Lessons from my career: synthesizing managementtheory with practice Part 7

Fitting into a New Culture

There was a massive contrast in the managerial style at the Tyre Corporation compared with my experience at State Engineering Corporation. At Tyre, the top management was more elitist, many of whom had come from the private sector at the start of the Corporation. Most of them were bridge players and would engage in bridge during the lunch break. Even the middle management was more polite and disciplined and would greet each other politely every morning. Phrases such as “please,” “thank you,” and “may I” were frequently used.

In contrast, I recall the time at State Engineering when we would send notes to others and often to the Administration. I would use very polite language; it was seen as unusual behaviour. Once, the Chief Clerk told me, “Your notes are so polite, your language so kind”. So, in a way, I was more at “home” at the Tyre Corporation. I wasn’t a bridge player and hated card games, so getting “accepted” to the elite group took me a while. This was a good lesson on how culture differs vastly from organisation to organisation and how one needs to fit in.

Everything at this Corporation ran smoothly, and the management was more relaxed. In contrast, at State Engineering, it was always a crisis or fire fighting. Initially, while studying each factory unit to understand the process, I also wanted to collect statistics for the past 10 years. Naturally, this meant going to different departments and collecting data, which I would analyse and compile later. Some had watched my bubbling energy in this exercise, and one manager even told me, “No one works so hard here, so just relax”. Thereafter, I decided to be more discreet so as not to engage the wrath of my peers and bosses. I had to fit into the culture.

bias cutting

The performance-based financial incentive scheme

As the Industrial Engineer, my most important responsibility was administering the “Performance Based Incentive Scheme”. Although I had studied financial and non-financial incentive schemes in theory, it was my first experience handling one so complex. My boss, who had a master’s degree in Industrial Management, was the master who had formulated the scheme. I realised how robust the scheme was. Every year, the scheme was reviewed and improved in such a way that the new targets were more stringent in quality standards, higher in productivity, better in safety, higher in machine utilisation, lower in waste and rejects and higher in morale. It was meant to drive performance forever upwards.

Even the administration units were kept on their toes with document flow targets and penalties. The whole system worked with clockwork precision. There was no need to even remind people about deadlines because the penalties for delays were automatic. Even in my subsequent positions in the public or private sector, I never came across any incentive scheme that was more comprehensive than this. Being responsible for administering and improving it, I was very keen to understand the reaction of the workers to any amendments.

Every time a change was made, I would send my faithful peon to the canteen to find what comments were made about the changes. Thereafter, I would visit each section to explain further and clarify their concerns. Adequate communication was paramount without leaving a vacuum for mischief makers and saboteurs to capitalise on.

The new MIS with Japanese expertise

I was fortunate to be involved in an experimental Management Information System (MIS) developed by Japanese experts as a model for Sri Lanka. I believe it was an Asian Productivity Organisation project. The Tyre Corporation was selected as the experimental source for the model because of a recommendation by the Ministry as a well-managed Corporation. The developed model was presented at a workshop to improve the performance of the entire manufacturing sector of Sri Lanka. The Tyre Corporation decided to modify it slightly and use it as a standard MIS. We called it the “The Action Oriented Performance Evaluation & Feedback Report”.

The name is self-explanatory. It would analyse the previous 24-hour production daily, analyse the losses of capacity utilisation and rejects, calculate the loss of contribution to the organisation, loss of incentives and recommend remedial action. This was an eye-opener to many heads of units who were determined to achieve better performance in their own units. Of course, some would disagree with me on the “recommended remedial action”. However, this new MIS scheme became a significant performance improvement factor.

Compound making

Collaboration with BF Goodrich of USA

In 1979 following the new policies of the new government the Corporation signed a technical collaboration agreement with BF Goodrich of USA, a giant tyre manufacturer with factories in many parts of the world. We would retain the Kelani trade mark, but the branding would say something like “in technical collaboration with BF Goodrich”. I had to work with the BF Goodrich agent in preparing the “Inter-firm Comparison report”.

This was my first experience with a comprehensive international inter-firm comparison. My task was to calculate the performance indicators and ratios and submit them. These were then telexed to the BF Goodrich Headquarters. Later in the month, we would receive, by post, the International Comparison Report, a table of performance indicators of all the factories in which BFG was involved. I remember the BF Goodrich agent asking me to compare our performance only with Peru, the Philippines, and Portugal. If you compare with more advanced countries such as Japan, you will get very depressed, he said.

Even looking at Peru, the Philippines and Portugal, I was depressed because we came out badly. The Tyre Corporatioj was a very profitable and well-managed corporation, but there were several areas where we performed below the others. There was a separate report called “Pounds Per Man-hour”, which indicated that our labour productivity in each process was found to be very low. After analysing these reports, we prioritised the action we could take immediately.

An example was our high consumption of compressed air compared with the production of tyre kilograms, which was found to be well above other countries. When I studied why it was so, I discovered that the workers constantly used many compressed air outlets in the factory to dry themselves by inserting the compressed air hose inside their shirts and drying themselves. This was a very common feature. In addition, there were several unattended leaks.

However, perhaps the most interesting use of compressed air was cleaning suede shoes, which was a fashion then. Even I was guilty of it. Almost everyone in the office wearing suede shoes would use compressed air to clean their shoes daily. There was no doubt that compressed air was the most effective method to clean suede shoes. These extra compressed air outlets were closed, leaks were repaired, and other modifications were made, so we were finally similar to the different factories regarding compressed air consumption per kg of tyres.

Storage of tyres

Similarly, many inferior performances were gradually remedied, and we came close to the comparative performance of Peru, the Philippines and Portugal. Unfortunately, the low labour productivity would not improve because over-staffing was not within the control of the management. The Board of Directors decided that the solution was to stop subscribing to the “Pounds Per Man Hour Report” as it would give a negative message to prospective investors.

Even then, I argued that with our low labour wages, where direct labour was only around 10% of the cost of production, we need not have worried. Rather than being a frog in the well, the Inter-firm Comparison opened our eyes to the practices of better companies outside.

The liberalised economy and a new culture

In July 1977, a new Government took over with a landslide victory, and the economy was liberalised. A new Chairman, Mr Justin Dias, arrived. He was a very dynamic person and was also hands-on. The top management initially found this new management culture very unsettling. Earlier, they were the decision-makers and handled all operational matters. The “new norm” was somewhat irritating.

It was a far cry from the D G Dayaratne style. Where Dayaratne hardly crossed the factory gate, Justin Dias would walk through the factory several times a day initially. He did not believe in the hierarchy and engaged with workers directly. He was effective ultimately, and the performance of the organisation improved. Still, for many people, the culture change took some time to digest.

The new open economy created new challenges and also some benefits. I was involved in an exercise to design a new finished goods storage facility with optimum space utilisation because our production was more than the sales. With the economy’s opening, the demand surged, and we were selling up to the previous day’s output, eliminating the need for more storage. The influx of the hi-ace vans with a small rim size caught us by surprise. It took a year to design and test this new size before releasing it. The earlier method of designing new tyre sizes based on the statistics of the Registrar of Motor Vehicles wouldn’t work in this situation.

The workers’ aspirations also changed. Senior officers bought new cars, and motorcycles came in. Milo, Ovaltine, and similar imported products were selling like hotcakes from the Welfare Shop. All this ultimately led to higher demand for pay and incentives when the workers’ standard of life improved.

The next episode will feature my life-changing course in Japan.

Sunil G Wijesinha

(Consultant on Productivity and Japanese Management Techniques

Retired Chairman/Director of several Listed and Unlisted companies.

Awardee of the APO Regional Award for promoting Productivity in the Asia and Pacific Region

Recipient of the “Order of the Rising Sun, Gold and Silver Rays” from the Government of Japan.

He can be contacted through email at: bizex.seminarsandconsulting@gmail.com)