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Synopsis: Communication For Productivity
Letters written to some 7500 Workers / Managers /
Union Leaders, following a period of strike / Go slow / Murders (1979 -
1987), at Mumbai factory of Larsen & Toubro Ltd. This direct / open /
honest communication led to a remarkable atmosphere of trust between
Workers and Management, which, in turn, increased productivity at 3% per year
(ave).
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16 Aug. 1986
To:
Dear Manager
TALE NO. 1
A TALE
OF TWO MANAGERS
What
kind of managers are proving successful these days in America ?
One such
manager is Rene Mcpherson -
Chairman of Dana Corporation - who
retired in 1979, after spending 12 years as Dana's
top executive.
During this
period,
- Dana's sales went up by 500 %.
- Earning per share went up by 15% every year.
- Productivity doubled (after adjusting for
inflation).
And how did
Rene manage this ?
By some beliefs
and some actions.
Let us look
at his ACTIONS first :
- Abolished time-clocks.
- Encouraged employees to establish
their own production-goals.
- Set-up a
"Stock participation plan" (similar to our own Employee Convertible
Debenture plan).
- Asked managers
to meet employees in person rather than sending memos.
- Established
"Dana University"
- an ambitious in-house training programme for those who wished
to move up.
- Introduced SCANLON PLAN in
which both workers
and management receive—substantial bonuses
if they
come-up with ways to increase production without
raising payroll costs.
- Shared information with the workers about plant profits (for which
he sometimes got into trouble
with this bosses ! ).
Now let us
look at his BELIEFS - in his own words :
- "It is not that
I am against tradition. I just
don't think tradition
works well if you have got
problems. If everything is great,
tradition is super".
- "If you
don't have the foot-soldier
with you, you are not going to
win the damned battle".
- "Just because these people (workers)don't have a necktie and a white
shirt, it does not mean they are
not bright - because they are brighter than hell!".
- (About SCANLON - PLAN)
"I
pushed and I sold and I wheedled and I
connived and I black- mailed, but I
would not tell somebody,
You, by God,
are going to do it! That is no
way to do anything. Then you have
not sold it on it's merits, and
you know it is not going to work".
(He
never imposed the plan, but
scrupulously observed the
requirement that 70% of a plant's work-force had to approve it).
A consultant
had this to say about Mcpherson,
SOURCE: FORTUNE - APRIL 14, 1986
TALE NO. 2
Do you
remember the sign of "ESSO" on our petrol-pumps many years ago? In
India, ESSO company was
taken over by our government. But in
America it continues under a new
name -EXXON.
I am
not sure, but it is perhaps the biggest
company in the whole world. During
last 12 months, it's sales was
$ 88 billion (to convert into
rupees that would mean Rs. 105600
crores). And it
made a net profit of $ 4.9 billion - about 5.6% of sales.
But EXXON's president Rawl is a
worried man these
days because, compared to
last year this year's sales has
come down by 4% and the net profit has come
down by 12% !
So what does
he do ?
- Cut down
capital expenditure from $
11 billion to $ 8 billion.
- Combine six subsidiary companies into one.
- Cut down layers of middle managers.
" I am bottom-line oriented.
I look at the revenues, and then I look at
everything that comes in between.
When I find something that looks a little bit soft, I take a
hard look. When the good times are rolling, you can ignore some of that stuff.
But when times get difficult,
you have got to do something.
In fact you
should do it anyway. That's
management. That's what shareholders pay us for. prospect of shaking-up people does not rattle
me".
And these words
are shaking EXXON's 145000
employees all over the world into
working harder and longer.
SOURCE:
FORTUNE - APRIL 14, 1986
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