Playing With Fire
Newsweek - June 21, 1993 - By Marc LevinsonEmpower Workers? A small-town firm finds it tougher than it sounds.
The 115 employees of Overly Manufacturing Co. had never seen anything like it. Amid rumors of layoffs, owners Terry and David Reese invited the workers at their Greensburg, Pa., company, along with their spouses, to a roast-beef buffet at the Garden Civic Center. After dessert came the entertainment: a 20-minute videotape making the case for greater worker participation_ and promising that managers would listen to what workers had to say about making the company more efficient. " You'll tell us how it's supposed to be done rather than us telling you," said president Jon Harts, appearing on a 12-foot screen at the front of the hall. There'd be no guarantees, the only way to secure jobs was to keep Overly competitive. As the workers filed out, each was offered a copy of the tape to take home and ponder.
Armed with monthly sales figures and quarterly reports: Overly welder Ken Guidas. On that cold night last February, Overly Manufacturing joined the most far-reaching economic trend of the 1990s, the restructuring of the American workplace. From Maine to California, regimented, standardized mass production is out. Flexibility, quality, low costs and quick response to customer needs are the orders of the day. To achieve those goals, employers big and small are enlisting frontline workers as active participants in rethinking the business, organizing the work and even hiring new employees (page 48). Washington is enthusiastic, too: Labor Secretary Robert Reich insists that worker participation is vital to improving the performance of U.S. business, and the Clinton administration's new commission on employee relations is looking at ways to promote it. The real battle over worker empowerment, however, is taking place not in Washington but in thousands of workplaces. There, tumult reigns as bosses used to giving orders and workers trained to follow them grope toward a new style of management. "It's like Pandora's box," Harts says. "You open up the door and everything comes out."
The poster children of the move to worker empowerment are household names like AT&T, General Electric and HewlettPackard' For these leading-edge companies, there is no alternative to radical change: foreign competition is so intense, customers' quality demands so stringent and product development so fast that a traditional hierarchical organization simply can't keep track of it all. But most Americans work in very diderent circumstances far from the leading edge. The success of these small factories and machine shops, construction firms and service companies is even more crucial to America's economic future than the sagas of a few high-technology superstars, because smaller companies are where the new jobs are. As Overly Manufacturing's story reveals, transforming a small company can be as tough as transforming an IBM-and for the people involved, it can be every bit as traumatic.
There's nothing high tech about Overly's business. In an aging red-brick plant in the mountains of western Pennsylvania, the 105-year-old company makes doors for laboratories, dormitories, nuclear plants and government vaults, as well as metal roofs for structures like the Astrodome. Each door is custom designed, but the manufacturing process is pretty much unchanged since the 1950s: workers weld metal members to a steel skin, lay insulation around them, weld the other door skin on top and attach knobs, locks and hinges. Customers, mostly construction contractors, don't demand electronics-industry precision. Fast delivery isn't an issue, either. No one buys a $1,000 door on the spur of the moment.
Deep Trouble
When brothers Terry and David Reese bought Overly from its longtime owner in 1991, they quickly made clear that they intended to change things. The Reeses envisioned building the staid, $12 million company into a $50 million company, and they believed that Overly's authoritarian, nose-to-the-grindstone culture couldn't accommodate such growth. They broke with tradition by giving workers monthly sales figures and quarterly financial reports to help them understand the company's woes. Harts, the 41-yearold door-industry veteran who runs the operation, told anyone who would listen that the business was in deep trouble. With construction slow, other doormakers were entering Overly's niches, and prices had fallen by half. Articles in the business press convinced him worker empowerment might help.
Four months ago he took the plunge, naming a team of a dozen designers, salespeople, welders, press operators and plant foremen and giving them one assignment: take the company's new, low-cost method for making soundretardant doors and get it into production. After a few days of training in teamwork, the members scoped out the task-and found it far more complex than any of them had imagined. Where to put the line? Team members found ways to eliminate piles of metal taking up floor space. Then a consultant suggested putting the entire operation in one small area and moving workers among the different jobs. The team was enthusiastic, but some supervisors and coworkers were not: having press operators install sound insulation would complicate relations with the Steelworkers' union. Production planning got complicated, too. While the team had figured on building doors no wider than four feet, salespeople were bringing in orders for larger doors. " It's nice to talk about, 'Let's make only 36inch and 48-inch doors,'but that's not going to happen," interjected designer Bill Hugus, the team leader, at the group's weekly meeting. When the equipment arrived, the first doors off the new line took far too long to assemble, blowing the cost projections.
Things were even more tense elsewhere in the plant. A separate team had taken on one of Overly's chronic problems, backups in the shop that makes heavy bank-vault and blast doors. After three months of discussion, the welders, engineers and salespeople proposed installing an overhead crane, allowing welders to move two-ton doors without long waits for a lift truck. The objections were instant. How much time would be saved? Isn't the roof too low? Wouldn't individual welders hog the crane? In management meetings, executives' reviews were scathing. Instead of praise, the team received an unwanted assignment to gather yet more data. The discouragement in Overly's sole conference room was almost palpable. Said Ken Guidas, a second-generation Overly welder, "It's going to take a lot longer than anyone thought to get it accomplished."
Atom Bomb
If these first stabs at worker participation were frustrating to Overly's workers, they were alarming to managers. " There's so much going on it's like an atom bomb ready to explode," said production manager Rick Brown, who came to Overly as a draftsman 16 years ago. Suddenly, everybody had ideas and suggestions. Telling the troops to knock it off and get back to work was no longer an option. Managers saw the company spiraling into self-directed anarchy. "I know there's a customer there who needs his product and I have responsibility for getting it to him," fretted plant manager Mike McConville. "I knew I could get it to him. I don't know that anymore." Gene James, the bearded 48-year-old who runs the company's computer systems, saw confusion spreading fast. "There's some vague idea that Overly wants to become a new democratic organization, empowering people," he said. "But we've lost the old structure before the new structure is in place, and the chaos scares the shit out of me.'t Such hesitations only added to workers' doubts about the depth of Overly management's commitment to change. " Every time we came up with what we thought was a good idea, somebody higher up in the company thought it wasn't a good idea," complained Joe Smith, a computer programmer. One team even resorted to guerrilla warfare. After managers nixed its proposal to scrap the cards that engineers used to record the time spent on each job, the team arranged to collect the cards and store them under a desk. Months elapsed before managers realized that the supposedly vital data weren't being logged into the computer.
After four months, teamwork no longer seems like such a hot idea to many at Overly. " Ideas are presented to upper management, and we don't know how fast they're going to be implemented," says union leader Tim Crossman, a press operator. " That's probably the biggest problem we have right now. Things are put on the back burner." Orders are slow and some white-collar workers have been laid off, souring the atmosphere. Although the union has filed no objections, older workers are resisting the pressure to learn several jobs. Most confusing of all is the slowly dawning recognition that the chaos will have no end that being an innovative, high-quality, low cost manufacturer is not a one-shot effort. " We upped the hours, increased sales and thought we were doing the right thing," says production manager Brown. "They said it wasn't good enough. People aren't sure now what's expected of them." Some are ready to dump employee involvement altogether.
Co-owner Terry Reese counsels patience. "It takes a while, especially when you've been in an environment where it's 'Sit down, shut up and do what I tell you'," he says. And the chaos has not been without payods. Perhaps the biggest has been better communication between the blue-collar folks on Overly's plant floor and the engineers upstairs, who, thanks to team meetings, are paying more heed to the difflculties of manufacturing their designs. The myriad small suggestions have helped to shave costs by reducing inventory improving storage and repositioning equipment. And earlier this month the first regular production run rolled off the new-product team's sound-retardant door line. "The product looks great!" Harts exults. "It's going to knock the market dead."
Maybe. Like many another company Overly has learned that a total corporate makeover doesn't guarantee profits_and that a partial makeover is an oxymoron. But by putting its emphasis on using people better instead of loading up on fancy machinery, Overly is riding one of the most promising trends in U.S. business today. Amid his company's turmoil, Terry Reese offers a prediction: "In 10 years, anybody who runs a business on the hierarchical model isn't going to be in business." A lot of futures depend on his being right.
When Workers Do The Hiring
The I/N Tek plant near South Bend, Ind., has gotten no end of attention; the $1 billion joint venture between Inland Steel and Japan's Nippon Steel is the nation's most advanced steel-finishing mill. But the innovations go beyond just a mill that rolls cold steel to precise thicknesses at 60 miles an hour. The threeyear-old plant is one of the few places in the country where workers do the hiring.
Suggestion boxes are everywhere these days' and asking teams of workers to help with cost cutting is a widespread practice. But employee involvement ends where management wants it to--and at most companies it stops at the personnel- office door. Human-resources directors, all too aware that many hiring decisions lead to litigation, are loath to cede the responsibility. A handful of pioneering companies, though have concluded that if employees are to be held responsible for an entire group's work, then they ought to have some say about who joins the team.
At I/N Tek, job applicants reach the interview stage only after passing a penciland-paper screening test and seor~ng well on exercises designed to evaluate initiative and cooperation. Then come three interviews, one with a prospective manager and one with a worker from the team with the vacancy. A job is offered if all three interviewers concur. "You avoid this reaction that if management had given us good people, we could get something: done," says I/N Tek manager Geerge Landsly.
Worker participation goes even further at CP Industries, which forges pressurized gas tanks in McKeesport, Pa. When the former U.S. Steel operation decided in 1991 to add workers, president Jack Croushore formed a committee of 13 union workers and two supervisors and handed them the job. None of them had ever hired anyone. The deal: the team would establish its own procedures and decide whom it wanted to hire--and Croushore would do it.
CP quickly learned that using teams to do the hiringcan take forever. Not until spring 1992, more than seven months after the process started, did the first of GP's 10 new employees come on board. Meanwhile, more than 10 percent of the comparly's 100 hourly workers were spending part of their time meeting and evaluating job applicants, at company expense. Despite their efforts, two of the 10 hires quickly washed out. Was it worth the trouble? Croushore thinks so. When CP hired :five more workers last year, it put team members to use once again.
Team Interviews
Few companies have gone so far. Milliken & CO., a huge textile manufacturer with hundreds of quality teams, lets the teams interview job applicants and offer recommendations, but nothing more. South Carolina plant manager Dirk Pieper notes that the company would be responsible for violating civil-rights laws if a team avoided hiring minorities, and he observes that some teams are more concerned with getting immediate help than with whether the new hire will be an asset to the company. " You've got to be certain that your management is making the ultimate decision," he insists.
Those concerns make it likely that team-based hiring won't spread quickly. But as companies like I/N Tek and CP Industries succeed with it, others are likely to give it a try. Jeff Berger, one of the interviewers at CP, remains an enthusiast, but he ofifers a word of advice: " Give yourself plenty of time.''
