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Human Resource Practices for Implementing Advanced Manufacturing Technology (1986)
Board on Manufacturing and Engineering Design (BMED)

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HUMAN RESOURCE PRACTICES FOR rMPLEMENT:NG ADVANCED MANUFACTURING TECHNOLOGY Committee on the Effective Implementation of Advanced Manufacturing Technology Manufacturing Studies Board Commission on Engineering and Technical Systems National Academy Press Washington, D. C. 1986

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~-- - NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Re- search Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This report has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee consisting of members of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The Nations1 Research Council was established by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy'. purposes of furthering knowledge and of advis- ing the federal government. The Council operates in accordance with general policies determined by the Academy under the authority of it. congressional charter of 1863, which establishes the Academy as a private, nonprofit, ~elf-governinq membership corporation. The Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in the conduct of their services to the government, the public, and the scientific and engineer- ing communities. It is administered jointly by both Academies and the Institute of Medicine. The National Academy of Engineering and the Institute of Medicine were established in 1964 and 1970, respectively, under the charter of the National Academy of Sciences. This study was supported by Contract E-9-M-05-0802 between the National Commission for Employment Policy and the National Academy of Sciences. Limited copies available from: Manufacturing Studice Board 2101 Constitution Avenue Washington, D.C. 20418 Printed in the United States of America ii

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ACXNoWLEDGMENTS The research and preparation of a report such as thin involves the dedicated efforts of people far too numerous to identi fy in the page. of the final work. All of the committee members brought their own experience and that of their colleagues. Each mite visit involved gathering the experience of many people. Further, a number of people who had not been involved in the study reviewed the draft report and contributed insights that are reflected in this final version. In particular, the committee wishes to thank the following companies for hosting site visits at a total of 16 plants: Consolidated Diesel, Cummins Engine Company Inc., FMC Corporation, Ford Motor Company, Frost Inc., General Motors Corporation, Grumman Aerospace Corpora- tion, Honeywell Information Systems Inc., International Business Machines Inc., Ingersoll Milling Machine Company, and McDonnell Douglas Corporation. The following peer reviewers contributed to the substance of the report through their written comments for the Commission on Engineering and Technical Systems: Margaret B. W. Graham, Associate Professor, Boston University School of Management, Boston, Massachusetts John Hoerr, Labor Relations Editor, Business Week, New York, New York Raymond Katzell, Professor of Psychology, New York University, New York Jerome M. Rosow, President, work in America Institute, Scarsdale, New York To supplement this peer review process, which is done for all Nations} Research Council reports, the committee sought additional reactions from potential users of the iii .

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report before it was in final form. Thanks also go to the following participants in a symposium to review the report: George L. Carter, Manager, Socio-Technical Engineering, Manufacturing Systems and Technica; Center, We~ting- house Corporation, Columbia' Maryland Dennis Chamot, Associate Director, Department for Professional Employees, AFL-CIO, Washington, D.C. Joseph G. Deley, Manager, Business Development for Advanced Production Technology, Westinghouse Electric Corporation, Pittsburgh, Pennsylvania David A. Dorman, Director, Computer Integrated Manufac- turing, McDonnell Aircraft Company, St. Louis, Missouri William D. Fletcher, vice President, Corporate Develop- ment, Allen-Bradley Company, Inc., Milwaukee, Wisconsin Robert Lund, Research Professor, Center for Technology and Policy, Boston University, Boston, Massachusetts Warrington S. Parker, Jr., Director, Organization and Executive Development, Rockwell International Corpora- tion, Pittsburgh, Pennsylvania John R. Pasquariello, Vice President of Manufacturing, Raytheon Company, Lexington, Massachusetts Donald L. Rheem IT, Office of the Secretary, Department of Health and Human Services, Washington, D.C. Markley Roberts, Economist, Department of Economic Research, AFL-CIO, Washington, D.C. William C. Rolland, Manager of Automation Systems, Nation- al Electrical Manufacturers Association (Automation Forum), Washington, D.C. Jerome M. Rosow, President, Work in America Institute, Scarsdale, New York Bradley T. Shaw, Research Analyst, Industry, Technology and Employment Program, Office of Technology As~ess- ment, Washington, D.C. Gerald Sudbey, Group Vice President, Worldwide Manufac- turing, Polaroid Corporation, Cambridge, Massachusetts The willing participation of so many in this study is testimony to the need this report has tried to serve. The committee is grateful for both the financial support and the substantive guidance of the National Commission for Employment Policy and its acting executive director, Carol Romero, and staff members, Stephen Baldwin and Sara Toye. Planning for this study was greatly assisted by Louis Tornatzky, Director, Center for Social and Economic iv

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Issues of the Industrial Technology Institute. The committee also appreciates the personnel and resources the Industrial Technology Institute devoted to assisting the committee in collecting site visit data. Particular mention must be made of the truly remark- able effort on the part of Gerald Susman to staff this committee and report. Professor Susman exercised consensual leadership in the early stages of the report and contributed immeasurably to the drafting of the committee's deliberations. His personal devotion to the agenda of the committee, the thoroughness of his staff- ing, and his sabbatical devoted to the study are indica- tive of the commitment he has demonstrated to the committee and are in large measure responsible for the quantity and quality of this committee' efforts. Thanks are also due other staff, including George Super, executive director of the Manufacturing Studies Board, and Janice Greene, staff officer, for their expert guidance and valuable substantive contribution., and to Lucy Fusco, administrative secretary, who capably handled the considerable logistical and support work. All this involvement and assistance notwithstanding, this is the report of a very hard-working volunteer com- mittee, which has been exemplary not only in generously committing time and effort, but also in sharing contro- versial ideas in a constructive fashion. I am privileged to have been the chairman. Richard E. Walton Chairman v

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COMMITTEE ON THE EFFECTIVE IMPLEMENTATION OF ADVANCED MANUFACTURING TECHNOLOGY RICHARD E. WALTON, Chairman, Jesse Isidor Straus Professor of Business Administration, Graduate Schoo} of Business Administration, Harvard University, Boston, Massachusetts BARBARA A. BURNS, Manager, SYSTECON, Division of Coopers & Lybrand, Atlanta, Georgia PETER S. diCTCCO, President, New England District Council No. 2, International Union of Electronic, Electrical, Technical, Salaried and Machine Workers, AFL-CIO, Saugus, Massachusetts DONALD F. EPELIN, Vice President, United Auto Workers, Detroit, Michigan JOEL A. FADEM, Senior Researcher, Institute of Industrial Relations, University of California, Los Angeles JAMES N. KREBS, Vice President (retired), Technology and Management Assessment, General Electric Company, Lynn, Massachusetts EDWARD A. LOESER, Senior Vice President of Operations, Rockwell International Corporation, Pittsburgh, Pennsylvania GAVRIEL SALVENDY, NEC Professor of Industrial Engineering, School of Industrial Engineering, Purdue University, West Lafayette, Indiana GRETCHEN S. STEPHENS, Director, Manufacturing Management Development, Raytheon Company, Lexington, Massachusetts ITI LIAISON JAMES JACOBS, Vinitinq Scholar, Industrial Technology Institute, Ann Arbor, Michigan vii

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STAFF GEORGE H. KUPER, Executive Director, Manufacturing Studies Board GERALD I. SUSMAN, Director, Center for the Management of Technical & Organizational Change, and Professor of Organizational Behavior on sabbatical leave from The Pennsylvania State University, University Park LUCY V. FUSCO, Administrative Secretary viit

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MANUFACTURING STUDIES BOARD ROBERT B . HURTS , Chairman, Senior Vice President (retired), General Electric Corporation, Fairfield, Connecticut GEORGE S. ANSELL , * President, Colorado School of Mines, Golden ANDERSON ASH URN, Editor, American Machinist, New York, New York AVAX AVARIAN, Vice President, GTE Sylvania Systems Group, Waltham, Massachusetts IRVING BLUESTONE, Professor of Labor Studies, Wayne State University, Detroit, Michigan BARBARA A. BURNS, Manager, SYSTECON, Division of Coopers ~ Lybrand, Atlanta, Georgia CHARLES E. EBERLE, Vice President (retired), Engineering, The Procter and Gamble Company, Cincinnati, Ohio ELLIOTT M. ESTES, President (retired), General Motors Corporation, Detroit, Michigan DAVID C. EVENS, President and Chairman of the Board, Evans & Sutherland Computer Corporation, Salt Lake City, Utah BELA GOLD, Fletcher Jones Professor of Technology and Management, Claremont Graduate School of Business Administration, Claremont, California DALE B. HARTMAN, Director of Manufacturing Technology, Hughes Aircraft Company, Los Angelo, California ROBERT S. RAPLAN, Professor of Industrial Administra- tion, Carnegie-Mellon University, and Professor of Accounting, Harvard Graduate School of Business Administration JAMES F. LARDNER, Vice President, Component Group, Deere ~ Company, Moline, Illinois . ix

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THOMAS J. MURRIN, President, Energy and Advanced Tech- nology Group, Westinghouse Electric Group, Pittsburgh, Pennsylvania ROGER NAGEL, Director, Manufacturing Systems Engineering, Lehigh University, Bethlehem, Pennsylvania PETER G. PETERSON, Peterson, Jacob. & Company, New York, New York RAJ REDDY, Director, Robotics Institute, and Professor of Computer Science, Carnegie-Mellon University, Pittsburgh, Pennsylvania DAN L. SHUNS, Director, Center for Automated Engineering and Robotics, Arizona State University, Tempe STEPHEN C. WHEELWRIGHT, Professor, Graduate School of Business Administration, Harvard University, Boston, Ma .sachu se tts EDWIN M. ZIMMERMAN, Member, D.C. Bar, Washington, D.C. *Term expired January 1, 1986 x

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CONTENTS Page 1e INTRODUCTION e ~ ~ ~ ~ ~ e e e e e ~ ~ e e e e e e e e e e e e e ~ e ~ e ~ e e e e ~ e e 7 Elements of AMT, 7 Sites Visited, 9 Human Resource Practices, 13 Unresolved Is~ues, 15 PLANNINGe e e e e e e e e e e e e e e e e e e e e ~ e e e e e e e e e e e e e e e e e e e e 17 Early Consideration of Employment Continuity, 17 A Champion for Organizational and Technological Innovation, 18 Imp}ementation Tea~, 19 Communication of AMT tmplementation Plans, 19 3. PI&ANT CUI`rURE.. e e ~ e e ~ e e e ~ e e e e e ~ ~ e e ~ ~ e e e e ~ ~ e e ~ e e e e e 21 Deciding to Change the Culture, 21 Change Mechanisms, 23 Benefits and Risk~ of Changing a Culture, 2S 4 e PLANT ORGANIZATION.... Organizational De~ign ~ 27 Information Systems, 32 The Transitional Organization, 33 J08 DESIGNe e e ~ ~ e e ~ ~ e ~ ~ ~ e ~ ~ e ~ ~ ~ e ~ ~ e e ~ ~ e e ~ ~ ~ ~ ~ e ~ ~ e ~ e 35 Implications of AMT for Job Design Criteria, 35 Fewer Job Classifications, 36 Broadened Scope of Work and Multiple Skills, 38 Work Teams, 41 Worker Involvement, 42 Career Advancement, 43 Preconditions and Pitfall., 44 xi

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6. COMPENSATION AND APPRAISAL 46 The Demands of the New Jobs, 46 Intrinsic Rewards, 46 Compensation, 47 Linking Pay and Contributions, 48 Performance Review Procedures, 49 Issues of Advancement, 49 7. SELECTION, TRAINING, AND EDUCATION S. Selection, 52 Increased Need for Training, 53 Changing Scope of Training, 55 Individual Investments in Training, 58 Education and Training Systems, 59 8. LABOR-MANAGEMENT RELATIONS 61 Quality of Labor-Management Relations, 62 Modifying Conditions of Employment, 64 Integrity of the Bargaining Unit, 65 Employment Security, 65 9. EPILOGUE. xii