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The Competitive Edge

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Spotlight on GSC Foundries

By Herb Christian, President

GSC Foundries, Inc. is a manufacturer of precision investment casings (aluminum and steel) and a provider of sub-assembly and assembly kits. Our customer base is worldwide and consists of the "best of the best" including Boeing, Northrup Grumman, Allied Signal Aerospace, Parker Hannefin, McDonnell Douglas, Lockheed and many others. This segment of the market accounts for approximately 90% of total annual sales. GSC originated in 1966 in Southern California, but is now located in Ogden, Utah at the base of the Wasaich Range of the Rockies. This family-owned business employs approximately 400 persons.

The past two years have been a "stretch" keeping up with customers' ever-increasing demands to increase as well as pull in shipments ahead of schedule. Looking back to 1994, life was much different as we were faced with the following challenges:

Requested 15% price reductions from our largest customer.

Cycle times were double what our customers expected.

Our facilities were running at 30% capacity.

Several Competitors were going our of business.

Engineering the hundreds of new jobs that were coming to GSC as a result of work re-allocation was stretching resources.

The steel division was in transition to more complicated hardware.

The Competitive Action team was asked to come into GSC and give their personnel help in improving the above situations. After several weeks of on-the-floor hard work we saw the following results:

Cycle time was reduced 50%.

We were taught how to use quality feed-back loops to obtain almost immediate feedback.

Part of the line was redesigned to move equipment to a trouble area to gain continuous flow of the product.

The distance the product moved was reduced approximately 25%.

Inventory was reduced by approximately 50%, resulting in increased cash flow.

The amount of scrap that flowed to the next process was reduced by about 80%.

We were able to absorb enormous numbers of new jobs in the steel division, thus increasing profitability.

The last three years have been a significant challenge for GSC. However, we have increased shipments by 60%, grown our international market, and continued to improve profitability. We believe that the Competitive Action team provided a significant share of the fresh ideas and direction for implementation of changes that were needed at GSC during a critical time in our corporate life.

One reason for the very favorable results at GSC was the fact that Herb Christian and his staff drove the change process and the entire company embraced change.

High Return of Effort and Investment Principles Corner

Reorganization Rules - To Assure Long Term Positive Performance Improvement

by James B. Swartz

On the average, studies have shown that reorganizations have a net effect of zero on organizational performance i.e., there is as much performance lost as gained on the average. A positive result from the organization and avoidance of an initial downturn can be accomplished with careful planning, implementation and adhering to the following rules.

1. Change the fewest dimensions necessary to accomplish the organizational performance improvement objectives.

If too many dimensions (people, facilities, reporting relationships, job descriptions, processes, policies, responsibilities, measurements, locations, or information systems) are changed at the same time the total task of making the changes and continuing to run the business may result in critical mass and bring the organization to a stand still. Remember, you are trying to achieve the largest performance improvement for the minimum change effort.

2. Organizational design should be based on four basic principles:

	It must satisfy future strategic needs
	It must be aligned with the performance requirements of delivery systems that it supports.
	It must not weaken any core competencies that are essential to the new strategy.
	It must carefully consider the additional matrix requirements of people and technology development.

Remember, organizations must be designed first and foremost to meet the needs of the external customer.

3. Create "Pull" for change by developing superior meaning.

Everyone has a state of being in which they are comfortable and there is powerful meaning in staying that way. You must create a superior meaning with them which makes all obstacles unimportant.

4. If reductions are made, freeze hiring.

Keep hiring frozen for a period long enough that people will know that the change was not just a temporary austerity program. Hire only for critical strategic replacement.

5. The order of organization modeling:

	The first "straw-man" model for the new organization should be based on future strategic needs and be developed by the top organization figures (CEO, President, Plant Manager, Chief Engineer, etc.)
	This "straw-man" should then be redeveloped by the top leader and key upper management.
	Don't put peoples names on the "straw-man" model, only positions, until all other decisions are made and until a consensus of the organization structure is reached.
	Middle management should be given the opportunity to redevelop the organizational "straw-man" with the understanding that names in all the boxes will be filled in at a later date.
	A consensus is reached by middle and upper management.
	Middle managers should fill in the names of people for levels below them without knowing which positions they, as middle managers, will be.
	Senior executives should fill in the names of the people for the middle manager positions without knowing which positions they, as senior executives, will be.
	Finally, the top leader fills in the names of the senior executives.

6. High performance people need to feel that they didn't lose.

7. A facilitated team building session should take place between senior executives and middle managers concurrent with or immediately after the change.

During this session, the roles and responsibilities of all senior management and executive positions should be clarified.

	If a new kind of teaming is part of the plan, have workshop sessions to demonstrate.
	If broader or overlapping scope of responsibilities is part of the new organization, provide demonstrations in the workshop.
	Document perceptions versus expectations of what each group or team should do and how they will relate to each other.
	Document agreed to responsibility contracts between groups or teams.
	Remember, everyone may not want to be part of the new way. When people fiercely resist becoming a team member, alternate assignments may become necessary.
	The management team should make a list of obstacles they will jointly face in rolling out this new organization and have an action plan developed before its removal.
	Remember that most things that can go wrong can be anticipated.

8. Implement the changes quickly, with clear actions and due dates.

9. Communicate, communicate, communicate.

On the first day after or concurrent with the reorganization everyone must understand the following:

	Why the change was made from a strategic and operational point of view.
	What are the new organizational objectives.
	What are the new departmental roles.
	What are the new job responsibilities.
	What are the new individual expectations.
	Keep the information flow continuous, on a daily basis flowing down and flowing back up, addressing all issues and rumors.

10. Trust, trust, trust.

There should be no hidden agendas by anyone during the reorganization process.

11. The work of the organization has to go on without dropping any balls that are in the air at that time.

Look at all future work and clearly specify succession or hand-offs.

To do all of this well takes time and planning, but the alternative requires additional time in remediation. Furthermore, the alternative is often loss of work, dropped balls, loss of loyalty to the company, distrust of management, and most of all less than enthusiastic support of the new organizational objectives.