April 1, 2023

You’re the Boss Blog: Small-Business Lessons From Harley-Davidson’s Turnaround

A Harley-Davidson Museum in MilwaukeeDarren Hauck for The New York Times A Harley-Davidson Museum in Milwaukee

Creating Value

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This weekend, I read an article in the Wall Street Journal about how Harley-Davidson turned itself around using “lean” manufacturing strategies. Lean, or just-in-time, manufacturing is the Toyota production system, which started with W. Edwards Deming and his work with statistical quality control. Whenever I see this kind of article about a large company, I think about how the thoughts and principles can be applied to the smaller companies I work with.

As I read this one, three things occurred to me.

1. The idea behind lean is to create capacity — not to reduce employee headcount. In this case, Harley-Davidson reduced its headcount by more than 1,000 people using lean techniques. Harley-Davidson probably can do this just once. If it continues to use lean strategies to reduce headcount, it will see employee enthusiasm for the program wane.

People don’t want to see their jobs go, and they don’t want to see their friends’ jobs go either. If the layoffs are an economic necessity, they can work. But you can only have so many economic emergencies before people say enough is enough.

My favorite use of lean is to create capacity for more business with the same headcount. I find that employees get excited and stay excited when more business comes into the company. If using lean techniques to make the company better allows for more job security through efficiencies, employees are all for it. If you cut employees in for a piece of the action through bonus programs, so much the better.

2. Installing lean in large companies is much different than installing lean in small ones. Large companies have lots of resources, both economic and human, that they can throw at arrangements like this. Small companies do not.

Still, I’m a big believer in lean activities in small companies. I’ve seen successful implementations increase profits by 50 percent or more. While large companies can afford to do more than one lean project at a time, the small company successes I’ve seen take it one step at a time.

3. Often, we see these activities led by those who have been through M.B.A. programs. The problem I often see with M.B.A.’s in smaller companies is that their educational training is for making positive changes in large companies. But those changes don’t always work in smaller companies with fewer resources. And an understanding of the strategies that do work in small companies is often totally foreign to those with advanced business degrees.

I’ve got nothing against M.B.A.’s. I’ve just come to believe that those with advanced degrees often need to have a complete reset in their beliefs about how successful change is done in a smaller company. Thankfully, there are several programs in the country that concentrate on small businesses.

I found this article very provocative. What do you think?

Josh Patrick is a founder and Principal at Stage 2 Planning Partners where he works with private business owners on wealth management issues.

Article source: http://boss.blogs.nytimes.com/2012/09/24/small-business-lessons-from-harley-davidsons-turnaround/?partner=rss&emc=rss

G.M. Reaches Tentative Deal With Workers

It is the first new labor pact for any of the Detroit carmakers since G.M. and Chrysler received government bailouts and went through bankruptcy in 2009. The deal will help G.M.’s 48,500 union workers share in the company’s turnaround and should give them more job security, two top priorities for the U.A.W., though the tenuous nature of the economic recovery will continue to inject some uncertainty.

G.M. said the deal would cover four years. The union declined to give details but said the agreement included improved profit-sharing and “significant improvements to health care benefits.” The deal was also expected to include so-called signing bonuses worth at least several thousand dollars. And the U.A.W. had been seeking a wage increase for entry-level workers, who earn about half as much as other workers.

The union said in a statement that it had successfully fought G.M.’s proposals to weaken retirement benefits and obtain major concessions to health benefits.

“In both pensions and health care, the U.A.W. was able to convince G.M. that far greater success could be achieved working together than by cutting pensions or health care,” it said.

Negotiations with Chrysler and Ford Motor are continuing.

The union’s president, Bob King, said the G.M. deal would “get our members who have been laid off back to work” and bring jobs to the United States from other countries.

“The U.A.W. approached these negotiations with new strategies and fought for and achieved some of our major goals for our members, including significant investments and products for our plants,” he said in the statement.

Negotiators met for 14 hours on Friday, two days after agreeing to extend the old contract when they were unable to reach a deal. The deal was announced shortly after 11 p.m. Friday.

“We used a creative problem solving approach to reach an agreement that addresses the needs of employees and positions our business for long-term success,” Cathy Clegg, G.M.’s vice president for labor relations, said in a statement. “We worked hard for a contract that recognizes the realities of today’s marketplace, enabling G.M. to continue to invest in U.S. manufacturing and provide good jobs to thousands of Americans.”

U.A.W. leaders from plants across the country are expected to gather in Detroit on Tuesday to vote on the deal. A ratification vote by rank-and-file workers is expected to occur in seven to 10 days, G.M. said.

Although the union did not confirm any changes to wages, its lead negotiator with G.M., Joe Ashton, said in the statement, “The wages and benefits we negotiated in this tentative agreement reflect the fact that it was U.A.W. members who helped turn this company around.”

G.M. officials had said before the start of negotiations that they wanted to tie more of workers’ pay to productivity, quality and profits. G.M. workers received profit-sharing checks averaging $4,400 this year as a result of the $4.7 billion it earned in 2010.

“There is something between the lines here that says this is an agreement that will result in a more successful General Motors and workers that share in that success,” said Harley Shaiken, a professor of labor relations at the University of California, Berkeley. “It will define competitiveness for Detroit.”

In its tradition of pattern bargaining, the union is expected to seek similar terms from Chrysler and Ford. But it is likely to have more difficulty doing so than in the past, given the disparate conditions of the three companies.

The union is expected to focus on achieving a deal at Chrysler before turning to Ford.

Article source: http://feeds.nytimes.com/click.phdo?i=76f51eb1d84e30440f43ecae7ec5635f

Verizon Workers Plan to End Strike, Agreeing to Revive Talks Toward a Contract

Beginning with the evening shift on Monday, the 45,000 striking workers will return to their jobs, posts that they left on Aug. 7 in the nation’s largest strike since 2007, when workers at General Motors held a two-day strike.

Union leaders are ending the walkout, they said, because Verizon management had finally agreed to engage in serious bargaining on the contentious issues after the company had originally insisted on negotiating more than 100 proposals for concessions.

Officials from the two unions that called the strike — the Communications Workers of America and the International Brotherhood of Electrical Workers — made the announcement on Saturday.

The strike was a painful one, forcing thousands of workers and their families to live without paychecks for two weeks and hurting Verizon’s image, as many customers complained of major delays for repairs and installations. The walkout involved workers from Massachusetts to Virginia in Verizon’s traditional landline operations and in its new FiOS Internet and cable operations, but not workers at Verizon Wireless, which is largely nonunion.

Union officials said they had originally called the strike because they felt they were not being taken seriously and because Verizon was insisting on so many and such sweeping concessions. Verizon was hardly budging from its original position, the unions said, another point of contention. Verizon is pushing for, among other things, a pension freeze for current workers, fewer sick days, an end to all job security provisions, far larger employee contributions toward health coverage, and freedom to do as much outsourcing as it wants.

Larry Cohen, the communications workers’ president, said in an interview Saturday that under an agreement reached Friday, the bargaining was being restructured to focus on major issues, with top Verizon officials indicating that there would be real progress in bargaining. Mr. Cohen said another factor that helped persuade the unions to return to work was that Verizon had agreed to keep the expired contract in force until a settlement is reached.

“Everybody knew we faced a long list of management demands and that’s why there was a strike, and we would go back into bargaining when the talks could be meaningful,” Mr. Cohen said. “We don’t consider this a victory in any way. We consider it progress toward a good process at Verizon.”

In a statement issued on Saturday, Verizon said the parties had agreed on a process “for moving forward to negotiate the major issues regarding benefits, cost structure, work flexibility and job security.”

Marc C. Reed, Verizon’s executive vice president for human resources, said Verizon believed that ending the strike “is in the best interest of our customers and our employees.”

“The company hasn’t conceded any of its proposals,” Mr. Reed said in an interview. “At the end of the day we still have health care on the table. We still have proposals on job security and moving work on the table.”

Mr. Reed said the unions had ended the strike because of “the pressure of having people not working in this tough economy.” He added, “This is a situation where the purpose of the strike may not have any need.”

Mr. Cohen acknowledged that the bargaining ahead might still be lengthy. He said Verizon initially seemed so dismissive of the two unions’ position and so unwilling to budge from its original stance that union negotiators felt the company was seeking in effect to wipe out the unions’ bargaining rights.

“The unions have been working with Verizon to restructure bargaining in a way that represents progress for everyone,” he said. “We believe that Verizon management shares the goal of meaningful bargaining.”

Jim Spellane, chief spokesman for the electrical workers’ union, said the unions went on strike to get management’s attention and to show that the workers could not be pushed around.

“The workers felt very strongly that their whole standard of living was under attack, that everything we’ve worked for for decades was under threat and wasn’t being taken seriously,” Mr. Spellane said. “They felt backed into a corner and so the strike was called.”

Verizon officials have repeatedly said they needed major concessions from the landline division employees to keep that business competitive and to increase its lagging profitability. The company said its traditional landline business had declines in profits and in its customer base, even though that division was slowly rebounding thanks to growth of Verizon’s FiOS fiber-optic business.

The two unions condemned Verizon’s push for large-scale concessions, saying the demands were inappropriate because the company’s overall profitability had been strong, totaling $22 billion over the last four years.

While many C.W.A. members voiced relief that they were returning to work, others posted complaints that their union had knuckled under by ending the walkout without a settlement and with Verizon’s concession demands remaining on the table.

Throughout the strike, a big question that union leaders faced was whether Verizon had proposed scores of concessions in the hope of narrowing them down to win just two or three major ones, or whether it was intent on winning dozens of concessions and seriously weakening the two unions.

More than any other union leader in the country, Mr. Cohen has sought to promote and preserve bargaining rights, and he often said that Verizon’s truculent approach to negotiations resembled those of state governors who wanted to abolish collective bargaining.

Article source: http://feeds.nytimes.com/click.phdo?i=b88c703a8d594069b6b9fa846e32fa95