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Studies in Market-Valued HR

June 23, 2001
Related Topics: HR Services and Administration, Featured Article
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Three case studies of market-valued HR in action:

BGA International
A large international pump manufacturer, BGA International, was preparing to builda newly designed pump that was much larger and more efficient than any it hadbuilt up to that time. BGA's sales force had sold the product while it was stillin the design stage: the significantly larger machining equipment required forfabrication had yet to be purchased, and the unionized machinists were preparingfor battle with management to determine who would operate the new equipment, andat what pay. A lot was at stake; unless this product was successfully built anddelivered as promised, the business's ability to sustain profitability was inquestion.

    In response to the challenge, BGA's HR manager tried to convince managementthat the workforce could come through -- if the problems were approached witha fresh outlook. HR and operations leaders contacted union leaders to discussthe issues and possibilities for addressing business needs, as well as the union'sconcerns. Soon the company reached an agreement: the top machinists would organizethemselves in a unique work system to install and learn to use the new equipment.They would develop the most effective methods of working together to producethe never-before-built product according to design specifications.

    HR arranged for a trained in-house facilitator to teach the new machinist teambasic analysis and problem-solving methods, as well as how to organize and functionas a team. Using the newly acquired knowledge, the team soon realized that previouswork practices, which rewarded individual productivity at the expense of overallshop performance, would be detrimental to its objectives. The machinists foundthat bottlenecks were created by workers who began cleaning up early to avoidsetting up jobs for the next shift, leaving the incoming machinists to beginthe job from scratch. The team also found that simply grouping productivitymeasures by machine, rather than by individual, eliminated many such problemsand other bottlenecks common in the shop. Productivity increased substantially.

    Working together, this team of core workers went on to overcome many equipmentfailures and design challenges. The team set up the equipment and work systemsto successfully produce the new product line on schedule, below budgeted cost,and with such precision that it surpassed product specifications for the operatingefficiency of the pump. Their work ensured another prosperous year for the organization.

Tucson Electric Power
    Tucson Electric Power faced a double challenge:deregulation and competition. In this business climate, a marketing departmentmanager at the utility company contacted the in-house organizational development(OD) group to request some training in interpersonal and communication skills.The manager's concern was that the marketing group was unable to work togethereffectively. If the group failed to turn things around, it was in danger ofbeing replaced or outsourced. In fact, the group had been given 18 months tosuccessfully market a new guaranteed energy-cost program that had been flounderingfor as long. But most employees knew only that they were under pressure to showan improvement in sales.

    After contracting with the marketing manager, the OD group proceeded to developits own point of view about the manager's concerns by collecting data througha series of personal interviews. After analyzing the data, the organizationaldevelopment team concluded that the marketing group indeed had a problem, butit wasn't poor communication or a lack of interpersonal skills. Instead, itsmembers lacked a sense of personal accountability for the success of the wholegroup. It had no clearly articulated vision or strategic direction, and it hadpoor meeting-management skills at all levels. These and other findings werereported by the OD staff to the entire marketing group, along with actions thatcould turn the group around.

    In general, the marketing group agreed with the findings and supported theinterventions recommended by the OD staff. At Tucson Electric Power, the staffsupport groups were set up to charge back the cost of services to their in-house"clients." In this case, the OD department agreed not to charge themarketing department for its time if there were no measurable results from theinterventions. This allowed the relationship to gel into a true partnership,with a strong commitment to success from the OD staff.

    After considering the recommendations, the manager readily agreed to some coachingand group training. The marketing group learned more clearly what managementexpected of it. Then facilitated learning and planning sessions began. Thoughskeptical that it could meet management's goals, it the group pushed ahead withan analysis of the situation. The group first clarified management expectationsand the details of what success would look like.

    Next, the group analyzed its current resources and work processes in relationto what was required for success. The OD staff helped the marketing group todiscover what was possible, and to overcome barriers to successfully achievingthe vision. In the sessions, the marketing staffers organized themselves totackle specific problems and decided that, in fact, they could meet or evensurpass sales expectations.

    With the help of the organizational development department, the marketing groupwas able to achieve more in the next fiscal quarter than in the previous sixquarters combined. As the year progressed, the group faced many unforeseen challenges,but was able to overcome them, meeting the sales expectations that senior managementhad set for it.

Magma Copper Company
    Although Magma Copper Company set new productionrecords and produced copper at an incredibly low cost of 62 cents per pound,it was facing depleted reserves at the world's largest underground copper mineunless it could exploit a richer orebody, located deep in the earth. The companyhad an engineering group working for years to design and develop a unique cost-effectivesystem for extracting the ore, and it believed it could be a success. However,in order to maintain the viability of the mine, the new orebody, called theLower-K, would have to begin successfully producing soon.

    When the HR department learned the details of the project, it determined thatthe organization was missing key workforce-coordination components. The projectwould be delayed significantly unless the problems were addressed immediately.A manager from HR began meeting regularly with the project team to tackle theissues.

    After several meetings, the HR manager recommended a process to address someof the project team's needs. The group then began, for the first time, to clarifythe overall objectives, values, and strategies of the project organization.The group developed teams that included core employees from mine-developmentprocesses and other operations to chart the engineered work flows and identifypotential bottlenecks. These teams were then able to design appropriate worksystems that included new work teams with multi-skilled members and new classificationsdemanding new pay rates. Since several unions represented the affected workers,HR was able to facilitate agreements that supported the needs of this new operation.

    The human resources department also was invaluable in the development of employee-selectionprocesses and integrated technical, safety, and team-competency training necessaryfor the effectiveness of each work team. HR was eventually able to facilitatethe development of a management structure to support the organization as itwas designed.

    With the help of the human resource department, the company (which was acquiredby BPH Copper) developed Lower-K and placed it in production slightly aheadof schedule, supported by people systems and processes that ensured its success.Instead of producing at 62 cents per pound, the new mine was able to produceat an even more impressive, lower cost-54 cents per pound.

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