Winning the Baldrige Award - quality development at Eastman Chemical Co - Management

Chief Executive, The, June, 1994 by Earnest W. Deavenport, Jr.

Embarking on the "Quality Journey" means changing corporate culture, empowering employees, and listening to customers. And it might well lead to a more impressive bottom line.

When President Clinton presented Eastman Chemical Co. with the 1993 Malcolm Baldrige National Quality Award in the manufacturing category, it was a victory for a team of nearly 18,000 employees.

Though winning the award was an important step in our "Quality Journey," we don't regard it as the final triumph. Eastman did not apply the principles of Total Quality Management to win the National Quality Award. We did it to win customers. And we've learned that a benefit of applying for the Baldrige Award is enhanced teamwork throughout the company.

Nearly everyone talks teamwork these days, but fewer organizations practice it. Without teamwork, however, employees at our widely scattered geographic plants could not have worked together to make Eastman the first major chemical company to capture the Baldrige Award. Hundreds of interlocking teams form the backbone of Eastman operations. Thus, everyone works toward the same outcome: creating superior value for our customers, employees, shareholders, and suppliers. Team measures are linked to corporate goals. And summary charts and graphs highlighting progress are posted in prominent locations throughout the company.

INTERLOCKING-TEAM CONCEPT

Team membership includes the chairman and CEO. When we were introducing TQM to the company, senior management teams attended both normal business-management meetings and regular "quality" meetings. As we matured in quality management, those duplicate sessions merged. Today, our weekly management meetings include reviews of the business as a part of the quality-management process.

Eastman's interlocking-team structure resembles a series of interconnected pyramids. The base of the higher pyramid overlaps the peak of the lower. Most employees are members of at least one team. Supervisors are members of at least two--they lead the teams formed by their direct reports, and they are members of the teams headed by their supervisors.

A two-way information system results from this interlocking structure. The interlocking-team process enables employees to develop goals and measures that correlate directly to the company's goals and measures. These teams, which typically meet weekly, give employees the opportunity for involvement and ownership in managing their work areas. They also promote information-sharing and feedback throughout the company. We continually reinforce goals and messages through print and electronic media. We also use face-to-face communication--from small group meetings to company wide communications through satellite broadcasts.

QUALITY EVOLUTION AT EASTMAN

The interlocking-team concept is not an addition to our existing organizational structure. It represents one element of a completely new organization. Let's look at how Eastman became a company committed to TQM.

Adoption of quality principles has been neither quick nor easy. It required a willingness to break from tradition and from accepted business practices. We took our first steps toward the Baldrige Award nearly two decades ago. In the years since, Eastman has become more attuned to its customer needs. We weren't always open to change.

Our wake-up call was the result of input from a valued customer that told us its company was not satisfied with a major Eastman product--cellulose acetate fiber--a product we had invented. Therefore, it was considering dropping Eastman and purchasing additional products from one of our competitors.

Though it was difficult to accept, we had lost touch with our customers. Our standards--not our customers'--defined quality. We learned a valuable lesson: Change and survival are inextricably linked.

Eastman has changed--not by a little fine-tuning, but by a massive overhaul of the corporate engine. The company reinvented the way it operates and deals with customers. When we say we manage for quality, that means we start and end with the Quality Management Process. QMP focuses on both internal and external customers. Every company team uses QMP. Team members are trained to understand and use quality methods and systems, including control charts and process control. Employees participate in a continuous cycle in which they plan quality improvement, do improvement, check progress and results, and act to drive and maintain gains.

The concept of involvement is a departure from the way Eastman and nearly every other company managed in the 1970s. When our customer threatened to go to another supplier for a product' so closely identified with our company, it indicated that our traditional system was not producing quality. It was producing compliance. We needed a sense of ownership. Owners want involvement in growing the company. Today, we recognize that our success depends upon all employees' participation in managing for quality.

As we learned the value and the power of the team concept, we scuttled our Suggestion System. This individual-reward system inhibited teamwork and full participation by all. We eliminated time clocks, and we don't miss them. Clocking in daily reinforced that trust was not part of the system. Our traditional performance-appraisal process was scrapped in favor of a development and coaching process. Improvement results from changing the system, not from end-of-the-line appraisals.