Nord Engineering Services: implementingproduction self-managed teams

Maria had a woried look as she said goodbye and thankedthose members of 'Team One for their report, assuring themthat she would soon advise them of her decisions. Tellingher assistant to hold all calls for the next hour, Maria re-read the report and reflected on why, as Executive DirectorProduction,she had championed with the Executive Leadership Group (ELG) for her division of Nord Engineering Services (NES) to adopt self-managed teams (SMT), theimplementation process and the outcomes. Maria recalled her ELG presentation just over two yearsago.At the time, manufacturers in Australia had fallen from96 000 10 years previously to just under 84 000.Thoughmanufacturing employed around one million people inAustralia, making it the sixth-largest employer by industry,and accounted for about 8per cent of all employment, only45 per cent of Australian manufacturers were innovating and there were warnings that if companies didn't transformthey'd further decline and face potential extinction. NES,headquartered in Westen Australia, generated around$1.75 billion annualrevenue with its 1200 employees makingparts and machinery for industries including mining,construction, defence and, more recently, aerospace. It hadto make some changes to its way of operating ifit was tosurvive and thrive. and there were warnings that if companies didn't transformthey'd further decline and face potential extinction. NES,headquartered in Westen Australia, generated around$1.75 billion annualrevenue with its 1200 employees makingparts and machinery for industries including mining,construction, defence and, more recently, aerospace. It hadto make some changes to its way of operating ifit was tosurvive and thrive. Maria recalled how enthused she was by the opportunities of SMT and how pleased she felt to be able toput into practice some of her last six months' research. Shehad already decided to start with the aerospace departmentwith its newer technologies,processes and, most importantly, people.Having built a relationship with Juan,the manager, Maria had called him to give him the newsand he was keen to be involved.At their meeting to designthe work system, they had both envisaged a simplifiedorganisational hierarchy of teams taking responsibility forwork production and monitoring, with authority to evaluatetheir own performance and adjust the ways in which thetasks were carried out in response to changing conditions.This approach, they believed, would provide employees witha high level of work satisfaction, build commitment, andinspire them to continuously improve processes to increaseproductivity andproduct reliability. Though Maria and Juan would have liked to hire inpeople who had the characteristics required for SMT, theyrecognised that timeline and budget restrictions meantthey had to move with momentum and use the existingworkforce's natural groups, based on functional boundaries.They had agreed that they would run some training onthe new skills required for SMT such as communication,collaboration, problem solving, conflict management and decision making. The teams would determine their ownteam leaders and how they would handle the four Ms:materials, machines, manpower and methods. Juan wouldact as mentor to the team leaders and Maria would holdquarterly meetings with all teams. It had all started out so encouragingly. At the first meeting of the aerospace department, most of the employeeswere keen to engage and even the dissenters agreed to giveit a go.Over the following six months,teams set themselvesup and came to understand they were being differentlymanaged. Enthusiasm for the change was high with different team members reporting their positive progress atthe first two quarterly meetings.The next six months hadnot gone as well.Teams reported ambiguities in the newapproach and there was increased fiustration and confusion,with poorly defined objectives and lack of clarity about the intersection of different teams.Some teams reported areduction in creativity and initiative brought about by rigidteam attitudes towards tasks. It became obvious that theinitial training was inadequate and the demand for moretraining increased. There had been some slippage in outputand on two occasions production flow had been impacted;both instances were identified as assembler unreliabilitycaused by rotating undertrained team members through theprocess. In the first half of the second year, things improvedas teams developed their own identities and became moreeffective at managing. The extra training in problem-solvingtasks, tools and techniques helped with solutions in skin-stringer riveting, fuselage joining and interiors assembly.NESwas able to raise daily and weekly targets and output hadincreased by 3 per cent since the start of the pilot program,with enror firequency rates dropping by 6 per cent. From mid-year, though, there were more instances of communicationissues with teams pushing performance, covering up forunderpeiforming members,and competing with other teamsso as to meet the targets. As the report noted, teams felt theywere continually being told by their teammates to improveproduction levels, which were uneven across the department,and for some this causedstress and fatigue. Teams were judged collectively but pay rates were still individualised, soprocess loss caused by free riders had a big impact on morale.Scrutiny of team performance intensified and was regulatedby teammates who disciplined, and sometimes bullied, whereexpectations weren't being met. Maria knew she had to present the report to ELG but wasconcerned that some ELG members would say the pilot was not working and the concept should be abandoned. Mariaknew that it was too early to declare SMT a failure and if itwas cut short all of Production's hard work would be lost.Also, there was a real danger that NES would see this as justanother example of a management fad, and the frustrationwith ineffective change initiatives would increase andproductivity and reputation would suffer. Maria thoughtabout how she would frame the pilot outcomes and therecommendations she would make about support systems,training, boundaries, incentives and pay scales. She thoughtshe would structure them around the original four Ms andadd in measurement and money. She hoped that the ELGwould allow the Production teams to mature and actually.

a. 8-10 dot point summary of the case

b. At least 3 dot point sentences critique

c. At least 3 dot point sentences reflection