Company “culture” was born in a factory. Since the industrial revolution, manufacturing companies have been exploring and re-inventing their culture. Time studies, quality circles, continuous improvement, Six Sigma, Lean and all of the other manufacturing best practices have always had a strong cultural component. Understanding the mindsets, behaviors, and ways of working – the culture – that produce the highest quality products, efficiently and reliably, has been the holy grail of manufacturing organizations from the beginning.
In addition, manufacturers are at the front lines of the macro economic trends that impact our world. They are the first to feel the brunt of commodity price changes, tariffs and trade agreements, overseas competition, and the global war for talent. They need to be some of the most flexible and adaptive organizations; however the truth is they can easily get stuck in old ways of doing things and mindsets that limit creativity and change. Deeply ingrained ways of doing things that have worked in the past can be one of the biggest hurdles to staying competitive in this industry.
“Leaders have to constantly reflect on culture,” explains Ed Magee, EVP Operations at Fender Musical Instruments and former general manager of the Harley-Davidson York plant. “They need to take time to step back from the day to day and think about it. Leaders unplugging to contemplate employee development and culture, and specifically what needs to change, is what’s missing, especially in manufacturing.”
The question is, why is this important?
While the global pandemic has clearly required companies in all industries to re-evaluate how they think about and do their work, manufacturing companies face unique challenges that lead to the need to re-evaluate their ways of thinking and working.
New Workforce Values
One of our manufacturing clients, a family-owned vegetable company, is finding it increasingly difficult to recruit the talent that it needs for the pack season. The younger seasonal workers don't want to put in the extreme hours that are needed over the summer months to pack the vegetables. The pride that the longer-tenured workers feel by “doing whatever it takes” is not shared by the younger generation, which has a significantly higher expectation for work-life balance, even during the intense pack season.
The management style needed to lead the next generation of manufacturing workers is shifting. At Fender, for example, employees are talked about as “value-adders.” Automation is not structured to replace people, explains Magee, but to make the systems more efficient so people can focus on the work that adds the most value. That work is their craft. That is a far cry from some more traditional plant environments where people can feel overworked and underappreciated.
The bottom line: If the management style and culture don’t evolve along with the workforce’s values and expectations, manufacturing organizations will not be able to staff their factories in the future.
In Roger Martin’s influential book, The Opposable Mind, he espouses the benefits of being able to hold two opposing ideas in your mind at the same time and then use that tension to generate solutions superior to solving either one of the challenges independently. What does this “both/and” thinking mean for manufacturing?
Manufacturers increasingly face a variety of challenges that cause this kind of tension in a very real and physical way – produce more, but spend less; be efficient and reliable, but also flexible to run new product testing; think global but act local. Operations leaders are bombarded with these seemingly contradictory demands and that can cause divides between the plants and other parts of the business, especially corporate.
These tensions, when not addressed effectively, can create an “us vs. them” mentality. As Rick Dauch, former CEO of Delphi Technologies, says, “It is important for management to understand the workforce is not your enemy; it is your partner.”
Plant managers and supervisors increasingly have to build the skills needed to deal with the paradoxical challenges inherent in the manufacturing system. Magee shared that at Fender, the CEO’s motto is: “We need to grow and develop our people at the same rate as the business.”
The Global Supply Chain
In the “old days,” a general manager’s main concern was to ensure the plant was performing at peak efficiency and profitability. Companies used leader boards and friendly competition to motivate higher performance across plants. While that still works to some extent today, plants are now typically part of a much bigger global supply chain, which makes life more complicated.
The actions taken by each plant are in service of the larger enterprise and not just the plant itself. A plant is no longer an island. Fortunately, most companies are starting to realize this and are doing things differently.
A heavy manufacturing company in the road construction industry comprises 20 smaller businesses that they acquired over time. Their strategy had been to let them run independently with light support from the parent company, and they were very successful. A few years ago, they took a first step to thinking more broadly and brought the presidents of the 20 companies together for a weeklong strategy session to share their best practices and the future direction of the enterprise. More recently, the CEO has gone further and overturned the historic value placed on decentralization and is continuing to integrate the system even more, because that is what the market and customers are demanding.
Plant managers and employees seeing themselves as part of a greater whole, and making decisions accordingly, is a cultural shift. And many companies have underestimated this shift in terms of the impact it has on the workforce. Often plant employees have a lot of pride in their plant. When you start asking them to do things differently for the “good of the whole,” that can bring about a unique change-management challenge.
COVID aside, it is critical to re-evaluate the company culture in manufacturing broadly across the sector because of the unique challenges it faces. New values in the workforce, inherent paradoxes in the system and a contextual shift to a global integrated supply chain require different ways of thinking and operating in manufacturing.
This is not about “fixing” manufacturing. This is about continuing to unleash the human potential and value inherent in the manufacturing industry. It all starts with recognizing these challenges and having the courage to look and see the kinds of shifts in mindsets, behaviors, and ways of working that companies need to be successful.
The next two articles in this series focus on how to kickstart a culture change and lessons learned from our CEO clients on how to successfully change the culture and make it stick.
Carolyn Hendrickson, Ph.D. is CEO and founding partner of Tandem Group, a firm that specializes in strategy, organization, and leadership. She has over 30 years of experience in working with senior executives and their boards to achieve and sustain breakthrough results in their businesses through accelerated growth and change. Her primary areas of expertise are in strategic planning, senior leadership team alignment, and cultural transformation.