Design and Implementation of a Process for a Large-Scale System Change at Boeing
In 1988 the Boeing Company decided to construct a $235-million Sheet Metal Fabrication Center to replace an existing facility that employs 2,600 people. This case describes the initial stages—plans and organizational approaches—of Boeing's effort to involve employees and managers in the design of the physical plant and the production processes of the new facility. The effort, to be continued after the facility has opened, represents an experiment in creating a common commitment to continuous improvement in the efficiency and responsiveness of a large new production facility.
Boeing, together with its subsidiaries, is one of America's major aerospace firms, the largest manufacturer of transport aircraft in the Western World and the largest nonagricultural employer in the northwestern United States. Boeing was born in Seattle in 1916 (initially under the name Pacific Aero Products, Inc.) and continues to maintain its corporate headquarters there. Boeing's principal business is conducted through three major divisions, Boeing Commercial Airplane Group, Boeing Defense and Space, and Boeing Computer Services. Located throughout the world, the total employee population is nearly 155,000, approximately two-thirds of which is located in Seattle and surrounding areas of Puget Sound.
The Boeing Company is organized in a traditional work structure, with an established ''pyramid" hierarchy. Many administra-
tive functions are centralized, particularly in the support, or service, organizations responsible for policy development and implementation. A more decentralized structure exists in manufacturing and engineering disciplines. This has allowed for maximum flexibility and responsiveness to day-to-day production issues.
A NEW FACILITY: DECISION AND DESIGN
The global market continues to shape the growth and development of the Boeing Company. World competition is on the rise. To remain a leader, the company must make the necessary changes to keep up with new technologies and to incorporate them into manufacturing strategies.
Technology has always been the major driver of change at Boeing. The Boeing Company's founder and namesake, William E. Boeing, once wrote, ''Our task is to keep everlastingly at research and experiment, to adapt our laboratories to production as soon as practicable, to let no new improvement in flying and flying equipment pass us by." However, American industry today reveals a long and increasingly obvious record of less-than-optimum results in technological innovation and implementation, a record that overlooks the contributions of individuals. Today there is a clear need to design ways to develop successful relationships between automation, or advancements in technology, and people. As always, the challenge is to use most effectively the ideas, talents, and contributions of the work force to produce quality products at a reasonable and competitive price in a timely way while exploiting the latest developments in technology.
Today's work force is changing. Workers today
have a stronger self-image;
have greater self-respect and expect treatment as individuals;
are less tolerant of authoritarianism and hierarchies;
want to play participative role in their work;
feel stronger entitlements;
believe they will continue to improve;
want to participate in decisions affecting their jobs, and moreover, believe they have a right to do so; and
have increased concerns for leisure and family life.
These examples represent significant differences from what managers believed workers wanted just a few years ago. In short, the work ethic of employees is shifting. Today, more workers
seek jobs that are interesting, meaningful, and challenging. Industry must listen, recognize the differences, and take the necessary steps to support these changes.
Within the context of global competition and a changing work force at Boeing, a specific element has provided an opportunity for organizational redesign. The Fabrication Division in Boeing Commercial Airplanes is an organization of approximately 15,000 employees located predominantly in a plant about 20 miles south of Seattle in Auburn, Washington. Many of these employees work many miles away from the home plant. The focus of this case study is a group of about 2,600 employees currently located in Seattle. This work force comprises both union-represented and non-union-represented employees. The hourly work force is covered by the International Association of Machinists and Aerospace Workers (IAM). In addition, the Seattle Professional Engineering Employees Association (SPEEA) represents technical nonexempt and engineering exempt staff. Together they make up approximately 72 percent of the existing sheet metal work force. The primary objective of this factory is to fabricate parts, where a need for in-house immediate-response capability is critical to meeting customers' requirements. Known as the sheet metal organization, its primary customers are the divisions responsible for assembly of Boeing Commercial Airplanes. The existing facility occupies one million square feet in four buildings in Seattle built between 1938 and 1949. It has 247 pieces of major equipment, mostly 20 to 30 years old. Material handling systems include fork lifts, tub skids, A-frame transportation dollies, and storage assembly boxes. The facility employs 2,600 factory and support personnel working on 101,000 active part numbers to produce 8.5 million parts per year. It receives on the average 1,000 new part numbers per week. Twenty-five percent of the workload is repetitive (i.e., production that is performed more than once and is within standard flow time); the remaining 75 percent is work requiring immediate response to unanticipated schedule changes (i.e., new customer introductions, new configurations, and short flow implementation). The flow process of a typical part is 40 days, during which it travels 1.5 miles from start to finish.
In July 1988, the corporation authorized a $235-million Sheet Metal Fabrication Center to be located with the parent plant facilities in Auburn. The three primary goals for the new center (in addition to the external issues already mentioned) are improvement in quality and increased efficiency; environmental efficiency; and support of emergent work (responsiveness to customer requirements).
The proposed 816,000-square-foot Sheet Metal Center is described as follows:
Cell concept (streamlining work process flow); parts will travel 0.3 miles versus 1.5 miles.
Automated material storage and retrieval system will be installed.
170 new pieces of major equipment; 272 existing rebuilt for new factory.
Factory Systems Application
Shop floor control.
Integration into existing related computer systems, e.g., Sheet Metal Analysis, Retrieval, and Tracking System, Computer-Aided Three-Dimensional Interactive Application, Order Location System.
Work Force Administration
High employee commitment and involvement system; a Socio-Technical System (STS).
Reduced job titles and broadened scope of responsibility.
Business Production Unit, includes all functions responsible for product delivery along with related support functions.
With the introduction of the latest technology, not all 2,600 employees will be needed in the new factory. Although specific numbers are not yet available, Boeing's objective is to reduce the number of employees by about 45 percent. The majority of this decrease will come from the support functions. Affected employees will be afforded retraining opportunities for placement elsewhere in the company. Details of this redeployment are currently being developed. Boeing does not intend to lay off employees as a result of this new technology.
These comments are representative of a dynamic process that did not actually get under way until spring, 1989. Therefore, the company is in the preliminary stages, with a great deal more to learn and work through.
Since Boeing had never before participated in such an enormous undertaking, the company sought the advice and guidance of a consultant with "hands on" experience in effecting organizational change. Richard Cherry of Consulting for Organizational Effec-
tiveness, Inc., was hired as a consultant. He introduced the concept of a Socio-Technical System, or STS, to seek the best fit between the way people work and the work people do. It is comparable to the high-commitment, high-involvement, high-performance systems referred to above.
At the request of Dr. Cherry, a consultant from inside Boeing was identified to work closely with him. Specifically, Boeing sought someone who had a working knowledge of the existing factory, demonstrated open and progressive thinking, had established a high degree of integrity and credibility with all Sheet Metal employees, and had been involved in training, including quality improvement and group facilitation. In addition, this "first line" supervisor would be provided additional training at various seminars and workshops to gain specific tools to aid in this transition.
To work with Dr. Cherry, a group of managers was assembled. These men and women were included among the company's "stakeholders." Each represented a vested interest in the existing factory and would be an integral part of the new center. This was done specifically to ensure that these decision makers would actually have to "eat a piece of the cake they baked."
It is important to mention here that these stakeholders included representatives from each of the two labor unions that have employees from their bargaining units in the existing Sheet Metal factory.
This team adopted the name Socio-Technical Development Team, or STDT. They began preparing for their tasks through a series of team-building exercises. All team members visited at least one plant around the country where some form of STS had been implemented, and some attended conferences on this subject. The results of this exposure were shared with all members of the STDT. This in no way should be interpreted as an attempt at finding a blueprint to follow. The primary goal from the beginning was to design a system that would be tailored to the Boeing Company and the Sheet Metal Center, appreciating the uniqueness of that environment.
The initial learning process of these stakeholders took about three months. Also included during this time was the development of a structure that would support the work to be done. It consisted of a steering committee, the Socio-Technical Development Team, a diagonal slice (or cross section, of Sheet Metal employees), focus groups, integrators, and implementation groups.
At the same time, the following mission statement for STDT was developed:
Development and recommendation of a plan that "best fits" employee needs with systems and processes, while providing an environment in which people can be innovative in the production of hardware to the quality, cost, and schedule objectives of our customer.
The group saw itself as the primary design or "sanction" group. Given its charter, the STDT then created mission statements for each of the groups in the support structure. The following charter was developed for the new Sheet Metal Center:
The Sheet Metal Center is responsible to provide detail components, minor subassemblies fit for use on a high-quality, leastcost, schedule-responsive basis that fully meets the needs of its customers. The Sheet Metal Center organization is an autonomous manufacturing business unit within the Fabrication Division, and as such is responsible for operational and financial performance within the boundaries of this charter.
The Sheet Metal Center acts as Boeing Commercial Airplane's (BCA) primary sheet metal manufacturing capability for fabrication of designated product line hardware and unique fabrication capabilities.
Support to Boeing organizations other than BCA is limited to developmental programs requiring unique capabilities or emergent support not available elsewhere.
Obviously, the STDT needed a shared vision and support for the Socio-Technical System and its application to the Sheet Metal Center. Introduced by Dr. Cherry and after much discussion, the following design principles were endorsed:
People support what they help create. Effective organizations are more likely to be developed when the individual employees who make the organization work are involved in the design of the organization. They are closer to the work that gets done, their ideas are necessary and valuable to effective design, and if they have been involved they will work hard to make their ideas work.
A balance and symmetry between all stakeholders must be maintained. All groups that have a stake in the performance of an organization ought to be involved in the design of that organization. No one group should have all the say or get everything it wants, but all must be listened to and have their ideas and points of view explored. For example, SPEEA, IAM, management, employ
ees, the Fabrication Division, and the Boeing Company are major stakeholders. The company's customers are also major stakeholders and ought to be listened to closely.
Control (the ability to make certain things happen or not happen) is widely dispersed through an organization. All employees in an organization have some degree of control over what happens or does not happen within the organization. This principle relates directly to the next.
Authority should be consistent with control. In designing effective organizations, it is critically important to provide employees with control and appropriate authority to exercise that control. To continue to put control only at the supervisor level or above is inconsistent with where the authority is needed. For this reason, in many newer organizations, employees at all levels are given greater authority to control or manage their operations.
Management is the responsibility of all employees—not just managers . With appropriate authority, employees today are planning, solving problems, making decisions, and monitoring the performance of their operations. Planning, decision making, and controlling are functions carried out by all employees—labor as well as management—in any organization.
After the STDT embraced these principles as its own, Dr. Cherry introduced the structure around which the team would apply its beliefs. This model is referred to as the Bull's-eye, a set of 12 statements reflecting the managing plant organization's beliefs about people and work and the relationship between these beliefs and the objectives for the plant organization. The Bull's-eye concept includes the following features:
Technology: The manufacturing process(es) to transform raw materials into finished products.
Jobs and People: How work is arranged to accomplish the responsibilities of the job.
Layout: The physical allocation and design of equipment and facilities within the plant.
Information Systems: The flow of communications within the unit.
Structure: The formal reporting relationships, typically represented by a physical drawing or chart.
Supervisor/Management: The definition of duties and re-
sponsibilities expected of individuals occupying particular position(s) of leadership within the unit.
Union/Management: The relationship between the two in achieving agreed-upon objectives.
Rewards: Mechanisms and processes developed within the unit for recognizing differences in performance and learning.
Recruitment/Selection: Mechanisms and procedures employed in developing an applicant pool, and the screening of potential employees from within this pool.
Orientation/Training: Providing employees with the information and skills necessary to operate effectively in the organization and to perform their work.
Personnel Policies/Practices: Corporate, divisional, and local unit policies regarding the treatment and roles of employees within the plant.
Symbols: Those characteristics of the unit which serve to distinguish or differentiate one class of employees from another.
As a point of reference, using the elements of the Bull's-eye and the endorsed design principles, the STDT put together its own set of beliefs, one for each one of the 12 features. This was done to solidify a common vision as well as to further the notion of taking ownership of our own beliefs collectively in support of the Bull's-eye.
Having achieved a common appreciation and understanding of work design, the STDT then began to put its ideas into action. In an unprecedented event, the STDT received approval to conduct a three-day, off-site working meeting to bring, for the first time thus far in the process, a representative group of current Sheet Metal employees together. Existing management was consulted on the number of employees they felt should attend. The decision resulted in about 8 percent, or 250 employees, being made available. The group of 250 represented a cross section, or "diagonal slice," of personnel in the Sheet Metal factory. All paycodes, including management, were included, based on the current percentages each represented, by payroll. A video explaining the process was shown to all 2,600 Sheet Metal employees, who were asked to volunteer and to send in their "application." About 800 employees responded, and the STDT made the final selection.
Both internal and external assistance was called upon to design the three-day session. In addition, because of Boeing's three-shift operation, attention was given to include appropriate representation from each shift. Age, sex, and Equal Employment Opportunity codes were considered as the choices were made.
The meetings were held at the Seattle-based IAM Local 751 (hourly employees) Union Hall. On the first day of this three-day working session, participants listened to various Boeing executives and labor leaders talk about the reasons for change in relation to both external and internal pressures. In addition, the company's commitment was reinforced, as well as the unions' support for the process.
Participants were given a general overview of what they could expect over the next three days. Particular emphasis was placed on explaining that employees would play an important part in making recommendations about how the new factory would operate. Presentations were made describing the current status of design and development of the new Sheet Metal Center, and the parameters within which participants would focus their attention were identified based on the assumptions and decisions that had already been made. On the second day, the participants were introduced to the specific design principles, philosophy, goals, and mission of the Sheet Metal Center. Groups were organized representative of a work crew. All groups were given instructions for participating in a simulation of a traditional factory. This is referred to as the Flying Frisbee Factory exercise. It had all the roles of a traditional factory; there was a supervisor, cutters, painters, quality control inspectors, material handlers, etc., and customers who either accepted or rejected "frisbees" based on their expectations.
After following the predetermined time for this exercise, the participants discussed the results of their work. Collectively, they determined that their quantity was relatively high, but their quality was not. Participants were then given an opportunity to discuss what they would do differently to improve quality. Their ideas were put into action when they were given yet another opportunity to build "frisbees." The results this time produced less quantity, but greatly improved quality. At this point, participants began to embrace with a heightened sense of awareness the reality of their task.
On the last day of the session, participants were asked to write down their ideas on "Post-it" notes and place them on a large piece of paper that supported each element of the Bull's-eye. Later,
each participant was given 12 red dots (strong support) and 12 yellow dots (no support). At intervals controlled by the facilitators and logistics personnel, participants placed the dots on the same large sheets of paper until they had gone through all of the 12 Bull's-eye features. This process, which is designed to capture information in a structured way, is commonly referred to as synergy.
Compiling these recommendations was no small task; it resulted in more than 3,000 different ideas, both pro and con. These results were made available to each participant along with the information exchanged over the three-day session.
Following each day's work, the participants were asked to evaluate their feelings about what had gone on. The STDT and the three-day design group joined in the review. An agenda for the next day also was reviewed, and concerns or issues were included for the purpose of clearing up misconceptions.
At this point, it is important to note that the employees were organized into a "structured" event because the fact that Boeing operates in a traditional environment could not be ignored. Although participants were afforded the greatest possible degree of creativity, realistic parameters and boundaries were set to support and guide their work. This is a most delicate process and requires careful balancing to be effective. Also, it is true that you get out what you put in. Every effort to achieve a most successful Sheet Metal Center was, and will continue to be, applied.
As noted earlier, on the third day of the meeting, participants were given instructions concerning the next step. They learned that there would be focus groups consisting of six people for each of the 12 elements of the Bull's-eye. Then the participants would again be Sheet Metal employees asked to volunteer from the original group of 250 and would have to state in 25 words or less why they wanted to be involved in this next step.
The STDT selected a committee to act as interviewers. It included one STDT management representative and one STDT union leader from each bargaining unit. After about a month, this group of three had selected 72 participants to make up the focus groups.
The STDT decided that the focus groups would be given maximum freedom to explore and understand the issues that came out of the synergism exercise. This meant establishing, in addition to their responsibilities, their own budget to use for plant visits and time spent on the project, estimated to be eight hours (on first shift) per week for a period of six months.
This time frame was established based on the STDT's knowledge of deadlines that would have to be met by April 1989. The
steering committee expects a set of objectives for the 1993 period. They have been assigned the task of defining both the what and the why of these objectives, not at start-up, but five years hence from 1988 when they began; in other words, what they want the organization to be like in the new center by 1993. Included in the model, along with the design principles and Bull's-eye, is the realization that focusing only on start-up expectations gives the people involved nothing to work toward.
Labor and Management Cooperation
Because the Boeing Company has been structured largely on a traditional hierarchical structure, its labor and management roles have been adversarial from time to time. Although some work had already been done in breaking down those walls to progress, the planning process for the Sheet Metal Center has provided a unique setting for more effective communication and mutually beneficial negotiations.
From the start, the Boeing Company has not avoided the reality of bargaining agreements; instead it has recognized the absolute necessity of reaching acceptable agreements that support the objectives of both labor and management.
As late as 1986, Boeing introduced into the IAM agreement an article that allowed for pilot projects and, more important, opportunities for exploring new ways of doing business. This direction provides a new opportunity for agreeing on the future success of the aerospace and aircraft industry. Although Boeing is not breaking new ground in American industry, it recognizes the benefits of such a cooperative relationship.
The IAM bargaining agreement, as well as SPEEA's, is up for renewal in fourth quarter of 1989. That adds a unique feature to the negotiation process for the Sheet Metal Center.
There are numerous labor issues that will be addressed in upcoming months. Until the steering committee receives recommendations from the focus groups, it is impractical to elaborate on what these will be. In any event, a joint labor-management committee under the steering committee and the STDT will review the recommendations further for possible future adoption.
The following lessons embody the essence of work to date:
Get the unions involved early.
Identify the management who are ''stakeholders'' and empower them to be responsive and responsible for the "deliverables."
The employees directly involved will test the system.
Allow more budget and time for all teams to do their jobs.
Be more relaxed (especially executives) regarding the deliverables.
Break through indifference and resistance.
Do hire a consultant if in-house capability does not exist.
Recognize that a consultant does not have all the answers.
Do assign in-house personnel to work with the consultant.
Do not be talked off your course of action once the commitment is made.
Include all stakeholders.
Communicate frequently with all employees involved, especially first-and second-level management.
"Walk the way you talk," or demonstrate your understanding of, and belief in, the STS through your daily activities.
Plan to do it right the first time; that is, plan, check, and act to ensure a successful outcome.
Maintain a record of process development, design, and implementation for future reference.
"Trust the process," or stay on course with the objectives.
Boeing does not expect to have all the issues and recommendations in place when the new factory opens. Implementation groups will be formed, bringing together representatives from the unions and a diagonal slice of all employees, including management. Their task will be to determine how to accomplish those recommendations that have been endorsed for application in the new facility. Their role will be to ensure congruence and systemic compatibility, that is, building in an interdependence between all functions and supporting procedures throughout the organization.
The steering committee is expected to develop the "roadmap" for achieving the changes agreed upon. Further, all involved employees, unions, and functional management will have to pay particular attention to integration of their efforts into the transition plans to provide for a smooth phasing-in and phasing-out process. For example, issues that must be considered include the attrition rate of existing employees, matching workers' abilities with the phasing schedule for movement of equipment and the training
and retraining required, as well as an increased rate of airplane production in support of Boeing's customers. This is no small task!
In summary, the large-scale organizational redesign that Boeing is undertaking is not only precedent-setting but necessary as the company moves into the next century. This experience offers the opportunity to learn not only a new way of doing business but also a new way of involving employees in achieving continuous improvements in both the quality of the product and the quality of their working lives.