European Steel Mill, December 2002
A Case Study in Improving Performance by changing Organisational Culture
European Steel Mill, December 2002
A Case Study in Improving Performance by changing Organisational Culture
Background
This summary describes the work carried out, and the results achieved, between January 2001 and July 2002 by the management and workforce team within a European Steel Mill.
The Mill employs 250 people, 200 of whom work a continental 24-hour 7-day/week-shift pattern. The plant manufactures 500kt/year of steel sections for customers worldwide. The mill had gone through a major product change process during the late 1990's and the introduction of team working coincided with a manning reduction of 20%. At the start of this process, morale was low and performance was declining.
Culture and Performance
The primary focus of the management team's efforts has been on developing the confidence, trust and self-efficacy of the whole workforce within the mill. The assumption was that plant and process change was not the answer: the spirit and motivation of the workforce had to be revived through a major shift in the working culture.
An initiative was sought which would impact the organisation culture positively and the management decided to use a culture change programme, which has worked successfully across the world in many different organisational settings. This programme was Investment In Excellence (IIE), offered by The Pacific Institute.
A study of major businesses over an 11 year period - undertaken by two noted researchers, Kotter and Heskett (Harvard) - has shown that cultures have a direct impact on business performance. The results of this research have been translated into an Organisational Effectiveness Culture Survey, and this was used within the mill prior to this work starting - and after it had finished.
The Change process
- Month 1: The Management team met with The Pacific Institute to make the business and strategic connections, and plan/agree the focus, scheduling, timescales, and methods of evaluation. (1 day max.)
- Months 1/2: The Pacific Institute and the client's management team set up the communication/administrative process for the culture survey.
- Month 2: The Pacific Institute ran the Investment in Excellence programmes for identified facilitators and all managers
- Months 3/4: The internal facilitator training programme
- Month 4: Internally run programmes began for the workforce
- Months 5-12: On-going project and facilitator support by the Pacific Institute
- Months 7-15: Follow-up team training and Mill Performance Improvement Programme set up.
- Month 16: The culture survey was repeated
Costs and Business benefits
The total cost of the investment in this process over the period - including employment costs - was £440,000.
The business benefits are in summary:
- A decrease of 16% in conversion cost per tonne by 2002 (compared to the 2000 figure)
- An increase of 10.5% in mill output
- An overall estimated saving of £1.88m per annum
Culture change measurements
The two organisational culture surveys (Feb 2001 and July 2002) show a significant shift towards a 'constructive' culture and away from a 'defensive' culture. The analysis shows a fundamental shift in cultural terms: i.e. from people believing that what they do has no effect, to where they believe it does. This is borne out by the huge increase in official and unofficial ideas and suggestions being generated and processed, and by numerous anecdotal attitude and behaviour changes recorded by managers.
