Eastman Chemical Company, a chemical giant, has over 450 product markets and employs over 17 000 people. Its operations cover the globe. Eastman has been a leader and pioneer in its field, and has won many accolades, such as the Malcolm Baldridge Quality Award. Eastman was, until 1 January 1994, a wholly owned subsidiary of the Eastman Kodak Company.

Eastman's success, however, has not always been guaranteed, but has required a lot of effort and hard work. Back in the 1970s, the company was floundering. According to Robert C. Joines, a former vice president of quality, the wake-up call arrived one day when a key customer of Eastman (which was then a division of Kodak) bluntly put to them ‘Your product is not as good as your competitor's’. This came as a shock to the company because it had always considered itself to be customer focused, and indeed had invented and patented the product in question. It was clear that if the company did not quickly put its house in order that it would rapidly lose market share and the threat of going out of business appeared a serious one. Eastman responded by taking the issue of customer feedback much more seriously, and by the early 1980s customer feedback was a central part of the operational planning process.

To develop customer responsiveness further, in 1983, the company formulated a quality policy that was to set the tone and direction of future initiatives. In 1984, the company started training in the tools of quality, namely SPC and the accompanying traditional tools of quality such as process flowcharting. Shop-floor workers were asked to chart their progress and post it for all to see. Unfortunately, for some employees these charts became ‘rat charts’, because the company had not been able to drive fear out of the workplace. One employee's comment typifies the underlying sentiment: ‘You are asking all of us using SPC to post all our mistakes. How will these things be used?’ These sentiments brought out to senior staff the cultural contradictions that existed within the company: a conflict between the hierarchical, structured and disciplinary corporate culture with the open, honest, trusting environment demanded to run an effective SPC and other quality initiatives.

Cognizance of the cultural tensions led, in 1985, to the development of the Eastman Way.

While the plans, for the Eastman Way, to nurture an open trusting environment were being thought up, some employees were asking: ‘We have always been honest. Why do we need to emphasize trust now?’ Others noted that SPC was about looking at data not trust. These types of questions indicated to the company that it needed to examine and understand internal employee perceptions and attitudes before it could move forward. So, employees were surveyed and from this internal marketing research effort the company found that there was poor communication throughout. Specifically, it found that:

1   Management must communicate what it is doing and why it is doing it.

2   Employees are the key to accomplishing anything the company wishes to do.

Based on these insights, The Eastman Way was developed, which subsequently became a strong foundation for the quality initiatives that were to follow.

Initiatives leading to winning the Quality Award

Year 1985

In 1985, a quality initiative, which started in manufacturing and then expanded organization wide, began to look at internal customers, external customers and suppliers. Its aim was to get the company to become more customer focused.

Year 1986

In 1986, senior management implemented their own quality process. In this, they had to identify their customers, understand their needs and develop measures to make sure that these needs were being met. This culminated in the implementation of a computerized internal customer satisfaction survey. The success of this programme was largely attributed to the fact that management was walking the talk, so to speak.

Year 1987

The quality focus was expanded from individuals to interlocking teams. Each team consisted of several members and a supervisor. The supervisors constituted another team with other supervisors and so on upwards. By 1995, about 99 per cent of employees were working as part of teams, using quality tools to drive continuous improvement.

By 1987, Eastman also began to focus on employee empowerment. In its effort Eastman quickly discovered that it couldn't empower people who:

   don't care;

   don't have authority;

   don't have appropriate skills.

With regard to skills and authority, the company began to ask questions about each unit's purpose and focus. Why did the unit exist? What was it doing? How did it support the overall organization? Only once these fundamental questions were answered was it possible for management to start addressing how to provide skills, authority and responsibility. As far as the issue of caring was concerned, Eastman decided to undertake a specific survey to find out what were the issues at stake. Eastman discovered that the key problem was the appraisal system, which was then changed in 1990.

Year 1988

The company applied for the Malcolm Baldridge Award, and learnt a lot from the site assessment.

Year 1990

Eastman registered to the ISO 9000 and built competencies for JIT systems deployment.

The company assessed all of its divisions against the Malcolm Baldridge Award criteria. Based on this and its earlier survey findings, it started to overhaul its appraisal system. Before the change, the appraisal system force ranked individuals on a bell-shaped normal curve. This system, as the quality guru Deming had noted, automatically identifies half the employees as below average. The consequence is that a great number of high quality people are classed as poor performers. After a 6-month review of the system, the company concluded that one improves nothing by only appraising. This led to the realization that improvements come about by working on the system and not by scoring people. This led Eastman to shift its focus from grading employees to developing them.

Year 1991

The company developed its strategic intent: to be the world's preferred chemical supplier. At the same time, the company was reorganized from a hierarchy to a hub-spoke structure.

Year 1992

Eastman initiated a supplier recognition programme, to reward and involve suppliers in its quality efforts.

Year 1993

Eastman won the highly prestigious Malcolm Baldridge Award.

Later that same year, Eastman expanded its commitment by announcing its ‘responsible care pledge’ for the environment, health, safety and community.

Eastman's internal market focus

After the findings of its employee survey in 1986, the company knew that it had to reorient itself to create skills, empower and motivate if it was to succeed in the external marketplace. By providing JIT and other training, as well as delegating authority downwards, Eastman was able to address the first two objectives. The task of motivating, however, was much trickier. Eastman knew this, in reality, demanded a two-fronted action:

1   Remove the impediments to motivation.

2   Provide employees incentives to keep them focused on corporate goals and objectives.

Put simply, this meant that management had to be able to answer the perennial employee question: ‘What's in it for me?’

After this realization, the company undertook to remove several motivational stumbling blocks:

   Fear of losing one's job. The company pledged that it would never lay off anyone as a consequence of quality improvements. This was to create a common mindset, in which the belief is grounded that as processes improve and productivity improves people would be able to accomplish more. This was an important motivator for improvement.

   Performance appraisal system. The performance appraisal system was abolished. As Joines noted, only those at the very top of the appraisal system objected to its removal. ‘The traditional system of telling people ‘‘We have determined that you are not in the top third of performers, go and do better’’ just didn't motivate. What's wrong with telling employees they are all in the top third, thereby making themselves feel better about themselves? When you do they will go out and win battles for you.’

   Employee suggestion scheme. The old scheme rewarded individuals with money for their suggestions. It was found that this process conflicted with team spirit, so the company abandoned it.

Motivating employees is not an easy task. It requires a change in the company and management's mindset. Eastman noted that there are three things in this:

1   Management must identify and focus on a unifying theme.

2   The theme needs to be communicated throughout the organization.

3   Teams are needed to implement management action plans.

Russell Justice, a technical associate and a champion of quality through motivation, suggests that how management responds to these challenges is just as important as the tasks themselves. For example, there are three scenarios to empowering employees:

   Scenario 1. Management tells employees they are empowered, gives them the task and walks away. Outcome – decline in enthusiasm for the task.

   Scenario 2. Management tells employees they are empowered and gives them a task, subsequently discovers that there are problems and punishes employees for their failure. Outcome – sharp decline in motivation and performance.

   Scenario 3. Management tells employees they are empowered, gives them a task, monitors the results and applauds them for their efforts. Outcome – commitment, enthusiasm and performance.

Praise is an accelerator for performance. It is part of the positive cycle of human behaviour reinforcement. Justice notes: ‘Behaviour is not a function of procedure. Behaviour is a function of consequences.’ The question for a company then is: ‘How can the company create the right consequences of behaviour to further its corporate goals?’ Eastman tackled this question by:

   offering positive reinforcement to the best behaviours;

   making everyone feel like a champion;

   rigorously measuring the results of business processes;

   encouraging employees to learn from their experiences.

These practices were organized into a seven-step process to unify the company around common goals. Eastman calls this process ‘Leadership for Accelerated Continuous Improvement’.

Leadership for Accelerated Continuous Improvement

The seven steps of this process are:

1   Focus and pinpoint.

Focus is about getting everybody to share the same goals. Pinpoint is about specifying in measurable terms. This helps to get employees see how their objectives fit in with the overall corporate objective. To attempt this, management should use simple tools that everyone can understand and use. For example, interrelationship diagrams.

2   Communicate.

The objective is to let employees know what is important and why it is important. As Eastman's chairman noted: ‘ If you want people to join you on this journey, if you want them to be enthusiastic and take responsibility for what needs to be done, there has to be lots of communication.’

Eastman undertakes organization-wide communication by publicizing its vision and mission. Corporate communications must help employees understand:

(a)   What is being improved?

(b)   Why is it important for the customer, to the company, to me?

(c)   What has the management team committed to do to help?

(d)   What, specifically, is the company asking me to do?

Eastman has found that one good way of seeing if the communication has been effective is to get employees to restate what they are going to do.

3   Translate and link.

The team must next translate company-wide objectives into their own language and environment. For example, whilst management may talk about the objective in financial returns, or market shares, teams need to transpose these into relevant items such as cycle time compression, higher reliability and so on.

4   Create management action plan.

Management must create a plan with specific action, which includes measures and metrics to reach the objective. Each team member is asked to know what tasks needs to be done, why they are important and what the team is going to do to get them done. In drawing up these plans, managers need to examine policy, possible system changes, barriers to success, training requirements, resources needed and any other problems that need to be addressed to reach the goal.

The methodology is to try to get managers to be proactive and progressive in making their plans. By using problem-solving techniques, they can make mistakes on paper rather than during implementation.

5   Improve processes.

At this stage, employees work together to solve problems. Eastman, has drawn up a very successful six-step team process to create and maintain improvements:

(a)   identify the problem;

(b)   use the tools to solve the problem;

(c)   plan the solution implementation;

(d)   execute and measure the results;

(e)   document what was done;

(f)   strategize how to maintain the level of improvement.

6   Measure and provide feedback.

Eastman insists on simple, clear, visual feedback to employees. Eastman's mottos amplify this: ‘feedback is the breakfast of champions’; ‘if you don't measure performance, you can't improve it’. Eastman has created rules for feedback, and the key of these include:

(a)   feedback should be visual (posted), frequent, simple and specific;

(b)   the baseline performance should be used for comparison;

(c)   the past, current period and goals should be posted;

(d)   the best ever score should be posted;

(e)   a chart should be immediately understandable;

(f)   a good scorecard allows comments and annotations.

7   Reinforce behaviours and celebrate results.

Celebrating positive results can provide a big boost to morale and energy. However, Eastman noticeably goes beyond this stage, to one of learning from success, since a party in itself is not enough. At celebrations, team members are encouraged to revisit how they achieved their success.

Eastman is also very wary to ensure they don't design a system in which there is a limited number and circle of people who can win, because such a design would simply repeat the mistake of Eastman's old appraisal system. In rewarding and recognizing success, Eastman complements monetary with intrinsic rewards. Letting people know they make a difference to the company pays dividends.

Eastman has attempted to reinforce positive behaviours by taking care not to be manipulative. This it has achieved by nurturing a spirit of respect, openness, teamwork and trust. These are the fundamentals laid down in The Eastman Way, which has helped to drive the company from one success to another.

Source: Milliken, W. F. (1996). The Eastman Way. Quality Progress, October, 57–62.