NUMMI Analysis Essay
The goal of this executive summary is to identify the problems, the major causes, solutions and methods of implementation for the New United Motor Manufacturing Inc. better known as NUMMI. NUMMI though specializes in vehicle manufacturing, was having trouble producing small vehicles. NUMMI workforce also had a horrible reputation. NUMMI would like to successfully reinvent its organization culture and produce high quality vehicles. NUMMI solution is to adopt a new production and management systems. To conclude this report, we will justify why adopting new production and management system will benefit NUMMI and help change its organizational culture. Problem Identification
In1983 the New United Motor Manufacturing Inc., Toyota and GM joint venture experiment in a unlikely collaboration to bring a new fleet of profitable small cars to the United States. This partnership took place in Fremont, California in a factory plant called NUMMI. GM objective was to learn how to make small profitable vehicles and learn Toyota production and Management System. Toyota objective on the other hand wanted to simply begin producing vehicles in the United States. GM already had the infrastructure in place that Toyota needed; this lead to their partnership.
The workforce at the original GM Fremont factory was well-known to be the worst in producing low quality vehicles in the GM ecosystem. “The work force in those days had a horrible reputation, frequently going out on strike (sometimes wildcat strikes), filing grievance after grievance and even sabotaging quality.”(Shook 2010) The objective of NUMMI was to devise a plan to help change the culture of the organization. NUMMI would measure there outcomes by successfully reinventing there organization culture and producing high quality vehicles. This level of achievement allowed NUMMI to go from being GM’s worst factory to later becoming one of its best. NUMMI employees where empowered to be accountable for their selves and build quality vehicles. “What changed the culture was giving employees the means by which they could successfully do their jobs. It was communicating clearly to employees what their jobs were and providing the training and tools to enable them to perform those jobs successfully.” (Shook 2010)
GM Fremont plant workforce was once considered one of the company’s worst production facilities. At the time, the plant workforce was producing some of the worst quality vehicles for GM; there level of absenteeism regularly ran over 20%, employees would habitually go on strike and sometime known to sabotaging quality. Without changing employees the once dysfunctional manufacturing plant was transformed into a model facility with a new company culture. By adopting Toyota’s production and management system, NUMMI overcame the many obstacles that once prevented its ability to achieve the objectives above.
Causes of the Problem
As stated before, GM Fremont factory in 1983 was producing extremely low quality vehicles. To try and correct this problem, GM entered a joint venture with Toyota. Toyota faced many challenges partnering with GM. To begin GM didn’t know how to make small profitable vehicles. GM attempts to create small size vehicles ultimately failed thus why reaching out to Toyota. GM also wanted to reinvent its work force production and management systems. This joint venture would allow GM to learn how to make quality small profitable vehicles and more importantly learn Toyotas production and Management System.
GM Fremont was well known for having an unsatisfactory workforce. The employees had a terrible company-employee relationship culture and reputation. Employees were known to habitually go on strike, filing grievances were common, and there were employees to go as far as sabotaging quality. “Toyota had many concerns about transplanting perhaps the most important aspect of its production system — its way of cultivating employee involvement — into a workplace as poor as Fremont. Toyota wondered how workers with such a bad reputation could support it in building in quality. How would they support the concept and practice of teamwork?” (Shook 2010) The work force culture obviously was not a positive one. Employees had an unfavorable outlook of the employers. Company -employee relationship morale was low thus affecting the company’s culture. GM Fremont facility was failing, due to the plant lack of company-employee relationship culture, production inefficiency and management systems.
Changing NUMMI company-employee culture was no easy task. Shook stated it best, “the way to change culture is not to first change how people think, but instead to start by changing how people behave — what they do. Those of us trying to change our organizations’ culture need to define the things we want to do, the ways we want to behave and want each other to behave, to provide training and then to do what is necessary to reinforce those behaviors. The culture will change as a result.” NUMMI empowered its employees to find and solve daily problems and make justified improvements as they see fit. By doing so NUMMI provided its workforce the necessary means to successfully do their jobs. In the article “The Stop the Line System” was the primary example of this. Stop the line enabled employees with the obligation to stop the assembly line if and when there was a problem.
This in turn reassured employees that the company value their opinions and trust them enough to make pertinent decisions. “Managers have the responsibility to create a proper climate in which employees can develop to their fullest potential. Failure to provide such a climate would theatrically increase employee frustration and could result in poorer performance, lower job satisfaction, and increased withdrawal from the organization.” (Steers and Porter 1983) “What changed the culture at NUMMI wasn’t an abstract notion of “employee involvement” or “a learning organization” or even “culture” at all. What changed the culture was giving employees the means by which they could successfully do their jobs. It was communicating clearly to employees what their jobs were and providing the training and tools to enable them to perform those jobs successfully.” (Shook 2010)
Secondly, NUMMI provided its work force with a since of membership. Employees desired commitment from their employers. NUMMI did not guarantee life time employment, no employer can guarantee that. Instead NUMMI devised a mutual trust agreement stating that the last thing it wanted to do was lay of its employees. To reassure employees, “NUMMI wrote into the contract the commitment that before anyone was laid off certain steps would have been taken, including reducing plant operating hours and cutting management bonuses.
Employee motivation comes from assuring membership in the organization, rather than from buying and selling time, whatever the price tag. “(Shook 2010) To further advance and change the culture of the organization; In the hiring process NUMMI allowed certain floor leaders take part in the hiring of their own team members. This in turn gives employees since of responsibility and authority, thus positively changing the culture dynamics of NUMMI company-employee relationship. These are only some of the reason why Shook suggests how NUMMI culture was changed.
Additionally, there are many other possible solutions that can be implemented in order to continue to motivate and change an organization culture. For instance, NUMMI can introduce an employee reward/recognition system. The drive to be rewarded or recognized by ones employer should be ample motivation to keep employees satisfied. The reward system could be broken down between the all-around best and worst performers, reward can be tied to individual performance and provide the lead performing employees with an opportunity for advancement. A disadvantage to the reward system would be convincing the entire workforce to continuously give 100% even though there may be a gap in skills amongst fellow workers. “The challenge therefore for organization is to develop reward system that are perceived to be fair and equitable and distributing the reward in accordance with employees beliefs about their own value to the organization.” (Ramlall 2004)
Another method to having an amazing company-employee culture is by having a good work environment. Employees want to go to work to in an environment with a friendly setting, productivity, promote teamwork, collaboration, are respectful, and encourages an since of inclusiveness. A organization never wants to be in a situation where an employee feels as if there working in a hostile environment. “The consequences of employees perceiving they are not treated fairly can create a variety of options for employees. These options include the employee reducing their input through directly restricting their work output, attempting to increase their output be seeking salaryincreases, seeking more enjoyable assignments or simply withdrawal from the situation entirely, that is, quit the job and seek employment elsewhere.” (Champagne 1989)
Lastly, developing jobs positions that are meaningful and challenging where employee roles and duties are clearly defined will help foster a positive organizational culture. For instance, “Cirque du Soleil, too, is committed to making jobs challenging and fulfilling. Despite grueling rehearsal and performance schedules, it attracts and retains performers by accommodating their creativity and pushing them to perfect their craft. Its employees also get to say a lot about how performances are staged, and they are allowed to move from show to show to learn new skills.” (Nohria, Groysberg, Lee2008)
Solutions and Implementation
Due to Toyota production and management systems, NUMMI went from being GM’s worst plant to GM’s best plant in just one year. “All with the exact same workers, including the old troublemakers. The only thing that changed was the production and management system — and, somehow, the culture.” (Shook 2010) There is no one specific solution for changing an organizations culture. The closet explanation explaining why NUMMI’s culture changed was the adoption of Toyota’s production and management system. Toyota’s system was more robust and organized compared to GM’s system. The workforce embraced Toyota’s system because it yielded them more favorable results and allowed employees to finally feel part of the organization.
Toyota’s system offered NUMMI employees the opportunity to find and solve daily problems and make justified improvements as they see fit. By doing so NUMMI provided its workforce the necessary means to successfully do their jobs. Toyota’s system also provided its work force with a since of membership. Employees wanted to be reassured that NUMMI was just as committed to the organization as they were. Other solutions that would keep the work force motivated and change origination culture is an employee reward/ recognition system, a good work environment/culture and developing job positions that are challenging and fulfilling. All of these solutions work hand in hand in order to create a well-balanced origination culture.
Furthermore, of the five solutions; I believe the opportunity for NUMMI employees to find and solve daily problems and make justified improvements would be the most important. By doing so NUMMI provided its workforce the necessary means to successfully do their jobs. The case states “Every person in a supervisory capacity, including hourly team leaders, visited Toyota City for two or more weeks of training at the Takaoka plant. The training included long hours of lectures but, most importantly, practical on-the-job training in which they worked alongside their counterparts to learn what was to be their job back in California. At the end of each training tour, we asked the trainees what they would most want to take back with them to Fremont of all they had seen at Toyota.
Their answer was invariably the same: “The ability to focus on solving problems without pointing fingers and looking to place the blame on someone.” (Shook 2010) This in turn reassured employees that the company value their opinions and trust them enough to make important decisions. The organization allowing employees to solve problems will benefit the company long term in that it will boost workforce morale, employees don’t have to be afraid to solve problems without ramifications and there will be a better form constant communication between employees and managers. Disadvantages for an organization allowing employees to solve problems without managerial supervision can result in damage product, slowdown or stop of assembly line thus resulting in loss of money.
Once implemented, the organization needs to ensure that the workforce (including managers) is on board with the changes in order to move forward. To do this, NUMMI must provide new training through workshops and seminars to all employees. After participating in either the workshop or seminars, Humane Resources should devise a form; having all employees sign that form in order to not have any miscommunication down the line. To sustain success, NUMMI should create team building events/demonstration for all employees to constantly remain on the same page. Currently, NUMMI provides its employees with the opportunity to find and solve daily problems and make improvements without fear of anyone pointing fingers. The workforce embraced the system so well that in one years’ time; NUMMI went from being GM’s worst plant to GM’s best.
Changing an organization culture is no easy task. When GM and Toyota decided to form there joint venture, no one could have predicted that they would become a success in a year’s time. There was no one specific solution for changing NUMMI organizations culture. The closet explanation explaining why NUMMI’s culture changed was the adoption of Toyota’s production and management system. Toyota management system benefited the organizational cultural in that it allowed NUMMI employees the opportunity to find and solve daily problems and make justified improvements. By doing so NUMMI provided its workforce the necessary means to successfully do their jobs. Toyota’s system also provided its work force with a since of membership. Employees wanted to be reassured that NUMMI was just as committed to the organization as they were.
Other solutions that would keep the work force motivated and change origination culture is an employee reward/ recognition system, a good work environment/culture and developing job positions that are challenging and fulfilling. All of these solutions work hand in hand in order to create a well-balanced origination culture. I believe the opportunity for NUMMI employees to find and solve daily problems and make justified improvements is the most important solution. The article stated that of all the solutions; being able to solve problems without anyone looking to place blame on someone” was the most important organizational culture change. Adopting this organizational cultural change benefitted NUMMI in that the company now is GM best vehicle manufacturing plant.
1. Champagne, P., & McAfee, B. (1989). Motivating strategies for performance and productivity. In A guide to humane resource development. New York: Quorum Books.
2. Ramlall, S. (2004). Motivation Theories and their Implications for Employee Retention within Organizations. Journal of the American Academy of Business, (5), 52-64.
3. Shook, J. (2010). How to Change a Culture: Lessons From NUMMI. MIT Sloan Management Review, 51(2).
4. Steers, R., & Porter, L. (1983). Motivation & Work Behavior. New York: McGraw-Hill Book Company.
5. Nohria, N., Groysberg, B., & Lee, L. (2008). Employee Motivation: A Powerful New Model.Harvard Business Review.