The Tread way Tire Company: Job Dissatisfaction and High Turnover at the Lima Tire Plant

Learning Objectives The case has four primary learning objectives: 1. Demonstrate consequences of employee dissatisfaction. 2. Evaluate both direct and indirect costs of employee turnover. 3. Discuss methods for reducing turnover and employee dissatisfaction. 4. Explore the challenges of introducing change into the workplace.

Synopsis
Treadway Tires Lima Plant is faced with a critical problem of

dissatisfaction and high turnover among its line foremen. The turnover rate ran 46% in 2007, with about half of those leaving their positions voluntarily and the rest being asked to leave after failing. Problems associated with the foremen are part of deeper concerns with workforce management and the role that these people play in the production process. The foremen are caught in the middle of an adversarial relationship between the union and management and must cope with the needs & interests of both. To resolve the problem of foreman turnover requires a rethinking of the philosophy that guides workforce management & change the culture that has grown up around that philosophy. With increasing pressure to reduce costs and increase productivity, Ashley Wall must work quickly to analyze the root causes of the problem and provide an action plan to reduce turnover of the line foreman segment.

QUESTIONS TO ADDRESS
1. What is the relationship between line foremen at Treadways Lima Plant and other groups within the plant: general supervisors and area managers, top management, the union, hourly workers, each other? 2. How do line foremen feel about their jobs and why? 3. What are the consequences of those feelings? 4. What are the elements of the work system that contribute to the problem? 5. What action plan should Ashley Wall recommend?

Overview
Rising raw material costs puts focus on cost reduction at plant Turnover is one obvious area where plant could focus to reduce costs & increase productivity. Difficult/strenuous work environment Job of line foreman is extremely difficult and demanding. Performance pressure is intense. 12-hour shifts can take its toll, too, causing both physical & mental strain. Low morale and high turnover among line foremen Employee surveys & exit interviews show problem with employee satisfaction. Less than half of the respondents in the satisfaction survey felt satisfied with the morale. Turnover rate of 46% in the line foreman position indicates serious issues. High frustration/alienation among foreman segment

Comments such as You always have to stay on top of things or they will let you have it; its a jungle in there & The hourly employees showed me no respect reflect a sense of dissatisfaction with relationships in the plant. Only 14% of the respondents in the satisfaction survey felt management was sensitive to their problems.

How do line foremen feel about their jobs?

Unequipped for the job Line foreman complained that he was placed on the job without any training and given no coaching once he got there. He was effectively left alone on the job without the required skills and competencies. Little discretion dealing with employees Union contracts dictated annual pay raises, & grievance procedures provide final ruling in most discipline or termination decisions. General supervisors appear to look favorably upon management methods that had been used in the past, which tended to be adversarial, and the general supervisors did not want to change.

 Career

frustration Few foremen (about 16% of foremen were college graduates) must have felt frustrated by their low potential for advancement. Almost all of the general supervisor and area manager positions at Lima were filled from within the plant, the typical pyramid structure (50 foremen, 13 general supervisors, and 5 area managers) of the plant meant that approximately three-quarters of the foremen had reached the peak of their career progression within the plant. Alienated/betrayed by everyone in the plant (upper management, grievance committees, hourly employees) Line foremen felt that poor communication had cut them off from the rest of the plant, including their own general supervisors. Lack of communication on grievance hearings decisions resulted in a feeling of disenchantment. Foremen felt frustration because they believed their authority was constantly challenged by workers and the union, and then undermined by deals made by the grievance committee. Wall and Bellingham concluded that lack of recognition was also a critical part of the dissatisfaction. Foremen felt that no one is paying attention to usjust putting demands on us.

Consequences of those feelings?

Turnovervoluntary and involuntary; functional and dysfunctional

Ashley Wall indicated that 43% of the turnover was voluntary (employees left by their own choice) and the remainder was involuntary (asked to step down due to poor performance or work rule violations). Turnover can be beneficial when low-performing or disruptive employees decide to exit (functional turnover). Dysfunctional turnover occurs when desirable, high-performing employees leave. The Lima Plant had examples of both types of turnover. Internal turnover is at 40% and external is at 75%. Half of the external hires leave voluntarily. This is in contrast to internal hires of which only 38% leave voluntarily. These figures suggest that external hires are dissatisfied with the position & the problem will not improve with simple skills training. Other potential expressions of dissatisfaction- Not all expressions of dissatisfaction are active and destructive . C. Rusbult and D. Lowery developed a two-by-two matrix of employee reactions to dissatisfaction.

 Estimate of cost of turnoverSimplified Turnover Costing Model

Average hours worked in a month for line foremen was about 15 days, with 12-hour work days = 180 hours in a month. $30 an hour plus about 40% in benefits = $42 an hour fully loaded. Number of months for an employee to become fully productive could be estimated at about 4 months, with new employees functioning at about 50% productivity while working their way up the learning curve. Number of positions turned over in the year = 23 Calculation: 180 * 42 * 4 * 50% * 23 = $347,760 This calculation although not a comprehensive assessment of the cost of turnover, but it is a quick way to illustrate the fact that turnover is indeed expensive, even when looking at the most basic costs. Other costs of turnover Other direct & indirect costs that could be added in a more sophisticated costing model. Revenue loss due to productivity decline Recruiting Costs Screening/Interviewing/Evaluation Costs Training Costs Separation Costs (Human Resources staff time, unemployment expenses, potential legal fees etc.)

Elements of the work system that contribute to the problem?

Lack of training Complaint by foremen about lack of adequate training is apparently justified. Many of

the foremen are placed on the line after only a few hours training: The general supervisors expect them to just sink or swim. General supervisor Herb Adams stated he didnt have time to spend training foremen. There were only about 4 foremen for every general supervisor, so there may have been an opportunity for on-the-job training by general supervisors that was not being taken advantage of. There was apparently no effort to promote networking among foremen: having experienced foremen coach inexperienced ones or having college graduates help those with less formal education. Ashley Wall did develop an innovative training program in 2007, but it was not a priority and was cut from the budget. Consequences of this lack of training are serious. Foremen felt frustrated by their lack of preparedness. Much of their job was a mystery to them: how to fill out a time sheet, how to handle a grievance. Finally, this lack of training resulted in little or no real understanding of how the rest of the organization worked: including departments like Industrial Engineering which have a critical impact on their own job (i.e., for instance, established the performance standards for foremen). Such lack of knowledge made commitment to the total organization difficult and enhanced feelings of frustration and alienation.

 Recruitment and selection metrics dont fit with the true

KSAs (Knowledge, Skills, and Abilities) of the job. Although interpersonal skills is listed as one of the three primary dimensions of evaluating applicants for the job during the FLT, there was little evidence that interpersonal skills such as the ability to communicate, ability to delegate, ability to work well with others, etc., were given much weight at all. In the recruitment and screening process, the emphasis seemed to be on the task and short-term results. This is actually consistent with the skills that were prized in the plant, such as the ability to meet forecasts, solve problems, be tough, and control workers. Motivation tools such as promotion, compensation, and termination are not available to the foremen because they are dictated by the union contract and grievance procedures. Motivation tools that are at the foremans disposal include praise, communication, recognition, involvement, feedback, etc. These skills are secondary in the recruitment and selection process and something that the middle managers of the plant hold in low esteem.

Performance evaluation contradictions Line foremen were evaluated annually. Five criteriabudget performance, labor control, housekeeping, absenteeism, and trainingwere noted by plant manager Bellingham. Training, however, was not really ever considered in the performance review. In fact, the key criteria for doing well in a performance review that emerged from interviews and case Exhibit 6 were controlling workers, keeping the number of grievances down, and meeting production forecasts. Foremen had little or no expertise in the handling of grievances, and decisions were often reversed by grievance committee people, who then did not bother to explain their reasons to the foremen. Thus, the only factor in performance evaluations over which supervisors seemed to have much influence was control of workers. Getting tough was obviously not seen as an indicator of advancement potential, so doing well in this area did not serve long-term career goals.

 Poor communications within the plant

Much of the alienation felt by supervisors was due to the almost total lack of communications from other groups within the plant. Other departments operated according to their own priorities and seemed unresponsive and unsupportive to the foremen. Foremen were told virtually nothing about the process of union negotiations or the content of the resulting contract. When the grievance committee made a decision or reversed one, foremen were more likely to hear of it from the union or the affected employee than from human resources. The reason for such decisions was never explained, therefore, the foremen were confused and frustrated when such a ruling was made.

 Adversarial norms within the plant

Foremen comments illustrated their beliefs that workers were not to be trusted, and they were engaged in a constant battle with management over authority. One employee noted in the satisfaction survey, If the hourly employees feel they can get away with something, theyll do it. The work ethic was declining. Foremen felt workers were not motivated by this counseling stuffpresumably meaning that management dismissed the notion that workers were motivated to the extent that the work environment met their higher level needs for esteem, autonomy, and self-realization. Instead, foremen felt workers were motivated by fear and resorted to confronting people, being unpleasant and aggressive, and making an example out of the trouble makers. Hourly workers felt foremen failed to treat them with any respect, and upper management agreed with that assessment. Such attitudes led to distrust, alienation, and bitterness between the supervised employees and the foremen.

Flawed philosophy within the plant The adversarial norms of the plant shows that the problems of the foremen are part of a larger set of general problems with the management of people at Lima. There is a basic philosophy at Lima that workers are extensions of the equipment and not thinkers, and that the union is the enemy. Of course, the union also treats management as an adversary. The implication is that changing the way foremen do their work will require change in several other areas, but most particularly in the attitudes and practices of the middle managers, and ultimately in the top management group. The current plant manager, Bellingham, seems to view the foreman problem as a personnel problem, not a line management or operating problem. Until he sees the problem in terms of how he does his job, and how his senior managers do their jobs, it will be difficult to deal with the root causes.

What plan of action should Ashley Wall recommend?

Recruiting, Selection, and Development Interpersonal skills should be seen as priority & given equal weighting in the FLT. Refocus recruiting and selection efforts to optimize mix of skills, experience, ages, & educational backgrounds in the foreman position. Promotions from hourly floor workers & outside recruitment of individuals with extensive manufacturing background would provide a pool of candidates. This could be complemented by a sizeable number of college graduates recruited for the job for the short term (one to three years) with the intent to promote them to other areas in the plant or move them to corporate headquarters/other divisions in the company. The above policy has three intents: (1) ensures continuing technical and managerial skills at the base of the managerial hierarchy; (2) provides highlevel managerial personnel with an in-depth understanding of, and appreciation for problems of the foremen & the hourly work force; (3) fosters formal & informal interaction among foremen, by promoting the exchange of individual skills and competencies for example, assigning a foreman with extensive manufacturing experience to help a new college-educated foreman in learning the technology, and assigning a new college-educated foreman to help the experienced foreman in writing reports and conducting meetings.

Training Scale back the intensive one-month training program for new foremen that Wall originally envisionedperhaps earmarking two- to four-hour increments each week over the span of a monthto accomplish critical objectives. The training program should provide new foremen with extensive, formal, and on-the-job training in human resource skillsperformance appraisal, problem-solving, communication, etc.as well as in the manufacturing process. The benefits of the training program will outweigh the costs. First, it would reduce the time it takes a foreman to get up to speed to work at 100% productivity. Next, it will provide tools necessary to be successful on the job. Finally, it will increase satisfaction with the job and help retain some of the foremen who may have left voluntarily. Wall must provide Bellingham with a cost-benefit analysis.

 Performance Reviews and Evaluations Formalize annual performance reviews for foremen to include more in-depth rating of key metrics and skills, such as meeting performance objectives, interpersonal skills, and peer mentoring. In addition, seek 360 feedback from subordinates, peers, and superiors, and feed results into both performance review and career development system. Set specific six- and twelve-month performance benchmarks for foremen, general supervisors, and area managers in such areas as training of subordinates and the attainment and use of interpersonal skills. Schedule regular meetings between these groups to discuss progress and growth.

 Higher Level Philosophical Change

Ashley will need to convince senior leadership that significant change is needed in attitudes and norms. If Bellingham sees the problem as an organizational issue, solving it will require major changes in every aspect of the way people are managedtreating people as doers and thinkers, not just doers; redefining relationships between levels of management, between management and union, between workers and the foremen; opening up new lines of communication; training people to cope with a new environment; and establishing new criteria for evaluation and promotion of managers, etc. To accomplish the goals of improving communication & institutionalizing the change in attitude, Human Resources could institute regular meetings with salaried work force & bring in representatives from line management & staff to discuss common issues, problems, concerns, etc. To form temporary, problem-solving task force teams between foremen, representatives of the union,& Human Resources people to diffuse growing distrust & suspicion & open channels of communication, would also benefit. Satisfaction Surveys and Exit Interviews Use these reports and documents to help analyze problems such as turnover. Monitor issues by comparing survey results over time.

 Mitigate Potential Resistance to Suggested Change

Ashley should suggest Long March strategy for change. (Kanter, Jick and Stein, 1992). Change in this situation will not happen overnight and must be carefully considered. Everyone at the plant is under pressure to meet delivery schedules, and Wall must be careful that her plan for the long-term viability of the plant does not create a disaster in the short term i.e., a strike or shutdown of some kind. Ashley must build support and get out to talk with employees at all levels to discover what they think should be done. She should also collaborate with the union to help develop her plan. Wall should try to bring a logical plan with hard data to Bellingham. One of the things Wall needs to worry about is managing her boss.

Conclusion
Careful consideration must be given to recruiting,

developing, appraising, and placing foremen with greater competencies in behavioral skills. Interviews by hourly workers, could help render judgments about an individuals ability to share influence, communicate, and fit in with the existing work system. An assessment center may be used to better understand developmental needs around behavioral issues. Performance appraisals based in part on employee attitudes & surveys could help signal clearly to foremen what is expected of them in terms of subordinate relations. Pay systems could either reward the acquisition of new skills or block such changes by continuing to reward old behaviors.

Learnings
Understand all reasons and consequences of employee dissatisfaction, before implementing any change. 2. Evaluate both direct and indirect costs of employee turnover, understand the need of the employees and try to satisfy the same to control the turnover. 3. Explore the challenges of introducing change into the workplace. When introducing the change, understand the urgency of the same before deciding to use Bold Strokes (Rapid change) or Long March(Gradual Implementation).
1.

Next Session
Topic- Learning and Behaviour Modification

Reading: 57-69