“GM’s decline truly began with its quest to turn people into machines”
There’s no shortage of doom and gloom articles about the automotive sector in the press at the moment but one in particular has caught my eye “GM’s decline truly began with its quest to turn people into machines” by Gwynn Guilford in Quartz.
So many aspects of the story have parallels with discussions today around work, the nature of work, the importance of purpose at work. Culture, engagement, the Four Enablers – they were all there in one fascinating read.
It’s a masterclass for anyone who misguidedly believes that putting people at the heart of your business is somehow pink and fluffy. It’s a salutary lesson for anyone still persisting with the idea of employees as just another asset, capital or resource.
I’ve captured some of the key points in this blog and if it sparks your interest as much as it did mine, get yourself a coffee, put your feet up and read the original article. It will be worth it.
From 1950 to 1980 9/20 new cars built in the US were built by GM. 1970 GM was the largest company in the world with revenues of $22.8 billion ($152 billion in today’s money). Those glory days are long gone.
Yes, you could talk about competition from foreign small cars but the seeds of GM’s decline were sown in 1970 with a new approach to automation and industrial relations.
GM unveiled their flagship Lordstown assembly plant in 1970. A mechanized assembly line with computerised quality control and robots – something never seen before in the industry. They did this to meet the the growing threat of foreign competition with a new compact model, the Vega. However they were soon facing sales, quality control and supply issues and took the decision to axe workers at the plant, many of whom worked in quality control, and to compensate for lost production by increasing the speed of the assembly line,
Let’s describe a typical assembly line worker’s day. Their arms suspended above their heads in the same position for most of the 11 hour day, installing a coil spring to the rear axle and bolting it in place with a gun. The coil spring weighed 4.5kg and mistakes could break fingers and wrists. Not only was assembly work a massive physical strain but agonisingly tedious and requiring unflagging focus. Get the picture?
To compete with foreign imports GM decided its only answer was to cut costs and increase output by automation. They decided to up the speed of the assembly line from 60 to 100 cars an hour – workers had to cram the same work they had done in 60 seconds into just 36. Along with this increased pace came new disciplinary measures, harassment and management threats. But the line was going too fast for quality assembly. GM relied on untested or ineffective computerised quality control in place of the laid off quality control workers with the result that the Vega had serious quality issues which became synonymous with GM’s wider reputation.
A perfect storm of serious quality problems and labour disenchantment was brewing.
In 1972 the Lordstown workers went on strike. Not about money, but about the jobs they were doing, how they were doing them and how they were treated. They craved newness and challenge and looked at what was happening in Swedish car plants where workers performed a range of tasks and mastered various skills. This seen as a “distant Nirvana” at the time would be recognisable to anyone who’s read Dan Pink’s Drive and understands about Autonomy, Mastery and Purpose. GM workers wanted to be treated like human beings and not as pieces of profit making machinery.
These ideas became known as Lordstown syndrome and their influence spread beyond the auto sector. When the strike ended the US government produced a report called Work in America. Lordstown was a key case study.
Radically for its time, the Report argued that work was an essential source of self-esteem and humanity. When work becomes highly standardized workers are left with nothing to distinguish their labour from that of animals.
The worst example of “dissatisfied work” came from the automotive industry, the assembly line it’s quintessential embodiment.
The report made two recommendations to companies 1. manage workers in a way that encourages their participation and 2. allow them to share in short-term profits. This would help lead to “healthier and more productive workers and citizens.” Nothing came of this report as it was overtaken by the Watergate scandal and the fall of Nixon but it’s fascinating to read nearly 40 years later as we once again begin thinking about the concept of ‘Meaningful Work’ in the 21st century.
And GM continued to invest eye-watering sums in automation and technology as the solution to their problems..
Trust that people want to do good work and treat them accordingly the Japanese formula for success
The culture in plants like Honda, Toyota and Nissan contrasted starkly with those at GM, Chrysler and Ford where factory life was governed by strict hierarchy. Toyota, famous for consistently high productivity and quality had Quality Circles on the assembly line where small teams were responsible for the quality of their own cars. At Toyota when a worker spotted a defect they had a range of choices to fix it, the most extreme to pull the brake and stop the assembly line – at a cost of $10,000 a minute! Toyota trusted their employees with this responsibility. GM would never have considered it in a million years, it was a culturally alien concept.
Two radically different belief systems about what motivates people to work.
“American companies tend fundamentally to mistrust workers” believing if you give them an inch they’ll take a mile. At Toyota the assumption was that everyone was there to do good work. Toyota had no concept of quality control or inspection, Instead everyone held their own work to the highest standards.
GM’s mistrust of its own workers ultimately prevented it from making great cars because by the time cars were inspected they were already finished and by this point it was too late to be exacting in what you were trying to create. Instead of making flawless cars workers simply did their job. They had no big picture goal of building cars together to motivate them – what we’d now call brand purpose and which is embodied in Engage for Success Enabler 1 and management relied on threats and intimidation to keep the line moving, rather than adopting the principles of Engage for Success Enabler 2.
2008 – the end of the line
General Motors went into bankruptcy. Toyota overtook GM as the world’s biggest producer of vehicles – a position GM had enjoyed for 77 years.
A salutary lesson indeed about the impact that, no matter how big or successful your company is or has been, failing to invest in your organisational culture and people will, whether in the short or long term, mean your business will become ultimately unsustainable.
Read the full article here by Gwynn Guilford, Quartz 30th Dec 2018
Read more on Engage for Success The Four Enablers here.