- Email: [email protected]
The power of flexibility
The Power of Flexibility D. Keith Denton
t seems that afmost everyone today is talking about the need to be flexible and adaptable to survive in the global marketplace. Tom Peters ( 19901, just one of those who have expressed such feelings, says that only those who are ready to confront and master change each day will thrive in the 1990s and beyond. The time when doing one thing well was good enough for career security is fading fast. Times are tough. Managers no longer expect greater commitment and involvement from their personnel-they need them. Simply being a cog in the corporation does not make sense when continuous improvement and continuous learning are the only survival tools. Change will be the only constant in most work lives. David Birch, the economist, says the average college graduate should expect to hold no less than 10 to 12 jobs in three to five different fields in the future (Peters 1990). If anything like this becomes reality, we could expect to see a need for perpetual upgrading of skills. Regardless of whether Birch’s assessment is true, one trend certain to have a dramatic impact on the need for highly flexible people is the continuous flattening of the organizational pyramid. As organizations become flatter, more people at the bottom will need to be “empowered” so they can increase their contributions to the firm. And this empowerment can only occur when employees are allowed to assume a wide range of responsibilities.
I
n an article in the Wall Strwt Journal, Peter Drucker (1988) describes what can occur if managers do not give workers an opportunity to l)e flexible. More specifically, he describes the detr~n~ental effects of work rules and job restrictions. For example, he writes about work rules that forbid electricians from straightening a stud when installing a fuse box. Rules that forbid workers from moving from one job to another cause problems. Work rules that restrict people to
I
narrow, repetitive tasks can also cripple competitiveness. Drucker maintains that ail the evidence indicates that work rules and job restrictions are the primary cause of the productivi~ gap hurting both American and European manufacturers. The U.S. construction industry, says Drucker, is a prime example of these abuses. The building industry is unique because it has unions, with their tight job restrictions, coexisting with nonunion shops. When both types of shops work side-by-side at the same company, it is called “double-breasting.” One double-breasted contractor did a study of two identical projects done by his company. The nonunion crew worked an average of 50 minutes out of every hour, whereas the union crew worked only 35 minutes. The rest of the time was spent waiting for someone to come back from the restroom or waiting for an available journeyman to do work that could have been done by an apprentice. ‘As a result of these types of arrangements, the union crew needed eight people to do the job; the nonunion crew needed only five. Excessive specialization and specialized work rules are, in large measure, the reasons for the greater productivity in Japanese-owned U.S. and European plants. For example, the greater productivity of Honda’s U.S. plant in Marysvilie, Ohio or Toyota’s plant in Fremont, California is, as Drucker says, largely-perhaps entirely-a result of their having only three to five job classifications. Ford and Chrysler, in contrast, each has about 60 job classifications. The same excessive specialization burdens the consumer electronics production industry. In the U.S. and European plants, there are typically 100 job classifications; in East Asia there are, at most, seven. 43
FLEXIFHLITY FLEXES ITS MUSCLE e on 1v way companies can continue to empower e’mployees and reduce the bureaucracy within their operation is to use flexible people-people who can do more than one task. Business needs workers who are crosstrained in other skills and who also participate in such traditional managerial concerns as job planning, organizing, and controlling. Consider the Kodak employees who work with X-ray cassettes and spools, canisters, and cartons for film. They now arrange their own hours, keep track of their own production, and fix their own machines. Unlike many workers who simply operate their machines, flexible workers such as those at the Kodak facility coach fellow team members in statistical process control, meet with their suppliers, interview prospective recruits, and manage just-in-time inventory. Flexible people are also having an impact on the service industry. One example, reported by Fortune (Alster 19891, is Lechmere, Inc., a 27store retail chain owned by Dayton Hudson. Experimenting with flexibility as a competitive tool, Lechmere began by offering employees in its Sarasota, Florida facility raises based on the number of jobs each learned to perform. Cashiers were encouraged to sell records and tapes. Sporting goods salespeople were taught to operate forklifts. What are the benefits to Lechmere? Flexibility in the work force has helped the company adjust quickly to shifts in staffing needs because workers can be moved to where they are needed. Pay incentives plus the chance for more varied and interesting work days are powerful recruiting incentives. Perhaps that is one reason Lechmere’s Sarasota facility has a more stable work force-60 percent full time, rather than the 30 percent that exists in the rest of the chain. Even traditionally bureaucratic organizations such as National Steel and General Motors are loosening up on their job classifications. The use of workers trained in several jobs helped Motorola solve critical quality problems. Likewise, an insurance and financial services company in San Antonio called USAA has invested heavily in office automation so its salespeople can handle every step of processing a policy. National Steel formerly assigned tasks that were 20 percent welding and 80 percent pipemh
1
“hcreusin~ly, companies fhat focus on flexibility pay workers for the variety of skills they acquire rather than for the job they do.”
fitting. When neither work was available, employees remained idle. In 1985 and 1986, an agreement with the United Steelworkers gave major plants the opportunity to consolidate 78 job classifications into 16. The immediate result was greater speed. National Steel now produces ton of steel in 4.5 man hours vs. 5.5 in 1984. Quality and profits have also improved. MAKING
FLEXIBILITY
a
WORK
lexihle workers give a firm a competitive advantage. They can find errors or flaws in others’ work. They better understand the “big picture” of how the organization works and how they fit into it. They are more effective at applying problem-solving tools and are able to fill in as needed. Flexible workers are absolutely essential to some of the newer inventory control techniques, such as just-in-time (JIT). John F. Krafcik, a consultant for MIT’s International Motor Vehicle Program, emphasizes that “around the world there’s a very strong correlation in durable goods manufacturing between quality and productivity and the use of multi-skilling (flexible workers), work-teams, and just-in-time” (Alster 1989). Motorola provides a perfect example of the power of flexibility. Using flexible workers and overhauling the compensation system was its key to enhanced quality and competitiveness. This is not unusual; increasingly, companies that focus on flexibility pay workers for the variety of skills they acquire rather than for the jobs they do. Motorola is only one company among many that overhauled its compensation system to reward those who learn a variety of skills. The strategy seems to be working: Motorola’s defect rate has fallen 77 percent at locations where the new system was tried. At the Motorola Heights, Illinois cellular phone factory, half a dozen pay categories were eliminated. Now all production workers are in the same category and each can qualify for the highest wage. Adding new skills means pay increases if a worker is able to maintain zero defect performance at a station. Increasing pay for acquiring new skills helps create interest in flexibility. But that alone is not enough to generate a true learning organization. Flexible people who can work across departmental lines and functions must be skilled in many aspects of business, They must be easily adaptable to team work and team participation. Most important, management must be able to figure out how to encourage flexibility in people. Managers must be able to identify ways of adding extra responsibilities without creating the extra stress and disillusionment that results in disgruntled employees who complain of working harder for less.
F
It’s Not For Everyone Not everyone should or can be a flexible worker. Probably the most widely recognized push toward greater flexibility is in the auto industry. Japan s automakers have introduced American auto workers to a different approach toward job classifications. These companies shun narrow classifications and instead give production workers broad titles such as “technicians.” At Nissan, they call these flexible people “associates.” At Honda, Mazda, and Toyota they call them “team members.” In all these companies, employees work in small groups; each person has prime responsibility for both the quality of his work and improving the production process. Even their neweht members participate in decisions most Amencan plants leave to management. This include.< such tasks as job scheduling, working overtime, and rotating jobs. To do this requires greater employee involvement and greater flexibility among workers. Of course, any company that expects to use flexible workers with accompanying greater individual responsibility also needs to be very careful about whom it hires. At Toyota it takes at least 18 hours to land a production job. Once prospective employees complete a general knowledge exam, their attitudes toward work are tested. Toyota exposes the top 30 percent of these prospective employees to the close scrutiny that many American firms only reserve for hiring new managers. Ar Toyota, potential team members in groups of 12 go to an interpersonal skills assessment center to participate in a session on problem solving. For instance, they might be told that a lawn mower manufacturer has production problems and asked what they (the team members) would do. Those who ask the right questions and work together to find solutions are more likely to continue to be interviewed. Remaining canddates then go through a manufacturing exercise, such as one that judges whether they are able to follow instructions for assembling an array of plastic pipes. Those who improve on the original method they were taught are most likely to be hired. Toyota found that participation in this exercise discourages anyone who dislikes repetitive factory work. In the end, fewer than 10 percent of applicants survive to the final stages of their proofing interviews and physical exams. Using Existing Personnel Toyota’s system is probably fine if you are hiring new people, but what do you do when you want to make your current people more flexible? What do you do when you cannot spend an enormous amount of money on recruiting and selection? The Pou er of Ik&ility
How do you change to a more flexible work force and not cause a great deal of disruption and disillusionment? A good example of the right approach can be seen in an example from Texas Instruments. Kenneth Spenser, vice president of the information technology group, believed there was a critical need to streamline TI’s Johnson City operation. At the time, his organization had eight layers, so he called a meeting of his managers and told them of the need for a flatter organization. In a bombshell, he told an audience of 240 of his managers and supervisors that the next time they held a meeting like this it would not be held in a room that could seat 240. Rather, he said, they would hold it in their miniauditorium, which seats only 99 people. His message was clear: in less than one year management-supervisory teams were streamlined to 103 people. Their eight levels had been trimmed to four, but people didn’t revolt! The lesson to be learned here involves how Spenser implemented the change. Unlike with typical downsizing or rightsizing methods, morale was not destroyed. Most displaced managers simply returned to their technical and engineering disciplines but-and here is the unique aspect-without sacrificing their chance for career advancement. So how does this relate to flexible people? Flattening organizations and creating more flexible people ofterl do go hand in hand. But they can also create anxiety, disillusionment, and a stressed and depressed work force. In TI’s case, displaced middle managers could have been disillusioned when the company was streamlined. Instead, they were able to generate a sense of self-worth because they were still able to experience career advancement. The secret was the new incentive TI created-a “technical ladder” with eight rungs. People can still have a sense of growth and career advancement, but the company does not have the bureaucracy it did with eight managerial levels.
“Flaitening organimfions and creafing more flexible people often do go hand in hand, If
Moving
Incentives
The progression through TI’s technical ladder begins with the junior position of associate engineer. Then one can become an engineer, senior engineer, master engineer, member of the group of technical staff, fellow, and senior fellow. Along with these new technical rungs comes correspondingly greater respect and status. In fact,
45
Spenser notes, “Senior fellow is a position right next to God” (“Lean But Not Mean” 1990). An arrangement such as this gives new hope to those who will not be in ma~gement. At the top of this technical ladder one can make as much money as any vice president in the corporation. The lesson to be learned from the Johnson City experience is that if you give people different or additional responsibilities to create a more flexible work force, then you must give them something else as well. Flexible people can be a tremendous competitive advantage, but having greater responsibilities alone is not enough to keep people motivated over the long term. In flatter and more flexible environments, people still need to feel a sense of movement, of achievement. It is possible to create a highly flexible work force whose members can do a variety of tasks. It is possible to pay for skills acquired, but it is not enough. People will still want to believe they are advancing. Why not create flexible people? The more flexible and knowledgeable they become, the more likely they are to move from associate to senior, depending on the skills they acquire. The greater the skills, the greater the pay, rank, and status. lexibility can be a competitive advantage, but not when it is approachecl piecemeal. Management has to reassess its approach, share more information, and expand employee involvement. This means letting employees plan, organize, and control their jobs.
F
46
Making flexibility work means creating new incentives and compensation to learn new skills. It requires continuous learning and continuous training. Some will need remedial help at first, others will need to learn new skills. Management must learn to trust and respect the intelligence innate within all of them. Cl References
Norm Alsrer, “What Flexible Workers Can Do,” Fo~orhune, February 23, 19X9, pp. 62-63. Peter F. Drucker, “Workers’Hands Bound By Tradi tion,” Wall Street~fvurnul, August 2, 1988. p. B3. Louis Kraar, “‘Japan’sGung-Ho Car Plants,“ Wtiune. January 30, 1989, pp. 100-104.
“Lean But Not &lean.“ Irzda~trt,R&k, February 19, 1990, pp. 53-54. Tom Peters, ~‘~~ap~bility, Not Job Security, Is Survival Skill for ~OS,” Springfi’eld Newsleader, October 1, 1990, p. IE.
D. Keith Denton is a professor of management at Southwest University, Springfield.
Missouri State
t seems that afmost everyone today is talking about the need to be flexible and adaptable to survive in the global marketplace. Tom Peters ( 19901, just one of those who have expressed such feelings, says that only those who are ready to confront and master change each day will thrive in the 1990s and beyond. The time when doing one thing well was good enough for career security is fading fast. Times are tough. Managers no longer expect greater commitment and involvement from their personnel-they need them. Simply being a cog in the corporation does not make sense when continuous improvement and continuous learning are the only survival tools. Change will be the only constant in most work lives. David Birch, the economist, says the average college graduate should expect to hold no less than 10 to 12 jobs in three to five different fields in the future (Peters 1990). If anything like this becomes reality, we could expect to see a need for perpetual upgrading of skills. Regardless of whether Birch’s assessment is true, one trend certain to have a dramatic impact on the need for highly flexible people is the continuous flattening of the organizational pyramid. As organizations become flatter, more people at the bottom will need to be “empowered” so they can increase their contributions to the firm. And this empowerment can only occur when employees are allowed to assume a wide range of responsibilities.
I
n an article in the Wall Strwt Journal, Peter Drucker (1988) describes what can occur if managers do not give workers an opportunity to l)e flexible. More specifically, he describes the detr~n~ental effects of work rules and job restrictions. For example, he writes about work rules that forbid electricians from straightening a stud when installing a fuse box. Rules that forbid workers from moving from one job to another cause problems. Work rules that restrict people to
I
narrow, repetitive tasks can also cripple competitiveness. Drucker maintains that ail the evidence indicates that work rules and job restrictions are the primary cause of the productivi~ gap hurting both American and European manufacturers. The U.S. construction industry, says Drucker, is a prime example of these abuses. The building industry is unique because it has unions, with their tight job restrictions, coexisting with nonunion shops. When both types of shops work side-by-side at the same company, it is called “double-breasting.” One double-breasted contractor did a study of two identical projects done by his company. The nonunion crew worked an average of 50 minutes out of every hour, whereas the union crew worked only 35 minutes. The rest of the time was spent waiting for someone to come back from the restroom or waiting for an available journeyman to do work that could have been done by an apprentice. ‘As a result of these types of arrangements, the union crew needed eight people to do the job; the nonunion crew needed only five. Excessive specialization and specialized work rules are, in large measure, the reasons for the greater productivity in Japanese-owned U.S. and European plants. For example, the greater productivity of Honda’s U.S. plant in Marysvilie, Ohio or Toyota’s plant in Fremont, California is, as Drucker says, largely-perhaps entirely-a result of their having only three to five job classifications. Ford and Chrysler, in contrast, each has about 60 job classifications. The same excessive specialization burdens the consumer electronics production industry. In the U.S. and European plants, there are typically 100 job classifications; in East Asia there are, at most, seven. 43
FLEXIFHLITY FLEXES ITS MUSCLE e on 1v way companies can continue to empower e’mployees and reduce the bureaucracy within their operation is to use flexible people-people who can do more than one task. Business needs workers who are crosstrained in other skills and who also participate in such traditional managerial concerns as job planning, organizing, and controlling. Consider the Kodak employees who work with X-ray cassettes and spools, canisters, and cartons for film. They now arrange their own hours, keep track of their own production, and fix their own machines. Unlike many workers who simply operate their machines, flexible workers such as those at the Kodak facility coach fellow team members in statistical process control, meet with their suppliers, interview prospective recruits, and manage just-in-time inventory. Flexible people are also having an impact on the service industry. One example, reported by Fortune (Alster 19891, is Lechmere, Inc., a 27store retail chain owned by Dayton Hudson. Experimenting with flexibility as a competitive tool, Lechmere began by offering employees in its Sarasota, Florida facility raises based on the number of jobs each learned to perform. Cashiers were encouraged to sell records and tapes. Sporting goods salespeople were taught to operate forklifts. What are the benefits to Lechmere? Flexibility in the work force has helped the company adjust quickly to shifts in staffing needs because workers can be moved to where they are needed. Pay incentives plus the chance for more varied and interesting work days are powerful recruiting incentives. Perhaps that is one reason Lechmere’s Sarasota facility has a more stable work force-60 percent full time, rather than the 30 percent that exists in the rest of the chain. Even traditionally bureaucratic organizations such as National Steel and General Motors are loosening up on their job classifications. The use of workers trained in several jobs helped Motorola solve critical quality problems. Likewise, an insurance and financial services company in San Antonio called USAA has invested heavily in office automation so its salespeople can handle every step of processing a policy. National Steel formerly assigned tasks that were 20 percent welding and 80 percent pipemh
1
“hcreusin~ly, companies fhat focus on flexibility pay workers for the variety of skills they acquire rather than for the job they do.”
fitting. When neither work was available, employees remained idle. In 1985 and 1986, an agreement with the United Steelworkers gave major plants the opportunity to consolidate 78 job classifications into 16. The immediate result was greater speed. National Steel now produces ton of steel in 4.5 man hours vs. 5.5 in 1984. Quality and profits have also improved. MAKING
FLEXIBILITY
a
WORK
lexihle workers give a firm a competitive advantage. They can find errors or flaws in others’ work. They better understand the “big picture” of how the organization works and how they fit into it. They are more effective at applying problem-solving tools and are able to fill in as needed. Flexible workers are absolutely essential to some of the newer inventory control techniques, such as just-in-time (JIT). John F. Krafcik, a consultant for MIT’s International Motor Vehicle Program, emphasizes that “around the world there’s a very strong correlation in durable goods manufacturing between quality and productivity and the use of multi-skilling (flexible workers), work-teams, and just-in-time” (Alster 1989). Motorola provides a perfect example of the power of flexibility. Using flexible workers and overhauling the compensation system was its key to enhanced quality and competitiveness. This is not unusual; increasingly, companies that focus on flexibility pay workers for the variety of skills they acquire rather than for the jobs they do. Motorola is only one company among many that overhauled its compensation system to reward those who learn a variety of skills. The strategy seems to be working: Motorola’s defect rate has fallen 77 percent at locations where the new system was tried. At the Motorola Heights, Illinois cellular phone factory, half a dozen pay categories were eliminated. Now all production workers are in the same category and each can qualify for the highest wage. Adding new skills means pay increases if a worker is able to maintain zero defect performance at a station. Increasing pay for acquiring new skills helps create interest in flexibility. But that alone is not enough to generate a true learning organization. Flexible people who can work across departmental lines and functions must be skilled in many aspects of business, They must be easily adaptable to team work and team participation. Most important, management must be able to figure out how to encourage flexibility in people. Managers must be able to identify ways of adding extra responsibilities without creating the extra stress and disillusionment that results in disgruntled employees who complain of working harder for less.
F
It’s Not For Everyone Not everyone should or can be a flexible worker. Probably the most widely recognized push toward greater flexibility is in the auto industry. Japan s automakers have introduced American auto workers to a different approach toward job classifications. These companies shun narrow classifications and instead give production workers broad titles such as “technicians.” At Nissan, they call these flexible people “associates.” At Honda, Mazda, and Toyota they call them “team members.” In all these companies, employees work in small groups; each person has prime responsibility for both the quality of his work and improving the production process. Even their neweht members participate in decisions most Amencan plants leave to management. This include.< such tasks as job scheduling, working overtime, and rotating jobs. To do this requires greater employee involvement and greater flexibility among workers. Of course, any company that expects to use flexible workers with accompanying greater individual responsibility also needs to be very careful about whom it hires. At Toyota it takes at least 18 hours to land a production job. Once prospective employees complete a general knowledge exam, their attitudes toward work are tested. Toyota exposes the top 30 percent of these prospective employees to the close scrutiny that many American firms only reserve for hiring new managers. Ar Toyota, potential team members in groups of 12 go to an interpersonal skills assessment center to participate in a session on problem solving. For instance, they might be told that a lawn mower manufacturer has production problems and asked what they (the team members) would do. Those who ask the right questions and work together to find solutions are more likely to continue to be interviewed. Remaining canddates then go through a manufacturing exercise, such as one that judges whether they are able to follow instructions for assembling an array of plastic pipes. Those who improve on the original method they were taught are most likely to be hired. Toyota found that participation in this exercise discourages anyone who dislikes repetitive factory work. In the end, fewer than 10 percent of applicants survive to the final stages of their proofing interviews and physical exams. Using Existing Personnel Toyota’s system is probably fine if you are hiring new people, but what do you do when you want to make your current people more flexible? What do you do when you cannot spend an enormous amount of money on recruiting and selection? The Pou er of Ik&ility
How do you change to a more flexible work force and not cause a great deal of disruption and disillusionment? A good example of the right approach can be seen in an example from Texas Instruments. Kenneth Spenser, vice president of the information technology group, believed there was a critical need to streamline TI’s Johnson City operation. At the time, his organization had eight layers, so he called a meeting of his managers and told them of the need for a flatter organization. In a bombshell, he told an audience of 240 of his managers and supervisors that the next time they held a meeting like this it would not be held in a room that could seat 240. Rather, he said, they would hold it in their miniauditorium, which seats only 99 people. His message was clear: in less than one year management-supervisory teams were streamlined to 103 people. Their eight levels had been trimmed to four, but people didn’t revolt! The lesson to be learned here involves how Spenser implemented the change. Unlike with typical downsizing or rightsizing methods, morale was not destroyed. Most displaced managers simply returned to their technical and engineering disciplines but-and here is the unique aspect-without sacrificing their chance for career advancement. So how does this relate to flexible people? Flattening organizations and creating more flexible people ofterl do go hand in hand. But they can also create anxiety, disillusionment, and a stressed and depressed work force. In TI’s case, displaced middle managers could have been disillusioned when the company was streamlined. Instead, they were able to generate a sense of self-worth because they were still able to experience career advancement. The secret was the new incentive TI created-a “technical ladder” with eight rungs. People can still have a sense of growth and career advancement, but the company does not have the bureaucracy it did with eight managerial levels.
“Flaitening organimfions and creafing more flexible people often do go hand in hand, If
Moving
Incentives
The progression through TI’s technical ladder begins with the junior position of associate engineer. Then one can become an engineer, senior engineer, master engineer, member of the group of technical staff, fellow, and senior fellow. Along with these new technical rungs comes correspondingly greater respect and status. In fact,
45
Spenser notes, “Senior fellow is a position right next to God” (“Lean But Not Mean” 1990). An arrangement such as this gives new hope to those who will not be in ma~gement. At the top of this technical ladder one can make as much money as any vice president in the corporation. The lesson to be learned from the Johnson City experience is that if you give people different or additional responsibilities to create a more flexible work force, then you must give them something else as well. Flexible people can be a tremendous competitive advantage, but having greater responsibilities alone is not enough to keep people motivated over the long term. In flatter and more flexible environments, people still need to feel a sense of movement, of achievement. It is possible to create a highly flexible work force whose members can do a variety of tasks. It is possible to pay for skills acquired, but it is not enough. People will still want to believe they are advancing. Why not create flexible people? The more flexible and knowledgeable they become, the more likely they are to move from associate to senior, depending on the skills they acquire. The greater the skills, the greater the pay, rank, and status. lexibility can be a competitive advantage, but not when it is approachecl piecemeal. Management has to reassess its approach, share more information, and expand employee involvement. This means letting employees plan, organize, and control their jobs.
F
46
Making flexibility work means creating new incentives and compensation to learn new skills. It requires continuous learning and continuous training. Some will need remedial help at first, others will need to learn new skills. Management must learn to trust and respect the intelligence innate within all of them. Cl References
Norm Alsrer, “What Flexible Workers Can Do,” Fo~orhune, February 23, 19X9, pp. 62-63. Peter F. Drucker, “Workers’Hands Bound By Tradi tion,” Wall Street~fvurnul, August 2, 1988. p. B3. Louis Kraar, “‘Japan’sGung-Ho Car Plants,“ Wtiune. January 30, 1989, pp. 100-104.
“Lean But Not &lean.“ Irzda~trt,R&k, February 19, 1990, pp. 53-54. Tom Peters, ~‘~~ap~bility, Not Job Security, Is Survival Skill for ~OS,” Springfi’eld Newsleader, October 1, 1990, p. IE.
D. Keith Denton is a professor of management at Southwest University, Springfield.
Missouri State