If the participation of labour in management decisions leads to a more responsive, better-run GM and Chrysler, then this economic recession will have yielded a solid legacy, proof that management-labour cooperation really does work. This author believes that the time has come for such cooperation to roll down the assembly line. He also suggests tried and true work practices that will create efficiencies, and in the end, build an enduring trust.
The restructurings at Chrysler and General Motors, soon to be accompanied by substantial union share ownership in the United States, if not in Canada, may finally give the long-mooted idea of labour-management teamwork a real workout. Some have worried that having union representatives on both sides of the bargaining table will create a conflict of interest. On the other hand, mutually beneficial self-interest often becomes manifest when employees have a stake in their employers’ and their boss’s fortunes. Hopefully, the realization that the adversarial model is out of date will lead both parties to trade in the “them versus us” mentality for a more conciliatory, constructive one. This could lead to major reductions in the traditional — and often artificial — barriers between what operators, technicians and managers are allowed and not allowed to contribute to the operation of the enterprise.
Toyota has convincingly demonstrated the potential benefits of a collaborative mindset for over 60 years. The key is labour-management teamwork based on cooperation, trust and equity. By working together, labour and management can enrich employees’ work, improve product quality, increase capacity and lower costs, all without the large investments that have accompanied most of the Detroit 3’s actions in the past.
While most of the examples of collaboration that follow are drawn from the automotive industry, the conclusions are applicable to most industrial or service sectors where work practices artificially constrain employees’ pursuit of product excellence, self-actualization and profitability. Some firms have already preceded the auto companies into foreclosure and even liquidation, but it is hoped that the remaining stakeholders will grasp the opportunity to eliminate the constraints that prevent effective labour-management teamwork. This article will describe how five work practices foster or hinder teamwork, as well as several other intangible qualities that contribute to a spirit of cooperation.
Forms of teamwork
The list of potential areas for cooperation is long and full of opportunities to increase profitability. While some of the activities below can be carried on without cooperation from organized labour, they tend to be carried out less frequently; and when they are, they take much longer to complete. Operators, technicians, engineers, staff experts and managers can work together to reduce set-up times; rebalance assembly-line speeds for different product models, production rates or crew levels; revise layouts to reduce operator and material movement; improve productivity; identify and eliminate root causes of defects, and identify and remove sources of workplace injuries.
The participation of the skilled trades is critical. Operators who are trained and permitted to relieve skilled technicians of routine maintenance tasks will see their jobs enriched, while technicians can redirect their expertise towards elevating equipment effectiveness. At the same time, these same technicians will be enriching their own jobs and applying their skills to important areas such as tightening equipment tolerances, increasing equipment speeds, detecting impending breakdowns, and achieving quicker inspections and repairs, thereby increasing equipment availability and output. Effective teamwork can accomplish much, and this article will suggest five tactics that organizations can use to foster that teamwork.
Opportunities for teamwork
Why do workers at some plants collaborate on the processes and functions noted above while workers at Detroit 3 plants and many others for the most part do not? First, operators, technicians and managers need opportunities to work together. Work practices – and how they are designed -are the major facilitators — or impediments. There are five broad classes of work practices that either facilitate or impede teamwork:
- Continued employment during production stoppages or slow-downs
- Job classifications
- Temporary employment
- Task standardization
- Receptivity to employee suggestions.
With good will, many of the impeding practices could be eliminated by thoughtful leadership from union and company management.
1. Continued employment during production stoppages or slow-downs
When production is stopped or slowed by the absence of a key resource, such as missing material, broken equipment, or absent operators, production is interrupted, and in many cases, workers are sent home. This can also occur when demand declines. However, some firms, like Toyota, stick to their long-established no lay-off policy, thereby creating opportunities for teamwork. For example, when production in all or a part of a plant is stopped or slowed, redundant employees are assigned to existing training or improvement projects like those described above. They become part of and contribute to another team, further reinforcing the team concept, spirit and value. Other corporations, such the Detroit 3, routinely send workers home whenever there is an interruption in work flow of more than a few hours. By doing so they miss one of the best opportunities to foster teamwork and improve operations. Unfortunately, workers accept or even welcome temporary lay-offs because they earn almost as much by staying at home as they would if they were on the job, thanks mainly to employment insurance funded by tax-payers and augmented by employers.
2. Job classifications
Job classifications in collective bargaining agreements stipulate which workers are allowed to perform which jobs. This is an artificial and restrictive arrangement that does not foster teamwork. Much more satisfactory is the example of Toyota, which can assign workers to a broad range of tasks, and can even use temporarily-idled operators to reduce or eliminate out-of-pocket contractor expenses. Such options are usually explicitly denied by the narrow job classifications in Detroit 3 collective bargaining agreements. Eliminating or greatly reducing the number of labour classifications would greatly expand the opportunities for collaboration. Flexibility in assigning and accepting jobs would also allow team members to participate in and contribute ideas for improving some of the larger processes – not just their own, individual job — and often enable them to make more creative suggestions for improving safety or reducing waste. For example, tasks that can be performed only by technicians could be evaluated to determine if they could be performed by suitably trained (unlicensed) operators.
3. Temporary employment
The use of temporary employees to ensure that seasonal demand variation does not result in the lay-off of permanent employees is another work practice that facilitates teamwork. It provides an effective way of relieving permanent workers from their normal jobs so that they can participate in training or continuous improvement (kaizen) activities. This can also produce other benefits. For example, Toyota’s use of temporary workers is an important advantage in reducing overhead costs. Although temporary, the workers are fully compensated, well trained and willing to work when needed. Would they prefer to be permanent? Most would probably answer “Yes,” but carrying their extra cost when they are not needed would imperil the plant’s competitive position and the jobs on which they depend. In any case, hiring workers who understand that their position is temporary is preferable to hiring people for supposedly permanent positions and then issuing lay-offs the first time demand dips. Enough permanent workers are employed at Toyota to meet the low end of demand, while temporary workers and overtime are used to meet demand peaks. Once a Toyota plant is staffed initially, the pool of temporary workers becomes the source of new, permanent workers. Employment of temporary workers by the Detroit 3 is prohibited by their labour contracts. Removing this restriction would allow production to more closely match varying demand, reduce the costs of no-layoff policies, and help level the playing field.
4. Task standardization
The fourth practice, task standardization, as exemplified by Toyota, requires workers that are doing the same job to follow exactly the same sequence of motions. On the other hand, Detroit 3 workers have some flexibility to innovate, provided that they meet the required production rates and maintain quality. At first blush, Toyota’s rigidity might seem to restrict creativity, whereas the greater freedom the Detroit 3 workers have to adjust their work routines might be seen as adding value through creative innovation. However, the exact opposite is true. Toyota workers are motivated to propose desirable procedural changes precisely because they are not allowed to change them unilaterally. Furthermore, the exact nature and potential benefit of the proposed change are easier to assess, since it is considered in reference to a well-defined, existing standard. All proposed changes must be approved by the team and its leader (and more senior management if safety, quality or cost is at risk). In addition to ensuring that procedural changes actually benefit the individual operation, policy requires that the changes be documented, something that facilitates their adoption in similar operations elsewhere in the organization – and increases their value. Finally, having fully detailed job descriptions ensures that workers will learn new jobs rapidly.
The opposite tends to be true at plants without job standardization. Operators at these plants are left on their own to discover many of the necessary, but unintuitive, steps that are required to complete even the simplest tasks. The resulting learning process endangers product quality and quantity, and even operator safety. Furthermore, workers will want to “own” the jobs that they have modified (often to their own advantage), and will resist management’s efforts to reassign them to new jobs or to redesign existing ones. The workers may even attempt to hide their changes from supervisors — even if they are potentially unsafe (such as removing safety restraints) or result in defects (such as cross-threaded fasteners, misaligned components or damaged finishes). They would fear that observed job changes would either be disapproved or that reduced work content would lead to the addition of more task elements. Hiding changes in piece-rate jobs allows workers to enjoy incentives that are disproportionately larger than those offered to others applying the same effort. In such a situation, safety, quality and employee morale can be at serious risk. This is one of the reasons most manufacturers have abandoned piece work.
5. Receptivity to employee suggestions.
If teamwork is to be effective, employee suggestions need to be actively supported by first-level supervisors and above. This means providing an easy way for supervisors to accept suggestions and quickly acknowledge and evaluate them. Although Toyota’s well-known and widely admired suggestion program was originally adapted from practices observed at Ford more than half a century ago, anecdotal evidence suggests that few first-level supervisors at the Detroit 3 and their traditional suppliers are receptive to workers’ suggestions. For example, this author and an idle worker at a parts plant watched a particularly wasteful change-over. As one might expect, the idle worker’s job classification did not permit him to assist in making the change. He had seen the waste and had alerted his supervisor earlier, several years earlier, in fact. His warning was ignored. This was a lost opportunity in three ways. First, an employee who could have accelerated the change-over and increased plant productivity was excluded from doing so by a restrictive job classification. Second, the organization continued to incur the costs of the waste for years. Third, an employee was ignored when suggesting an improvement. This does not have to occur very often before all employees stop making suggestions. In this case, the employee in question stopped making suggestions.
Constancy of purpose
Quality guru J. Edwards Deming’s admonition to maintain “constancy of purpose” is most often associated with the pursuit of quality. However, the admonition has a wider application. Senior executives routinely ignore his advice by constantly switching focus to pursue the latest “low hanging fruit.” This is why many practitioners urge management to view pursuits such as just-in-time or lean manufacturing as a “way of life,” not as a program with a specific end date. Once initiatives such as set-up time reduction or zero-defect quality are launched, it is important that junior management and especially first-level supervision keep these initiatives going, even when senior management switches direction and starts to emphasize other activities. Detroit 3 plants and their traditional suppliers often seem to hop from one initiative to another, in a constant search for the one “silver bullet” solution. The Detroit 3 firms have all adopted variations of the Toyota Production System, but they seem, as the saying goes, to have “learned the words, but not the music.”
Suppliers regularly suffer from their customers’ failure to pursue constancy of purpose. Here is a glaring example of why suppliers routinely rate the Detroit 3 firms dramatically lower than Toyota, Honda and Nissan. The rankings appear in Planning Perspectives Inc.’s annual OEM-Tier 1 Supplier Working Relations Study. A Detroit 3 supplier, after having been awarded several new parts contracts, had invested in new robotic equipment and extensive training for newly-hired employees, while complying with continuing demands for lower prices. Not long after, the supplier wrote to the customer, requesting assistance with the high cost of maintaining some badly worn tools. The tools, which were owned by the customer and had been used for years to produce parts for an older model, were spending more time in the repair shop than they were producing parts. Amazingly, a letter arrived the following week simply saying that a new supplier had been obtained to produce the parts with the old tools—and that the new venture would be closed as a gesture to the new supplier! All the newly hired employees had to be let go. No discussion, no options, and definitely no constancy of purpose.
It is hard to establish strong teams when some members are seen to be heavily favoured over others. Most people close to the shop floor will recognize that people in more senior positions in the organization deserve to be rewarded more; however, the size and nature of the disparities between the ranks is a concern. These include outlandish current and deferred compensation levels, and extravagant, highly visible perks ranging from the use of executive dining rooms to corporate jets. When senior management is seen as being rewarded excessively — especially in times when the business is losing money and head-count reductions are being pursued — it is not surprising to see minimal rank-and-file support. This is yet another area where the Detroit 3 is vulnerable – and rightly so – to harsh criticism in relation to its foreign competitors.
With almost a century of antagonistic, litigious labour-management relations behind them, it is reasonable to ask what it will take for European and North American companies and their unions to form a new relationship based on cooperation and respect? First among firsts is trust!
Of course, trust is something that takes years to build, but only minutes to destroy. Many of the obstacles to effective labour-management teamwork sprung up as a result of management abuses of labour that occurred over one hundred years ago. Job security concerns are at the roots of union-negotiated, company-funded supplementary employment insurance, restrictive job classifications, and temporary worker prohibitions. Lack of trust is also the reason why the Detroit 3’s U.S. and Canadian unions have long opposed continuous improvement initiatives (kaizen); they fear both job losses and the marginalization of union representation.
Clearly, management needs to reflect on the negative impact of its actions. A good start would be the decision to treat workers as valuable assets instead of disposable liabilities. Sending workers home as soon as production stops indicates both an absence of trust and the abject failure of management to plan for the exploitation of the most likely of contingencies — material shortages and equipment breakdowns. Management needs to take the initiative in this instance and identify opportunities for effective teamwork during periods when some or all workers are not required to perform their usual jobs. The effort required to organize teams, train team leaders and provide alternative work descriptions will be extensive, but management will ultimately be rewarded. Finally, terminating a relationship with a supplier instead of providing assistance cannot help but send a big “Don’t trust us” signal throughout the supply base.
Toyota built trust in its early years. In 1950, in the midst of a recession, the company was confronted by reduced vehicle demand and a weak balance sheet. Its founder and first chief executive, Kiichiro Toyoda, was under extreme pressure from Toyota’s banks to reduce labour costs. (Sound familiar?)
Needing 1,600 voluntary retirements in order to avoid almost certain bankruptcy, he wrote to his work force, “We, the management, bear a heavy responsibility for having brought the company to these straits. I ask for your help and cooperation and await your fair judgment.” The union refused. It had a no-layoff labour contract. Toyota learned that, although the contract bore the company’s stamp, it had not been signed as required by law. Toyota did not take advantage of the loophole. In the words of a subsequent president Eiji Toyoda, “We would lose the trust of our employees, and our treachery would later come back to haunt us.” Instead, Toyota founder and chief executive officer Kiichiro Toyoda, the executive vice president and the managing director responsible for finance all resigned. Soon after, 1,700 employees applied for retirement. (At least 1600 employees had to apply for retirement for the company to consider the application). The company was saved and the bond between management and labour was cemented.
Sixty years later it is the Detroit 3’s turn. Their management is arguably in a more difficult labour relations position than Toyota was in the 1950s. Union formation was required by law when Toyota faced its greatest challenge, but its workers were happy to just have a job with minimal pay and few benefits. Current Detroit 3 workers feel entitled to much more. The example of the resignation of founder Kiichiro Toyoda and his two most senior executives, and their admission of responsibility, resulted in sufficient employees stepping forward to accept voluntary retirement. It is hard to imagine a similar result if the senior executives of the Detroit 3 took steps like these. In fact, in the early going in the fall of 2008, Detroit 3 executives, arriving in their corporate jets, declined to commit to salary reductions during the Senate’s hearing on their firm’s request for emergency loans. Acting consistently, union negotiators in both Canada and the United States have only made narrow concessions with minimal impact on the take-home pay of current members, while giving up benefits that few workers outside the automotive industry have ever enjoyed.
It is possible – and in today’s world, critical — for management and labour to cooperate for the greater good of the enterprise. Labour-management teamwork can dramatically improve performance across many dimensions—including labour climate and job satisfaction. Labour groups and the organizations they work for will be rewarded if they work on improving the opportunities, constancy of purpose, and most importantly, the trust of each other.