Maria had a worried look as she said goodbye and thanked those members of Team One for their report, assuring them that she would soon advise them of her decisions. Telling her assistant to hold all calls for the next hour, Maria reread the report and reflected on why, as Executive Director Production, she had championed with the Executive Leadership Group (ELG) for her division of Nord Engineering Services (NES) to adopt self-managed teams (SMT), the implementation process and the outcomes. Maria recalled her ELG presentation just over two years ago. At the time, manufacturers in Australia had fallen from 96 000 10 years previously to just under 84 000. Though manufacturing employed around one million people in Australia, making it the sixth-largest employer by industry, and accounted for about 8 per cent of all employment, only 45 per cent of Australian manufacturers were innovating and there were warnings that if companies didn’t transform they’d further decline and face potential extinction. NES, headquartered in Western Australia, generated around \($1.75\) billion annual revenue with its 1200 employees making parts and machinery for industries including mining, construction, defence and, more recently, aerospace. It had to make some changes to its way of operating if it was to survive and thrive.  Maria had said that SMT were a way to work smarter and increase innovation, which required creating an environment open to change and focused on continuous improvement. Maria remembered that her concluding comments were that moving to SMT would enable NES to improve its production efficiency, restore its competitive edge, and reduce its lead times and costs. The move would also have the benefit of improving employees’ working life as SMT offered choice and opportunities that enhanced motivation and job satisfaction and would better deal with the impact of COVID-19. After some lengthy discussion, where Maria sometimes had to be quite persuasive, especially with a couple of ELG representatives who wouldn’t support SMT implementation until it was proven that it worked, the ELG finally agreed to a two-year pilot in Production. Maria recalled how enthused she was by the opportunities of SMT and how pleased she felt to be able to put into practice some of her last six months’ research. She had already decided to start with the aerospace department with its newer technologies, processes and, most importantly, people. Having built a relationship with Juan, the manager, Maria had called him to give him the news and he was keen to be involved. At their meeting to design the work system, they had both envisaged a simplified organisational hierarchy of teams taking responsibility for work production and monitoring, with authority to evaluate their own performance and adjust the ways in which the tasks were carried out in response to changing conditions. This approach, they believed, would provide employees with a high level of work satisfaction, build commitment, and inspire them to continuously improve processes to increase productivity and product reliability. Though Maria and Juan would have liked to hire in people who had the characteristics required for SMT, they recognised that timeline and budget restrictions meant they had to move with momentum and use the existing workforce’s natural groups, based on functional boundaries. They had agreed that they would run some training on the new skills required for SMT such as communication, collaboration, problem solving, conflict management and decision making. The teams would determine their own team leaders and how they would handle the four Ms: materials, machines, manpower and methods. Juan would act as mentor to the team leaders and Maria would hold quarterly meetings with all teams. It had all started out so encouragingly. At the first meeting of the aerospace department, most of the employees were keen to engage and even the dissenters agreed to give it a go. Over the following six months, teams set themselves up and came to understand they were being differently managed. Enthusiasm for the change was high with different team members reporting their positive progress at the first two quarterly meetings, which had been held in hybrid form due to COVID-19. The next six months had not gone as well. Teams reported ambiguities in the new approach and there was increased frustration and confusion, with poorly defined objectives and lack of clarity about the intersection of different teams. Some teams reported a reduction in creativity and initiative brought about by rigid team attitudes towards tasks. It became obvious that the initial training was inadequate and the demand for more training increased. There had been some slippage in output and on two occasions production flow had been impacted; both instances were identified as assembler unreliability caused by rotating undertrained team members through the process. In the first half of the second year, things improved as teams developed their own identities and became more effective at managing. The extra training in problemsolving tasks, tools and techniques helped with solutions in skin-stringer riveting, fuselage joining and interiors assembly. NES was able to raise daily and weekly targets and output had increased by 3 per cent since the start of the pilot program, with error frequency rates dropping by 6 per cent. From mid-year, though, there were more instances of communication issues with teams pushing performance, covering up for underperforming members, and competing with other teams so as to meet the targets. As the report noted, teams felt they were continually being told by their teammates to improve production levels, which were uneven across the department, and for some this caused stress and fatigue. Teams were judged collectively but pay rates were still individualised, so process loss caused by free riders had a big impact on morale. Scrutiny of team performance intensified and was regulated by teammates who disciplined, and sometimes bullied, where expectations weren’t being met. Maria knew she had to present the report to ELG but was concerned that some ELG members would say the pilot was not working and the concept should be abandoned. Maria knew that it was too early to declare SMT a failure and if it was cut short all of Production’s hard work would be lost. Also, there was a real danger that NES would see this as just another example of a management fad, and the frustration with ineffective change initiatives would increase and productivity and reputation would suffer. Maria thought about how she would frame the pilot outcomes and the recommendations she would make about support systems, training, boundaries, incentives and pay scales. She thought she would structure them around the original four Ms and add in measurement and money. She hoped that the ELG would allow the Production teams to mature and actually become self-managed teams, and that this could ultimately spread through all of NES.
Questions
Mainstream
1. What are some benefits for NES in creating self-managed teams?
2. Why did the self-managed teams have some difficulties in functioning effectively?
Critical
1. How was concertive control used at NES?
2. What examples of work intensification happened at NES?