What happens when a manufacturer has no vice presidents, no managers, no supervisors, no foremen, no manager approvals, no strict attendance policy and no performance reviews?
This isn’t a trick question — for Abrasive Technology Inc. the answer has been success.
Now, founder and president Loyal “Butch” Peterman Jr. wants to share what he’s learned about creating an environment of trust.
“People are good. They want to work. And they want to do something that’s productive every day, or something that is important to them,” he says. “And so we make our customer important to them.”
The concept starts with people, and then building everything around them, says Peterman, who started Abrasive Technology, a superabrasive grinding and tooling manufacturer, to make diamond-cutting tools with two partners.
After becoming the sole owner in 1992, he set out to change the organization’s culture.
Employees can be trusted and want to come to work every day and contribute, says Tanya Patrella, who was an executive at Abrasive Technology for 25 years.
“If business owners/leaders come from ‘this place,’ then strategies, direction and actions naturally tend toward leading from the heart and creating a workplace that is positive and productive,” she says.
Peterman and Patrella, who spoke at a panel discussion about this manufacturing model, have created Manufacturing with Heart Inc., a consulting and coaching company for small and midsized manufacturers, to further spread their message.
Structuring with a light hand
A manufacturer without a hierarchal organizational structure is unusual, but that doesn’t mean there’s no structure at all.
Peterman, whose son took over day-to-day operations, says people on the ground run the manufacturing facilities worldwide with the aid of a computer system. One person is no longer responsible for what happens with a team.
Managers are normally better at handling business processes or people, Peterman says, so the manager’s role is broken into two divisions — process engineers and coaches.
The company of 400 employees went from 45 managers, supervisors, etc., to 16 leaders — eight coaches and eight process engineers.
Abrasive Technology also got rid of attendance policies and performance reviews.
But even so, people show up on time and volunteer to work overtime when necessary. In fact, Peterman still has had to turn out the lights on people so they go home.
“The people are so connected to each other that they will not let them fail ever,” he says.
As for performance reviews, Peterman says those focus on the past and often are just a tool to help fire people.
“We’re trying to encourage people for the future,” he says. “What do you do for us? How do we work together? How can we make you part of our organization? And how is the organization part of you so that you can go home and be happy?”
Patrella, president of Manufacturing with Heart, says you still need to set clear expectations and have some structure, but it doesn’t need to generate fear, which hampers innovation.
“So, there is structure there,” she says. “It’s just not all of the rules and the policies that make people feel really heavy and afraid.”
Connecting with customers
Like other industries, the customer is king in manufacturing. So, just as Abrasive Technology’s employees underwent a transition period, customers faced the same thing.
Customer service representatives are the main contact with customers. They have the authority and responsibility to make decisions, such as turning down an expedited order request.
As the voice of the company, customer service may consult with a salesman and the manufacturing floor about decisions, but it has the final word.
“We have a very controlled direction of how we deal with customers and how we talk to them,” Peterman says.
Once customers understand how one contact point is as much for their benefit as the company’s, they love it, he says.
In addition, at Abrasive Technology, salespeople have gone back to what he or she are supposed to do — introduce people to the company and explain the products. They don’t take orders.
Peterman and Patrella admit this is an unusual approach, but it works, especially in a business-to-business company.
“It’s just simply about being human and letting everyone know …remember that we’re all just people trying to get by,” Patrella says. “We’re making different things. We are working in different capacities. We’re all just trying to raise our families and get through this life together.”