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.