Chapter6
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Transcript of Chapter6
HRM and Lean
‘Lean’ thinking has revolutionised productivity in all
sorts of settings, much of it coming through using the
ideas and experience of the people closest to operational
tasks developing ways of doing them better. But this
doesn’t happen by accident – it all depends on them
being trained, feeling empowered and actually
motivated to contribute their ideas.
The Downside of HRM
The recent BP Deepwater Horizon disaster appears to have
been due to management placing undue pressure on staff to
compromise on safety standards and procedures. China’s
glowing reputation as a manufacturing powerhouse has
been tarnished somewhat by a spate of suicides seemingly
triggered by unacceptably high pressures placed on workers
in some of the factories. And growing concern about
working conditions in some factories in emerging
economies have led major retailers to rethink their sourcing
policies.
HRM Tasks in Operations
Empowerment’ sounds good but allowing people freedom to
decide what they do and how they do it may be somewhat
dangerous when applied in the context of complex systems or
safety-critical operations. ‘Team-working’ requires more than
just throwing a group of individuals together; effective teams
are the result of careful selection, training and experience.
‘Employee involvement’ in problem solving (sometimes called
kaizen or continuous improvement) requires a supporting and
enabling system and a long-term commitment to establishing
this as the ‘way we do things around here’.
HRM excellence - examples
The long-running success story of General Electric owes
much to its ‘Workout’ programme originally instituted by
Jack Welch which harnessed the initiative and ideas of its
huge workforce. Toyota has managed to remain the world’s
most productive carmaker year on year through a high
degree of involvement of its workforce in continuous
improvement – kaizen. And 3M’s survival and strength
over a hundred years of operation owes much to the strong
cultural foundations laid down one of its early CEOs,
William McKnight.
HRM - evidence
In work on US companies Jeffrey Pfeffer noted the strong
correlation between pro-active people management
practices and the performance of firms in a variety of
sectors (Pfeffer, 1998), a finding supported by Way in his
survey of smaller businesses (Way, 2002). In regular
surveys of high performing UK firms the same pattern of
‘competitiveness through partnerships with people’
regularly emerges (CIPD, 2006).
HRM and Technology
There is another compelling reason for paying
attention to the human resource dimension in strategic
operations management – if we don’t, there is a high
risk that our sophisticated technologies won’t work!
HRM – People Matter
But there are also limits to how far simply replacing people can
take us – as a long-running set of studies demonstrate
(Parasuraman & Wickens, 2008; Ettlie, 1999; Kaplinsky, den
Hertog, & Coriat, 1995).
Experience has shown that we still need people in many situations
– and over-reliance on the equipment end of technology can have
disastrous consequences.
The Change within HRM
Whilst many Western manufacturers experienced growing
problems of productivity, quality and flexibility during the 1970s it
became clear that elsewhere – and particularly in Japan – the same
story was not true. Manufacturing businesses there seemed able to
manage the process of delivering customer value through speed,
flexibility, quality and with high productivity. Inevitably attention
focussed on how these gains were being achieved – and it became
clear that a fundamentally different model of organizing
manufacturing had been evolving in the post-war period.
Japanese HRM
“… our findings were eye-opening. The Japanese plants require
one-half the effort of the American luxury-car plants, half the
effort of the best European plant, a quarter of the effort of the
average European plant, and one-sixth the effort of the worst
European luxury car producer. At the same time, the Japanese
plant greatly exceeds the quality level of all plants except one in
Europe - and this European plant required four times the effort of
the Japanese plant to assemble a comparable product…”
(Womack et al., 1991).
Japanese HRM (cont.)
Schroeder and Robinson (2003) reported that Japanese firms
received around 37.4 ideas per employee, coming from
around 80% of the workforce and with nearly 90% of these
being implemented (Schroeder & Robinson, 2004).
Comparative figures for US firms suggested 0.12 ideas per
worker, with participation rates of less than 10% and
implementation rates of around 30%. Similar studies in
Europe highlight both the potential of employee involvement
but also the relatively low diffusion of such practices (Boer,
Berger, Chapman, & Gertsen, 1999)(Bessant, 2003).
Learning Organizations
Garvin suggests the following mechanisms as important within
learning organizations:
• training and development of staff
• development of a formal learning process based on a
problem-solving cycle (for example the ‘Deming wheel’)
• monitoring and measurement
• documentation
• experiment
• display
• challenge existing practices
• use of different perspectives
• reflection - learning from the past
Learning Organizations
3M is famous for its ‘15%’ policy which allows employees
to explore and experiment for a proportion of their time,
effectively giving them ‘permission’ to think and innovate
in directions not necessarily specified in their formal
project or task allocations. This could result in lost
productivity – but 3M’s view is that it is also a regular
source of breakthrough ideas for products and services
which keep the business growing (Gundling 2000).
Studies on effective team working
highlights the importance of
• Clearly defined tasks and objectives
• Effective team leadership
• Good balance of team roles and match to individual
behavioural style
• Effective conflict resolution mechanisms within the group
• Continuing liaison with external organisation
Why don’t people like change?
•They don’t see the point, or the need
•They feel powerless to express any views – it’s being done to them whether they like it or
not
•They are scared that it will need them to do things they don’t feel capable of
•They are scared it will cost them their jobs or change their jobs to something less pleasant
•They are worried about losing their power or the control they have over what they do
•They are sure there’s a better way than the one you are proposing
•They don’t see what’s in it for them
•They feel overloaded with what they already have to do and lack resources for anything new
Key Points
Good solutions to the operations management challenge are not
country-specific – they can be adapted and spread widely. Much is
often made of the Japanese ‘miracle’ which gave birth to the ‘lean
revolution’ – but although the conditions for the emergence of a
new model were present in post-war Japan, the underlying
principles are of much wider relevance. Just as mass production
evolved in the factories of the USA but then diffused widely, so
those of lean (and beyond) began life in Japan but have come to
dominate the operations management agenda across the world.
Key Points
People provide flexibility – and at a time when
‘agility’ and ‘customisation’ are increasingly in
demand in manufacturing and service operations,
human resources become central to delivering this.
Automation is a powerful resource but even the most
advanced systems lack the flexibility and
adaptability which human interaction can provide.
Key Points
These are big challenges for the strategic operations
manager – not only does he/she have to create and
implement new structures and procedures to enable and
support more active participation in the development and
improvement of the business – they also have to play a key
role in the process of helping the organisation ‘unlearn’
some of the beliefs and accompanying practices which
pushed people to the side of the stage.