Slides for Chapter 6 . HRM and Lean.
‘Lean’ thinking has revolutionised productivity in all sorts of settings, much of it coming through using the ideas and experience of the people closest to operational tasks developing ways of doing them better. But this doesn’t happen by accident – it all depends on them being trained, feeling empowered and actually motivated to contribute their ideas.
The recent BP Deepwater Horizon disaster appears to have been due to management placing undue pressure on staff to compromise on safety standards and procedures. China’s glowing reputation as a manufacturing powerhouse has been tarnished somewhat by a spate of suicides seemingly triggered by unacceptably high pressures placed on workers in some of the factories. And growing concern about working conditions in some factories in emerging economies have led major retailers to rethink their sourcing policies.
Empowerment’ sounds good but allowing people freedom to decide what they do and how they do it may be somewhat dangerous when applied in the context of complex systems or safety-critical operations. ‘Team-working’ requires more than just throwing a group of individuals together; effective teams are the result of careful selection, training and experience. ‘Employee involvement’ in problem solving (sometimes called kaizen or continuous improvement) requires a supporting and enabling system and a long-term commitment to establishing this as the ‘way we do things around here’.
The long-running success story of General Electric owes much to its ‘Workout’ programme originally instituted by Jack Welch which harnessed the initiative and ideas of its huge workforce. Toyota has managed to remain the world’s most productive carmaker year on year through a high degree of involvement of its workforce in continuous improvement – kaizen. And 3M’s survival and strength over a hundred years of operation owes much to the strong cultural foundations laid down one of its early CEOs, William McKnight.
In work on US companies Jeffrey Pfeffer noted the strong correlation between pro-active people management practices and the performance of firms in a variety of sectors (Pfeffer, 1998), a finding supported by Way in his survey of smaller businesses (Way, 2002). In regular surveys of high performing UK firms the same pattern of ‘competitiveness through partnerships with people’ regularly emerges (CIPD, 2006).
There is another compelling reason for paying attention to the human resource dimension in strategic operations management – if we don’t, there is a high risk that our sophisticated technologies won’t work!
But there are also limits to how far simply replacing people can take us – as a long-running set of studies demonstrate (Parasuraman & Wickens, 2008;Ettlie, 1999;Kaplinsky, den Hertog, & Coriat, 1995).
Experience has shown that we still need people in many situations – and over-reliance on the equipment end of technology can have disastrous consequences.
Whilst many Western manufacturers experienced growing problems of productivity, quality and flexibility during the 1970s it became clear that elsewhere – and particularly in Japan – the same story was not true. Manufacturing businesses there seemed able to manage the process of delivering customer value through speed, flexibility, quality and with high productivity. Inevitably attention focussed on how these gains were being achieved – and it became clear that a fundamentally different model of organizing manufacturing had been evolving in the post-war period.
“… our findings were eye-opening. The Japanese plants require one-half the effort of the American luxury-car plants, half the effort of the best European plant, a quarter of the effort of the average European plant, and one-sixth the effort of the worst European luxury car producer. At the same time, the Japanese plant greatly exceeds the quality level of all plants except one in Europe - and this European plant required four times the effort of the Japanese plant to assemble a comparable product…” (Womack et al., 1991).
Schroeder and Robinson (2003) reported that Japanese firms received around 37.4 ideas per employee, coming from around 80% of the workforce and with nearly 90% of these being implemented (Schroeder & Robinson, 2004). Comparative figures for US firms suggested 0.12 ideas per worker, with participation rates of less than 10% and implementation rates of around 30%. Similar studies in Europe highlight both the potential of employee involvement but also the relatively low diffusion of such practices (Boer, Berger, Chapman, & Gertsen, 1999)(Bessant, 2003).
Garvin suggests the following mechanisms as important within learning organizations:
• training and development of staff
• development of a formal learning process based on a problem-solving cycle (for example the ‘Deming wheel’)
• monitoring and measurement
• challenge existing practices
• use of different perspectives
• reflection - learning from the past
3M is famous for its ‘15%’ policy which allows employees to explore and experiment for a proportion of their time, effectively giving them ‘permission’ to think and innovate in directions not necessarily specified in their formal project or task allocations. This could result in lost productivity – but 3M’s view is that it is also a regular source of breakthrough ideas for products and services which keep the business growing (Gundling 2000).