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1991 Managing Change Optimas Award ProfileBRSaturn Corp

June 1, 1991
Related Topics: Competitive Advantage, Basic Skills Training, Labor Relations, Featured Article
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When R. Timothy Epps, vice president of people systems at Saturn Corp., has an interview with the press, his partner, Joseph D. Rypkowski is there, too. Rypkowski is a vice president of the United Auto Workers (UAW) and also serves as business team adviser for Saturn's people systems. In fact, says Epps of his partner, "Joe and I virtually share everything. We sit together. We're in meetings together. We're together even when we're apart."

That's the crux of Saturn's revolutionary idea. Not only are Epps and Rypkowski "paired," but so are Skip LeFauve, Saturn's president, and Dick Hoalcraft, the UAW's top boss. From the top down through the ranks, represented and non-represented workers have partners. And, unlike other American auto manufacturing corporations, in which adversarial relationships between labor and management are common, the UAW and Saturn's management work together as teams in every facet of the business.

"It's as different as it has ever been," says Epps, as he compares the Saturn experience to his years in various aspects of the human resources market. "We're committed to an entirely different set of beliefs. One is to have UAW involvement in all aspects of the business. The other crucial principle is that we believe that those people affected by a decision should be involved in the decision."

This radical experiment began in February 1984, with the establishment of the Group of 99, which consists of 99 members who represent a broad cross-section of UAW members, GM managers and staff from 55 plants and 14 UAW regions.

The group's mission was to study other General Motors (GM) divisions, as well as other organizations — among them top- performing, globally successful corporations — and create a new approach to building a small car in the United States. The hope here was that this would enable GM to compete successfully in the cost-competitive, small car market, something it had a poor reputation for.

After traveling two million miles, the Group of 99 concluded that employees did best when they felt that they were a part of the decision-making process. And if Saturn, which has its headquarters in Troy, Michigan, and its production facilities in Spring Hill, Tennessee, were to overcome some of the traditional difficulties in auto manufacturing, it would have to operate with a different philosophy.

"The primary goal is to create a culture in which employees accept ownership for the direct labor functions they perform," says Epps, "but to also create a culture that reaches out and helps them understand the systems that support them."

To develop that new environment, GM had to start with a clean slate. Thus, Saturn was created as a separate subsidiary that will eventually have total assets of $5 billion. This autonomy allowed the new structure to be put into place, which will be crucial for Saturn to succeed. So committed to the company's success was GM's then chairman, Roger Smith, that in his initial announcement to the press he said that the techniques GM would learn with Saturn would spread throughout the company, "improving the efficiency and competitiveness of every plant we operate...Saturn is the key to GM's long-term competitiveness, survival and success as a domestic producer."

The UAW was also committed to this experiment, signing a historic labor agreement that attempts to minimize confrontation. "Traditionally, in my experience," explains Rypkowski, "production employees felt that the corporation had very deep pockets and their input wasn't welcome. It didn't matter whether they provided input. Therefore [they felt], who cared if the systems that supported them or the operations around them were inefficient because it didn't matter."

The UAW has accepted some fundamental philosophical approaches to running the business that are different. "We're trying to get more involvement in decision-making and ownership for activities that traditionally have been performed by management or resource-type people," explains Rypkowski.

Now those tasks are performed by the people who produce the product. For example, assembly workers have responsibility for quality control, building their own budgets, material handling and, to some degree, ordering their own material. Team members even hire new team members.

"We've broadened the scope of their responsibility so they have a better and bigger picture of what it takes to run the business," says Rypkowski. "Even though their piece of running the business may be relatively small, they gain a better appreciation for what the organization has to do and what it costs in dollars."

Workers have a better understanding of the systems that support what they do. Because of this greater awareness and appreciation, they have the opportunity to provide input to change some of the processes and systems for the good of the organization.

"Our intent is to have people approach their job and job functions as much as they would their personal lives," says Rypkowski. "As with their own checkbooks — every dollar spent should be spent wisely."

The ultimate goal is to have semiautonomous, self-directed work teams in which consensus is the method by which decisions are made. Currently, there are approximately 150 work teams, each consisting of approximately 15 people.

There are varieties of teams. If work functions are complex, requiring a lot of skills, smaller teams (6-12 members) are more effective. If work is relatively simple and redundant, teams are created to be sufficiently large so as to add enough people to broaden the scope of responsibilities so members have something meaningful to manage. If it's in an area where there's a lot of technology, they might team people who operate equipment with those who maintain — and even design — the equipment.

The company's mission statement makes it clear to employees that the intent is to allow them to be involved in decision making in the areas that impact them. These decisions are reached by the "70% comfortable" rule of consensus. Each team member must feel 70% comfortable with a decision.

"All you have to do is tell somebody that once," says Rypkowski. "They hear that, and they're going to hold you to it. Once you make that statement, you better be prepared to follow through because people take it very seriously."

There's no shortage of interest and involvement. In fact, he says that now employees always ask how their input was taken into consideration in a particular situation.

But people's willingness to take responsibility and their ability to do so can be two different things. They may want to be involved, but are they able to perform?

That's where education comes in. The company has a tremendous education strategy. In 1990, Saturn had more than 800,000 training hours for about 2,000 to 4,000 employees.

The first week after being hired, every employee goes through intensive training. An Independent Training Plan (ITP) is developed for each employee. "We analyze the types of tasks we expect people to perform and then analyze those to develop skill requirements to perform those. We then develop courses to teach people," says Epps.

The ITP is broken into two components: a job-ready segment (minimum fundamental skills to be a functional team member) and a component tailored to specific job requirements. Part of the work team's responsibility, in addition to hiring the new team members, is to create a training plan that will build the skill level required for that team to be fully efficient.

Each plan is distinct and follows a needs-driven, competency-based approach. For instance, an assembler in the chassis assembly complex would have an ITP that has a generic piece, and an additional piece that's tailored to job functions in the chassis area. That would look very different from the ITP for an assembler who happens to be in the body assembly part of the operation.

Even so, according to Rypkowski, the worker may be ready, he may be willing, but then again, during the transition period when he's asked to perform these new tasks, he may become so afraid as to become unwilling again.

Budgeting is a good example. Team members are thoroughly educated about how to develop budgets. They learn the corporate perspective, see how many products they're going to produce, make an assumption of scrap rate costs, as well as other material and indirect costs. They make assumptions about the amount of training each person will receive during the year, vacation time and so on.

"There's a certain amount of comfort when you learn it in class," explains Rypkowski. "But, come mid-year and it's time to develop the 1992 budget, the confidence in yourself to do that job is a whole other story. Until you've experienced it, building the budget that first year can be threatening."

This is when a lot of hand-holding on the part of financial people and experienced team leaders comes into play. According to Epps, about three-quarters of all training has been done on a train-the- trainer basis. "We didn't bring in outsiders," he says. This is part of Saturn's approach to the learning process and the integration of the training.

The objective, however, isn't to train 100% from the inside. The company is constantly searching for outside approaches and individuals who can bring information and innovation. But wherever possible, Saturn uses a train-the-trainer approach when it applies.

It's too early to tell how Saturn's grand experiment will fare, but those involved are hopeful. Says Epps, "If we're successful, the means by which we've accomplished our objectives would be truly extraordinary and will be appreciated. It will also have an impact in our industry."

Personnel Journal, June 1991, Vol. 70, No. 6, pp. 72 - 74.

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