ELECTRONICS UK

case study

Read the following case study and use three of the following topics to analyse the case study.

Structure and design
Technology
Motivation
Leadership
Decision making
Culture

In your reading of the case study you should identify which issues you think are important for the organisation. These issues need then to be analysed using theories from the three chosen topics (Note: you do not need to use all theories from a particular topic. You need to choose those that you think are most appropriate). Your analysis should incorporate application of theory to the case study and critical evaluation.

ELECTRONICS UK

Background

Electronics UK is a Japanese owned firm that was established in the UK in the early 1990s and which manufactures home audio and DVD equipment. It is a subsidiary of a large Japan based company that was originally founded in Tokyo in the late 1930s. The establishment of Electronics UK represents the parent company’s strategy of setting up production facilities in Europe. The rationale for this strategy was as follows. First, to give the company a base within European Union (EU) markets. Second, with specific respect to the UK, was the relative absence of employment laws in comparison to the rest of Europe.* This as said by a British manager to be an important contributory factor in Electronics UK’s decision to locate here. A final point relates to the decision to establish production facilities in a locality with no history of this type of enterprise. According to British managers, the decline of the local coal and textile industries led to the availability of a cheap pool of labour, both male and female. Since 1997, however, the strength of the UK economy has reduced this pool of cheap labour. Since the accession of Eastern European countries to the EU, Electronics UK has made use of immigrant labour from the Eastern Europe. The majority of these workers are employed through an agency rather than directly by the company. They are not entitled to the same terms and conditions as permanent employees. This has led to some problems relating to cultural differences and differences over attitudes to work. The locality in which the company is based has a history of industrial dispute and unrest. This has led to conflictual attitudes by some indigenous employees that are not shared by immigrant workers. For example, indigenous employees are less willing to work overtime at short notice, often because of family commitments. They view requests to perform such duties as evidence of unfairness and exploitation. Immigrant labourers tend to be young and do not have families in the UK. Overtime at short notice is not therefore a problem. Managers now view indigenous employees as ‘poor’ workers and immigrant workers as ‘good.’ This has led to resentment and suspicion between the two groups and, as a result, managers try and ensure that indigenous and immigrant employees work different shifts. On the other hand, immigrant employees are beginning to resent the inferior terms and conditions they receive as agency workers and some have joined the trade union to which many indigenous staff belong. Moreover, when agency workers from other EU countries were first utilised, individuals tended to be employed on the lowest grades in Electronics UK. Some individuals are now beginning to move up the organisational hierarchy and some are achieving direct employment status. This gives them the same terms and conditions as UK workers.
From the outset Electronics UK encountered problems. Unstable market conditions resulted in a decrease in demand for the firm’s products. This problem was exacerbated by the firm’s failure to meet production deadlines for orders. This failure was, according to managers, caused by too rapid an expansion and the related problem of having to recruit large number of workers in a short space of time (i.e., 400 extra temporary staff, which led to the firm employing large numbers of unsuitable people). Rather than choosing people on the basis of their skills, the procedure involved recruiting en masse and then, in the words of the Training Manager, ‘working on what we had got.’ However, failure to meet production targets led the firm to retrench its position and many of the temporary staff were discarded.
A major external influence on the production system and technology utilised by Electronics UK is the sectoral division between hi-tech research and development and low-tech assembly operations. Electronics production in the UK outside the south East is concentrated in low-tech assembly plants. In the case of Electronics UK, research and development is carried out by the parent company in Japan. Electronics UK is an assembly operation which is geared towards the European market. An important Feature of the production process at Electronics UK is the Just-In-Time (JIT) production strategy, which is geared towards flexible production in the context of uncertain market conditions. Two particular features of the electronics market engender a need for flexible production at the firm. First is the specific market in which it operates: that is the middle range mass market for home and car audio equipment. Demand in this sector is determined by wider economic conditions. Electronics UK has been in operation during the recessions of the mid 1990s and the more recent period of economic stability. Also important is Electronics UK’s position as a sub-contractor for other, larger, electronics manufacturers. The instability associated with this aspect of the company’s operations engenders a need for flexibility, both in terms of the quantity of goods produced and the variety of products. Flexibility is provided by the JIT production strategy.
At the start of its operations, Electronics UK did not operate a JIT delivery system. This is because it is located in an area with no tradition of electronics production. When the firm set up operations there were no existing suppliers who could be relied upon to deliver on a JIT basis. More recently the firm has succeeded in building up a network of UK suppliers and JIT delivery is utilised.

Structure

Production system and technology

Production is dominated by the JIT strategy. This strategy shapes the design of the firm and there are two related aspects to JIT. First, raw materials are delivered from suppliers on a JIT basis and are brought to production areas as and when required. Second is the close relationship between production and demand. No buffer stocks of the finished product are held and this results in a tight production schedule. There is constant pressure to produce goods on time. The culmination of the JIT strategy is a relentless concern with daily productivity targets.
The effects of JIT production are felt by employees at all levels of the occupational hierarchy. Middle managers and supervisors are under constant pressure to increase the productivity of subordinates. Shop floor workers are under intense pressure to work at speed and to a high quality. Because the firm does not keep buffer stocks it is vital that the goods produced meet the quality standards of customers. A number of surveillance methods are used to ensure that these demands are met. The performance of shop floor workers is closely observed by managers and supervisors, and VDU screens detailing daily production targets and totals are placed above assembly lines. In addition to this, close monitoring of raw materials which is part of the JIT delivery system enables the firm to control waste and makes visible any mistakes.
Production is divided into four areas, the auto insertion department and three assembly lines. The auto insertion department is the key to the Electronics UK operation. The department contains specialist hi-tech automated auto insertion machinery which produces the circuit boards (CBs) used in audio and DVD equipment. It is the first stage in the production process and involves operators setting the machines and feeding through the basic component called a surface mount. Different settings are required for the production of the different types of CB used in various products. Once surface mounts are fed into the machine the process becomes fully automated. Any problem or error will be diagnosed by the machine which will, as a result, close itself down.
Following this, CBs are transferred to one of the assembly lines. Production involves building up the product from the basic CB and each stage entails the addition of components until the product is complete. Production at Electronics UK is thus organised around automated technology and traditional Fordist assembly lines. These technologies coalesce with the JIT strategy to form a highly integrated production system.

Management structure and style

The managerial structure follows a traditional hierarchical Taylorist pattern. The senior levels are filled by Japanese managers to whom other employees must defer. The four production areas are controlled by an overall General Manager and three assistant general managers. All four are Japanese. Individual production areas are the responsibility of area production managers, all of whom are non-Japanese. The managerial chain in auto insertion begins with the Area Production Manager and below him the Assistant Manager. At this point the managerial chain divides into production and technical (maintenance) operations. In production operations, the next level below the Assistant Manager is the Senior Shift Leader. He is line manager to 14 operators on his shift. His role is to ensure that all operations are running to capacity, and that there is enough operators to guarantee this at any point in time. Any operator who is not performing to the expected standard, or who has a record of unauthorised absences is put through a disciplinary procedure. It is the responsibility of the Senior Shift Leader to initiate this procedure. A final aspect of this role is to oversee any training that needs to be carried out. Below the Senior Shift Leader are four shift leaders who provide line support for 5 operators. Their role is to oversee the work of operators and ensure they perform to the expected standard. In technical operations the supervisor role below the Assistant Manager is the Senior Technician. His role is to prioritise and organise maintenance work; to deploy technicians to jobs; and to oversee the work of trainee technicians. He is also responsible for ensuring that the auto insertion machines are properly serviced and repaired.
The managerial and supervisory chain in the assembly line area is also hierarchical and Taylorist. The Area Production Manager is ultimately responsible for all aspects of production on the area. His role includes dealing with technological problems and staff problems. Below him are production supervisors who supervise production throughout an area. Next are line supervisors who are responsible for the 2 or 3 individual flow lines in each assembly line area. Their role is to oversee production and organise training. The lowest supervisory role is line leader. Line leaders are responsible for monitoring the performance of operators on individual flow lines.
It is evident that the managerial structure at electronics UK is highly hierarchical. Each managerial and supervisory layer has a clearly defined set of responsibilities, and each is responsible to an individual line manager. The management style at the firm is best described as overt monitoring and surveillance. The performance of basic grade operatives in both auto insertion and assembly lines is closely monitored by immediate line supervisors whose own performance is similarly monitored from above. According to the Area Production Manager, ‘Operators on the line are closely supervised, that is if the line leader is doing her job properly. They should all be working in close proximity to the line. The line leader is watching their progress all the time and checking on how the line is doing as a whole, looking for problems and jumping in to sort them out if there are any.’
The performance of operators is not only monitored by immediate line leaders and supervisors, senior Japanese managers are also engaged in surveillance activities. For example, four Japanese managers walk around the auto insertion area closely observing people at work. This is repeated in assembly line areas. The line leader walks up and down the line constantly watching operators at work. The result is continuous and conspicuous surveillance of operators which, when combined with the VDU screens detailing daily performance targets, leads to a highly pressurised and oppressive atmosphere. A female auto insertion operator says that, ‘Japanese managers are always walking around the department, making sure we are doing it properly. Where I worked before they let you get on with it, trusted you. But here it has to be spot on or they are down on you immediately.’ And a female assembly line operator concurred with, ‘I hate them watching me. Then you’ve got the screens telling you how much work has been done.’
The consequences of surveillance reinforce this oppressive atmosphere. The sanction applied to staff who do not achieve the expected standard is described by employees as ‘public humiliation.’ Anyone failing to meet the standard is pulled off the line and sent for ‘corrective training.’ This feature of the labour process is disliked by some British managers who are responsible for applying this sanction. For example, ‘the one thing that I really do not like about this job is having to discipline people for not performing well. I don’t mind about other things like absenteeism or graffiti on walls, but performance, that’s difficult.’

The auto insertion department
Auto insertion is the most hi-tech area in the factory. Sixty people work here, 60% of who are female. The workforce is divided into three groups. First are operators and senior operators. Although 60% of this group are female, none are senior operators. The second group is shift leaders. Although it is the stated aim of the company to promote auto insertion staff on the basis of ability, all shift leaders are male. Third are technicians who maintain the auto insertion machinery. In line with the firm’s policy of training and promoting from within, a number of auto insertion operators have been chosen to train as technicians. Again, however, whilst females have applied for these posts none have been successful.

Operators: All auto insertion operators have been transferred in from assembly lines. In order to gain promotion into auto insertion (as it is regarded throughout the firm) workers sit a test that measures their technical and numerical ability, and their manual dexterity. They then receive three months on the job training from experienced operatives. The reasons for the test and relatively longer training period are twofold. First, the auto insertion machinery is very expensive and easily damaged. It is therefore important to ensure operatives’ competency. Second, auto insertion is the first stage of the production process and errors would jeopardise the quality of the finished product. Although operators have responsibility for programming machines, all machine settings are displayed in charts positioned above them. These charts consist of step by step instructions that detail the whole process. In the past a qualified technician would deal with machine shutdowns but this led to wasted time and lost production if no technician was available. As a result operators now deal with minor problems. In terms of supervision, once the shift leader has given out the daily jobs, operators are responsible for completion of the job. Direct supervision is given to trainees only.
Whilst the labour of auto insertion operators is controlled by technology, the job does involve some limited proactive and reactive skills. Basic numerical skills are needed to set the machines for production. Operators also need a basic understanding of the machines. These skills need to be considered, however, in the context of the step by step instruction charts that describe the process in detail. A level of manual dexterity is needed to physically manipulate the machine and the basic components to be fed through. Reactive skills relate to the procedures to be followed if the machine shuts down. Although the machine diagnoses the problem, the operator must decide if she is competent to deal with the problem herself or whether she should call a technician.

Shift leaders: Shift leaders are responsible for ensuring that production runs smoothly and for dealing with subordinates. They are also subject to some degree of pressure. The shift leader occupies a lower middle management position and part of the job is to mediate between senior Japanese managers and the workforce. A culture clash between the two groups renders this role problematic at times. Moreover, this clash is exacerbated by the introduction of Eastern European immigrant workers. According to one shift leader, Japanese managers have unrealistic expectations of workers that are based on the Japanese workplace. They expect to be able to tell an employee that a job needs to be done and that the employee will do it, no matter how long it takes. UK workers, on the other hand, tend to view any request by managers with suspicion no matter how reasonable the request or how important it is that a certain job is completed on time. Immigrant workers are caught between the two groups. They are more willing to work for the good of the company, but are wary of creating further tensions between themselves and the indigenous workforce.

Technicians: Technicians are responsible for dealing with breakdowns and with the regular servicing of machines. The job of the basic grade technician is to perform these tasks following deployment by the senior technician. Diagnosis of any problem is made by the technician, along with the decision on how to proceed. The importance of the auto insertion department to the whole operation means that these men are the most important group in the factory. However, like all other groups in the firm, they are subject to high levels of monitoring by a supervisory figure. In this instance a senior technician. Additionally, the ideology of ‘one best way’ ensures that performance of any task is subject to rigid procedures. This serves to reduce the amount of discretion and autonomy on the job.

The assembly line

Assembly line work is organised around short strictly demarcated tasks performed at various stages in the production process. The division of labour is, moreover, highly gendered. The majority of assembly line staff are female, although no females occupy positions above line leader. Work is broken down into rigidly prescribed short repetitive actions. Operators repeat the same 50 second task continuously over an 8 hour day. These tasks are described on a work instruction sheet positioned above each work station and must be followed exactly. The sole form of discretion workers are allowed to exercise is whether to position their box of parts and screwdriver to the left or right. In addition to this is the constant monitoring mentioned earlier. This constant observation is intended to ensure that people carry out the task in the prescribed way and keep up with the speed of the assembly line.

*In 1997 the UK adopted the EU social charter and is now comparable with the rest of the EU with regard to employment protection.

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