Dunbar Mirco-engines situated on the north side of Dublin city was founded 30 years ago. A manufacturer of small engines for leisure goods, they have been well-positioned to take advantage of the contemporary public demand for smaller and more effective electronic leisure goods. The plant now employs 266 staff, mostly in the production unit, although in recent years the number of qualified scientific engineering and research staff recruited has expanded significantly.
The following table gives an insight into the departmental distribution of employees at Dunbar.
|Manufacturing||Research & Development||Sales & Marketing||Human Resource Management||Distribution and Service||Finance|
|Number of Employees||188||35||15||6||16||6|
|Percentage of graduates in unit||9%||90%||60%||75%||0%||50%|
The plant has been unionised since its inception and although current union membership and activism have declined relative to the early years. The management style at the plant could have been described as traditional with a hierarchical framework of power and responsibility. The line manager was a central figure in the effective functioning of the production department.
Dunbar was run by a six-person top management team comprising of the directors of Production, R&D, Sales and Marketing, Finance/HRM, and Distribution along with Terry Lodge the Managing Director since 1998. Dunbar’s turnover had steadily increased from 1998 to 2013 but the top team recognised that they were losing contracts to overseas competitors who could provide similar products, not at lower cost, but in less time and with fewer faults than Dunbar could. There was a recognition that it was time for Dunbar to re-engineer if it was to have a competitive future.
In late 2013 Dunbar recruited a Gunther Baumler, a German ‘change consultant’ to lead the organisation through the Quality based change process it had to embrace if it was to keep pace with its Japanese competitors in particular. Gunther came from the automobile industry in southern Germany and had a reputation as being a change champion. When the top team interviewed Gunther he was excited by the challenge offered by Dunbar and the opportunity to work in the land of Celtic music and black beer! He accepted the job on an initial three-year contract.
Soon after arrival Gunther quickly realised that he would not only have to help Dunbar review and revise their production processes, he would actually have to help the organisation redefine its entire culture. He recognised that this process would involve:
He proposed a Total Quality Revision programme to transform Dunbar to a cutting edge manufacturing and research organisation which would proactively face the future. To achieve this a massive re-education package was agreed with the main unions (particularly the two manufacturing unions). As an added incentive the management even sponsored union activists to take specially devised courses on partnership and change management for union activists at Dublin City University. These programmes, while facilitating a growth in awareness of contemporary perspectives on change and so forth, also gave the union representatives a forum to discuss and evaluate the changes facing Dunbar.
On March 21st 2014 Gunther addressed a full-plant meeting introducing the challenges that faced Dunbar and the sort of changes that would have to be adopted if the organisation was to continue to function effectively and to maintain market share. He did not hide that there would be considerable change for many employees but promised that the dividends for those who engaged fully would be great. Despite the apparent radical nature of the changes that Gunther was proposing there seemed to be a little negative reaction from the employees that day. It appeared to him that staff knew the situation facing Dunbar and were resigned to a change initiative to help ensure the future of the plant. At least that’s how he read the reaction of the employees at the meeting.
With the agreement with the top management team and the unions, it was decided that a fully representative Change Committee be established to oversee the change initiative. The nine-person Change Committee was elected with 3 representatives from manufacturing (2 union representatives), 2 representatives from research & development, 1 from sales and marketing, 1 individual representing HR and finance (the HR director), 1 from distribution and services (union representative) and Gunther as chair.
A series of sub-groups of this committee visited plants in the USA and eastern Europe to review best practice in firms in their sector. After this research was compiled and reviewed a series of initiatives were formally tabled for Change Committee discussion and decision.
It was generally agreed (after some argument) that more flexible work practices would need to be introduced in manufacturing as a first step. The change involved the end to demarcation and the introduction of a quality circle (QC) initiative. This would involve employees working in production committees or circles taking responsibility for product quality and efficiency. The quality control office would no longer exist as this role would be in the ownership of each circle/committee. Necessarily, this evolution led to the dilution of the role of the traditional line manager/supervisor. Initially, this led to considerable problems. Some supervisors agreed to take on new roles on project development committees but they also returned to production work in the new QC environment. Many of the supervisors who would not agree to this were offered very attractive redundancy packages and extensive out-counselling/placement programmes.
In return for the agreement of production staff engaging in the QC initiative employees were guaranteed a reduction in hours worked per week from the current average of 46 (including overtime). Standard baseline hourly pay was to be increased by 10%. In return production was to move from an average 48 hour operating week to a 64 hour operating week. Employees within their circles could arrange the shifts and employee rotation themselves. It was envisaged that the QC approach would lead to a reduction in the number of employees required to staff the production process at any one time.
Bonuses were agreed for production efficiencies and for improved quality and production targets. Cross functional training would be scheduled on a phased basis and have the full input of the relevant unions in production. Gunther made it clear to top management that the additional cost of this training and the initial loss of productivity in the transition period would be far outweighed by the efficiencies which would accrue once the new process was established.
The R&D department were also engaged in the quality revision process. Management felt that while it was a productive department the actual capital and salary cost were quite considerable for a small department. When proposal were made for efficiencies and clearer accountability, it led to considerable disquiet from the R&D representatives on the committee and among R&D staff when they heard of the proposals. They rejected outright the extension of their working week beyond 40 hours.
The also reacted negatively to the institution of shorter time frames for development work and the suggested introduction of more tangible targets. They felt it was inappropriate for their department and it was a cause of some considerable anger. When bonuses were suggested as an incentive to adopt the goals based approach the reaction was worse. The representatives claimed that the proposals indicated how much R&D was misunderstood.
R&D did agree to the strengthening of links with the production department as they recognised that poor communication with production in the past had resulted in a number of problems which could have been overcome if some formal channels of collaboration were in place. Thus a production strategy committee was established to foster this line of communication and collaboration. However, the negative atmosphere still persisted with R&D staff claiming that the organisation as a whole was too production focussed and no allowance was given to the different culture which existed in R&D. Short timelines and goals were not appropriate nor were purely financial bonus schemes.
In order to buy into the quality initiative R&D demanded more flexible working schedules within their department. The also requested the provision of company crèche facilities and more support for further development/education. Included in this was a request for the introduction of a 6 month sabbatical period in each 6 year working block. The implication being that they were primarily members of a profession and needed to keep up with changing developments in their field as do accountants or doctors. They also wanted the bathroom and shower facilities at the company to be upgraded from their current primitive status.
On hearing this set of demands production representative reacted strongly, claiming that R&D were being elitist and also demanded that the additional packages being requested by R&D be extended to production and to other departments. The representatives from both R&D and production needed to be asked to cool down at one meeting as the discussion descended to a slagging match about how much the other actually cared about the future of Dunbar.
Things were not going well for Gunther!
When Sales and Marketing, who already worked in a coherent team-based system heard that production was to get the additional reward for working in teams they claimed that they clearly had been denied their just rewards up until now. In compensation for this, they requested that their expense allowance be extended by 33% and that since much of their work was often done on their own time they wanted 2 days extra annual leave per annum for members of their department. They would also like to avail of the further development/education options requested by R&D. They had no problem setting goals and targets (a common practice in S&M) and would continue to do so and said they looked forward to a bonus scheme being implemented for them also when they exceeded targets.
The Finance/HR representative watched this evolve with a shocked expression on her face. She felt that the initiative in her departments would involve extra systems to ensure accountability and transparency but did not see it involving longer hours or any great change to current work practices. The typical workday in these departments was 9-5, five days a week, 21 days leave per year and no clocking-in each morning. Both departments were efficient and functionally effective. However, when there was a suggestion at a change committee meeting that many of the HR roles and duties could be comfortably subsumed or delegated to shop floor level, the alarm bells rang!
What has happened??
Gunther was stressed! A highly driven professional he realised that both his reputation and his bonus (for smooth change programme implementation – 33% of his overall contract) were in jeopardy. His initial task was to lead the change process but without incurring crippling costs. He could not believe that what appeared to him initially to be a fairly coherent plant, if not the most efficient, had now become so fragmented and confrontational. He realised the conclusions he drew from employee reaction on March 21st. last was a little wide of the mark.
What a mess, the beloved green hills of his hometown of Buxtehude (outside Hamburg), never seemed so far away.
1. Analyse the situation at Dunbar and with reference to your SHRM Management literature (and any other associated literature you think relevant) and make sense of the behaviours in the different units which appear to have led to the current chaos.
2. Suggest a solution path to Gunther which might be sensitive to the diverse needs of the various set of employees at Dunbar (using where possible motivation literature to support your recommendations) but which would also achieve his stated goals