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1994 Competitive Advantage Optimas Award Profile Granite Rock Co.

April 1, 1994
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Related Topics: Total Quality Management, Competitive Advantage, Featured Article
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When Arthur Roberts Wilson started Granite Rock Co. in 1900, the business consisted of 15 men who broke rock from the quarry and loaded it onto horse-drawn wagons. The men were paid $1.75 per 10-hour day, slept at the quarry bunkhouse and ate at the cookhouse.

Today, a lot has changed at the Watsonville, California-based firm. Its operations have spread to 15 Northern California locations, incorporating a growing list of products and services for the construction-materials market and employing 400 people. Picks, shovels and wheelbarrows have been replaced with state-of-the-art equipment, including the world's largest crusher and a computer-controlled truck- and railcar-loading system.

Graniterock's adaptation of the latest technologies have helped it keep pace with its competitors, which since 1987 have been primarily foreign-owned conglomerates. However, it's the company's workers that it credits as giving it a competitive advantage. By embracing human resources programs linked to a total quality management process, the company's market share has increased 88% during the last seven years.

It was the change in the market that prompted the company to institute the TQM process in the first place. Before 1987, Graniterock's competitors consisted mainly of companies similar in size and resources to itself. When multibillion-dollar global firms bought them out practically overnight, however, "We realized that we couldn't compete with them in terms of dollars," says Bruce W. Woolpert, co-president of Granite Rock Co. and A. R. Wilson's grandson. "We knew we had to win by doing things better."

To truly embrace that concept, Graniterock sought advice from its customers. What it learned was that its customers, although generally satisfied with the company's product quality and customer service, believed the company had become too inflexible in terms of special needs. "We had our standard products and weren't overly willing to deviate," says Woolpert. "The impression that we gave was that we were bothered by anything non-standard."

Graniterock's employees had at least a partial explanation for the inflexibility. They told management that decision making took too long. When customers made special orders, the requests had to go through several channels before getting approval.

The solution? Giving the employees the knowledge and the power to say yes to any customer request and to follow up the agreement with action. "We put the customer in charge," says Woolpert, "and if you have an empowered customer it requires that you have empowered employees. They need to know as much as the managers."

The company created nine corporate objectives that gave the development of Graniterock people equal priority to such other objectives as profit, product quality and customer satisfaction (see "Granite-rock Co.'s Nine Corporate Objectives"). It communicated these objectives to everyone in the company, two-thirds of whom belong to one of five different collective-bargaining units. The company then took steps to ensure that the people-development objective was attained. These steps included: offering extensive training opportunities linked to individual professional and personal goals; implementing recognition programs to acknowledge accomplishments; strengthening its promotion-from-within policies; and increasing employee involvement in decision making and problem solving.

Individual goals spark employee development.
The cornerstone of the TQM program is the Individual Professional Development Plan (IPDP), a proactive system in which employees set developmental goals for the upcoming year. The IPDP is voluntary for collective-bargaining workers and mandatory for salaried employees. Currently, 85% of the work force participates.

Here's how it works: Once a year, an employee and his or her supervisor receive an IPDP form to fill out for the employee. The form is broken up into four sections:

  • An outline of the employee's major job responsibilities
  • A review of the results from the employee's previous IPDP
  • Identification of the worker's exceptional job strengths
  • An outline of the development plan for the next 12 months.

The employee and the supervisor each fill out the form independently. This method enables the employee to really think about his or her developmental goals. For example, the worker may have aspirations to move to the maintenance department, which would require learning the computer system used in that function. Or, as a dispatcher, the person may want to improve his or her product knowledge.

After both parties complete their forms, "They sit down together, look at each other's documents and come up with a consensus,"says Shirley Ow, director of HR for Graniterock. The revised document containing both people's input becomes the rough draft of the employee's development plan.

At this point, the manager takes the rough draft to a roundtable meeting of executive committee members and other managers. These roundtables are scheduled approximately 15 times throughout each year. A manager might attend just one or two annually, depending on the number of staff members he or she has participating in the IPDP. The senior managers that make up the executive committee, including Woolpert, the company's financial officer and members of the corporate council, reside at every session. Ow facilitates them.

At the roundtable, the managers discuss their employees' IPDPs. The roundtable serves several purposes. It enables managers to get advice and suggestions on ways for their employees to meet their objectives. "Other managers may suggest a particular class or seminar, benchmarking with another company or partnering with another person at Graniterock who has similar objectives," says Ow, who also makes recommendations to the managers. Occasionally, she also brings in outside consultants to offer advice.

The roundtable provides opportunity for the executive committee to assess the overall strength of the organization in terms of what people are doing to improve their skills. And, it identifies interests in particular topics in which the company needs to add training classes. Shortly after the company instituted the IPDP, for example, numerous managers and supervisors expressed interest in improving their leadership skills. As a result, the company established the Frontline Leadership Training program, a course offered to all employees.

When the company first implemented the roundtable process, sessions typically lasted a full work day. As managers have become familiar with the process and come better prepared to the sessions, the meetings today conclude in half the time.

After the roundtable, the manager and the employee discuss the recommendations that the manager received. Together, they develop the final IPDP agreement. By this time, the manager has put in anywhere from one to five full days of effort on this one employee's development plan. "The company puts a lot of investment of time in its people," says Ow, "but we think that that's extremely valuable."

The final document on which the two parties agree not only lists the developmental bjectives of the individual, but also spells out what steps the employee will take toward reaching those objectives, as well as the means for measuring the efforts. The accomplishments are measured in two ways: Employees must take the steps needed within a particular time frame, and demonstrate the knowledge learned from each step taken. For example, the action needed for a person who wants to develop particular computer skills might be to attend a computer course. The manager and the employee will set a time frame for taking that course, such as within the first quarter. They also will specify some type of observable measure, such as having the employee create a spreadsheet or share the information learned with co-workers.

Goal setting is backed by training opportunities.
The company links training to the IPDP. Based on the goals that employees set, managers, as a result of roundtable discussions, make suggestions on types of training courses that will help their employees accomplish their goals. The training to be taken is then finalized by the employees and their managers when drawing up the IPDP document.

To satisfy employees' training needs, the company offers an extensive list of courses on-site through what it calls Graniterock University. Types of offerings generally fall into five categories: quality-process skills; maintenance skills; sales and service skills; product knowledge and technical skills; and instruction on better health, wellness and personal growth. Courses on these topics are scheduled continually.

Graniterock people conduct some of the classes. For example, inside experts on the company's products teach basic product knowledge courses, the MIS department holds introductory computer seminars, and Ow teaches workers about employment law.

Other instructors include suppliers—such as Coast County Trucking, a Peterbilt equipment dealer that has conducted training sessions on brakes, cooling systems and hydraulics—and outside experts. In 1993, for example, Graniterock brought in two speakers for a family educational seminar titled "Human Effectiveness Begins with Discovering How Other People Learn." The full-day seminar included a morning session on the seven types of intelligence and how they affect learning. This portion was taught by Thomas Armstrong, an expert in the study of multiple intelligence. The afternoon session, titled "Quantum Creativity: Getting the Best From Yourself and Others," was led by Pady Selwyn, a national speaker, trainer and consultant.

According to Ow, most of the courses offered through Graniterock University are a direct result of needs identified through the roundtable and IPDP process. "We might have some people come forth and say they'd like to be better able to communicate with customers," says Ow. "One of the actions that they might need to take is to learn some basic Spanish. If we hear that there's a big enough need, than we'll bring in an outside person to conduct that seminar for us."

Graniterock doesn't have a set number of people who have to request a topic for the company to offer a course in it. Ow says that usually at least six workers must express interest. The decision to conduct a course on site is also affected by the company's resources, such as if it has an in-house expert to teach it.

If the need isn't large enough to bring someone on site, the company picks up the tab for employees to get the training elsewhere. Twice a month, the HR department publishes available courses in Tuesday Facts , a weekly newsletter sent via facsimile to all company locations. The newsletter lists the training schedule for Graniterock University, current seminars offered by the various associations with which the company is affiliated and courses from other sources that have received high recommendations.

For these off-site training sessions, Graniterock pays for travel expenses, meals and lodging, as well as the employees' wages for a minimum of four hours and a maximum of eight. The only exception is for employees who are working on obtaining college degrees. The company will pay for the classes, but not for the employees' time while attending the classes because it's an ongoing process.

The option of having the company pay for college work is open to everyone at Graniterock, regardless of whether or not a college degree is necessary for a person's present or future position. The only requirement Graniterock has is for the participants to prove they're committed to their choice by achieving at least a C grade in each class taken. "Many people are going to college to better themselves," says Ow. "We think that through that additional training, they'll be able to apply that knowledge at Graniterock. Even if they decide to leave Graniterock down the road, [the company benefits because] they're still utilizing that knowledge while they're here."

It's because of this philosophy that the IPDP includes personal goals as well as specific professional goals. Through the IPDP process, some employees who never graduated from high school have made goals of passing the General Educational Development (GED) tests with the company's help to obtain their general equivalency diplomas. There even have been several employees who, because of learning disabilities such as dyslexia, never learned to read. These are people who, despite their disabilities, have been outstanding employees. One such worker, for example, Woolpert credits as being one of the best mechanics in the company. "If there were PhDs in repair work, this guy would have one," says Woolpert. "He's an absolute genius." Yet, this person has never been able to write a check or go to a restaurant by himself because he can't read the menu.

Because the IPDP process enables people to address issues that concern them personally, this employee and several others identified that they wanted to learn to read. Before, says Woolpert, these people lived in fear of their futures—fear that their secrets would be discovered and that they would lose their jobs. "You can't have that in your company," he says. "You either have to tell those people, 'We don't want you, go find another job,' or you have to train them. You can't leave it vague because it makes people worry too much. In our company, because all of these people were so outstanding and they were willing to learn to read, it was an easy decision."

Graniterock found an outside counselor and covered the costs of having these people learn to read. The result? The mechanic, for one, now can read manuals and write letters to people—activities for which he used to rely on other people. "What we see now is a much more powerful human being than we had before," says Woolpert. As his self esteem has risen, so too has his work performance.

When the company first started the IPDP process and made the decision to allow workers to attend any training (on company time) regardless of its relevance to their jobs, Ow says that there was some fear that people would sign up for classes just to get out of working. That hasn't been the case. The company ensures that employees understand that their work still needs to be done. Also, workers must make a commitment when signing up for classes. They're expected to participate and bring value to the class, as well as to their jobs when they return to work.

In 1993, Graniterock employees averaged 32 hours of training at an average cost of $1,850 per employee (exclusive of safety training). This is nearly three times more than the mining-industry average and 13 times more than the construction-industry average.

HR policies support the employee-development process.
Graniterock's annual investment of time and money into its people is substantial. To ensure that the company receives a return on investment, its HR department links its policies and procedures to the employee-development and empowerment process.

For starters, the company instituted several mechanisms for recognizing people who have met goals identified in the IPDP or who have demonstrated empowerment by taking such actions as stopping a product from leaving the plant because of quality concerns. At the minimum, supervisors review the progress of IPDP participants quarterly and summarize their accomplishments in their IPDP forms. In addition, the company's internal publications—the weekly Tuesday Facts and RockTalk , a glossy, three-color employee newsletter that's published quarterly—note employees' outstanding performances. Through these publications, employees get the message that it's OK, and even encouraged, to make decisions, offer advice and take action.

These achievements are further recognized by two formal recognition programs. The Incentive Recognition Awards reward employees for outstanding accomplishments or continuous improvement in one of the nine corporate objectives. At year-end, the executive committee privately hands out cash awards ranging from $100 to more than $1,000 based on the scope of the achievement. For example, an employee who streamlines one specific job process may receive less than employees who implement an improvement that has long-term effects on the entire organization. Other factors, such as whether the employees were paid for their time while working on the project, also go into the decision.

Employees from all levels are eligible to receive awards. In 1993, the company rewarded 130 people—approximately 35% of the work force. The number of awards has increased steadily each year since the program's inception. In 1987, only 15% of the employee population received awards.

Annual Recognition Days are an opportunity for all employees to toot their own horns and be heard. Once a year, members of the executive committee, along with workers from various sites, visit each of the branch locations to hear firsthand about what's been happening. "Recognition Days are a chance for employees to share what they've done with members of management and others within the organization," says Ow. The range of accomplishments shared in this forum is broader than for the IPDP, which concentrates on an individual's specific goal attainment. "Recognition Days focus on the entire team at the location and the things that they've done together as a group or as individuals."

While at each site, executive committee members tour the facilities, take rides with drivers and physically examine workers' innovations that focus on better customer service or streamlining processes. At one facility, for example, employees came up with the idea to take pictures of all of their customers and post the pictures on a bulletin board in the front office. It was their way of telling the customers that they're appreciated. "When customers come in now, they look to see if they're up there," says Ow.

At another facility that sells bricks and block products, workers have found ways to put the products on display in a decorative way. In one area, they built the blocks into a planter and are growing flowers.

The Recognition Days typically end with dinner for the entire group. Woolpert follows up each of these visits by listing all of the improvements or accomplishments that the committee heard about during the visit and commenting on them. He sends the memo back to the branch so that the workers get direct feedback. "Through the Recognition Days, we've seen people's confidence build," says Ow. "People who once were scared to talk to a member of management now are proud to share because we come to their environment. We've seen these people grow professionally."

Employee growth is demonstrated as well through promotions. In 1987, the company only filled about 24% of its open positions with internal candidates. Today, that number's up to 65%.

This increase is due in part to the increased development of employees. It also has come about from strengthened policies on promotions from within. The company posts all open positions, including those to be filled by collective-bargaining workers, for 10 days before beginning outside recruitment. "We've had a lot more people take other positions since we've been posting them," says Ow. "In the past, either they didn't know about them or they didn't think that we encouraged internal promotions."

Part of how the company encourages internal movement is through its Try-A-Job program. Employees have the opportunity to spend a day learning a job in which they're interested before actually applying for it. An additional benefit of the program is that it helps workers better understand their counterparts' jobs and how those jobs affect their own.

Woolpert points out that although more people are being promoted than seven years ago, the hiring criteria actually is tougher, making that 65% a more qualified group than the 24% were. One reason for this is the adaptation of the TEC —Traits, Experience/Education and Chemistry—hiring program developed by Marketing Personnel Research.

Rather than focusing on experience, as was customary in the past, the TEC model looks at a person's adaptability to a job. Examinations of traits reveals whether a person may have talents and skills that may not have been used in a previous position, and a chemistry check determines if he or she is compatible to the company's or department's values. For example, if a person is used to working independently, will he or she be able to work in a team-driven function?

In conjunction with the TEC, HR implemented a team-interviewing process that encourages employee involvement in determining compatibility. People who will report to a person being hired have the opportunity to interview the candidates. Although the hiring manager still has authority to make the final decision, the employees can make recommendations. This eliminates the resistance to change that often occurs when a new supervisor is brought in. "There's been more of a buy-in," says Ow. "[The employees involved] help make that person successful."

Hiring isn't the only area in which the company applies team decision making. In fact, the use of teams for problem-solving is a fundamental element of the TQM process, supported by employee development. "Through the team concept, we focus on letting people help make decisions for the company," says Ow.

One example is the use of teams for making major purchase decisions. In the past, management personnel bought such equipment as mixer trucks by calling vendors and comparing prices and features. When the trucks arrived, the employees who used them would find faults. "Now we include one or two drivers in the selection process," says Ow. "They help define what the needs are and help make the wisest purchases."

The use of teams doesn't stop there. Employees form teams for a variety of reasons. To address specific areas within the corporation identified as needing attention, for example, the company formed ten Corporate Quality Teams. Members of management responsible for each of these areas selected team members from a cross-section of people who they felt would make meaningful contributions. Ow facilitated one such team—the Corporate Quality Communications team. Members included a driver, a salesperson, someone from the payroll department and a purchasing agent. Some of these teams have since disbanded, but others are ongoing.

Employees form project-quality teams for much the same purposes. Usually, these teams address specific issues, and disband after the improvements have been made. People who perform the same job at different locations form function teams that meet regularly to discuss ways of improving processes specific to that function. And, task-force teams are formed to find ways of implementing specific improvements resulting from identified needs.

Many of these task forces are formed to make improvements in areas identified as needing work by the workers themselves in employee surveys. Human resources calls in an outside firm annually to survey employees in 14 categories. The department then publishes the results, interpreting what the comments mean and spelling out the improvements that need to be worked toward during the next year or more. A corporate publication outlines the areas that the entire company needs to improve on; each branch receives a publication of the areas needing improvement at the individual facilities. It's up to the branches to create their own teams to implement change.

Here's an example. The 1993 survey revealed that some employees were frustrated about the level of consideration managers gave their safety suggestions. To improve on this in the future, the company put together a safety task force comprising a cross-section of employees. The team reviewed the current safety program and then published a new one for 1994. "We use [the survey] as a tool for continuous improvement," says Ow.

Employee development reaps results.
In addition to using employee surveys as tools for change, the company surveys customers extensively and puts their comments to use. It's through these surveys that Graniterock initially learned just how effective its employee-development process is. "As soon as we increased training in the company, our customer satisfaction increased right away," says Woolpert. "Customers are starving for the truth and reliability," which is what Graniterock's empowered employees offer them.

More substantial proof has surfaced since in the form of increased quality and service. Employees trained in statistical process control, root-cause analysis and other quality-assurance and problem-solving methods are able to exploit the company's state-of-the-art technologies to greatest capacity. By doing so, the company's current concrete products consistently exceed the industry performance specifications by 100 times. In addition, the measures of process quality have steadily improved to levels not generally attained in the industry. Variability in some specified criteria, for example, has decreased to the six-sigma level (3.4 errors per 1 million chances to err, a level many high-tech industries pursuing TQM hope to reach by 1995).

In terms of service, The Granite Rock Co. has topped the on-time delivery average of a prominent national company that it benchmarked by consistently delivering more than 90% of product on time. Complaints solicited by the organization on Customer Comment and Suggestion cards have gone down annually, and the majority of comments are complimentary.

How does employee development at the organization relate to all of this? "It's key," says Woolpert. Ow adds, "People are very important to the success of the organization. Our message to our people is that we want to make an investment in them, that we only can be successful as a company as we develop and improve the skills of the people within the organization."

Definitely a lot has changed at Granite Rock Co. during the last century. Unlike A.R. Wilson's laborers, who needed only to develop muscle for the organization to be productive, his grandsons must ensure that their employees continually develop skills and knowledge.

Personnel Journal, April 1994, Vol.73, No. 4, pp. 84-93.

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