PeRFORfTlflnCG 36 NOVEMBER/

DECEMBER 1976

Bra inwork :

SOME THOUGHTS ON THINKING

Cer t i f i ca t ion :

WHAT IT MEANS TO MANAGERS OF HUMAN RESOURCES

Al te rna t i ves :

MASS TRANSIT AND COST REDUCTIONS

Awareness:

A WAY TO ENSURE VALUE S SURVIVAL

Part ic ipatory Management :

IS IT THE NEXT STEP FOR CORPORATIONS? And, If So:

SUGGESTION SCHEMES * N n t h f p a r t i c i p a t i o n GAME

INA Corporation Chairman Ralph S.Saul (right) pre­sents check to Robert E. Mullock representing largest employee suggestion award ever made by the f i r m . For details, see page 5.

T. C. F07/LER, CVS 419 Z m O DRIVE FAIRBORN, OHIO 45324

0 5 2 - 0 1 / 6 6 SR • £ • ]

OFFICIAL PUBLICATION OF

An Authorized Program of

P E R F O R M A N C E Magazine

"The One Bicentennial Book To Have If IfouVe Having Only One*"

Read What the Nation is Saying About THE PATRIOTS

Edited by Virginius Dabney Introductory Essay by Henry Steele Commager

• Philadelphia Inquirer "My personal favorite."

• Wall Street Journal "One marvels at this burst of varied genius in 18th century America and can only give thanks for it."

• Dallas News "Excellent"

"Any parent or individual who does not put this tremendous American work ot American letters on his bookshelves will deprive his offspring or loved ones of the germ of national pride and the knowledge of how it all began and why. I cannot understand why this has not been attempted before . . . But anyone who reads this beautiful volume agrees that this is the perfect book with which to celebrate our bicentennial.

"The Patriots costs fourteen ninety five. When you pick it up, you will wonder why it wasn't priced at thirty where it belongs. The price puts it within the treasure range of you and your loved ones. The con­tents will make you proud . . . regardless of your background . . . that you are an American."

Robert Bauder N B C / W R N L Radio

Chicago Tribune "A wonderful book to browse in."

Cleveland Plain Dealer "Glistening"

Des Moines Register "An eloquent, important book."

Fort Wayne (Ind.) Journal-Gazette "Excellent book."

' - T H E ATLANTIC MONTHLY.

• Signature (Diner's Review) "The pick of the bicentennial lot so far is a quiet but elegantly crafted volume which fits the spirit of the occasion perfectly." "If I were to pick one book clearly intended as a commeration of the nation's birthday, this would be it."

• Wilmington Delaware Journal "A reading of these biographies can give us an aware­ness and an appreciation of our past."

• Roanoke Times "A clear, simple and scholarly explanation of what the Revolution was all about."

• Island Packet (Hilton Head, S.C.) "One of the best bicentennial productions I have seen so far."

Contributing Writers: Irving Newton Brant, Kingman Brewster, William F . Buckley, Jr., Bruce Catton, John Cogley, Henry Steele Commager, Alistair Cooke, E . M. Coulter, Virginius Dabney, Archie K. Davis, Michael E . DeBakey, Ralph Ellison, James Thomas Flexner, Shelby Foote, W. Edwin Hemphill, Jenkin Lloyd Jones, Herbert A. Johnson, Hugh T. Lefler, Henry Cabot Lodge, Samuel Eliot Morison, Richard B. Morris, Merrill D. Peterson, Charles Coleman Sellers, Clifford K. Shipton, Page Smith, Bradford Swan, John J. Waters, Harold A. Williams.

Special offer arranged by this publication: You will

receive with your order for T H E P A T R I O T S ;i com­

plimentary membership in the U . S. Historical Society

and a 16" x 24" reprint, suitable for I'raniiiu'.. ol an

attractive and extremely rare map of the Theatre ol the

War of American Independence.

P E R F O R M A N C E Magazine c/o U.S. Historical Society First and Main Streets Richmond, Virginia 23219 Gentlemen: I am enclosing $ Please send:

-copies of the hardcover edition of The Patriots @ $14.95, plus 50c per edition postage and handling.

.copies of the deluxe, richly bound, limited and numbered edition of The Patriots @ $75,00, plus $1,00 per edition postage and handling.

As part of this special offer, I understand I will also receive a complimentary membership in the U.S. His­torical Society and a 16" x 24" American Revolution map reprint, suitable for framing.

Name

Address

City/State/Zip Residents of Virginia add 4% sales tax. Please make checks payable to U.S. Historical Society.

SAVE ANNOUNCES- - -A 1976

COMPETITION FOR ALL MEMBERS

SPONSORED BY THE JOY MANUFACTURING C O .

The Joy Manufacturing Co. is again sponsoring two awards available to SAVE members, to be known as:

A. The Joy Manufacturing Co. Recognition Award of $1,000.

B. The A. E. Mudge Award of $500. Both awards also include a suitably engraved Silver Bowl.

Requirements 1. The submittal of a paper approximately

1500 words in length, double spaced (with artwork is suitable) describing what the submitter believes is an outstanding example of cost effectiveness in Value En­gineering, implemented in the submitter's company (or organization) during the year 1976. The first page should contain the title, company name, author's name, and (short) author's biography.

2. Originality, innovation and results obtain­ed will be key elements considered by the judges. The amount of dollars saved will not be a criterion to equalize the size dif­ference of various companies represented.

3. The subject can apply to any aspect in the Value Discipline; a simple project, a mo­tivational technique, a new approach, etc.

4. Multiple entries can be submitted; with one subject topic per entry.

5. A statement by a company officer should accompany the entries, attesting to the validity of the subject described.

6. Submitters must be members of SAVE at the time of entry.

7. All papers submitted will become the prop­erty of the Society and they reserve the right to publish or otherwise distribute the papers as they deem wise.

Deadline Three copies of each paper must be submitted and received on or before January 31, 1977. All papers for this competition to be mailed to the SAVE National Business Office. The envelope should indicate "Joy Recognition Award."

*{c j | c *Jc jjc «fc j c jjc jfs i j l jjc jji 2f(

Judging; The judges will be: 1. Jerry Kaufman, Immediate Past President-

SAVE. 2. A. E. Mudge, Vice President, Joy Manu­

facturing Co. 3. Jimmie L. Carter - President - SAVE.

Winners: The winners will be notified in advance of the Annual Conference in the Spring, 1977, and it is hoped they will be present to read the winning papers to those attending the conference.

%^

* *[+ f* f* T*

Winners will receive their awards from J . W. Wilcock, President, and A. E. Mudge, Vice President, of Joy Manufacturing Company, at the Annual Awards Banquet. Note: 1. Employees of Joy and the Society's

Board of Directors will not be eligible to compete.

2. It is anticipated, for these awards to be­come an annual event, that both the number of submitted papers and their continued acceptable quality level will be maintained.

PERFORMANCE 3

E D I T O R I A L AND

BUSINESS O F F I C E S Charger Product ions, Inc.

34249 C a m i n o Capistrano (Box H H ) Capistrano Beach , C A 9 2 6 2 4

T e l : (714) 493-2101

E D I T O R I A L D I R E C T O R Robert R. Springer

Charger Product ions, Inc.

S T A F F A R T I S T S Lor ie Disney

Bill Myers J o h n Vi ta le

S o n y a Kaiser R ick Rivadeneyra

P R O D U C T I O N C O O R D I N A T O R Wendy L . Wisehart

P R O D U C T I O N A S S I S T A N T S Rusty Springer

Deborah S . Payne J o A n n a S impson

A D V E R T I S I N G D I R E C T O R Robert W. Arsenault

A D V E R T I S I N G M A N A G E R Jock Mahoney

A S P I E D I T O R Alex Petchkurow

Col l ins Radio G r o u p (MS 402 -231 ) Rockwel l International

1200 N. A l m a Road Richardson, T X 7 5 0 8 0

S A V E E D I T O R

T o m King, C V S Manager, Cost Improvement

J o y Manufacturing C o m p a n y Mining Machinery Division

F r a n k l i n , PA 1 6 3 2 3 T e l . 8 1 4 / 4 3 7 - 5 7 3 1

N A S S E D I T O R Robert H. Marshall Manager, E m p l o y e e

Motivational Programs Equ ipment Division

Raytheon C o . Boston Post Road

Wayland, MA 01778 T e l : (617) 358-2 721

E D I T O R I A L A D V I S O R Y B O A R D

Kei th A d a m s Jerry Kaufman D S A Honeywel l , Inc.

Bill Bailey H I T C O

Robert H. Rossman Kempter -Rossman Int' l .

Paul M. Bailey Gene Peretti Pac. Gas & E l e c . C o . T h e Boeing C o .

F rank Rees IBM Corporat ion

Richard Brengel U.S. Civi l Service Commis ion

A n t h o n y T o c c o Bill Dean T R W Mission Mfg. Honeywel l , Inc.

PERFORfTlflnCE VOLUME 6 NUMBER 6 NOVEMBER/DECEMBER 1976

Official Magazine of the

AMERICAN SOCIETY FOR PERFORMANCE IMPROVEMENT 790 Broad Street, Newark, New Jersey 07102

and SOCIETY OF AMERICAN VALUE ENGINEERS

29551 Greenfield Road, Suite 210, Southfield, Michigan 48076

and

NATIONAL ASSOCIATION OF SUGGESTION SYSTEMS 435 North Michigan Avenue, Chicago, Illinois 6061 T

FEATURES:

Thoughts On Thinking Keith van Heerden 8 What Professional Certification Means To

The Manager Of Human Resources F . Cecil Hill 13 Value Consciousness - A Plan For Survival R.W. Jamison 14 Suggestion Schemes And The Participation Game Kristine Olsen 18 Future Cost Reduction Possibilities In

Mass Transit Systems Vincent Lao 22 Participatory Management:

The Next Step For Corporations Alfred J . Marrow 26 Tomorrow's Quality Control Manager Harry E . Williams 29

DEPARTMENTS:

Performance Update 5 Thunder 6 Bits And Barbs 7 Classifieds 7

S U B S C R I P T I O N S — Single Issue $2 . Year ly Rates: U .S . and possessions $ 1 2 ; Canada $ 1 2 . 6 0 ; Foreign countries $13 .20 . (Make all checks payable in U . S . dollars.) WrMe lor organizational bulk rales.

E D I T O R I A L POLICY: PERFORMANCE Magazine umbrellas those perform­ance factors which improve the competitive advantage and excellence of American Consumer/Defense products and services for the markets of the world. PERFORMANCE is dedicated, to the effective.exchange of innovative technology and ideas as they relate to quality, reliability, safety, maintain­ability, cost reduction, value engineering, life cycle cost, management im­provement, cost-to-produce, standardization, cost engineering, integrated logistics support, defect prevention, suggestion systems, motivation and productivity.

Contributions in the form of articles, photos, letters to the editor, etc., are welcome. Editorial policy dictates the right to edit or reject any material submitted for publication. Views and comments o f contributors do not necessarily constitute the endorsement or opinion of the American Society For Performance Improvement, the Society o f American Value Engineers, the National Association of Suggestion Systems, nor that o f the National Pro­perty Management Association.

PERFORMANCE Magazine is published by Charger Productions, Incorpo­rated, 34249 Camino Capistrano, Capistrano Beach, California 92624. Second class entry at San Clemente, California 92672.

4 PERFORMANCE

P E R F O R M A N C E U P D A T E PERFORMANCE SUBSCRIBERS are invited to contribute.

INA Corporation Chairman Ralph S. Saul (right) presents check for $2,500 to Robert E. Mullock for his proposal to establish a company integrated delivery system. Award was the largest in the two-year history of IN A Cor­poration's Employee Suggestion System.

INA PAYS $2,500 FOR SUGGESTION

The largest award in the two-year history of INA Cor­poration's Employee Suggestion System has been presented to Robert E. Mullock, director-Operations Services, for his proposal to establish a company integrated delivery system. INA Chairman Ralph S. Saul presented Mullock wi th a check in the amount of $2,500, representing ten percent of INA's anticipated savings in the first year of implementa­t ion .

Designed to provide faster and less costly mail and freight delivery. Mullock's proposal involved purchasing a van and hiring a driver to make daily deliveries between the home office in Philadelphia and eight of the company's

locations in Pennsylvania, New Jersey and New York. Mullock cited spiralling postage rates, as well as substantial increases f r o m private carriers, as the basis for developing his suggestion.

In making the award Saul commented, "The INA Suggestion System has proven a successful means for c h a n n e l i n g the ingenui ty and creative thought of employees. It has provided the means to effect cost savings, increase productivity, make our service and products better, and improve working conditions and relationships."

Since implementation of the Suggestion System in the Fall of 1974, INA has awarded more than $20,000 to its employees, reflecting a tangible savings to the company of $144,460.

DATA PROCESSING SALARIES UP LESS

Salaries for data processing employees in the United States rose an average of 5.7 percent f r o m June 1975 to June 1976; a slower rate of escalation than the 1974 to

Continued on page 6

M r . I d e a s a y s

(STOP WE HAVE A COMPLETE LINE OF PROMOTIONAL MATERIALS FOR SUGGESTION SYSTEMS . . .

if Powerful posters (4 colors). if Durable and attractive cabinets. if Carefully worded suggestion forms. if Effective employee booklets. if Unique Award Certificates and other

incentives.

PHONE: 312-232-7213 | PHONE: 3

i d ft / \f\«tc*-t«f9

P. 0. Box 134P —Geneva, III. 60134

PERFORMANCE 5

T H U N D E R

( ° ) A ( ° )

by TOM KING

BECAUSE OF THE BREEZE THAT BLOWS

An acquaintance of mine was telling me one day of his intense desire to return to a certain section of New Mexico which I had envisioned as being somewhat barren and lack­ing.

He concurred that this was true. Following up, I surmised that his desire was due to birth­

right — a love for the hometown. " N o , " he responded. " I was born and raised in Pitts­

burgh, moving to New Mexico as a result of a job reassign­ment."

"Why then," I queried, "your fondness for this seeming­ly unspectacular patch in God's great universe?"

"Because," he said. "Because of the Breeze that Blows." I can understand that. A job in itself would become rather mundane, were it

not for the occasional breeze that blows. I'm not speaking of air currents and velocities; I 'm speaking of the highs — the serendipity happenings that seem to make it all worth­while.

The boss, saying wi th sincerity, "Thank y o u . " Or, perhaps, after a super blunder, "That's alright, To Err is Human."

My personal refreshing breeze is in the f o r m of certain industrious co-workers; real, live, flesh and blood indi­viduals, who not only perform their work seriously but take an active role in reducing costs and improving output as well .

Take Jack, for example. Jack is an assembly mechanic who also happens to be an

elected union off ic ia l . And a very good one. Not a spineless Jack, subserviant to all company desires; nor a messenger boy, acquiescing to all his constituents bellyaches. Jack is a straight shooter.

He has distinguished himself by support and active participation of these programs that do, in fact, reduce costs and foster job security. He originates cost-savings ideas and is a member of the action committees that analyze and implement the valued ideas. He further partici­pates in an Assembly Productivity Committee, which seeks to facilitate assembly efficiency by identifying constraints, such as inadequate methods or design shortcomings. Jack's long-range perspective is that an efficient company is a competitive company, a healthy company; one that is likely to be around as long as he needs a job.

Not bad thinking. We need more Jacks. We need more refreshing breezes that blow.|~"i>~|

PERFORMANCE UPDATE Continued from page 5

1975 increase of 7.1 percent, according to the twel f th edition of A.S. Hansen's Weber Salary Survey on Data Pro­cessing Positions. The 1976 survey included salary data f rom 1,150 data processing installations reporting on more than 83,000 individual employees.

Managerial personnel wi th in the data processing funct ion fared better than the nonmanagerial group; their salaries went up an average of 6.8 percent. The average corporate manager of data processing experienced a ^.5 percent pay raise and now receives an annual salary of $32,396.

The Hansen survey also revealed that the status of the data processing funct ion has increased, as reflected in f ind­ings relative to the top EDP manager position; fo r ty percent are company officers; thirty-three percent are vice-presidents; f i f t y percent are eligible for bonus or p rof i t sharing plans; and approximately twenty-five percent parti­cipate in stock option plans.

Today, the typical incumbent of the top EDP position earns forty-one percent more than the 1970 average of $19,760, and the chances of this individual participating in key management forms of compensation, such as bonuses or stock options that are layered on top of salary, are rapidly improving.

EXTENSION COURSE IN VA/VE

A new independent study course, " A n Introduction to Value Analysis and Value Engineering," is being offered by the University of Wisconsin-Extension, Department of Engineering. The course consists of f i f teen lessons divided into three sections: an organized approach to good value, the management of value analysis activities, and advanced application and techniques.

L . D . M i l e s ' text, Techniques of Value Analysis/ Engineering — second edition, a study guide and project are utilized in the course. Cost, including text and service fee, is $106.50. Additional details are available f rom Thomas J. Snodgrass, CVS, Department of Engineering, University of Wisconsin-Extension, 432 North Lake Street, Madison, Wisconsin 53706; telephone 608/262-2061.

JAPANESE RENEW PRODUCTIVITY SYSTEM

LICENSE

Science Management Corporation (Amex) has completed negotiations and reached agreement wi th the Japan Manage­ment Association for renewal of an exclusive license for application of the Work-Factor system in Japan. A proprietary system developed by the WoFac Company, a division of Science Management, Work-Factor was f irs t introduced to Japan in the early 1950s and is credited wi th a major role in the dramatic post-war growth of Japanese productivity. Now used in virtually every industrial nation.

Continued on page 30

6 PERFORMANCE

B I T S S B A R B S

HIGH K E Y V E AT RAN CO Not always so, but R.W. Bartholo­

mew, manager o f Value Engineering, Ranco Controls, Columbus, Ohio, reports V E on a high key beginning its eighth year.

Following a good primary year w i t h cost savings returns o f five to one, the program slipped due to major commit­men t s o f p r i o r i t y elsewhere. A management change in 1974 redirect­ed the efforts toward V E w i t h the result that one major project during 1975 yielded a seventy-one percent reduction in costs.

I n addition to cost savings, many side benefits were realized, such as improved performance, standardization of parts and better wear properties on moving parts.

V E TEAM S T R U C T U R E

One should avoid V E team struc­ture based on emotion, gimmicks and oratory rather than solid management p r i n c i p l e s says Arnold Skromme, senior division engineer, John Deer Harvester Works.

Summarizing the results o f several years o f V E t e a m exper ience , S k r o m m e highlights the fol lowing fundamentals o f a sound team con­cept.

Active management support. Five-man teams, all peers. Original product designer as team

chairman. Meetings free f r o m interruptions. VE trained team members. Scheduled field trips and vendor

visitations.

THIS MONTH'S TOPIC

How Has The Value Manager's Job Most Changed During The Past Decade?

CHANGING STRATEGY - Having been a former industrial engineer and then a market manager for about thir­teen years, I felt I was a pretty good salesman and did a lo t o f selling. I've found i t takes a lo t more selling in V a l u e Engineer ing to your own people. I t takes soft sell and hard sell. There is no formula for i t , you just have to use your best professional

judgement. Value Engineering should be m o r e c lose ly associated wi th engineering, where costs can be pre­vented in design.

We are moving our efforts into the init ial design stages on our products. Our first -attempt, on a new product has been most encouraging: A poten­tial ninety-seven percent less than the init ial design.

This has been accomplished by starting w i th good cost estimates, using the techniques of funct ion evalu­a t i o n , F A S T diagramming, cost-reduction, and brain-storming.

R.W. Bartholomew Ranco Controls Division

CHANGING TRENDS - Changing trends in Value Management in a more general way relates specifically to one's effectiveness. I f anything, the science of value engineering has become more exact and therefore requires more attention to details. In the old days, Seat o f the Pants decisions forced elimination of functions. Savings were created by brute force. Today, how­ever, most value engineering programs are highly organized wi th method­o log ies a p p r o a c h i n g that o f an accountant or personnel officer.

The real question, o f course, is the credibility o f savings vs the intangible platitudes o f value engineering. One approach is direct tangibility o f cost benefit or else! The other approach is isoteric by emphasizing the manage­ment technique, management under­standing and communications skills among administrators. Perhaps the modern value manager should work to maintain balance o f both qualities.

John Hollar, Jr., CSSA Harrisburg, Pa.

N E X T T O P I C

Should The Value Manager Be A Lion Or A Lamb In Performing His Job? -Tom,King, SA VE Editor

SAD NOTE

Sorry to report the passing of Edward D. Heller, long time member of SAVE, author of the book Value Management, and twice winner o f SAVE Best Paper o f Year Award. [T]

Classified Section

Position Wanted

Cert i f ied Suggestion System Administ ra ­tor seeks challenge of setting up new or revitalizing existing, Suggestion Plan. F ive years of experience include originating and m a n a g i n g suggestion and zero defects programs for multi-plant company . Has authored article published in professional journa l , served as a director of the National Associa t ion of Suggestion Sys tems , and has b e e n an i n s t r u c t o r at the Suggestion Sys tems Administ ra tor 's A c a d e m y in Evans­v i l l e , Indiana. Please reply to B o x A , National Associat ion of Suggestion Sys tems , 4 3 5 N o r t h Michigan Avenue , Chicago, I l l inois 6 0 6 1 1 .

Position Wanted

Suggestion Sys tem Adminis t ra tor with proven record at present company is willing to relocate to achieve career goals. Position desired is E m p l o y e e Suggestion Sys tem A d m i n i s t r a t o r and/or Safety Director . Capable and willing to initiate a complete s a f e t y p r o g r a m . H a s g o o d w o r k i n g k n o w l e d g e o f O S H A regulations and twenty- three years ' experience as a pro­fessional firefighter. Member of Amer ican Soc ie ty of Safety Engineers and National Associa t ion of Suggestion Sys tems . Cur­rently completing requirements for N A S S C e r t i f i c a t i o n . Please reply to Box B, National Associat ion of Suggestion Sys tems , 4 3 5 N o r t h Michigan Avenue , Chicago, I l l inois 6 0 6 1 1 .

Help Wanted

Major Western New Y o r k F o o d Processor needs an administrator for new. Productivi ty Improvement Program. T h e successful appli­cant wil l be an engineer w h o has had experience in initiating and administrating a plant Suggestion S y s t e m . Duties wil l later include plant engineering as wel l as adminis­tration of the Productivi ty Improvement Program. I . E . or M .E . degree is a must; Cert i f icat ion or Registration as a Suggestion S y s t e m Administ ra tor is a plus. Salary is commensurate with exper ience; full bene­f i t s . We a r e an E q u a l O p p o r t u n i t y E m p l o y e r . Send resume and salary require­ments to Box C , National Associat ion of Suggestion Sys tems , 435 North Michigan A v e n u e , Chicago, Illinois 6 0 6 1 1 .

Help Wanted

F o u r hundred and fifty bed health care facil i ty in Northeast Indiana needs bright, aggressive person to manage well-established Suggestion S y s t e m . Position will provide excel lent opportunity to be involved with all departments and funct ions of the hos­pital . Undergraduate degree or equivalent required; two year 's experience in communi ­cations and/or incentive or suggestion pro­grams helpful . Starting salary is in the low teens. T h e experienced candidate would find this a nonentry level posit ion. Please reply to Box D, National Associat ion of Suggestion Systems, 435 North Michigan Avenue , Chicago, I l l inois 6 0 6 1 1 , or call (312) 614 -0075 .

PERFORMANCE 7

H. KEITH V A N HEERDEN - Pr. Eng., CVS, managing director of South African Engineering (Pty) Ltd. , is vice-president of the Value Management Society of Southern Africa. A mining-engineer w i th over twenty-five years practical experience in mining of all types, he first became exposed to the V E / V A disciplines at the Wisconsin University Workshop in 1967, while employed by Union Carbide. Intro­ducing the first V E / V A formal training seminars in Southern Africa in 1968, he has become increasingly involved in the disciplines. A t the start of 1972 he launched into the commercial f ie ld, and an ever-widening spectrum of South Africa business and industry is being exposed to and is using the value management disciplines.

T h o u g h t s o n

T h i n k i n g By H. Keith van Heerden

In handbook after handbook on the subject o f value analysis and/or value engineering one encounters the famous Job Plan. This varies f r o m the five basic steps o f 1. Information Phase, 2. Creative Thinking Phase, 3. Evalua­t ion and Development Phase, 4. Report or Recommend Phase, and 5. Act ion Phase, each wi th their respective sub­divisions. Some practitioners have expanded this to as many as eleven major phases o f Job Plan.

In South Afr ica the tendency has been to get away f r o m the Job Plan approach. Perhaps this is because the disci­plines have been applied less to hardware design and manu­facture problems, and more to open-ended major problem areas in a wide spectrum o f business and industry. This has happened more through circumstance than by design, and the results have been so good as to be beyond the wildest dreams o f the most dedicated value engineers.

A t this stage, let i t be emphasized that these paths followed have got us away f r o m the term value analysis as not giving an understanding o f being a complete discipline — in other words, leaving someone else to f ind a solution to the subject studied. In the same way value engineering has been largely abandoned because o f the engineering connota­t ion — "Look , i t would be no good to us, we are not Engineers." Instead, and quite rightly so, the term value management has come to stay, and any value engineer wor th his salt could not possibly rest content unt i l every part o f the organization to which he belongs is managing value in everything they do, and more especially in the way they think.

In common w i t h the rest o f the world, South Afr ica has been experiencing severe inf la t ion problems, and there have been the usual exhortations " to work harder," "be more productive" and especially for "people to remember their responsibilities" i f the country is to beat this threat. Sadly though, i f i t has been said at all , no one mentions what is w i t h o u t d o u b t the m o s t i m p o r t a n t anti-inflation weapon; namely, to make one's thinking more effective. For wi thout improved thought we could easily be working harder, etc., but at the wrong things.

And i t behoves us to take a look at our thinking in respect o f value analysis, value engineering, value manage­ment or whatever you wish to call our common approach to problem solving.

Normal Thinking However, how many o f us have ever taken the trouble to

think about our thinking? More of ten than not we only think we think, when in fact we are only reacting. This applies even to bl indly fol lowing our Job Plan, wi thout trying to understand f u l l y the thinking philosophy in­volved.

A useful analogy to use here is that each o f us carries a r o u n d an imaginary rear-view mirror. Encounter a problem, and the first reaction is to check this mirror for a focus on the same or some similar problem in our past experience. I f successful, the problem is as good as solved; i f not, we go about checking some other person's rear-view mirrors for the same purpose. In either case, i f successful in picking up the desired focus, we have saved ourselves the trouble o f thinking. In solving present-day problems in this way, we should bear in mind that we are doing so in the context o f conditions, parameters and factors which probably no longer apply, or which have undergone subtle changes in the interval. In t ru th , we have only reacted. Thinking is one o f the most d i f f i cu l t things to get people to do, at any level.

In order to improve our ability to think, i t is necessary that we develop an understanding o f our normal mental processes, their strengths and weaknesses. Just as we are able to use our motor cars effectively wi thout knowing the detail of their working, but by having a basic understanding of the general principles involved, so, too, is i t possible to understand thinking, and thereby use our brains more effectively. It stands to reason that continued practice is essential.

We human beings are very much pattern-orientated. Con­formi ty to orderly patterns is vitally necessary for the wel­fare o f our modern society, and indeed for the survival o f the individual in the society. The stark death-toll on the roads, mainly f rom failure to adhere to the established pattern o f road-usage, illustrates this.

We have bui l t up a clear pattern in our behavior o f think­ing when solving problems, which works something like this (based on work done by Prof. Wallen, University o f California). This applies to individuals and/or groups.

8 PERFORMANCE

Someone, let's say the head o f a department, realizes the need to do something about a problem. He gets his people together to examine the problem - Don' t let anyone else know - they' l l think we don't know our job - ensuring a narrow attack. A statement o f the problem is made.

Having got this far someone w i l l of fer a solution.

Almost invariably the solution w i l l be judged out o f existence — based on experience.

This w i l l lead to a restatement o f the problem, followed by further solutions and further judgment, gradually build­ing up a slightly modif ied step by step understanding.

Once an acceptable solution is brought to light, the boundary o f decision is broken through and a decision for action is taken.

^p. A C C E P T A B L E

Now a prevalent phenomenon occurs. A guillotine comes down on the thinking, effectively cutting o f f the develop­ment o f any further ideas.

PERFORMANCE

Note should be made that under these circumstances there is no way that a new and revolutionary approach to the problem is going to emerge to find a really creative solution to the problem.

Further, way-out ideas are frowned on and have to be practical above all else. I t is highly unlikely that anywhere near enough ideas, by our value standards, w i l l be generated.

In fact, the whole patterning process o f their minds w i l l have switched the group into seeing the problem as they think i t should be seen or the way they are in the habit o f seeing i t . This wi thout having had a chance o f properly analyzing the problem.

I t is not surprising, therefore, that in some eighty per­cent o f the major problems what is brought to the confer­ence table is the effect, and not the cause o f the troubles. I t is axiomatic that i f one is able to define the problem at the outset the solution has been pre-empted.

In his books on the subject o f Lateral Thinking, Dr. Edward de Bono has shown that the thinking process can be conveniently divided into two phases: 1. The concept or idea phase; and 2. The processing or logic phase.

For thousands o f years our thinking processes have con­centrated increasingly on the value o f logic, and logic has become our modern thinking-idiom.

Man has become so good at i t that he has brought into being the computer, the perfect instrument for applying logic, but i f the concept is wrong logic is useless.

Again and again Dr. de Bono shows that in order to develop a creative solution to a problem, one has to get different entry points into that problem, that one has to see i t different ly. We know the d i f f i cu l ty humans have in just seeing things different ly. Our environment, experience and learning dictate that we see.

Young Woman Or Old Hag?

In fact, people can be at the same point in time and place, but be seeing things differently — such as the ship­wrecked sailor and the lost and thirsting prospector reach­ing the beach o f a desert coastline.

This goes even further. In experiments conducted at the University o f Kansas, as many as sixty-nine percent o f sub­jects specifying that they were looking for a piece o f string were unable to see i t , although i t was in f u l l view hanging a mirror to a nail i n the wal l . Somehow, by its useful funct ion o f supporting the mirror, the string be­comes lost to perception or psychologically unavailable. The moral: How many useful bits o f string are lost to us and our organizations in our daily work?

Value Management Thinking I t is w i t h this in mind that in our Think Plan we stress

the need for a concentrated analytical phase o f thinking. This combines to bring together all relevant informat ion, plus the ability to see in different ways every facet o f the subject under study. Our basic tool o f funct ion defini t ion backed up by numerical funct ion evaluation, applied by a s t r u c t u r e d multi-disciplined team, satisfies this need adequately. A l l i n all, this develops a sound understanding o f the subject.

Next, we satisfy the demands o f lateral thinking by using applied creative thinking to selected functions. Once more, this greatly expands the number o f ways o f looking at the subject, providing still more entry points. This is our normal creative thinking phase.

These two phases then add up to Dr . de Bono's concept or idea phase.

Lastly, there follows the judicial thinking phase, where we may use logic to our hearts content, but conscious o f the need o f continuing the process o f combating the pre­judices bui l t up through our experience and normal learning processes.

A model o f Value Thinking follows: A. Analytical thinking phase - Having realized the need

to do something about a problem, a team is structured to attack i t — different disciplines and departments to sur­round the problem and broaden the attack. As the projects dealt w i t h are invariably large, at least seven and prefer­ably not more than ten people comprise the team.

PERFORMANCE

prejudice. However, such prejudice has been largely dis­sipated by what has gone before - and by this time there wi l l invariably be ways opened to creative and even revolu­tionary but practical solutions to the problem/project under study.

Thus, you can see that the Think Plan has expanded, though simply, on that put forward by Dr. de Bono and could be represented thus:

t FUNCTION ANALYSIS NEW IDEAS PROCESSING )

- ^ m C O N C E P T ^ - ^ L O G I C

In this way we ensure proper attention to the concept phase, and even enhance the application o f logic by having a much greater base on which to operate.

No more can the lack o f barriers block access to creative solutions that elude us when we apply only logic. Dr. de Bono describes i t as driving down the road at night w i th an open road ahead l i t up by the headlamps; the open road represents the obvious solution, while a better solution may lie up a side track.

The problem area then is analyzed according to func­t ion .

ANALYSIS OF F U N C T I O N S

A B A S I C

• ^ " S E C O N D A R Y S U P P O R T I N G

P A R A S I T I C

A N T I - F U N C T I O N

The functions fa l l conveniently into the fol lowing cate­gories.

Basic or Essential functions. Secondary functions, which may be further broken up as

follows: a. SECONDARY, but supporting by virture o f the design

approach used. b . PARASITIC, doing nothing but adding cost. c. ANTI-FUNCTIONS, which erode basic values besides

adding cost, e.g., in a gold recovery plant "Lose gold" would be a very anti-function.

In most problems i t is advisable to use numerical evalua­t ion o f funct ion to establish objective order o f importance, eliminate prejudice, and develop understanding o f the func­tions listed.

Cost and wor th may now be added, i f desirable. In major problems, i t is of ten more convenient to apply costs only at the evaluation stage and of ten to ignore wor th altogether.

This completes the analytical thinking phase, which we all recognize as the information phase.

B. Creative thinking phase - This is in effect brainstorm­ing applied to selected functions — sometimes basic, some­times secondary supporting, and always to the elimination of anti-functions.

C. Judicial thinking phase - This should be applied bear­ing in mind our natural tendency to lock onto personal

BETTER

SOLUTION!

T> L > t > C > OBVIOUS SOLUTION

BLOCKED BY OPENNESS

In effect we stop, as a matter o f discipline, and prospect in all directions w i th the funct ion analysis fol lowed by the creative thinking.

t> c> O

f F U N C T I O N ANALYSIS

IDEA PROSPECTING

I t becomes inf ini te ly easier to turn this three-step think­ing formula into a new and beneficial habit o f thinking -not only in attacking major problems, but in almost every­thing we do. I t has become apparent to many in South Afr ica applying this principle in general, that they are able to outgun died-in-the-wool users o f the old th ink school. And more often than not is the exclamation: "I t 's so obvious, why couldn't we have thought o f i t before?"

PERFORMANCE 11

Results They say the proof o f the pudding is in the eating. Let

us look at some of the results f r o m value management train­ing workshops which last just five days.

Mining shaft layout at depth - One o f our largest gold­mines was faced w i t h the problem of opening up a large area o f reef f r o m depths o f 8500 feet and 9500 feet below surface to depths o f 9000 feet and 1100 feet, respectively. They used a project team to plan the best possible shaft system. They came up w i t h a plan to use two sub-vertical shaft systems at a capital cost o f $15.25 mi l l ion . The pro­ject was then submitted to a value management training session lasting one week, using the original project team, and adding a few additional disciplines such as ventilation and rock-mechanic specialists.

I t is interesting to note that on Wednesday morning at about 10:30 a.m., the project leader expressed concern that nothing had yet been accomplished. The group was still in the process o f analyzing the problem, while he was already looking for solutions, as his boss had been promised a formal report on Friday at 2 p.m.

Needless to say, the presentation was made at the appointed time. Only three questions were asked by higher authority, and one o f two recommendations put forward were adopted fo r thwi th . Capital expenditure proposed was reduced by a minimum o f $3.5 mi l l ion , while expected operating costs were reduced by an estimated $350,000 annually.

In comparing the old think w i t h the new think in this case, the project team had init ial ly considered only three alternatives. In the value workshop sixty-eight alternatives were achieved by the end o f the creative thinking phase. These were refined to fourteen possibilities which were looked at in detail, and f r o m which two recommendations were made: one being high capital-low operating cost; the other low capital-high operating cost. The first o f these options was adopted. Furthermore, i t was noted that the best solution encompassed a modificat ion to a system summarily rejected b y the original team as unpractical.

Administration - I t is in this field at the highest level that some of the most valuable returns in applying value management lies, both in setting direction and objectives and also in ident ifying and defining problem areas that need attention.

During the latter half o f 1975, one organization, in a series o f three workshops, looked at its corporate structure, its management funct ion and its advertising policy. I t is importing and merchandising certain household appliances not manufactured in this country.

The studies led to a well-defined program of problems to be tackled and their order o f importance. While no attempt was made to cost workshop results in terms o f cash, great importance was laid on the soundness o f thinking that went into the decisions taken. Not being a large organization, the result is that the total top management team throughout the country has participated in and understands the new thinking. The company president has, himself, led sub­sequent project studies, while a number o f his senior staff have done the same. There is no shadow of doubt that this organization, has gained a tremendous advantage over com­petitors in that they have been able to take the devaluation of the national currency, in late 1975, in their stride. In

fact, they had achieved a positive payback wi th in three months o f the first training workshop.

Similar experiences have been had in fields covering computer programming, accounting, timekeeping and pro­duction control exercises.

General I t is significant that the only areas where the principles

of value management have taken effective root and flourish­ed is where top management has been directly involved. Our experience has been that i t is almost impossible to tell people how the discipline works, and i t is only through doing-it-yourself that the new think catches or*. To relegate the discipline to a department set up for applying i t is to gain only a small f ract ion o f its potential value.

I see evidence o f this when one reads Commander Rossman's comments in the November-December 1972 issue o f PERFORMANCE Magazine. He was a visitor to the Society o f Japanese Value Engineers' Annual Congress in October o f that year. "Almost 700 delegates attended" and "the V E / V A disciplines are totally accepted by manage­ment and government in Japan" are a few of the points he made. When one relates this information to that contained in a paper wri t ten i n May 1965 and presented to the Insti­tu t ion o f Mechanical Engineers (USA) by H . Davies on "Experience w i t h Value Analysis as working T o o l , " you w i l l see what I mean. He says, "...and there is some evidence the technique w i l l soon be adopted in Japan."

This indicates that you in the US have by and large kept looking at i t as a too l , something mechanical, to produce savings, whereas i t would appear to have become a way of l i fe , a philosophy, in Japan.

There must be significance in the fact that while trying to sell the discipline as a technique or tool to generate savings, very l i t t le progress was made in South Afr ica in propagating its use. Y o u know the answers one gets: "We do i t anyway, it's part o f the j o b , " and "That's what we're paid to do anyway." I heard these in my first visit to the US in 1967, and I have been hearing them in my country. Even to the extent that "We don't need this type o f train­ing; we employ the best brains in the country." (But are they using them?)

However, having come in contact w i th the teachings o f Dr. Edward de Bono and combining key points f r o m these w i t h those o f V E Job Plan, and propagating a new approach to thinking, and an easily proven approach at that, w i t h a by-product being savings, i t has started catching on and is now a healthy, virile and evermore effective factor in our business l i fe .

There can be no doubt that best results are achieved when all line management, f r o m the top to the bo t tom, use the discipline as a matter o f course.

The very simplicity of the basic approach illustrated, coupled w i t h the practicality and universality o f its applica­t ion, makes value management a must in every conceivable situation. Using it consciously w i l l get us raising that five to f i f teen percent use o f our available individual mental capa­city to possibly, say, ten to thir ty percent or even more, and wi th greater effect. Surely this is wor th inf in i te ly more than the best o f cost reductions ever dreamed of. When this thinking becomes a habit through a whole organization, we value" engineers have really achieved something.fp]

12 PERFORMANCE

What Professional Certification Means to the Manager of Human Resources By F. Cecil Hill

F. CECIL H I L L is the manager of Improvement Programs fo r Hughes Aircraf t Company, where he has been employed for the past f i f teen years. He has a BS in Business Management and an MBA. He has taught manage­ment and marketing at Pepperdine University, and has taught special manager classes for various govern­ment agencies. He is the vice-president of Professional Development for ASPI.

The last ten years have produced a p r o f o u n d change in our attitudes toward those who possess expertise in managing our human resources. This is acknowledged in the way we operate our organizations, as well as in peri­od ica l s and other literature. The February 1976 issue o f Fortune Maga­zine, for instance, points out that organizations are seeking managers w h o possess a background and successful experience managing that major asset: Human Resources.

This interest, which is more than the casual interest o f the past, is found in the government as well as the industrial sector. The movement is dis­cussed in seminars, articles, books, case histories, etc. The interest is not l i m i t e d t o m a n u f a c t u r i n g or production-line enterprises, but is also e v i d e n t i n service industries and engineering companies.

These organizations are not merely seeking experts in administering the cosmetic human relations or motiva­tional programs o f the sixties. This concern for people appears to come f rom a real change in management philosophy. Numerous companies are investigating, innovating and reorganiz­ing in order to better utilize the un­t a p p e d p o r t i o n o f their human resources.

Managers, because o f the scarceness o f c a p i t a l do l la r s , have become acutely aware that there is a vast, un­tapped potential in the people that are already on board. Many managers who gave token acknowledgement to state­m e n t that "people are our most important asset" are suddenly con­cluding that people really are just that. They have decided that there is a need to better understand human produc­t iv i ty , or contribution to goals, as a supplement to the contribution o f capital.

Managers are becoming sophisticat­ed enough to know that terms like human motivation, productivity, or j o b e n r i c h m e n t , and the other commonly used names, are really descriptive o f just one small segment of the whole f ie ld . They seek people who have a broad perspective and are good managers, but they must also have the capability to develop and u t i l i z e h u m a n resources. I t has, admittedly, proven d i f f i cu l t for many managers to decide exactly what traits are required, and what type o f experi­ence and education is needed.

Therefore, ASPI, because o f its close association w i t h people in the human resources field, is attempting to provide a method for ident ifying and training people in the field. Our pro­f e s s iona l development program is geared to accomplish this. ASPI initiat­ed its professional certification pro­gram in May of 1976, after several years o f development. The stated goals of the program, which certifies Human Resources Managers, follows:

A . To raise the professional stan­dards and assist w i th the total manage­m e n t and development o f human resources by providing professional recognition by their peers to practi­tioners who, in fu l f i l l i ng prescribed standards o f performance and con­

duct, have demonstrated and maintain­ed a high level o f competence and ethical practices.

B. To ident i fy practitioners w i t h extensive knowledge in H R M and the ability to professionally apply the p r i n c i p l e s o f H u m a n Resources Management.

C. To develop and implement an ongoing program whose goal is the improvement o f individual Human Resources Management skills and pro­fessional development.

D . To add to and develop the knowledge in the area and provide standards o f conduct for the practice of Human Resources Management.

As is true w i t h any certification program, the program offers a service to those managers who wish to special­ize in the f ie ld . Its primary service is the system that certifies the holder has fu l f i l l ed certain requirements that are known to those who seek managers in the f ie ld . A list of certified members is published, and free referral system is provided.

I n a d d i t i o n , the professional development program w i l l continue to provide educational material and assess the certification requirements.

Those who are interested in obtain­ing the information brochure may obtain i t by wri t ing F.C. Hi l l at Hughes Aircraf t Company, Building 20, Mail Station X-125, Culver City, California 90230.

/ sincerely urge all ASPI members who qualify for certification as pro­fessional Human Resource Managers to submit their applications to the certifi­cation secretary at the earliest oppor­tunity.

A lot of effort has been directed at the certification program to ensure professionalism, and to provide industry and government with another means of identifying individuals quali­fied to fill current and future require­ments.

Among the future plans for the program will be specific instruction sessions that will provide information to future professionals that need addi­tional training to meet the qualifica­tion requirements.

If you have any questions regarding the current system or plans for the

future, or the names of those certified, these should be directed to F. Cecil Hill, vice-president Professional Development and chairman of the certification committee. On behalf of the ASPI membership, I congratulate Cecil Hill on the launching of this program and commit our wholeheart­ed support to its future growth. - W. Michael Richardson f r 7 ]

PERFORMANCE 13

!

: R.W. JAMISON is manager of Value v| Analysis at the John Deere Dubuque I W o r k s , Dubuque, Iowa. Attended ft Iowa State University; twenty-eight | | years w i th John Deere; thirteen years

in industrial engineering management; ; five years as value analysis manager.

Past-president of the Iowa Chapter, SAVE; past-president of the American

« Institute of Industrial Engineers. Has the responsibility of formulating and developing value engineering programs,

j d i r e c t i n g and coordinating value :j engineering training at the Dubuque ; factory.

VALUE CONSCIOUSNESS

a p l a n f o r

s u r v i v a l

By R.W. Jamison

Introduction

Any business is only as successful as its employees are able to make i t so, but un t i l an atmosphere, climate and environment are created in which high and unnecessary costs are acknowledged, no f o r m of p rof i t improvement w i l l survive. Value consciousness does not develop as a re­sult o f a single program. Continual evidence is necessary, s h o w i n g cos t savings results and recognizing those employees responsible for good results.

Improved Cost Effectiveness There are many ways cost effectiveness can be improved.

New methods, materials, machines and processes are being developed every day. Much publicized are new manage­ment, engineering and manufacturing techniques. One tech­nique we have found to be effective - one that has broad coverage and cuts across all lines wi th in the organization — is Value Analysis. Its basic concept and funct ion approach to the everyday job - the concern for value or value con­sciousness - I 'm convinced, cannot be matched for overall effectiveness by any other similar approach. But, value studies alone, whether on currently manufactured products, new products under development, systems-or procedures are not enough. I t does force identification o f unnecessary costs. A n active program may show a return on investment many times over. However, these programs must be supple­mented in the long run by other efforts .

We at the John Deere Dubuque Works do not profess to be models in this respect, but we have several programs and

14 PERFORMANCE

activities we feel contribute much to this desirable quality o f cost consciousness.

A Value Analysis Program

Contrary to most large companies, John Deere does not have a corporate Value Analysis staff, although nearly every factory has a V A program. As you might expect, the pro­gram varies in organization. Our organization at the John Deere Dubuque Works is structured as shown in Figure 1. We report directly to the general manager, but receive direc­t ion f r o m the Value Management Team. The Value Manage­ment Team is comprised o f our fourteen top operating heads representing all operations wi th in the factory.

G E N E R A L MANAGER V A L U E MANAGEMENT T E A M

V A L U E A N A L Y S I S MANAGER

* P R O J E C T S T E E R I N G COMMITTEE

TASK F O R C E TEAMS

(5)

V A L U E M A N A G E M E N T T E A M I N C L U D E S :

General Manager (Chairman) Mgr., Product Services Control ler Mgr., Product Engineering Works Manager *Mgr. , Rel iabi l i ty *Mgr., Manufacturing Engineering *Mgr., Materials *Mgrs. , Divisions of Product Engineering (4)

Figure 1 - Value Analysis Organization

A value-oriented top management team, providing active support and involvement, is a necessary ingredient for success. A t our plant this team has the authority and responsibility for policy and major decision-making. (See Figure 2)

Evaluate and approve proposed projects for study.

Approve assignment of task force team members and time budgets.

Evaluate team proposals and assign implementation responsibility.

Review status of the program and provide guidance.

Figure 2 - Duties-VA Management Team

Again, I can't overemphasize the importance o f having top management support and involvement. This structure provides the necessary support the program must have in order to funct ion properly.

A competent V A staff is necessary to administer the program. The emphasis here is on administration and not on responsibilities for implementation. Our staff includes one coordinator and myself, whose responsibilities are shown in Figure 3.

PERFORMANCE

Serve as a Clearing House for all suggested projects.

Investigate and recommend project proposals.

Recommend team representatives and set goals.

Assist and lead teams in value studies.

Report status of the program.

Follow implementation of team proposals.

Administer training and promote a cost conscious attitude throughout the factory.

Figure 3 - V A Staff Duties

Task force teams use the V A Job Plan and Techniques. Our teams are usually comprised o f four or five men. A typical team assigned a hardware study might include members f r o m the Product Engineering, Manufacturing Engineering, Reliability, Purchasing, and the Materials Engineering departments. Also assigned is a team sponsor. A sponsor is usually a member o f middle management assigned as a key person knowledgeable o f current designs and processes o f the project being studied. He should be in a position to lend guidance and monitor team activities in a manner to obtain the best results f r o m the study.

Team members are chosen according to qualifications needed to best suit the individual projects. Assignments are made on a part-time basis o f about three or four hours a

VALUE ANALYSIS PROJECT FLOW CHART

SOURCES OF PROJECT UNITS

VALUE MANAGEMENT TEAM PRODUCT SERVICES PERSONNEL INDUSTRIAL RELATIONS MANUFACTURING ENGINEERING MATERIALS ENGINEERING BUSINESS SYSTEMS PRODUCTION CONTROL RELIABILITY MANUFACTURING PURCHASING PRODUCT ENGINEERING FINANCE & ACCOUNTING V. A. MANAGER

PROJECT STEERING COMMITTEE

VALUE ANALYSIS MANAGER

VALUE MANAGEMENT TEAM

RECOMMENDS FOR APPROVAL

SCOPE PRIORITY TIMING PERSONNEL

APPROVES PROJECTS

VALUE ANALYSIS MANAGER

TASK FORCE TEAM TASK FORCE TEAM

• + • [7 A VALUE ANALYSIS k I ~ MANAGER ™j

|~* TASK FORCE TEAM

REVIEW COMMITTEE 4

_ I

H

LEADS TASK FORCE TEAM STUDIES FOR RECOMMENDATIONS AND POTENTIAL SAVING

KEY VALUE MANAGEMENT TEAM MEMBERS PREVIEW REPORT PRIOR TO FINAL PRESENTATION

APPROVES FOR IMPLEMENTATION OR FURTHER INVESTIGATION AND TESTS

RESPONSIBLE LINE ORGANIZATIONS OR DEPARTMENTS FOR FURTHER REVIEW,

TESTING AND IMPLEMENTATION

Figure 4 — Flowchart-VA Project

week. A typical study w i l l require 150 man-hours and take about four months to complete. The team concludes its job at the end o f the study wi th a final report.

15

There are some disadvantages in working w i t h part-time assignments that take this long to complete studies, but we have found i t d i f f i cu l t to draw full- t ime team members and have the necessary experience and qualified talent. Normally, most o f the members shall have had the for ty-hour V A seminar training, bu t occasionally untrained personnel are used.

Suggested project ideas come f r o m all areas o f factory operations (See Figure 4 ) . Normally, project ideas are directed to our department but may come through members o f the Project Steering Committee. We w i l l inves­tigate each idea, gather data as to potential value improve­ments, and then submit them to the Project Steering C o m m i t t e e . A f t e r approva l by these management committees, task force teams are organized, assigned their projects, and the studies are started.

Once studies near completion, preliminary reviews are held w i t h management that w i l l be responsible fo r imple­mentation to discuss proposals prior to final reports. The team leaders give the final reports to the Value Management Team, who then assign implementation responsibility to operating departments normally responsible for the work .

I would like to stress the results that may be achieved f r o m these preliminary reviews held prior to final reports. A l l task-force members are present in this meeting. Usually, department heads w i l l have key subordinates also present. Details o f the proposals are discussed. Any significant objections are usually cleared up at this meeting. This provides for more complete understanding o f the team recommendations and has been a key factor in getting better acceptance and faster implementation.

Final reports to the Value Management Team are usually l imited to eight or ten minutes. Visual aids, sample hard­ware, posters, etc., are used to make these presentations as effective as possible.

Management by objectives sets goals for projects and savings. Figure 5 shows the number o f projects completed during the past five years. The lower port ion shows Value Analysis hardware projects. Value Engineering projects are shown in the middle, and the top port ion reflects software projects. Value Engineering, as we use i t , identifies projects applicable to product in the development phase prior to production. Value Analysis applies to the studies o f existing or current products. Software includes studies o f systems and procedures. Savings f r o m V E activities are classed in a cost avoidance category, where we consider V A as actual cost savings.

Our MBO program, besides including objectives for the

V.A. /V.E. PROJECTS COMPLETED

5 W f A Software

number o f project studies to be completed, includes a dollar goal on gross savings to be identified, and a training program for a specified number o f employees. Setting these objectives is an important step, as i t is a basis for our planning at the start o f the year and provides a means o f commitment and understanding w i t h the Value Manage­ment Team. I t lets them know what is expected f r o m us and allows us to make plans well in advance.

A monthly report to the Value Management Team is important as a means o f communicating status. Our monthly report lists outside suppliers we have contacted, all active projects remaining open, the savings status for the program to date, the status o f unimplemented proposals, and general remarks showing staff activities and other important happenings. Our aim is to show progress on every open project each month , such as:

Outside suppliers contacted Active projects Savings status Status o f unimplemented proposals * Staff activities and general remarks Expediting project implementation is our responsibility.

Following project implementation is an important step. As already pointed out, this matter is not the responsibility o f the task-force team. O f course, the end responsibility o f implementing the team proposals is up to the operating divisions. However, we must maintain contact so as not to let the projects die due to a lack o f decision, and at the same time avoid antagonizing the irnplementers. Once the decision to proceed has been made, i t is a mistake to assume that implementation w i l l continue smoothly and expeditiously to final installation. Even w i t h careful planning, there are of ten unexpected developments. The safest thing to assume during the implementation phase is that the brakes are always on and follow-up is continually required i f you are going to get results.

A chart used periodically in our monthly management meetings is one showing savings implemented and pending implementation for each division wi th in the factory. We call this an Hour Glass Chart (See Figure 6) . This tells each manager how successful he is i n implementing savings i n his area and those projects w i t h respect to potential dollars o f savings yet to be implemented. This usually stimulates discussion and follow-up.

V A L U E ANALYSIS PROJECT STATUS

O P E N P R O J E C T N U M B E R S

16 3

C R A W L E R S E N G R . S E R V I C E M F G . E N G R .

Figure 6 - V A Project Status

Figure 5 - V A / V E Projects Completed

16

Value Analysis/Value Engineering Training A well-organized Value Analysis training program that

PERFORMANCE

cuts across all lines in the organization is one of the first needs toward developing Value Consciousness. We feel the forty-hour seminar workshop is the backbone o f a success­f u l V A / V E program. A l l efforts should be directed toward a long-range plan for function-oriented value consciousness throughout all areas o f the company. Conceivably every employee, as he does his everyday j o b , should be familiar w i th the techniques. He has to be sold on the use o f the technology — i t has to be an automatic step in his planning and design routine. He w i l l be enthusiastic i f he knows i t w i l l work . These attitudes and skills w i l l lead to success.

A short time ago, one o f our research engineers who has been assigned a number o f Value Studies in the past, made a comment at the opening session o f a new project study. The assignment appeared to be a tough one, bu t he com­mented, "We're all at this point a l i t t le apprehensive about being successful in this study, bu t I know, based on past experience, that i f our team uses the Value Analysis tech­niques we w i l l be successful."

A t the start o f our program we wanted to be sure that training was as effective as possible. I t was evident we needed some assistance in getting started. For this reason we used an outside consultant who conducted our first eight seminars. Later, we developed our own training seminar, fol lowing the original format rather closely. More recently we have organized an interfactory training program whereby all o f our domestic factories are working together in a jo in t e f fo r t . Essentially, we sti l l fo l low a forty-hour schedule; however, we have divided the lecture port ion f rom the workshop allowing eight weeks for project development. This provides sufficient time for well-documented reports and allows the team more time in the application o f techniques.

Early in our program we recognized the need for refresh­er training. As a result, two video tapes are used. One is a twenty-minute tape in color entitled "This is Value Analysis," obtained through the Society o f American Value Engineers. The other is a thirty-five-minute tape prepared w i t h the assistance o f Value Analysis, Incorporated, that covers the Value Analysis job plan and a detailed review of the first three steps. Much emphasis is placed on use o f funct ion analysis and the techniques, such as the FAST diagram.

A new employee indoctrination program w i l l involve those recently employed. A series o f two-hour orientation sessions are conducted at six-month intervals. These sessions are mainly held for those employees who have not been involved either in training or Value Studies and is done to promote cost awareness and suggestions for pro­jects.

Outside Suppliers Outside suppliers are one o f our primary sources o f

information. Almost every value study includes contacts w i t h at least two suppliers. Of ten , field trips are arranged to visit outside operations firsthand and learn o f vendor capabilities. We f ind excellent cooperation f r o m these people in providing technical assistance. Our suppliers are t o l d we expect their participation to be a sharing experience w i t h mutual benefits. They are challenged to use Value Analysis i n their own operations and to suggest changes that w i l l contribute to improved value and lower cost. These vendors of ten participate w i t h task-force teams during seminar training.

I t is d i f f i cu l t to estimate our outside suppliers' contribu­tions in terms o f savings, bu t we find about half o f the proposals developed in our seminars are originated f r o m suppliers' suggestions.

In-House Displays Much work has been done in our factory to promote the

simplification o f designs and standardization o f parts. A photograph o f a display o f clamping parts is used to pro­mote standardization. Shown are the part numbers, annual usage, and the direct manufacturing cost o f each part. Designers use i t i n selecting parts for new products.

A tremendous wealth and technology is available f rom outside suppliers at practically no cost to the factory. A photograph o f an exhibit displayed in our main office lobby is called " A Gallery o f Ideas." The idea is to exhibit items used in our manufacture that present problems in­volving high cost, poor quality or workmanship. This dis­play is changed at six-week intervals. Many new ideas have been contributed, and the project has paid for itself many times over.

Another in-house exhibit called "Imagineering" was recently installed in our Product Engineering Department. I t shows examples o f cost reduction, project standardiza­t ion , or preferred parts. The purpose o f this exhibit is to show illustrations o f new processes or materials. I t is aimed at engineers and designers to spawn new ideas fo r improved designs and lower costs.

Other Cost Improvement Programs The programs covered above are those administered by-

our Value Analysis Department. We would be far amiss to infer all factory concerns for cost improvement lie only wi th in these programs. Other programs administered out­side our department having a significant effect on cost control and improvement are:

Wage Incentives — A standard hour plan covering direct labor operations w i t h wage incentives.

Work Simplification Program - Work Simplification has been used since 1960. I t also uses the task-force team approach. However, teams are permanently assigned who search out their own ideas for cost improvement. Their improvements fa l l mostly i n the manufacturing area and do not involve design changes. Consequently, their projects are what we call "part-oriented" rather than "design-oriented." Their program has interfaced w i t h ours very wel l , as most o f our projects are o f greater scope and fa l l either in the hardware design or software areas.

Employee Suggestion Plan - The Employee Suggestion Plan involves mainly wage employees. Payment in monetary rewards are made directly to the employees based on one-half o f the first year's savings and one-fourth of the cost installation.

Purchased Profi t Improvement Program - This program involves the Purchasing Department personnel in the selec­t ion o f better sources o f materials. They promote improve­ments in product designs to allow suppliers to reduce costs.

In addition, there are less formally structured cost improvement activities administered wi th in various other departments.

Summary In summary, we feel our role in Value Analysis must be

one that creates constructive discontentment throughout the factory. We must provide an atmosphere to encourage ,cost creators, those individuals involved in the everyday decision-making process, to take effective action. We also must provide an environment in which suggestions for improvements w i l l be studied with no fear of personal loss but w i l l be reviewed w i t h an economic or profit point of view.

Value Consciousness is the name of the game. It's how we play i t that determines whether we win or lose. In the long run i t w i l l also determine our success or failure. PH

PERFORMANCE 17

S U G G E S T I O N S C H E M E S a n d t h e

P A R T I C I P A T I O N G A M E B y K r i s t i n e Olsen

(The views and comments made by the author do not necessarily constitute the endorsement or opinion of Vick International S.A.)

Participation is the name o f the game in management today, and one o f the oldest forms in which i t exists is the company suggestion scheme, as we call i t in the United Kingdom, or the suggestion system, program or plan according to the Americans, for whom the words scheme and schemer have negative connotations. But where, amongst the wealth o f techniques now available, does the modern manager use the classic suggestion scheme, is its purpose still valid in the management field today, or have changes in industrial relations taken place that render i t obsolete?

The first formal scheme recorded appears to be the one established in 1867 at the Krupp Works in Essen, Germany. In the United Kingdom, William Denny & Brothers, Limit ­ed, shipbuilders in Dumbarton, Scotland, started a scheme in 1880. The National Cash Register company is credited w i t h the first suggestion system on the Nor th American continent in 1894. The last word , however, must be said on behalf o f Chance Brothers, Limited, glassworks, o f Birming­ham, United Kingdom, where, although there was not a formal suggestion scheme as we know i t , the practice o f paying work people for ideas put forward to management dates back to 1857. Then, ten pounds was paid to a worker who invented a fo rk for use i n connection w i t h flattening glass.

In "Model Factories and Villages," a book published in 1905, there is an account o f some early suggestion schemes in the United Kingdom. Mention also is made o f several schemes run by firms in the United States where i t was reported that "...this plan o f cooperation is much more generally employed." The author gives the fol lowing in support o f suggestion schemes:

Hitherto, it has been too much the practice to snub the man who would teach his betters and many an ingenious fellow whose advice would have been invaluable, had it been welcomed, has had either to take his ideas to a rival firm or make no use of them at all. Yet, who is in a better position to devise labour saving and economical methods than the man engaged in the operations concerned?

The situation today shows l i t t le change in the attitude o f management in the United Kingdom to suggestion schemes. This attitude has always been a reactionary one, while the trade unions in the United Kingdom have continued to regard schemes w i t h suspicion or indifference. The Americans do not appear to experience the same degree of union opposition to their suggestion systems.

Suggestion systems in the United States have received formal recognition since World War I , when a suggestion program was initiated in the U.S. Navy by an Ac t o f

Congress i n 1918. They were used extensively by the Americans to help the World War I I e f for t w i t h respect to productivity and manpower. »

The National Association o f Suggestion Systems (NASS) was started in the United States in 1942 to give promotion to the use o f suggestion systems and to provide a means o f constructive communication between member companies. NASS produces a comprehensive annual statistical report or survey o f suggestion systems run by member companies, and has even gone as far as establishing a professional certification program that enables members to become qualified suggestion system administrators in an ef for t to i m p r o v e the effectiveness o f the administration o f suggestion systems. NASS also provides a means o f comparison o f systems' performance on a national basis through the NASS suggestion system performance index formulae. International conferences are held annually for suggestion system administrators, w i t h as many as ten countries being represented.

During the 1950s, there was considerable expansion in the number and scope o f suggestion systems operating in the United States, Canada, and western Europe, w i t h even some being started in Communist countries. But, because o f the difference in methods o f reporting statistics — or lack o f statistics on suggestion schemes, as is the case in the United Kingdom — the data are not wor thy o f comparison f r o m country to country, except to say that, in general, American management has the most regard fo r the profitable operation o f their systems w i t h respect to the ratio o f savings realized for the company to the total costs involved in running the systems.

In the United Kingdom, the Industrial Society, f r o m its inception in 1918, has supported the growth o f suggestion schemes, believing "they can play a most useful part in implementing progressive human relations policies over and above the value they undoubtedly have in the productivity f i e l d . " As a result of a survey on schemes run in the United K i n g d o m in 1957, the Industrial Society formed a Suggestion Scheme Group to provide companies w i t h a means o f exchange o f informat ion on successful policies in the operation o f schemes. The lack o f response and enthusiasm by management in the United Kingdom, however, has made i t d i f f i cu l t to carry out further statistical surveys or even estimate the number o f schemes in operation. The last successful survey was in 1965. The B r i t i s h organization, called the National Suggestion Schemes Association, was formed as late as 1970 to continue the work formerly done by the Industrial Society's Suggestion Scheme Group. The NSSA holds annual conventions for suggestion scheme administrators.

Besides company suggestion schemes, there was a National Suggestion Scheme in the United Kingdom, which

18 P E R F O R M A N C E

thrived for three years or so and was envisaged as a means of evaluating and directing suggestions f r o m the general public to the appropriate authorities. I t published several issues o f a booklet called "What" in the late 1960s.

From the A N B A R Index on business publications, i t can be seen that the number o f articles on company suggestion schemes appearing in management literature is, once again, o n the increase over the last few years; now that management is becoming more receptive than ever to the various forms of participation by employees.

Participation The idea o f worker participation means different things

to different people in management. The suggestion scheme principle is intended to encourage employees to participate in improving the efficiency and economy of operations, based on the assumption that they are best able to con­tribute in their own functional area, and that any contribu: t ion beyond an accepted line o f responsibility should be.' financially rewarded. But, as a method of participative management, suggestion schemes have largely been over­looked by top management, except perhaps in the United States, Japan and West Germany, where they have become an integrated part o f the national management style.

I t could be that the apparent renewed interest is due to the eventual recognition o f that venerable ins t i tu t ion, the suggestion scheme, as the original practical answer to such new phenomena of management science as job enrichment, co determination, worker participation, value analysis, prof i t sharing, industrial democracy, etc. A l l essentially are ways o f relating the workers' needs more closely to the aims o f the company, or ways o f using all the resources o f the company in the most efficient manner. A suggestion scheme sets out to do these things in a basic fashion, in the industrial relations and productivity functions.

A n idea can only be wri t ten down or discussed out o f context o f t ime, place, direction, chance, cause and effect. As soon as the idea is put into practice, i t begins to have, or lose, value; i t can be evaluated, analyzed, modif ied , made to succeed or made to fa i l , depending on the forces i t en­counters. These forces can be suggestions for improvement coming f r o m those who are practically involved. To work in an environment where your ideas are condemned as worth­less, wi thou t even the opportunity for those ideas to be spoken or wri t ten down for consideration; to work in a position where the job specification clearly says "initiative and judgment - not applicable" can mean the only other outlet fo r aspirations and identity is w i t h a trade union movement. Initiative and judgment are never inapplicable for anyone in a company that operates a suggestion scheme for all levels of employees.

I t is doubt fu l whether Yugoslav-type workers' councils and the West German Two-Tier Management Board struc­ture are acceptable in the context o f industrial relations as i t has developed in the United Kingdom. Anyway, neither o f these two methods offers a means o f direct participation in management for all individuals, but only a means o f representation. Suggestion schemes encourage direct partici­pation through a sense o f involvement, available to every­one, as distinct f r o m sharing in decision making by repre­sentation.

I n these days o f frequent change in the economic climate, the confrontation between Them and Us is be­ginning to be replaced by the realization o f a common need, the success o f the company and its survival. The con­fl ic t ing objectives o f employer and employee can be channelled into reciprocal aims o f employer and employee in the contest o f the suggestion scheme. This conflict then becomes constructive rather than remaining destructive, as

i t is outside the framework o f a scheme. There is, o f course, the possibility o f using this conflict to make productivity agreements or collective bargains between employer and employees, but these efforts to reconcile the aims o f the two parties are, at best, only temporary.

The successful scheme Although the suggestion scheme principle is universal,

there are no two suggestion schemes exactly the same. The policy decisions that lead to the formula for success in one company's scheme do not apply to another company. That is why the many comparisons that have been drawn between different schemes operating in similar and differ­ent companies only serve to confuse the issue o f what dif­ferent policies practiced give the most successful scheme. The successful scheme is one that fu l f i l l s the objectives set for i t by top management; and these objectives depend on the attitude o f top management to suggestion schemes, and where i t sees such a scheme in line w i t h its company objectives for prof i tabi l i ty and industrial relations.

The unfortunate assumption o f similarity, of ten made between complaints and suggestions, probably stems f rom the fact that bo th were collected in a box in the days when this was the best attempt authoritarian management could make at communication w i t h employees. A well-managed scheme is bui l t into the existing structure o f a company's organization and communication, and so provides a healthy counterpoise for the attitudes o f employers and employees in any working situation. In practice, the responsibility o f the suggestion scheme can vary f r o m being run by Old Joe Soap about to retire f r o m the personnel department to being the responsibility o f the factory manager, company secretary, company director, work study department, pro­duction department and, even, the wages or accounts department. The ideal position, in a firm large enough to need a more formal method o f communication and control, is that this responsibility should be vested in a top line manager in his own right, independent o f other functional or divisional managers. He should have sound skills in sales, communication, administration and investment analysis techniques. He should be given a budget f r o m which to pay for awards and the administration costs for the scheme, and he should be required to show a prof i t on the scheme's operation that is not less than the company's rate o f return on capital employed. A n alternative way to evaluate a scheme's performance is by comparison w i t h national average standards o f performance. This is possible only i f all schemes use the same performance index, the same elements of savings and costs in the savings/costs ratio com­putation, and keep the same statistical records on the schemes' performance and operation. Lit t le attempt is made to do this in the United Kingdom at the present time, but in the United States the National Association o f Sugges­tion Systems has the situation well in hand.

The investment potential i n a suggestion scheme is clear when one considers the companies in the United States that report a ratio o f dollars saved for the company (less imple­mentation costs for suggestions) to dollars spent on the scheme — as high as 6.52 to 1 for 1974. In so many cases in Britain, the suggestion scheme still remains one o f the com­pany's functions that is paid for out o f profits because of its industrial relations value alone or, even worse, because top management is unaware o f the cost o f running the scheme and, therefore, unaware that this cost is consider­ably higher than the savings f rom suggestions implemented through the scheme.

Evidence of changing attitudes and changing schemes Having established that there are sound economic

PERFORMANCE 19

reasons for the existence o f a suggestion scheme, w h y is i t that so many United Kingdom schemes end up by being unsuccessful and abandoned? I f we say that the administra­tion o f these schemes is not to be blamed - and there are many suggestion managers who would defend themselves on this point - then we have lef t the attitudes of manage­ment, the employees, and the unions to these schemes.

Many articles have been wri t ten on the financial and industrial relations value o f suggestion schemes. I t can be concluded that top management attitude on this subject can be divided into three categories:

1. Those who think that the industrial relations value, alone, must jus t i fy the creation or continued existence o f a suggestion scheme in a company, even i f the money saved annually f r o m the suggestions implemented is less than the total costs involved in running the scheme.

2 . Those who think that any operation in a company must be made to funct ion profi tably in order to ju s t i fy its continued existence in a company and, thus, that the only acceptable value o f a scheme comes f r o m the high savings to costs ratio fo r its annual operation.

3. The third category comprises those managers who have always been o f the opinion that their company does not need a suggestion scheme because employees' ideas are already considered and rewarded in the system o f commun­ication already established in the company. But , maybe this is just the attitude they adopt to cover up the fact that they are afraid the introduction o f a suggestion scheme would upset the apple cart. I t could be that these companies are in need o f an improved dialogue between management and the work force, not the unions, because the union has become quite powerful and, consequently, has outgrown its pur­pose. On the other hand, i f this sort o f a company's appraisal o f its own situation is true, then perhaps they are wor thy o f more careful consideration as possible examples o f the participative management style that both manage­ment and unions are struggling to attain today.

The attention given to suggestion schemes by employees can never be any greater than the prior i ty the scheme re­ceives f rom top management.

The generally suspicious union attitude is confirmed when a suggestion arises that causes changes in manpower requirements or a reduction in the production bonus rate. Otherwise, indifference is the main union reaction that management experiences on this alternative channel o f cooperation w i t h its work force that is provided through a suggestion scheme.

Even so, the influential opposition to suggestion schemes sometimes shown by the trade union movement must be considered. This opposition is often based on arguments like the fol lowing: I f there is to be payment for suggestions, i t should be on a more democratic and unilateral basis than the individual award structure in a classic suggestion scheme, because a suggestion that is not implemented by the workers involved would save nothing for the company and no award would result for the one worker/suggester. Also, the considerably larger savings amounts still accruing to the company after the first year o f implementation are not considered when the individual award amount is com­puted. These can be considered as valid comments and such a union attitude has led to the search for alternatives to the classic suggestion scheme and its award structure as we know i t . An outline o f one such alternative follows. I have called i t the Bonus Incentive Suggestion Scheme (or System) - BISS.

Bonus Incentive Suggestion Scheme

The Bonus Incentive Suggestion Scheme operates on the principle o f savings being made i f all employees share equal­

ly w i t h management, and then w i t h each other, the mone­tary benefits derived by the company f r o m the implementa­t ion and continued use o f the employees' suggestions. The motivation to realize savings in costs is spread throughout the whole company because departmental target savings to be attained are linked in to the overall Management by Objectives system operated between top management and supervisor level, and a monthly BISS bonus for all non-management is paid f r o m the total pool o f savings currently being earned for the company by employees' suggestions currently in operation.

New suggestions are considered at monthly department meetings attended by the suggesters, a representative f r o m the union, management (the department manager), and a work study engineer, who documents the suggestions and coordinates their statistical evaluation. The suggestions that show a saving are then considered for nonacceptance or implementation by a coordination committee higher than departmental level, but also w i t h union representation. Once implemented, all suggestions are monitored monthly by the work study department for attributable savings on a departmental basis, i n order to establish the department's savings against the target monthly savings amount set by the department manager, and in order to arrive at a month­l y savings bonus pool. This pool amount is the basis for the computation o f the monthly BISS bonus for nonmanagerial employees. Each month, once the pool amount has been established, i t is first reduced by a certain percentage to cover the company's investment interests before i t is split fifty/fifty; one half for the company and one half to be shared between the number o f nonmanagerial employees on the payroll that month as their BISS bonus.

Whether or not i t is feasible to monitor each month , to any degree o f accuracy, the savings being made by imple­mented suggestions still in operation is not so important when one considers that paying the bonus achieves fo r the company the objective o f continually buying the right to eliminate restrictive practices — a sort o f perpetual produc­t iv i ty bargain.

Some other advantages o f BISS are: 1. I t is a group rather than an individual incentive, using

the word group in its widest sense - the company as a whole. I t encourages group participation in return for a monthly bonus directly related to the level and quantity o f participation by all employees.

2. What the employee fears to lose on the production bonus (as the result o f production rates being altered by a suggestion), he gains on the BISS bonus.

3. BISS is an integral part o f the overall management o f the company by objectives. The setting o f target savings to be reached by each department motivates department managers (by whom the targets are set) to give practical support and encouragement for ideas to be put forward by their employees. This overcomes the manager's resistance to time spent on evaluation o f suggestions. This resistance is due to the extra work involved and to the fact that under a suggestion scheme there is usually no benefit or recognition for his e f for t . The fact that managers are of ten concerned about the amount o f time they spend evaluating suggestions when they should be doing their job shows how separately they see their job f r o m the e f fo r t o f effecting savings for the company f r o m other people's ideas. This is especially true i f the manager sees these ideas as criticisms o f his work.

4. Technological change in industry is generally facilitat­ed by the group incentive provided under BISS.

5. Savings made as a result o f employees' group efforts are directly related to their pay packet as a monthly bonus, instead o f being just figures published at the end o f the year

20 PERFORMANCE

relating to savings the classic suggestion scheme has realized for the company, a certain percentage o f which has been given to employees as individual awards.

6. Bonus payment rather than individual awards means that workers are not at a disadvantage i f they work in a funct ion which does not lend easily itself as material for suggestions.

7. BISS is more acceptable to the union membership who are not so suspicious o f some workers being exploited at the expense o f the few who are individually rewarded under a suggestion scheme, nor are they so afraid o f giving up restrictive practices, which may be the subject o f sugges­tions, and getting nothing in return.

8. Wi th the suggestion scheme, there is always a degree of bad feeling and confusion resulting f r o m necessary deliberation over the ineligibility o f employees to receive awards, or o f suggestions for consideration under the scheme's rules. This eligibility usually depends on the scope or level o f the employee's job responsibility or on the type 1

of suggestions being eligible for consideration under the rules o f the scheme. Wi th BISS all this no longer exists.

9. There is no opportunity fo r submission o f a sugges­tion under wrong identity in order to t ry to qual ify for an award under the scheme's rules.

10. BISS encourages active participation in management through the attendance o f suggesters at the monthly depart­ment meetings in order to present and discuss their sugges­tions.

11 . The suggester has the work study engineer present at the meeting to document the idea; any points not clear about the suggestion can be discussed at the outset.

12. Two of the costs to the company, normally associat­ed w i t h the operation o f a classic suggestion scheme, are eliminated w i t h BISS: Awards are no longer necessary for suggestions w i t h intangible merit because the bonus comes f rom only those suggestions w i t h a tangible cash saving to contribute to the bonus pool ; i t is no longer necessary to isolate the administrative cost o f operations, as w i t h a sug­gestion scheme, since operation o f the BISS is absorbed into the administrative system already in existence — such as the work study department and the ordinary producti­vi ty bonus activity.

13. There is no reason why administrative workers can­not also participate in BISS. Unlike the production bonus, the BISS bonus would not increase the differential between the take-home pay o f administrative and production work­ers.

The disadvantages o f BISS against the classic suggestion scheme are:

1. Considerably more o f the company's savings f r o m sug­gestions are being given to the employees w i t h the BISS bonus than w i t h individual awards. Suggestion awards under a classic scheme are usually based only on the savings f rom the first year o f a suggestion's operation. The bonus is calculated on monthly savings f r o m all suggestions as long as they are still in operation. Although this is a disadvantage for the company, f r o m the employees' viewpoint i t is the main advantage.

2. Awards under a regular suggestion scheme are not automatically taxable income for employees i n certain countries, whereas the BISS bonus would be taxable in the same way that a production bonus is taxed.

3. Since the bonus is derived f r o m tangible cash savings, there is no award stimulus to submit ideas that have no direct cash-saving value.

No payment

In talking about suggestion schemes, we are talking about participation and payment fo r i t . The question not

yet considered is: Now that employees expect more and more to participate in management, w i l l they still expect to be financially rewarded for this participation?

The feasibility o f a system that requests and implements ideas f r o m employees but does not pay for them would seem doub t fu l indeed. But such a system has been tried and accepted in one company in the United States. I t was de­signed to be used as a means o f planning the company's strategy, as an aid in the recognition o f the company's pre­sent strengths/weaknesses, or future opportunities/threats. The system operates under complete anonymity and the employees understand they are not required to provide a solution to the viewpoint or potential improvement they wish to bring to the attention o f management. In this way, management avoids the obligation to give payment for this f o r m o f participation. Except fo r urgent matters, all sub­missions f r o m employees are kept and considered at depart­ment and corporate-level yearly planning sessions, where they are classified into six subject groups according to pro­duct, process, market, distribution, finance and administra­t ion. The purpose o f these sessions is to fit into the com­pany's plans as many o f the employees' ideas as possible wi thout making too many different plans. The more urgent issues dealt w i t h during the year are presumably more like the suggestions considered under a classic suggestion scheme, in that they relate to the current production situa­t ion , rather than to the company's long-term plans.

The main difficulties associated w i t h operating such a system arise because, unlike the suggestion scheme, there is no need to monitor or estimate savings i f awards are not given. Thus, there is no follow-up ensuring that action plans finalized are, in fact, carried out, monitored for progress and modified i f necessary.

The main advantage is the anonymous channel o f com­munication for employees' grievances to management. Un­fortunately, this anonymity also equally detracts f r o m the communications value o f this system, in that no vehicle is provided for management's communication back to the em­ployees concerning their ideas.

In short, this last system works on the principle that a sense o f involvement is more important than cash as a moti­vation factor to employees.

Where we stand today

As a method o f payment for participation, the classic suggestion scheme stands between the two extreme approaches, developed wi th in the last decade, o f payment for all, or no payment at all.

I t could be considered that changing attitudes w i l l mean that managers and workers, alike, w i l l expect to give this participation wi th in the usual channels o f communication at work , thus rendering obsolete the classic suggestion scheme. On the other hand, attitudes change only as fast as the changing generations; in the meantime, suggestion schemes afford a practical way o f using participation in management.

The suggestion scheme principle still holds good today, but its conception as a management tool is having to change as the management/union interface changes over the years. I t can be all things to all people or just a dead duck idea, long outgrown by developments in industrial relations and management technique.

There is, clearly, a need for change towards a more democratic management style. To discover how best this can be done was the task appointed by the British Govern­ment to the Bullock Committee in 1975. Some sort o f a suggestion scheme could, feasibly, be one o f the types o f worker participation that industry in Britain w i l l be requir­ed by law to introduce. [TJ

PERFORMANCE 21

F U T U R E COST REDUCTION POSSIBILITIES

MASS TRANSIT SYSTEMS By Vincent Lao

V I N C E N T L. LAO, CVS, principal, V . L . Lao & Associates, majored in ME and CE at the University of Wisconsin. Graduate studies in Highways, Urban

Planning, Sanitary Engineering and Power Plant Design. Worked for pri­vate consulting firms and government agencies with broad and in-depth experience in planning, design and construction of public facilities. He has written numerous technical papers, most of which have been translated into Japanese. He received the S A V E Technical Paper of the Year Award (1970-71) and the S A V E Editor of the Year Award (1975-76). In 1975, he conducted V E seminars in Japan and the Philippines and was a guest speaker at the S J V E National Conference. His specialty is in the teaching and prac­tice of the art and science of V E in construction.

Introduction The success o f Value Analysis and Value Engineering in

industrial products is an established fact. However, V A / V E may not be as successful in the construction industry as i t should be, especially when the government is involved. There are many reasons for this and some o f them w i l l be discussed in this paper.

Based on well-documented value case studies, ten p e r c e n t t o t w e n t y percent value improvement/cost reduction possibilities would be an average for most c o n s t r u c t i o n projects. This means $20 bi l l ion cost reduction per year for the $100 bi l l ion construction industry in the United States. There are cost-reduction possibilities in applying the philosophy and methodology of V A / V E to construction items, equipments, operation and maintenance. However, emphasizing the philosophy and methodology o f V A / V E may not be good enough when there are time constraints. Application of the art and science o f V E in construction at the early stage o f the design must also be emphasized for substantial value improvement/cost reduction possibilities.

Cost Escalation Cost overrun is such popular news in Washington and

other big cities like New York that i t is becoming a fashion for local governments to fo l low. The talk about bureau­cracy, inefficiency and waste in government is so like a broken record that government officials are becoming immune to i t . Af t e r all , what is a million-dollar or a bi l l ion-dollar waste here and there? I t w i l l mean only a penny or a

few dollars to the taxpayers. This is peanuts compared to what the average citizen expends every day.

O f course, no one can question how the individual uses his own money. However, government workers are paid to make sure that public funds are put to good use instead o f being wasted. Waste is a big business and i t is away of l i fe i n America. The practice o f bribery, graft or corruption tends to dul l the sensitivities o f public officials to the idea of waste in government. Elected officials should see to i t that citizens' tax money is getting its greatest value for public good. V A / V E is a new disciplinary technique that can be used to extend the value o f the citizens' tax dollar.

I n 1969, Congressman Larry Winn, Jr., o f Kansas con­ducted a survey concerning the effective application o f V A / V E i n the federal government, including the Washing­ton Metropolitan Area Transit Author i ty ( W M A T A ) . The administrator o f W M A T A replied and criticized Congress for not appropriating the money soon enough to beat infla­t ion . Inf la t ion was used as a cover-up for the other causes of the cost escalation, especially for the unnecessary cost that could have been technically controlled.

Before talking about future cost-reduction possibilities for mass transit systems, we must first know all about the cost escalations in order to find out where and what the cost-reduction possibilities are and how they can be effectuated. According to the January 1965 Report to the President, "Rai l Rapid Transit for the Nation's Capital," the capital outlay for the Mass Transit System was approxi­mately $800 mi l l ion . In February 1976, the price tag for

22 PERFORMANCE

completing the system escalated to $5.5 b i l l ion . This is more than a 587 percent rise in cost in eleven years. Is this rise in magnitude normal or are there other reasons for the cost escalation?

Figure I is a conceptual breakdown o f where the major cost escalations might have come f r o m and where the cost-reduction possibilities are.

Figure 1 Conceptual Breakdown — Cost Escalation

Causes for the Cost Escalation Cost Escalation

Item Description % $ in millions

1 Rise in Construction Cost 150* 1,200

2 Modernization & Ignorance 130 1,040

3 Management, Politics, etc. 120 960

4 Miscellaneous Cost Escalation 27+ 220

5 Unnecessary Cost 160** 1280

Total Cost Escalation 587+ 4,700

* T h e rise in construct ion cost is approximately 2 3 5 percent between 1965 and 1976 ; Reference: Engineering News R e c o r d , March 1976 . S ince more than half of the capital costs were com­mitted earlier than 1976 , 150 percent cost escalation for Item 1 should be suff icient for the purpose of this analysis.

* * T h i s is the unnecessary cost that can be technical ly con­trol led. It is almost thirty percent of the total cost escalat ion. T h i s also shows that effective V A / V E can offset Item 1 to alleviate if not stop inf lat ion.

The cost escalation in Item 1 is due to inf la t ion and may have been used to cover up the other cost escalations. Top management might not realize or would not admit that lack of value assurance of the money in their charge was one o f the main causes o f in f la t ion . Nor would they volunteer to highlight or mention the cost escalations due to moderniza­t ion , ignorance, management, politics, etc., shown as Items 2, 3, and 4. Most l ikely, they would never admit that there was a cost escalation due to Item 5, Unnecessary Costs; however, the owners (users and taxpayers) who pay the bills and the leaders who appropriate the money should be interested in knowing all the reasons for the cost escalation and the possibilities fo r cost reduction.

Because o f the $4.7 bi l l ion cost escalation, the transit riders may have to pay as much as seven times the original estimated cost o f twenty-five cents for a local t r ip ($1.75) or fifty-five cents for outlaying areas ($3) to satisfy the 1965 economic forecast. This is over and above what the taxpayers w i l l have to pay for subsidizing the transit system in Washington, D.C.

Cost Reduction Possibilities Item 1 — Inf la t ion has many causes and there are many

ways to slow i t down. Lack o f value assurance is one o f the basic causes o f inf la t ion that very few people know about and much less do they know about V A / V E as a new disci­pline for value assurance. There are no cost reduction possi­bilities for this i tem; however, effective application o f V A / V E w i l l assure the greatest value o f the investments and help slow down inf la t ion i f not stop i t .

I tem 2 — Modernizing the system is sometimes necessary for long-term, cost-reduction effect. The ignorance factor is due to management's lack o f knowledge o f V A / V E and value awareness o f the short-term and long-term cost im­pact o f modernization. For example, the cost o f automa­tion and the additional cost for passenger comfort and con­venience may be out o f proport ion in view o f funct ion and cost. Without proper functional and cost analysis o f the additional features, i t may be too late to control the cost once the init ial investments are made. Effective application

of V A / V E can have short-term as well as long-term cost reduction possibilities in this regard.

Item 3 - Cost escalation due to mismanagement, poli­tical and other intangible factors are complex. Cost reduc­t ion possibilities on intangible factors may not be easy to accomplish technically. However, comprehensive under­standing and effective application o f V A / V E should pro­duce substantial value improvements. Empire or Toy Build­ing is a common practice to jus t i fy the existence o f the off ice and its cost; Reference: "The Things I Cannot Change," W. Gentry and R.L . Pool, Civil Engineering Maga­zine, July 1968.

Unfortunately, the Mass Transit System in the nation's capitol is becoming a political footbal l to be kicked around by the politicians. A t best, i t is a make-work project for the benefit o f the people who are planning, designing, con­structing, operating and maintaining the system. The finan­cial situation o f the project is i n a mess. Its cost effective­ness and economic viability are in great doubt. Either i t w i l l become a big white elephant or the taxpayers w i l l have to continue subsidizing i t .

I tem 4 — Miscellaneous cost escalation may include, but is not l imi ted to , the costs that were not accounted for in the contingencies. In this particular case, i t may include the costs o f public relations, aesthetic and environmental con­siderations, etc. Wi th an effective V A / V E application, great­er value (tangible and intangible) o f the expenditures could have been obtained w i t h half the cost.

I tem 5 — Unnecessary cost that can be technically con­trolled is what V A / V E is trying to avoid. Most administra­tors and managers w i l l not admit there is such a thing as unnecessary cost. Those who are conscientious about their responsibilities may admit that unnecessary costs always exist, but they w i l l also insist that they are doing V A / V E all the time to reduce i f not totally eliminate them. The government and the A/E's claim that they are doing V E all the time as a way-of-life may be true to some extent. How­ever, V A / V E as a way-of-life may not even scrape the t ip of the iceberg. I t must be applied as a special disciplinary task w i t h its philosophy, methodology, art and science to tap the remaining V A / V E gold mine.

W M A T A must have been so busy w i t h the daily adminis­trative duties and technical problems that i t was unlikely for them to spend extra time for value assurance. Because of the complexity o f the project and the time involved in preparing the contract plans, W M A T A and the A/Es were pressed f o r time (the project was already behind schedule) just to finish the construction plans according to accepted design standards and specifications. How could they possi­bly spend extra time for innovations and in-depth design-to-cost analysis? Even i f they had time to analyze the design-to-cost impact, who was going to take a second look (one o f the important concepts o f V A / V E ) at the pre­liminary and final design plans according to V A / V E objectives? Besides, V A / V E w i l l not be effective i f i t is done by the same people who are responsible for the general engineering and construction plans. This is why an outside V A / V E artist should be used.

The V A / V E artist should work w i t h the in-house review sections. While they are reviewing the plans according to accepted standards and conventional designs, the V A / V E artist can concentrate on pinpointing and determining high-value improvement potentials. The V A / V E task should not distrub or lengthen the original time table for the comple­t ion o f the project. In fact, substantial cost reduction through V A / V E should shorten the time table.

This paper w i l l try to emphasize the cost reduction possibilities by applying V A / V E as a separate disciplinary task after planning and preliminary design, final and detail

PERFORMANCE 23

design, plan preparation and construction contract award. The fol lowing example w i l l show why there are cost reduc­tion possibilities, what they are, when and where they can be located, and how the remaining V A / V E gold mine can be tapped.

Highway tunnel under the reflecting pool.

South portal of the tunnel.

For VA/VECP 1, applying functional and cost analysis o f the t raff ic patterns would have shown that a four-lane tunnel was sufficient for the through t ra f f ic . However, for practical considerations, a six-lane tunnel would have been the best solution. This tunnel is located i n the Central Busi­ness District o f Washington, D . C , which was the zero point o f the Origin and Destination study. Reversing the ramps at both ends o f the tunnel would have automatically eliminat­ed two extra lanes in the tunnel. This would also have resulted i n better t raff ic circulation and highway safety be­cause there would be no weaving t ra f f ic inside the tunnel.

Eliminating two lanes i n the tunnel wou ld have reduced construction cost by as much as $21 mi l l ion . This would also have reduced millions o f dollars o f construction cost for the new Labor Department Building at the nor th end o f the tunnel.

R E MAIM INC V A / V E G O L D MINE

The example shown below is to illustrate the application of V E as a Disciplinary T a s k from ph ning, preliminary and final design to plan preparations and construction contract award.

Project : 1-95 (Highway Tunnel at the vicinity of the U . S . Capitol

Date : 1965 - 70 (Preliminary and F i n a l Design) 1967 - 74 (Construction)

Total Cost t $70 Million

V A / V E C P

Designing for Value Value Improvement Potential's V A / V E as a Separate Disciplinary Task

V A / V E C P

Designing for Value % $ Million

V A / V E as a Separate Disciplinary Task

1 Design Assumptions (Highway geometries)

30/0/0 21 .0 /0 /0 Philosophy, methodology, art and science o£ V A / V E

2 Design Assumptions {Design load)

15/25/10 8 .0 /17.5/7 .0 A r t and science of V E

3 Types of Design 10/10/10 S. 0 /7 .0 /7 . 0 A r t and science of V E

4 Design Configurations (incl. New Labor Bldg.)

10/10/20 5 .0 /7 .0 /14 .0 A r t and science of V E

5 Details, Specs . , Temp. Construction, etc.

5/5/5 2 . 5 / 3 . 5 / 3 . 5 Philosophy, methodology, art and science of V A / V E

Total Cost .Reduction Possibilit ies

60/50/45 41.5/35.0/31.5 Depending upon tho combina­tion o f V A / V E C P s .

Value Improvement : $1.5 million is the amount that is claimed to be V E as a way-of-life.

Remaining V A / V E Gold Mine : $40.0/33.5/30.0 mill ion which can be only tapped by applying V A / V E as a Disciplinary Task with its philosophy, methodology, art and science.

Cost of V A / V E : $0. 5 mill ion

Net Returns : $39. 5 /33.0 /29. 5 mill ion { V A / V E benefit/cost ratio is approxi­mately 60 to 80).

Note : I . F o r a 40 year l ife, the total value improvement or savings would have been approxi­mately $330 million i i the $33 million was invested at 6% compounded interest.

2. Even if only $20 million of the V A / V E gold mine could be tapped, tlie value improve­ment or savings for a 40 year life would still have been approximately $200 million,

3. Reducing the construction cost by $20 mill ion would reduce construction time by at least 25% or 21 months. The delay due to the V E changes should not be more than 5, 000 man-hours or 25 weeks of 5 man-40 hours/week or approximately 6 months. The completion date of the project would have been 12 to 15 months sooner.

V E Change Proposals

VECPs 1 and 2 wi l l be used to illustrate why the un­necessary cost exists and how the V A / V E gold mine could have been tapped. The eight-lane highway tunnel (1-95) is almost one mile long and crosses the Great Mall under a reflecting pool in f ron t o f the Capitol.

This tunnel was at the preliminary and f inal design stage when the then director o f the Bureau o f Public Roads testi­fied in the U.S. Senate that they had been doing V E all the time as a way-of-l ife. But he may not have been aware o f the rich V A / V E gold mine that was to be buried and abandoned in this tunnel. This tunnel is only a stone's throw f r o m where the director was speaking. The remaining V A / V E gold mine could only be tapped by applying the philosophy, methodology, art and science o f V A / V E as a special disciplinary task.

8-Lane Tunnel

Original Design

6-Lane Tunnel

VA/V.JCP Ko.

24 PERFORMANCE

During the early design o f this tunnel, an eight-foot earth cover was to be put on top o f i t for the trees along its path. This was the plan that the A / E used to prepare the construction drawings. Halfway through the final design o f the tunnel", the U.S. Park Service and the D.C. Highway Department agreed on a plan to put a reflecting pool on the Mall , and i t happened to be on top o f the tunnel where the trees were supposed to be. Probably no one knew about the original design load because o f the trees. I f someone d id , he may not have had the design-to-cost sensitivity to realize the tremendous cost reduction i f the design load was re­duced to half its original assumptions.

I f there was a special V A / V E task in the government (D.C. or FHWA) to apply the art and science o f V E , the V E gold mine i n VECP 2 could have been easily tapped. I f VECP 2 was implemented, the cost reduction would have been approximately twenty-five percent o f the original cost or $17.5 mi l l ion . The cost o f redesign and changes in the, contract plans would not be more than $100,000. Reducing the construction cost would reduce the construction time and more than offset the time needed to change the con­struction plans.

FHWA could have caught this oversight i f they had some­one in charge to review the plans according to V A / V E objectives.

VECP 2 may look simple because everything has been pointed out. Since cost reduction is automatically accom­plished by reducing the design load, someone might wonder whether this is what V A / V E is all about. However, he may not realize that VA/VECPs 1 and 2 or any o f the other proposals were never discovered and developed because V A / V E was not applied as a separate disciplinary task. He may not even know that effective V A / V E is more than just a way of l i f e . I t involves conscious application o f its philos­ophy, methodology, art and science.

Conclusion I f V A / V E is effectively applied, substantial value

improvement/cost reduction is possible for major construc­t ion projects. The total cost-reduction possibility used, for example, is more than twice the average cost reduction that was mentioned in the introduction o f this paper. The art and science o f V E is for speed, visibility and credibility. I t w i l l help expedite the determination, development and evaluation o f the value proposals and enhance more cost-

TUNNEL CROSS SECTIONS

Afte r these examples, someone might th ink that the A / E must have been shortsighted not to catch this oversight. Yet, even i f the A / E knew, he could not have had the inclination to suggest a change because o f the logistics of preparing the construction plans. Af t e r all , the design and the contract plans were more than half finished. Besides, would he be compensated accordingly for extra work be¬

' cause o f the changes? How about his deadlines and commit­ments on other jobs? The D.C. Highway Department or

reduction possibilities. Applying the art and science o f V E need not delay the

completion o f the project. In fact, the project can be com­pleted earlier according to the amount o f work eliminated and the construction time saved as a result o f V A / V E . How­ever, without special authority and responsibility to effectively pursue and fol low up value objectives as a separate disciplinary task, the remaining V A / V E gold mine/ cost-reduction possibilities w i l l never be tapped, m

PERFORMANCE 25

Participatory Management: The

Next Step

For Corporations

Dr. A L F R E D J . MARROW is presi­dent of the American Board of Pro­fessional Psychology and former head of New York City's Commission on Human Rights. A pioneer in the use of sensit iv i ty training techniques to st imulate more open, productive working environments, he has con­ducted ongoing studies of the relation­ship of people to their work, and has a i d e d corporat ions and small businesses with his ideas on how to improve the work situation through the use of T-Groups (training groups)

that enable participants to understand and reshape their impact on others. His findings on the effectiveness of the T-Group experience have been publish­ed in "Behind The Executive Mask," one of the ten books on work that he has written.

A d i p l o m a t in i n d u s t r i a l psychology. Dr. Marrow has been honored by a Distinguished Service Citation from the U.S. Department of State for his contributions to the refinement of Embassy administration techniques throughout the world.

As we celebrate our two hundredth yea r , t he business community is becoming aware that we need another revolution — a revolution in manage­ment. We are just facing the fact that much o f our economic sphere is still buil t on an archaic despotism, a hold­over f r o m the Industrial Revolution when the company was the man who headed i t ! While new innovations are eagerly seized upon by management, creating technology that is second to none, business people are still looking for a way to create a thriving economy and contented personnel on all levels.

The despotism which worked in the

By Dr. Alfred J . Marrow

Nineteenth Century has long since out­l ived its usefulness. Today's work f o r c e is b e t t e r educated, more affluent, and brings to the job higher expectations for self-management and self-actualization than have employees i n the past. The implications are that conventional procedures that keep all decision making at the top must be revamped.

I t was pointed out in the recent g o v e r n m e n t s t u d y , " W o r k i n America," that most managers and supervisors are chosen because they possess authoritarian traits. But these

very traits can bring managers into daily confl ict w i t h their subordinates — particularly those workers, younger and well educated, who have grown up in homes and schools where demo­cratic and participative methods are practiced.

Managers have discovered that shorter hours and higher pay w i l l not provide a satisfactory answer to the employee's yearning for self-fulf i l l ­ment — or for the loss o f self-esteem f r o m having to perform mindless, rate-type taslcs. I t is also a hard fact o f l ife that climbing wages and stable

26 PERFORMANCE

prices are economically feasible for companies only through increased pro­ductivi ty. Yet during 1973 and the first half o f 1974 the productivity rate in the United States showed no in­crease, despite an increased rate in modernization o f equipment and in improved automation. I t is obvious t h a t e f f i c i e n t equipment, though important, cannot do the job alone; there must be a major increase in human productivity. The challenge is to create a work climate in which the employee is motivated to produce.

My own work w i th corporations, along w i t h countless studies done by others in the f ie ld, emphasizes that the weak l ink in the business community is lack o f employee participation in the decision-making process, resulting in the alienation o f workers. The organization that is over-managed and over-controlled harvests restlessness and anger, which creeps out o f the factories, shops and offices, and into the streets and homes o f Americans.

Research has found that people on a job , who have nothing to say about the way things are done, are apt to show l i t t le interest or concern w i t h their company's profits or productivi­ty . They d r i f t along just to get by, while doing as li t t le as they can. How­ever, i f they are involved in face-to-face, problem-solving tasks, they j o i n wholeheartedly in f inding practical solutions. They are participants. Now they are more than mere hired hands. They no longer feel like robots. They have a piece o f the action and can earn genuine feelings o f achievement — because they are able to really con­tribute to shaping a company's policy.

Just what is meant by participa­tion? There are, o f course, many different kinds o f participation. Here we refer to the ability o f people to influence to some degree the decisions that affect them and their jobs. Such participation applies to personnel at every level.

I n instances where participatory p o l i c i e s have been pursued wi th commitment and seriousness, com­panies have found workable and pro­fitable answers. I t is important, how­ever, that the participation be genuine and consistent w i t h what is t ruly feasible. Employees should not be in­vited to decide anything unless the decision is really to be up to them, and only when i t involves decisions that are important to them. In other situa­tions, counsel may be sought, rather than consent. The distinction between

" I ' d l ike your opin ion" and "It 's up to y o u " should be clearly made, to the precise degree o f the participation sought.

Wi l l the employee's opinion be o f much value? In case after case, the answer is a resounding "Yes!" True, i t depends on how well-informed they are on the subject; but they w i l l be more informed about their own jobs than the top managers or the men in the board room who lack first-hand experience w i t h the details o f a par­ticular task. , " ,

What i f the employees offer sug­gestions that must eventually be turn­ed down? In our studies we have found that participants w i l l be ready to work w i t h whatever policy is f inal ly adopted. Remember, in this country there is a tradition o f going along w i t h the winners after our democratic elec­tions. Being a good sport about losing is heavily inculcated in all o f us.

What i f , having invited the frank expression of opinion, management hears things i t might prefer not to hear? Well, that is one o f the great virtues o f participation! Obviously, i f top management is surprised by such frank comment, there has been a barrier to good communication, a con­dit ion that's always dangerous.

A n additional point should be stressed. When an employee is invited to participate in decision making, i t should be a sincere request and the subject matter must be immediately relevant to h im. Many problems are beyond the scope of the average employee — and he is apt to know his limitations better than anyone else.

There is a valid criticism of the group-participation process that must be brought up here. I t is that i t takes more time for this kind o f decision making. I t does. But the ultimate cost, as proved by many studies, is consider­ably less than the cost o f alienating workers, which can erupt into serious problems.

One o f the studies in which I parti­c ipa ted concerned the well-known resistance o f production workers to changes in their methods and job tasks. A company was impelled to change its methods because o f compe­titive conditions and new technology. During the switchover, we divided the production workers into groups. I 'd like to describe what happened in two of these groups.

T h e f i r s t group of production workers were simply told that they would be transferred; the production

manager explained new job assign­ments and the new piecework rates were announced. Shortly after, the workers were transferred to their new work assignments.

The second group was given a complete explanation as to why the change was necessary. They were told , in detail, exactly what problems the company was facing and were en­couraged to regard this as a jo in t problem. They were asked to give input on various cost-reduction plans, and did so. The management's attitude was stated this way: "We don't want to sacrifice quality. We don' t want you to lose income. But we must reduce our prices to get new business. What suggestions can you of fe r?"

Af t e r the two groups were trans­ferred to the new units, their perform­ance was compared. The nonparticipa-tive group dropped thirty-five percent in performance after the changeover, and showed no improvement for a month afterwards. Nine percent o f the operators in that group quit, others filed grievances about the pay rates and, in general, morale was exception­ally low. A t the end o f six weeks, the performance was still so poor that management decided to dissolve the group and assign its members to other work stations.

The participative group reacted differently. By the second day they were back to their former level o f production, and after three weeks they had raised their production level four­teen percent higher than before the changeover. None had quit and no grievances were filed w i th the union.

T h e evidence was unmistakably clear: The participative group had handled the problem created by the transfer in a far superior way. I t was possible to conf i rm this even more dramatically a short time later. The earlier nonparticipative group, which had been disbanded, was reassembled, but this time management fol lowed the procedures that had been used w i t h the participative group.

The improvement was impressive. Within a week this group, which had been so recalcitrant, had attained a new and much higher level o f output. The re was no mani fes ta t ion o f hosti l i ty and not one worker quit . The pa r t i c i pa t i ve approach was highly successful; i n this instance, at the blue-collar level.

I t is d i f f i cu l t for change to take place, but i t has been my experience

Continued on page 28

PERFORMANCE 27

A R T I C L E S P R O V E U S E F U L The last three issues of P E R F O R M A N C E

have improved. My congratulations to a few such as Tom King, Chris Rand, Art Murray, Joseph Glasser, Ashok Kr. Sethi.

I am using this material to assist me in promulgating Value Engineering with the Beneficial Suggestion System here at this Naval Weapons Stat ion , Seal Beach, California.

Since I'm the only full-time value engi­neer, by job description in the Department of Defense, this material is extremely help­ful.

It's extremely fortunate that our people F A C E IT, see the potential in V E , never be satisfied to excuse it, define it, explain it away, or rationalize it. Tell the truth, based on our proven successes, and we can con­tinue to move forward.

George K. Huff, CVS Seal Beach, California

W T h e jf O u t d o o r s m a n , ? fashioned in true

Western style of _„^tieavy blue den im, holds

its hand-creased shape no matter how tough the weather . T h e brim is decorated with 24 rows of contrasting red stitching as is the matching band. A patented feature in the edge of the brim al lows you to shape it to your own tastes. In addit ion, it is practical and the price is right at $ 1 0 . 9 5 , plus 60 cents shipping and han­dling. Avai lable in sizes 6% through 7 -5 /8 . With heavy-duty sweat band, satin-like lin­ing. Send $ 1 1 . 5 5 today, designating Sty le 5 4 5 .

Quality S h o p , Dept . p, P .O. Box 5 6 2 , E l T o r o , C A 92630

Please send m e . . o f your S ty le 545 Outdoorsman hats. I have enclosed $11 .55 in r.ash, rhe rk or money order for each hat ordered, which includes handling and shipping charges.

Cal i fornia residents add 66 cents for each hat ordered:

Hat Size Tota l remitted: $_

Name

Address

Ci ty

State . Z i p .

(Please print plainly)

PARTICIPATORY MANAGEMENT Continued from page 27

that when the need for change is seen by upper levels o f management, and the tools for this change given to executives, they can begin to create the k ind o f open atmosphere that is the springboard for problem solving. O r g a n i z a t i o n leaders come t o recognize that building cohesive teams is a vital process in today's complex organizations. This means that people must be open and trusting o f one another — and that trust must extend downward throughout all levels o f the company.

To build this trust we have success­f u l l y utilized T-Groups (sensitivity training groups for managers). The T-Group creates a group-learning situa­t ion in which the participants are taught to see themselves as others see them. I t is an open dialog whereby each helps the other to drop the double meaning f r o m transactions and to stay "on the level" w i t h themselves and o t h e r s . F r o m the T-Group, internal changes are made that help to forge mutual cooperation, increase f lexibi l i ty and encourage independent creativity among managers.

Some o f the questions dealt w i t h in the T-Groups are:

Is your behavior in tune w i t h your feelings? I f not, how do they differ?

A r e your transactions w i t h co­workers and staff straight and clear?

Can you admit to yourself when you're afraid? What do you do about it?

Do you trust other people? How well do you trust yourself?

Do you make unnecessary demands on yourself, and then blame others because you are overworked?

Can you monitor your tone o f voice when presenting ideas or making requests?

Are you prone to store up resent­ments to be used later in anger or withdrawal?

Do you take your problems home w i t h you?

Do you always have to be liked? Do you enjoy your job , or are you

stopping yourself f r o m taking pleasure in what you do?

These questions help the executive to become more aware o f the contra­dictions between his professed con­cepts — so many managers espouse views supportive o f democratic pro­cedures and greater self-management, yet do not relate any differently to employees — and their actual behavior. The f lexib i l i ty learned in the T-Group experience can break down the resis­

tance o f management toward sharing decisionmaking w i t h employees on other levels.

W h i l e there are a number of h y p o t h e s e s d r a w n f r o m clinical experience and f rom such research studies as "The Authoritarian Person­al i ty ," concluding that some execu­tives need to gain fu l f i l lmen t through acquiring power, i t is also true that t h e y have attained their position because they are capable of flexible response to challenges. They did not reach their positions by running away f rom problems.

Given the need and the tools for change, management personnel w i l l respond. We have found that managers are wil l ing to revamp their attitudes and reach for more openness among t h e m s e l v e s and t o w a r d t h e i r employees, i f they know that this is an effective way to do a better job .

I f our basic problems are human ones, then our next challenge is to bui ld a bridge between the behavioral sciences and business management. I f we succeed, then the critically needed changes can be made by a ski l l ful and conscious choice. I f we don't , the changes w i l l possibly come through the militance o f the dissatisfied who w i l l upset the power balance o f the past, sabotage and topple the tradi­tional pyramidal organization struc­t u r e and p o s s i b l y cause serious economic consequences.

In order to maximize the pro­ductive capabilities o f our employees, we m u s t cons ide r pa r t i c ipa t ive management that responds to the social needs o f all workers, rather than the a u t h o r i t a r i a n needs o f the managerial few. Our democracy was buil t on the concept o f equal rights for all people, yet over the past two hundred years our corporate structure has sadly strayed f rom this principle. Surely the lesson o f the past industry­wide strikes has been that our trust i n the paternalism and authoritarianism of most corporations today is i l l -founded.

What happens next wi l l be deter­m i n e d b y h o w enl ightened the managers o f our country's vast techni­cal and intellectual resources become i n t h i s m a t t e r . Wha t American industry needs as a pr ior i ty is not more intricate machinery, but more insight in to the intricacies o f the h u m a n m i n d and s p i r i t . Treat American workers as adults w i t h ideas as well as hands — w i t h creative impulses as well as a desire for material rewards - and there w i l l be an explos­ion o f energy that w i l l make our next one hundred years a bright and pros­perous page in American industry, p q

28 PERFORMANCE

H A R R Y E. WILLIAMS is the director of Quality Assurance and Reliability for Electronic Memories and Magnetics Corporation, Hawthorne, California. Previously, he was manager of Field Operations for Litton Data Systems where he organized and staffed a nationwide field engineering function. He has held managerial and engineer­ing positions with high-technology cor­porat ions in the aerospace and cryogenic fields since 1946.

Williams has a Bachelor of Science degree in Engineering and a Master of Arts degree in Business Administration

from California Western University. He also holds a Professional Engineer's license in California. He was an officer in the Orange Empire and San Fernando Valley Sections of the American Society for Quality Control and is an active member in the Society for Advancement of Management in Orange County.

He has authored many articles and editorials on product quality, person­nel development, and cost-effective organization concepts. Williams also lectures on these subjects to college students.

T O M O R R O W ' S

Q U A L I T Y

C O N T R O L

M A N A G E R By Harry E. Williams

The manager o f today who has been generally successful in the role o f Q u a l i t y C o n t r o l possesses some u n i q u e characteristics in order to achieve this status. He is product-oriented. He has the ability to organize an effective monitoring system and is usually persuasive when dealing w i t h the customer representative and his peers.

I f he has achieved a technical edu­cation and is an effective problem solver, these abilities are additional assets o f a high magnitude.

T o m o r r o w ' s Q u a l i t y C o n t r o l manager not only wi l l require a greater degree o f technical expertise, but he also w i l l have to carefully plan what he reads and studies.

T t is anticipated that by 1985 the vast amount o f informat ion that wi l l be available to the manager wi l l be staggering and impossible to cover for any individual, regardless o f his abili­ties.

One distinct disadvantage w i l l be the d i f f i cu l t task o f absorbing this abundance o f data. Therefore, he w i l l have to be highly selective in what he chooses to read, and speed reading offers a partial solution to this unique problem.

PERFORMANCE

Another major crisis, which is be­ginning to impact management, is the f lexib i l i ty rule. Recognizing and react­ing to a change is a skill that more managers wi l l have to develop in order to become successful in the future. Truly, this attitude wi l l be vital to the Quality Control manager o f the 1980s. Resistance to change is an action that is undesirable and wi l l slow down pro­gress i f allowed to continue or even grow.

Another potential trap in the pro­gress syndrome wi l l be the increased pressure for a manager to do. The necess i ty t o s i t b a c k , organize thoughts and plan wi l l become more and more apparent to his supervisors. The ability to apply business statistics and utilize control charts w i l l be al­most mandatory for the Quality Con­t ro l manager who wi l l funct ion in tomorrow's environment.

Sophisticated informat ion systems wi l l become more complex. The com­puter w i l l play an ever-increasing role in tabulating, sorting and displaying critical data. The need to understand these systems w i l l increase at a rate greater than the util ization o f the re­sultant data.

The necessity for continuing his

education in the field o f his choice wi l l plague the Quality Control manager in the 1980s. The semi-conductor indus­try is an excellent example o f a rapidly expanding technology. The utmost in incentives, technical education and personal motivation is required in order to achieve success. Adequate financing is, o f course, also an essential ingredient.

In the next decade, the manager must be increasingly alert to the effects o f government and internation­al economics. They w i l l have a marked influence on the business or industry where he is employed.

The standards by which managers wi l l be rated also wi l l change. The manager o f today who is better than average w i l l be but a mediocre manager in the highly competitive business world o f the future.

Although specialization wi l l evolve i n m o s t f i e ld s , the true general manager w i l l , by necessity, be a generalist. The choice o f his staff, and the supervisors that his staff have selected, wi l l be critical w i th respect to the progress o f the organization and its ultimate success.

A l l o f these managers w i l l , essential­ly , be affected in the same manner as the Quality Control manager. Each

29

QUALITY CONTROL MANAGER Continued from page 29

funct ion and responsibility w i l l require a real pro in order to assure success for the company.

As industry moves towards expand­ed uses o f automation, the Quality Control manager w i l l have to increase his expertise in dealing wi th people. Not just i n being persuasive, but more people-or ien ted than ever before. Without this essential skil l , his tech­n i c a l e d u c a t i o n and informat ion system wi l l not provide the basis for a successful career.

Younger people o f both sexes are entering the middle management levels today. Although the trend is not obvi­ous yet, younger managers also are en­tering the upper management levels. Independent management develop­ment companies w i l l prosper as a re­

sult o f the need for experienced and skilled senior managers to train the younger, less experienced ones. The senior managers wi l l have approxi­mately the same number o f years' ex­perience. I t could be tragic to have the m a j o r i t y o f the decision-making managers involved in an on-the-job training program at the same time. There w i l l be no other method for the up-and-coming manager to learn the necessary skills.

In the future predicted for the Quality Control manager o f the 1980s, there is one fact that cannot be over­looked. The world o f Quality Manage­ment is a dynamic situation, and the good old days — whatever they were — w i l l never, never return. Maybe that's what the evolution theory is all about!

LU

STATEMENT OF OWNERSHIP. MANAGEMENT AND CIRCULATION

UPDATE Continued from page 6

the system scientifically predetermines times involved in manual and mental work.

Approximately sixty-five percent of Japanese industry uses the Work-Factor system and has engineers trained in its application. This includes such major corporations as Sanyo, Hitachi and Mitsubishi. Over the past twenty-five year, productivity gains by Japan have outpaced all other industrial nations.

ASQC FAVORS SAFE NUCLEAR POWER

"It is the firm position of the American Society for Quality Control that the establishment and attainment of rigorous standards of quality have given the nuclear indus­try an enviable reputation for safety. It is our firm convic­tion that continued development and application of rigor­ous standards make maintaining that safety reputation a realistically attainable goal.

"To say that something can be safe and has been safe does not guarantee that in the future it will be safe. The engineers, manufacturers and utilities who design, build and operate nuclear plants, and we, the public, should maintain healthy skepticism and eternal vigilance to assure nuclear plants are designed, built and operated to be safe. We must not use it to thwart and to destroy one of the few tech­nologically feasible alternatives capable of resolving a short­age of energy that in itself is more hazardous to our health and safety than the use of nuclear power could ever be."

At its annual meeting held in Toronto, Canada, the Board of Directors of the American Society for Quality Control issued a statement endorsing safe nuclear power. The statement read, in part:

"There is no question whether nuclear power can be safe. The country has safely operated nuclear reactors for thirty years with a safety record unequalled.

"There is no question that utilization of nuclear energy involves risk. Most things that man does to improve his living environment on this earth involve risk. Aviation has inherent risks, yet the commercial airlines in the United States today provide the safest means of transportation in the world. Safer than walking. Yet, the safety record of the airlines does not compare with that of nuclear power generation.

"The thing that makes aviation safe, that made the space programs safe and that makes the nuclear industry safe is intensive knowledge of the risks involved, and the establish­ment and attainment of standards of design, manufacture, construction, installation, test, operation and maintenance in such a way that the known risks are compensated for by the safety systems involved, and by the training, skill and dedication of the people who make them work.

NASS PAPERS WIN CASH AWARDS

Judges of the National Association of Suggestion Systems' recent International Papers competition selected three papers for top honors. First place and a cash award of $200 was won by Kristine Olsen, whose paper was titled "Suggestion Schemes and the Participation Game." Mrs. Olsen is employed by Vick International S.A., Paris. The second-place award of $75 was made to Roland A. Haedge, a labor-management and employee relations specialist at the Department of Health, Education and Welfare, Dallas. His paper was titled "Motivation Theory." R.W. Chase, project manager at Southam Murray Printing, Weston, Ontario, was the recipient of the third-place award of $50 for his paper "Research and Introduction of an Employee Suggestion Plan at Southam Murray."

The awards were presented at the Association's Annual Conference held at Orlando, Florida, in September 1976. International in scope, the Association annually offers its members an opportunity to compete for cash awards and recognition through creative writing on subjects related to any aspect of Suggestion Systems, fp]

30 PERFORMANCE

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QUALITY ASSURANCE: MANAGEMENT

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Q U A L I T Y ASSURANCE: MANAGEMENT AND T E C H N O L O G Y , Glenn Hayes' second book on the subject, encompasses the entire QA spectrum. His first work, Quality Assurance in a Manufacturing Enterprise - published in 1970, was quickly accepted as a standard text by major colleges and universities.

QUALITY A S S U R A N C E : MANAGEMENT AND T E C H N O L O G Y delves profoundly into the theoretical aspects of QA while at the same time amplifying practical techniques for control and meaningful reporting.

Q U A L I T Y ASSURANCE: MANAGEMENT AND TECHNOLOGY ' S more than 400 pages, the result of over two years' preparation, are profusely illustrated wi th easy to read diagrams, charts and reporting structures. Expanding greatly on his first work, Hayes' second volume is destined to become THE primary guideline for establishing and maintaining effective industrial QA operations.

Q U A L I T Y ASSURANCE: MANAGEMENT AND T E C H N O L O G Y , attractively bound in a durable cloth cover wi th silver foi l imprint, is available on a special 30-day, money-back quarantee to individuals and corporations at $14.95 a copy. The companion QA PROBLEM SET is available at $3 a copy. To take advantage of the money-back offer on the hard-bound textbook, simply complete and mail the coupon below.

QA: PROBLEM S E T , designed as a companion study guide and structured in the identical chapter-to-chapter sequence of Dr. Hayes' hard-bound textbook on Quality Assurance, contains a compilation of nearly 700 selected questions, problems and answers. This 8V2 x 11 -inch, 48-page supplement not only is helpful to instructors and students of quality assurance, but also is an important tool for those attempting to become certified quality engineers; questions and problems presented are representative of those given on the quality engineering certification examination.

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