Despite the downturn, several EMS companies found ways to improve workers’ lives both in and outside the plant.

With organizations tightly watching costs and a steady stream of headlines on (high) unemployment rates, it would be easy to assume that companies are no longer willing to invest in their employees. When I surveyed several EMS providers in February, however, I found nothing could be further from the truth. While programs varied, the common link was that all these companies saw investments in improving employee quality of life and skills as a practice that contributed to the bottom line. I selected some program highlights from operations in the US, Mexico, Singapore and Poland to provide a broader look at variations between countries and cultures.

MEC. According to Rick McClain, general manager of MEC NW’s Canby, OR facility, MEC chose to invest in employee development during the downturn by keeping a trainer on staff and enhancing internal capabilities. Training focused on a mix of IPC-A-610 certification training and in-house systems training. One result is that the company recently added IPC-A-610 Class III assembly capability.

There also is a strong focus on continuous improvement (CI). Employees are encouraged to submit CI suggestions that improve one or more of eight identified areas of waste: waiting, rework, overprocessing, transportation, inventory, overproduction, unused employee creativity or motion. At a facility level, MEC has a game similar to the TV show Amazing Race. In this “race,” employees pick a spot on a world map and then earn “miles” based on tracked company improvements. Metrics tracked are revenue, on-time shipments, warranty returns, employee improvements implemented, parts per million (PPM) defect rates and employee fitness (i.e., miles walked, swam or biked). A conversion chart is used to assign miles to each category. If the target mileage is hit, there is a luncheon and prizes that reflect the country originally targeted on the map.

As the metrics example indicates, there is also a wellness program. The company hosts an annual Wellness Fair featuring 10 to 20 vendors and benefits specialists who offer advice on fitness options. Biometric screenings for employees are free, and results are translated to recommendations for a healthier lifestyle. Fitness activities such as walking are encouraged and there is monthly recognition for employees living healthy lifestyles. Fitness club discounts have been negotiated as well.

EPIC Technologies. EPIC Technologies maintains a strong focus on worker training and quality of life in its US and Mexico operations. Here, we focus strictly on its programs in Juarez, Mexico. Mexican law mandates a wide range of employee benefits related to onsite health care, bonuses, vacation and sick leave. EPIC’s programs exceed these minimums. According to Salvador Baca, EPIC’s Mexico human resources manager, good benefits are one way to reduce absenteeism, tardiness and turnover.

Although Mexican law only requires infirmaries be staffed by nurses, EPIC has an onsite doctor too. Nurses are present on all shifts and the doctor during the day. The facility provides prescription medicine and immunizations. Employee families are also treated. According to Baca, the benefit of this extra health care option is improved health for employees and less lost time, since the government’s health care system typically has long waiting times.

The company also has invested in training. A teacher conducts classes within the facility to help employees who haven’t completed high school study for their degree. After six months on the job, employees are eligible for an annual $400 scholarship for special training. In special cases, tuition reimbursement is provided for programs toward a job-related degree. Employees are also sent to schools around the country for special programs related to IPC, ISO/TS-16949, or customer-required training.

While emphasis is on CI initiatives throughout the year, EPIC drives an extra focus on quality once a year with its Race for Quality event. The race adds a competitive element to Lean projects and kaizen events for three consecutive months. Goals are set for projects for each month. If the goals are met, employees get a prize and the best-performing shift gets a double prize. Each monthly goal is more difficult, but prizes are improved as difficulty increases.

Also, focus is on social activities, as Mexico has a very family-centered culture. For example, a special Mother’s Day celebration in May includes mariachis, a special lunch and raffles for all employees who are mothers. Families are invited to an annual picnic in July. A Christmas party for employees in December includes a special dinner and gift for each employee. Sports teams also have been organized. There are internal tournaments for soccer, and the teams also play in a city league with other factories. Basketball and volleyball tournaments are held.

“These types of activities improve the company by encouraging better communications and working environment,” says Baca. “This type of teamwork and communications creates more ownership.” It is not unusual to see companies without such activities experience 25% more turnover than those that invest in expanded benefits, he adds.

Unique at EPIC is its Values Program targeted at employees’ families. Employees who sign up to participate are given monthly homework assignments to take to their children. The assignments are focused on core values such as justice and responsibility. “We want to invest in the community and send strong values messages out to families,” said Baca.

Employees who work with their children in this program are recognized by EPIC with a small gift. At the end of the year, EPIC has a party with the families that participate.

CEI Contract Manufacturing. During the downturn, when asked if layoffs would help create better shareholder value, CEI contract manufacturing managing director Ka Huat Tan replied, “Do you want to create shareholder value for the next three months or the next 10 years?” Not only did the Singapore-based EMS company have no layoffs, it continued to pay small bonuses.

“When times are hard, people become uncertain and edgy,” Tan said. “It is important to make sure people feel valued. CEI is very sensitive to that. We had our HR department informally communicate that there would be no layoffs. During the worst of the downturn, we kept our staff busy with additional training, funded in part through Singapore Economic Development Board incentives. We also bought a new factory with gross space of 40,000 sq. ft. and continued to invest in new technology, which signaled employees we were committed to long-term growth.”

That decision also had positive impact on the bottom line. In 2009, the company received nearly S$600,000 in job credit incentives because it maintained its employment levels.

Tan believes people are a company’s most important asset, but cautions that simply stating that is meaningless if not backed by actions. For example, Tan asked his managers to watch for employees who might be experiencing financial difficulties. While the company didn’t provide cash in those cases, it did provide informal assistance, including suggestions on contacts or resources that could help. “The goal wasn’t to give employees in financial trouble a handout, but instead create a supportive environment that made it easier for them to fix the issues themselves,” said Tan.

CEI has a Work Life Balance committee that consists of a safety committee, a sports committee, a special interest group committee and an HR committee.
The company’s Wellness Program is quite comprehensive. HR organizes a 1.5 to 2 hr. quarterly seminar that focuses on health-related topics such as stress management.

Sports teams have been organized for bowling, table tennis and badminton. The company also holds a Sports Day at a local stadium and gets almost 100% employee attendance at the event. There is a recreation room in the facility used for table tennis and yoga classes. A gym with a treadmill, cross trainers and a fitness instructor were recently added.

CEI funded 80% of a 2009 medical checkup to encourage all staff to have diagnostic testing. This testing program provides them with a measure of the general health of the company’s employees that can be compared to Singapore averages. “The statistics show there is room for improvement. Part of showing you care about employees is identifying areas for personal improvement and encouraging them to improve. By studying overall health trends and tracking sick leave, we can tell who abuses sick leave and who truly has health issues that need to be accommodated,” said Tan.

At the last dinner dance, the organizing committee invited staff members who have been exercising to talk about what they’ve learned in the process. Participation in extracurricular wellness activities is part of the equation in determining the size of an employee’s bonus. But CEI’s program also has punitive measures. A pattern of sick leave abuse can impact annual bonuses.

Tan sums it up simply: “We try to encourage the best in our employees, but also have checks and balances to address issues such as sick leave abuse.”

Kimball Electronics Group. Kimball has strong programs for sharing corporate values and incenting individual employee development. According to Julie Dutchess, Kimball Electronics Group’s global HR director, the company has been administering Vision and Guiding Principles Surveys in its Poznan, Poland, facility since 2004. In 2007, the Poland group included an additional step in the survey process to provide group and production unit leaders with 360° feedback on softer management skills. Employees’ comments for improvement in previous guiding principle surveys were used as criteria in the feedback process.

“Polish culture always placed high value on work ethic and accomplishing goals, and when they added focus on the softer interpersonal relationship management skills, they could see the positive impact,” Dutchess said. “The survey allows us to measure how supervisors and managers are improving in terms of the way they manage. Tracking rating trends the same way we track metrics for on-time delivery or quality has helped the staff to realize the importance of this area of management skills, and we have seen visible improvement over time.”

Another area of improvement has been in worker skills. Originally, employees’ jobs were focused fairly narrowly. As the company’s customer base has grown in size and diversity, so has the need for greater flexibility on the floor. Keeping headcount the same meant training operators for several job stations.

“Originally people didn’t like this. They were used to doing the same job. We told them that if they were willing to develop themselves and gain new knowledge through training, their promotion ability and earning potential would grow. Some embrace this; others do not,” said Magdalena Okon, the Poland facility’s HR manager.

The new program created a core group of employees called multi-operators. When demand varies, Kimball can very quickly shift employees between production lines. To qualify as a multi-operator, the operator must be trained and certified for 60% of the job stations within the production area.

Multi-operators are paid more and are prioritized for promotion to higher levels, such as group leader or transfer to other departments. Okon points out that this has helped to create a clear path for career advancement on the production floor. Currently 80% of internal promotions come from the pool of production operators.
One other path for career advancement is Kimball’s Individual Development Program. “People development is everyone’s responsibility. HR supports by providing engagement, tools and knowledge. Participants must have a vision for their career. Kimball can help, but the employee is the owner of their own development,” said Okon.

IDP has several goals:

• Development and retention of key employees.
• Assurance of successors for key management positions in the organization.
• Improved employees’ satisfaction as the result of advancement potential.

A class of candidates are selected every two years. Candidates must fill out an application that outlines long-term career aspirations and a plan to achieve them. There is a a follow-up interview with HR and their immediate supervisor. Managers in each department then nominate the employees they feel have the most development potential.

An IDP Council composed of the managers of the facility, quality, production, HR and an HR specialist reviews the nominees and chooses final participants. It is interesting to note the selection process looks at organizational resources in terms of availability of mentors and the availability of career path advancement, in addition to the relative merit of each candidate. No more than seven candidates are selected per IDP class.

Once selected, the candidate, HR and the candidate’s immediate supervisor identify the key skills that need to be developed to perform well in the final position and create a detailed plan that lists skills, development activities, responsibilities, timeline, risks, cost and status of execution. External consultants verify the level of competencies while the candidate is in development. Every six months, HR checks plan status and collects feedback from participants. The information also is discussed with the IDP Council.

“Not everyone stays,” Okon said. “In some cases, there is no path for further progression, and a candidate opts to leave the program to pursue other opportunities. We do debrief candidates who leave to determine what went well and what could be done better. It is definitely worth the risk of investing in training. In the end, even when we lose someone because the organization is not ready to utilize his or her full potential because a desired advancement opportunity isn’t available, we still have the opportunity to get some benefit from his or her talent while the candidate is growing. We would probably lose the candidate much sooner if we did no development. The program has helped fill some key slots.”

One key measure of the success of Kimball’s program is turnover. According to Okon, while voluntary turnover in the Poznan region averages 8% per year, Kimball’s Poland facility’s annual turnover rate is 2%.

Each of these companies has taken basic good management practices and used them creatively to increase motivation and productivity, reduce turnover and improve employee quality of life. Given that employees are often the key differentiators between one EMS provider and another, it appears money well spent.

Susan Mucha is president of Powell-Mucha Consulting Inc. (smucha@powell-muchaconsulting.com), a consulting firm providing strategic planning, training and market positioning support to EMS companies. Her book, Find It. Book It. Grow It. A Robust Process for Account Acquisition in Electronics Manufacturing Services, is available through barnesandnoble.com, amazon.com and the IPC and SMTA bookstores. Her column runs bimonthly.

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