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Levi's Management Ideas To Improve Teamwork In Their Company - Articles Surfing

There is a wide range of forces acting upon organisations which make the need for change inevitable. These forces of change can be summarized in five broad concepts: changing technology; knowledge explosion rapid product obsolescence; changing nature of the workforce; and quality or working life. The organization under analysis is Levi jeans manufacturer, USA, which represents one of dynamic and fast growing branches in the United States and around the world.

Levi Strauss employed so-called modular manufacturing production process which *utilizing either teams or cells - has been up and running in the U.S. sewn products industry for nearly a decade* (Abend, 1999). The aim was to operationalize values through actions designed, for example, to implement total quality and provide financial and non-finan*cial rewards for expected behaviour, to improve productivity, to promote and reward good teamworkю Using the value set as headings for reviewing individual and team performance emphasizing that people are expected to uphold the values Levi expected to improve manufacturing system.

Research into industrial psychology has changed to the examination of organization psychology, with emphasis on groups and relations between groups. The emphasis was on individual training and development, but it appeared that a broader out*look was needed to consider the complete organization, concentrating on organizational, group and interpersonal processes, and develop plans to improve the whole system.

Innovations in Levi have been prompted precisely by the need to have a continuous workflow that the expensive technologies require, in order to be cost-effective. In order to survive Levi Strauss restructured and reorganised its traditional work organisation into a modular form. Collective bargaining and work organisation are almost invariably affected when enterprises change their structure and management, i.e. when they reorganise or rationalise the management system or the production process.

In a time of rapidly changing technologies and ever-shorter product life cycles, product development often proceeds at a glacial pace. In an age of the customer, order fulfillment has high error rates and customer enquiries go unanswered for weeks. In a period when asset utilization is critical, inventory levels exceed many months of demand. The usual methods of boosting performance - process rationalization and automation - haven't yielded the dramatic improvements for Levi need. In particular, heavy investments in information technology have delivered disappointing results - largely because companies tend to use technology to mechanize old ways of doing business.

In modular working organization there is a need to induct both managers and employees into the new ways of working. The process of changing managers into supportive coaches * delegating responsibility but retaining accountability * is a major challenge in any organisation. In Levi, individuals at work-stations were responsible for all operations including customer ordering, assembly of processor boards and testing. A modular manufacturing production process, however, is used to co-ordinate the work. Each modular, consisting of four work-stations and 7 employees, is designated to a single purpose; supply chain contact and decisions, however, are outside the work of the modular * these are performed centrally (Chase, Jacobs, 2003).

Control is exercised through a *visual management system* whereby a number of key performance indicators are conveyed to the modulars in the areas of production. These indicators are subject to the agreement of the modular employees. The modulars have daily meetings to monitor and review progress on the performance indicators and weekly meetings are held on a cross- modular basis. The modulars have no budgetary responsibilities. Plans are in hand, however, for modular responsibilities to be extended in this area. There is a trend that production can no longer be changed into a modular form. What were previously considered as core competencies, i.e. centres of production or manufacturing, are now increasingly being provided by contract manufacturers. In other terms, Levi was redefining what it considered to be its core competence.

The modular teamwork involves the employees enjoying a significant boost to their competencies, through the induction training and individual competence development plans, and thereby the potential to earn higher rewards. The key elements of this form are leadership, co-worker development and the environment. Modular teamwork is successful at some traditional command and control system of work organisation companies where it is now being replaced by a full partnership. The pyramid style work organisation where decisions are made at the top of the organisation gives way to a work system in which decisions are made at the appropriate level of the organisation with input from those involved to arrive at decisions through a consensus.

Except this programme Levi organized a team incentive programme to improve productivity through better use of labour and materials. It is a group-based incentive programme that encour*ages employees to improve productivity through efficient use of labour, capital, materials, and energy. The value of the increased productivity is determined, and the dollar amount is split between the company and the team. In this way, Levi and its stockholders saw tangible benefits for their investment, and the employees receive bonuses for their work. Specifically orga*nized around natural work groups and not individuals, the programme was administered by a steer*ing committee composed of 7 staff personnel and 11 management personnel. The amount of money allocated to the payment 'pool' was based on gains over target rates and achievements related to system performance service-level objectives. Eligible participants receive payments equal to a certain percentage of their total annual wages.

In general, the essential steps in designing and introducing a 'Gain share' scheme are: Identifying the measure of performance; Identifying the size/scope (i.e. membership of the groups) to be covered by the scheme; Establishing a representative and consultative process (to cover management, employees involved, and specialist personnel) through which to define and introduce the scheme; Designing and defining the scheme and, if appropriate, incorporating in collective bargaining agreements; Training and educating all involved and affected; Establishing a representative committee to join the scheme;

With the participative change cycle, a significant advantage is that once the change is accepted it tends to be long lasting. Since everyone has been involved in the development, each person tends to be more highly committed to its implementation. According to the survey Levi had: *highly flexible manufacturing lines turn out a custom-fitted pair of jeans* (DesMarteau, 1999). The disadvantage of participative modular team is that it tends to be slow and evolutionary - it may take years to implement a significant change. An advantage of it, on the other hand, is speed. A disadvantage of this strategy is that it tends to be volatile. It can be maintained only as long as the leader has position power to make it stick. It often results in animosity, hostility, and, in some cases, overt and covert behavior to undermine and overthrow (Ruas, 2000). A more participative and supportive style of leadership and managerial behaviour assisted modular manufacturing management; for example, showing an attitude of respect and trust; encouraging personal self-development; creating a work environment in which staff can work co-operatively together. A participative approach to leadership and management helped to create greater employee commitment.

It is possible to conclude that Levi implemented a modular manufacturing and 'Gain share' scheme programme in an effort to involve employees in improving company performance. Modular manufacturing was a part of an integrated process which is involved with all the other aspects of the business.

Submitted by:

Andrew Sandon

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