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Change Keeps TQM Programs Thriving

Five years ago, the human resources function at L.L. Bean was an entrenched part of the corporate bureaucracy. Simply stated, it was a staff function that delivered prepackaged personnel programs to the rest of the company. For example, HR specialists developed staffing, benefits and compensation services without any input from the employees who used them. “We were embroiled in programs for programs’ sake,” explains Anne Sowles, director of HR operations at the Freeport, Maine-based company.

Today, HR at L.L. Bean is a different animal. It’s less territorial and less concerned with protecting its turf. Gone are the days when HR assumed that it knew what was best for the company. Now Bean’s HR professionals collaborate, cooperate and respond to employee needs. As a result, the HR programs are more effective, and there’s less duplication of effort.

What accounts for this transformation? The total quality management (TQM) process that the company began in 1988. “One of the key differences between today and five years ago is that we now understand [that] we’re here to serve the customer—in other words, the employees,” Sowles says. This wasn’t obvious in the beginning, when the department was more concerned with training, performance management and other traditional HR issues. As the quality effort progressed, it became obvious that Bean’s HR function had to undergo some fundamental changes in its operation.

The experience at L.L. Bean is typical of the way in which HR must change to sustain a long-term quality effort, because HR issues related to quality also change after the TQM process has been in place awhile. You can’t implement quality training, revise the reward-and-recognition system and change the company’s hiring practices, and consider your quality work done. As important as it is to align these HR systems with the company’s quality goals, HR also must take a hard look at the way in which the department itself operates. In other words, how you provide services becomes just as important as the services that you provide.

Partnerships will improve the satisfaction of HR’s customers.
Stephanie Wilson, principal and managing director of the International Human Resource Group in Westport, Connecticut, recently completed a survey of HR practices in companies that have won the Malcolm Baldrige National Quality Award. Her survey reveals that one of the keys to sustaining a long-term quality effort is for HR to become a partner with other departments in the organization. Why? Because a goal of quality management is customer satisfaction, and HR has the whole organization as its customer. “HR doesn’t own all the keys to the company,” she explains. “They share the HR role with many other individuals.

“The winning companies, in many cases, reorganized their HR function so that there were HR representatives in each business unit,” Wilson says. “This way, they could be more responsive to the units’ needs. For example, a number of Baldrige winners had reward-and-recognition programs that were developed by a function or department outside of HR. These departments created the programs, with HR serving as an internal consultant, not administrator.”

Paul Elmer, corporate director of international human resources at Motorola in Schaumburg, Illinois, agrees that major structural changes are needed for the HR function to support quality over the long term. As he explains, the role of HR at Motorola, which won the Baldrige Award in 1988, has changed significantly since the company’s quality effort began 10 years ago.

“You can’t implement quality training, revise the reward-and-recognition system and change hiring practices, and consider your quality work done.”

“The HR organization has always been a corporate function, but it used to be a fairly monolithic organization,” Elmer says. “There was a personnel organization, and there was everybody else. But this has changed dramatically over the years. Personnel professionals now function as primary members of the management teams at each of the seven business sectors, with the vice president of personnel participating in every aspect of each sector’s business.

“Furthermore, 10 years ago, the corporate HR staff used to review everything,” he adds, “including a few-cents-per-hour wage increase. Now the sectors can determine their own courses of action, and partnering with line managers happens at every level. HR has given up the record-keeping role it used to play.”

According to Wilson, Baldrige winners consider this idea of partnering a crucial element in their HR strategies. After all, HR can’t very well preach the gospel of teamwork if the function doesn’t operate this way.

The HR function at Detroit-based Cadillac, which won the Baldrige Award in 1990, institutionalized the partnership concept in 1987 with the development of its people-strategy teams. These cross-functional teams, which include salaried and hourly workers, are responsible for the research, design, recommendation, implementation and evaluation of various HR programs. “Early on, we saw we had a product strategy and a business strategy, but we really didn’t have a people strategy,” explains John Harless, director of personnel at Cadillac. “Instead of the HR department coming out with new initiatives to address this oversight, we developed the people-strategy teams.”

The missions of these teams change depending on the needs of the business. Early teams were charged with finding more-effective means of rewards and recognition and employee selection, for example. Today, there are four teams in place:

  1. The first team is researching employee development opportunities.
  2. The second team is benchmarking the best HR practices in other companies.
  3. The third team is looking for ways to improve employee communication.
  4. The fourth team is finding ways for Cadillac to become a more socially responsible company.

To keep HR involved in the process, each team of six to 10 people has one or two HR representatives. In addition, the teams report to another cross-functional management team called the HR management operating committee. This is a team of executives who are concerned with people issues, Harless says. “The teams are the way we spread out HR responsibility throughout Cadillac. It takes away the problem of new initiatives becoming just another personnel program of the month.

“Furthermore,” he adds, “the opportunity to participate on people-strategy teams gives our employees developmental opportunities because they have a chance to look at people issues as well as functional issues within their own areas. This makes them better managers.”

One of the best examples of HR becoming a partner with other business units is found at International Business Machines Corp., based in Purchase, New York. Through its Workforce Solutions company, IBM’s personnel professionals have been redeployed to each of the company’s major business units. In this way, HR services can be customized to fit the individual needs of each business unit, instead of trying—usually unsuccessfully—to customize a one-size-fits-all program.

As William Colucci, president of Workforce Solutions, explains, “As a line of business evolves inside IBM, it’s entirely possible that it might wish to seek a different compensation scheme, such as incentive-based, that fits its industry. Now we’re in a position where we can help each business inside the company design, implement and administer a separate compensation scheme for that business.”

IBM’s Workforce Solutions is becoming a model for other companies that are searching for ways to enhance the quality of services provided by their HR departments. Westinghouse, for example, which won the Baldrige Award in 1988, is in the process of restructuring its HR function so that individual business units will be billed directly for the personnel services that they utilize.

“Conceptually, there are a lot of similarities between our approach and IBM’s,” explains Jerry Marcoz, director of HR for the Pittsburgh-based company. “In the past, the HR function made decisions and dictated policies to the rest of the company. Those days are gone, and rightfully so. As we begin to direct-bill our customers for our services, we have to become more competitive in terms of cost and quality. We have to continually improve the way we deliver services. What we’re doing fits in with the philosophy of total quality management.”

Sam Woolford, director of quality management for The Wyatt Company in Boston, agrees that partnerships between HR and line management are essential for the long-term success of a quality effort. “If you have a corporate HR function, and they aren’t actively working with either the line HR function or line managers to help identify training needs and understand how the business is changing from a line perspective, they won’t be terribly effective in providing services. There has to be a better integration of HR into the business, both from a business planning and strategic point of view to a line-operations, what’s-really-happening point of view.”

Without communication and self-monitoring, long-term quality efforts will fail.
As corporate HR departments restructure themselves and begin to form more partnerships throughout their organizations, the need for effective employee communication becomes more important than ever. In her survey of Baldrige winners, Wilson found that to sustain a long-term quality effort, the companies had to spend an enormous amount of time and money on communication.

“One of the single biggest flaws in most corporations is that they don’t communicate to employees,” she says, “so that when they do communicate, employees don’t give management much credibility.” The Baldrige winners, however, consistently communicate both good and bad news and make sure that employees find out things before the public does. The amount of communication may overwhelm employees sometimes, but they gain a better understanding of the business.

“The Baldrige winners consistently communicate both good and bad news and make sure that employees find out things before the public does.”

At Universal Foods Corp. in Milwaukee, where a quality effort has been in place since 1985, communications was the most significant area in which HR had to make adjustments, according to Rich Carney, the company’s vice president of HR. “Communication is essential, and the HR function is the principle communicator in the business,” he says. “We’ve had to look at communication methodology and recognize that in the TQM environment, communication has to be done differently. It has to be much more explanatory. With TQM, people need a lot more information.”

Many of the communication vehicles at Universal Foods have been developed with input from employees, he adds. “It may be something as simple as posting jobs, but to make sure everyone has the opportunity to see what jobs are available, we asked employees to develop the posting system. This was not developed by HR, but by employees with HR involvement,” says Carney.

However, communication at Universal Foods isn’t just one-way. The company also has put mechanisms in place to hear what employees are saying. For instance, the company developed a Right-to-Know program, which gives employees the right to ask questions of anyone in the organization at any time. There also are regular employee meetings hosted by the vice presidents of the company, and HR professionals make regular visits to the various business units to give employees the opportunity to ask questions on personnel issues. “No one should feel uncomfortable asking any type of question,” Carney says. “You’ve got to listen to what employees are saying, so you can be able to determine what the needs of employees are and try to develop programs that reflect those comments and meet those needs.”

But more than listening to what employees have to say, Baldrige winners also have found that HR managers need to ask specific questions so that they can determine how well the existing programs are working. Say, as part of your TQM effort, you’ve revised the compensation program to focus on pay for performance. How do you know if that program is doing what you want?

“There are a number of ways,” Woolford says, “and one very direct way is, again, to start thinking of the people you work with as your customers. After you’ve gone through initial changes, you need to pursue the plan-do-check-act cycle. You planned a better HR program, you implemented it, now you need to continue checking the results.”

At Jacksonville, Florida-based AT&T Universal Card Services, a 1992 Baldrige winner, self-monitoring of the HR function is part and parcel of the quality-improvement process. The function monitors itself using 34 indicators that are measured on a weekly, monthly and quarterly basis, depending on the indicator. According to Jim Vautier, HR quality manager, indicators include such things as turnaround on correspondence to potential employees, the timeliness and accuracy of HR information-system reports, the quality of training and the accuracy of paychecks and quarterly bonuses. As Vautier says, “If we mess up a paycheck, we’ve got a quality miss.”

In addition to monitoring its own progress, AT&T’s HR department conducts an annual client-satisfaction survey to find out employees’ opinions of various HR programs. “This survey asks people to tell us how we’re doing in HR,” Vautier says. “We want to know what our clients think of the pay system, the reward-and-recognition system, performance management and so on.” Furthermore, the company conducts an annual employee-opinion survey to uncover attitudes about morale, job satisfaction and the work environment.

Although this would appear to be a very thorough way for AT&T’s HR department to monitor itself, the function doesn’t rely solely on internal indicators. In fact, the department is benchmarking itself continually against other quality-based companies. For example, the compensation group benchmarked its communications efforts against other high-performing organizations and used the information that it found to increase significantly its communications regarding pay. As a result, favorable survey responses increased 19% between 1991 and 1992.

AT&T’s emphasis on self-monitoring is typical of companies that have had successful quality efforts in place for a number of years. As Wilson discovered, most of the Baldrige winners are involved in very thorough climate studies once a year, with many of the questions on those surveys addressing such HR topics as employee development, compensation and benefits. “The winners have about 90% participation with these surveys,” Wilson says, “but that’s because they spend a lot of time closing the loop. They are following up on everything they find out constantly. They report their findings back to employees, and then they take action.”

The continuing need to take action is essential if TQM is going to work in the long run. To use a shopworn phrase, in quality-based companies, change is the only constant. “The outside environment is changing every single day,” Woolford explains, “so the old concept that we can develop a management program and plunk it into place and not go back and revisit it for 20 years is totally inconsistent with TQM. Quality management recognizes the fact that you have to constantly be changing everything to make sure that you achieve the aim of the system. Not making changes is how HR systems got out of balance in the first place. You have to always be willing to move your organization in the direction it needs to go because the market changes, because your customers change, because your products change and because the competitive nature of the business changes.”

One of the things that’s fascinating about companies that are dedicated to total quality, Wilson adds, is that they’re constantly reinventing themselves, and they aren’t afraid of change.

“The continuing need to take action is essential if TQM is going to work in the long run. In quality-based companies, change is the only constant.”

“They aren’t victims of inertia like a lot of companies are. They recognize change is necessary, and they embrace it,” says Wilson.

So if you adjust to change, if you form partnerships throughout the organization, if you learn to communicate more often and more effectively with employees and if you continually check your progress both internally and externally, can you then assume that quality in human resources will become self-sustaining?

No. Wilson says that you must assume that TQM will always need reinforcement, and the way you provide that is through the activities just outlined. For the quality movement to be successful, it has to be nurtured, reinvented and rejuvenated continually.

“I relate TQM to raising a child, in that you’re always having to nurture them,” she adds. “Just because the child is grown doesn’t mean you stop being a parent.”

Personnel Journal, October 1993, Vol. 72, No.10, pp. 104-109.