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Human resource issues in cellular manufacturing: a sociotechnical analysis.


Following conversion to a cellular manufacturing layout, a West Coast electronics firm experienced a doubling of its employee turnover rate. Employees complained of] increased scheduling pressures and felt overwhelmed by the increase in coworker interdependence that had developed. Another West Coast plant, this oen involved in sheet metal fabrication, was forced to delay construction of a new cellular manufacturing facility because of union objections regarding design, work assignment, and pay issues. At an East Coast engine plant that converted to a cellular manufacturing-style just-in-time system (Klein (1989)), employee motivation declined because of lost work autonomy. Another East Coast company, after four years of technical success with cellular manufacturing, is experiencing worker-management conflict over work rules and procedures related to cellular practices. Although many examples of successful cellular manufacturing (CM) implementations have appeared in the literature, these four cases illustrate the potential for human resource problems in CM conversions and underscore the need for research in this area.

Research on the human or social side of CM has been notably lacking. With the exception of anecdotal descriptions of CM concerns (Fazakerley (1974, 1976)), only two empirical studies have attempted to systematically pinpoint the nature of human resource issues in CM (Brown and Mitchell (1991); Huber and Hyer (1985)). These two empirical studies compared the attitudes of employees working in CM environments with those of peers working in traditional, functionally arranged job shops, and they represent the kind of research that is needed in assessing the influence of CM on employees (Wemmerlov and Hyer (1987)). Although Huber and Hyer (1985) found no major differences in job satisfaction or job characteristics between cellular and functional employees, Brown and Mitchell (1991) found several areas where CM employees experienced more performance obstacles than those who worked in the functional layout. These two papers provide helpful insights, but there is not enough evidence for us to draw generalizable conclusions about human resource issues in CM.

Given the lack of research on human resource issues in CM, this article has been written with several objectives in mind. First, there is a general need to provide a theoretical foundation for CM, particularly in light of human resource issues. This foundation can improve our understanding of CM successes, as well as failures, and can provide academic rigor to an area where field-based research has been primarily descriptive. We have chosen sociotechnical systems theories (STS) for this purpose because their underlying tenets closely parallel CM principles. Based on an STS framework, another objective of this article is to review the human resource management (HRM) issues and practices relevant to CM. Specifically, we suggest ways in which six HRM practices--planning, employee relations, job analysis and design, selection, reward structures, and training and development systems--may be used to complement the technical components of CM. Our theoretical and practical goals provide the groundwork for recommendations regarding field research, a third objective of the article.

It is our contention that past research on CM has been biased toward the technical side of CM and has overlooked technical-social interactions. This bias is undoubtedly an artifact of the predominant research methodologies in operations management (Meredith, Raturi, Amoako-Gyampha, and Kaplan (1989)), which have emphasized quantitative modeling. Although they are useful in establishing a core of knowledge about the interactions of technical subsystem components, quantitative models cannot easily measure or predict human resource outcomes such as job satisfaction, pay satisfaction, turnover, or absenteeism. Because these human issues may be as important to CM success as technical issues, it is our position that CM researchers need to capture a broader set of variables. Field research involving cross-sectional, longitudinal, and quasi-experimental designs will help to answer questions about the effects of CM on employees, and about the effectiveness of various human resource practices in ensuring successful CM implementation.

In the next section, we have provided a description of cellular manufacturing which concentrates on the issues that will have the greatest implications for human resource management (HRM), particularly with respect to direct labor. These relationships are then explored within a sociotechnical systems (STS) framework.

Cellular Manufacturing

Cellular manufacturing involves the redesign of a functionally organized small batch manufacturing facility (i.e., a job shop) into a cellular layout in which dissimilar but sequentially related machines are relocated in physical proximity to one another and dedicated to the manufacture of a specific family of component parts (Pullen (1976); Wemmerlov and Hyer (1989)). The creation of part families may be facilitated through the use of classification and coding systems (Hyer and Wemmerlov (1984)), but less formal methods also have been shown to be effective (Schonberger (1982, 1986)). Because each cell manufactures products that have similar characteristics, product changeovers are relatively easy to accomplish and small lot sizes may be justified economically. Firms adopting this strategy have been rewarded with improvements in inventory levels, throughput time, quality, and flexibility (Fry, Wilson, and Breen (1987); Hyer and Wemmerlov (1984)).

A variety of staffing arrangements is possible in CM layouts. However, Wemmerlov and Hyer (1989) recently found that 87% of CM firms focus on "intracell mobility." With this arrangement, each cell is staffed by a group of operators who are multiskilled and trained to assist with several processes inside the same cell. Under these circumstances, a high degree of within-cell cooperation will be necessary (Klein (1989)). We will focus on the approaches involving several workers per cell because of their greater social complexity and frequent use. A sociotechnical systems framework highlights the relevant human issues.


The term sociotechnical systems (STS) was first used by Trist and Bamforth (1951) to describe the importance of finding a complementary match between technical and social systems, specifically in cases where the technical system has been altered. Emery (1959) refers to this essential complementarity as "joint optimization," and suggests that major changes in only one of the two subsystems (technical or social) will be ineffective.

Although STS theories emphasize the importance of organizational choice (Trist, Higgin, Murray and Pollock (1963)), much of the research in this area seems to point toward the creation of work groups whose members are temporally interdependent with one another. This concept is similar to what Thompson (1967) has called "sequential interdependence," and it provides theoretical support for the structures advocated in CM. Consistent with STS, a move away from functionally-oriented structures brings about changes in the necessary coordination mechanisms, and temporally interdependent team members are more likely to rely upon "mutual adjustment" modes (Thompson (1967)) than on more structured modes of coordination. This suggests that major changes in the social system must accompany the technical changes associated with a CM layout.

Sociotechnical Systems Definitions

Various definitions are available for the components of sociotechnical systems, but most of them follow similar themes. Pasmore, Francis, Haldeman, and Shani (1982) have integrated definitions from several sources to develop the following descriptions of the technical and social subsystems:

The Technical System

"The technical subsystem of an organization consists of the tools, techniques, procedures, skills, knowledge, and devices used by members of the social system to accomplish the tasks of the organization . . . the technological configuration chosen by organization designers constrains the operation of the social system by shaping the behaviors required to operate it. The level of variety, challenge, feedback, control, decision making and integration provided for social system members is largely a function of the way in which the technology is arranged." (p. 1184) [Emphasis added]

The Social System

"The social system of an organization is composed of the people who work in the organization and the relationships among them . . . . More broadly, the social system includes the reasons that organizational members choose to work in the organization, their attitudes toward it, their expectations of it, patterns of supervisory-subordinate relationships, skill levels of employees, and the nature of the subgroups within the population." (p.1183)

Tied together, these two definitions indicate that if we change the technical "arrangement" or layout of the system, we also change the nature of the social interactions among employees and their supervisors. These social changes will require careful attention because of their potential to influence employee attitudes, motivation, and retention.

It is worth noting that the body of literature on STS began to evolve in the early 1950s, about the same time that CM came into practice in the United Kingdom. In spite of the parallels that exist between these two fields, little effort has been made in the operations literature to integrate them in any systematic way. Such an integration may be useful to the managerial profession in suggesting guidelines for CM implementation. From the standpoint of the academician, it provides a needed theoretical grounding for CM and suggests areas for future research. A foundation for creating sociotechnical symbiosis may be found in Cherns' (1979) nine STS principles. These are summarized in Table 1, along with related CM and HR issues.

As indicated in Table 1, there are several close ties between CM practices and STS principles. In the implementation of CM, there is the potential for significant human resource problems such as resistance to change, job dissatisfaction, pay dissatisfaction, lowered productivity, and stress. However, these potential problems may be avoided or minimized through careful attention to the social system. Several HRM practices can provide the support necessary for adapting the social system to a CM environment. We have chosen six HRM areas for our discussion here: HRM planning, employee relations, job analysis and design, selection, reward structures, and training and development. These are integrated with the nine STS principles in order to illustrate managerial and research issues related to CM. In several cases, two STS principles have been combined because they have similar HRM implications.



Principle 1: Compatibility, and Principle 2: Minimal Critical Specification

These two principles recognize the importance of empowering employees to 1) assist with planning, and 2) make decisions about the way in which their work is performed. The Compatibility Principle emphasizes the importance of aligning system design with the organization's long-term adaptive objectives by involving employees in the planning process. Minimal Critical Specification advocates an unstructured approach to job design, wherein employees, themselves, decide how they will accomplish their work. Both of these principles are based on the assumption that employee empowerment will provide a useful source of ideas for system improvement. This has proven to be the case for a West Coast sheet metal manufacturer that is undergoing a CM conversion; the design of the new facility has been greatly improved through employee involvement. For example, employees suggested the decentralization of heat treat operations through the use of several smaller ovens located throughout the plant. The concept of employee empowerment has implications for employee relations, training and development, and job analysis and design.

Employee Relations. Regardless of whether or not a labor union is involved, the way in which the organization manages its relationships with its work force may be crucial to the successful implementation of CM. Research on employee participation (Lawler (1981)) shows that it can increase the probability of employee acceptance of change and enhance the quality of the organization's long-term relationships with its employees.

Because unions may have goals and objectives which are not necessarily aligned with those of the organization (Brett (1980)), unionized plants present a special case and are deserving of further discussion in relation to Principles 1 and 2. Knauss and Matuszak (1989) contend that a participative program involving direct interaction between employees and managers may appear to undercut the role of the union as the "go-between" for these two groups. Hence, the key to successful CM implementation lies in the effective integration of management, union, and employee goals, and the recognition that the long term viability of both the organization and the union will be to the

advantage of all three groups. This synergistic approach was used by an Eastern manufacturer of drive shaft chains. A joint union-management committee developed procedures for selecting CM employees, redesigned the compensation system, and modified the union contract to allow flexiblity in job assignments. To a large extent, the success of this implementation may be attributed to these early efforts at finding common goals compatible with long term organizational viability. By comparison, a four-year "veteran" CM company is still experiencing union-management conflict because management did not involve the union in the selection of representatives to employee planning committees.

Training and Development. If organizations are to tap the full potential of employee involvement, they may need to train employees in group interaction skills and creativity (Majchrzak (1988)). Most job shop organizations will begin the CM conversion with a large pool of employees who are not attuned to group work, and initial training must be geared to convince them of the general effectiveness of group problem solving. Following that, training in group interaction skills may be necessary. Components of this training may include oral communication skills, listening, joint problem solving, and negotiation. Although no research has fully tested the validity of these assertions, Brown and Mitchell (1991) discovered that cell team members experienced distress over the inadequacy of training in group interaction skills.

Job Analysis and Design. Adherence to the Minimal Critical Specification Principle generally requires a complete restructuring of the organization's job analysis and design system. Job analysis and design provide the foundation for the entire HRM system, and represent important first steps in the development of selection procedures, work assignments, compensation programs, and human resource inventory systems. In traditional systems, job analysis and design are centered around the creation of skill-related job categories. With CM, fewer job categories may be necessary, and the organization may go so far as to write job descriptions for entire teams, but none for individual employees (Schonberger (1990)). Although self-management is not usually associated with CM (Wemmerlov and Hyer (1989)), it may be left to the teams, through group negotiation and problem solving, to decide on task allocation and specific job content.

A word of caution is in order regarding the Compatibility and Minimal Critical Specification Principles. Increased employee involvement in decision-making may be viewed as a natural outgrowth of CM. However, it is possible that the increased coworker interdependence associated with a cellular layout may lead to a greater need for standardization than might have been anticipated by employees if they have mistakenly equated involvement with autonomy (Spector and Beer (1985)). For example, one East Coast manufacturer has found it necessary to turn to mandatory involvement in CM meetings and has established strict procedural rules for these sessions because of the need for more structure and control. The issue of reduced autonomy will be discussed in greater detail in relation to realistic job previews.

If job analysis de-emphasizes skill specialization, the system may need to reorient itself toward the assessment of more relevant job components. One approach involves the use of "worker oriented" job analysis processes such as the Position Analysis Questionnaire (PAQ) and the Job Element Inventory (JEI). Both of these structured questionnaires identify the generic human behaviors that are involved in jobs, as contrasted with elements of a job-task oriented nature that deal more with the technological processes of jobs (Harvey, Freidman, Hakel and Cornelius (1988)). "Worker-oriented" analysis procedures may be useful in identifying the broad human competencies (e.g., flexibility, tolerance of ambiguity, cooperation) necessary to operate effective CM teams. These tools represent an important extension to the job analysis methods traditionally employed in industrial settings.

Research Issues Relevant to Principles 1 and 2. Wemmerlov and Hyer (1989) speculated that initial resistance is natural and likely to subside after people have become involved with the design and/or operation of the cells. If employees at all levels are involved in the change process, power, information, knowledge, and rewards may be filtered to the lowest organizational level (Lawler (1981)); commitment and job satisfaction may escalate, and resistance to change may dissipate. To date, these options for overcoming resistance to change have not been empirically validated in CM settings, and should be investigated with subsequent research. Research which assesses the effectiveness of various types of employee involvement will most likely require cross-sectional comparisons between organizations and between organization subunits. For example, the effectiveness of direct involvement of hourly workers (voluntary or chosen by management) in the design of cells, the restructuring of their jobs, and the design of pay systems should be compared to indirect involvement through union representation, and to conditions of no involvement. It will also be useful to determine the utility of self-management and the conditions that favor its application in CM environments. Dependent variables for these studies might include objective group performance measures, cohesiveness, grievances, absenteeism, job satisfaction, and CM conversion time.

Principle 3: The Sociotechnical Criterion, and Principle 4: Information


These two principles support the notion that employees should control variances and information because they are in the best position to correct operating problems. According to the Sociotechnical Criterion, variances should be controlled as closely as possible to their points of origin. In a CM environment which is built around STS principles, direct labor employees in work teams may have responsibility for correcting assembly or fabrication errors, or performing routine maintenance on machinery. So, for example, rework activities would no longer be delegated to a separate rework department, and, instead, corrections would be made by the group originally responsible for producing the faulty item (Schonberger (1990)). This approach has been used effectively in a West Coast electronics plant where CM teams able to achieve "zero defects" are allowed to bypass assurance and rework divisions.

Traditional information flows may require revamping to support localized control of variances. The Information Flow Principle specifies that individuals at the operating level (who are, therefore, closet to variance sources) should have timely access to information about the work that flows in and out of their work units. In a more traditional system, information about final inspection results is often fed to a middle level manager, who will then request information from a first line supervisor. The supervisor takes this information to direct labor employees, seeking to find the source of the problem. This pyramidal information flow is likely to take a considerable amount of time, making it difficult for those on the shop floor to recall the original cause of the problem, and placing them in a defensive position. Moreover, it will be subject to information content loss. The STS solution does not remove managers from the information loop, but it does provide employees with immediately access to information so that they may solve problems in a timely manner.

A successful application of the Sociotechnical and Information Flow Principles is found at Evans and Sutherland, a Utah firm which produces flight simulators. CM is linked to a computer-based information system; all parts being manufactured are bar-coded, and work time is tracked via computer. All team members have access to parts records and can readily trace quality problems to their origins. The changes in variance control and information flow that result from a CM implementation will have implications for employee relations and training and development.

Employee Relations. The implementation of the Sociotechnical and Information Flow Principles may raise objections from employees. Although empirical research has been limited (see Dean and Snell (1991), for a review), several authors have argued that CM increases task complexity, shifting the emphasis from "touch labor" to "knowledge work" which requires greater technical, conceptual, and analytical skill (e.g., Helfgott (1988); Wilkinson (1983)). Additionally, employees may be concerned that the company is attempting to add more tasks (horizontal loading), as well as more responsibility (vertical loading), to their jobs (e.g., inspection, information management) without commensurate changes in rewards. Changes such as those associated with CM also may place a strain on employee relations by altering long-standing work roles, procedures, and interaction patterns which suit the preferences of existing employees (Majchrzak (1988)).

Training and Development. Potential training costs have been seriously underestimated in the implementation of some advanced manufacturing technologies (Majchrzak (1988)). A major reason for this underestimation may be a failure to anticipate the effects of the Sociotechnical Criterion and the Information Flow Principle. In order to operationalize these principles, an organization may need to provide cell members with training in basic skills, interpersonal skills, and conceptual/integrative skills (Schuler and Huber (1990)). Basic skill training programs are designed to correct deficiencies in mathematics, reading, and writing. New responsibilities associated with the management of information, including the interpretation of statistical process control charts, review of documents, and report writing, are likely to make this training essential, especially if we consider the high proportion of American adults who are functionally illiterate (Torrence and Torrence (1987)). Interpersonal and conceptual/intergrative skills also may help employees to solve problems, listen to coworkers, develop intra- and inter-cell coordination mechanisms and interpret data, all of which will enable them to meet the new requirements of the CM work environment.

It does not appear that training has been a priority at all CM conversion sites. For example, Wemmerlov and Hyer (1989) found that formal education in group technology, cell concepts or just-in-time (JIT) was offered in only one-third of the CM plants which they surveyed, and five of 29 CM firms provided no training at all to their employees. Additionally, Brown and Mitchell (1991) found technical skill training inadequacy to be a major performance obstacle for employees working in cells.

Research Issues Relevant to Principles 3 and 4. In combination, the Sociotechnical and Information Flow principles focus on providing employees with greater control over the work environment, and they suggest a number of research issues. From a methodological standpoint, longitudinal measures may provide the best means for studying employee control through decentralization of information and response to variances. Longitudinal measures have been advocated by other writers (Wemmerlov and Hyer (1987); Meredith, Raturi, Amoako-Gyampah and Kaplan (1989)), but only one study, to date, has taken this approach in a cellular environment (Brown and Mitchell (1991)). These authors found that the quality of work-related information improved when employees were transitioned from functionally-organized work structures to a CM/JIT system. In its efforts to support the Information Flow Principle, the company had improved the quality of shop drawings and instructions, and employees apparently appreciated the changes. However, improved information flow and variance control also introduced a new feature to the work environment; a computer terminal for tracking, scheduling, and ordering parts was added to every cell. This addition introduced new problems and concerns for employees, and they complained about computer downtime, computer speed, and inadequate training in the use of the system. Of all of the obstacle areas measured in that study, problems associated with the computer system proved to represent the most significant negative change over time. These results suggest the potential for both positive and negative outcomes associated with operating-level variance and information control However, one study cannot tell the entire story, and more field research clearly is needed.

In examining the changes associated with localized control of variances and information, researchers should assess employee attutides toward such job characteristics as role ambiguity and conflict (Rizzo, House and Lirtzman (1970)), stress, performance obstacles (Brown and Mitchell (1988)), and organizational commitment (Porter, Streers, Mowday and Boulian (1974)). The purpose of this research will be exploratory, and will help to describe the ways in which employees are affected by CM-related changes. Research on job attitudes could be followed up with hypothesis-testing research which examines the interelationships among attitudes, job design, and output measures such as performance, grievances, turnover, absenteeism, and work place safety. This systematic approach will help to answer questions about the influence of employee attitudes on bottom-line results.

The increased variance control associated with CM has the potential to change several job design factors, including task complexity, task variety, and task interdependence. These job attributes were investigated by Dean and Snell (1991) in relation to integrated manufacturing. Although this study was focused very broadly on a variety of manufacturing advancements, its cross-sectional approach provides a good model for CM research. Their investigation was designed to assess the extent to which job design varied with the utilization of integrated manufacturing technologies. Although there were no main effects, three organizational characteristics--firm size, firm performance level, and firm dependency--were found to moderate the relationship between integrated manufacturing and job design. For example, there was a significant interaction effect between firm performance and the application of JIT in determining the level of task interdependence experienced by operating level employees. Similar cross-sectional research, focused more specifically on CM characteristics associated with increased variance control, would provide a useful extension of the Dean and Snell study (1991), as well as the Huber and Hyer study (1985), which also assessed job characteristics. Changes in job design could be examined objectively through job analysis procedures such as the PAQ and JEI, which were described previously. Results would help to establish the extent to which employees are effected by CM changes, and would have implications for HRM planning, selection, and training and development.

Another research issue focuses on the effectiveness of various types of training during different stages of CM conversion. A relatively new type of training that may help to support the STS Criterion and the Information Flow Principle is called self-management training, a program that teaches people to exercise control over their own behaviors. If cell members are required to do everything from ordering supplies to evaluating output, this training option may be particularly beneficial. Consistent with the Information Flow Principle, self management training teaches employees to assess their own problems by evaluating job specific information. With this information in hand, they explore alternative courses of action to deal with problems, devise action strategies, and set specific, difficult, but attainable performance goals. Once goals are set, employees discuss ways in whjich the environment facilitates or hinders goal attainment, and then they identify strategies to overcome performance obstacles. Although the value of this type of training has been established in other environments (Frayne and Latham (1987); Kanfer (1980)), its potential should be tested specified in CM settings.

Principle 5: The Multifunctional Principle, and Principle 6: Boundary


In combination, these two principles are illustrated by the structural change that occurs when employees are moved from segregated functional work groups (e.g., all drill press operators work in the same department) into multifunctional cells that combine jobs and employees from several specialized skill areas. Wall or boundaries between functional areas are dissolved, and interdisciplinary teams work together cooperatively, sharing and exchanging tasks. In effect, these two principles represent the essence of the CM layout, and are closely aligned with the concept of horizontal loading in job design.

As a result of the removal of "walls" between functional areas and the creation of multifunctional work cells, scheduling may become easier, and bottlenecks between sequential functions may be ironed-out through group problem sovling. For example, when the Illinois Tool Works' Elgin, Illinois plant reorganized its shop floor into product-specific manufacturing cells, scheduling became so simplified that the company's mainframe scheduling computer became superfluous (Henkoff (1990)).

In a CM layout designed around STS Principles 5 and 6, all cell employees are likely to to feel in touch with raw material suppliers, as well as with internal and external customers, because of the tight interdependence they share from start to finish (Schonberger (1990)). Still, these changes may present some new challenges, and will have notable implications for HRM planning, employee relations, selection, and training and development.

HRM Planning. The Multifunctional and Boundary Location Principles have the potential to increase the complexity of HRM planning. In traditional layouts, employees are grouped by function and the status of the organization's human resource inventories can be readily accounted. That is, it is relatively easy for a capacity planner to determine the number of lathe operators or drill press operators available when employees are grouped by skill specialization. However, when the skill mix becomes distributed across all employees, human resource status assessments for production planning may become more difficult. For example, there may be 20 individuals certified to perform drilling functions, and 25 individuals certified to operate cutting equipment, but these sets may overlap if several operators are certified in both areas. Under these circumstances, operator re-assignments necessitated by employee turnover or product mix changes may present a challenge.

The HRM planning process may be facilitated through the use of a Human Resource Information System (HRIS) which inventories knowledge, skills, abilities, experiences, and preferences of employees (Bloom (1982)). An HRIS functions similarly to an MRP system, except that human resource information is being managed instead of information about raw materials and component parts. Although we have found no reports of specific applications to CM, these systems have been used successfully by several major corporations, including IBM and Boeing. They allow organizations to check production plans against human resource inventories, locate individuals eligible for transfers into work units where vacancies have occurred, and identify skill training areas where the current work force may be insufficient to meet strategic manufacturing goals.

Employee Relations. The Multifunctional and Boundary Location Principles, as applied in CM, may conflict directly with the structures and objectives of most unions (Knauss and Matuszak (1989)). Because of the need to carefully delineate bargaining units, unions have fought hard to establish strong distinctions between various job categories. However, CM implementation can require that these distinctions be removed or seriously blurred. Because any issues which change the nature of the job or the compensation system must be discussed in collective bargaining (356 US 342 LLRM 2034 (1958), the organization's interest in multiskilling and job assignment flexibility must be communicated to union leaders at an early stage, and negotiated to a satisfactory agreement in advance of implementation. Success may hinge on the extent to which negotiators (union and management) have an "expanding" rather than a "fixed pie" perception of organizational resources, and view bargaining as an integrative rather than win-loss proposition. In spite of the importance of early negotiations, it appears that the need for cooperation with the union may often be ignored (Knauss and Matuszak (1989)). For example, a survey by Wemmerlov and Hyer (1989) revealed that only four of 29 unionized CM companies involved the union in selecting employees for cell membership. As noted earlier, this may seriously jeopardize union-management relations and hinder the CM implementation process.

Selection. The selection of employees who will staff particular cells may be a critical issue for implementing the Multifunctional Principle. In contrast to practices in traditional job shops, CM employees probably should be selected based on their trainability and flexibility, rather than for their functional specialization. Trainability refers to how well a person can acquire the skills, knowledge, and behavior necessary to perform a job, and achieve specific outcomes in a given time; it is a combination of an individual's ability, motivation, and interest in the job (Cascio (1990)). Boeing has recently moved toward this sort of assessment process in selecting CM employees. Where education, experience, and an informal interview once sufficed for employee selection, the company now spends a full day assessing applicant potential for CM positions. In one plant, only one in five applicants met the new criteria for trainability and flexibility.

In a multifunctional environment, performance tests involving work samples or simulations may represent substantial improvements over traditional unstructured interviews or written aptitude exams. For example, an applicant might be required to load a numerically controlled machine, or set up and operate multiple tooling devices. A number of studies have demonstrated that work simulations or samples are far superior to traditional selection approaches in predicing job performance (Hunter and Hunter (1984)). Screening and testing methods may also provide a useful source of information for cell placement decisions. These decisions may remain in the hands of supervisory and support personnel, or they may be delegated to cellular work teams (Wemmerlov and Hyer (1989)). The effectiveness of these options in CM settings will require empirical verification.

Just as the organization needs information about an employee's potential for working in a multifunctional team environment, the employee also may need a realistic preview of what the job will involve. Realistic job previews (RIPs) are accomplished through a variety of formats such as video tapes, written descriptions, trial runs, or interviews with incumbents, and share the fundamental goal of presenting relevant aspects of a job as realistically and accurately as possible (Meglino, DeNisi, Youngblood and Williams, 1988). Research has provided convincing evidence that employees who are presented with both the positive and the negative aspects of a job will have the highest job satisfaction and will have longer job tenure than employees exposed only to the positive aspects of a job (Wanous (1977)).

The potential importance of realistic job previews in CM environments is illustrated by a classic Harvard case about the Sedalia Engine Plant (Spector and Beer (1981)). Following a major restructuring which included the creation of manufacturing cells, employee morale plummeted because of high expectations and demands. Later, the company implemented improved procedures for assessing employee "fit" and began to provide realistic job previews in the form of video tapes (Spector and Beer (1985)). Employee morale, performance, and turnover were much improved as a result of these changes in the preparation of the work force.

Training and Development. Ideally, organizations should strive to select employees who possess all of the technical skills and flexibility necessary for a multifunctional CM environment. However, this is unlikely to occur for several reasons. First, no procedure, regardless of its validity, can guarantee the selection of ideally suited employees. Second, CM is usually implemented in existing organizations, complete with a current work force. Here, the issue becomes one of reorienting and retaining, rather than selecting. In either case, conversion to multiskilling will be likely to tremendous increases in time and budget allocations for training. For example, a West Coast sheet metal manufacturer converting to CM has estimated that its employees will spend about 25% of their time in training during the first two yeras of the implementation process. Wemmerlov and Hyer (1989) found that the concept of multifunctional operators was practiced in 87% of CM companies claiming to have mobile operators, yet only one third of these companies educated operators on the concepts underlying CM. When asked what they would do differently, the companies concurred that they should have put a greater emphasis on technical and process training.

In a related area, career development systems may require serious revamping. Functionally organized structures provide natural mechanisms for career-ladder progression as employees move through a series of steps from apprentice to journeyman to lead operator to first line supervisor. With time-based boundaries, this progression sequence may be difficult to maintain because employees within a particular functional specialty are scattered across cells. This problem may be compounded when the number of job categories is reduced, as discussed in relation to the Minimal Critical Specification Principle. With more employees within any one job category, competition for advancement increases, and with greater employee control over variances, we would expect that the availability of supervisory positions might also be reduced. In response to these potential problems, Majchrzak (1988) has recommended new forms of carrer progression. One route may involve moving from being an NC machine operator to becoming an NC programmer, a natural extension of job enrichment or vertical loading. Another option, which will be discussed in more detail in relation to the Support Congruence Principle, is to view the accumulation of certifications in a range of skill areas as a form of advancement (Schonberger (1990)). For example, the Boeing Company has set aside 10 cents an hour from direct labor wages to establish a career mobility program for nonexempt employees in a new CM plant. The program will provide a means for employee self-assessment, and will give employees information about specific strategies for attaining various career goals. These strategies may involve the accumulation of experience in particular skill areas and/or the completion of specific training programs.

Research Issues Relevant to Principles 5 and 6. These two STS principles represent an important foundation of CM; the removal of departmental barriers and the creation of multifunctional work teams. This approach differs from traditional job shop practices and raises a number of research question regarding union acceptance of multiskilling, methods for selection, job previews and employee attitudes. Throughout this section, we have made a number of recommendations regarding implementation; each of these will require empirical testing. For exampole, cross-sectional research will help to determine the extent to which various approaches to bargaining will increase union acceptance of multiskilling. Or, a quasi-experimental design could be used to examine the effectiveness of various types of training.

Integrative research which combines psychometric rigor with technical expertise is particularly needed regarding employee selection in CM environments. This will help to determine which approaches to selection are most appropriate (e.g., simulations, work samples, interviews, tests), and which employee characteristics ensure the greatest fit with CM. For example, research should explore the role that self efficacy, a measure of an employee's beliefs about his or her abilities (St. John (1980)), has on trainability in a CM environment. The predictive power of Gough's (1985) measure of "work orientation" might also be tested in relation to CM. This instrument measures an individual's disposition to "self discipline, dedication to obligations and adherence to rule" (p. 505) and may help to identify workers who have the discipline to master the technological and interpersonal change associated with the introduction of multiskilling. Other instruments which may be used in this research include the Hogan Personality Inventory (Hogan (1986)) which assesses factors associated with successful adaptation to and performance in everyday life and the Employee Reliability Scale (Hogan and Hogan (1989)) which assesses the likelihood of tendencies toward counterproductive behaviors on the job.

Finally, researchers also may wish to empiricially validate the usefulness of realistic job previews in CM environments. As mentioned previously, RJPs have been shown to have a significant effect on employee turnover rates in other environments. Given the dramatic changes in job design associated with CM, this will be a critical research topic. Using a true experimental design, some job applicants could be exposed to a written job preview and others might spend a day on the job. The relative effectiveness of these technique could then be assessed over time in relation to performance, turnover, absenteeism, and job satisfaction.

Principle 7: Support Congruence

According to Principle 7, STS technical innovations such as CM must be accompanied by complementary changes in support systems. In a move toward interdependence and multiskilled teams, old systems for managing personnel must be revised so that they support, rather than detract from, the technical effectiveness of the change. Several of these systems (e.g., planning, job design, training) have been addressed in previous paragraphs, but the one HRM issue which stands out clearly here is the reward structure.

Reward Structures. Reward structures address the ways in which people are compensated for work. A key issue in establishing a supporting reward structure in any environment is the level of aggregation (e.g., individual, work group, subunit, or entire organization) at which performance will be measured and rewards distributed (Lawler (1981)). Consider the traditional batch manufacturing organization where rewards often focus strictly on the individual employee as the level of "aggregation." Here, rewards typically are based on one or more factors: (1) the value of the job or skill area relative to other jobs in the organization and in the external market; (2) the seniority of the worker; (3) the performance of the employee (e.g., piecework, Taylor differential piece rate system, Merrick multiple piece rate system). Higher levels of aggregation may be needed in CM settings where collective output is viewed as more important than individual output.

Although they have been effective for jobs in traditional batch manufacturing systems (Milkovich and Newman (1990)), individual wage structures involving piece rates may be inappropriate in CM environments for three reasons. First, they promote individual output, rather than cooperatively produced team output. When each employee is paid to produce as many units or components as possible, some employees may be able to work faster than others. As a result, work-in-process within a cell will become unevenly distributed work stations and operators, and bottlenecks will develop (Schuler and Huber (1990)). In a cell characterized by task interdependence, resentment may build as some operators experience idle time and others are faced with excess incoming inventory. Under these circumstances, team output may be less than optimal. The second problem with piece rates in CM settings is that they fail to account for the diversity of skills necessary to operate multiple pieces of equipment (Huber and Hyer (1985)). A piece-rate system focuses only on specialized output. An employee who wishes to take full advantage of incentives will be wise to focus on a single skill area, performing one task in a repetitive manner. This sort of behavior will not support the multiskilling goals of CM. Finally, piece rate pay systems may be incompatible with vertical loading. If employees are to be encouraged to take on functions in maintenance and inspection, the pay contingency must be redesigned to take into consideration indirect labor tasks. Otherwise, employee objections are likely to arise (Huber and Hyer (1985)).

Reward systems which promote teamwork will be preferred in CM environments, and it will be important for the application of these systems to be consistent throughout the plant. Inconsistencies can create tremendous conflict between interdependent employees or work units. Two major compensation system options likely to promote teamwork in CM environments are gain-sharing and profit-sharing. Gain sharing plans focus on fairly straightforward measures of group productivity or cost savings (e.g., labor, material, or rework cost savings). Required measures are fairly easy to calculate, but may focus employee effort on short-, rather than long-term goals. In contrast, profit sharing plans are focused on broader organization-level profit goals, and include such factors as level of bad debt expenses, economic conditions, goal attainment, and depreciation schedules, all of which are beyond the control of the direct labor employee (Milkovich and Newman (1990)). In spite of their potential weakness, gain sharing and profit sharing have been shown to encourage employees to refocus their individual efforts toward group goal attainment (Latham and Huber (in press)).

Although higher levels of aggregation should be considered in pay systems associated with CM, changes in individual pay structures also may help to support CM goals. Skill-based pay represents an individual reward structure which may be appropriate in these environments (Susman and Chase (1986)). In stark contrast to the pay systems supporting narrow specialization that have been the hallmark of the traditional job shop, skill-based pay rewards employees for mastering a variety of jobs or skills. The major managerial impetus for skill-based pay appears to be the flexibility in job assignments that a multiskilled work force can provide.

As the experience of the Sedalia Engine Plant (SEP) have shown, skill-based pay is not without problems. Although the SEP program was initially successuful in increasing work force flexibility, once employees had mastered all skill areas, opportunities for further pay increments were limited. The impact on motivation, performance, and job satisfaction was quite serious. Skill-based pay systems may be costly, especially if multiskilled workers are reimbursed for skill diversity regardless of whether a particular skill is ever utilized. As the number of skill units increases, the possibility that a worker may become "a Jack of all trades, a master of none" also increases (Gupta, Schweizer, Jenkins (1987)). Another potential problem is related to the question of who evaluates skill mastery. Given the association with an employee's pay check, there is potential for resentment regarding pass or fail judgments in skill testing situations.

Research Issues Relevant to Principle 7. CM has not often been associated with the concept of support congruence, and we have little empirical evidence to indicate that one approach to compensation is better than another in these settings. Instruments such as the Pay Satisfaction Questionnaire (PSQ), which assesses satisfaction with pay administration processes and outcomes (Heneman and Schwab (1985); Scarpello, Huber, and Vandenberg (1988)), may be used to examine the effectiveness of alternative reward systems in CM environments. For example, pay satisfaction under conditions involving skill-based pay, profit sharing, and gain sharing could be compared within or between CM settings. The costs (wages and administration) versus the productivity benefits of various plans also could be compared in CM settings. Although a number of studies have reported the outcomes of company-wide wage incentive or bonus systems, they have not involved rigorous research methods and may be biased, in number, toward reports of succesful implementations (Lawler (1981)). Thus, research which assesses the effects of these plans in CM settings will provide useful information to practitioners, and will also make an important contribution to the compensation literature.

The compensation structure cues employees as to the value of different work behaviors (e.g., quantity, quality of production, teamwork). Thus, decisions regarding pay system selection, the scope of a gain sharing formula, the split of gains between management and workers, the strength of the reinforcement (base pay versus incentive pay), and the pay-out schedule (quarterly, annually) also should be carefully evaluated (Bazerman and Graham-Moore (1983)) and their effectiveness empirically verified with respect to CM.

Principle 8: Design and Human Values

This principle points toward the attainment of quality of work life as an important goal of the organization. Quality of work life (QWL), as it applies to job design, has implications for job satisfaction and performance, as well as for the social responsibility of the organization (Griffin (1982)). However, job satisfaction and performance are not necessarily correlated. That is, satisfied workers may not necessarily be the best performers (Sheridan and Slocum (1975)). However, job satisfaction has been shown to be closely related to absenteeism and turnover, two variables which can have a major economic impact on any organization. For example, at General Motors, the annual cost of employee absenteeism is $1 billion. The cost of turnover is also high, including separation, selection and replacement, and retraining costs (Cascio (1990)). Factors to be considered in evaluating QWL include development of human capacities, considerate supervision, job security, and employees' rights. These issues have their greatest implications for Job Analysis and Design.

Job Analysis and Design. As described previously, jobs in small batch manufacturing facilities traditionally have been on scientific management principles, as operationalized through approaches such as time and motion studies and methods analysis. These classical approaches to job design focus almost all attention on the uniformity and speed of the task, and little on the social or personal needs of the operator. Although it may be tempting to assume that job designs associated with CM will automatically improve QWL, industry experience has not supported this hypothesis in every case. For example, Klein (1989) found that increased standardization and interdependence associated with a CM layout led to alienation of the work force in an engine plant. In another example, a move toward cellularization accomplished through integrated manufacturing approaches led to lowered morale and reduced job satisfaction at the Winnebago motor home plant (Bailey and Rose (1988)).

Special care must be taken in the design of tasks and the work environment. Two job design characteristics with potential to improve QWL--horizontal and vertical loading--are likely to emerge in an CM environment. These have been termed, respectively, Job Enlargement and Job Enrichment (Hackman, Oldham, Janson and Purdy (1975)). The word potential is important here, and relates to our earlier warnings about imposing job design changes on employees whose personalities, abilities, and work preference may be incompatible with a new design. As Hackman and Oldham (1975) have shown, an employee's predisposition to adapt to job enrichment and job enlargement has a powerful influence on the extent to which these changes are positively associated with job satisfaction. However, if the organization designs its employee selection systems according to the STS principles described previously, the likelihood of successful matching may increase.

Research Issues Relevant to Principle 8. To date, only two studies have even peripherally examined the effects of CM on quality of work life and job design (Huber and Hyer (1985); Dean and Snell (1991)). Both of these studies used survey data and drew conclusions from employee self-reports. Although this sort of research provides useful descriptive information, research employing true experimental design principles should be conducted also. For example, employee involvement in decision making, vertical and horizontal loading in job design, and CM team structure should be varied and systematically tested. The consequences in relation to job satisfaction and objective outcomes such as performance, absenteeism, turnover and grievances should be assessed. This will help to determine the human resource practices that are most likely to minimize employee stress, role overload, obstacles, and job satisfaction during CM transitions. Descriptive research is also needed: within-plant longitudinal and cross-sectional research will help to determine the differences in job satisfaction between CM and functional layouts. This may appear to be an ambitious research proposal, but similar questions have been tested in other contexts, and the organizational literature presents many examples of studies which may serve as models for field-based CM research.

Principle 9: Incompletion

Based on the Incompletion Principle, organizations should never accept organization design as final. As soon as a new design has been successfully implemented, efforts should be underway to examine, critique, and improve it. This is important in terms of overall system design, but also in terms of task design and allocation within cells. For example, a West Coast electronics plant, which has successfully adopted CM, has changed the composition of cell teams several times during the implementation process. The average number of operators per cell has been increased from six to eleven, and the composition of those teams has changed as team members have horizontally and vertically expanded their skill mastery. Schonberger (1990) and Wheelwright (1985) both promote this perspective in their claims that organizations should avoid permanence.

Lewin (1951) developed what is now considered a classic perscriptive model of the change process. This model includes three essential stages: Unfreeze, Move Forward, Refreeze, and it has been very useful in emphasizing the importance of setting the proper groundwork for change. In relation to the Incompletion Principle, the "Refreezing" stage is worthy of further discussion. The assumptions traditionally underlying this last phase may require some rethinking for STS cellular environments. If we re-freeze the organization into its new social and technical framework, the "unfreezing" necessary for continued improvement may be difficult. The Incompletion Principle has implications for all six of the HR areas covered in this paper, because it indicates that all of them must be continually evaluated and adapted. Thus, it is not layout is even longer than the path described by a tour of the far-flung operations it must visit for processing. Rather, a part typically moves in "hub and spokes" fashion in and out of the stacker crane an average of five times prior to completion, and is then moved across the street into another stacker to be stored as finished goods inventory until it is shipped to satisfy customer demand.

Cells differ from the dominant process flow illustrated in Figure 2 only in that the value-added operations are grouped together in close physical proximity in a single production area, allowing material to flow smoothly from one machine to another. There is no flow to and from an inventory checkpoint between the operations in a cell, and so material handling and its costs are at a minimum for cell manufactured products. Processes and machinery employed in the cells are at the same level of technology as the remainder of the plant.

Movements between departments are made by fork trucks which handle wirebound bins or pallets. The capacity of the bins/pallets implicitly defines a maximum transfer batch size, which is also effectively a minimum. Material Handling (MH) capacity is a scarce resource which should not be wasted by forcing a truck and driver to pick up partial loads. For certain operations, such as plastic injection molding, this constraint is not usually tight; setup times required for die changes are so long that they dictate larger production batch sizes than the efficient transfer batch sizes. In other cases the transfer batch size does constrain production batch size. Therefore the plant experiences larger WIP inventories and longer lead times than it would without the MH constraints (Karmarkar (1987)).

Handling costs associated with the movement of productive material in the plant amounted to slightly more than $5,000,000 in model year 1988. The total expense associated with MH of all typs (including receiving and shipping, incoming inspection, and movement of nonproductive material) is twice that high, and comprises more than 10% of the total factory cost of a product. Since these are costs which cell manufacturing is expected to affect substantially, we made a detailed study of these costs. We found that MH is treated as an overhead item, and that the total cost for all MH is allocated to products using one of two bases: machine hours or direct labor hours. Machine hour allocation is used consistently for parts whose major operation is molding. These represent approximately 1/3 of the total part count and value added in the plant. Most other parts are allocated MH costs based on their direct labor content. These include operations such as painting, plating, metallizing, hot stamping, welding and assembly.


The evident distortion introduced by allocation of large MH costs to cell products led us to study the process "features" (along the lines of Banker et al. (199), who applied a similar analysis to product features) that drive those costs. We met with managers, operators and staff and generated a long list of plausible drivers of material handling cost. Among them were process features such as dimensions, finish, weight, special care, geometry, etc., as well as the process feature, distance moved, which was determined by the factory layout and production routing. Further investigation revealed that most of the product-related potential cost drivers are insignificant in their impact upon material handling overhead costs. For example, special handling or packing for movement made necessary by unusual part geometry is done by labor within the productive departments, and so is captured in direct labor costs.

This list was eventually trimmed to only two factors: number of moves and distance moved. (For a discussion of the issue of aggregation of cost drivers, see Gupta (1990).) Number of moves was significant because of setup activities required for each move (e.g., handling of the paperwork, finding the material, verifying the delivery, etc.) Also, certain expenses such as bin cleaning and repair were found to be move-related (since bin contamination and damage occurred in the process of loading/unloading rather than in transit). Distances per move were highly variable, and both interviews with managers and effort studies confirmed that distance was a highly significant factor in the time and effort required to accomplish each move. It turned out that packing standards for bin/pallet movement are such that all parts required the same degree of care. As long as the weight of a pallet/bin did not exceed the capacity of the fork truck (as was typical), weight was also irrelevant. What matered, then, was the number of parts contained in each load. This does vary greatly between part numbers, depending on the size of the parts. Smaller parts have many more parts per load than larger ones, and thus should pick up lower unit charges per move.


Our analysis of the costs begins with the recognition of three distinct stages of the production process at which material must be handled: purchased parts (raw materials and components), WIP, and finished goods. We collected the costs incurred in 15 departments with material handling responsibilities and assigned them to six cost pools, a move-related and a distance-related pool for each stage. Examples of departments whose costs are move-related include receiving, incoming inspection, container repair, and carton recycling. In contrast, fork truck maintenance was considered to be distance-related. For some costs, e.g. fork truck driver salaries, we divided the costs between move-related and distance-related pools based on interviews with managers and operators as well as our own time-and-efffort observations. In this way the total cost of material handling was subject to a much finer-grained analysis than was possible with a single large cost pool. Our system also contains inherent distortions, since we have allocated the many overheads in the cost pools on the basis of only six drivers (two at each of the three stages) rather than assigning a unique driver for each cost item. However, in our judgment and in the opinion of Auto Light personnel, the distortion levels are much lower than those imposed by the previous allocation system.


Each part in active production (approximately 200) was entered into a material handling data base. This data base included parts made in cells as well as those produced in traditional fashion in many different functional departments. This data base contained fields for weight, dimensions, annual volume, and production routing. Weight was necessary because it determined the amount of raw material and raw material handling needed for production. Dimensions determined the fraction of a load represented by the part. Annual volume times the fraction of a loa per part determined the total number of loads (= number of moves) annually. The production routing specified the departments in the plant through which the part passed during production. Some of this information was available in electronic form company data bases, some was read from engineering drawings and production routing sheets, and some was obtained by visually observing and measuring the parts themselves.

One critical but time-consuming task of the study was the creation of a file containing data on the location (X and Y coordinates of bay numbers) of each department. This information was transferred from plant layout diagrams and observation on the plant floor. Next, all observed pairs of consecutive departments were entered with the rectilinear distance expressed in bay enough for human resource practices to assist with the initial conversion process, they must continuously evolve with the organization.

Research Issues Relevant to Principle 9. Longitudinal approaches will be best suited to research which attempts to answer questions about incompletion and continuing change. Field studies conducted over time could assess the extent to which CM technical and social systems have been altered to adapt to changing needs. Examples of changes that might be measured would include: extent of cellularization (a plant may increase or decrease its use of cells, depending on market conditions or perceived value) or changes in pay practices (perhaps the firm initially used team incentives but later converted to a company-wide bonus plan). Many other changes could be measured, s well, but the purpose of the research would be to determine the extent of change and the degree to which continuing change is associated with measures of technical success (e.g., throughput time, st up time, inventory levels), as well as with measures of social system success (job satisfaction, turnover, absenteeism).


Firms that successfully implement CM programs may expect reductions in work-in-process, throughput time, and cost, with simultaneous improvements in quality. However, if an organization is to attain the full potential of CM, technical changes must be accompanied by parallel changes in the organization's social system. The HRM system is at the nucleus of an organization's social system, and its redesign and reorientation can provide the needed support for joint optimization with the technical subsystem. This will mean that many of the HRM policies and practices traditionally applied in job shop settings will require alteration. The nature of the HRM distinctions between functional and CM layouts is summarized in Table 2. As shown, cellular manufacturing affects all HRM areas. It is suggested, therefore, that the development of a CM social system be pursued with the same vigor as the changes in the technical system. For an organizaton to do otherwise would compromise the integrity of the sociotechnical system upon which cellular manufacturing is founded.


We have suggested a number of areas where field research will be helpful in clarifying social-technical linkages in CM environments, and Table 2 suggests potential contrasts in HRM practices which may be assessed through descriptive field research. This sort of research will help to determine the extent to which CM changes will fit with the STS framework that we have proposed. Moreove, empirical hypothesis testing should be employed to determine the extent to which these principles influence outcomes such as job satisfaction, pay satisfaction, performance, perceptions of performance obstacles, turnover, absenteeism, and the duration of the implementation process. These recommendations will require a re-orientation of OM research methodologies (Flynn, Sakakibara, Schroeder, Bates, and Flynn (1991)). Mathematical simulations and descriptive studies have provided important insights into relationship between technical variables and have assessed the state of current management practices in CM. However, they do not go far enough in assessing the relative effectiveness of various approaches to managing the social subsystem. We know very little about the causes of implementation problems, but the evidence seems to suggest that human resource issues often are at their root. The question that must be answered involves the extent to which the HRM practices which we have advocated can help organizations to realize high levels of success from CM, and also help them to avoid implementation problems.


(1) Several company examples are cited throughout this paper. Wherever firm names are omitted, the information is based on plant tours and the authors have promised anonymity.

(2) Although a review of the literature suggests a high success rate for CM implementations, some caution is necessary in interpreting self-report-based findings (Morris and Tersine (1990)). There is also the traditional research problem of null hypothesis results not being reported because organizations are willing to share information about their successes, but not about their failures.


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Title Annotation:Special Issue on Group Technology and Cellular Manufacturing
Author:Huber, Vandra L.; Brown, Karen A.
Publication:Journal of Operations Management
Date:Jan 1, 1991
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