In the 1880’s Frederick Winslow Taylor developed time study methods to determine what the potential productivity of a particular job might be. “Taylorism” was a hotly debated issue because it reduced people to the position of being just one more cog in a machine. But in the eternal search for profit and productivity the captains of industry used Taylor’s time studies to set production goals. Ultimately in the steel industry, they were used to determine part of a workers wage. Steelworker contracts put rules around the time-study process and how production “rates” were to be developed. Because time-study was a specialty, Joint Labor/Management Incentive Committee’s (JIC’s) were established that oversaw the rate-setting process and allowed our members to contest “rates” they felt were being unfairly applied.
But on the Mill floor management dishonesty and human ingenuity had resulted in a convoluted “incentive” system that old Fred Taylor could never have predicted. The basic truth was that management never wanted to put a fair rate on any production process and used their time-study engineers to try to cheat workers out of making money from their increased efforts. As a response, workers being time-studied would “work to rule” and hide any short-cuts they had devised, to compensate for the expected deductions that the time-study people would use to depress the rate. Over the decades that this went on, the system lost any semblance of integrity. Rates varied wildly, and their connection to productivity was often questionable.
W. Edwards Deming’s work on quality had been ignored in the United States, but a post-war Japan eagerly adopted his methods and they used his ideas in part, to become a significant competitor to domestic steelmakers by the 1970’s. The production rates that time study engineers implemented in the U.S. rarely had a significant quality component. “Quantity” was king, and the system encouraged workers to meet minimum quality standards to reach their “tons per hour” or “pieces per day”. But the Japanese assault caused the domestic industry to look at the cost of bad product. The amount of “right the first time” product, or “yield” became a new imperative. I should note that in our 1978 Steelworker International Convention, then International President I. W. Abel read the thousands of delegates assembled a long New York Times article on the need for quality, long before the steel industry seriously began to address the issue.
The Taylor approach broke work down in to small components and paid based on very small parts of each production process. Over time, technology had significantly changed production to larger continuous processes that were interdependent. The individual rates focused workers on just their small piece work station, instead of rewarding when the total outcome was more efficient.
That’s where Key Performance Factor Plans or KPF’s came in. In our joint labor/management efforts to regain viability at Steelton we began experimenting with a new style of “incentive” that looked at these integrated processes and rewarded based on three to five “key” production outcomes that could be controlled by workers throughout a mill or product stream. The Plans were supposed to be designed to have the potential to pay off as well as the old Taylor plans they replaced. Joint labor/management teams helped develop the key production factors that would be targeted. But the actual mathematical formulas that determined the balance between these factors and which ones weighed most in the final payout were done by management, with oversight by the union officials on the Joint Incentive Committee. A standing committee of management and workers, who were covered by a particular KPF Plan, met monthly to review and discuss the prior month’s results.
In one critical department the new KPF paid off reasonably well, but the Mill committee was never happy with it. Even though the JIC adjusted the plan to meet several complaints, the committee quickly came up with new reasons to be dissatisfied. Monthly meetings were contentious and the JIC members on both the union and management sides felt they were targets on a shooting range. This was no small matter because the union was way out on a limb with the attempt to move away from the traditional Taylor plans and we didn’t want a major department to feel they weren’t working. In one discussion, after a particularly argumentative meeting, one of the union JIC members, who felt the plan was a good one, said in frustration, “if they think they can do better, let them try”. Even though it was said as an aside, the idea had merit. There were guidelines on how the KPF’s generally were designed, so why not let the department committee take a shot at making it work the way they wanted it too. The management side of the JIT was tired of taking heat at the meetings and with an agreement that any final plan would have to gain JIC approval; they agreed to provide the computer model to the union and management committee members and see what resulted.
It took all of forty-eight hours for the Committee to return to the Union Hall with a plan that both workers and management had devised. If we adopted their revisions, the committee members promised, they would explain it to the workforce and line management and endorse it. We adopted the plan and they were as good as their word.
This changed the dynamic of the monthly meetings entirely. Since the committee had devised the plan, any problems with it were theirs to deal with. The discussions focused on what was going wrong and right with the production process for that month, not “lets gang up on the JIC”. Over time, the committee would make adjustments to the plan as things changed, but it was no longer a source of continuous workplace dissatisfaction.
The lesson that I took from it was the importance of who “owns” change. Underneath the committee’s dissatisfaction was a sense that decision-makers thought they weren’t capable of understanding the design of their own incentive plan, or able to choose the best way to set the weights and payouts. Given the opportunity to show what they could do, they set the record straight. And they honorably took responsibility for the ups and downs that any production plan goes through.
This is how our local union came to realize a new role, helping our members manage change. For better than a decade the little Mill in Steelton reconstructed both its equipment and work practices with a degree of real employee participation that had never been possible before. There were a whole lot of other market and union factors that allowed Steelton to survive and prosper. But the fact that change was owned by the people who did the work meant that we avoided the resentment and fear that usually accompanies wrenching shifts like the ones we were contending with.
The corporate mentality that demands decision-making be hoarded by management has been injected with steroids in the world of global competition. As one labor relations manager at Steelton used to say, “What’s the use of being the boss if you can’t tell people what to do?” That attitude pervades all kinds of non-manufacturing organizations as well. I’ll leave this with two questions of my own. How smart is it to pay a human being with a brain and the full knowledge of the work to be done, and only use part of that talent and experience? Why shouldn’t workers enjoy the dignity and respect that comes with participating in and enjoying the success of an enterprise?
Copyright 2014, Ike Gittlen