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Now for the Good News : Some California Companies Have Found Prize-Winning Ways to Beat the Productivity Problems

December 15, 1985|WILLIAM G. OUCHI | William G. Ouchi, author of "Theory Z: How American Management Can Meet the Japanese Challenge," is a professor at the UCLA Graduate School of Management and was chairman of Sen. Alan Cranston's Senate Productivity Award Board

In 1928, Chiksan Co. was established in Brea to manufacture piping and other equipment used in California's oil fields. It was eventually acquired by an out-of-state corporation, FMC, but continued to operate as an autonomous plant and prospered as the oil business prospered. By 1980 it had grown to 600 employees. Then came the drop in oil profits in 1981, and the plant had to lay off more than half of its employees. The remaining 240 employees decided to do whatever was necessary to remain competitive.

The step they took was fairly simple: make use of both the brawn and the brains of every worker and manager. The results have been impressive. In sharp contrast to nationwide productivity--which hasn't grown since 1980--overall plant productivity has risen 15% annually since 1981, even though the business outlook at FMC-Brea is still under the shadow of the weak oil industry.

And last May, at a ceremony on the UCLA campus, the company got recognition for its achievement: It was a finalist for the first U.S. Senate Productivity Award in California, an award created two years ago to encourage awareness of the importance of productivity and quality. (Each senator can give the award once each year.) What impressed the eight productivity experts brought together by Sen. Alan Cranston to judge the entries was the number of organizations, such as FMC-Brea, that had increased their productivity through some form of employee participation. The winner of the prize, Hewlett-Packard Signal Analysis Division in Rohnert Park, Sonoma County, had made use of similar techniques; so had the other finalists, the Conejo Valley Unified School District in Ventura County, Douglas Aircraft and American President Lines.

The theory and the techniques of what's come to be known as participative management are not new; the concept of increasing productivity through employee involvement was introduced to the academic world in 1926, when Fritz J. Roethlisberger and William J. Dickson published their now classic book, "Management and the Worker." But the ideas weren't embraced in the United States until the 1980s, when the success of Japanese companies indicated that much of their productivity came from employee participation.

Although U.S. industry is the most productive in the world--as a result of our high levels of technology, education and political stability--it's a well-known fact that this nation is facing a productivity crisis. Since World War II, Japan's productivity has increased, on average, about 7% per year; West Germany's has grown 4.6% annually. American productivity has grown only about 2% per year.

What haven't received as much attention as this crisis are the individual companies that are changing the way things are done. Cranston's panel expected only a few entries; it was overwhelmed by 140 applications.

The changes at FMC-Brea are typical of the growing emphasis, in California and throughout the country, on increased employee participation, a reversal of a 85-year trend that left the \o7 thinking \f7 to the professionals and the \o7 doing \f7 to the blue-collar workers. At FMC-Brea, each department has been organized into work teams responsible for setting their own goals; measuring their own performance on efficiency, productivity and cost, and solving their own problems. Job descriptions for machine operators have taken on a decidedly non-traditional flavor: "work with little supervision," "communicate effectively with others" and "learn and do other jobs." Employee task forces advise the plant's engineers who are planning computer-based manufacturing systems. Shop-floor work teams review prices quoted by subcontract suppliers and determine the allocation of materials and equipment. Between 1981 and '84, individual work teams achieved one-year productivity increases of as much as 45%; accidents are down 64%; absenteeism is down 50%, and on-time shipments to customers are up 64%.

"As I walked through the factory, I was looking for a disgruntled worker--every plant has some," said Howard McNeely, productivity administrator of Rockwell International Space Systems Division in Downey and a member of the awards committee, when he visited FMC-Brea. "I spotted a dour-looking man on the loading dock and thought he was it. But when I approached him and asked how he felt about the factory's productivity efforts, he told me, in broken but enthusiastic English, all about how the loading dock team was involved in the process and about the productivity awards they had won."

In a competitive world, when someone comes up with a way to deliver lower prices and higher quality to customers, others must follow or perish. That competition is the driving force for change, and the force is so great, no aspect of business is immune--even if the change is as revolutionary as teamwork between labor and management.

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