WHY TEAMS WORK

By Margaret Houston, Kim Parks, and John Talbott

In late 1995, Toyota ran a series of advertisements in national publications such as Newsweek extolling the benefits of teams. The advertisements which showed Camrys and Avalons on the production line in Georgetown, Kentucky, stated the following:

At Toyota's five American manufacturing plants, we employ robotics, computers, and advanced technology. We also employ people who share the belief that quality is a team effort. In fact, last year alone more than 60,000 team-member suggestions were introduced into our U.S. production line. It's this combination of technology and teamwork that is bringing world-renowned Toyota quality to everything we build here in America.

The Rochester Institute of Technology and USA Today also found teams to be important when determining their 1996 quality-award winners. Teams from US West found ways to reduce the need for their cellular customers to call customer service representatives and decreased the time it took to answer the questions that did come in. A team of fifteen managers, for example, met once a month for six months to identify major customer service problems. Subteams, including rank-and-file workers, then proposed 70 ways to reduce calls, 20 of which were implemented.

Prosair Manufacturing designed a new process to handle industrial gas deliveries that reduced customer fuel outages and increased sales volume. The impetus for the redesign stemmed from an eclectic team formed to attack declining morale. The team decided that Proxair would monitor supplies and delivery orders and that Proxair, and not customers, would be responsible if tanks ran dry.

Our research indicates that when teams don't work, their failures can be identified with shortcomings in one of the following three areas:

1. Poor initial hiring practices;

2. Insufficient commitment on the part of management; and

3. Lack of implementation of team ideas.

The following paragraphs examine these areas.

Hiring Practices

The Toyota automobile plant in Georgetown, Kentucky and the Honda plant in Marysville, Ohio resemble visions of manufacturing heaven. Plants are spotless, and employees are courteous and productive. These employees do not materialize out of thin air, however; they are the survivors of a formidable hiring process. Employees at Toyota, for example, are subject to both a written and oral examination, a simulated team performance, a drug test, and a probationary period before they become permanent employees and formal team members. Toyota feels so strongly about the initial hiring process that they recently decided to build their new $700 million truck plant in Evansville, Indiana as opposed to Georgetown, Kentucky. While the rationale was not given in the press releases, the company questioned whether there were 3,000 quality employees left in the Georgetown, Kentucky area in light of the 6,000 already employed.

If the Deming disciples are correct and 99% of workers crave the responsibility of teams, why do Japanese companies such as Toyota and Honda go to such tremendous efforts in their initial hiring process? The harsh fact is that a significant number of American workers do not care about their work and are detrimental to the team process. More importantly, American companies, which do not subject job applicants to such a rigorous process, have employed a large number of workers who would not survive the Japanese hiring process. The following quote from an employee of an American company illustrates this point:

A die needed repair, so the toolmaker argued with the boss for the first two hours. Then he took the top and bottom apart and sent them out to be cleaned. He knew it would take until the last part of the shift before the cleaning would be completed. He said by then it would be too late to start working on it
and the third, or first shifts would
repair the die.

Exacerbating the situation is that poor employees will often contaminate good employees. One individual described her 11-year career with a sizeable American manufacturing concern to us as follows:

The pay and benefits were great. My first job was [as] a lathe operator in the machine shop. I was excited and wanted to do a wonderful job, above and beyond what was expected of me. After training, I worked so hard I ran more parts than the time-study rate. I felt wonderful! This was not for long. An employee informed me I had done the unforgivable. The employee said running over rate was against rules. Since I felt I couldn't just stand at my machine and do nothing, I asked what I should do. She said to sit in the lobby of the restroom. The company paid hundreds of dollars for me to sit in the restroom during the next 11 years.

While anecdotal corroboration, such as the above quotes, are often specious, J.D. Power's Initial Quality Study (Table) released in 1996, buttresses our position that careful attention in the initial hiring process has tremendous salutary implications.

Management Commitment

Companies that initiate half-hearted commitments to the team and empowerment approach are doomed to failure. Conversely those that truly empower their workers reap the benefits illustrated earlier. The following two vignettes compare and contrast these approaches.

The Center for Urban and Public Affairs at a major university presented a workshop to selected members of management and several employees of a regional company that culminated in a teamwork committee (TC). The TC was developed to facilitate cooperation and improve communications between employees and departments and to provide a means to make the work flow more efficiently through the plant. Most importantly, the TC ostensibly promised an avenue for the employees to express their ideas and proposals to management.

The company's effort, however, was not successful. Management did not fully understand, nor did they appreciate, the potential benefits of empowerment and did not have a well-developed plan to implement change in the organization. Many of the early TC members quickly realized this was just another empty promise and enthusiastic members became cynical and eventually dropped out of the program.

This example can be contrasted with the experiences of Volunteer Capital Corporation which owns the J. Alexander's restaurant chain. J. Alexander's, which is arguably the most successful restaurant in Dayton, Ohio, employs a "no rules recovery" worker empowerment policy for its employees, who are called Champions. To put it simply, there are no rules; a Champion has full autonomy to "comp," or buy, any meal or portion of a meal. For instance, if a guest orders a prime rib and does not think that it is the best prime rib she has had in the city, J. Alexander's will buy that meal.

J. Alexander's creed states in part--"Every Champion not only has the right, but also the obligation, to avoid preparing a product that does not meet our high quality standard," and one of the key elements of their shared values is the "Support Team." The attributes of a Champion include teamwork. We believe in 100% teamwork. The center of our philosophy is respect for the individual and belief in the team. We also believe in empowering everyone.

A couple of examples of the team and empowerment philosophy at J. Alexander's as related by Jeremy Hinshaw, an employee, follow:

This particular case took place in our Chicago store late last year. A first time guest came in for lunch and ordered a glass of wine to go with it. As the server was bringing the wine to the table he slipped and the wine was spilled all over the front of the gentleman's suit. The server felt bad and wanted to do everything in his power to make the situation right. At this point the server went up to a coach and told him that he wanted J. Alexander's to send the man over to Nordstrom to buy a new suit because he had a presentation in less than an hour and that was not enough time to get the suit dry cleaned. We spent over $400 to buy the man a new suit. Needless to say, he was very grateful. We received a letter one week later at corporate thanking us for the way the situation was handled and that
J. Alexander's just earned a customer
for life.

Another case was one that I was involved in. I had a family come in for dinner one night. When I asked them for a drink order one of the children said she wanted Mountain Dew. I said, "I'm sorry we carry Coca-Cola products here." Well, that did not make the little girl very happy and I could tell the parents were not very pleased either. So I had one of my coaches run over to the gas station across the street and buy a bottle of Mountain Dew. Needless to say, the parents were very grateful and went on and on about how wonderful we were. I also had a similar situation occur about one month ago when a guest came in for dinner and wanted an appetizer that was being served at another restaurant. So I sent a coach over to that restaurant to buy the appetizer for the guest.

The above vignettes illustrate that teams will not work unless management is committed to truly passing decision making down to the workers and empowering them. At many of the companies we examined, there is management trepidation, ambivalence, or skepticism. Any combination of these characteristics will doom the teams. The members will quickly become disillusioned and view the teams as a charade.

Formal Implementation--
The Honda Approach

The best way to assure team failure is to have no formal implementation methodology to address specific suggestions. At Toyota, the process for making team ideas operational is well defined. A team member's idea goes first to the team leader who, after reviewing the idea, forwards it to the team leader of the alternate shift for review. The idea is then forwarded to the group leader of the originating shift. There is no further delay in the process. The idea is either adopted or dismissed.

Cognizant of the implementation problem, in October 1995, Honda of America conducted an associate survey administered by a leading independent human resource consultant to determine employee satisfaction on various topics, including implementation perception. Because the survey was administered during work hours, more than 10,000 associates, 94%, completed it. Most associates offered favorable responses when asked whether Honda does a good job of encouraging involvement and empowering them--44% favorable, 35% mixed, 21% unfavorable.

The survey provided other insights. Most associates responded to teamwork as the most positive aspect of working at Honda of America--58% favorable, 30% mixed, 12% unfavorable. The survey indicated that the workers at Honda believe that their ideas will be implemented as opposed to being "studied."

Honda believes the experts are the people who perform the jobs. A team within the purchasing department, for example, is currently developing a system which will replace the one being used to control material costs. The team is comprised of members from different parts of purchasing who will use the new cost system. Members from accounting who will use the system to pay supplier invoices are also on the team. There is also a programmer from the Information Systems Group who assists the team in the development of the purchasing system and implements any programming changes. Those on this team are viewed as the experts and the most capable group to create a new
cost system.

Honda also frequently has "town meetings," where the production line is shut down and the entire company gathers together so the plant manager can express his or her appreciation for the work that the employees are doing. The town meeting is a formal way for management to listen to the comments or concerns of associates. The meeting is always opened up to the associates to share concerns or experiences with the hundreds of other people within the company. If an associate prefers a one-on-one discussion with the president, a "speak-out" letter is written by the associate to the president. The company president does any follow-up necessary to provide feedback to the associate, and then goes to where the associate works and spends time talking with that
individual.

In preparation for the new Acura model that began mass production in February 1996 at the East Liberty Plant, all associates were given the opportunity to drive an Acura Legend. For 30 minutes, an associate was to drive the car off company grounds in order to understand the level of quality that was built into the product. Since this was the first Acura to be built in a Honda of America facility, management saw the need to show every associate the level of quality needed. Each associate was asked to provide positive and negative feedback on the Acura Legend in an effort to improve the newest Acura model to be produced at the East Liberty Plant.

Honda also has a voluntary involvement program (VIP) that combines the NH-Circle (quality circles), suggestion-system, quality-award, and safety-award programs. VIP is designed to recognize and reward employees for their achievements in employee involvement. It gives workers various channels for receiving recognition for problem solving. Workers can qualify through a point-earning system for everything from a U.S. Savings Bond or cash awards (short term) to a Honda Civic (middle term) to a Honda Accord (long term).

Every department within the organization sets goals and the means for achieving these goals. For example, the purchasing department had a cost reduction goal on purchased materials for fiscal year 1995 which was exceeded and resulted in significant cost savings. The goal established for fiscal year 1996 was even more aggressive. The purchasing department realized that the savings could not be squeezed out of the suppliers. So, Honda initiated a program to improve processes at the suppliers' facilities in order to increase productivity and efficiency resulting in a decreased cost of
production, which will be shared with Honda.

Honda conducts customer satisfaction surveys to obtain performance feedback. Instead of working on the assembly line, the associates call customers who have purchased a Honda product to ask questions regarding their satisfaction with the purchase. This program is very effective in making the associates aware of the impact that they have on customer satisfaction. In addition, customers are truly excited that a production line associate is calling to ensure that they are satisfied with the product.

In the parlance of the day, Honda and Toyota "walk the walk" as well as "talk the talk" in the utilization of teams to enhance performance. Many American companies talk the talk but do not have a formal implementation program, do an inadequate job of initial hiring, and lack a true commitment to the team and empowerment process. The results, we believe, are manifested in the J.D. Powers Survey.
Toyoji Yoshiki, former president of Honda of America, stated this dichotomy eloquently. "Each of you will be given the latitude in your daily job to search for better ways to improve our operation and the quality of our products." *

Margaret Houston CPA, CMA, is an assistant professor at Wright State University, Kim Parks, an employee of Honda of America, and John Talbott, CMA, a professor at Wright State
University.

Editor:
Michael Goldstein, CPA
The CPA JournalMARCH 1997 / THE CPA JOURNAL