What makes a firm profitable? Are there really any secrets to successful business management? Is there some method, formula, or procedure that will guarantee a place in Fortune 500?
Probably not, but lately there has been a great deal of attention focused on how to search for and find excellence. Analyzing what has made some firms perform extraordinarily well in comparison with their competitors, one finds certain common factors. Most of these are simply common sense, a realization of how people in the work force have changed, and a willingness on the part of management to adapt to the realities of the 1980s.
Basically, what it comes down to is this: any business is dependent on the proper management of materials, finances, and people. The majority of companies expend most of their efforts on the first two, while the excellent companies have realized that people really are the keys to the kingdom. After all, there is relatively little that a firm can do to alter its material of financial resources, but it can obtain dramatic results through its human resources. Organizations don’t achieve success or efficiency or higher productivity; people do.
Unfortunately, deep down, most North American managers still think that people aren’t important to productivity. They are deluded by a belief that a new process, a new product, better technology, or computerization will solve their problems. However, the truly excellent companies have learned that people are the most important elements. These firms have also found that there are ways to unleash the untapped talent of the work force.
According to the authors of In Search of Excellence, “there was hardly a more pervasive theme in excellent companies that respect for the individual.” For example, at IBM this is the single most important management concept, the one that occupies the major portion of management time. IBM’s position in the marketplace is a clear indicator of how effective this philosophy can be. Let’s assume you are convinced that people are important and that your firm should do something about it. What should you do? Where should you start? Can you afford it?
First of all, you must understand that greater productivity through an emphasis on people doesn’t occur overnight; it requires changes and true commitment from the chief executive on down to the fellow who sweeps the floor. What we are talking about here is nothing less than a basic company philosophy about people and their place in the organization. As one local company president put it, “You have to treat people as mature, intelligent individuals who are just as entrepreneurial and dedicated to the company as you are.” This means developing a spirit of trust and respect in which employees are viewed as partners and treated with dignity. Now this does not imply galloping democracy or an abdication of management decision-making or authority. It involves tough-minded respect, which has to be earned by both parties, and the need to train both management and employees for a new working relationship.
Many firms have found that a good way to move toward excellence is through a Quality of Working Life (QWL) program. A number of QWL programs established by local firms have shown that the best way to begin is with a pilot project. This allows both management and employees to test the waters and see whether the concept fits their organization before making a total commitment to it.
There are two important prerequisites. First, there must be some assurance that the firm is ready for QWL and that the program will have a chance for success. This is often established by measuring management and employee attitudes and determining the hidden concerns and issues that exist in every company. Secondly, there must be an honest commitment and readiness on the part of the senior management to manage in the QWL mode. This process simply will not work if management views it as something to keep the natives from becoming restless or as another short-lived fad that needn’t involve them.
Questions about what the program accomplishes and how it works can best be answered through these examples drawn from Regional firms.
Company A is a footwear manufacturer whose QWL pilot team came from the warehouse. The group of employees elected to improve a labeling procedure that they hated because it was a messy, dirty job. Within a few weeks, the team conducted a time and motion study and had designed a new labeling procedure that eliminated the messy label, the old procedure, and saved the firm more than $3,500 a year in labor costs alone.
Company B is a dairy whose pilot team came from the powdered milk department. This team ultimately helped design a new plant facility and improved the existing plant layout as well as light and air quality. In addition, the team replaced its boring job with a robot! This allowed the team members to move on to more interesting and challenging work.
In Company C, a custom machine shop, the QWL pilot team comprised welders who, much to management’s surprise, chose to work on the problem of not having the right tools with which to work. This team not only shopped for the right tools, but also designed a maintenance procedure and a storage system for the new tools. This pilot group proved to management that its solution would save the company $14,000 a year and that the cost of implementing their ideas would be recovered in six months.
These kinds of results are not unusual, nor have they come from highly educated employees. These were ordinary hourly-wage earners who were simply given the training and opportunity to use their brains and get involved in more than just the daily routine of their jobs. In each case, there were important increases in morale, job satisfaction, co-operation, and ease of management, as well as greater efficiency and productivity.
The third question mentioned above was, “Can you afford it?” There is really only one way to answer this and that is by asking, “Can you afford no to draw on the people resources you already have?”
The co-operative team approach of a good QWL program has proved to be a highly effective way to achieve excellence and maintain that all-important competitive edge. The value and power of the team approach should not be underestimated. The Japanese have developed teamwork and the QWL approach to the level of a fine art. As a result, Canadian businesses are facing increasingly stiff competition from Japanese and other foreign firms that have learned how to get the best from their work forces.
Our markets are slowly being eroded by this superior people-management system, while we continue to sit back and rely on outdated attitudes and values. We can’t afford to turn our backs on reality. As William Coates, executive vice-president of Westinghouse, has said “In factory after factory in Japan, everyone inside is trying to whip us. If we don’t get that attitude, we literally won’t survive.”
Attitudes come from people. This is why more and more firms that want to achieve success are looking to the development of their human resources as the key to greater productivity.