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r - 6 COMPENSATION AD APP~.IS~ THE DEMANDS OF THE NEW JOBS As the previous chapter indicated, managers are experimenting with ways to design jobs for advanced manufacturing technology. They are grouping new and familiar tasks into fewer job classifications and encouraging workers to broaden the scope of their jobs or to become multiskilled. They are creating teams and considering the team, rather than the individual job, to be the primary unit of work. As members of such teams, workers are asked to coordinate their activities with those of other team members, to make decisions previously made by managers, to solve problems, and, in varying degrees, to manage themselves. In most cases, the job designs are carefully aligned with the characteristics of the new technology: in some cases, the introduction of new technology in taken as an opportunity to try innovative personnel practices that are in keeping with the company's present or emerging culture. No matter what the catalyst, these new job designs and accompanying practices demand more of workers than did their previous jobs. As a result, managers need to reconsider the appraisal and reward of workers' performance. INTRINSIC REWARDS Some aspects of the new jobs are intrinsically rewarding to cast workers. Broadened and multiskilled jobs offer more variety and are more interesting and challenging. The increased training and education required by such jobs will also be viewed favorably. 46

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47 The majority of workers are likely to think themselves on the leading edge of work, welcome the opportunity to perform such jobs, report greater job satisfaction, and be optimistic about their future employment prospects. A company that is willing to provide such opportunities in likely to have managers that respect those who work for them and thus is likely to be viewed by workers an a good employer. The ef feats of the new technology on working condi- tions are mixed. The jobs are almost always cleaner and quieter, but often they increase the amount of shift work for operators, supervisors, and the professionals supporting the technology. COMPENSATION At the majority of the sites visited, the average pay in the plant increased as a result of introducing AMT. The new technology eliminated many of the lowest paying jobs, thus raising the average pay for the plant an a whole. Some of the workers whose job. were eliminated were retrained for jobs that paid more than the ones they left. The trend toward higher compensation is not without exception, however. Some jobs, if they had been assigned exclusively to one worker, would have paid Begs. Workers were able to keep the same pay or increase it by agreeing to rotate among several jobs and become multiskilled. Although overtime may be higher during Tart-up (as it was at plants J and 0), it is generally reduced when the technology is debugged and achieves steady state. At that point, the plants are running near full capacity (24 hours, 7 days a week) so that work cannot be expanded, and preventive maintenance is practiced more conscientiously so that maintenance work is limited primarily to the day shift. When a higher level of compensation is combined with lower overtime, the effect on total take-home pay is not clear. Three of the plants visited (C, M, and N) had no time clocks to record employees' arrival and departure. Plant M continued to pay workers by the hour, plant C paid a salary biweekly, and plant N paid workers a weekly salary. Three other plants (D, J. and P) also put production worker- on weekly salary, which may have contributed to a reduction in overtime. More companies may experiment with thin practice as labor increasingly becomes a fixed

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48 rather than a variable cost of production. The number of workers required to operate a highly automated plant will be stable, whether or not it is running at full capacity. Isolated instances of limited reductions in compensa- tion were observed. At an automobile company's new components plant (M), workers selected for the new jobs were initially paid less for 6 months while they received full-time training. 0 At two other companies (plants F and G), a few jobs were ~red-circled. no that those who currently held them received the same pay. Any future occupants of these jobs, however, will be paid less. LINKING PAY AND CONTRIBUTIONS Many of the companies visited were experimenting with alternative ways to recognize individuals for their efforts and contributions to the production process. m e degree and variety of experimentation suggest that no consensus has emerged on the best ways to evaluate and reward workers for their contributions with AMT. When every worker in a job classification performed the same set of activities, then it wan feasible to place a consistent value on their contributions. As job classifications decrease in number and broaden in scope and skills, however, no two workers holding the same classification are necessarily performing the name activities. As ~ result, job classifications offer diminishing guidance for valuing a specific worker's contribution to the production process. The number of work modules a worker can perform appears to be replacing job classifications as an objective basis for pay differentials. At an engine _, _ company (plant C), workers decide, with skilled help, what modules they will learn, and they develop a plan for obtaining the training and experience needed to master those Modules. Their compensation is based on the number of Modules learned. More judgment ts required, however, to determine a worker's mastery of any particular module, vigilance in detecting machine malfunctions, or performance as a problem solver or team member. These are difficult judgments for a supervisor or a worker's fellow team members to make.

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49 Objective measures of performance, such as yield or down-time, are difficult to apply to any one worker because of the interdependence among workers, super- visors, and maintenance and other support personnel in highly integrated technologies. Measurements can more readily be made on a team basis, acknowledging team members' collective responsibility for common machines, products, or territory. The increasing use of shop-floor sabeduling systems that require workers to record when they start and finish jobs (e.g., by passing a wand over bar codes) may permit management to continue keeping track of workers' time and the jobs they perform. Even this technological innova- tion, however, may not permit such tracking of workers on flexible manufacturing systems (FMS), which may do a large number of jobs at the same time with the workers less likely to be performing hands-on operations on the parts. PERFORMANCE REVIEW PROCEDURES Performance reviews in the ANT systems studied were of two types: the traditional one-on-one supervisor and employee review, and the peer or team review of the individual. The choice of review type is determined by how well developed the team is and the extent to which it is encouraged to be ~elf-managing. Both type. of reviews assess individual performance in new ways. The highly integrated nature of the work in ANT systems requires that the review focus on the effort and ideas that workers contribute to their teams or to the overall production process. Supervisor. and workers must have good judgment and maturity to make fair assessments. When the team is responsible for the review, it may get comments from support personnel and from managers where relevant. The reviews may be held according to a strict calendar schedule, such an every 6 or 12 months, or when workers complete work modules and ask to be evaluated on their performance. ISSUES OF ADVANCEMENT When there are fewer job classifications, there are also fewer opportunities to promote workers to a higher

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so level in the job hierarchy. Companies with fewer levels were replacing the job hierarchy as a means of advance- ment with a sequence of work module. to be learned. In some cases, workers will quickly reach a plateau. An automobile component. plant (M) with only three nonexempt job classifications expected that unskilled workers would reach the top pay level in 2 years, after passing module reviews at 6-month intervals. An engine plant (C) with two job classification. had one of them, ~technicians,. pas. through six levels in 5 yearn. Each team had 30 to SO work modules to learn in it. area. The plant reported that some people chose not to apply for these jobs when they learned of the lack of traditional advancement. O Managers in a military vehicle component. plant (D) expected that team members would reach the highest level after 4 years. The next step for worker. would be to learn to operate the software and simulation system in the FMS, thus reducing the work presently done by managers. In non-FMS areas, workers who complete all requirements for one classification could move to another work team or area. It may be possible to extend the incentive JO learn by rewarding workers not only for the number of modules learned, but also for their depth of knowledge and skill in performing any one module. Also, management may not be willing to continue rewarding everyone in the plant for the number of modules they can perform. Beyond some point, it does not pay to have every worker skilled in all activities required in the factory, and management may ask how many multiskilled workers are needed and worth paying for. As managers communicate the plant's values to the work force, they will have to emphasize that learning and development must also be cost effective.