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COMMUNICATION IN ft CHANGING CORPORATE CULTURE: AN ETHNOGRAPHIC
CASE STUDY Of AN EMPLOYEE STOCK OPTION PLAN -- •'
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ELIZABETH L. FOGARTY
Thesis Sp.Com. 1995 F655C
c. 2
Fogarty, Elizabeth L.
Communication in a
changing corporate
1995.
COMMUNICATION IN A CHANGING CORPORATE CULTURE:
An Ethnographic Case Study of An
Employee Stock Option Plan (ESOP) Corporation
by
Elizabeth L. Fogarty
Submitted in Partial Fulfillment of the Requirements
For the Masters of Arts in Communication Degree
Approved by:
s/f/fs
Date
Chairperson, Thesis Committee
Edintoro University of Pennsylvania
uLM
a
r
Committee Member
Date
Committee Member
Date
§1995
A j*J> $ c-l
i.
ACKNOWLEDGEMENT
I wish to express my gratitude to the employees of
Erie Forge and Steel Corporation for their openness and
cooperation with this study.
They extended courtesy and
patience in assisting with this study.
The members of this
organization allowed me to experience "life as seen through
their eyes".
I learned more than I can ever express with
mere paper and words.
My hope is that this paper will help
them in some manner as they attempt to create their on
going business success.
Thanks
also to Trissa
reading and suggestion.
and Wess
for their careful
Special thanks to Dr. Golden for
her constant ear and helpful advise without which I might
have
given up.
Special
thanks
go
to James
Sabol
for
allowing his drawings to be included within this work.
With them the reader*s understanding of Erie Forge and
Steel is greatly enhanced.
There is no way to express my thanks to Rick for his
suggestions and advice which led to my initial choosing of
this topic.
Without his patient and insightful support
this study would not exist.
ii.
TABLE OF CONTENTS
TABLE OF ILLUSTRATIONS
iv
v
TABLE OF GRAPHS
Chapter I
A.
Introduction
1
B.
Communication and Corporate Cultural Effects
2
C.
Organizational Culture
5
Chapter II-Employee Ownership
16
A. Background
16
B. Past Research Parameters
18
C.
19
Historical Overview
1.
The ESOP Movement
21
2.
Employee Buy Outs of Failing Firms
25
3.
Unsuccessful Attempts
4.
Successful ESOPs
28
5.
The Changing Corporate Structure
30
26
a.
Labor-Management Roles
32
b.
Labor-Management Cooperation
33
c.
ESOP Culture
40
iii.
6.
D.
Status of ESOP Cultural Research
Summary and Conclusions
Chapter Ill-Study Focus
42
45
47
A.
Ethnography as a Method
47
B.
Study Methodologies
52
Chapter IV-Observations and Analyses
59
59
A.
The Study Focus
B.
Background of the Company
61
C-
Description
64
D.
Steel Manufacturing
77
E. Survey Results
1.
Communication Patterns
82
2.
Feelings of Ownership
91
3.
Need For ESOP Education
95
4.
Feelings of Participation
101
Chapter V.
A.
82
Summary and Conclusions
109
109
References
118
Appendix
131
iv.
TABLE OF ILLUSTRATIONS
How a Leveraged ESOP works
23
Drawing of Original Company
60
Aerial view of Company
63
Pen & Ink of front gates by James E. Sabol
66
Navy drive shaft
71
Pouring a heat by James E. Sabol
73
Teeming of Ingots by James E. Sabol
80
Vacuum Degassing
85
V.
TABLE OF CHARTS AND GRAPHS
Mohan's stable and unstable cultures
11
Information sources chart
86
Information sources graph
89
Feelings of ownership chart
93
Feelings of ownership graph
94
Need for ESOP education chart
98
Need for ESOP education graph
99
Stockholder voting results
102
Feelings of participation chart
105
Feelings of participation graph
106
1
CHAPTER I
INTRODUCTION
The goal of this research project was to discover the
developing culture as it is revealed in the communication
aspects
of
the
employees
in
a
wholly
employee
owned
corporation.
The critical focus of the study was to discover if
this corporation differs from a traditional corporation in
its attempts at meeting the communication needs of the
employees who are now the stock owners,
as well as the
producers of the goods for the corporation.
It might be
natural to assume that differences may exist in the way
that
communication
organization.
takes
place
in
this
type
of
This study focused on whether or not this is
true, and in what manner differences were detectable.
The study employed both quantitative and qualitative
methods
to
perceived
determine
feelings
participation
in
of
the
ownership,
functioning
degree
of
of
the
organization, communication channels and need for education
among
employees
structure.
about
this
new type
of
organizational
2
COMMUNICATION AND CORPORATE CULTURAL EFFECTS
Depending upon which source one chooses to use, culture
has
been
customs/
variously
described
manners/ values,
as:
"the...
distinctive
religious behavior and other
social and intellectual aspects of a society (Goldenson,
1984, p.196), "patterns of behavior within a species whose
transmission is totally dependent on non-genetic processes
(Harre & Lambedds, 1983, p.136)",
"that part of the total
repertoire of human action (and its products), which is
socially as opposed to genetically transmitted (Mitchell,
1979, p.45)", Taylor (1871) describes:
Culture
or
ethnographic
includes
custom,
civilization,
sense,
is
knowledge,
and
any
taken
that
its
wide
complex
whole
which
art,
morals,
law,
beliefs,
other
in
capabilities
and
habits
acquired by man as a member of society (In SeymourSmith (1986), p. 65).
In any case, it seems clear that culture is something
which humans
contains
arrive at in groups,
shared
meaning
for
its
and this
group
"culture"
members.
In
describing culture, there are three fundamental aspects to
be considered; these being, cultural behavior—what people
do,
cultural
knowledge—what
people
know and cultural
artifacts—what people make and use (Spradley,
1980. P-
16). Seemingly, it should be an easy task to discover this
3
culture,
but much of the culture of any group is tacit
knowledge which
knowledge
is
is
not easily detected.
easily
communicated,
The
but
the
explicit
cultural
intersubjective is less easily realized and expressed.
The
understanding necessary to interpret the communication of
this knowledge is referred to as idexicality.
refers
to
the
amount
of
shared
"Idexicality
background
knowledge
necessary to understand a message.*' (Agar, 1980, p.5)
By example, a group of people may view an object (an
automobile).
To the non-driver it signifies a mode of
The
transportation on four wheels, largely made of metal.
owner may perceive this same object as a machine requiring
specialized care, to a race car driver it is a finely tuned
machine
created
injectors,
of
turbo
valves,
chargers,
achieving great speeds.
pistons,
etc.
which
cylinders,
is
fuel
capable
of
Meaning is a situational specific
process which seems to be endlessly negotiated by a social
systems members.
A conversation among these three people
would likely not have a great deal of idexicality.
Why is it that humans create culture?
fundamenta1ly,
are
humans
communal
First,
beings,
and
which
necessitates the utilization of some form of communication
(Radc1if fe-Brown,
cerebral
1961).
economies,
that
Secondly,
is,
they
humans
practice
attend
to
information and disregard other information.
some
This process
4
is being explored in the research on the process of first
and
second-order
belief
cultivation-analysis
Dearing,
formation
research
as
well
(Iyengar,
1988;
1988; Hawkins & Pingree, 1990;).
communicate
beliefs.
requires
People
shared
extract
meanings
the
the
Rogers
&
This need to
and
necessary
as
fundamental
data
from
the
presented information and subsequently store that data in
previously established belief categories.
All of the other
information deemed non-pertinent is disregarded (Hawkins &
Pingree: 1990).
This sharing of
fundamental meanings and
beliefs is what constitutes a culture.
aptly states the process
"
As Radcliffe-Brown
‘culture*.
.
. refers to a
process, and we can define it as the process by which a
person acquires,
from books or works of art, knowledge,
skill, ideas, beliefs, tastes, sentiments** (1961, p.4).
He
further summarizes that it is this process of culture and
cultural tradition that human social life differs from the
social life of other animal species.
that
Mohan (1994), states
"socialization is defined by many theorists as the
process by which people learn the fundamental parameters of
their culture." (p. 62)
Etzioni (1964) puts it another way:
Our society is an organizational society.
We are born
in organizations, educated by organizations, and most
of
us
spend
much
of
our
lives
working
for
5
organizations.
We spend much of our leisure time
paying, playing and praying in organizations.
Most of
us will die in an organization, and when the time
comes for burial, the largest organization of all-the
state-must grant official permission (p. 1).
ORGANIZATIONAL CULTURE
According
to
"Organizations
are
Lofland
and
consciously
Lofland
formed
(1984):
collectives
with
formal goals that are pursued in a more or less articulated
fashion" (p.l).
They provide settings for regular meeting
and interactions, therefore; providing grounds for cultures
to develop.
So
too,
organizations
have
a
"taken
for
granted"
quality that reflects their own unique cultures, while at
the
same
time
reflecting
the
cultures
societies within which they exist.
of
the
broader
Rentch (1990), in her
discussion on climate and culture in organizations states
that
"shared
interpretations
and
understandings
of
organizational events are a component of most definitions
of culture" (p 669).
Organizations can be loosely defined
as groups of people who have a common goal and are working
together towards
the
accomplishment of
that goal,
An
organization provides regularly-convening settings in which
a culture may develop.
Corporations, by this definition,
6
are organizations, and the existence of corporate cultures
should be discernable.
As Smircich (1987) states:
"The emergence of this dominant system of meaning can
be
understood as
development
of
a
consequence
the
company,
of
the
the
historical
struggles
for
leadership within it, and the personal ideologies of
the current president" (p. 58).
"Secondary socialization"
(Van Maanen, 1988) is the
process through which a person learns the values, norms and
required behaviors for participation as an organizational
member.
Jablin (1982) uses the term "assimilation" and
Louis (1990) refers to "acculturation"
to describe this
same process.
Theories about organizations have always reflected the
manner
of
society’s
Early
formulated.
interchangeable
Weber’s
(1912)
thinking
views
parts
in
at
of
a
the
time
workers
large
they
saw
were
them
machine-like
as
system.
views were the major influence creating
organizational bureaucracies,
Under this factory system
managers insured success by organizing production systems
that kept machines busy and costs under control. People and
organizations
were
to
economic principles.
act
in accordance
with
rational
These classical organizational views
were supplanted by a neoclassical movement which viewed
workers
from a more
humanistic
perspective,
but
still
7
retained much of the classical traditions of organizational
theory.
Jaques's
factory.
is
(1952)
the
work,
earliest
The
changing
publication
culture in an organizational context.
culture
to
use
of
the
a
word
Jaques's definition
of the factory culture is:
. . . its customary and traditional way of thinking
and of doing things, which is shared to a greater or
lesser
degree
by
all
its
members,
and which
new
members must learn, and at least partially accept, in
order to be accepted into service in the firm. The
culture
of
the
factory
consists
of
the
means
or
techniques which lie at the disposal of the individual
for handling his relationships, on which he depends
for making his way among, and with, other members and
groups (p. 251).
From a functionalist perspective,
organizational
control
the
controlling
culture
is
organizational
a
management
behavior
communication practices
of
and
(Weber, 1912)
tool
its
that
can
members
by
thus
influence
organizational performance. The interpretivist perspective
(Burrell & Morgan, 1979, Putnam, 1983) of culture is the
process by which the culture is developed, enacted,
and
continually reconstructed into an organizational reality.
From
a
functionalist's
perspective,
managers
need
to
8
understand their corporate culture in order to be able to
exercise control over the destiny of the organization.
This control can be exercised in the form of layout/ or
standard operating procedures and
This
kind
of
control
decision premises.
works
by
restricting
what
decision makers consider as relevant/ the form of
logical reasoning that is deemed appropriate/ and the
kinds
of
solutions
that
are
seen
as
acceptable
(Wilkins: 1983/ p. 85.).
S.A. Melman is a researcher of government contractors
for the past 30 years and has studied Erie Forge and Steel
during its history as a government production facility. In
a personal communication (April/ 1993) he stated that "the
primary factors in capitalistic organizations have been the
fundamental
occupational
separation of
decision
making
(hierarchy of management) and production (workers)."
process
has
led
to
the
escalating
cost
This
factor
perpetuation of more hierarchy to control workers.
In another view. Deal and Kennedy (1982) state that:
. . . people are a company's greatest resource/
and the way to manage them is not directly by
computer
reports/
but
by
subtle
cues
of
a
culture.
A strong culture is a powerful lever
for guiding behavior; it helps employees do their
jobs a little better, especially in two ways:
of
9
A strong culture is a system of informal rules
that spells out how people are to behave most of
the time (and) a strong culture enables people to
feel better about what they do, so they are more
likely to work harder, (pp. 1-2)
Mohan (1993) suggests that it may be "erroneous to
assume that an organization has a single culture." (p. 25)
She suggests that it may be more fruitful to examine the
"incongruence"
researchers
within
with
It
organizations.
more
material
by
may
beginning
weaknesses within an organizational system.
provide
with
the
Gregory (1983)
presents a view of organizations as multiple, crosscutting,
cultural contexts,
stable,
changing over time as opposed to
homogeneous,
time-bound
Brown
entity.
a
and
McMillan (1991) state that the potential to produce culture
lies
within
employees
throughout
organizational hierarchy.
focus
all
levels
of
the
They advise researchers not to
solely on the managerial
"texts,"
but
also
to
analyze lower-level "sub-texts" to glean a more broadly
based,
efficient,
and
realistic
interpretation
of
an
organization's culture.
Like
the
individuals
of
whom
they
are
comprised,
corporate cultures go through a series of distinct stages.
Some scholars employ a lifetime metaphor of birth, early
growth, organizational midlife, and organizational maturity
10
to describe these stages
(Schein,
1985).
Still others,
describe these stages from the standpoint of organizational
focus (Cameron & Quinn, 1981, Dyer, 1985, Mintzberg, 1983,
Adizes, 1988, and Atkinson, 1990).
These focuses involve
internal and external forces and the organizations ability
to take risks and be
cyclical
dilemmas:
adjustments
flexible.
over
time
Tichy
(1980)
based on three
suggests
ongoing
the resolution of technical design problems,
political allocations of power and resources across the
ranks,
and the establishment of the optimum ideological
cultural mix (Mohan, 1993).
Mohan's description of cultural
cultural
contexts
unstable cultures.
which
are
stability suggests
exhibited
in
stable
and
Her work can be used as a basis of
analysis of cultural flux.
Although corporate cultures can
not be viewed as frozen and are in constant flux, Mohan
gives a table of characteristics by which to gauge stable
and unstable cultural contexts (see Mohan's TABLE 7.1, next
page).
11
TABLE 7.1
Cultural Characteristics of Stable and Unstable Contexts
Stable Contexts Tend to Exhibit
Clarity on core organizational vision and mission
Positive tone regarding present developments
Tendency to view tradition with moderation
Unification of ranks against a perceived collective challenge
Leader who actively promotes positive aspects of organization and its people
Leader who encourages collective action
Leader who articulates a universal theme in print and oral communications
Unstable Contexts Tend to Exhibit • • •
Disagreement and/or confusion regarding core vision and mission
Marked increase in activity levels
Major restructuring across ranks
High uncertainty levels within subcultures
Clinging to "traditions" that thwart innovation
Perceived disparity among subcultures
Low morale at key organizational levels
From
Organizational
communication
and__cultural—vision.:.
Approaches for analysis by M. L. Mohan, 1993, P- 135.
Copyright 1993
by State University of New York Press.
Reprinted by permission.
12
There is debate whether or not a corporations culture
can/or
should
be
"managed".
Deetz
(1985)/
Adams
and
Ingersoll (1985)/ and Morgan (1986) question the ethics and
even
the
ability
of
managers
to
manipulate
strategic
cultural interventions which hope to have planned effects
on human beings.
In spite of this
debate,
advice to
managers is still popular in the business world.
If
it
is
possible
to
exercise
control
over
the
corporations culture, a manager must know what makes up a
company1s culture.
All western corporations contain the
elements of a business environment, values, heroes, rites
and
rituals,
environment
and
a
consists
cultural
of
The
network.
the
products,
business
competitors,
customers, technologies, government influences, and so on.
This environment is, of course, the single most important
influence in shaping the corporate culture.
environment in which a corporation exists
The type of
is
the most
important determinant of the type of culture that develops.
The corporate values consist of the basic concepts and
beliefs
of
the
organization.
Values
"success" messages of the company.
this" epic which directs behaviors.
spell
out
the
They are the "if you do
Corporate heroes are
those people who personify the culture’s values.
the role models for employees to follow.
They are
Rites and rituals
are the day-to-day programmed routines of company life.
In
13
their mundane forms we call them rites, but in extravagant
form they are rituals or ceremonies. The cultural network
is the primary (yet informal) means of communication in the
company.
It serves as the carrier of the corporate values
and heroic mythologies.
By understanding and working the
network effectively, the manager might get things done and
understand what is going on in the corporation.
Sometimes
these elements are fragmented and difficult to read from
the outside, but every business has a culture, however weak
it may be.
Naisbitt and Aburdene (1990) share the opinion that
the dominant principle of organization has shifted from
management of control to leadership which empowers people
to assist the organization in its adaptation to change.
This notion is
further explained by Burns
(1978)
and
Atkinson (1990) in their attempt to distinguish between
and
transformationa1
transactional
leadership.
Transformational leadership is characterized by terms like
"visionary", "inspirational", "intuitive" and "creative",
while
transactional
leadership
"concrete" and "tangible".
which
is
"practical",
If leaders do not distinguish
between these styles they may fall short of their desired
goal for the cultural change.
advise
that
more
than
Wilkins and Patterson (1985)
the
manifestations must be changes.
surface
artifactual
Change must occur at the
14
deeper assumption level.
change
must
include
Fitzgerald (1988) agrees that the
a
organizational dimension.
gradual
alteration
of
core
Leaders must employ different
cognitive frames during this process of cultural change.
Bolman and Deal's (1991) frames are useful in understanding
how
leaders
must
employ multifaceted
aspects.
Their
structural frame sees leaders as "social architects" who
analyze
and design
outcomes.
systems
that will
support
desired
The human resource leader acts as a "servant" or
"catalyst" providing employees support and empowerment.
The political leader must provide advocacy and coalition
building, while the symbolic leader plays the part of
"prophet and poet" in defining and articulating the vision
which will support the organization's mission.
The leader
who chooses to change culture must become proficient in
selecting
from
these
frames
to
fit
the
distinct
organizational context.
In planning and enacting corporate cultural change.
Mohan (1994) warns:
.
(sic)
. If change in the corporate culture are
promulgated
without
participation and consent,
organization-wide
then native subcultural
groups may tend toward greater fragmentation from any
unitary vision. . .
. Symbolic framing should begin
with a level of understanding of the values held by
15
the
specific
individuals
and
groups
across
the
organization, as well a firm grasp of market realities
and emerging trends.
One way for leaders to develop
this familiarity is to spend time with internal and
external
constituencies
in
a
nonauthoritative
atmosphere that fosters the free exchange of ideas,
providing a basis for a shared corporate vision.
the organization’s vision is not collective,
will
be
little
alignment
elements, (pp- 86-87)
with
unitary
If
there
cultural
16
CHAPTER II-EMPLOYEE OWNERSHIP
A rapidly growing new development in the field of
organizations
Plans
is the trend of Employee Stock Ownership
(ESOP's).
There
are
currently
10,000
ESOP
corporations with over 2,000,000 employees in the United
This
States.1
movement
is
creating
new
types
of
organizations which are wholly or partially owned by the
employees who work in the organization.
This movement has
changed organizations, and provided new areas for study
about the effects of these changes on corporate culture.
BACKGROUND
The Employee
Retirement
and Income
Securities Act
(ERISA) of 1974 created the specific statutory framework
for ESOPs
(Employee Stock Ownership Plans) and exempted
them from certain requirements that are applicable to other
plans
(such
as
pension or profit
This
sharing),
act
provided ESOPs with the unique authority to borrow money.
The subsequent legislation (e.g. Trade Act of 1974 and Tax
Reduction Act of 1975, etc.) refined the advantages of ESOP
ownership, making them even more attractive to management.2
By
allowing
significant
tax
exemptions,
the
Deficit
Reduction Act of 1984 added further incentives for both
owners and banks
to
allow employees
greater shares
ownership in profits from the fruits of their labors.
of
As
17
these laws became more appealing, the move to create ESOPs
exploded. By 1988 there were about 8,000 ESOP corporations
in existence (Rosen & Quarrey, 1988).
Some of these ESOPs
were created in an effort to save failing corporations and
thus
save
workers
jobs
who
for
bought
workers.
these
However,
failing
frequently,the
businesses
were
not
equipped to manage them. In most cases, they sought out
managers to manage the corporations.
The critical problem
seems
manage
to
be
that
corporations
research.
has
no
best
way
yet
been
supported
collected
by
worker-owned
the
existing
A national network, called the National Center
for Employee Ownership
Washington,
to
DC,
to
through
(NCEO),
help
by
surveys
of
has been established in
disseminating
ESOP
information
corporations.
The
Northeast Ohio Employee Ownership Center at Kent State
University,
has
begun
some
pilot programs
designed to
assist in training employees of ESOP corporations (Logue,
Bell & Ivancic, 1991).
These programs, however, have been
directed mainly at non-managerial employee owners who sit
on boards of directors.
While the developers felt some
success was achieved by these early attempts at education,
they acknowledge the need for further education to be given
to all employee owners in ESOP firms.
It is clear that assessing the need for information
and
education
about
the
communication
that
employees
18
receive in these new corporate structures will be a vital
first step in creating their new corporate culture.
Some research questions that this paper addresses are:
How much do the employees understand about the functioning
of the corporation?
To what degree is it necessary to
educate about corporate finances and the functioning of the
ESOP structure?
Is there a relationship between the level
of understood information, and job satisfaction?
What is
the relationship between ownership and other areas such as
absenteeism and job performance?
Does employee ownership
necessarily create new cultural and communication patterns?
If so, do these new patterns require new decision making
structures?
Will
ownership
in
itself
create
a
more
democratic corporate structure?
The ESOP movement has only been under study for a
short period of time, and the exploration of past research
parameters
reveals
that many answers
still
need to be
formulated by future researchers.
PAST RESEARCH PARAMETERS
The research that has been conducted on existing ESOP
corporations falls into 1) historical accounts, 2) legal
and
government
policy
regulations,
3)
current-status
statistics, 4) labor-management roles, 5) labor-management
cooperation and its effects on company performance,
6)
19
attitudes of employees and management, and 7)communication
and corporate-cultural effects.
Early research centered on the areas of historical
accounts, legal matters and the status statistics of ESOP
corporations.
For the purpose of this paper, these points
will not be discussed (for detailed information on these
areas see Bell, 1988; Blasi,
1987, 1988; Blasi & Kruse,
1991; Klein, 1987; Stern, 1989.
HISTORICAL OVERVIEW
The
first
factory organized by workers
with
each
person owning a single share and participating equally in
decision making was by shoemakers in Baltimore, MA, in 1794
(Curl,
1980).
The idea of employees owning a stake in
their corporations,
therefore,
American business scene.
is not a new one to the
As early as 1916, Sears, Roebuck
& Company initiated profit sharing among its employees and
is considered a bellwether for the concept (Blasi, 1992).
This trend is a reflection of the progression of worker
ownership from the cooperative movements of the late 19th
century through the profit sharing movement of the 1920*5
and into the industrial market stresses of the 1970*s and
1980's.
In the early history of labor and management,
skilled trade workers,
formed
the
Knights
of
seeing the benefits of uniting,
Labor
and
other
early
union
20
movements.
These movements
formed into the AFL-styled
business unions and producer co-ops that are factors in
creating
the
management.
adversarial
climate
of
workers
against
Most of organizational communication research
deals with the study of communication as it relates to the
interaction between these parties.
In
the
early
1920*s,
"profit
sharing"
and
the
"American Plan" became the paternalistic device to take
care of worker*s needs.
It was a combined plan of company
unions, pensions, and profit sharing.
Unfortunately the
Great Crash of 1929 buried many of these programs before
any research could be conducted on them.
After World War II, profit sharing and participatory
management were revived as "enlightened management" ideas.
At this time, the communist movement in the east was viewed
as a threat to democratic and capitalistic principles.
Giving workers ownership and power became unpopular ideas.
The spread of the McCarthy hearings and fear of being
labeled a "socialist" caused people to deny sentiments of
shared wealth and control.
ownership, Leo Kelso,
One leading advocate of worker
fought this trend.
His book, The
Capitalist Manifesto (1958), represented worker ownership
as the one way to defeat the socialist movement.
now known as the "Father of the ESOP" movement.
Kelso is
21
THE ESOP MOVEMENT
This movement got its biggest boost with the 1974
Trade
Act
legislation.
Devised
by
Louis
Kelso
and
sponsored by Senator Russell Long. The plan essentially
allows a company with a profit-sharing plan to borrow taxsheltered money.
Kelso firmly believed that the only way
to defeat the socialist movement of his time was to vest
employees with ownership and participation in corporations
(Kelso, 1958).
He created an employee-owned corporation as
early as the 1950’s.
His zeal was influential in obtaining
sponsorship by Senator Long,
influential
in
the
and together the two were
twelve-year
battle
to
establish
legislation favorable to the formation of these types of
The Employee Retirement Income Securities
corporations.
Act
(ERISA)
further gave preference to companies using
ESOPs for Commerce Department loans and loan guarantees in
communities
adversely
affected
by
foreign
trade
(Blasi,1987).
This act spurred corporations to create ESOP
plans.
There are
leveraged.
two
types
of ESOPs,
non
leveraged and
The first type is no more than a standard stock
bonus plan, with the managers controlling all aspects of
the plan.
The leveraged plan (which most ESOPs are today)
is that form which Kelso and Long believed would truly
revolutionize
America’s
corporations
making
them
22
authentically democratic in nature.
A simple explanation of the leveraged ESOP is that
the company sets up an Employee Stock Ownership Trust,
which borrows funds from a commercial lender.
The company
guarantees to pay back the loan, so the trust purchases
corporate stock. As the loan is paid back, the stock is
allocated to members of the trust in individual accounts
(See figure 1)
23
Figure 1. How a leveraged ESOP works
original owners*'
(A)
BANK
(B)
a
ooooa
ooooo
-
COMPANY
m
jin
r
XULS
(
ESOP
(E)
EMPLOYEE OWNERS
(A) A lender makes a loan to the company (typically based on the fixed assetsi. (B)
The company uses the loan money to buy out the original owners' interest. (C) Each
year the company makes loan repayments, through the ESOP. to the bank: and it de
ducts the contributions from its taxable income for the year. (0) Once, the bank has
been paid. (E) the ESOP releases stock of an equal value into employee owners' indi
vidual accounts. Employee owners typically receive the value of their stock upon ter
mination or retirement. When an employee's stock is cashed out. it is usually
recontributed to the ESOP.
From Democratizing the American economy:
Illusions and
realities of employee participation and ownership (p.13).
by C. J.
Ivancic and J. Logue,
Greenwood Press.
1991:3.
Copyright by
24
Since contributions to a worker-ownership trust are
tax deductible, both the amounts attributed to repaying the
loans and the interest and principle on the loan are tax
deductible.
Obviously,
this plan is attractive to the
business community because it offers tax incentives, but it
does not require employee participation in the running of
the corporations,
Unions, for this reason, were unable to
see any benefits to workers in this situation.3
It was not until the large movement where corporations
were taken over and closed down that labor realized some
vested worker influence needed to be established in order
to protect their jobs. As Bado & Logue (1991:4) point out:
The
appearance
democratically
trade
unions
gives
unions
of
100
percent
structured
to
rethink
the
employee-owned,
enterprises
their
opportunity
challenges
role....Ownership
to
convert
the
traditional defensive, reactive role into a proactive
one.
They can exert influence over company investment
policies, hiring decisions, or long-term development
by
representing
employees
as
owners
on
company
governing bodies, and broaden their scope of activity
into
new
fields,
such
as
finance.
Instead
of
complaining about management, unions need to learn how
to select managers, (p. 1).
25
EMPLOYEE BUY OUTS OF FAILING FIRMS
After World War II, the United States was the only
world power whose production capabilities had not been
devastated by
the
war.
While
the
rest of
the world
rebuilt, the country settled into a complacent attitude of
supposed world superiority.
The adversarial roles between
labor and management increased in intensity and drove wages
and benefits up.
This
was not believed to be a problem,
since prices could just be raised to meet these demands.
The consensus was that no one could make a better product
than American workers, so no threat of marketability was
perceived.
During the mid-seventies, all this changed because of
a coincidence of factors.
During that period, energy costs
jumped and the market exploded with European and Asian
products.
These products were produced with a variety of
methods that cut and controlled costs as well as increased
product appea1.
Besides having to compete with a world
market and escalating fuel costs, the United States also
had to support a military-industrial complex that drained
more resources from its private sector,
These factors,
coupled with the rising cost of wages and benefits, caused
cycling recessions and the take over markets of the 1980's.
In the late 1970's these factors became the subject of
many popular media articles.
It was not until the large
26
movement of corporate take overs and raids, though, that
labor realized some worker-vested influence in corporations
needed to be established.
In the late 1970*s employees
began to attempt to buy out companies to save jobs,
This
movement proved to be successful in only rare situations,
as most of the 200 cases of employee takeovers of failing
companies ended in the company ultimately failing (Blasi,
1987). In some cases, employees invested their own capital,
gave wage concessions, lost pension funds, and still found
themselves out of jobs because of the ultimate failures of
these companies. Unfortunately, employee ownership does not
change capitalist principles, and many businesses still did
not survive the foreign competition and local recessionary
trends.
UNSUCCESSFUL ATTEMPTS
One of the first worker buy-outs was the 2,000-workerowned
Rath
Meat
packing
Company.
The
union
members
initially accepted $4,000 per worker pay cuts to finance
the buy-out with bank loans,
economic
development
An additional $4.3 million
grant was
secured,
but
still
the
employee pension fund was later consumed by this process.
Workers took a second round of pay cuts, yet business in
the meat packing industry still declined.
bankrupt.
Today, Rath is
27
South Bend Lathe is another example of early chaotic
organizational disasters.
The workers used an ESOP to
borrow monies from local Indiana banks but wound up with
management's shares out weighing theirs.
The workers made
national headlines by going on strike against themselves.
Another example of lack of future planning on the part of
the worker groups is Vermont Asbestos Group,
This firm
rebounded after selling its operation to the workers.
The
workers sold their stocks and became rich, only to lose the
company to other owners.
Both of these situations were
opposed by the parent unions because they undercut the
union's master contract.
The airline industry has also been a site of
organizing to take over failing businesses,
labor
Due to the
recent slump in passenger usage and the increases in flight
expenses brought on by both increased fuel costs and the
need to revitalize the airline fleets to meet proposed
government regulation deadlines, these take overs have met
with mixed success.
People's Express Airlines was one of
a
benevolent-paternalistic
corporation at its take over.
Because all the related
the
unions
first
to
(pilots,
included
in
organize
mechanics,
the
attendants,
take-over,
a
etc.)
complicated
had to be
system
of
management of the company evolved with all employees being
responsible for all duties.
A pilot may be flying one day,
28
and taking reservations the next,
The system began to work
well,
being
with
all
"People/People"
problems emerged.
equal,
but
soon
Some pilots did not want other duties.
Soon some "Non-People/People" had to be hired to perform
the
duties
employees
others
got
indoctrination
did
neither
into
the
not
the
want
to
profit
culture.
fill.
These
new
nor
the
that
the
sharing
It
employees now had employees to deal with.
seems
After a valiant
try, this ESOP ultimately ended in bankruptcy.
Many similar stories can be related about the airline
industry, rental car corporations, steel mills, and so on.
These early experiences were perhaps necessary to provide
the historical background for later employee ESOPs to be
formed and operated in a more successful manner.
SUCCESSFUL ESOPs
The
Philadelphia
Association
for
Cooperative
Enterprise is a success story currently running well.
was
a corporation formed by A&P
employees
It
to purchase
Philadelphia grocery stores that were scheduled to be shut
down. The United Food and Commercial workers-Local 1357
worked with public officials and local groups in the area
to convince A&P to keep open 16 of the 79 stores scheduled
to be closed.
Two
large worker-owned stores,
Stores, were spin offs of this transaction.
the 0&0
The workers
29
modeled their take over after the Mondragon-style co-ops of
Northern Spain. These function by creating their own bank
and entrepreneurial departments to organize the co-ops.
New members may borrow from this bank to finance equity in
the corporation.
When an employee retires, the bank buys
out the employee’s equity, or the employee may have the
nest egg as an annuity. Eighty percent of these Mondragon
co-ops
are
corporations.
capital
The
intensive,
annual
divided into three parts:
profits
heavy-manufacturing
from the
firms
are
ten to fifteen percent going to
social purposes and to benefit the community, fifteen to
twenty percent is set aside for a reserve fund to maintain
the firm, and the remaining seventy percent is distributed
to the members in the form of account payments.
These
accounts are considered worker loans and are paid back to
the members with a minimum of six percent interest.
When
workers leave the co-ops, they may withdraw up to eighty
percent of their account.
At retirement age, the rest of
the accumulated profits may be withdrawn (Zwerdling, 1984).
The problems experienced by the workers taking over
their corporations are clearly identified by Andrew Lamas
(staff director of the Philadelphia Cooperative):
The problem with worker ownership, ... is not
lack of capital.
It's lack of experience. Nobody in
America knows how to operate a 1,000-person worker-
30
owned firm.
People didn't have much experience with
democratic decision-making in their daily lives, and
they
also
lack
technical
and
financial
skills
(Kuttner, 1985, p.16.).
The problems may also be due in part to a lack of
interest, or simply in a belief in the traditional division
of labor and the practical aspects of letting managers
manage (Hammer & Stern, 1980).
THE CHANGING CORPORATE STRUCTURE
The newly growing system of ESOPs is having a radical
effect on the ways which labor and management both think
about and deal with each other.
Following the Mondragon-
style, new co-ops and ESOPs are being formed with workers
now hiring management.
Instead of the workers having one
vote for one share (as would be traditional in standard
stock ownership),
new management structures are forming
with one vote for one worker, or workers simply having
control
of
seats
corporation.
on
About
the
Board
30
percent
of
Directors
of
the
of
top
the
1,000
corporations currently have more than 60 percent of its
stock owned by institutional investors.
Soon the property
rights of the workers will play a more important role in
corporate
influence
than
labor
laws
ever
dreamed.
Corporations are actively encouraging employees to invest
31
in ESOPs by offering discounts and paying brokerage fees,
Many
pension
funds
are
actively
buying
up
their
own
company *s stock by using their cash reserves. Employees are
encouraged to put their savings in 401(k) plans and invest
it in company stock. Companies are giving profit-sharing
payments to employees in the form of stock,
Some workers
are being asked or required to take stock as part of their
wage and benefit concessions and increases. This is all
leading the work force to a new dimension of risk that they
have
not
experienced
before.
According
to
William
D.Partridge of the Wyatt Company, the risk falls into four
categories: investment risk, longevity risk, contribution
risk, and inflation risk (Blasi & Kruse, 1992).
Investment risk involves the fact that the value of
the stock may decrease or the corporation may go bankrupt.
Longevity risk involves outliving the amount of assets that
have
accumulated.
substantial
Contribution
investment
must
be
duration to insure a good return,
risk
made
means
now,
that
and
in
a
the
Inflation risk means
that the value deemed for the future is negated by the
lower buying power of the dollar,
All of these areas are
unfamiliar territory to most workers and hold potential
risks.
Many of these factors account for the early ESOP
corporation failures.
The
assumption
among
the
managerial
corporate
32
proponents
of
ESOPs
was
that workers
would be
highly
motivated because of ownership stakes, and production costs
would go down,
while the assumption among workers was that
communications and control of corporate organizations would
be radically different (Stern, 1989).
The problem with
workers owning the company is the lack of expertise about
how to run a worker-owned firm,
and research into the
effects of these changes has only been going on for a
decade.
LABOR-MANAGEMENT ROLES
Labor-management roles, although somewhat litigated
by federal regulations,
traditional
structures
vary in ESOP corporations
with
labor
having
little
from
or
no
control to employees owning and having equal status in
As Toscano (1981-82) points out, even if
corporations.
employees own 100 percent of the company, ESOPs are not
required by
law to pass voting rights of
stock on to
employees, except on major corporate issues such as sale or
bankruptcy of the company.
The
mere
owning
of
stock
does
not
necessarily
associate with psychological or felt ownership by employees
(Klein,
1987).
For
example,
Hammer
and
Stern's
(1980)
research indicates that there was no positive correlation
between the number of shares held by an employee owner and
33
the perception of ownership or partnership in the company,
although
larger investment in corporate stock has been
found to
result
in the
granting of
larger amounts
influence to management on all issues (Rosen et al •
/
of
1986).
The relationship between managerial control over work place
issues remained about the same, with employees wishing to
have some say over issues directly concerning them but
little influence over organizational policy level matters.
The question of
affiliation.
influence was
The
found to correlate with
conclusions
revealed
the
relative
importance of group membership and the weakness of stock
ownership in predicting the desired distribution of control
within the organization (Quarry and Rosen, 1986).
LABOR-MANAGEMENT COOPERATION
Cooperation was another area where it was assumed that
change on both the parts of management and labor would
occur.
It was found that identification with the company
did increase because of the formation of ESOPs, and this
can engender greater commitment (Logue & Cross, 1993:4).
Managers were found to continually overestimate the degree
of cooperation that existed in their firms.
A General
Accounting Office survey (1986a) reported that sixty-six
percent of responding firms felt that employee ownership
would
increase
employee
morale.
Thirty-six
percent
34
believed that employee turnover would be reduced,
Fourteen
percent felt that there would be decreased absenteeism, and
eight percent even felt that it might help them avoid
unionization.
The early research in ESOP and share ownership effects
upon employees indicated an initial enthusiasm, increased
motivation, lower turnover and less material loss due to
poor quality production.
commitment
to
the
firm
There also was
(Why the,
1979).
an
increased
This
initial
reaction was followed by disappearance of these effects,
and a
dramatic
increase
in
labor-management conflicts.
Kruse (1984) reviewed studies to the time, and found that
support for increased job satisfaction due to ownership was
simply not evident.
Share ownership alone among workers
generated no
for participation in the
desire
company.
Workers are more critical, and unions do little to advance
labor-management cooperation.
no significant changes
functions
of
the
If employee ownership makes
in the work place, the adversarial
union
are
reinforced as
one
of
the
dependable forms of worker representation (Blasi, 1988).
Traditional managers, embroiled in attempts to save
firms,
often did not think about employee participation
plans that would acknowledge employees as owners.
Bell (1988) states that:
35
•
.
.
the
partnership between the
owner
and the
employees created by the ESOP not only provides a
basis for long term security, but also stimulates a
source of employee motivation (p. 47).
The assumption that employee motivation and production
increases
would
researchers.
occur
has
been
studied
In a report by Rosen et. al.
by
several
(1986), 2,700
employees responded to a survey on job satisfaction.
A
majority reported that owning stock made them feel more
committed to the firm, and two-thirds indicated they would
stay longer.
Nonetheless, less than 50 percent felt that
they worked harder, enjoyed their work more or were more
cooperative because of
percent
felt that
Less
stock ownership,
stock ownership had
influence in firm decision making.
than 30
increased their
The study significantly
related positive effects to management philosophy about
employee ownership and the size of the company contribution
to
the
Communication was
ESOP.
decision
making
was
satisfaction and commitment.
participate
in
decreased
Perceived and desired worker influence
turnover intention.
in
related to
social
positively
associated
with
Workers indicated a desire to
events,
work
process
and
compensation, indicating a desire for participation largely
focusing
on
things
other
than
the
stock
itself.
An
overlapping study by Quarry et al. (1986) revealed that the
36
most successful firms studied had an attitude that employee
ownership was
Positive
central to the identity of the company.
attitude
and performance were
related to
the
implementation of some participatory mechanism along with
the
ownership.
The
evidence
seems
to
indicate
that
cooperation in the form of participation is necessary to
capture employee ownership benefits.
The conclusions of this research point to the fact
that simple ownership of stock in a corporation alone is
not
a
sufficient
motivator
without
participation
in
decision making (Quarrey, 1986; GOA, 1986a; Blasi, 1987;
Klein, 1987; Bell, 1988; Stern,1989).
Senator
Bill
Bradley,
in
his
introduction
to
Rubinstein*s (1987) Participative Systems at Work, states
that:
. . . the basic proposition that self fulfillment will
ultimately come from what one does in the workplace .
. . So we have a convergence of two necessities:
kind
of
work
environment
which
will
bring
the
self-
fulfillment converging with the kind of workplace that
is essential for long-term economic growth, (p. 20)
The idea of democratizing and changing corporations is
by no means a new one.
Changing the bureaucratic corporate
culture has been a movement since the early 1960*s.
Peter
Drucker (1969) and many of his followers began to look at
37
the
needs of
the
changing work force which he
"knowledge workers".
termed
He preached a gospel of change for
the bureaucratic structures of his day:
What
the
knowledge worker needs
to be positively
motivated is achievement . . . Knowledge workers also
require that the demands be made on them by knowledge
rather than by bosses, that is, by objectives rather
than by people.
organization
They require a performance-oriented
rather
than
organization.
(pp- 288-289)
Organizations
were
managing
workers*
accomplished,
structure.
system.
to
knowledge
an
become
by
authority-oriented
more
the
productive
objective
to
by
be
but there still was to be organizational
Organizations had one basic problem with this
If "knowledge" was the key to who was in charge of
a team, the organizational structure would have to know
what knowledge each worker possessed—not a small task.
Sorcher (1976) stated that:
. . . employees can become more involved in their work
if the incentive is a heightened sense of self esteem
. . . These concepts require supervisory commitment to
employee involvement, a basic trust in employees, and
the willingness to take apparent risk (but perhaps not
actual risk) when trusting employees, because there is
no
halfway
point
between
mistrust
(autocratic
38
supervision) and trust (employee involvement), (p.213)
Thomas (1993) further argues that:
.
.
.
this process of reshaping corporations from
bureaucratic structures to teams of workers striving
for the successful operation of the corporation will
not be an easy process.
States,
where
In nations like the United
individualism
is
a
much
stronger
social value than collectivism, the tendency to talk
about
teams
and team
efforts
is
results are frequently muddled.
strong,
but
the
It is difficult to
expect a company managed by business school graduates
whose education and careers have been built on their
individual
competitive
unwavering
support
successes,
for
a
to
provide
team-based organization.
(p.91)
One solution supposedly offered for this change is the
The
ESOP movement.
idea of
employee ownership
giving
employee input and control to the corporation was presumed
to
exist
in the
laws,
but
in actual
fact,
ESOP's
can
provide for no worker influence and still be a completely
legal ESOP.
Some ESOPs
felt that providing votes
for
shares and seats upon the Board of Directors of the company
would accommodate the need for involvement in decision
making.
The
idea
of
worker
directors
rejected by corporations in the 1970's.
was
tried
and
As Brannen (1983)
39
states:
The paradox of board room participation is that if
worker representatives are strong enough and willing
to
put
forward
likely to
competing
rationalities
they
are
create conflict in the board room/
and
ensure that the real centers of decision-making move
elsewhere/ thus rendering themselves impotent in the
director role; but if they adopt the director role
then their raison d’etre, from the perspective of the
workforce, disappears.
(p. 114)
The historical development of a culture of hostility
between management
and workers
history of the union movement.
has
developed with the
Bado and Logue (1991:4) in
their study of the union's revolving role in ESOP firms
advise that
"ownership gives unions the opportunity to
convert the traditional defensive,
proactive one."
(p.l)
reactive role into a
Most union leaders in this study
felt that their roles had expanded with the establishment
of the ESOP.
New areas of decision making about investment
policies, hiring decisions and long-term developments are
now within the realm of the union's responsibilities.
The
lie
the
key
problems
seem
to
enterprise for democracy,
in
the
structuring
of
Since conventional corporate law
offers no model for democratic enterprise,
systems are
still being worked out in a trial and error basis and ESOP
40
cultures are still developing.
ESOP CULTURE
The
research
on ESOP
cultures
approaches to viewing employees
indicate
in ESOP
differing
firms.
Blasi
(1991) has classified these into five types of corporate
cultures
(not
styles).
First there is the feudal culture where employee
ownership
is
unlike
Likert*s
strictly
under
(1961)
the
four
control
managerial
of
senior
management and are threatened by any corporate governance
Second is the investor culture where
roles for employees.
ownership is seen as a way to expand wages into a more
long-term sharing in the company*s economic future.
It is
hoped that this will just happen, and no effort is made to
empower
employees
performance.
Thirdly
to
improve
their
involvement
and
Their view of employees as passive investors.
there
exists
the
participatory
culture
which
realizes that productivity and profitability are effected
by joint information sharing and problem solving. Fourth is
the shareholder culture.
This culture incorporates the
pride of ownership of the investor culture with the active
involvement
of
the
participatory
culture.
Employee
representatives have seats on the Board of Directors and
actively vote the employee shares.
Lastly there is the
41
entrepreneurial culture which strives to make ownership of
the company a part of making the company the leader in its
competitive field.
The emphasis here is not on employee
benefits as much as in asking employees to take risks as
owners for the sake of the company.
Blasi estimates that 20-30 percent of companies are
feudal structures, 60-75 percent are investor cultures, an
additional
5 percent are participatory,
one half of a
percent are shareholder cultures, with virtually 0 percent
being entrepreneurial.
These statistics reveal that few
ESOP companies seem to realize the results of the research
of effects on employee performance.
be
attributed
to
the
fact
This fact can possibly
that
means
for
sharing
information about ESOPs exists in only some states.4
A
good example is that Pennsylvania *s ESOP Association has
only been in existence since May of 1992.
Harrison’s
organizations
(1994)
recent
lists two types:
study
of
democratic
"Type 1" organizations
which were specifically constructed by individuals seeking
economic
and
political
alternatives
to
traditional
bureaucratic organization, and "Type 2" organizations which
were
created
closings.
In
to
prevent
each
case,
factory,
the
plant
potential
or
to
business
develop
a
democratic system exists. These two types exhibit different
cultural
realities
because
the
strategic
choices
and
42
developmental
patterns
will
be
legitimatized
"by
the
meanings and understandings that members attribute to their
organization
as
conceptualized
(Harrison, 1994, p. 262.).
recreate
in the
newly
by
the
social
pact"
This social pact is create and
developing
culture,
Harrison’s
research indicates that "Type 1" organizations typically
attempt to reproduce some version of democracy within the
organization, while "Type 2" organizations "are attempts to
reproduce capitalist structures among individuals of middle
and working classes." (p. 263)
STATUS OF ESOP CULTURAL RESEARCH
Given the fact that ESOPs have only been steadily
growing since the 1984 legislation, research has centered
mainly on legal and statistical aspects of the corporate
performances.
Currently, researchers are studying employee
communication needs and their effects on satisfaction and
performance.
The overwhelming data indicate that shared
information patterns and decision making will be necessary
to enhance competitiveness of these corporations in the
world market.
The combination of ownership and significant
participation in the corporation seems
to
lead to
the
development of an ownership culture, but the new roles for
employees have created a need for training,
puts it:
As Ford (1991)
43
Increased participation and shared decision making
have meant, for many employees the challenges of role
changes.
of
While many employees have an excited feeling
empowerment,
confusing,
others
blurring
responsibilities.
have
the
found
boundaries
these
of
changes
their
job
(p. 11.)
In 1988 an Urban University Technical Assistance Grant
was
given to speed the growth of ownership culture by
developing an employee ownership education program (Logue,
Bell & Ivancic, 1991). This experimental program developed
six areas for a multi-company training program for nonmanagerial employee owners.
The six area included were 1)
Working of an ESOP, 2) reading of financial statements, 3)
rights
and
responsibilities,
4)
group
processes
and
practices in group decision making, 5) problem analysis,
and 6) attitudes.
No national data existing on what ESOP
companies are doing about employee owner education, but
some
informational
research
educational programs.
has
been
done
on
pilot
(See Moody & Ivancic, 1991; Logue,
Bell & Ivancic, 1991; and Thomas, 1993; as some examples.)
The
research
into these programs
indicates preliminary
positive data, but has not been in place long enough yet
for conclusive data collection.
follow
the
six
steps
above
dissemination among employees.
All of these programs
and
aim
at
information
44
According
to
the
National
Center
for
Employee
Ownership (1991) there is a need for ESOP corporations to
develop a new theory for management,
theory is termed "Theory 0".
This new type of
In "Theory 0" (for ownership)
companies there are only partners, or associates, or fellow
owners.
People—whether managers
or
non-managers—are
expected to act and treat each other like the owners they
all are. The corporation needs to make commitment to this,
training for employees must be included, and participatory
decision making must be engaged in.
While there is no set
pattern for accomplishing this, suggestions are made that
communication and training in communication skills will be
essential to the success of this style of management. (See
Appendix A for this theory.)
face-to-face
priority,
Communication should follow
with written
reports receiving least priority.
non-managers)
must develop
other's perspective.
be used.
computer
generated
Employees (managers and
skills
in understanding the
Multiple mediums and messages should
Feed back is encouraged, both downward and upward
messages, and subordinate-initiated communications must be
encouraged and positively received,
Presently, research
indicates that the most often used form of communication is
the
annual
account
balance
statement
for
each
plan
participant. The least used are the face-to-face methods of
open doors,
etc.
and only
limited use
of
small
group
45
meetings.
SUMMARY AND CONCLUSIONS
Although legislation has been in existence since 1974
which
allows
Ownership
corporations
Plans,
it
was
to
not
establish
until
Employee
the
Stock
1980*s
that
significant numbers of corporations began to take advantage
of
this.
Many of the early attempts resulted in the
ultimate failures of already failing corporations.
The
recent surge of new ESOP corporations has offered an arena
for new research, but much of the early research was geared
to
legal
and
corporations.
statistical
It
was
not
performances
until
the
of
late
these
80* s
that
significant data began to be accumulated to point the way
towards
further
research.
Some
theories
have
been
postulated, but the most significant data indicate the need
for inclusion of employees in the decision making processes
Experimental programs have begun in
of every day work.
training employees, but results of these programs have not
been proven by researchers.
The
"Theory O"
style of
management in these companies is also in the proposal and
testing stages.
Current research points out two types of
ESOP companies, those formed for democratic purposes and
those formed to save failing corporations.
of
these
differ
in
their
communication
The structures
patterns
and
46
cultural
characteristics.
The
data
which
have
been
accumulated from past research are not organized for easy
availability by either corporations or researchers.
Since there are now ten thousand ESOP companies with
over eleven million employees5, there exists an area which
is basically unexplored by communication researchers and
offers fertile ground for many future studies.
47
CHAPTER III-THE STUDY
The right and privilege of being an observer is a gift
presented to the researcher by his host and subjects.
. . . The gift of access, of witnessing social life as
it is lived in someone else's environment, exercises
a tyranny of its own.
-Charles Bosk (1989)
ETHNOGRAPHY AS A METHOD
Ethnographers,
by
methodology,
taking the role of child-learner.
are
field
workers
Their experience is that
of learning the culture that they wish to study.
Since
culture, as has been formerly defined is created by groups
commonly
sharing
meanings,
it
ethnographer to discover the
is
the
job
of
the
"meanings" present in the
cultures which they have chosen to study.
Communication
is
the
vehicle
through
cultural meanings are shared by its members.
communication be
by
which
the
Whether this
spoken or written symbols,
signs,
artifacts, or kinetics, the ethnographic challenge is to
decipher the cultural meanings which are shared by the
Garfinkel (1967) states that these
subjects of the study,
meanings
are
idexical,
having
meanings
associated
in
context of the setting within which the communication takes
place.
"Idexicality
refers
to
the
amount
of
shared
48
background knowledge necessary to understand a meaning
(Blumer, 1984, p.5)."
the
researcher
In order to share this idexicality,
assumes
the
role
of
cultural
learner,
entering to learn and then analyze what has been learned.
As Coser says,
"ethnomethodology aims at a descriptive
reconstruction of the cognitive map in people's minds which
enables them to make sense of their everyday activities and
encounters (In Blumer, 1984, p.302)."
Ethnomethodologists
attempt to achieve what Schutz terms the "attitude of daily
life...the world known in common and taken for granted
(Garfinkle, 1967, p. 37)".
Ethnomethodologies
began
anthropological tradition.
with
British
the
These traditions grew from the
combined needs of administration of the Empire and the
required cultural knowledge needs of the missionaries.
origin,
society.
the
anthropologists
were
non-members
of
By
the
As such, most early accounts were of the purely
observational nature.
investigation
and
ethnographies
moved
With the advent of sociological
the
from
Chicago
the
anthropology to the urban setting,
School
non-urban
tradition,
focus
of
Indeed, Manning (1987)
implies that the main difference between the two forms
seems to be discipline of their training and the choice of
setting for the fieldwork,
Whatever the difference in
training and focus, the methods of each discipline are now
49
being adapted the area of Communication studies,
As Frey,
et al. (1992) put it:
Ethnographers believe that all we perceive and do is
influenced by communication . . . Ethnographers seek
to identify those culturally imposed constraints, the
patterns which continue to be learned and to influence
our communication throughout our lives, (p. 249)
According to Frey, there are two basic approaches to
ethnographic
study.
approaches.
Blumer relates their derivation to phonetic
They
are
the
etic
and
the
emic
and phonemic studies of language (1980).
In the first (etic) case, the researcher is focused on
the
environmental
and
cultural
forces
influencing
subjects* messages and social behaviors.
ethnographer
would
be
on
style,
the
the
The focus of the
observable
communication
phenomena.
In the
emic
subjects are thinking,
researcher
focuses
on how
Their focus is observation within
normal communication settings where the communication is
more important to the subject, than the fact that they are
being observed,
The
attempt
is
to discover cognitive
categories, assumptions and rules that guide encoding and
decoding messages exchanged in context,
Care must be taken
by the researcher not to impose preconceptions on their
subjects, and the consciously detach himself/herself, so as
50
not to predict what might be discovered (Agar, 1980).
In
a sense , becoming an infant in the society of subjects,
thereby learning from its members the rules and assumptions
shared by
its
categories.
members
who
have
created the
cognitive
As Blumer (1984) states:
Ethnome tho do1o gy aims at a descriptive reconstruction
of the cognitive map in people*s minds which enables
them to make sense of their everyday activities and
encounters
.
.
. Ethnomethodologists put particular
stress on the contextuality of accounts and meanings,
their imbeddedness in the interactive context, their
"situated** nature, (p. 302-303)
Adler and Adler (1987) state that "Ethnomethodologists
thus offer studies of members* work instead of studies
work (p.29)."
about members
To do this faithfully, the
researcher should become a member in the fullest sense of
the word.
The researcher should become what Gold (1958)
calls a complete member of the group,
By example, to study
the life of a police officer would require obtaining a job
on
the
police
restrictions
as
an
officer.
placed
on
ethnomethodologies
force
are
Obviously,
by
some
the
temporal and skill levels of both the subjects who are
being studies and the researcher.
not always possible.
roles:
Complete membership is
Gold offers three other possible
Participant as-observer, Observer as-participant
51
and complete observer.
The participant as-observer is the
most preferable form of ethnographic inquiry if complete
participation
is
not
possible,
participating in this role.
relationship
to
the
point
is
situations.
of
used most often
The
complete
time
is
spent
The role strives to bring the
actually reaching intimate form.
participant
Much
friendship,
but
avoids
By contrast, observer asin one-visit
observer
role
researcher entirely from social interaction.
interview
removes
the
On occasion,
all researchers may employ this role as a subordinate role
to implement the dominant ones.
Because the researcher assumes the role of learner,
void of preconceptions in a social setting, ethnographic
studies are an evolving process.
research,
where
causal
Unlike experimental
interrelationships
between
two
variables are dealt with, ethnomethodological field work
offers sets of possible interrelated propositions (Strauss,
et al •
t
1964).
A second characteristic of this field work
is its temporally developed character.6 It begins with an
initial stage of general observation, proceeds to a second
phase of sense making and greater attention to particular
aspects that lead to an emerging set of propositions, and
ends with a final phase of systematic effort to pinpoint
various hypotheses.
52
STUDY METHODOLOGIES
The focus of this study involved a company that is
wholly owned by the employees,
It was chosen because it
was accessible to the researcher and has been owned by the
employees for several years,
The immediate effects of
ownership should have diminished, and the possibility of an
ownership culture developing might be
likely,
It was
brought to the attention of the researcher by a friend, who
had
observed
conversations
between
employees,
These
conversations seemed to denote a different attitude from a
non-employee owned company.
The
study
participant
was
conducted
by
as-observer method.
chosen for the study.
using
primarily
An emic
approach was
It was conducted over a seven month
period to give the best depth of inquiry.
relationship
between
the
any
study
There is a
selection
psychoanalytical reasons for choosing it
and
(Hunt,
the
1989).7
This relationship was not considered during the selection
of the study, but was taken into consideration during the
study.
Although every effort was made not to influence the
observations given here, as Denzin (1970) states:
"The
mere presence of the observer means that movements are made
and orientations are developed toward him which would not
otherwise have occurred” (p. 261).
Every effort was made
to portray a realistic picture of the study group, or as
53
Van Maanen (1988) states:
"to offer the perspective as
well as practices of the member culture" (p. 50).
Whether
or not this was accomplished, it was intended.
This researcher attempted to dress and act in a manner
that would minimize the effects of observation on the
subjects.
It was
soon realized by both
subjects
and
researcher alike that it was impossible for a female not to
be observed in an all male shop.
spent
observing
lessened
the
It is hoped that the time
effects
the
researcher*s
gender may have had on the observations, but as Hunt (1989)
states:
.
a
dualism
between
subject
and
object
is
problematic because fieldwork is an intersubjective
process.
It is also interpretive, mediated by the
minds of both researcher and subject.
.
. Subjects
also develop transference to researchers, which may
have a profound effect on the stories they tell to
researchers and their relationships with them.
(P-
81)
With
all
of
this
acknowledged,
observations
are
offered here from the interpretive point of the observer
having spent seven months in all parts of the company, and
on all three
shifts of the work schedule.
Since the
researcher spent from ten to twelve hours a day in the
field,
after a time the subjects seemed to become less
54
aware of the novelty of a female presence, and more open in
their interactions with the researcher as a researcher.
Many
of
the
observations
were
interviews with selected subjects,
these
subjects
organization.
deemed
This
to
choice
be
was
based
on
repeated
The researcher chose
"key
members"
based
on
the
of
the
initial
observations of the organizational structure, as well as
the patterns of communication which were discovered by
observing the company*s functioning,
Sub-cultures were
also checked for their significance in the operation of the
company*s culture and communication channels.
Special time
was spent in observing new members of the culture who were
hired during the study period.
These new members gave
insight into the culturization of complete members.
Some
subjects
were
extensively
interviewed,
while
others were given shorter interviews which were repeated
over the period of the study.
Additional data were gathered by casual observations,
and
eavesdropping
on
situations,
Note
taking
by
the
researcher (in what came to be known as the "Little Black
Book") was kept to a minimum in the shop area, because it
was revealed that this was perceived negatively by hourly
workers.
There was
an apparent association with note
taking and "time study" techniques which had been used in
the shop in the past.
55
A
guarantee
participants.
of
anonymity was
established for
all
Notes taken, interviews and survey results
were kept by the researcher in an off site location,
As a
further guarantee of anonymity, a lap-top computer was used
for transposing notes during the day, rather than using a
company terminal that was offered.
Access to interactions with all employees,
as many
corporate documents as possible, and interactions within
the
company*s
researcher.
daily
activities
was
gained
by
the
Permission to access these areas was granted
by both the president of the company and the union.
It was
acknowledged that any individual not choosing to interact
with the researcher had the right to decline or withdraw at
any time.
There were very few problems in acquiring materials
which
the
company
felt might be
too
sensitive
to
its
The exception
interests to share with the researcher,
being individual pay rates, bids on new jobs, managementnegotiations
labor
and
the
meeting
of
the
Board
of
Directors.
There were certain restrictions placed on the study
due
to
the
A
contractor.
recording,
as
that
fact
the
restriction
well
as
company
is
on
all
audio
taking
was
picture
a
government
and
video
already
in
existence in the company—this restriction imposed by the
56
government.
All photographs included have already been
cleared for public release.
A
survey
(Appendix B).
was
also
administered
during
the
study
The purpose of the survey was to gather some
quantifiable data both for presentation to the company and
to provide triangulation of data.
The questions were based
on two questionnaires; one was given to the management of
the company a number of years ago, and the other was used
successfully with
another ESOP
company
questions were given in Likert form,
in Ohio,
The
Since this ESOP was
three years old at the time of the study, data collected
were divided into those employees who had three years or
less service (when the ESOP was created) and those who had
more than three years service.
hourly/salaried categories.
It was further divided into
Most of the salaried employees
had managerial type positions in the company, while the
hourly workers were in production functions. The questions
were
coded
ownership,
for
communication
expressed
need
channels,
for
education
feelings
of
about
the
functioning of the ESOP and feelings of participation.
These
areas
were
chosen
for
investigation
during
the
research because of past research in the field and in
response to spicific areas that indicated a need for data
to be gathered about the needs of this ESOP.
Graphs included in the Analyses section of this paper
57
indicate a "desired" response comparison,
agreement
or
This category
indicates
perfect
question.
This measure is given for comparison with what
disagreement
with
the
the company might wish to be the "perfect" response by
employees to these questions.
It was produced by the researcher, with only final
approval of the form being given by both presidents.
The
researcher printed and stuffed the surveys into the pay
envelopes of the hourly workers, and the mail boxes of the
salaried workers.
The survey was given out to all 321
employees on the same day.
Boxes were set up for retrieval
of the responses over a two week period.
The questionnaire
included an envelope for anonymous reply.
The surveys were
color coded, but only the researcher knew the code, and no
subjects appeared to notice the coding.
photocopied on white
paper
Two responses were
and returned,
included in the summary of the results,
but
are
not
The researcher
collected the returns both from the box, and in person. A
total of 182 surveys were returned within the two week
collection period.
Those employees who were interviewed extensively were
appraised of their right to decline the interview, and a
written permission was
signed and witnessed by another
employee (Appendix C).
They were also informed of their
right to rescind permission at a later date, and given
58
phone numbers to assist in contacting the researcher for
this purpose.
59
CHAPTER IV-OBSERVATIONS AND ANALYSES
THE STUDY FOCUS
The focus of this study was to discover if a wholly
employee
owned
corporation
differs
from
a
traditional
corporation in its attempts to meet the communication needs
of
the
employees
who
are
now
stockholders.
This
investigation centered on the cultural changes which were
developing because of this new form of communication among
the
now owners
of
the
company.
It
also
included an
analyses of the needs for education about the functioning
of the ESOP, feeling of inclusion as owners, and feelings
of participation.
60
•:*
_• ...•
••• ' i «-.•■•;-
.*
<• -*
■=»-*ttf8ss2j6T
: ”C5^5’
:•- ---=r.'
■
THE ERIE FORGE COMPANY
From H. P. Spencer, Erie ... a history (1962) Published
by
the
author.
Reprinted
unknown).
by
Distributed
permission
of
by
the
the
Erie
Book
distributor.
Store.
(Artist
61
BACKGROUND OF THE COMPANY
Erie Forge Company,
Company,
was
founded
in
now the Erie Forge and Steel
1872
by
George
Starr,
J.P.
Harrington and A, Brabender (Spencer, 1962, pp. 228-235.).
The
company
continued to manufacture
steel
and forged
products and experienced rapid growth as a Navy contractor
during World War II.
At this time most of the employees
were female, and the manufacturing was primarily focused on
the manufacture of gun barrels.
The company was acquired
out of bankruptcy in 1969 by National Forge of Warren, PA..
In mid-1988, Robert Wilder announced that National Forge
Company was for sale.
with
employees
reduction
employees.
being
was
Late that same year, a new contract
ratified
given
in
Immediately
with
salary
after
a
and
this,
significant
benefit
the
cost
cuts
Union
by
and
Management of the Erie plant met to discuss a potential buy
out by the Employees by formation of an ESOP.
National
Forge decided to sell the company as a whole, and a letter
of intent was signed by Gambelli and Rosenthal in August of
1989.
The collapse of the Bond Market in October/November
caused that deal to fall through, paving the way for the
employees to move forward with the ESOP purchase.
Over the 120 plus year history of this company,
strong union has been formed,
a
The relationship of the
union to the management of the company has often been
62
stormy.
During the 1970*s several "wild cat" strikes were
staged.
That relationship
when forming this ESOP,
was taken into consideration
and the charter includes Board
representation by the choices of three seats on the Board
by the union.
one seat.
The President of the local union occupies
The other two seats are currently occupied by an
Attorney (with union ties) and an Accountant (also with
union background and ties).
An analysis of
the most
current ownership structure data shows that 74 percent of
the common stock is owned by the ESOP, 11 percent preferred
stock is owned by "Key Management" people (these people
having given monies to the original purchase agreement from
National Forge), and 15 percent preferred stock is owned by
the financial institution which helped to negotiate the
purchase, and took stock for its payment. The ESOP stock is
allocated according to pay scale and number of hours worked
during the year.
it.
Common stock carries voting rights with
Employees were vested at the time of the establishment
of the ESOP takeover, and new employees are vested after
five years.
63
64
DESCRIPTION
Erie Forge and Steel
(from here on referred to as
EFS) is located in Erie, Pennsylvania, on Sixteenth Street
between Weschler and Greengarden.
It is bounded by the New
York Central tracks on the North and the Bessemer and Ohio
tracks on the south.
acres,
virtually
The company occupies almost sixteen
all
of
production facilities.
the
area
being
occupied
by
In comparing it with an Historical
Society document (Appendix B.
Document #3777, 1932), the
buildings are twice the size today as the original drawing
indicates.
This
seems
to verify the
fact that fewer
workers, but more skilled laborers are required for today*s
steel production. Hiestand (1974) relates that:
The
occupational
apparently
proportions
composition
shifted
of
of
slightly
managers
the
industry
toward
and
has
increased
administrators,
professionals and technicians, and skilled workers at
the expense of a decline among the number of laborers.
(p. 21)
A new office complex was built on the south side of the
entrance
to
the
plant
in
1956.
buildings have been eliminated,
Most of
the
smaller
It is interesting to note
that the original drawing included both bunk houses and a
hospital.
Since the shop is now run on electricity, the
elimination of oil storage tanks and coal heat for steam
65
production is logical.
A
new "Bag House" was installed
where the old Engine House used to be.
This building can
be seen in both the pen and ink drawing and aerial views.
It is located at the extreme right of the drawing past
the gates and is the building with pipes running out of the
roof
to
the
melt
shop,
The
environmental
controls
affecting all of industry necessitated the installation of
this building.
Many other changes are being undertaken at
the company because of the regulations by the Federal
Government to protect the environment.
Scrap steel can no
longer be left on the ground, as the rain causes it to rust
and this rust is considered a hazard to the ground water
supply.
Plans will have to be implemented to store the
steel on concrete, with drainage ditches provided to carry
the
water
environment.
to
be
treated
before
release
into
the
66
o
SO
1 *
0^
D -2
?!
<3
a
3
at
67
The company is physically divided by buildings into
five main areas.
Finish
Shop,
These divisions are the Melt Shop, Forge,
Heat Treat
and
the main Office
Complex.
Within these areas other jobs take place (e.g. Welding is
in the Finish Shop,
the Chem Lab is in the Melt Shop,
etc.).The physical division, while necessary for production
needs is a factor which divides the work force and affects
the communication and culture of the organization.
the
most
universally
expressed
complaints
One of
from
all
employees was that the other people who work in the company
do not know what the production and tooling needs of their
particular job are.
It was also commonly acknowledged by
these same people that they do not know much about what the
jobs were like in other areas of the shop.
is
likely
a
complaint
in
any
Although this
organization,
the
interdependence of all workers on the production of other
shops to attain "gain sharing" at the end of the year and
for the company stock to increase seems to be increasing
the
criticism
and
dissatisfaction within
the
company.
There were often comments about this dissatisfaction at
monthly meetings held between the president and the hourly
workers.
Production graphs were shown,
but workers in
different departments couldn't seem to grasp why "heats"
were lost, or finished jobs had to be scrapped.
The work force consists of mostly skilled labor, with
68
the diversity of these skills also being a major factor in
complicating the communications and culture,
its
own
terminologies,
different
ways
performed
is
elements
in
often
and
these
different
dangerous,
of boredom,
Many of
are
Each shop has
often
departments.
while
the
The
also
jokes
used
in
work
containing
and humorous
rituals are an attempt to alleviate the boredom and relieve
the stresses of the danger involved.
male environment, the jokes are often
Since it is an all
sexually slanted.
The jokes and pranks serve the function of self-definition
and socialization in this setting.9
The hard hats that were worn by the hourly workers
bore many symbols, some of these were related to the old
company that had owned EFS.
These hats served a symbolic
function in the work place.
Supervisory personnel used to
wear white hard hats in the former company.
The term
"white hat" is now often used to refer to someone who acts
like he is in charge, or knows it all.
made
about
devices.
the
necessity
to
wear
Often jokes were
these
"protective"
Indeed, the danger from falling objects in this
work place would not have been decreased by the presence of
the hard hats, because the weight of objects falling would
have crushed anything they hit.
The workers often referred
to cartoons where objects drop on someone, and two legs
walk away under the hat.
69
It was easy to observe which members of the work force
were
also
members
of
sub-cultures.
Often
the
most
respected and skilled craftsmen were also the center of a
group joke. As Boland and Hoffman (1983) state it:
is
an important device
"humor
for allowing participants
in a
social structure to reciprocally confirm the ambiguity of
certain aspects of that social setting (p. 196)."
There
majority
are
of
seventeen
these
work
female
in
the
employees
office
at EFS,
complex,
the
The
exception to this being one female crane operator (who was
hired during the study) and one female in the office of the
shipping dock.
As was previously mentioned, the fact that
the work force is largely males possessing high degrees of
skill influenced the type of ethnomethodologies used.
It
was literally impossible to conduct a covert or complete
An effort had to be made
participant study of the plant,
at all times to minimize the influence that might occur
because the researcher was female.
There were many posters
and jokes around that the researcher had to deal with
without
interfering with the
subjects
discuss any topics with the researcher.
feeling
free to
It is acknowledged
that some normal behaviors may not have occurred during the
observation period because of this fact (e*g* One of the
hot weather rituals was water fights; although it was often
mentioned that I would be a prime target, I never became
70
the target of any of these fights,
On several occasions
someone was stopped from soaking me because other members
of the group felt it was improper to treat a lady that way.
A male researcher might have become a target).
What is
revealed here is the separateness with which females can be
expected to be treated in this culture.
It seems likely
that a female could not become a complete member of this
culture.
This observation is offered for those seventeen
members of this organization who share the same ownership
as their male counterparts.
71
^ -V ^
Av
Erie Forge and Steel Inc. is the leading producer of propulsion
shafts for the United States Navy. Our capabilities include weld
overlay, shrink fitting of liners and sleeves, along with fitted
and line reamed assemblies.
72
The product line produced by EFS is dominated by the
production of drive shafts for Navy vessels.
They proudly
point out that ninety percent of the Navy's shafts are
produced by EFS.
There is a government inspector on the
facility full time,
Several times a year there are visits
and Navy briefings, and all work must be approved by a Navy
inspector.
The importance of this product gives a certain
status to the executive in charge of this department. In
the company newsletter,
his articles are placed third,
after the president and vice-president.
no
assigned
seats
at
the
weekly
Although there are
staff
meetings,
this
executive occupies the chair to the immediate left of the
president.
All of the other regular executives sit in what
might be considered less important positions.
On my initial introduction at the regularly scheduled
Monday morning meeting of the executives, I was asked to
sit immediately to the left of the CEO.
I noticed the
reaction of one of the members to my being in "his" seat,
but no comment was made.
asked to occupy this seat,
At later meetings I was never
The same situation occurred
when two consultants were invited for an initial meeting
later in the study,
rules
of
a
group
As Shimanoff (1988) observed, "the
are
also used
symbolic acts within the group (e.g •
one sits . . .) (p. 56).
to
/
attach meaning to
the meaning of where
WmMTiiB!®.
” *ZJFiz
of <£ttzCn
^JajifiLncj a 75 !I7on c^izat of
74
The unique quality about EFS is that it melts and
produces the steel, forges it, and finishes it for shipping
all within one
facility.
It
is
the
largest
capable of doing this in the United States.
facility
This ability
to produce and finish the product in one location brings
both unique marketability and production problems for the
company.
All of the shops depend upon the success
other shops for their gain-sharing profits,
of the
If the melt
shop has a bad month/ the finish shop employees may be very
critical of their fellow owners.
The
physical
separation
of
the
departments
also
interferes with face-to-face communication patterns.
also
contributes
specific
to
to
each
the
creation
physical
of
location.
many
It
subcultures
Lockers,
snack
machines/ computer punch-in terminals and picnic tables are
dispersed throughout the shop,
places
near
work
stations
These serve as gathering
for breaks
and
lunch
Genuine subcultures are formed around these areas.
time.
For
this reason many workers never interact with people in
other
areas.
Certain
workers
like
maintenance,
the
transfer car and crane operators work throughout the plant.
These workers tended to be officers in the union, because
of their ability to interact with others in the plant.
While this is probably the case in most plants. it
contributes to the lack of conviviality among the owners.
75
Terminology is also not shared with the same meanings in
each location of the shop.
a
(e.g.
To the forge department,
hot end" is that part of a piece of steel used in the
manipulator of the forge press, while the same term in the
office complex refers to the melt and forge shops.)
Another factor affecting the culture and communication
climate is the long history of the plant,
According to
personnel statistics, most of the employees have been there
for an average of seventeen years,
Many reported that
their fathers, grandfathers, uncles, etc.
had worked at
the same plant, with many even remembering visiting when
they were children.
This seems to lend a "business as
usual" attitude to the reaction to any new proposals.
This
attitude is quickly passed on to new employees by the
sharing of stories about things that were tried before and
did not succeed.
One of the new attempts which is being
met with skepticism is the pouring of ingots in the forge
shop.
Many stories of past disasters were related while
the planning for this process was going on.
It is to the
credit of the management that meetings were called to hear
complaints and gather expertise from the employees who
remembered when this had been done before.
One of the
stories gave advice about the direction in which to pour
from the
ladle,
Placement of the
ladle in the wrong
direction had caused death and injury before.
76
The manufacture and production of the steel products
at EFS is a lenotlw and complicated process.
^7&\'
v/iji
f> deeming of Ongotx
Sxie Oorge and tStexl, One,
e^kout tfie &Cf\tixt
Sxie ^Doxgt and cSteel, One. kax Cr ten a gualitg
Q.amex S
■ xufxfxCiex of ofxen-die, forgedfxroductx to c/Cmerica x
nationaCCg known fox kix fxen and ink drauringx.
keawg induxtxg fox aCmoxt a centuxg. ^Wikk out
' cWix works are included in coCCectionx tkrougkout
fallg integrated manufackuxing cafiaCriCitiex, we
■ tke world. jCocaCCg, kc continuex to fxxexexve tke
continue to offex a fuCC xfxectxum of forged xteeC
kixtoxic xigktx and Candmax kx of tke Sxie,
fixoductx fox tke moxt deman ding afxfxlicakionx in
&ennxglvania area. cHix dxawingx of Sxie ^}otge
kotk tke commerciaC and defenxe induxtxiex. (Dux
and £keel, One. kave cafituxed tke xfxixit of tke
numlre x one fixioxitg continuex to Cre tke xatixfaction
forging induxtxg and xkow tke kxoad divexxikg of
of oux cuxtomexx tkrougk guaCitg, value andxervice. . r- JxUtalent
I
•
*
77
What
difficulties
resolve!
How
many
to
conquer I
arts
piled
What
on
problems
the
other
to
are
necessary to make this mail or pin which we value so
lightly!
-Buffon (1962)
STEEL MANUFACTURING
The manufacture of steel goes back thousands of years
to the beginning of the Iron Age.
The most prized iron was
of meteoric origin, being called "metal from heaven" or
"meteoric steel" (Fisher, 1963).
Accounts of its use have
been discovered in carefully wrapped specimens found in a
grave at Abydos, Egypt dating from 2600 B.C..
objects
were
wrapped
in
the
mummy
of
Three iron
Tut-ankh-Amen
(fourteenth century B. C.) the blade of a dagger, part of
an amuletic bracelet and a miniature head rest.
The three
iron relics were found in the wrappings of the mummy and
presumably were placed there because they were among the
Pharaoh's most treasured possessions, more highly prized
than the gold of which the ornate sarcophagus was made.
It
seems likely that iron of such rarity and value came from
the heavens. (Fisher, 1963, p. 9)
The manufacture of iron and steel has always been
regarded by people as a national secret,
Many types of
steel manufacture were discovered, and lost because of the
78
fall
of
one
civilization
to
another.10
Wootz
steel,
manufactured in India, described by Aristotle in 384 B. C • 9
was
the
basis
of modern day
steel manufacturing
discoveries.
A piece of wootz steel was given to Michael
Faraday by James Stodart.
Faraday began his research of
this steel in 1819 and ended it in 1824.
The steel was
analyzed as an alloy of aluminum and silicon with iron ore.
Together,
wootz.
Faraday
and
Stoddart
produced an
artificial
The true significance of this project was the fact
that it stirred the scientific desires in Faraday to go on
to analyze the whole field of alloy steels.
His research
led to the systematic alloying of steel with no less than
nine elements.
Since
the
alloying
of
iron
with
other
elements
produced steels with different qualities, their production
and use for industrial, commercial and military purposes
became national secrets.
The need for raw materials to
produce these new alloys caused the formation of world
markets and international alliances that have survived to
present times.
This researcher was present at a meeting about the
production
of
stainless
steel
at
documents marked "Confidential-NFORE".
EFS,
and
observed
Upon questioning
this marking, I was informed that these documents were "not
for foreign eyes", and regarded as a national secret.
79
Obviously, the development of computer analysis and
spectrographic analysis of materials has introduced a new
dimension of technical skills required in the production of
steel.
The
computer
in
steel
the
produced at EFS
furnace,
adjusted before pouring.
is monitored by a
analyzed by
microscope,
and
The job of furnace operator is
one of the most highly specialized skills in the Melt shop.
Some steels are sent to a vacuum degassing process before
pouring, which is also run by computer analyses,
This
process extracts gases which can be absorbed into the steel
and
cause
structural
Illustration, p. 80.)
faults
during
later
use.
(See
According to Fisher (1967):
As much as 9,600 cubic feet of gases may be withdrawn
from a ton of steel.
.
.Steels melted or cast in a
vacuum are purer and stronger than those produced in
the presence of air. They have improved mechanical
properties at high temperature, greater ductility, and
a higher degree of uniform quality, (pp. 117-118)
The complexity of producing steel further complicates
the understanding between the departments at EFS.
The
slightest fault in the production of the raw material, or
in its subsequent annealing (cooling process), can cause
the loss of a five-hundred thousand dollar product, which
could have taken up to a year to finish for shipping.
80
A
O’/
FURNACE LADLE
n—
£=^STOPPER ROD
PONY ladl:
-v«> •
Ey
Wys-OBSERVATION PORT
OBSERVATION PORT-'
VACUUM-
ja
S'•
WATER COOLINgJ*
■g;
DEGASSING CHAMBER-4—
----- INGOT MOLD
P
r
D
Equipment to degass steel for extra large ingots. As molten steel pours
through the degassing chamber it forms into droplets. The droplets are
purified by the powerful vacuum pumps which suck out minute traces
of harmful gases, chiefly hydrogen. The falling droplets slowly build up
into an ingot. American Iron and Steel Institute.
From The epic of steel (p. 112) by D. A. Fisher, 1963, New
York:
Harper & Row.
by permission.
Copyright by Harper & Row.
Reprinted
81
Along the line of processing, another department is
responsible
for
the
final
OK
of
department is Quality Control.
commented upon factors
Defects"
"inside
reports.
jokes"
the
shipping.
This
One of the most often
in any meeting were
"Error and
These reports became the source of
among the members of the culture.
The
terminology "E & D" report was used for any occasion where
someone made a stupid mistake,
viewed as the "enemy".
Often quality control is
No one wants to produce a faulty
product, but it is the unhappy duty
stop this from happening.
school
chaperons
Watching over products like high
at a dance,
unpopular decisions.
of Quality Control to
they must sometimes make
The nature of their job puts them
into a sub-culture of their own.
The pressure of rejecting
or fixing a job comes from all sides of the company,
The
management does not want defective products to harm their
future markets, but the production side is interested in
finishing the product and obtaining the profits.
Ironically, this department was also given the first
assignment
of
production,
It was necessary to establish this educational
program to
meet
educating
other
workers
new world standards
corporate producers (ISO-2,000).
for
about
steel
international
The attendance at these
classes was voluntary and it was not surprising that many
members did not attend the sessions, since quality control
82
was already viewed by many members of the culture as a
hinderance to their job.
SURVEY RESULTS
COMMUNICATION PATTERNS AT EFS
The
formal
communication
patterns
of
the
company
consist of monthly newsletters, bulletin boards, computer
print-outs, memos,
the Foremen's log books,
periodic
up-dates
by
meetings
with
employees
all
Navy
personnel,
by the
job boards,
monthly
up-date
company president,
weekly staff meetings on all levels, and daily face-to-face
meetings.
No
There is also an extensive grapevine.
electronic
mail
was
used,
although
terminals are everywhere in the company.
computer
All employees use
them to both clock in and out, and enter completed jobs
numbers.
There is an extensive telephone system, but this
seems to often be busy, and requires repeated calls.
is also a paging system throughout the shops.
There
The paging
system is difficult to understand, calling to mind airport
terminals with their garbled messages.
The paging system
is also an annoyance in the work environment as it is quite
loud.
The monthly newsletter, What’s Going On (Appendix E),
Each department head submits
is arranged by departments.
an
article
Relations
about
his
Director,
or
her
and it
is
department
her
to
the
Human
job to produce
and
83
distribute the newsletter.
Although the newsletter was
well read by most employees, specific terminology is used
in each article which is not clearly understood by all
employees.
After the distribution of each newsletter, I
questioned many employees about specific articles and found
that most did not know what was said in the articles.
While the survey results indicated that most information
was received by the monthly newsletter, with significantly
more employees relying on the newsletter than any other
form of communication, observations in the study found that
face-to-face sharing of the information in the newsletter
occurred immediately after its distribution.
Each worker is responsible for reading the Job Board
(which
lists
their
assigned
job
for
the
shift),
the
bulletin boards, the foreman*s log book, and speaking with
the worker preceding his shift and following it.
to Daft and Lengel
supposed to
be
According
(1986) face-to-face communication is
the
preferred
method
for
information
gathering "because it provides immediate feedback so that
interpretation can be checked", (p. 560)
The workers would
often gather at picnic tables before and during shifts to
share information.
It was often expressed that the workers
wished the president of the company would come around the
shops more often,
attended
during
His monthly "up-date" meetings were well
the
seven
month
study.
The
highest
84
possible score was
given to the monthly newsletter as the
information source most used by the employees to gain
information about the company (See chart p. 89).
highest
score
among
hourly
workers
on
The next
communication
channels was given to fellow employees, with lower scores
given to communication with the CEO and foremen.
85
The following questions from the survey were keyed to
indicate what information sources were most often used by
the employees.
SURVEY QUESTIONS
Keyed to Information Sources
Question 10-1 get most of my information about the company
from the bulletin boards and newsletter.
Question 11-1 get most of my information about the company
from my monthly meetings with Mr. —
(CEO)
Question 12--I get most of my information about the company
from my fellow workers.
Question 13-1 do not get the information I need about
performing my job from my foreman.
86
DATA FROM SURVEY QUESTIONS:
Related to Information Sources
**Comparison/More or less than three years of employment:
Hourly
Less
Salary
More
Less
More
*Desired Score
Q. 10
4
3.73
2.71
2.86
5
Q. 11
3
3.08
3.41
2.76
5
Q. 12
3
3.31
3.06
2.62
5
Q. 13
3
3.02
2.06
2.35
1
♦Desired Score indicates what the score would be if perfect
agreement or disagreement with answers to the question
were given.
The term "Desired" is used to indicate the
desired score for the interests of the company, and not any
pre-determined answer which was sought by the researcher.
**The categories of Hourly and Salaried indicate selected
difference in production workers (Hourly) and management
workers (Salary).
All employees are have equal "ownership"
in the company, but different attitudes might exist because
of different job functions.
employment or
less
The division of three years of
relates
company has been an ESOP.
to
the
length of
time the
Differences in attitudes may
exist because of this factor.
87
Although the workers indicated that they got most of
their information from the printed articles, it may be that
by sharing information in face to face meetings with fellow
employees at group meeting places, the true meaning was
worked out.
As Darroch and Silvers (1982) state:
the
interpretive
understanding
of
another's
experience requires that we look to the truth and
wisdom expressed in that other*s view as a practical
feature to which knowing may be applied ... We look
instead to the unstated foundation from which people
experience
occasion,
through
and embrace the
immediate world of
an unstated foundation which we
constructing
a
generous
an
located
conceptualization
which retains the good sense and the reasonableness of
their expressed meanings (p. 242).
Significantly lower scores were given to the monthly
up-date by the CEO among the salaried workers, with higher
scores being given to information gathered from immediate
superiors
(See
chart
p.
89) .
These
results
may
be
attributable to the fact that the salaried workers are more
often
in
face-to-face
contact
with
both
the
CEO
and
supervisors since they are housed in the same building with
them, and hourly workers seldom interact with these people
in face-to-face situations,
Lower scores were also given
to the newsletter and bulletin boards by this group.
This
88
also seems to reinforce the comments that workers wished
for more face-to-face interaction with superiors,
there was
a box placed in the shop areas
While
for written
questions which were promised to be responded to by the
CEO, workers expressed dissatisfaction with this method,
and seldom used it as an information source.
Comments were
often given about the fact that production workers felt
that the CEO needed to "walk around and talk to people”.
The following graph of the results of the data from
the chart on page 85 indicate the areas preferred by the
workers as information sources.
It indicates that both
salaried and hourly workers are not obtaining information
through the channels the company thinks they are getting
them from.
updates
on
The assumption is that employees get daily
Bulletin
Boards,
and
from
their
immediate
superiors (either informally or in weekly meetings),
The
monthly newsletter and CEO updates are to fill in the gaps
and answer questions which might have come up.
INFORMATION
89
More/Less than three years employment
Desire'I
90
Bulletin boards
are present
in all
areas
of
the
company.
There are over forty in the shop area alone.
Important
memos,
the
newsletter
information are posted here.
and
other
important
Although I checked these
often, I had trouble finding notifications of things which
I
knew
were
supposed
to
be
posted,
It
is
the
responsibility of all employees to read the bulletin boards
(this
responsibility
is
covered
in
the
new
employee
induction materials), but supervisors were often told to
remind employees to read the boards.
Some of the notices
that were posted were several years old,
and some even
contained the letterhead of the company who formerly owned
EFS.
Memos are used mostly by the management personnel
(Appendix F).
Some of these are posted on bulletin boards
for general communication needs, but most are distributed
within the in-house mailing system.
announced
meetings,
upcoming
The memos most often
deadlines,
reminders
company policies and status reports about customers.
of
The
most attention seemed to be given to reminders of company
policies.
I would often hear about the memos from the
hourly workers before I had managed to see a posting.
Often these memos were viewed by the hourly work force as
a reprimand.
Since the head of the department responsible
for the posting was female, the comments about the memos
91
often were shaded with sexual references even though the
memos were often not originated by her.
FEELINGS OF OWNERSHIP
The
company
approximately
has
three
been owned by the
years,
so
ownership and commitment have
1993:4)).
Conflicting
the
initial
lessened
graffiti
employees
and
effects
for
of
(Logue & Cross,
comments
about
ownership reveal that the culture has not yet developed
into an ownership climate.
During the acquisition by the
employees, no major event occurred to signal a change to
the culture.
The management personnel and daily routines
have remained mostly the same as when the employees did not
own the
company.
Some
symbolic efforts were made to
demonstrate the change (i.e. the painting of EFS on the
tower,
the printing of "My Father Owns the Company" T-
shirts, and the landscaping day at the office complex by
all of the office personnel), but no major difference was
seen by the hourly workers.
This lack of a dramatic event
has given a "business as usual" notion to the workers.
No
major event took place, and the leadership did not indicate
any major change in philosophy regarding their core vision
and mission.
Many of the other signs of unstable contexts
were also indicated.
As owners, the employees displayed
confusion about the company, and its activities.
92
Survey Questions
Keyed to feelings of ownership
Question 1-The job I do is important to the success of this
company.
Question 2-1 care about the survival of this company.
Question 3-Employee owners at this company work hard at
their jobs.
Question 4-1 do not feel like a real owner in this company.
Question
5-The
employee
important factor
stock
ownership
plan
is
an
in my decision to work for this
company.
Question 17-Employee ownership has been a good change for
this company.
Question
19-People
in
this
company
work
together
to
accomplish a job.
Question 20-This company can be successful in the future.
93
Data From Survey Questions
Related to feelings of ownership
Comparison/More or less than three years of employment:
Salary
Hourly
Less
More
Less
More
Desired Score
Q.l
4
4.34
4.71
4.5
5
Q•2
5
4.6
4.88
4.81
5
Q-3
3.01
3
3.03
3
5
Q•4
4
3.78
3.06
2.7
1
Q.5
3
3.25
3.53
3.22
1
Q.17
3
3.47
3.71
Q.19
2.47
3
Q .20
4
3.95
4.16
5
2.59
2.88
5
4.06
4.24
5
EELING OF OWNERS
Comparison Hourly/Salary:by service
6
5
fW
.
-
'i
J!&
.
mI
m
m
3
I
0
iHi
■
u:;
01
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HLJj HL- LL
Ql
J Hourly loss
I lif
a i
i11
2
i
:
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Q2
Hourly-more
Li
Q3
I Salary - less
95
The data indicate a strong agreement with the feelings
of caring about the survival of the company and its future
success, as indicated in questions 2 and 20 (graph on page
91).
The extremely negative responses to question 4 ("i do
not feel
like a real owner of this company.")
seem to
indicate that a feeling of ownership has not developed.
The relatively neutral answers to questions 5 and 17 ("The
employee stock ownership plan is an important factor in my
decision to work for this company." & "Employee ownership
has been a good change for this company.")
also seem to
indicate lack of a feeling ownership.
NEED FOR ESOP EDUCATION
Rosen, Kline & Young (1986) have stated that one of
the measurable independent variables in ESOP participation
In their survey of 37 corporations
is worker influence.
having over 2,000 employees,
three main variables were
listed as significantly positive to employee participation.
These
factors
are
as
follows:
full
voting
rights,
a
relatively substantial ESOP communication program, and a
management philosophy which is firmly committed to employee
ownership.
Although they admit that these measures are
necessarily more speculative and interpretive, there is a
clearly positive relationship between these three factors
and employee satisfaction with ownership.
96
In this study, there is a clear response to the need
for
employee
education
and
its
communication about the ESOP.
effect
on
improved
Many employees expressed a
lack of complete trust that the information they received
was sufficient, and a desire to obtain more education on
the operation of the company.
During the observation
period, I was often approached by individuals who stated
"Let me tell you how an ESOP should be run."
Often, these
explanations lacked any understanding of the laws which
pertain to the actual structure and function of ESOPS.
While
it
is
true
of
most
situations
that
the
information received is perceived not to be sufficient, the
establishment of an education program for all employees
would increase shared terminologies and help to foster a
better understanding of ownership roles.
The following questions from the survey were related
to education about the functioning of the ESOP company:
97
Survey Questions
Keyed to need for education
Question 6-1 feel I do not have a good understanding of our
employee stock ownership plan.
Question 7-1 have a good understanding of our company's
financial report.
Question 8-1 would be interested in attending an in house
class on the employee stock ownership plan.
Question 9-1 would be interested in attending an in house
class on understanding the financial report.
98
Data From Survey Questions
Related to a need for education on the ESOP
Comparison/More or less than three years of employment:
Hourly
Salary
Desired Score
Less
More
Less
More
Q-6
3
3.06
2.59
2.27
1
Q.7
3
2.63
3.82
3.49
5
Q•8
4
3.75
3.94
3.32
1
Q.9
4
3.75
3.88
3.08
1
.) FOR EDUCATION ABOUT THE [SO
\
)
COMPARISON-MORE/LESS THAN THREE YEARS
6
5
1
s
in
3
i
:
.1
I
?
L
1II
.£37
>
:1
!
m-:-
m
v> i
I
|
&
{
i •
i
li !'
i :
:
:
i
1
i
i
' !
'
:
;
■
I
■
-
i|
:• i
;
h
i
B—i£l
Q.6
HOIJRLY/LE cr
jj
! v
Q.7
m uoiiRi iAFEr
SALARY/LESS
DESIREI) ANSWER
SALARY/MORE
99
100
Except for question 10- "I get most of my information
about the company from the bulletin boards and newsletters”
(which
received
the
highest
negative
response
on
the
survey), the responses to the questions about classes about
the stock ownership plan and financial report (questions
eight and nine) showed the highest need by employees on the
survey.
These two questions seem to demonstrate a need for
education,
employees
especially
are
not
coupled with
getting
the
the
fact
information
that
the
from
the
newsletters and bulletin boards as the company assumes that
they are.
This fact is magnified by the observation during
the research that the information placed in these channels
is either
lacking or containing technical jargon which
interferes with the common understanding of all employees.
The establishment of a system to educate the employees
could help to eradicate some of these problems.
Although the survey indicates a higher agreement with
information being gained through
foremen and the CEO,
observations during the study of face-to-face sharing by
fellow employees and the "grapevine" seem to indicate that
these sources are actually relied upon more heavily than
the forma1 channe1s.
On several occasions misinformation
through the grapevine was presented to me about situations
occurring in the company,
On one occasion I was attempting
to get a release form signed by a supervisor.
I questioned
101
several people about his location, but was not able to
locate him until the next day.
Before finding him on that
day, I was approached by someone who stated that he heard
Mr.-
was hiring a
lawyer to
sue me.
There was no
foundation for this rumor, but it had been conveyed through
this
information
source
incorrectly.
Another
misrepresented story involved the "ramp" which was being
constructed to deliver scrap steel in a more efficient
manner to the railroad cars.
This project had to be
undertaken between reports from the CEO, and was the cause
for speculation by the "grapevine" for some time.
The
confusion should have been eliminated in conversations
between
the
foremen
and
workers,
but
many
stories
circulated before the issue was clarified at a monthly
update meeting by the CEO.
FEELINGS OF PARTICIPATION
This company has one of the most participative forms
of ESOP structure allowable under the laws, with three
members of the Board of Directors of the corporation being
selected by the employees, and all members having voting
rights.
In response to Question 25:
stock holder voting,
I participate in
102
VOTING PARTICIPATION
HOURLY
Less
Q.25
SALARY
More
Less
More
Total
NO
15
50
5
2
72
YES
9
49
12
34
104
17
36
176
TOTAL POSSIBLE
24
99
*Total does not include 4 "no responses" and two surveys
that were xerox copies of the original forms and were not
included.
Total survey response was 182.
A consistent comment was made about the desire for
more participation in the directly job related functions of
the
company.
Although they are aware of
and endorse
employee stock ownership, confirming Logue, et. al (1986),
the employees do not find that this factor alone makes
their job more satisfying,
harder.
or that it makes them work
Workers with less than three years of service
answered "3-no opinion" to Question 5-"The employee stock
ownership plan is an important factor in my decision to
work for this company",
If being employee owned were a
significant factor in job satisfaction, it would be likely
that a more positive response could have been expected to
103
been expected to this question,
job availability, etc.
While other factors like
play a factor in this question,
management's assumption of the importance of the ESOP as a
benefit plan is not positively relate to the reason for
employees obtaining and keeping jobs here.
Although the
answers to questions one, two and twenty indicate a strong
positive feeling of the importance of their jobs and caring
about
the
success
of
the
company,
the
survey
results
indicate a lack of positive feelings about the employees
being able to participate in and trust the decisions being
made about the daily running of the company.
104
Feelings about participation are also revealed in the
fo1lowing questions:
Survey Questions
Keyed to feelings of participation
Question 14-1 am not well informed about how the company is
run.
Question 15-What I have to say about work is listened to by
those above me.
Question 16-1 am not well informed about what goes on in
other parts of the company.
Question 18-Mv ideas and suggestions are not important to
this company.
Question 21-1 do not understand the gain sharing plan.
ouestion_22-I understand the profit sharing plan.
105
Data From Survey Questions
Related to feelings of participation
Comparison/More or less than three years of employment:
Salary
Hourly
More
Desired Score
Less
More
Less
Q.14
4
3.79
2.59
2.62
1
Q.15
2
2.48
3.65
3.30
5
Q.16
4
3.75
3.06
3.08
1
Q.18
3
3.25
2.41
2.14
1
Q.21
3
3.15
2.41
2.73
1
Q .22
3
2.89
3.41
3.78
5
LINGS OF PARTICIPATION
More/less-three years service
6
5
4
Desired answer
106
107
The data indicate a large discrepancy between the
desired response especially among the hourly workers.
This
discrepancy seems to be most prevalent among the newest
employees.
there is
Perhaps they have not been enculturated yet, or
an actual need for more formal education and
participation in the functioning of the company.
The data
seems consistent with past research indicating that few
companies
1991).
have established
"Theory O"
cultures
(Blasi,
The answer to Question 19-"People in this company
work together to accomplish a job."
should indicate a
feeling of participation in the company, yet all workers
answered in the "no-opinion" or lower categories.
This may
indicate an opinion that not all employees participate to
their abilities as perceived by others,
In spite of the
communication efforts of the management, the workers still
feel poorly informed about what is going on and that what
they have to say is not listened to.
Harrison
(1994),
organizations,
organizations.11
in her description of democratic
describes
She
ESOPs
states
as
Type
2
democratic
that
they
may
best
be
"regarded as attempts to reproduce capitalist structures of
ownership among individuals of middle and working classes
These organizations are supposed to be
(p.263)."
characterized as rich in face-to-face interactions and
relatively high in their degree of social
integration.
108
However, since many Type 2 organizations are founded to
save failing bureaucracies,— "interaction patterns can be
considerably
more
similar
to
those
within
traditional
bureaucracies (p. 265)".
This organization seems to be following the typical
bureaucratic communication patterns,
given in the print form.
over
print
forms,
with
Most information is
Weekly meetings spend time going
little
verbal
exchange
being
conducted during the meeting, and mostly relying upon the
printed information which is passed out to all members of
the group.
After the formal meetings, verbal exchanges
seem to take place about the issues that really need to be
dealt with.
however,
These conversations are not a planned session;
and only happen after the meeting is formally
concluded.
The researcher noted that this seems to be the
most relevant exchange of information which takes place
about the needs of the company, as observed in the study.
109
CHAPTER IV
SUMMARY AND CONCLUSIONS
This research paper involved an ethnographic study of
a three year old wholly employee owned corporation,
While
many of the early effects of becoming an ESOP corporation
have seemed to dissipated (Klein, 1987, Hammer & Stern,
1980),
the employees are still committed to ownership.
Since this was
a
"type
2"
(Harrison,
1994)
democratic
organizational attempt created to save a failing business,
there
remains
a
commitment
organizational structure.
to
the
usual
bureaucratic
Since the ultimate competitive
advantage in today's business environment rewards those
corporations
who
can
consistently
make
high-quality
decisions with less than adequate information and little
time for discussion.
Bureaucratic organizational hierarchy
is efficient, while democratic decision making may be time
consuming.
Therefore,
Gorden's
question "is modern
(or
postmodern) capitalism really compatible with democracy?"
(P-
281)
sets
the
frame
for
the
ideal
of
democratic
organizations in the light of survival.
Long (1982) advises that the most important factor in
improved employee attitudes and increased organizational
effectiveness. He warns that: "
.
. empirical evidence
suggests that without changes in traditional patterns of
110
participation employee ownership will not have the desired
effects” (p. 197).
The commitment to the former bureaucratic structural
forms seems to be hindering the flow of information to the
now "owners” of this company.
The company is using the
standard print forms of communication, and the employees
are exhibiting dissatisfaction with the results,
There is
an observed need for developing different means for sharing
information,
as well as a need for greater sharing of
terminologies so that information can be shared in a more
efficient and accurate manner.
Employee
Ownership
(1991)
The National Center for
suggests
more
face-to-face
communications should be considered. "Generally, face-toface communication is the most effective,
and computer
printouts of numbers with no or little explanation are the
least effective methods of communicating.” (National Center
for Employee Ownership, 1991, p. 12.)
There also seems to
be a need for more upward as well as downward message flow,
Gordon
providing more feedback for management.
(1994)
suggests a possible solution is to promote dialogue.
three
step
opportunities
process
for
involves
employees
to
(1)
His
equalization
of
speak their minds,
(2)
promotion of empathy for differing ideas,
opinions and
world-views, and (3) the manner by which life experiences
are expressed. "Equal opportunity to voice one's concerns,
Ill
however, appears to be a fundamental premise of employeeowned companies."
(Gordon,
1994, p.
295)
The National
Center for Employee Ownership (1991) suggests four areas to
consider improving for effective communications.
They are:
1) have both parties try to view a situation from the
other's perspective,
2) employ varied media and be continuous,
3) provide feedback, and
4) provide multiple ways to allow effective
subordinate-initiated communications, (sic, p.14)
There seems to be a high level of commitment by the
employees to the company and a feeling that the company can
be a success. This is indicated by both the high scores on
the survey and observed comments during the study.
There
still remains a general desire for more participation in
the job related functions of the company.
Plans need to be
considered to give greater involvement by employees in this
area if job satisfaction is to be increased.
1986; Rosen et. al •
/
1986; Blasi, 1987; GOA, 1987; Klein,
1987; Bell, 1988; Stern, 1989)
that
"employees
(Quarrey,
are most
Rosen et. al • 9 (1986) found
satisfied when management
is
actively committed both to employee ownership and to worker
participation" (p. 103).
most
Eisenberg (1994) comments that:
contemporary
organizations
are
experimenting with some form of increased employee
112
participation and involvement,
These changes are well
reflected in the popular press, but .
.
. academic
theory and research have lagged behind practice. (P276)
As research catches up with practice, more efficient means
for
sharing
in
democratic
organizations
will
be
established.
While the company*s management team and mission are
only presently being formulated, Mohan’s warnings about
stable cultural formulations should be heeded.
Subcultural
elements need to be included to provide for a truly shared
"vision".
Symbolic restructuring of the culture needs to
be planned to incorporate organization-wide participation
and consent.
Plans for management to spend time in non-
authoritative atmospheres for fostering exchange of ideas
will help to shape a shared corporate vision.
The shaping
of this corporate vision should include the education of
all members by formulating well structured communication
plans,
which
transmission.
needs
to
be
will
help
guarantee
accurate
message
The establishment of shared terminologies
included in this
plan,
An analyses
and
restructuring of the communication channels will be an
important change at EFS.
Establishment of
a better system for posting and
monitoring Bulletin Boards seems to be indicated.
The
113
survey showed a high dependency on this information source,
but it was found to be an inadequate source to meet the
needs of the employees,
The information posted there was
either out-dated or missing,
Bulletin boards should be
purged of all out-dated information and letter heads, and
the EFS symbolism should be established to promote the
corporate image.
Rotation of the responsibilities for
posting notices might provide more inclusion of all staff
members.
Since EFS team sports are important to many employees,
an area should be set aside to keep all trophies and awards
on display.
Perhaps in the newly created education room.
The walls of this room could be used to display past and
present memorabilia.
A new format for the company newsletter, containing
more shared terminologies is also indicated by the observed
lack of understanding of the articles by many members of
the organization,
Soliciting contributions of articles
from all employee levels might help to establish guidelines
for
the
content of
the
newsletter,
The new computer
software available on today*s market could make production
and distribution of the newsletter less time consuming.
Contributions of art work and shared jokes might help to
make it more "real" to all employees. Results from team
sports could also be included, with the head of each team
114
presenting results to be added to the newsletter.
A
need
for
functioning of
education
ESOPs
is
about
the
structure
indicated by both
the
and
survey
results and the comments made to the researcher during the
study.
A program for educating the employees was being
planned at the time of the study,
but no data on the
objectives or results of this program were available during
the study.
included
It would be helpful if these classes also
instruction
relations,
making.
in
communications
the
areas
skills
of
interpersonal
and teamwork
decision
There is a demonstrated need for education about
the working procedures and needs of all department in the
corporation
expressed
among
its
acknowledged
the
employees
uniqueness
that
in
they had
no
Each
its
department
comments,
idea what
but
also
it was
like
elsewhere in the plant.
More
established.
face-to-face
offs
needs
to
be
This communication needs to be informal and
non-threatening.
print
communication
could
The use of electronic mail and computer
expedite
formal
meeting
situations.
Meetings need to be planned to include less print forms,
and more exchange of conversations.
More MBW (Management by Walking Around) is desired by
most of the production employees,
The CEO is respected for
his vision in leading the company to the accomplishment of
115
its ESOP foundation,
This fact should be utilized to
promote company unity.
Although it is time consuming, the
benifits of the CEO spending time on the shop floor would
increase perceived ownership.
employee owned culture,
For EFS to become a truly
demonstrations of commitment to
employee ownership ideals must seen.
The use of a voice
mail system for comments and suggestions to the CEO might
prove fruitful in saving time for the CEO, and also provide
for
the
inclusion
of
opinions
from
the
sub-cultures.
Answers to the voice mail could be included in the monthly
update by the CEO.
There is a need for creation of a feeling of unity and
shared vision for the corporation.
which
are
vision.
Events and celebrations
carefully planned could help establish
this
Many workers feel isolated in their job functions,
and there is a need to establish inclusion to provide for
unity of vision.
RECOMMENDATIONS FOR FURTHER STUDY
One of the complicating factors in conducting this
study was the difficulty in obtaining information on ESOP
research,
readily
The information which has been compiled is not
available
in
libraries,
purchased by the researcher•
further researchers.
and
much
had
to
be
This is a major obstacle for
Blasi (1992) comments upon the lack
116
of easy access to these materials.
Although some ESOP
centers have been created, the focus of these groups is
upon the corporate world, and little attempt has been made
to make their research available to academics.
Since the only current research on ESOP culture seem
to be Mohan (1993) and Harrison's (1994) work, there is a
vast area of ESOP cultural research yet to be explored by
further researchers.
The surge of new companies within the
last ten years may provide areas for these researchers to
investigate.
According to a personal conversation with
North East Ohio Employee Ownership Center in August of
1994, there are currently 10,000 ESOP companies with over
2,000,000 employees in them.
of
these
new
cultures
Exploration of the formation
offer
researcher to investigate.
areas
for
communications
117
END NOTES
1.Data from a personal conversation with the North East Ohio
Employee Ownership Center, August, 1994.
2.For a more complete detail of these and related acts,
Employee ownership resource guide. 1993. 84-89.
see
3.For an in-depth« explanation of the establishment and functioning
of ESOPs, see: Adelson, S. J.
& Berka, J. W. (1991). Employee
stock ownership plans.
Houlihan, Lockey, Howard & Zurkin, Inc.
Financial Services, Los Angeles, CA.
4.For sources of information on ESOP assistance consult Bell
(1988), Appendix A & B, the National Center for Employee Ownership,
2201 Broadway, Suite 807, Oakland, CA 94612-3024 or The ESOP
Association of America, 1100 17th Street, NW, Suite 1207,
Washington, DC 20036.
5.Statistics reported are based upon a personal conversation with
the Northeast Ohio Employee Ownership Center, August, 1994.
6.For further readings on participant observation, see: G.McCall &
Simmons (1969). Issues in participant observation: a text and
reader, Reading, MA: Addison-Wesley Publishing Company.
7.For a detailed discussion of this and the other psychoanalytical
J.C.
(1989).
Hunt,
aspects of ethnographic study see:
Psychoanalytic aspects of fieldwork. Newbury Park: Sage.
8. Information taken from personal interviews of Company executives „
and long time employees.
9.For an excellent analysis of humor in a shop setting, see:
Boland, R. J. & Hoffman, R. Humor in a machine shop. In Pondy, et
al. (1983). Organizational Symbolism.
10.For a complete analysis of the history of steel, see Fisher, D.
A (1963). The epic of steel. New York: Harper & Row. Also,
Wertime, T. A. (1962).
The coming of the age of steel...
Netherlands: University of Chicago Press.
Pon an insightful evaluation of Democratic Organizations see.
Harrison, T. (1994).
Communication and interdependence in
democratic organizations. In Communication Yearbook 17, pp. 247274.
118
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131
APPENDIX
Appendix A
132
"THEORY O"
The personal commitment of the person at the top of the
organization is essential.
A set of written values embodying your commitment to
employee ownership is an important starting point.
Symbols of
important.
how
everyone
is
treated
as
an owner
are
The people who have the most expertise about an area should
be the ones making decisions about it.
If employees are to participate in decision-making, they
need training to develop necessary skills.
Information should be shared not just from the top down but
from the bottom up as well
Participative decisions take more time to make but less
time and effort to implement.
There are no pat formulas for implementing the ownership
What works for one company may not work for
theory.
another, or even for the same company at different stages
of its development.
Taken from Beyond Taxes
(1991), page 37
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IMDEX MUM BEK
APPENDIX C
134
SURVEY
PLEASE CHECK ONE ANSWER FOR EACH QUESTION
1-STRONGLY DISAGREE
1.
3
4
5
2
3
4
5
2
3
4
5
I do not feel like a real owner in this company.
1
5.
2
Employee owners at this company work hard at their jobs
1
4.
5-STRONGLY AGREE.
I care about the survival of this company.
1
3.
3-NO OPINION 4-AGREE
The job I do is important to the success of this company.
1
2.
2-DISAGREE
2
3
4
5
The employee stock ownership plan is an important factor in my
decision to work for this company.
2
6.
3
4
5
I feel I do not have a good understanding of our employee
stock ownership plan.
2
7.
3
4
5
I have a good understanding of our company's financial report.
2
3
4
5
135
8.
X would be interested in attending an in house class on
the employee stock ownership plan.
2
9.
3
4
5
I would be Interested in attending an in house class on
understanding the financial report.
2
10.
3
4
5
I get most of my information about the company from the
bulletin boards and newsletter.
11.
5
4
3
2
I get most of my information about the company from my monthly
meeting with Mr. Concoby.
12.
5
4
3
2
I get most of the information about the company from my fellow
i
worker*•
i
2
13.
3
5
4
I do not get the information I need about performing my
job from my foreman.
2
3
4
#•
5
136
PLEASE CHECK ONE ANSWER FOR EACH QUESTION,
1-STRONGLY DISAGREE 2-DISAGREE 3-NO OPINION 4-AGREE 5-STRONGLY AGREE
14.
I an not well informed about how the company Is run.
2
15.
3.
4
5
What I have to say about work is listened to by those above
i
me.
2
16.
3
4
5
I am not well informed about what goes on in other parts of
the company.
2
17.
3
4
5
Employee ownership has been a good change for this
company.
2
18.
5
3
4
5
People in this company work together to accomplish a job.
2
20.
4
Hy ideas and suggestions are not important to this company.
2
19.
3
3
4
5
This company can be successful in the future.
2
3
4
5
137
21.
I do not understand the gain sharing plan.
2
3
4
5
i
22.
I understand the profit sharing,plan.
2
3
4
5
PLEASE CHECK YES OR NO
I read the company newsletter.
yes
no
I read the bulletin boards.
yes
no
I participate in stock holder voting.
yes
no
Number of years with the company.
more than three years,
Age
18 — 25
26---- 35
36---- 45
Please check
three years or less
46---- 55
55---- Over
APPENDIX D
138
INTERVIEW RELEASE FORM
^
conducting research on communication in Employee Stock
Ownership Plan Corporations (ESOP's) to better understand how they
differ from traditional corporations.
My proposed study has been reviewed and approved by the Human
Subjects Review Board of Edinboro University.
I am asking for
volunteers to take part in the study, and would like you to take
part in the study. Your involvement is entirely voluntary and you
will not be penalized in any way for not volunteering.
Your
involvement is an undetermined amount of time starting in April,
1993 and lasting for five months. You may be periodically asked
questions during that time to help me learn about your work place.
You have a right to full and complete information about this
project. If you decide to participate, you are free to stop at any
time without penalty of any sort.
Information on Edinboro
University policy and procedures for research involving human
subjects can be obtained from the Human Subjects Review Board,
Development and Planning Office. Administration Building, Edinboro
University of Pennsylvania, 16444.
For this project you will be asked to do the following:
* Fill out a questionnaire-the information from which will be
shared as final totals only.
* Answer questions about your job and how it relates to the
functioning of your company.
* Relate stories you remember about your job and the company.
The final data will be shared with all participants in a not
yet determined, but appropriate manner. The benefits to you will be
a better understanding of the functioning of Erie Forge and Steel
All of the
and how it functions as an ESOP corporation,
information gathered in this study will be kept confidential in the
following manner:
Every effort will be made to disguise the
sources of any particular information. My interest is not in
individuals, but in the organization as a whole.
All data and
notes will be kept by me solely for the purpose of this study.
I and others listed below will answer any questions you may
have regarding procedures or any other aspects of the study.
Betsy Fogarty
(814) 866-9342
Dr. Kathleen Golden
(814) 732-2528
139
ESOP STUDY INTERVIEW RELEASE FORM
I have been briefed by the project director in detail on this
project and understand what my participation involves. I agree to
participate with the understanding that I may withdraw at any time.
Date
Subject's Signature
Witness Statement:
I have witnessed the consent process and believe that the
subject has been fully informed, understands the project and
his/her role, and has agreed to voluntarily participate.
Date
Signature of Witness
APPENDIX e
WHAT’S
COIN ci n n
03/22/93
****
9
increasing our sell price to cover the increased cost of our raw materials,
energy and health care. „ We must continue to -look for ways to*.lower our
overall cost of operation..The-bankruptcy plan of reorganization has been
filed for Edgewater and a preliminary hearing is now scheduled for April 14.
The final hearing should be held in mid-June.
operations
(by
) • • • • With
volume continuing to be low through
the Forge and Heat Treat Departments in February, departmental variances for
February were disappointing,
although Melt,
Finish, Roughing and
N.D.T. /Inspection had their best performance for several months,
Volume
throughout the shop should show improvement in March. Error and Defects were
high in February, in part due to the problems'we have experienced in the.Melt
Shop. This will have a direct effect on our gainsharing performance. Melt
backlog continues to be strong, although commercial component work continues
to be almost non-existent except for back-up rolls. The casting project with
Whemco continues to progress, and a decision should be reached in the next
few weeks on this being a definite go ahead project. Quality of product to
and
Edgewater.continues to improve, particularly with the efforts of I
in manning the Midwest Grinder so effectively. Cleanliness of the
shop is still not where it should be---- particularly in the Melt Shop Pit
and Forge Shop areas. A new Dresser Rand bulldozer was delivered to the Melt
Shop, two new small pear plates and three spacer plates. Twelve 16-1/2" x
240" molds will arrive in the month of April.
COMPONENT SALES (by
9 ... .Representatives from EFS will . be
attending a seminar hosted by NAVSEA on March 24 and 25, 1993. This seminar
is for all navy shaft manufacturers and concerns the policy parameters
demanded by NAVSEA, the difficulties with compliance and discussions on
various manufacturing procedures. We anticipate that the results of this
meeting will necessitate revisions to our present operation sequences.. .EFS
was awarded a contract by NAVSEA for 3 spare 688 class shaft assemblies.
Total contract is in excess of $2 million. .. .We will be meeting with General
Dynamics on March 26 to discuss our continued involvement with the navy s
composite shaft program. We expect an order will be let for a prototype
composite shaft by the end of this year:
STEEL SALES
fbv
Bookings for January finished at $2.6
;
million.
Year-to-date we have booked $10.8 million in steel Products.
Edgewater's bookings continued to run at $900,000/month. Booking leaders
were:
National Forge @ $100,000 of ingot,
® §370'000
Thyssen ® $220,000 of block, and Tube Supply § $150,000 of bar. Scot■
bought their first ingot from us and Brooker Brothers bought a truckload of,
billet, which is their first order from melt....Our bookings continue to b
strong in ingot, billet and block.
Our bar business has slowed down,
primarily due to U.S. Metalsource who is in the process of liquidating, We
win replace their business in time with alloy & tool steel bar.
Newsletter #75
-2-
141
03/22/93
gwrey/ma flaaaMfflao: r^y
•. - Production schedules for the fiscal
March call for the completion of 3 shipsets—DDG59, DDG61 & DDG62. Each tie
a shipset is completed, we are able to bill the customer for revenue that was
previously unbilled. In simpler terms, completing a shipset generates extra
cash. Completing 3 shipsets within the same month will provide a substantial
boost to our cash flow. As of this writing DDG59 is complete, and DDG62 is
finishing up in final- inspection.
The . 2 remaining shafts on DDG61 are
receiving careful attention by all involved in their processing. In addition
to the DDG shipset completions, we completed and shipped 2 Trident shafts on .
sales order 6797'which allowedus to bill General- Dynamics over -$200,000 on
a milestone billing....Production Planning and Operations have been working
together to implement capacity planning techniques in the machine shop.
Preliminary results suggest that this will be a powerful 'tool for us, with
the ultimate result being improved customer service and better throughput.. .
.. .Information Systems has been working to improve our computer response
time.
We purchased and installed additional memory which had a positive
•impact.
In addition, after studying the data collection "out" punch, we
determined that it could be improved by a rewrite which was completed and
installed during the first week of March. Further response time, improvements ’
are now in the planning stage.
«'•
QUALITY ASSURANCE
(by
.. .Westinghouse-Cheswick will be in on
March 25-26 for an audit of our Quality Assurance System.
There is an
opportunity for 6 more shell & flanges. ABS/GE will be in on April 1 for a
routine audit of our QA system... .EFS audited 3 of our' suppliers in March:'
Sandusky -Foundry, Dyson Corp. and American Hollow Boring. All 3 continue to
be approved vendors.... The current waiver dollars are holding steady at $1.1 .
million, with the YTD average at $1.6 million. This is down from 1992’s
average of $2.1 million... .One heat of 410 stainless steel for Viking
Metallurgical Corp. has been processed with acceptable heat qualification
tests. A second heat has been melted, with a third heat to follow. We have
unsuccessfully melted several heats trying to meet the customer's minimum
quantity requirements for this order. There is a potential for approximately
1 million more pounds of 410 stainless to be purchased by Viking, depending
upon our material's quality and whether we can meet delivery requirements!
HEALTH AMD SAFETY (by
j .. • • In the first quarter of 1993, we have
sustained 31 lost days due to shop injury. All of those days are due to one
accident.
Our goal for the 1st quarter is to hold our days lost due to
injury below 65. With less than 2 weeks remaining, it appears that we'll
meet the goal and all shop employees will be awarded a portable first aid
kit___ Recently placed in the melt & forge departments are 5' x 6' water gel
burn blankets.
These blankets were put in place for the treatment of
traumatic burns. They are far superior to the older petroleum-based burn
dressings. Rapid application of these blankets to a burn victim reduces the
severity of their burns and does not require the debriding process that was
necessary with the older style dressings.
They also have the ability to
&
suppress burning clothing when applied. Thanks to
for this life-saving ideal___ Many of the dispensary visits lately have been
due to foreign bodies in eyes. A reminder that proper eye protection must
be worn at all times. The gift of sight is precious, so do all you can to
maintain it • • • • and remember • • •
SAFETY-SAFELY: THE WAY TO BE IN 1993!
w
Newsletter #75
-3-
03/22/93
pUMAN RESOURCES
(by
• • • • Welcome to ____
, melt shop
general foreman, and
/ ESR melter who have joined the company
recently • • • • Happy 20th shop anniversary this month to
and
fe. May you have many more!....The bloodmobile was here on March
16th« We .donated 17 pints of blood • The van will return on July 8th • • • •
• • • • Our 3 free counselling sessions through our Empldyee Assistance Program
are now available to immediate family membefrs. if you, your spouse, or your •
children havejprobidms Tof any kind, please feel free to callat
—tor - a confidential appointment.'.. .2 MOTES f 7OR -YOUR.. PLANNIUG,PURPOSESj .'The;.plant' and offices will be closed on Monday,' July 5th, in'
celebration of the 4th of July holiday.-.. .-.Secondly, vacation pay-will only
be paid , when vacation time off is taken. . Unused vacation will be paid on
November 15th. Therefore, there.will Joe no. vacation checks'issued to people
who work during shutdown. This is different than the last couple of years,
but it's in accordance with the contract...."Over-the-hill" birthdays this
on the 29th, and
on the 25th,
month include
on the 30th • • • • Don't forget the company bowling tournament that's
scheduled for April 3rd. Please turn in your entry & money
by
___ to
WJtB
sons did well .
and
.Wednesday, March 24th • • • «
was on the county
bn their high school wrestling teams.
’''placed 3rd in the sectionals.
championship team and
Congratulations!.... Finally, just a reminder to all — April 9th, (Good
Friday) is not a holiday for us.
TO THINK ABOUT:
it today.”
"The vay to have a better tomorrow is to start vprfcing on
;
i
i
143
GROWING
up IS
/•
\•
1
; use drugs in order to escape from
unpleasant emotions or feel more ' ■*. / .
confident—particularly if they often ! r
; . feel shy or insecure about how they . i\.
/look and act.
4
/
i
■n'
••
• Fa* ■ ■—zr^r—
* 1 ;•
■C/T-4
ru
i; :
HARD TO
DO
i
m '
K'i.r ,
> What To Look For
i
f;'.:
I.
*
V-:VV-.
Here are some symptoms to watch *
for if you believe your teenager may ■
v be using drugs: '
* :*•
/ Discipline problems, constant
,
arguing, lying and irresponsibH.:
'• ity.
Teens,
Drinking &
Drugs
✓ Isolation, secrecy and less
involvement in family activities.
: ,/ • *
✓ New interests and friends—
especially older friends.
/ Bad grades or poor school
More than ever children face great
attendance.
pressure to try alcohol and other
. / Hyperactivity, drowsiness or
drugs. Whfle some parents believe
forgetfulness.
that alcohol is less dangerous than
drugs, die truth is that alcohol is a
drug, and it is the drug of choice for ‘ / Depression or mood swings.
most teens. By educating yourself
✓ Change in speaking patterns.
about teen drinking and drug use,
✓ Weight gain or loss, junk-food
you can help your teenager make
cravings.
wise decisions.
/ Bloodshot eyes, use of eyedrops
or incense, runny nose or coughWhere Drug Use Starts
ing.
Teenagers use drugs for many
/ Odd small containers in pockets
reasons. But their first notions
or purse.
about them may come from the be
havior of their own families. To help
/ Money problems.
prevent them from abusing drugs,
parents need to provide teens with
✓ Alcohol drugs or possessions
plenty of love, good communication
disappearing from die house.
and calm and consistent standards
✓ Drug paraphernalia, such as
about drug and alcohol use. Even
pipes, papers and razor blades.
then, teens feel a need to fit in with
their peers. They may be influenced
✓ Needle marks.
by ads and news stories which
imply that everyone drinks or takes
✓ Tremors.
other drugs. Adolescence is a
✓ Hallucinations or delusions.
confusing time at best Some teens
To help prevent them from abusing . T*
drugs, parents need to provide teens '
with plenty of love, good
communication and calm and
consistent standards about drug and
alcohol use. ^
What To Do
Here are some steps you can take if
you believe'your teenager has a
drug or drinking problem.
✓ Learn more about alcohol, other
drugs and dependency.
✓ Find out about drug treatment
programs available to your teen
and your family.
✓ At a time when you can remain
calm and your teen is sober, talk
calmly and honestly about the
changes you see and about the
harmful consequences of drug
abuse. Talk about seeking treat
ment together.
/ Do not shield your teen from die
effects of drug abuse.
/ Take good care of yourself. Get
plenty of rest Eat properly and
exercise.
/ Talk with other parents and join
a support group.
□
omo PMJCT MTCRKATOUi
A SERVICE OF YOUR EMPLOYEE ASSISTANCE PROGRAM
FOR CONFIDENTIAL ASSISTANCE PLEASE CALL
PHONE *
OR *
OR FOR EMERGENCIES
Or
APPENDIX f
EFS
ERIE FORGE AND STEEL, INC.
memorandum
144
September 6, 1990
TO:
FROM:
SUBJECT:
All Employees
Z
MEETING SCHEDULE FOR RETIREMENT SAVINGS (401K) PRESENTATION
On Monday and Tuesday, September 17 & 18, Mr.
__
from Marine Bank will be here to explain our retirement
savings and 401 (k) plans that will go into effect with the formation
of Erie Forge and Steel. It is extremely important that all
employees attend their scheduled meetings. At this time, you will
designate a beneficiary for your retirement savings plan; as well as,
receive a detailed explanation of the savings options for the
voluntary 401(k) plan. After the formal presentation, there will be
time for questions of a general nature about both plans.
Except as noted, all meetings will be held in the safety training
room. Please be prompt.
MONDAY, SEPTEMBER 17, 1990
8:00 a.m.
All salaried employees — in the board room.
9:30 a.m.
1/2-Finishing, Tool Room, and support people.
11:00 a.m.
1/2-Finishing, Tool Room, and support people.
1:30 p.m.
Shipping, welding, yard, stores, H.T • 9 inspection.
met lab, instrumentation, all local 3186.
3:00 p.m.
All 2nd Shift
TUESDAY, SEPTEMBER 18, 1990
6:00 a.m.
All 3rd Shift
7:30 a.m.
Forge, Melt*, and any 1st shift employees who did not
attend on the 17th (please notify your supervisor that
you are attending).
9:00 a.m.
Maintenance, Roughing and Boring
♦Melt employees may attend at 6:00 a.m. if work schedule permits.
CASE STUDY Of AN EMPLOYEE STOCK OPTION PLAN -- •'
•'__
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1995
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•.
ELIZABETH L. FOGARTY
Thesis Sp.Com. 1995 F655C
c. 2
Fogarty, Elizabeth L.
Communication in a
changing corporate
1995.
COMMUNICATION IN A CHANGING CORPORATE CULTURE:
An Ethnographic Case Study of An
Employee Stock Option Plan (ESOP) Corporation
by
Elizabeth L. Fogarty
Submitted in Partial Fulfillment of the Requirements
For the Masters of Arts in Communication Degree
Approved by:
s/f/fs
Date
Chairperson, Thesis Committee
Edintoro University of Pennsylvania
uLM
a
r
Committee Member
Date
Committee Member
Date
§1995
A j*J> $ c-l
i.
ACKNOWLEDGEMENT
I wish to express my gratitude to the employees of
Erie Forge and Steel Corporation for their openness and
cooperation with this study.
They extended courtesy and
patience in assisting with this study.
The members of this
organization allowed me to experience "life as seen through
their eyes".
I learned more than I can ever express with
mere paper and words.
My hope is that this paper will help
them in some manner as they attempt to create their on
going business success.
Thanks
also to Trissa
reading and suggestion.
and Wess
for their careful
Special thanks to Dr. Golden for
her constant ear and helpful advise without which I might
have
given up.
Special
thanks
go
to James
Sabol
for
allowing his drawings to be included within this work.
With them the reader*s understanding of Erie Forge and
Steel is greatly enhanced.
There is no way to express my thanks to Rick for his
suggestions and advice which led to my initial choosing of
this topic.
Without his patient and insightful support
this study would not exist.
ii.
TABLE OF CONTENTS
TABLE OF ILLUSTRATIONS
iv
v
TABLE OF GRAPHS
Chapter I
A.
Introduction
1
B.
Communication and Corporate Cultural Effects
2
C.
Organizational Culture
5
Chapter II-Employee Ownership
16
A. Background
16
B. Past Research Parameters
18
C.
19
Historical Overview
1.
The ESOP Movement
21
2.
Employee Buy Outs of Failing Firms
25
3.
Unsuccessful Attempts
4.
Successful ESOPs
28
5.
The Changing Corporate Structure
30
26
a.
Labor-Management Roles
32
b.
Labor-Management Cooperation
33
c.
ESOP Culture
40
iii.
6.
D.
Status of ESOP Cultural Research
Summary and Conclusions
Chapter Ill-Study Focus
42
45
47
A.
Ethnography as a Method
47
B.
Study Methodologies
52
Chapter IV-Observations and Analyses
59
59
A.
The Study Focus
B.
Background of the Company
61
C-
Description
64
D.
Steel Manufacturing
77
E. Survey Results
1.
Communication Patterns
82
2.
Feelings of Ownership
91
3.
Need For ESOP Education
95
4.
Feelings of Participation
101
Chapter V.
A.
82
Summary and Conclusions
109
109
References
118
Appendix
131
iv.
TABLE OF ILLUSTRATIONS
How a Leveraged ESOP works
23
Drawing of Original Company
60
Aerial view of Company
63
Pen & Ink of front gates by James E. Sabol
66
Navy drive shaft
71
Pouring a heat by James E. Sabol
73
Teeming of Ingots by James E. Sabol
80
Vacuum Degassing
85
V.
TABLE OF CHARTS AND GRAPHS
Mohan's stable and unstable cultures
11
Information sources chart
86
Information sources graph
89
Feelings of ownership chart
93
Feelings of ownership graph
94
Need for ESOP education chart
98
Need for ESOP education graph
99
Stockholder voting results
102
Feelings of participation chart
105
Feelings of participation graph
106
1
CHAPTER I
INTRODUCTION
The goal of this research project was to discover the
developing culture as it is revealed in the communication
aspects
of
the
employees
in
a
wholly
employee
owned
corporation.
The critical focus of the study was to discover if
this corporation differs from a traditional corporation in
its attempts at meeting the communication needs of the
employees who are now the stock owners,
as well as the
producers of the goods for the corporation.
It might be
natural to assume that differences may exist in the way
that
communication
organization.
takes
place
in
this
type
of
This study focused on whether or not this is
true, and in what manner differences were detectable.
The study employed both quantitative and qualitative
methods
to
perceived
determine
feelings
participation
in
of
the
ownership,
functioning
degree
of
of
the
organization, communication channels and need for education
among
employees
structure.
about
this
new type
of
organizational
2
COMMUNICATION AND CORPORATE CULTURAL EFFECTS
Depending upon which source one chooses to use, culture
has
been
customs/
variously
described
manners/ values,
as:
"the...
distinctive
religious behavior and other
social and intellectual aspects of a society (Goldenson,
1984, p.196), "patterns of behavior within a species whose
transmission is totally dependent on non-genetic processes
(Harre & Lambedds, 1983, p.136)",
"that part of the total
repertoire of human action (and its products), which is
socially as opposed to genetically transmitted (Mitchell,
1979, p.45)", Taylor (1871) describes:
Culture
or
ethnographic
includes
custom,
civilization,
sense,
is
knowledge,
and
any
taken
that
its
wide
complex
whole
which
art,
morals,
law,
beliefs,
other
in
capabilities
and
habits
acquired by man as a member of society (In SeymourSmith (1986), p. 65).
In any case, it seems clear that culture is something
which humans
contains
arrive at in groups,
shared
meaning
for
its
and this
group
"culture"
members.
In
describing culture, there are three fundamental aspects to
be considered; these being, cultural behavior—what people
do,
cultural
knowledge—what
people
know and cultural
artifacts—what people make and use (Spradley,
1980. P-
16). Seemingly, it should be an easy task to discover this
3
culture,
but much of the culture of any group is tacit
knowledge which
knowledge
is
is
not easily detected.
easily
communicated,
The
but
the
explicit
cultural
intersubjective is less easily realized and expressed.
The
understanding necessary to interpret the communication of
this knowledge is referred to as idexicality.
refers
to
the
amount
of
shared
"Idexicality
background
knowledge
necessary to understand a message.*' (Agar, 1980, p.5)
By example, a group of people may view an object (an
automobile).
To the non-driver it signifies a mode of
The
transportation on four wheels, largely made of metal.
owner may perceive this same object as a machine requiring
specialized care, to a race car driver it is a finely tuned
machine
created
injectors,
of
turbo
valves,
chargers,
achieving great speeds.
pistons,
etc.
which
cylinders,
is
fuel
capable
of
Meaning is a situational specific
process which seems to be endlessly negotiated by a social
systems members.
A conversation among these three people
would likely not have a great deal of idexicality.
Why is it that humans create culture?
fundamenta1ly,
are
humans
communal
First,
beings,
and
which
necessitates the utilization of some form of communication
(Radc1if fe-Brown,
cerebral
1961).
economies,
that
Secondly,
is,
they
humans
practice
attend
to
information and disregard other information.
some
This process
4
is being explored in the research on the process of first
and
second-order
belief
cultivation-analysis
Dearing,
formation
research
as
well
(Iyengar,
1988;
1988; Hawkins & Pingree, 1990;).
communicate
beliefs.
requires
People
shared
extract
meanings
the
the
Rogers
&
This need to
and
necessary
as
fundamental
data
from
the
presented information and subsequently store that data in
previously established belief categories.
All of the other
information deemed non-pertinent is disregarded (Hawkins &
Pingree: 1990).
This sharing of
fundamental meanings and
beliefs is what constitutes a culture.
aptly states the process
"
As Radcliffe-Brown
‘culture*.
.
. refers to a
process, and we can define it as the process by which a
person acquires,
from books or works of art, knowledge,
skill, ideas, beliefs, tastes, sentiments** (1961, p.4).
He
further summarizes that it is this process of culture and
cultural tradition that human social life differs from the
social life of other animal species.
that
Mohan (1994), states
"socialization is defined by many theorists as the
process by which people learn the fundamental parameters of
their culture." (p. 62)
Etzioni (1964) puts it another way:
Our society is an organizational society.
We are born
in organizations, educated by organizations, and most
of
us
spend
much
of
our
lives
working
for
5
organizations.
We spend much of our leisure time
paying, playing and praying in organizations.
Most of
us will die in an organization, and when the time
comes for burial, the largest organization of all-the
state-must grant official permission (p. 1).
ORGANIZATIONAL CULTURE
According
to
"Organizations
are
Lofland
and
consciously
Lofland
formed
(1984):
collectives
with
formal goals that are pursued in a more or less articulated
fashion" (p.l).
They provide settings for regular meeting
and interactions, therefore; providing grounds for cultures
to develop.
So
too,
organizations
have
a
"taken
for
granted"
quality that reflects their own unique cultures, while at
the
same
time
reflecting
the
cultures
societies within which they exist.
of
the
broader
Rentch (1990), in her
discussion on climate and culture in organizations states
that
"shared
interpretations
and
understandings
of
organizational events are a component of most definitions
of culture" (p 669).
Organizations can be loosely defined
as groups of people who have a common goal and are working
together towards
the
accomplishment of
that goal,
An
organization provides regularly-convening settings in which
a culture may develop.
Corporations, by this definition,
6
are organizations, and the existence of corporate cultures
should be discernable.
As Smircich (1987) states:
"The emergence of this dominant system of meaning can
be
understood as
development
of
a
consequence
the
company,
of
the
the
historical
struggles
for
leadership within it, and the personal ideologies of
the current president" (p. 58).
"Secondary socialization"
(Van Maanen, 1988) is the
process through which a person learns the values, norms and
required behaviors for participation as an organizational
member.
Jablin (1982) uses the term "assimilation" and
Louis (1990) refers to "acculturation"
to describe this
same process.
Theories about organizations have always reflected the
manner
of
society’s
Early
formulated.
interchangeable
Weber’s
(1912)
thinking
views
parts
in
at
of
a
the
time
workers
large
they
saw
were
them
machine-like
as
system.
views were the major influence creating
organizational bureaucracies,
Under this factory system
managers insured success by organizing production systems
that kept machines busy and costs under control. People and
organizations
were
to
economic principles.
act
in accordance
with
rational
These classical organizational views
were supplanted by a neoclassical movement which viewed
workers
from a more
humanistic
perspective,
but
still
7
retained much of the classical traditions of organizational
theory.
Jaques's
factory.
is
(1952)
the
work,
earliest
The
changing
publication
culture in an organizational context.
culture
to
use
of
the
a
word
Jaques's definition
of the factory culture is:
. . . its customary and traditional way of thinking
and of doing things, which is shared to a greater or
lesser
degree
by
all
its
members,
and which
new
members must learn, and at least partially accept, in
order to be accepted into service in the firm. The
culture
of
the
factory
consists
of
the
means
or
techniques which lie at the disposal of the individual
for handling his relationships, on which he depends
for making his way among, and with, other members and
groups (p. 251).
From a functionalist perspective,
organizational
control
the
controlling
culture
is
organizational
a
management
behavior
communication practices
of
and
(Weber, 1912)
tool
its
that
can
members
by
thus
influence
organizational performance. The interpretivist perspective
(Burrell & Morgan, 1979, Putnam, 1983) of culture is the
process by which the culture is developed, enacted,
and
continually reconstructed into an organizational reality.
From
a
functionalist's
perspective,
managers
need
to
8
understand their corporate culture in order to be able to
exercise control over the destiny of the organization.
This control can be exercised in the form of layout/ or
standard operating procedures and
This
kind
of
control
decision premises.
works
by
restricting
what
decision makers consider as relevant/ the form of
logical reasoning that is deemed appropriate/ and the
kinds
of
solutions
that
are
seen
as
acceptable
(Wilkins: 1983/ p. 85.).
S.A. Melman is a researcher of government contractors
for the past 30 years and has studied Erie Forge and Steel
during its history as a government production facility. In
a personal communication (April/ 1993) he stated that "the
primary factors in capitalistic organizations have been the
fundamental
occupational
separation of
decision
making
(hierarchy of management) and production (workers)."
process
has
led
to
the
escalating
cost
This
factor
perpetuation of more hierarchy to control workers.
In another view. Deal and Kennedy (1982) state that:
. . . people are a company's greatest resource/
and the way to manage them is not directly by
computer
reports/
but
by
subtle
cues
of
a
culture.
A strong culture is a powerful lever
for guiding behavior; it helps employees do their
jobs a little better, especially in two ways:
of
9
A strong culture is a system of informal rules
that spells out how people are to behave most of
the time (and) a strong culture enables people to
feel better about what they do, so they are more
likely to work harder, (pp. 1-2)
Mohan (1993) suggests that it may be "erroneous to
assume that an organization has a single culture." (p. 25)
She suggests that it may be more fruitful to examine the
"incongruence"
researchers
within
with
It
organizations.
more
material
by
may
beginning
weaknesses within an organizational system.
provide
with
the
Gregory (1983)
presents a view of organizations as multiple, crosscutting,
cultural contexts,
stable,
changing over time as opposed to
homogeneous,
time-bound
Brown
entity.
a
and
McMillan (1991) state that the potential to produce culture
lies
within
employees
throughout
organizational hierarchy.
focus
all
levels
of
the
They advise researchers not to
solely on the managerial
"texts,"
but
also
to
analyze lower-level "sub-texts" to glean a more broadly
based,
efficient,
and
realistic
interpretation
of
an
organization's culture.
Like
the
individuals
of
whom
they
are
comprised,
corporate cultures go through a series of distinct stages.
Some scholars employ a lifetime metaphor of birth, early
growth, organizational midlife, and organizational maturity
10
to describe these stages
(Schein,
1985).
Still others,
describe these stages from the standpoint of organizational
focus (Cameron & Quinn, 1981, Dyer, 1985, Mintzberg, 1983,
Adizes, 1988, and Atkinson, 1990).
These focuses involve
internal and external forces and the organizations ability
to take risks and be
cyclical
dilemmas:
adjustments
flexible.
over
time
Tichy
(1980)
based on three
suggests
ongoing
the resolution of technical design problems,
political allocations of power and resources across the
ranks,
and the establishment of the optimum ideological
cultural mix (Mohan, 1993).
Mohan's description of cultural
cultural
contexts
unstable cultures.
which
are
stability suggests
exhibited
in
stable
and
Her work can be used as a basis of
analysis of cultural flux.
Although corporate cultures can
not be viewed as frozen and are in constant flux, Mohan
gives a table of characteristics by which to gauge stable
and unstable cultural contexts (see Mohan's TABLE 7.1, next
page).
11
TABLE 7.1
Cultural Characteristics of Stable and Unstable Contexts
Stable Contexts Tend to Exhibit
Clarity on core organizational vision and mission
Positive tone regarding present developments
Tendency to view tradition with moderation
Unification of ranks against a perceived collective challenge
Leader who actively promotes positive aspects of organization and its people
Leader who encourages collective action
Leader who articulates a universal theme in print and oral communications
Unstable Contexts Tend to Exhibit • • •
Disagreement and/or confusion regarding core vision and mission
Marked increase in activity levels
Major restructuring across ranks
High uncertainty levels within subcultures
Clinging to "traditions" that thwart innovation
Perceived disparity among subcultures
Low morale at key organizational levels
From
Organizational
communication
and__cultural—vision.:.
Approaches for analysis by M. L. Mohan, 1993, P- 135.
Copyright 1993
by State University of New York Press.
Reprinted by permission.
12
There is debate whether or not a corporations culture
can/or
should
be
"managed".
Deetz
(1985)/
Adams
and
Ingersoll (1985)/ and Morgan (1986) question the ethics and
even
the
ability
of
managers
to
manipulate
strategic
cultural interventions which hope to have planned effects
on human beings.
In spite of this
debate,
advice to
managers is still popular in the business world.
If
it
is
possible
to
exercise
control
over
the
corporations culture, a manager must know what makes up a
company1s culture.
All western corporations contain the
elements of a business environment, values, heroes, rites
and
rituals,
environment
and
a
consists
cultural
of
The
network.
the
products,
business
competitors,
customers, technologies, government influences, and so on.
This environment is, of course, the single most important
influence in shaping the corporate culture.
environment in which a corporation exists
The type of
is
the most
important determinant of the type of culture that develops.
The corporate values consist of the basic concepts and
beliefs
of
the
organization.
Values
"success" messages of the company.
this" epic which directs behaviors.
spell
out
the
They are the "if you do
Corporate heroes are
those people who personify the culture’s values.
the role models for employees to follow.
They are
Rites and rituals
are the day-to-day programmed routines of company life.
In
13
their mundane forms we call them rites, but in extravagant
form they are rituals or ceremonies. The cultural network
is the primary (yet informal) means of communication in the
company.
It serves as the carrier of the corporate values
and heroic mythologies.
By understanding and working the
network effectively, the manager might get things done and
understand what is going on in the corporation.
Sometimes
these elements are fragmented and difficult to read from
the outside, but every business has a culture, however weak
it may be.
Naisbitt and Aburdene (1990) share the opinion that
the dominant principle of organization has shifted from
management of control to leadership which empowers people
to assist the organization in its adaptation to change.
This notion is
further explained by Burns
(1978)
and
Atkinson (1990) in their attempt to distinguish between
and
transformationa1
transactional
leadership.
Transformational leadership is characterized by terms like
"visionary", "inspirational", "intuitive" and "creative",
while
transactional
leadership
"concrete" and "tangible".
which
is
"practical",
If leaders do not distinguish
between these styles they may fall short of their desired
goal for the cultural change.
advise
that
more
than
Wilkins and Patterson (1985)
the
manifestations must be changes.
surface
artifactual
Change must occur at the
14
deeper assumption level.
change
must
include
Fitzgerald (1988) agrees that the
a
organizational dimension.
gradual
alteration
of
core
Leaders must employ different
cognitive frames during this process of cultural change.
Bolman and Deal's (1991) frames are useful in understanding
how
leaders
must
employ multifaceted
aspects.
Their
structural frame sees leaders as "social architects" who
analyze
and design
outcomes.
systems
that will
support
desired
The human resource leader acts as a "servant" or
"catalyst" providing employees support and empowerment.
The political leader must provide advocacy and coalition
building, while the symbolic leader plays the part of
"prophet and poet" in defining and articulating the vision
which will support the organization's mission.
The leader
who chooses to change culture must become proficient in
selecting
from
these
frames
to
fit
the
distinct
organizational context.
In planning and enacting corporate cultural change.
Mohan (1994) warns:
.
(sic)
. If change in the corporate culture are
promulgated
without
participation and consent,
organization-wide
then native subcultural
groups may tend toward greater fragmentation from any
unitary vision. . .
. Symbolic framing should begin
with a level of understanding of the values held by
15
the
specific
individuals
and
groups
across
the
organization, as well a firm grasp of market realities
and emerging trends.
One way for leaders to develop
this familiarity is to spend time with internal and
external
constituencies
in
a
nonauthoritative
atmosphere that fosters the free exchange of ideas,
providing a basis for a shared corporate vision.
the organization’s vision is not collective,
will
be
little
alignment
elements, (pp- 86-87)
with
unitary
If
there
cultural
16
CHAPTER II-EMPLOYEE OWNERSHIP
A rapidly growing new development in the field of
organizations
Plans
is the trend of Employee Stock Ownership
(ESOP's).
There
are
currently
10,000
ESOP
corporations with over 2,000,000 employees in the United
This
States.1
movement
is
creating
new
types
of
organizations which are wholly or partially owned by the
employees who work in the organization.
This movement has
changed organizations, and provided new areas for study
about the effects of these changes on corporate culture.
BACKGROUND
The Employee
Retirement
and Income
Securities Act
(ERISA) of 1974 created the specific statutory framework
for ESOPs
(Employee Stock Ownership Plans) and exempted
them from certain requirements that are applicable to other
plans
(such
as
pension or profit
This
sharing),
act
provided ESOPs with the unique authority to borrow money.
The subsequent legislation (e.g. Trade Act of 1974 and Tax
Reduction Act of 1975, etc.) refined the advantages of ESOP
ownership, making them even more attractive to management.2
By
allowing
significant
tax
exemptions,
the
Deficit
Reduction Act of 1984 added further incentives for both
owners and banks
to
allow employees
greater shares
ownership in profits from the fruits of their labors.
of
As
17
these laws became more appealing, the move to create ESOPs
exploded. By 1988 there were about 8,000 ESOP corporations
in existence (Rosen & Quarrey, 1988).
Some of these ESOPs
were created in an effort to save failing corporations and
thus
save
workers
jobs
who
for
bought
workers.
these
However,
failing
frequently,the
businesses
were
not
equipped to manage them. In most cases, they sought out
managers to manage the corporations.
The critical problem
seems
manage
to
be
that
corporations
research.
has
no
best
way
yet
been
supported
collected
by
worker-owned
the
existing
A national network, called the National Center
for Employee Ownership
Washington,
to
DC,
to
through
(NCEO),
help
by
surveys
of
has been established in
disseminating
ESOP
information
corporations.
The
Northeast Ohio Employee Ownership Center at Kent State
University,
has
begun
some
pilot programs
designed to
assist in training employees of ESOP corporations (Logue,
Bell & Ivancic, 1991).
These programs, however, have been
directed mainly at non-managerial employee owners who sit
on boards of directors.
While the developers felt some
success was achieved by these early attempts at education,
they acknowledge the need for further education to be given
to all employee owners in ESOP firms.
It is clear that assessing the need for information
and
education
about
the
communication
that
employees
18
receive in these new corporate structures will be a vital
first step in creating their new corporate culture.
Some research questions that this paper addresses are:
How much do the employees understand about the functioning
of the corporation?
To what degree is it necessary to
educate about corporate finances and the functioning of the
ESOP structure?
Is there a relationship between the level
of understood information, and job satisfaction?
What is
the relationship between ownership and other areas such as
absenteeism and job performance?
Does employee ownership
necessarily create new cultural and communication patterns?
If so, do these new patterns require new decision making
structures?
Will
ownership
in
itself
create
a
more
democratic corporate structure?
The ESOP movement has only been under study for a
short period of time, and the exploration of past research
parameters
reveals
that many answers
still
need to be
formulated by future researchers.
PAST RESEARCH PARAMETERS
The research that has been conducted on existing ESOP
corporations falls into 1) historical accounts, 2) legal
and
government
policy
regulations,
3)
current-status
statistics, 4) labor-management roles, 5) labor-management
cooperation and its effects on company performance,
6)
19
attitudes of employees and management, and 7)communication
and corporate-cultural effects.
Early research centered on the areas of historical
accounts, legal matters and the status statistics of ESOP
corporations.
For the purpose of this paper, these points
will not be discussed (for detailed information on these
areas see Bell, 1988; Blasi,
1987, 1988; Blasi & Kruse,
1991; Klein, 1987; Stern, 1989.
HISTORICAL OVERVIEW
The
first
factory organized by workers
with
each
person owning a single share and participating equally in
decision making was by shoemakers in Baltimore, MA, in 1794
(Curl,
1980).
The idea of employees owning a stake in
their corporations,
therefore,
American business scene.
is not a new one to the
As early as 1916, Sears, Roebuck
& Company initiated profit sharing among its employees and
is considered a bellwether for the concept (Blasi, 1992).
This trend is a reflection of the progression of worker
ownership from the cooperative movements of the late 19th
century through the profit sharing movement of the 1920*5
and into the industrial market stresses of the 1970*s and
1980's.
In the early history of labor and management,
skilled trade workers,
formed
the
Knights
of
seeing the benefits of uniting,
Labor
and
other
early
union
20
movements.
These movements
formed into the AFL-styled
business unions and producer co-ops that are factors in
creating
the
management.
adversarial
climate
of
workers
against
Most of organizational communication research
deals with the study of communication as it relates to the
interaction between these parties.
In
the
early
1920*s,
"profit
sharing"
and
the
"American Plan" became the paternalistic device to take
care of worker*s needs.
It was a combined plan of company
unions, pensions, and profit sharing.
Unfortunately the
Great Crash of 1929 buried many of these programs before
any research could be conducted on them.
After World War II, profit sharing and participatory
management were revived as "enlightened management" ideas.
At this time, the communist movement in the east was viewed
as a threat to democratic and capitalistic principles.
Giving workers ownership and power became unpopular ideas.
The spread of the McCarthy hearings and fear of being
labeled a "socialist" caused people to deny sentiments of
shared wealth and control.
ownership, Leo Kelso,
One leading advocate of worker
fought this trend.
His book, The
Capitalist Manifesto (1958), represented worker ownership
as the one way to defeat the socialist movement.
now known as the "Father of the ESOP" movement.
Kelso is
21
THE ESOP MOVEMENT
This movement got its biggest boost with the 1974
Trade
Act
legislation.
Devised
by
Louis
Kelso
and
sponsored by Senator Russell Long. The plan essentially
allows a company with a profit-sharing plan to borrow taxsheltered money.
Kelso firmly believed that the only way
to defeat the socialist movement of his time was to vest
employees with ownership and participation in corporations
(Kelso, 1958).
He created an employee-owned corporation as
early as the 1950’s.
His zeal was influential in obtaining
sponsorship by Senator Long,
influential
in
the
and together the two were
twelve-year
battle
to
establish
legislation favorable to the formation of these types of
The Employee Retirement Income Securities
corporations.
Act
(ERISA)
further gave preference to companies using
ESOPs for Commerce Department loans and loan guarantees in
communities
adversely
affected
by
foreign
trade
(Blasi,1987).
This act spurred corporations to create ESOP
plans.
There are
leveraged.
two
types
of ESOPs,
non
leveraged and
The first type is no more than a standard stock
bonus plan, with the managers controlling all aspects of
the plan.
The leveraged plan (which most ESOPs are today)
is that form which Kelso and Long believed would truly
revolutionize
America’s
corporations
making
them
22
authentically democratic in nature.
A simple explanation of the leveraged ESOP is that
the company sets up an Employee Stock Ownership Trust,
which borrows funds from a commercial lender.
The company
guarantees to pay back the loan, so the trust purchases
corporate stock. As the loan is paid back, the stock is
allocated to members of the trust in individual accounts
(See figure 1)
23
Figure 1. How a leveraged ESOP works
original owners*'
(A)
BANK
(B)
a
ooooa
ooooo
-
COMPANY
m
jin
r
XULS
(
ESOP
(E)
EMPLOYEE OWNERS
(A) A lender makes a loan to the company (typically based on the fixed assetsi. (B)
The company uses the loan money to buy out the original owners' interest. (C) Each
year the company makes loan repayments, through the ESOP. to the bank: and it de
ducts the contributions from its taxable income for the year. (0) Once, the bank has
been paid. (E) the ESOP releases stock of an equal value into employee owners' indi
vidual accounts. Employee owners typically receive the value of their stock upon ter
mination or retirement. When an employee's stock is cashed out. it is usually
recontributed to the ESOP.
From Democratizing the American economy:
Illusions and
realities of employee participation and ownership (p.13).
by C. J.
Ivancic and J. Logue,
Greenwood Press.
1991:3.
Copyright by
24
Since contributions to a worker-ownership trust are
tax deductible, both the amounts attributed to repaying the
loans and the interest and principle on the loan are tax
deductible.
Obviously,
this plan is attractive to the
business community because it offers tax incentives, but it
does not require employee participation in the running of
the corporations,
Unions, for this reason, were unable to
see any benefits to workers in this situation.3
It was not until the large movement where corporations
were taken over and closed down that labor realized some
vested worker influence needed to be established in order
to protect their jobs. As Bado & Logue (1991:4) point out:
The
appearance
democratically
trade
unions
gives
unions
of
100
percent
structured
to
rethink
the
employee-owned,
enterprises
their
opportunity
challenges
role....Ownership
to
convert
the
traditional defensive, reactive role into a proactive
one.
They can exert influence over company investment
policies, hiring decisions, or long-term development
by
representing
employees
as
owners
on
company
governing bodies, and broaden their scope of activity
into
new
fields,
such
as
finance.
Instead
of
complaining about management, unions need to learn how
to select managers, (p. 1).
25
EMPLOYEE BUY OUTS OF FAILING FIRMS
After World War II, the United States was the only
world power whose production capabilities had not been
devastated by
the
war.
While
the
rest of
the world
rebuilt, the country settled into a complacent attitude of
supposed world superiority.
The adversarial roles between
labor and management increased in intensity and drove wages
and benefits up.
This
was not believed to be a problem,
since prices could just be raised to meet these demands.
The consensus was that no one could make a better product
than American workers, so no threat of marketability was
perceived.
During the mid-seventies, all this changed because of
a coincidence of factors.
During that period, energy costs
jumped and the market exploded with European and Asian
products.
These products were produced with a variety of
methods that cut and controlled costs as well as increased
product appea1.
Besides having to compete with a world
market and escalating fuel costs, the United States also
had to support a military-industrial complex that drained
more resources from its private sector,
These factors,
coupled with the rising cost of wages and benefits, caused
cycling recessions and the take over markets of the 1980's.
In the late 1970's these factors became the subject of
many popular media articles.
It was not until the large
26
movement of corporate take overs and raids, though, that
labor realized some worker-vested influence in corporations
needed to be established.
In the late 1970*s employees
began to attempt to buy out companies to save jobs,
This
movement proved to be successful in only rare situations,
as most of the 200 cases of employee takeovers of failing
companies ended in the company ultimately failing (Blasi,
1987). In some cases, employees invested their own capital,
gave wage concessions, lost pension funds, and still found
themselves out of jobs because of the ultimate failures of
these companies. Unfortunately, employee ownership does not
change capitalist principles, and many businesses still did
not survive the foreign competition and local recessionary
trends.
UNSUCCESSFUL ATTEMPTS
One of the first worker buy-outs was the 2,000-workerowned
Rath
Meat
packing
Company.
The
union
members
initially accepted $4,000 per worker pay cuts to finance
the buy-out with bank loans,
economic
development
An additional $4.3 million
grant was
secured,
but
still
the
employee pension fund was later consumed by this process.
Workers took a second round of pay cuts, yet business in
the meat packing industry still declined.
bankrupt.
Today, Rath is
27
South Bend Lathe is another example of early chaotic
organizational disasters.
The workers used an ESOP to
borrow monies from local Indiana banks but wound up with
management's shares out weighing theirs.
The workers made
national headlines by going on strike against themselves.
Another example of lack of future planning on the part of
the worker groups is Vermont Asbestos Group,
This firm
rebounded after selling its operation to the workers.
The
workers sold their stocks and became rich, only to lose the
company to other owners.
Both of these situations were
opposed by the parent unions because they undercut the
union's master contract.
The airline industry has also been a site of
organizing to take over failing businesses,
labor
Due to the
recent slump in passenger usage and the increases in flight
expenses brought on by both increased fuel costs and the
need to revitalize the airline fleets to meet proposed
government regulation deadlines, these take overs have met
with mixed success.
People's Express Airlines was one of
a
benevolent-paternalistic
corporation at its take over.
Because all the related
the
unions
first
to
(pilots,
included
in
organize
mechanics,
the
attendants,
take-over,
a
etc.)
complicated
had to be
system
of
management of the company evolved with all employees being
responsible for all duties.
A pilot may be flying one day,
28
and taking reservations the next,
The system began to work
well,
being
with
all
"People/People"
problems emerged.
equal,
but
soon
Some pilots did not want other duties.
Soon some "Non-People/People" had to be hired to perform
the
duties
employees
others
got
indoctrination
did
neither
into
the
not
the
want
to
profit
culture.
fill.
These
new
nor
the
that
the
sharing
It
employees now had employees to deal with.
seems
After a valiant
try, this ESOP ultimately ended in bankruptcy.
Many similar stories can be related about the airline
industry, rental car corporations, steel mills, and so on.
These early experiences were perhaps necessary to provide
the historical background for later employee ESOPs to be
formed and operated in a more successful manner.
SUCCESSFUL ESOPs
The
Philadelphia
Association
for
Cooperative
Enterprise is a success story currently running well.
was
a corporation formed by A&P
employees
It
to purchase
Philadelphia grocery stores that were scheduled to be shut
down. The United Food and Commercial workers-Local 1357
worked with public officials and local groups in the area
to convince A&P to keep open 16 of the 79 stores scheduled
to be closed.
Two
large worker-owned stores,
Stores, were spin offs of this transaction.
the 0&0
The workers
29
modeled their take over after the Mondragon-style co-ops of
Northern Spain. These function by creating their own bank
and entrepreneurial departments to organize the co-ops.
New members may borrow from this bank to finance equity in
the corporation.
When an employee retires, the bank buys
out the employee’s equity, or the employee may have the
nest egg as an annuity. Eighty percent of these Mondragon
co-ops
are
corporations.
capital
The
intensive,
annual
divided into three parts:
profits
heavy-manufacturing
from the
firms
are
ten to fifteen percent going to
social purposes and to benefit the community, fifteen to
twenty percent is set aside for a reserve fund to maintain
the firm, and the remaining seventy percent is distributed
to the members in the form of account payments.
These
accounts are considered worker loans and are paid back to
the members with a minimum of six percent interest.
When
workers leave the co-ops, they may withdraw up to eighty
percent of their account.
At retirement age, the rest of
the accumulated profits may be withdrawn (Zwerdling, 1984).
The problems experienced by the workers taking over
their corporations are clearly identified by Andrew Lamas
(staff director of the Philadelphia Cooperative):
The problem with worker ownership, ... is not
lack of capital.
It's lack of experience. Nobody in
America knows how to operate a 1,000-person worker-
30
owned firm.
People didn't have much experience with
democratic decision-making in their daily lives, and
they
also
lack
technical
and
financial
skills
(Kuttner, 1985, p.16.).
The problems may also be due in part to a lack of
interest, or simply in a belief in the traditional division
of labor and the practical aspects of letting managers
manage (Hammer & Stern, 1980).
THE CHANGING CORPORATE STRUCTURE
The newly growing system of ESOPs is having a radical
effect on the ways which labor and management both think
about and deal with each other.
Following the Mondragon-
style, new co-ops and ESOPs are being formed with workers
now hiring management.
Instead of the workers having one
vote for one share (as would be traditional in standard
stock ownership),
new management structures are forming
with one vote for one worker, or workers simply having
control
of
seats
corporation.
on
About
the
Board
30
percent
of
Directors
of
the
of
top
the
1,000
corporations currently have more than 60 percent of its
stock owned by institutional investors.
Soon the property
rights of the workers will play a more important role in
corporate
influence
than
labor
laws
ever
dreamed.
Corporations are actively encouraging employees to invest
31
in ESOPs by offering discounts and paying brokerage fees,
Many
pension
funds
are
actively
buying
up
their
own
company *s stock by using their cash reserves. Employees are
encouraged to put their savings in 401(k) plans and invest
it in company stock. Companies are giving profit-sharing
payments to employees in the form of stock,
Some workers
are being asked or required to take stock as part of their
wage and benefit concessions and increases. This is all
leading the work force to a new dimension of risk that they
have
not
experienced
before.
According
to
William
D.Partridge of the Wyatt Company, the risk falls into four
categories: investment risk, longevity risk, contribution
risk, and inflation risk (Blasi & Kruse, 1992).
Investment risk involves the fact that the value of
the stock may decrease or the corporation may go bankrupt.
Longevity risk involves outliving the amount of assets that
have
accumulated.
substantial
Contribution
investment
must
be
duration to insure a good return,
risk
made
means
now,
that
and
in
a
the
Inflation risk means
that the value deemed for the future is negated by the
lower buying power of the dollar,
All of these areas are
unfamiliar territory to most workers and hold potential
risks.
Many of these factors account for the early ESOP
corporation failures.
The
assumption
among
the
managerial
corporate
32
proponents
of
ESOPs
was
that workers
would be
highly
motivated because of ownership stakes, and production costs
would go down,
while the assumption among workers was that
communications and control of corporate organizations would
be radically different (Stern, 1989).
The problem with
workers owning the company is the lack of expertise about
how to run a worker-owned firm,
and research into the
effects of these changes has only been going on for a
decade.
LABOR-MANAGEMENT ROLES
Labor-management roles, although somewhat litigated
by federal regulations,
traditional
structures
vary in ESOP corporations
with
labor
having
little
from
or
no
control to employees owning and having equal status in
As Toscano (1981-82) points out, even if
corporations.
employees own 100 percent of the company, ESOPs are not
required by
law to pass voting rights of
stock on to
employees, except on major corporate issues such as sale or
bankruptcy of the company.
The
mere
owning
of
stock
does
not
necessarily
associate with psychological or felt ownership by employees
(Klein,
1987).
For
example,
Hammer
and
Stern's
(1980)
research indicates that there was no positive correlation
between the number of shares held by an employee owner and
33
the perception of ownership or partnership in the company,
although
larger investment in corporate stock has been
found to
result
in the
granting of
larger amounts
influence to management on all issues (Rosen et al •
/
of
1986).
The relationship between managerial control over work place
issues remained about the same, with employees wishing to
have some say over issues directly concerning them but
little influence over organizational policy level matters.
The question of
affiliation.
influence was
The
found to correlate with
conclusions
revealed
the
relative
importance of group membership and the weakness of stock
ownership in predicting the desired distribution of control
within the organization (Quarry and Rosen, 1986).
LABOR-MANAGEMENT COOPERATION
Cooperation was another area where it was assumed that
change on both the parts of management and labor would
occur.
It was found that identification with the company
did increase because of the formation of ESOPs, and this
can engender greater commitment (Logue & Cross, 1993:4).
Managers were found to continually overestimate the degree
of cooperation that existed in their firms.
A General
Accounting Office survey (1986a) reported that sixty-six
percent of responding firms felt that employee ownership
would
increase
employee
morale.
Thirty-six
percent
34
believed that employee turnover would be reduced,
Fourteen
percent felt that there would be decreased absenteeism, and
eight percent even felt that it might help them avoid
unionization.
The early research in ESOP and share ownership effects
upon employees indicated an initial enthusiasm, increased
motivation, lower turnover and less material loss due to
poor quality production.
commitment
to
the
firm
There also was
(Why the,
1979).
an
increased
This
initial
reaction was followed by disappearance of these effects,
and a
dramatic
increase
in
labor-management conflicts.
Kruse (1984) reviewed studies to the time, and found that
support for increased job satisfaction due to ownership was
simply not evident.
Share ownership alone among workers
generated no
for participation in the
desire
company.
Workers are more critical, and unions do little to advance
labor-management cooperation.
no significant changes
functions
of
the
If employee ownership makes
in the work place, the adversarial
union
are
reinforced as
one
of
the
dependable forms of worker representation (Blasi, 1988).
Traditional managers, embroiled in attempts to save
firms,
often did not think about employee participation
plans that would acknowledge employees as owners.
Bell (1988) states that:
35
•
.
.
the
partnership between the
owner
and the
employees created by the ESOP not only provides a
basis for long term security, but also stimulates a
source of employee motivation (p. 47).
The assumption that employee motivation and production
increases
would
researchers.
occur
has
been
studied
In a report by Rosen et. al.
by
several
(1986), 2,700
employees responded to a survey on job satisfaction.
A
majority reported that owning stock made them feel more
committed to the firm, and two-thirds indicated they would
stay longer.
Nonetheless, less than 50 percent felt that
they worked harder, enjoyed their work more or were more
cooperative because of
percent
felt that
Less
stock ownership,
stock ownership had
influence in firm decision making.
than 30
increased their
The study significantly
related positive effects to management philosophy about
employee ownership and the size of the company contribution
to
the
Communication was
ESOP.
decision
making
was
satisfaction and commitment.
participate
in
decreased
Perceived and desired worker influence
turnover intention.
in
related to
social
positively
associated
with
Workers indicated a desire to
events,
work
process
and
compensation, indicating a desire for participation largely
focusing
on
things
other
than
the
stock
itself.
An
overlapping study by Quarry et al. (1986) revealed that the
36
most successful firms studied had an attitude that employee
ownership was
Positive
central to the identity of the company.
attitude
and performance were
related to
the
implementation of some participatory mechanism along with
the
ownership.
The
evidence
seems
to
indicate
that
cooperation in the form of participation is necessary to
capture employee ownership benefits.
The conclusions of this research point to the fact
that simple ownership of stock in a corporation alone is
not
a
sufficient
motivator
without
participation
in
decision making (Quarrey, 1986; GOA, 1986a; Blasi, 1987;
Klein, 1987; Bell, 1988; Stern,1989).
Senator
Bill
Bradley,
in
his
introduction
to
Rubinstein*s (1987) Participative Systems at Work, states
that:
. . . the basic proposition that self fulfillment will
ultimately come from what one does in the workplace .
. . So we have a convergence of two necessities:
kind
of
work
environment
which
will
bring
the
self-
fulfillment converging with the kind of workplace that
is essential for long-term economic growth, (p. 20)
The idea of democratizing and changing corporations is
by no means a new one.
Changing the bureaucratic corporate
culture has been a movement since the early 1960*s.
Peter
Drucker (1969) and many of his followers began to look at
37
the
needs of
the
changing work force which he
"knowledge workers".
termed
He preached a gospel of change for
the bureaucratic structures of his day:
What
the
knowledge worker needs
to be positively
motivated is achievement . . . Knowledge workers also
require that the demands be made on them by knowledge
rather than by bosses, that is, by objectives rather
than by people.
organization
They require a performance-oriented
rather
than
organization.
(pp- 288-289)
Organizations
were
managing
workers*
accomplished,
structure.
system.
to
knowledge
an
become
by
authority-oriented
more
the
productive
objective
to
by
be
but there still was to be organizational
Organizations had one basic problem with this
If "knowledge" was the key to who was in charge of
a team, the organizational structure would have to know
what knowledge each worker possessed—not a small task.
Sorcher (1976) stated that:
. . . employees can become more involved in their work
if the incentive is a heightened sense of self esteem
. . . These concepts require supervisory commitment to
employee involvement, a basic trust in employees, and
the willingness to take apparent risk (but perhaps not
actual risk) when trusting employees, because there is
no
halfway
point
between
mistrust
(autocratic
38
supervision) and trust (employee involvement), (p.213)
Thomas (1993) further argues that:
.
.
.
this process of reshaping corporations from
bureaucratic structures to teams of workers striving
for the successful operation of the corporation will
not be an easy process.
States,
where
In nations like the United
individualism
is
a
much
stronger
social value than collectivism, the tendency to talk
about
teams
and team
efforts
is
results are frequently muddled.
strong,
but
the
It is difficult to
expect a company managed by business school graduates
whose education and careers have been built on their
individual
competitive
unwavering
support
successes,
for
a
to
provide
team-based organization.
(p.91)
One solution supposedly offered for this change is the
The
ESOP movement.
idea of
employee ownership
giving
employee input and control to the corporation was presumed
to
exist
in the
laws,
but
in actual
fact,
ESOP's
can
provide for no worker influence and still be a completely
legal ESOP.
Some ESOPs
felt that providing votes
for
shares and seats upon the Board of Directors of the company
would accommodate the need for involvement in decision
making.
The
idea
of
worker
directors
rejected by corporations in the 1970's.
was
tried
and
As Brannen (1983)
39
states:
The paradox of board room participation is that if
worker representatives are strong enough and willing
to
put
forward
likely to
competing
rationalities
they
are
create conflict in the board room/
and
ensure that the real centers of decision-making move
elsewhere/ thus rendering themselves impotent in the
director role; but if they adopt the director role
then their raison d’etre, from the perspective of the
workforce, disappears.
(p. 114)
The historical development of a culture of hostility
between management
and workers
history of the union movement.
has
developed with the
Bado and Logue (1991:4) in
their study of the union's revolving role in ESOP firms
advise that
"ownership gives unions the opportunity to
convert the traditional defensive,
proactive one."
(p.l)
reactive role into a
Most union leaders in this study
felt that their roles had expanded with the establishment
of the ESOP.
New areas of decision making about investment
policies, hiring decisions and long-term developments are
now within the realm of the union's responsibilities.
The
lie
the
key
problems
seem
to
enterprise for democracy,
in
the
structuring
of
Since conventional corporate law
offers no model for democratic enterprise,
systems are
still being worked out in a trial and error basis and ESOP
40
cultures are still developing.
ESOP CULTURE
The
research
on ESOP
cultures
approaches to viewing employees
indicate
in ESOP
differing
firms.
Blasi
(1991) has classified these into five types of corporate
cultures
(not
styles).
First there is the feudal culture where employee
ownership
is
unlike
Likert*s
strictly
under
(1961)
the
four
control
managerial
of
senior
management and are threatened by any corporate governance
Second is the investor culture where
roles for employees.
ownership is seen as a way to expand wages into a more
long-term sharing in the company*s economic future.
It is
hoped that this will just happen, and no effort is made to
empower
employees
performance.
Thirdly
to
improve
their
involvement
and
Their view of employees as passive investors.
there
exists
the
participatory
culture
which
realizes that productivity and profitability are effected
by joint information sharing and problem solving. Fourth is
the shareholder culture.
This culture incorporates the
pride of ownership of the investor culture with the active
involvement
of
the
participatory
culture.
Employee
representatives have seats on the Board of Directors and
actively vote the employee shares.
Lastly there is the
41
entrepreneurial culture which strives to make ownership of
the company a part of making the company the leader in its
competitive field.
The emphasis here is not on employee
benefits as much as in asking employees to take risks as
owners for the sake of the company.
Blasi estimates that 20-30 percent of companies are
feudal structures, 60-75 percent are investor cultures, an
additional
5 percent are participatory,
one half of a
percent are shareholder cultures, with virtually 0 percent
being entrepreneurial.
These statistics reveal that few
ESOP companies seem to realize the results of the research
of effects on employee performance.
be
attributed
to
the
fact
This fact can possibly
that
means
for
sharing
information about ESOPs exists in only some states.4
A
good example is that Pennsylvania *s ESOP Association has
only been in existence since May of 1992.
Harrison’s
organizations
(1994)
recent
lists two types:
study
of
democratic
"Type 1" organizations
which were specifically constructed by individuals seeking
economic
and
political
alternatives
to
traditional
bureaucratic organization, and "Type 2" organizations which
were
created
closings.
In
to
prevent
each
case,
factory,
the
plant
potential
or
to
business
develop
a
democratic system exists. These two types exhibit different
cultural
realities
because
the
strategic
choices
and
42
developmental
patterns
will
be
legitimatized
"by
the
meanings and understandings that members attribute to their
organization
as
conceptualized
(Harrison, 1994, p. 262.).
recreate
in the
newly
by
the
social
pact"
This social pact is create and
developing
culture,
Harrison’s
research indicates that "Type 1" organizations typically
attempt to reproduce some version of democracy within the
organization, while "Type 2" organizations "are attempts to
reproduce capitalist structures among individuals of middle
and working classes." (p. 263)
STATUS OF ESOP CULTURAL RESEARCH
Given the fact that ESOPs have only been steadily
growing since the 1984 legislation, research has centered
mainly on legal and statistical aspects of the corporate
performances.
Currently, researchers are studying employee
communication needs and their effects on satisfaction and
performance.
The overwhelming data indicate that shared
information patterns and decision making will be necessary
to enhance competitiveness of these corporations in the
world market.
The combination of ownership and significant
participation in the corporation seems
to
lead to
the
development of an ownership culture, but the new roles for
employees have created a need for training,
puts it:
As Ford (1991)
43
Increased participation and shared decision making
have meant, for many employees the challenges of role
changes.
of
While many employees have an excited feeling
empowerment,
confusing,
others
blurring
responsibilities.
have
the
found
boundaries
these
of
changes
their
job
(p. 11.)
In 1988 an Urban University Technical Assistance Grant
was
given to speed the growth of ownership culture by
developing an employee ownership education program (Logue,
Bell & Ivancic, 1991). This experimental program developed
six areas for a multi-company training program for nonmanagerial employee owners.
The six area included were 1)
Working of an ESOP, 2) reading of financial statements, 3)
rights
and
responsibilities,
4)
group
processes
and
practices in group decision making, 5) problem analysis,
and 6) attitudes.
No national data existing on what ESOP
companies are doing about employee owner education, but
some
informational
research
educational programs.
has
been
done
on
pilot
(See Moody & Ivancic, 1991; Logue,
Bell & Ivancic, 1991; and Thomas, 1993; as some examples.)
The
research
into these programs
indicates preliminary
positive data, but has not been in place long enough yet
for conclusive data collection.
follow
the
six
steps
above
dissemination among employees.
All of these programs
and
aim
at
information
44
According
to
the
National
Center
for
Employee
Ownership (1991) there is a need for ESOP corporations to
develop a new theory for management,
theory is termed "Theory 0".
This new type of
In "Theory 0" (for ownership)
companies there are only partners, or associates, or fellow
owners.
People—whether managers
or
non-managers—are
expected to act and treat each other like the owners they
all are. The corporation needs to make commitment to this,
training for employees must be included, and participatory
decision making must be engaged in.
While there is no set
pattern for accomplishing this, suggestions are made that
communication and training in communication skills will be
essential to the success of this style of management. (See
Appendix A for this theory.)
face-to-face
priority,
Communication should follow
with written
reports receiving least priority.
non-managers)
must develop
other's perspective.
be used.
computer
generated
Employees (managers and
skills
in understanding the
Multiple mediums and messages should
Feed back is encouraged, both downward and upward
messages, and subordinate-initiated communications must be
encouraged and positively received,
Presently, research
indicates that the most often used form of communication is
the
annual
account
balance
statement
for
each
plan
participant. The least used are the face-to-face methods of
open doors,
etc.
and only
limited use
of
small
group
45
meetings.
SUMMARY AND CONCLUSIONS
Although legislation has been in existence since 1974
which
allows
Ownership
corporations
Plans,
it
was
to
not
establish
until
Employee
the
Stock
1980*s
that
significant numbers of corporations began to take advantage
of
this.
Many of the early attempts resulted in the
ultimate failures of already failing corporations.
The
recent surge of new ESOP corporations has offered an arena
for new research, but much of the early research was geared
to
legal
and
corporations.
statistical
It
was
not
performances
until
the
of
late
these
80* s
that
significant data began to be accumulated to point the way
towards
further
research.
Some
theories
have
been
postulated, but the most significant data indicate the need
for inclusion of employees in the decision making processes
Experimental programs have begun in
of every day work.
training employees, but results of these programs have not
been proven by researchers.
The
"Theory O"
style of
management in these companies is also in the proposal and
testing stages.
Current research points out two types of
ESOP companies, those formed for democratic purposes and
those formed to save failing corporations.
of
these
differ
in
their
communication
The structures
patterns
and
46
cultural
characteristics.
The
data
which
have
been
accumulated from past research are not organized for easy
availability by either corporations or researchers.
Since there are now ten thousand ESOP companies with
over eleven million employees5, there exists an area which
is basically unexplored by communication researchers and
offers fertile ground for many future studies.
47
CHAPTER III-THE STUDY
The right and privilege of being an observer is a gift
presented to the researcher by his host and subjects.
. . . The gift of access, of witnessing social life as
it is lived in someone else's environment, exercises
a tyranny of its own.
-Charles Bosk (1989)
ETHNOGRAPHY AS A METHOD
Ethnographers,
by
methodology,
taking the role of child-learner.
are
field
workers
Their experience is that
of learning the culture that they wish to study.
Since
culture, as has been formerly defined is created by groups
commonly
sharing
meanings,
it
ethnographer to discover the
is
the
job
of
the
"meanings" present in the
cultures which they have chosen to study.
Communication
is
the
vehicle
through
cultural meanings are shared by its members.
communication be
by
which
the
Whether this
spoken or written symbols,
signs,
artifacts, or kinetics, the ethnographic challenge is to
decipher the cultural meanings which are shared by the
Garfinkel (1967) states that these
subjects of the study,
meanings
are
idexical,
having
meanings
associated
in
context of the setting within which the communication takes
place.
"Idexicality
refers
to
the
amount
of
shared
48
background knowledge necessary to understand a meaning
(Blumer, 1984, p.5)."
the
researcher
In order to share this idexicality,
assumes
the
role
of
cultural
learner,
entering to learn and then analyze what has been learned.
As Coser says,
"ethnomethodology aims at a descriptive
reconstruction of the cognitive map in people's minds which
enables them to make sense of their everyday activities and
encounters (In Blumer, 1984, p.302)."
Ethnomethodologists
attempt to achieve what Schutz terms the "attitude of daily
life...the world known in common and taken for granted
(Garfinkle, 1967, p. 37)".
Ethnomethodologies
began
anthropological tradition.
with
British
the
These traditions grew from the
combined needs of administration of the Empire and the
required cultural knowledge needs of the missionaries.
origin,
society.
the
anthropologists
were
non-members
of
By
the
As such, most early accounts were of the purely
observational nature.
investigation
and
ethnographies
moved
With the advent of sociological
the
from
Chicago
the
anthropology to the urban setting,
School
non-urban
tradition,
focus
of
Indeed, Manning (1987)
implies that the main difference between the two forms
seems to be discipline of their training and the choice of
setting for the fieldwork,
Whatever the difference in
training and focus, the methods of each discipline are now
49
being adapted the area of Communication studies,
As Frey,
et al. (1992) put it:
Ethnographers believe that all we perceive and do is
influenced by communication . . . Ethnographers seek
to identify those culturally imposed constraints, the
patterns which continue to be learned and to influence
our communication throughout our lives, (p. 249)
According to Frey, there are two basic approaches to
ethnographic
study.
approaches.
Blumer relates their derivation to phonetic
They
are
the
etic
and
the
emic
and phonemic studies of language (1980).
In the first (etic) case, the researcher is focused on
the
environmental
and
cultural
forces
influencing
subjects* messages and social behaviors.
ethnographer
would
be
on
style,
the
the
The focus of the
observable
communication
phenomena.
In the
emic
subjects are thinking,
researcher
focuses
on how
Their focus is observation within
normal communication settings where the communication is
more important to the subject, than the fact that they are
being observed,
The
attempt
is
to discover cognitive
categories, assumptions and rules that guide encoding and
decoding messages exchanged in context,
Care must be taken
by the researcher not to impose preconceptions on their
subjects, and the consciously detach himself/herself, so as
50
not to predict what might be discovered (Agar, 1980).
In
a sense , becoming an infant in the society of subjects,
thereby learning from its members the rules and assumptions
shared by
its
categories.
members
who
have
created the
cognitive
As Blumer (1984) states:
Ethnome tho do1o gy aims at a descriptive reconstruction
of the cognitive map in people*s minds which enables
them to make sense of their everyday activities and
encounters
.
.
. Ethnomethodologists put particular
stress on the contextuality of accounts and meanings,
their imbeddedness in the interactive context, their
"situated** nature, (p. 302-303)
Adler and Adler (1987) state that "Ethnomethodologists
thus offer studies of members* work instead of studies
work (p.29)."
about members
To do this faithfully, the
researcher should become a member in the fullest sense of
the word.
The researcher should become what Gold (1958)
calls a complete member of the group,
By example, to study
the life of a police officer would require obtaining a job
on
the
police
restrictions
as
an
officer.
placed
on
ethnomethodologies
force
are
Obviously,
by
some
the
temporal and skill levels of both the subjects who are
being studies and the researcher.
not always possible.
roles:
Complete membership is
Gold offers three other possible
Participant as-observer, Observer as-participant
51
and complete observer.
The participant as-observer is the
most preferable form of ethnographic inquiry if complete
participation
is
not
possible,
participating in this role.
relationship
to
the
point
is
situations.
of
used most often
The
complete
time
is
spent
The role strives to bring the
actually reaching intimate form.
participant
Much
friendship,
but
avoids
By contrast, observer asin one-visit
observer
role
researcher entirely from social interaction.
interview
removes
the
On occasion,
all researchers may employ this role as a subordinate role
to implement the dominant ones.
Because the researcher assumes the role of learner,
void of preconceptions in a social setting, ethnographic
studies are an evolving process.
research,
where
causal
Unlike experimental
interrelationships
between
two
variables are dealt with, ethnomethodological field work
offers sets of possible interrelated propositions (Strauss,
et al •
t
1964).
A second characteristic of this field work
is its temporally developed character.6 It begins with an
initial stage of general observation, proceeds to a second
phase of sense making and greater attention to particular
aspects that lead to an emerging set of propositions, and
ends with a final phase of systematic effort to pinpoint
various hypotheses.
52
STUDY METHODOLOGIES
The focus of this study involved a company that is
wholly owned by the employees,
It was chosen because it
was accessible to the researcher and has been owned by the
employees for several years,
The immediate effects of
ownership should have diminished, and the possibility of an
ownership culture developing might be
likely,
It was
brought to the attention of the researcher by a friend, who
had
observed
conversations
between
employees,
These
conversations seemed to denote a different attitude from a
non-employee owned company.
The
study
participant
was
conducted
by
as-observer method.
chosen for the study.
using
primarily
An emic
approach was
It was conducted over a seven month
period to give the best depth of inquiry.
relationship
between
the
any
study
There is a
selection
psychoanalytical reasons for choosing it
and
(Hunt,
the
1989).7
This relationship was not considered during the selection
of the study, but was taken into consideration during the
study.
Although every effort was made not to influence the
observations given here, as Denzin (1970) states:
"The
mere presence of the observer means that movements are made
and orientations are developed toward him which would not
otherwise have occurred” (p. 261).
Every effort was made
to portray a realistic picture of the study group, or as
53
Van Maanen (1988) states:
"to offer the perspective as
well as practices of the member culture" (p. 50).
Whether
or not this was accomplished, it was intended.
This researcher attempted to dress and act in a manner
that would minimize the effects of observation on the
subjects.
It was
soon realized by both
subjects
and
researcher alike that it was impossible for a female not to
be observed in an all male shop.
spent
observing
lessened
the
It is hoped that the time
effects
the
researcher*s
gender may have had on the observations, but as Hunt (1989)
states:
.
a
dualism
between
subject
and
object
is
problematic because fieldwork is an intersubjective
process.
It is also interpretive, mediated by the
minds of both researcher and subject.
.
. Subjects
also develop transference to researchers, which may
have a profound effect on the stories they tell to
researchers and their relationships with them.
(P-
81)
With
all
of
this
acknowledged,
observations
are
offered here from the interpretive point of the observer
having spent seven months in all parts of the company, and
on all three
shifts of the work schedule.
Since the
researcher spent from ten to twelve hours a day in the
field,
after a time the subjects seemed to become less
54
aware of the novelty of a female presence, and more open in
their interactions with the researcher as a researcher.
Many
of
the
observations
were
interviews with selected subjects,
these
subjects
organization.
deemed
This
to
choice
be
was
based
on
repeated
The researcher chose
"key
members"
based
on
the
of
the
initial
observations of the organizational structure, as well as
the patterns of communication which were discovered by
observing the company*s functioning,
Sub-cultures were
also checked for their significance in the operation of the
company*s culture and communication channels.
Special time
was spent in observing new members of the culture who were
hired during the study period.
These new members gave
insight into the culturization of complete members.
Some
subjects
were
extensively
interviewed,
while
others were given shorter interviews which were repeated
over the period of the study.
Additional data were gathered by casual observations,
and
eavesdropping
on
situations,
Note
taking
by
the
researcher (in what came to be known as the "Little Black
Book") was kept to a minimum in the shop area, because it
was revealed that this was perceived negatively by hourly
workers.
There was
an apparent association with note
taking and "time study" techniques which had been used in
the shop in the past.
55
A
guarantee
participants.
of
anonymity was
established for
all
Notes taken, interviews and survey results
were kept by the researcher in an off site location,
As a
further guarantee of anonymity, a lap-top computer was used
for transposing notes during the day, rather than using a
company terminal that was offered.
Access to interactions with all employees,
as many
corporate documents as possible, and interactions within
the
company*s
researcher.
daily
activities
was
gained
by
the
Permission to access these areas was granted
by both the president of the company and the union.
It was
acknowledged that any individual not choosing to interact
with the researcher had the right to decline or withdraw at
any time.
There were very few problems in acquiring materials
which
the
company
felt might be
too
sensitive
to
its
The exception
interests to share with the researcher,
being individual pay rates, bids on new jobs, managementnegotiations
labor
and
the
meeting
of
the
Board
of
Directors.
There were certain restrictions placed on the study
due
to
the
A
contractor.
recording,
as
that
fact
the
restriction
well
as
company
is
on
all
audio
taking
was
picture
a
government
and
video
already
in
existence in the company—this restriction imposed by the
56
government.
All photographs included have already been
cleared for public release.
A
survey
(Appendix B).
was
also
administered
during
the
study
The purpose of the survey was to gather some
quantifiable data both for presentation to the company and
to provide triangulation of data.
The questions were based
on two questionnaires; one was given to the management of
the company a number of years ago, and the other was used
successfully with
another ESOP
company
questions were given in Likert form,
in Ohio,
The
Since this ESOP was
three years old at the time of the study, data collected
were divided into those employees who had three years or
less service (when the ESOP was created) and those who had
more than three years service.
hourly/salaried categories.
It was further divided into
Most of the salaried employees
had managerial type positions in the company, while the
hourly workers were in production functions. The questions
were
coded
ownership,
for
communication
expressed
need
channels,
for
education
feelings
of
about
the
functioning of the ESOP and feelings of participation.
These
areas
were
chosen
for
investigation
during
the
research because of past research in the field and in
response to spicific areas that indicated a need for data
to be gathered about the needs of this ESOP.
Graphs included in the Analyses section of this paper
57
indicate a "desired" response comparison,
agreement
or
This category
indicates
perfect
question.
This measure is given for comparison with what
disagreement
with
the
the company might wish to be the "perfect" response by
employees to these questions.
It was produced by the researcher, with only final
approval of the form being given by both presidents.
The
researcher printed and stuffed the surveys into the pay
envelopes of the hourly workers, and the mail boxes of the
salaried workers.
The survey was given out to all 321
employees on the same day.
Boxes were set up for retrieval
of the responses over a two week period.
The questionnaire
included an envelope for anonymous reply.
The surveys were
color coded, but only the researcher knew the code, and no
subjects appeared to notice the coding.
photocopied on white
paper
Two responses were
and returned,
included in the summary of the results,
but
are
not
The researcher
collected the returns both from the box, and in person. A
total of 182 surveys were returned within the two week
collection period.
Those employees who were interviewed extensively were
appraised of their right to decline the interview, and a
written permission was
signed and witnessed by another
employee (Appendix C).
They were also informed of their
right to rescind permission at a later date, and given
58
phone numbers to assist in contacting the researcher for
this purpose.
59
CHAPTER IV-OBSERVATIONS AND ANALYSES
THE STUDY FOCUS
The focus of this study was to discover if a wholly
employee
owned
corporation
differs
from
a
traditional
corporation in its attempts to meet the communication needs
of
the
employees
who
are
now
stockholders.
This
investigation centered on the cultural changes which were
developing because of this new form of communication among
the
now owners
of
the
company.
It
also
included an
analyses of the needs for education about the functioning
of the ESOP, feeling of inclusion as owners, and feelings
of participation.
60
•:*
_• ...•
••• ' i «-.•■•;-
.*
<• -*
■=»-*ttf8ss2j6T
: ”C5^5’
:•- ---=r.'
■
THE ERIE FORGE COMPANY
From H. P. Spencer, Erie ... a history (1962) Published
by
the
author.
Reprinted
unknown).
by
Distributed
permission
of
by
the
the
Erie
Book
distributor.
Store.
(Artist
61
BACKGROUND OF THE COMPANY
Erie Forge Company,
Company,
was
founded
in
now the Erie Forge and Steel
1872
by
George
Starr,
J.P.
Harrington and A, Brabender (Spencer, 1962, pp. 228-235.).
The
company
continued to manufacture
steel
and forged
products and experienced rapid growth as a Navy contractor
during World War II.
At this time most of the employees
were female, and the manufacturing was primarily focused on
the manufacture of gun barrels.
The company was acquired
out of bankruptcy in 1969 by National Forge of Warren, PA..
In mid-1988, Robert Wilder announced that National Forge
Company was for sale.
with
employees
reduction
employees.
being
was
Late that same year, a new contract
ratified
given
in
Immediately
with
salary
after
a
and
this,
significant
benefit
the
cost
cuts
Union
by
and
Management of the Erie plant met to discuss a potential buy
out by the Employees by formation of an ESOP.
National
Forge decided to sell the company as a whole, and a letter
of intent was signed by Gambelli and Rosenthal in August of
1989.
The collapse of the Bond Market in October/November
caused that deal to fall through, paving the way for the
employees to move forward with the ESOP purchase.
Over the 120 plus year history of this company,
strong union has been formed,
a
The relationship of the
union to the management of the company has often been
62
stormy.
During the 1970*s several "wild cat" strikes were
staged.
That relationship
when forming this ESOP,
was taken into consideration
and the charter includes Board
representation by the choices of three seats on the Board
by the union.
one seat.
The President of the local union occupies
The other two seats are currently occupied by an
Attorney (with union ties) and an Accountant (also with
union background and ties).
An analysis of
the most
current ownership structure data shows that 74 percent of
the common stock is owned by the ESOP, 11 percent preferred
stock is owned by "Key Management" people (these people
having given monies to the original purchase agreement from
National Forge), and 15 percent preferred stock is owned by
the financial institution which helped to negotiate the
purchase, and took stock for its payment. The ESOP stock is
allocated according to pay scale and number of hours worked
during the year.
it.
Common stock carries voting rights with
Employees were vested at the time of the establishment
of the ESOP takeover, and new employees are vested after
five years.
63
64
DESCRIPTION
Erie Forge and Steel
(from here on referred to as
EFS) is located in Erie, Pennsylvania, on Sixteenth Street
between Weschler and Greengarden.
It is bounded by the New
York Central tracks on the North and the Bessemer and Ohio
tracks on the south.
acres,
virtually
The company occupies almost sixteen
all
of
production facilities.
the
area
being
occupied
by
In comparing it with an Historical
Society document (Appendix B.
Document #3777, 1932), the
buildings are twice the size today as the original drawing
indicates.
This
seems
to verify the
fact that fewer
workers, but more skilled laborers are required for today*s
steel production. Hiestand (1974) relates that:
The
occupational
apparently
proportions
composition
shifted
of
of
slightly
managers
the
industry
toward
and
has
increased
administrators,
professionals and technicians, and skilled workers at
the expense of a decline among the number of laborers.
(p. 21)
A new office complex was built on the south side of the
entrance
to
the
plant
in
1956.
buildings have been eliminated,
Most of
the
smaller
It is interesting to note
that the original drawing included both bunk houses and a
hospital.
Since the shop is now run on electricity, the
elimination of oil storage tanks and coal heat for steam
65
production is logical.
A
new "Bag House" was installed
where the old Engine House used to be.
This building can
be seen in both the pen and ink drawing and aerial views.
It is located at the extreme right of the drawing past
the gates and is the building with pipes running out of the
roof
to
the
melt
shop,
The
environmental
controls
affecting all of industry necessitated the installation of
this building.
Many other changes are being undertaken at
the company because of the regulations by the Federal
Government to protect the environment.
Scrap steel can no
longer be left on the ground, as the rain causes it to rust
and this rust is considered a hazard to the ground water
supply.
Plans will have to be implemented to store the
steel on concrete, with drainage ditches provided to carry
the
water
environment.
to
be
treated
before
release
into
the
66
o
SO
1 *
0^
D -2
?!
<3
a
3
at
67
The company is physically divided by buildings into
five main areas.
Finish
Shop,
These divisions are the Melt Shop, Forge,
Heat Treat
and
the main Office
Complex.
Within these areas other jobs take place (e.g. Welding is
in the Finish Shop,
the Chem Lab is in the Melt Shop,
etc.).The physical division, while necessary for production
needs is a factor which divides the work force and affects
the communication and culture of the organization.
the
most
universally
expressed
complaints
One of
from
all
employees was that the other people who work in the company
do not know what the production and tooling needs of their
particular job are.
It was also commonly acknowledged by
these same people that they do not know much about what the
jobs were like in other areas of the shop.
is
likely
a
complaint
in
any
Although this
organization,
the
interdependence of all workers on the production of other
shops to attain "gain sharing" at the end of the year and
for the company stock to increase seems to be increasing
the
criticism
and
dissatisfaction within
the
company.
There were often comments about this dissatisfaction at
monthly meetings held between the president and the hourly
workers.
Production graphs were shown,
but workers in
different departments couldn't seem to grasp why "heats"
were lost, or finished jobs had to be scrapped.
The work force consists of mostly skilled labor, with
68
the diversity of these skills also being a major factor in
complicating the communications and culture,
its
own
terminologies,
different
ways
performed
is
elements
in
often
and
these
different
dangerous,
of boredom,
Many of
are
Each shop has
often
departments.
while
the
The
also
jokes
used
in
work
containing
and humorous
rituals are an attempt to alleviate the boredom and relieve
the stresses of the danger involved.
male environment, the jokes are often
Since it is an all
sexually slanted.
The jokes and pranks serve the function of self-definition
and socialization in this setting.9
The hard hats that were worn by the hourly workers
bore many symbols, some of these were related to the old
company that had owned EFS.
These hats served a symbolic
function in the work place.
Supervisory personnel used to
wear white hard hats in the former company.
The term
"white hat" is now often used to refer to someone who acts
like he is in charge, or knows it all.
made
about
devices.
the
necessity
to
wear
Often jokes were
these
"protective"
Indeed, the danger from falling objects in this
work place would not have been decreased by the presence of
the hard hats, because the weight of objects falling would
have crushed anything they hit.
The workers often referred
to cartoons where objects drop on someone, and two legs
walk away under the hat.
69
It was easy to observe which members of the work force
were
also
members
of
sub-cultures.
Often
the
most
respected and skilled craftsmen were also the center of a
group joke. As Boland and Hoffman (1983) state it:
is
an important device
"humor
for allowing participants
in a
social structure to reciprocally confirm the ambiguity of
certain aspects of that social setting (p. 196)."
There
majority
are
of
seventeen
these
work
female
in
the
employees
office
at EFS,
complex,
the
The
exception to this being one female crane operator (who was
hired during the study) and one female in the office of the
shipping dock.
As was previously mentioned, the fact that
the work force is largely males possessing high degrees of
skill influenced the type of ethnomethodologies used.
It
was literally impossible to conduct a covert or complete
An effort had to be made
participant study of the plant,
at all times to minimize the influence that might occur
because the researcher was female.
There were many posters
and jokes around that the researcher had to deal with
without
interfering with the
subjects
discuss any topics with the researcher.
feeling
free to
It is acknowledged
that some normal behaviors may not have occurred during the
observation period because of this fact (e*g* One of the
hot weather rituals was water fights; although it was often
mentioned that I would be a prime target, I never became
70
the target of any of these fights,
On several occasions
someone was stopped from soaking me because other members
of the group felt it was improper to treat a lady that way.
A male researcher might have become a target).
What is
revealed here is the separateness with which females can be
expected to be treated in this culture.
It seems likely
that a female could not become a complete member of this
culture.
This observation is offered for those seventeen
members of this organization who share the same ownership
as their male counterparts.
71
^ -V ^
Av
Erie Forge and Steel Inc. is the leading producer of propulsion
shafts for the United States Navy. Our capabilities include weld
overlay, shrink fitting of liners and sleeves, along with fitted
and line reamed assemblies.
72
The product line produced by EFS is dominated by the
production of drive shafts for Navy vessels.
They proudly
point out that ninety percent of the Navy's shafts are
produced by EFS.
There is a government inspector on the
facility full time,
Several times a year there are visits
and Navy briefings, and all work must be approved by a Navy
inspector.
The importance of this product gives a certain
status to the executive in charge of this department. In
the company newsletter,
his articles are placed third,
after the president and vice-president.
no
assigned
seats
at
the
weekly
Although there are
staff
meetings,
this
executive occupies the chair to the immediate left of the
president.
All of the other regular executives sit in what
might be considered less important positions.
On my initial introduction at the regularly scheduled
Monday morning meeting of the executives, I was asked to
sit immediately to the left of the CEO.
I noticed the
reaction of one of the members to my being in "his" seat,
but no comment was made.
asked to occupy this seat,
At later meetings I was never
The same situation occurred
when two consultants were invited for an initial meeting
later in the study,
rules
of
a
group
As Shimanoff (1988) observed, "the
are
also used
symbolic acts within the group (e.g •
one sits . . .) (p. 56).
to
/
attach meaning to
the meaning of where
WmMTiiB!®.
” *ZJFiz
of <£ttzCn
^JajifiLncj a 75 !I7on c^izat of
74
The unique quality about EFS is that it melts and
produces the steel, forges it, and finishes it for shipping
all within one
facility.
It
is
the
largest
capable of doing this in the United States.
facility
This ability
to produce and finish the product in one location brings
both unique marketability and production problems for the
company.
All of the shops depend upon the success
other shops for their gain-sharing profits,
of the
If the melt
shop has a bad month/ the finish shop employees may be very
critical of their fellow owners.
The
physical
separation
of
the
departments
also
interferes with face-to-face communication patterns.
also
contributes
specific
to
to
each
the
creation
physical
of
location.
many
It
subcultures
Lockers,
snack
machines/ computer punch-in terminals and picnic tables are
dispersed throughout the shop,
places
near
work
stations
These serve as gathering
for breaks
and
lunch
Genuine subcultures are formed around these areas.
time.
For
this reason many workers never interact with people in
other
areas.
Certain
workers
like
maintenance,
the
transfer car and crane operators work throughout the plant.
These workers tended to be officers in the union, because
of their ability to interact with others in the plant.
While this is probably the case in most plants. it
contributes to the lack of conviviality among the owners.
75
Terminology is also not shared with the same meanings in
each location of the shop.
a
(e.g.
To the forge department,
hot end" is that part of a piece of steel used in the
manipulator of the forge press, while the same term in the
office complex refers to the melt and forge shops.)
Another factor affecting the culture and communication
climate is the long history of the plant,
According to
personnel statistics, most of the employees have been there
for an average of seventeen years,
Many reported that
their fathers, grandfathers, uncles, etc.
had worked at
the same plant, with many even remembering visiting when
they were children.
This seems to lend a "business as
usual" attitude to the reaction to any new proposals.
This
attitude is quickly passed on to new employees by the
sharing of stories about things that were tried before and
did not succeed.
One of the new attempts which is being
met with skepticism is the pouring of ingots in the forge
shop.
Many stories of past disasters were related while
the planning for this process was going on.
It is to the
credit of the management that meetings were called to hear
complaints and gather expertise from the employees who
remembered when this had been done before.
One of the
stories gave advice about the direction in which to pour
from the
ladle,
Placement of the
ladle in the wrong
direction had caused death and injury before.
76
The manufacture and production of the steel products
at EFS is a lenotlw and complicated process.
^7&\'
v/iji
f> deeming of Ongotx
Sxie Oorge and tStexl, One,
e^kout tfie &Cf\tixt
Sxie ^Doxgt and cSteel, One. kax Cr ten a gualitg
Q.amex S
■ xufxfxCiex of ofxen-die, forgedfxroductx to c/Cmerica x
nationaCCg known fox kix fxen and ink drauringx.
keawg induxtxg fox aCmoxt a centuxg. ^Wikk out
' cWix works are included in coCCectionx tkrougkout
fallg integrated manufackuxing cafiaCriCitiex, we
■ tke world. jCocaCCg, kc continuex to fxxexexve tke
continue to offex a fuCC xfxectxum of forged xteeC
kixtoxic xigktx and Candmax kx of tke Sxie,
fixoductx fox tke moxt deman ding afxfxlicakionx in
&ennxglvania area. cHix dxawingx of Sxie ^}otge
kotk tke commerciaC and defenxe induxtxiex. (Dux
and £keel, One. kave cafituxed tke xfxixit of tke
numlre x one fixioxitg continuex to Cre tke xatixfaction
forging induxtxg and xkow tke kxoad divexxikg of
of oux cuxtomexx tkrougk guaCitg, value andxervice. . r- JxUtalent
I
•
*
77
What
difficulties
resolve!
How
many
to
conquer I
arts
piled
What
on
problems
the
other
to
are
necessary to make this mail or pin which we value so
lightly!
-Buffon (1962)
STEEL MANUFACTURING
The manufacture of steel goes back thousands of years
to the beginning of the Iron Age.
The most prized iron was
of meteoric origin, being called "metal from heaven" or
"meteoric steel" (Fisher, 1963).
Accounts of its use have
been discovered in carefully wrapped specimens found in a
grave at Abydos, Egypt dating from 2600 B.C..
objects
were
wrapped
in
the
mummy
of
Three iron
Tut-ankh-Amen
(fourteenth century B. C.) the blade of a dagger, part of
an amuletic bracelet and a miniature head rest.
The three
iron relics were found in the wrappings of the mummy and
presumably were placed there because they were among the
Pharaoh's most treasured possessions, more highly prized
than the gold of which the ornate sarcophagus was made.
It
seems likely that iron of such rarity and value came from
the heavens. (Fisher, 1963, p. 9)
The manufacture of iron and steel has always been
regarded by people as a national secret,
Many types of
steel manufacture were discovered, and lost because of the
78
fall
of
one
civilization
to
another.10
Wootz
steel,
manufactured in India, described by Aristotle in 384 B. C • 9
was
the
basis
of modern day
steel manufacturing
discoveries.
A piece of wootz steel was given to Michael
Faraday by James Stodart.
Faraday began his research of
this steel in 1819 and ended it in 1824.
The steel was
analyzed as an alloy of aluminum and silicon with iron ore.
Together,
wootz.
Faraday
and
Stoddart
produced an
artificial
The true significance of this project was the fact
that it stirred the scientific desires in Faraday to go on
to analyze the whole field of alloy steels.
His research
led to the systematic alloying of steel with no less than
nine elements.
Since
the
alloying
of
iron
with
other
elements
produced steels with different qualities, their production
and use for industrial, commercial and military purposes
became national secrets.
The need for raw materials to
produce these new alloys caused the formation of world
markets and international alliances that have survived to
present times.
This researcher was present at a meeting about the
production
of
stainless
steel
at
documents marked "Confidential-NFORE".
EFS,
and
observed
Upon questioning
this marking, I was informed that these documents were "not
for foreign eyes", and regarded as a national secret.
79
Obviously, the development of computer analysis and
spectrographic analysis of materials has introduced a new
dimension of technical skills required in the production of
steel.
The
computer
in
steel
the
produced at EFS
furnace,
adjusted before pouring.
is monitored by a
analyzed by
microscope,
and
The job of furnace operator is
one of the most highly specialized skills in the Melt shop.
Some steels are sent to a vacuum degassing process before
pouring, which is also run by computer analyses,
This
process extracts gases which can be absorbed into the steel
and
cause
structural
Illustration, p. 80.)
faults
during
later
use.
(See
According to Fisher (1967):
As much as 9,600 cubic feet of gases may be withdrawn
from a ton of steel.
.
.Steels melted or cast in a
vacuum are purer and stronger than those produced in
the presence of air. They have improved mechanical
properties at high temperature, greater ductility, and
a higher degree of uniform quality, (pp. 117-118)
The complexity of producing steel further complicates
the understanding between the departments at EFS.
The
slightest fault in the production of the raw material, or
in its subsequent annealing (cooling process), can cause
the loss of a five-hundred thousand dollar product, which
could have taken up to a year to finish for shipping.
80
A
O’/
FURNACE LADLE
n—
£=^STOPPER ROD
PONY ladl:
-v«> •
Ey
Wys-OBSERVATION PORT
OBSERVATION PORT-'
VACUUM-
ja
S'•
WATER COOLINgJ*
■g;
DEGASSING CHAMBER-4—
----- INGOT MOLD
P
r
D
Equipment to degass steel for extra large ingots. As molten steel pours
through the degassing chamber it forms into droplets. The droplets are
purified by the powerful vacuum pumps which suck out minute traces
of harmful gases, chiefly hydrogen. The falling droplets slowly build up
into an ingot. American Iron and Steel Institute.
From The epic of steel (p. 112) by D. A. Fisher, 1963, New
York:
Harper & Row.
by permission.
Copyright by Harper & Row.
Reprinted
81
Along the line of processing, another department is
responsible
for
the
final
OK
of
department is Quality Control.
commented upon factors
Defects"
"inside
reports.
jokes"
the
shipping.
This
One of the most often
in any meeting were
"Error and
These reports became the source of
among the members of the culture.
The
terminology "E & D" report was used for any occasion where
someone made a stupid mistake,
viewed as the "enemy".
Often quality control is
No one wants to produce a faulty
product, but it is the unhappy duty
stop this from happening.
school
chaperons
Watching over products like high
at a dance,
unpopular decisions.
of Quality Control to
they must sometimes make
The nature of their job puts them
into a sub-culture of their own.
The pressure of rejecting
or fixing a job comes from all sides of the company,
The
management does not want defective products to harm their
future markets, but the production side is interested in
finishing the product and obtaining the profits.
Ironically, this department was also given the first
assignment
of
production,
It was necessary to establish this educational
program to
meet
educating
other
workers
new world standards
corporate producers (ISO-2,000).
for
about
steel
international
The attendance at these
classes was voluntary and it was not surprising that many
members did not attend the sessions, since quality control
82
was already viewed by many members of the culture as a
hinderance to their job.
SURVEY RESULTS
COMMUNICATION PATTERNS AT EFS
The
formal
communication
patterns
of
the
company
consist of monthly newsletters, bulletin boards, computer
print-outs, memos,
the Foremen's log books,
periodic
up-dates
by
meetings
with
employees
all
Navy
personnel,
by the
job boards,
monthly
up-date
company president,
weekly staff meetings on all levels, and daily face-to-face
meetings.
No
There is also an extensive grapevine.
electronic
was
used,
although
terminals are everywhere in the company.
computer
All employees use
them to both clock in and out, and enter completed jobs
numbers.
There is an extensive telephone system, but this
seems to often be busy, and requires repeated calls.
is also a paging system throughout the shops.
There
The paging
system is difficult to understand, calling to mind airport
terminals with their garbled messages.
The paging system
is also an annoyance in the work environment as it is quite
loud.
The monthly newsletter, What’s Going On (Appendix E),
Each department head submits
is arranged by departments.
an
article
Relations
about
his
Director,
or
her
and it
is
department
her
to
the
Human
job to produce
and
83
distribute the newsletter.
Although the newsletter was
well read by most employees, specific terminology is used
in each article which is not clearly understood by all
employees.
After the distribution of each newsletter, I
questioned many employees about specific articles and found
that most did not know what was said in the articles.
While the survey results indicated that most information
was received by the monthly newsletter, with significantly
more employees relying on the newsletter than any other
form of communication, observations in the study found that
face-to-face sharing of the information in the newsletter
occurred immediately after its distribution.
Each worker is responsible for reading the Job Board
(which
lists
their
assigned
job
for
the
shift),
the
bulletin boards, the foreman*s log book, and speaking with
the worker preceding his shift and following it.
to Daft and Lengel
supposed to
be
According
(1986) face-to-face communication is
the
preferred
method
for
information
gathering "because it provides immediate feedback so that
interpretation can be checked", (p. 560)
The workers would
often gather at picnic tables before and during shifts to
share information.
It was often expressed that the workers
wished the president of the company would come around the
shops more often,
attended
during
His monthly "up-date" meetings were well
the
seven
month
study.
The
highest
84
possible score was
given to the monthly newsletter as the
information source most used by the employees to gain
information about the company (See chart p. 89).
highest
score
among
hourly
workers
on
The next
communication
channels was given to fellow employees, with lower scores
given to communication with the CEO and foremen.
85
The following questions from the survey were keyed to
indicate what information sources were most often used by
the employees.
SURVEY QUESTIONS
Keyed to Information Sources
Question 10-1 get most of my information about the company
from the bulletin boards and newsletter.
Question 11-1 get most of my information about the company
from my monthly meetings with Mr. —
(CEO)
Question 12--I get most of my information about the company
from my fellow workers.
Question 13-1 do not get the information I need about
performing my job from my foreman.
86
DATA FROM SURVEY QUESTIONS:
Related to Information Sources
**Comparison/More or less than three years of employment:
Hourly
Less
Salary
More
Less
More
*Desired Score
Q. 10
4
3.73
2.71
2.86
5
Q. 11
3
3.08
3.41
2.76
5
Q. 12
3
3.31
3.06
2.62
5
Q. 13
3
3.02
2.06
2.35
1
♦Desired Score indicates what the score would be if perfect
agreement or disagreement with answers to the question
were given.
The term "Desired" is used to indicate the
desired score for the interests of the company, and not any
pre-determined answer which was sought by the researcher.
**The categories of Hourly and Salaried indicate selected
difference in production workers (Hourly) and management
workers (Salary).
All employees are have equal "ownership"
in the company, but different attitudes might exist because
of different job functions.
employment or
less
The division of three years of
relates
company has been an ESOP.
to
the
length of
time the
Differences in attitudes may
exist because of this factor.
87
Although the workers indicated that they got most of
their information from the printed articles, it may be that
by sharing information in face to face meetings with fellow
employees at group meeting places, the true meaning was
worked out.
As Darroch and Silvers (1982) state:
the
interpretive
understanding
of
another's
experience requires that we look to the truth and
wisdom expressed in that other*s view as a practical
feature to which knowing may be applied ... We look
instead to the unstated foundation from which people
experience
occasion,
through
and embrace the
immediate world of
an unstated foundation which we
constructing
a
generous
an
located
conceptualization
which retains the good sense and the reasonableness of
their expressed meanings (p. 242).
Significantly lower scores were given to the monthly
up-date by the CEO among the salaried workers, with higher
scores being given to information gathered from immediate
superiors
(See
chart
p.
89) .
These
results
may
be
attributable to the fact that the salaried workers are more
often
in
face-to-face
contact
with
both
the
CEO
and
supervisors since they are housed in the same building with
them, and hourly workers seldom interact with these people
in face-to-face situations,
Lower scores were also given
to the newsletter and bulletin boards by this group.
This
88
also seems to reinforce the comments that workers wished
for more face-to-face interaction with superiors,
there was
a box placed in the shop areas
While
for written
questions which were promised to be responded to by the
CEO, workers expressed dissatisfaction with this method,
and seldom used it as an information source.
Comments were
often given about the fact that production workers felt
that the CEO needed to "walk around and talk to people”.
The following graph of the results of the data from
the chart on page 85 indicate the areas preferred by the
workers as information sources.
It indicates that both
salaried and hourly workers are not obtaining information
through the channels the company thinks they are getting
them from.
updates
on
The assumption is that employees get daily
Bulletin
Boards,
and
from
their
immediate
superiors (either informally or in weekly meetings),
The
monthly newsletter and CEO updates are to fill in the gaps
and answer questions which might have come up.
INFORMATION
89
More/Less than three years employment
Desire'I
90
Bulletin boards
are present
in all
areas
of
the
company.
There are over forty in the shop area alone.
Important
memos,
the
newsletter
information are posted here.
and
other
important
Although I checked these
often, I had trouble finding notifications of things which
I
knew
were
supposed
to
be
posted,
It
is
the
responsibility of all employees to read the bulletin boards
(this
responsibility
is
covered
in
the
new
employee
induction materials), but supervisors were often told to
remind employees to read the boards.
Some of the notices
that were posted were several years old,
and some even
contained the letterhead of the company who formerly owned
EFS.
Memos are used mostly by the management personnel
(Appendix F).
Some of these are posted on bulletin boards
for general communication needs, but most are distributed
within the in-house mailing system.
announced
meetings,
upcoming
The memos most often
deadlines,
reminders
company policies and status reports about customers.
of
The
most attention seemed to be given to reminders of company
policies.
I would often hear about the memos from the
hourly workers before I had managed to see a posting.
Often these memos were viewed by the hourly work force as
a reprimand.
Since the head of the department responsible
for the posting was female, the comments about the memos
91
often were shaded with sexual references even though the
memos were often not originated by her.
FEELINGS OF OWNERSHIP
The
company
approximately
has
three
been owned by the
years,
so
ownership and commitment have
1993:4)).
Conflicting
the
initial
lessened
graffiti
employees
and
effects
for
of
(Logue & Cross,
comments
about
ownership reveal that the culture has not yet developed
into an ownership climate.
During the acquisition by the
employees, no major event occurred to signal a change to
the culture.
The management personnel and daily routines
have remained mostly the same as when the employees did not
own the
company.
Some
symbolic efforts were made to
demonstrate the change (i.e. the painting of EFS on the
tower,
the printing of "My Father Owns the Company" T-
shirts, and the landscaping day at the office complex by
all of the office personnel), but no major difference was
seen by the hourly workers.
This lack of a dramatic event
has given a "business as usual" notion to the workers.
No
major event took place, and the leadership did not indicate
any major change in philosophy regarding their core vision
and mission.
Many of the other signs of unstable contexts
were also indicated.
As owners, the employees displayed
confusion about the company, and its activities.
92
Survey Questions
Keyed to feelings of ownership
Question 1-The job I do is important to the success of this
company.
Question 2-1 care about the survival of this company.
Question 3-Employee owners at this company work hard at
their jobs.
Question 4-1 do not feel like a real owner in this company.
Question
5-The
employee
important factor
stock
ownership
plan
is
an
in my decision to work for this
company.
Question 17-Employee ownership has been a good change for
this company.
Question
19-People
in
this
company
work
together
to
accomplish a job.
Question 20-This company can be successful in the future.
93
Data From Survey Questions
Related to feelings of ownership
Comparison/More or less than three years of employment:
Salary
Hourly
Less
More
Less
More
Desired Score
Q.l
4
4.34
4.71
4.5
5
Q•2
5
4.6
4.88
4.81
5
Q-3
3.01
3
3.03
3
5
Q•4
4
3.78
3.06
2.7
1
Q.5
3
3.25
3.53
3.22
1
Q.17
3
3.47
3.71
Q.19
2.47
3
Q .20
4
3.95
4.16
5
2.59
2.88
5
4.06
4.24
5
EELING OF OWNERS
Comparison Hourly/Salary:by service
6
5
fW
.
-
'i
J!&
.
mI
m
m
3
I
0
iHi
■
u:;
01
lii
i
: S|
i
!
:
!
HLJj HL- LL
Ql
J Hourly loss
I lif
a i
i11
2
i
:
□
Q2
Hourly-more
Li
Q3
I Salary - less
95
The data indicate a strong agreement with the feelings
of caring about the survival of the company and its future
success, as indicated in questions 2 and 20 (graph on page
91).
The extremely negative responses to question 4 ("i do
not feel
like a real owner of this company.")
seem to
indicate that a feeling of ownership has not developed.
The relatively neutral answers to questions 5 and 17 ("The
employee stock ownership plan is an important factor in my
decision to work for this company." & "Employee ownership
has been a good change for this company.")
also seem to
indicate lack of a feeling ownership.
NEED FOR ESOP EDUCATION
Rosen, Kline & Young (1986) have stated that one of
the measurable independent variables in ESOP participation
In their survey of 37 corporations
is worker influence.
having over 2,000 employees,
three main variables were
listed as significantly positive to employee participation.
These
factors
are
as
follows:
full
voting
rights,
a
relatively substantial ESOP communication program, and a
management philosophy which is firmly committed to employee
ownership.
Although they admit that these measures are
necessarily more speculative and interpretive, there is a
clearly positive relationship between these three factors
and employee satisfaction with ownership.
96
In this study, there is a clear response to the need
for
employee
education
and
its
communication about the ESOP.
effect
on
improved
Many employees expressed a
lack of complete trust that the information they received
was sufficient, and a desire to obtain more education on
the operation of the company.
During the observation
period, I was often approached by individuals who stated
"Let me tell you how an ESOP should be run."
Often, these
explanations lacked any understanding of the laws which
pertain to the actual structure and function of ESOPS.
While
it
is
true
of
most
situations
that
the
information received is perceived not to be sufficient, the
establishment of an education program for all employees
would increase shared terminologies and help to foster a
better understanding of ownership roles.
The following questions from the survey were related
to education about the functioning of the ESOP company:
97
Survey Questions
Keyed to need for education
Question 6-1 feel I do not have a good understanding of our
employee stock ownership plan.
Question 7-1 have a good understanding of our company's
financial report.
Question 8-1 would be interested in attending an in house
class on the employee stock ownership plan.
Question 9-1 would be interested in attending an in house
class on understanding the financial report.
98
Data From Survey Questions
Related to a need for education on the ESOP
Comparison/More or less than three years of employment:
Hourly
Salary
Desired Score
Less
More
Less
More
Q-6
3
3.06
2.59
2.27
1
Q.7
3
2.63
3.82
3.49
5
Q•8
4
3.75
3.94
3.32
1
Q.9
4
3.75
3.88
3.08
1
.) FOR EDUCATION ABOUT THE [SO
\
)
COMPARISON-MORE/LESS THAN THREE YEARS
6
5
1
s
in
3
i
:
.1
I
?
L
1II
.£37
>
:1
!
m-:-
m
v> i
I
|
&
{
i •
i
li !'
i :
:
:
i
1
i
i
' !
'
:
;
■
I
■
-
i|
:• i
;
h
i
B—i£l
Q.6
HOIJRLY/LE cr
jj
! v
Q.7
m uoiiRi iAFEr
SALARY/LESS
DESIREI) ANSWER
SALARY/MORE
99
100
Except for question 10- "I get most of my information
about the company from the bulletin boards and newsletters”
(which
received
the
highest
negative
response
on
the
survey), the responses to the questions about classes about
the stock ownership plan and financial report (questions
eight and nine) showed the highest need by employees on the
survey.
These two questions seem to demonstrate a need for
education,
employees
especially
are
not
coupled with
getting
the
the
fact
information
that
the
from
the
newsletters and bulletin boards as the company assumes that
they are.
This fact is magnified by the observation during
the research that the information placed in these channels
is either
lacking or containing technical jargon which
interferes with the common understanding of all employees.
The establishment of a system to educate the employees
could help to eradicate some of these problems.
Although the survey indicates a higher agreement with
information being gained through
foremen and the CEO,
observations during the study of face-to-face sharing by
fellow employees and the "grapevine" seem to indicate that
these sources are actually relied upon more heavily than
the forma1 channe1s.
On several occasions misinformation
through the grapevine was presented to me about situations
occurring in the company,
On one occasion I was attempting
to get a release form signed by a supervisor.
I questioned
101
several people about his location, but was not able to
locate him until the next day.
Before finding him on that
day, I was approached by someone who stated that he heard
Mr.-
was hiring a
lawyer to
sue me.
There was no
foundation for this rumor, but it had been conveyed through
this
information
source
incorrectly.
Another
misrepresented story involved the "ramp" which was being
constructed to deliver scrap steel in a more efficient
manner to the railroad cars.
This project had to be
undertaken between reports from the CEO, and was the cause
for speculation by the "grapevine" for some time.
The
confusion should have been eliminated in conversations
between
the
foremen
and
workers,
but
many
stories
circulated before the issue was clarified at a monthly
update meeting by the CEO.
FEELINGS OF PARTICIPATION
This company has one of the most participative forms
of ESOP structure allowable under the laws, with three
members of the Board of Directors of the corporation being
selected by the employees, and all members having voting
rights.
In response to Question 25:
stock holder voting,
I participate in
102
VOTING PARTICIPATION
HOURLY
Less
Q.25
SALARY
More
Less
More
Total
NO
15
50
5
2
72
YES
9
49
12
34
104
17
36
176
TOTAL POSSIBLE
24
99
*Total does not include 4 "no responses" and two surveys
that were xerox copies of the original forms and were not
included.
Total survey response was 182.
A consistent comment was made about the desire for
more participation in the directly job related functions of
the
company.
Although they are aware of
and endorse
employee stock ownership, confirming Logue, et. al (1986),
the employees do not find that this factor alone makes
their job more satisfying,
harder.
or that it makes them work
Workers with less than three years of service
answered "3-no opinion" to Question 5-"The employee stock
ownership plan is an important factor in my decision to
work for this company",
If being employee owned were a
significant factor in job satisfaction, it would be likely
that a more positive response could have been expected to
103
been expected to this question,
job availability, etc.
While other factors like
play a factor in this question,
management's assumption of the importance of the ESOP as a
benefit plan is not positively relate to the reason for
employees obtaining and keeping jobs here.
Although the
answers to questions one, two and twenty indicate a strong
positive feeling of the importance of their jobs and caring
about
the
success
of
the
company,
the
survey
results
indicate a lack of positive feelings about the employees
being able to participate in and trust the decisions being
made about the daily running of the company.
104
Feelings about participation are also revealed in the
fo1lowing questions:
Survey Questions
Keyed to feelings of participation
Question 14-1 am not well informed about how the company is
run.
Question 15-What I have to say about work is listened to by
those above me.
Question 16-1 am not well informed about what goes on in
other parts of the company.
Question 18-Mv ideas and suggestions are not important to
this company.
Question 21-1 do not understand the gain sharing plan.
ouestion_22-I understand the profit sharing plan.
105
Data From Survey Questions
Related to feelings of participation
Comparison/More or less than three years of employment:
Salary
Hourly
More
Desired Score
Less
More
Less
Q.14
4
3.79
2.59
2.62
1
Q.15
2
2.48
3.65
3.30
5
Q.16
4
3.75
3.06
3.08
1
Q.18
3
3.25
2.41
2.14
1
Q.21
3
3.15
2.41
2.73
1
Q .22
3
2.89
3.41
3.78
5
LINGS OF PARTICIPATION
More/less-three years service
6
5
4
Desired answer
106
107
The data indicate a large discrepancy between the
desired response especially among the hourly workers.
This
discrepancy seems to be most prevalent among the newest
employees.
there is
Perhaps they have not been enculturated yet, or
an actual need for more formal education and
participation in the functioning of the company.
The data
seems consistent with past research indicating that few
companies
1991).
have established
"Theory O"
cultures
(Blasi,
The answer to Question 19-"People in this company
work together to accomplish a job."
should indicate a
feeling of participation in the company, yet all workers
answered in the "no-opinion" or lower categories.
This may
indicate an opinion that not all employees participate to
their abilities as perceived by others,
In spite of the
communication efforts of the management, the workers still
feel poorly informed about what is going on and that what
they have to say is not listened to.
Harrison
(1994),
organizations,
organizations.11
in her description of democratic
describes
She
ESOPs
states
as
Type
2
democratic
that
they
may
best
be
"regarded as attempts to reproduce capitalist structures of
ownership among individuals of middle and working classes
These organizations are supposed to be
(p.263)."
characterized as rich in face-to-face interactions and
relatively high in their degree of social
integration.
108
However, since many Type 2 organizations are founded to
save failing bureaucracies,— "interaction patterns can be
considerably
more
similar
to
those
within
traditional
bureaucracies (p. 265)".
This organization seems to be following the typical
bureaucratic communication patterns,
given in the print form.
over
forms,
with
Most information is
Weekly meetings spend time going
little
verbal
exchange
being
conducted during the meeting, and mostly relying upon the
printed information which is passed out to all members of
the group.
After the formal meetings, verbal exchanges
seem to take place about the issues that really need to be
dealt with.
however,
These conversations are not a planned session;
and only happen after the meeting is formally
concluded.
The researcher noted that this seems to be the
most relevant exchange of information which takes place
about the needs of the company, as observed in the study.
109
CHAPTER IV
SUMMARY AND CONCLUSIONS
This research paper involved an ethnographic study of
a three year old wholly employee owned corporation,
While
many of the early effects of becoming an ESOP corporation
have seemed to dissipated (Klein, 1987, Hammer & Stern,
1980),
the employees are still committed to ownership.
Since this was
a
"type
2"
(Harrison,
1994)
democratic
organizational attempt created to save a failing business,
there
remains
a
commitment
organizational structure.
to
the
usual
bureaucratic
Since the ultimate competitive
advantage in today's business environment rewards those
corporations
who
can
consistently
make
high-quality
decisions with less than adequate information and little
time for discussion.
Bureaucratic organizational hierarchy
is efficient, while democratic decision making may be time
consuming.
Therefore,
Gorden's
question "is modern
(or
postmodern) capitalism really compatible with democracy?"
(P-
281)
sets
the
frame
for
the
ideal
of
democratic
organizations in the light of survival.
Long (1982) advises that the most important factor in
improved employee attitudes and increased organizational
effectiveness. He warns that: "
.
. empirical evidence
suggests that without changes in traditional patterns of
110
participation employee ownership will not have the desired
effects” (p. 197).
The commitment to the former bureaucratic structural
forms seems to be hindering the flow of information to the
now "owners” of this company.
The company is using the
standard print forms of communication, and the employees
are exhibiting dissatisfaction with the results,
There is
an observed need for developing different means for sharing
information,
as well as a need for greater sharing of
terminologies so that information can be shared in a more
efficient and accurate manner.
Employee
Ownership
(1991)
The National Center for
suggests
more
face-to-face
communications should be considered. "Generally, face-toface communication is the most effective,
and computer
printouts of numbers with no or little explanation are the
least effective methods of communicating.” (National Center
for Employee Ownership, 1991, p. 12.)
There also seems to
be a need for more upward as well as downward message flow,
Gordon
providing more feedback for management.
(1994)
suggests a possible solution is to promote dialogue.
three
step
opportunities
process
for
involves
employees
to
(1)
His
equalization
of
speak their minds,
(2)
promotion of empathy for differing ideas,
opinions and
world-views, and (3) the manner by which life experiences
are expressed. "Equal opportunity to voice one's concerns,
Ill
however, appears to be a fundamental premise of employeeowned companies."
(Gordon,
1994, p.
295)
The National
Center for Employee Ownership (1991) suggests four areas to
consider improving for effective communications.
They are:
1) have both parties try to view a situation from the
other's perspective,
2) employ varied media and be continuous,
3) provide feedback, and
4) provide multiple ways to allow effective
subordinate-initiated communications, (sic, p.14)
There seems to be a high level of commitment by the
employees to the company and a feeling that the company can
be a success. This is indicated by both the high scores on
the survey and observed comments during the study.
There
still remains a general desire for more participation in
the job related functions of the company.
Plans need to be
considered to give greater involvement by employees in this
area if job satisfaction is to be increased.
1986; Rosen et. al •
/
1986; Blasi, 1987; GOA, 1987; Klein,
1987; Bell, 1988; Stern, 1989)
that
"employees
(Quarrey,
are most
Rosen et. al • 9 (1986) found
satisfied when management
is
actively committed both to employee ownership and to worker
participation" (p. 103).
most
Eisenberg (1994) comments that:
contemporary
organizations
are
experimenting with some form of increased employee
112
participation and involvement,
These changes are well
reflected in the popular press, but .
.
. academic
theory and research have lagged behind practice. (P276)
As research catches up with practice, more efficient means
for
sharing
in
democratic
organizations
will
be
established.
While the company*s management team and mission are
only presently being formulated, Mohan’s warnings about
stable cultural formulations should be heeded.
Subcultural
elements need to be included to provide for a truly shared
"vision".
Symbolic restructuring of the culture needs to
be planned to incorporate organization-wide participation
and consent.
Plans for management to spend time in non-
authoritative atmospheres for fostering exchange of ideas
will help to shape a shared corporate vision.
The shaping
of this corporate vision should include the education of
all members by formulating well structured communication
plans,
which
transmission.
needs
to
be
will
help
guarantee
accurate
message
The establishment of shared terminologies
included in this
plan,
An analyses
and
restructuring of the communication channels will be an
important change at EFS.
Establishment of
a better system for posting and
monitoring Bulletin Boards seems to be indicated.
The
113
survey showed a high dependency on this information source,
but it was found to be an inadequate source to meet the
needs of the employees,
The information posted there was
either out-dated or missing,
Bulletin boards should be
purged of all out-dated information and letter heads, and
the EFS symbolism should be established to promote the
corporate image.
Rotation of the responsibilities for
posting notices might provide more inclusion of all staff
members.
Since EFS team sports are important to many employees,
an area should be set aside to keep all trophies and awards
on display.
Perhaps in the newly created education room.
The walls of this room could be used to display past and
present memorabilia.
A new format for the company newsletter, containing
more shared terminologies is also indicated by the observed
lack of understanding of the articles by many members of
the organization,
Soliciting contributions of articles
from all employee levels might help to establish guidelines
for
the
content of
the
newsletter,
The new computer
software available on today*s market could make production
and distribution of the newsletter less time consuming.
Contributions of art work and shared jokes might help to
make it more "real" to all employees. Results from team
sports could also be included, with the head of each team
114
presenting results to be added to the newsletter.
A
need
for
functioning of
education
ESOPs
is
about
the
structure
indicated by both
the
and
survey
results and the comments made to the researcher during the
study.
A program for educating the employees was being
planned at the time of the study,
but no data on the
objectives or results of this program were available during
the study.
included
It would be helpful if these classes also
instruction
relations,
making.
in
communications
the
areas
skills
of
interpersonal
and teamwork
decision
There is a demonstrated need for education about
the working procedures and needs of all department in the
corporation
expressed
among
its
acknowledged
the
employees
uniqueness
that
in
they had
no
Each
its
department
comments,
idea what
but
also
it was
like
elsewhere in the plant.
More
established.
face-to-face
offs
needs
to
be
This communication needs to be informal and
non-threatening.
communication
could
The use of electronic mail and computer
expedite
formal
meeting
situations.
Meetings need to be planned to include less print forms,
and more exchange of conversations.
More MBW (Management by Walking Around) is desired by
most of the production employees,
The CEO is respected for
his vision in leading the company to the accomplishment of
115
its ESOP foundation,
This fact should be utilized to
promote company unity.
Although it is time consuming, the
benifits of the CEO spending time on the shop floor would
increase perceived ownership.
employee owned culture,
For EFS to become a truly
demonstrations of commitment to
employee ownership ideals must seen.
The use of a voice
mail system for comments and suggestions to the CEO might
prove fruitful in saving time for the CEO, and also provide
for
the
inclusion
of
opinions
from
the
sub-cultures.
Answers to the voice mail could be included in the monthly
update by the CEO.
There is a need for creation of a feeling of unity and
shared vision for the corporation.
which
are
vision.
Events and celebrations
carefully planned could help establish
this
Many workers feel isolated in their job functions,
and there is a need to establish inclusion to provide for
unity of vision.
RECOMMENDATIONS FOR FURTHER STUDY
One of the complicating factors in conducting this
study was the difficulty in obtaining information on ESOP
research,
readily
The information which has been compiled is not
available
in
libraries,
purchased by the researcher•
further researchers.
and
much
had
to
be
This is a major obstacle for
Blasi (1992) comments upon the lack
116
of easy access to these materials.
Although some ESOP
centers have been created, the focus of these groups is
upon the corporate world, and little attempt has been made
to make their research available to academics.
Since the only current research on ESOP culture seem
to be Mohan (1993) and Harrison's (1994) work, there is a
vast area of ESOP cultural research yet to be explored by
further researchers.
The surge of new companies within the
last ten years may provide areas for these researchers to
investigate.
According to a personal conversation with
North East Ohio Employee Ownership Center in August of
1994, there are currently 10,000 ESOP companies with over
2,000,000 employees in them.
of
these
new
cultures
Exploration of the formation
offer
researcher to investigate.
areas
for
communications
117
END NOTES
1.Data from a personal conversation with the North East Ohio
Employee Ownership Center, August, 1994.
2.For a more complete detail of these and related acts,
Employee ownership resource guide. 1993. 84-89.
see
3.For an in-depth« explanation of the establishment and functioning
of ESOPs, see: Adelson, S. J.
& Berka, J. W. (1991). Employee
stock ownership plans.
Houlihan, Lockey, Howard & Zurkin, Inc.
Financial Services, Los Angeles, CA.
4.For sources of information on ESOP assistance consult Bell
(1988), Appendix A & B, the National Center for Employee Ownership,
2201 Broadway, Suite 807, Oakland, CA 94612-3024 or The ESOP
Association of America, 1100 17th Street, NW, Suite 1207,
Washington, DC 20036.
5.Statistics reported are based upon a personal conversation with
the Northeast Ohio Employee Ownership Center, August, 1994.
6.For further readings on participant observation, see: G.McCall &
Simmons (1969). Issues in participant observation: a text and
reader, Reading, MA: Addison-Wesley Publishing Company.
7.For a detailed discussion of this and the other psychoanalytical
J.C.
(1989).
Hunt,
aspects of ethnographic study see:
Psychoanalytic aspects of fieldwork. Newbury Park: Sage.
8. Information taken from personal interviews of Company executives „
and long time employees.
9.For an excellent analysis of humor in a shop setting, see:
Boland, R. J. & Hoffman, R. Humor in a machine shop. In Pondy, et
al. (1983). Organizational Symbolism.
10.For a complete analysis of the history of steel, see Fisher, D.
A (1963). The epic of steel. New York: Harper & Row. Also,
Wertime, T. A. (1962).
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Netherlands: University of Chicago Press.
Pon an insightful evaluation of Democratic Organizations see.
Harrison, T. (1994).
Communication and interdependence in
democratic organizations. In Communication Yearbook 17, pp. 247274.
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Van Maanen,
Employee ownership and democracy in
Social Policy. 12, (May-June) 16-23
(1988).
Tales
of
the
Chicago:
field.
University of Chicago Press.
Weber,
M.
(1947).
organizations.
Persons.
Wertime, T. A.
The
theory of
social and economic
Translated by A. M. Henderson and T.
New York: Oxford University Press.
(1962).
The coming of the age of steel.
Netherlands: University of Chicago Press.
Whyte,
W.
F.
(1991).
Social
theory
for
action:
How
130
individuals
and
organizations
to
learn
change.
Newbury Park, CA: Sage.
Williams, E.
(Ed.).
concepts,
(1976).
Participative management:
theory and implementation.
Publishing Services Division.
Administration.
Wilkins,
A.
L.
Atlanta, GA:
College of Business
Georgia State University.
(1983).
The
culture audit:
understanding organizations.
A tool
for
Organizational Dynamics
4, 24-38.
You can't get
Wilkins, A. L. , & Patterson, K. J. (1985).
there
from
here:
What
will
make
culture-change
In R. H. Kilmann, M. J. Saxton, & R.
projects fail.
Serpa (Eds.), Gaining control of the corporate culture
(pp. 262-91)
Zwerdling,
San Francisco: Jossey-Bass.
D.(1984).
Harper & Row.
Workplace
democracy.
New York:
131
APPENDIX
Appendix A
132
"THEORY O"
The personal commitment of the person at the top of the
organization is essential.
A set of written values embodying your commitment to
employee ownership is an important starting point.
Symbols of
important.
how
everyone
is
treated
as
an owner
are
The people who have the most expertise about an area should
be the ones making decisions about it.
If employees are to participate in decision-making, they
need training to develop necessary skills.
Information should be shared not just from the top down but
from the bottom up as well
Participative decisions take more time to make but less
time and effort to implement.
There are no pat formulas for implementing the ownership
What works for one company may not work for
theory.
another, or even for the same company at different stages
of its development.
Taken from Beyond Taxes
(1991), page 37
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APPENDIX C
134
SURVEY
PLEASE CHECK ONE ANSWER FOR EACH QUESTION
1-STRONGLY DISAGREE
1.
3
4
5
2
3
4
5
2
3
4
5
I do not feel like a real owner in this company.
1
5.
2
Employee owners at this company work hard at their jobs
1
4.
5-STRONGLY AGREE.
I care about the survival of this company.
1
3.
3-NO OPINION 4-AGREE
The job I do is important to the success of this company.
1
2.
2-DISAGREE
2
3
4
5
The employee stock ownership plan is an important factor in my
decision to work for this company.
2
6.
3
4
5
I feel I do not have a good understanding of our employee
stock ownership plan.
2
7.
3
4
5
I have a good understanding of our company's financial report.
2
3
4
5
135
8.
X would be interested in attending an in house class on
the employee stock ownership plan.
2
9.
3
4
5
I would be Interested in attending an in house class on
understanding the financial report.
2
10.
3
4
5
I get most of my information about the company from the
bulletin boards and newsletter.
11.
5
4
3
2
I get most of my information about the company from my monthly
meeting with Mr. Concoby.
12.
5
4
3
2
I get most of the information about the company from my fellow
i
worker*•
i
2
13.
3
5
4
I do not get the information I need about performing my
job from my foreman.
2
3
4
#•
5
136
PLEASE CHECK ONE ANSWER FOR EACH QUESTION,
1-STRONGLY DISAGREE 2-DISAGREE 3-NO OPINION 4-AGREE 5-STRONGLY AGREE
14.
I an not well informed about how the company Is run.
2
15.
3.
4
5
What I have to say about work is listened to by those above
i
me.
2
16.
3
4
5
I am not well informed about what goes on in other parts of
the company.
2
17.
3
4
5
Employee ownership has been a good change for this
company.
2
18.
5
3
4
5
People in this company work together to accomplish a job.
2
20.
4
Hy ideas and suggestions are not important to this company.
2
19.
3
3
4
5
This company can be successful in the future.
2
3
4
5
137
21.
I do not understand the gain sharing plan.
2
3
4
5
i
22.
I understand the profit sharing,plan.
2
3
4
5
PLEASE CHECK YES OR NO
I read the company newsletter.
yes
no
I read the bulletin boards.
yes
no
I participate in stock holder voting.
yes
no
Number of years with the company.
more than three years,
Age
18 — 25
26---- 35
36---- 45
Please check
three years or less
46---- 55
55---- Over
APPENDIX D
138
INTERVIEW RELEASE FORM
^
conducting research on communication in Employee Stock
Ownership Plan Corporations (ESOP's) to better understand how they
differ from traditional corporations.
My proposed study has been reviewed and approved by the Human
Subjects Review Board of Edinboro University.
I am asking for
volunteers to take part in the study, and would like you to take
part in the study. Your involvement is entirely voluntary and you
will not be penalized in any way for not volunteering.
Your
involvement is an undetermined amount of time starting in April,
1993 and lasting for five months. You may be periodically asked
questions during that time to help me learn about your work place.
You have a right to full and complete information about this
project. If you decide to participate, you are free to stop at any
time without penalty of any sort.
Information on Edinboro
University policy and procedures for research involving human
subjects can be obtained from the Human Subjects Review Board,
Development and Planning Office. Administration Building, Edinboro
University of Pennsylvania, 16444.
For this project you will be asked to do the following:
* Fill out a questionnaire-the information from which will be
shared as final totals only.
* Answer questions about your job and how it relates to the
functioning of your company.
* Relate stories you remember about your job and the company.
The final data will be shared with all participants in a not
yet determined, but appropriate manner. The benefits to you will be
a better understanding of the functioning of Erie Forge and Steel
All of the
and how it functions as an ESOP corporation,
information gathered in this study will be kept confidential in the
following manner:
Every effort will be made to disguise the
sources of any particular information. My interest is not in
individuals, but in the organization as a whole.
All data and
notes will be kept by me solely for the purpose of this study.
I and others listed below will answer any questions you may
have regarding procedures or any other aspects of the study.
Betsy Fogarty
(814) 866-9342
Dr. Kathleen Golden
(814) 732-2528
139
ESOP STUDY INTERVIEW RELEASE FORM
I have been briefed by the project director in detail on this
project and understand what my participation involves. I agree to
participate with the understanding that I may withdraw at any time.
Date
Subject's Signature
Witness Statement:
I have witnessed the consent process and believe that the
subject has been fully informed, understands the project and
his/her role, and has agreed to voluntarily participate.
Date
Signature of Witness
APPENDIX e
WHAT’S
COIN ci n n
03/22/93
****
9
increasing our sell price to cover the increased cost of our raw materials,
energy and health care. „ We must continue to -look for ways to*.lower our
overall cost of operation..The-bankruptcy plan of reorganization has been
filed for Edgewater and a preliminary hearing is now scheduled for April 14.
The final hearing should be held in mid-June.
operations
(by
) • • • • With
volume continuing to be low through
the Forge and Heat Treat Departments in February, departmental variances for
February were disappointing,
although Melt,
Finish, Roughing and
N.D.T. /Inspection had their best performance for several months,
Volume
throughout the shop should show improvement in March. Error and Defects were
high in February, in part due to the problems'we have experienced in the.Melt
Shop. This will have a direct effect on our gainsharing performance. Melt
backlog continues to be strong, although commercial component work continues
to be almost non-existent except for back-up rolls. The casting project with
Whemco continues to progress, and a decision should be reached in the next
few weeks on this being a definite go ahead project. Quality of product to
and
Edgewater.continues to improve, particularly with the efforts of I
in manning the Midwest Grinder so effectively. Cleanliness of the
shop is still not where it should be---- particularly in the Melt Shop Pit
and Forge Shop areas. A new Dresser Rand bulldozer was delivered to the Melt
Shop, two new small pear plates and three spacer plates. Twelve 16-1/2" x
240" molds will arrive in the month of April.
COMPONENT SALES (by
9 ... .Representatives from EFS will . be
attending a seminar hosted by NAVSEA on March 24 and 25, 1993. This seminar
is for all navy shaft manufacturers and concerns the policy parameters
demanded by NAVSEA, the difficulties with compliance and discussions on
various manufacturing procedures. We anticipate that the results of this
meeting will necessitate revisions to our present operation sequences.. .EFS
was awarded a contract by NAVSEA for 3 spare 688 class shaft assemblies.
Total contract is in excess of $2 million. .. .We will be meeting with General
Dynamics on March 26 to discuss our continued involvement with the navy s
composite shaft program. We expect an order will be let for a prototype
composite shaft by the end of this year:
STEEL SALES
fbv
Bookings for January finished at $2.6
;
million.
Year-to-date we have booked $10.8 million in steel Products.
Edgewater's bookings continued to run at $900,000/month. Booking leaders
were:
National Forge @ $100,000 of ingot,
® §370'000
Thyssen ® $220,000 of block, and Tube Supply § $150,000 of bar. Scot■
bought their first ingot from us and Brooker Brothers bought a truckload of,
billet, which is their first order from melt....Our bookings continue to b
strong in ingot, billet and block.
Our bar business has slowed down,
primarily due to U.S. Metalsource who is in the process of liquidating, We
win replace their business in time with alloy & tool steel bar.
Newsletter #75
-2-
141
03/22/93
gwrey/ma flaaaMfflao: r^y
•. - Production schedules for the fiscal
March call for the completion of 3 shipsets—DDG59, DDG61 & DDG62. Each tie
a shipset is completed, we are able to bill the customer for revenue that was
previously unbilled. In simpler terms, completing a shipset generates extra
cash. Completing 3 shipsets within the same month will provide a substantial
boost to our cash flow. As of this writing DDG59 is complete, and DDG62 is
finishing up in final- inspection.
The . 2 remaining shafts on DDG61 are
receiving careful attention by all involved in their processing. In addition
to the DDG shipset completions, we completed and shipped 2 Trident shafts on .
sales order 6797'which allowedus to bill General- Dynamics over -$200,000 on
a milestone billing....Production Planning and Operations have been working
together to implement capacity planning techniques in the machine shop.
Preliminary results suggest that this will be a powerful 'tool for us, with
the ultimate result being improved customer service and better throughput.. .
.. .Information Systems has been working to improve our computer response
time.
We purchased and installed additional memory which had a positive
•impact.
In addition, after studying the data collection "out" punch, we
determined that it could be improved by a rewrite which was completed and
installed during the first week of March. Further response time, improvements ’
are now in the planning stage.
«'•
QUALITY ASSURANCE
(by
.. .Westinghouse-Cheswick will be in on
March 25-26 for an audit of our Quality Assurance System.
There is an
opportunity for 6 more shell & flanges. ABS/GE will be in on April 1 for a
routine audit of our QA system... .EFS audited 3 of our' suppliers in March:'
Sandusky -Foundry, Dyson Corp. and American Hollow Boring. All 3 continue to
be approved vendors.... The current waiver dollars are holding steady at $1.1 .
million, with the YTD average at $1.6 million. This is down from 1992’s
average of $2.1 million... .One heat of 410 stainless steel for Viking
Metallurgical Corp. has been processed with acceptable heat qualification
tests. A second heat has been melted, with a third heat to follow. We have
unsuccessfully melted several heats trying to meet the customer's minimum
quantity requirements for this order. There is a potential for approximately
1 million more pounds of 410 stainless to be purchased by Viking, depending
upon our material's quality and whether we can meet delivery requirements!
HEALTH AMD SAFETY (by
j .. • • In the first quarter of 1993, we have
sustained 31 lost days due to shop injury. All of those days are due to one
accident.
Our goal for the 1st quarter is to hold our days lost due to
injury below 65. With less than 2 weeks remaining, it appears that we'll
meet the goal and all shop employees will be awarded a portable first aid
kit___ Recently placed in the melt & forge departments are 5' x 6' water gel
burn blankets.
These blankets were put in place for the treatment of
traumatic burns. They are far superior to the older petroleum-based burn
dressings. Rapid application of these blankets to a burn victim reduces the
severity of their burns and does not require the debriding process that was
necessary with the older style dressings.
They also have the ability to
&
suppress burning clothing when applied. Thanks to
for this life-saving ideal___ Many of the dispensary visits lately have been
due to foreign bodies in eyes. A reminder that proper eye protection must
be worn at all times. The gift of sight is precious, so do all you can to
maintain it • • • • and remember • • •
SAFETY-SAFELY: THE WAY TO BE IN 1993!
w
Newsletter #75
-3-
03/22/93
pUMAN RESOURCES
(by
• • • • Welcome to ____
, melt shop
general foreman, and
/ ESR melter who have joined the company
recently • • • • Happy 20th shop anniversary this month to
and
fe. May you have many more!....The bloodmobile was here on March
16th« We .donated 17 pints of blood • The van will return on July 8th • • • •
• • • • Our 3 free counselling sessions through our Empldyee Assistance Program
are now available to immediate family membefrs. if you, your spouse, or your •
children havejprobidms Tof any kind, please feel free to callat
—tor - a confidential appointment.'.. .2 MOTES f 7OR -YOUR.. PLANNIUG,PURPOSESj .'The;.plant' and offices will be closed on Monday,' July 5th, in'
celebration of the 4th of July holiday.-.. .-.Secondly, vacation pay-will only
be paid , when vacation time off is taken. . Unused vacation will be paid on
November 15th. Therefore, there.will Joe no. vacation checks'issued to people
who work during shutdown. This is different than the last couple of years,
but it's in accordance with the contract...."Over-the-hill" birthdays this
on the 29th, and
on the 25th,
month include
on the 30th • • • • Don't forget the company bowling tournament that's
scheduled for April 3rd. Please turn in your entry & money
by
___ to
WJtB
sons did well .
and
.Wednesday, March 24th • • • «
was on the county
bn their high school wrestling teams.
’''placed 3rd in the sectionals.
championship team and
Congratulations!.... Finally, just a reminder to all — April 9th, (Good
Friday) is not a holiday for us.
TO THINK ABOUT:
it today.”
"The vay to have a better tomorrow is to start vprfcing on
;
i
i
143
GROWING
up IS
/•
\•
1
; use drugs in order to escape from
unpleasant emotions or feel more ' ■*. / .
confident—particularly if they often ! r
; . feel shy or insecure about how they . i\.
/look and act.
4
/
i
■n'
••
• Fa* ■ ■—zr^r—
* 1 ;•
■C/T-4
ru
i; :
HARD TO
DO
i
m '
K'i.r ,
> What To Look For
i
f;'.:
I.
*
V-:VV-.
Here are some symptoms to watch *
for if you believe your teenager may ■
v be using drugs: '
* :*•
/ Discipline problems, constant
,
arguing, lying and irresponsibH.:
'• ity.
Teens,
Drinking &
Drugs
✓ Isolation, secrecy and less
involvement in family activities.
: ,/ • *
✓ New interests and friends—
especially older friends.
/ Bad grades or poor school
More than ever children face great
attendance.
pressure to try alcohol and other
. / Hyperactivity, drowsiness or
drugs. Whfle some parents believe
forgetfulness.
that alcohol is less dangerous than
drugs, die truth is that alcohol is a
drug, and it is the drug of choice for ‘ / Depression or mood swings.
most teens. By educating yourself
✓ Change in speaking patterns.
about teen drinking and drug use,
✓ Weight gain or loss, junk-food
you can help your teenager make
cravings.
wise decisions.
/ Bloodshot eyes, use of eyedrops
or incense, runny nose or coughWhere Drug Use Starts
ing.
Teenagers use drugs for many
/ Odd small containers in pockets
reasons. But their first notions
or purse.
about them may come from the be
havior of their own families. To help
/ Money problems.
prevent them from abusing drugs,
parents need to provide teens with
✓ Alcohol drugs or possessions
plenty of love, good communication
disappearing from die house.
and calm and consistent standards
✓ Drug paraphernalia, such as
about drug and alcohol use. Even
pipes, papers and razor blades.
then, teens feel a need to fit in with
their peers. They may be influenced
✓ Needle marks.
by ads and news stories which
imply that everyone drinks or takes
✓ Tremors.
other drugs. Adolescence is a
✓ Hallucinations or delusions.
confusing time at best Some teens
To help prevent them from abusing . T*
drugs, parents need to provide teens '
with plenty of love, good
communication and calm and
consistent standards about drug and
alcohol use. ^
What To Do
Here are some steps you can take if
you believe'your teenager has a
drug or drinking problem.
✓ Learn more about alcohol, other
drugs and dependency.
✓ Find out about drug treatment
programs available to your teen
and your family.
✓ At a time when you can remain
calm and your teen is sober, talk
calmly and honestly about the
changes you see and about the
harmful consequences of drug
abuse. Talk about seeking treat
ment together.
/ Do not shield your teen from die
effects of drug abuse.
/ Take good care of yourself. Get
plenty of rest Eat properly and
exercise.
/ Talk with other parents and join
a support group.
□
omo PMJCT MTCRKATOUi
A SERVICE OF YOUR EMPLOYEE ASSISTANCE PROGRAM
FOR CONFIDENTIAL ASSISTANCE PLEASE CALL
PHONE *
OR *
OR FOR EMERGENCIES
Or
APPENDIX f
EFS
ERIE FORGE AND STEEL, INC.
memorandum
144
September 6, 1990
TO:
FROM:
SUBJECT:
All Employees
Z
MEETING SCHEDULE FOR RETIREMENT SAVINGS (401K) PRESENTATION
On Monday and Tuesday, September 17 & 18, Mr.
__
from Marine Bank will be here to explain our retirement
savings and 401 (k) plans that will go into effect with the formation
of Erie Forge and Steel. It is extremely important that all
employees attend their scheduled meetings. At this time, you will
designate a beneficiary for your retirement savings plan; as well as,
receive a detailed explanation of the savings options for the
voluntary 401(k) plan. After the formal presentation, there will be
time for questions of a general nature about both plans.
Except as noted, all meetings will be held in the safety training
room. Please be prompt.
MONDAY, SEPTEMBER 17, 1990
8:00 a.m.
All salaried employees — in the board room.
9:30 a.m.
1/2-Finishing, Tool Room, and support people.
11:00 a.m.
1/2-Finishing, Tool Room, and support people.
1:30 p.m.
Shipping, welding, yard, stores, H.T • 9 inspection.
met lab, instrumentation, all local 3186.
3:00 p.m.
All 2nd Shift
TUESDAY, SEPTEMBER 18, 1990
6:00 a.m.
All 3rd Shift
7:30 a.m.
Forge, Melt*, and any 1st shift employees who did not
attend on the 17th (please notify your supervisor that
you are attending).
9:00 a.m.
Maintenance, Roughing and Boring
♦Melt employees may attend at 6:00 a.m. if work schedule permits.