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NATIONAL WORKFORCE ASSISTANCE COLLABORATIVE
Focus Groups: Summary of Findings
As part of the data collection leading to the development of a
strategic plan, Collaborative staff conducted eighteen focus groups
in February and March. Focus groups were conducted in: Atlanta;
Baltimore; Chicago; Cleveland; Dallas; Detroit; Los Angeles; New
Brunswick, NJ; Pittsburgh; and Washington, D.C. Separate focus
groups were conducted with small and mid-sized businesses, with
union and non-union employees, and with service providers. A list
of the dates and participants in each focus group is provided in
Attachment 1. Background information on the business and service
provider focus group participants is provided in Attachment 2. The
results and impressions from these focus groups are summarized
below.
ONE OF THE PREMISES BEHIND THE COLLABORATIVE IS THAT REMAINING
COMPETITIVE IN TODAY'S ECONOMY REQUIRES THAT COMPANIES CHANGE. IS
THIS PREMISE TRUE? IS CHANGE REQUIRED TO STAY COMPETITIVE? WHAT
TYPES OF CHANGE?
Everyone we talked to agreed that change is a fact of life
today for small and mid-sized businesses. As one business owner put
it, "business is entirely different today." There was general
consensus across our focus groups, that companies have to change if
they wanted to stay in business. One business owner summarized that
companies have to "work smarter, cheaper, and harder."
The list of changes necessary for businesses to stay
competitive cited by business leaders, employees, and service
providers was relatively consistent across the focus groups. The
most frequently cited changes included:
* Restructuring/downsizing. A number of the firms represented
in our focus groups had been involved in buy-outs, mergers,
and/or reductions in force. We heard few positive stories
from employees about the results of this type of
restructuring/downsizing.
* Technology. Introduction of new technologies (e.g., external
and internal electronic data interchanges, numerically
controlled machine tools, etc.) is dramatically changing the
way business is done by the participants in our focus groups.
* Cross training. Flexibility is seen as a critical success
factor for today's small and mid-sized businesses. One of
the best ways to obtain flexibility is to develop a work
force with flexible skills through cross training. Many of
the companies represented in our focus groups were cross
training employees.
* Employee involvement. The majority of the business leaders
and employees in our focus groups cited increased employee
involvement in decision making as an important change in
their company. Several saw employee involvement as part of
a broader change, namely the need to reduce the adversarial
relations between labor and management in both union and
non-union firms. Open communication is a critical part of
effective employee involvement. As one business owner said,
we "used to operate on a need to know basis; that has to
change." For many of the employee focus groups, self-directed
work teams epitomized the changes surrounding employee
involvement.
* Quality. Efforts to improve quality were cited as another
important change. Customer focus was cited as one key to
quality. One business owner felt that, for his business,
"asking the customer is revolutionary...we don't do that
well." Process improvements are another key element in
quality. Another business owner stated, you "cannot
increase your price, so profits have to come in reducing
your costs and overhead associated with making the product"
(i.e., by reducing the non-value added time in the
manufacturing process). The emphasis being put on ISO 9000
certification was cited across all the focus groups as a
third element in the quality change effort.
* Employee skill needs. Upon thinking through all of the
changes being made in her company, one business leader cited
building employees' skills as the biggest need in her firm.
Every change creates new skill requirements for employees.
Several other business people also commented on the need to
build employees' skills, with many lamenting how ill-prepared
students coming out of school are for the world of work.
After listening to the discussion of change in the companies
represented in his focus group, one employee participant concluded
that the tougher economy is creating similar demands on all
companies: technology is speeding everything up; quality is being
pushed down to the production line, and taken away from separate
inspectors; employees are being given access to on-line information
and data needed for setting up their jobs; and employees are being
cross trained to enhance staff flexibility.
WHAT HAS TRIGGERED SIGNIFICANT CHANGES IN SMALL AND MID-SIZED
COMPANIES? WHAT MESSAGES/METHODS WOULD CONVINCE OTHER COMPANIES THEY
NEEDED TO MAKE CHANGES?
Everyone we talked to agreed: change is being forced on
companies. More to the point, change only occurs if there is a
crisis, if the company's survival or bottom-line is threatened. As
one employee put it, "crisis overcomes resistance to change."
Three sources of crisis were cited consistently across the
focus groups:
* Competition. The small and mid-sized businesses in our
focus groups are facing what for them is an unprecedented
level of competition.
* Customer demands for quality. Customers are much more
sophisticated today. They expect and demand more from those
with whom they do business. Suppliers to large companies
(e.g., defense contractors, auto parts suppliers) are
particularly vulnerable to increased demands for quality.
They are typically required to meet quality specifications to
remain suppliers. Many are told to reduce costs by X percent
or the company will find another vendor. (On the positive
side, as part of meeting such client demands, some small and
mid-sized businesses have been able to work with the client
firms to re-engineer products and/or achieve economies of
scale in purchasing.)
* Government mandates. The final source of change cited across
the focus groups was government mandates. OSHA and
environmental mandates were seen as especially onerous by most
small and mid-sized business owners.
Although everyone we talked to may agree that businesses have
to change to remain competitive, the participants, particularly the
service providers, realize that the vast majority of companies have
not made the significant changes needed to remain competitive.
Participants had good and bad news about getting the message out to
these companies. Several believe that no message will force change
-- the individual business leaders have to see the need for change
in their companies. However, there was a common belief that
businesses learn from other businesses. Therefore, one of the best
ways to reach businesses is to form consortia to share examples of
success (without burdening the successful companies) and information
on available technical assistance. There was agreement that in
order to generate additional demand, these success stories should
demonstrate an impact on companies' bottom lines. Ultimately, such
consortia may also provide a mechanism for sharing resources and
costs.
WHAT FACTORS SUPPORT OR FACILITATE CHANGE EFFORTS IN SMALL AND
MID-SIZED BUSINESSES? WHAT FACTORS ARE THE MOST SIGNIFICANT BARRIERS
TO CHANGE?
Several of the employee focus groups provided a dramatic
contrast between companies that had embraced the changes that
characterize high performance workplaces, and companies that were
struggling to fit these changes into an organization grounded in a
more traditional management style. Employees in the former say they
"could never go back to the old way of working," while employees in
the latter listen to the employees from the high performance
workplaces with a mixture of envy and disbelief. The results across
the seventeen focus groups strongly suggest that the difference
between the two types of companies is how they prepare for and
manage the change process. A few business leaders are proactive --
they have a positive vision for their company as a high performance
workplace and they set out on a carefully planned journey to make
that vision a reality. Companies with an action plan in pursuit of
a vision will encounter obstacles and stumble along the way; several
of the companies represented in our focus groups were working
through trouble spots in their change effort. Some business leaders
have a vision, but lack a plan to make that vision a reality.
Several employees expressed frustration that their leaders did not
"walk the talk." Other business leaders operate in a reactive
manner, implementing changes in response to continually emerging
crises with no plan or vision of the cumulative effect of these
changes. Employees from these firms tended to be the ones who
listened in disbelief to stories told by employees from the high
performance companies.
There are a series of issues involved in preparing for and
managing change. How each of these issues is are handled will
determine whether it will support or be a barrier to change.
* What to change. The first step in preparing for and
managing change is to know what to change. Several people
in our focus groups argued that change should be based on a
comprehensive assessment of the company, which is used to
develop an action plan for change. The ideal action plan
should include specific change activities, time lines, and
measures for evaluating progress. The high performance
workplaces in our focus groups used comprehensive assessments
and action plans, the struggling companies used a more
hit-and-miss approach.
The high performance companies used a variety of methods to
develop their change plan. One used a consultant to conduct a
comprehensive assessment, another interviewed consultants and then
did its own assessment. A third used an existing strategic plan as
a basis for change, and a fourth used employee involvement to
identify areas in need of change. Yet another relied on competitive
benchmarks with other plants under the same parent company as a
basis for identifying opportunities for change.
Service providers noted that one challenge to a comprehensive
assessment is that businesses come to them with an immediate problem
they want solved; they seldom come looking for a comprehensive
restructuring effort. However, once that problem is solved, the
company may consider other services that together would approach a
comprehensive change effort. One business owner who has guided
several small-business turnarounds commented that small and mid-
sized businesses often lack the "intellectual capital" needed to
conduct a comprehensive assessment. To paraphrase one service
provider, companies want a result -- service providers should help
them get that result. As another service provider said, "companies
want a problem solved; they do not realize the problem may be
training related." We will consider the delivery system necessary to
support comprehensive and integrated services later in this summary.
* Management Support. For change to succeed, management must
support the change effort. Top management support is
especially important. Top management has to believe in the
change. For many top managers in small and mid-sized
businesses, however, the concepts associated with the changes
required to become a high performance workplace -- total
quality, value-added, self-directed teams, etc. -- are
relatively new. These managers are still trying to figure
out what these concepts mean for their companies. As one
company president noted, he wished there was a "parenting
class" for company presidents. He said that issues like
leadership, direction, accountability, follow-up, and the
ability to bring closure to issues are critical for a
business owner, but these intangibles are never taught in a
classroom.
The culture change required to shift from a traditional
workplace to a high performance workplace is also a barrier to
achieving top management support. It is difficult for many managers
to drop the "us versus them" mentality when thinking of labor and
management, or to modify their short-term performance-based concerns
by recognizing the importance of investing in training. One human
resource manager bemoaned her top management's insistence on
concrete performance measures prior to change, wishing management
would take what another manager called a "leap of faith."
Several service providers commented that without top
management's belief in the ultimate value of training and other
change activities, companies would put off purchasing services they
needed in order to preserve resources. In many companies where
resource issues result in change and restructuring, the increased
need for training and other services that emerges from change and
restructuring may not be addressed due to lingering concern with
costs. Thus service providers noted that the demand for free or
subsidized services remains high. One service provider recommended
leveraging company discretionary funds with federal and state funds
to support change. It is important to note that for small and mid-
sized businesses, finding time to engage in change activities is
often a bigger issue than finding money.
Another critical aspect of management support is the commitment
to see change through and to stay the course despite setbacks.
Focus group participants from high performance workplaces said this
was one of the most difficult lessons -- to keep going despite
setbacks, to learn from mistakes and redouble the change effort.
Discussions in our employee focus groups suggest that several small
and mid-sized businesses are characterized by a high level of
management turnover. This turnover makes it difficult to achieve
the continuity of management commitment needed to ensure successful
change.
Management at all levels must support the change effort.
Several of the focus groups highlighted the importance of first-line
supervisors to any change effort. One of the high performance
companies began its change effort by creating a team of first-line
supervisors. This team's first task was to develop a new job
description for their positions as "team leaders." They then went on
to identify future opportunities for team leaders as the company
made the transition to self-directed work teams. More often,
however, companies leave first-line supervisors "out of loop" when
planning and implementing change; these supervisors then remain as
stumbling blocks in their change efforts.
* Employee buy-in. Employee buy-in is a critical success
factor in creating a high performance workplace. Both
managers and employees said that trust is the foundation of
employee support. In many companies, however, there is a
long history to be overcome in order to achieve the level of
trust necessary for employees to support change. If the
change effort is not well managed, it can further erode
employee trust in management.
Two factors make a significant contribution to securing
employee buy-in to a change effort. The first is employee
involvement in the preparation for and management of the change
effort. All of the high performance workplaces in our focus groups
used labor-management committees to design and oversee the change
process. For example, one start-up company used labor-management
teams to design policies and procedures for job certification,
safety, and scheduling. Self-directed work teams now oversee each
department in this plant. Another company sent cross-functional
labor-management teams on benchmarking trips to other companies to
generate support for change and build a knowledge base for the
company's change effort. One service provider said that the general
rule is to involve as many people as possible in the change effort.
The second factor that contributes to employee buy-in to change
is open and honest communication. One employee said management
should explain the proposed changes to employees, including what
changes are going to be made, why the changes are going to be made,
how the changes will affect the company, and how the changes will
affect the employee personally.
Several participants felt that change was especially difficult
for older workers. An extra effort should be made to involve older
workers in the change effort. Several of the high performance
companies said that their employee selection processes are very
selective. Once change is underway, it is important to ensure that
any new employee will support the change effort.
* Follow through. As noted above, management support is
needed for the duration of the change effort. One of the
ways in which this support is manifest is the level of
follow through on change plans and proposals. Follow
through may apply to any aspect of the change effort. For
example, one employee participant said that his company had
instituted an employee involvement program, but never
scheduled any meetings. Another cited an instance where he
had trained a new shear team for a steel press, but management
failed to make the modifications on the press necessary for
this team to begin work.
Since many of the changes involved in creating a high
performance workplace require new employee skills, employees are
especially sensitive to companies' follow through on training.
Several individuals were particularly vocal about the impact on
plant safety of companies' failure to provide training. Employees
identified several characteristics of effective training programs,
including:
* Training before the change is implemented, and follow up
training once the change is underway.
* Training that is performance-based versus time bound,
i.e., training until the skill is acquired versus for a
limited time period.
* Training that is done in context, preferably in-house,
and ideally with in-house trainers and/or employee mentors.
* Training that is done on company time for which employees
are paid.
* Training that is linked to a planned change effort
Service providers pointed out that the size of a company has an
impact on the cost-effectiveness of training; keeping training
affordable is a challenge when dealing with small and mid-sized
companies. Since small and mid-sized companies have limited
workforce flexibility, it is harder for them to give employees
release time. To meet these challenges, service providers suggested
pooling companies' resources, making better use of technology (e.g.,
individualized instruction, using computerized down links and mobile
learning labs), and developing new models of training.
A final element of follow through that deserves attention is
the alignment of company systems. For example, the performance
evaluation system should support the change effort. If managers are
expected to support employee involvement, then managers' performance
evaluations should include items on responsiveness to employees.
* Equity. For change to succeed, it must be seen as fair and
equitable. Two elements of equity emerged from our focus
groups. First, preparation for change should help everyone
involved determine "what's in it for them?" To illustrate,
change may mean increased profitability for the company,
which means employment security for employees.
Cross-training means flexibility for the company, and, in
high performance companies which use pay-for-knowledge
compensation plans, better pay for skilled workers.
The second element is whether the benefits of increased
productivity are shared across the company. All of the high
performance companies in our focus groups had profit sharing or
bonus plans in which profits were distributed equally across all
members of the company. Companies struggling with change either had
profit sharing or bonus plans that did not deliver (for example, one
company could not agree with the union on a date for determining
profits), did not have any profit sharing or bonus plans, or had
plans that awarded management only. (Employees in one focus group
said their company declared a loss, but awarded the CEO a $57,000
bonus.)
* Supportive culture. The final issue involved in preparing
for and managing change is the creation of a supportive
company culture. Employee participants suggested the test of
a supportive culture is whether employees are treated with
respect and dignity. Are managers willing to help? Do
managers have a real understanding of employees' work rather
than a theoretical understanding? Are employee skill
assessments confidential? Are employees trained so they can
retain their jobs? Some of the worst stories we heard were
of companies in which employees must ask permission to go to
the bathroom (and sometimes cannot get permission) -- a
practice that does not reflect an atmosphere of respect
or dignity.
It is also clear that the changes going on in the workplace have
created significant levels of stress among management and labor,
especially in those companies that have not prepared for and managed
the change effort. Employees are putting in significant overtime
(in one company, up to 20 hours of overtime a week for the last two
years) and are stretched to the edge. As one business owner
acknowledged, "the eight hour work day doesn't exist in business --
period!" A supportive culture recognizes the limits of physical and
mental capacity.
MANY SMALL AND MID-SIZED BUSINESSES SEEK OUT ASSISTANCE TO
SUPPORT THEIR CHANGE EFFORT. WHAT ROLE DO SERVICE PROVIDERS --
VENDORS, CONSULTANTS, COMMUNITY COLLEGES, TRADE ASSOCIATIONS, ETC.
-- PLAY IN SMALL AND MID-SIZED BUSINESSES' CHANGE EFFORTS?
The ideal role of the service provider is to facilitate the
preparation and management of the change process in small and mid-
sized businesses. Based on our focus groups, it is clear that many
service providers perform that role admirably. Business leaders and
service providers had a common vision of what was required of
service providers. These requirements include:
* Clear Expectations. The foundation of a successful
relationship is the establishment of clear expectations
up-front. This is true for both the company and the
service provider.
* Honesty. Honesty is also critical to an effective service
provider/company relationship. Several business leaders
commented that many service providers are not the experts
they claim to be. Some business people use pilot projects to
assess a service provider's skills before engaging the
provider in a full change effort. Several service providers
admitted that while there is a demand for quality services,
not all of the available services are of quality.
Most of the service providers in our focus groups recognize the
value of hard numbers in assessing value, and make every effort to
provide quick results to their clients. A few have gone so far as
to rely on performance contracts, a concrete method for establishing
credibility up front. Further, the majority of service providers we
talked to have extensive mechanisms to ensure their organizational
and staff capacity is up-to-date. Still, there is a recognized need
for a more comprehensive professional development and/or
certification system for service providers.
* Business experience. Many of the service providers commented
on image problems surrounding service providers. For some,
it is a problem with being "government," for others an
academic or a "university type." It is not surprising, then,
that both service providers and business leaders emphasized
the need for service providers to have business experience
to legitimate their services.
* Customized services. Each business owner knows his or her
business is unique. Therefore, business owners want service
providers who can deliver customized programs tailored to
their companies' unique needs. One element of customized
service is the content of the service. Most service
providers have a variety of on-going activities
(e.g., benchmarks, focus groups, on-going dialogues) designed
to determine the business community's needs and establish the
general menu of services appropriate to that community.
Beyond this, quick, on-site assessments are critical to the
development of customized content for a specific client.
For service providers, the ability to adapt off-the-shelf
programs to fit the needs of a specific business is a
essential skill.
A second element in the delivery of customized services is the
process in which the service is delivered. Here, the responsiveness
of the service provider comes to the fore. For example, many small
and mid-sized businesses cannot afford to send employees away to
class. Many businesses also operate around the clock. Can the
service provider deliver services on-site at any time of the day?
* Commitment. The final requirement for a successful service
provider/company relationship is the full commitment of the
service provider to the company. Several business people
stated that they expected a service provider to "become a
part of the company." They do not want a one-shot service;
they want a service provider who will work with the company
for the long haul, for the duration of the change effort.
The company expects to grow in the change effort, and it wants
a service provider who will not only help build the company's
capacity, but also grow with the company through the change
effort.
The service providers we talked to translate the "commitment"
requirement into a recognition that the relationship is the key:
how a service provider works with the company is what is important.
One service provider talked about "working the relationship":
keeping her ears open when on site, constantly inquiring and
providing feedback, and addressing any problems as they emerged.
Both business leaders and service providers also recognized that
personality plays a significant part in creating and sustaining a
successful service provider/company relationship.
While many service providers are doing an admirable job
facilitating the preparation and management of the change process in
small and mid-sized businesses, the focus groups suggest that
significant work is needed to ensure the delivery of comprehensive,
integrated services to small and mid-sized businesses. There are
three areas which deserve attention in enhancing the capacity of the
delivery system for technical assistance to small and mid-sized
businesses:
* Mechanisms for sharing. One of the most consistent requests
from all groups was for sharing of information and resources
to support change. Both business people and service
providers would like to know what others are doing to
facilitate change. What works? What doesn't work? What and
where are the benchmarks for different processes or programs?
What performance measures are used to monitor program progress?
Who provides services in what areas? Participants hoped the
Collaborative could help leverage existing resources to
facilitate change in small and mid-sized businesses.
Business participants in our focus groups commented that there
is a lot of information available, but the information is not
organized or accessible. While business people get a lot of mail
from service providers, they do not know how to determine the
quality of these service providers. For their part, many service
providers would welcome information on how to better work with small
and mid-sized businesses. Both service providers and businesses
would like easier access to government information (e.g., Department
of Labor and Department of Commerce data).
Costs are a significant issue for small and mid-sized
businesses. Participants in our focus groups said that mechanisms
are needed to promote resource sharing. Suggestions ranged from
federal and state incentives for change, through cost sharing of
programs across companies, to information on where to get available
resources (e.g., federal and state grants). Several participants
hoped that the federal government would engage in its own cost
sharing by more closely coordinating program activities across
departments (e.g., the Departments of Labor, Commerce, and Defense).
Participants agreed that the Collaborative could provide a
critical service by facilitating the exchange information and
resources among businesses and service providers. They suggested
that hard data be shared through such media as an electronic
database, a directory, and/or a newsletter. They also recommended
that forums be established for a more personal exchange of
information.
* Linked Services. The discussions with high performance
companies in our focus groups indicate the value of
comprehensive assessments and integrated action plans to guide
a change effort. The illustrations reveal that what may start
as a work restructuring effort ( e.g., manufacturing cells)
quickly becomes concerned with issues related to labor
management relations (e.g., pay for knowledge), literacy,
and/or technical training (e.g., production scheduling).
What alternative strategies are there for delivering such
integrated services to small and mid-sized businesses?
Regardless of the alternative, the focus groups reveal that
the services should be regionally based and easy to access.
The focus groups provided illustrations of a variety of
alternative delivery models. These included:
* A full service provider;
* A formal consortia of service providers;
* An informal network of service providers;
* A consortia of companies organized according to industry
or common supplier; and
* A service integrator that conducts firm assessments and
pulls together appropriate service providers.
* Marketing. One of the most consistent messages across the
business and service provider focus groups was the need to
educate and inform businesses about the need for change.
There was also a need to inform businesses and service
providers about the programs and services available.
The focus group participants provided a plethora of
illustrations and suggestions for marketing services. These
included working with trade and professional associations, quarterly
videos on service providers, a technical assistance hot line,
service provider fairs, a newsletter with success stories, radio ads
providing an 800 number and a fax response, and a dedicated cable
channel.
CRITICAL ISSUES:
1. The solicitation creating the Collaborative identifies service
providers as our clients. The focus groups indicate that many
businesses want to guide their own change efforts. The employee
focus groups support the Collaborative Board's and Councils'
request to consider the effect of change in the workplace on both
the firm and the individuals in the firm. Who are the
Collaborative's clients?
2. What are the value-added services the Collaborative should
develop and provide to address the needs and concerns emerging
from the focus groups?
3. How do we balance the Collaborative's role as a national entity
with the need to empower regional change efforts?
4. How do we establish a level of quality and validity to the
information provided by the Collaborative?
5. What is the best way to ensure that the Collaborative remains
responsive to its clients?
Stephen M. Mitchell
Terri Bergman
National Alliance of Business
.