AMERICAN WORKPLACE VOLUME 2 ISSUE 4 NOVEMBER 1994 U.S. DEPARTMENT OF LABOR __________________________________________________________ THE PROOF IS IN THE PRACTICES Robert B. Reich, Secretary of Labor I'm glad to be back with you to talk about high-performance workplaces. I am convinced that these workplaces, and the work practices that define them, are good for workers, managers, investors, and the nation. A small but growing number of pioneers in the investment community agree with me. In June, the California Public Employee Retirement System (CalPERS) decided to make workplace practices a criterion for managing investments. They understand that a balance sheet tells investors a great deal about a company's condition, but it misses hard-to-measure data about characteristics like the quality and loyalty of employees, investments in training and retraining, and health and safety strategies. And now the Office of the American Workplace has issued Road to High Performance Workplaces: A Guide to Better Jobs and Better Business Results [available for download from the TQM BBS. Filename: ROAD.ZIP--SysOp.]. The guide's message is simple: sound employment practices matter. They can boost productivity and increase profits. This abundance of empirical evidence and real-world case examples is difficult for even the most hardened skeptic to dismiss. I realize I may be preaching to the converted. Many of you are already on the road to high performance. Some of you have traveled that road for a very long time. I hope this guide serves as a celebration of your journey. ________________________________________________________________ BEST PRACTICES BUILD SUCCESSFUL IN-ROADS FOR AMERICAN FIRMS Can workplace practices promote better jobs for American workers and better business results for American enterprises? Can these work practices be measured reliably? Are they tied in any way to long-term corporate performance? Answering these questions goes to the heart of why the Office of the American Workplace was created in 1993. The intervening year's exploration led OAW to CEOs, managers, directors, labor leaders, and front-line workers, to the academic world, and to the investment community--a wide array of stakeholders in American workplaces. What emerged is a body of first-hand experience and empirical evidence about the country's best-run workplaces and the nine best practices they most often adopt to become high performance, high-commitment enterprises. These practices combine business acumen with highly skilled, creative, and committed workers to achieve greater productivity and, to some extent, long-term profitability. Road to High-Performance Workplaces. A Guide to Better Jobs and Better Business Results, a 29-page publication summarizing OAW's findings, offers numerous case examples of companies adopting high performance work practices and experiencing positive results. "This guide reflects what we have learned from the unsung heroes of the American workplace--that high-performance workplaces offer great benefits for workers, managers, companies, unions, and the economy as a whole," said Secretary of Labor Robert B. Reich. Integration of these practices with company goals, the guide points out, is equally important to sustained success. Best practices are used in a wide variety of settings--from airline passenger service to paper packaging manufacture. Not all organizations use all practices. Those that do, however, are finding the results worth the effort. What are these practices? A summary: -- Today's workers need to master a broad array of new skills and find ways to constantly improve design and quality of products and services. The answer? Training and continuous learning for every employee. High-performance organizations may devote 5 percent or more of payroll to training and will often cross-train employees in multiple skills. -- High-performance enterprises communicate strategic plans, management priorities, and financial and operating constraints as part of a systematic information sharing program. -- Employee participation is built into the organizational structure and pushes responsibility down to teams of workers. At one Corning plant, for example, errors went down and quality shot up when employees organized into self-governing work teams. -- Organizational structures are flatter, broadening a worker's ability to respond to changing demands and creating flexibility within the enterprise. Products or services are no longer "handed off" to the next in line; entire teams invent new processes and build new products. -- Increased flexibility leads to better worker-manager and labor-management partnerships, laying the foundation for a joint focus on product and service quality and on joint accountability, responsibility, and decision making. -- Compensation is linked to performance through such programs as gainsharing, profit sharing, employee stock ownership, and team-based pay. -- Layoffs become the option of last resort, since companies value their investment in workers. A number of the companies cited in Road to High-Performance Workplaces committed to employment security by adopting no-layoff policies, redeploying workers, or using other strategies, including part-time work and work sharing, to respond to business downturns. -- High-performance enterprises provide a supportive work environment, offering flexible work schedules, child care resources, health benefits, and other employee-friendly commitments. -- And, finally, high-performance firms and organizations view integration of these practices as essential to long-term, strategic business success. "The preliminary anecdotal and empirical evidence suggests a strong relationship between these practices and corporate performance," said Jonathan Low, director of OAW's Performance Measurement Project. "Not everybody is adopting high-performance practices yet. Our job is to build on the current information and share the results." He added that the next step would be "to encourage more businesses to adopt these practices, which, we believe, will make them more globally competitive." Road to High-Performance Workplaces is available from: Superintendent of Documents U.S. Government Printing Office Phone. (202)512-1800 Stock No.. 029-000-00450-1 Price: $2.50 [Or you can download it from the TQM BBS. File name: ROAD.ZIP--SysOp.] ________________________________________________________________ HIGH-PERFORMANCE WORK PRACTICES - ONE COMPANY'S ROAD Company: Fel-Pro, Inc., Skokie, IL. Programs: Quality control, employee involvement, and a wide range of family-supportive practices Fel-Pro, a 76-year-old family-owned manufacturer of automotive sealing products and the world's largest gasket manufacturer, employs over 1,700 people in Skokie and facilities scattered across the U.S. and overseas. The company is a parts supplier to some of the transportation industry's largest and best-known manufacturers, including Ford Motor, General Motors, and Harley-Davidson. Fel-Pro had always considered itself a manufacturer of quality products. In the 1980's, however, the company faced an increasingly competitive market where success and profitability hinged on the ability to deliver top-quality products on time. "Quality is no longer a nice thing to do," says Amy Schuman, director of organization development. "It is now the minimum price for entry into the marketplace." When the company began the process of change from "inspecting in" quality to "building in" quality, it recognized that one major component to success would be a work force willing to take part in continuous improvement efforts. To enhance this participation and support its employees, Fel-Pro implemented a vast array of benefits, including medical, dental, and vision care; health insurance for retirees; on-site day care; high school graduation gifts for employees' children; tutoring for employees' children with special needs; adoption financial assistance; a "new baby gift of $1,000; and a host of other programs. Fel-Pro's family benefits package costs approximately $700 per employee per year--or about 35 cents per hour worked --according to a 1993 University of Chicago study. As the company sees it, family- and worker-supportive programs help them solve customers' problems. "When employees don't need to worry about day-to-day problems, they can concentrate better on making a quality product and serving the customer," says Schuman. "The employee who is treated with dignity and respect will treat the customer with dignity and respect." Given this kind of support, employees are more than willing to contribute to the company's success. Workers have participated on a number of quality improvement teams, saving Fel-Pro millions of dollars in ongoing costs. Lupe Castro, a Fel-Pro employee, believes that the employee participation programs enable her to make worthwhile changes. "No idea or suggestion is too little or too dumb. The people working at the jobs know them best and come up with the best ideas." Because of the company's ongoing commitment, the change process was seen by employees as an honest improvement effort and not just another "program of the month." "I felt like Fel-Pro did it for me and I want to give something back," says Castro. "Because of the benefits offered, I have become a more committed worker." Fel-Pro realizes that its suppliers also affect product quality, which is why company employees work to ensure that incoming goods are right the first time. In some cases, Fel-Pro employees spend time with other firms' employees, delivering Fel-Pro-designed quality training. As a provider to some of the nation's top manufacturers, Fel-Pro takes its role to heart, satisfying customers by working closely to ensure that definitions of quality are consistent and improvement is continuous. As a measure of its quality levels, Fel-Pro has received numerous quality awards, including Ford's Q-1 Preferred Quality Award, GM's Mark of Excellence, and Harley-Davidson's quality award. Fel-Pro has seen measurable returns. According to Commitment Plus, a company newsletter, improved processes have resulted in a 41 percent reduction in shipping errors; a 90 percent decrease in billing errors; and a 35 percent reduction in inventory. These improvements impact directly on Fel-Pro's bottom line, including lower insurance costs, because of fewer accidents, and reduced production costs from reductions in waste and hours used. Does this mean Fel-Pro has finished changing? Not by a long shot. Fel-Pro's long-range 5-year strategic plan lays out objectives in terms of reduced scrap, better conformance to customer specs, and other measures of quality success. The company continues to improve work processes and employee communication as well. There will always be bumps on the road to continuous change. But, as Amy Schuman notes: "The need to build a quality product is a survival mechanism. Inspection does not create a quality product. Only by building in quality can Fel-Pro continue to compete in the marketplace." _________________________________________________________________ HANDBOOK ON WOMEN WORKERS ISSUED The Women's Bureau, U.S. Department of Labor, has recently released the 1993-94 Handbook on Women Workers: Trends and Issues, the first comprehensive view of women and work issued in 10 years. The publication includes chapters on working women's labor force participation, minority women workers, education and training, industrial and occupational distributions, and labor force projections through the year 2000. "The Handbook tells a story of uneven progress toward equality in the work force," said Women's Bureau Director, Karen Nussbaum. "There have been real gains for some women, especially those in professional and managerial jobs," she noted. However, "the average working women saw her hours of work expand while her job security and benefits diminished. And the wage gap still persists: Women's annual earnings are just 70 percent of men's." The handbook is intended for researchers, employers, women's organizations, government agencies, educational institutions, and business and labor organizations. Single free copies are available by contacting: Women's Bureau US. Department of Labor 200 Constitution Ave., NW Box HB Washington, DC 20210 _________________________________________________________ DOWNSIZING DILEMMA DISCUSSED Downsizing in corporate America continues at a steady pace, according to the American Management Association's (AMA) annual downsizing survey. Of the 713 major U.S. companies responding, 47.3 percent reported job eliminations during the past year, a figure slightly higher than the previous 12 months. This year's AMA report revealed one important difference in the downsizing trend, however: Two-thirds of the companies that eliminated jobs also added new employees to their payrolls. "We see more and more companies firing with their left hands and hiring with their right hands," said Eric R. Greenberg, AMA's director of management studies. Greenberg spoke at a recent OAW- sponsored national forum on Responsible Restructuring. Simply cutting jobs and expecting companies to operate more productively with fewer people may not be the answer, however. "The economy has changed in fundamental ways," noted Secretary of Labor Robert B. Reich as he addressed the forum's audience of CEOs, managers, labor leaders, government executives, and media. "A skilled, flexible work force can offer enduring competitive advantage. Employees can be a strategic trump card," said Reich. He cited studies showing lower productivity, poorer customer service, or reduced profits when companies lay off employees. "Companies throughout America are demonstrating that success often hinges on treating workers as assets to be developed, not costs to be cut, he said, pointing to NYNEX and Rhino Foods, a specialty dessert maker, as prime examples of companies that used employee training, work sharing, and other "high-performance practices to cement worker commitment and respond to economic downturns. "I'm convinced that these practices can lead to better jobs for middle-class workers and better business results for American firms," Reich concluded. ________________________________________________________________ LABOR-MANAGEMENT PARTNERSHIP HANDBOOK Under the direction of Vice President Al Gore, the National Partnership Council--a team of senior union, neutral, and management leaders charged with encouraging labor and management to work together--has released the Partnership Handbook: A Roadmap to Partnership [available for download from the TQM BBS. Filename: NPCHNDBK.ZIP]. According to Vice President Gore, it "is not an exhaustive guide or rote checklist, but rather a snapshot of approaches and resources available to you." The 32-page handbook offers suggestions on building effective partnerships and discusses how to get started, where assistance is available, what partners can accomplish, and how to evaluate a team's effectiveness. When crafted jointly, the handbook suggests, partnerships can help determine what policies, structures, and processes will work best in each organization. In addition, they reflect the parties' unique relationship. For information about obtaining copies of the Partnership Handbook, contact: National Partnership Clearinghouse 1900 E St., NW, Room 7412 Washington, DC 20415-0001 Phone. (202) 606-2940 Fax (202) 606-2613 ______________________________________________________________ HIGH-PERFORMANCE COMPANIES VIDEO FEATURED The Business of High Performance, produced by the National Center on Education and the Economy (NCEE), gives business people, employees, and policy makers a glimpse of high-performance workers in action. The 10-minute video showcases examples of companies that have reorganized work to effectively use their high-skilled workers and, in the process, have improved their productivity. It makes a compelling argument for changes in American workplaces if the nation is to remain globally competitive. The video is produced by the same organization that published America's Choice: High Skills or Low Wages!, the 1990 report calling for greater national investments in the skills of workers. For information on the video, contact: National Center on Education and the Economy 39 State St., Suite 500 Rochester, NY 14614 Fax: (716) 546-3145