Changing workplace culture is costly. Ask H E Butt Grocery Company.
In 1996, the supermarket operator in Southeast Texas and Mexico began the arduous task of reshaping a traditional seniority-based work structure at its manufacturing and distribution centers.
The process of training employees for new leadership roles was expensive and time-consuming. Longtime employees enjoyed preferred work shifts and vacation schedules. Some decided they couldn't handle the change and resigned from a company that prides itself on offering a pro-partner work environment.
Other company divisions showed impatience with manufacturing's initial decline in performance. But reorganization of work shifts, delegation of additional responsibilities for line employees, and the introduction of team-based compensation continues to improve plant efficiency and employee retention significantly, said speakers at the 2002 Dairy Distribution and Fleet Management Conference in San Antonio, Texas.
“The change has been very challenging and expensive,” said Stephen W Collier, HEB senior human resources manager. “We invested in the creation of a team work environment where everyone has new responsibilities — from hourly employees to managers. We also invested in training, new leadership positions, and team meetings at the beginning of every work shift. It has resulted in better business.
“During the past two years, our ice cream plant in San Antonio has seen a 17.5% improvement in productivity and a 9% increase in output. That's 9% more volume with 50 fewer partners working a five-day production schedule compared to seven days.
“Efficiency also has increased 11.2% at the milk plant, and the perishables distribution center experienced a 6.42% increase in unit throughput per labor hour. We haven't added any technological improvements to the plant, and retention of hourly employees has increased 40%.”
After six years of changing the old work environment into a team system, HEB managers continue to repeat the message that teams get better business results than traditional organizations. Leaders frequently answer the question of why employees must go through this disruptive change.
“It's similar to spouses saying they love each other,” Collier said. “Doing it at the engagement, the marriage ceremony, and the anniversary is not enough. Employees want to be assured that this is not just a program-of-the-month. They want to hear their leaders articulate the business imperative — changing markets, competitive pressures, or additional customer demands. And just as importantly, they want to know if leaders will return to the old way of doing business when the pressure is turned on.”
Manufacturing has been a part of HEB for almost 60 years. It evolved from a single vegetable canning operation to a company division that operates plants in Houston, Corpus Christi, and San Antonio. Employees worked in departments. Each department had different agendas. They were not held accountable to a common goal.
Work shifts and assignments as well as vacation schedules were determined by a seniority system that rewarded employees on length of employment. The system made senior employees feel more valuable. They could refuse higher-paying jobs requiring additional skills to protect their preferential schedules.
“The traditional system reduced our ability to hire and retain new partners,” said Robert Vogel, HEB ice cream plant leader. “It even reduced partner skills because some were saying ‘I'm not going to learn any new work skills in order to stay in this time slot that I have earned by my many years of service.’ The old system rewarded tenure, not contributions to the business. We had to create a more equitable plan to attract new partners to HEB.”
The manufacturing division used a work model called the Galbraith Star to help in planning. It identifies the design variables that have the greatest impact on the work environment in an organization. The model includes an examination of the tasks that people perform; the technology they use to complete those tasks; the people who are selected for the operation and the manner in which they are trained; the structure of the tasks; the flow of information and how decisions are made; and the type of rewards available to people in the organization.
Work assignments at distribution plants can be unpleasant. Washing trays in the meat plant, cleaning the casers and stackers in the milk plant, and palletizing product in the ice cream plant are some examples. Unpleasant work assignments that can't be eliminated by technology are shared by all partners assigned to teams working in that area.
Another element of unpleasant work can be scheduling. Manufacturing operates nights and weekends as well as weekdays. HEB plants now operate on rotating shift schedules so that everyone shares equal work time on weekends and nights.
“Partners and leaders have a shared work schedule,” Vogel said. “Everyone starts and stops work at the same time. When a team rotates to another department, the team leader goes with them. Team members always know who will evaluate their work, provide additional information, and teach them new skills.”
Teams are flexible and self-sufficient. They must be able to cover for member absences without borrowing from other teams. Members are trained to perform two or more jobs.
“Each team is treated as a mini-plant within the distribution facility,” Vogel said. “The team has to have multiple shippers, receivers, and pasteurizers who share such responsibilities as safety coordinator, maintenance coordinator, cost coordinator, service, and sanitation.
“In the past, mix operators, for example, were accountable for the number of batches. They didn't care how much the fill operator was running. Now they focus on the number of finished packages, the pass-through yield and quality of the product, and customer satisfaction.”
Information and decision-making
Decision-making in a traditional manufacturing facility is based on hierarchy. Information flows from the supervisor to workers who receive different bits of news about what is going on in the company. Little, if any, two-way communication occurs, resulting in minimal reaction from employees.
A team environment provides members the opportunity to identify and solve problems, improve communication, develop leadership, increase ownership, resolve conflicts, set goals, and improve productivity, said Larry Batie, HEB perishables retail support center leader.
“Every team has a 30-minute meeting before the start of their shift,” Batie said. “This is an opportunity for the team to review their results from the previous day, formulate a plan of action for the shift, and decide how to use their resources to achieve the desired results. Team members also discuss information on division and company policies to improve group productivity.”
Decision-making at HEB plants is a three-part process, Batie said. A request for input communicates a desire by management to know the opinions of partners. A request for recommendations carries with it a commitment that the recommendation will have a significant impact on the final decision. A request for a decision is a delegation of authority, which conveys a commitment by management to abide by the decision. This results in more employee involvement.
“As we continue to ask for input, recommendations, and decisions, partner involvement has increased and ultimately more day-to-day decisions are being made by partners at our manufacturing plants,” he said. “They begin to focus on more comprehensive issues. For quality, they concentrate on process and sanitation audits. For service, they are concerned about order fill rates, percentage of stock items, and on-time releases and deliveries. They also understand how productivity, shrink control, and other efficiencies affect the profitability of the company.”
Entitlement, seniority, tenure, job title, and work assignments are elements of a traditional reward and recognition system. Individual awards in the team structure are based on personal contributions and peer evaluation. All individuals have equal access to rewards in the system.
At the HEB distribution center in San Antonio, productivity results for all teams are posted prominently. Results are measured on a daily, weekly, and other periodic basis. Teams try to beat their own results as well as those of other teams to receive a team reward. A sign displaying a competitor's product reminds team members that they also work together as one company.
Coaching improves skills
Under the traditional system, supervisors spent more time on management tasks such as organizing, directing, and controlling others, including writing work schedules, directing floor activities, and filling out lots of reports. Less time was devoted to leading employees with coaching and training.
“The focus of the HEB team leader is on coaching others to develop technical and social skills as part of the team design,” said Collier. “This change in core leadership represents the single greatest challenge to the success of our efforts. The leader sets the tone for team members in how they view the company, the department, and the team.
“It requires leaders to look at leadership as a process, not a position — leading rather than being the boss. This view supports shared leadership. We've accomplished that by creating rotating, part-time hourly roles in the form of team coordinators, each with an emphasis on a different team result — safety, production, administration, quality, and technology.”
Hourly employees also participate in the hiring and retention processes. Management shares information with team members on the cost of employee turnover and the importance of mentoring new hires. To do this, hourly employees need additional technical and interpersonal skills.
“To be flexible and adaptable to change in the workplace, team members must be multi- and cross-skilled,” Collier said. “The combination of skills is different for each member of the team. Skills are based on practical factors, including productivity goals of the team, the number of overlap combinations required by functional area, and holiday, vacation, and sick days that need to be covered. Team members also have technical skills in areas of operation, maintenance, process improvement, and project management.”
A typical team working in the milk plant is composed of members with different technical, process, and interpersonal skills. Work skills could include raw milk receiving, pasteurizing, case filling, blow mold maintenance, safety coordination, and administration. When a team member is absent, other team members take over those responsibilities. Typically, the 30-minute team meeting before the work shift is the venue for this decision-making.
“This process creates an environment where learning new technologies and applying new skills is encouraged,” Collier said. “Because everyone works the same schedules on a rotating basis, there is no shift bidding to interfere with new skill acquisition.
“Under the old system, disincentives were built into the process of acquiring new skills. After moving to a new skill area or job, previous seniority was lost along with the ability to bid for a more preferred shift schedule because the shift bidding process was weighted for seniority.”
In the area of interpersonal and team training, HEB provides training and leadership workshops and skill certification. A team basics course gives team leaders, new team members, and new teams instruction regarding the values and beliefs of teams. Instructors explain the team scorecard, where results are tracked against team goals.
A class for team members explains tools for conducting effective team meetings. Another course emphasizes the importance of one-to-one communication using case studies and role playing with real HEB examples, and the why and how-to of documentation.
A five-day workshop places employees on teams and challenges them with specific work assignments in a competitive environment. This increases their understanding of the overall process and the need for change in their behavior. More than 200 leaders at hourly and management levels are graduates of the workshop, Collier said. “To paraphrase an old saying, ‘I hear and I forget. I see and I remember. I do and I understand.’”
HEB team leaders have experienced plenty of pressure while adapting to the new system. Productivity at every plant and facility initially decreased after teams were put into operation — an anticipated temporary change in performance. However, as time increases, performance increases. Fear, anger, and uncertainty are replaced with confidence, validation, and enthusiasm.
“One of our most significant lessons has been the gap in understanding in our company regarding the normal drop in performance following the beginning of a major change,” Collier said. “There was very little patience in other areas of our company for this drop in performance.
“Because of the highly visible role of retailing in our business, manufacturing represents a more invisible behind-the-scenes role in delivering high-quality private label products. This isolation or decentralization works in our favor in making organizational changes. But it also works against us when productivity suffers. Support from senior company management is critical, especially when you're on the downward slope of performance.”
Another hurdle in the transition has been design changes for employee rewards. Most traditional pay systems are simple with well-defined ranges of pay by position. Six-month and annual pay raises are typical. Team-based pay systems are more discriminating because they are based on individual and team performance.
“We had to redefine what the company meant by performance and contribution,” Collier said. “Contribution is inherently complex. It involves a person's knowledge, skills, talents, and their results. The new pay system requires a much more sophisticated measurement and accounting system to accurately judge team results.”