Central New York business leaders experiment with self-managed teams

CNY Business Journal (1994-95), May 29, 1995 by Hadley, Mark

SYRACUSE--For some companies, self-managed teams are bringing new life and productivity. And, predictably, the few, highly publicized success stories are enough to push other businesses to create teams here, there, and everywhere.

And, equally predictably, many bandwagon jumpers fall short.

A number of companies in Central New York are experimenting with self-managed teams. The experimenters range from large companies like Carrier Corp. in DeWitt and Lawson Mardon Packaging in Radisson to small companies like Higbee Gaskets & Sealing Products, Inc. in Syracuse. No executive from any of the companies thinks that his efforts have been completely successful. And few have made extensive use of self-managed teams. Instead, the programs that most companies have in place are more like experiments en route to a shift in company policy and procedure.

Only at Higbee and Lawson Mardon are teams really a way of life.

At Higbee, teams have been a way of life in recent years, with shifts divided into teams and team representatives participating in other teams. The company's forward-looking management philosophy helped it earn the annual business of the year award from the local chamber of commerce in 1993. Higbee teams have full sway, even going so far as to decide to eliminate shifts for some production operations, with shift workers moving to another shift.

And when it comes to devising a bonus system, what better mechanism to use than a team?

Lawrence E. Higbee, president, recalls that, when the company made a shift in its operating structure, the company's previous bonus structure meant that no one was going to get a bonus despite the fact that, by most indicators, the company did very well.

"The system we had in place was designed in the 1970s and was based on the system one of our directors used in his company. In one of our meetings, I explained the system and how it came about. We decided that we really needed to take another look at it and maybe design a new system that more accurately reflected the company in 1995 and beyond, instead of 1975," Higbee explains.

The previous plan was based on revenue dollars per production employee per hour, Higbee says. "And it just didn't fit the company today."

They put together a team to come up with a new program, but somewhat to Higbee's dismay, team members wanted him to lead the team. That is not what he wanted.

"I said that I would lead it at the beginning, but then after the first meeting I told them that it was something they needed to do," Higbee says. "I told them that whatever they came up with had to meet two requirements: "It had to be responsible to our customers first, paying attention to things that were important to them. And second, it had to be responsible to us as a company."

Higbee reports that the program the employees came up with links how the company performs based on several factors that the customers say they are looking for and other factors that the company and the employees agree are important to the company. The company's performance on those factors determines what percentage of the company's bonus pool gets paid out in a given year.

Up to 50 percent of the company's profits can go to employee bonuses.

At Lawson Mardon, teams are equally pervasive in the plant's production operation, which produces fiberboard packaging for companies such as Lever Brothers, Procter & Gamble, and Colgate Palmolive. Like Higbee, the local operation of the Canadian packaging company divides each shift into teams in their respective departments. But the company has only one job title for its entire production work force--production technician.

Pay, according to Robert Ryan, human-resources manager, is skill-based. "We built a comprehensive system to produce an environment of continuous learning. It is a system that is designed for workers to get training and certification in more and more jobs within the plant," Ryan explains. "We need versatility in our work force so that we can give our customers the level of quality and the fast response that they need."

In designing the system, the company also had to design the training system. They rely on a system of mentoring and formalized training programs and then a certification process once a worker has completed training for a new function in the plant.

"All of our workers are salaried. We don't have any hourly workers on the production floor," Ryan reports, adding that salaries are based on how much training and how many certifications a worker has. On top of that, a gain-sharing system enables employees to benefit directly from gains in productivity or cost reductions.

And Lawson requires workers to earn a specified number of training credits each year, with pay increases tied to the number of training credits each employee earns.

Ryan reports that the company also struggled to come up with a way to be sure that workers could not simply o through the motions of getting new training. That led to a peer-challenge and decertification process in which any worker can challenge another worker's certification.