Hunt-Wesson Memphis Refinery and United Food and Commercial
Workers Local 515 Memphis, Tennessee for the State of
Tennessee Labor Commissioner’s Award for Excellence
August 17, 1994
Scott P. Camlin
Restructuring Associates, Inc. Washington, D.C.
Hunt-Wesson and United
Food and Commercial Workers (UFCW), Local 515 (AFL-CIO),
have created a strong labor-management partnership at
the Memphis Refinery. The parties achieved their partnership
through a relationship of trust, a restructured organization,
extensive training, and new ways of working together
that emphasize participation and accountability throughout
The aim of their approach,
the New Work System (NWS), is to be partners in the
success of the Refinery. They have an explicit commitment
to provide quality goods and service to customers, healthy
profits for the company, good working conditions and
living standards for employees, and to be a responsible
and involved member of the community. Their stated goal
is to build an enterprise that is good for business
and good for people.
The Memphis plant
refines and bottles vegetable oils and shortening under
the Wesson brand. Hunt-Wesson sells its products to
retail grocery stores and to establishments such as
restaurants and hospitals. Two hundred employees –
140 union members and 60 managers and staff –
ship some 14 million cases a year. In recent years,
the vegetable oil market has experienced demands for
higher quality, shorter delivery times, and lower costs.
As a premium brand, Wesson is under continuing cost
pressures due to heavy promotions by rivals and the
expansion of private label oils. Wesson Oil has remained
the number one brand in the market since the early 1990’s
by meeting these challenges. The plant’s efforts
at increasing quality, reducing cost, improving on-time
delivery and devising packaging innovations have been
an integral part of this market success.
The partners at the
Memphis Refinery have taken a systemic approach to improvement:
rather than a program, NWS is a way of doing business
that changes virtually every part of the enterprise.
Among its many elements, these are key:
by joint union-management committees
- A pay-for-skill
- Three weeks
of training in team skills
within each team
- An average
of 13 days of on-going
among jobs within teams training per year per employee
- Hourly coordinators
leading each team
- A Total
The Memphis Refinery
partnership is alive due to the vision, effort and personal
leadership of managers and union officers. They had
the courage to lead the plant into a new era, involving,
empowering and training people in their organization
to prepare them for a fast changing environment. Their
strategy created an organization able to provide opportunities
for all employees and prosper as a business –
now and in the future.
The formation of a
partnership at the Memphis Refinery was neither coerced
by immediate business necessity nor nurtured by favorable
labor relations. Rather, key managers and union officials
took the long-term challenges to the business and the
union seriously. They resolved to prepare their organizations
for the challenges rather than merely react.
When the partnership
first emerged, there was no particular crisis in the
business. While competitive pressures were significant,
profits and market share were healthy. The plant had
been designated as the company’s primary manufacturing
facility for oil.
Labor relations were
not especially favorable for forming a partnership.
Among its many initiatives to meet the competition,
the company focussed on controlling labor costs. During
the 1980’s, the company won a series of wage concessions,
a two-tier wage structure, and work rule concessions.
Newer workers experienced intermittent employment as
the company adjusted to its cyclical production schedules
with frequent layoffs. The decade ended with a bitter,
nine-week labor dispute which witnessed picketing and
hiring of replacement workers. By early 1989, labor
relations had reached a low point.
Determined not only
to repair their relationship but to achieve long-term
success, plant leaders agreed to form a joint union-management
Advisory Committee. At first, the committee worked out
contractual issues remaining from the labor dispute.
After initial successes, the body undertook a broader
mission to improve the business and the wellbeing of
employees. The committee set up a joint Safety Committee,
changed personnel practices, developed a new attendance
program, modified work rules and operating practices,
improved training, and encouraged employee involvement
under a quality program called the Process of Continuous
Improvement (PCI). A separate joint committee started
a monthly newsletter. Most importantly, committee members
grew to respect each other as they worked together to
resolve problems which previously had been discussed
across a bargaining table—if at all.
In March 1990, the
committee resolved to study alternative ways of structuring
the business. Its members believed that the plant’s
external challenges would only intensify in the long-term.
They sought to create an organization that could meet
outside forces while sustaining healthy profits and
market share, and supporting a secure, high-skill, high-wage
workforce. They educated themselves in a study process
which included seminars on new approaches to work, the
oil business and the future of the food industry. They
also visited plants which had pioneered high-involvement
work systems. During this study period, the company
and union negotiated a contract which contained language
empowering the Advisory Committee to make economic and
non-economic changes in the labor agreement necessary
to implement New Work Systems.
By October 1990, leaders
on the committee had agreed in principle to design a
new organization. Early progress was promising, but
by February 1991 the parties reached an impasse over
a few core issues: seniority, job rotation, wage levels,
the two-tier pay system and employment security. Rather
than retreat, the committee decided “do the right
thing.” After much discussion, extensive analysis
and repeated consultations with corporate managers,
the committee reached an understanding which addressed
all the core issues. The Advisory Committee restarted
their analysis of the operations and finalized an ambitious
new design in January 1992.
The key agreement
was to stabilize employment around a somewhat smaller
permanent workforce. The 15 % of the workforce terminated
under the plan were, in effect, part time employees—many
working only six or seven months a year. Remaining union
members were offered year-round employment security.
The savings in labor cost were applied towards substantially
higher wages, elimination of the two-tier wage structure
and more skills training. The arrangement was labor
cost neutral: direct labor costs would neither increase
nor decrease. The company anticipated its gains in the
operating improvements made possible by a fundamentally
different way of managing the business.
The plant could operate
with fewer employees due to flexibilities in the redesigned
organization. The New Work System design called for
teams of cross-trained employees taking direct responsibility
for most tasks and results in their area. Union members
would learn most jobs within their team and rotate among
them. Teams would take on new tasks including quality,
sanitation, administration and minor maintenance. Hourly
coordinators would assume most supervisory responsibilities.
Former supervisors would act as Team Advisors and attend
to long- term business and developmental needs. Teams
would manage performance results according to jointly
established standards and work to improve continuously
on previous accomplishments.
The NWS partnership
would not exist today without the personal involvement
of the Advisory Committee. Leaders looked beyond past
strategies and the immediate interests of their respective
institutions. They took risks to educate and stretch
their respective constituents. Managers challenged and
ultimately reversed long-established corporate labor
relations policies. In meetings and personal conversations
over the two-year design period, union members of the
Committee developed employees’ understanding of
the plant’s competitive situation and convinced
them that NWS was a sound approach.
Those on the Advisory
Committee—department heads and front line supervisors,
union officers and rank-and-file members—combined
a vision and a sustained determination to alter their
future. Their leadership in the face of resistance was
the key reason meaningful change occurred at Hunt-Wesson.
As the union’s Chief Steward often reminded the
Committee when tough decisions had to be made: “we’re
the straw that stirs the drink!”
The NWS partnership
recognizes the central role of all employees in the
success of the organization. The fundamental belief
is that employees should understand the business well
enough to be able to make decisions with the minimal
amount of management. The strategy developed by the
company and the union is to structure employee involvement
into jobs by pushing information, decision-making and
accountability to the lowest appropriate level. Participation
is a full time job at the Memphis Refinery.
The challenge for
leaders was to create and implement the policies, systems
and atmosphere which empower employees to contribute
to the business. The NWS does this by establishing a
co-governance structure, business units, self-directed
teams, hourly coordinators, team advisors, and the Process
of Continuous Improvement.
Co-Governance. A system
of joint union-management committees oversees most activities
at the Memphis plant. While the committees deal with
many traditional union-management concerns— work
rules, pay, advancement, work schedules, overtime and
the like—they are not limited to industrial relations
issues. They also set policies and take responsibility
for core business issues like production schedules,
department budgets, production standards, overtime costs,
and equipment procurement. Committees include:
Committee. Sixteen managers, union officials and employees
form a joint Advisory Committee that meets monthly
to oversee the enterprise and establish policy. Teams
and committees are commissioned by and accountable
to the Advisory Committee.
NWS Committees. Application and implementation of
policies are delegated to joint Department NWS Committees
where managers, Team Advisors, union stewards and
rank-and-file union members manage their own business
units. Among other responsibilities, the Department
Committees establish performance standards for departmental
teams and hold them accountable for results.
Committees. Each department has its own Training and
Certification Committee which sets standards, develops
materials, manages training and certification activities,
and approves pay raises.
- Plant Committees.
Plant committees develop guidelines for areas such
as pay, training and safety. Other joint committees
may be formed as the need arises.
Committee. A small Planning Committee coordinates
the business and sets priorities on a weekly basis.
Six top union and management leaders serve on this
The central innovation
is to make both human resource and business issues a
joint responsibility. Line managers have new responsibilities
for labor relations and union officers make commitments
to achieve business results. Together they guide the
enterprise towards success.
Business Units. Activities
within the plant are organized into two business units—Processing
and Packaging—which have responsibility for business
results. Support departments such as maintenance and
quality control act as suppliers servicing the production
departments as customers. Maintenance and quality representatives
sit on production teams and departmental training committees.
Most joint governance committees are organized around
these business units.
The business unit strategy has two
responsibility to the organizational level where the
work is being done.
broad accountability for business results rather than
narrow responsibility for functional activities.
The basic organizational units at the Memphis Refinery
are self-directed teams. Teams are self-directed groups
of employees that collectively take responsibility for
work and results in an area. Teams are self-directed
when they make and carry out decisions necessary to
fulfill their responsibilities.
In practice, this
means that teams take responsibility for performance
in such areas as:
Teams manage themselves
internally. They determine their own procedures to meet
external standards and customer demands. They set policies
at regular team meetings, manage daily activity through
rotating coordinators, and rely on Team Advisors for
guidance and information. Teams propose performance
standards for approval by their Department Committee.
Their performance is measured, usually by data they
collect themselves. They are then held accountable for
results in regular review sessions.
Teams are led by team members who serve as coordinators.
Team members rotate through coordinator positions on
a regular basis. A team has several coordinators at
a time, each one responsible for a different functional
area. A team typically has separate coordinators for
Operations, Scheduling, Quality, Training, Safety, and
to work as team members, performing regular production
or maintenance tasks. An individual performs coordinator
duties during his or her regular work time, while being
relieved, or on overtime. The purpose of multiple, rotating
coordinators is to share the work, fully utilize all
employees, and give every team member an opportunity
to learn about the business.
Team Advisors. Each
team is assigned a Team Advisor to guide and assist
the team in all areas of its responsibility. Team Advisors
are not members of a team, but take active part in the
team’s affairs. TA’s provide leadership,
support, advice, training and expertise to the team.
Teams report to Team
advisors for the responsibilities assigned to them.
As teams become self- directed, they take increasing
responsibility for themselves. Team Advisors still oversee
teams, but increasingly take on roles as coaches and
Process of Continuous
Improvement. A fundamental goal of teams is to manage
their quality performance and improve it continuously.
They do this by implementing a four-part Process of
Continuous Improvement (PCI), known as Total Quality
Management (TQM) in other organizations. PCI focuses
teams’ efforts on four related activities:
Setting quality and process standards
Measuring conformance to these standards
Acting when these standards not met
Planning for improvements in these standards
to standardize processes, developing operating manuals,
setting up procedures to collect and chart data, and
using statistical analysis to guide operating decisions.
To date, process standards are complete for about 50
% of the plant.
Results to Date
for the past five years demonstrate that the partnership
at the Memphis Refinery has achieved significant performance
improvements. The following key measures show percentage
improvements in performance for the fiscal year 1994
(FY 94) compared to the base year FY 88 (the last full
year before partnership activities):
Improvement FY 88-94
(cases per labor hour)
(conversion cost per case)
(ratio of shipments to average inventory)
Employee Training and Empowerment
The NWS at the Memphis
Refinery demands new abilities from managers and union
members alike. Workers need substantial technical and
administrative skills to handle flexible work assignments
and managerial responsibilities. Team Advisors must
broaden their technical abilities as well as learn business
and interpersonal skills. The partners at Hunt-Wesson
recognized this need and incorporated training as a
fundamental component in their work system redesign.
Every employee at
the plant, including front office staff, attended three
weeks of up-front NWS team training. These experiential
workshops covered NWS and business concepts as well
as hands-on team skills. Team Advisors and union stewards
received additional training in their roles. Beyond
this, the Advisory Committee committed the resources
necessary to substantially increase on-going training.
Each employee is budgeted an average of 13 days a year
for technical and team skills training.
Training is integral
to the NWS design. The new skills enable team members
to rotate tasks, assume management responsibilities,
manage performance and make improvements. In turn, rotating
assignments reinforce skills and fully utilize the abilities
of all employees. Skill requirements are tied directly
to department and team standards for processes, products
and performance. Team members are required to meet minimum
standards for skills, the so-called Minimum Effectiveness
Level (MEL). Learning is encouraged by a Pay-for-Skill
System (see below). Training is designed to inculcate
a broad, thorough understanding of the business so all
employees can fully contribute to its success.
Employee Diversity and Morale
While business challenges
are the focus of many NWS activities, the partners committed
to labor equity as well as competitiveness. From the
start, the Memphis Refinery built labor equity into
its vision for NWS. It addressed what the union regarded
as setbacks in wages and working conditions during the
1980’s. It also aligned the interests of union
members—and the union as an institution—with
the success of the business.
A new Pay-for-Skill
(PFS) plan provides a wage increase for each skill area
a team member masters. Employees receive the pay regardless
of the work they perform on a given day. Employees may
earn 20% higher wage rates under the PFS plan. The two-tier
pay scale was eliminated; wages available to junior
employees almost doubled with the new system. A gainsharing
plan to share in future improvements has been agreed
to in principle.
The commitment to
employment security cures several problems related to
constant layoffs. The company can attract and retain
quality employees that it could not given the previous
employment instability and low tier-two wage level.
Security makes it possible to justify the substantial
investment in training contemplated under the NWS. Perhaps
most importantly, it inspires commitment from employees
and encourages them to improve efficiency without fear
of eliminating their jobs.
Many NWS features
enhance the parties commitment to diversity:
training and job rotation give all employees opportunity
to improve skills and earnings. Junior employees no
longer wait years to advance into new jobs.
- The rotating
coordinator duties and the MEL not only encourage
but require all employees to assume leadership positions
within their team.
attention is given to training which will enable current
employees to qualify for skilled jobs that historically
have been filled with outside hiring.
policies explicitly require departments to provide
assistance or alternate assignments to employees with
disabilities without losing pay. The flexibility of
teams builds this capability to accommodate disabilities
into the work organization itself.
- After proper
training, union officials and members also participate
in all aspects of the hiring process—including
setting criteria, screening, interviews, evaluations
and recommendation—though managers make the
Team members and managers
use a structured Problem Solving Procedure (PSP) to
handle conflicts, grievances and discipline in an integrated
way. In its early steps, the PSP emphasizes one-on-one
discussions and a team-based, problem-centered approach.
Managers and union officials intervene jointly when
teams are unable to resolve problems themselves. Union
officials and managers settle almost all contractual
problems through consultations; only discharge cases
and occasional items of contract interpretation reach
the grievance stage. Absenteeism has been controlled
by an objective point system and the increased involvement
of employees in running the business. The joint Safety
Committee has been active in identifying unsafe equipment
and procedures; Safety Coordinators, regular team meetings
and standardized processes have helped build safe work
practices into daily operations.
Besides all these
tangible ways of acknowledging employee contributions,
the Memphis Refinery offers symbolic recognition as
well. The monthly newsletter provides recognition of
employee accomplishments as well as communication and
education. Plaques listing employees who achieve record
production are posted. And as part of NWS, team performance
is recognized in review sessions with department managers
Results to Date
efforts to address employee needs is confirmed by the
results. The following key measures of employee morale
and safety show percentage improvements in FY 94 compared
with the base year FY 88:
Improvement FY 88-94
|Lost Time Accidents
(LTA) Severity Index
Since 1994 many innovations
and performance improvements have been realized as a
result of the New Work System at the Memphis Refinery.
Training, developing standards and continual reinforcement
of team design concepts have provided the impetus for
ongoing changes. The competition in the retail vegetable
business accelerated; a sister plant in Savannah, Georgia
was closed and most of the retail and food service production
was moved to the Memphis facility. Memphis accepted
the challenge, changing equipment and manufacturing
processes to improve quality and increase productivity.
Teams continue to
meet on a regular basis to address performance and people
problems. One of the maintenance teams, for example,
meets at the beginning and the end of each shift to
assure the smooth hand-off of projects and operational
problems. Scheduling Coordinators on each of the teams
are responsible for making sure that the scheduled work
is accomplished. On each of the teams, several team
members have reached the MEL and beyond. This provides
the teams with additional flexibility in meeting the
needs of the business while increasing the pay of team
members. Rotating Operations Coordinators meet daily
to review performance and strategize ways to meet customer
needs. The focus now is on ongoing performance improvement.
What used to be record-setting performance is now a
common occurrence. Productivity continues to improve
and trend upward. In the processing area new technology
and a redesign of the teams led to increased knowledge
and improved performance. Team members systematically
are trained in leadership and technical skills that
have improved operations and quality.
The Department NWS
Committees continue to take an active role in implementing
the NWS design within the business units. Meeting regularly,
they continue to make fine adjustment to policies as
the business units strive to meet the needs of the customers.
The Training and Certification Committees within each
business unit meet regularly to approve newly developed
training materials and tests, test trainees and certify
those meeting certification standards. The ongoing use
of the Problem-Solving Procedure has led to the expedited
resolution of issues on a routine basis.
The Wesson Refinery
Memphis continues to be the most efficient plant in
the Hunt-Wesson Organization, even encountering difficulties
in implementing the New Work System.
Attendance – Absenteeism increased by 2.7% over a two-year
period from 1993 to 1995. During this time, successful
marketing promotions drove up product demand, resulting
in heavy overtime during the week and on weekends. Employees
resorted to calling in sick in order to take care of
personal business. This, of course, forced others to
cover by working even more overtime. Through the performance
management process, however, teams tracked their own
attendance with a great degree of discipline, and brought
the absentee rate down to just 1.8% by 1997.
Grievances – During 1996, non-discharge grievances rose from
zero to 10. Many operations would be unconcerned with
this level of grievance activity. However, both UFCW
515 and Hunt-Wesson management perceived the rise as
a dramatic increase. A new set of union leaders were
elected in 1995, in part because employees felt that
the union needed a more distinct and separate identity
from management. The new union leadership saw grievances
as one way their make a mark on the plant, and filed
several on behalf of members who felt the New Work System
placed too much additional responsibility and accountability
on plant employees.
Performance – The cost of converting
crude vegetable oil to edible deodorized oil declined
2% a year from 1994-1997. This allowed the plant to
invest further in technological and organizational change,
which led to further improvements in performance. It
should be noted that during this time, the cost of labor
actually increased slightly due to skill block acquisition
through the pay for skills plan. This increased cost
in hourly wages, however, did not lead to an increase
in the overall cost to manufacture the products. Instead,
team members looked for even more ways to improve productivity
and quality, thus reducing overall costs.
Performance – In the Packaging business
unit, increases in packaging materials costs forced
teams to continually seek ways to reduce waste and improve
productivity. They succeeded in increasing productivity
on the packaging lines by 10% from 1994-1997. A small
portion of the increase was realized from upgrades in
equipment, but most of the improvement was realized
from the team collectively learning the cause and effect
relationship between the work they did and the decisions
Employee Turnover – An aging workforce and a negotiated retirement
package led to an initial increase in employee turnover,
which reached 11% by 1994. By 1997 turnover had dropped
to 7%. The spike in turnover was no surprise, and was
anticipated in the original New Work System design.
Today, teams continually look for creative and efficient
ways to improve performance while bringing new team
members on board.
The Memphis Refinery
was confronted by continued pressure from the corporate
offices to find ways to reduce overhead cost while remaining
efficient. As a result, about half of the management
and support staff positions (approximately 59) were
eliminated by the end of 1997. These changes created
opportunities for leadership from within the ranks to
step forward and jointly manage and lead the business.
Consequently, L515 members have taken a much more active
role in the day-to-day operation and developed their
level of understanding about the business to the point
that decisions once deemed "management work"
have become bargaining unit work.
The edible vegetable
oil business continues to go through changes and challenges.
Consumption continues to increase as consumers eat out
more. However, private labels within the retail grocery
business pressure brand names like Wesson, Crisco and
Mazola to improve productivity, quality, and efficiency.
The people of the Memphis refinery hope that the change
and learning that has taken place over the last ten
years have positioned the organization to succeed in
the this highly competitive market.