J. L. Kellogg Graduate School of Management Executive Master's Program Course: Management of Organizational Change Professor: Robert Duncan cc) ANBM-CEO: Kirt Akiyama ANBM-COO: Karl Inoue ANBM-CFO: Henry Takai An Analysis of ANBM's System-Design for the Change towards Continuous Improvement 12-2-95 EMP-32 Ted Sogo

EXECUTIVE SUMMARY I analyzed our "organizational change to support continuous improvement" in our U.S. plants. This change is currently in progress, and I've been working for this project for two years, as a member of Steering Committee. From analysis, the followings are the essence of my recommendations in implementing the change successfully. * New systems we have already designed for the change should be implemented linking with our "target control system." * We have to design reward systems for the achievements through the target control system. * We have to refine the vision ( core ideologies) of our company clearly, and share the vision with all employees thoroughly. Because a shared vision is the first step in allowing people who mistrusted each other to begin to work together. * We have to keep fostering KAIZEN spirit. The tolerance for honest mistakes is necessary. * We have to build up teamwork, and cross functional liaison (between "line" and "staff'). * We should not seek for a Japanese management style, nor American style management, nor a mid point between them. What we have to establish is a global management style through heart-to-heart discussions of core values. * We have to design the system to develop, promote, and carefully select managerial talent grown from inside the company, so that we can get the continuity of quality leadership that preserves the core values of ANBM. What we are working for now is just the beginning of the unending challenge. I think, however, we are on the right track. I

TABLE OF CONTENT Executive Summary [1] SITUATION [2] ANALYSIS <2-1> <2-2> <2-3> <2-4> <2-5> <2-6> Problem Diagnosis of Present Situation Setting of Change Goals Setting up the Transition Process Selection and Implementation of Change Strategy Evaluation [3] SUMMARY & FURTHER CONSIDERATIONS References Appendix A: Draft of "New Wage System" Appendix B: Draft of"New Skill Evaluation System" (Skill review) Appendix C: Draft of"New Effort Evaluation System" (Contribution review) Appendix D: Draft of "New Training System" 1 3 5 5 11 14 19 24 28 31 41 42 48 58 68 2

(1) SITUATION I came to ANBM(American NTN Bearing Manufacturing Corporation) as a chief engineer from NTN-H. Q. in Japan to start up our new bearing manufacturing plants in Elgin six years ago. (NTN is the third largest bearing company in the world whose worldwide share is 10%.) We have started up the TURNING, HEAT-TREATMENT, GRINDING and ASSEMBLY plants in Elgin in the past 6 years. And our production capacity has increased dramatically followed by the radical expansion of the plants, so that we can catch up with the great demands of our bearings in the U.S. market. As a result, we currently have about 500 employees working for ANP1 A, and our sales revenue has become equal to one of our major manufacturing works in Japan. Our manufacturing costs, however, are much higher and our productivity and quality standards are much lower than those of our Japanese counterparts. To achieve our goals, such as cost reduction, improving productivity and product quality, I believe it is necessary not only to take technical measures or engineering innovations but also to gain overall strength that includes the skill and morale level of all the production workers through vitalizing all of them. I have to admit that the current skill and morale level of the employees in our U.S. plants is much lower than the level of those in our mother plants in Japan. I have found out from my experiences in our U.S. plants that the key factor of this difference between our plants and Japanese plants is KAIZEN or continuous improvement. KAIZEN spirit is the simple truth behind this difference. We tried many Japanese management practices such as TQC(Total Quality Control) activities, small circle activities, KAIZEN suggestion activities and TPM(Total Productive Maintenance) activities, which didn't work very well in our U.S. plants. KAIZEN is the fundamental concept covering those Japanese style practices, but this

concept has not been rooted in our U.S. plants yet. Because of the cultural difference between U.S. and Japan, I'm afraid our existing systems and corporate structures in our U.S. plants are not supporting KAIZEN spirit at all. I discussed this problem with COO of ANBM (who is also from Japanese H.Q. and used to be my boss in Japan, too) and explained to him that we cannot compete with our Japanese plants without rooting KAlZEN spirit effectively. We decided that organizational change is necessary including personnel practices, compensation systems and training systems to establish the new organization in which all employees are committed to the cross-functional goals as productivity, quality and ~-lsts. We have been working to prepare for this organizational change for the last two years. First of all, we are going to start a new wage system and training system for production workers (hourly-waged employees) next February. I'm going to analyze in the following chapters what we did and what we are going to do through this organizational change project that is currently m progress. 4

(21 ANALYSIS <2-1> Problem Ever since I came to ANBM, I tried a lot of major engineering improvements or innovations to achieve higher level of productivity, quality and profitability. We also transferred manufacturing technologies and know-hows from our Japanese plants to ANBM. Most of the machineries were developed in Engineering HQ. in Japan, and they are exactly same or better than those in our Japanese plants from the engineering point of view. The biggest difference between U.S. and Japanese plants is the level of workers' skill and morale. I'm afraid this gap has been growing larger and larger every year. The following chart shows the current progress pattern in our U.S. plants for the last six years. Fig.-1 Current pattern in ANBM ( l Engineering improvements) ~----------------------- Actual progress achieved through engineering improvements generally follow the pattern shown in Fig. -1. This is caused because a system, once it has been installed as a result of new .. technology, is subject to steady deterioration unless continuing efforts are made to maintain it. So we are trying to make a good maintenance system to get the progress pattern shown in Fig.-2. 5

Fig.-2 Ideal pattern with maintenance ~---------------------- We can't get this pattern in ANBM yet. On the other hand, the pattern in our Japanese plants is quite different, because continuous efforts are made effectively, not only to maintain the level but alsc ' o improve it after the engineering improvements are installed. Fig.-3 Pattern in Japanese plants with KAIZEN ----- - -- ---- t (:-: :} KAIZEN) 1-----------------------• This is the progress pattern in our Japanese plants. In Japan, KAIZEN means gradual, unending improvement performed by everybody doing little things better, setting and achieving ever-higher standards. These constant efforts are not only to maintain but also to upgrade standards. When such efforts are lacking, decline is inevitable. ,, ... Top management in NTN-H.Q.(JAPAN) always ask ANBM, "Why your performance is so low in comparison with that of Japanese plants?" We couldn't give them a clear answer for a long time because we have been so busy solving a lot of daily problems caused by the radical expansion of our plants. We didn't have enough time to think about the fundamental problem in 6

ANBM. We have solved a lot of problems already, and the final biggest problem we have now is the lack ofKAIZEN spirit. Hwe can't get KAIZEN spirit rooted in our U.S. plants, any kind of Japanese style management doesn't work and we can never achieve continuous improvement. ANBM has the following definite problems under the current situation without KAIZEN spirit. 1. Supervisors are not making constant effort to improve workers' skill and morale. 2. Communication between supervisors and workers is not good enough to create a positive attitude toward the assignments. 3. Supervisors have a difficulty in recognizing and evaluating workers' skill and effort. 4. ANBM has a very high turnover ratio (about 20% per year). We are losing some of our high-skilled workers every year. 5. Workers are not motivated to learn more for skill development. 6. Workers don't try to challenge difficult assignments. 7. Teamwork is not good enough to solve problems. PDCA(Plan-Do-Check-Action) cycle changes to PDCF(Plan-Do-Check-Fight) cycle very often. These problems have been recognized by all managers in ANBM, and each manager have tried something to 'improve the situation in his department. But each of them achieved just a minor improvement, and the situation didn't change any better. I thought we need a major change ( organiz.ational change) to solve these problems. I was sure that it would be very tough to establish a new organization to support continuous improvement in ANBM where the employee have a completely different culture from those in our Japanese plants. But ifwe don't try, we cannot compete with those who try. 7

Three years ago, ANBM was in danger of unionization. Fortunately we evaded the movement of unionization. We did morale survey at that time and found out that our workers had the following complaints under the current situation. 1. They feel that skills and efforts are not evaluated fairly by their supervisors. 2. They feel that they don't have the opportunities to get enough training for skill development. 3. They feel that supervisors have favoritism in the process of the review (merit rating) and training. 4. They feel that they are not paid respect aqd dignity. 5. They feel that they don't have enough opportunity to communicate with supervisors and they can't get timely feed-back. I'm afraid that current training and review system is very fuzzy so that supervisors have difficulty to handle this system. (Japanese system is also very fuzzy, but they can handle the fuzzy system successfully, and so far, I've never heard such a lot of complaints from workers in our Japanese plants.) ANBM doesn't have any clear written policy for training. Fig. -4 on the next page is the current check sheet for the review, but this looks too fuzzy to evaluate skills and efforts fairly. Also supervisors might not be trained for management skill, especially for team-building skill, so there must be a big probability for them to make rating errors, even if they don't have any favoritism. Although it is said that rating errors always exist in merit rating, ours are not an acceptable level and workers feel that they are being treated unfairly. As a result, I found out the actual situation ¥ followings.

9 REVIEW: DUE DATE: ---------------------- ------------------------- EMPLOYEE PERFORMANCE REVIEW NAME: nEPT.: ------------------- ----------------- BI RE DATE: _____________ _ JOB CLASS : ____________ _ DATE/LAST RATING: _________ _ CHECK ON. E SPECIFICATION WHICH BEST RATES THE EMPLOYEE FOR EACH FACTOR . FACTOR POOR BELOW AVG AVERAGE ABOVE AVERAGE EXCELLENT JOB - --- - 0 - --- 6 - - -- 12 -- - - 18 ---- 25 Rm:ilfLEDGE/ ABI LI T'i FREQUENT USUALLY HAS NO DOES QUALITY WORK HAS A COMPLETE HOW WELL DOES TIIE PROBLEMS . CAN ' T OR INCONSISTENT. PROBLEMS FOLLOWING IN LESS TIME THAN GRASP OF EMPLOYEE JCNOW AND WON'T LEARN . HAS MAKES SIMPLE COMPANY PROCEDURES COMPANY NORMl'I.LLY PROCEDURES, APPLY THE PROBLEM WITH MISTAKES . AND METIIODS. EXPECTS . WILLING METHODS , THEORY, PRINCIPLES AND ROUTINE JOB . REQUIRES HANDLES ROUTINE JOB TO HELP on!ERS AS CAUSE & EFFECT, FUNDAMENTALS, CWSE WITHIN COMPANY WELL. MAINTENANCE COMPANY PROC.sDURES SUPERVISION . STANDARDS AND TIME ETC.; AND AND METHODS · LIMITATIONS. FOLLOWS THEM TO A TEE . MINIMl'I.L LOSS TIME DUE. TO , UNFORESEEN CONDITIONS. QUALIT'i ---- 0 ---- 5 ---- 10 ------- 15 -- --· 20 CONSIDER HOW CARELESS. MANY REQUIRES USUALLY RELIABLE . SELDOM DEVIATES EXTREMELY HIGH ACCURATE EMPWYEE QUALITY PROBLEMS . CWSE REJECT RATE IS FROM TOLERANCES. DEGREE OF PERFORMS THEIR JOB CAUSES EXTRA SUPERVISION ACCEPTABLE. SHOWS A LOT OF ACCURACY . VERY AND WHETHER TIJE WORK . TO ASSURE WORKPLACE IS INTEREST IN DOINO METICULOUS . EMPLOYEE CHECKS THAT TH I NGS REASONABLY WELL THE JOB . VIRTUALLY NO THEIR WORK ARE DONE ORGANIZED AND IS WORKPLACE IS NEAT REJECTS. FREQUENTLY AND CORRECTLY . GENERALLY GOOD . AND ORDERLY. CORRECTLY. WORK IS NOT AS GOOD AS IT SHOULD BE. DEPENDABILITY -- - - 0 - - - - 2 -- -- 5 -- - - 7 ---- 10 CONSIDER TIME NEEDS CONSTANT MUST BE REQUIRES NORMl'I.L USUALLY AT WORK CAN BE TRUSTED SPENT AT WORK SUPERVISION. CHECKED AND SUPERVISION . TIME STATION. RARELY TO DO ANY JOB ON STATION, RETURNING WASTES A WT OF INSTRUCTED WST IS NOT WASTES TIME . THEIR OWN. STICK FROM BREAKS AND TIME TALKING AND FREQUENTLY. EXCESSlVE, LITTLE STRICTLY TO LUNCH ON TIME, WALKING AROUND . OFTEN WANDERi• SUPERVISION BUSINESS. TENDENCY TO OOSSIP AWAY FROM NEEDED. AND WASTE TIME. WORK AREA. INITIATIVE ---- 0 ---- 6 --- - 12 - --- 18 ----- 25 CONSIDER HOW WELL DEPENDS ON DOES JUST USUALLY ABLE TO WILLING TO DO WORKS OUT NEW EMPLOYEE SEEKS OTIIERS. AVOIDS ENOUGH TO GET SOLVE PROBLEMS THAT MORE THAN WHAT'S IDEAS AND SEES FRESH SOLUTIONS TO RESPONSIBILITIES . BY. COME UP . TAICES EXPECTED. TAKES THAT THINGS OET PROBLEMS AND RESPONSIBILITY AS A ON ADDED JOBS DONE. ACCEPTS IMPROVES EXISTING MATTER OF COURSE . WITHOUT BEING RESPONSIBILIT'i CONDITIONS . ASKED. EAGERLY. IIAFET'i ---- 0 ---- 5 - - - - 10 - --- 15 ---- :10 CONSIDER THE WORKS IN AN DOES NOT TAKF. USUALLY FOLLOWS • MAKES A CONSCIOUS GOES OUT OF EMPLOYEES ATTITUDE UNSAFE MANNER . ENOUOH' CARE RULES, PROCEDURES EFFORT TO FOLLOW THEIR WAY TO PUT AND WORJC PRACTICES FREQUENTLY IN DOINO AND WORKS IN A SAFE SAFETY RULES AND SAFETY AS A IN nJE AREA OF DISREGARDS SAFETY THINGS IN THE MANNER. MAJCES AN PROCEDURES . TAJCES PRIORITY . MAKES SAFETY. RULES AND SAFEST EFFORT TO ICEEP WORK THE TIME TO SUGGESTIONS TO ,, .~ PROCEDURES MANNER·. AREA AND TOOLS IN A PERFORM ALL IMPROVE SAFETY WELL ORGANIZED AND DUTIES IN THE AND CAN BE SAFE CONDITION. SAFEST MANNER. COUNTED ON TO REPORT UNSAFE CONDITIONS. COMES UP WITH WAYS TO IMPROVE I N THE AREA OF SAFETY.

1. There is not a big difference in actual wage level between high-skilled workers who are making a lot of efforts for improvements, and low-skilled workers who are not contributing to improvements. (CENTRAL-TENDENCY) In the worst case, some low-skilled workers get higher wage than high skilled workers. 2. Some supervisors are affected by special characteristics or general impression of their particular worker, and they give the unnecessarily high ratings to this kind of workers. (HALO-EFFECT) 3. M,lst supervisors give relatively high ratings to the workers who have been working for ANBM for a long time, even if their skill and efforts are very poor. (LENIENT- TENDENCY) Seniority is the biggest factor for merit ratings under the current situation. Under these rating errors, it is very difficult to motivate workers to learn more. Workers don't like the current way they are evaluated, and we are losing many good workers. It is impossible to perform continuous improvement in ANBM under this situation. Most of our managers are Japanese, and they know how important KAIZEN spirit is. This situation has been the recent biggest headache for all of them. We definitely need a new system with a clear philosophy to support everybody's KAIZEN spirit. /0

<2-2> Diagnosis of Present Situation First of all, we have to make sure that everyone understands what he/she has to do for the realization of continuous improvement. Since KAIZEN is an ongoing process and involves everyone in the organization, everyone in the management hierarchy is involved in some aspects ofKAIZEN, as shown in Fig.-5. Fig.-5 Hierarchy ofKAIZEN involvement TOP MANAGEMENT * Be determined to introduce KAIZEN as a corporate strategy. * Provide support and direction for KAIZEN by allocating r~sources. * Establish policy for KAIZEN and cross-functional goals. * Realize KAIZEN goals through policy deployments and audits. * Build systems, procedures, and structures conductive to KAIZEN. MIDDLE MANAGEMENT & STAFF * Deploy and implement KAIZEN goals as directed by top management through policy deployment and cross-functional management. * Use KAIZEN in functional capabilities. * Establish, maintain, and upgrade standards. * Make employees KAIZEN-conscious through intensive training programs. * Help employees develop skills and tools for problem solving. SUPERVISORS * Use KAIZEN in functional roles. * Formulate plans for KAIZEN and provide guidance to workers. * Improve communication with workers and sustain high morale. * Support small group activities such as QC circle and the individual suggestion system. * Introduce discipline in the workshop. * Provide KAIZEN suggestions. WORKERS * Engage in KAIZEN through the suggestion system, small group activities and daily jobs. * Practice discipline in the workshop. * Engage in continuous self-development to become better problem solvers. * Enhance skills and job-performance expertise with cross-education. (/

Then, we have to change our organization culture to achieve continuous improvement, as shown in Fig.-6. Fig.-6 Key success factors for the change Current situation Key success factors Narrowly defined job descriptions. Broadly defined job descriptions. Specialized workers Specialized and generalized workers. No cross-functional training. Cross-functional training. Wage for the job classifications. Wage for skills and contributions. Technology-oriented. People-orit-nted. No interest in career development. Interest in learning and progress. Rigid and constant assignments. Flexible assignments. Attention to great leaps. Attention to details. Seek new technology first. Improve existing technology first. Closed information. Open and shared information. Hire from outside. Promote from inside. Result-oriented. Process-oriented. Individualism. Teamwork. Limited feedback. Comprehensive feedback. Considering the current problem, priorities to do should be the followings. (We are going to complete the followings before next February. February is our target to start new system.) 1. New evaluation system (new wage system) for workers should be established to support their KAIZEN spirit. 2. Training system for workers should be established to support their KAIZEN spirit. 12

3. Company policy for the change to new system should be clarified and understood by everyone. 4. Supervisors' education for the change should be necessary to start the new system. 5. Final adjustments and agreements for the details should be necessary among all managers before the new system is enforced. 13

<2-3> Setting of Change Goals NTN has the following corporate philosophy. NTN--an enterprise dedicated to precision machines and equipment that contribute to global society. (NTN=New Tech Network) Last year, NTN-H.Q. has established the new corporate policy for all group members throughout the world to keep growing as a global organization towards 21 century, as shown in Fig. -7 on the 1 ,ext page. This is the VISION of all NTN groups, under the unified corporate philosophy "New Tech Network." Some of the key success factors for our change are clearly mentioned in this new VISION (such as teamwork, self-development etc.) One ofNTN's targets in the "NTN-21VISION" is 10% for the share ofbearings in overseas operation. NTN's current share in U.S.A. is about 6%, and the demand is increasing rapidly, especially for the bearings that are being produced in ANBM. NTN-H.Q. is expecting ANBM to improve productivity and increase the production capacity. This is ANBM's expected role as a manufacturing division in NTN-US.A. The target figure in 2000 is 10% for the share of bearings in U.S.A. Fig.-8 Current bearing share in U.S.A. 1. TORR 15% 2. TIMKEN 15% 3. SKF 10% 4. NTN 6% 5. NSK 3% 6. FAG 3% 7. KOYO 2% 8. INA 2% /4

IS I. POLICY FOR COMPANY BEHAVIOR -------1DWARDS 21 CENlURY -------- The following policy has been es1ablished as a guide line for NIN CORFORA 110N to keep growing as a global organi2ation with ever greater contnbutions to society all around the world, in our unified COipOrate philosophy "NEW TEG-1 NETWORK". (l)FAIR BEHA VIORASA lEADlNGCOMPANY Obey laws and spirits of them, and behave in the clean and serious wey as a company. (2) CREA 110N OF ORIGlNAL TEGINOl...(X}Y Research the needs of customers in advance, and develop our own technology. (3) ACCEIBRA110N1D BE A 01.DBAL COMPANY Have a global point of view, and es1ablish the status as a global company. (4) RESFON'SIBIB BEHAVIOR 1DWARDSCUSIOMERS Continue to improve the quality of all ourproducts, and supply them to our customers properly with a reasonable price (S)RESFON'SIBIB BEHAVIOR mw ARDS SIOCKIDl.DERS Maintain s1able dividends and iJnrrove the profit-return to our stockholders. (6)RESPECTFOR EMPLOYEE Make efforts to realize the higher stndard of living for our employees, and respect each employee's personality. (7)CONlRIBlJilON1D ~ Attune to local society and contnbute to develop the culture, and harmomze with global society. (8) PROIECTION OFGI.DBALENVIRONMENT Be environmentally sensitive, and give careful consideration to environmental protectioIL 2. POLICY FOR EMPLOYEE BEHAVIOR --1DWARDS 21 CENTURY---- The following policy has been es1ablished for all NIN employees to concentrate everybody's effort into the same direction so that we can achieve the company target with the .. POLICY FOR COMPANY BEHAVIOR". (l)RESFON'SIBIB ATITIUDE Have a good sense and Jride as an employee of NIN and attend your job with diligence, possitiveness and sense of responsibility, obeying the companyrules and laws of the govemmentrelated to your job. (2) ESfABLISHMEITTOFRELIABIUIY Alwaysbehavefairlyandgainagoodreputationforyourselfandcompany. (3)1EAMWCRK Respect each other and work hard as a member of your department to es1ablish good team work. (4) SEIF DEVELOPMENT Try to keep yourself in a healthy condition, continue to study and improve your knowledge. (S)VOLUNTARYCONlRIBUTIONlD s:::cIEfY Contnbute to society as a member of society, and gain respect for yourself and others . .___3_._E_N_F_o_R_c_E_M_E_N_T_o_F_TH_E_N_E_w_P_o_L_i_c_Y ________________ -j EfiectivefromApril 1. 1994.

ANBM's strengths to compete with these competitors are, *Brand name. (NTN) *Global reputation for quality. *Excellent technology and specialized know-hows to produce bearings. *Non union. ANBM's major weaknesses are, *Low skill and morale level of production workers in comparison with that of workers in Japanese plants. *Communication gap between Japanese managers and American managers caused by cultural difference. ANBM's opportunity is that demand has been growing rapidly in U.S. market. ANBM's threats are, *Lot size of production is becoming smaller, which requires a lot of set-up change. This will kill the productivity if workers skill does not improve. *30% of the materials are still from Japan, and CIF is going higher because of the strong yen. Considering our target, strengths, weaknesses opportunity and threats, ANBM's strategies toward 21 century are the followings.--High quality and cost reduction strategy-- I. Invest and rearrange the plant to increase production capacity. 2. Increase the domestic procurement ratio from 70% to 100% and reduce the material cost. 3. Enhance workers' training to improve their skill. 4. Enhance localization of managers and engineers. 5. Improve productivity by applying new technology. 16

ANBM still needs a lot of information, direction and help from HQ. in Japan, but we have to realize continuous improvement in our organization as our own responsibility. Any help from H.Q. would not work effectively without KAIZEN spirit. The purpose of our organizational change project is to support continuous improvement, and the goals of this change are the followings as shown in Fig.-9. ANBM has to increase the production capacity by achieving the following goals. Fig.-9 Setting of Change Goals Simultaneous Achievement of the Best Quality in the World and Highest Productivity (1) To win the reputation for a long period (more than 10 years) that ANBM products are best in quality. (2) To produce the products which regularly sell in substantial quantity at reasonable prices in the growing U.S. market. (3) To produce the quality which always exceeds the levels of our competitors. (4) To have technical capability (products and production) which makes ANBM to cope with the users' needs aggressively. (5) To supply the products constantly which ensure high reliability, resulted from reduction to defective rate produced in the manufacturing processes. (1) Machine efficiency-----------More than 90% (2) Man efficiency----------------More than 90% (3) Reject rate (process total)---Less than 0.3% To achieve our goals, we have to get rid of the "Tyranny of the OR" and embrace the "Genius of the AND." The "Tyranny of the OR" is the rational view that cannot easily accept paradox, that cannot live with two seemingly contradictory forces of ideas at the same time. The "Tyranny of the OR" pushes people to believe that things must be either A or B, but not both. I encountered numerous situations in which employees are dominated by the "Tyranny of the OR" in our U.S. plants, such as "You can have low cost OR high quality." But we need low cost AND high quality at the same time. We have to achieve the highest level"of quality and 17

productivity at the same time to survive and improve our share in U.S. market. When I was working for our Japanese plants, I was told so many times by my boss, "Even an idiot can improve quality if he can sacrifice the productivity. Think how to reduce the costs and improve quality at the same time." Instead of being oppressed by the "Tyranny of the OR", all employees in ANBM have to liberate themselves with the "Genius of the AND" --- the ability to embrace both extremes of a number of dimensions at the same time. Instead of choosing between A or B, we have to figure out a way to have both A and B. This is not mere "balance," but the bottom line ofKAIZEN spirit in our Japanese plants, which achieves both to an extreme. This is exactly what we need in AfBM through our change process, and I want all the employees throw away the current conventional wisdom in the following three areas, and be real KAIZEN challengers to realize continuous improvement toward our change goais. Fig.-10 Challenge to conventional wisdom Conventional Wisdom ANBM-Revolution Higher quality leads to higher costs Higher quality leads to lower costs Larger lots lead to lower costs Smaller lots lead to lower costs Workers do not need to be taken into account A thinking worker is a productive worker

<2-4> Setting up the Transition Process First of all, COO of ANBM organized the "Steering Committee" to develop the change plan and commitment, as shown in Fig.-11. Fig.-11 Steering Committee Steering Committee Leader: COO Members: Production Superintendent H. R. Manager Chief Engineer Dept. Manager Supervisor All supervisors and managers are involved in the transition process. Steering Committee (including me) developed the ACTION PLAN for CHANGE, considering the following two cardinal rules of organizational change. 1. No new change in an organization will work unless the people in the organization are behind the change. 2. You can only change people by making them want or need to change themselves. We knew that the change must be implemented in Participative way rather than Authoritarian way. Steering Committee reviewed our diagnosis and developed a list of issues /9

we want to work on. Fig.-12 below shows the action plan that must be done to translate our intentions into successful change. Fig.-12 Action Plan for Change I No. I ACTIONS WHO WHEN 1 Diagnose the current situations Committee Mar. 1994 2 Set change goals Committee Sep. 1994 3 Design new systems (drafts) to achieve the goals 1) Wage system ( Appendix A) 2) Skill evaluation system (Appendix B) Committee Aug. 1995 3) Effort evaluation system (Appendix C) 4) Training system (Appendix D) 4 Explain the concepts of change to CEO and get approval Committee Aug. 1995 5 Explain the concepts of change to all managers and get Committee Sep. 1995 agreements 6 Explain the concepts of change to all supervisors and get Committee Sep. 1995 agreements 7 Refine the drafts of new systems, decide the details, and Committee Oct. 1995 feed-back to managers 8 Refine the drafts of new systems, decide the details, and Managers Nov. 1995 feed-back to Committee 9 Adjust and complete the design of new systems and get Committee Dec. 1995 final approval from CEO 10 Explain company policy for the change to new systems to Committee Jan. 1996 all employees (Kick-off Meeting) 11 Follow up the questions from workers. Make sure there is Supervisors Jan. 1996 no misunderstandings or confusions. Managers 12 Start new systems ALL Feb. 1996 Key concepts of our actions are the followings. So far, we got perfect agreements from all the supervisors and managers with the concepts. 1. Define workers' job descriptions broadly, so that they can pursue the higher levels of 20

performance according to their skill levels. 2. Encourage workers to learn more and improve their skills for their career development. 3. Encourage cross-functional training for those who have enough skills and guts to challenge. 4. Emphasize people-oriented and process-oriented problem solving. 5. Emphasize teamwork, so that autonomous teams can pursue ever higher performance flexibly. 6. Keep good communication and feed-back to share information and priorities. 7. Establish a pay for skill and effort reward system to motivate workers. WAGE= f (SKILL, EFFORT) *Draft from Steering Committee is shown in Appendix A. 8. Establish a skill evaluation system (Skill review system) to evaluate each worker's skills fairly. *Draft from Steering Committee is shown in Appendix B. 9. Establish a effort evaluation system (Contribution review) to evaluate each worker's efforts fairly. *Draft from Steering Committee is shown in Appendix C. 10. Establish a training system to support skill-improvement. *Draft from Steering Committee is shown in Appendix D. The transition process has already been supported by all supervisors and managers very successfully. I believe the reasons for these positive supports are the following issues that reduced resistance to the change. 2/

1. All supervisors and managers have the very high level of dissatisfaction with the current situations, such as low level of workers' skills and morale, and high turnover ratio. 2. This change was initiated by COO, which means the change has whole-hearted support from top management in the organization. 3. Steering Committee showed them clear vision of change, and answered following three critical questions clearly to reduce Fear of the Unknown. 1) What is the impact to my career? 2) How do I change my behavior on my job? 3) How will I get skill? 4. Steering Committee started partial change in one of the production departments as a test case, and got good results. This made everybody believe that the change is possible. 5. Reward system (New wage system) is very clear and makes sense to everybody. 6. Supervisors and managers see this change in the long run as reducing rather increasing the difficulties they encounter in their job. They believe this change will solve the major problems of ANBM that have been unable to be solved for a long time. They understand that the new systems will empower them to solve the problems. 7. Supervisors and managers are currently involved in the transition process to refine the ideas of new systems drafted by Steering Committee. Change procedure is kept open to them. Steering Committee analyzed that the key actors involved in implementing change are supervisors and managers. We have provided them paradigms for the change, and I think our current responsibility is to guide them in the transition process. We understand the importance of both LEADERSHIP & MANAGEMENT processes as they relate to change. Steering 22.

Committee should be in charge of leadership aspects (visionary aspects) of the change, and supervisors and managers should take care of management aspects (practical aspects). We'll continue to have a lot of meetings with them to refine our drafts and complete our design until the end ofthis year. (2-3 hours every day for each department for the final adjustments.) We have to make sure that they can develop the ownership of this change through those meetings. Introduction and direction of this change should be top-down. But the suggestions for the new systems should be bottom-up, since the best specific suggestions for improvement usually come from the people closest to the problems. Our strategy for the transition process therefore calls for both top-down and bottom-up approaches. 23

<2-5> Selection and Implementation of Change Strategy We have selected the Employee Involvement Strategy to solve our problems. Our organization has been contaminated by F. W. Taylor's principles, called "scientific management," including specialization of work into the narrowest possible jobs, careful specification of work tasks in detail, repetition of activity with little ( or no) variety, and removal hf all discretion and "brain work" from operational personnel. We have found out that we can •• ••• never realize continuous improvement unless we clearly say "Good bye" to our old friend, Taylor. Our organizational change is based on the beliefs that people want to work and produce quality products; that through participation, people's energies can be enlisted in the service of organizational goals; and that there is potential power in groups or teams of people working together collaboratively. We are going to build up a new organization in which large numbers of autonomous teams working for the same direction. We are going to move toward "high involvement management" (that is called "target control system" in NTN) as a core principle. Currently, our target control system is not working efficiently because KAIZEN spirit is not rooted in our workers mind yet. Once top management's semi-annual targets have been determined, they have to be developed throughout the lower levels of management. The targets that are stated as abstracts by top management become increasingly concrete and specific as they are developed downward. Unless top management's targets are put to practical use by lower level managers, they will be of no use. (No better than castles in the air.) We expect all employees understand the direction of ANBM, and contribute to achieve the targets. We need organized KAIZEN activities involving everyone in ANBM, in a totally integrated efforts toward improving performance at every level. This improved performance is directed toward satisfying such cross functional goals as quality, 24

Fig.-13 ANBM "Target Control System" NTN-21 VISION i ANBM's Targets (Top Ma.nagement) l Setting of Targets in each department (Dept. Managers) l Setting of Targets in each section (Supervisors) ~ Setting of 'Iugets in each team (Small circle activities such as QC circle) i Setting of Targets for each employee i Team Activities PLAN- i DO i CHECK J ACTION- ! INNOVATION and KAIZEN Accomplishment of Targets Rewarding for individual, team, section, department

cost, scheduling, manpower development, and so on. We assume these unending activities ( continuous improvement) ultimately lead to increased customer satisfaction. Fig.-14 shows how job functions will be perceived in ANBM after the successful implementation of our change strategy. Fig. -14 Ideal Perceptions of Job Functions in ANBM Top Management Middle Management Supervisors Workers *MANAGEMENT= MAINTENANCE+ IMPROVEMENT *MAINTENANCE = Activities directed toward maintaining current technological, managerial and operating standards *IMPROVEMENT = Activities directed toward improving current standards =INNOVATION+ KAIZEN *K.AIZEN = Gradual, unending improvement = Continuous improvement Under its maintenance functions, management performs its assigned tasks so that everybody in ANBM can follow the established standard operating procedures. Maintenance refers to maintaining such standards through training and discipline. At the bottom level, an unskilled worker (new worker) working at machines may spend all his/her time following instructions. However, as he/she becomes more proficient at the work, he/she begins to think about improvement. He/She begins to contribute to improvements in the way his/her work is done, either through individual or team activities. Improving standards means establishing higher standards. Once this is done, it becomes a maintenance function to follow the new standards. Maintenance and improvement have to be inseparable as a result of ongoing efforts, and the

higher up you go, the more you are expected to be concerned with improvement. Our change strategy has to be implemented to support KAIZEN spirit, and realize continuous improvement, that is not rooted in ANBM yet. *New systems (Wage for skill and effort system, Skill evaluation system, effort evaluation system, and Training system) will be enforced in February 1996 to motivate workers.

<2-6> Evaluation Our change efforts are currently in progress, and I can't evaluate the results yet. I'm going to review our design process for the change according to the following seven check points. 1. VISION I think NTN's VISION (Corporate Philosophy and Policy) is general enough to apply to the whole organization and to stay unchanged for a long period of time. And it is specific enough to differentiate our organization from its competitors. It is the aspired future state of NTN, which sets priorities for goals and objectives, and guidelines by which these goals and objectives will be pursued. I be.Leve NTN has developed its VISION successfully, but the problem is that it is not well understood in our organization, ANBM. Steering Committee has to share this VISION with all employees. 2. STRATEGY We have selected Employee Involvement Strategy for the change, and set change goals as Simultaneous Achievement of the Best Quality in the World and Highest Productivity. We are going to move to High Involvement Management (Target Control System), and realize continuous improvement in ANBM. This strategy matches the VISION, and I believe this is the best way under our diagnosis of the present situations. Because only this strategy can fill up the gap between key success factors and existing situations. 3. STRUCTURE We have focused on workers to realize continuous improvement. this is just a first step to empower whole management structure. We need the same kind of design approach for supervisors, managers, engineers, etc. to complete this organizational change. We have to continue to study and find out the best structure that will be appropriate for achieving

cross-functional goals in ANBM. Since our top management is committed to such cross functional goals as quality, cost, and scheduling, I believe we can continue to make cross functional improvement as an ongoing program involving everybody in the organization. As a member of Steering Committee, I'd like to start researching the so called Matrix Organization. 4. DECISION SUPPORT SYSTEMS We have to design the flow of information so that each autonomous team can create, receive, and transmit information as needed. Currently, ANBM is staffed with proud professionals. The prouder they are, the more difficult it is for them to communicate effectively with people from other functional areas on cross functional matters. For examp1e, how can we encourage American engineers, who are very proud of their engineering degrees, to get more involved in production-related activities? Effective cross functional communication is impossible in such an atmosphere, and I'm afraid profound attitude changes are needed. 5. REW ARD SYSTEMS We have just established the wage for skill and effort system, followed by skill and effort evaluation systems. (Review systems) These systems are only for hourly workers, and we need same kind of systems for supervisors managers, engineers, etc. We also need to establish the Reward systems for the accomplishment of targets through our target control system, for individuals, teams, sections, and departments. We have to design reward systems to support our key success factors. 6. HUMAN RESOURCE SYSTEMS We have to understand that if ANBM is so clear about what it stands for and what it is trying to achieve, it simply doesn't have room for those unwilling or unable to fit their existing standards. Human resource department should know what kinds of people ANBM want to

recruit, and make the organization more attractive to those who we want to recruit. Recruitment system, training and career developing systems need to be established to achieve our change goals. I think supervisors' training for team building is very important to start the new systems effectively. 7. CULTURE We need KAIZEN culture to achieve our change goals. We need sweeping changes from our current culture in which the personnel practice and the way people work have been dominated by "hire-and-fire environment." CONCLUSION I believe our change design has consistency among the seven issues mentioned above. However, our current change design that is going to be enforced next February is just a first step to achieve our change goals. We have just established the systems to evaluate and compensate workers' performance as team members, and train them for their skill improvement. We still have to consider and establish a lot of systems to complete the change and get rid of all the misalignments before they spread too far. It's a long way to go, but I'm sure this is the right way we have to go. Jo

[3] FURTHER CONSIDERATIONS What we are working for is the first step of our dramatic and unending change for ANBM. We have designed the new systems, such as wage system, skill evaluation system, effort evaluation system and training system for our hourly workers. These new systems are scheduled to be enforced on February next year, because we believe these are the priorities for us to establish a new corporate culture, filling up the gap between our existing situations and key success factors of ANBM. Although these are just the starting points, we still have a lot of things to consider and get agreements. The followings are the detail issues for each system to be determined. (Short-term recommendatinhs in implementing the change.) 1. Wage system We decided that self-development and teamwork as core values, so we developed the compensation structure in which workers can be compensated on individual performance and contribution to teamwork. Wage should be determined fairly by workers' skills and efforts that are demonstrated in daily activities. Though all managers and supervisors agreed with this concept, we have to decide the level($) of compensation for each level of workers' performance. This level should be maintained at an reasonable level as compared to that of other companies in the Metropolitan Chicagoland area. Our H. R. manager is in charge of this market survey, and we are going to decide the level of fair wages. Whatever the level of new wages may be, we are going to have the gap between the new level and current level for each worker. Since current wages are primarily based on the seniorities in ANBM, some workers will be shocked to see their ratings with the new system. We feel immediate wage reduction is unreasonable, and we have to find out the way how to deal with these unhappy workers. If too many workers are discouraged with their new ratings, we are going to get a lot of 31

resistance for the change. I think we have to expect the current labor costs to increase at the starting of new system on next February. This increase, I believe, is the initial costs for the change, and the ratio of labor costs should be reduced as workers improve their performance towards our expectations. 2. Skill evaluation system (Skill review) Skill is one of the factor to determine a workers' wage in the new wage system. Each department established the skill check list, which includes all the necessary skills for workers. If a worker who is working for a certain section gets higher skills in his/her section, or gets skills for a different section and demonstrate them to improve the performa,1ce, his/her supervisor should recognize and evaluate it fairly. We designed the skill evaluation system using the skill check list for each department. Supervisors should know skills of all the workers working for them. All the managers and supervisors agreed with this concept, and we are working for the final adjustments among departments to make sure the skill check lists have been developed under the same philosophy and the evaluation system is fair for everybody. All of them understood the importance of cross functional training between sections. However, they are afraid that they don't have time to do it because of the very tight production schedule. Also they are not sure how to achieve the cross functional training effectively. They feel the gap between what it should be and what it is now, and they can't handle this gap by themselves. Since we are not talking about the cross functional training between departments yet, but between sections in each department ( we don't need cross-department training for hourly workers), I believe it should be done under the responsibility of each department manager. But it looks like impossible under the current situations. They need company's initial support until they can establish and handle their own training programs for their workers. 31

3. Effort evaluation system (Contribution review) Effort is another factor to determine a worker's wage in the new wage system. This systein was designed to evaluate a worker's efforts or attitudes that contribute to his/her work place, based on our assumptions what kinds of workers we need and what kinds of efforts we expect them to demonstrate. We expect supervisors to perform good feed back to workers with this system. But I'm afraid our supervisors might not have skills to perform this review effectively, because they have never trained to do this kind of job. Although we tried to establish an easy system for supervisors to use, this review may have more chances for them to make rating f!: Tors in comparison with the skill review. Because skills are much easier to evaluate than efforts. All supervisors are paying a lot of efforts to refine and complete this system, but some of them are not confident enough to use this system effectively. I think all of them should get "Team Building Training" and "Rating Training" before February to make sure that all of them have the same standard of ratings and they can give fair and consistent feed back to workers. 4. Training system Skill improvement of workers are the major priority in ANBM, but each department cannot start training programs effectively under the current situations. So we are going to organize the "Training team" under the supervision of our Production Superintendent. They are going to concentrate just on training to support skill improvement for each department. Trainers are going to be promoted from high-skilled workers in each department, and leader of this team will be promoted from production engineers. The leader is supposed to work as a coordinator of the training programs for all departments. Trainers have to establish the most effective training standards, so that each department can follow without the assist from them in the future. 33

Training team will be organized just temporarily (about three years) to assist each department to start up the training programs. We have to select the members and organize the team as soon as possible. Before we enforce these four systems on next February, we have to share our vision with all workers and let them know the followings: What we are going to achieve, what kind of behavior we are expecting from them, how can we evaluate their performance, and how can we support and reward them. When we implement these initial changes, I expect the current situations will start to improve gradually. ANBM's "target control system" will work more effectively, and I expect a lot of accomplishments from individuals, teams sections, and departments. I think we have to establish a reward system for these accomplishments as soon as possible. Two years have already passed since we (Steering Committee) started to study for the change. Finally, we are going to implement the first step for the change at the beginning of next year. It has been a long way, but we still have a lot of things to do. Steering Committee has to keep it in mind to be a clock builder-or architect-not a time teller, to embrace the "Genius of the AND," to preserve the core values of ANBM and stimulate progress, and to seek consistent alignment. Steering Committee has to let everybody believe that we don't need a charismatic visionary leader, but a visionary company or learning organization, and everybody can be a major contributor in building it. Because it is through the power of human organization--of individuals working together in common cause--that the bulk of the world's best work gets done. Steering committee hopes that what we are working for is the end of the beginning--the beginning of the challenging and arduous, but eminently doable task of building a visionary company (new ANBM).

The followings are long-term recommendations as to how to be more effective in implementing change. 1. Sharing the Vision In a corporation, a shared vision changes people's relationship with the company. It is no longer "their company," it becomes "our company." A shared vision is the first step in allowing people who mistrusted each other to begin to work together. But this vision is not understood by everybody in ANBM. Yet to tell the truth, I tried to discover NTN's vision for this report and I guessed it might be what I mentioned in Fig.-7. However, I'm afraid that there are too many statements in Fig.-7, so I summarized into six statements as core ideologies of W~i-l. These are not authorized, but just my idea. 1) Creation of original technology and contribution to global society. (NTN= New Tech Network) 2) Excellence in reputation for reliability as a leading company. 3) Contribution and responsibilities to the communities in which we operate. 4) Responsible behavior towards customers and stockholders. 5) Respect and full consideration for individual employee. 6) Self development and teamwork for ever-higher goals. I think these core values need no rational or external justification. Nor do they sway with the trends and fads of the day. Nor even do they shift in response to changing market conditions. However, we've never had a chance to discuss ideologies in ANBM. We have to arrange the opportunity to discuss core values of ANBM as soon as possible, so that all the employees can share the same vision. I believe this is very important for ANBM in which two different cultures

(Japanese culture and American culture) exist. Our change project might be mainly for the fourth and fifth values in my draft. I'm afraid most Japanese managers who are very realistic, practical and fuzzy, might not feel the importance of a vision. When I mentioned a vision, some of them called it a dream. But I believe a vision is completely different from a dream, and it is extremely important in U.S.A., and all over the world (including future Japan). Since NTN is going to be a global company, it is necessary to share its vision. Shared vision is the base of our change project, and we have to think about this very seriously. Otherwise our challenge would never make success in a long run. Steering Committee has to spend a lot of time continuously communicating the ~ ·ision throughout the company, until the vision becomes genuinely shared among people throughout all levels of ANBM-focusing the energies of all employees and creating a common identity among people from different cultures. 2. Fostering KAIZEN Spirit New systems have to be linked with our "target control system" effectively for Simultaneous Achievement of the Best Quality in the World and Highest Productivity. We can't achieve our goals without KAIZEN spirit, however I'm afraid KAIZEN spirit is not understood completely in ANBM yet. I think KAIZEN spirit is based on "Personal Mastery." Personal mastery is the phrase used for " the discipline of personal growth and learning. Our organizational change has to support personal mastery, because pe~ple with high levels of -pe.rsonal mastery are more committed, more initiative, have a broader and deeper sense of responsibility, and learn faster. KAIZEN activities need personal mastery because it win make the organization stronger. However, it must be remembered that embarking on any path of personal growth is a matter of choice. We can support, but we can't force anybody to develop his or her

personal mastery. It is guaranteed to backfire. We can get into considerable difficulty if we are too aggressive in promoting personal mastery for our employees. All managers and supervisors have to commit ourselves to our own personal mastery. Talking about personal mastery has no meaning, but actions speak louder than words. There's nothing more powerful we can do to encourage workers in their quest for personal mastery than to be serious in our own quest, as a model. This is easy to say, but difficult to do. However, I believe all responsible persons in ANBM should be KAIZEN challengers who can lead following employees by examples. Since KAIZEN is an endless process, an achievement means a start for next challenge. So there is no final goals or perfect solutions. Even if people achieve a tough target, they'll start identifying problems again. Japanese are already familiar with this endless cycle, and we are always ready to accept and adopt constructive criticism towards our accomplishment. We don't feel it as criticism, but as an opportunity to improve more. However, I'm afraid this mentality towards criticism has not rooted in our American employees yet. I feel they are too serious and nervous to criticism from their bosses. Also if they are asked the details of their progress, they tend to feel that they are not trusted. They don't clearly understand that Japanese managers are so deeply process-oriented that they want to know the process as well as the result. Japanese managers should show them clearly the tolerance for honest mistakes, and try to avoid unnecessary misunderstap,ding caused by different ~ultures. The followings are my suggestions to Japanese managers in ANBM from my experiences. 1) When you make an important decision, explain to your subordinates so that they can understand your strategy. 2) When you give an assignment, make sure that you explain the importance, know-hows,

and due date of the assignment. 3) Try to go home early if possible. 4) Try not to take a long time for decision making. Quick feed-back is necessary. 5) Say "Yes" or "No" clearly. 6) If you are satisfied with the achievement, praise your subordinates, and if you are not satisfied with it, tell them the reason clearly. 7) Keep in mind that some of your common sense is not a common sense here any more. I think cultural difference is just a minor problem if we can trust each other and try to understand the essence of both cultures. However, careless misundn :;tanding between Japanese managers and American managers still often happens in ANBM. We have to fix this problem completely, because it will discourage KAIZEN spirit. We can't accept two different cultures existing in ANBM any more. We just need an organized KAIZEN culture. 3. Building Teamwork We can't achieve our change goals without building teamwork. It is very valuable for us to have high-skilled people in ANBM, but what really matters is that they know how to work together. Whether they are workers' QC circles or managemeni teams or cross functional task forces, teams are the key learning unit in our organization. Individual learning, at some level is irrelevant for organizational learmng. Individuals learn all the time and yet there is no organizational learning. But if teams learn, they beco~~ a microcosm for learning throughout the organization. Insights gained are put into action. Skills developed can propagate to other individuals and to other teams. The teams' accomplishments can set the tone and establish a standard for learning together for the total organization. This is exactly what we need for our "target control system." We have to keep fostering teamwork to make our target control system

work effectively. I expect all departments in ANBM consider seriously how they can contribute to "Simultaneous Achievement of the Best Quality in the World and Highest Productivity." Cross functional liaison is essential to achieve our change goals, but I'm afraid this is one of our current weak points in ANBM. Especially, I feel communication between "line" and "staff' is very poor. Cross-department training might be necessary for professional staff, so that they can understand the real problems. 4. Pursuing Global Management Top management of ANBM are Japanese, and middle management are mixture of Japanese and '\mericans. Japanese managers are transferred from Japan and they stay in ANBM for approximately five years. Some American managers are "home grown," and others are from outside the company. ANBM is supposed to reduce the number of Japanese managers gradually. Why we still need a lot of Japanese managers in ANBM? Because Japanese managers have failed to transfer their responsibilities to American managers. I assume the reasons as followings. 1) Since ANBM has been expanded so rapidly, Japanese managers have been always too busy in trouble shooting to do anything else. 2) The priority has been to achieve the scheduled production, and training has been always less priority in their minds. 3) Japanese manager~ tried to train Americans in the same or similar way he did in Japan, which caused a lot of misunderstandings. I want everybody understand clearly that what we are going to seek for is not a Japanese management style. Nor are we seeking for an American management style. Nor are we seeking for a mid point between them. What we need is a new Global management

style through heart-to-heart discussions between Japanese and American managers. I've been working as a member of Steering Committee with other two American managers, Production Superintendent and H. R. manager. I've learned a lot of things from them, and I'm sure they've learned something from me, too. From this experienre, I found out that cultural difference is not a problem, but can create something new. We should make the best use of the cultural difference. Heterogeneous teams have a possibility to get much higher profits in a long run, than those from homogeneous team. We have to establish the atmosphere in which we can discuss our own core values and understand each other for a ever higher performance. Al' [ 3M should develop, promote, and carefully select managerial talent grown from inside the company. We should do this as a key step in preserving our core values. ANBM, thereby can get the continuity of quality leadership that preserves the core values of ANBM. This is the most important thing to be considered, before thinking about reducing the number of Japanese manager. I recommend our top management to establish "Management development and succession plan" to get the "Management continuity loop" in ANBM. Also, top management have to develop clear systems of evaluation and rewarding for each level of management. If top management don't initiate to design these systems, ANBM will continue to suffer from "Leadership-Gap" or "Leadership-Crisis." I'm learning a lot of new ideas through Kellogg executive MBA course, and I know Kellogg provides a lot of short programs in executive education that will meet our particular needs. I'd like to suggest to offer these courses to our managers. "Group study and teamwork"-hallmark of all Kellogg's programs--will promote interactive learning, and provide practical solutions to them. I think this investment is very effective for our ongoing change process. 0

REFERENCES Nadler, David A et al. Organizational Architectures. Jessey-Bass, 1992 Collins, James C., and Porras, Jerry I. Built to Last. Harper Business, 1994 Senge, Peter M. The Fifth Discipline. Currency Doubleday, 1994 Northcraft, Gregory B., and Neale, Margaret A Organizational Behavior. Dryden, 1994 Imai, Masaaki. KAJZEN. McGraw-Hill, 1986 Chase, Richard B., and Aquilano, Nicholas J. Production and Operations. Irwin, 1995 Rehfek:, John E. Alchemy of a Leader. Nikkei-BP, 1995 Amako, Tetsuo. Japanese Manager. Sogensha, 1992 41

Appendix A Draft of New "Wage System" [1] Objectives 1) To attract those who ANBM wants to recruit and keep. 2) To provide a fair, consistent and uniform wage administration program. 3) To provide incentive based on individual/team performance and personal growth through systematic and equitable training and wage administration. [2] Concepts 1) Wage for each worker is determined by evaluation of his/her skill and effort. WAGE= /(SKILL, EFFORT) 2) Each worker's "grade" is determined by his/her skill level. Each grade requires that certain skills are learned and demonstrated at a particular proficiency. This is called "skill review" that should be performed by supervisors. Supervisors have to check workers' skill improvement according to the "skill check list." They have to input the skill data into the computer whenever they recognize new skills demonstrated by workers successfully, so that they can get the output of "skill score" for each worker. Each grade has the minimum requirement of skill score, which is set for each department. Supervisors can find out each worker's grade with this skill score and the minimum requirement for each grade. (* Details are mentioned in Appendix B.) 3) Each worker's effort is evaluated by what we call "contribution review." Supervisors have to evaluate workers' attitude towards the following three categories. 41

1. Procedures & Standards This category measures the employee procedural responsiveness and also degree of compliance with company standards and rules. 2. Teamwork This category measures how well the employee works with other people. 3. Self-Reliance This category measures how well the employee accomplishes tasks with confidence and how much the employee exercises their own power or judgement to solve the many challenges that arise. "Wage ranges" are established for each grade associated with all wage jobs. The range may run from 95% to over 100% depending on the wage grade. Midpoint of each range is represented by 100%. Compa-Ratio (percentage of range to midpoint) is used to designate where individuals stand in their ranges. Wage ranges are established with midpoints representing current market position. The midpoint of a range maintained should compare favorably to the prevailing wage for similar jobs in the Metropolitan Chicagoland area. (* Details are mentioned in Appendix C.) 4) Accordingly, skill review determines each worker's grade and contribution review determines where he/she stand in the range of his/her grade, as shown in Fig.-15. 43

Fig.-15 Wage-curve for production workers (EXAMPLE) J.,..,..,...,...,...,,...,...,,~~~ Mid roin t C @\ WAfrE · RANG- ) A-'-___,_~......-M;r\. ! .SET- UP 1 PER5oNS V - GRADE * Grade 1: Reasonable level for operators to reach within one year. * Grade 5: Top operator (Set-up trainee). It will take five to seven years to reach this level. * Grade 6: Starting level as a set-up person. * Grade 7: Top set-up person. (Foreman trainee) It will take about ten years to reach this level. * Midpoint of each grade should be reviewed annually and adjusted to maintain an equitable level as compared to compensation provided by other companies in the Metropolitan Chicagoland area. * From foremen (supervisors), this system will not be applied. This is for hourly workers. (Foremen= Salary) * Wage level and the number of available grades are different for each job classification. 44

For example, wage curve for trades such as electric technicians, mechanics, and so on, is shifted upward as compared to this machine operators' curve. On the other hand, wage curve for janitors, warehouse people, and so on, is lower level and has less grades in comparison with that of operators. (Top warehouse person might reach grade 3 that is the maximum grade available for this job classification. And the wage level of this grade 3 is lower than that of operator's grade 3) * Employee who has the skill level over grade 7 could be entitled such as an associate engineer, and this wage system will not be applied. (Salary) * Each new employee will be hired at a specific rate within a wage grade. If the new employee has no experience, they will be hired at the beginning rate of grade O. * After a new employee has worked for ANBM for 90 days, he/she will receive a review. If the review is satisfactory, he/she will be retained as an employee. If the review is unsatisfactory, he/she will be terminated. * Employees who were hired at the beginning rate of grade O will receive a wage increase if the 90 day review is satisfactory. (3] Merit Increases (Contribution review) 1) Individuals in a supervisory capacity are responsible for the merit reviews of those reporting to them. This responsibility includes evaluation of performance, discussion with a manager and finally communication with the individual. In all cases, discussion of contribution reviews must be handled on a strictly confidential basis. 2) An individual's work record should be reviewed regularly. The normal standard is once a year, and the normal time is February. Maintenance of a regular review activity will provide a good feed-back and let the individual know how he/she is doing. 4.S

3) ANBM management is responsible for establishing the amount of money that will be given out based upon the contribution review. 4) H. R. manager of ANBM will provide the functional guidance to the management of ANBM to establish the correct amount of money to be given out for merit increases. [4] Promotion Increases (Skill review) 1) Promotion increases to a new grade within the same job classification are based upon successfully demonstrating skills. Each item is worth points that are earned after acquiring a certain skill level. Each grade requires that certain skills are learned at a particular proficiency. 2) Promotion increases to a new job classification are based upon criteria established to measure minimum requirement of the new job classification. 3) Promotion represents a major event in a person's career and should be accompanied by an increase and timing reflecting the worth of the promotion. * Promotion should be studied and decided every three month by each department manager with the approval from the Plant manager. * Individuals receiving a promotion to a new grade within the same job classification should receive their new wage after the beginning of the month following the month of promotion. * Individuals receiving a promotion to a new job classification should receive their new wage after the beginning of the month following the month they start their new job. * Individuals receiving a promotion to a new grade within the same job classification should ordinarily receive a new wage of the average between the 46

minimum of the new range and midpoint of the new range. If their present wage is the same or higher than the normal new wage would be, then the Plant manager, with the guidance from H. R. manager, will establish a new wage. The new wage will in all cases be within the wage range of the new grade. * Individuals receiving a promotion to a new job classification should ordinarily receive a new wage that is same as the minimum of the new range. If their present wage is same or higher than the minimum of the new range, then the Plant manager, with the guidance from H. R. manager, will establish a new wage. The new wage will in all cases be within the range of the new grade. 47

Appendix B Draft of New "Skill Evaluation System" (Skill review) (1] Skill Check List Skill check list is established in each department. This includes all the necessary skills for workers in each department. Each skill mentioned in the list will be a necessary training item, and it is classified according to the difficulty to be learned by workers. For example, there are six STEPS in the skill check list for each production department. STEP 1: Daily operating prncedures STEP 2: Checking for machine settings STEP 3: Handling alarms STEP 4: Preventive maintenance STEP 5: Tool changes & Adjustments STEP 6: Mfg. Theories The higher number the STEP goes up, the more difficult for workers to learn. Fig.-16 shows how many training items exist in the skill check list for each production department. Fig. -16 The number of training items for each department ~ Unit Taper Roller Radial Ball Pre- Steel p Brg. Brg. Brg. Process Ball 1 455 275 492 923 2 367 141 158 224 3 325 174 307 249 4 226 74 692 234 5 310 281 239 189 6 63 48 48 86 TOTAL II 17461 19361 19051 495 161 153 168 140 38 11551

Skill check list is still under refining process, however it is clear that the more complicated the manufacturing process of the department is (with many machine types and sections), the more training items are for the department. Fig.-16 tells us the characteristics of each department. Each department can be divided into sections. Currently most of our operators can work just for a particular section. For example, Unit Brg. department can be divided into four sections, as shown in Fig.-17. Fig.-17 The number of training items for each section in Unit Brg. dept. ~ Pre- Grinding Coating Assembly I TOTAL p Grindin2 1 78 191 53 133 455 2 78 166 43 80 367 3 45 117 23 140 325 4 38 85 19 84 226 5 52 145 3 110 310 6 23 40 0 0 63 I TOTAL ~ 54711 17461 Fig. -17 tells us that the grinding section might be the toughest section to be learned completely. [2] Skill Score Whenever a worker learns something new, he/she gets points for each training item. 1.0 Understand completely and can explain the procedure step by step. 0.5 Have been shown the procedure, but have not performed independently. 0.0 Unfamiliar with the procedure. But the difficulty to complete training items is different between each of six STEPs, so each STEP has a "Rating Weight" to compensate the difference of the difficulty.

Training items in STEP 1: * 1.0 Training items in STEP 2: * 2.0 Training items in STEP 3: * 2.5 Training items in STEP 4: * 3.0 Training items in STEP 5: * 5.0 Training items in STEP 6: * 5.5 If a worker learns a new training item in STEP 4, and demonstrates it successfully, he/she will get 3.0 points (because -the rating weight for STEP 4 is 3.0). Fig.-18 shows how many training points are available for each production department, following this rating standard. Fig. -18 Skill points for each department ~IUnit Taper Roller Radial Ball Pre- Steel STEP Bre. Bre. Bre. Process Ball 1 455 275 492 923 2 734 282 316 448 3 812.5 435 767.5 622.5 4 678 222 2076 702 5 1550 1405 1195 945 6 346.5 264 264 473 495 322 382.5 504 700 209 TOTAL ~ 45761 28831 5110.51 4113.5 I 2612.5 I Suppose a worker in Unit Brg. department learned 150 items from STEP 1, 100 items from STEP 2, 50 items from STEP 3, and 30 items from STEP 4 successfully, his/her skill score would be calculated as the followings. *Skill score (points)= (150*1.0) + (100*2.0) + (50*2.5) + (30*3.0) = 565.0 (points) *Skill core(%)= 565.0/4576.0 = 12.3 (%) ( 4576. 0 = total points available for Unit Brg. Dept.) $0

[3] Definition of the Grades Definition of each grade should be clear for everybody in each department. Fig. -19 shows the definition in case of production departments, as an example. Fig.-19 Grade-Definition for production departments (Guideline) GRADE DEFINITIONS 1 01 Basic skills for a particular section 2 02 Beginner Deeper skills for a particular section and basic skills for another section, if necessary 3 03 Starting level to learn other sections aggressively Medium 4 04 Cross-section operator who can work for several sections 5 05 Top operator who can meet the maximum expectations as an Advanced operator (Set-up trainee) 6 SIA Starting level for set-up jobs(New set-up person) SIB Top set-up person who can meet the maximum expectations for Expert set up jobs *7 S2 Foreman trainee who is expected to be a supervisor *Grade 7 requires some of the basic management skills. Grade 7 = Grade 6 (SIB)+ Management skills [4] Evaluation Ea_ch grade _ has the minimum requirements of the skill score, and "Grade-Table" is established for each department. Fig.-20 is the Grade-Table for Unit Brg. department, as an example.

Fig.-20 Grade-Table for Unit Brg. Dept. SKILL SCORE GRADE % POINTS 00 0~ - 0~ 01 9~ 412~ 02 18~ 824~ 03 27~ 1236~ 04 36~ 1647~ 05 45~ 2059~ SIA 54~ 2471~ SIB 63~ 2883~ The Grade-Table should be developed from "Grade-Map" that shows the guideline of the skill development plan for each department. Fig.-21 is the Grade Map for Unit Brg. department, as an example. Fig.-21 Grade-Map for Unit Brg. dept. --Required achievement(%) for each grade-- I ~ 00 01 02 03 04 05 1 0 35 45 55 65 75 2 0 15 35 45 55 65 3 0 10 20 30 40 50 " 4 0 9 18 27 36 45 5 0 0 5 15 25 35 6 0 0 0 0 0 0 TOTAL SKILL SCORE 0 9 18 27 36 45 (%) · SlA SlB 80 80 70 70 60 70 50 60 45 55 20 50 54 63

Fig.-21 shows that workers should learn deeper and also gradually wider. Cross-section training is necessary for workers to go up to the higher grade. Skill requirement for grade SlB is 63%, and we can call the worker above this level as an expert. Since Unit Brg. department is such a big area, 100% achievement is impossible. Those who have achieved close to 100% should be entitled as associate engineers. The Grade-Map is developed for each department under the same philosophy. Skill requirement for each grade in Unit department is 9%, but this percentage is different for other departments depending on their characteristics. However, we have to keep the "skill points per grade" reasonably close to each other among the different departments to offer fair ratings to the workers for all the departments. Skill score(%) per grade should be set higher for the department that has less training items. Within the same job classification, we have to keep the following formula. Skill score (Points)/ Grade= Constant By following this formula, the difficulty of promotion can be set reasonably same for all the departments within the same job classification. Supervisors for each department should develop the detailed "skill development plan" according to the Skill-Map, considering each worker's skill level and characteristics. S3

[5] Learning-Curve We can set the "Grade-Curve" just a straight line, as shown in Fig.-22. This is the Grade- Curve for Unit Brg. department. (9% per grade) Lu ~ /oD Q 8'0 u V) ')o _j _j {O .so 4 J 0 0 ). V 0 0 Fig.-22 Grade-Curve for Unit Brg. dept. --With Rating Weights-- I, .. ,.,. - t3 ·a (24'11' ~ 5"4 ~ (lo,1) ,,,,,,. -:, 4S. ~ .· Ii:" ,~ (i/,47) / ... ,, _ ... (/l3') ' ,r ,/ 'f"' ()!1.~J 2 ~ - / / (417[ / r, V Do o, 02. 03 04 Os S1A ~ V ', >18 GRA-DE This doesn't look like a "Learning-Curve" because of the "Rating Weights." Ifwe eliminate the rating weights to see the relationship between grades and the number of training items required for each grade, we can get a learning curve as shown in Fig.-23.

r•o r s:: -~ /000 C) ()° z 500 0 Fig.-23 Grade-Curve for Unit Brg. dept. --W /0 Rating Weights-- I ~I ,A /OQ ~ ,f ...,,.i.9 'f~ .1-,...,"-.' A§_ A=/t/, ~ ,~ {).O L~ ,- ·,o_ o A .t,.=-/66 454 -.,,,, ~ --· ~ ,1=/~o .i6.~ ,t,.." "\ ' ffi ,:1=26? ~ Oo o, o:J.. 03 04- Or s,11 1'74, J ;-x. .. 4=/oS -·· - 5113 GRAf)E This is why just a straight line for skill score requirement for each grade works fine for each department. ss

[6] Current Skill Distributions Fig.-24 shows the current skill distributions in Unit Brg. department. Other departments also have the same pattern of the distributions. This is the biggest problem in ANBM. Most of our operators have very limited skills, and most of our set-up persons don't have enough skills to do set-up jobs. Fig.-24 Current skill distributions in Unit Brg. dept. (SKILL INVENTORY: 10-2-95) (J3) . S ~ ... oPEIZAToR ( n::. iJ) ~ JO / : ·._- \ ~ l •.. ·• . • , J ~ ( (J ... SfT · Ip fERSorJ ( h-:..62) _ 0 :z lO ( O) 0 I. 1f.. m.. fr V vTT 6-/c-A-f> E '-------'------''----....,__----'---'-----'--....,__ _ __,_ We have to try to achieve the Normal Distribution Curve in the future. However, the immediate goal is to achieve the curve as shown in Fig.-25. 1 0 Fig.-25 Immediate Goal ~ - / ' I . - I I 1I fv V We:. ~~e. ... so,-,s 56

Seeing the current distributions, we should know that we have tremendous opportunities to improve productivity and quality. 57

Appendix C Draft of New "Effort Evaluation System" (Contribution review) [1] Major Categories There are three major categories in the contribution review. The followings are the definitions of the. major categories. 1. Procedures & Standards * This category measures the employee procedural responsiveness and also the degree of comrliance with company standards and rules. 2. Teamwork * This category measures how well the employee works with other people. 3. Self-Reliance * This category measures how well the employee accomplishes tasks with confidence and how much the employee exercises their own power or judgement to solve the many challenges that arise. [2] Sub categories Each major category has several sub categories. 1. Procedures & Standards * Safety: Be free from danger or risk. * Dependability: To rely on. * Quality Standard Compliance: Compliance with standards set for certain properties and/or conditions. * Job Procedural Compliance: Compliance with established method of action for given tasks. * "SS" Application: Utilization of orderliness and cleanliness, etc.

2. Teamwork * Cooperation: Working and/or acting with others. * Communication: Conveying information, ideas, thoughts, etc. with others. * Participation: Taking part with others. * Commitment: Faithful to company, department, etc. 3. Self-Reliance * Initiative: Originate or begi~ on own. * Resourcefulness: Having abilities to cope with a situation. * Responsibility: Being accountable or trustworthy. * Judgement: Act of making decisions, using good sense. (3] Statements Sub categories have several statements to I! {plain the details for each of them. These statements are shown in Fig.-26, Fig.-27, and Fig.-28. Steering Committee established the brain-storming team for each major category to develop the statements. Each team was organized by three or four supervisors from different departments. These statements have been developed by our supervisors through a lot of brain-storming sessions. (TOTAL= 135 MAN-HOUR) They have made a presentation in front of all managers and supervisors, and got feed-back from them. These statements are now under the final refining process. The statements will be the guidelines for supervisors to review each worker's degree of contribution. [4] Evaluation 1) Supervisors have to evaluate each worker's degree of contribution on the scale from 1 to 5 for each sub category. "S" = Superior 5 points "ER" = Exceeds Requirements 4 points "MR" = Meets Requirements 3 points "C" = Capable 2 points "NI" = Needs Improvement 1 point s9

60 Fig.-26 Statements for Procedures & Standards GRADES (e: Applies A: May apply X: Does not apply) 0-2 3-5 6-7 (a) Safety * Follows Dept/company safety guidelines • • • * Reports/corrects unsafe conditions • • • * Perform job duties in a safe manner and utilize proper safety equipment •• • • * Contributes to safety improvement activities • • • (b) Dependability * Is prompt ( on time for work, breaks, meetings, etc.) • • • * Is at work regularly (has good attendance record) • • • * Performs assigned jobs quickly and accurately with minimum A • • supervision (c) Quality Standard Compliance * Understands and effectively implements "Standardization of product A • • quality" (Standards) * Diagnoses and report quality problems in an effective and timely A • • manner * Is accurate and complete when performing checks and recording data on • • • check sheets * Contributes to quality improvement activities (Suggestions, QCmonth, • • • Special projects, etc.) (d) Job Procedural Compliance * Understands operating standards and follows proper procedures , (Supplies parts, perform checks, does preventive maintenance, records lot • • • traceability, etc.) * Is accurate, neat and informative in filling out paperwork • • • * Is able to correctly develop, implement, document and report • A A procedures * Contributes to the improvement of dept. job procedures A • • Continued

61 I GRADES (e: Applies A: May apply X: Does not apply) 0-2 3-5 6-7 (e) "5S" Application * Differentiates between necessary and unnecessary, and discards • • • unnecessary (SEIRI) * Keeps things organized and orderly (SEITON) • • • * Keeps work place clean (SEISOU) • • • * Maintains appropriate uniform appearance (SEIKETSU) • • • * Demonstrate self discipline towards on-going "5S" program • • • (SI-IlTSUKE)

62 Fig.-27 Statements for Teamwork I GRADES c•: Applies .6.: May apply X: Does not apply) 0-2 I 3-s I 6-7 (a) Cooperation * Works together with others, understands personal responsibility and • • • performs to high standards regardless of feelings * Accepts tasks given without complaints (Gripe, Grouse, Bellyache, etc.) • • • -- - * Shows considerations and respect of others • • • * Willingly helps others to achieve dept. goals • • • (b) Communication * Informs appropriate people of problems in a logical and timely manner • • • * Expresses concerns in a c.:,ustructive and tactful manner • • • * Open minded to others' suggestions • • • * Maintains good dialogue with others (Including shifts, departments, • • • etc.) * Ask for help if unsure or when needed • • • ( c) Participation * Volunteers for special projects A • • * Encourages others to get involved A • • * Works to achieve group goals • • • ( d) Commitment * Consistently puts forth high effort to achieve targets and goals • • • * Supports group decisions • • • * Supports project until complete • • • * Demonstrate a positive attitude • • • * Leads by example A • • * Willingly train others A • •

Fig.-28 Statements for Self-Reliance I GRADES c•: Applies A : May apply X: Does not apply) 0-2 3-5 6-7 (a) Initiative * Helps to improve existing conditions • • • * Seeks outside source to help solve problems • • • * Completes tasks and takes on added jobs • • • * Willingly puts forth effort to learn and apply new skills • • • * Willingly takes first step in initiating a solution • • • (b) Resourcefulness * Uses available resources effectively • • • - * Capably devices ways and means to solve problems • • • * Uses creative approach to solve problems and does not give up • • • * Demonstrates troubleshooting abilities A • • (c) Responsibility * Works overtime when needed • • • * Sees job through to completion and follows up • .. • * Is reliable and trustworthy • • • * Accepts constructive criticism, admits mistakes • • • ( d) Judgement * Comprehends what a problem is and possible causes • • • * -Reasonably evaluates facts before stating an opinion • • • * Differentiates between acceptable and unacceptable • • • * Identifies options for a solution • • • * Consistently makes sound and timely decisions • • •

2) Under each major category, average of each sub category's points will be calculated to get the score for the major category. --For example-- Suppose a worker is rated in each sub category as the followings, under the "Self- Reliance" category. Initiative Resourcefulness Responsibility Judgement "MR" (3 points) "ER" (4 points) "ER" ( 4 points) "MR" (3 points) Then, his/her score for "Self-Reliance" would be, (3+4+4+3)/4=3.5 points * Supervisors have to study the statements for each sub category carefully to decide each sub category's points. 3) The overall score for each worker will be calculated using the points of each major category. Each major category is weighted differently, and the weight changes according to the skill grade of the workers. This means that the importance of each major category changes if a worker's grade goes up. • "Procedures & Standards" should be more important for the lower grades, and "Teamwork" and "Self-Reliance" should be more important for the higher grades, as shown in Fig.-29. Fig.-29 Rating Weights for Major Categories I ~ 0-2 3-5 6-7 Procedures & Standards 0.6 0.45 0.25 Teamwork 0.25 0.3 0.4 Self-Reliance 0.15 0.25 0.35

--For example-- Suppose a worker whose grade is 4, gets the following score for each major category Procedures & Standards Teamwork Self-Reliance 4.2 points 3.8 points 3.5 points Then, his/her overall score would be, (0.45*4.2)+(0.30*3.8)+(0.25*3.5)=3.9 points 4) The overall score will be evaluated, as shown in Fig.-30. Fig.-30 Overall Rating Table Overall Rating I Overall score (points) I "S" = Superior 4.5- "ER" = Exceeds Requirements 3.5- "MR" = Meets Requirements 2.5- "C" = Capable 1.5- "NI" = Needs Improvement 1.0- --For example-- If a worker's overall score is calculated to be 3.9 points, his/her overall rating would be "Exceeds Requirements." [5] Communication Supervisors have the responsibilities to evaluate the contribution of each worker fairly and consistently, to discuss with managers, and to communicate with each worker. They have to provide a good feed-back and let each worker know how he/she is doing and what he/she is expected to do. This format is shown in Fig. -31. Steering Committee is planning to perform the "Rater's training" for all the supervisors before this system is enforced. (next February)

Fig.-31 Format of Contribution Review (1/2) Review Date: --------- Name: - - - - - - - - - - - Dept._________ Shift: ___ _ Hire Date: - - - - - Title: ______ Grade: _____ _ [1] Procedures & Standards----- ----Points (a) Safety----- -----------------Rating ( ) Comments: ------------------------- (b) Dependability---------------------------Rating ( Comments: ) - - - - -- - - - - --------------- ( c) Quality Standard Compliance-------Rating ( ) Comments: - - - - -- - - - - - -------------- (d) Job Procedural Compliance----------------------Rating ( ) Comments: ------------------------- (e) "5S" Application----------------Rating ( ) Comments: - - - - - - - - - - - - - - - - - - - - - - - - - [ 2] Teamwork------------------------Points (a) Cooperation-----------Rating ( ) Comments: - - - - - - - - - - - - - - - - - - - - - - - - (b) Communication----------Rating ( ) Comments: - - - - - - - - - - - - - - - - - - - - - - - - ( c) Participatio,11------------Rating ( ) Comments: - - - - - - - - - - - - - - - - - - - - - - - - ( d) Commitment----------Rating ( ) Comments: - - - - - - - -- - - -- - - - - - - - - - - -

Fig.-31 Format of Contribution Review (2/2) [3] Self Reliance---------------------------------------------------------Points __ _ (a) Initiative------------------Rating ( Comments: ) - - - - - - - -- - - - - - - - - -- -- - - - (b) Resourcefulness-------------------------------------Rating ( ) Comments: - - - - - - - - - - - - - - - - - - - - - - - - - ( c) Responsibility----------------------------------------Rating ( ) Comments: - - - - - - - - - - - - - - - - - - - - - - - - ( d) Judgement----------------------------------Rating ( Comments: ) - - - - - - - - - - - - - - - - - - - - - - - - [ 4] OVERALL RA TING·------------------------------------ Comments: - - - - - - - - - - - - - - - - - - - - - - - - ( 5] Feed-back from employee *SIGNATURE Employee: __________________ Date: ____ _ Supervisor: Date: - - - - - - - - - - - - - - - - - - - - -- - - Manager: Date: - - - - - 67

AppendixD Draft of New "Training System" [1] Organization of Training Team We are going to organize the "training team," as shown in Fig.-32, and the training team is going to develop the standardized training system of ANBM in three years. CFO coo H. R. d t Fig.-32 Organization Chart (1) 1 - - - - - - - - - - - - - - - - - - - - - 1 - - - ---+ACC. dept. Steering Committee Elgin Plant manager (COO) Shiller Park Plant manager Production Superintendent 1 - - - - - Purchasing dept EDP dept. Production dept. (UNIT) Production dept. (TRB) Production dept. (RBB) Production dept. (PP) Production dept. (SB) Training team 1-------------l lENG. dept) t-----------lQ. A. dept. 1-------------!Production Control dept. I .------ Production dept. RBB 1-----l ENG. dept r------1 a. A. dept. I ·----ii Production Control dept.

* Training team will be organized in the Elgin plant. Schiller Park Plant is relatively small and has longer history, so that they have enough skilled workers to handle the training program by themselves. * Training team will be under the supervision of our Production Superintendent, so that trainers can concentrate just on training related jobs for each production department. Fig.-33 Organization Chart (2) Production Superintendent Production Manager Foreman j I Set-up person erator Training Coordinator (FOR ALL DEPTS.) Trainer * A training coordinator has to be selected. He/She must be a best available candidate to coordinate and develop the system. * One or two trainers will be selected from each department. They are supposed to be the highest-skilled set-up persons. * Training team will be organized just temporarily ( about three years) to assist each department to start up the training program. Each department is supposed to handle the training program without the help from trainers in the future (three years from now). t9

* In the future, we may need justs coordinator who reports to H. R. manager. This coordinator will take care of the maintenance and improvement of the training system that will be standardized in three years from now. [2] Training Flow Chart Fig.-34 Training Flow Chart I ~' -M_A_N_A_GE_R~ REPORT t REPbRT I I I * r COORDINATOR TRAINERS REQUEST I TRAINING &CHECK * ~-----------~ .__F_O_R_E_M_A_N~I !SCHEDULING ♦ LJOLLOW-UP HELP & (SKILL INVENTORY) ADVISE I COORDINATOR I ~ TRAINING TRAINING & CHECK & CHECK~ OPERATOR ~ CHECK'----,---~ I APPROVE C~ O.J.T. I (INFORM) -------...... (2 WKS) • - NEW OPERATOR * The coordinator has to develop the training plan, discussing with each production manager and foreman. * Trainers have to perform the training, following the directions from the coordinator. * In the future, foremen are supposed to develop and perform the training plan. And all the higher-skilled workers such as set-up persons are supposed to train lower- r;o

skilled workers in their departments. * The results of training should be checked and evaluated by the skill improvement (Skill- Check list), productivity improvement and quality improvement. [3] Responsibility of Training Team -Contribute to the skill improvement that is linked to productivity and quality i_ mprovement. -Establish the best training system of ANBM and let it rooted, so that all departments can follow it by themselves. * Base salary that reflects these job duties might be needed_ [4] Goal for Training Team 1) Immediate goal= "Bottom up" * Identify low skilled employees and establish criteria for improvement. * Improve their skills to their foreman's and department manager's satisfaction_ (Evaluate the results using the benchmark.) 2) Medium term goal= "Development of the system" * Research how to structure the training manuals and develop them. (Format and style of communication) * Develop teaching style. * Establish individual and group grade advancement plan with department managers, and complete the plan. 3) Long term goal = "Standardization of the system" * Standardize the teaching style within each department by using foremen and set-up 7/

persons. (Use written manuals/videos) * Establish the feed-back system from operators (trainees) on training methods. * Establish group problem solving methods for foremen and set-up persons. 4) Final goal (in three years)= "Rooting of the system" * Let the new system rooted into each production department, so that each department can handle the on-going training program independently. [5] Education for Training Team Steering Committee is considering to provide education to the trainers to support them, using consultants or schooling. W,! expect them to learn effective training methods and principles that will help them to develop the best training system of ANBM. Also, we are going to provide "team building training" to foremen so that they can contribute to develop the new system. 172