I made two pretty significant changes. First, I set up some labor/management committees, each consisting of shop supervisors, trade people, and a shop steward. Second, I created what I called “profit centers” to substitute for work standards in the central repair facility. The results were phenomenal.

The speaker was Emanuele Sponza, Director of The Bureau of Motor Equipment of the Milan Sanitation Department. The Bureau was responsible for maintaining the Sanitation Department's 5,000 vehicles. It had about 1,200 employees and an operating budget of about € 38 million. It operated 75 repair garages located throughout the city, and one central repair facility.

BACKGROUND

Two years prior to Mr. Sponza’s assuming the position of Director, the central repair facility used a series of negotiated work standards that covered practically every job, from rebuilding an engine to fixing a generator. At that time, according to a report of the Italian Financial Control Board, conditions in the facility, and in the entire Bureau, were chaotic. On an average day, over half the vehicles it was responsible for servicing were out of service, resulting in huge amounts of overtime pay for the personnel assigned to the remaining vehicles. Mr. Sponza commented:

I was placed in charge of the Bureau almost immediately after the mayor received the report from the Financial Control Board. I spent a few weeks discussing the problems with everyone from supervisors to mechanics. No one seemed happy. The mechanics thought that the work standards were demeaning, and the supervisors complained that the effort needed to enforce them was oppressive. Clearly, some sort of radical change was needed.

Mr. Sponza decided to begin with the central repair facility, where the problems seemed to be the most serious. Rather than attempting to solve the problems himself, however, he created eight labor/management committees, one for each of the facility’s eight departments (usually called shops): transmission, axle and related, upholstery, radiator, exhaust system, brakes, electrical system, and engines. He commented:

I gave the committees a mandate to solve problems, improve the quality of work life, and increase productivity. I instructed them to meet monthly with the manager of the facility to recommend improvements. Early on, it became apparent that committee members were concerned that if they suggested ways to improve productivity, and if their suggestions were implemented, management would subsequently adjust the work standards upward. So there was a lot of distrust. We seemed to be at an impasse. That was when the profit center idea occurred to me. Of course the idea took some selling, but in the end the committees accepted it. . . .

Assignment

1. What are the strengths and weaknesses of the system that Mr. Sponza developed for the central repair facility?
2. Records on performance by individuals or on costs for individual jobs were discontinued. Do you agree with this policy?
3. What recommendations, if any, would you make to Mr. Sponza concerning the system he has developed? How might you improve on it?