Bratton J. and Gold J. (2007) Human Resource Management (4e), Basingstoke: Palgrave Macmillan.
case study Servo Engineering
Your task is to read the case study Servo Engineering and prepare a presentation that deals with the following four tasks:
1. Research the use of ‘self-managed’ or semi-autonomous teams in manufacturing, and critically review the SMT system at Servo Engineering. What changes might be made in the organisation of work that might improve labour productivity?
2. Explain the possible pay systems that might be used in a team working situation and discuss the possible benefits of introducing changes to the pay system at Servo Engineering
3. Discuss what role if any the recognised trade union might play if the plant manager seeks to change work organisation or pay arrangements in the factory. How might the manager seek union support for bringing about improvement to factory performance?
4. Discuss what might be the qualifications and role of an HR manager recruited to succeed the retiring manager, and explain why and how this should be different from the current situation
NB. The case was published in 2007 and is set in the period just before the current recession. You may assume that the company is in a competitive environment and has no plans for reducing production
Servo Engineering was founded in 1897 andover the last 50 years, the company has developed into a leading manufacturer of commercial vehicle components. Since 1977 Servo Engineering has been a subsidiary of American Ensign. This multinational company has manufacturing plants in the UK, the USA and Germany.
In recent years the company has replaced the majority of its production machinery with equipment using computer numerical control. In addition the firm has organised production into six ‘self-managed teams’ (SMT). SMTs are product-centred; for example one SMT will manufacture a whole component such as vacuum pumps or air compressors. Each SMT operates as a miniature factory within the larger factory, and each has sufficient machinery to complete the majority of the manufacturing stages. Processes outside the scope of the SMT are subcontracted out, either to another SMT or to an external contractor. The number of workers in each SMT varied between 12 and 50, and they work on a three-shift system.
The division of labour within an SMT is as follows. The SMT Supervisor has overall responsibility for the team. The product-coordinator’s job is to ensure the supply of raw materials and parts to meet SMT production targets. The charge-hand acts as progress-chaser. Below the supervisory grades is a hierarchy of manual grades reflecting different levels of training, experience and pay. For example, a setter is apprentice-trained who is paid a skilled rate to set up the machines for the semi-skilled operators. Semi-skilled operators receive little training. In total the firm employs 442 people, and just over half the workforce belong to the trade union AMICUS which is recognised for collective bargaining purposes.
The factory is located in Yorkshire. Levels of unemployment are quite high in the area, and yet the company has had difficulty in recruiting ‘good people’. In addition, absenteeism and turnover are felt to be higher than they should be.
The apparent low level of commitment among manual employees can be explained in two ways. First, shop stewards and workers have expressed considerable discontent over the bonus scheme, complaining that the standard time allowed to complete a particular task was not adequate to earn a ‘decent’ bonus. Second, the way in which the SMTs were designed resulted in operatives performing narrow, repetitive tasks under close supervision. Some of the SMT leaders have a somewhat autocratic management style. Productivity rose in the factory when computer numerical control was introduced, but management now feels it is lagging behind their other plants.
Elizabeth Bell was recently appointed the plant manager, the first time a woman has occupied the role in what is a very masculine environment. She is concerned about employee relations, and productivity. Although there is no suggestion that the plant is under threat, Elizabeth is aware that the company could switch manufacture to Germany, or consider opening a facility in Eastern Europe where labour costs may be lower.
Reporting to the plant manager is George Wyke the personnel manager, who has worked for the company for 25 years. Prior to becoming the personnel manager he had been a union shop steward. George has no formal training or qualification in personnel/human resource management. When the SMT system was established, the company gave SMT leaders considerable discretion for employee relations. To quote George Wyke: “What the SMT system has done as far as man-management is concerned is to push responsibility further down the chain into the SMTs. So where somebody wants disciplining, they don’t say to the personnel manager ‘I want to sack this bastard, what can I do to get rid of him?’ They know what they have to do. The only time they will come to me is to seek advice on whether they are doing it right or wrong.”
George Wyke is due to retire at the end of the year. Elizabeth Bell has decided to seek an external candidate to replace him. When Elizabeth became plant manager she suggested to George that his title might be changed to HR Manager, but George was against this, as he was against any suggestion that he might benefit from joining the Chartered Institute of Personnel and Development. Elizabeth now plans to advertise for an HR Manager who has the appropriate qualifications and experience to help bring improvement to human resource management in the factory.