularly share new ideas and information. In order to create a customer service culture, the company strives to have every employee meet with a customer at least once a year at the customer's plant or place of business. COMPENSATION LINKED TO PERFORMANCE: Web employees own 30 percent of the company through the Employee Stock Ownership Program. More than 90 percent of Web employees own stock in the company. A February, 1994 agreement provides for Web employees to buy all of the company's stock over the next ten years and become a 100 percent employee owned company. Web also has a profit-sharing bonus system based on the monthly profit and loss statements shared with employees. The returns are calculated at the monthly meetings when employees and managers go over the profit and loss statements. Profit sharing bonuses are paid out every month. Bonus checks can range from as little as $10 in bad months to $150 in good months. WORKER-MANAGEMENT RELATIONS: STRATEGIC INTEGRATION OF BUSINESS: Web officials point to employee ownership as the strategic fulcrum for their workplace practices. Web employees strive for continuous improvement because they own a stake in the company and benefit financially from company success. REMARKS: ACCOMPLISHMENTS/AWARDS: Web was named ESOP company of the year in 1993 by the ESOP Association. SERVICE PROVIDERS: A number of books, discussed in the read-aloud reading program, have influenced Web's development as a high-performance company. Some of the more influential books have been Organization Culture and Leadership by Edgar H. Schein, Leadership is an Art by Max dePree, The Great Game of Business by Jack Stack, Flight of the Buffalo by James Balasco and Ralph Stayer, and The Fifth Discipline by Peter Senge. GOAL/QPC based in Methuen, Massachusetts is recognized by Web as an important service provider in developing quality training programs. Web also points to the National Center for Employee Ownership (headquartered in Oakland) and the ESOP Association (headquartered in Washington, D.C.) as major sources of information and assistance. REFERENCES: Brokaw, Leslie. 1991. "The Enlightened Employee Handbook." Inc., October 1991, 12-14. Brokaw, Leslie. 1991. "Books that Transform Companies." Inc. July 1991, 17-23. Marsh, Robert W. 1993. "Employee Input Drives Converter's Improvement." Paper Film & Foil Converter, Feb. 1993, 8-9. ------------------------------------------------------------------- COMPANY: Weyerhaeuser Company New Bern Pulp Mill CORPORATE ADDRESS: Weyerhaeuser Company Tacoma, Washington 98477 PLANT/BRANCH ADDRESS: P.O. Box 1391 New Bern, North Carolina 28560 SIZE (employees): 550 UNION(S): United Paperworkers International Union (UPIU) INDUSTRY: Pulp SIC CODE: 2421 NEAREST METRO AREA/MILES: Wilmington, NC (90 miles) Raleigh, NC (110 miles ) CONGRESSIONAL DISTRICT: NC-01 SECTOR: P OWNERSHIP: Public NYSE - WY CONTACTS: Carl Tyer Organization Development Manager Weyerhaeuser Company P.O. Box 1391 New Bern, NC 28560 (919) 633-7607 Joel Horne President Local 1167 United Paperworkers International Union P.O Box 12352 New Bern, NC 28561 (919) 638-6667 DATE: 09/06/94 COMPANY DESCRIPTION: Weyerhaeuser Company is the world's largest private owner of softwood timber, and primarily produces wood products, and pulp and paper products and services. In 1993, Weyerhaeuser had sales of approximately $8.7 billion and employed 38,669 workers. The New Bern Pulp Mill produces bleached kraft pulp used mostly in disposable paper products such as disposable diapers, industrial absorbent towels, and filters. The plant produces approximately 269,000 tons per year. The New Bern plant employees 550 employees, 400 of which are in the collective bargaining unit. TRAINING AND CONTINUOUS LEARNING: Training for non-salaried operators is primarily on-the-job. The plant has a qualification system tied into the ISO standards, with job requirements based on classification. Operators acquire training and new skills on-the-job, and through manuals and provided written materials. Progression in the qualification system is determined by a group composed of a qualified senior operator and two supervisors. The plant's 110 maintenance employees participate in a multi- craft program in conjunction with the North Carolina Department of Labor, through which they can achieve journeyman status in two primary crafts. Managers at the plant receive broad external and internal-based training. EMPLOYEE PARTICIPATION: Each department at the New Bern Pulp Mill makes use of involvement teams on a project-by-5) housekeeping (based on a 1 to 5 scale rating of a committee of four inspectors, composed of a department head, a supervisor, and two hourly employees, who rate a randomly chosen department every week). The overall mill rating for the quarter is converted to a percentage, and that percentage is multiplied by each persons W-2 earnings for the quarter, which results in the quarterly bonus. In 1993, variable pay through the bonus plan amounted to approximately 5 percent of annual salary. WORKER-MANAGEMENT RELATIONS: Weyerhaeuser's recognition of the union as a valuable partner is regularly expressed by top corporate executives. The New Bern Pulp Mill is recognized both within Weyerhaeuser, and externally, for its collaborative labor management relationships which have developed since a seven month strike in 1981. Since that time, an atmosphere of trust has developed between management and union officials, and formal grievances have declined from 49 in 1985 to only 20 in 1993. Both the president and vice-president of the Paperworkers' Local 1167, which represents New Bern Weyerhaeuser employees, sit in on all quarterly and semi-annual business reviews so that they have the same data as managers. A number of joint labor-management committees exist throughout the plant, including committees on safety, wellness, and planning for the 25 year celebration of the mill. In 1992, a five year labor contract was signed between the mill and the union as the result of a labor negotiation that lasted only one day. The local union president at the New Bern Mill points to a joint union and management philosophy where "if both parties have trust, honesty, and integrity, everything else falls in place." STRATEGIC INTEGRATION OF BUSINESS: REMARKS: ACCOMPLISHMENTS/AWARDS: Average finished tons per day produced by the mill have grown from 699 in 1984, to 737 at the end of 1992, and 808 today. Each year the mill has out performed the goals set forth in its business plan. SERVICE PROVIDERS: Approximately 25 percent of the salaried and supervised work force at the New Bern Pulp Mill have received leadership training from the Center for Creative Leadership in Greensboro, North Carolina. REFERENCES: Tyer, Carl. 1993. "Labor-Management Collaboration at New Bern Pulp Mill, Weyerhaeuser." At Work, November/December 1993, 7-9. ------------------------------------------------------------------- COMPANY: White Storage and Retrieval Systems CORPORATE ADDRESS: 30 Boright Avenue Kenilworth, New Jersey 07033 PLANT/BRANCH ADDRESS: SIZE (employees): 475 UNION(S): International Brotherhood of Teamsters Retail, Wholesale, and Department Store Union INDUSTRY: manufacturer of automated storage and retrieval systems SIC CODE: 3535 NEAREST METRO AREA/MILES: Newark, N.J. (10 miles) New York, N.Y. (35 miles) CONGRESSIONAL DISTRICT: NJ-07 SECTOR: private OWNERSHIP: family-owned CONTACTS: Donald Weiss Chief Executive Officer White Storage and Retrieval Systems 30 Boright Avenue Kenilworth, New Jersey 07033 (908) 272-6700 Michael Roccia International Brotherhood of Teamsters Local 262 137 Evergreen Place East Orange, New Jersey 07018 (201) 678-3434 DATE: 10/04/94 COMPANY DESCRIPTION: White Storage and Retrieval Systems is a family-owned manufacturer of automated retrieval systems. In 1946, the company was founded in a loft in Newark, N.J. by Mort and Hugo Weiss and Stephan Speckhart. White employs 475 people and had over $50,000,000 in sales in 1993. More than 80 percent of Fortune 500 companies are White customers, along with smaller businesses and institutions. White has the industry's widest range of automated retrieval systems, with products such as automated filing systems, storage conveyors, and robotics, and has 200 dealers nationwide. TRAINING AND CONTINUOUS LEARNING: After CEO, Donald Weiss, attended a seminar on quality in August of 1988, he developed an internal Pride in Quality program to promote excellence in every aspect of the company. The cornerstone of this program is basic English education classes for White employees. With two-thirds of the workforce non- English speaking, Weiss realized that everyone in the company needed to have a firm grasp of the English language in order to implement the changes needed to increase quality. Twice a week employees volunteered their time for the classes, and White paid fa profit-sharing plan for salaried employees based on company profits. The plan currently has over $3 million in assets. WORKER-MANAGEMENT RELATIONS: White employees are represented by the International Brotherhood of Teamsters and Retail, Wholesale, and Department Store Union. Relations are cooperative, but there is no extensive interaction between the company and the unions. Contracts are typically negotiated every three years, and contract negotiations to date have been cooperative and resolved in quick fashion. STRATEGIC INTEGRATION OF BUSINESS: REMARKS: Turnover at White has decreased from over 25 person to under 10 person in 1993. The company's CEO gives three main reasons for the low turnover rate: investments in people through training, the company's stable marketplace, and high rates of pay for White employees. Also, White promotes from the inside. For example, 10 of 11 manufacturing foremen began as union employees on the front line. ACCOMPLISHMENTS/AWARDS: In 1989, White Storage and Retrieval Systems was voted one of the ten best companies to work for in New Jersey by the New Jersey Business Magazine. In 1992, White was recognized by Inc. magazine as one of the best small companies to work for in America. White's CEO, Donald Weiss was selected as the New Jersey manufacturing entrepreneur of the year in 1993 by the American Institute of Entrepreneurs, and was awarded the 1993 Botwinick Prize for business ethics from the Columbia University Graduate School of Business. SERVICE PROVIDERS: REFERENCES: Inc. 1992. "The Best Small Companies To Work For." November 1992, pp. 111-112. Gill, David. 1989. "The Ten Best Companies." Business Journal of New Jersey, June 1989. Reynolds, Bill. "Firm Offers Workers English Class." The Daily Journal, 3 December 1988, p.5. Cappon, Patricia. "Literacy Proves Profitable." The Star-Ledger, 25 November 1988. Johnston, Oswald. "Need for Skilled Workers Spurs Training Effort." Los Angeles Times, 17 October 1988, 1,12. ------------------------------------------------------------------- COMPANY: The Will-Burt Company CORPORATE ADDRESS: 169 South Main Street P. O. Box 900 Orrville, Ohio 44667-0900 PLANT/BRANCH ADDRESS: SIZE (employees): 330 UNION(S): non-union INDUSTRY: manufacturer of fabrication and machine parts and telescoping masts SIC CODE: 3499, 3433, 3613 NEAREST METRO AREA/MILES: Akron, Ohio (20 miles) Cleveland, Ohio (50 miles) CONGRESSIONAL DISTRICT: OH-16 SECTOR: Private OWNERSHIP: ESOP (98.7 percent) CONTACTS: Harry Featherstone Chief Executive Officer & Chairman The Will-Burt Company 169 South Main Street P. O. Box 900 Orrville, Ohio 44667-0900 (216)682-7015 DATE: 09/21/94 COMPANY DESCRIPTION: The Will-Burt Company is an equipment manufacturer, specializing in environmental, auto, and heating products, as well as telescoping masts. The company was founded in 1894 and was family-owned until 1985. At that time, a 98.7 percent employee stock ownership program was initiated by Will-Burt CEO, Harry Featherstone to prevent a forced liquidation of the company. Will-Burt is now very successful with $23,800,000 in sales reported in 1993, and major customers such as, Volvo-GM, the U.S. military, and Caterpillar. TRAINING AND CONTINUOUS LEARNING: Will-Burt CEO, Harry Featherstone, is adamant about the importance of both education and training for employees, and the company is recognized for two very successful training/education programs. In 1986, Will-Burt began an employee education program, after Featherstone realized that many of the employees could not read blueprints properly. This skill is imperative for the correct assembly of products, which in turn leads to higher product quality. Will-Burt's education program has several different levels. Starting with beginning blueprint reading, employees progress through advanced blueprint reading, geometry, and statistics. In 1988, the State of Ohio offered to pay for books and a teacher from the University of Akron, while Will-Burt maintained the classroom. Today, classes are held for 1-2 hours a week on company time, and employees finish the program in 1-2 years. This program is mandatory for production workers, and by 1989, the University of Akron determined the company 99 percent math literate. In order to promote cross-training among white-collar and production employees, Will-Burt established a "mini-MBA' program. This elective program is similar to the first year of a business degree, with classes such as, production, quality control, scheduling, business organization, promotion, and finance. Because Will-Burt is an ESOP company, continuing education is thought to lead the employee-owners to a better understanding of how the company should direct its efforts. The "mini-MBA" degree requires over 78 hours of course work over two years, and employees attend classes on their own time. Classes are taught by a professor at the University of Akron and a professional from another company. Coordinators of the program have found that the teacher-professional combination works well, because the professor expresses the theoretical ideas on the textbook facts, and the professional offers a real-world view on the subject from personal experience. Over 200 workers at Will- Burt have completed this successful project, and this contributes to the fact that Will-Burt is one of the "highest educated" companies of its kind in the United States. To promote overall quality throughout the company, Will-Burt created the "Star Program" in 1990. The five points of the "star" are safety, quality, product control, materials, and personnel. Employees are divided into teams, and each person on the team receives training on each point of the star on a rotating basis. The employee relays what he has learned to the rest of the team, so employees at Will-Burt are constantly receiving helpful tips in every area of the company. Will-Burt spends 1 percent of the payroll on education and training, and receives $20 for every $1 spent. Harry Featherstone, CEO, is so enthusiastic about his company's results that he guarantees at least a $10 return on every $1 spent by companies on educating and training employees. EMPLOYEE PARTICIPATION: Employee teams at Will-Burt are the vehicles for employee participation. There are factory-production teams, safety teams, manufacturing review teams, and the "Star Program" teams. Problems and suggestions discussed in team meetings are brought to the company's attention by the appointed team leader. Everything in the production process is done in groups; for example, groups handle scheduling, tooling, safety, and quality control. Also, teams can hire and recommend discipline for employees. Employees' ideas are regularly used in designing new products or processes. For example, a new product for fire departments was developed by two employees and will be announced as a product in 1995. Also, there is a team working on building a new factory. ACCESS TO INFORMATION: Since Will-Burt is an employee-owned company, workers are constantly kept up to date with important issues within the company through several methods. Once a month, the CEO meets with each section of the company and answers questions and addresses concerns of the employees. Also, once every two weeks, the president has 20-25 randomly selected employees to lunch for a similar open discussion. The teams meet every two weeks, where the team leader announces all of the financial reports and fields any questions and concerns. ORGANIZATIONAL STRUCTURE: Will-Burt has a relatively flat organizational structure. After the reorganization of the employees into work teams, Will-Burt reduced its job classifications from 85 to 4: general, semi- skilled, skilled, and craftsman. The employees developed a Just-In-Time inventory system, which has resulted in the elimination of inventory, halved the work in process, and doubled output. Inventory now turns over twice a month. Customers in a jam receive next-day service from Will- Burt's "quick turn system". The second and third shifts go over the day's orders, price them, and make them in one day. EMPLOYMENT SECURITY: Will-Burt was forced to lay off workers in both 1990 and 1994, but within 2-3 weeks of each lay-off, 99 percent of the workers were hired back. The remaining 1 percent received help finding other employment in the area. Growth is another goal at Will-Burt, and the company has an objective of adding 50 jobs in the next two years. SUPPORTIVE WORK ENVIRONMENT: Will-Burt has dramatically cut its workers' compensation costs through a follow-up program that monitors the employees from the time they become sick until they are back at work. The company also offers rehabilitating employees jobs, so as to get their bodies attuned again to the work atmosphere. In 1987, a policy was introduced, where injured or sick employees receive pay for the first six months that they are out of work. Safety is important to the company, and employees are constantly studying all aspects of safety through the "Star Program" as mentioned before. The company offers two extra holidays for employees with perfect attendance, which has reduced daily absenteeism from 8 percent to 2 percent. A 401(k) retirement plan is also offered to employees. Employees are granted flex-time under the discretion of their team. PRODUCT/SERVICE QUALITY: Quality is one of the major goals at the Will-Burt Company. All of the teams measure their progress weekly with charts on areas such as indirect labor hours, labor efficiency, quality, scrap, and re-work. Statistical Process Control (SPC) is used for performance tracking. Will-Burt also has internal quality consultants that meet with the teams on a regular basis. Customers report pleasure with Will-Burt's products and service, through regular customer surveys which the company uses to monitor quality and customer satisfaction. A materials manager at Parker-Hannifin reports that the parts from Will-Burt are "flawless", and he no longer inspects what he receives from the company. To continue striving for perfect quality, Will-Burt regularly benchmarks with other companies. Once a year, Motorola and Will- Burt exchange factory workers for 3 or 4 days. Each company shares its procedures and learns from the other. COMPENSATION LINKED TO PERFORMANCE: In 1985, CEO, Harry Featherstone, accomplished a leveraged buyout from the owner-family and placed the company into an employee stock-ownership plan (ESOP). Will-Burt had been close to liquidation, and the employees had to borrow $3.5 million to buy the stock. The debt was paid off in December of 1993 and the employees now own 98.7 percent of the company's stock. In 1987, the floor workers were put on a salary plan, which was formulated to effectively increase wages by up to $3.50 an hour. The company is in the process of developing a pay-for-knowledge compensation system that is designed to reinforce both the team- oriented work organization and the company's belief in continuous training. Employees will become eligible for raises as they complete training in each of the areas of responsibility within their teams. The company expects the program to be underway within one year. WORKER-MANAGEMENT RELATIONS: N/A STRATEGIC INTEGRATION OF BUSINESS: REMARKS: ACCOMPLISHMENTS/AWARDS: Will-Burt boasted a 98 percent on-time delivery rate in 1993. Quality is on the six sigma level with 3.4 rejections out of every million; in 1995, Will-Burt aims to have only one reject out of every million. Time reworking parts has dropped from 2,000 hours a month to 400 hours a month. The Will-Burt Company was voted a Blue Chip Company in 1992. SERVICE PROVIDERS: Teachers in the Will-Burt's education program are faculty-members from the University of Akron. REFERENCES: Biank-Fasig, Lisa. "Will-Burt Achieves Success Through Program." The Beacon Journal, 24 July 1994, 4. Finegan, Jay. "The Education of Harry Featherstone." Inc., July 1990. "Memorandum of The Will-Burt Company," 19 July 1993. Stoddard, Brooke. "The Will-Burt Company: The Power of Learning", 1991. ------------------------------------------------------------------- COMPANY: YSI, Inc. CORPORATE ADDRESS: P.O. Box 279 Yellow Springs, Ohio 45387 PLANT/BRANCH ADDRESS: SIZE (employees): 275 UNION(S): non-union INDUSTRY: Electronic analytical instrumentation SIC CODE: 3812 NEAREST METRO AREA/MILES: Dayton, Ohio (25 miles) CONGRESSIONAL DISTRICT: OH-07 SECTOR: Private OWNERSHIP: Privately held. Over 60 percent employee-owned through an Employee Stock Ownership Program (45 percent) and other employee stock plans (15 percent). CEO/PRESIDENT: Malte von Matthiessen Chairman, CEO YSI, Inc. P.O. Box 279 Yellow Springs, OH 45387 CONTACTS: Nan Harshaw Vice-President of Human Resources YSI, Inc. P.O. Box 279 Yellow Springs, OH 45387 (513) 767-7241 DATE: 10/31/94 COMPANY DESCRIPTION: YSI, Inc, was founded in 1948 as The Yellow Springs Instrument Company, Inc. at Antioch College, and was incorporated in 1949. In the 1980s, the sole remaining founder (originally, there were three) determined that he wanted to ensure the continuance of the company after he left and established an Employee Stock Ownership Program for that purpose. The company has a manufacturing facility in Marion, Massachusetts (15-20 employees); a distribution center in the United Kingdom (15 employees); and a three-person sales office in Hong Kong, in addition to its facility in Yellow Springs, Ohio. Company sales are approximately $30 million annually. TRAINING AND CONTINUOUS LEARNING: Employees attend classes to gain and improve team building skills. Other areas are used for combination class and conference rooms. For example, the company's Board Room and a large conference room are used for most in-house training. Additional classes may be held off-site, depending upon circumstances. High levels of training began in 1988, when YSI first began implementing its self-directed work teams. At that time, all employees of YSI (at that time 300) went through two days of team building training in groups of twenty. This training was developed by an outside consultant, and has since been adapted and used by in-house trainers. The company-wide training has enabled YSI employees to converse with a common language and provided employees with a common experience on which to build. Since 1988, YSI has implemented problem solving-decision making training based on the Kepner-Tregoe training programs. A YSI employee attended Kepner-Tregoe train-the-trainer course and adopted the training for YSI's use. Nearly two-thirds of YSI employees have been through the training. Additionally, there has been in-house development of additional interpersonal training, as well as modified outside training in other areas. The outside training has been changed to fit YSI's unique culture. The skills learned in the past through this training has been built into the team culture through continual use and now is more informal through ongoing use, rather than formal. Employees also receive technical, job skill training. Employees are cross-trained, not only within their teams, but also across functions. This enables employees to go across teams when requested, assuming the vacated job is covered during the employee's absence. The teams and leader determine cross- training needs and evaluate the team members being cross-trained. The evaluation is enhanced by a process called the Transferring Learning Process. On-the-job training is provided by a team member and, after the training is completed, the trainer and trainee meet to provide formal feedback to each other. Technical training has included on-site courses in soldering and basic electronics. Most training, though, has been on an informal, on- the-job basis. YSI makes use of a wide range of training capabilities and resources. Employees of YSI's Information Services and Communications areas have provided training in basic computer skills. These courses are provided in-house and are developed by the ISS employees. These courses are almost invariably fully booked, even though they are strictly voluntary. There is also a PC Resource center that operates on an as-needed basis. The Center includes computer-based training software as well as more formal, hands-on training. Employees at YSI have had their basic skills assessed and basic skills training has been offered at a local community college. Overall, YSI employees receive approximately 50 hours of formal and informal training yearly. They also have access to a tuition reimbursement program that currently provides 100 percent reimbursement for any class (including non-job related). Overall, the YSI training programs focus on making the employee employable. EMPLOYEE PARTICIPATION: In 1989, growing out of functional groups and work centers, YSI established self-directed work teams. Each team has five to ten members and the coordinator role on the team (called the "Point Person") is shared on a rotating basis. Teams decide when and where to meet and are authorized to invite employees outside the team to meetings if their expertise is needed. Teams may change work processes if they receive the signoff from an engineer. Engineers may help the team in identifying and solving problems related to process. The Point Person's role is to act as liaison with other teams and with administration functions, facilitate meetings, and follow-up on ideas, solutions and requests. Teams are also empowered to hire new members, after an initial screening of job candidates by the Human Resources Department. Guidelines for hiring and firing are provided to the teams by the HR Department. Teams also carry out performance reviews of team members, with the help of specifications established by the HR Department. Managers perform the pay review and base pay increases partly on the information contained in the performance reviews. Teams are responsible for meeting with customers to gather specifications for products and to keep in touch with the customer during production to ensure that the customer is satisfied. YSI's sales catalog lists the name of teams and their members, including department and telephone numbers, allowing customers to contact the teams directly. Teams are also responsible for a number of budget items. Teams are given order/expense budgets and authorized to buy what they need within these budgets. The monthly budgetary meetings are used to determine whether or not a team is on-budget. Teams also help set production standards, working with the engineers to set these standards. Each week, the operations manager holds a meeting to go over scheduling and other relevant matters. Each team sends a representative to this meeting, who then reports back to the team. YSI also uses cross-functional design teams to design and produce new products. These teams consist of engineers, manufacturing employees, marketing and sales representatives, and other employees from other functions on an as-needed basis. The manufacturing employees provide input into the manufacturability. There are also ad hoc task forces which are formed to solve specific problems and issues. Anyone can be involved on these teams. The formation process tends to be informal, but process changes still need an engineer's signoff. In 1994, two employee-owners were elected to serve on YSI's Board of Directors. There are ten positions on the Board (of which nine are currently filled). In addition, voting rights on all issues that require shareholder approval are passed through to the employee owners. There is an elected "Owners Participation Committee" that meets monthly. Members of management are encouraged to attend these meetings to facilitate communications up and down in the organization. This Committee also plans ESOP activities. The roles of this Committee are slowly being merged with those of the ESOP Administrative Committee, which was established to address the technical aspects of the ESOP. This Committee tracks legislation and public policy which might affect the ESOP and reports back to the employee-owners. ACCESS TO INFORMATION: YSI shares financial information during quarterly business meetings held at the Yellow Springs headquarters. The purpose of the meetings is to discuss financial information and the state of the business, and to set goals for the coming year. Income and financial statements are distributed at these meetings and discussed. In addition, a guest speaker is usually invited to speak about a general interest global issue. The meetings are videotaped and distributed throughout YSI for employees who work in other plants or are otherwise unable to attend. The president of the company holds a monthly "birthday" lunch for those employees having a birthday. At these meetings, any employee can bring up any issue for discussion. There are also monthly brown bag lunches which act as all-company meetings. Each meeting has a topic to focus on, such as retirement planning, the 401(k) plan, etc. In 1992, a bulletin board was established for ESOP information in the cafeteria. Postings include such things as: stock value; how to read the ESOP account statement; stock holdings; recent dividends and distributions; questions and answers about the ESOP; recent quarterly and annual reports; the names of the ESOP Committee; and names and biographies of Board members. There are two newsletters printed, the Owner's Update and the Good GNU's. YSI publishes financial news of interest (statements, etc) in these newsletters. Everyone at the company has access to a computer terminal and information is distributed through an internal local area network, using the e-mail system. In addition, YSI uses its voice mail system to disseminate information to employees. ORGANIZATIONAL STRUCTURE: The company is in the process of converting the three self- directed manufacturing teams to Business Centers. These Centers will handle all customer orders from receipt of order to shipment. These Centers are an outgrowth of the successful work teams. Coupled with YSI's vendor certification process, the Business Centers are undertaking all in-coming supply inspection, as a result of the improved relationships between YSI and its suppliers that have arisen. The close relationship has resulted in inspection of in-coming supplies only when a quality problem with the supplies is identified. Over time, YSI has moved away from a traditional hierarchical organization structure to a much flatter structure. There are currently only 1 or 2 organizational levels from employees to the CEO. There are no formal supervisors or foreman. Rather, there are team leaders who perform many of the functions of the supervisor. The flatter structure has led to the implementation of a formal "open door" policy. Each Friday morning, from 10: a.m. to 11:00 a.m., members of management are expected to make themselves available to any employee who can discuss any subject. YSI also has close relationships with its suppliers. The company has implemented a vendor certification process and is presently lowering and limiting the number of suppliers it does business with. This has allowed YSI to become more focused in its relationships with the remaining vendors. As a result of the close relationship between YSI and some of its vendors, some of the product lines at YSI have adopted a just-in- time production system. In some areas, the vendors themselves take care of YSI's inventory, check inventory levels for re-order points, and deliver straight to the point of production. YSI is in the process of implementing an Electronic Data Interchange ordering system with a number of its vendors. YSI has also established an EDI ordering system with some of its customers. EMPLOYMENT SECURITY: YSI has long followed a policy of no-layoffs. In late 1990, when faced with a drop in orders, YSI cut hours to 36 hours per week and used the additional time available to train its employees. Classes were offered in math, reading and composition. Staff from a local community college assessed employees educational needs. Of the 204 employees assessed, 116 received training in information gathering, 60 received training in math, and eight others took classes in basic English and math skills. One outcome of this attention to training was an increase in the performance of the self-directed work teams. SUPPORTIVE WORK ENVIRONMENT: YSI provides its employees with a Personal Computer purchasing option which allows employees to purchase PC's through payroll deductions. YSI has flextime scheduling in some of its areas, although the parts of the company dealing with customers remain on an 8 to 5 work schedule. YSI provides health care with family benefits to its employee- owners and provides paid pregnancy leave through a disability program. There is an Employee Assistance Program that provides for up to five paid visits to a counselor on a confidential basis. There are also a wide range of special, wellness programs that take place on a periodic basis (such as blood pressure screening). YSI has an arrangement with the local school system to provide the opportunity for students to "job shadow" a YSI employee. Because of the type of business it is in, the YSI workplace is relatively safe, as there are minimal hazardous or pathogenic materials used. There is a safety coordinator at YSI and a part- time occupational nurse who is brought in-house. YSI is establishing regular safety training as part of an effort to make the workplace even more safe. PRODUCT/SERVICE QUALITY: YSI recently was certified to be in compliance with ISO 9001 standards. YSI provided training in ISO 9000 to support this effort. An ISO 9000 Steering Committee was established to guide the company through the process, and a series of company-wide meetings were held. One key to obtaining the ISO 9001 certification was a program of ongoing communication established at YSI. These communications were used to convey the importance of ISO 9000 to the employees and resulted in higher participation in obtaining certification. Building a quality product is an ongoing effort that receives full support from managers and employees. The communications program that was used in the certification process is also used as a means of obtaining support for continuous improvement and quality. As part of its ongoing quality process, employees are now being provided with statistical process control training (beginning in 1992) On an ad hoc basis, YSI surveys its customers and is working to make this ad hoc relationship more continuous and ongoing. YSI uses customer feedback that it collects during surveys, warranty and product phone calls, mail, and reports from sales representatives as a source for improvement. All customer comments and feedback is tracked by computer and a variety of information can be accessed through this tracking system. The information collected is fed back to the work teams and anything that needs corrective action must be handled and a solution implemented before the matter is closed. COMPENSATION LINKED TO PERFORMANCE: There is an Employee Stock Ownership Plan that has transferred 45 percent of YSI's stock to the employee-owners. In addition, employees own an additional 15 percent of YSI stock outside of the ESOP. In addition to the ESOP, there is also a profit sharing plan. Each year, 15 percent of pre-tax profit is accrued and paid out. In 1993, YSI paid out over $1.1 million of pre-tax profit in cash to the profit sharing plan, the ESOP and a 401(k) plan. Employees are given the option of receiving stock dividends in either cash or may use the money to purchase additional YSI stock. Although there is no formal gainsharing program, there is a contingent reward process which compensates employees for lowering the payouts under the product warranties. In 1993, YSI determined that warranty costs were too high, so the warranty budget was halved and a bonus payout was established if warranty costs came in under the new budget. Since that time, cash payouts have been around $55 per employee per quarter. WORKER-MANAGEMENT RELATIONS: Feedback regarding the workplace is solicited from employees and there is an annual formal survey which is used to identify areas to improve within the workplace. The "Owner's Handbook" acts as an employee contract. STRATEGIC INTEGRATION OF BUSINESS: The move to Business Centers has moved strategic planning to this level. As such, the employee-owners have substantial input into the planning and implementation of YSI's strategic business plans. Overall budgeting is also done at the Business Center level and, as noted, the employee-owners have representation on the Board of Directors. All the strategic plans have input from the human resources functions. REMARKS: ACCOMPLISHMENTS/AWARDS: SERVICE PROVIDERS: Much of the training has been based on the Kepner-Tregoe problem solving-decision making model and training. A YSI employee was sent to Kepner-Tregoe train-the-trainer training and adopted what was learned for the YSI workplace. REFERENCES: Young, Karen, "YSI, Inc.: From Work Centers to Business Centers," Theory O: Creating an Ownership Style of Management. National Center for Employee Ownership, Oakland, 1993, pages 95- 98. "YSI Inc. is Named ESOP Company of the Year," Owners at Work, Summer 1994, page 9. .