Associated Company Inc., a Wichita, Kansas-based supplier of machine parts to aviation companies, knows the importance of employee involvement firsthand. In November 1987, the company implemented Work Smarter, a quality program aimed at reducing the company's expensive quality costs caused by high scrap and rework rates and high external failure costs (failures that customers experience).
The first step that Associated took toward quality improvement involved setting the product-failure rate at 0.5%. Top management chose this rate over a zero-defect rate for two reasons:
- The perfect rate would be unattainable and probably would be demotivating.
- The cost of achieving zero defects might be greater than the benefits.
In addition to making the quality goal attainable, Associated crafted a plan that would be understandable and meaningful to all of its employees. The plan, which followed the teachings of quality gurus W. Edwards Deming and J.M. Juran, encouraged employees to be innovative and to take risks. Most importantly, employees knew that they had the opportunity to fail.
Group meetings help Associated communicate TQM to employees.
To facilitate implementation and more-specific goal setting, the company divided its approximately 100 employees into eight groups. In the initial implementation, the quality manager met with each of the eight groups. The quality manager described the magnitude of the quality program, indicated the improvements that were necessary and achievable and explained the actions required. He tried to sell the program to the employees and their first-level managers.
The initial approach failed. The employees were skeptical. They had seen programs come and go, and were not convinced of the need or the possible benefits. The first-level managers didn't oppose the program, but they didn't actively support it.
To focus attention on the waste in manufacturing, the quality manager started placing orange tags on defective parts and broken equipment. One such message stated, "This casting costs $1,378. Can you afford to throw it away?" Another orange ticket read, "This machine costs $6,000 to repair. Can you afford to break it?" The orange tickets helped make the cost of quality meaningful to each employee.
The quality manager then started another cycle of meetings. Now, workers paid much more attention to the cost of quality. Small projects that had high probabilities for success were selected and implemented successfully. Goals were set, and as the groups met these goals, they were rewarded. ACI stressed group rewards to encourage teamwork. Some of the rewards included dinners at local restaurants, movie tickets and $50 savings bonds.
With the iteration of meetings and the successful completion of several small projects, the momentum built quickly. Top management continued to expand the rewards program to include a wider variety of rewards for goals that employees attained. As a result, employees gradually accepted more authority and responsibility for quality, and became more involved in all aspects of the business.
TQM improves scrap and rework rates and decreases turn-over.
As a result of Work Smarter, Associated's scrap and rework rates declined quickly and bottomed out at a 0.25% rate. In addition, the company's annual turnover decreased from a high of 200% to 25% after the introduction of the program. A more stable work force that was involved in decision making and quality improvements, along with simple but powerful HR management practices, produced major gains for the company. These practices allowed the company to:
- Redirect its employees to become more quality-conscious
- Set goals that were specific and challenging, yet attainable, which led to increased motivation
- Link rewards to accomplished goals, which reinforced desired behaviors and made it more likely that employees would sustain their efforts.
In addition, continuous feedback about the groups' progress in relation to their goals made it possible for midcourse corrections and ensured that groups stayed on course toward long-term goals. Finally, by encouraging employee involvement through suggestions and specific work changes, Associated treated its people as human resources to be valued instead of mere labor costs to be minimized.
Personnel Journal, October 1993, Vol. 72, No.10, p. 108.