Introduction to Industrial Engineering
By Jane M. Fraser
Chapter 4
Organizations
Return to the Table of Contents.
Think about where you work. Does anyone ever ask you how things could be improved? Does your supervisor say he’s listening to your ideas, but he really isn’t? Are you encouraged one day, then criticized the next? In far too many cases, the supervisor behaves differently depending on the circumstances and how he feels that day. Much of the time he’s friendly and considerate, perhaps even outwardly cooperative. Then suddenly he turns on you, criticizing you and undermining your confidence. In an uncertain environment like that, where people never know what to expect, they quickly learn to quit sticking their necks out and retreat back into their shells. (page 4, A Better Idea, by Donald E. Petersen and John Hillkirk).
Employees are turned off to the company through the normal operating practices of the organization. The thoughtless, irritating, unconcerned way they are dealt with is what does it. They feel they are pawns in the hands of uncaring functional operations. (page 15, Quality without Tears, Philip B. Crosby).
Companies must put their people first. Yes, even before there customers. There. Now, I’ve said it. I know it’s controversial. It makes most people nervous just to hear it, but it works. (Rosenbluth and Peters, The Customer Comes Second, page 9)
In the previous section I argued that the customer comes first, but now I say “the customer comes second.” These two statements don’t really conflict because the first one means that employees must put the customer first, but the second one means that employees can only put customers first if the company puts the employees first.
I borrowed this phrase “the customer comes second” from the book by that name by Hal Rosenbluth and Diane McFerrin Peters, which describes the policies at Rosenbluth Travel, a travel agency that focuses on corporate accounts. Rosenbluth Travel has a long, rigorous hiring process to be sure they are hiring the right people, emphasizes finding nice people who will provide excellent service, extensively trains new associates, listens to and reacts to what associates say makes them unhappy, helps associates continue to learn, gives associates the support and the freedom to provide exceptional service, and lays off workers only as a very last resort. They summarize the approach as follows:
Every company operates on a hierarchy of concerns. Ours is the following: people, service, profits. In that order. The company’s focus is on its people. Our people then focus on serving our clients. Profits are the end result. (page 25)
Measuring up: Benchmarking your workplace practices quotes a Purdue study that concluded that
organizations with high levels of employee satisfaction are more likely to have high levels of customer satisfaction.
Rosenbluth emphasizes the importance of hiring well. Pyramid Machine, in Somerset, Kentucky, hires people with an attitude of humility, as described in “Humility, Inc.” from MMS Online.
Compared to this humility, says Mr. Daniels [general manager of Pyramid], any lack of prior machining experience is not an important consideration at all.
Collins talks about how Nucor emphasizes hiring the right people. Nucor located its steel making factories in farming communities because of the work ethic of such people. They pay well and use team bonuses.
The Nucor system did not aim to turn lazy people into hard workers, but to create an environment where hardworking people would thrive and lazy workers would either jump or get thrown right off the bus. (page 81)
Tom Peters, in Thriving on Chaos, also emphasizes recruiting people who share the values of the company. The line people, he argues, are best able to determine who those hires should be (pages 315-320).
Increasingly, organizations ask applicants to demonstrate their abilities in the work situation. For example, the Pueblo Area Boys and Girls Clubs observe applicants
implementing a hands-on activity with youth in a program as a key part of the interview and screening process. Final candidates are each given a program activity to implement while being observed by senior staff. Sometimes youth involved in the activity are asked their opinion of how the activity was run and what they thought of the individual candidates. The comments are recorded and used to assist in making a final decision about employing the candidate. This process gives the organization a better idea of how the candidate will perform on the job, as well as giving the candidate more information about job expectations. Also, staff and youth gain a sense of involvement and connection with the organization by participating in the process.
Denove and Powers focus on customer satisfaction, so they studied what organizations do in order to provide good customer service. The successful companies use hiring policies "founded on the following key tenets:"
- They focus on personality rather than the technical skills of the potential employee with whom their customers will spend most of their time.
- When necessary, they will pay above market average -- sometimes well above -- to attract the absolute best candidates from which to choose.
- They attract career-minded individuals who will care about the long-term satisfaction of their customers by making it widely known that they are a company that believes in promotng from within.
- They search out creative employee benefits that create a more desirable working environment. (pages 154-155)
Training of new workers is crucial. Peters says that training - and retraining - should be an obsession, but isn’t. He cites Federal Express and Disney as having strong training programs.
The training Federal Express gives its customer service people in Memphis and Disney’s training of a 17-year-old would-be jungle boat drive far surpass the training many technical firms give their machinists. (Thriving on Chaos, page 325).
He says that Nissan spent $30,000 per worker on training before opening its plant in Smyrna, Tennessee. Peters lists these elements of a good training program: (pages 326-328)
- "Extensive entry-level training that focuses on exactly the skills in which you wish to be distinctive."
- "All employees are treated as potential career employees."
- "Regular retraining is required."
- "Both time and money are generously expended."
- "On-the-job training counts too."
- "There are no limits to the skills that can profitably be taught to everyone." Even complicated topics like statistical process control can be taught to everyone, if the course is taught well.
- "Training is used to herald a commitment to a new strategic thrust."
- "Training is emphasized at a time of crisis." In response to new technology or competitive challenges, training helps the organization respond.
- "All training is line-driven." The line workers help develop the training.
- "Training is used to teach the organization's vision and values."
Will people take the training and leave? Perhaps, but why would they leave an organization that treats them so well?
Rosenbluth gives associates the support and the freedom to provide exceptional service. According to Denove and Powers (page 135), Nordstrom department store has two rules for employees:
- Use your good judgment in all situations.
- There will be no additional rules.
This freedom is not an invitation to chaos because the supervisor’s job is to help the salesperson learn what good judgment is. Without detailed rules, Peters says (page 348), workers concentrate on helping customers, not on trying to get around the rules about toilet breaks.
Some organizations practice open books. According to the case for open-book management
Companies that practice open-book management teach employees how to read a balance sheet and share critical financial information. In short, they get their front-line people to think like owners.
Open book management gives workers the data to help them understand how their work affects the company. Also, opening the books clearly conveys trust.
Rosenbluth lays off workers only as a last resort and Peters argues for employment guarantees. [find info on the Work in America Institute.]
Most trace the idea of employment security back to 1806 and the cotton mill owned by Robert Owen in New Lanark, Scotland. Faced with an abrupt reduction in the supply of raw materials (an American embargo), almost all millers shut down and fired their workers. Owen stopped the machines, but kept paying full wages and turned people to maintenance tasks during the four-month crisis.
Owen reaped the reward that is, today, the heart of the matter. His workforce was subsequently much more amenable to managerial, organizational, and technological changes. Constant innovation, supported by workers, led to extraordinary long-term profitabilty relative to competitors.
Peters argues that such guarantees will work only with these 3 tactics:
Such guarantees can’t always continue, but how the company handles the layoff may affect its ability to recover.