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Partnering, Lean Production And The High Performance Workplace

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ACLN - Issue # 55 29

Partnering - - - - - - - - - - - - - - - 1

Partnering, Lean Production And The

High Performance Workplace

- Dr James Barlow, School of Construction,

Housing and Surveying, University of
Westminster, London.

Abstract emphasis on customer focus, teamwork, empowerment

Undoubtedly, more attention is being paid in the and improved information flows between different
British construction industry to the lessons that can be elements of the production process.
learnt from manufacturing for improving its production The question we address is whether the
processes. These include such lean production concerns developments stemming from new approaches to
as teamwork, customer focus, quality control, lIT production have begun to penetrate the British construction
production and continuous improvement. Arguably, industry and whether partnering has itself helped to
though, it is the "softer", "cultural" areas relating to inter- promote interest in these trends.
organisational collaboration that have become a particular In the next section we examine the recent trends in
focus of attention in the 1990s. production systems, the work practices associated with
The paper, based on research being carried out for these systems, and their implications for the construction
the ESRC Innovation Programme, argues that industry. We then consider whether high-performance
"partnering" has to be seen in a context of the search for systems hold lessons for organisations involved in
new organisational practices covering a range of related partnering, before discussing some preliminary findings
issues. These include human resource management, from case studies of firms engaged in partnering. We focus
information management and collaborative working especially on the extent to which these firms have changed
practices. Underlying many of these are notions of "high- their managerial practices to emphasise teamworking,
peiformance" work systems emphasising the management empowerment, improved inter- and intra-organisational
of employees as a way of improving performance. High- communications and greater customer focus. Finally, we
performance systems involve the devolution of draw some conclusions on the barriers to the adoption of
responsibility for decision making to smaller business new practices and whether partnering has itself acted as a
units, and teams within those units, in order to create a catalyst for their introduction.
more flexible, customer-focused organisation.
Using case studies of five partnering relationships, Lean production, agile manufacturing and high-
involving some 40 companies, the research explores the performance systems
way the organisational changes arising from partnering Concepts of lean production have been popularised
are related to wider concerns, some of which draw on since the early 1980s as a way of improving manufacturing
notions of lean and other high performance production quality, minimising stocks and ensuring continuous
systems. improvement (Schonberger 1982,1986; Hall 1983; Ohno
1988; Ohno and Mito 1988; Womack et a11990). The
Introduction original objective of lean production was to combine
The purpose of this paper is to explore the advantages of craft work with those of mass production,
relationship between "partnering" - an attempt to create but at the same time avoid the rigidities of factory systems
closer collaboration in the construction industry - and and the high costs of craft production. Its success in motor
contemporary trends in production theory such as lean vehicle manufacturing is associated with three important
production, agile manufacturing and high-performance factors - the simplification of manufacturing dies, the
production systems. These all involve developments in development of long-term supply relations to allow just-
organisational design and associated work systems, in-time delivery of parts, and changes in work practices,
elements of which can be found in managerial changes notably the introduction of teamworking and quality
associated with partnering. Particularly important is the circles.
ACLN - Issue # 55 30

As Zipkin (1991) points out, lean production has assumption is that markets are now characterised by
been viewed by some simply as a toolbox providing consumer demands that are too local, too fleeting or too
practical solutions for problems in manufacturing industry, many in number to permit centralised decision-making
while others have seen it as a radically new philosophy processes - hence the need to transfer decision making
embracing all areas of corporate activity. Lean production from centralised administrations directly to those closest
is not, however, suitable in all industries (Karmarkar 1989; to the customer.
Zipkin 1991; Pine et aI1993). In particular, the concept Contemporary ideas of "empowerment" differ from
was originally developed for industries serving steadily older versions in their underlying principles (Mumford
growing export markets for consumer durables; it is 1996; Cappelli and Rogovsky 1994, 1995). The
probably less suited to situations where markets are "behavioural" or "socio-technical" models which were
turbulent, customer requirements change rapidly, refined in the Swedish car industry focused on raising
competition is increasing and there are high rates of market productivity by improving workers' satisfaction. Recent
saturation. Lean production allows only limited variation models of empowerment are less concerned with raising
in the volume and mix of products and tends to be most productivity through increased employee satisfaction than
effective for relatively standardised products (Baker 1996). with meeting the need for a rapid and flexible response to
There has, therefore, been growing interest in recent changing customer requirements (Peiperi 1996).
years in new forms of high-performance production A number of major firms have begun to adopt the
system, including agile manufacturing (Cappelli and organisational designs and work practices of high-
Rogovsky 1994; Cappelli and Crocker-Hefter 1996; performance systems, including AT&T, Du Pont, Ford,
Useem 1990, 1996; Baker 1996). These systems borrow Hewlett-Packard, IBM, Kodak and Xerox (Useem 1996).
concepts from lean production, such as notions of There are, however, as yet few operational examples of
continuous improvement and teamworking, but also agile manufacturing (Baker 1996).
challenge some of the concepts at the heart of lean High-performance production has several potential
production - in particular, limited variation in product types drawbacks. While its work systems may offer more variety
and the need for long-term supply relationships. The and require more skills than systems associated with
emphasis is on flexibility in production processes, "mass scientific management, they generally involve less variety
customisation" such that highly customised products can and skills than behavioural models (Cappelli 1993;
be made at costs comparable with mass production, and Cappelli and Rogovsky 1994, 1995). Individualautonomy
adding value by including a greater element of customer is restricted, with decision making occurring in an
service within the product (Baker 1996). aggregated inter-team setting. There is less commitment
Several principles are associated with newer forms between employees and firms as temporary contracting
of high-performance production (Useem 1996). As well is greater. Furthermore, level of stress, effort and pace in
as streamlined management with tighter financial control the workplace may rise. In this environment companies
and increased benchmarking of production decisions, need to find ways of ensuring they maintain the support
customer requirements are channelled directly to managers of their employees, through the introduction of
of operating units at key decision points. This is achieved mechanisms for linking their business goals to individual
by increasing management contact with customers and and team objectives, and measuring and rewarding
inserting customer criteria into production decisions. As performance. This paradoxically may require greater
a result there is a stress on breaking down traditional central control.
corporate functional divisions based on development, Another problem of high-performance production
manufacturing and marketing, and replacing them with systems is that information requirements arising from
strategic business units focused on specific products or distributed decision making tend to rise. The costs of
services and incorporating as many business functions as coordinating teams and cross-functional business units,
possible. This in turn leads to more devolved decision which would once have been borne by the corporate
making, with business units receiving fewer policy bureaucracy, now have to be borne by individual units
directives from the corporate centre. and teams. There is, therefore, a need to increase the
Two central work practices associated with high- quality and speed of information flows, and streamline
performance production systems are employee information processing throughout the organisation.
empowerment and teamwork (Cappelli and Rogovsky To what extent do the high-performance systems
1994, 1995; Peiperi 1996). While notions of team-based described above, including lean production, hold lessons
work, multi-skilling, participatory and self-management for the construction industry?
are important features of lean production, comparatively There is clearly a relationship between the degree
rigid hierarchies have remained prevalent in many "lean of flexibility required in the production process and the
organisations" (Baker 1996). More fluid and empowered most appropriate type of work system to carry out that
team structures are therefore required to increase process. Industries which demand reliability and
flexibility. This helps to promote better quality decision consistency, such as transport or distribution, or involve
making and improve problem solving. An empowered the continuous processing of a uniform product, have less
workforce is also felt to be freer to make the horizontal use for highly flexible work practices (Cappelli and
connections appropriate to their activities, with cross- Rogovsky 1995). Many of the construction industry's
functional teams able to form and regroup in response to activities do not involve a continuous production process
changing customer requirements. The underlying resulting in uniform products - construction activities tend
ACLN - Issue # 55 31

to involve fewer regimented, routine tasks than many partnering in construction (Barlow et al 1996). Some see
manufacturing or service industries and its assembly it as an example of synergy, such that the sum of the
processes are often based around single projects effectively activities of clients and constructors exceeds the product
involving a customised product. of their independent actions (CII 1991; Provost and
Production management in the construction industry Lipscomb 1989; Bennett and Jayes 1995). Partnering
has traditionally focused on the need to schedule discrete has also been seen as a management process. For example,
activities in the building process, rather than seeing it as a Mosley et al. (1993) feel partnering is simply a form of
manufacturing process involving the management of strategic planning and Wanner (1994) sees it as a variant
resources across a network of firms. This perspective has of TQM. Others have argued that partnering is simply a
been increasingly criticised (e.g. Halpin 1993) and there new word for being reasonable, conscientious or
is a growing body of research on supply-chain professional in business (Larson 1995) - it has been
management techniques in construction (O'Brien 1995), described as "putting the handshake back into doing
design for buildability, and just-in-time and other "lean business", restoring trust in business agreements and
construction" practices (Akintoye 1995; Koskela 1992). opening lines of communications (Donald 1991). The
Arguably, though, lean production techniques may only presence of a "moral contract" and an emphasis on
be of limited applicability to construction, given that much collaboration, rather than confrontation,· is held. to be (1
of the industry's output involves project-based, bespoke key feature of partnering (Uher 1994).
buildings. Furthermore, lean production appears to A number of factors tend to be seen in the literature
achieve the greatest improvements in efficiency, quality as essential for successful partnering (Barlow et al. 1996).
and flexibility when all activities from design to assembly These include the presence of mutual objectives, trust, a
occur in close proximity, with a high degree of face-to- partnering "charter" which all parties "buy into", an agreed
face contact, unlike many forms of construction where problem resolution mechanism and an understanding of
production processes are physically dispersed (Gann each others' commitments.
1996). However, while these necessary conditions may well
Nevertheless, the work systems associated with be a key to the successful implementation of partnering,
high-performance production, may still hold lessons for they do not develop independently of the structural and
the construction industry. In particular, construction cultural circumstances within which an organisation is
activities which involve more bespoke projects essentially situated. Partnering - a shift towards greater collaboration
involve the coordination of inputs from a variety of sources and open exchange of information - implies a potentially
to produce customised products, often under conditions radical change in the management practices and
of uncertainty over design requirements in the initial organisational structures of those involved. It seems
stages. Work systems which emphasise the devolution of unlikely that partnering could emerge in the absence of
decision making to smaller business units or teams and new organisational designs and managerial practices
greater customer focus may help create an organisational covering such inter-related issues as human resource
form which is better able to respond flexibly to changing management, information management, new
customer requirements during the conceptualisation communications systems, collaborative working practices
phases of the project and accelerate decisions as fast as and business strategy development. In this way, one would
possible during the realisation phases. expect partnering to be facilitated by the introduction of
To what extent, though, does the current interest in new managerial and work practices in the construction
partnering draw on these theories? industry, particularly those relating to high-performance
production systems. Indeed, partnering may itself have
Partnering and production theory acted as a catalyst for the spread of new work systems in
In Britain there has been particular concern in the the construction industry.
1990s that many of the performance problems of the
construction industry are related to its organisational and Partnering and new managerial practices: some
cultural environment. The industry's adversarial culture, preliminary findings from the case studies
and its lack of coordination and planning during the Our research for the ESRC Innovation Programme
building process, are regarded as a major hindrance to is investigating the managerial processes involved in
efficiency improvements. There is an underlying partnering, through a series of case studies of existing
assumption that greater collaboration between clients, partnering arrangements in the construction industry. The
contractors and suppliers would help to overcome these case studies were selected because they represent a range
problems (e.g. NEDC 1991; Latham 1994). In response of different types of partnering relationship and different
to these concerns, partnering has been widely encouraged. construction sectors:
Partnering essentially involves clients, contractors and British Petroleum: the "Andrew Alliance",
suppliers committing themselves to closer working construction of a North Sea oil platform.
relationships to improve buildability and increase Safeway: development of new supermarkets.
performance. It has been highlighted as a way of National Westminster Bank: refurbishment
overcoming the problems associated with highly programme for high street banks.
competitive relationships between different parties McDonald's: development of new outlets.
engaged in construction projects. Selfridges: refurbishment of Oxford Street
There is little agreement on the definition of store.
ACLN - Issue # 55 32

In total, over 40 companies are involved in these assembly processes. In fact, some clients (e.g. NatWest)
partnering arrangements. So far, some 60 in-depth were specifically recruiting suppliers who they felt would
interviews have been conducted with personnel in these question existing approaches. This process also involved
companies. These are examining such areas as: the clients posing new challenges for suppliers (e.g.
direction of, and motives for, the particular strategies that McDonald's challenging suppliers to develop new
have been adopted; the ways in which personnel adjust prefabrication techniques).
to change by making trade-offs or restructuring work
relationships; and the evolution of partnering in response Individual personality, teamwork and
to unexpected events or crises. Interviews have also been empowerment
conducted with major contractors (Galliford, Gleeson, The strategic movement of personnel to ensure an
Birse, Henry Boot, Willmott Dixon) who are pro-actively optimum mix in project teams was generally seen as a
seeking partnering relationships, to explore their critical factor behind successful partnering in the case
experiences in the current construction market. study firms. There were several examples of clients and
partners moving personnel to avoid personality clashes
Why were firms partnering? or put in place workers with the "right attitude". For
Occasionally, a key individual had been responsible example, in the NatWest case study, regional bank
for driving a general corporate objective to "become managers - as construction customers - had requested
involved in partnering". This was especially true of the specific individuals (project managers, quantity surveyors,
contractors, who tended to be actively selling partnering architects) to work on the refurbishment of their branches,
as a part of their pursuit of clients. In most cases, though, because they were deemed to be especially sympathetic
the impetus for partnering was the need to carry out a to their requirements. In another example, one of
project with specific requirements which could not be McDonald's partners recognised a key individual was
fulfilled using traditional procurement methods. In some unable to work with the client's informal style of
cases there was an explicit construction problem which communication. This individual, who was felt by
needed to be overcome - BP was seeking to develop an managers to operate more effectively in a more aggressive
economically marginal oil field; McDonald's, Safeway and conflictual setting, was moved to work with a suitable
and NatWest were all rapidly increasing their construction client. In the Selfridges' case study, an architect was
programmes. However, a common thread to all the case moved in the first week of the project and a project
studies was the desire on the part of both clients and manager, who was felt to be unable to cope with the
contractors to reduce construction costs. increased responsibility resulting from greater
"Soft", non price-related issues were also important empowerment, was by-passed in the flow of
for clients as reasons for partnering. These generally communication between client and partner.
related to the need to maintain a positive public image in Whether this emphasis on alignment of people with
high profile construction projects by working with the "right" personality is new to the construction industry
"trustworthy" partners who understood their requirements is, however, a moot point. It has long been pointed out
(e.g. Safeway were concerned about minimising that the management and decision making environment
environmental protest over greenfield supermarkets; of the construction industry is frequently characterised by
NatWest wanted to avoid disruption to staff and public at high interdependency in its problems, but high
bank branches undergoing refurbishment). There was also independence in its people, methods and organisations
a general concern to change "ways ofworking" by avoiding (Crichton 1966). Construction projects are essentially
disputes, although only the BP and Selfridges partnering carried out by groups of individuals within temporary
arrangements included formal dispute resolution multi-organisations which are disbanded after completion
mechanisms. of the work (Cherns and Bryant 1984; Winch 1989). The
It is not clear to what extent firms were already temporary nature of projects means that their participants
engaged in the promotion of continuous improvement, can spend considerable amounts of time adjusting to the
before their involvement in partnering. NatWest had working practices of others on the project (Luck 1996),
established a new purchasing and supplies division with suggesting that optimising the mix of personalities has
a brief to look at ways of improving the procurement of always been a feature of successful project management.
construction and other services. The possibility of What is perhaps different in partnering is that this factor
achieving continuous improvement was, however, may be more important given the non-confrontational
highlighted as a reason for partnering by some firms. This aspirations of partnering and its emphasis on collaboration.
was felt to be facilitated by partnering because teams and It has been argued that personality tends to reveal itself
individual workers were situated in a collaborative most clearly when people are able to choose how they
structure in which lessons about mistakes and problems can act (Pervin 1993; Furnham 1992) - in other words,
could be more easily transmitted between different parties. situations where people work in empowered environments
However, unlike traditional continuous improvement are likely to require closer attention to the balance of
models - where workers tend not to question the basic personalities.
design of the product and simply learn by carrying out a Team-based decision making systems were the norm
task (Pine et al 1993) - partnering had tended to result in a for the case study clients, main contractors and some of
more questioning environment, whereby workers the larger suppliers. In some instances there had been an
challenged fundamental assumptions about design or explicit attempt to reform a company's organisational
ACLN - Issue # 55 33

structure to produce cross-functional teams (e.g. Simons assembly stages of a project could talk directly to those
Construction, contractors to NatWest and Safeway). Team involved in the earlier design and planning stages, without
work was, however, not new to these companies and communicating through intermediate project managers or
certainly not stimulated by their involvement in partnering. quantity surveyor. This was especially evident in the two
There was very little effort at teambuilding, either cases involving complex, non-routine projects. The BP
internally or across organisations, in the case study Andrew scheme involved a high level of face-to-face
organisations. In the Safeway, McDonald's and NatWest communication by members of different companies
cases, where each individual construction project was seen sharing the same office, using integrated design and project
as relatively straightforward, there was no perceived need management systems and video links with the various
for teambuilding. Only in the two cases involving manufacturing and assembly sites. Selfridges and its
complex, non-routine projects - the BP and Selfridges partners had attempted to cut down paperwork by
projects - was there any formal teambuilding using standardising requisition forms and increasing face-to-face
external facilitators, and only the BP case involved regular interaction - sub-contractors were allowed to talk directly
teambuilding sessions at key points in the project. to architects.
To what extent was there evidence of increased More common in the "routine" construction
empowerment because of the partnering process? programmes was direct contact between senior personnel.
According to Hackman (1986) a crucial indicator of This was made easy because many firms in the partnering
empowerment is the way employees interact with each relationships were relatively small. For example, the two
other and with customers. Typical behaviours of main McDonald's partners were able to talk directly to
empowered employees include an increased awareness staff at McDonald's head office, even though their
of their organisation's goals, increased personal contracts were with McDonald's regional offices. Safeway
responsibility for the outcomes of their work, self- head office staff also liaised directly with the managers
monitoring of their own performance and helping others of key suppliers.
to improve their own performance. In general, there was a feeling that new
There was much discussion about empowerment in communication channels and higher levels of trust had
the case study companies. It was felt that empowerment improved the ability of staff to deal with problems when
of those further down the chain of command was essential, they arose. However, open and flexible communications
particularly for project managers who formed a key link appeared to have also resulted in some problems:
between the managerial level and on-site staff. There was There was a feeling that there had been a
also a concern (expressed by BP and NatWest) to move disproportionate increase in the amount of time
away from a situation in which suppliers and contractors spent in communications. The number of
were directly "shadowed" by the client's own staff; for points of contact between organisations seemed
example, a client's quantity surveyor continually checking to be growing. Most interviewees agreed that
an external quantity surveyor's work. It was, however, partnering has meant more meetings involving
clear that in some cases empowerment had not been more senior staff, with contractors and
matched by any training in how to modify behaviours - suppliers complaining that partnering is
this had led to a demoralisation of staff in some cases. consequently an extremely expensive approach
Whether increased empowermentwas a new feature, to procurement, with an uncertain pay-off.
arising from partnering, is not clear at this stage. In most Some partners felt there was an uneven balance
cases, key staff were empowered to make relatively of power in terms of time spent on
autonomous decisions because they had been working long communications - clients were able to demand
enough for their employers to be trusted. Nevertheless, more of partners than in more traditional types
in at least one case (NatWest) two key individuals had of relationship. For example, McDonald's
been given a free reign to develop new procurement required its partners to be "on call" for regular
methods, leading to the establishment of partnering meetings in London at very short notice;
NatWest's architects were permanently on call.
arrangements and a decision-making structure based on
Organisational roles had become more
greater individual empowerment.
ambiguous by removing traditional,
hierarchical forms of communication. For
Communications and information management
example, in the Selfridges' case a quantity
There are two elements to inter- and intra-
surveyor was formally held to be the central
organisational communications - the channels for
node for financial transactions between the
communications and levels of openness and trust.
main contractor and the client. The lack of
Attempts to simplify information flows and develop new
formal paperwork - a by-product of the attempt
communications structures were a common feature in all
to simplify communications - had made the
the case studies, generally either by cutting out a chain of
quantity surveyor's role ambiguous, leading to
command or by allowing key people in each organisation
conflict between contractor, client and quantity
to talk directly to each other. This helped to break down
surveyor over requests for payments.
formalised, hierarchical systems of communications and
create a flatter structure.
Customer focus
Another feature was the compression of the
To what extent were the contractors and suppliers
information flow, so that people working on the later
in the case studies seeking to inject customer concerns
ACLN - Issue # 55 34

more closely into their decision-making process? A of power within the company (with the human
primary objective of partnering is, of course, the promotion resources function sometimes representing the
of greater collaboration between clients, contractors and fiercest source of resistance). A breakdown of
other suppliers. This can involve closer involvement of hierarchical authority may mean managers
clients in early design decisions or in selection of key with ultimate responsibility for functional units
suppliers of components or services. However, beyond feel a loss of control, which they may reject.
this, clients were especially concerned to reduce their In addition, internal sub-cultures can
burden of work by identifying key individuals in the undermine new arrangements. These features
partners who already knew about their requirements when were evident to a greater or lesser degree in
starting a new project. In the case studies involving longer several of the case study companies. For
term construction programmes some contractors had set example, the centralised construction
procurement divisions of both McDonald's and
up teams dedicated to specific clients. For example,
NatWest had faced some resistance from other
Simons Construction had established a cross-functional
divisions or regional units, which were less
team with a board-level manager responsible for Safeway
keen on partnering.
contracts, along with other teams dealing with other Demoralisation can act as a barrier to greater
clients. Similarly, Bovis had a team of around 19 managers empowerment, with some employees rejecting
and 40 other employees working on Safeway projects. It the increased responsibility involved. Again,
had been agreed that the core team would not work this was clear in some of the case study firms,
simultaneously for their other retailer clients. where specific individuals had requested they
In most cases, however, there was no need for a be moved to positions involving more
client-focused team since the suppliers and contractors "traditional" roles.
were small and it was easy for a client to liaise directly There can be greater potential for chaos arising
with the individual who dealt with their projects. Another from a lack of clarity about responsibilities and
factor which has mitigated against the establishment of more points of communication. This can
specific client focused business units was the fact that even undermine systems of distributed decision
where there is a longer term, regular programme of making as conflicts have to be resolved by
construction work from a given client, individual projects centralised statements of company policy and
tended to be relatively infrequent. Nevertheless, it a return to bureaucracy.
appeared that even in the absence of specific client-focused The costs and benefits of change are unclear.
individuals or teams, partnering had resulted in a shift in Companies do not know which of the areas of
attitude, with contractors and other suppliers placing strategic advantage the market is most likely
greater emphasis on the need for close liaison with to reward. In these circumstances, they may
customers. go for all areas simultaneously - trying to be
the cheapest, most flexible and best quality
producer - leading to the adoption of
Partnering and high performance production incompatible production systems.
systems - some conclusions Furthermore, there is no reason to suppose that
It has been suggested that having a model of a the capabilities fostered by high-performance
particular work system in the same industry is one of the production systems are the only goals an
best predictors as to whether it will be adopted (Cappelli organisation might have. Different goals may
and Rogovsky 1995). Although there appear to be few, if necessitate different work systems (Hunter
any, models of high-performance systems in the 1996).
construction industry to guide firms, it seems likely that We have argued that the practices associated with
elements of new work systems have infiltrated the industry. some forms of high-performance production may hold
This is consistent with the experience in other industries- lessons for the construction industry. The emphasis on
in general, organisations tend to adopt individual work flexibility and customisation may be especially
practices, such as empowerment or teamworking, rather appropriate. More research is needed, but in the case
than an entire production system. studies at least it seems that emerging organisational
Elements of the work systems described earlier in designs and managerial processes seem to have helped
this paper which are evident in some of the case study promote partnering arrangements, although partnering
companies include an emphasis on cross-functional itself has only had a limited effect as a vehicle for wider
teamwork, devolved decision-making and increased changes in the organisations involved.
customer focus. These seem to have been adopted on a
Acknowledgements
relatively piecemeal basis, rather than in a systemic way
We are grateful to the Economic and Social Research
such different features relate to one another in tandem
Council for supporting the research on which this paper
and to their broader environment.
is based.
It is perhaps not surprising that this should be the I would like to thank David Gann and Tony Manzi
case. Full implementation of high performance - and other for their helpful comments on an earlier draft of the paper.
- systems face a number of barriers to their adoption:
New systems frequently require a redistribution
ACLN - Issue # 55 35

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