Change is uncomfortable. As individuals we often avoid change because we fear the struggle of adjusting. Organizations are especially slow to adapt to change because it is even more difficult for a group to change than a single person.

Erie Forge and Steel is an exception. Since it became employee owned in August 1990, it has embraced change. Once a traditionally operated firm, Erie Forge has embarked on the process of remaking the company through process improvement and employee participation.

"I think change is interesting," says Al Concoby, Erie's CEO. "You want it to happen quickly but you can't snap your fingers and change the culture. So it tends to happen slowly, which I think is probably for the best. I believe that it lasts better the slower it happens. People slowly move into this new way of doing things and, all of a sudden, it becomes a way of life. But if you attempt to draw a curtain one day and then declare that tomorrow we're going to be doing everything different, that generally doesn't have a lasting effect and falls apart over time."

Erie Forge and Steel (EF&S) is a steel plant with melting, forging, heat treating, rough and finish machining, and testing capabilities. The facility, located on seventy acres of land in Erie, Pennsylvania, has approximately 800,000 square feet of manufacturing space and employs 340 people.

Through the 1980s, EF&S produced mainly open die forgings for the marine, electrical and nuclear industries. The most notable products were drive shafts for the U.S. Navy's submarines and ships, but the product mix included large pipe molds for centrifugal casting of pressure pipe, larger crankshafts, rolls, mandrels, and pressure vessels. These products are high precision, high quality, high cost, and usually low volume items. In 1990, defense cutbacks forced EF&S to move into new product areas: ingot, billet, bar, and block for sale to forgers and steel service centers. To survive, EF&S had to move from mostly high margin defense-related work to primarily lower margin civilian production.

Simultaneously, employees bought the plant. The changes in ownership and market conditions created an awareness of the need for internal change. The traditional adversarial labor-management relations would have to give way to employee participation if EF&S was to survive, let alone succeed.

It has been widely documented that employee ownership combined with employee participation can greatly enhance firm performance. (See, for example, stories in the OAW Spring 1993, Winter 1993, Winter 1994/1995 issues.) Unfortunately, EF&S had tried employee participation programs before and they had not been successful.

The problems with previous employee participation programs were many. According to Concoby, earlier attempts had not been combined with employee ownership and the more recent programs were not focused and formal enough. "When we looked at our earlier efforts in employee participation, we saw that we had some successes and some failures. We found that much of the success or failure of an effort was attributable to the team leaders. Some were very effective in building consensus while others were pursuing their own agendas.

So Erie set up a joint labor-management steering committee to design a program which avoided these pitfalls. The committee visited other plants to study what they had done, went through training in problem solving procedures, and developed EF&S's continuous process improvement (CPI) program.

The CPI effort began at EF&S in August 1994, when the leadership of the management and union jointly received training from Penn State University. The steering committee met weekly to consolidate and coordinate already existing efforts and establish operating guidelines. The first step was to formulate company vision and mission statements. The committee then developed an action plan that details how to make that vision a reality. This action plan formulated three goals to guide the efforts:

The steering committee quickly recognized a tremendous need for training to support the CPI effort. Audrey Haag, Director of Materials and a member of the training committee formed from members of the steering committee, explains that "We have really struggled with how we can effectively assess what those [training] needs are. We tried the survey approach and some of us liked it and some of us didn't. Consequently, we are now exploring sitting down with each of the foremen and a key union person out of each process or department and reviewing each basic position . . . in order to determine if there are particular technical types of training that those people need as well as more broadly based skills such as literacy, basic mathematics, and blueprint reading."

EF&S has made a major commitment to training. The company has already completed instruction for all employees in the basics of ESOPs, reading a simplified financial statement, and the Value of the Person (VOP) program. Erie's supervisors have attended training sessions on coaching and team building skills, and top management and union officers have received training in developing leadership skills in a three day retreat and received instruction on Total Quality Management, in conjunction with CPI program. In addition, various individuals have attended seminars on employee ownership.

Communication is vital to any employee participation program and a variety of mechanisms have been instituted to enhance the flow of information at EF&S. There is a monthly newsletter, and the company conducts monthly meetings to explain the financial status and projections to all employees and to take up important current topics.

The annual employee shareholder meeting is held on a Saturday morning and the plant is closed for the day to encourage maximum attendance. The performance of EF&S for the previous year is reviewed and the strategic plan for the next year is presented. The five-year plan and capital investment strategy are also presented.

EF&S has the standard bulletin boards for sharing information, but it has also developed a computer bulletin board which employees can access any time during the workday. This computer bulletin board is the product of a CPI team that was developed to improve the communication process of EF&S. From computer terminals that are located everywhere in the shop employees can learn of new orders, visitors coming to the plant that day, union business and announcements, and even check the "for sale" or "swap" ads. Each component of the communication system is designed to facilitate the employee's involvement and interest in the company. For those who are interested, the information is available.

Problem-solving teams had been in use at EF&S prior to CPI but were not part of a comprehensive program. They were undocumented and often not focused. In conjunction with the CPI program, however, problem-solving teams are established to solve specific problems identified by the steering committee as well as those submitted by employees through the CPI suggestion process.

The program is designed to encourage employee input. Any employee who sees a problem, an opportunity for cost savings, or safer production process can fill out a CPI suggestion form and submit it to the steering committee. A full-time facilitator is available to those who do not feel comfortable filling out the form. The facilitator will present the completed form to the employee for his or her inspection and signature. The form insures that ideas are documented, given a full hearing, and not ignored by the foreman or other intermediate personnel.

Once the form has been submitted, the steering committee reviews the suggestion and responds directly to the employee. The steering committee can choose one of several solutions:

No matter what the decision is, the decision and reasons for it must be returned to the employee who submitted the suggestion.

In January 1995, EF&S began a major quality of working life program to support the CPI initiative. "Our Value of the Person (VOP) program is really the first step in our journey to implementing CPI. It's an effort to shift the culture at EF&S so that people are more enthusiastic and receptive to participating on the CPI teams," says Haag.

The VOP program is really about "treating your people as valuable assets," explains Terri Hulihan, a bar and billet inspector and chairman of the union grievance committee. "You need to treat them with love, dignity, and respect. If you do those things, people will certainly be happier and more productive. Productivity is a by-product of happy people."

During two days of training "the whole shop learned to treat each other with love, dignity, and respect, says Concoby. It was "not just between management and union, but also between union brother and union brother and between manager and manager."

"We discussed what we thought the barriers were to openness and trust among union and management. In addition we got to know each other as people and realized that we each have some of the same problems. This has made a difference in how some of us relate to each other," explained Hulihan.

Some of the projects already completed by the VOP teams include some painting and cleanup inside the shop, improvements to rest rooms and shower rooms, and an outside cleanup for which about thirty people volunteered a Saturday of hard work planting trees and grass "We figure this is where we come everyday," says Hulihan. "If it looks a little nicer on the outside then maybe we won't feel so bad about spending all day in here."

The CPI and VOP programs are designed to complement each other. The CPI program is primarily concerned with the material, quality, safety, and competitiveness aspects of EF&S. It is designed to improve productivity, quality, and customer service and to allow expansion into a diverse array of new products with different dimensions, shapes and metallurgical qualities. The VOP program is designed to facilitate the improvements and provide a supportive encouraging environment in which the EF&S team can meet the new challenges.

The VOP program is an effort to facilitate cultural change at EF&S. For Erie Forge to succeed, the old adversarial labor-management relations must give way to mutual trust, respect, and cooperative team work. The VOP program focuses on the people of Erie Forge -- to insure that they have full opportunity to grow and develop professionally. This means a comfortable environment, and respect for diversity and differences of opinion. The VOP program enhances the capacity of the EF&S team to work together toward a common goal.

Continuous Process Improvement is that common goal. CPI's focus on quality, efficiency, competitiveness, productivity and safety is the way that Erie has chosen to meet the challenges of surviving in a new and dynamic economic environment. The CPI program is designed to make the EF&S work force more flexible, better educated, skilled, and more cooperative. Employees need to be trained in all aspects of customer and supplier requirements, safety, and quality, and need to have timely access to information and the authority to make decisions. However, for the CPI program to succeed, the culture of EF&S needs to change, and the VOP program and Erie Forge's extensive training program are designed to facilitate that change.

Vital to the success of both programs is the partnership between Erie's management and the Steelworkers Union. The union leadership participates in the decision making at all levels including the board of directors, the CPI steering committee, and the VOP leadership team. Union involvement legitimizes the process and shows that the efforts are in everyone's best interests. Since union representatives sit on the board of directors, union employees know that their interests are being represented even on decisions of strategic importance, they are more likely to accept and support the necessary changes if they believe that these changes are being made with their and the company's best interest as the main criteria in the decision-making process.

The union also provides a safe atmosphere for constructive disagreement and open debate. Employees are more likely to express their ideas and unique opinions where it is insured that management will not dominate or quash the debate.

Management still manages the day-to-day functions in support of the strategic goals of the board of directors. But those goals are now established with worker input. Likewise, the decisions made at other levels in the firm are now made on a joint basis with input from management and union employees. Management's role has evolved to include the duties of coach, supporter, and team builder.

Both the CPI and the VOP programs represent major changes in the way decisions are made and in the culture of EF&S. While some of these efforts are in the early stages and will take time and effort to realize their goals, significant changes have already been made. Already, the amount of information shared and made available through new avenues of communications has increased dramatically. The impact has been a growing commitment to make these endeavors a success, as Hulihan explains:

"We're working really hard at it. We have a deep commitment to see that the Forge is a success. . . . It's a struggle. It's not perfect; it's not even close . . . but I can see our potential. Our orders are up right now and everyone is truly stretched to keep up . . . and of course productivity has to take priority, so in between that we do these other little things to the best of our ability. So, it's tough and sometimes it's tiring and frustrating, but I am not going to quit doing it because I have a lot of faith in this company."

A more complete account of Erie Forge's employee participation system by Allan Concoby and Matt LaBo is available from the OEOC "Forging a New Future? Employee Ownership and Participation at Erie Forge and Steel," OEOC Occasional Paper 1995:4, 19 pages, $5.