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 / Autumn 2007 / Issue 48(originally published by Booz & Company)


My Unfashionable Legacy

We suffered a major setback when a new division CEO arrived at CPFilms who did not seem to believe in human development and who saw manufacturing as a liabil­ity. He pulled back the training that was a critical part of the team system, and he used our gains in productivity to mandate new head-count cuts nearly every Monday. One night, we both attended a dinner meeting with his boss, a Courtaulds vice president. The VP asked me how the people were doing. “We’re still making improvements,” I said, “but it’s despite ourselves. We’re going to get a union if we keep this up.” This breach of hierarchical decorum infuriated the division CEO; he later chewed me out, and, for the next three months, he barely said good morning to me. We continued the layoffs.

Then, one rainy February morning, I arrived at the plant to confront picket signs. Labor union organizers had gathered signatures from more than 65 percent of the employees. The CEO charged into my office, demanding to know how, as head of HR, I had let this happen. When I pulled together the frontline supervisors, they said that although they supported the organizing effort — “You management are getting what you deserve” — they didn’t actually want to be  unionized. They wanted to go back to our team system. So did the other employees, they said. That turn of events helped me negotiate an agreement: There would be no union, we’d reinstate the high-performance approach, and we would guarantee that no layoffs would result from any improvements we made in productivity in the future.

No Such Thing as Commodities
That was 1993. For the next 12 years, there were no layoffs. Our housekeeping, maintenance, environmental, and safety records were as good as any company’s in the world; you could eat off the floors in the plant. With our quality intact, our business grew. Revenue in­creased more than 100 percent; margins improved by 55 percent or more. Production doubled, profits were three times the industry average (an improvement of 650 percent), and on-time delivery rose 30 percent, to almost 98 percent. Safety, the first problem we’d addressed, was now world class; we went two years without a lost-work accident at any plant anywhere in the world. Waste decreased dramatically; one product line reduced its waste level from 13 percent to 2 percent. When I expressed satisfaction, the technicians responded, “Actually, we know we can get it to zero.”

One critical factor was our workers’ ability to gain individually from these results. We had said that pay would increase after business successes, and we lived up to that promise. We made it easy for people to take on new tasks and build new skills, working closely with business and technical colleges in the area. We set a corporate goal: becoming the employer of choice in our area. We gave people pay increases when they learned and used new capabilities, and we promoted them for merit and promise, not seniority, through an open process involving written or oral tests (their choice) and a peer review.

At one point, the Courtaulds vice president of finance tried to block our pay-for-skills approach. “You’re just giving away money to be popular,” he told me. “For every $80,000 in pay increases, I will cut four people.” But he dropped that threat after the next quarterly cycle, when we made far more in income than we were spending on pay increases.

Visitors to CPFilms plants often said, “If we had your people, we could do this too.” And I would just smile. After all, a dozen years before, management had wanted to displace these very same employees.

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