Scanlon August 2004 E-zine

Greetings!

In this month's E-Zine we feature stories on Magna-Donnelly's unique Equity structure, Pacific Cast's new T.E.A.M. plan and the connection between Sustainability and the Scanlon Principles.

Sustainability: the Scanlon Connection

Sustainablity is about creating the things we need while preserving our environment.

Three years of research on how to lead successful sustainabilty efforts has led Professor Bob Doppelt to believe the Scanlon Principles are necessary for organizations to develop successful sustainability programs and processes. Read this month's article on Sustainability: The Scanlon Connection to find out more.

Scanlon Thrives At Magna Donnelly; VonIns Elected Committee Chair



Magna Donnelly Corporation, a long-standing Scanlon member headquartered in Holland, Michigan, continues to support the Scanlon Leadership Network and embody its principles and processes through Magna Donnelly's Equity Structure. The Equity Structure embraces the Network's four principles of identity, participation, equity and competence, and reinforces the company's open door policy by encouraging two-way communication.

"It's been almost two years since the acquisition of Donnelly Corporation by Magna International," said Tom VonIns, the newly elected Magna Donnelly Committee Chairperson. "Overall both cultures fit together very well and the transition has been smooth as we continue to have a high level of employee involvement and participation with our Equity Structure."

The Magna Donnelly Equity Structure embodies the principles of the Magna Employee's Charter by resolving issues of fairness quickly and effectively and supporting the open door process by giving employees the opportunity to ask questions, communicate concerns, and influence the issues and policies that affect them while balancing the needs of all stakeholders. The Equity Structure consists of equity representatives, building forums, equity chairpersons, the Magna Donnelly Committee, and the Committee Chairperson.

As Chairperson, VonIns is an elected, full-time committee member set to begin his three-year term and will play an integral role on the Magna Donnelly Committee. VonIns is responsible for overseeing Magna Donnelly's Equity Structure by involving employees from all levels of the company in the equity process, maintaining the principles of the Employee's Charter, and developing and facilitating training for equity representatives. VonIns will serve as a resource to equity representatives, equity chairpersons, building forums, human resources, and management. He is also expected to represent Magna Donnelly as part of the Scanlon Leadership Network, especially at the organization's annual conference.

"This position will be a challenge, but it's one that I'm definitely ready for and excited about," said VonIns. "The Scanlon principles have been embraced by Magna Donnelly for decades and I personally support these beliefs. I'm eager to see how each location utilizes our Equity Structure and puts it into action to best meet its needs."

VonIns has been with the company for 16 years, starting his career in production and most recently serving as a team leader and supervisor for the past thirteen. His primary role as Committee Chairperson is to see that the Scanlon principles are put into action and upheld at more than a dozen manufacturing facilities and offices throughout Michigan, located in Holland, Grand Haven, Newaygo, Lowell, Grand Rapids and Holly.

"Because Magna Donnelly has become more decentralized with its policy development, each plant is responsible for ensuring that policy development happens within its business group and each has latitude to make policy changes respective to their site," VonIns explained.

He will ensure that each plant understands how to make a policy change, how such changes impact the bottom line and the training that is involved, and will also assist with implementing policies. Two plants, located in Holly and Lowell, Michigan, did not have a Scanlon plan in place previously.

"I think these locations will prove to be an interesting educational process," VonIns said. "We'll have the opportunity to build these plans from the bottom up and tailor the Scanlon principles to each facility. I'm looking forward to getting started."

Magna Donnelly, a subsidiary of Magna International, is the world's largest producer of automotive mirror systems. It is also a major supplier of automotive electronics that will provide automotive control, sensing and communications systems to improve vehicle safety and convenience. Magna Donnelly has more than 8,000 employees in 16 countries around the world and supplies products to every major automotive manufacturer.

Pacific Cast Renews T.E.A.M.work

Pacific Cast Technologies, Inc. launched its updated Scanlon Plan T.E.A.M. (Together Everyone Achieves Milestones) this month, laying the foundation for the company's new culture. Headquartered in Albany, Oregon, the company specializes exclusively in titanium investment castings and produces large, complex castings for the commercial and military aerospace industry.

"The firm's original Scanlon Plan was developed in 1997," said Human Resources Manager Bruce Wilmot, who played a key role in the renewal process and will help oversee implementation of the new plan. "We have since changed ownership and how improvements and bonuses are calculated and measured. During the renewal process, we realized that the original plan was written with regard primarily to bonuses and we didn't want to focus solely on that. It was called the Gainshare Plan and employees measured our success based on whether or not they received a monthly bonus check. The principles of Scanlon are much more involved than just the payment of a bonus."

To begin the renewal process, Pacific Cast organized a 14-person cross-functional design team. The team's primary goals took shape as the process got underway, including ensuring all employees are educated about the plan and understand it, full employee participation in the improvement process and revising the bonus formula.

"Our new T.E.A.M. plan emphasizes the equity triangle and, using the identity, participation, equity and competence principles, has turned into an immense training and orientation for employees as to what Scanlon is all about," said Wilmot.

While some issues took more than a year to design and finalize, the team encountered its biggest challenge with putting the plan into action, which originally required a 75% employee vote.
"We discussed the possibility of not reaching 75%," Wilmot explained. "We realized that whether we received more or less, we were still going to continue with educating employees about Scanlon and the culture we are trying to achieve. A vote no longer made sense to us so we decided, rather than voting, to conduct a survey."

The survey asked whether employees understood and supported Pacific Cast's new culture. It was distributed to all employees within a few days of the plan's launch and consisted of three options. 1. Yes, I understand and support the plan and will participate. 2. Yes, I support the plan, but I do not understand all or part of the plan. 3. No, I do not support the plan.

The results of the survey showed that 75% of all employees supported the plan, with the majority of respondents both understanding and supporting it, while some still had questions. In addition, out of the 84% of returned surveys, 89% supported the plan. The company intends to continue with education programs for all employees and hopes to raise the level of support and understanding over time.

"This T.E.A.M. plan is now the benchmark for ongoing operations," Wilmot added. "We'll address issues as they arise, such as how to conduct our monthly rewards and recognition meetings or what the next employee training program should be."

Pacific Cast created a T.E.A.M. Steering Committee with representatives from all manufacturing areas, quality and engineering, and human resources to oversee the plan's ongoing implementation and resolve questions.

"Improving the skills of our employees through problem solving, conflict management and communication skills seminars and allowing them to work together in a fashion that will help bolster the improvement process is what this is all about," Wilmot said. "Making improvements enables us to continue to compete and return above-average value to our employees, customers and shareholders."

In order to continue to improve in every aspect of the business, Pacific Cast's plan supports full employee participation in the improvement process by dividing the workforce into small teams. These teams are just beginning to function and will meet for training purposes, to discuss problems in operational areas, for periodic updates or monthly informational meetings.

"We realize that our Scanlon Plan is a process not an end-all answer," said Wilmot. "We expect what we do and how we do it to change over time with regard to engaging these teams in the improvement process." When an idea or suggestion is presented, it may be addressed in a number of ways including assigning an area-specific or cross-functional task force to handle it. This has been part of Pacific Cast's standard procedure for years.

In addition, Pacific Cast will have payouts on an annual basis now instead of monthly to protect the company's shareholders. The specifics for the bonus formula are still under review. Members may see a copy of the T.E.A.M. plan in the member only area of the Network web site.

Pacific Cast Technologies has developed a fast, reliable process for manufacturing the industry's most advanced and complex large-scale, near-net-shape castings for customers such as Boeing, General Electric and Lockheed Martin.

Sustainability: The Scanlon Connection



In his book "Leading Change Toward Sustainability: A Change-Management Guide for Business, Government and Civil Society," University of Oregon Professor Bob Doppelt highlights five principles for environmental and social sustainability, four of which are comparable to the Scanlon Leadership Network's identity, participation, equity and competence principles, and provides companies worldwide with a set of guidelines for becoming environmentally sustainable.

"Historically, companies really struggled to understand how to adopt environmentally, socially and economically-sound principles to achieve sustainability," Doppelt explained. "These guidelines target how leading sustainability companies have been able to succeed by developing a clear vision and set of practices to follow regarding how they want to operate. The Scanlon Principles provide a solid foundation for sustainability and how to reduce and eventually eliminate a company's impact on its surrounding environment."

Doppelt suggests that every organization: 1. Follow a vision and a set of principles focused on conserving the environment and enhancing social and economic well-being 2. Continually produce and widely distribute information necessary for expanding the knowledge base and measuring progress toward a core purpose or vision (Identity), 3. Engage all those affected by the organization's activities (Participation), 4. Equitably share resources and wealth generated by the organization (Equity), and 5. Provide people with the freedom, and authority, to act within an agreed-upon framework. (Competence)

Without Scanlon or Doppelt's five principles, companies will not have the tools necessary to tackle myriad environmental issues, such as global warming, and succeed.

The growing consensus among scientists and governments is that we can and must do something to combat global warming. New York Attorney General Eliot Spitzer has joined the cause and is quoted in a BusinessWeek special report published this month warning, "Global warming threatens our health, our economy, our natural resources, and our children's future. It is clear we must act."

"Global warming is the ultimate issue of sustainability and the way in which our worldwide economy operates is at the heart of this debate," Doppelt explained. "While we used to believe that global warming was the result of how humans relate to energy use and production, it has now been shown that the entire way that goods and services are produced may contribute to global warming. We must systematically redesign how we produce and deliver products and services - by making them less energy intensive and from a renewable energy source."

Through his research, Doppelt found that the most successful sustainability companies have a participatory leadership structure because sustainability requires a fundamental change in the way society produces and uses natural resources and energy, which can only occur if everyone is on board.

"We can make this transition but it will require a major cultural change and a change in the way we think. The Scanlon Principles are at the core of an organization's ability to make this kind of major shift," he said. "Those who have formally adopted Scanlon are already being proactive in their management approach. I hope to work with these companies in the near future to target the similarities in both sets of principles."

Bob Doppelt is Director of the Program on Watershed and Community Health, a Courtesy Associate Professor in the Department of Planning, Public Policy and Management, and the academic coordinator for the newly formed Sustainability Leadership Academy at the University of Oregon in Eugene, Oregon.

For more information on global warming, read the special report by John Carey and Sarah Shapiro in the August 16, 2004 issue of BusinessWeek, titled "Global Warming; Consensus is growing among scientists, governments, and business that they must act fast to combat climate change. This has already sparked efforts to limit CO2 emissions. Many companies are now preparing for a carbon-constrained world."

As I See It - Buz Sutton



Buz Sutton, Salvage Analyst/Shift Lead at Pacific Cast Technologies in Albany, Oregon has been with the company for more than seven years and most recently helped to rewrite the company's T.E.A.M. (Together Everyone Achieves Milestones) plan as a member of the design team.

"I first learned about Scanlon when Pacific Cast adopted its plan and have become more involved over the years," Buz said. "There was some resistance to change at first, but everyone began to see the positive outcomes as more ideas were suggested and implemented. As changes started happening, production increased, attitudes improved and everyone was on board.

"The aspect of the Scanlon program that I enjoy most is that it allows the individuals to have a voice in the way the company is run. The president still makes major job decisions, but the workers on the floor are involved with production and know what we have to do to improve our work areas, the product flow and ultimately, the bottom line. This tends to give everyone a sense of ownership in the company. I'll even catch myself and other employees using words like 'we' and 'us' when talking about the company instead of 'them' and 'they' like I used to hear.

"Although the number of suggestions has dropped off, one will come in that really gets the inventive juices flowing and several more ideas will follow. I can see a marked improvement in personal ownership after a suggestion has been implemented that was made by one of our teammates. Everyone realizes that if it's good for them, it's good for the company and that positive feedback has been wonderful!"

As I See It - Penny Tibedo



Penny Tibedo, Front End Operations Manager for Pacific Cast Technologies in Albany, Oregon has been with the company nearly eight years and involved with Scanlon since its inception at the company.

"I attended the Annual Conference in 1997 and that was my first real exposure to Scanlon," Penny said. "It was such an awesome learning experience. Since we were fairly new to the process, it was interesting to talk to people that had gone through it. We were able to share both the successes and the growing pains that occur with this type of culture change.

"With the Scanlon culture, I think that seeing the improvements are the biggest reward. As a member of the Front End Improvement Team, we developed a Steering Committee for suggestions from employees on the production floor. We review the suggestions weekly, develop a plan of action and then go to the floor for feedback. We have a sharp workforce and have implemented some big suggestions in the past few months - such as improving quality and reducing the time needed to make parts. Employees are seeing that their suggestions are paying off and the satisfaction of seeing these improvements come to fruition is great.

"We're a big team and we're always looking for improvements. Everyone is comfortable talking with one another to make sure that happens. Scanlon has helped a lot of people to grow and feel they can express their ideas. I see the results of the suggestions that we implement and for me it's rewarding both professionally and personally. Scanlon isn't just something you have to do - it's a way of life that needs to be as common as brushing your teeth. We're heading in that direction."