Paul Holmes 04 Jan 1991 // 12:00AM GMT
Traditional analysis of the competitive position of American industry vis-à-vis its Japanese counmanagement, which might imply that American executives—so much better paid than the Japanese—should shoulder some of the blame.terpart has focused on differences of circumstance, emphasizing advantages inherent in rhw Japanese system rather than examining differences in
The first theory was that Japan was beating the U.S. because its labor costs were cheaper. When Japanese salaries (at least for junior level employees) achieved rough parity with those in the U.S., critics turned their attention to state-of-the-art technology and new factories. General Motors invested $68 billion trying to catch up and still lost market share, and so the focus shifted to the soft yen. Then the yen reached an all-time high, putting an end to cheap imports, and so recently Japan-bashers have concentrated on the cozy relationship between Japanese government and industry.
But while some continue to seek a scapegoat for America's loss of competitiveness, a growing number of companies—market leaders such as Ford, Xerox, Federal Express and Boeing among them—have started to look inward for the answer, examining their own processes, and particularly the involvement of employees in these processes, and finding shortcomings there.
A recent Fortune CEO poll indicated that many senior executives considered worker quality to be a major problem for U.S. industry. However, even among this elite group 64% felt that improving education was the most important challenge, while only seven per cent suggested improving incentives for workers and a mere six per cent were prepared to recognize the shortcomings of management. It is these six per cent who are finding new ways of motivating their people to produce better quality products and services.
The quality process involves every division of the organization, but the real driving force for change in many of the companies that have adopted successful quality programs has been the marketing department. After all, marketing executives are the ones who have to deal most immediately with the consequences of poor quality.
"There must be a hundred or more books on the market dealing with Japanese management," says Geoffrey Nightingale, president of Burson-Marsteller's SynerGenics division, a management consulting and organizational communications agency. "What most of them don't mention is that in the '50s and '60s Japanese products were synonymous with low quality. What we think of as Japanese they really borrowed from us, from American entrepreneurs like Henry Ford."
The way in which the quality concept was appropriated by the Japanese would make a book in itself, but somehow American companies lost sight of the one differential that made them market leaders, and quality gurus such as W Edwards Deming and Joseph Juran found themselves more in demand in Tokyo than they were in New York, or Chicago, or Detroit.
"The difference was, instead of looking at quality as an individual company issue, the Japanese looked at it as a national issue," Nightingale says. Over a period of 20 years the Japanese adapted the teachings of Deming and those who followed him, until positions were reversed and the Made in Japan label was synonymous with quality.
It was with all this in mind that Ford management invited W Edwards Deming back to this country in February of 1981. Deming's statistical analysis of quality control had achieved brief popularity in the United States in the '60s, but had never taken hold. In Japan, however, he had found more willing disciples, and there his teachings had flourished to the point where he was acknowledged as the father of the Japanese quality movement. Ford executives knew of his "statistical process control" system, and expected Deming to help them apply his teachings properly.
As Andrea Gabor reports in her book The Man Who Discovered Quality: "The Ford men couldn't have been further off the mark. While the guru touched on the importance of statistical theory... he didn't want to talk about cars or the reject rates on the production line. Instead, what he wanted to know about were the processes and people and how they were managed. He wanted to know about the executives sitting in the room and what they understood their responsibilities to be—to the company, to their employees, and to the customer."
Deming's theories on quality concentrate as much on human relations—with both employees and the customer—as they do on any kind of magic mathematical formula. He believed that the real victim of American mismanagement was not the consumer, who could always buy a Toyota car or a Sony stereo system, but the employee, whose livelihood was being jeopardized and who often found himself taking the blame for management mistakes. Deming enunciated fourteen points for improving quality. Some, including continuous improvement and the elimination of numerical quotas, have their basis in statistics, but others concentrate more on corporate culture and communications. He talks of driving out fear in the workplace, and of instituting leadership, which he defines as transforming the role of the manager and production supervisor from "cop to coach."
Says Gabor: "Deming believes that a mutual covenant is established between a company and its employees. just as the employee accepts the responsibility of performing a job to his or her best ability, the company has an obligation to make sure the individual is given meaningful work to do."
He further calls for the "empowerment" of employees, for management to encourage its workers to participate more actively in designing and improving the processes.
Of course, there is nothing tremendously radical about this belief—long espoused by leading public relations thinkers—except perhaps the fact that this time it seems to have achieved a level of acceptance among senior executives, because Deming has successfully shown the ability of his approach to make an impact on the bottom line.
As a corollary, the role of public relations in the quality process is enormous, Nightingale says. Indeed, without effective communication and listening. It's up to public relations people to champion their role."
To understand the role internal public relations can play in helping a company achieve its quality goals, it is important to understand the tools of internal communication, and the way in which they have evolved, along with its basic philosophy.
There is a new emphasis on face-to-face communications, for example. The concept of Management By Walking Around, popularized by Peters and Waterman in In Search of Excellence, has taken its place as the most efficient way of receiving feedback from employees. According to former International Public Relations Association president William Corbett: "Sometimes employees are just waiting for the boss to ask how things are going. Some will use the opportunity to unload and will give you an earful of valuable information."
Corbett also stresses some technological advances which can aid in the internal communications process, from video—which allows the CEO a rare opportunity to talk to employees without "watering down" of his message by newsletter editors or junior level managers—to electronic mail, and even satellite staff meetings.
Once companies understand the messages they need to communicate, and the importance of feedback from employee the increasingly sophisticated communications vehicles at their disposal can facilitate the entire process. It's little wonder, the that the larger public relations agencies expect internal communications to be major growth area of the '90s.
"I've had clients call me and ask if, can help them win the Malcolm Baldridge Award," says Robert Harris, senior vice president at Hill & Knowlton. "It's the wrong question of course. First you have to make the kind of changes in your organization that will make you the kind of company that wins the Malcolm Baldridge Award."
Many agencies are still called in too late in the process, however, after management has been through its quality training courses and decided on the messages it wishes to communicate. But experienced public relations professionals have more to contribute, including some communications thinking that challenges the accepted Deming wisdom.
Geoff Nightingale has some fundamental concerns about Deming's statisticallybased approach to quality: "To me its weakness is that it stresses continuous performance improvement based on statistics, a steady incremental approach that says you can get a little better every day. But that has problems at each end. It doesn't allow for a massive leap in performance quality at the start of the program, and it doesn't allow for a zero defects target."
If that sounds like a fairly academic quibble, a technical point, to some extent it is. Nightingale agrees with Deming's emphasis on the importance of quality, and would probably go along with most of his Fourteen Points. But on another level his criticism is important, because it points to a fundamental difference in communication and motivation.
"Your goals set the tone for the entire program," he says. "If my role as CEO is to improve a product or process operation, then continuous improvement makes sense, but if my role is to change the whole dynamic of the organization, then something else is needed. In some cases, continuous improvement serves to cement old ways of doing things in place, it reinforces the structure, by asking the structure to do more and more, when the answer may be a new structure."
The alternative, says Nightingale, is to get employees to commit to a goal that cannot be achieved, given the history of the company. The zero defects goal is still the most popular. Once that goal is set, he claims, the next question becomes how to achieve it, and at that point the whole process can be examined, with input from all team members.
"From a communications and motivation point of view," he says. "This approach has the advantage of setting a definite goal, and a time frame to which people can commit. It's easier to get people committed to a very simply stated objective, one they can see, than to simply getting a little better every day, and then getting a little better the next day, and then getting a little better the next day." Once the goal of zero defects is achieved, he says, a new goal can be set. The company can ask itself how else it defines quality—perhaps in terms of speed of service, or after-sales followup—and adopt a new goal.
Chicago-based GolinHarris is one of only a handful of public relations agencies to have developed a specialist practice area dedicated exclusively to Quality. The group's first assignment was for Dow Chemical, and is typical of the way professional communicators are playing a part in helping companies design and implement quality programs.
"They were looking toward 1995 and trying to decide what kind of company they should be, and they came to realize that quality was going to be a survival issue," says Golin's Charlene Barnard. "More than that, they recognized that communication was going to be a cornerstone of any quality program."
Dow was coming off several years of record growth, and to the outside world had the appearance of a highly successful corporation, wellplaced to meet the challenges of the '90s. But Dow was well aware of the increasing competition in the chemical business, particularly from the Japanese, many of whom had adopted the Deming process.
Dow decided that the starting point for any process aimed at changing the very nature of the company should start with research that established what employees' current feelings were. GolinHarris conducted exten sive research, including more than 30 focus groups, and found a level of employee cynicism: Dow, like most companies, had talked about quality in the past, but done little more than talk.
"What the company was trying to do was to create a fundamental change in the behavior of its employees," says Barnard. "If they were to achieve that, they had to change the whole culture of the company, and they had to make it clear that employees would be rewarded for quality-oriented behavior. For example, if you have a sales quota system the emphasis tends to be on quantity rather than quality. That had to change. There has to be more reward for after-sales service."
One company to make such a change is Xerox, one of the first to seek Deming's advice on his return to the United States. There, since 1989, management performance bonuses have been linked not just to sales and profits but to customer satisfaction. A Customer Satisfaction Measurement system was devised, with questionnaires sent to 40,000 customers worldwide every month.
If asked, of course, every corporation in America would claim to make quality a priority. Yet few have achieved the success of a Xerox, or a Cadillac, or a Federal Express. The key difference, according to Hill & Knowlton vp Bob Harris, is commitment.
"The amount of effort senior management is prepared to put in is the most important thing," he says. "If the CEO doesn't believe in quality, and if he doesn't understand that a quality orientation will mean changing some fundamentals of corporate culture and corporate behavior, a quality program doesn't stand a chance."
Geoff Nightingale of SynerGenics takes it a step further: "The most important factor is who owns the program. If the CEO or top management owns the program it will fail. It will be easy to cut when times get hard. But if the program has been communicated effectively, if everyone has a stake in it, if people have bought into the program at every level of the company, then they all have a stake in it, they all own the program, and that will make it very difficult to cut."
While some have emphasized the importance of motivating employees to do well, Frederick Smith, CEO of Federal Express, has a different point of view, one that indicates the much broader understanding of employee communications among senior executives today. He says he and his managers do not motivate anybody, but rather that their job as managers "is to provide a workplace in which the highly motivated people who come to us stay that way."
At Dow, Barnard says, senior management was sold on the process through a series of Deming seminars, at which the quality process, their part in it, and its importance to the company were explained to them. If the CEO is committed to quality, it usually is not difficult to convince his inner circle that quality is important, she adds. However, there can be a problem in the middle level of management.
"The chairman can have a vision of what he wants the company to be, but there's a level at which that vision can get road blocked," says Hill & Knowlton's Harris. "The problem is not at the very top, because the chairman can get the people around him fired up, and it's not at a junior level, because junior level people in almost any company will get excited with the idea that they are going to be empowered, that their jobs are going to be more stimulating, more rewarding.
"Unfortunately, there always seems to be a level at which someone believes that to empower the people who work directly under a manager you have to take the power away from that manager; there's always someone who feels their power is being diminished by giving employees more responsibility. The critical challenge is to convince the middle layer of management that encouraging employees to take responsibility for themselves, to have an input, is good for them too."
Harris further points out that a roadblock at that middle level can impede communication in both directions. The management vision might not be translated effectively to lower level workers, while the ideas and suggestions of employees might be considered threatening by mid-level managers, and not passed up the ladder.
The solution lies in rewarding openness, and ensuring that mid level managers are rewarded for the ideas that come from their team, even if those ideas seem to challenge their authority. The concept of team is perhaps the most important, and it is being put to work by companies throughout the country.
At General Mills in Lodi, for example, teams cover schedule and operate so efficiently that the factory runs with no managers present during the night shift; a team of Federal Express clerks is credited with having spotted and solved a problem that was costing the company $2 million a year; and at 3M cross-functional teams tripled the number of new products. "Typically, companies first go through a phase of awareness building," says Barnard. "The first thing is to talk to people in the company about why this kind of program is being introduced, and get them to buy in. The questions you have to answer are `What's in it for me?' and `If things aren't broke, why fix them?'"
During this first phase, the communication effort tends to be pervasive, including executive speeches, employee-directed video, and face-to-face meetings wherever possible. "It's very important to use all staff meetings to reinforce the focus on quality," she explains. "It should be the first thing on the agenda of every meeting in every department."
Nightingale suggests introducing a company newsletter devoted exclusively to quality, one that allows individuals from all divisions to have an input. One feature common to all successful publications of this kind, he says, is a section devoted to "Ideas That Work."
One mistake that many companies make is the attempt to come up with catchy slogans that seem to capture the spirit of improvement and that exhort employees to do better. Deming himself has insisted on the avoidance of such slogans, out of concern that they imply the onus for improving standards depends on the added effort of individual employees. "Such exhortations only create adversarial relationships," he says, "as the bulk of the causes of low quality belong to the system and thus lie beyond the power of the workforce."
"Another pitfall is jargon," Barnard says. "If you have a level of management that has been through quality seminars trying to talk to people who have not, it's very easy to get bogged down in statistics and patrol charts and statistical process control and plan-do-check-act cycles and that can be pretty alienating. The key is to simplify. A proven strategy is to develop communication materials which are actionable and speak directly to the questions employees have about the change process."
To explain the whole process, Barnard uses a mythical pizza delivery company as an example, asking workers to think about the steps involved in placing an order for pizza: answering the telephone; taking the order; creating the pizza dough; adding the toppings; baking the pizza; making up the bill; delivering the pizza. "Then we take each area and look at what quality means: what the effect on the process of an error in billing might be," she says.
"Then we challenge the group to think about every specific of the process and how it might be improved."
For Dow, Golin-Harris developed a package of eleven brochures, each addressing an aspect of the quality initiative as an employee might, asking "How will I be led?"; "What skills will I need?"; and "How do we track our progress?" A fin ther guidebook helped standardize practices at Dow's various sites and business units and unify the quality initiative.
"Once employees have bought in, you can find yourself facing an unexpected problem," Barnard warns. "If you're not careful they can get ahead of you. They may bombard you with ideas and even actions without all the tools to make the decisions or understand the processes involved."
Finally, the flow of ideas must be rewarded. Many companies that have successful quality programs find ways other than bonuses to acknowledge the participation of workers, ranging from mentions in the quality newsletter to incentives such as vacations to presentations by senior officers at glitzy award ceremonies.
If all of this is a little too "warm and fuzzy" for many traditional American managers—and most quality experts agree that there is always a minority who feel threatened—their attitude is going to have to change, because the quality process is already moving on.
"To be successful in business today, it is no longer enough to embrace change," says SynerGenics' Geoff Nightingale. "To be successful a company must embrace change. It must seek it out, it must lead change. American manufacturers are so busy congratulating themselves on having finally achieved quality they have failed to notice that their Japanese competitors have moved beyond quality to customized elegance. Change has passed them by."