NUMMI No-Layoff Story

Several years before Toyota shutdown the NUMMI plant, I took a tour there.

One of the workers showed us a video of how great NUMMI is and that there had never been a layoff there.

Later the worker told us it was his last day because he was being laid off.

I raised my hand and pointed out the contradiction. He then explained there's never been a lay-off of permanent employees.

I later wondered if Toyota's large temp force was their way of solving the Layoff Dilemma (how to get employees to co-operate with process improvement when that could lead to their own obsolescence and layoff).

Temporary employees might be motivated to cooperate with process improvement if that could lead to permanent status.

Permanent employees are not demotivated to cooperate because they are never (or rarely) laid off.

Just a thought, not sure if that's what they do.

Root Cause

Scenario: Some bad event B happens in a manufacturing environment.

A root cause investigation is conducted and it is determined that R is the root cause (or set of causes) of B.

Corrective action (or set of actions) C is taken to eliminate the possibility of R occurring again.

Yet the same bad event B happens 3 months later.

What happened?

There are three possibilities:

1. C wasn't implemented correctly
2. C doesn't really eliminate the possibility of R
3. R isn't really the root cause of B

Options 2 and 3 often aren't considered.

Factory Simulator

I've been working on a Factory Simulator program that combines an operational view with an accounting view so you can see how operational changes affects the bottom line. Check it out at

www.manufacturingsimulation.org

Over at isixsigma.com, I've read some conflicting comments regarding the effects of the economy on the willingness of employees to cooperate with process improvement. One school of thought is this "If fear of layoffs makes it hard to get employees to cooperate in an up economy, how much more unwilling will they be in a down economy?" The other school of thought is "Employees know their companies are fighting for their very survival and if something drastic isn't done they will go bust, therefore they will be willing to cooperate with process improvement."

I think both schools have valid points. But note that the motivational factors in cooperating in the latter case is fear and desperation. That's not the type of motivation that I think will work in the long run. But hey, it worked for NUMMI when they hired all those laid off GM auto workers in return for cooperation with the Toyota Way.

Process Improvement and the Layoff Dilemma

I have a friend who is a manager at a large corporation, which, like the company I work for, and many others throughout the world, has dabbled in process improvement. And like many other companies, they have found that it is difficult to overcome resistance by employees. Companies eventually learn that without employee cooperation, no amount of cajoling, nagging, process improvement activity quotas, etc works. Eventually the company will give up and it will be remembered as just another management fad that had it's day in the limelight.

But why do employees not want to cooperate? Well, I believe that there are three main categories of employee attitudes towards process improvement. 1) "It is kind of boring and an annoyance, especially when it is imposed on me. Just stay out of my way and let me do my job". 2) "If I cooperate with management with process improvement, the company will be able to get the same work that is getting done now with fewer people. How do I know that by cooperating I won't end up getting laid off?" 3) "I believe that process improvement is a good thing, but have trouble dealing with other employees who are resistant to it."

I will dispense with category 1) for now by just saying that I think it is a mistake to ever impose process improvement on someone who clearly doesn't want to cooperate. And I'll dispense with category 3) for now by saying that that's the category I'm in and if you’re reading this blog, you probably are too. But I have to admit that I have category 2) thoughts from time to time.

Regarding the second category, fear of layoffs, I think such a fear is valid and should not be simply dismissed by category 3 people, employers, or process improvement consultants as irrational. If you think about things from the employee's perspective, many or most generally have nothing (or little to nothing) to gain from process improvement and potentially everything to lose (their very livelihoods if their fear of a layoff actually occurs). On the other hand, the company has everything to gain by it: increased quality, fewer customer complaints, and higher throughput; all at a lower cost. I believe this is why it always seems to be management that introduces process improvement campaigns, and employees who resist them. And without employee cooperation, any process improvement campaign will eventually get abandoned because it simply doesn't work without it.

But suppose that employees were rewarded financially in such a way that the more they practiced process improvement, the more money both the company AND the employees made? More on this in a future post ...