"KAIZEN"

THE MISSED OPPORTUNITY

by N G Nelson
ngnnelson@yahoo.co.uk

Employee Ownership of the CIP Creates the Artificial Extended Family Structure

Roth observes that for Imai, the most significant failing of Western management lies in the fact that there is no system within the company which rewards the efforts of individuals with regard to improvement. Using employees innovations, recognising and rewarding individuals for their contribution to the Continuous Improvement Process is crucial, because this gives them an ongoing investment in the process. This creates the self perpetuating dynamic which drives 'Kaizen'. Instead, in the West, evaluation of a person's performance is based entirely on results. [10]

Employee ownership of the innovative/decision making process, at all levels, is the key factor which creates the self-perpetuating dynamic which makes continuous improvement possible within Japanese industry. Everyone involved has to have a real involvement/investment in ensuring the Continuous Improvement Process succeeds. For this reason managers, even company directors, share eating facilities with their staff to show they are open, approachable and a receptive part of the overall team. The flat management structures developed by Japanese industry were not introduced to cut middle management costs, they evolved gradually to ensure that ideas flowed quickly and effectively back and forth between those directly involved in production, to designers, to marketing specialists and so on. These changes occurred because employees had an investment in suggesting them and making them happen.

What differentiates the Kaizen orientated company from the Western norm is that it has added a social dimension to the corporate equation. Besides striving for profitability through innovation the company is also encouraging its employees to invest their efforts long term in what amounts to an artificially created, extended family structure. In a CIP environment the view is long term. Access to training is seen to be a long term investment by management in the employee. Employee input is seen to lead to actual changes which increase profitability, which in turn provides long term security of employment and improvements in the working environment. Employees see that their ideas are valued and that they are actually being used effectively. They are rewarded for their input into the CIP by written/verbal acknowledgement of their efforts by management and their peers, and in more direct financial terms. Senior Management participation in "Back to the Floor" exercises is also important here. Managers find out what their staff actually do every day and in return staff actually get to meet their Senior Managers. Within this structure all employees have an investment in enhancing the viability of the company because the company is seen to have a long term commitment/interest in its employees. Without this extra dimension the dynamic which drives Kaizen can not exist. These points may seem inconsequential to Western managers, but sustainable employment, investment in training, the application of employee innovation, management acknowledgement of those innovations and seeing some kind of financial return for helping increase profitability through innovation is crucial in creating long term personal investment in the CIP. Otherwise the process is seen as just being short term and "one way". These factors make Continuous Improvement sustainable over the long term.

Two case studies on General Motors and the Ford Motor Company from the MIT research illustrate some of the problems and limited successes experienced in adapting the CIP for use in the US motor industry during the 1980s. In the Japanese automobile industry, employee investment/participation in the CIP had led to the gradual, coherent evolution of "Teamworking" and "Lean Production", which in turn produced enhanced competitiveness. Rather than taking the time to take the many small steps necessary to create a coherent production system, Western Industry focussed on copying "Lean Production/Teamworking" to try to achieve immediate increased competitiveness. In their contribution to the MIT study, M Parker and J Slaughter argue that merely changing the organisational chart to show "Teams" and introducing "Quality Circles" to find ways to improve production processes are unlikely to make much difference.[4] Employee investment in these structures tends to be short term as they are not geared toward long term innovation, rather they tend to be geared toward solving immediate management defined problems and cutting costs. By participating in such initiatives employees see that they are effectively innovating themselves out of the job.

A modern example of this cultural misunderstanding is a Western belief that continuous improvement can be injected into a failing part of a company via management inspired seminars facilitated by external consultants. This type of focussed project may be used in a non KAIZEN orientated firm to facilitate the improvement of a particular process. In isolation this may lead to short term change within a particular area of the working environment, however isolated projects will not produce a continuous improvement dynamic within the organisation. This type of exercise is wasted unless it is part of an overall long term CIP strategy implemented within the company as a whole. Within the Kaizen environment, this type of consultant guided exercise should be unnecessary. Areas for improvement should be identified by employees and innovation should result from this over the short, medium and long term. For the CIP dynamic to work, all of the employees must own the improvement process, not just senior managers and the consultant.

Achieving investment from all employees in the long term process is more important than creating strong, pro-active management structures to achieve short term aims and goals. If employees own the process, they are more likely to have a long term investment in its success. Achieving personal Investment and involvement in the creative process from every employee is the crucial element in creating the self-perpetuating dynamic which drives the CIP. This leads to innovation, improved products, improved working systems and lower costs over the long term. Indeed the CIP dynamic has enabled Nissan, to maintain its position as having the most productive automotive plants in North America during 2001/2002 and its plant in Sunderland has won awards for being the most productive in Europe [13].

To achieve this dynamic Japanese managers appear initially to be more re-active than pro-active, they become "the leader who may not appear to lead".[6] They facilitate, focus and manage changes brought about by the CIP. At all levels, they facilitate a dynamic process of information sharing, project planning and implementation; filtering and refining the ideas of employees so that these ideas are brought together into coherent strategies which can then be applied throughout the organisation. Rather than being rewarded simply for meeting targets, all employees are rewarded for their contributions to the CIP. The goal of the CIP is to continually improve overall performance, without rigid targets which can serve to set limits on what can be achieved by employees.

"We have been working with Honda for ten years and we have been talking to them for all that time. For the first seven years, we did not really understand what they were saying.".

R G Bertodo - Strategic Planning Director Rover Group Plc, August 1989. [5]

Rewarding employees for their involvement in the process gives the CIP legitimate status and facilitates its absorption into the work culture of the entire organisation. Besides monetary reward, investment in employee training, long term sustainable employment and day to day acknowledgement of employee effort reinforces commitment to the CIP. This encourages continued personal investment and involvement because employees see that their work and ideas are valued in real terms. Creating strategies and improvement at all levels within a company on the basis of employee input also makes employees aware that they actually own the process. It is these management and reward systems which create employee investment in the artificial extended family structure. This is what creates the self-perpetuating dynamic which drives the CIP. This is what makes the Continuous Improvement Process sustainable over the long term.

Bibliography

[1] R Murray - IDS Bulletin Vol 23 4/10/92 "Toward a Flexible State" p 2

[2] Womack et al - "The Machine That Changed The World" Maxwell Macmillan International (1990) p48

[3] ibid - p 3

[4] ibid - p 99 - 100

[5] R Hannam - "Kaizen for Europe - Customizing Japanese Strategies for Success" IFS Publications (1990) p 1 -3

[6] ibid - p 17

[7] ibid - p 43

[8] Hannam - p 46

[9] ibid - p 49

[10] S Roth - "Japanisation, Or Going Our Own Way - Internationalisation + Interest, Representation" in "Concepts in the German Automobile Industry" Hans - Bockler - Stiftung. Dusseldorf, Grave Reihe (1992) p 5 - 9

[11] ibid - p 14

[12] K Rafferty - "64 Bits Does Not a Plumber Make" Guardian - On Line 20/06/96 pp 5

[13] Automotive Intelligence - Nissan: comments on the Harbour Report 2003. http://www.autointell.com/asian_companies/nissan/
nissan-facilities/nissan-us-harbour-2003.htm 16/02/04

also: http://canadiandriver.com/news/020614-6.htm 16/02/04
http://www.investintheuk.com/news9909.html 16/02/04

[14] Joseph Stiglitz "Globalization and its Discontents" Penguin (2002) p89 - 132

Thanks to Ken Mortimer - ex-Education Director of Ford UK for his help and encouragement and to Dennis Gregory & Roy Moore at Ruskin College, Oxford for supervising my initial draft of the paper. Thanks to Alan Price at HRM Guide. Thanks also to Toni Davies, Ph.D at the Kaizen Institute for her input.

N Nelson: MA International Political Economy, Leeds; BA (Hons) Pol, York; R Dip Labour Studies, Ruskin College, Oxford. 1994 (Amended 1996, 2003, 2004, 2005)