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SUBJECT: Employee Relations

BRIEF DESCRIPTION: Harmonious relations amongst employees are essential to the successful implementation of lean manufacturing. The worker is the key to product quality and production efficiency. Continuous improvement can only be achieved with workers that are empowered; disgruntled workers will sabotage any improvement initiative. The joint Toyota-GM New United Motor Manufacturing, Inc. (NUMMI) plant in Fremont, California is used to illustrate best practices in employee relations and their impact on quality and productivity.

KEYWORDS: employee relations, quality, continuous learning, teams

OVERVIEW:

A successful lean manufacturing system relies on workers’ initiative to reach its quality and productivity goals. Therefore, the cooperation and innovation of the employees involved is critical to the competitiveness of a manufacturing company. Continuous improvement, and hence increasing efficiency, is only achievable if production and salaried workers alike are motivated and empowered to find waste and improve the manufacturing process. As Michael MacCoby writes, "Lean manufacturing is not merely a set of processes and procedures. It is a broad system that engages its participants in their work with an ideology that appeals to their hearts and minds."

However, lean manufacturing, with its empowerment and reliance on continuous improvement can cause stress and anxiety. In addition, many argue that harmonious employee relations and cooperation between management and production associates is difficult, at best, in a union environment. We recognize these concerns, but feel that they are unfounded. Using the GM-Toyota joint venture called New United Motor Manufacturing, Inc. (NUMMI), we illustrate the feasibility and best practices for harmonious employee relations to meet quality goals.

GM’s Freemont, CA. Plant had a history of poor quality and confrontations between management and union employees. Productivity was among the lowest of any GM plant and drug and alcohol abuse was rampant both on and off the job. Absenteeism was extremely high. The plant was and continues to be a union plant.

Toyota began management of the plant in 1983 and by 1986, the plant’s productivity and quality were higher than any other GM plant. Absenteeism and substance abuse also dropped dramatically. All this was done in a union shop. How did they do it? Toyota’s actions to improve employee relations can be grouped into the following "best practices":

• No "We-They" – eliminate separate management parking and eating facilities, provide business cards to all employees, institute one wage rate with few classifications, and require uniforms with the company logo. These actions emphasize the fact that all employees are responsible for the success of the company and all are equal. Toyota included union representatives on all decisions to gain acceptance of these changes. A uniform with the UAW and company logo is a positive compromise if a uniform with just the company logo is not possible.
• Build Pride – all workers desire to take pride in their work. Clearly visible signs denoting quality achievement should be hung in team areas that meet or exceed quality targets. These targets should be set by employees to increase their level of ownership of the goal. Training should also be provided to empower workers to meet goals. Signs and slogans should not be used unless the workers are trained and empowered to achieve these goals.
• Realism – all workers realize that line assembly and manufacturing is not a "utopia." They are willing to work hard, as long as management is realistic about competition and goals.
• Respect and Trust – The most successful change programs have guaranteed no job loss as a result of the change. Teams should be given their own financial accounts to purchase equipment and material as they see fit. Automation should not be seen as a threat. Rather, machines should be used to improve workers lives. For example, at Honda’s Marysville, Ohio plant, machines reduce the amount of bending and lifting employees do, making assembly line work more ergonomically pleasing and reducing back and neck injuries.
• Continuous Learning – Employees should be given proper training to complete tasks. This training should be provided immediately before it is applied, not months before application. It should be fresh in the employee’s mind when it is applied. Workers are not empowered unless they are properly trained. Requiring workers to contribute continuous improvement without provided the tools necessary results in anxiety and frustration! The degree and quality of employee suggestions is a good indication of strong continuous improvement and learning within a plant.
• Be Consistent – one of the most common complaints within a plant is that management says its want quality, but is only concerned with quantity. Management must not pay lip service to quality initiatives. Quality performance should be included in worker evaluation, as well as management compensation. Consistency between stated goals and observable actions is crucial to achieving worker harmony and increased product quality.

The best practices presented here are not exhaustive. They are merely to stimulate managers and employees alike to review their relationship and find common ground for improvement. As the NUMMI plant illustrates, applying these principles can turn even the most adversarial plant into a highly efficient, high quality production facility.

REFERENCES:

• Adler, Paul S. "Time and Motion Regained," Havard Business Review, January-February 1993, pp. 97-108.
• MacCoby, Michael, "Is There a Best Way to Build a Car?" Havard Business Review, November-December 1997, pp. 161 –171.
• "Lean Production Yields More than Reduced Costs," IIE Solutions, vol 27, no.11, November 1995, pp. 12.
• Sohal, Amrik S and Egglestone, Adrian, "Lean Production: Experience among Australian Organizations," International Journal of Operations & Production Management, vol 14, no. 11, 1994, pp. 35-51.
• Demings, W. Edwards, "Dr. Deming’s Cure for U.S. Management,", Wards Auto World, November 1981, pp. 16.

ACKNOWLEDGEMENT: This is a March 29, 1999 revision by Gene Goodson of an assignment for OM742 contributed by Ralph Bolognese.