Participative management for success at Saturn

In 1991, for the first time in 15 years, an American car manufacturer sold more cars per dealer than any other manufacturer, including Honda. And the performance was repeated the following year. The company was Saturn Corporation.

The inspiration for Saturn came out of the early 1980s, as domestic US car manufacturers, confronting fierce competition from Japanese manufacturers such as Toyota and Honda, had been steadily losing ground since the late 1970s Roger Smith, then chairman of General Motors, set his sights on developing a world class economy car that could beat the Japanese imports. And so was born Saturn, GM’s $3.5 billion subsidiary, staffed by fiercely loyal people who are hard to keep up with customer demand for their quality cars.

In launching Saturn, GM departed from traditional industry and company norms. Smith determined that if Saturn were to produce a different caliber of cars, it had to be a different type of company. So Saturn was set up as an independent subsidiary, not a division to allow the company to “break the rules” by which US auto manufacturers have traditionally been managed.

Instead of accepting labor/management antagonism as inevitable, GM based Saturn on principles of participative management. The result was a partnership between traditional rivals, GM management and the United Auto Workers (UAW), through a contract signed in 1985. The system is designed so that decisions are made in partnership between the UAW employees and management noted, a people systems advisor at Saturn which gives the employees a sense of empowerment.

Saturn set up shop in Tennessee. As of June 1992, 6,885 people worked there. Gary Wilson a maintenance coordinator in the body shop area recalled, he came to Saturn because of its vision about how it was going to operate what it was intending to do. It’s hard to see what’s going on, not only in the auto industry but in US business in general and not feel angry about the deterioration. There’s got to be a better way [to run a business] and I want to be part of that. We are on a mission to make this [partnership between management and labor] successful, so that we as a country, GM, and employees personally can survive.

But the partnership between GM and the UAW was not an automatic success. Key to the success of this revolutionary new concept of cooperative management was executive support. In addition, it took preparation. It’s not an easy proposition to get existing organizations to turn in place and get where we have here to create a new culture from an existing one. One reason for their success is the trust they have built with the union and the way they can work together. But that trust was not built overnight; it took a lot of planning.

The management/labor partnership has actually enhanced Saturn’s employment flexibility. Because of the partnership work classifications have been reduced. There is only one classification for production workers and five for skilled trades. Everyone is on salary – the partnership did away with the hourly wage for production workers. In addition, every team member knows the other member’s jobs and receives the same salary. Team members rotate jobs regularly to prevent employees from having to perform the same task for too long a period of time. The teams, or work units, are charged with making a lot of decisions about their jobs. And they are not only responsible for direct work, but also for work that is indirect.

The biggest differences between Saturn and other auto plants is that there are no management prerogatives for decision making, asserted Michael Bennett, president of Union Local 1853. Decisions at Saturn are made by all stakeholders with the UAW sharing fully in that process. The fact that the decision making process at Saturn is fully integrated with union members at all levels is unique in the United States and even goes for beyond what progressive European countries have legislated concerning union involvement.

All Saturn employees participate in at least one team. Employees work in self-managed teams of 5 to 15 people on the production floor and determine for themselves everything from budgeting to scheduling hiring and training. Consensus building is the guiding principle. Team members do not vote. If the entire team does not feel comfortable enough with a decision to support, that decision will not be made. —