Profile of a company's transformation by tapping into employee ideas.
You've heard it a million times: your employees have hidden reserves of resourcefulness. But here's how they could actually transform your company
The rebound of United Electric Controls Co. may sound like a familiar story. But it looks like nothing you've seen.
Yes, United Electric is a 60-year-old family-run business that lost its bearings thanks to antiquated manufacturing methods and entrenched autocratic attitudes. In 1987 the company, which makes industrial temperature and pressure controls, posted "the worst loss we've ever had" on sales of $28 million, according to Robert Reis, 57, the company chairman. And yes, the now $36-million business found its way back to sturdy profits by grabbing hold of Japanese techniques such as poka-yoke (mistake proofing) and kanban (an inventory-control system). There was cultural upheaval; there were nonbelievers who had to be converted or dismissed; there were even times when management felt like "throwing in the towel," admits David Reis, Robert's younger brother and the company's president. "You reach a point where you can't go back but also don't like where you are. It's scary."
How did this weary business gather the momentum to pull through? Management, to the surprise of just about everyone inside the company, plugged into a previously neglected resource: employees. "We had developed a structure, over time, that was designed to resist employee participation," admits Bruce Hamilton, vice-president of operations. "This was a military school." With taps blowing, the company had no choice but to change formation. "Over and over again, you hear about empowering employees," says Robert Reis. "You know intuitively that it's the thing to do. After a while, hearing about it can get nauseating."
But listening is not always believing. To appreciate the true nature of United Electric's about-face -- and neutralize any queasiness about employee involvement -- you need only roam the company's 100,000-square-foot factory in Watertown, Mass. The approximately 350 employees at United Electric's headquarters, 90% of whom last year responded in some form to management's plea for ideas, have launched an invasion of imagination, transforming an otherwise drab and often tedious work environment. Everywhere, it seems, workers are using devices that they themselves invented -- to work faster or test more accurately or track materials more closely. They have even splashed some color around. Pictures of some of the company's parts hang over worktables, guiding assemblers through their paces; red plastic bins affixed to the edges of assembly tables hold just enough parts to fill existing orders. At times employees seem engaged in sleight of hand as they spin shelves of fixtures that rest on lazy Susans, or slide out worktables that are cleverly stored, trundle-bed-style, underneath tabletops. "There's always a way to do something a little bit better," says Gladys Appleby, who has worked as an accounts-receivable analyst for 22 years. "We always thought of things. But there was nobody to listen to our ideas. Now there is."
There was nothing particularly magical about United Electric's conversion. "We are definitely not an overnight success," stresses David Reis. When Hamilton took over as materials manager, in 1986, he recognized that the company had too many problems for a small, removed group of managers to solve -- something employees already knew. "The production workers saw the lack of customer orders," says Bonnie Rafuse, manufacturing education manager. Closer to home, they had also seen their Christmas bonuses shrink and profit sharing evaporate.
To officially open up lines of communication, in 1987 Hamilton and his seven managers distributed a manufacturing plan that alluded to declining profits. Soon after, the company began setting up formal tools for collecting ideas and rewarding the employees who came up with them. (See "Where's the Big Idea?," following main story.) "The methods we've used have all been tried somewhere else," says Robert Reis. "We didn't invent anything."
Fortunately, the same can't be said for his employees. Passing through the facility, just as nearly 10,000 different parts do, you can't help bearing witness to a stunning display of worker ingenuity. The trendy and often fuzzy concept of employee involvement suddenly seems very concrete: given the chance, people can come up with improved inventory controls, more efficient machines, better quality-testing tools. What follows is a sampling of the more striking and ingenious responses to the company's appeal for good ideas.
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Luis Catatao's Big Board. No one could blame Luis Catatao for feeling frustrated. As an assembler of hermetically sealed switches, he was constantly shuttling to the purchasing department to ask for more parts. Furthermore, the company's computer wasn't always up to date -- meaning that sometimes the parts he needed weren't even in the stockroom.
Late last year, inspired by the company's endless appetite for new ideas -- and by a workshop on visual controls he had attended -- Catatao began collecting information about the parts he used. How many had he used in the last three months? How did usage change over a six-month period? What was the lead time to get each part from the supplier? Numbers in hand, he approached production manager Harvey Chambers with his idea for a simpler way to track the parts himself. "I didn't carte blanche it," recalls Chambers. "But I could see he felt a genuine concern." To help Catatao think his idea through, Chambers invited in a sales representative from a company that makes charts.
After flipping through the rep's catalog, Catatao knew what he wanted. A magnetic board is quick and easy, and it doesn't take all day to keep it up to date, he reasoned. Though such boards are not cheap, the company approved Catatao's request for $350 to buy one. "It was important to him," says Hamilton.
Using magnetic tabs, Catatao designed a board that indicates with the placement of a green arrow the current inventory levels of all the parts he needs, while a red square sits at the reorder level for each part. As inventory shrinks, arrows close in on squares, threatening to gobble them in Pac-Man fashion. If arrows and squares drift dangerously close, those parts need to be reordered. "Ever since I got this board, I run out much less than I used to," notes Catatao. "I can see where I stand in about two minutes."
