Engineering Management International, 2 (1984) 271--278 Elsevier Science Publishers B.V., Amsterdam - Printed in The Netherlands

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QUALITY CIRCLES: SQUARE DEAL FOR PRQDUCTIVITY

Bonnie Hunt Corporate Quality Circles Administrator, General Dynamics Pomona Division, Pomona, California 9 1769 (U.S.A.)

ABSTRACT

A 7:l savings/cost ratio was projected from the results of the six-month pilot program in quality circles at General Dynamics Pomona Division. Productivity in six circles was moni- tored in terms of reduced attrition, higher performance, improved quality, increased employee suggestions and specific projects. Less quantifiable, but equally impressive indications of better morale, tremendous team spirit, and more harmonious manage- ment/employee relations were present. These

favorable results stimulated implementation plans for all General Dynamics’ aerospace divisions, one marine division and several subsidiaries. Training material and programs for facilitators, leaders, and members were developed. The application of this concept as both a management and employee develop- ment tool was demonstrated. The responsibil- ity for success of this program lies in the com- mitment, dedication, and support of all participants, particularly management.

INTRODUCTION

United States productivity growth is at an all time low, trailing several industrial nations, particularly Japan. Examination of this phenomenon reveals personal savings, capital investment in equipment and facilities, and maximizing development and use of human resources among important contributors to those nations’ gains. Concerning the latter, Fullmer stated that our own lack of tapping the tremendous amount of personal energy available in the U.S.A. has contributed to our declining position (Fullmer, 1981). He further states that only 10% of our individual potential is used, due to some extent to the dehumanizing structure of the workplace. Investigation of avenues related to quality of work life and optimization of human creative effort is a timely and important aspect of the productivity formula.

One avenue, quality circles, has already been used successfully in Japan and is accredited with making a strong contribution to its tremendous economic growth since World War II (Juran, 1967; Byron, 1981). This participative management style has stressed the importance of the human compo- nent in the total productivity formula. It is an intrinsic approach to motivation in which rewards to the employees come through greater involvement in their work and management decisions about it. The rewards to the companies are realized in greater output, lower costs, improved communica- tion and harmony in the work environment. The result for Japan has been capturing a steadily increasing proportion of business in world market competition and gaining a reputation for superior quality products.

As that position becomes more and more enviable to nations witnessing Japan’s ascent,

0167-5419/84/$03.00 o 1984 Elsevier Science Publishers B.V.

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questions arise concerning the applicability of this concept to other countries. Could and should it be adapted to other cultures? Were national traits and conditions present in Japan during this period prerequisite to quality circles’ success? In answer to those questions, several factors should be considered. First, lifetime employment in Japan is widespread and turnover is small; the country is pater- nalistic and homogeneous. Second, there has been a nation-wide commitment to quality improvement encouraged by the Japanese Union of Scientists and Engineers (JUSE), the domestic educational center of statistical quality control (Kondo, 1976). Finally, company-wide quality control encompassing all executives, management and engineering staff, and basic level employees has been stressed (Tamura and Noguchi, 1980).

Although these conditions are considerably different in the U.S.A., many American com- panies have studied them and launched quality circles programs. They have reaped outstanding benefits. One frequently stated reason for their success which influenced the present study, is that quality circles are steeped in American foundation. During its evolution in Japan, essential input from American statistical quality control experts, management consultants and behavioral theorists formed its basis. Japan was essential- ly the proving ground in which it flourished (Amsden and Amsden, 1976; Deming, 1980). It seems as American as it is Japanese. The review of the literature and discussions with American companies having quality circles yielded sufficient evidence that it could be instituted in the U.S.A.

The question then arose, “Can it be successfully applied at General Dynamics to

TABLE 1

Pilot program sites

address productivity and human resource needs?” In order to obtain information about the feasibility of implementation, the com- pany sent a senior manufacturing develop- ment specialist to a week-long facilitator training course conducted by nationally reputed experts, Beardsley and Dewar (1977). The course provided the expertise and training material required to convince top management to support a pilot program in quality circles. The purpose of this investiga- tion was to obtain results from within one division that would be the determinant of this concept’s long range utility in General Dynamics Corporation.

PILOT PROGRAM IMPLEMENTATION

Plan

The entire six-month pilot program con- ducted January 1 through June 30,198O was outlined in a plan approved by the Pomona steering committee in October, 1979. Schedule, training, and budget were established and attention was called to the importance of interface between this program and existing functions such as the employee suggestion program, quality assurance and the supervisory training program.

Sites

Two facilities of the General Dynamics Pomona Division differed considerably in internal structure and external climate and were the sites for the pilot program. Both were engaged in similar electronics assembly work. However, they were diverse in terms of

Facility Area Population of plant Union Pilot circles

Pomona, California greater Los Angeles 7000 employees yes 2

Camden, Arkans-.s small town; midwest 500 employees no 4

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size, location, and unionization. The head- quarters of the Pomona Division at Pomona, California, located near Los Angeles, em- ployed nearly 7000 and was a union shop. The Camden facility of Pomona Division had approximately 500 employees, no union, and was located in the small town of Camden, Arkansas. The Pomona site was responsible for initial coordination and training at both facilities, however each became functionally autonomous for the duration of the pilot phase. There were two circles at Pomona and four at Camden. Table 1 outlines the sites.

Objectives

The objectives of quality circles had been stated by Beardsley and Dewar (1979): 1. Enhance quality of products and reduce

errors. 2. Improve company communications. 3. Inspire more effective teamwork and job

involvement. 4. Create a problem solving capability. 5. Build an attitude of problem prevention. 6. Develop harmonious management-worker

relationships.

Organization

This program was an integrated system of human resources comprised of seven basic structural elements defined by the following statements: 1. The steering committee consisted of a

diagonal segment of management from the superintendent to the vice-president level, which included the Operations, Industrial Relations and Quality Assurance depart- ments. They were responsible for establish- ing program resources and policy as well as for approving the plan. A steering commit- tee was established at each facility.

2. Circle members were approximately ten volunteers who did similar work and reported to the same first-line supervisor. They were trained in problem solving techniques and met once a week for one hour to identify, analyze, and solve

problems affecting their work. They represented the extent of the workforce continuum in terms of age, ability, motiva- tion, interest in work and other character- istics. Most were female electronics assemblers, which is representative of that job classification. Members of one circle were painters and maskers and evenly divided between male and female.

3. Circle leaders were first-line supervisors of the members and other employees in their designated work area. They received three-days’ training to prepare them to conduct the circle meetings in a participa- tive style and to work closely with the facilitator. They assisted the facilitators in training the circle members and in encouraging their ideas and communica- tion. There were three males and three females between the ages of 34 and 56.

4. Non-member employees were those people who did not participate directly in the circles. Some were in areas not designated for the pilot phase. Others had an oppor- tunity to volunteer and chose not to do so. They are mentioned as a structural element because they were affected by some changes the circles recommended. They also sometimes participated indirectly by passing ideas to a circle member who would convey them to the circle.

5. Department management represented the company to the employees. Therefore, supplying requested information to the circles and timely implementation of accepted circle-recommended solutions to problems was viewed by the employees as company support. Management commit- ment to support circle activities was crucial to the success of the circles. At every employee presentation given,

there were enough volunteers to start a circle. Nonetheless, many areas were not ultimately designated for pilot circles. The initial invest- ment of time coupled with a period of heavy production schedules were reasons most often stated. After many management and employee presentations had been made, six areas, two at Pomona and four at Camden, were chosen for the pilot program.

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Training

All the structural elements except the employees from an area not designated for a circle in the pilot phase received an orienta- tion to the quality circles concept. The primary training effort concentrated on the facilitators, leaders and members and utilized tapes, slides, and manuals purchased from the International Association of Quality Circles (IAQC). The Camden facilitator initially received one week of on-the-job training with the coordinating facilitator and subsequently, a two-day seminar by the IAQC. They in turn, conducted a two-day session for the six leaders which included an introduction to participative style management, communica- tion skills and motivation theory, and the quality circles problem-solving techniques: brainstorming, data gathering recording, Pareto analysis, cause and effect analysis, and presentation techniques. Finally, the leaders and the facilitators conducted one-day sessions for all the members at each location on these techniques. All participants were familiar with the content and business conduct of the meetings which started the fol- lowing week.

Meeting procedure

Upon conclusion of the training, the circles started their weekly meetings and began problem solving. Normally present during each meeting were the members, the leader, and the facilitator. In order to respect the function of the team, and to avoid the fish- bowl effect, only guests invited by the circle and required as resources were allowed to attend. A procedure was followed to guide the problem-solving function since several projects were in various stages of resolution at any given time. Problems were identified by anyone: management, members, the leader or by technical specialists. Problem selection, however, was done only by circle vote after using a technique to rank order them. Data collection and analyses were also done by the circle, with assistance from any technical

specialist or other resource the circle requested. The members recommended solutions to management, informal presenta- tions prepared by the members themselves. Management reviewed the recommendations and decided whether to implement or reject the solution. They presented a decision to the circle in a subsequent meeting. Then another problem was selected by the circle, and the process was repeated.

RESULTS AND DISCUSSION

The pilot program was not a controlled experiment, but a field observation inter- jecting one variable into all others, i.e., quality circles into the regular working environment. Therefore, it is difficult, if not impossible to attribute a specific proportion of the observed results directly to quality circles. The effects of other parameters, such as contract maturation and changes in management, workforce, equipment and facilities were immeasurable and possibly contributed to or detracted from results. However, interviews with management, cost analysts, and work measurement engineers revealed no systematic biases. All comparisons were made using like periods before and after implementation. That is, the pilot program period, January-June 1980 was compared with January-June 1979.

Morale and motivation

Several criteria sssociated with morale and motivation were monitored.

Employee suggestions - This criterion was used as an indicator of job involvement and interest. If employees were increasingly involved in their work, they would be more inclined to submit ideas to the Employee Suggestion Program. Table 2 illustrates the difference in submission rates in like periods before and after implementation of quality circles. That difference was significant at the p < 0.05 level on the t-test of the difference between means for correlated samples. It is

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TABLE 2

Percent of people submitting employee suggestions

Before January-June 1979 After January-June 1980

Quality circles

members 13.7% 74.7%

Other employees 8.8% 6.7%

Number of suggestions submitted 923 980

of interest that the 65 members influenced the magnitude of the submission rate for the rest of the approximately 3300 employees eligible for the suggestion program. That is, the submission rate for the other employees declined while the absolute number of sub- mittals did not.

Attrition - Only people terminating employment with the company were in- cluded; transfers between departments were not included. The attrition rate was 8% in the circles compared to the factory-wide rate of 25%.

Attitude survey - A survey was conducted at the completion of the pilot phase. Responses to all questions were 84-100% favorable. Circle members felt that the pro- gram had made their jobs more enjoyable, had improved their relationship with their supervisor and fellow employees, and had impacted the quality of their own workman- ship. Many circle members had invested some of their own time in circle activities. Atten- dance at the meetings was 95%. Ninety-two percent of the members felt the program should be continued and expanded.

Attendance - Company attendance and circle attendance were both monitored. There was no significant difference in company attendance in like periods before and after implementation of quality circles. Attendance at the circle meeting on days when members were in plant was 95%.

Grievances - The number of grievances filed in circle areas was monitored. This

criterion remained the same during the pilot program as it had been during a like period in 1979: two filed in the two circles in the union.

Management assessment - Managers of circle areas were asked for their subjective assessment of the program. They were pleased with the progress the circles had made. Several comments attributed employees’ improved attitude to the program. Others attributed substantial portions of the observed productivity improvement to employees’ participation in quality circles. Others drew attention to a team spirit and quality consciousness not present before the program.

Performance - Performance measures were specific projects, realization and quality.

Specific projects - The circles solved many kinds of problems; those involving time savings or rework reduction were readily quantifiable. Others, directed toward quality of work life frequently resulted in greater employee satisfaction, but were impossible to assess monetarily. One example is a rack that was designed by a circle to organize masking material in the paint shop. The painters had organized the material in a central location and saved an estimated 120 hours at an annual rate. The same circle collected data showing that hand sanding parts used 147.8 hours labor time in a two-week period as opposed to negligible labor time dipping the parts in solvent. The circle recommended a new heating element to make an existant

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solvent tank operational. The value of each circle’s projects was measured in terms of cost and time savings. The estimated dollar savings per circle for the pilot phase was $3500.00.

Realization - Defined as the ratio of standard hours earned to the actual hours expended to do a task, realization was the indicator of operator performance efficiency. It was the established measure of work cost center performance in the factory. However, many factors influence it which made it a somewhat inaccurate assessment of individuals’ performance. Rework items did not earn standard hours and scrap items were subsequently deducted. Those aspects reduced realization but liability for them wasn’t always correctly attributable to a specific work cost center. Additionally, data were available only at the work cost center level, not at the circle level. Realization then could only be used as an indicator of per- formance, not a direct measure. Nonetheless, it was monitored in two of the size circle work cost centers and the average improvement amounted to 1227 hours saved.

Quality - This was subjectively evaluated by Quality Assurance personnel and manage- ment by statements alluding to a general quality consciousness exhibited by circle members. Objectively, two circle areas main- tained their defect rate 20% and 50% better than the acceptable quality level for nine weeks.

CONCLUSION

The purpose of this investigation was to determine the long range utility of quality circles in General Dynamics Corporation. The results obtained were presented at the corporate office in St. Louis, Missouri and were accepted favorably. At that meeting a team of representatives from all aerospace divisions was designated to initiate implemen- tation plans in those divisions. Subsequent presentations in one marine division and two subsidiaries culminated in implementation plans for those plants.

Cautions must be mentioned when

reviewing how well the objectives were met. Many variables affected the outcome of this field observation. Some variables, such as normal variations occurring from day to day, could not be identified, measured, or con- trolled. Fluctuation in circle composition by transfers between departments at the member, leader, or upper management level responded to immediate requirements or work flow. One circle had three successive supervisors during the pilot phase. Two of the three supervisors were not proponents of quality circle activities. That circle performed relatively poorly. Other variables such as new equipment, methods or facilities may have improved performance but possibly were accompanied by an initially less productive learning period. Performance in another circle’s work area cost center improved by almost 50%. However, improvement in this area had begun prior to circle implementation and was attributed to that cost center’s acqui- sition of an exceptionally capable supervisor and a dedicated technical support staff. The improved performance continued after the circle’s implementation. In this circle, the initial leader remained during the pilot phase; subsequent changes in upper manage- ment did not prove detrimental because the entire management team was highly effective and supportive of the program. In this case, the management credited a portion of the improved performance directly to quality circle activity. These variables illustrated that the positive and negative results had to be interpreted with caution.

Nonetheless, the degree to which the objec- tives specified in the plan were met was indi- cated by the observed results and provided a basis for projecting a savings to cost ratio. Only two specific measures of these objectives, attendance and the number of grievances filed showed no change. Attendance could have been affected by a high rate of overtime. Excessive overtime work renumerated by higher, overtime pay is not uncommonly followed by the overtime worker opting for a day off the next week. The absent worker loses only straight time pay and gains the flexibility of determining which

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day off to take. The other unchanged measure, number of grievances filed, could have been a consequence of the relatively short time span of the pilot program.

Positive changes were observed on all the measures taken to address product quality, error reduction, job involvement, and problem-solving capabilities. Job involvement expressed by the number of submittals to the employee suggestion program showed over- whelming improvement. Members had many new ideas about their work as they became active in decisions about it. Another conclu- sive measure of job involvement was attrition. The difference between the 8% rate observed in quality circles and 25% in the factory-wide population produced a lucrative savings potential of 2/3 in projected rehiring costs, That projection assumed factory-wide applica- tion of quality circles and observation of the lower attrition rate. Realization and specific projects as indicated in the results were global measures of several objectives and were calcu- lated into the overall savings to cost ratio. That ratio was over 7 :1 based on scheduled expansion of up to 45 circles by June 1981.

This ratio was considered an important factor in determining whether or not to undertake a permanent quality circles program. However, many other criteria, impossible to measure in the short term, must be considered as part of a long term invest- ment in an ultimately profitable venture. The general quality consciousness that was evident through circle activity incorporates quality control into every step in the production process. Employees function in an error- prevention rather than an error-detection mode. More effective communication emerges as employees work more closely with manage- ment in solving problems. A synergistic effect is seen as development of employees’ capabil- ities and learning more about their work environment produce greater self-confidence and enthusiasm. Greater cohesiveness between the employees and their supervisor ensues. The emergence of natural leaders through quality circles provides management a basis for profitably planning supervisory develop-

ment and training endeavors. Frequently, supervisory promotions are made on the basis of specific job performance, not leadership ability. Additionally, quality circles partici- pation at the leader and facilitator level is a powerful management screening and develop- ment tool. Good supervisors make good leaders and they become even more effective. Supervisors who are ineffective leaders are identified through poor employee attitudes and work cost center’s performance. The role of facilitator provides a proving ground for development of interpersonal skills and human sensitivity required for “management by caring” of the diverse workforce of the 1980s (Massey, 1980).

The results and benefits of quality circles become particularly meaningful when ob- tained from within the organization as these were. However, there are some limitations with the time frame used that should be expressed. As mentioned earlier, a six-months monitoring phase preceded by only four months of research and preparation is a very short interval in which to accomplish real and long lasting organizational changes. Its use here does not imply that it is considered adequate. It didn’t allow sufficient time to orient the organization at large and to insti- tute a state of readiness to accept participa- tive management. In some cases several years were required for this in Japan. Further, because such a small segment of the organiza- tion was involved in this effort, wide-spread commitment to it was not present.

In conclusion, quality circles are an effec- tive means to productivity improvement which taps that other 90% of human potential still available that Fullmer discussed (Fullmer, 1981). It has demonstrated that improved human performance and morale are realistic outcomes possible from participative manage- ment. Opponents still allude to the Hawthorne effect where results were attributed not to experimental variables, but to the attention paid to the employees for their participation. Perhaps they have missed the point; quality circles provide an avenue for sustained attention to people through

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continued employee-. management involve- ment in problem solving. Sensitivity to human needs in industry and humanizing the work- place contribute to company and national economic growth. This brief investigation and Japan’s 20-year experience with the concept of quality circles attest to it.

ACKNOWLEDGEMENTS

The author acknowledges P.A. Powell, L.K. Dell’Osso and N. Bozich for supporting this effort. Special appreciation is extended to D.M. Carlson for instigating this endeavor.

REFERENCES

Amsden, D.M. and Amsden, R.T., 1976. Quality circles: a challenge to ASQC. ASQC Technical Conference Transactions, Toronto, pp. 244-24

Beardsley, J. and Dewar, D., 1977. Quality Circles Facilitator Manual. J.F. Beardsley and Associates, San Jose, CA.

Byron, C., 1981. How Japan does it. Time, 117(13): 54-60.

Deming, W.E., 1980. If Japan can, why can’t we? NBC Whitepaper.

Fullmer, T.P., 1981. Clues to motivation and produc- tivity. Speech at American Society for Perfor- mance Improvement Conference, Los Angeles, CA, February 1981.

Juran, J.M., 1967. The QC circle phenomenon. Industrial Quality Control, pp. 329-336.

Kondo, Y., 1976. The roles of manager in QC circle movement. In: D.M. Amsden and R.T. Amsden (Eds.), QC Circles: Applications, Tools, and Theory. American Society for Quality Control, Milwaukee, WI, pp. 41-54.

Massey, M., 1980. Speech at National Management Association, General Dynamics Electric Boat Division, Groten, CT.

Tamura, Y. and Noguchi, J., 1980. Recent advance- ment of the QC circle. In: Japanese Union of Scientists and Engineers, Reports of QC Circle Activities, 13.