Financial targets Essay
In the United States of America the crisis of the early 1980s were seen as rooted not just in problems of the business cycle and in the new competition but in lack of trust between management and labour, a lack of clear corporate values and sharply defined goals and in a turbulent history of adversarial labour management relations. In the United Kingdom the move towards an HRM culture was not stimulated by a crisis to that experienced a vital role in providing the finances which sustained the parent company through these troubled years. The contrasting fortunes of Ford U.
S and its European division, particularly the cash-cow Ford UK, were factors shaping the trajectory of the change process in the two organizations. For almost 40 years Ford UK has been a wholly owned subsidiary of Ford Motor Company USA. From the formation of Ford in Europe in 1967 the US parent has exercised an increasing degree of strategic control, notably through budgetary controls, and although Ford UK retains operational responsibility, including pay bargaining, performance is closely monitored against financial targets set in Detroit. Two major change initiatives have dominated Ford UK since 1979.
The first, after Japan, sprang from a study trip
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After Japan was the view that the roots of Japanese success could be traced to a management style that was diametrically opposed to the Fordist model. The essence of the Japanese approach was seen to lie in management by consent rather than by control, and in the mobilization of commitment rather than the elimination of worker discretion. The need for change was communicated to the workforce with the results of a competitive bench-marking exercise against Japanese productivity standards and strategic targets set in terms of return on investment, market share, efficiency measure and reduction in head count.
The cumulative effect of exposing shop-floor trade unionists to business information should not be underestimated. Initially, bench-marking was received skeptically by a UK workforce accustomed to being criticized for relatively poor productivity. However, over time bench-marking combined with continued nationalization slowly infused new realism into the lay leadership of Ford UK’s shop-floor unions (Darlington 1994: 213-14). The strategic goals of quality, customer satisfaction and cost competitiveness became part of the discourse of management-union negotiations.
Elements of the Japanese system of JIT inventory management were introduced as well as a new quality philosophy of right first time, at the same time, the introduction of more rigorous cost control systems. Initially, Ford envisaged the introduction of quality circles as the first step in the rapid Japanization of the company, a process that was to include training the workforce in problem-solving and interpersonal skills to enhance teamwork, JIT and more stable relations on a long-term basis with preferred suppliers who could meet the company’s exacting design and quality standards.
The failure of the quality circle initiative was a watershed in the development of Ford UK’s approach to HRM. This chastening failure compelled Ford executives to recognize that a gradual processual approach to modifying a deeply adversial company culture was essential.