In recent years this pattern has changed. We have seen the stripping out of layers of bureaucracy as organisations have become leaner and flatter. Increasingly the emphasis today is on creating a teamwork approach, where groups of employees are given far more responsibility for making decisions for themselves. Two new terms have come to be widely used:
- Empowerment - This means the increased participation by employees in their workplace with a view to encouraging initiative and a spirit of internal entrepreneurialism, or intraprenurism among employees.
- Work Teams - The idea is that business is really a series of projects carried out by small groups of people with complementary skills. This is a move away from dividing businesses into clearly-defined functions such as production and marketing.
This case study focuses on changes which took place in Blue Circle Cement’s Cauldon Works in Staffordshire. These changes were mirrored in a similar change programme at Dunbar in Scotland. The company decided to develop cultures in these business units that would be at the leading edge of best work practices, labour relations and productivity which would then be further employed throughout all other business units in the country.
Like many companies in the UK in the 1980s, Blue Circle Cement was desperately in need of change. Blue Circle Cement is the UK’s largest cement producer, supplying about half of the country’s needs from ten cement works. The company’s Cauldon Cement Works is situated at the southern tip of the Pennine Chain near Stoke-on-Trent. Cement has been manufactured there since 1957. The factory supplies the West Midlands area and is the third largest belonging to Blue Circle Cement. In the early 1980s, it was decided to make a major investment of £40 million at Cauldon to build a new highly automated computer controlled plant capable of producing over 3,000 tonnes of cement per day.
The UK cement industry in the early 1980s was characterised by high manning levels of both staff and hourly paid workers; relatively low wages and high overtime levels. A working week in excess of 60 hours was common. Restrictive working practices were the norm, with strict demarcation between crafts and between process and craft workers. Additional payments were made for unsocial hours (overtime) and also for work in adverse conditions (e.g. excessive heat or dust). Under this system the more breakdowns that occurred, the more overtime had to be worked and the more employees earned.
Not surprisingly, productivity was very low even though the amount of supervision was high.
Morale was poor and conflict was common. Management and employee relationships were characterised by low levels of trust and an adversarial “them and us”, “win/lose” culture. All change was regarded with intense suspicion and involved much bargaining. Compounding this situation was the lack of international competitiveness, in particular with regard to Europe. In the early 1980s the UK cement market was in steep decline and under increasing threat from lower priced imports.
It was patently obvious that Blue Circle Cement could not continue in this way. Radical changes needed to be made in this deeply rooted culture. A new vision for the future was required. However, creating that vision was not something that management could do alone. Instead, Blue Circle Cement had the foresight to have early discussions with the Trade Unions, who readily accepted that the uncompetitive position could not continue.
At the time of these discussions the Cauldon Works was highly unionised with five recognised trade unions:
- GMB (Representing process workers)
- AEU (Amalgamated Engineering Union)
- EETPU (Electrical, Electronic, Telecommunications & Plumbing Union)
- TGWU (Transport and General Workers Union)
- BCSA (British Cement Staff Association)
The AEU and EETPU have now merged to form the AEEU. The Trade Unions gave their support to the initiative subject to negotiation, development and argument, so that collectively it was possible to develop a shared vision. To help in creating the vision the services of the Advisory Conciliation Arbitration Service (ACAS) Work Research Unit were called on. As an independent body it was seen as being impartial by both management and unions.
- An annual hours contract.
- The reduction in job categories from 14 to 3. Jobs are now defined far more broadly than in the past. The three broad categories are process operator, senior process operator and craft worker. This has meant that each employee has been expected to learn and develop new skills through a training programme.
- A new teamworking approach. The ability of everyone to work together and have mutual respect was considered essential to the development of the new culture. This has involved a considerable resource implication in terms of developing teamwork skills through training, including the training of team leaders.
- A joint (management and union) review of the system on a regular basis in order to seek continuous improvements.
The features of the Stable Income Plan
In order to create a new environment based on trust it was important to give employees a new package based on a secure income. The Stable Income Plan was based on the premise that: Employees were to be paid for 2,250 hours a year. This is made up of 2,028 hours worked in a seven shift system and a bank of 222 flexi-hours which have to be worked only if there is an operational need.
This system is based on a Fixed Constant Salary. From the management point of view this had the advantage that labour costs were predictable. In addition, the system encouraged employees to be motivated in their work and go home when their shift was completed, thus effectively breaking the previous blue collar ethos of prolonging the job to boost overtime earnings.
Employees were expected to work to a pattern of full shifts, thus taking responsibility and hence accountability for work done during that shift.
In order to facilitate the changes team training was at a premium. Team training involved everyone in the workplace and was given active support by shop stewards as well as the management team. The training programme included four main elements:
- Senior Managers - This workshop looked at all aspects of team building, leadership and teamwork. For example, it was concerned with procedures involved in building high performance teams, and ways of ensuring that suitable resources were provided for team building. Management needed an in-depth understanding of the training to be given to the rest of the workforce.
- Staff Team Training - Staff Team Training was given to all middle managers and supervisors. Attendance at each session was organised so that all managers were accompanied by their supervisors. The focus was very much on putting teamwork into operation and ways of organising the Team Building Workshops.
- Team Leader Briefings - The role of the team leader was seen as crucial. The purpose of the team leader briefings was to prepare the leaders for the workshop session with their teams and to ensure as far as possible that they assumed a leadership role in Team Building.
- Team Building Workshops - The workshop was the key element of the change process. During the workshop, an important part of the leader’s job was to relax the team and ensure that they became involved in the training experience. Because many employees were unused to the processes of teamwork, it was necessary to encourage and develop participatory and co-operative approaches. Team members were asked to list all their concerns about Integrated Working e.g. problems about flexibility, the need for job training, the prospect of not being able to earn more than a stable income, etc. All the concerns were listed and displayed until the end of the workshop.
In addition to the team training, employees were expected to carry out a skills training programme. Everyone had to learn at least four new skills and craft workers had to learn at least one other new craft. Initial training involved between four and six weeks for each employee.
Making the changes
It took Blue Circle Cement two and a half years to research, negotiate, carry out training and implement new approaches to teamworking. The new equipment, technology and new working practices dramatically improved the productivity and efficiency of Cauldon. In 1989 and 1990 recognised output and performance measures (e.g. output per employee per year, production costs per tonne, etc.) made Cauldon the top performing cement plant in the United Kingdom.
Cement production had increased from 330,000 tonnes in 1985 to 750,000 tonnes in 1990 and the workforce had fallen from 548 to 311. Continuous improvements since that date have resulted in the workforce in 1996 being further reduced to 223 with a corresponding increase in productivity. The new working practices were self-financing with reduced staffing levels, reduced unit labour costs and increased output per employee. Employees had gained higher wages whilst each worked on average eight hours less per week.
When ACAS were asked to review attitudes of employees to these changes, the results were heartening. There was an almost unanimous view that Integrated Working had been an enormous step forward both for the company and the workforce. The increased skills and flexibility of employees, plus the end of demarcations, produced a more efficient workforce able to complete jobs more quickly. Employees found the increased variety and challenge in their jobs stimulating and the development of team working increased employee involvement and sense of pride in the job. This had led to improvements in commitment and morale. Integrated Working was subsequently introduced to all Blue Circle Cement plants. However, this was in many ways only a starting point for a process of continuous improvement.
- Identifying barriers to involvement - It is important in getting the Total Quality process going to identify the barriers to employee involvement in the process. Clearly if an organisation has a “Them and Us” culture predominating then it will not be ready for successful change. What is required is a set of relationships in which employees and managers are prepared to envisage the desirability of a situation based on equal opportunities and mutual respect, in which there is a strong motivation to do jobs well.
- Develop a common vision - Managers and employees need to share a vision. In the case of Blue Circle Cement, this was based on building a highly skilled and flexible workforce.
- Develop the plan - The next step is to develop a plan based on this shared vision. In Blue Circle Cement’s case, this involved Integrated Working and the Stable Income Plan.
- Keeping people informed - This step is to provide information to everyone in the workplace - to let them know what the effect of their work and actions are and what they will be.
- Develop the Total Quality concept - Having brought everyone on board and committed to change, it is important to develop the Total Quality concept. Everyone needs to understand what it means and build up a commitment to it, so that all managers and employees share ownership of the concept.
- Building a supportive structure - If the same management structure remains in place after Total Quality is introduced, then it is probable that the same results will be obtained. In order to change the culture it is essential for managers to change their attitudes and approaches.
- Developing facilitators to help the process - To assist in the process of change it is necessary to gain the support of a cross-section of the workforce which has been trained to facilitate change. They must be able to offer unbiased support for the operational teams. This includes a full range of skills including team composition, team dynamics, meeting skills, problem solving skills as well as being able to deal with a multitude of “people” problems that arise in business.
- Empowerment flow - This then leads to the position where empowerment can develop because the foundations are in place to allow this to flourish. The empowerment flow diagram above highlights the way in which an empowered workforce is enabled to be entrepreneurial in developing continuous improvement.
- Improvement Teams - At the centre of the process of continuous improvement is a series of improvement teams which are empowered to “do it” i.e. get things done by using their own initiative.
- Customer Focus - Only when the house is in order can the needs of the customer be enhanced by customer focus.
- Continuous improvement - Given all of the above there will have been set in motion a process of continuous improvement which is ongoing.
In recent times Blue Circle Cement has won a number of awards for its Quality Improvement Cycle and Human Resources initiatives. What the company has done is to create an empowered workforce which has become the driving force for superior performance coupled with the utilisation of advanced technologies. It has taken Blue Circle Cement ten years to achieve this huge change in culture and this could not have taken place quickly. It has needed time but the achievement in winning Quality Awards is recognition from external experts that Blue Circle Cement is getting it right.