Readings Corporate Fantasies B&B Chapter
| B&B Specialties Chapter |
 |
 |
 |
|
B & B Specialties: Increased Profits by Investing in Human Resources and Team Strategic Planning
B & B Specialties, Inc. (“B & B”) was founded in 1971 by the Borchardt family, and since its inception has remained a privately held family business. The current President is the son of the original founder and has worked consistently in the Company since age 15. B & B is a manufacturer of socket head cap screws and special fasteners. The ability to manufacture these ‘specials’ was a key aspect of the Company’s foundation and thus became part of the name. B & B has specialized in sockets and historically has sold primarily to distributors of aerospace and military organizations, fastener manufacturers and some limited sales to OEM customers. B & B distinguishes itself by stocking the most comprehensive inventory of MS/NAS socket screws in the industry. B & B is the number two manufacturer of MS/NAS socket screws and also manufactures products over a broader size range than all but one of its competitors. Initially, B & B was a commercial manufacturer with its emphasis on volume. Unable to compete on price with imports, B & B was able to transition from the commercial socket screw business to the aerospace socket screw business. During the past eight to nine years, B & B has developed its three competitive strengths: an outstanding reputation for quality, the largest MS/NAS socket screw inventory in the industry and service unequaled by competitors. Interviews with customers of B & B confirmed they perceive the quality of service and the quality of the product line to be excellent and the large stock on hand to be reason for purchasing from B & B. Standard stock products are usually shipped the same day as ordered or no later than 24 hours after the order. Over the past five years, B & B has consistently grown 20% annually or 103% in four years. Reasons B & B Embarked on a Company-wide Training Program B & B is clearly a company with a successful track record, but ensuring future success in an increasingly competitive market was a critical reason behind the decision to go forward. President Bruce Borchardt says, “We want to be able to expand and grow profitably. I felt we were doing well as a Company but I wanted to make it better. So we brought in outsiders to assess us, help us determine what wasn’t working and enable us to fix it. We had some training a while back and I attribute a lot of our success to that, so I wanted to continue with on-going training.” Erin Houghton, Human Resource Manager, added, “When we did strategic and tactical planning, we (the management team) saw we needed to change our culture from one where there was a total lack of trust to one with mutual trust and communication between employees and managers. We crafted a plan to grow the company so we could be more efficient and productive, and we knew we needed an empowered and proactive workforce.” “Basically, we needed to get our people involved—they were not involved,” explains Tom Rutan, Operations/Manufacturing Manager. “We needed to change. They needed to change. We all needed to learn about things that applied to both people and machines.” Dick Smernoff, Quality/Reliability Manager, summarized, “It was essential to build a team. One way to build a team is through education.” Kerry Johnson, Manager of Sales and Marketing, agreed, “We needed to do this to continue our success.” II. Challenges Business Remain competitive Culture Transformation Resistance to change One of the biggest challenges is the attitude of management and employees, and motivating people to change is often difficult. Getting them to be willing to try something new and to approach it with a positive attitude in order to prove the effectiveness of the modifications takes a lot of expertise on the part of the presenter. Circumventing the attitudes of some employees from sabotaging the whole group requires resourcefulness. Emphasizing the personal benefit to be gained was necessary in order to get cooperation, and then keeping the momentum takes continued reinforcement through recognition and support. Trust Gaining the confidence of management was essential Training management in the importance of keeping their word and of being consistent Initially, trust of the management was very low because of frequent management turnover and resulting changes of management style, which ranged from very inaccessible to a “dictator” type. Employees were suspicious and didn’t really believe what the managers said. Employees wondered if management would really follow through with the training once it was introduced. Set-up Times The Company had been setting up the equipment for years following the same procedures. Initially, the operators did not believe it could be improved upon. Reward System Developing a good and equitable reward system that would be received positively by all was a struggle. Developing a system that assures individual/group success as well as company-wide success without one department exploiting another was essential. Experienced Supervision Many of the leads and supervisors were inexperienced and their initial training was necessary before going to the employees. The new responsibilities of the supervisors created from the tactical planning were a significant stretch from what they had been doing.
The communication between management and employees was very poor and had to be restored. III. Approaches Taken Once the President decided to invest in the continued growth of B & B, he interviewed several outside consulting/training firms to see which group would best serve the needs of his organization. National Summit Group (“NSG”) of Newport Beach was selected and aided B & B in completing the application for State-funded training reimbursement through the State of California. Prior to the start of every training, a complete assessment is done by NSG, which includes analysis of the culture, management team, organizational dynamics, operations, quality and sales & marketing. The assessment report includes a triage plan; i.e., the critical issues found and recommendations for resolution of those issues. Next, the management team met with NSG for a strategic planning session. During this planning session, the executive team agreed on the B & B Vision: what they wanted to be in three to five years. They also created their Mission Statement. The Mission Statement consisted of who their customers/markets would be; what their products would be; how they would produce them, what was the distinction between B & B and their competitors; and why they were in business. They formulated the B & B Values and defined them by a consensus decision. The Values serve as the driving force of how the Company is going to operate, a reference for decisions and behaviors for the Company and as the foundation for management and employees alike. A tactical planning session followed in order to provide a detailed outline of how to implement the strategic plan; B & B wanted to make sure they did this, since many companies establish a strategic plan but never implement it. The deliverables of the tactical plan were the critical business success factors, their metrics and the projects to be implemented to achieve the vision. Parallel with the strategic and tactical planning phases, management and the consultants developed a success-sharing program to include all employees in the Company. The Company had to be successful for everybody to share in the program, and a fixed percentage was established so that 25 cents of every dollar saved was given back to the employees in the way of incentive. However, individual departments could share even more, depending on opportunities and the targets they had established. This incentive program was announced at the same time that the Vision, Mission and Values were announced and it was overwhelmingly well-received. The management team presented the Vision, Mission Statement and Values to all employees in a videotaped presentation. The videotape is now used for all new hires to educate them on what drives the Company. Finally, a year long, Company-wide training program was launched. The program had separate curriculums: one for managers and supervisors and one for all other employees. All participants were involved in classroom training as well as lab sessions to practice the skills taught in class. The beginning training focused on soft skills such as accountability, personal effectiveness, competent communication, team-building, effective meetings, management training and leadership. The hard skills, such as process mapping, cycle time reduction, set-up time reduction and statistical process control followed the soft skill training. The projects addressed by the teams were identified in the tactical planning. The program was structured in this way in order to create a culture transformation and a different mind-set to open up people’s thinking so they would be able to capitalize on subsequent training. “Initially, we started with all of the soft skills and a lot of people couldn’t see what was behind that training because they couldn’t see immediate results from it. But then we did the set-up time reduction training afterward and it all came together,” explained President Bruce Borchardt. “If we had done some of the hard skills at the beginning, it certainly wouldn’t have been as effective. We achieved the results because of the sequence of the training. Then we took what we did and built on top of that to establish processes and procedures and tie it into our ISO certification.” As part of the set-up reduction-training program, Tom Rutan of the executive management team came up with the idea of structuring a program, taking the training material and all of the soft skill material and converting it into a hands-on challenge for the employees. They all participated and the results were very exciting! During the training sessions, the teams worked on their projects. For example, there were eight teams. The team leaders were selected from the operators. The team leaders received a list of all of the employees in the Company and then they were allowed to pick team members in a draft system, much the same way as professional sports players are drafted. Executive management participated as advisors or consultants and all the employees were involved. The teams had three goals: - set-up time to be reduced by 70% The teams had six weeks to complete their projects with these goals in mind. The team leaders had to set up the schedule for the project and submit a plan for review and the whole team had to make a presentation to the rest of the Company at the completion of the project. They also had to videotape the initial set-up and then videotape the results of their efforts in order to document the changes. An incentive was created so they would receive compensation for “Quick Kills,” which were usable ideas or short-term successes. Each team was compensated based on their success. The team members were allowed to vote on how much of the incentive each member of the team would receive—from $100 to $700—depending upon their participation and effort. The teams were given a set amount of money for a 70% reduction, and proportionately more would be given if they exceeded the 70% and reduced proportionately if they went below the 70%. Employment of the Vision, Mission and Values “This is best explained by the adherence to our vision, mission and values. Our values of honesty, trust, integrity, accountability, communication, innovation, change, results orientation, respect for the individual, teamwork and commitment have been very meaningful; they certainly have created our foundation,” stated Bruce Borchardt. “I‘ve noticed many people referring to our values because it helps them make better decisions by knowing where we come from and what we stand for. The management team was totally committed to applying what we learned in class. We want to be open to change and hold ourselves accountable as well as every Company employee; I know we have to invest in people and be responsive to our employees and customers alike.” The B & B Mission Statement reflects the core principles that the Company believes in: We are dedicated to understanding and meeting the needs and expectations of our customers IV. Performance Results Achieved Improved Profits “The bottom line result is our profitability. Profit margins increased 20% while sales remained level. It is still good despite all the time we spent in training; we are still better than last year.” said Bruce Borchardt, President. “It was one of the most profitable years we have had even though we invested time and resources in the program,” said Dick Smernoff, Quality and Reliability Manager. Improved Operations Production levels are up 25% in heading department and production records set in threadroll with 20% less manpower. Improved Quality Reduced the staff in Quality by 25% and increased our efficiency 200%. We got the people in the Quality Dept. involved and let them decide what they wanted and what they needed and then backed them 100%. We allowed the team to cross-train themselves, which allowed the individuals to move to the bottlenecks, remove them and produced increased efficiency. The staff who was reduced through the increased quality was deployed elsewhere. Turnaround time in Quality is less than 24 hours. Converted the Company into an aerospace manufacturing quality system. Gained FQA approval and certification of the Quality Lab. Accredited for QMLS - Quality Manufacturers List. We are in the final ISO audit and are doing the final corrective actions and expect to have ISO accreditation by first quarter, 1999. We are finalizing plans for a state-of-the-art metallurgical and physical testing lab that is slated to be finished at the end of the first quarter with accreditation by the end of the third quarter, 1999 Dick Smernoff, Quality and Reliability Manager. V. Cultural Shifts and Improvements Improved Teamwork and Communication “Our communication is more open and effective now between management and employees and there is better interaction with my team—a much more open approach than before.” Bruce Borchardt “We used all of our communication, team building and accountability skills on the set-up reduction teams. I don’t think we could have broken down barriers that existed between the front office, sales and the manufacturing floor without the training to use the skills. It improved our overall teamwork.” Erin Houghton “People are listening more and asking more questions.” Tom Rutan “The training has given the management a nice surprise: seeing the teams come together, work out joint problems and take responsibility without management intervention. Also, communication has improved tremendously. This kind of thing was unheard of before we started the training.” Dick Smernoff “The project broke down some barriers between departments. My sales people came back saying how they really enjoyed it. It was a good opportunity for people on the floor to meet the office people and see they are not just the people “up front”. The climate in the Company has changed for the better—it’s entirely different than what it was a year ago.” Kerry Johnson Increased Employee Involvement, Responsibility and Proactivity “One of the biggest positives was seeing the employees get involved and discover for themselves things they thought were impossible…were possible. They did it! The biggest benefit is that now people know they are capable of doing great jobs. People got to see what they and others are capable of when they truly get involved.” Tom Rutan “We have created improved morale, improved competitiveness, improved ideas; the culture has changed and is continuing to change. The teams gave us lots of great ideas that we’re implementing. The success we had with the small teams just needs to be applied to the big team.” Bruce Borchardt “Actually being part of the creativity was a great reward! Previously, managers used to have to be the creativity and then pass it on to the employees— but that left us without any buy-in. Being part of it instead of being told it - made worlds of difference. Another big reward was the decisions that we on the teams had to step up and make. We had to be able to live or die with our own decisions because we were going to do what we decided. That is really key: making decisions ourselves and having to act upon them without needing to wait for approval or some management meeting. It was great.” Randy Garner, Maintenance Supervisor “I think everybody saw so many positive results because we all were involved and participated in the team exercise. We exceeded targets! Now there are no doubts: if we have an open mind and are willing to challenge our ways of thinking, great results happen! The employees really made a substantial difference. They realize that now, and many of them are proud of what they have done.” Kerry Johnson “People stepped up and become more than they were and are continuing to take responsibility. I found this program to be extremely beneficial, because when the employees do that, it makes my life so much easier and I can do the things that I’m supposed to do.” Tom Rutan Eight Teams That Exceeded Expectations: 72 to 84% Reduction in Set-up Time Quality Supervisor, Larry Steele, describes what it was like for him. “The management wanted us to be more vocal, participate more, take more group action. So Tom and Dick came up with this set-up reduction team idea as a means to make this happen. Operators were the team leaders so they were forced to use the skills they had learned in class. Managers were not allowed to take over or take charge. We established a charter that was our agreement between the teams and management. It established our shared responsibilities, what each of us would commit to. Then we followed an outline we learned in class. We evaluated our films, determined internal and external inputs. We established Quick Kills and ongoing action items. At the end, we prepared our presentation and had a practice session so that we could determine who would do what. We prepared a written presentation “How we got there” with graphics and hands-on things people could touch. We also wrote set-up instructions and work instructions for the operators to use. Our set-up time went from 2 hours, 31 minutes to 28 minutes, 19 seconds. An 84% reduction! It was great! People that normally wouldn’t participate—actually did it.” “I was surprised at how much people bought into the success of the set-up reductions and how enthusiastic they were. They took personal pride in it. I sat there listening to their presentations and was amazed at the transformation in people. It was really incredible to see; it was truly wonderful!” Kerry Johnson - Sales & Marketing “It was great to see how people grew. At first, the team leaders didn’t want to take charge but by the end they were telling us what to do.” Randy Garner - Maintenance Supervisor Many people didn’t think that what we did was possible— but we did it! Our set-up time had been one hour and we took it down to seven minutes. We have since broken that seven-minute barrier. The training was really a benefit for me; there was a lot of information and I didn’t get it all, but what I did get was very beneficial.” Jose Cruz, Threadroll Operator VI. Learning Points Synergism Team work; i. e., working together made it all come together. Individuals from different departments shared common goals and all participated in the projects; hence, achieved more than they could have as individuals. Confidence and Self-esteem This program has been very positive for all who participated. People could see how their ideas and behaviors provided value to their Company’s objectives. “People had a lot of pride in what they were doing; they took charge and made things happen. It was great to see.” Erin Houghton Improved teamwork, interaction and communication. Organizations and individuals shared information, worked together in identifying problems and issues and developed resolution. Empowerment Everyone was given the opportunity to succeed and they received support in their efforts, achieving incredible results. Management gave them expectations, guidelines, authority, resources and skills and then got out of their way. Enthusiasm There was great momentum, team spirit and cooperation and tremendous ideas. Individuals who were typically quiet became vocal on their teams. Everyone had a new level of excitement. Success-Sharing Program High expectations and support proved to be a major factor in the team’s accomplishments. The success-sharing program had a direct influence on the attitudes and behavior of the Company and the values of the Company. It has direct influence on the people’s decisions and behaviors. Leadership Demonstrated B & B’s results are directly related to Bruce Borchardt and his staff’s commitment to the Company’s Vision, Mission, and Values statements. “B & B approached the process very methodically. First, the business assessment, strategic planning, then tactical planning to implement the strategic plan, followed by the development of a profit-sharing program. Finally, launch of the soft and hard skills with emphasis on implementation. They did it right!” Jack Hradesky, CEO of NSG.
|