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.
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."
Cheryl O'Connell's Rolling Pegboard. Cheryl O'Connell's inventory-control invention is a little harder to figure out on sight. In 1988 O'Connell, a senior buyer, noticed that the company was storing many of its inexpensive labels in a very expensive stock-retrieval system. Buried beneath fasteners, springs, and stampings, the labels were hard to find -- and often their adhesive had worn off by the time they were located.
After scavenging through existing material, including a typing table and a four-sided corkboard, O'Connell and a coworker designed a special rack for the labels. It is, essentially, a pegboard on wheels, with rolls of labels hanging from the pegs. "We got a lot of ribbing," she recalls. "You look at it and you say, 'It's not a rack and it's not shelving, so what is it?' "
Nobody pokes fun anymore, though -- especially those who remember what it was like to spend a half hour hunting down labels. "I don't work with labels, but when I think of things, I like to follow through," says O'Connell. "Now I always find myself asking everybody, 'Why do you do things that way?' "
Harry Moumdjian's Quality-Testing Aquarium. Harry Moumdjian has been building -- and rebuilding -- diaphragm assemblies for the past 16 years. When the company appealed for new ideas, he knew he wanted to find a way to cut down the number of faulty assemblies that came back from the inspection department. "They always found leaks," he says.
Moumdjian made his supervisor an offer. Let me do the testing, he said, and I'll give you a 100% leak-free guarantee. "Always, I was talking about it before," he says. "When they said to put ideas on paper, I did. Everybody said it was a very good idea." With the help of the model shop, Moumdjian set about building an aquarium big enough to hold one of his diaphragm assemblies. To test an assembly, he figured, he could simply run an air hose through it, then stand back and check for air bubbles. The sole sticking point: finding a way to position the assembly so he could see it from every angle. "Once we got that, it was very nice," says Moumdjian. "I can tell exactly where it's leaking from, so I can fix it."
Bob Comeau's Wheeling and Dealing. Bob Comeau found plenty of motivation in his aching back. As manager of the wire department, he simply wanted to relieve the pain of carrying spools of wire, which can weigh as much as 50 pounds apiece. "Lifting those things was painful and time-consuming," he says.
Since the company was after ideas, Comeau imagined what it would be like to have a rack with wheels that would hold all 35 or so of the giant rolls, so he could move them to the cutting, measuring, and stripping machine. He experimented by building a version that would hold just six rolls, but even that "proved dangerous. The thing could tip easily," he says. But Comeau remained committed to the concept. "I knew this could really save time," he says. He finally hit upon the answer, late last year: he built immobile racks for the spools and mounted the machine on wheels. Now Comeau simply wheels the machine, pushing it like a supermarket cart, to the appropriate spool of wire.
Comeau's invention worked so well that he began trying to simplify every job in the department: he added armrests to some of the machines and invented a hand tool that allowed the dies on one machine to be changed more easily. Most of his creations have used scrap parts. "I have these little brainstorms sometimes," he says.
Beverly Scibilia's Air Campaign. As part of her job assembling temperature controls for hospital sterilizers, Beverly Scibilia had to pull down an arbor press to push three pivots into a metal plate. "It was hard on the arms," says Scibilia, who also had to use two different fixtures to get the job done.
Judging from the number of ideas she saw people coming up with, she concluded that "we've got some very brilliant people around here," she says. So she decided to enlist their brains to find a better way. One day she asked a group to gather round the large, heavy press. "I showed them how we used it," she recalls. "That got everybody talking about what would be good." A few folks suggested using compressed air to force the pivots into their places. Scibilia then worked with the model shop to design such a machine, which was made mostly out of parts the company already had.
The collaboration paid off. Scibilia now uses a machine that simply requires her to press two buttons and wait for an indicator light to turn red. What used to take an hour on the arbor press takes no more than 15 minutes. Another machine, which works on the same principle, reduced setup time from 45 minutes to a matter of seconds. "I'm more interested in what I do now," she says.
Vinny Petrillo's Revelation. Vinny Petrillo didn't invent anything, really. He just felt obliged to let management in on one of its long-standing buying blunders. "One day I asked, Why do we have to do things this way?" the assembler recalls.
More specifically, Petrillo was wondering why the company was ordering a certain kind of switch that came with three unnecessary terminals. It was a logical question, since he spent as much as two hours a day removing those terminals. "We were paying the switch manufacturer to put the terminals on, and we were paying Vinny to take them off," says Hamilton. "That happens because the buyer doesn't have the slightest idea what the piece does; and Vinny doesn't have the slightest idea where it comes from."
Once Petrillo mentioned the problem -- by submitting a suggestion in writing -- the company embarked on an investigation. As it turned out, the supplier could provide a switch without the terminals; in fact, it would be cheaper. "I thought it was a good idea," Petrillo says proudly. "A job becomes tedious. Finally, you say, 'What the hell am I doing?' The company seems open, and it gives you something to think about while you are doing these things."
It stands to reason that United Electric's openness would make employees feel better. Don't people generally enjoy having more control over their workplace? But United Electric earns money by building controls, not self-esteem. "I usually get yawns when I start waving my banner about employee involvement," says David Reis.
Of course, he can rouse even the soundest snoozer by reciting some of the company's more quantifiable achievements since 1987: inventories cut by 60%, work-in-process down by 90%, on-time delivery rising from 65% to a consistent 95%. Nothing improved in one fell swoop; the company made progress with such day-to-day improvements as those detailed above. Bob Comeau's wire-assembly department, for instance, is now more productive with two people than it was with seven. Beverly Scibilia swears that with her compressed-air machines, "what took me six weeks before, I can now get out in a week." Savings can add up in unexpected ways: Robert Galvanin, who manages purchasing, estimates that he saved United Electric at least $6,000 a year by figuring out how to eliminate one sheet of paper from the requisition process. "We've saved millions and millions of dollars in inventory reduction alone," adds Hamilton.
"Some of the things people have done are real surprises to me," continues Hamilton, who is 42. "We've had things happen that are not seen in any book -- the pull-out shelves, just the freedom people feel in moving things around. These embody the idea of eliminating waste, and they were all things that could be done for a few dollars." Companies do themselves a disservice, Hamilton says, by evaluating ideas purely on the basis of how much money they save. "It's the process of arriving at those ideas -- even thinking about them -- that we want to reward, not just the result," he explains. "A person may come up with nine ideas that save a dollar apiece, then the tenth saves $50,000. People hate rejection. If you reject the first few, you don't get that last one.
"With fewer employees, we're spitting out more production than we ever did," he adds. "It seems like magic until you try it. But it's really just overcoming your own stupidity."
WHERE'S THE BIG IDEA?
How United Electric Unleashes Employee Creativity
It seems safe to say that until recently, no one would have confused United Electric Controls Co. with a think tank. Between roughly 1968 and 1988, employees had slipped a whopping 20 or so ideas into the company's suggestion box. Not only was the procedure drawn out and intimidating, but management had a reputation for implementing employees' ideas without giving them credit.
Now about 90% of employees contribute ideas via one forum or another. Among other rewards, their initiative earns them chances in monthly, quarterly, and annual drawings for such prizes as sports tickets, getaway weekends, and even a weeklong cruise.
Here are the company's three main tools for harvesting ideas:
1. Valued-Ideas Program. This effort is a distant relative of the company's long-standing suggestion box. United Electric first began tinkering with this program in 1988, offering cash bonuses that generally ranged between $50 and $400. But deciding how much an idea was worth added an often troublesome element of subjectivity. So management now hands out a flat $100 in cash for every usable idea (up to 10 per person). In 1989 employees submitted 500 ideas; last year that figure doubled. About two-thirds of all ideas are implemented, and the company doled out about $50,000 in bonuses last year. Sound costly? "Lots of companies give employees money every Christmas, but we stopped doing that," explains David Reis, company president. "And the improvements we get in return far exceed the amount we invest." In keeping with the company philosophy, management rewards even fruitless attempts at problem solving: ideas that can't be implemented still earn a chance in an awards drawing.
2. Action Centers. These short-term groups, formed to solve specific problems, resemble the quality circles of yore. With management's approval, any employee can assemble an action center, which generally lasts several weeks. The group reports its results back to management. "Often, people who visit say, 'How can you have people in conference rooms who are not out there producing anything?' " says David Reis. "But they are producing solutions to problems." The first month the company announced the program, in February 1987, employees set up more than 40 such groups.
3. CEDAC (Cause-and-Effect Diagram with the Addition of Cards). This problem-solving method uses long-term groups, which usually last at least three months, to solve problems for which the cause needs to be determined. One group, for instance, is now using this problem-solving technique to try to figure out why production capacity remains so low in the company's sensor division. CEDAC groups get together and brainstorm to gather all the possible causes, which they write on cards and organize on a chart. Over a period of months, they subject each possible cause to rigorous testing. "It's methodical and systematic," says Bruce Hamilton, vice-president of operations. "Only about 25% of them have been successful. We're still learning."