Running Head: NUMMI Case Study
Running Head: NUMMI Case Study
NUMMI Case Study
Katie Gleason
HRD501: Organizational Theory & Behavior
The joint venture between GM and Toyota, called New United Motor Manufacturing, Inc. (NUMMI) began officially in 1984. This venture was the result of poor performance from the GM Fremont manufacturing plant and Toyota’s wish to learn more about building cars in the United States and dealing with U.S. suppliers. After much negotiation, GM contributed its Fremont plant and Toyota contributed the capital and the way of life (Adler, 1993).
By creating this new company (initially for the purposes of creating the “new” Chevy Nova) GM and Toyota created a whole new corporate culture in American car manufacturing. They took a plant that had closed due to poor performance and completely turned it around. The employees of NUMMI, most of which were the old employees from the Fremont plant, now had a place of work in which they could take pride and feel as though they truly contributed. This new attitude was due to the freedom and respect given to the employees from the beginning of the venture. The employees were treated from the start as adult individuals with ideas and experiences, which in turn lead to more satisfied and productive workers (Adler, 1993).
The new company culture at NUMMI included an environment where worker ideas were welcomed and more often than not, listened to. Employees did not feel as though a suggestion or complaint would be cause for termination because of the no-layoff clause in the Collective Bargaining Agreement with the United Auto Workers (UAW) (Adler, 1993, p. 102). This increased level of job security for employees allowed them the freedom to say what they needed to. The respect they received allowed them to behave as adults when they spoke out and offered ideas.
Employee’s ideas were requested to help maintain the production system. The management philosophy was, from the start, more of a guidance philosophy. Although the work on the production system was standardized, employees were developing and maintaining the methods. Engineers were no longer standing above them telling them what they should be able to accomplish. Employees were taught the additional knowledge necessary to monitor and make changes to the production system to keep it optimal, which in turn granted the employees a sense of power (Adler, 1993, p. 103). By empowering the employees to make changes to a system they use constantly, the workplace became a more effective place to work.
NUMMI began the venture by hiring most of the GM Fremont employees who had been laid off. The selection process was fairly standard, including interviews and pre-employment testing with their applications (Adler, 1993, p. 99). Keeping the application process standard, as well as the testing and simulations that were required, was a benefit to the selection process as it creates a level playing field for all possible employees. It creates an environment where all are equal and so the final hiring decision is based on actual qualifications. Using both managers and union officials to choose employees creates a level of trust and a feeling of openness from the start. Teamwork is emphasized and enforced from the top down.
Following up the selection process with an excellent socialization process is essential to the success of any organization. Employees entering a new work environment tend to be anxious about what awaits (Kanouse, 1980, p. 36). All employees have an adjustment period as they are learning the new company, and according to Chao et al. (1994), “Organizational socialization plays a central role in the adjustment and learning process of employees” (p. 730). By providing a solid socialization process, the organization provides the first stepping stone for success and helps reduce anxiety about new responsibilities. Chao et al. (1994) continue to state:
Although job performance is also related to issues not directly tied to organizational socialization (e.g., training programs, previous experience, education, etc.), the identification of what needs to be learned and how well an individual masters the required knowledge, skills and abilities can be directly influenced by the socialization process. (p.731)
Welcoming each employee individually during this socialization process helps employees realize they are viewed as individuals instead of numbers. This is important to the people on a psychological level, as Roethlisberger (1941) states:
Whether or not a person is going to give his services whole-heartedly to a group depends, in good part, on the way he feels about his job, his fellow workers, and supervisors – the meaning for him of what is happening around him. (p. 143)
Employees need to know that their opinions count. Beginning the socialization process by personalizing everyone creates the impression in the employees’ mind that they are important.
NUMMI management made a difficult choice when hiring the old GM-Fremont employees. Some would argue against hiring former employees based on the statistics that came from GM-Fremont. However, Adler (1993) states that “GM was afraid of a union backlash at other plants if it tried to set up the joint venture as a nonunion shop” (p. 99). While fear of consequences should not be what a decision is based on, it was good business to consider the morale of the other shops. Another salient point to consider is that by hiring the workers who had been laid off, the work pool has experience being unemployed. This experience would provide incentive to perform better, as most of those people would not want to experience the same situation again.
Initially I would not have suggested hiring the old employees – this is a gut reaction not based on facts or any substantial research. Delving deeper into the case, and also into the ideas of Roethlisberger (1941), Chao (1994), and Maslow (1943), hiring the former GM-Fremont employees, including the union hierarchy, is actually a very smart business decision. Roethlisberger (1941) found that employees essentially want to be listened to (p. 144). This will make them happier. Chao (1994) found people who are better socialized are more satisfied and involved with their careers, in addition to being more adaptable and having a better sense of personal identity (p. 741). Maslow (1943) found that individuals have basic needs which must be met, starting with physiological needs (p. 149). These physiological needs can only be met if there is the ability to provide for them, which the job at NUMMI begins to be able to do. Maslow (1943) also recognizes the esteem needs (p. 151) which state that people need to be recognized and held with respect. By providing the employees with respect and treating them as equals, NUMMI management meets another of Maslow’s basic needs. By meeting these needs and providing the old employees with the tools and incentives to be better workers, the organization created a better workforce than it would have been able to hire new.
A benefit of having the old GM-Fremont workers at NUMMI is their experience with the way things used to be. At GM-Fremont, the factory was arranged on a more traditional Taylorist method. Engineers evaluated and created methods which the managers were supposed to enforce and the employees were supposed to follow. This method did not work well. When NUMMI opened its doors, it approached Taylor’s views from a different angle. The management teams at NUMMI took Taylor’s basic principles and humanized them (Adler, 1993).
It was recognized that there is one best way for accomplishing a task – the NUMMI spin on this is to let the employee who has to accomplish the task design the best way to accomplish it. Providing the employees with the education to design the task is only a small step in the new process. Allowing the workers to develop the best procedures empowers the employee and gets them more involved in the job. They become more willing to do what they need to because they have determined that they are accomplishing the task in the best way possible. With every team member involved in the design process, every person becomes more committed to the end result.
The employees already went through a rigid application process to become part of the team and are given the education to be able to match well with the job at hand. Cross-training all employees allows for better job matches to be made when necessary, as well. The team environment of NUMMI promotes cooperation. Including management levels on teams ensures that there is a voice from management as well as the extra experience level available when necessary. Because the traditional power structure has been abolished at NUMMI, management is already working closely with the employees – this ensures management’s input on the task design as well as a fair share of task work.
The “Taylorist” principles are applied every place they can be in the NUMMI plant, and applied effectively. Allowing the employee input is crucial to the success and does not countermand the Taylorist approach because of the training the employees receive. The employee essentially becomes the engineer sitting in the little observation room, only he’s on the floor and able to make logical, sound decisions based on experience and knowledge.
This interpretation of Taylor’s principles can be used in other organizations if they use NUMMI as a model. The key to NUMMI’s success is the respect and trust given to the employees. To try to implement this version of Taylorism without giving the employees the respect and trust they deserve would be setting an organization up for failure.
The employees are in an admittedly bureaucratic structure. They have management levels and are in a union environment. The type of work they do, basic assembly line work, requires standard procedures to maintain quality and quantity. To counteract the idea that bureaucracy and standardization are bad for the company, NUMMI places a very strong emphasis on workplace learning and continuous improvement (kaizen). This emphasis enables the employees to feel as though they are not in such a rigid environment.
The NUMMI project began with an emphasis on learning by sending the management teams to Japan, then having them return to the U.S. to train the remaining employees. The organization arranged management as such that the upper level managers are on an equal level with the rest of the employees as far as dress and special privileges. The organization also places an emphasis on management’s role in the company. Management is to be a support to the employee and is seen as the place to go when expert knowledge is needed (Adler, 1993). Employees look to management when a problem arises that they cannot find an answer to or when it is time to learn something new to fix a current issue.
A key point in the kaizen philosophy of NUMMI is cross-training. Adler (1993) states that “workers are cross-trained in all team assignments and then allowed to shift from one task to another” (p. 102). Having all employees’ cross-trained opens up communication channels and allows more ideas to come to the surface. It also provides variety to the employees in what could be a mundane job. By making sure that everyone is cross-trained, options are available to the company when sales are low or when an employee leaves or has an emergency. When opportunities arise, such as in 1988 when sales were low, the company took advantage of this and employees who were no longer needed on the production floor were sent to training classes instead of being laid off (Adler, 1993).
Another benefit of having everyone cross-trained is the reciprocal relationship between standardization and learning. All employees learn all aspects of the job, which means that the employees are now knowledgeable and experts in their own place. This enables them to monitor their position and make changes when something goes wrong. While the standard procedures are in place to maintain quality and quantity, the employees have the power to improve the standard process because they have the knowledge and ability (from learning) to make adjustments. Providing a standard structure enables the employee to become an expert in their field, which in turn gives the employee the opportunity to apply their knowledge at their workstation and create better and more positive standards for the company. Employees are invested in their positions instead of simply being there to complete a process. This level of employee involvement, defined by Robbins and Judge (2007) as “a participative process that uses the input of employees to increase their commitment to the organization’s success” (p. 97), is very high at NUMMI. This empowers the employee to make a difference in their work environment.
NUMMI provides an excellent model of employee empowerment. The traditional power relationships have been abolished in the NUMMI work environment and the first step towards this was implementing the clothing/uniform requirement and eliminating the special privileges for management. By putting everyone on a visual level of equal footing, it makes the technical divisions less obvious and removes overt power levels. Adler (1993) states “middle management layers are layers of expertise, not of rights to command, and if middle managers have authority, it is the authority of experience, mastery, and the capacity to coach” (p. 107). Removing the traditional power structure allows power to be gained by those with experience who have earned the respect of the rest of the work force. This benefits the company as “research suggests pretty clearly that the personal sources of power are most effective” (Robbins & Judge, 2007, p. 200).
The next step that NUMMI makes for its employees is providing them with the knowledge, abilities and authority to make decisions regarding the production system. NUMMI offers its employees respect and trust and indicates this, for example, by allowing them their own accounts for supply orders (Adler, 1993, p.106). Workers realize that they have “positive power to improve quality and efficiency” and “negative power to disrupt production” (Adler, 1993, p. 107). There is a balance at the plant that keeps the entire system functioning, however. The environment of continuous learning, trust and respect that has been developed creates loyalty and a source of motivation for the employees. Because they are being treated with respect and as adults, the employees are more motivated to create excellent product and maintain a good work record.
Prior to reading about NUMMI and through personal experience dealing with my own staff, I had learned that if you showed people respect and trust while allowing them as much flexibility and autonomy as possible, they tended to be more productive and loyal. Empowering the employee in the workplace is extremely important because employees are adults who wish to be treated as such. Ideas and thoughts should be valued and taken into consideration when coming from the person who completes a job day in and day out. Employees should be empowered – chances are they will work happier, longer and better. Learning about NUMMI has only cemented these views more firmly in my mind. Seeing the same techniques and views implemented on such a large scale with the excellent results that NUMMI ended with proves that empowering the employee can truly make the organization a better place to work while increasing the bottom line.
In conclusion, NUMMI seems to be the perfect synergy of Japanese work practices and American technology. Pairing the two with the commitment levels and management support that was given and received from everyone involved created a conducive environment for the successful interpretation of Taylor’s scientific management ideas as well as continuous learning culture. Removing the traditional power structure of corporate culture and replacing it with a structure which empowers the employees creates an ideal work environment where people can feel valued and feel as though they are respected. The NUMMI example can be transferred to other companies that are willing to invest the time and effort into their people. It would be amazing to see all of the corporations of America focus on their people using NUMMI’s model of business – chances are their bottom lines would increase as well as employee satisfaction!
References
Adler, P. S. (1993). Time-and-Motion Regained. (Harvard Business Review Reprint 93101).
Boston, MA: Harvard College, Harvard Business School Publishing.
Chao, G., O’Leary-Kelly, A., Wolf, S., & Klein, H. (1994, October). Organizational socialization: Its content and consequences. Journal of Applied Psychology. 79(5), 730- 743. Retrieved September 17, 2007, from PsycARTICLES database.
Internet Center for Management and Business Administration, Inc. (2007). Frederick Taylor &
Scientific Management. Retrieved November 1, 2007, from
Kanouse, D., & Warihay, P. (1980, July). A new look at employee orientation. Training &
Development Journal, 34(7), 34. Retrieved September 17, 2007, from Academic Search Premier database.
Maslow, A. H. (1943). A Theory of Human Motivation. In J. S. Ott., S. J. Parkes, & R. B. Simpson (Eds.), Classic Readings in Organizational Behavior (5th ed.) (pp. 148-157). Belmont, CA: Wadsworth.
Robbins, S. P. & Judge, T. A. (2007). Essentials of Organizational Behavior. (9th ed.). Upper
Saddle River, New Jersey: Pearson/Prentice Hall.
Roethlisberger, F. (1941). The Hawthorne Experiments. In J. S. Ott., S. J. Parkes, & R. B. Simpson (Eds.), Classic Readings in Organizational Behavior (5th ed.) (pp. 140-147). Belmont, CA: Wadsworth.
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