FMC ABERDEEN

Kenneth Dailey, site manager for FMC Corporation’s Green River, Wyoming, facility, leaned back in his seat in the conference room near his office. He was listening to a team of employees tell him about their visit to FMC’s Aberdeen, South Dakota, plant and the unusual operating procedures they had observed there. Dailey was intrigued with the results that Roger Campbell, plant manager at Aberdeen, and his predecessors had been able to achieve at the plant, and he had sent this team to see it and make recommendations about whether or not it would work at Green River. He wondered if the Aberdeen system would work for his operation as a whole, in part, or not at all; if there were parts that might work, he wondered what they were and how to implement them.

Dailey knew that his operation was different from the Aberdeen plant in a number of significant ways and that these differences would make his deliberations difficult. First, Aberdeen had only a single customer, while Green River had over 100 and distributed its products worldwide. Second, the Aberdeen facility employed only 100 people, while Green River had 1,150. Third, Aberdeen produced basically a single product, while Green River had several product lines. Fourth, Aberdeen had been a new start-up five years ago, while the first of the several Green River plants was begun in 1948. Dailey was supervising the start-up of three new plants in his complex this year, though, and recognized that similarity. Fifth, the two units functioned in very different industries--Aberdeen in defense and Green River in chemicals. Finally, Aberdeen had no union, while the Green River site worked with the United Steel Workers of America.

Despite these differences, there were several features of the Aberdeen management approach that were either appealing to Dailey or suggested that the Aberdeen approach might fit his operation. Operating under FMC corporate guidelines, both management teams enjoyed, along with the other 87 FMC North American sites, considerable flexibility in how they ran their businesses. Both units also had a common link to the FMC corporate image and objectives and thus had some similar operating values and systems. Dailey also knew that productivity in the Aberdeen plant had grown dramatically since its opening and that costs had continued to drop. Finally, Dailey felt that the principles and values upon which the Aberdeen system were built aligned well with his own. As Dailey listened to his team describe the Aberdeen system, he continued making mental notes and questions about the system and its applicability to the situation in Green River.

2	FMC Corporation

FMC Corporation was a Chicago-based conglomerate with $3.4 billion in 1989 sales spread over five major businesses: Industrial Chemicals ($975,000), Performance Chemicals ($566,000), Precious Metals ($190,000), Defense Systems ($900,000), and Machinery and Equipment ($783,000). The company’s products included military equipment (including the Bradley Fighting Vehicle), a variety of industrial chemicals, gold and other precious metals, agricultural chemicals and a variety of specialty chemicals, and a broad range of specialized machinery and equipment for the material-handling, petroleum, and food industries. When FMC’s Naval Systems Division (NSD) won a secondary sourcing bid with the U.S. Navy to supply them with surface-ship missile launching canisters, many factors pressed NSD management to consider a new plant to fill the contract. Headquartered in Minneapolis, Minnesota, NSD was a large facility, with over 40 acres under factory roof and more than 3,000 employees. Its primary product was naval surface-ship gun mounts, large systems that were produced at the rate of about 1 per month. The smaller (2’ x 2’ x 20’) missile canister could be produced at the rate of about 2 per day and was viewed by NSD as a volume product that required a different production approach from that of the gun mounts. NSD executives also noted that, since the canisters contract was a fixed-price one, the new operation was much more like a “commercial” operation than the cost-plus government contract under which NSD usually worked. Furthermore, recent investigations of the local business environments suggested that the tax regulations, community support, and available labor pools and wage rates were more favorable in nearby South Dakota than in Minnesota.

With these factors in mind, NSD’s director of manufacturing, Ron Weaver, chose Bob Lancaster as the manager for a new plant. Lancaster had been plant manager in FMC’s construction equipment division’s Bowling Green, Kentucky, plant when Weaver had been director of manufacturing for divisional headquarters in Cedar Rapids, Iowa. While in Bowling Green, Lancaster had captured Weaver’s attention with his unorthodox managerial style and ability to raise plant productivity some 10 to 15 points higher than the parent Cedar Rapids facility. In the fall of 1984, Weaver and Lancaster chose Aberdeen from among many aggressive offers as the site for the new facility. Aberdeen was a town of about 30,000 people located 90 minutes flight time southwest of Minneapolis. The Aberdeen Development Corporation had offered to build a building to FMC specifications, to give FMC favorable tax status, and to assist in whatever way possible in return for the selection. FMC negotiated a 7-year lease on the new building, with options to renew annually thereafter.

Although NSD had seen the missile canisters as a natural extension of its work with other naval surface-ship weapons systems, the new product was different in many ways and surprisingly complex. First, the canisters had to be strong enough to withstand the tremendous heat and explosive force of the ignited rocket engines that propelled the missiles. A structurally failed canister could endanger the entire ship and the lives of its crew. The missiles used were powered by solid-propellant engines that, once lit, could not be shut down. If a missile failed to launch, the canister would have to contain and control the engine until it burned out. For this reason, the canisters were fitted with a controllable fire extinguisher system that could flood the entire canister.

The tubes were also fitted with launching electronics that armed the missiles’ warheads and ignited the engines. The insides of the tubes were lined with a system of rails and flanges that guided the missiles out of the tubes on a straight course and allowed their folded guidance fins to extend properly. The inside of the top part of the tube was also covered with a shock-absorbing material to ease the impact on the warheads of any inadvertent bumps from loading or the rigors of sea passage. The entire canister had to be clean and relatively free of dirt to minimize the possibility of malfunction. The tubes were also fitted with an anti-electromagnetic shielding system that shielded the missiles and their launch electronics from any disruptive electromagnetic force. The top of the canister had to have carefully designed tearable membranes to keep the tube clean and yet allow free and easy passage once the missile was ignited. Also, amid the extremely corrosive conditions of sea life, the canisters had to be completely rust proof. Pinpoint-sized holes in the rust-proofing paint on the canisters would begin to run and wear through in as little as two weeks at sea. The canisters were designed and built to fit in eight-tube modules in large holes in the decks of missile cruisers and frigates. Consequently, they also had to have armored, water-tight, and carefully synchronized sections of decking with a hatch for each tube to be secured in place after the loaded tubes were lowered into the decks of the ships.

NSD also knew that modifications of the present tube design were coming soon. New prototypes would probably include stronger structural components, heat-sensitive and flame-retardant paint materials that would immediately well to 32 times their normal size in case of a fire, and more sophisticated electronics subassemblies. Consequently, if the new facility were to survive, it would have to have the capacity of responding to and contributing to these new designs as they came along.

Bob Lancaster

Lancaster was known throughout FMC as something of a maverick. As the plant manager at Bowling Green, he had tried several new approaches to management, most of which were based on principles of participative management, trust of production workers, and respect for the individual. One Lancaster story originated when he worked where they built cranes in Bowling Green. One young man from a poor family came and asked for the blueprints to the company’s crane. He said he was going to build a scale model, sell it, and then go to college. Lancaster gave him the blueprints. Several months later, the boy returned with a remarkable scale, working model of the crane. Lancaster asked him how much it was worth. The boy said $5,000. Lancaster paid him $20,000 and installed it in front of the office building as a marketing tool. The divisional controller expressed serious concern with Lancaster’s action. Lancaster persisted, though, knowing that he was paying for the boy’s college education.

Stories like this about Lancaster circulated through the company. One time, Lancaster had told his employees that they knew what needed to be done and he expected them to do that without bothering him. If they needed something they couldn’t get, he remarked offhandedly, then steal it. The next morning as Lancaster arrived in his office, he noticed that his water cooler was gone; he later found it in the welding bay. Recognizing this as a test of his commitment to his ideas, he left the cooler where it was and did without himself. Another time, Lancaster had a customer who was complaining about late delivery of parts. When another order for a small part came in, Lancaster had a parachutist carry the part and jump into the customer’s back yard. Then he called to see if that was fast enough service. Once he had been pressing divisional leadership for a new retractable factory door that would accelerate the flow of materials. The division had balked at the cost and refused. Lancaster then began encouraging an employee to drive his fork lift truck through the wall, saying that it was the only way they could get through the bureaucracy. At first, the employee resisted but finally gave in and destroyed the wall in question. Lancaster got his retractable door.

Roger Campbell, the first quality manager at Aberdeen and later plant manager, explained one of Lancaster’s central beliefs:

He had a saying, “What’s the worst they can do to me?” And then he’d sit and tell you the worst. “The worst they could do is kill me, right? And as long as I’m OK with dying, I’m OK. I’ve made my peace with dying. What is it that’s gonna stop me?”

In his negotiations with Ron Weaver, Lancaster had said that at Aberdeen he wanted to build a participative-management system on the principle of trust, involving self-directing work teams that would eliminate fear from among all employees. In January 1985, Lancaster began to assemble a team to build and manage the new plant. He wanted people who were open to new ideas, who had a history of participative-management interests, who were dedicated to serving the customer, and who were not only willing but eager to create something new, something outside the mainstream of current management practice. He chose five men, four of whom had grown up in the South Dakota area and who therefore wanted to live in the Aberdeen area for more than professional reasons. During this recruitment period, Lancaster also began to formulate the basic principles that would govern the new plant. He printed these up for all to read and to use in training his new team (see Exhibit 1).

Lancaster’s desire to create a new management system at Aberdeen presented something of a problem for the plant’s only customer, the U.S. Navy. Navy contracts required adherence to MThQ-9858, which specified inspection systems, supervision, and other quality-control processes that would not be manifestly visible at Aberdeen. Roger Campbell explained that

Bob Lancaster was a master at sitting down with other human beings and talking about what it is that’s important and what isn’t. He spent a lot of time with the local NAVPRO [U.S. Navy purchasing department] folks telling them that he considered them his customer, and that he was going to do what was necessary to make sure that he kept them satisfied with what was going on there. He convinced them that participative management and the quality standards were not mutually exclusive. He spent a lot of time doing just that. This is the “commercial mentality” we were trying to get. Commercial people are business people.

Having selected his leadership team and cleared the way with the Navy, Lancaster began organizing his staff and teaching them the principles that would govern the plant. The entire organization would be built on trust of every employee: they would eliminate fear altogether; they would eliminate supervisors and foremen by organizing self-directing work teams; they would expect people to assume and exercise responsibility; they would pay everyone a salary based on their ability to contribute; and they would maintain high standards of quality and service. Lancaster began meeting with his staff every night after work in Minneapolis for extended dinner discussions about how they should organize the plant. These sessions often lasted for three hours and extended over a three-month period. Out of these meetings and Lancaster’s values statement, the group developed the initial concepts that were to become the Aberdeen Credo shown in Exhibit 2.

Employee Selection

Employee selection for the Aberdeen plant became a rigorous process that focused on a four-hour assessment-center activity. Lancaster hired a consultant to lead his team through a two-day seminar that identified the kind of employee that would thrive in the new environment. Their underlying philosophy was that technical skills were more easily trained than personal and interpersonal skills and attitudes. Once the group had agreed on what those skills were, the consultant developed four group exercises for use in identifying those skills. The skills and attitudes targeted by the workshop were group skills, communications skills, personal skills, problem-solving skills, results orientation, and leadership skills. These were the same criteria that the company determined to use in performance evaluations.

The recruiting assessment centers were typically conducted on Saturday mornings, in which 12 applicants were divided equally into two groups, each with two assessors. As the groups worked on the various problems and tasks given them during the morning, the assessors would observe and rate each applicant on the key dimensions. Each assessor used a 1-7 rating scale where 4 was the average acceptable level of that skill in that assessor’s view. After each task, the assessors and applicants would rotate to give the assessors each a chance to observe all of the applicants. When the applicants had been dismissed at noon, the assessors would remain to compare notes and ratings, to generate a composite score for each applicant, and to make hiring decisions. Typically, only 4 of the 12 applicants would meet the assessors’ minimal standards. The opportunity for assessors to review hiring criteria and values and to reach consensus on what they looked for in candidates was a significant culture-building aspect of the assessment center.

All of the exercises in the assessment center were designed to highlight aspects of groupversus-individual behavior. The goal of the first exercise was to have each and every member of the team construct a completed square from parts of squares given to each team member. The second was a survival exercise where team members had to rank the importance of a list of items left to them in the midst of a life-and-death emergency (like being shipwrecked at sea, crash landed in the subarctic, or stranded on the moon). The third exercise was a hiring decision that had to be made by a leaderless group. Many of the “candidates” were minorities. The fourth exercise was a problem-solving situation where each of the team members had important but disparate clues to the solutions.

By 1990, this recruiting-and-selection process had produced 100 Aberdeen employees, 74 of which worked in production. The administration manager commented that they had 30 percent women plantwide, and about 8 percent minorities, primarily American Indians. He noted that the goal of the plant was to have 50 percent women.

Training

Lancaster and his staff expected that, in order to make the experiment work, employees in the facility would need to have introductory and ongoing training. They began with an orientation to the philosophy of the Aberdeen plant in which the idea that everyone was responsible for the success of the facility was presented. If this were to work, management noted, there could be no game playing and no withholding of data in plant relationships. Lancaster and his team told the new employees that they were to be included in the decision-making process and they were to be trusted with all relevant management information. Furthermore, employees were taught how to give and receive information about each other as data rather than as judgments or criticisms.

Fear of every kind, especially fear of failure, Lancaster noted, also had to be eliminated. Failure was sometimes the result of taking good risks and usually had a positive effect on learning and growth. People should not be held at risk for making honest mistakes and for learning from them. He stressed that the usefulness of any innovation was limited to the time that a better idea came along and that every employee should be seeking new innovations constantly. The management team taught that the “invented here” mentality caused people to stop looking for and accepting new solutions. They stressed that there were no job definitions in the plant, and that therefore everyone was responsible for making top-quality canisters profitably. The management team also discussed their own willingness to share power and to include all employees in the decision-making process. Fear and trust, they said, could not survive in the same environment. People had to be free to do the right thing and to make decisions without fear of reprisal and arbitrary anger and dismissal. Lancaster knew from his previous experiences that the new employees would test these ideas before accepting them fully.

Lancaster and his staff retained a consultant from New Jersey to conduct three nine-day seminars divided into three-day segments in topics like personal growth, accepting responsibility, interpersonal skills, nurturing fellow employees, giving clear and descriptive feedback, causation, a sense of “family” at work, and team management skills. These sessions were called “Mastery Training” and included the idea that people were perfect as they were, and therefore employees had no need to try to change others. In Mastery Training, useful feedback consisted of relating data and facts, including how one felt about those facts. The sessions were intended to point out that these ideas were not simply nice, abstract ideas, but the values upon which Aberdeen would operate. By 1990, three groups of fifteen employees had been through the full nine days of Mastery Training.

They had been encouraged to pass on what they had learned to those who had not yet gone. At least one employee interviewed claimed that these seminars changed her entire outlook on life and work.

In the emerging Aberdeen culture, criticism and allegation were replaced by direct feedback. Campbell explained:

We talk about feedback being neither positive nor negative; it’s only feedback. That’s an important piece of what we do in the evaluation system. When you’re giving somebody feedback, you’re saying this isn’t negative or positive; it’s just feedback. For example, “I notice you were late days last week. When you were late, that caused me to work harder; I noticed I was pretty irritated about that.” People talk about how this training helps them in their families. We talk about the plant being a family. As a result of being here, people should be doing better with their lives and taking more responsibility for their lives.

Team Organization and Management

The fundamental work unit of the Aberdeen organization was the work team. Teams ranging in size from 3 to 16 managed virtually every aspect of the plant’s work and reporting. Teams scheduled work hours, purchased materials and tools, planned work schedules, coordinated with other teams, evaluated team members’ performance, recommended salary increases, generated reports, and dealt with virtually every problem that arose in the running of the plant.

Every employee at Aberdeen was assigned to a team. A team leader was chosen by the team from among volunteers. The team decided how long team leaders would serve; this tenure varied from a few weeks to two or more years depending on the team leader’s willingness and perceived competency. Each team also selected a supply person, a safety person, and a quality person to pay particular attention to those areas. Teams met as needed to discuss and resolve issues that confronted them. A team member of the Deck and Hatch team (responsible for assembling the decking and hatches that covered a pod of 8 canisters) who had been with the company 5 years and in manufacturing environments for 19 years commented:

We have 13 on our team now. When we have problems, we don’t wait for a meeting. If our leader met with {the plant manager] about a schedule or something, he’d come back and holler, “Come on over! We need to talk for a few minutes.” And we would get things ironed out right away. That really helps. We do not wait for pay evaluation time to talk. If we have problems, we take care of them right away. It is so much easier that way. If you have something on your mind that you are going to talk to this person about it, go see them now. If you do, a month from now, that person might have realized what he was doing and have changed it. The problem is, if you don’t get it out and talk about it, it just keeps getting worse and worse. Our people have learned that.

Each employee’s work schedule at Aberdeen was administered by his or her team. One team member outlined the system:

On a normal week, our average hours are 6:00 to 4:30. We say you have to call in if you’re not there by 8:00. 8:00 is late, but unless it really disrupts the function of another station or another team or something, anything between 6:00 and 8:00 is okay. We work 40-hour weeks, 4 or 5 days a week. If our schedule is good, some of the teams may work 4 10-hour days and then they have Friday, Saturday, and Sunday off. Then the rest of us use Friday for any kind of catch-up paperwork or updating manufacturing procedures or anything like that that has to be done. Working 50 hours a week is pretty normal out here. This year we have cut down a lot compared to the last few years. We work the overtime to insure our jobs. We’d rather work overtime than to have more people hired so that we were working an even 40 hours and then sometime in the future have a layoff. Now, we would just cut back to 40. It helps keep our jobs secure.

The plant manager added:

The interesting thing is that the teams will make it OK for people to work different hours. Mothers out here with young children are allowed to work around baby-sitting schedules. When people have baby-sitter problems or things like that, the team will figure it all out and still get the work done. I couldn’t administer that. Nor could anybody else. They can administer that so much better than anything I could do.

Team leaders were an important part of the Aberdeen team organization. Donna Cwikla, a former team leader for over two years, described the role:

Team leaders facilitate. If you see a problem, you call them together. If someone comes to me and says, “I have a problem,” you don’t solve it. You say, “Okay, let’s get a meeting.” You keep things going if meetings get side-tracked. If they get into personal fights or just talking, the team leader has to get them back on track. Team leaders are responsible. You’ve got to make schedule, so you can suggest this and that. But it is up to the whole team what your schedule is, what your hours are, and what we do. Team leading is facilitating mostly.

I think the hardest thing for me [as a team leader] was to step back and stop taking responsibility. If the team failed, I would take it as if I had failed. That was really hard to get over. But once I realized that it was going to be the team’s responsibility, whether I was a member or the team leader, it took a lot of the pressure off.

The importance of selecting the right kind of people to fit the system was highlighted by this team member:

One thing that works against us is people who withhold from actually involving themselves or people that just don’t want that responsibility. There are very few of those people. Most people enjoy the fact that they can be responsible and take responsibilities easily. But there are a couple of people that I have worked with that said, “I don’t really need this job; I don’t really have to participate and be responsible; my husband has a better job and we get by, or I am just working here because xyz.” That makes it hard.

The team will sit down and counsel that person, if they are like late for work, if their quality is bad, or whatever the problem may be, just their attitude, or getting along with other people. At any given time, your team or a team member can ask for an evaluation of you. If the team feels that it is necessary to have it documented and put it into your personnel file, they will bring in Sheila [human resources manager] and sit down and go around the room and say, “This is what I feel, and I don’t think you are living up to what the expectations are of this place, and we either feel that you should conform or else fmd another job.” They are usually given a choice and a time limit to how long they think that it should take a person to come around. Usually people react fairly well. There have been a few people who have just left; they just didn’t like it. And they just didn’t fit in. Some people who just didn’t like working indoors.

One team member talked about program innovations that teams made:

We are responsible to keep our own area clean. There for a while, it had gotten so that production was really heavy, and the people weren’t caring about the way the place looked as much as what they had when I had started. I have always been kind of picky about that, because I knew how good and clean the place can look, where other people if they come in and it is halfway dirty they never realize that. So, I went out and purchased two signs that said “Cleanest Area in the Plant,” one for the plant and one for the office. We rotate them on Mondays. The last team to receive it will go around, survey the plant on Monday morning before the 8:00 plant meeting and then come in and give it to another team to keep for a week. It’s an honor and lots of fun. We used to have a Pig Pen award, but the negative began to outweigh the positive. We usually concentrate heavily on the positive. Negative just shows up. You don’t have to try to find it. And people bring it from other plants, other jobs, their home life, whatever. You don’t have to work to make negative feelings happen.

Information

Managing at Aberdeen required individuals who were willing to share information. Campbell held plantwide meetings Monday and Thursday mornings involving all 100 employees;

[Thursdays] We talk about schedule; we talk about quality; we talk about customer questions and what’s going on with the competition. About costs, about our new budget, about overtime, productivity—all those things. We talk about the contract:
“Here’s the contract, and here’s the contract delivery requirement. Here’s how we think we have to smooth this work to make this factory work and help the contract schedules. Here’s how each team has to interface with each other team in order to get this flow going so that it gets through the assembly in the time it’s supposed to. Here’s when we are going to start ordering materials and tooling.” We run that meeting as a group. Then people go off in their teams and talk about whether or not this makes sense, and can we live with this schedule, and maybe we ought to move this to there, and so on. So, when they’re done, it’s their schedule; it’s not mine.

On Monday, we open it up; we talk about everything. We talk about the company picnic, about the fishing trip, personal sorts of things that go on. We talk about anything that anybody wants to know about—softball games and who went fishing last week. We make that a time when people get together and talk about what needs to be talked about. See, my perception is that it’ll happen anyway. I’d just as soon have it done there where you aren’t asked six different times to tell the story over and over. Observers who just spend a day in the plant won’t see that time savings. They’ll just say, “Gee, you guys spend a lot of time in meetings.” Thursday’s meeting is more focused towards the plant, the schedule: Who needs help; what are we going to do about this weekend?

Two large charts in the cafeteria provided focal points for these discussions. One was a diagrammatic layout of the plant with movable stickers showing each canister’s location in the manufacturing process. The second was a large table showing productivity measures for each department in the plant. Since these charts were updated weekly, anyone in the room could easily see what was going well and what needed further attention.

With regard to management information, Campbell described the custom-built Aberdeen system:

We built a customized dBase system in this plant. The neat part of it is that it fills the demands of the new government requirements, material-handling requirements, and accounting system, including the 10 key elements. We think that $200,000 systems don’t do the things that ours does. We tie in and integrate shop-floor control systems with the purchasing and quality system. And we run all that off the master schedule. For $30,000. That was a part of our credo. We keep things simple.

The Aberdeen reward structure was unusual in a number of ways. First, all employees at the Aberdeen plant were referred to as technicians and were paid on a salary basis. Those who were production technicians were also paid overtime for any hours worked beyond 40 per week. There were no annual bonuses, no profit-sharing plans, no stock-option plans. Elaine Jensen, a team member, described one reward the teams had in addition to salary:

We do have a thing going right now where if we can keep four or five factors, including productivity, sick time, our downtime, and our absenteeism, at certain rates, we get a day off around the 4th of July. So, it’s sort of like a bonus or an incentive type day.

The evaluation system included a continuous peer-review process. Team members were expected to give accurate and timely feedback to their team members on their work on an ongoing basis. When evaluation time came around, the team decided whether or not a team member had learned enough and contributed enough to deserve a pay increase.

Qualification Standards

At Aberdeen, each team member was expected to learn all of the jobs associated with their team so that, if one person were gone, others could fill in. This was done on a voluntary basis at a self-determined pace through a certification process. Team members who were certified on each set of tasks assigned to the team were expected to respond to requests by other team members for coaching, training, and eventual certification.

People were paid according to the number of skills, called “qualification standards,” in which they were certified. Each skill had a number of points assigned to it according to the contribution it made to the plant’s work. The more jobs a person could do, the more valuable they were as an employee, the more they were paid. The plant had guidelines for how long a person had to work with a particular skill before being eligible for that pay level. Overall, though, a person could move to the top of the five-step pay scale within two years. An outline of the pay system and the related qualification standards appears in Exhibit 3.

Certification for each of the qualification standards involved four basic, agreed-upon steps. First, an employee had to fmd a coach who was willing to teach the set of skills to him or her. Then, the aspirant would observe the certified coach perform the task to see how it was done correctly. Third, the person would perform the task under the supervision of the coach until the coach was satisfied that the person had learned the skills. Finally, the person would perform the tasks alone for subsequent review by the coach. When the coach was satisfied that the person could perform the task in the skill set independently and properly and with high quality, he or she would sign a certificate indicating that the person was “certified” in that skill set. Roger Campbell described this as “watch while I do it; do it while I watch; do it alone; follow-up.”

Elaine Jensen described her experience learning new skills:

When I came out here, the only thing I knew about welding was that you weren’t suppose to look at it because you would go blind. We lived on a farm, and my dad told me. I went into receiving, but I wanted to learn to weld. I worked hard on those certifications. To me, it was like going to trade school. That’s what this whole shop
is. People are not hired on their technical skills, they are hired on their behavioral factors. We make our salary and are still being taught a skill that we can take with us the rest of our lives. I think it is fantastic!

Every Monday and Wednesday, we had a class, on our own time. We came out here, and we welded. They’ve changed that now to get more people certified because of the demand for welders. So they pay them during the regular hours now. I learned how to machine parts and to paint. Some of those skills you can take with you no matter where you go. Once you learn them, it’s great.

Layoffs, Turnover, and Morale

There had been only two forced terminations at Aberdeen in recent history. In both cases, the employee’s team members concluded that the individual did not fit temperamentally with the management concepts at Aberdeen. One individual, described by several Aberdeen employees, simply wanted to be told what to do and not have to accept responsibility to find out what to do.

Turnover at the Aberdeen plant, at 5-10 percent annually, was not unusually high or low. Most people who left the plant did so because they did not like the independence of the working culture, because they had found better paying work elsewhere in the country, or because they were going back home.

A team member noted:

We’ve had maybe 5 percent turnover since I started, I think. I think that is fair to say.
I have been working on the [companyj newspaper lately and, on the last three issues,
I have gone back through all the people who had started out here and the people who
have left, trying to track down everybody that has moved on to other things. What
I have found is that everybody has really done great with their lives. Everybody
seems to be really happy, really content with what they have done and that leaving
FMC was a good decision for them. FMC does not discourage that.

Roger Campbell also commented on turnover:

I don’t want you damaged when you leave here. If it doesn’t look like you fit into this organization, then it’s time now for you to go find a job someplace else where you’ll be happier and more comfortable. There’s a lot more responsibility here than at most places. Are people going to stay here for money? No, probably not. They stay because they’re in control of their lives, their destinies here. The idea of having people walk around with smiles on their faces while they’re doing their job seems like it’s foreign to many people. And you spend half of your life here [at work]! People at work ought to be happy.

Morale was consistently high. People commented on how much they appreciated being trusted by management, having management’s help in times of need, having a management who listened to their concerns, and having control over their work environment, pace, and structure.

Managerial Style and Organizational Culture

Dailey’s team noted that a key balance in self-directed systems was the amount of upper level involvement in planning and implementing such systems. For some, this was a paradox. Mark Scherschligt, manager of administration, commented on the importance of the business leader in making a system like the one at Aberdeen work:

I truly believe that this has got to come from the guy at the top. You could pronounce that, “yeah, there is no fear, everything’s on trust.” But if you don’t act like that and really have a commitment to it, it won’t work. It is a commitment. You’ve got to let people make mistakes. We see that when people from other FMC plants come to visit, that the guy at the top says, “yeah, I want this to happen, but I’m not willing to give up any of the power that I’ve got to make it happen.” I see that so much when people come visit here. That’s the thing that’s got to be changed, that unwillingness to give up their so-called power.

Given this emphasis on the leadership of the operating officer, Dailey’s team had asked Campbell about his managerial style:

I am not going to run off and fire you or take disciplinary action against you for telling me how you feel about something. Now, if they can tell me how they feel, it also follows that I get to go out and tell people how I feel about what they’re doing. One of the rules we’ve got here, and we’ve got danm few of them, is you don’t attack the human being. We tly to run this place like a family. Once people come in here, they’re OK like they are. We don’t go around trying to change human beings. And what the heck, I’m too tired and too busy to go off and try something impossible like change human beings anyway. So, I’m OK with people being like they are. Once in a while, there are some things that I point out to them and ask them to consider changing.

Now, this isn’t a democracy. There are certain things that we do here, and we decide as a group, as a plant, what’s unacceptable behavior. I usually sit and talk to every person that gets hired here and spend some time with them. I tell them that I don’t want them to lie, cheat, or steal, and I want them to understand that they’re responsible for their own actions in this place. Once I get people to nod their head that they agree with that—that’s about the only rule we need to put into place. Lancaster expanded it and said that you could run an entire plant based on The Ten Commandments. That’s probably true, but I’ve got it down to you can’t lie, cheat, or steal. That’s what we ask people to do when they come to work here. Don’t lie, cheat, or steal, and be responsible for your own behavior.

I tell them, “I want you to run this like it was your own business; I want you to help me manage it. If you know the right thing to do, by all means, do it.” We give the team leaders, for instance, purchasing authority to $500. You hear horror stories about people who need six signatures to get a wrench. We tell them to go to the store and buy a wrench, and we sign the invoice when it comes through. New employees always test us on this. They’ll come in without exception and ask about buying something. And I ask them, “Is it something you need for the business? Would you do this if this were your business?” If the answer to that is yes, then I ask them, “Why are you asking me about it then?”

We allow for some mistakes. We consider it a learning experience. I could tell an example about myself. We have to vacuum out these canisters about four times, and it is hard on vacuum cleaners. I came up with the idea that a sump sucker [a large machine used to clean out the sumps of oil-cooled machine toolsi would work like a huge vacuum cleaner and cut the vacuuming time in half. It was a good idea in theory; however, a sump sucker doesn’t work very efficiently if you don’t have it in liquid. And the hoses are really bulky and hard to haul around. So, I went out and bought one of these things for $12,000, and it didn’t work well. So, I sent it back, and I took some pretty good ribbing from people. People don’t walk around saying, “I wonder if I’m going to lose my job” about things like that. They don’t wonder if they’re going to get sat down and hear the riot act. We tolerate honest mistakes all the time here.

There were a variety of social activities that also helped build the family culture at Aberdeen. The plant sponsored softball teams, basketball teams, fishing tournaments, and an annual all-employees meeting. Donna Cwikla explained:

They make a point of it. When the plant started, family activities were everything. They had swimming parties, roller-skating parties; the whole point wasn’t how many canisters you were going to get off that week; it was: we are going to be a family. We are going to do things together. And it is still that way; that’s as important as anything else.

The annual off-site all-employees meeting provided another example of employee involvement. Before 1990, these meetings were often seen by employees as boring and dry, filled as they were with overhead transparencies, charts, statistics, and long recitations of the past year’s events. In 1989, the employees came to management and asked if they couldn’t plan the day. Given the chance, a team took responsibility for the entire event. They planned the day around the credo, dividing the group up into teams who made presentations and led cheers on each element in the credo. Six months later, photos of the event still hung in the main corridor of the plant and people still talked with enthusiasm about what a good experience it was.

When asked if they thought the Aberdeen system was a durable one, Dailey’s team reported that Campbell expressed confidence that the Aberdeen system was well in place and that, even if a more traditional, authoritarian manager were to replace him, the system would carry on. “I don’t think you could change it if you wanted to. It’s down the path now,” he had said. He also expected that he would have some say in who the next plant manager would be and that he would try to make sure that a person with values consistent with the Aberdeen culture would be selected

Aberdeen Structure and Organization

The organizational structure at Aberdeen was simple. The plant manager had a staff of four: a quality and engineenng manager, a purchasing manager, a production manager, and an administration manager. None had a secretary. One office technician answered the phones and greeted people at the front door. Campbell commented that, if you wanted a letter typed, you learned how to use a word processor (listed, by the way, as one of the skills on the qualification-standards list).

It was clear at Aberdeen who the plant manager was, but the usual trappings of executive title were missing. Campbell usually wore boots, jeans, and an open-necked shirt to work. He parked in whatever slot was left open. He did have a nice, new, expensive laptop computer on his work counter in the plant manager’s office, but he noted that anyone who needed it could come in and use it.

Aberdeen and FMC

The Aberdeen facility was a cost center for accounting purposes within FMC. Initial engineering and product designs came out of NSD in Minneapolis, as did sales and marketing support and government liaison. At the same time, Campbell noted, the plant’s products were built, tested, inspected, shipped, and invoiced from Aberdeen, so that the Navy began to look at the plant as its primary contact for the canisters. Aberdeen did not maintain its own general ledger but consolidated with NSD. In absolute terms, the Aberdeen plant was not a major contributor to FMC. FMC ‘5 defense segment was about 30 percent of overall sales, and Aberdeen’s part was only 3 percent of the defense business.

The plant manager reported to two people at NSD—one a dotted-line relationship to the program director for vertical launch systems and the other a solid-line relationship to the site manager at NSD. This was a change from recent history when the Aberdeen plant manager reported directly to the vertical launch systems’ program director. The plant manager was evaluated on meeting production schedule, on controlling costs, and on the quality of the product. Human resource activities for the plant were managed locally.

Management Succession

After two years, Bob Lancaster had established with great care and consistency the operating culture outlined here. At that time, he returned to NSD headquarters in Minneapolis, where he began teaching similar principles to the larger installation. Then one day, he complained to his wife of chest pains. She called an ambulance and, when it arrived, accompanied her husband to the hospital. As she stepped out of the ambulance at the emergency room, she collapsed and died. Lancaster passed away two days later. When Lancaster had left Aberdeen, he was replaced by Jeff Bust.

Jeff Bust

From the description by those who worked for him, Bust, who graduated from the U.S. Naval Academy and had an M.B.A. from the Amos Tuck School at Dartmouth, really lived the Aberdeen philosophy. Sheila Quinn, the human resources manager, described his style:

He would try to get you to think about things differently. He would go around to the plant and spend a lot of time just talking with folks trying to get them to see things a little differently. Jeff actually lived it. He would go out and actually work in an area. He would go out and work with the welders, and he lived there and learned how things were going by actually spending time with the teams. Even as plant manager, he would go weld. Both he and Bob would get to where they wanted to get you to go. Bob would talk about it a lot longer; Jeff wouldn’t. Bob would bend your ear for 2 hours, where Jeff would take 30 minutes. Roger’s more easygoing than both of them.

Elaine Jensen, a member of the Cable Conduit team, added her description:

Jeff Bust was always in here with his worn-out, steel-toe work boots on. He always wore these shabby, shabby coveralls that we always begged him to get rid of, but he would spend more of his time, I would say he spent 60 percent of his time if not more, out on the shop floor. He would weld, he would grind, whatever awful job needed to be done, he would walk around and say, “Well, where are you having a problem in your team today?” It meant a lot to the people out on the floor, because here was the plant manager, this was the guy that was our role model, and he was

coming out here. Nine times out of ten he got the real rotten jobs, the jobs that everybody would kind of leave to the last, or the dirtiest, or, you know, the heaviest. That meant a lot.

Roger Campbell

Roger Campbell became the third Aberdeen plant manager in 1988. He had received his bachelor’s degree from South Dakota State University in mechanical engineering and gone to work for FMC directly out of school. He had worked in the construction-equipment division and observed Bob Lancaster as he managed the Bowling Green plant. When he heard that Lancaster was putting together a team to start a new plant in Aberdeen, South Dakota, he had contacted Lancaster and convinced him to let him join the team. Although he knew that Lancaster’s approach was not his own style, he was intrigued by Lancaster and welcomed a chance to live near the area in which he grew up. He started out as the quality manager for Aberdeen, then went to manage production and finally, plant manager. By 1990, he was 41 and had 2 children.

Campbell wasn’t sure how people would describe him, but offered that he was pretty easygoing about most things. The thing that made him angry was:

Dishonesty, is probably the biggest one. People not taking responsibility. And people who quit without giving me notice. With regard to his future, Campbell mused:

I’d like to go run another plant someplace; maybe start one up again. If I went to work in Chicago [at company headquarters], I’d probably have to get an M.B.A. before I did that. My challenge is to go find another place to work and let somebody else come in here. That’s a responsibility I’ve got to the folks in a plant this size.

If I went to another plant, I’d do the same thing I’m doing here. It would take longer. There’s a magic number in the world someplace, and I haven’t found it, that says this is the optimum size of factories. Maybe it’s 200, maybe it’s 500, I don’t know. It’s not 2,000, I don’t think. It’s easier if you’ve got fewer numbers of people because you can sit everybody down in one room and talk to everybody at once. They all get the same story; they all get a chance to get out what they’ve got on their minds.

I came out of a traditional UAW shop with the yelling and screaming, “Do it this way,” and all that. It doesn’t really work. If you’re desperate, for a short term, you could get 10 more points out of this plant in productivity. You go around and rant and rave and scream and fight. But it doesn’t last. Here we “benchmarked” the standards. We work on learning curves. We’re working on a 79-percent learning curve here on decks and hatches. We think that’s about 6 points better than Minneapolis was doing. Mark Scherschligt, the manager of administration, described Roger:

I’ve known Roger for a long time. I knew him back in a previous life in Cedar Rapids, and he’s changed a lot. Roger’s changed an awful lot. He was kind of authoritarian, and he’s changed into a people-type person now. In fact, when he first started, he had a lot of doubts about this philosophy and how this thing would work. Through his involvement and just working on it over time and since becoming plant manager, he’s switched 180 degrees from where he was before. He really believes in it, really feels that it’s important to push responsibility down to the lowest level, and he supports it all the way through. I think the swing for Roger took a couple of years, to really sign up for it and to live it.

Elaine Jensen commented on the change in management:

I had a lot of problems dealing with the change in management. Bob was like my father. He was the man that gave me all the encouragement and support and the nurturing that my own father hadn’t given me in a completely different adult life relationship. And then Jeff Bust, he was a young, highly intelligent, brother type of a guy, and when he left and Bob left, I felt really alone. A lot of the people I had started with have left. When Roger came, he was okay, but he was very traditional—up until last November, when Roger fmally just kind of got it. He realized he was more empowered by releasing his powers than by dictating. It really empowers the people to release your power. He had no idea, I think, how powerful he really became after that.

Career Development at Aberdeen

The topic of management succession stimulated Dailey to ask about career development at Aberdeen. He could see how the rotating training was a career development of sorts, but with a flat organization, there wasn’t much room to move up. On the rotating assignments, the team reported on Elaine Jensen’s experience:

I started out here in November 1985, right after the grand opening, doing a little bit of receiving. That was before any teams were really born. Then I became a member of the Weld team. Then I went into the Finishing team and was team leader there. Then I went into assembly. I worked there for quite a long time, and finally into the Cable Conduit team. I am still a member of the Cable Conduit team, but I work outside of the team as a material coordinator for the cables doing a lot of receiving of their supplies and what nots. So, I have kind of circled the place and come back to receiving, which has changed a lot.
What about quiet people? Some people when they come into a team are quiet. But the more you get to know people, the more they come out of their shell. They do open up. They do take responsibility. On every one of the teams, we have a supplies person, a safety person, a quality person, and we have a team leader. Everybody gets a chance to take on one of those responsibilities. So, being a team member responsible for an area encourages that person to grow. I have seen massive growth in people that before would have had a real tough time just speaking in front of a group. We do that, too; we take turns. In the Thursday plantwide meeting, we take turns standing up and conducting the meeting.

Visitors to Aberdeen

The unusual nature of the Aberdeen operation had, as Bob Lancaster predicted, made it something of a model to be studied by others. In fact, interest was so high that observation teams, like the one from Green River, came through at the rate of about two per month. Roger Campbell commented:

People come to visit and walk away from here a little disappointed because I don’t give them a cookbook about how you do this. There is no magic to it. If you really believe that people want to do a good job, and that’s a well-worn thing, but if you believe that and that they’re intelligent, sensitive human beings, and if you just get out of their way, they’ll do the job for you; then I guess it’s all pretty easy.

It’s the middle managers that are stopping this whole thing from going on in the whole country. They’re the ones that don’t understand about sharing their power. For years, you were taught: when you get promoted, you’ve got a little more authority. Then, the game is to go collect all the authority you can and all the power you can, and keep it. Try it the other way. Go get all the authority you can, then walk around and give it away to people, and see how it works. It’s amazing how it works.

We’ve got folks that offer, and they’ve done it, to get in a car, drive to Indiana, and pick up 10 gallons of adhesive because we’re out of it, and we couldn’t figure out how to get it here any faster. No one told them to do that. And if you would have, they’d have thought you were crazy. They wanted to do it because that’s how you get the product out of the door. They come up with stuff in this place on a monthly basis that amazes me. All this by just saying, “Now, if this was your business, what would you do?”

There are some people in the world, a few of them—two that I can think of—that came through here, that leave because they don’t like this management style. They want to come in here in the morning and be told what to do, be watched, make sure they did it right, and then go home with their minds shut off. They are absolutely miserable here.

One team member who had been at Aberdeen for 5 years and working in manufacturing for 19 years before that reflected on one visiting team meeting he had participated in:

I have talked to people out of a Wyoming plant, out of an Idaho plant, out of a West Virginia plant. I have talked to people out of San Jose and all over who came here and looked at our system. They come thinking “It ain’t going to work, it ain’t going to work!” and by the time they leave, they’re convinced. They go out and see how happy and cheerful the people are that are working here. The best part is we are building quality product, and we are moving it fast. So they say, “Maybe this will work.” By the time they leave, they have gotten an idea. And lo and behold, they get back and start talking about this to other people.

But to take it into a union? I shouldn’t say it, but I got my foot in my mouth one day. I was in a meeting of some men that worked in the soda ash plant in Green River, Wyoming. I was saying to them, “I don’t think I have worked in a union job before.” I sai& “I don’t think that you could take this kind of a management system into a full-blown union shop.” My team member kicked me under the table, and I told him, “I don’t care. I want everybody at the table to hear it.” I didn’t know who they were. It was the union president.

They were opening new sections to their plant, but it was still management against workers.

Sometimes Aberdeen employees were invited elsewhere to explain the system to others. In one such trip to another FMC facility in Minneapolis, Elaine Jensen explained the plant and then fielded questions. One listener, referring to Roger Campbell’s trips to Washington, said:

“Well, if you guys are so equal, why is Roger in D.C. and you’re here?” They had asked me so many questions, I felt like I had really been prosecuted by noon. They were asking me all these questions, and I answered them basically as honest as I could, and when Roger came back from Washington at noon, this man asked Roger the same questions. It was as if Roger and I had sat down and had planned this all out, had it all written down, ‘cause his answers were almost word for word what I had said. It was funny. And people had actually come up to me afterwards and apologized for being rude and disbelieving. I think it is a philosophy that we truly believe in. We have the credo that we have written and we work by it; we live by it. I think if you ask anybody out there [in the plant], they all know. It’s a way of life;

it’s nothing special, we just do it. It is easy to have the same answer to come out of 20 people, because that’s just the way it is. It’s nothing special to us. It’s a way of life.

Results

The results of the Aberdeen experiment through the end of 1989 were dramatic. Productivity had been increasing steadily at a fast rate, costs had been decreasing consistently, and employee morale continued unabatedly high. Employees were learning a variety of new skills that they could use, enjoyed a variety of tasks and assignments, were listened to in all employee and team meetings, and felt and behaved as if they were colleagues with the management group. --

Pride in the plant’s work and in being a part of the team was high among employee& Campbell relayed one incident in which some used canisters came back to the plant for refurbishin~ The Navy said that they didn’t want them cleaned up, just made functional again for further test~ launches. The factory employees could not tolerate returning the canisters in their dirty stat&.Unasked, they vacuumed, scrubbed, and touched up the old canisters so that they went back looking almost as good as brand new ones. That kind of pride in quality and reputation, Campbell noted, came along with giving employees all the business data so they knew who their customers were and so that they realized they were part of the success or failure of the plant.

Campbell said he also often sent shop technicians [“hourly workers,” in the usual parlance-i to visit dockside at the naval yards so they could talk to the sailors and get the real story on how their canisters were performing. Campbell thought that they learned more from those conversations than-from the managerial-level discussions. This policy also contributed to the high level of employee morale.

Enthusiasm for the Aberdeen way was perhaps best exemplified by this team member’s comments:

I love everything about this place. It’s hard for me to get that across to people; I haven’t worked that many places. I am so young, but it’s just when people ask me about this place, it’s like I just can’t tell them enough. I mean, it’s the most incredible thing! I can’t believe it works. I guess the hardest thing to think is it works without supervisors and stuff, but the thing I like about the plant most, I guess, is what it does for the person. Everything you get done is going to be self-motivated. I think that every person that works here, even if they didn’t come in growing or selfmotivated, that’s the way they are going to get around here. It took me a while to realize when I first started. I was so happy to get the job, because I went from a minimum-wage job working in ajewehy store to this, and it was all completely new. I was getting a lot of money, and they trust me! I have been here a year and a half, and the money doesn’t even impress me any more. In a way, that’s not why I am here. I’d give up everything; I’d give up the great benefits and everything to be able to work in a place like this.

FMC Green River

As Ken Dailey listened to his team present the major features of the Aberdeen system, he outlined in his mind the major characteristics of the Green River facility. The large underground mine employed 400 people and produced about 5 million tons of trona ore (a mixture of bicarbonate of soda and soda ash) a year. The first plant, begun in 1948 and completed in 1953, produced about 1.3 million tons of various grades of soda ash a year. The second refining plant, completed in 1970, turned out 1.5 million tons of a single grade of soda ash; Green River also had the largest sodium tri~polyphosphate plant in the world. The power plants for the complex relied on the coal and natural gas that were abundant in the high Wyoming/Utah/Idaho basin. The refineries were organized by the steel workers’ union. Dailey was supervising the construction of three new, smaller plants, one each for 60,000 tons annually of sodium bicarbonate, 30,000 tons of sodium cyanide used in refining precious metals, and 60,000 tons of caustic sodium hydroxide.

Dailey had been in Green River for 18 months. Previously, he had been an operating supervisor at another FMC chemical plant, the plant manager of FMC ‘S coke plant, manager of the environmental compliance project at the company’s Pocatello, Idaho, facility, and most recently, development director at the Alkali Division headquarters.

The Green River complex was a part of the Alkali Chemicals Division of FMC that supplied sodium-based chemicals to the detergent industry, the glass industry, and large commercial chemical plants. Each day, the complex would send out an 80 to 100-ton hopper car train full of product. Much of the bicarbonate went out in 50- or 100-pound bags. Green River sent about 10 percent of its products by truck to different railheads in an attempt to spread out its distribution costs to different railroads. For most of these products, freight composed 25 percent of the fmal cost. Some 25 percent of Green River’s revenues came from overseas. FMC competed against Texas Gulf, General Chemical, Rhone-Poulenc, and Tenneco (owned 20 percent by Japanese interests) in these markets. Dailey believed that the market for his products was strong over the next 10 years.

Dailey had recently reorganized the facility. Historically, there had been separate managers for the mine and for the surface plants. Now, he had a manager for the soda ash business in both below-surface and surface facilities, one to oversee the three new plants under construction and one to look after all of the services required by the plants.

Recruitment in Green River was surprisingly easy. Green River itself was a town of only about 15,000, but for the last 10 openings that FMC had advertised, over 300 applicants, from as far away as Colorado and Alaska, had applied.

Dailey thought that his management style was very interactive, with a high level of trust for people; he was relatively open, was willing to pass out information, and was eager to drive decision making down into the organization. He believed that the company’s ability to share information was limited by its computer systems.

Dailey thought that the union was a progressive one that yet labored under old standard job descriptions. He believed he would receive their support in seeking more flexibility in applying those job descriptions. He also noted that the Green River force earning $18 per hour was the highest paid among all FMC employees. Mine productivity, too, he noted, had doubled in the last 8 years, despite a decline in the size of the work force.

As he thought about the Aberdeen system and whether or not it would work at Green River, he wondered about the huge infrastructure already in place in Green River and did not know if he could change it quickly. He also realized that the plants, built 20 and 40 years ago, contained isolated work stations with little opportunity for groups of people to interact.

As Dailey wondered if the special characteristics of the South Dakota plant were what made it possible for the Aberdeen system to work so well, his team reported the comments of one Aberdeen team member:

I personally feel that you can do this any place in the country. I know we have had groups from all over the country in here. I think the biggest factor that you will find is the trust level. You can initiate trust simply by eliminating fear. When I started
up here, there were only six of us technicians out here. Bob Lancaster was our plant -manager, and he told us to do what we needed to do. I wasn’t used to having
freedom to just do whatever I wanted: If you need it, go buy it. It just amazed me, and I still had a lot of fear about that. He says, “How about if I tell you this? No matter what you do,” he says, “as long as you don’t perform an unsafe act toward yourself or a fellow employee, I promise you you won’t lose your job. You do what you want to, you do what you need to, to get this product produced at this set time. But other than that, however you want to go about getting it done, just go do it.”

Exhibit I

FMC ABERDEEN

Aberdeen Plant Philosophy and Policies

Robert F. Lancaster, Plant Manager
01Jan85

The Aberdeen plant will operate on policies and procedures that come from a foundation-~Of
“TRUST.” This is in line with modern American business practices and certainly encouraged by
FMC Corporation. For clarification, I quote from “Building Trust in the Workplace” by Gordon F.
Shea:

America is undergoing a social revolution as profound as its technological one. The transformation, as far-reaching as any in history, is as fundamental as the emergence of democracy and self-government, the growth of public education, or the rise of capitalism.

This benign overturning is in the way people interact with one another for mutually beneficial ends. And the business community has positioned itself at the forefront of the revolution, though sometimes unknowingly.

Never before have we seen such a pervasive interest in participative management, quality circles, union~managemeflt committees, work teams, quality of work life programs, and the like. At their core, each of these innovations draws on the power of mutually beneficial interaction.

And this unleashing of the human potential, a great resource indeed., will continue to shape our future. Across America, individuals are increasingly searching out, informally, through their churches, schools, and institutions of higher learning, human relations skills to improve the quality of their personal, family, and organizational lives. These efforts to become more effective, to develop problem-solving skills, and to operate more productively in organizations signal a new era of human growth.

How do you identify these “budding revolutionaries?” As Caesar’s spies knew, when ferreting out early Christians, you note the words they use, the deeds they do, the ideas they express, the locations they frequent, and with whom they associate. From these, you can ascertain their beliefs and guiding philosophy. As with those earlier, gentle revolutionaries, many of our “new breed” have chosen the inner way and are therefore difficult to discern.

Exhibit 1 (continued)

During the past 10 years with FMC I have explored many of the concepts and practices of working
together, with common goals, in an open communications environment. I have found these concepts -to be much more productive than our historical “win-lose” approach which invariably results in
“lose-lose” outcomes.

Quality

Product quality is everyone’s concern! The plant is to function with a total quality concept where each piece part is to be known to meet specification and each operation is performed in a manner known to produce the specified result. Defects (which can cause expensive rework and scrap) are to be prevented by focusing on process control inside the plant and vendor manufacturing techniques for buy parts.

Design Engineering, Manufacturing Engineering, Production employees, and Quality Control employees are to work as a team to identify and solve quality problems. Responsibility for documentation and follow-up of these activities rests with the Quality organization.

Customer Relations

Customers (the U.S. Navy) are not adversaries—they are the people we intend to please. We will interface openly, with integrity. We will provide all appropriate information in an accurate and timely manner. We will assume that the customer is the final authority on what is required and make every effort to accommodate his wishes.

Community Relations

This Plant is a corporate citizen of Aberdeen, South Dakota. It is concerned about the environment and will take appropriate action to assure its preservation. It will fmancially participate in community activities, and its employees will be encourage to take active leadership roles in civic, charitable, political, social, educational, and religious activities.

Employee Relations

All employees will be on the salary payroll and will share the same benefit programs. A highly productive, disciplined work environment will be maintained. All employees will be treated fairly, thereby making Unions unnecessary.

Exhibit I (continued)

Health and Safety

FMC is particularly concerned about the physical and mental well-being of its employees. Every employee will be asked to participate in maintaining a safe, healthy, and pleasant enviromnent.

Cost Containment

This Plant represents a large investment by FMC Corporation as well as the city of Aberdeen. The product for this Plant was competitively bid, and future contract awards depend on our ability to remain competitive.

Opportunities for product cost reductions should be sought and cataloged so that proposals can be made at the appropriate time. Individual productivity must be maximized to reduce labor and overhead costs. All expenditures should be tested for their value added to the business.

Systems

Systems are to be kept simple! Current technology makes it possible to handle large amounts of information very efficiently. Since our plant is quite small we will emphasize the use of microcomputers using commercially available software. All personnel will need an understanding of these devices in order to effectively participate in the business.

Organization

Job titles and labor grades will be developed to accurately reflect the unique circumstances at Aberdeen. Because of the size, each job title will have a broad job description which may include the combining of functional responsibilities in nontraditional manners.

Exhibit 2

FMC ABERDEEN

The Aberdeen Credo

Quality:	Everyone is responsible for quality in everything we do.

Customers:	We will willingly satisf~’ our customer through honesty, integrity, cost, and quality. -~

Community:	As citizens of Aberdeen, we will actively promote and participate in community activities and work to protect the environment.

Employees:	Employees are treated fairly and trusted to actively participate and communicate in-achieving objectives.

Health	and Safety: Safety and health is everyone’s responsibility to each other and must not bó taken for granted.

Cost:	All employees continually strive for the most productive use of labor, money and materials
	to ensure our future.	-

Systems:	Systems will be kept simple and understandable while remaining efficient and effective.

Organization:	Broad jobs necessitate nontraditional, creative methods. All employees creatively define their responsibilities and work beyond job title and salary grade boundaries. -

Exhibit 3

FMC ABERDEEN

Skill-Based Pay System

The Aberdeen FMC employee skill-based pay/evaluation system is based upon two criteria:
1) technical competence and 2) sociallinterpersoflal skills. The employee attaining the subsequent step in pay must complete both criteria.

Technical Competence

Technical competence is demonstrated by means of a series of qualification standards. Qualification standards have their roots in the “Nuclear Navy” and are based on demonstrated skill in particular areas of plant operations. For example, an employee would have to demonstrate competence in operating a forklift (including safety and maintenance requirement), slinging, lifting, etc., to be qualified in material handling. These skills are demonstrated by a plant employee that has been identified as qualified in that particular area. Completion of a qualification standard is indicated by the qualified “signer” signing off on demonstration indicating satisfactory completion.

At the Aberdeen plant there have evolved approximately 70 qualification standards. These standards range in length from several sign-off lines to as many as 30. Each qualification standard, when complete, indicates attaining skills in a particular area of plant operation.

Generally there is a qualification standard for each work area in the plant, mandatory areas such as safety, hazardous materials, material handling, etc., and “elective” qualification standards such as Lotus, dBase, Multi-Mate, Assessing, etc.

A point value is assigned for each elective and plant work area qualification standard. This plant value is based upon complexity, skills required and duration to complete. At the Aberdeen plant a group of Shop Technicians and Office support personnel review the standards and establish point values. This group will generally meet annually for this purpose. At that time any requirement for new standards will be established, if necessary.

The point designation is used as a basis to determine when an employee is eligible to be considered for a pay increase. At Aberdeen, the employee review group is integral to the process of determining what the point requirement is in order to be eligible to progress to the next pay level. For example, there are approximately 700 points available, 400 points required to reach the top of the pay scale (5th step) and 40 points to be eligible for the 1st pay evaluation.

Exhibit 3 (continued)

Social/Interpersonal Skills

Upon completion of the technical requirement the employee will petition the team he/she i~ working with for a pay evaluation.

In this process the team members and any plant employee that has input will evaluate the employee. All data is acceptable with certain “ground rules” being observed:

Whatever is said with the employee out of the room must be said with the person in the-
	room.	-
Employees giving input must speak for themselves and in the first person. Ex: “I notice that you are very competent in your grasp of the first station assembly requirements.”
Give straightforward feedback. Use examples to illustrate points. State facts and tell how you choose to feel about the stated action. Ex.: “I noticed that you were late coming back from break 3 times last week. That causes me to work harder to make schedule and I fed angry when that happens.”
Do not attack the human being. Follow the precept that all human beings are perfect and~ there may be behaviors that the person may choose to alter. Come from the position th~f everyone wants to work and do a good job. 

Establish eye contact.
Keep the comments serious. Joking causes confusion about whether you mean what you say. Feedback is neither positive or negative. Data given is merely data and the person may choose how he/she interprets the feedback 

Demonstrate care and concern for the employee
Based upon completion of technical requirements and acceptable social/interpersonal skills, the team members determine by consensus if the employee is entitled to the pay increase.

Most pay evaluations end positively. The session is training in the art of feedback and straightforward talk. The pay increase is often secondary to the feedback session. That gets everyone on the team “flat” with each other and gives a forum to get personality and habit differences on the table before they get out of proportion. It also establishes the legitimacy of an evaluation or feedback session whenever it is required.

It will typically take 18-30 months for an employee to get through the five pay steps. In order to accomplish this the employee will have to pass through 4 of the 7 teams.

A monthly point system was established for positions in the plant that did not allow for completion of qualification standards or where longer time in the job is desirable. Examples would be maintenance and the receiving area. At Aberdeen, we determined that 10 points per month for a maximum of 24 months was a norm for those positions.

Exhibit 3 (continued)

The employee acceptance of this pay/evaluation system has been extraordinary. They have-a stake and responsibility in the pay system and an influence in the outcome. The feedback sessions generally have a positive outcome and the employees normally are relieved to hear honest comments from their peers.

At Aberdeen, we incorporate the same evaluation system for office support and staff personnel. Employees have the opportunity to evaluate the plant manager in the same fashion as-their peers.

Positions Earning Points by Month

The following positions are treated as exceptions to the Pay Progression System.

Since these team members are expected to stay in these positions for a minimum of one (1) year (and more than likely longer), they will accrue qualification points per month at the rate listed below. The maximum number of points that can be acquired by working in any of the jobs that have monthly points is 240. Once 240 points have been earned, through one or more of the jobs listed below, no additional monthly points are earned.
	Points
	-	Per Month	Position                                 Team
                10                 	Material Coordinator                       ASSY
                10              	Material Coordinator                        CCA
                10        	Material Coordinator                        D&H
                10        	Material Coordinator                       WELD
                10        	Machining Expert                            MACH
                10         	Maintenance                                     WELD
                10        	Maintenance                                    FINISH
                10        	Category H                                         CCA
                10                	Category D                                         CCA
                                                                    Total People                                            9

Exhibit 3 (continued)

Pay Progression Criteria

FIRST STEP
*	Accumulate 40 qualification points.
*	Complete all mandatory qualification standards.
*	Obtain team consensus in formal meeting that pay increase is warranted.
*	Complete I welding certification or a soldering certification.

Note:	All Shop Technicians are expected to progress to the 1st step in 3-12 months after hire. Shop Technicians will be counselled by their respective team and management if they take longer than 6 months.

SECOND STEP
*	Accumulate a total of 95 qualification points.
*	Complete 1 elective qualification standard.
*	Complete 1 weld certification and 1 soldering certification, or 2 welding certifications.
*	Obtain team consensus in formal meeting that pay increase is warranted.

Note:	All Shop Technicians are expected to progress to the 2nd step in 6-24 months after hire. Shop Technicians will be counselled by their respective team and management if they take longer than 12 months.

THIRD STEP
*	Accumulate a total of 205 qualification points.
*	Complete 2 weld and 1 solder certifications, or 3 welding certifications.
*	Complete a total of 3 elective qualification standards.
*	Obtain team consensus in a formal meeting that pay increase is warranted.

Note:	All Shop Technicians are expected to progress to the 3rd step in 12-36 months after hire. Shop Technicians will be counselled by their respective teams and management if they take longer than I g months.

FOURTH STEP
*	Accumulate a total of 300 qualification points.
*	Complete a total of 5 elective qualification standards.
*	Obtain team consensus in formal meeting that pay increase is warranted.

FIFTH STEP
*	Accumulate a total of 400 qualification points.
*	Complete a total of 7 elective qualification standards.
*	Obtain team consensus in formal meeting that pay increase is warranted.

Note:	The team consensus meeting required at each pay progression step is an opportunity for the team and management representatives to give that individual feedback both positive and negative on their performance.

Exhibit 3 (continued)

The individual desiring a pay increase, will ask his/her team leader to schedule the meeting. At d4ss~ point the team leader should check with the Human Resources Rep to see if all requirements have been met (# of points, mandatory and elective quals, certs). Schedule the meeting with. Human Resources Rep and Plant Manager or designate.

The team and management representatives will meet prior to inviting the individual to join them to develop a consensus as to whether the individual should receive a pay increase based on that individual’s performance and behavior.

Qualification Standard Listing
	Oual #	# Points	Description
	10	15	Assy Station 1	A
	12	10	Safe & Arm Drilling Station 2A	A
	45	10	Assembly Inspection	A
	54	15	Assy Station 5	A~ ~.
	79	0	Blue Print Assembly Mk14	A
	11	15	Assy Station 2	A
	42	20	Final Acceptance Test	A ~j~4
	46	10	Safe & Arm Assembly	A
	78	0	Blue Print Assembly MK13	A
	9	95	Totals
	48	10	Soldering Cable Conduit Assembly	C
	56	15	Test and Wrap Station	C
	58	10	TB2!J2/Jl Assembly	C
	60	10	J3MK14CCA	C
	62	5	Box Build-Up Mk14	C
	34	5	Pre-Assemble Box MT(13	C
	55	5	J-l Kit Assembly	C
	57	10	W2-W3 Sub-Assembly	C
	59	10	P1MK14CCA	C
	61	5	P2MK14CCA	C
	63	10	Final Box Assembly MK14	C
	11	95	Totals
	70	15	Hatches Sub Assembly	D
	72	20	D&H Assembly I	D
	74	15	D&HTest	D
	81	20	D&H Assembly IV	D
	83	15	Elevator Door/Cyl Brack/Adjust	D
	93	10	Inspection/Close Out	D
	71	15	D&II Assembly II	D
	73	20	D&H Assembly III	D
	75	5	D&H General	D
	82	10	Mechanical Sub Assembly	D
	84	5	Deluge	D
	11	150	Totals