In the mid-1980s, morale at General Electric's mobile communications plant in Lynchburg, VA couldn't have been much worse. The business had been losing money for years. Angry employees said that managers didn't know their names, much less talk to them.
"You were told what to do and when to do it," recalls one plant worker. "You were just a machine. I didn't know what the final product looked like--and I didn't care."
A pay freeze, a layoff of nearly one third of the work force, and other cost-cutting measures returned the unit to profitability in 1986, though morale had sunken even deeper. Management brought in Dr. Tim Ross, a Chapel Hill, NC-based expert on employee involvement and group incentives. His recommendation: a team-based incentive plan, where employees would be rewarded for ideas that cut costs and improved quality.
Everyone Wins The program was called "Winshare," a name created by an employee, meaning that the company that wins together shares that success. In its first year, 36 self-directed teams--Win teams--comprised of 495 members produced more than 1,100 ideas, saving the company $7.1 million. Winshare snowballed quickly into an avalanche of personal and business transformations, one of the most striking of which was Sam Hedrick--originally a skeptical plant worker and today the coordinator of the program. Hedrick's business card identifies him as: Humanitarian, Empowerment Evangelist, Story Teller, Winshare Coordinator.
By 1990, the business had improved sufficiently for Ericsson, Inc., the Swedish telecommunications giant, to buy a controlling interest in the Lynchburg facility. The plant is now part of the corporate owner's core business strategy, manufacturing cellular phones and radio systems.
After ten years, the Winshare program has evolved beyond anyone's imagining. The money that management hands over to each team to implement its ideas reflects its commitment to the program. Back in 1987, each team was allotted $250. Today, each team receives $6,000, and the number of teams has doubled.
Employees have responded with enthusiasm and trust. While team enrollment has roughly doubled during the decade, the number of solutions proposed and adopted by workers in 1996 is more than six times that of a decade ago.
Bright Ideas The Win teams are divided by production areas or service units, such as credit collections or billing. Teams are empowered to approve any solutions they propose for their area and to call on outside support, such as engineers, as required.
The ideas they approve are as simple as moving a trash can from one end of the production line to the middle to save workers time and as complicated as changing the computer program for the production line. The impact of these ideas can be dramatic. For example, one employee suggested a way to salvage wasted parts and saved the company $100,000 in 12 weeks.
The Incentives Originally, the Winshare plan compensated teams by measuring the return on assets and paying a percentage of base pay for returns above a stated threshold. Today, the bonus is structured around specific priorities set by management. In 1996, for example, the focus was increased inventory turns and decreased cost of product. The 63 teams produced $10.4 million in savings and received 4.5 percent of base salary as bonus. Although just over 1,100 of the 1,400 eligible employees signed up for Win teams, everyone shared in the bonus, which worked out to an average of $800 per person.
Ericsson also presented approximately 15,000 non-cash Recognition Awards to individuals who had submitted solutions, among them restaurant certificates and warm-up jackets.
While savings, bonuses, and gifts are all part of the picture, Sam Hedrick insists that "the program is not focused on the bottom line. It's focused on the dignity of the employee. The only thing this looks at is education, communication, and quality of life for the employees." Still, he admits that "the bottom line is always affected when the quality of life is there, and the employee is satisfied."
Communicating the Message A highlight of the program is the annual Team Spirit Day--basically, a pep rally. An annual Winshare Fair is held partly to show employees in the 950,000-square-foot plant what the finished products look like. Last year, Ericsson CEO Bo Hedfors attended the Fair and spent the day circulating among the 228 customers and 2,000 staffers.
Throughout the year, Ericsson employees give plant tours to customers, business prospects, and suppliers. Customers can ask any question of any person on the shop floor. Afterward, production workers have dinner with the guests. In this way, Ericsson communicates an important message to customers, says Hedrick. "Technology is the given in our business. But more and more, the question for the customer is: Can they trust the supplier?" When customers experience these enthusiastic employees, their trust in Ericsson is solidified, he says.
Other companies--117 to date, among them Hewlett-Packard, Xerox, Volvo, and Whirlpool--have visited the plant to learn how to improve their own empowerment programs. For those who want to emulate Winshare, the key to success, Hedrick says, is "aggressive patience when things don't work as simply as they're supposed to. Also, management must be willing to commit resources, delegate authority, and encourage initiative.
"This requires a very heroic management," he continues. "To give up some responsibilities, entitlements, perks--it's not a simple task to ask management to allow this to take place. That $6,000 for each team comes out of a director's budget. If he had $100,000 and he has three teams, he only gets $82,000."
Still, the payoff has been enormous. As longtime employee Ruby Parrish puts it: "Employees really feel that they have ownership in the company. Before, you were just a number."