Schaeffler

The global market leader for aviation and aerospace bearing systems overcomes two serious crises in two years. And sets itself up for further growth in future.

Gustav Wenhold hasn’t known any quiet times since he became managing director of Schweinfurt-based FAG Aerospace in mid-2014. The plant, which makes bearings for the aviation and aerospace industry and can trace its history back to Friedrich Fischer, the father of the modern ball bearing, has been an integral part of the Schaeffler Group’s industrial division since it was taken over in 2003. Around 550 staff are currently employed at the aerospace factory.

High product diversity with relatively small production runs is a defining feature of its core business – a rarity within the Schaeffler Group. That means that many of the Group’s KPIs and production standards cannot be easily applied to the aerospace company.

In 2013, the management team at the time carried out large-scale restructuring of the manufacturing process in order to achieve much needed efficiency increases. This included switching production from a job shop set-up to continuous-flow manufacturing. The changes were carried out with barely any involvement of the workforce, which caused widespread dissatisfaction and uncertainty among the production workers and ultimately led to planning and productivity problems. However, the stringent safety standards in the aerospace industry mean that quality problems must be (and were) completely ruled out, even at the expense of productivity and profitability.

A team leader structure was quickly introduced but initially had little effect because the team leaders lacked leadership experience and qualifications.

It was at this point, in June 2015, that Trainconsulting was invited to an initial discussion to improve the mood of the team, put production onto a solid footing and get the plant back on track.

Due to the high level of complexity, the decision was made to adopt an iterative approach, starting with a qualitative organisational assessment by the consultants. The aim was to establish a clear picture of the situation for the management, identify latent patterns within the organisation (particularly among the managers) and lay the groundwork for the next steps.

‘We, the employees of FAG Aerospace, take responsibility for building the best bearings in the world for our customers.’

The shared vision

A way out of the crisis together

The picture provided by the analysis was dire. Managers and employees described the situation as chaotic, characterised by mutual mistrust and resignation. There was no shared vision of what a way out of the crisis might look like. The lack of trust in particular – both between management and workers and within the management team – made it hard to work on solutions together.

The consultants’ analysis showed that important foundations had been laid and that key resources for a positive future were available. But the view of these resources was completely obscured by the numerous everyday problems. And yet amid all the complaints, there were clear signs of resources that were to prove valuable later in the process. Such as an exceptionally strong sense of camaraderie and high identification with Aerospace, a high level of flexibility and technical expertise and a strong reputation among customers.

From early 2016, the management team began working on a shared sense of identity. The group of line managers were to become a (management) team that would take joint responsibility for the site.

I don’t need a management team that I have to push. I need a management team I have to rein in from time to time.

Uwe Kaufmann, Segment Leader Manufacturing

Even at this early stage, it was clear that the focus of the project would be on the culture. The way in which responsibility was handled within the company in particular quickly emerged as a mission-critical factor. It had to begin moving from a culture of back-covering and finger-pointing towards more individual responsibility, trust and fearless decision-making.

Just a few months later, the management team invited all 70 or so managers at the site to a first management conference to jointly develop the vision for the company. The guiding principles for the day-to-day (leadership) behaviour and strategic initiatives such as cost reduction in manufacturing were worked on together. This was a complete break with the usual patterns of communication at the time. A cross-functional and cross-hierarchical steering group was to meet regularly to reflect on the process and work with Trainconsulting to develop recommendations for next steps by the management team.

Strengthening the culture with principles

The jointly defined principles of trust, responsibility and respect were to provide the guiderails for future decision-making in the company.

The three most important strategic thrusts of the change were to be:

• Equipping the organisation, particularly production, to meet the requirements of customers in a growing market
• Strengthening a culture shaped by individual responsibility, trust and mutual respect
• Strengthening the management in terms of their effectiveness and their assumption of joint responsibility

These three goals could not be viewed or addressed separately from one another. Work on culture only makes sense when carried out in parallel with strategic work on organisational objectives. The culture forms the framework within which change can take place. It is also the sensor that detects the impact of the change, and often also the subject of the change, if deep-seated patterns have to be altered in order to achieve strategic goals. Management is both the engine and the launch vehicle here, determining not only the goals and pathway for change but also its parameters. It also has to systematically change itself.

Organisation is communication about work

In order to bring the principles of trust, responsibility and respect to life, it seemed especially important to establish broad participation and dialogue-based forms of communication. Central communication structures, such as the quarterly information events for staff, were increasingly staged in dialogue-based formats where managers could discuss issues of relevance to the company with staff.

Key initiatives that followed focused on cost reduction, the reorganisation of production (this time involving the employees), an efficiency programme for non-production staff called for by the Group and a skills upgrading programme for all managers.

The consultants also supported the managers in taking the key points of the change to the team.

Initial, important successes were quickly notched up. Critical KPIs improved, and even the mood within the team was significantly more upbeat. The management team, the members of which also changed, was increasingly perceived as a team that was taking a common line. At a second management conference at the end of 2016, emotional highlights included an open dialogue with a representative of the strategically most important customer and the increasing shouldering of responsibility by the team leaders. New focal points and initiatives included a working group for internal communication and a task force for improving occupational health and safety.

Riding the wave

But in the first half of 2017, the mood of optimism was suddenly dampened again. Production, still coping with the aftermath of the reorganisation, could no longer keep up with the unexpectedly high order levels. The enforced reduction of production inventories in late 2016 meant critical machines standing idle.

And key repositories of know-how within the organisation had left the company during the efficiency drive, revealing serious gaps in knowledge management and process management within production. Expertise in neuralgic interfaces within the value creation process practically disappeared overnight. The target of processing all customer orders on time initially seemed almost impossible. The organisation tipped abruptly from breathing a joint sigh of relief back into crisis mode. The mounting pressure suddenly seemed to be in conflict with the proclaimed principles. The apparent conflict between short-term crisis management and strategic realignment was reawakened, and at the same time the pressure from outside the company grew quickly and massively.

Old patterns became more entrenched again. At the same time, however, the power of a united management team that takes joint responsibility for the organisation as a whole was already evident.

The focus of the process support shifted radically during this phase towards achieving the output targets. The management team convened daily in a ‘war room’ within production to identify the obstacles currently hindering target achievement and clear them out of the way without delay. ‘Ensuring on-time delivery and quality under all circumstances’ was the motto.

At the same time, market developments showed that the future would also be shaped by massive growth of the whole aviation sector. In addition to achieving the short-term goals, it was also important to set the organisation up for sustainable growth in the medium and long term.

This meant change could not stop at the management team. A new plant manager (a function that had previously been performed concurrently by the managing director of FAG Aerospace GmbH) and a new segment leader strengthened the production management structure. A seven-strong senior leadership team (SLT) was formed from among the management team, which had become too big, to enable stronger and more rapid decision-making.

It worked. Looking back, Gustav Wenhold has no doubt: ‘It was only because of the change work carried out the year before that we were able to cope with these challenges.’ The precision landing was made in a photo finish in December 2017.

Everything has an end – only change has none

At the start of 2018, the senior leadership team and the consultants decided to initiate the final phase of the change process: taking the successful change into a self-sustaining state and phasing out the external support as soon as possible. In one of the last meetings with the senior leadership team, the group reflected on the degree to which the proclaimed principles were tangible in day-to-day operations. The level of success clearly shows that working on culture works. And in terms of the figures, working on culture is also worthwhile financially.

A final conference in April 2018 aimed to celebrate these successes, but at the same time show that the pathway to change continues even though the project has ended. Now, however, the way will be led by a strengthened management team that works together in a spirit of respect and trust, and takes responsibility for its Aerospace.