Best Practice Aerospace

Best Practices in the Aerospace and Defence Industry is available electronically on the World Wide Web at the following address: http://strategis.ic.gc.ca/SSG/ad03414e.html This report was prepared for the Aerospace and Defence Branch, Industry Canada, by Underdown Associates of Nepean, Ontario. For information about the contents of these case studies, or for additional print copies, please contact: Bryan Paul Dalphy Sector Development Officer Aerospace and Defence Branch Industry Canada Room 617C, East Tower 235 Queen Street Ottawa ON K1A 0H5 Tel.: (613) 946-5797 Fax: (613) 998-6703 E-mail: [email protected]

Permission to Reproduce: Except as otherwise specifically noted, the information in this publication may be reproduced, in part or in whole and by any means, without charge or further permission from Industry Canada, provided that due diligence is exercised in ensuring the accuracy of the information reproduced; that Industry Canada is identified as the source institution; and that the reproduction is not represented as an official version of the information reproduced, nor as having been made in affiliation with, or with the endorsement of, Industry Canada.

For permission to reproduce the information in this publication for commercial redistribution, please e-mail: [email protected]

Cat. No. C2-505/2000E ISBN 0-662-29151-4

Aussi disponible en français sous le titre Pratiques exemplaires dans l’industrie de l’aérospatiale et de la défense.

Contains 20% recycled material

Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v Composites Atlantic Limited — Company Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Hiring the Right People . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Creating an Organizational Culture to Support Continuous Improvement . . . . . . . . . . . . 4 Composites Atlantic’s Commitment to Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Performance Management and Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Continuous Improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Messier-Dowty Inc. — Company Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Increased Demand Leads to Rapid Evolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Sound Values and Effective Communication — Keys to a Committed Work Force . . . . 17 Keeping Employees Informed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Rewarding Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Building an Effective Management Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management Competencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Succession Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21 21 22 22

Linking Company Strategy to Every Employee’s Job . . . . . . . . . . . . . . . . . . . . . . . . . . . . Strategic Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The C.O.R.E. System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other Human Resources Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22 22 23 25

Messier-Dowty Employees are Driving Continuous Improvement . . . . . . . . . . . . . . . . . . 25 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

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NMF Canada Inc. — Company Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Organizational Culture and Workplace Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Recruitment, Training and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Performance Management and Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Evaluation of Employee Performance and Development . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Standard Aero Limited — Company Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Creating the Right Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Overview of Training at Standard Aero Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Standard Aero Human Resources and Training Organization . . . . . . . . . . . . . . . . . . . The Standard Aero Approach to Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Types of Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Training Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Resources Used and Return on Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

44 44 44 45 46 48

Job Classification, Performance Appraisal and Compensation . . . . . . . . . . . . . . . . . . . . . 48 Some Standard Aero Training Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . On-the-job Technical Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Apprenticeship Program for Machinists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Health and Safety Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Training to Support Quality and Productivity Improvement . . . . . . . . . . . . . . . . . . . . . . . .

50 50 51 52 53 53

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

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Introduction The Canadian aerospace industry believes that having effective human resource elements is a critical component to ensuring the growth and survival of a company. These elements include the ability to adopt new managerial and shop-floor practices and to develop new staff training techniques, such as teaming and empowerment. To examine the human resource issue, Industry Canada’s Aerospace and Defence Branch hosted the National Aerospace Skill Symposium in February 1999. This skill symposium identified the use of best practices case studies in human resources as the number one priority that addresses the changing human resource needs of companies. This document has been prepared in response to that priority.

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BEST PRACTICES IN THE AEROSPACE AND DEFENCE INDUSTRY

“Teamwork and Continuous Learning Lead to Success at Composites Atlantic Limited”

Best Practices in the Aerospace and Defence Industry — Composites Atlantic Limited

Company Profile Mention Lunenburg, Nova Scotia, to most people and two thoughts come to mind: Lunenburg’s beautiful countryside, well known to tourists everywhere, and the famous Bluenose schooner, whose success in international racing competitions became a Canadian legend. They probably won’t think about leading-edge aerospace technology unless, of course, they have done business with, or had the opportunity to visit, Composites Atlantic Limited. This rapidly growing company, located in Lunenburg, has established an international reputation for innovative design, high-quality manufacturing and customer service. The company has built a highly skilled, motivated and stable work force and is empowering it to contribute to the company’s success. Composites Atlantic Limited was launched in 1993 as a 50/50 joint venture between the Aérospatiale Matra group and the Province of Nova Scotia. The company is an international leader in the design and manufacturing of advanced composite components and integration of subassemblies for aerospace, defence and commercial markets. Its products include aircraft and helicopter components, such as leading-edge fairings, radomes, structural panels and ducting; space and defence products, such as launch tubes, ballistic nose cones, electromagnetic interference protected enclosures and satellite components; and pressure vessels for space and commercial applications. Composites Atlantic Limited has over 80 customers throughout the world. Major customers include Aérospatiale, AlliedSignal, BF Goodrich, Boeing, Bombardier, Bristol Aerospace, Lockheed Martin and Raytheon. The company’s 4650 square metre plant, located in Lunenburg, Nova Scotia, is being expanded to 9300 square metres. Its work force, currently about 80 employees, is expected to reach 100 employees by July 2000. In addition to its plant in Lunenburg, the company has a sales office in Kent, Washington, and an engineering office in Laval, Quebec. Composites Atlantic’s highly versatile manufacturing capabilities encompass a wide range of composite materials and manufacturing technologies. Composites manufacturing processes include hand lay-up, filament winding, resin transfer moulding, compression moulding, thermoforming and pultrusion. Associated manufacturing processes include computer numerical control (CNC) machining, laser machining, robot-controlled plasma spray, bonding, surface finishing and assembling. The company’s facilities include computer-controlled filament winding (five, three or two axis), four- and three-axis CNC milling machines, three clean rooms, and several autoclaves and ovens for curing composite parts. The company’s laboratory provides a comprehensive range of testing capabilities to support quality control and product development, including chemical analysis, physical properties and non-destructive testing.

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Best Practices in the Aerospace and Defence Industry — Composites Atlantic Limited

Computer systems are used extensively within Composites Atlantic’s manufacturing, engineering, testing and business operations. Several processes, such as machining, cutting and filament winding, are computer controlled. Manufacturing operations are coordinated using a state-of-the-art Manufacturing Resources Planning (MRP II) system, featuring real-time bar code data collection, which provides full traceability and maximizes efficiency and performance. Composites Atlantic has comprehensive product design and development capabilities and performs some or all design work on about 60 percent of its products. It also designs and manufactures all of its own tooling. The company’s engineering department is equipped with the latest computer-assisted design (CAD) tools, such as ProEngineer and other software, providing complete two-way compatibility with CATIA. With research and development spending of 5 percent per year, the company considers its product and process development capabilities as essential to its competitive success. The company wins a lot of business by investing in up-front development work to produce prototypes, demonstrating that it can make the product better and for less cost. Composites Atlantic Limited holds the following quality certifications: ISO 9001, Boeing D1-9000 and Qualifas,1 as well as airworthiness certifications from Transport Canada and the U.S. Federal Aviation Administration.

Hiring the Right People Composites Atlantic’s human resources management was discussed at length with Executive Vice President and General Manager Maurice Guitton. Mr. Guitton, who is also a member of Composites Atlantic’s board of directors, had primary responsibility for setting up the company and has been involved in hiring decisions since the beginning. “Composites Atlantic makes a point of hiring people locally,” says Guitton. He emphasizes that this policy not only reflects the company’s sense of responsibility toward the surrounding community, but also makes good business sense. “This community,” he continued, “has been a source of many highly motivated people who are developing their careers in parallel with the growth of the company.” The selection process at Composites Atlantic is rigorous but flexible. The company wants people who are highly qualified or have high potential, but uses some flexibility in evaluating potential applicants. Entry level qualifications for production operators are Grade 12 graduation plus some demonstration of mechanical ability. Prior experience in composites or aerospace is not necessary, but the applicant must have the ability and motivation to learn. Local people, some of whom received post-secondary education outside the area, are also hired at higher level positions. The company maintains a list of pre-screened applicants whose applications

1

Qualité des Approvisionnements pour les Industries Françaises Aéronautiques et Spatiales.

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Best Practices in the Aerospace and Defence Industry — Composites Atlantic Limited

have been reviewed and who have had preliminary interviews. Managers from all departments are involved in this preliminary screening process. When there is a need to hire new workers, applicants are chosen from the pre-screened list and are interviewed. The interviewing process, which may last up to five hours, is conducted by Mr. Guitton and the managers with whom the applicant would be working. The goal of these interviews is to assess the applicants’ abilities and attitudes and to communicate what the company’s expectations are. The applicants also learn about what it is like to work at Composites Atlantic, and are asked the questions, “What are your goals?” and “What can you do for the company?” They must be willing to devote more than 40 hours a week to their careers, including work time and training. The company looks for candidates who are motivated, flexible and willing to learn and work in teams.

Creating an Organizational Culture to Support Continuous Improvement The organizational culture at Composites Atlantic has been shaped by its leadership — people with technical backgrounds who are also concerned with the human side of the business. In his early career, Executive Vice President Maurice Guitton sometimes saw management that was autocratic and out of touch with employees. He vowed that if he became a senior manager, he’d use his power in a positive manner. Guitton has assembled a management team with similar values and a common goal — creating an atmosphere of trust and loyalty in which managers and their employees work on the same team. The management style at Composites Atlantic emphasizes effective communication to ensure that employees at all levels have the information they need to be effective and that managers and their employees understand each other’s concerns. Maurice Guitton stresses that employees need to know about issues that may affect them; for example, if a program is borderline in terms of profit margin, employees should know about it so they understand the importance of finding ways to improve things. Employees are aware of the quality and production targets that they must meet. If, for some reason, they cannot meet these targets, they discuss the situation with their managers and agree on what is achievable and what can be done to meet the target. Everyone in the plant, from the most senior manager to the most recently hired employee, is referred to on a first-name basis. All managers have an open-door policy. Maurice Guitton describes the thinking behind this approach: “In traditional organizations, people are usually afraid to go to management and tell them what’s wrong with the organization, but that’s precisely the kind of information we need.” This approach is a two-way street, “If I don’t like the way someone is doing things, I tell the person directly and we fix the problem and move on.” Guitton stresses that, in a no-blame atmosphere, employees understand that covering up their own mistakes benefits no one in the long run. Employees know that if they make honest mistakes, they will not be fired or otherwise sanctioned. Underlying this attitude is the common

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Best Practices in the Aerospace and Defence Industry — Composites Atlantic Limited

understanding by everyone in the company that true job security comes from making the company better. The organizational structure at Composites Atlantic has been designed to support teamwork and a customer orientation. The company is organized along functional manufacturing units, such as lay-up, assembly and finishing, and other functions, such as engineering, quality assurance, laboratory testing and marketing/sales. The functional units operate as teams and are supervised by a team leader. The company’s Production Manager, Ali Syed, is responsible for all production operations. Team leaders for each manufacturing process report directly to Syed. Overlying this functional unit is a management-based program that focusses on product/customer orientation. A program manager has overall responsibility for each program and interfaces with everyone involved, including manufacturing, quality assurance, engineering, finance, sales and customers. Reporting to the program manager is a program leader, who focusses on the manufacturing aspects and interfaces directly with team leaders for each manufacturing process. Program meetings, involving the program manager, program leader, production manager and representatives from quality assurance, engineering, finance and sales, are held frequently to discuss any issues relevant to the success of the program. Managers communicate key outcomes of these meetings directly to employees on the shop floor and within other departments. The goal is to keep all employees informed about the programs and operations in which they are involved. To support its team-based philosophy and reinforce employees’ sense of ownership for their work, the company has a profit-sharing plan based on team rather than individual performance. Last year, the company distributed about $1000 per employee through the plan. The amount this year will likely be close to $1800. Each employee’s total remuneration also takes individual performance into account as explained later under Performance Management and Compensation. Employee participation on the Health and Safety Committee and Employee Committee is important because managers and non-managers can work together on key issues of common concern. The Health and Safety Committee meets every month to discuss health and safety issues. The committee’s membership includes managers from manufacturing, quality assurance and materials handling and non-management employees from throughout the plant who serve on the committee on a rotating basis. The Employee Committee has monthly meetings to discuss profit-sharing, benefits, events such as the Christmas party, and any issues of concern to employees and management. The committee includes Executive Vice President Maurice Guitton, Production Manager Ali Syed and employee representatives from each department. Composites Atlantic has a policy of promoting from within. Employees have opportunities to move up the ladder if they acquire the right experience and training. For example, shop-floor

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Best Practices in the Aerospace and Defence Industry — Composites Atlantic Limited

employees can be promoted to process team leader, program leader and, subsequently, program manager. The company’s training activities, discussed below, play an important role in helping employees progress in their careers, as well as raising the overall technical capabilities of the work force.

Composites Atlantic’s Commitment to Training Improving skills and knowledge is an important and ongoing part of every employee’s job at Composites Atlantic. The company supports in-house and external training and has been increasing the resources it devotes to training each year. Last year, external training costs, including instructors’ fees and tuition for external courses, averaged over $900 per employee. If the resources devoted toward in-house training were included in this total, it would be considerably larger. All new employees take an orientation course, which includes information on the company and its policies and procedures, employee responsibilities and benefits, the ISO 9001 quality system, health and safety, and materials handling. Several company managers are involved in providing this training. During the orientation session, employees receive a manual outlining the company’s policies and procedures. The company provides a number of in-house courses on the production technologies and related skills used in its manufacturing operations. All employees take a one-week course in the fundamentals of composites. There are also courses in vacuum forming and resin transfer moulding for employees who work in these areas. Employees can also take courses in drafting and blueprint reading. Depending on the subject matter, in-house courses are taught by company or external specialists. Composites Atlantic invests heavily in acquiring new technology, expanding its facilities and training its people — roughly $1 000 000 annually or 10 percent of revenues. In return, it expects its people to invest in themselves by taking some training on their own time. Courses typically run from 4:00 to 5:30 p.m. and sometimes later. Employees are paid for the first half-hour with an understanding that they will contribute an equal amount of their own time. They are generally willing to stay later because they realize that they are gaining valuable knowledge. As a service to the community, Composites Atlantic Limited has allowed individuals outside the company to attend some courses. These people pay a nominal fee to help cover the cost of outside instructors. To provide an effective and easily accessible learning environment, Composites Atlantic has built its own 20-desk classroom within the plant. Along one side of the classroom, a wide range of the company’s products are displayed to illustrate technical issues. Charts showing quality performance, inventory turnover and other production-related variables are posted along the other side. The classroom is a multi-purpose facility; it is also used for problem-solving and

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Best Practices in the Aerospace and Defence Industry — Composites Atlantic Limited

planning sessions. The company also pays the tuition for external courses, subject to management’s approval. In some cases, it has allowed employees to take leaves of absence to study full time. As a knowledge-based manufacturing company, the ability of Composites Atlantic’s work force to generate, utilize and communicate information is a key factor in the company’s ability to compete in the international marketplace. The company’s design, manufacturing and business processes are becoming increasingly computerized and integrated via computer. The company currently uses 56 computers among 80 employees and all employees have access to computers. An employee’s ability to work effectively in this environment is increasingly dependent on computer literacy. Recognizing this reality, the company has supported a number of employees to purchase home computers through a payroll-deduction agreement. According to Maurice Guitton, an important part of every manager’s job is to recognize talent in employees and help them find ways to develop their abilities. Troy Brake is an outstanding example of an employee who is meeting the challenge to develop his career. He was hired three years ago as a production worker after completing Grade 12. As he was very interested in computer-assisted design, he proposed to management that he purchase a computer system, suitable for CAD, based on 50/50 cost sharing with the company — management agreed. Brake bought the computer and learned CAD programming through a combination of self-study and help from the company’s engineers. He is now a first rate CAD programmer.

Performance Management and Compensation All employees at Composites Atlantic are paid on a salary basis, with adjustments made for overtime and leave without pay. Salary is tied to skill level and performance, based on several criteria. Production employees must qualify in at least one production skill, such as lay-up, autoclave, filament winding, compression moulding, thermoforming, etc. Each production skill is rated based on two to five levels. A representative five-level classification scheme is presented on the next page.

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Best Practices in the Aerospace and Defence Industry — Composites Atlantic Limited

Level

Capabilities

1

Basic work, with supervision

2

Ability to work, unsupervised

3

Standard operator level; ability to work to all production requirements

4

Ability to train and supervise people at lower levels

5

Composite technician level; ability to troubleshoot, communicate at the engineering level and contribute to development programs

The standard operator level represents the skill level that a typical production operator can achieve. This level corresponds to the operator being sufficiently skilled to meet the company’s principal production requirements within a particular process. Operators at this level earn a standard wage for that job category. Employees are also rated on several generic skills and behaviour that reflect their performance in contributing to the company: quality of work, quantity of work, attendance, ability to plan and organize, flexibility and potential, health, safety and environment, continuous improvement, teamwork and years of service. Employees receive yearly performance assessments, based on a management-of-objectives system, that are used to adjust compensation and to assess people for promotion. Compensation levels are based on achievement of individual, team and company objectives. To initiate the process, a production employee and his or her supervisor discuss and agree on objectives for the coming year. These objectives are recorded on a review form. For most jobs, six to eight objectives are sufficient. The objectives should be specific, realistic, meaningful, achievable, challenging and measurable, and reflect company business and health and safety objectives. If, as the year progresses, circumstances change, the objectives can be modified. Year-end performance reviews are conducted by the supervisor, with input from the employee and next line supervisor. In addition to the yearly formal assessment system, employees receive continuous feedback on performance from their managers, who also pass this information upward within the organization. Managers can request raises and/or promotions for employees at any time during the year, if they feel that they are warranted. This approach provides a more direct link between performance and reward than relying exclusively on yearly assessments. Composites Atlantic uses a skills matrix to track the overall skill set of its work force. The matrix contains a row for each employee and a column for each level within the production process that indicates specific and generic skills needed within the company. The cells formed

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Best Practices in the Aerospace and Defence Industry — Composites Atlantic Limited

by the intersection of each row and column are colour-coded, showing each employee’s progress in attaining skill levels in each category. This matrix shows, at a glance, the capabilities of the company’s work force, making identification of priority areas for skills development immediately visible.

Continuous Improvement Shoky Mahmood, Quality Assurance Manager at Composites Atlantic, has a staff of nine people, over 10 percent of the work force, representing a major investment in quality assurance by the company. Reflecting the company’s total quality management approach, quality assurance personnel work closely with production and program management to ensure that quality concerns are incorporated into the company’s product design and manufacturing operations. Each quality assurance employee is assigned to work with one or more teams responsible for manufacturing programs. The Quality Assurance Department has weekly meetings to discuss quality issues across the company and to examine new ideas for quality improvement. Because of the critical nature of its products, it is not surprising that Composites Atlantic places great emphasis on its quality management system. The company holds several quality and airworthiness certifications, as discussed earlier, and, in 1994, became the first aerospace company in Atlantic Canada to achieve ISO 9001 registration. Shoky Mahmood explains the importance of effective quality systems in winning and keeping business: “We have been audited by over 70 primes and never failed an audit. In fact, audits by potential customers, for the purpose of qualifying our company’s quality system, often lead to additional visits and new business.” The company’s approach to quality is to resolve problems at the lowest possible level within the organization. Managers encourage employees to develop a sense of responsibility for their work. One of the key tools used to encourage responsibility is the Continuous Improvement To Do List. Each entry on the list includes (1) a statement of the problem/issue, (2) the countermeasure being developed, (3) the person responsible for problem resolution and (4) the expected completion date. Entries are filled out jointly by employees and their supervisors and can be initiated by either person. The company is implementing a system of delegated inspection in which qualified employees are given responsibility to inspect and sign off on work within their production unit. This initiative began in one area of manufacturing and will be expanded throughout the company. Currently, ten production employees have been qualified to inspect and sign off on the quality of work within their production units. According to Quality Assurance Manager Mahmood, the initiative has been well received by employees and is a source of pride among those qualified to perform delegated inspection.

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Best Practices in the Aerospace and Defence Industry — Composites Atlantic Limited

In 1998, Composites Atlantic began adopting lean manufacturing with encouragement and support from one of its customers — BF Goodrich Aerospace. Program Manager Jake Wheeler spent 10 days at BF Goodrich, in California, learning that company’s methods of lean manufacturing and continuous improvement. The BF Goodrich people have also been to Lunenburg to provide training to managers at Composites Atlantic. The initial focus within the lean manufacturing initiative at Composites Atlantic has been on the 5 S’s and visual factory concepts, both of which are described below. The company has also begun to streamline its manufacturing processes, using Kaizen events, and eventually plans to move to a just-in-time system for work flow. The lean manufacturing initiative is not being launched as a separate program, but rather as part of the company’s ongoing continuous improvement process, which began several years ago with a commitment to total quality management principles. Composites Atlantic is adopting the 5 S’s philosophy as a key step toward lean manufacturing. Originally developed by the Toyota automobile company, the 5 S’s provides a basis for creating a self-sustaining culture, which perpetuates a neat, clean, safe and efficient workplace. Moreover, it helps build and sustain a total quality management environment. The 5 S’s are presented below:

Element

Employee Action

Sort

Clearly distinguish between what is needed, what is not needed and what should be thrown out (i.e., outdated, defective or unused items)

Simplify

Organize items logically, making it easier for anyone to find, use and return them to the proper location

Sweep

Keep things clean (i.e., floors swept, machines and furniture clean)

Standardize

Maintain and improve the first three S’s in addition to personal orderliness and neatness

Self-discipline

Make a habit of maintaining the correct procedures and thinking about how they can be improved

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Best Practices in the Aerospace and Defence Industry — Composites Atlantic Limited

Employees are responsible for implementing the 5 S’s in their work areas. This means more than just cleaning up messes; it involves reorganizing the physical workplace to make work safer and more efficient. The goal is to eliminate all forms of waste in inventory, transportation, processing, scrap, motion, overproduction and a person’s effort. Application of the 5 S’s is not a one-time event. Employees will continuously look for ways to improve on a day-to-day basis, as well as during subsequent periods of concentrated effort on the 5 S’s. Program Manager Jake Wheeler is the company’s lean manufacturing coordinator. To introduce the 5 S’s to the work force, he makes half-hour presentations to groups of employees. He and other managers then reinforce the ideas from the seminar through ongoing discussions. To underscore the need for the 5 S’s, Wheeler conducts evaluations of work areas to assess their status relative to the 5 S’s criteria. The results of these evaluations are used by employees to focus their efforts on continuous improvement. “The biggest challenge in implementing the 5 S’s is getting employees to understand that it’s not just about cleaning up a work area because the manager wants it cleaned up, or saving a few seconds here and there,” says Wheeler. “Employees have to understand that small improvements, multiplied many times per day, can significantly improve the company’s performance.” Ali Syed adds, “Everyone has to be involved, from senior managers to the most junior employee; otherwise, it won’t work. It takes a while to get people convinced of the value of the program; it’s important not to try to do everything at once.” The company began applying the 5 S’s by having one group of employees reorganize their work area. In this particular work area, one of the problems was that tools were not stored in an organized manner. It was difficult for workers to find the tools they needed quickly. Sometimes new tools were ordered because misplaced tools could not be found. Using the 5 S’s approach, the employees determined what tools were needed for their work. They took inventory within their area and assembled a complete set of tools, buying new ones where necessary. The complete set of tools was then organized on a shadow board2 and a new rule established: Put tools back on the shadow board when finished with them. With the new system, employees no longer waste time looking for tools. If one is missing, the empty space on the shadow board makes it immediately obvious. When implementing the 5 S’s in their work area, the employees found a number of spare tools that had been purchased as replacements for misplaced tools. The spare tools are now kept in a storage area and can be transferred to work areas when new or replacement tools are needed. The highly visible improvements from this project have helped communicate the benefits of the 5 S’s to employees throughout the company. Another idea, which came from shop-floor 2

Wall-mounted board with hooks for each tool and the tool’s outline drawn on the board to show proper placement.

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Best Practices in the Aerospace and Defence Industry — Composites Atlantic Limited

employees following the 5 S’s, was to paint equipment areas, which are prone to resin buildup, white. Spilled resin is visible against the white surface and can be promptly cleaned up. Once the 5 S’s have been implemented throughout the plant, they will be applied to the engineering and administration offices. The second component of the company’s lean manufacturing initiative is the visual factory concept. Creating a visual factory actually begins with using the 5 S’s to organize work areas so that anything out of place will be immediately obvious. Beyond this initial step, the company has implemented a system of visual controls that makes the status of processes, machines and upcoming work orders immediately visible to anyone in the plant. The system employs colourcoded status indicators: green, operating normally, yellow, operating but problems encountered, red, not working correctly and gray, calibration and/or maintenance in progress. Notice boards posted in each work area show the planned workload and specific job orders to be processed. The notice boards have spaces, organized by customer and by month, in which job-order cards are posted. Coloured dots on the job-order cards show the status of orders and these dots use the same colour-coding as the other visual controls. Machine usage logs are posted next to process equipment. These visual controls allow everyone in the company to see what is currently happening and what is planned for equipment and processing areas throughout the plant. A third aspect of the lean manufacturing initiative involves process improvement. The company recently held a Kaizen event, involving several production employees, managers and Kaizen trainers from BF Goodrich. The five-day event involved about 50 percent training and 50 percent improvement work on one manufacturing process. Employees found ways to improve their work. For example, by simply putting a door between two processing areas, the travel distance for parts was reduced from 2135 metres to 1130 metres, resulting in a 20 percent time savings. This and other changes resulted in a 40 percent reduction in cycle time and work-in-progress inventory. Keeping the momentum going for continuous improvement is crucial. The level of effort on the 5 S’s and other continuous improvement activities must vary with the workload in the plant. During peak periods, this activity level is reduced, but management makes sure that some continuous improvement effort is ongoing. Ali Syed adds, “We have a production meeting every Friday and there is always some time spent on the 5 S’s or other continuous improvement initiatives.” Consistent with the importance that the company attaches to continuous improvement, contributions to continuous improvement initiatives are considered as part of employee performance evaluations. How big a difference can empowered employees, using continuous improvement methods, make to the company? Executive Vice President Maurice Guitton points out that Composites Atlantic achieved a 15 percent improvement in productivity last year, much of it due to the

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Best Practices in the Aerospace and Defence Industry — Composites Atlantic Limited

efforts of shop-floor employees. Ali Syed concurs, “Continuous improvement provides the tools to empower our employees. It makes them more effective and leads to increased productivity.”

Conclusion Composites Atlantic is an excellent example of a company that uses its human resources effectively to help achieve success in the aerospace marketplace. The company has been winning new business and exceeding its revenue growth target of $1 000 000 per year. Its employees are enthusiastic about their work. This was clear not only from our interviews and plant tour, but also from the fact that the turnover rate from all causes is about 0.5 percent per year, far below the industry norm. The quality of life in the Lunenburg area is another positive. Employees at all levels place a high value on being able to work for an advanced technology company and live in the area. They are willing to make an extra effort to ensure that the company is successful. Leadership by example is a key factor in the company’s success. Its organizational culture and values have been determined by the management style of senior executives. By developing a management team with similar values, the company intends to maintain its culture and values as it continues to grow.

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BEST PRACTICES IN THE AEROSPACE AND DEFENCE INDUSTRY

“Management Leadership Drives Positive Change at Messier-Dowty Inc.”

Best Practices in the Aerospace and Defence Industry — Messier-Dowty Inc.

Company Profile Messier-Dowty Inc. is a major supplier of landing gear systems to aircraft manufacturers throughout the world. In Ontario, the company has 435 employees at its Ajax facility and 65 employees in Peterborough. The work force is 36 percent managerial and administrative, 20 percent engineering and 44 percent unionized production workers. Sales in 1999 were over $140 million, most of which was either exported directly or indirectly through sales of Canadian regional and business aircraft. Messier-Dowty Inc. is part of Messier-Dowty International, the leading global supplier of landing gear systems with worldwide sales of $750 million in 1999 and over 2700 employees. In addition to Messier-Dowty Inc. (Ajax and Peterborough), Messier-Dowty International’s Canadian operations include manufacturing operations in Mirabel, Quebec. Messier-Dowty provides landing gear systems to some of the world’s major aircraft manufacturers and is the sole supplier to Airbus and largest supplier to Bombardier. Although its roots go back to the formation of Dowty Aerospace 60 years ago, the current organization was created in 1995 as a joint venture, when Britain’s TI Group and France’s Snecma combined their landing gear businesses. Messier-Dowty International became a fully-owned Snecma company in 1998. Messier-Dowty International has implemented a global strategy based on supplying comprehensive landing gear systems, from runway to cockpit, whose design, manufacture and integration into an airframe is undertaken as a seamless, global engineering challenge. In this environment, engineering teams span supplier–customer boundaries to focus on the interface between landing gear and airframe. Their goals are to optimize the aircraft design, from an owner perspective, while minimizing development and manufacturing costs and time. Competitive advantage is created by constantly finding new ways to improve landing gear systems and to ensure that they are manufactured reliably and economically while meeting customers’ scheduling requirements. The approach has required expansion of the skills possessed by the company’s engineers, technologists and manufacturing employees. These changes have been very evident at Messier-Dowty Inc. (Ajax and Peterborough), which designs everything it manufactures. Messier-Dowty3 has created a cohesive management team and committed work force to implement the above strategy while responding to a rapidly changing aerospace market. The result has been a tripling of company sales and a substantial increase in profitability since 1994. This case study illustrates how the company’s human resources practices have helped achieve these results.

3

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In this case study, “Messier-Dowty” refers to Messier-Dowty Inc. or Messier-Dowty (Toronto), comprised of the Ajax and Peterborough facilities.

Best Practices in the Aerospace and Defence Industry — Messier-Dowty Inc.

Increased Demand Leads to Rapid Evolution The early 1990s were a difficult time for Messier-Dowty. The company was particularly vulnerable to external market conditions because it only had two landing gear programs. A downturn in the aerospace market led to a downsizing of the work force. Employee morale had seen better days. Fortunately, market conditions began to improve, leading to new opportunities. A determined effort at diversification led to new programs and improved sales. This was a positive development, but brought with it a host of unanticipated problems. MessierDowty’s manufacturing and business systems had not been updated during the downturn of previous years. The result was high-intensity strain on these systems as the company struggled to respond to growing business opportunities and more demanding customers. Inefficiencies that had crept into the system when production volumes were lower were amplified by the increasing demands. Delivery times and profitability suffered, so the company had to make major changes. In 1995, a mostly new management team, led by President Ken Laver, undertook the challenge of fixing the basics of Messier-Dowty’s manufacturing system while continuing to meet immediate customer needs. A team effort was undertaken with minimum formal team-building methods and philosophy — there wasn’t time. Tony Wood, Vice President, Operations, described it this way, “Everyone from the president on down was chasing parts through the plant, determined to find out where excessive costs and time delays were occurring.” Gradually, they succeeded in bringing processes under control, eliminating bottlenecks and reducing non-value-added work. Performance improved dramatically, allowing the business to continue expanding. The challenges faced by Messier-Dowty throughout the 1990s were made even more daunting by the growth in the complexity of the business. The number of programs increased from two to thirteen and the programs themselves grew more complex as Messier-Dowty evolved from a landing gear assembly supplier to a landing gear supplier/systems integrator. During this time, Messier-Dowty began to make significant changes to the way it worked with its suppliers by increasing the proportion of work being contracted out while moving to fewer suppliers. Today, the company manufactures 53 parts in-house, down from several hundred parts five years ago.

Sound Values and Effective Communication — Keys to a Committed Work Force Keeping Employees Informed One of the key factors behind Messier-Dowty’s success has been the support of a motivated and committed work force. Creating this work force was challenging because morale had been poor during the downturn in the early 1990s, followed by a period of rapid growth during which

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Best Practices in the Aerospace and Defence Industry — Messier-Dowty Inc.

management made a concerted effort to increase productivity. As processes were streamlined, gaps in work schedules were created. Management had to deal with employees’ fears concerning the impact of improved productivity and increased outsourcing of their jobs. Management made a verbal commitment to employees that it would make every reasonable effort to avoid laying off workers as a result of the changes being made to the business. Management asked for and received one concession — that employees who had free time take on other tasks to help the company, even if that meant a machinist sweeping the shop floor. Over the last five years, Messier-Dowty management has honoured its commitment of making every reasonable effort to avoid layoffs. Although the growth environment made it easier to avoid layoffs, specific plans were needed to keep employees with the company. For example, when Messier-Dowty spun off a non-core business in 1998, the affected employees stayed with the company and were simply reassigned to other jobs on a priority basis. In late 1996, Messier-Dowty launched a new strategy to improve communication across the business. The goal was to replace the rumour mill with facts so that employees would be better informed on the direction of the business and why decisions were being made. Some of the initiatives used to implement the strategy are discussed below. Management Meetings: During these quarterly off-site meetings, managers are briefed on manufacturing, financial, marketing and other business issues. The objective is to provide consistent messages to all managers, which can then be cascaded to all employees through subsequent meetings. Cascade Briefings: Managers hold monthly one-hour meetings with their direct employees to inform them of the outcomes of management meetings; to review sales, profit and cash flow numbers; and to discuss other developments. Information cascades down through the organization, providing all employees with a better understanding of how the company is doing, where it is going and the rationale for decisions. Stand-up Meetings: Cell leaders hold brief, informal meetings once or twice a week to deal with issues needing immediate attention. Lunch with the President: Groups of employees are invited to lunch with the president to voice concerns, have questions answered and share ideas among departments. When these luncheons were first instituted, most of the focus was on employee complaints, but as these issues have been resolved, the focus has shifted to discussing future developments within the business. Quarterly Newsletter: The Human Resources Department publishes Touchdown, with Human Resources Vice President Barry Wohl acting as editor and employees from throughout the company contributing material. A typical issue contains articles on business developments, a profile of a Messier-Dowty department or group, and accounts of employee social events.

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Best Practices in the Aerospace and Defence Industry — Messier-Dowty Inc.

Human Resources Runways: These official company bulletin boards, placed strategically throughout the facilities, inform employees about recent developments in the company, employee benefits, job postings and other items. Barry Wohl stresses the importance of multiple paths of communication, “You need top-down, bottom-up and sideways communications to fill the black holes that might otherwise stop the information flow.” His Human Resources Department has been instrumental in developing and implementing the communications strategy, but it could not have worked without support from the other managers. By communicating clearly, consistently, accurately and often, management has increased the level of trust and confidence among employees. Rewarding Employees One of the most important things that Messier-Dowty management communicates to employees is the high value placed on their contribution to the firm. Management’s policies and actions demonstrate this in a number of ways. Profit Sharing: Messier-Dowty pays a bonus to its employees when the company has met or exceeded its financial performance targets, i.e., profit and cash flow. Charts showing progress toward these targets are posted within the plant. All employees receive the same amount. Last year, they received a $1500 bonus and that amount is expected to be even higher this year. Physical Environment: In spite of an increasing workload, Messier-Dowty managers and employees have continued making improvements to their physical work space. Visitors to the plant in recent years have noticed many visible changes: painted floors, clearly delineated work areas, better organization of work-in-progress, etc. Air conditioning, rarely found in machining operations, was installed in the plant at a cost of approximately $500 000. There are no hard numbers that say it will pay off, but management believes that the improved working environment will enable people to be more efficient. Family Day: Management invites employees to bring their families and friends to visit the site. The employees act as tour guides and provide demonstrations of manufacturing operations. These events have drawn over 900 people. Bring Your Kid to Work Day: Once a year, employees are encouraged to bring their Grade 9 teenagers to work with them. After receiving a guided tour, they meet the president and other senior managers. This gives teens an opportunity to see first-hand the type of work their parents do. Christmas Parties: The company hosts a Christmas party, held at a local hotel, for employees and their spouses. Formal invitations, each hand-signed by the president, are mailed to the employees’ home. President Ken Laver and other senior managers make an effort to greet

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Best Practices in the Aerospace and Defence Industry — Messier-Dowty Inc.

everyone as they arrive or during the evening. The Messier-Dowty employees’ Sports and Social Club also organizes a children’s Christmas party and the company purchases a gift for each child. In the week leading up to the holidays, Ken Laver and other senior managers try to shake hands with everyone in the company, extending holiday wishes and thanking them for their contribution. Global Art Contest: Messier-Dowty International held an art competition for employees’ children with the theme “The Airplane of the 21st Century.” Close to 200 children, from France, the United Kingdom and North America, took part. The first place winner and winner in another category were children of employees working at Messier-Dowty’s Peterborough and Ajax plants respectively. The first place winner’s artwork appears on Messier-Dowty’s Christmas cards. The artwork of all other contest winners appears in the company’s Year 2000 calendar. All of the children who entered the contest received a large colouring set and a copy of the calendar, which listed all those who entered the contest on the second page. Summer Jobs: Messier-Dowty hires a number of its employees’ university-level sons and daughters. Children of all employees are encouraged to apply. The Human Resources Department ensures that the selection process is unbiased with respect to the parent’s position within the company. Purchase of Company Cars: All employees are given an equal chance to purchase company cars at the end of their leasing period. The Human Resources Department ensures that the bidding process is fair. Messier-Dowty Promotional Material: The Human Resources Department has produced items to promote company team spirit, including quality clothing, mugs, etc. These items are given in recognition of employee efforts, such as participating on process improvement teams. These items have become very popular with the employees and, in response to demand, can also be purchased by employees at cost. Production Manager Eli Brigler did a case study on the company’s communication strategy as part of his MBA studies. According to Brigler: “Employees spend more than a third of their adult life in, and travelling to and from, the workplace. It is important that employees take pride in their achievements since usually only bad news filters home.” Many of the events described above are intended to bring families closer, while instilling pride among Messier-Dowty employees. How well does this work? An exact measurement might be difficult; however, based on the high participation rates, these programs are viewed very positively by employees. Clearly, Messier-Dowty’s investments in its work force have been good for the business as well as its employees. We asked President Ken Laver how the company balances the interests of customers, employees and owners. He answered this way: “Everyone should put the customer first — building successful, stable relationships with customers is in the long-term interest of

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Best Practices in the Aerospace and Defence Industry — Messier-Dowty Inc.

managers, employees and shareholders. The key is to look beyond the scope of what you are doing today and identify how your company can be more valuable to customers in the future, and get all employees involved in making this happen.” He provided an example of a MessierDowty manager who actually requested that a promotion, already awarded, be postponed. A program that the manager was responsible for was coming to a critical milestone, and the manager wished to stay with the program to ensure that everything went well.

Building an Effective Management Team The senior management team, which has led Messier-Dowty through the current period of rapid change, was assembled mostly from individuals who came from other parts of the organization and from other companies. They brought with them their individual abilities and a willingness to take on a challenge. As the focus has shifted from fixing problems to continuous improvement, the company has developed a long-term approach to ensure that its management team will be able to meet future challenges. Some highlights of this approach are discussed below. Management Competencies Ken Laver recently gave a presentation at an executive education round table, sponsored by Industry Canada and the Ontario Aerospace Council, in which he articulated five key qualities that managers need to develop: Flexibility: Being able to respond rapidly to a changing environment. Communication Skills: Being able to communicate effectively your organization’s vision, mission, goals and objectives throughout the company in order to enhance employee motivation and empowerment. Senior managers should spend most of their time communicating. Team-oriented: Being able to create and work within teams to enhance internal capabilities and bring in external capabilities where needed. Working effectively on customer–supplier teams in which everyone “gets a vote” on how a product is designed. International Mind-set: Being comfortable with differences in cultures and able to appreciate different business concepts. Strategic: Being able to think outside the box and see new opportunities and directions; for example, evolving from supplying components to supplying assemblies and developing a systems engineering capability.

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Best Practices in the Aerospace and Defence Industry — Messier-Dowty Inc.

Education The company uses several means to build competency among its managers. For example, it has supported some of them to earn conventional or Executive MBA degrees, in some cases, at a foreign university. Recognizing that the MBA route is not appropriate for all managers, Messier-Dowty has been working through the Ontario Aerospace Council to examine the possibility of creating an Executive Education Program for aerospace managers. Succession Planning Human Resources Vice President Barry Wohl has been working with senior management to develop a succession plan. To develop and update the plan, he first meets with all vice presidents individually to get cross-feedback on managers’ performance and to identify changes to the business that may occur over a three-year period and the implications for management competency. He then develops a preliminary plan that is presented at senior management’s offsite meeting. The plan is then refined through a process of open discussion. According to Wohl, “Developing the initial succession plan was tough. There was a considerable amount of input to gather and analyze; however, the annual updating process will be much easier. Besides making the company better prepared for the future, the succession plan is a motivating factor for managers to perform well and build their potential.” The succession planning process developed at Messier-Dowty has been adopted by Messier-Dowty International.

Linking Company Strategy to Every Employee’s Job Strategic Planning At an off-site meeting in January 1996, the senior management team developed a new process for planning and running the business based on a combination of bottom-up and top-down planning. The process begins with managers discussing past performance and future opportunities with their employees. This is followed by a senior management off-site meeting during which the strategic plan is updated. The plan defines critical success factors to support the company mission and initiatives that are linked to these factors. Messier-Dowty’s mission and critical success factors are presented on the next page.

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Best Practices in the Aerospace and Defence Industry — Messier-Dowty Inc.

Messier-Dowty Key Business Mission “Maintain and strengthen Messier-Dowty’s position as a world-leading landing gear supplier in its chosen segments through the eyes of its stakeholders” Critical Success Factors: What the team must accomplish to achieve its business mission C C C C C C C C

Maximize profitability Benchmark quality outputs Provide world-class customer support Achieve 100 percent delivery reliability Minimize utilizing working capital to finance business growth Simplify and integrate business systems Maintain competitive advantage through innovative design and manufacturing Create an environment that encourages people to maximize their contribution to the business goals

The C.O.R.E. System Messier-Dowty’s performance management process is called C.O.R.E. (Communicating Objectives and Results for Excellence). C.O.R.E. is the principal mechanism for linking the company’s strategy to the tasks and performance objectives of all employees and for aligning day-to-day operations with the business plan. The C.O.R.E. process consists of the following six elements: 1. Communicating the strategic plan, critical success factors and initiatives. 2. A responsibility review, in which the major responsibilities of an employee’s position are reviewed and prioritized. 3. Performance plans, developed to support the strategic plan and performance improvement objectives. 4. Progress reviews, which are formal and informal updates that are conducted during the business cycle. 5. A year-end review, which provides a final performance review between the manager and employee. 6. Developmental plans for each employee.

The C.O.R.E. process cycle begins once the annual strategic plan has been developed by senior management. The critical success factors and initiatives are the key inputs to the C.O.R.E.

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Best Practices in the Aerospace and Defence Industry — Messier-Dowty Inc.

process. Starting with the president and proceeding down through successive levels in the organization, employees complete their C.O.R.E. responsibility reviews and performance plans. Non-union employees participate directly in the C.O.R.E. process. Unionized employees have their manager’s performance plan communicated to them and have a developmental plan created. Employees start a new C.O.R.E. process annually with their direct managers. At the initial C.O.R.E. meeting, management is responsible for ensuring that the employee understands the C.O.R.E. process, the critical success factors, and his or her responsibility for any initiatives and supporting tasks. The employee and his or her direct manager conduct a responsibility review to ensure that they are in agreement on the employee’s responsibilities and priorities, that the responsibilities are in alignment with the strategic plan and that performance standards are understood. Opportunities for performance improvement are also highlighted. Performance plans are developed for the significant tasks the employee is responsible for. These plans are tied directly to the initiatives and critical success factors. The performance plan answers the following questions: $ $ $ $ $ $

Why is this being done? Who is going to be involved? What is to be done? When is it to be done? What resources will be used? How can the objectives be achieved?

Once completed, the responsibility review and performance plan are approved by the direct and next level managers. The manager and employee meet on a regular basis to review and discuss progress in achieving the performance plan. These meetings provide an opportunity for management to give feedback and support, and to ensure that there will be no surprises at the end of the cycle. A formal interim review is required about halfway through the year to document the status and results of initiatives. It also provides an opportunity to review the employee’s commitments, reassess plans and objectives, acknowledge good performance, update strategies and renew commitments. At the end of the business year, the manager and employee conduct a year-end review meeting to examine success in implementing the performance plan and the employee’s effectiveness in carrying out his or her major job responsibilities. The interim and year-end reviews evaluate not only the achievement of objectives but also the methods used; how effectively people have worked together; effects on suppliers, customers and other departments; and the skills being used and developed. Results of performance plan

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Best Practices in the Aerospace and Defence Industry — Messier-Dowty Inc.

reviews are communicated back to senior management to provide information on the success in achieving strategic plan initiatives. The results are also a major input for creating the employee’s developmental plan. Developmental plans are designed to assist employees in developing skills that will: 1. 2. 3. 4.

Address weaknesses identified in the year-end review. Improve organizational flexibility and employee mobility. Meet future organizational requirements for skills and qualified personnel. Meet the employee’s personal goals and aspirations.

There is no direct link between C.O.R.E. and compensation, although achieving one’s performance plan is a factor considered in salary reviews. Other Human Resources Systems Messier-Dowty’s Human Resources Department has been updating systems for job evaluation, performance evaluation and compensation. These interrelated systems play a central role in employee development, as well as in identifying the company’s human resources needs. According to Human Resources Vice President Barry Wohl, coming up with well-designed systems is only the first step toward success. “For the systems to work, the Human Resources Department must get support from other managers and the company’s employees. We have to convince them that the system is fair and will provide benefits that justify its use. The trust built up through the communications initiatives provides a foundation.”

Messier-Dowty Employees are Driving Continuous Improvement Regardless of where they work within the company — management, engineering, shop floor or administrative offices — Messier-Dowty employees are increasingly being delegated responsibility to critique, invent and implement new practices. The company is introducing lean manufacturing concepts to its operations, including reorganization of work into cells, the 5 S’s approach to work habits, elimination of non-valueadded work and adoption of a pull or just-in-time system for managing the flow of work throughout the plant. Tony Wood, Vice President, Operations, points out that the company downplays the term lean manufacturing: “Labels get overused and can lose credibility. Our emphasis is on getting people involved in making the improvements.” Employees are participating in the re-design process through action workout teams, which focus on specific manufacturing problems or re-design objectives during seven-day problem-solving sessions. During the sessions, employees are trained in problem-solving and teamwork methods by a facilitator hired specifically for that purpose. The action workouts have so far resulted in

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Best Practices in the Aerospace and Defence Industry — Messier-Dowty Inc.

several improvements to the company’s manufacturing operations and are expected to be an ongoing mechanism for continuous improvement. Process improvement at Messier-Dowty is by no means confined to the shop floor. Improving the company’s design and development processes is a high priority. George Novacek, Director, Electronics Facility at Messier-Dowty’s Peterborough operation, has been working on changing the engineering processes and culture for five years. “When I first took over managing the Peterborough facility, most of the engineers were not overly concerned with the development costs and times involved in their work. Also, because engineers like to design things, there was a tendency to re-invent the wheel. The business mind-set needed to make practical decisions versus buy decisions was not there.” Novacek has been instilling this business mind-set in his engineers through a combination of training courses, coaching and leading by example. It appears to be working. During the last five years, development times at Peterborough have been reduced from five to two years and sales have increased from below $2 000 000 to $7 000 000. Further improvements are expected as process improvement teams map design and manufacturing processes to identify opportunities for the elimination of non-value-added steps. The Peterborough division has strengthened its manufacturing engineering function and is moving toward closer integration of design and manufacturing engineering, which will ultimately lead to concurrent engineering. One of the major improvements currently under way at Messier-Dowty involves program management. Messier-Dowty operates as a matrix organization with functional and program managers. A program manager is responsible for each landing gear program and must keep the schedule, budget, quality and statement of work in balance throughout the course of a program. Program managers must ensure that functional areas work well together and that manufacturing priorities respond to customer requirements. To handle the growing number and complexity of programs, the company decided to introduce a new system that would support uniform program management methods across all programs. Ken Chandler, Director of Program Management, is leading the team that is developing and implementing the new system. When they examined the company’s current program management practices, they found significant variations from contract to contract. Developing the new system has involved selecting the best practices already being used at Messier-Dowty and supplementing them with others used elsewhere. Program management software was selected that provided reasonable compatibility with plans for the new system. According to Ken Chandler, the challenges involved in implementing a new program management system are 40 percent procedures-related and 60 percent people-related. People will have to know how to use the new system and why it is important. Everyone who will have some contact with the new system, including program managers, procurement managers and engineers, will receive training on the system. Messier-Dowty has been working with the Ontario Aerospace Council to develop a program management course that will provide comprehensive training for its program managers. It will be implemented at Messier-Dowty in

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Best Practices in the Aerospace and Defence Industry — Messier-Dowty Inc.

2000. Some program managers, designated as super users will receive extra training and be responsible for providing support to other users. To avoid overloading them, these super users will be assigned relatively smaller programs during the start-up period. The new system will be implemented on existing programs when they reach a gate or milestone point. To ensure that the people-related issues associated with the system are dealt with effectively, the vice president, human resources, is on the implementation steering committee.

Conclusion Senior management at Messier-Dowty has set a clear mission and objectives for the company and adopted values that are in the long-term interests of its customers, employees and owners. Management focusses on informing employees so that they understand the business, why decisions are made, what the decisions mean to them and what they can do to help the company. The human resources function supports this process by developing and executing a human resources strategy as a key element of the company’s overall strategy. This represents a departure from the traditional role of human resources as being primarily an administrative function. The new approach requires the senior human resources manager to be part of the company’s leadership and act as a change agent, in partnership with the other senior managers. Messier-Dowty’s size appears to favour effective human resources management. The company is large enough to have dedicated human resources professionals, but not so large as to make organizational change unwieldy. Nevertheless, the company’s approach to human resources, and many of its methods, can certainly be adopted by smaller companies, even those without a separate human resources function. The starting point — the chief executive officer and all other managers should consider human resources to be one of their key responsibilities.

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BEST PRACTICES IN THE AEROSPACE AND DEFENCE INDUSTRY

“Focussing on Values Creates an Effective Organization at NMF Canada Inc.”

Best Practices in the Aerospace and Defence Industry — NMF Canada Inc.

Company Profile NMF Canada Inc. (also referred to as NMF) is a world leader in the production of large aircraft wing panels. Located in Mirabel, Quebec, 20 kilometres north of Montreal, the company employs over 180 people at its 9300 square metres plus manufacturing facility. As a major supplier to Bombardier, NMF Canada Inc. has provided wing panels for Bombardier regional and business jets, including the Challenger, Global Express, Lear Jet 31, 45 and 60 and de Havilland Dash 8-400. Other customers include Mitsubishi Heavy Industries, Israel Aircraft Industries (IAI), Messier-Dowty, Avcorp and Bell Helicopter Textron. NMF Canada Inc.’s proprietary Formax shot peening technology, used to manufacture wing panels, provides the company with unique capabilities and a competitive advantage in the global marketplace. NMF has been building on this advantage by adding other process capabilities as it evolves into a fully vertically integrated wing manufacturer. The 1990s have been a period of rapid expansion for the company, the expansion having occurred in three phases: Phase I: NMF Canada Inc. was formed in 1991 and, at the request of Bombardier Aerospace, built a facility in 1992. As part of this initiative, the company designed and built the largest saturation shot peening machine in the world. Phase II: In 1995–96, the company added several downstream operations, including liquid penetrant inspection, chromic acid anodizing, a paint shop for fuel-resistant coats and topcoats, and an inspection and finishing facility. Phase III: In 1998, NMF acquired machining and design capabilities, which established the company as a vertically integrated manufacturer of wing assemblies, and set the stage for the next major goal — to become a manufacturer of complete wings. The company acquired a 10 000 rotations per minute, 3-spindle, 5-axis gantry milling machine, capable of machining 18 metre long parts, and created a numerical control (NC) programming group, equipped with CATIA, NCL, Vericut and AutoCAD software. NMF also added a structural assembly facility. The expansion has been accompanied by rapid growth in the company’s work force, which has doubled annually during the last seven years. NMF Canada Inc. has been recognized as an outstanding aerospace supplier and for its excellence in management. In 1997, the company won the Mitsubishi Supplier of the Year Award and, in 1998, the company was recognized as a Supplier of Excellence by Israel Aircraft Industries for cost reduction and quality achievements. In January 1999, NMF was voted one of the 50 best-managed companies in the Arthur Anderson-Financial Post survey (also sponsored by the Canadian Imperial Bank of Commerce and PeopleSoft).

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Best Practices in the Aerospace and Defence Industry — NMF Canada Inc.

NMF Canada Inc. has a strong organizational culture, based on fairness, open communications, teamwork, learning and entrepreneurship. This case study examines NMF Canada Inc.’s organizational culture and the management practices that created it.

Organizational Culture and Workplace Environment To understand the organizational culture at NMF, one needs to know that most managers in the company have advanced from the ranks of the company’s production workers. Operations Director Guy Levasseur, for example, came to the company with a background in machining and welding and was originally hired to work in production. Shortly after being hired, he saw that there were opportunities to improve production methods and brought this to the attention of President David Cook, who then assigned him responsibilities in methods development and subsequently in management. The development of Levasseur’s career, and those of other NMF managers, parallels the growth of the company. “What this company looks like is what we look like; the organizational culture was created from the ground up,” states Levasseur. NMF Canada Inc. has a non-traditional management philosophy, based on semi-autonomous work teams consisting of 10–12 employees and led by a team captain. The approach emphasizes multi-skilling and strives to maximize employee sense of ownership for the work being done. The Management by Walking Around approach is widely practised at NMF, from the president on down. President David Cook can be found in the plant, discussing technical issues and finding out what is new from employees. If there is a rush in production, NMF managers, who started out on the shop floor, will get involved in hands-on production operations. The presence of managers who have advanced from the shop floor helps create a close working relationship between managers and production workers. It also demonstrates that there are opportunities for people to advance in the company. Most managers at NMF have learned how to manage people mainly from their own experience and from each other. According to Levasseur, NMF managers always ask the question, “How can I manage my employees the way I wanted to be managed when I was doing their jobs?” To answer this question, the managers often discuss different ways of managing employees and dealing with specific issues. The company considers the shop-floor background of many of the company’s managers as one of its most valuable assets. As the company grows, the management approach will evolve but the goal for management is to stay close to its shop-floor roots. To this end, managers who move up through the ranks have a responsibility to communicate the management philosophy to those who join from outside. NMF managers emphasize that their first priority is the well-being of the company’s employees, and this starts with an open-door policy. All employees can talk to any manager in the company. If employees are having problems with their work, managers try to find out why. If,

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Best Practices in the Aerospace and Defence Industry — NMF Canada Inc.

for example, an employee is not suited for the work to which he or she has been assigned, the manager will try to transfer the employee to a different type of work or location in the company. In some cases, special arrangements have been made; for example, a painter with a knee problem had difficulty reaching the underside of wing panels. The solution was to have the panels racked higher. In the case of disputes between employees, those involved are responsible for bringing the problem to the attention of Management Coordinator Anne Truchon, who designates a mediator to help the employees solve the problem. To create an atmosphere of confidence and common purpose, the company emphasizes effective communication, both vertically and horizontally, throughout the organization. There are frequent management meetings involving the supervisory level and above. Supervisors discuss the outcomes of these meetings with their team captains, who then relay information to team members. Operations Director Guy Levasseur also holds monthly employee–management meetings with small groups of employees. Managers make a point of listening to everyone who will be affected by a decision. Once a decision is made, managers explain it to everyone involved so those who disagree with the decision will understand the reasons behind it. NMF endeavours to create an entrepreneurial atmosphere in which employees think about how they can help the company succeed. Charts showing work schedules, performance in meeting schedule objectives and quality conformance are posted throughout the plant. To provide an opportunity for employees to see how their work fits into the big picture, the company is arranging an employee visit to a major customer’s plant. Managers at NMF are expected to extend the team-based approach across departments. For example, they are encouraged to make their needs known to upstream departments, to anticipate scheduling problems in advance and to ensure the availability of additional people to avoid problems. If, for example, the on-hand supply of a particular part or material is falling toward problem levels, the manager responsible will talk to the relevant people to get things moving before a serious shortage occurs. Vice President, Operations, Steven Kennerknecht points out that middle managers are the ones who see the problems first-hand; it’s important to give them support and latitude to solve them. Although the management approach has evolved from the ground up through practical experience, managers understand that they must manage in a consistent manner. Decisions must be consistent with the company’s values and be in compliance with applicable regulations. While the line managers are very involved in human resources management, Management Coordinator Anne Truchon is responsible for documenting human resources-related procedures and information, and for ensuring that the correct procedures are consistently followed. Human resources management is governed by rules noted in the company’s employee manual. This document, which is provided to all employees, articulates the rights and responsibilities of employees and management in topics such as working hours, statutory holidays, sick leave,

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Best Practices in the Aerospace and Defence Industry — NMF Canada Inc.

workplace behaviour, health and safety, seniority, job classification, pay rates and promotion. The manual was developed by management and a committee of employees. Do employees like working at NMF Canada Inc.? Management Coordinator Anne Truchon has been with the company for three years and has worked with managers and employees throughout the company. According to Truchon, “For people who really like challenges, always learning new things and being part of a team, this is a great place to work.” Based on NMF’s extremely low turnover rate, less than 2 percent per year, the company has proven that it has been able to find the right kind of employees.

Recruitment, Training and Development NMF has found that a disciplined approach to recruitment is essential to building an effective work force. The recruitment process begins with the management coordinator conducting preliminary screening interviews with new applicants, as well as obtaining and checking references. Line managers, for whom the new employee would be working, conduct follow-up interviews. All new employees must undergo a medical exam to ensure their suitability for employment. New employees take a basic training course and receive a training manual covering the following topics: • • • •

workplace health and safety; familiarization with the workplace, including the different departments and their responsibilities and functions; documents used for production, including work orders, travel cards, inspection reports, etc.; and terms related to scheduling, quality and process specifications.

New employees are assigned to work closely with an experienced employee during an initial training/probationary period, which may be three months for employees assigned to the more technically demanding Formax (shot peening) process, or three weeks for employees who will start work in other operations within the company. There is a formal evaluation at the end of the probationary period, at which time the employee must demonstrate knowledge of the company’s operations and the production methods that he or she will be using. In addition to on-the-job training, employees receive formal instruction where needed. Educational institutions, upon NMF’s request, provide in-house training courses in technical areas, such as machining and painting. The company is currently examining possibilities of having outside service providers conduct customized courses in shot peening and in basic industrial operations. Each year, two or three of the most promising shot peeners are sent to an internationally known shot peening course. The company also reimburses employees for tuition

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Best Practices in the Aerospace and Defence Industry — NMF Canada Inc.

for successful completion of approved courses at outside educational institutions. To be approved, courses must be relevant to the employee’s current or future responsibilities in the company. The company makes every effort to help people advance their careers within the company. For example, job openings are posted in the plant for five days. Part of every manager’s job at NMF is to find ways to match people with job opportunities. Managers make a point of learning about the goals and capabilities of employees and sharing information among their fellow managers. Operations Director Guy Levasseur describes the approach, “Developing employees to meet future opportunities is like a chess game and we try to think six moves ahead.” NMF’s employee development philosophy is very evident in the evolution of the company’s Formax process. Formax, the most unique and technically demanding of NMF operations, involves using shot peening for the precision forming and surface conditioning of large, integrally machined aluminum wing panels. Formax has several advantages over other forming methods, including long-term retention of complex curvature. Once a wing panel is formed, saturation shot peening is used to create a compressive surface layer with a homogeneous grain structure that extends fatigue life and resists stress corrosion. Initial shot peen forming, as well as the final saturation peening, is done in a large, computercontrolled machine. The detailed or surgical forming work is done by highly skilled operators using hand-held shot peening tools. As the wing panel is formed, it adopts the contours of a checking fixture, but the shape changes are controlled by the operator. It takes one to four days to form a wing panel, depending on its size and complexity. The forming pattern is critical to quality and cycle time. François Adam is the supervisor of Formax operations. He emphasized that it takes special abilities to be a good Formax operator: “These people are like artists. It’s hard to describe what makes a good operator; mathematical ability appears to be the common trait.” NMF has been standardizing its shot peening processes to ensure repeatability and to continuously improve quality while reducing cost and cycle time. This transformation of shot peening from a craft-oriented process to a more systematic, documented technology is being accomplished by a group of the company’s most highly skilled and creative shot peening operators, known as Team Formax. The creation of this team has provided these individuals with challenging career opportunities as process developers. In addition to standardizing shot peening procedures, the team is responsible for ongoing development of Formax technology, troubleshooting and employee training. George Hébert, who joined the company six years ago as a maintenance worker, leads Team Formax. He had been trained as an electrician but was not able to find a job in his field. When the company was short-handed and facing tight production schedules, Hébert asked if he could

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Best Practices in the Aerospace and Defence Industry — NMF Canada Inc.

work in production. He received training in basic manufacturing methods and was soon working on production. Since this first opportunity, he has continued to advance in the company. According to Hébert, replacing the traditional approach to shot peening with Formax has involved people issues as well as technical ones. “Everyone had their own best way of doing shot peening and egos were naturally involved.” Hébert relied on the company’s team philosophy to make the project work, telling his colleagues, “We each have our way of doing the job but as a team we need to find out what works best.” He points out that it is important to include people with different ideas on the team to ensure that the best way will be found. To become a Team Formax member, one must demonstrate superior ability in shot peening and have the necessary character attributes, such as working well in a team, desiring technical challenges and being able to teach others. Admitting a new member to the team is a group decision. Although the Formax approach has taken some of the art out of shot peening, it remains a very technically demanding process. To assist new workers in acquiring the required skills, Hébert wrote a technical manual. He has also developed a seminar for Formax technicians to help them further develop their skills. NMF’s management approach encourages employee versatility. About 80 percent of the employees are cross-trained in more than one production skill. Cross-training is not a formal process; managers encourage employees to learn the skills required to work in different parts of the company. François Adam, the supervisor responsible for Phase I (Formax) operations, joined the company in 1996 and has worked in both Phases I and II. One of the advantages he had when he started in Formax was that he came from the downstream process, and knew how his work would affect his colleagues. “In this company, everybody knows what the other guy is doing. It helps us get the job done.” Stephane Fortin is the supervisor for Phase II operations, which include anodizing, painting and shipping/receiving. He joined the company in 1998 as a mechanic. Along the way to becoming a manager, he worked in painting, Formax and tooling. Fortin believes that his experience in other parts of the company helps him manage the Phase II operations. In turn, he helps others gain experience: “I am sharing some knowledge on painting techniques with the anodizing team leader,” says Fortin, “which should eventually enable that individual to take on more responsibility.” The emphasis on versatility applies to other areas of the company as well. Michael Deshaies, Director of Machining Operations, is the company’s most experienced computer numerical control (CNC) programmer and has trained others at NMF and elsewhere. He points out that CNC programmers must understand machining as well as programming because they are interrelated — the quality of their machining knowledge influences their programming, which in turn influences the efficiency and quality of machining.

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Best Practices in the Aerospace and Defence Industry — NMF Canada Inc.

NMF’s policies in multi-skilling, good communication and promotion from within serve to reinforce each other. François Adam summarizes the attitude toward helping others succeed: “We all try to train our employees so they can do our jobs. Making the team stronger is the best way to enhance our individual job security. If, in the future, I get an opportunity to move up the ladder, I want to be sure that there is someone who can take over my current job.” A high level of commitment, combined with the versatility resulting from multi-skilling has enabled the company to turn on a dime to meet challenges. For example, one customer asked NMF to repair the damaged wing on a new aircraft several days before the scheduled delivery date. They had five days to do the repair — four days to repair the wing using shot peening and the fifth day to paint. NMF put a task force together and sent the people and equipment on site to do the job. To accommodate the effort, many people in the company had to do a different job for four days. Successfully meeting this challenge provided a positive experience for NMF’s employees. In addition to their sense of accomplishment in getting the job done, there was a realization that the company’s ability to apply its technology in different settings could lead to future business opportunities. NMF’s employees are encouraged to contribute to improving quality and productivity. There is a suggestion box, but the main way that employees contribute is through direct contact with their managers. The company is in the final stages of implementing ISO 9002. It has designated an ISO coordinator and hired an outside consultant to provide ISO-related expertise; however, everybody is on the ISO team. Employees are involved in developing the ISO documentation. Implementation teams, consisting of a supervisor, production team leader and one or two employees, are responsible for implementing ISO within each area of the company. Vice President, Operations, Steven Kennerknecht points out that the company used the same approach when implementing its Materials Requirements Planning system. “If you’re going to have an effective system, every department has to take ownership, beginning at the development stage.”

Performance Management and Compensation Being committed to fairness and encouraging everyone to develop to the best of his or her ability are worthy goals, and most companies would agree with them. To put these ideas into practice, however, a company needs effective systems for measuring performance and using the results to compensate employees and help them advance in their careers. NMF Canada Inc. has implemented a system to accomplish these goals. As mentioned earlier, new employees in technical positions, such as shot peening, must complete a three-month training/probationary period, during which time their abilities to master basic skills and demonstrate good work habits and attitudes are evaluated. Thereafter, employees are evaluated as they progress through the levels associated with their job category. There are three or four levels above the beginner level, depending on the job category. The

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Best Practices in the Aerospace and Defence Industry — NMF Canada Inc.

knowledge and performance requirements for each level are defined and included in the company’s employee manual. Lower level requirements include understanding production operations and being able to perform them, interpreting work instructions and demonstrating good work habits. Upon progressing to the highest level within a job category, one needs to demonstrate the ability to inspect one’s own work, to train workers to meet the requirements of the lower levels, to manage other employees and to develop the process further. Each employee is evaluated for promotion to the next level of his or her job category after working a specified number of hours at the current level. The number of hours between evaluations varies with the job level and category. If an evaluation outcome is satisfactory, the employee moves up to the next level. If the outcome is unsatisfactory, a second evaluation is done a month later. The employee and his or her supervisor conduct the evaluation using a three-part evaluation form. Key topics covered in evaluations are listed below. Once completed, the evaluation form is signed by the employee and supervisor. The completed form then goes into the employee’s personnel file and the employee receives a copy. Pay rates are tied to job levels within each category and are revised upward each year based on published cost-of-living statistics. By improving their skills and performance, employees are able to achieve pay raises beyond what is needed to match cost-of-living increases. If an employee reaches the highest level within a job category and promotion to a higher job level is not available, the employee can earn an additional pay raise at management’s discretion.

Evaluation of Employee Performance and Development Part One (completed by employee) • Results achieved with respect to key objectives set at the last evaluation • Suggestions and recommendations that would assist the employee in accomplishing his or her work, and obstacles that exist • Objectives relative to the current position for the next evaluation period • Proposed steps for improving skills and capabilities in the future • Additional comments Part Two (completed by management; performance is rated on a five-point scale) • Employee knowledge relative to position, including technical knowledge, rules and policies, health and safety standards, and relevant industry requirements • Attitude, including working well with management, being innovative and contributing new ideas, handling stress and conflicts, accepting more responsibility and attendance

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Best Practices in the Aerospace and Defence Industry — NMF Canada Inc.

• Productivity, including the amount and variety of work accomplished, meeting schedules, use of proper methods, working to the required standard with a minimum error rate, contribution to the team and ability to deal with non-routine situations • Communication: written and verbal, with supervisors and co-workers, knowing when to ask for clarification • Judgement: knowing when to take independent decisions and when to consult others, demonstrating initiative, handling complex subjects and recognizing when to change schedules to accommodate priorities • Management capabilities: contributing to the development of subordinates, assuring that their work is consistent with company standards, effective planning of the team’s work and resolving interpersonal conflicts Part Three (completed by employee) • Specifies training and development topics to be addressed in the upcoming evaluation period

Conclusion NMF Canada Inc. has developed an organizational culture and human resources management practices that effectively meet its needs as a small but rapidly growing company. Although the company has avoided overly complex procedures and documentation, it has not ignored the need for a systematic approach to human resources management. It has put in place the fundamental elements of effective human resources management, including company-wide values and expected behaviours, systems for performance evaluation and compensation, and a commitment to managing consistently. As the company grows, it can expand its human resources system to meet its evolving needs. One of the most outstanding features of NMF’s management approach is the emphasis placed on values, that is, the shared ideas about how the company should operate. Although there is no formal statement of the company’s values, it is very clear that NMF managers share a number of values that guide the way they operate. The following is an unofficial list of NMF Canada Inc.’s values: 1.

2. 3. 4. 5.

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Focus on the customer, including people in the company who depend on your work, aerospace companies that buy the product and the people who travel on aircraft built with our products. Employee well-being is the highest priority. Employees will be treated fairly. Technical skills and knowledge are critical to our success. Managers should encourage and support employee development. Everyone can be part of the entrepreneurial team. How can you help the company succeed?

Best Practices in the Aerospace and Defence Industry — NMF Canada Inc.

6. 7. 8.

If you develop your capabilities and contribute to the company you should be given advancement opportunities. Share information with others. Help them solve their problems. No one has all the right answers. Work as a team to find the best way to do things; then do them consistently.

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BEST PRACTICES IN THE AEROSPACE AND DEFENCE INDUSTRY

“Training and Development at Standard Aero Limited Built on a Commitment to Continuous Improvement”

Best Practices in the Aerospace and Defence Industry — Standard Aero Limited

Company Profile Standard Aero Limited is one of the world’s largest independent gas turbine engine and accessory repair and overhaul companies. Headquartered in Winnipeg, Manitoba, with facilities located around the globe, the company has over 60 years of experience in serving the needs of aircraft, marine and industrial engine operators in over 80 countries. Standard Aero’s customers include corporate and charter aircraft organizations, governments/militaries, power generation and gas line pumping companies, and some of the world’s largest regional airlines. Standard Aero’s strategy focusses on ensuring that its customers operate their engines at the lowest possible direct operating cost. The company emphasizes a repair rather than replace approach and has extensive facilities for component restoration. It has developed proprietary repair processes that, in some cases, enable components to exceed their original design specifications. The company offers a comprehensive range of related services, including logistics, financing, diagnostic, reliability and monitoring tools; program management and field service; troubleshooting; and engineering support. Standard Aero employs 1200 employees in Winnipeg and 2200 worldwide. The non-unionized work force is about 25 percent managerial and administrative, 10 percent engineering, and 65 percent skilled trades and technicians. The company’s matrix organizational structure is based on strategic business units, corresponding to engine repair and overhaul (R&O) programs, and functional areas, such as engineering, operations, marketing, quality and human resources. Within the strategic business units, production and support operations are organized into teambased work cells. Human resources and most other functions within the company have personnel assigned to the strategic business units as well as within a central department. The organizational structure has five levels, ranging from the president to the shop floor. During the last six years, Standard Aero’s revenue has grown by 196 percent to over $4 000 000. Exports to the United States, Europe, Asia-Pacific and other regions of the world account for close to 80 percent of total revenue. The company’s Large Engine Product Unit, servicing Allison T56/501D and AE2100 engines, has the largest world market share in the repair and overhaul industry. Several other business units are ranked second and third by world market share. Standard Aero cites the caliber of its work force as being a critical factor in achieving success. To create this work force, the company has developed a highly sophisticated and disciplined training system. This case study illustrates the training system and its links to the firm’s other human resources systems, as well as its business strategy and operations.

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Best Practices in the Aerospace and Defence Industry — Standard Aero Limited

Creating the Right Environment Although this case study focusses on training and development at Standard Aero, it is worthwhile to examine how the company’s other human resources practices help create a good working environment, without which even the best training system would be ineffective. The company’s approach to human resources can be summarized with the PRIDE acronym: Provide a positive workplace environment; Recognize, reinforce and reward everyone’s efforts; Involve everyone; Develop skills and potential; Evaluate and measure progress while managing employee expectations. The first step, provide a positive workplace environment, is described below. Human resources plays a central role in fostering Standard Aero’s team-oriented culture and emphasizing harmonious relations and trust between managers and other employees. Human resources is readily accessible to employees through human resources coordinators, who are responsible for each business unit. The human resources coordinators are generalists who deal with a wide range of human resources issues. Employees are encouraged to go to human resources with problems and have the option of discussing their situation with anyone they wish. Managers learn that they should not feel threatened if employees go directly to human resources with a problem. As Human Resources Director Alex Yoong points out, “It doesn’t matter who was approached first, as long as problems are resolved to everyone’s satisfaction.” Besides dealing with hiring and staffing of new employees and conducting exit interviews, the human resources coordinators handle day-to-day employee relations issues, including career opportunities and development. Effective management−employee communication is fundamental to having a motivated and empowered work force. The company strives to solicit employees’ input wherever feasible. To provide input effectively, employees must be informed; for example; they should understand the reasons for management’s decisions. The president gives a “state of the company” address generally once a year and, several times a year, members of the executive management group meet with employees to discuss company developments. Cell leaders share highlights of business developments with employees at regular meetings. Standard Aero does a number of things to boost employee morale and build loyalty; for example, funding Christmas parties and summer picnics. Besides a traditional gift of a Christmas turkey, employees receive a yearly bonus, equal to about 15 percent of one month’s pay. Also being considered is a scholarship program for employees’ children, as well as a computer purchase program. To help employees address work-related and/or personal problems, the company instituted an Employee Assistance Program, delivered by an outside counselling service. Employees using the service are guaranteed secrecy and are guaranteed that their jobs will not be at stake.

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Best Practices in the Aerospace and Defence Industry — Standard Aero Limited

The Human Resources Department continually works to find ways to improve its services to employees. For example, when an employee decides to leave the company, an exit interview is conducted to determine the reasons. The department also works with its counterparts in other companies to benchmark human resources practices.

Overview of Training at Standard Aero Limited The Standard Aero Human Resources and Training Organization Standard Aero’s human resources function has 24 people in Winnipeg and 12 others outside Canada. The executive vice president, human resources, heads the human resources function. Reporting directly to him are the directors of human resources and training. There are six training staff in the Training Department, and several other staff located elsewhere in the company who report jointly to the training manager and their business unit manager. The company tries to have as much training as possible delivered by line personnel because they are most current in the techniques to be taught. As Human Resources Executive Vice President Bruce Clarke says, “The goal is to have everyone in the company become a trainer and a trainee.” The Standard Aero Approach to Training In its current form, Standard Aero’s training system is about three years old, having evolved to its present state through 16 years of effort that began when Bruce Clarke, now Executive Vice President, Human Resources, joined the company as its first training coordinator. Standard Aero’s human resources personnel emphasize that management support is critical to the success of the company’s training and development program. Management must create a culture that supports training and allocates the needed resources. All training personnel at Standard Aero play a role in gaining this support. A key responsibility of the executive vice president, human resources, is to get training concepts across to other senior managers. The training coordinators work closely with cell leaders to ensure that training meets the needs of each cell and to optimize scheduling. Production demands sometimes make it difficult for employees to make time for training; however, because senior management assigns training a high priority, the needed time is found. According to Clive Bebbington, Director of Employee Training and Development, “Training is a process, not an event.” Standard Aero strives to provide training that is closely geared to company and employee needs and is delivered reliably and cost-efficiently. The most immediate reason for training is to meet regulatory requirements, as defined by Transport Canada, Federal Aviation Administration (FAA), International Organisation for Standardization (ISO). Other reasons include improving an employee’s skills in his or her current job, developing skills for future jobs, and attracting and retaining employees. Training needs are systematically evaluated and used to plan training programs. Training is delivered by qualified

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Best Practices in the Aerospace and Defence Industry — Standard Aero Limited

instructors using documented, consistent methods. Progress and outcomes are monitored to ensure quality and to support continuous improvement. Training is followed up with related hands-on practice within a reasonable time period, and this practice is documented. The systems for training and development, job classification, performance management and compensation are mutually consistent and use essentially the same approach for technical, professional and managerial skills. To date, the approach has been implemented for all technical personnel, first-line managers and 70 percent of the company’s professionals. Standard Aero trains to qualify people in skills rather than tasks. They must understand why procedures are done and be able to apply them under a variety of circumstances. The company believes that versatility creates value for the company and the employee. Multi-skilling is particularly valuable in a cell-based organization as it allows the cell to handle changing workloads and solve problems involving more than one skill. Cross-training (training people in several skill sets) is a big investment. Besides the direct training costs, it can involve paying a higher than regular rate to a trainee in recognition of skills achieved in other areas. The company considers this investment worthwhile. The company encourages employees to attain relevant professional designations, such as those associated with the Canadian Aviation Maintenance Council (CAMC), the Association of Professional Engineers and the Purchasing Managers Association of Canada. This promotes professionalism and makes the company more competitive in the marketplace. The company pays training costs and membership dues associated with these designations. Possessing relevant designations is a prerequisite for achieving the highest pay rate for a particular job. Standard Aero has been instrumental in validating the concept of a Gas Turbine Engine Technician, one of the designations developed and supported by CAMC. This designation defines a cross-trained gas turbine engine mechanic and inspector. The skill set combines dismantling, assembly and inspection into one job, replacing the old approach in which these tasks were done by different people. The old way missed opportunities to create synergy among these tasks; for example, performing some inspection during dismantling. Types of Training Training for new Standard Aero employees begins with the company’s orientation and basic training programs. The orientation course (22 hours over five days) provides an overview of the company, health and safety procedures, regulatory compliance and quality assurance and an introduction to the company’s training system. Employees receive a package containing an employee handbook and other documents containing information found in the orientation course. Technical employees take an additional basic training course (48 hours over approximately 3–9 months) that provides comprehensive coverage of basic manufacturing

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Best Practices in the Aerospace and Defence Industry — Standard Aero Limited

skills, including precision measuring, blueprint reading, lock-wiring, torquing, quality assurance and other skills. Standard Aero provides technical and managerial training to enable employees to develop throughout their careers. Most of this training is provided in-house by company personnel and some outside instructors. The company also pays the tuition for employees to take relevant external courses outside normal working hours. The Training Cycle Ongoing training and development at Standard Aero is based on a one-year training cycle. The process is managed by training coordinators and receives input from employees and their managers. At the beginning of the training cycle, skill gaps are identified and training plans formulated and recorded in training documents, described below. To avoid redundant training, qualified employees can be exempted if they meet the required standard. During training, progress is monitored and the employee’s direct manager signs off when the employee has demonstrated attainment of the required skills. Training outcomes are then entered into training documents. Progress is tracked by training coordinators to ensure that the time taken to complete courses, and the training/workload ratios, are reasonable. Darryl Rudge, Quality Assurance Training Manager, points out that the Quality Assurance Department does quality assurance on training processes to ensure that they are operating as planned and that the quality of workmanship meets the company’s standards.

Training Cycle and Documentation

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Best Practices in the Aerospace and Defence Industry — Standard Aero Limited

Standard Aero uses the following tools to manage training and development: Employee Development File: Current information on training and development, e.g., copies of certificates, transcripts and training database printouts, is contained within a file for each employee. As the employee completes training and acquires experience, the file is updated. The file contains only training-related material. It belongs, and is always accessible, to the employee, but is held by the manager to ensure adequate security. Information is transferred to the employee’s permanent personnel file at the end of the annual training cycle. People leaving the company can take their training files with them. Training and Development Plan: A training and development plan defines the skills needed for a particular position and documents training progress on an ongoing basis. Training and development plans are used to plan and control training to meet skill set requirements. Training coordinators work with employees and their training managers to implement training and development plans. They are initiated within six months of beginning employment and updated on an ongoing basis as skills are required. The training and development plans of employees in each cell are used to update the skills matrix for that cell. Employee Development Plan: Employee development plans identify training and development needs and describe agreed upon plans to address them. They are created by doing a gap analysis between an employee’s skills and his or her training and development plan. Employee development plans specify areas of development, objectives for the development period and courses to be taken. They are initiated upon beginning employment, re-issued annually and updated at six-month intervals. While in progress, the plan is kept in the employee development file. Each year, at the end of the training cycle, the completed employee development plan is forwarded to the Human Resources Department and placed in the employee’s personnel file. Skills Matrix: Skills matrix charts, posted in every work cell, document the available skills within the cell. There is a row within the matrix for each cell member and a column for each skill used in the cell. An individual’s progress through four levels for each skill is shown by progressively drawing the four sides of a square within the intersection of the appropriate row and column. The trainer and trainee must sign off at each step and the cell leader and training coordinator sign off when Level 4 is completed. When an appropriate group of skills has been signed off, the trainee is assigned a program of work (experience package) that he or she must complete using the skills acquired. Training Database: The training database provides a record of skill acquisition, internal and external courses, and designations for each employee. It also provides an overall view of the work force capabilities for planning purposes. Employee-specific printouts are placed in one’s employee development file.

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Best Practices in the Aerospace and Defence Industry — Standard Aero Limited

Resources Used and Return on Investment Training hours at Standard Aero, as a percentage of payroll, vary over time due to changing company and employee needs. The company expects that, over the long term, training hours amounting to 6–7 percent of total hours worked would be a sustainable level. According to Director of Employee Training and Development Clive Bebbington, it is difficult to measure the return on training investments accurately. A more practical approach is to determine needs accurately, set the right training objectives, and design and conduct the training in the most cost-efficient manner possible.

Job Classification, Performance Appraisal and Compensation In 1996, Standard Aero assessed its system for job classification, performance appraisal and compensation. Focus groups were used to determine employees’ level of satisfaction with and specific issues related to the existing system. The feedback indicated a need to improve consistency with respect to pay grades and benefits, such as vacation time. There was also a need to provide more uniform mechanisms for career development. Furthermore, employees did not perceive value in having separate systems for salaried employees and those paid an hourly rate. Feedback results were shared with employees, making the change process more open and gaining everyone’s support. The first step in redesigning the system was to develop consistent and accurate job descriptions, using a systematic process of job evaluation. Marion Johnston, Manager, Compensation and Human Resources Information System, emphasizes that doing this right required considerable effort and attention to detail. To avoid inconsistencies and prevent bias, human resources provided training to management on how to evaluate jobs. The department also obtained information on salaries through external surveys and used this information to assist in setting compensation levels. To improve the system and increase buy-in, human resources provided employees with the opportunity to review the results of job evaluation and voice their concerns. After a three-year period of redesign, the new systems for job classification and compensation have been implemented at Standard Aero. They provide a uniform approach for both salaried employees and those paid an hourly rate and match pay to skills and performance. The illustration below shows how an employee can progress in terms of pay and job classification. Within a particular job classification, an employee’s pay is 70–100 percent of the job rate. By performing well and adding skills, the employee can increase pay as a percentage of the job rate within the current job level and subsequently move to a higher job level. At 100 percent of the job rate, employees can earn a re-earnable bonus of up to 10 percent of the annual job rate through several mechanisms, such as exceptional job performance, cross-training/multi-skilling, participating on continuous improvement teams, being a trainer/mentor, pursuing designations/certifications and working on other projects of value to the company.

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Best Practices in the Aerospace and Defence Industry — Standard Aero Limited

The new system promotes employee training and development and supports the multi-skilling approach; however, the transition to the new system required some measures to accommodate employees. In cases where employees’ existing salaries were above the new job rate for their classification, the company gave these individuals priority on training and development opportunities to allow them to progress to a higher job classification prior to the new policy taking effect.

Progression Within and Between Two Job Levels

The company has implemented a new system for performance appraisal that uses a softwarebased evaluation tool to assist managers in conducting annual performance appraisals. The offthe-shelf software has built-in flexibility, which enabled Standard Aero to configure the software to meet its own needs. The software leads the evaluator through a series of questions dealing with technical and behavioural competencies that are derived from the employee’s job description and the company’s vision, values and goals. Currently, the employee’s direct manager performs the assessment, which must be signed off by at least two levels of management. Down the road, the company may consider expanding the assessment to a 360 degree format, in which an employee’s manager, subordinates and co-workers all provide input. The new system provides a more consistent approach to deciding who gets a particular job and how much the job pays. The output of the performance appraisal, in combination with training outcomes, is used for salary and promotion decisions, to identify training and development requirements, and to assist in company-wide human resources planning.

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Best Practices in the Aerospace and Defence Industry — Standard Aero Limited

Some Standard Aero Training Programs On-the-job Technical Training Standard Aero’s technical training is provided through a combination of classroom and on-thejob training. The company is applying similar principles to in-house classroom training. Technical Training and Development Coordinator Len Baspaly is responsible for the on-the-job training program. Baspaly emphasizes that training must be done with the same attention to quality as the company’s repair and overhaul operations; otherwise, the outcomes will not be acceptable. He says that the old approach to on-the-job training was “learning by osmosis.” “It doesn’t work very well  if there is no rigour, how do you know that the people doing the training are teaching the right things? You need a system to prevent the possibility of the wrong way being taught,” states Baspaly. On-the-job training is carried out in accordance with well-defined company practices designed to maximize effectiveness. Before training starts, the instructor questions the trainee concerning his or her mental and physical state to ensure that the trainee is ready, willing and able to take the training. During a pre-training discussion, the instructor covers the following points: •

• • •

Importance of the job and consequences of error. Baspaly asks the instructors to communicate the message, “You are working with nuts and bolts, but people’s lives will depend on how you work with them.” Use of Original Equipment Manufacturer or approved documentation. The sequence of steps in the training, including the start and end points and critical steps. Safety issues, including bail-in/bail-out procedures (to be used by the instructor or trainee, respectively, for interrupting the trainee’s use of power-on equipment).

Training lessons are carefully designed. The trainer and cell leader may decide what skills are to be taught, but the trainer is responsible to ensure that all on-the-job training and follow-up evaluations comply with relevant technical standards and approved procedures. In other words, on-the-job training is used only for teaching approved technical processes. Some good practices that must be built into on-the-job training include: • • • •

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ensuring that the trainee is involved in hands-on practice as soon as possible after learning theory; ensuring that interruptions do not detract from training; ensuring that training is as realistic as possible; for example, tools and materials should be where they would normally be found in the working environment; enforcing, for safety reasons, the requirement that the instructor must never turn his or her back on the trainee during the training session; and

Best Practices in the Aerospace and Defence Industry — Standard Aero Limited

•

encouraging the trainer not to step in unless trainees are about to damage the part, the machine or themselves.

Trainees are evaluated using well-defined procedures and criteria and receive a rating of Pass or More Practice Needed. The trainee must demonstrate 100 percent capability to meet the criteria and the instructor must be truly confident that the trainee has reached the desired level of competence in order for a passing grade to be given. If the result is more practice needed, the instructor and student take a break prior to discussing where improvement is needed. There is a post-training period of supervised practice during which the employee must successfully utilize the acquired skills to perform a specified number of operations. Becoming an on-the-job training instructor requires special capabilities and commitment. During a one-day course, followed by two on-the-job evaluations, prospective on-the-job training instructors learn training and evaluation methods and about the personal characteristics of effective trainers — integrity, responsibility and consistency. Each instructor trainee is asked to do some soul-searching before deciding to become a trainer and must have the support of his or her cell leader. Before being qualified as trainers, they must develop a new training lesson for the on-the-job training program and obtain approval for its use. Prior to conducting on-thejob training, instructors must be technically qualified in the area of training, as well as receive training authorization from the Training Department. Approximately 55 percent of those who take the on-the-job training Instructor’s Course become qualified instructors. Newly qualified on-the-job training instructors receive a framed certificate under glass, plus a $50 gift certificate to a local restaurant. Being an on-the-job training instructor is one way to earn credits toward the re-earnable bonus. Apprenticeship Program for Machinists Standard Aero has developed a provincially approved (Red Seal) internal apprenticeship program for machinists. John Leroux, Training Coordinator for the Component Restoration Services Business, explains the problem with traditional apprenticeship training: “It requires eight-week blocks of time away from the job to attend classroom and practical instruction at a training institution. This is not feasible for most people and companies, due to lost wages and production time. Typically, apprentices tend to go through several companies and collect Employment Insurance benefits during time away from work.” The company developed an alternative program for apprenticeship training that spreads the training period over a ten-month period with the training being done in the evening and on the weekend. As with conventional apprenticeship training, the mix is 70 percent shop time and 30 percent theory. The new training arrangements make it possible for the apprentice to continue working throughout the training period, providing benefits to the individual, the company and the economy. Standard Aero proposed the arrangement to the Government of Manitoba and obtained funding to hire instructors from local technical colleges. As part of the

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Best Practices in the Aerospace and Defence Industry — Standard Aero Limited

agreement, Standard Aero reserves some places in the program for smaller companies. Students take the training on their own time and pay for their own textbooks. Standard Aero’s journeyperson machinists are involved in the program as mentors. Some were hesitant, at first, to become involved. Leroux asked them to think about the person from whom they received their training. Did they appreciate that person’s help? He suggested to them that they have a responsibility to complete the circle. The response has been very positive, with many journeyperson machinists participating. Besides the intangible benefits involved, being a mentor is another way that Standard Aero employees can earn credits toward the re-earnable bonus. The apprenticeship program has been very successful, with over 70 apprentices currently enrolled. A recent analysis of exam performance, conducted by the Manitoba Ministry of Education and Training, showed that Standard Aero program graduates scored significantly higher than average. The company’s scrap and re-work rates have decreased as a result of the training. Standard Aero has developed a flexible approach to help experienced machinists obtain journeyperson qualifications. The individuals involved include people who have learned onthe-job, people who have been away from school for a long time, or immigrants who have completed programs in other countries that are not recognized in Canada. They may also need to strengthen their English language skills prior to writing provincial board exams. Both groups have the practical knowledge and required hours of experience needed for the designation. The company provides individual assessments to identify what language, math and technical training is needed to pass the provincial board exam and, if the employee wants to continue, contracts teachers to tutor the employee in the required areas. Health and Safety Training Standard Aero promotes ongoing health and safety awareness, knowledge acquisition and problem solving through several safety committees involving managers and employees at all levels and throughout the company. These committees include (1) an executive level committee, (2) safety committees for each business unit (consisting of managers and an elected employee representative for each cell in the business unit) and (3) committees to deal with specific issues, such as job-hazard analysis, respiratory concerns and hearing conservation. These committees meet regularly and are interconnected through common members. To transfer the information developed by safety committees to all employees, safety representatives often speak on safety topics at weekly stand-up meetings. Safety Officer Bob Tetrault emphasized the need for ongoing awareness building, “The key challenge is to build safety into the company culture and keep people’s awareness of their responsibilities high.” This challenge is being met. Trevor Boulanger, Safety Training and

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Best Practices in the Aerospace and Defence Industry — Standard Aero Limited

Chemical Safety, cites some results: “The average Workers’ Compensation premium in Manitoba is $1.49 per $100 of payroll. By achieving a low and decreasing accident rate, Standard Aero has been able to reduce its premiums from $1.46 to $0.25.” Management Training There are about 500 people employed at Standard Aero in the management and professional job categories. To support its policy of promotion from within, the company is implementing a training program for managers, designed to be followed over three to five years. Although the company previously outsourced all its management training, it has decided to bring much of it in-house, to lower costs and increase flexibility. The new program uses a combination of internal and external courseware and instructors, including: •

The Canadian Institute of Management (CIM) Program, delivered through the University of Manitoba. This program provides baseline skills in various management functions, such as finance, human resources and information technology. People are encouraged to pursue the CIM designation on their own time. The company pays the tuition and dues.

•

A leadership-oriented training program, which is delivered through a combination of videos and in-person facilitators, was purchased from a major private sector training provider. Alicja Rarog and Jack Bernier, coordinators for professional training and development, have taken facilitator training from the training provider and act as facilitators for in-house delivery of the program to Standard Aero managers at its facilities in Canada and in other countries.

Training to Support Quality and Productivity Improvement Standard Aero’s Quality Assurance and Training departments work closely with each other to provide quality training to employees. According to Quality Assurance Director Kim Olson, the company’s matrix organization provides an effective framework for involving both departments in quality training. New employees receive an introduction to the quality assurance system during orientation or basic training. This includes an overview of quality principles, viewing quality from the customer’s perspective, the cost of poor quality, the company’s quality documentation, the role of the Quality Assurance Department, employee and management responsibilities, measures of performance (quality, cost and turn-time) and continuous improvement. Employees attend in-house seminars on a variety of quality topics and receive training to acquire internal quality assurance qualifications as needed. Training is also provided to employees working on continuous improvement projects. The Quality Assurance Department has trained about 25 continuous improvement facilitators (mostly cell leaders or engineers) in problem-solving methods and people skills. These

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Best Practices in the Aerospace and Defence Industry — Standard Aero Limited

facilitators provide training to project team members as needed. Approximately 8–10 weeks in duration, the continuous improvement projects are undertaken with well-defined objectives in mind and make use of project-management methods. The projects have resulted in measurable results that justify the resources used. Since the early 1990s, Standard Aero has implemented many business process redesign projects, which have transformed the company’s production and support operations into a cellbased organization. The redesign projects, which require significant capital outlay, have resulted in high process ownership and large reductions in waste, cost and turn-time. Executive Vice President, Special Projects, Brian Lanoway leads the redesign program and enlists resources from other business units as needed. Redesign task forces, consisting of mostly shopfloor employees, perform the redesigns over 5−6 week periods of full-time effort. Three internal consultants work on redesign projects full-time and provide training to task force members as needed.

Conclusion Standard Aero has a highly sophisticated training system that is closely linked to the company’s related human resources systems, such as job classification, compensation and performance management. The company’s approach to designing and implementing training and development processes, based on rigorous attention to detail, is similar to that taken in other areas of critical importance, such as repair and overhaul operations and business process redesign. The approach includes setting objectives high and focussing on needs, creating processes that will achieve objectives consistently, and following up systematically to ensure that processes work as intended and to find ways to continuously improve them. Considering the impact that employee skills can have on operational and business outcomes in an aerospace company, it is difficult to understand why all aerospace companies would not adopt this approach.

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