SCANLON NEWS

Below you will find SCANLON NEWS, which was distributed during the annual conference held earlier this year. The September internet Scanlon E-zine follows the SCANLON NEWS articles.

From Parts To Pets, Scanlon Improves

Service And Profitability

When Limerick Veterinary Hospital joined seven years ago, it became the most unusual member of the Scanlon Leadership Network. But although Limerick was far removed from the manufacturing base of the Network, its goals for the business and its employees were quite similar: engage employees in the business for self-fulfillment, and improve the care and services of the hospital for its patients and their owners. Limerick adopted its Scanlon Plan, People at Work Succeeding (P.A.W.S.), in 1998 to help achieve these goals.

As a service-oriented practice, Limerick, located in southeastern Pennsylvania, had to adapt the Scanlon Principles and Processes accordingly. Catering to a different kind of client, Limerick implemented P.A.W.S. to strengthen its position in veterinary medicine to provide compassionate care for its best friends and their owners.

“We’re in the service business,” said Dr. Charles Koenig, President of Limerick. “Most Scanlon companies are in the business of making parts. But just like anywhere else, if you don’t know what’s going on, you can’t help fix problems.” Since the inception of P.A.W.S., Limerick employees are more informed, and are more involved in the day-to-day activities.

“I was initially attracted to Scanlon because of Dr. Frost’s approach to management,” said Dr. Koenig. Dr. Frost was the founder of the Scanlon Principles and Processes.

“It’s the idea that we’re always going through change,” he added. “If you can make the employees aware that your workplace is changing, that your clients are changing and that everything you do is changing, that’s the way to go. It’s important to be on top of new situations that arise, and through P.A.W.S., our employees are prepared for those situations. Management is a continuous process, and Scanlon helps us manage that change.”

According to Limerick, veterinary medicine is a rapidly evolving profession because the strength of the human-animal bond is making pet owners more aware of better healthcare for their best friends.

In addition to veterinary medicine, Limerick’s Happy Tails facility provides animal daycare, agility training, grooming and boarding. During the day pets may engage in everything from playtime to obedience training to behavioral counseling.

“Pets and their owners love animal daycare because the animals aren’t left at home alone,” said Dr. Koenig. “Pet owners go to work with a clear conscience and don’t worry about the health and safety of their pets or wonder what kind of mischief they may be getting into,” he added. Soon Limerick will offer even more services to clients, a testament to the evolving nature of the 42-year-old practice.

In January 2005 Limerick held its first offsite Scanlon rally to map out ways to put the new ideas, such as geriatric and hospice care for pets, into action. Limerick’s suggestion committee is responsible for many of the new ideas implemented at the practice, such as puppy kindergarten, puppy parties and the agility program.

“The suggestion committee makes everyone part of the process, which was our original goal,” explained Dr. Koenig. “It’s the best thing that Scanlon offers. On the whole it’s an excellent medium through which employees can both express their frustrations and contribute new ideas for improvement.”

Dr. Koenig also strongly supports customer communications. Limerick keeps in touch with clients through a postcard rating system, which makes employees aware of how they’re doing.

“Before we started with the Scanlon Process, employees complained that we never told them what was going on,” said Dr. Koenig. Prior to Scanlon Limerick’s management regularly reviewed financial records, but often employees were not informed and did not seem concerned because business was good.

Limerick has since made substantial strides in that direction by publicizing financial figures on charts around the offices, giving employees access to information to which they weren’t privy before. Now employees know what they have to do to meet practice goals, and nothing is hidden. Limerick’s owners also let employees take ownership of projects from start to finish, ensuring that their voices are heard.

“Scanlon stresses communication and visibility – it’s a great system,” said Dr. Koenig. “I believe employees are much more aware that their opinions about their jobs count, which, in the end, helps us make better decisions,” he added. “All of this helps us achieve our ultimate goal, which is to become a better veterinary hospital for the community.”

Tim Tindall Receives 2005 Steward Award

Tim Tindall, Chairman of the Board at Spring Engineering, is the recipient of the 2005 Scanlon Stewardship Award, the Network’s highest honor. The Award recognizes exceptional individuals who over time have contributed to the Scanlon Network and demonstrated the Scanlon Principles both professionally and in the community.

“It’s a great honor to receive the Stewardship Award,” said Tindall. “I was a little surprised – some very influential people have preceded me,” he added. “I’m flattered to be held in the same regard.”

Spring Engineering, of Canton, Michigan, manufactures custom-formed metal parts and assemblies to primarily the automotive industry. The company’s Scanlon Plan, Investors, Customers, Employees (ICE), was implemented in 1994.

“I believe Scanlon is the correct and only way to form and run a business or any other organization,” said Tindall. “The Scanlon Principles give you a 360° compass to direct your activities – the Plan is extremely complete.”


Carl Brown Begins Second Year As Chair

Carl Brown, Executive Vice President and Chief Operating Officer of Nicholas Plastics Incorporated, will soon begin his second year as Chairman of the Scanlon Leadership Network.

“It’s an honor to be able to serve as Chairman for another year,” said Brown. “It was a growing experience because I’ve had the opportunity to get
involved with so many different organizations that share Scanlon business philosophies,” he added. “We’ve had a very hardworking Board this year, as in the last several years. It’s been a great experience for us all.

“One of our largest tasks was to update our strategy for providing services to members,” said Brown. “We do our best to make sure we provide the resources that we perceive as being needed and wanted by our membership. We believe that the Scanlon Principles and Processes are beneficial to both individuals and entire companies as they grow personally and professionally.

“At Nicholas Plastics this is essential to competing in today’s world marketplace. Many of us are faced with widespread global competition, a challenge that participative leadership principles and Scanlon help us meet.”

Brown, who has been with Nicholas Plastics since 1988, previously worked for 23 years at Uniroyal Inc. He holds a BS in chemistry from Cumberland College in Williamsburg, Kentucky, and an MBA from Indiana University’s South Bend campus.

Carl and his wife Phyllis reside in Grand Rapids, Michigan, and have two married sons and three grandchildren. He has played an active role in the Scanlon Network since 1996.


Top-To-Bottom Communication Fuels
Participation At Nicholas Plastics

Sparked by a driving need in the automotive industry to reduce costs, Nicholas Plastics Incorporated joined Scanlon in 1997 to improve Lean Manufacturing and boost employee participation. The company’s management first attended a Scanlon Conference, liked what they saw and followed up.

Nicholas Plastics, headquartered in Allendale, Michigan, is a family-owned, full-service profile extruder and molder of precision parts, specializing in complete extrusion molding design and engineering services for the appliance, automotive and office furniture industries.

“I look back and think that our involvement in Scanlon and its Principles has created a common vehicle for communication with our employees and our customers,” said Carl Brown, Executive Vice President and Chief Operating Officer. “It’s the best organization I know of that incorporates total employee participation and involvement in the business,” he added.

Nicholas Plastics holds regular Operating Team meetings where employees and management review the status of the business and any other company issues. The company is grouped into five teams that run different parts of the business, from which representatives are sent to Operating Team meetings. Each team separately holds its own meetings and maintains programs for improving productivity, housekeeping and other areas of the business. Nicholas Plastics gives employees the authority to spend money up to a certain amount on necessary improvements resulting from team meetings.

“We’ve gone beyond the traditional suggestion system to incorporating Lean principles,” said Brown. “We depend on the small teams to identify changes in our processes,” he added. “I don’t know of any other organization that promotes and sponsors networking among shop floor people and executives. Personally, I think it’s outstanding.” In keeping with the Scanlon Principles, employees are recognized and rewarded for their creativity, innovation and participation.

The four Principles of identity, participation, equity and competence have also helped Nicholas Plastics set the desired tone of the workplace.

“We want everyone to feel like an owner,” said Brown. “It’s important to us that people feel responsible for their activities because our customers expect perfection. However, we deal with tools and equipment that don’t always yield perfection, so we rely heavily on the human element. Scanlon helps us meet those customer expectations and deliver the high quality products they desire,” he added. Nicholas Plastics has invested aggressively in developing new materials, new products, new processes and innovations to meet the changing needs of customers and ensure a competitive position in the markets it serves.

“Everything we do is measured by how well we service our customers, our employees and our communities,” said Brown. “We pride ourselves on our ability to meet the changing requirements of our customers.

“A lot of things are subtle,” he added, “but from top to bottom, communication and employee participation play a huge role here and lay the groundwork for all that we do.”


Rooted Values Preserve ‘Small Business Feel’
At Landscape Forms Despite Growth

Founded by charismatic entrepreneur John Chipman in 1969, Landscape Forms was practicing Scanlon Principles well before it joined the Network more than a decade later. Landscape Forms implemented its Scanlon Plan, Quality, Understanding, Education, Service/Safety and Teamwork (QUEST), in 1981 to help create the “small business feel” in a growing workplace. Chipman wanted to have the same personal influence on the company as when it was smaller years before.

The Kalamazoo, Michigan company, which designs, develops, manufactures and markets proprietary site furniture and amenities for exterior and nonresidential spaces, began primarily as a landscaping business, but was repeatedly faced with slow winter seasons that forced yearly layoffs due to the nature of the industry.

The Scanlon Principle of competence at Landscape Forms, mainly the company’s ability to train new employees each spring, eventually spawned the creation of a new furniture design division that would carry them through the winter. According to Scanlon, competence is the ability to respond to constant demand for improvement and change, requiring ‘a commitment to be in a state of becoming something that you never were before.’

“Every year we were starting our busiest season with a raw crew,” said Becky Fulgoni, Vice President for People. “It was hard to maintain the desired level of quality and keep any semblance of continuity when we were constantly starting over with new people,” she added. Landscape Forms was looking for a way to keep its employees busy during the winter so it could move forward rather than starting fresh each spring. “It’s a unique story,” said Fulgoni. “Normally people don’t start businesses to give people work – there’s usually a strong financial influence.” After that their furniture business took off, she said, and it is now the company’s main source of revenue.

“Scanlon has allowed us to keep both customers and employees engaged in our business,” said Fulgoni. “It has also let us attract the kind of people we want to work with, and those who are interested in working for us. It’s held us together. While we lack a professional organization to join, we’ve been lucky to be a part of Scanlon, which has served as a networking outlet where we can learn and exchange ideas. Scanlon has filled that role for us.”

In addition to competence, the Identity principle is key to Landscape Forms’ success.

“Because our competitive advantage is design, we have to be on the cutting edge,” explained Fulgoni. “Being in an environment that’s constantly changing, Scanlon has helped with the idea of change and knowing your identity,” she added.

Some of the programs launched as a result of Scanlon include quarterly company-wide theme meetings that educate employees on a variety of topics, such as personal health, respect for diversity and customer service. For the personal health meeting, an employee from a local hospital visited to discuss nutrition tips.

“John Chipman had some pretty strong ideas of how people should be treated in a business environment,” said Fulgoni. “Instead of establishing arbitrary programs, he wanted that closeness among employees to be part of underlying values,” she added. Today those wishes are still inherent in Landscape Forms’ culture.

“It’s hard to pick out things that are just done as part of our Scanlon Plan,” explained Fulgoni. “With everything we do we try to make sure it’s influenced by Scanlon Principles,” she added. “To me, Scanlon has to be part of the way you work. It’s like doing a heart exam – you can’t take the heart out without killing the patient. Likewise, if you take something and call it ‘doing Scanlon,’ you’re separating it from your real goal.

“We don’t want to do things here just because they have a Scanlon label – otherwise, we’d be taking away from what we do, which is make beautiful furniture for people.” That was their intention from the beginning, said Fulgoni – to create and maintain a culture defined by intrinsic Scanlon beliefs and Principles.


“Scanlon lets us integrate those founding ideas and principles – they’re not just memories and history.”


Scanlon Spawns Both Personal And Financial Growth At Wescast

From a family-owned company in rural Ontario, to the world’s largest supplier of exhaust manifolds for passenger cars and light trucks, Wescast Industries Inc. has used its Scanlon Plan, Helping Everyone Achieve Rewards Together (HEART), to expand its operations, increase productivity and facilitate positive communication among employees. Since adopting HEART in 1989, Wescast has sought to continually engage and empower its people.

“In the late 1980s Wescast was at a crossroads,” said John Leitch, Director, Machining Operations. “Business was growing, but we had some productivity and management-labor relations issues,” he added. “We needed to find a better way to run the business, so we explored various management systems and determined there was a compelling need to change. It was then that we began our Roadmap to Scanlon.”

Today, Wescast, with Corporate Headquarters in Brantford, Ontario, designs, develops, casts and machines high-quality iron exhaust components for automotive manufacturers at seven production facilities in North America and Europe.

“I believe that much of the North American growth Wescast has achieved is a result of our people systems, which are a product of the Scanlon Principles and Process,” said Leitch.

The Scanlon Principles support a number of Wescast initiatives. A new two-and-a-half day leadership training program was rolled out during 2003-2004. Advanced Communications training helped build interpersonal and conflict resolution skills using a simple, easy-to-understand model. Wescast has also implemented Six Sigma, as well as other Lean Manufacturing tools, to help improve operations.

In addition to its employee education and communication programs, Wescast has encouraged growth by applying Scanlon to its sales and marketing functions. Wescast was the first known company to use Scanlon in this way.

Wescast’s original HEART Plan, while effective for operational metrics such as scrap rate, safety, efficiency, up-time and other manufacturing issues, was not specific to sales and marketing. The company was growing and becoming more complex, facing issues of globalization, product diversification, increasingly tougher customer demands and other factors. Wescast believed it would be more successful if a new HEART Plan included objectives, measurables, accountability and rewards that more closely fit the company’s sales and marketing functions.

Guided by the Scanlon Implementation Roadmap, Wescast’s Sales Leadership Team worked with Scanlon Steward and Consultant Bill Greenwood to create a detailed, customized HEART Roadmap, which won Wescast a Gold Medal Best Practices award in 2003.

“Over the years a lot of the pieces of Scanlon have become embedded in our culture,” said Kerry Pletch, Organizational Effectiveness Specialist. “We do many things that are Scanlon based, and sometimes we don’t even realize it,” she added. “The principles and processes just make sense."

“We apply Scanlon’s four Principles every single day,” said Leitch. “We practice Identity when we share with our employees as much information as we can about our business, our competitors and the business environment. We provide training and development to give them the skills they need to do their jobs – Competence. And, when they understand the business climate and have the skill sets to make improvements, they participate at a much higher level. The result: everybody wins through Equity. Our company does better, our employees do better and the customer is satisfied.

“When we hire people from outside of the company, they often tell us they’ve never experienced a workplace like Wescast’s,” added Leitch. “Many companies don’t do these sorts of things, but here it’s the way we do business.”

Today, Wescast’s greatest challenge is global competition.

“We certainly want to equip our people with the necessary skills and knowledge to succeed on a global basis,” said Leitch. “As we enter new geographic markets in Europe and Asia, our challenge and opportunity will be to continue to take advantage of the Scanlon Principles and really engage our entire workforce.”


Employee Participation Improves
SGS Tool Product, Profitability

Family-owned SGS Tool Company of Munroe Falls, Ohio, a manufacturer of solid carbide rotary tools, joined the Scanlon Leadership Network in 1998 to encourage a more participative management approach and to keep the company moving forward by networking with others who share similar values.

Now well versed in the Network’s principles, SGS has used its Scanlon Plan, Together Everyone Acquires More (TEAM), to formalize employee participation, its suggestion system and its Gainsharing program, and to strengthen leadership training. Since joining Scanlon, SGS has also established teams for quality improvement, production methods and safety. Since the implementation of TEAM, employee involvement has improved not only the product but also profitability.

“We were into the whole involvement journey long before we joined Scanlon,” said Marge Holata, Director of Associate Involvement. “But we needed something more to take us to the next level. It turned out Scanlon provided the momentum we needed,” she added.

Holata, who takes care of day-to-day organizational change and development at SGS and is on Scanlon’s Annual Conference Planning Committee, is devoted full-time to the company’s Scanlon Plan.

“The number of resources we dedicate to Scanlon always impresses people,” she said. “All companies have coordinators, but they often have other roles, too. This underscores the importance we place on continuous improvement.”

SGS employees were supportive of Scanlon from the beginning, when they passed the Plan by an overwhelming majority vote.

“Most employees really want to be involved – we have a lot fewer people now that simply do their jobs and go home,” said Holata, who receives more requests to attend Scanlon’s Annual Conference than she has space for. With 350 total associates, Holata can only take about 25 to the Conference each year.


“The Annual Conference gets people to understand the four principles in a hands-on environment,” she added. “You just can’t put a price on that experience.” For Holata and many others at SGS, Scanlon’s Annual Conference epitomizes employee involvement.

In 2003 SGS began making a video to chronicle its Conference experiences, and in 2004 the company won a Silver Medal Best Practices award for its second Conference video, entitled Scanlon at SGS: Past, Present and Future.

“With four separate manufacturing plants and three support buildings, it’s too much to have the whole group visit each site to discuss their experiences,” said Holata. When participants return they use the video to share what they have learned in an attempt to bring the Conference to their colleagues. “Now those who can’t travel to the Conference can still see what it’s all about.”

In 2004 SGS was also recognized for its dedication to employee participation and continuing education opportunities with two other Best Practices Medals: a Bronze for its in-house computer classes offered free to employees on weekends, and a Gold Medal for its revamped TEAM Plan.

The TEAM Gainsharing Plan, implemented in July 2003, was created by a cross-functional team of SGS associates with the help of a Scanlon consultant. TEAM, which is based on specific measurables such as Overall Equipment Effectiveness, Scrap, Spending and Customer Service, replaced SGS’ previous profit sharing plan.

“At SGS employees take a true ownership in the company,” said Holata. “They understand how they affect business because they have access to those key measurables, which reflect their own work,” she added.

SGS’ Associate Integrated Management (AIM) program, a customized version of the Hoshin tool, its Competency Program and its Leadership Retreat are other examples of applied programs that utilize the Scanlon Principles.

“Before Scanlon, we all believed in involvement,” said Holata. “We laid an excellent foundation for ourselves in prior years. The Scanlon Principles, however, gave us all the same direction and put us on the same page. As demonstrated through our many Scanlon programs and initiatives, employees now take a more proactive approach to life at SGS.”


Resources For Scanlon Members

The Scanlon Leadership Network is dedicated to continuously meeting your needs. The following are some of the products and services offered by Scanlon to help you achieve your organizational goals. With questions or for more information, please call the Scanlon office at 517-332-8927, or e-mail us at Office@scanlonleader.org. For additional information visit our Web site at www.scanlonleader.org.

Online Training Through Moodle
Moodle is a course management system, a software package designed to facilitate quality online courses. SLN is using the program to offer customized, Scanlon-based training for personal, professional and organizational competency development. Members may also use Moodle to offer their own company-specific courses.
All courses are interactive and flexible – you can log onto the course at any time from any computer to receive expert instruction. Scanlon members can access Moodle online at www.scanlonnet.org/moodle.

Coaching Program, Keystone Coaching
Coaching allows managers to seek professional assistance on personal productivity, leadership development, corporate culture, succession planning and the assimilation of new employees. Different from consulting, coaching relies on the premise that an individual has the solution that the process will help draw out.

Ropes Courses, Inc. Team Building
This program is led by longtime Scanlon friend Jim Liggett, who has built high ropes team training courses all over the world. He has recently developed a portable high ropes course called the Sky Trail that brings the training to your doorstep.
The program, which can be set up in a grassy area or parking lot, involves in-the-air and on-the-ground training that employees can participate in on site. A Sky Trail team training program has been created to teach and reinforce the Scanlon Principles.

Web Site and Resource Library
As a member, you’ll receive a password to our award-winning Web site’s Members Only area, your gateway to the world of Scanlon-related training programs and links. The public sections contain extensive files of Scanlon articles, books and speeches.
The Web store lets you purchase books and programs online. Free materials include Hoshin Quick Start (policy deployment), Lean Manufacturing, Team Building, Listening Skills, Costing Suggestions, Business Literacy, Leadership Programs and the entire Best Practices archive.
Electronic News
Scanlon publishes a free monthly E-zine to increase communication and networking among member companies. The short newsletter features current member activities and programs, as well as links and updated Network event information. Sign up for the E-zine at www.scanlonleader.org.

Weblog
Scanlon’s Weblog, or Blog for short, provides regularly updated ideas and questions to ponder on leadership and the Scanlon Philosophy from a wide range of bloggers in the Scanlon community. The Blog also contains archived Scanlon E-zines. Visit the Scanlon Blog at http://scanlonleadershipnetwork.blogspot.com.

Yearly Publications
Newsletter
To supplement monthly E-zines, the Network publishes a hard copy newsletter for the Annual Conference featuring case studies of member companies.
Membership Directory
1997-2005 Best Practices Books
More than 1400 pages of leading-edge member processes and tried-and-true systems that are implemented well, all from Scanlon member companies. Contains company contact information.

Satisfaction Surveys
Customizable surveys available at low or no cost:
Motorola Survey
Employer of Choice Survey

Lean Implementation
Hoshin Quick Start
Based on Magna Donnelly’s successful “Management by Planning” process, this comprehensive tool effectively links your entire organization, ensuring that every aspect of your organization is headed in the same direction. Includes Leader and Coordinator Guide, Training Program and customizable Excel™ software.
Lean Sim Machine™This factory-in-a-box provides a hands-on way to learn Lean concepts and the Scanlon Principles. Used worldwide, the Lean Sim Machine is the most effective solution for teaching lead concepts experientially.





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Scanlon September 2005 E-zine

Greetings!

In this E-Zine we feature an article about one of our newest members....Timber Roots in Mitchell South Dakota. Learn what this plant does to be among the of highest in employee satisfaction ever recorded by the Network! We also have a first look at what the 2006 Conference Planning committee is planning and an update on the Network's new web site. We remind you that the Innovation seminar is going to happen on September 20th. It is not too late to enroll.



Perks Prove Invaluable To Employee Satisfaction
With some of the best results ever measured from a Scanlon Leadership Network employee satisfaction survey, the Timber Roots MTD plant in Mitchell, South Dakota shows its gratitude to employees with cookouts, four-day workweeks and golf outings, among others.

The facility manufactures wooden roof trusses with up to a 100-foot clear span and open-web wooden floor trusses up to 42 feet. The Mitchell plant supplies its trusses to more than 150 locations, including 19 sites of parent company United Building Centers plus 131 independent lumberyards and large contractors.

“We wanted our employees to take the survey to gauge how we were doing,” said Dan Stolp, Manager of the Mitchell plant. “We had positive results and everyone seems to feel good about the job, the environment and working here. We feel good about that.”

The Mitchell plant employs 44 people and each completed the 97-question survey. Stolp has introduced several tangible programs that have likely contributed to the Mitchell plant’s record satisfaction results.

Strong communication and safety measures: All lead operators have the opportunity to run their department in the manner they see fit in order to maximize production and efficiency. As a result, management is ready to listen to employees’ needs and respond accordingly.
Furthermore, the plant operates as a team – working together and communicating in order to meet deadlines, while maintaining stringent safety guidelines. The site holds monthly committee, plant and safety meetings to make sure everyone is on board with the current objectives.

“Safety is our top priority,” said Stolp. “We pride ourselves on running a safe operation and take great care to ensure that every employee returns home safely at the end of the day.”

Flexible hours and optional overtime: The Mitchell plant operates two shifts with employees on daytime working eight- or nine-hour days Monday through Friday and night shift working four 10-hour days Monday through Thursday. “This has really been a benefit to the guys who work nights,” Stolp added. “They enjoy having the flexibility of a three- day weekend.”

In addition, Saturday overtime hours are on a volunteer, rather than mandatory, basis. Stolp notes that he tends to receive a better response when employees are asked. Personnel from either shift are eligible for the Saturday hours.

Weekly cookouts: Every Friday during the summer months, employees are treated to a free lunch, either a cookout or catered, as a thank you for their efforts that week.

We’re constantly looking for ways to improve,” said Stolp. “It may not seem like much, but this is our way of saying ‘thank you’ in lieu of a formal incentive program. I’ve even sat with the staff and asked what they thought about the meals.”

A personalized wheel of fortune: About two months ago, the site began a monthly drawing of meals, gas cards, groceries and other giveaways for those employees who maintained perfect attendance for the month – with zero tardiness and a clean safety record. All employees who meet these requirements are eligible for a chance to spin the wheel.

The plant has also hosted summer golf outings for its employees.

Mitchell, SD is located just north of Interstate 90 in the southeastern corner of the state.
Timber Roots MTD (Millwork, Truss and Distribution) centers are located strategically, serving a 17-state region and now consist of 19 truss/panel and component manufacturing facilities, six distribution centers and seven millwork manufacturing plants. The company prides itself on manufacturing state-of- the-art trusses and components produced from quality construction materials and maintaining a knowledgeable, certified staff trained in the industry’s cutting-edge technology.


2005 Annual Conference A Success, 2006 Planning Underway
With 41 successful seminars completed, the planning committee for the Scanlon Leadership Network’s 42nd annual Scanlon Conference, themed “Servant Leadership: The EPIC Way,” has met to begin preparations for 2006. Each year, the team reviews and tries to implement member suggestions to make the event more efficient.

Led by Committee Chairperson Tom VonIns of Magna Donnelly Corporation, the 2006 committee plans to follow and expand upon a new formula that was developed for the 2005 Conference as a result of members’ suggestions.

“The 2005 planning committee made minor changes that were very well received by this year’s attendees,” VonIns explained.

Most notably, the committee eliminated the pre- conference workshops and replaced the usual banquet-style dinner and awards presentation with a more informal two-hour meet-and-greet networking reception. During the reception, each member company who attended staffed a booth that showcased what its business did and work samples, plus other display materials and product information.

“This proved to be a huge success,” VonIns said. “Members had each other as a captive audience to network, ask questions, see what has worked for others and what hasn’t, or discuss how another member resolved the same issue their company may be facing. This type of teamwork and collaboration is invaluable.”

The Network’s annual Best Practice awards were presented during the reception as well.

With its servant-leadership theme for 2006, the Network will feature a topic that is on-target with the manufacturing industry’s current trends, which also include continuous improvement processes and Lean Manufacturing.

“We’re going back to our roots,” VonIns said. “Servant leadership is the core principle that founded and has shaped the Network over the years. Our pioneering members saw the advantages of servant leadership and its value to employees.

“Today we need to accommodate all forms of businesses, from those in the service industry to manufacturing,” he continued. “We need to make sure that every member understands it takes each of us working together – bringing forward the ideals of the Scanlon principles and servant leadership, staying ahead of the curve and remaining up-to-date on industry trends – to succeed.”

The 2006 Scanlon Conference will be held from May 1 – 3 at the Radisson Plaza Hotel in Kalamazoo, Michigan. If you would like to volunteer to join the planning committee, please contact Tom VonIns at tom.vonins@magnadon.com.


Scanlon Plan, Article Span Five Decades
The following article, titled The Scanlon Plan, first appeared in the business section of TIME magazine’s Monday, September 26, 1955 issue. It is featured here to celebrate the installation of the first Scanlon Plan some 60 years ago. Scanlon is still viable today and, as The Scanlon Leadership Network, offers management assistance to organizations.

The Scanlon Plan. The most sought-after labor-relations adviser in the U.S. today is Joe Scanlon, 56, onetime prizefighter, open-hearth tender, steel company cost accountant, union local president and now a lecturer in industrial relations at Massachusetts Institute of Technology. Wearing an open-neck sport shirt and studding his shop lingo with four-letter words, Joe Scanlon looks and sounds like anything but what he is: a fervent evangelist for the mutual interests of labor and management, who knows how to sell the idea to both sides. His selling device: the Scanlon Plan, designed to 1) cut the worker in on the adventure, the decisions and the profits of increased production, and 2) help management tap the ingenuity of employees as a means of improving production.

Scanlon's way is actually less a formal plan than an approach, with three constant ingredients. First, the union and management in the plant fix a productivity “norm,” and the working force is promised a bonus out of the savings the workers can effect by producing at a lower cost per unit. Unlike many other incentive plans, the Scanlon Plan is noncompetitive, does not throw the plant wage structure out of balance, and unites the men on a common goal instead of pitting them against each other. The second ingredient is a system of production councils in which union and management attack production costs. But the most important ingredient of all is Joe Scanlon himself, who learned about production from the bottom up.

Company to Union. The son of Irish immigrants, Joe Scanlon finished a hitch in the Navy in the early ‘20s and went to work as a cost accountant in a small Ohio steel company, since absorbed by giant Republic Steel. Later he quit to tend an open hearth, became a volunteer union organizer when the C.I.O. Steelworkers’ Organizing Committee was formed in 1936. Scanlon believed that workers could help improve production if they had an incentive to do so.
In 1938 there was an incentive. Scanlon was president of his Steelworkers’ local when management told him that if the plant could not do better, it would be shut down. Scanlon took the company executives to the C.I.O. steel headquarters in Pittsburgh and there worked out a union- management productivity plan. It not only rescued the plant but put it on a profitable basis. For example, one suggestion by the union production committee cost $8,000 in new equipment but saved the plant $150,000 in one year. Impressed, Phil Murray’s Steelworkers put Scanlon to work in the head office to doctor other sick companies.

The Prototype. In 1945 Scanlon for the first time took the bits and pieces of what he had tried out in dozens of companies and put them together at the Adamson Co. of East Palestine, Ohio, a small maker of welded steel tanks. Complained Owner Cecil Adamson, “I give the union everything it asks for. But still the shop isn’t working well. Let’s get together and work out something so that you’ll get something and I’ll get something.” Joe went into the plant, checked the books, and determined a “normal” labor cost per unit. He then set up a system for a 50-50 split of the savings the workers made by producing at less than normal cost.
Soon the new joint union-management was flooded with workers’ suggestions. Welders who had stood around waiting for materials began helping to unload. Workers formerly indifferent to substandard work turned out by slackers began raising Cain: it cut down their bonus. Employees and executives became a team working toward a mutual goal. After a year, the Adamson Co. was five times as profitable as in the old days; even after sharing the productivity savings 50-50, management still reaped twice as much income. As for the workers, a union veteran of many picket lines told Scanlon: “Joe, I can’t fight here. I'd be fighting myself.”
The next year, Scanlon moved into the Lapointe Machine Tool Co. of Hudson, Mass., then on the verge of a strike. Within 20 months its production was up 61%. Said a National Planning Association report on Lapointe meetings on joint production problems: “An outsider has difficulty distinguishing management from union.”

The Success. While the plan had worked with troubled companies, how would it work in a successful one? The test came at the Parker Pen Co. of Janesville, Wis. A progressive firm, Parker had an intelligent management and union, a standard incentive system, a new retirement plan, a sleekly modern, air-conditioned plant with such production aids as piped-in music for its workers. Nevertheless, the company found that even a good incentive plan made trouble. Some men in low-paying jobs were taking home more pay than the men in highly skilled divisions.

Invited to come in and help, Scanlon pitched out the old-style incentive system, which promoted individual effort at the expense of the group. He spent days with the finance and accounting people, whose role he considers vital, and devised a productivity norm. In Parker’s case, it was the fiscal year March 1953 through February 1954. He then arranged that the savings on output made at less than the costs of the base year figure (as measured by sales value) should go into a bonus pool. A fourth of the pool money was automatically set aside as a reserve fund to be paid out in the break-even or deficit months when no bonus was earned. The rest of the melon made up of increased value through productivity savings was split; labor got a whopping 75%, management 25%. The first month’s bonus, paid in September 1954, amounted to $43,199, a 13.8% wage increase. In January, the pen and pencil industry’s seasonal low point, the workers failed to earn a bonus, but it was the only month they missed (payments from the reserve pool are made only at year’s end). They earned a peak 27.1% over their wages in September.

During the year, the eight joint production committees (one in each major department) and the lyman overall “screening committee” (nine workers, eight executives) considered 400 employee suggestions, an average of one for every two workers, and adopted some 240. Last week, as the plan began its second year, Parker Operations Vice President Philip Hull announced: “I’m a convinced Scanlon Plan adherent.”

The Agreement. The plan is now working in some 60 plants from furniture to steel, where profits were excellent and where they were nonexistent, where labor relations were good and where they were bad, where labor productivity was easy to measure and where it was virtually impossible. But the plan cannot operate without the wholehearted agreement of both management and unions. It requires a strong union, able to guarantee the support of its members. It also requires a management willing to open its books and innermost production secrets to union members. And the plan demands a sense of management-union cooperation that is often most lacking in the plants that most need Scanlon’s help.

Scanlon refuses even to try unless he is convinced that the two sides will work together. Once, in desperation, the union and management of a deeply troubled plant arrived in Scanlon's office and announced they were all ready to try out his plan. Scanlon looked at the glowering men arrayed on both sides, each with a watchful lawyer, and said: “Yeah, you’re all set, both of you to get the hell out of here.”

Rough on Clients. Scanlon bullies his clients and lays down the law, once told an executive: “You’ll probably have to fire every foreman you’ve got working for you.” Another time, when a company head came in with his troubles, Scanlon roared: “Why in hell did you put your brother- in-law in that job? That’ll have to be changed.”

Despite Scanlon’s brusque ways, the companies who have tried his plan are sold on it. Said President Leo Beckwith of the Market Forge Co. of Everett, Mass., a Scanlon plant since 1947: “Maybe it isn’t the Utopia that some people try to make it, but it has been a fine thing. If for any reason we ever had to drop it, the boys in the plant would be very unhappy and so would I.” The vice president of an Illinois company was even more enthusiastic: “As far as I'm concerned, Joe has the answer to the future for American free-enterprise capitalism.”


Network To Launch Updated Web site, New Server
Scheduled to launch in September, the Scanlon Leadership Network has updated its online capabilities and plans to unveil an easier-to-navigate Web site from its new server.
“As a small non-profit organization, it’s rare that we have the software and maintain the network ourselves,” said Paul Davis, President, Scanlon Leadership Network. “But operating in this manner put us ahead of the curve and this upgrade was necessary in order to stay there.”
The Network installed award-winning Web-content management software and has nearly completed converting and transferring its information to the new server.

“The Web site is our primary source of marketing,” Davis noted. “With more than 10,000 unique visitors each month, it is imperative that we remain competitive.”

Upon completion, the new server will provide a more stable Web site that is easier to use, navigate and search, with improved flexibility and additional features. The site will allow consultants the convenience of updating their respective Web site sections and will feature an entirely new Scanlon store. Users will have direct access to the Network’s Web log (Blog) and the new site will support Web streaming and podcasting as well.
Visit www.scanlonleader.org for more information.