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Top Ten Best Workplace in Southeast Michigan Grand River Printing & Imaging has been selected by Crain’s Detroit Business and IRI Consultants to Management as one of Southeast Michigan’s top ten best workplaces for the years 1999-2000. Speeches:
David Green’s remarks to the IRI seminar Like those who have spoken before me, I would like to pay tribute to IRI —not only for the exceptional analytical skill and intellectual depth that it displayed in including Grand River Printing & Imaging among the Best Work Places in Southeast Michigan—but also for having, in the very decision to conduct this survey, performed an invaluable service to the entire Detroit business community. It has concentrated our collective attention on what may well prove to be the most critical issue facing businesses in the first decade of the new century—attracting qualified employees and retaining their loyalty and commitment. During the last four months, Grand River Printing has been gratified by the immense interest generated by the IRI-Crain award. Of course, we want our customers to read and hear nice things about our company. But beyond that, the numerous inquiries that we have received about the award—many from companies with whom we have no direct business relationship—indicates to us that a major reconsideration of the proper relationship between corporations and their employees is presently underway. IRI’s selection of Best Work Places has attracted such a broad response precisely because there is a growing recognition among serious companies that their long-term success depends upon their ability to develop and maintain exceptional working environments. Of course, in today’s very tight labor market, most companies are concerned about their ability to attract and retain competent employees. But how this is to be accomplished remains a subject of tremendous controversy. After all, for more than a decade we have lived in a world that has proclaimed that profitability and survival depends upon a hard-nosed, even ruthless, approach to corporate-employee relations. Perhaps diamonds are forever, but jobs aren’t. Fast-moving markets, we have been warned, don’t permit long-term commitments. Working relations must be casual. Like the soldiers in the old war movies, we’re better off not making friends because the next pink slip may have our colleague’s name on it. How, in such a world, is it possible to foster an environment that encourages loyalty and commitment? Many believe that it is futile and even dangerously wrong-headed to strive for such an objective. In a recent issue of Harvard Business Review, Professor Peter Capelli from the Wharton School argues that corporations should accept that relatively little can be done to control the outflow of employees. Realistically, companies should attempt to do no more than identify the most critical employees and devise compensation plans and associated programs that keep them in place—“Golden Handcuffs”—at least until the critical projects in which they are engaged have been completed and they can be allowed to move on, or let go, without excessive damage to the company. Thus, he tell us, in a business environment where the market inevitably dictates high turnover rates, a broad-based effort to hold on to workers is a waste of time and resources. Identify only those whom you desperately need, determine how long you will really need them, and work out a program to meet those limited and highly specific objectives. Old-fashioned employee retention programs, Capelli writes, were “akin to tending a dam that keeps a reservoir in place, today it is more like managing a river. The object is not to prevent water from flowing out but to control its direction and speed.”1 To a certain extent, I can understand the logic that underlies Professor Capelli’s approach. There is no social mechanism less tolerant of sentimentality or utopian schemes than the market. Employment patterns, the movement of workers in and out of companies, are determined in the final analysis by powerful market-driven economic forces. Moreover, there are limits to what any company—even the wealthiest—can do to retain workers who have been given, or believe they have been given, a better offer by someone else. And yet, I believe that there is a dangerous flaw in Professor Capelli’s approach. In the solitude of a professor’s study, it may appear that it is a relatively simple matter to distinguish between critical and non-critical employees, and on that basis, tend to the needs of the first group and take a “devil-may-care” attitude toward the second. But beyond the confines of the campus, in the factories and workplaces of Southeast Michigan and the country as a whole, it is not so easy to distinguish between the critical and non-critical employees. “Every man’s death diminishes me,” said the poet John Donne. This poignant truth is relevant to the complex modern work place. Companies are diminished by the unplanned and uncontrolled loss of not only so-called “key people” but of workers at every level. Speaking of what I know best, there is not a single position at Grand River Printing that I could describe as either unimportant or unskilled. Of course, there are varying levels and types of skill and training required by different positions. But every position requires the concerned involvement and active interest of the individual who has been hired to fill it. Moreover, every position takes time to learn—some less than others, but time nonetheless. Especially in the social conditions that prevail within this region —where our public schools, to put it gently, are not quite as good as we might wish they were—there are no positions that are easily filled. Indeed, I sometimes think that it would be easier for Grand River Printing to find a top-notch nuclear physicist than a qualified operator for the three-knife trimmer in our bindery department. The sudden loss of an experienced executive or manager may come as an unpleasant shock to any company. But it would be dangerous to underestimate the insidious impact upon a company of excessive turnover, and of an apathetic, alienated and even hostile workforce. It is for this reason that employee-retention plans that merely target small and select groups of workers are, I believe, deeply flawed. A quality work place is one where the company, as a matter of policy, strives to maintain the loyalty of all its employees, not just a few. How is this to be done? First of all, one must accept the hard truth that this costs money. Attractive wages and benefits are, by definition, expensive. Educational programs that develop skills and offer the possibility of steady advancement require a significant long-term commitment of resources. In this regard, Grand River Printing made a strategic decision several years ago to invest heavily in the education of every employee. Working closely with Macomb Community College, our Human Resources Department devised an innovative and award-winning plan to raise the knowledge and technical skills of its entire staff—in everything from the history of printing to the role and use of computers in the modern manufacturing process. We put every worker in our facility through an extensive training program. Attendance at our training sessions was obligatory and, therefore, on company time. The financial cost to our company was substantial. But as a long-term investment—in raising skills, improving morale, and fostering commitment and dedication to company objectives—it was money well spent. Here we come to the most difficult question: How can a company justify substantial expenditures on training programs, not to mention other “soft” and supposedly inessential HR issues? Frankly, it cannot afford not to—if, that is, it is concentrating on the achievement of its long-term objectives, as opposed to merely short-term considerations. Whatever the nature of the specific business, the essential and irreplaceable component of quality, real efficiency, and value is the labor of a skilled and concerned workforce. I believe every one in this room knows that this is true. That is why you are here. Unfortunately, not every business has come to the same conclusion. It is not only among day traders that one finds an excessive and self-destructive fixation on short-term gains. No one company is in a position to determine the direction of the market. However, there are ways it can be influenced. If I may be permitted to make one proposal, it is that the companies represented in this room resolve to form a community of businesses collectively committed to the fostering of a broad-based regional environment of outstanding workplaces. In setting company policies, we must include in our objectives the promotion of high workplace standards—not only within our own companies but also in those who seek our business. Therefore, in the choice of companies with whom we collaborate, or whom we choose as suppliers and vendors, would it not be appropriate to include in our selection process an evaluation of their workplace environment? Tbis information would provide us with perhaps the best indication of the quality of their services, of the real value they offer, and their long-term durability. Among the questions we should ask are: Do they have dedicated and adequately-staffed Human Resource Departments? What are their wage levels and benefit packages? Do they offer real, i.e., corporate financed, training programs? What are their turnover rates? And, finally, do they intend to fill out, completely and accurately, the next IRI survey on workplace conditions? Such a broad-based encouragement of outstanding work place conditions would prove to be, in the long run, good business. It would also be, in a moral sense, the right thing to do. David Green’s remarks to the Research & Engineering Council of the Graphic Arts Industry Allow me to begin by congratulating the Research and Engineering Council of the Graphic Arts Industry for organizing such an outstanding conference on “Critical Trends.” By way of introduction, I’ll say a few words about my company, Grand River Printing & Imaging. It was founded in 1979 as a cold-web printer. In 1994 the company acquired its first heat-set commercial web press. We have enjoyed a very rapid growth during the last six years, from annual sales of about $3 million to over $14 million during our most recent fiscal year. The press line that we are currently installing will be our third six-unit web press. We are, of course, very pleased with the company’s strong financial performance. But what has been most gratifying is the official recognition of Grand River Printing as one of the 10 Best Work Places in Southeast Michigan. GRP currently employs 85 workers. Of that number, approximately 35% have been with the company at least 5 years; approximately 65% have been employed at GRP for at least 3 years. During the past year, the company has drastically curtailed its use of temporary labor. We now contact temp agencies only as a last resort, when there exist no other options. Our company is convinced that the stability of its work force has been among the most critical factors in the success of GRP. Having said this, I do not wish to imply that our company has devised the best solutions to the problems that are the topic of this morning’s discussion, let alone that GRP’s handling of the astonishing complexities of human resource issues is above criticism. We, like so many other companies in our industry, struggle with the problem of attracting and retaining skilled and committed employees. If it’s any consolation, this is not a problem that is confined to the printing industry. Yesterday afternoon, while eating lunch, the waitress noticed from my nametag that I was visiting the hotel as a speaker. She asked what I would be talking about, and I told her that my topic was the state of labor-management relations and working conditions in the printing industry. “Why,” she immediately replied, “don’t you say a few words about working conditions in the hotel-services industry?” So the severe problems that we confront are probably of a universal character. It is now widely recognized that the scarcity of skilled workers and the difficulty that companies face in holding on to those they have poses an immense and long-term danger to our industry. Given the seriousness of the problem, why have we been so slow to recognize and respond to it? Perhaps the simple answer is, that in a world full of problems we can only find time to pay serious attention to those that have assumed crisis dimensions. But I would suggest that there is another reason. In examining the origins of the acute shortage of qualified personnel and devising solutions to this problem, our industry is being forced to look critically and reconsider many of the conceptions and policies that for many years have governed its handling of human resource issues. The present shortage of competent personnel is not merely the unavoidable by-product of the existing economic conjuncture—the maturity of the economic cycle and the relatively low rate of unemployment. To state that there is a shortage of available skilled workers because unemployment is low is little more than an empty tautology. It recalls the hilarious observation made many decades ago by President Warren Harding, that unemployment is the result of an increase in joblessness! The point I’m trying to make is this: the present shortage of skilled labor is to no small extent the product of the very policies that were embraced by printers over the last two decades as the key to profitability. If there is any set of statistics that has been followed by print companies with an almost religious zeal, it is the PIA ratios. We have all been taught to benchmark our employment levels and the costs associated with them against those of the industry leaders. To be frank, we are compelled by the realities of the market to practice this religion at GRP as well. It is an undeniable economic fact that it is impossible to achieve and maintain the levels of profitability essential to long-term growth without the rigorous tracking of manning levels and over-all labor costs. Moreover, in the unforgiving environment in which printers have worked—one characterized by a highly unfavorable balance of power between the purchasers of manufactured goods on the one hand, and the manufacturers on the other—printers have been under relentless pressure to squeeze costs out of the production process. The work force has been the most easily identifiable target of this squeezing process. As long as things were more or less going—or seemed to be going—well, little attention was given to the long-term implications of this lean and often very mean approach. There was an unstated expectation that somehow or other the job market would remain soft enough to provide additional workers on a kan-ban “just in time” basis. This has proven to be a false assumption. It overlooked the fact that the quantity of available skilled workers is related to the scale of investment, both corporate and social, in the development of the work force. The erosion in the supply of workers cannot be explained simply as the inescapable outcome of the fall in the percentage of unemployed workers. The shortage is, in a more profound sense, the expression of shortsighted corporate and social priorities. To put it somewhat differently, the supply of available workers is a matter not only of quantity, but also of quality. It takes time and resources to train a skilled workforce. To the extent that print companies had been exclusively concentrated on maximizing short-term economic performance, insufficient resources were allocated to the development of serious recruitment and training programs. It is easier to calculate the short-term costs that will be saved by cutting the work force, than to perceive the long-term benefits to be derived from investments in educational programs. I must at this point add, in defense of my industry, that public policy in relation to vocational education has not been exceptionally supportive. Nor, to be perfectly frank, have print buyers shown a great deal of interest in precisely how their jobs were getting done. Prospective clients often have asked me whether or not GRP has a backup press. I cannot remember being asked whether our presses or bindery had sufficient manning, or about the benefits offered by GRP to its employees. The extraordinarily high levels of employee turnover in the work place exacerbate the general shortage of skilled labor. Print companies—let us say, most companies—find it difficult to retain skilled people. This social phenomenon is also a product of the same policies and approach that have predominated over the last two decades. The once firmly rooted conception among workers that there existed a reliable link between corporate profitability and long-term and stable employment has been drastically undermined, if not shattered, by the experiences of the last 20 years. It is now a widespread belief among workers that their efforts in behalf of the company that employs them will be rewarded, in the end, with a layoff notice. After all, no less a personage than the President of the United States declared a few years ago that the average worker should expect to change jobs eight or nine times during the course of his or her working career. In such a social environment, is it a surprise that workers are tempted to respond favorably to the lure of short-term financial gains—that is, to leave their current employer if someone else, even a competitor to their present employer—offers than more? Another significant social factor has contributed to the widespread alienation that is to be found among production workers. It is a sensitive topic, but one that deserves mention. It is difficult to make the case that the interests of the workers and their company are indissolubly linked at a time when there exists such a vast disparity between the rewards that accrue to company executives and those that accrue to the production workers. Make no mistake about it: Workers are acutely aware of this income disparity. I came across the following set of statistics in a business journal that I would like to share with you: During the last eight years, CEO compensation among Fortune 500 companies increased at a rate of 535%. If the wages of production workers had risen in the 1990s as fast as the total income of CEOs, the average worker would be earning $114,000 per year and the minimum wage would be $24 per hour. It is far easier to identify the problems than to provide answers to them. Clearly, the human resource problems that confront the printing industry are the product of a very complex interaction of objective economic forces and prevailing social policy. One is even reluctant to make recommendations for fear of sounding simplistic. But as I quite unexpectedly find myself, without any special credentials, at the podium, I will take advantage of this opportunity to make a few rather modest suggestions. There are three levels at which we can strive to find solutions to the human resource issue: The first level is that of the individual company. There, we must recognize—within the objective limits set by the competitive economic environment—that there are policy alternatives to the method of slash and burn and a Pavlovian approach to PIA ratios. Companies should strive to develop a broader sense of their long-term needs, and replace the concept of maximum profitability with one of optimum profitability—that is, one in which financial targets allow the allocation of sufficient resources for the consistent improvement of the working environment. The market is a powerful objective force, but company executives do have some control over corporate priorities. The second level is that of the industry. Those who are in a position of leadership in the vast complex of interconnected corporations of which our industry is comprised should review critically not only their own work place practices, but also those of their vendors. The selection of vendors should include an evaluation of their human resource policies. Let’s be honest with ourselves and each other: the reality of the competitive bidding process all too frequently favors those companies whose low cost structures are achieved through poor treatment of their employees. That tendency could be counteracted if some effort were made, prior to the awarding of a contract, to discover the hidden social content, in terms of working conditions, of the lowest competitive bid. The third level is that of society. Who can reasonably doubt that the many problems related to the recruitment and retention of workers are inextricably bound up with broader social issues, such as the state of public education? In the final analysis, every company functions within society. But an examination of this social environment would inevitably require far more time than we have here today and is best left to another forum.
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