Business Psychology - Latest Findings

Article No. 132
Business Practice Findings, by James Larsen, Ph.D.

Team-Based Management

Researchers examine a new management system and discover its warts.

Imagine being in charge of a highly automated factory and taking a stroll surrounded by a fortune in humming, efficient machines. Now imagine noticing an occasional production worker among the robotic machines carrying out a delicate task or testing completed components. "Too bad," you might mumble to yourself as you think of the not-so-distant future when these workers will have little more to do than dust the machines. But executives actually taking these strolls today are noticing something else, something troubling.

Production workers know ways to improve quality, productivity, and cost effectiveness, and they recognize ways to introduce flexibility -- ways only they can see. But you can't take these people one-at-a-time and make much progress. The pieces are spread across groups of people. And once you identify improvements, it still takes coordinated effort to implement them. This leads executives to teams.

Many companies are experimenting with team-based management systems hoping to tap this resource. And few settings present a greater challenge than manufacturing plants.

Production workers in factories are a little different. They enjoy working alone, performing repetitive tasks with machines, and they aren't good candidates for team-based management systems. But there they are, and we have to work with them.

Rajiv Banker, of the University of Minnesota, recently discovered a natural experiment in an electro-mechanical assembly plant where the executives decided to implement team-based management. The company allowed Banker's group to examine the records, and to observe the implementation for 22 months. Banker's team was able to compare performance before and throughout the change.

Three subassembly production lines and one final assembly line made up the factory, and each line was formed into a team, varying from 4-6 workers to 14-18 people. Groups met weekly for an hour and were joined by a company facilitator, a planner and an engineer assigned to the line, and the plant manager.

Typical meetings followed an agenda which included quality, the past week's accomplishments, customer delivery, and deviations from the budget. Other topics included problems with products in the field, changes in the customer base, competitors' products, and business performance.

Ideas and problems that required action were recorded in an action log, which noted who submitted the idea, who was responsible for addressing it, and when it should be completed. Subsequent meetings began by reviewing progress of existing entries in the log. Teams were evaluated based on the progress they made.

Seven primary team responsibilities served as a focus of their efforts: quality, customer satisfaction, training, cost awareness, safety, efficiency and comfort, and housekeeping. Teams could spend $200 implementing ideas.

Banker compared the manufacturing defect rates before and after the teams were introduced and found a 38% decline. He also compared the ratios of the number of units produced to total production hours, and found a 20% improvement.

So far, so good.

But a closer examination of the data found one of the subassembly lines posting dramatic gains, while another showed no improvement at all. The remaining teams posted only modest gains. The difference seemed to lie in conflict in the unresponsive team and strong cohesion in the responsive team.

Keeping in mind the investment in team-based management, Banker's findings point to selective implementation of this new work arrangement. Cohesive groups whose members enjoy each other's company are good candidates. Quarrelsome isolates are not. And it calls to mind a management principle that also needs repeating: managers must adapt to meet the leadership needs of the people they lead, and everyone is a little bit different from everyone else. Managers must know their people and do a lot of adapting. Team-based management is the right thing to do with some people.

Reference: Banker, Rajiv D., Joy M. Field, Roger G. Schroeder, and Kingshuk K. Sinha (1996). Impact of Work Teams on Manufacturing Performance: A Longitudinal Field Study. Academy of Management Journal, 38 (4), 867-890.

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