Slides for Chapter 6

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.