The company
Thorn Lighting, Ltd. was founded in 1928 in the United Kingdom by Jules Thorn and subsequently became part of the Thorn-EMI Group. The company separated from Thorn-EMI in 1993 through a management buyout. TLG plc, the holding company of the Thorn Lighting Group, is one of the world's leading suppliers and manufacturers of lighting systems and products, having a broad application in commercial, industrial and public amenity markets. In November 1998, TLG was taken over by Wassall plc, the current owners.
Thorn Lighting has some 20,000 product items available to customers. The 1999 Product Catalogue publication contains some 200 product ranges, of which an estimated 300 products are in production. With operations in 30 countries, 11 of which have manufacturing facilities, the Group sells to customers in 140 countries worldwide. In Europe, where it is the second largest supplier of light fittings, Thorn Lighting is the market leader in the United Kingdom and has strong positions in France, Germany and the Nordic region. The Group is the leading supplier in the Australasian market and is developing further its established presence in the Far East, where it is a market leader in Hong Kong.
The Thorn Lighting Group believes that its fundamental challenge is to supply light fittings and lighting solutions to the professional user: lighting which enriches all lives and, above all, benefits its customers.
Thorn Lighting, Ltd. is the UK business of the Thorn Lighting Group. In 1998, sales increased to £392 million and the operating profit was £26.4 million. The Group employs 4,200 people worldwide, including 1,800 people in the UK across ten sites, three of which involve manufacturing operations.
The focus for this case study is the Spennymoor operations plant in the UK with a mission "to supply the products required by the market, at the lowest possible cost, consistent with meeting our customers' expectations on quality and delivery". The plant employs just over 1,000 people.
Since 1989, Thorn Lighting has undergone major organizational and cultural changes enabling its market share to approximately double. Much of this has been attributed especially to more effective performance management and teamwork.
Main driving factors
Product and quality, technology and innovation, and global capabilities are the three main driving factors behind the innovations implemented in Thorn Lighting.
Product and quality
Lighting people and places continues to be the central philosophy in all that the Group does. It is firmly committed to producing quality products that provide the best lighting solutions for its customers. Its commitment to quality remains steadfast, and it intends to continue to develop high standards in design, production, distribution and marketing. To this end, the company recognizes that quality can only be attained with the best people, and investment in employees and rigorous training schemes are needed to help in reaching the goals.
Technology and innovation
The Group appreciates that today's successes are, in part, the result of past investment in research and development and that tomorrow's successes will rely upon a continuing commitment to be at the forefront of future technologies, innovation and the development of the industry. It is forecast that exciting opportunities are ahead. Technological advances in the application of electronics, new and smaller light sources, new developments in materials, legislative changes designed to enhance the environment, new emergency lighting laws and energy efficiency standards are amongst the developments which are inspiring the company to deliver innovative and cost-effective lighting solutions. It is estimated that 40 per cent of group sales are generated from products introduced in the last three years.
Global capabilities
Thorn regards its strength as lying in the ability to be a leading player in an increasingly global market whilst, at the same time, fulfilling the requirements of customers and markets at a local level. The international scope of operations, the breadth of product range, the depth of lighting design and applications skills and the quality of support services are all dedicated to serving customers and markets. Much effort is focused upon developing primary European markets. The company is eagerly pursuing opportunities in Eastern Europe, the ASEAN region and China.
In support of the above three driving factors, the organizational structure for the period 1990-96 remained the same. Within Europe, the structure was then fairly traditional and "territory" based. It was replaced with a "divisional" European structure lasting for two years when, at the beginning of 1999, the structure was transformed into the current state of having a "functional" European basis.
The management of Thorn has always taken a holistic approach to its total business needs. A major strand of the vastly increased competitiveness has been a fresh approach to long-term human resources requirements. The approach has seen the company active in all aspects of employee involvement. New initiatives included a culture change programme, "just-in-time" (JIT) methods of delivery, the development of teamworking, continuous improvement as a way of life, applying "investors in people" principles and practices and significant community involvement programmes at its manufacturing sites in Spennymoor and Hereford.
Main managerial practices
The main practices Thorn has adopted to achieve a high performance output have stemmed from decisions to introduce a new culture for assisting the acceleration of the pace of change, including cellular-based manufacturing and a focused commercial operation. For the vast majority of the workforce, this has meant radical change in the relationships of teams and people across the whole business as well as equipping people with the "tools" to perform effectively. More flexible working practices and a move towards self-managed teams have also taken place.
Culture formation
The prospects of Thorn Lighting becoming independent from Thorn-EMI in 1993 influenced the then senior management team to contemplate new strategies and operations for competing in world markets. A programme of "exploration" was activated to find and learn from best practices within world-leading companies and to compare those practices with the status quo inside Thorn. Project teams were set up to review the existing internal processes and challenge their effectiveness in contributing to business performance by comparing the internal situation with external, equivalent processes. Each project team was asked to focus upon an area of the business that asserted maximum leverage on overall performance. A major transition then began to take place for shifting the culture from relative "introversion" to "customer-focused and outward-looking".
An aspiration to become world class is unlikely to be realized without attention to the company culture if any short-term achievements are to be sustainable, Thorn's manufacturing operations began to address the issue by asking key managers to review Japanese manufacturing techniques and to discuss their transferability into the company. If the responsibility for the quality of products and processes were to be owned by every single employee, then the behaviour of management in this respect would be crucial. Would they "walk the talk"?
Cellular-based manufacturing
In the early 1990s, the manufacturing sites moved to cellular-based manufacturing on the shop floor. This allowed for better management of the product range. The layout within the factories was changed so that all operations relating to a product can be done in one area. A cell has anything between 20 and 200 employees, depending on the product, with larger cells divided into smaller teams.
A team typically has up to 20 members and is led by a working team leader. The team members are multi-skilled operators, and teams usually incorporate a dual-skilled engineer. Some areas also have supervisors, depending upon the size of the team. Team leaders may be working day to day with the team or may have a wider planning role, depending on the product. The team leader role is a supervisory/first-line management position enabling Thorn to reduce the number of management levels in the company structure.
Because operators are able to perform many tasks, a team is competent in most of the skills required to do a job. Teams carry out their own maintenance, but there is still a supporting maintenance function for higher-level skills. To a large degree, operators rotate around jobs, although not every team member is able to complete every task. One operator is typically competent in three jobs. To support teamworking, Thorn simplified the pay structure and eliminated manufacturing bonus schemes.
Changing relationships
Early on in the change process, the company decided that employees needed to understand the importance of teamworking for the overall business and not just how it affects individual departments. In the late 1980s and early 1990s, managers in the commercial areas of the business undertook in-house, modular development programmes on effective management in which teamworking was a component. This was subsequently expanded to manufacturing sites which had concurrently been putting their employees through a teambuilding programme. A human resources strategy was developed for the UK operation in which teambuilding was identified as a key element in enabling the company to achieve its business goals. Through the teamworking programme, employees are given information about all business functions. This helps individuals realize the importance of other functions and how they are all interdependent. Business awareness sessions covering every aspect from cash flow to material inflation and the market place are also held.
Monthly team briefings by line managers for their employees are another important feature. Consistent information is cascaded through the business to shop-floor level. The pursuit of an open and transparent style of leadership is never-ending.
A major part of the strategy was to concentrate on developing a partnership with the trade unions from local to district official level. Under a "Partners in Change" programme, regular management and union workshops were held. Annually, the union and senior management meet for a business review and planning workshop. The company provides the trade unions with details of performance, market conditions and the forthcoming strategy for the year. This results in the development of a joint action plan to enable the trade unions to play a positive role in the business.
Implementation of practices
Selecting teams
When cellular-based manufacturing was initially introduced, the teams were made up of employees already in the area. However, as new production lines are being opened, wider selection is taking place. Employees are volunteering to come into teams from other areas, and external recruitment is also taking place.
Line operators undergo a basic assessment and are given a mini-presentation so that they are aware of the requirements of teamworking. Team leaders have a three-day course which also covers management skills. Potential leaders are assessed not only on their technical skills but also on their interpersonal and teamleading abilities.
Training for teams
Initially, the "Kielder" teambuilding programme served to provide training in teams for employees in the manufacturing function. The programme incorporated "outdoor activities" into the range of methods used. Almost everyone in manufacturing enrolled for this two-and-a-half day programme held over a weekend. A significant feature of the Kielder programme of teambuilding was that 14 line managers were prepared and trained to be facilitators of the learning process within the programme.
The Kielder programme was subsequently replaced with a more business-focused approach to teambuilding. The "UK Team Building" business awareness programme incorporated all of the main functions including manufacturing, and this two-day programme ran every two weeks for14 people over a four-and-a-half year time span. The programme was facilitated by line managers who were perceived as role models for the new ways of working. Other line managers were invited to make presentations of the functional role of their departments and the external market place. Again, such activity underlined a culture that the line manger was in the leadership role for the development of employees with the support of the human resource function. This key supporting role was to design, develop and facilitate innovative practices, as well as to develop line management.
In addition to the training programme for all employees to ensure they understand the teamworking concept, there is also in-house training for multi-skilled line operators. Team leaders receive further training, especially in team skills, which includes leading meetings and managing people. Individual training is sometimes difficult to coordinate in areas working a three-shift system. Training sessions are also held for the team as a whole.
Thorn Lighting also conducts pre-employment training for unemployed people through the local Careers Service. This three- or five-day programme allows the company to build up a pool of potential applicants with an understanding of company culture, as well as the necessary knowledge and skills. A formation of attitudes about the business is a key part of pre-employment training. When vacancies arise, individuals can be appointed at very short notice and are able to make an impact from the first day. Line management is particularly appreciative of this flexible service provided by the Human Resources Department. More will be said about this unique programme in the next section.
Communications
The success of teamworking, whether at the level of company teams or small cellular-based manufacturing teams, depends upon good communication channels. The teamworking programme at Thorn concentrates on helping employees to understand and believe in the concept. A monthly site liaison and improvement committee was formed encompassing trade unions, shop-floor employees and managers. This committee discusses current business issues and ensures interaction amongst all areas and allows the company to inform individual employees.
Team briefings are also held monthly to ensure that information cascades down through the tiers of teams and thus through the organization. Confidential attitude surveys amongst employees are conducted regularly, which helps mangers in understanding what employees are thinking. The team leaders across three shifts have a "shift hand-over" to help maintain communication and continuity of production.
In addition, appraisals are conducted with employees to develop their skills, knowledge and awareness of the business. Appraisals also serve to review employee performance as individual members of their own team and of the broader UK "team".
When the teamworking ideas were first implemented in Thorn as part of the overall organizational and cultural changes, there were certain barriers to overcome. The major problems were the fear of change and the lack of understanding why the change had to occur. The company feels that trust in the whole process was built up through educating and training the workforce and by communicating why changes had to happen and how they would benefit the business.
The communications strategy is further strengthened by a publication for all employees and is designed to both inform and increase ownership from an already loyal and committed workforce. Highlights is a magazine issued quarterly and features employees involved in company activities. Achievements of people in training, development and community activities are prominent, and the current edition includes pictures of over 60 Spennymoor employees receiving National Vocational Qualification Certificates in Performing.
Manufacturing operations
A clear manifestation of the creation of a quality working environment through an effective communications strategy is the speed by which the annual pay round is negotiated and settled. An atmosphere of trust and openness at Thorn has helped a process which previously had taken up to eight months to conclude to be reduced and settled within one month. At the last set of negotiations, a two-year agreement was reached, the second year of which resulted in a nil increase but with the potential for employees to earn a non-consolidated bonus, based upon performance against UK operating profit. This recognized the need to minimize additional permanent on-costs to the business. However, both management and trade unions agreed that employees need to be even more involved and proactive in addressing business issues affecting future developments.
Team rewards
Thorn Lighting does not have a bonus scheme based upon team or individual performance. The company feels that team reward actually detracts from teamwork because it leads to competition between teams who become preoccupied with their own performance rather than teams working together for the good of the overall organization and its objectives. Also, teamworking does not take place in a vacuum, and other factors influence whether a team is able to reach its target.
However, team performance can be recognized in other ways. A team can receive individual badges and certificates for quality, and managers can write articles in the company magazine about team performance of outstanding merit. When Thorn wins awards, for example on training or environmental improvements, line operators and supervisors often represent it at the awards ceremony.
National cultural and institutional factors
Thorn Lighting in Spennymoor is located in a region of the country suffering from above- average unemployment. The North-East of England has been adversely affected in this respect for many years. Traditional industries such as coal mining and shipbuilding have been in almost terminal decline since the 1960s, and the employment prospects for people of the region have been relatively bleak compared with most other parts of the UK.
Thorn takes its responsibilities as a member of the local community very seriously. It also realizes that enlightened business practices help to gain an image and reputation as being a good employer and to be capable of attracting the best from the pool of labour available. Nationally, the Spennymoor plant is the third most-visited plant in the UK for interested parties to experience a "quality environment" and the application of "effective business tools and techniques". The Department of Trade and Industry includes the plant in its best-practices publication Inside UK Enterprises.
Thorn has been invited to enter competitions and apply for awards from a number of prestigious bodies and has been conspicuously successful in doing so. The main reception area of the plant includes 36 trophies or certificates that have been acquired through the contribution of people to business success. Amongst the wide range of awards is a National Training Award for a programme of training for continuous improvement, an Electrical Industry Award for employee relations development and a Manufacturing Industry Award for a pre-employment programme. Ironically, the company is now reviewing its policy of gaining external recognition and the number of visitors it can accept. It may be more selective about involvement within these areas and reduce them in the future, due to changing priorities.
The following example of "pre-employment courses" is an outstanding illustration of the way that Thorn relates positively to the local culture and people who are not their own employees. It is also a shrewd business initiative demonstrating enlightened self-interest.
High unemployment and pre-employment training
A series of work experience courses has been set up at Thorn in which local, unemployed people, including school leavers, visit the factory to experience working conditions and receive training. The courses are run in partnership with local bodies as part of a service to the local community and partly as a recruitment process.
Since 1994, Thorn has run pre-employment training courses. The courses were designed to meet the company's need for a ready pool of flexible individuals who could fulfil the need for temporary, short-term labour in line with new working practices. Generally, an individual enters the company through the pre-employment training route on a temporary short-term contract. If he/she is still with the company after six to 12 months, he/she is normally confirmed as a permanent employee.
The frequency and number of participants engaged in the training workshops are dictated by the labour needs of the individual manufacturing teams. Workshops are only run if insufficient trained people are on the database and ready to work at short notice. A strong working relationship has been forged with the local Employment Service. When extra staff are required, the Employment Service performs a pre-screening of candidates. This consists of a brief interview, a medical questionnaire and simple dexterity tests. They are designed to find out how an individual could best fit into Thorn, rather than to sort into selected and rejected candidates.
The courses vary in length between three and ten days and introduce trainees to Thorn and its processes. They cover basic business knowledge, teambuilding, health and safety and actual assembly-work training. Trainees participate in a two-way continuous assessment.
Trainee costs
During the training, individuals still receive state benefits as they are technically available for work. The company does not pay the trainees but does provide free meals. Travelling expenses are paid by the Employment Service, and trainees do not perform work having a commercial value.
On the last day of the course, the trainees are presented with a Certificate of Achievement. This Certificate has become widely respected by other employers. The trainees are then placed in a database, and Thorn gives them preference when either temporary or permanent direct operator vacancies arise.
Throughput
Up to the end of May 1999, 329 people completed the Spennymoor programme; 150 of these have gone on to take up full-time employment with Thorn. A significant number of the remainder have managed to obtain permanent employment elsewhere. Such a throughput has led to a high turnover of individuals from the Thorn register, thus necessitating further courses. In short, the more successful the courses are in improving the skills and marketability of the individuals, the more courses Thorn needs to run. Whilst this situation may appear to be a disadvantage, Thorn has found significant business advantage from this approach.
Benefits
The following benefits to the company, the community and the trainees have accrued since the scheme began:
Concluding comments
The sustained business success being enjoyed by Thorn Lighting at Spennymoor is a powerful tribute to the company's ability to create conditions for motivating and aligning people behind commercial goals. It has taken a decade, in a generally hostile and fiercely competitive market place, for such a strategy to mature. Employees, at all levels, deserve recognition and credit for the constructive role that they have played as part of teams or as individuals in helping to secure the benefits and gains that are clearly apparent. However, a determination to continually improve is evident, and any hint of complacency is absent.
Thorn Lighting is undertaking a capital investment programme under its new owner, which includes a new purpose-built distribution centre at Spennymoor, an international expansion programme as a global competitor, a special niche in the local community as a corporate citizen and a committed, skilled workforce who want to continue to grow. Thorn Lighting appears well placed to achieve its goals.
