Arctic freezer plant.

Pesch, Michael J. ; Ahmad, Sohel ; Nebosis, Timothy 等

CASE DESCRIPTION

The primary subject matter of this case concerns managing diversity issues in the workplace and the application of total quality management principles. Specifically, an appliance manufacturer is experiencing challenges involving Somali refugees who comprise a significant percentage of the plant's available labor pool. These challenges include quality and productivity problems caused by the Somali workers' lack of English skills and adherence to cultural and religious customs, as well as by the plant's own poor preparation to manage this group of employees. The case has a difficulty level of three or four, appropriate for junior or senior level students. The case is designed to be taught in a ninety minute class period, with two hours of outside preparation time by students.

CASE SYNOPSIS

Imagine the challenge of being a manufacturing plant manager of a major employer in the community, faced with the need to satisfy rigorous customer requirements in the areas of quality, price, and delivery. You must fulfill these requirements with a local labor pool that has a limited supply of applicants and recently has become populated by refugee immigrants who speak little or no English. Additionally, these refugee employees have cultural and religious customs that pose challenges in the areas of plant safety and productivity.

As a leading employer in the business community, you know the spotlight will be on your company to help come up with ways to address the community challenge of helping a new immigrant population become productive members of the community. The last thing your company needs is bad publicity in the area of relationships with workers from diverse ethnic backgrounds. Yet you know that your plant must compete on a global basis and your giant retail customers will spare no time in seeking other suppliers if you cannot meet their requirements.

INSTRUCTORS' NOTES

Research Methods

This case is based on a real company, though officials at the company prefer that the real name of the company not be used in the case. Therefore, in the writing of this case, the company's name and several other descriptive characteristics have been disguised to protect the company and the individuals involved. Except for these company-identifying characteristics, the facts relating to refugee immigration in Minnesota, the competitive environment of the appliance manufacturing industry, and the issues concerning the experience with hiring Somali refugees for the third shift are real. The authors collected data from contacts within the company, local leaders in the Somali community and social service agencies, newspaper articles, and public presentations by company officials.

Learning Objectives

To understand the complexities of managing workers from diverse backgrounds while staying focused on achieving the strategic objectives of the company.

1. To explore ways in which companies can be more effective in hiring and training workers from diverse backgrounds.

2. To utilize quality management tools to identify root problems that hinder the achievement of plant performance goals.

3. To examine the role of a company in a community context.

4. To better understand how multicultural issues must be carefully evaluated in deciding to transplant manufacturing operations to foreign countries.

Links to Theoretical Frameworks

There are several opportunities to incorporate total quality management ideas into the case discussion. These include discussing how quality improvement efforts pay off in terms of preventing internal failure costs (rework, scrap, and downtime) and external failure costs (unhappy customers, warranty costs, and cancelled orders). A discussion of the "Plan-Do-Check-Act" framework for quality improvement and the "Seven Tools for Quality Improvement" can also be applied to this case. For example, a cause and effect diagram can be used to help the class trace quality problems that the plant is currently experiencing (see below).

The case is rich with potential to discuss multiculturalism in the workplace. Key discussions can address questions such as: (a) Is it enough to hire trainers and consultants to conduct surveys and to deliver diversity training sessions to employees? (b) How can the culture of a company be changed to create an environment that is naturally self-sustaining in terms of being inviting to all employees? (c) Are the management challenges presented in the case rooted in a poorly-qualified Somali labor pool or management's failure to recognize that old approaches to new problems may not suffice, especially since Somalis are only one of many immigrant groups that have arrived and will continue to arrive in communities throughout the United States?

SUGGESTIONS FOR EFFECTIVELY TEACHING THE CASE

A significant problem with case discussions is that students often arrive to class not having read the case. The Arctic Freezer case is short enough that it can be read in class in about 15 minutes. Another approach is to give the students a written assignment that is due on the day the case is discussed. Either of these approaches would improve the class discussion.

Small group discussions are always a good way to get everyone to engage in the case discussion. One person in each group takes notes during the small group discussion. In the general class discussion, each group takes a turn by contributing one idea from its list. After each group has taken a turn, the process is repeated until all groups have exhausted their lists.

A human resource manager and an operations manager from a local company could be invited to class to give their perspectives on the case and discuss how their companies have dealt with diversity issues. The testimony of these credible "real world" individuals can help students appreciate better the issues of multiculturalism and corporate responsibility that the case raises versus having a professor "preach" to them on these topics.

Note on Legal Issues Pertaining to the Case

While this case is not intended to be a business law case, the issues in the case do raise questions on the legal obligations of the employer to accommodate religious beliefs. On the subjects of religious discrimination and religious accommodation, an article by Anderson and Campbell (1), states:

 ... (E)mployers remain free to establish nondiscriminatory rules
 against conduct, such as religious proselytizing, that could be
 disruptive to the smooth operations of the workplace. Not only do
 American employers have a duty not to allow religious
 discrimination or harassment but they also face a legal obligation
 to accommodate the religious beliefs and practices of their
 employees. However, that obligation is not absolute or open-ended.

Anderson and Campbell compare religious accommodations to accommodations required of employers by the American with Disabilities Act (ADA). According to the authors, for both religious beliefs and disabilities the laws similarly state that employers must make "reasonable accommodations" that do not cause "undue hardship" to the employer. But the way "undue hardship" is interpreted is different:

 According to the ADA, the "term 'undue hardship' means an action
 requiring significant difficulty or expense when considered in
 light of factors" such as the overall financial resources of the
 employer. In the context of accommodating an employee's religious
 beliefs and practices, however, the courts have given the phrase a
 significantly different meaning. Many types and levels of burden
 can constitute an undue hardship in the religious accommodation
 setting. Something that imposes more than a minimal cost on an
 employer is an undue hardship. A cost can be economic, such as lost
 business, or the cost of paying additional workers (or overtime to
 current employees). A cost can also be non-economic, such as
 compromising a neutral scheduling or job-assignment system (which
 would adversely affect other employees), impairing customer service
 or customer relations, compromising the integrity of a
 manufacturing process, or compromising the safety of the employee
 in question or other employees.

The insights provided by Anderson and Campbell demonstrate that, unlike ADA decision settings, employers have a great deal more latitude to decide how to handle requests for religious accommodations. Therefore, both the students and the instructor should understand that deciding what to do in the Artic Freezer case is not driven primarily by legal requirements.

ASSIGNMENT QUESTIONS, ANALYSIS, AND ANSWERS

1. What cultural and religious issues mentioned in the case impact the plant in terms of safety, productivity, recruitment, quality, delivery, and employee morale? Discuss the degree and nature of the impact.

This is a good "discussion starter." It gets the students to think of specific examples of how cultural characteristics in the Somali employees present special challenges to management. Examples of these include:

(a) Safety Issues: Loose clothing and long hair can become entangled in machinery. Water on the bathroom floor from washing creates a slippery floor. Illiteracy or lack of English skills can lead to a failure by Somalis to understand safety rules.

(b) Productivity Issues: Differences in work habits, lack of factory work experience, language problems in understanding the instructions from experienced workers, failure to take orders from female supervisors, and attempting to pray during the work shift can all negatively affect productivity.

(c) Recruitment Issues: Language problems can make it hard for recruiters to understand worker qualifications and skills. Translators are hard to find and incur additional interviewing costs. Social service agencies are critical to identifying and aiding recruitment of Somali applicants.

(d) Quality and Delivery Issues: In the case of the Somali workers, the effects of language barriers, lack of experience, and adherence to religious and cultural customs create a more complicated situation for achieving the plant's quality and delivery goals.

(e) Employee Morale Issues: Plant management faces the challenge of addressing the special situation posed by the Somali workers while treating all employees fairly. More problems can be created if the non-Somali workers perceive that management has given special concessions to the Somali workers, such as extra breaks for prayer. Management also needs to strive to stay positive in their interactions with the Somali workers so they will feel supported and want to improve their performance.

2. Discuss this case from a Total Quality Management (TQM) perspective. How can spending more on "prevention" activities such as training, workplace redesign, and language training reduce the total costs of quality in the Arctic plant?

The late W. Edwards Deming, a quality guru par excellence, famously blamed management for 85% of the quality problems in the organization. Adopting Deming's perspective, a TQM approach to the Arctic case starts and ends with making management responsible for organizational performance.

TQM identifies four categories of quality-related costs in the workplace:

1. Prevention costs are incurred for activities that prevent bad quality, including training, process design, preventive maintenance, and supplier certification.

2. Appraisal costs are incurred for activities that monitor quality, including inspection, testing, and quality audits.

3. Internal failure costs are incurred when defects are discovered and addressed before it reaches the final customer. Internal failure costs include scrap, rework, and lost production.

4. External failure costs are incurred when defective goods and services are discovered after they are received by the final customer. These include the costs of warranty, replacement, lost goodwill, and lost future business.

The TQM philosophy says that in a traditional organization that attempts to save money on training, maintenance, and investment in capable equipment, and relies heavily on inspection as the main way to prevent defects from reaching the end customer, external failure costs typically represents the largest percentage of total quality costs. By practicing a defect prevention approach, a TQM organization invests more in prevention activities and dramatically cuts the much large costs of internal and external failure costs, thereby reducing total quality costs in the organization.

A TQM approach can be used as a guide for what might be done in the Arctic case. For example, the less-prepared Somali employees incur significantly higher rates of internal failure costs of scrap, rework, and reduced productivity compared to traditional new employees. External failure costs include the impact on relations with Sears and other major wholesale customers when orders are delivered late and higher warranty costs if shipped products turn out to be defective.

Students should be encouraged to discuss how specific prevention measures might reduce the two types of failure costs Arctic is now experiencing. The benefits of additional investments in prevention activities have significant long-term benefit if employing Somalis results in acquiring loyal and (eventually) experienced employees. After all, manufacturing jobs are some of the best paying jobs available for refugee immigrants. Social benefits also accrue to the company when it can show how it has contributed to the community effort to welcome and assist the new immigrant arrivals in becoming independent and self-sufficient.

By using Total Quality Management (TQM) principles that emphasize prevention of poor quality, the case discussion can include how Arctic's management could develop a set of critical skills and qualifications that all workers must possess. For example, it is important that all workers respect and fulfill the work-related requests of managers and supervisors, regardless of gender. Perhaps the interview process for all job applicants can include a few questions that test for a gender-neutral orientation in the worker-supervisor relationship. In another example, perhaps Arctic management could work with interpreters to develop simple tests of literacy and/or the ability to learn and follow directions. These measures are prevention-oriented and would help avoid the costlier consequences of poor quality that currently threaten Arctic.

3. Using a fishbone (cause-and-effect) diagram, explain the factors that are contributing to late deliveries.

This question helps the class to understand the use of the fishbone diagram for determining the source of poor organizational performance. It is important to note that the causes for some late deliveries may not have anything to do with the new Somali workers. Here is a sample fishbone diagram that might be generated in a class discussion on the causes of late deliveries:

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4. What should Jim do? Given the circumstances, is three weeks enough time for the third shift to meet Jim's expectations for productivity improvements? Are the workers primarily responsible for the third shift's struggles? Suggest some short-term and long-term plans to address the issues raised, taking into account both the internal (organizational) and external (environmental) factors.

Jim faces a common problem to all managers: how to balance what's good for the plant in the short-term and what's good for the plant in the long-term. Jim worries that in the short-term the Somali workers are harming the plant's quality, delivery, and productivity performance, as well as the plant's relations with its customers. He also knows that in the long term, investing time and money in the newly hired Somali employees will likely pay off in securing a group of loyal and productive employees that will allow the plant to meet its performance goals.

In conducting the class discussion, the instructor should elicit from the class the ways in which the plant was not prepared for this new pool of Somali job applicants. Recruitment, screening, training, supervising, and general cultural awareness fell far short in providing the best chance of achieving success with the Somali hires. The case discussion should focus on:

(a) Improving the plant's relationships with the social service agencies that refer Somali job applicants to the plant.

(b) Finding ways to break through the communication barriers (hire more translators, conduct in-house English language classes, translate plant signs into Somali, etc.).

(c) Implementing a more sophisticated and rigorous training program.

(d) Assigning more supervisors and experienced workers to work alongside the Somalis.

(e) Bringing in an outside consultant to conduct management training sessions on Somali culture.

EPILOGUE

The third shift on the upright line was cancelled in late September, three weeks after it began. The reasons given were the poor productivity and delivery performance that showed little improvement over the time the third shift was in operation. After canceling the third shift, plant management added two extra hours of overtime to each of the first and second shifts on the upright line to absorb some of the product demand. Other orders were delayed or cancelled.

A new third shift upright line was launched the following February. This time, the third-shift workforce met the normal 3-week "ramp-up" timeline for new lines to meet plant performance standards. Recognizing the problems from their past experience, plant management implemented some new training and supervisory procedures, including:

1. Special work station simulations were constructed in the training center so newly hired workers could be trained in certain tasks prior to working on the real assembly line.

2. New hires were partnered with workers on the first or second shifts and were required to work 3-4 days under this arrangement, compared to the previous approach that allowed new workers to work as little as a single day with an experienced partner.

3. Plant management identified critical task "cells" that were comprised of one or more work stations on the upright assembly line that performed a major assembly function such as door assembly or compressor installation. The workers within these task cells were organized into teams, with a lead person assigned to provide oversight. The lead person was responsible for assigning employee breaks, getting more parts delivered to the work stations, and providing other support activities. Management hoped that these teams would help the line run with fewer delays and improved quality performance.

4. Three additional supervisors were reassigned from the first and second shifts to work on the third shift line during the start-up time, along with the two supervisors who were already assigned to the third shift.

5. Standard work instructions were translated into the Somali language.

Although all five measures were implemented, the first two measures (training on mock work stations and partnering with experienced workers for longer periods) proved to be the biggest contributors to the success of the second launching of the third line. Another likely contributing factor to the success of the second launch was a learning curve effect that carried over from the first launching, since about 90% of the 82 Somalis that were hired for the second launch were also part of the first launch.

Receiving special emphasis in the simulation and other training activities were the following critical operations:

1. Soldering. There were seven solder jobs on the line.

2. Leak Checking. Two operators use a complicated piece of equipment to make a critical go/no go quality check.

3. High Potential Test. One operator completes a test of the electrical system to check for proper grounding and good connections.

4. Final Inspection. This person checks for the right model number, correct literature, all included features are present, and that the unit is clean.

The analysis of the freezer line to identify these four operations that were deemed "critical" can be related to the "Seven Tools for Quality Improvement" that uses simple charts and data collection techniques (check sheets, fishbone diagrams, etc.) to identify the "significant few" operations that contribute to most of the quality and productivity problems. Pareto Analysis indicates that out of 130 workers on the third shift, only 11 are involved with "critical" operations. By focusing on these 11 "critical" work assignments to ensure proper training, tools, and techniques, the plant can avoid a large majority of quality and productivity problems.

Figure TN1 shows schedule attainment performance for the second launch period for the third shift only and for the combined first and second shift. The third shift achieves almost 85 percent of its schedule goals in the first week of operation (Week 6) and comes close to matching the performance of the first and second shift by Weeks 9 and 10.

[FIGURE TN1 OMITTED]

Figure TN2 shows productivity for all shifts on the upright line. Separate third shift productivity figures were not available from plant management. However, the third shift was launched in Week 6 and did not appear to affect overall line productivity, according to the chart. In Weeks 9 and 10, overall productivity of the line increases by one-half unit per labor hour.

While there is a relationship between schedule attainment and productivity, these performance measures are calculated separately and do not perfectly correlate. Schedule attainment reflects the number of units built versus the weekly production goal, both of which can vary.

Productivity is the ratio of total labor hours to units produced. Since the third shift was phased in over the first three weeks, and did not utilize all 130 workers until the fourth week, this would largely explain why the shift would perform less well on schedule attainment (units produced) in the first three weeks, but still maintain high levels of productivity, since the units that were produced were produced by less than the full complement of workers.

[FIGURE TN2 OMITTED]

REFERENCES

Anderson, Steven R., and Greg Campbell, "Religious Discrimination and Religious Accommodation in the Workplace," http://www.faegre.com/articles/article_2113.aspx.

Michael J. Pesch, St. Cloud State University

Sohel Ahmad, St. Cloud State University

Timothy Nebosis, St. Cloud State University