THE CASE: BACKGROUND

A new plant manager has introduced a plant improvement initiative and hired a vice president of improvement initiatives to assist him. They have involved management and non- management employees throughout the plant, and the initiative is working. As the teaming occurs, those involved are caring more about each other and their work. They are streamlining processes and improving relationships as they learn theories and tools related to their work and to the improvement initiative. Then the plant loses a major contract , and corporate starts asking for layoffs and re-structuring.

INFORMATION ON KEY PLAYERS

Key players are depicted on Chart 1 and include Ross, Executive Vice President & Plant Manager, and Laura, Vice President of Improvement Initiatives.

CASE SCENARIO

The people in the plant believed every word he said to them. They wanted to believe him, this executive vice president and plant manager, Ross, who came to them from New York by way of Florida. (The organizational chart is depicted in Chart 1.) Ross went straight to the shop floor. He walked among them. He became a part of them. He brought mahogany row to the machine shop. It was an unlikely alliance. For years, there had been layoffs, strikes, and all the distrust that came with them. But Ross seemed different. Also, there was a new vice president named Laura on the plant managers staff. She walked through the plant with Ross. She and Ross ate in the cafeteria with the union employees. She had an easy laughter that made everyone relax. No one knew exactly what Laura did, but her title was Vice President of Improvement Initiatives. Together she and Ross made the plant seem a special place to work, a place where the workers could actually challenge existing processes and offer innovative ideas. There was now a comfortable look in the workers eyes as Ross said to them: You know, management does not know anything about the things you do out here in the machine shop. You run this place. Your ideas are the only ones that matter to me! Glen, a machinist said, Well, lets get on with it then. If you want this place to operate better, we can do that. But it wont work if we try to do it alone. You go back to your office, and your words mean nothing out here not to us, not to our bosses. There was a deafening silence. Then everyone laughed uneasily as they looked to see Ross reaction. Suddenly, he burst into laughter and said, Why would I want to be up there looking at reports that tell me what might be happening down here? Id rather come down here and talk with yall and know for sure whats happening. Thats how it began in October, 1985 two teams of hourly guys in the machine shop focused on improving the processes by which they did their work. They had found a soul mate, someone who cared about them and wanted to work with them, to be on their teams. Managers, directors, and supervisors observed this strange scenario cautiously, but Clyde, Vice President of Production, and Randy, Vice President of Quality, seemed energized by this sudden interest in people on the production floor. For the first time, a plant manager wanted the production people to give him ideas about how the plant should operate and to offer suggestions for improvement. Ross and Laura pulled the machine shop people together after hours (paid them overtime) and asked: What problems exist for you? Ross personally began writing their answers on a flip chart. After a little time had passed, he asked: What can management do to help you solve these problems? See Chart 2 for the answers to Ross questions. Ross asked the Machine Shop employees (management and non-management) what things they cared about passionately at work. Their responses were: safety, job security, product quality (so we dont have to do rework), co-workers, getting our work done fast so our bosses will leave us alone, and being respected. This time the Production Director over the Machine Shop wrote the responses on the flip chart. Ross and the members of his leadership team used these responses and others obtained in similar scenarios throughout the factory to revise the organizations core values. He suggested to Production directors, managers and supervisors that all processes in every shop should have key performance indicators. He asked them to think about the core values, the things they care about and to ask themselves questions, such as If we care about safety, how will we behave, and how will we measure our safety results? If we care about quality, how will we behave, and how will we measure our quality results? Who will track results? Ross involved vice presidents, directors, and people in the Training Department in teaching management and non-management employees about process ownership, management and improvement; leadership; empowerment; change management; quality theories and tools; and many other performance excellence concepts. He sent people to Quality courses taught by Dr. W. Edwards Deming and Dr. Joseph Juran and to other external courses such as Quality Function Deployment and Taguchi Methods. Also, he brought experts to the plant to teach a variety of subjects such as Managing Agreement (The Abilene Paradox - Dr. Jerry Harvey), Leadership (The Leadership Challenge - Jim Kouzes and Barry Posner), and Innovation (Col. Rolf Smith). For five years, everyone in the plant was involved in documenting, managing, and continuously improving the processes which they owned. Customers and suppliers were also involved in the improvement initiatives. For the first time in the history of the plant, the hourly union employees were involved in the development and execution of strategic and tactical plans. The stock price soared. Everything seemed so perfect. Then the plant lost a bid for a major contract. Corporate asked Ross to lay off 20% of the people at the plant. Such a reduction in force had historically been from the bottom up. Ross was almost in tears as he discussed the situation with the members of his leadership team. Laura sat quietly as the vice presidents commented that this always happens. Sandy, the Vice President of Engineering said emphatically, Thats the reason you cant involve hourly people in strategic planning and suggestions for improvement. It just sets them up for disappointment in, and distrust of, management. Sam, Vice President of Finance, and Dan, Vice President of Marketing agreed. As Vice President of Improvement Initiatives, Laura had always played a behind the scenes role. She had led the team that designed the improvement initiative system, and the intent was that Ross would be the formal leader of the system. Laura would be Ross confidante and internal consultant, his executive coach. Therefore, after the meeting was over, Laura stayed to talk with Ross. She said, Why do we have to lay off people from the bottom up? She suggested, Why dont we lay off people (or let them retire) from the top down? We have 12 vice presidents. Lets merge areas and have 7 vice presidents. We have 75 directors. Lets merge areas and have 25 directors. We have 150 managers. Lets merge areas and have 50 managers. We have 500 supervisors. Lets merge areas and have 100 supervisors. Lets keep all the hourly people and cross train them. Lets keep all the engineers and let them help us figure out how to get the next big contract. Ross response was, Laura, you are one of the 12 vice presidents. You know that this will not be easy. Laura replied, Yes, but the hourly guys will know we care about them when some of us leave. Ross, the Plant Manager and Earl, the Vice President of Human Resources (with input from Laura) executed the organizational restructuring in order to meet the Corporate-mandated goal of 20% reduction in employees and still retain the plants continuous improvement strategy. To support the organizational restructuring, an early out program was developed that would allow people to retire early or simply leave to find another position. Within six months, Corporate asked for another 20% reduction in headcount. With his attorney by his side, Ross flew to corporate headquarters and met with the CEO and his top executive team to ask for a delay in this headcount reduction until the next contract was acquired. When the CEO would not relent, Ross told him that it was a matter of integrity for him to stand up for people who had actually saved the plant during the contract loss. He then resigned as executive vice president and plant manager and let his attorney negotiate his settlement. When that was done, Ross called Laura first and told her to prepare her own exit strategy since he was no longer her boss because he had refused to lay off any more people. He asked Laura to call an all-plant meeting for the end of each shift for the next day. At each of the shift meetings, Ross tried his best to convey hope for the future. He told the people that they had made a huge positive difference in the plant operations and that they should continue to operate the same way in the future. On each shift, as Laura looked around at the people, they all had tears in their eyes. No one said a word. Obviously, word had gotten out at the plant that Ross had resigned. Over the years, many people had left this plant. Some had resigned. Some had been laid off or fired. This was the first time that the people cried.

1. What did Laura do right? Justify your answer.

2. What mistakes did Laura make? Explain your answer.

3. What other information do you need to better analyze this case?