A Business Model that Can Transform Your Company

The 70's and 80's were known as the time for work teams and product groups. Some of these principles have been forwarded to the current time in the form of teamwork and employee empowerment. However, not all models developed during the time got their appropriate consideration due to their limited application within a small company. If these models would have been better known to the public they may well have become the standard for most industries.

In Flint Michigan during the late 80's a new automotive manufacturing supplier was launched and the owners wanted to have one of the most productive small plants around. What they couldn't get done according to their small size they wanted to be able to complete with their efficiency. They designed a completely new and interesting model for their business.

Recruitment: As with any business the strength of the organization relies on the ability and productivity of its workers. In the Flint area workers education was low, motivation to work was low and poverty was rampant. Urban decline had set in. This created a dilemma for the owners who had a hard time finding qualified candidates. They decided to hire 8 veterans first and let them recruit an additional 16 employees.

The company felt that veterans were more disciplined, had a right to be chosen first for employment and were more likely to follow directives. The 8 employees chosen were expected to recruit 2 people each. If the new person was fired within the first year the employee who recruited them would be fired as well. Therefore, people didn't hire based on friendship and instead hired based on the ability of people to work hard and productively.

As you might expect the Company had few to no problems with its workers. They were able to recruit a total of 24 excellent employees for this small plant. The workers naturally referred only the people that would make them look good. The neat part about it was that the human resource department didn't have to do any of the recruitment work other than the initial 8.

Structure & Self-Monitoring: The Company had 3 product groups of 8 employees each. In most cases the teams were self-monitored and controlled their own internal affairs. Since each member of the team relied on every other team member they worked with diligence to please each other. There was a culture of a "can do" attitude and responsibility towards each of the team members. When a disciplinary problem arose the team handled it promptly and swiftly.

In many companies people care little if the worker next to them is doing their job. There simply is no incentive under an hourly system. However, in this plant the success of the team required that each worker do his/her job. Since the teams were self-monitored they developed a mini-culture that encourage productivity and ostracized those who wouldn't do their jobs. When both the person who referred them and the worker themselves could be fired for poor performance there was great pressure to keep working.

Compensation Structure: The Company paid approximately 80% of the wages of other companies. The difference is that they also gave huge bonuses to teams that actually did their jobs. Each product team was responsible for manufacturing parts and a percentage of those profits went back to the team. Therefore, the more productive the team became the higher their paychecks went.

Amazingly workers ended up being paid approximately 120% of the going market rate. They were paid based on their performance and the pressure to be productive increased within the group. No one wanted to earn a poor paycheck so they demanded productivity and excellence from each of the workers. Even better many of the teams became innovative and developed more productive ways of doing the same job.