6.-7 Nov CMR267 Work Cells With Staying Power - Lesson For Process-Complete

CMR267
10/1/03
F a l l 2 0 0 3 | V o l . 4 6 , N o . 1 | R E P R I N T S E R I E S
California
Management Review
Work Cells with Staying Power:

Lessons for Process-Complete
Operations
Nancy Lea Hyer
Karen A. Brown
© 2003 by The Regents of

the University of California
This document is authorized for use only in PAD's SENIOR EXECUTIVE 2022-2024 DO at Universidad De Piura (PAD) from Jul 2022 to Jan 2023.
Work Cells with
Staying Power:
LESSONS FOR PROCESS-
COMPLETE OPERATIONS
Nancy Lea Hyer

Karen A. Brown
L
ooking back over 100-plus years to the work of Max Weber, Freder-
ick Taylor, Charles Babbage, Chester Barnard, Lillian Gilbreth, and
many other organizational luminaries, we find a nearly continuous
theme of reflection about the arrangement of work. Some of these
reflections focus on macro-level organization structure and others involve the
arrangement of tasks that provide value to customers through production or
service delivery. Regardless of the level of analysis, the repeating questions seem
to be:
▪ “Should we group people (and other entities) by function?”
▪ “Should we group people (and other entities) in multifunctional arrange-
ments that serve the needs of a particular client/product/service
category?”
At the macro-level, such questions frequently lead to the creation of
hybrid matrix organization structures, intended to serve the needs of projects
and functions simultaneously. At the micro-level, enterprises are increasingly
moving toward process-complete or lateral arrangements, often called work
cells. The latter approach, our focus in this article, has produced widely
acknowledged advantages in quality, cost, throughput time, and flexibility,
both in manufacturing and service environments.1
Much has been written about work cells—e.g., advantages, challenges,
assignment methods, workload balancing, and implementation strategies. Our
purpose here is to consider how an organization can maintain cells such that
they continue delivering intended benefits over time. Even well-designed cells
can flounder, often drifting back to less-effective functional arrangements (a
tendency we call “functional drift”—see Sidebar 1).
CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003 27
Work Cells with Staying Power: Lessons for Process-Complete Operations
Following, as points of reference, are descriptions of two cell

arrangements, one in a white collar service setting and the other in a manufac-
turing environment.
▪ A Fortune 500 company that designs, builds, and sells large, complex
industrial equipment has implemented and sustained 22 engineering
change-order cells over a period of five years. Under the previous system,
change orders spent weeks routing from one department to another (e.g.,
from drafting to manufacturing to engineering to tooling to cost estimat-
ing to quality and so forth), typically spending much non-value-added
time in desktop queues. Under the new system, engineers and drafters
have been brought together in three- to seven-person cell arrangements.
Their desks are configured so that all team members can see and easily
communicate with each other. Work flows from station to station follow-
ing a “pull” type of material flow discipline. Average processing time has
dropped from over two months (with a large standard deviation) to one
day, and errors have diminished to nearly zero.
▪ The “Sunburst” cell at a medical equipment manufacturer assembles and
tests complex medical test equipment. Prior to the cell’s implementation,
the entire manufacturing facility was arranged as a job shop, with similar
activities grouped together (e.g., fabrication, assembly, and test). Large
batches of different products traveled from area to area depending on
their specific production routings and
Nancy Lea Hyer is an Associate Professor of following a “jumbled flow.” The cells,
Management at the Owen Graduate School designed with significant employee input,
of Management at Vanderbilt University.
<nancy.lea.hyer@owen.vanderbilt.edu>
operate in stark contrast to the previous
configuration. The “Sunburst” cell, for
Karen A. Brown is a Professor of Operations
and Project Management at the University of example, has six stations arranged in three
Washington, Bothell. <kab@u.washington.edu> face-to-face pairs where operators work on
opposite sides of the same unit then pass it
to the next pair of stations. Each assembler can work at any of the assem-
bly stations, assisting co-workers as required. The team is self-managed
and performs all activities from material control to inspection to process
improvement. Quality has improved and throughput time is a fraction
of what it was under the old system.
These two examples represent work cells that were not only designed and
implemented effectively, but also have stood the test of time. Their longevity
appears to be attributable to the universal factors we have identified through
our observations and analyses.
Although work cells have been in use since the turn of the 20th century,
the real growth in application occurred in the 1990s, primarily in manufactur-
ing.2 According to Industry Week’s 2001 census, manufacturing cells have been
“widely adopted by one in five manufacturers.”3 Other studies report even
higher rates of adoption, noting that between 43% and 50% of manufacturing
firms in the U.S. and U.K. have cells in place.4 Outside manufacturing, compa-
nies are just beginning to leverage cell concepts. Anecdotal reports reveal appli-
28 CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003
SIDEBAR 1
Functional Drift: An Organizational Phenomenon
Organizations develop process-complete or lateral forms of organizations with good inten-
tions, but for a variety of reasons people display an inclination to move back to functional
forms. Functional drift describes the tendency for people to drift into groups whose members
present characteristics similar to their own.We have observed this phenomenon on factory
floors, in new product development, and in macro-level organization structuring.
We have witnessed several instances where organizations move to cells and then back to a
functional arrangement. Demands for highly customized products that are not easily made in
existing cells can motivate a return to a seemingly more flexible job shop style organization.
Similarly, a decline in cell product demand or a change in product or process technology that
leap-frogs cell capabilities can motivate a return to a functional arrangement. Some organiza-
tions have reverted to a functional layout because they felt the training required to keep oper-
ators multifunctional exceeded the benefits from cells. Many seem to view a functional
arrangement as “the answer” to any sort of challenge or adversity.
We have asked ourselves why functional drift occurs, and based on our observations we have
uncovered several factors that seem to drive it.These fall into two categories—those of a
human or social nature and those of a business or technical nature:
Human and Social Factors Driving Functional Drift

• Human affiliative needs; we like to be with people who are similar to us.
• Desire for professional information exchange with peers; learning from others.
• Career progression; in most organizations, if one is separated from one’s functional area,
he or she may go unnoticed when it comes to performance reviews and promotions.
• The comfort that comes with hierarchy; if people are in the ivory tower and separated
from the hoi polloi, they gain a sense of comfort about their own superiority and relative
power. In particular, this causes engineers to drift back to their functional homes.
• Employment mobility; depth of knowledge and experience in a particular functional area
(as opposed to shallower knowledge across a wider set of skills) may give someone more
of a “leg up” on the job market, particularly in white collar and professional categories.
Business and Technical Factors Driving Functional Drift

• Difficulty of creating and maintaining multi-functionality compared with the ease of main-
taining employee mastery in narrower functional specialties; particularly in environments
characterized by rapid turnover in employees.
• Desire to reduce costs of supervision. (They believe that a supervisor can more easily
manage a homogeneous set of resources.)
(continued on next page)
• Company concerns about loss of skill level depth. (The company may be concerned that
skilled workers will lose their edge if they are not focused exclusively on their specialty,
but are instead doing broader jobs).
• Desire for greater flexibility in resource use. (There may be a desire to be able to use
equipment and people for any work, not just the work assigned to that particular cell.)
• Desire for higher utilization of key resources. (There may be a desire to have cell equip-
ment and personnel, especially expensive equipment and personnel, more fully loaded.)
Although all of the above reasons can emerge as excuses for a return to a functional orienta-
tion, we would argue that in most cases they do not provide adequate rationale. Organizations
that adhere to the principles of cells with staying power can counter these arguments in most
cases.
cations in bank loan processing, health care delivery, insurance claims process-
ing, product design, order processing, and other administrative and service
processes.5
What Is a Work Cell?

A work cell is a small group of technical and human resources closely
located and dedicated to processing a family of similar parts, products, informa-
tion deliverables, or services.6 Items qualify as family members based on similar-
ity in processing steps. Thus, the engineering change order (ECO) cells described
above are dedicated to a particular type of engineering work—the verification,
documentation, approval, and implementation of changes to designs for current
products. Cells are responsible for the start-to-finish processing of the family and
include all the technical equipment and human skill sets necessary to complete
the required work. The cells are designed and staffed to meet an expected vol-
ume of work sufficient to justify allocating resources exclusively to these
activities.7
Cells are considered to be a type of lateral organization8 or process-
complete9 operation, where work is organized by outcomes. This arrangement
is quite different from the traditional functional organization (called a “job
shop” in manufacturing contexts) where similar processing activities are located
together and work is organized by means.10 Figure 1 depicts this contrast graphi-
cally. The shaded boxes represent different types of processing entities, which
in a manufacturing setting might be machines, tools, equipment, and/or people.
In a service environment, these processing entities are more likely to be people
with specific skills, but might also include equipment of a particular type. Hos-
pitals, for example, often are organized functionally such as the configuration
shown in Figure 1a. Thus, the radiology department (a processing entity) would
include radiology technicians, radiologists, and radiology-specific equipment
located together and separate from other departments (processing entities) such
FIGURE 1. Functional versus Lateral Organization Types
a. b.
Functional Type Lateral or Process Complete Type
Entities are arranged by type or function. Entities are mixed. Each cluster serves a
Each product or service may require a particular outcome or outcome category
different routing through the system, and is typically arranged sequentially.
leading to a jumbled flow and, typically, Arrows imply direction of flow. Family
long lead times. However, the arrangement members require the same processing
does offer a high degree of flexibility for steps and are completed, start to finish,
accommodating many different types of within the cluster. Cells are an example
products or services. of this architectural form.
as the pharmacy or laboratory. In the course of care, patients typically receive

services from an array of departments located across the hospital. In contrast,
the two case examples described at the beginning of this paper illustrate the
cellular work organization depicted in Figure 1b. Here, resources needed for
start-to-finish service delivery or item production are located together.
Space,Time, and Information Linkages

In an earlier paper, we described the criteria for distinguishing real cells
from other organizational forms.11 We discuss them briefly here because they are
the foundation for our exploration of cells with staying power. Before a cell can
move into a sustaining mode that stands the test of time, it must meet three
criteria. In addition to dedicating productive resources to a family of similar
work, a “real cell” links tasks and those who perform them in terms of space,
time, and information.12
▪ Space Linkages: Cell resources must be located closely together.13 More-
over, proximal human and technical resources must include all the neces-
sary skill sets and processing capabilities a product or service family will
require.
▪ Time Linkages: Both the physical layout of the cell and its operating rou-
tines must permit work to flow expediently from one station to the next.
SIDEBAR 2
How Does a Work Cell Differ from an Assembly Line?
Assembly lines and work cells have some characteristics in common—both organize multiple
functions together to serve the needs of a particular product or service type. Although there
is a gray area between the two types of work arrangements, cells may be distinguished as
follows.
▪ Cells offer more flexibility in that they typically can produce a range of service or prod-
ucts within a family. Assembly lines commonly are dedicated to just one product.
▪ Cell workers normally perform a broader range of tasks than the more narrow roles
typical of assembly line work.
Cells often are described as a hybrid that combines the focus of an assembly line with the
flexibility of a job shop functional arrangement.
Thus, closely locating equipment but continuing to build in large batches

would negate many of the advantages associated with cells.14 Large
batches contribute to long lead times and create excessive time gaps
between error creation, error detection, and error correction.15
▪ Information Linkages: A cell should be configured and operated such that
information about the work being processed flows easily. If equipment is
close together, but the shape of the arrangement or physical barriers pre-
vent people from seeing or speaking to one another, exchange of infor-
mation needed for feedback and problem solving will be impeded.
Cell size has a bearing on these three critical linkages—space, time, and
information.16 The larger the cell—in terms of both equipment and operators—
the less likely that tasks and those who perform them can be co-located physi-
cally. Some operations will be nearby, but the large physical footprint means that
certain operations will be physically remote from one another. Moreover, as a
cell grows larger to include more operations and steps, the lapse in time between
initial and concluding operations will increase. As the number of workers in the
cell grows, it becomes increasingly difficult to share information among all oper-
ators.17 Although it is not possible to suggest a specific cell size, research indi-
cates that when group size exceeds 10, task groups begin to break down.18 In
addition, once group size exceeds 5, decision quality begins to diminish.19 If a
cell becomes too large, space, time, and information links deteriorate and it
moves more toward being an assembly line (see Sidebar 2).
Cells with appropriate space, time, and information linkages are what we
term “real cells” and have the greatest likelihood of generating substantial bene-
fits. Cells that do not adhere to these criteria likely will under-perform. Consider
the following example:
In the early 1990s, one company created cells to assemble families of
automotive components. However, most cells still had certain processes
that were “off line”—located in an area adjacent to the cell, but where
operators were not able to see or communicate with cell co-workers. In
addition, each cell was staffed by about 14 operators. The size (e.g., num-
ber of operators and stations) and the dispersed physical arrangement
weakened the space, information, and time linkages.
Cells were assessed using metrics (e.g., equipment utilization rates,
material and labor variances, and efficiency measures) developed for
the functionally oriented departments they replaced. Needed operational
information on cell performance (e.g., cell lead times, defects, scrap,
changeover minutes, downtime, training and worker skills inventories,
and attendance) was not available to drive improvements. Thus, the
information linkage was further compromised.
In addition, batch sizes remained relatively large, creating significant in-
process inventories and queues between stations. Extended lead times
weakened time linkages, undermining feedback systems.
These work arrangements were not designed and operated as “real cells,”
and, ultimately, they disintegrated as they succumbed to the forces of
functional drift. In retrospect, those close to the situation acknowledge
that management “really didn’t understand the cell concept.”
The real cell characteristics described above—dedication and tight link-
ages—form the foundation for our model of cell success. Designing cells with
these characteristics is difficult enough, but maintaining dedication and tight link-
ages in the face of changing conditions requires discipline and dynamic response
capability. Cells with “staying power” are those cells that continue to support
organizational objectives long after they are created. These cells have the
dynamic attributes that allow them to battle the forces of functional drift.
Research Methods
Our research is based on a longitudinal study of 16 firms over a span
of more than 10 years. Our approach is best described as framework, or theory,
building.20 We were not testing particular hypotheses, but rather were attempt-
ing to discern patterns across organizations and over time. The existing literature
on organization theory and design, combined with more focused literature on
cell manufacturing, provided the grounding for our observations. In keeping
with case-based research protocols,21 we selected organizations in a deliberate
manner, identifying those reported to be using cell concepts effectively. Some
proved to be more effective or well sustained than others, providing us with
helpful contrasts. In most firms, we were able to make multiple visits, but in
others we extracted historical information from intensive single visits. Extensive
semi-structured interviews and observation of shop floor or office activity also
were central to our methods. We have disguised the names of participating firms
because of the sensitive nature of some of our findings.
FIGURE 2. Building Blocks for Cells with Staying Power
Maintain an
Appropriate
Measurement System
Design and Maintain a

Dynamic Supportive Infrastructure
Attributes of
Cells with Ensure that Design and Climate
Staying Power are Primed for Adaptation
Leverage the Cell’s Power for

Continued Process Improvement
Involve Employees
Cell Design Real Cell Design:

Foundation Space,Time, Information Linkages
Cells with Staying Power: Key Research Findings

As we visited companies, observed activities, interviewed key personnel,
and triangulated our results, we recognized five universal themes characterizing
cells with long lives and absent in situations where cells floundered or were
disbanded. These appear as the building blocks in the pyramid in Figure 2. The
dynamic factors listed below build on this foundation and are summarized in
Table 1.
Involve Employees
Often, a move to cells means substantial change in job responsibilities
of operators, but also of supervisors and support groups. Cell operators may be
required to learn multiple tasks, rotate among work stations, become skilled at
giving and receiving feedback, and match the pace of their work to that of pre-
vious and subsequent stations (e.g., as is required by the pull material flow
disciplines typically used in cells).22 Moreover, operators in cells can “own”
the start-to-finish production of cell outputs. This is not possible in process-
incomplete architectures (i.e., job shops) where responsibilities are fractionalized
and operators see only their single step in the process. These changes in operator
job responsibilities may represent a marked departure from prior ways of work-
ing23 and may threaten the traditional roles of supervisors. In addition, where
operators assume responsibilities for indirect labor tasks (e.g., materials manage-
ment activities, maintenance and housekeeping activities, and quality assurance
activities), support personnel may need to adjust their work sets as well. Pre-
dictably, these types of changes can lead to resistance—resistance rooted in a
TABLE 1. Principles of Work Cells with Staying Power
To Create and Sustain Cells over Time:

• Involve Operators: They will have insights to offer and a vested interest in designing a well-
functioning cell. Moreover, participation in design and implementation will help prepare operators
to improve and adapt the cell over time. Ownership is critical.
• Leverage the Cell’s Power for Continued Process Improvement: Create a culture that
makes the most of the cell’s rich potential for ongoing improvement.
• Ensure that Design and Climate Are Primed for Adaptation: Think flexibility. Cells
that are positioned to adapt over time will have a greater life expectancy. Adaptability tactics
include: movable equipment, cross-trained workers, a mind-set of quick response, and so forth.
• Design and Maintain a Supportive Infrastructure: Maintenance, engineering support,
material planning and control, compensation, and information systems must fit and support the
new cell architecture.
• Maintain an Appropriate Measurement System: Select a balanced set of customer-
focused metrics and make them available to operators.You get what you measure.
number of potential sources, the most significant of which tend to center around
loss of power and fears about job security.24
Perhaps the most important strategy for easing the move to cells is to
involve operators in the design and implementation process itself. Consider the
following example: In the early 1990s, “Carnelian Electronics” reorganized its
entire assembly operation by creating several cells. The redesign was highly par-
ticipative: following classroom and hands-on training in cell concepts, about 30
of the assembly department’s 100 employees served directly on one of several
design teams that developed the high-level plan for the work organization.
Moreover, an extensive communication campaign kept those not directly
involved informed of the redesign’s progress. Operators themselves, working
within broad parameters laid out by the design teams, were given the responsi-
bility for determining layouts, work methods, operating routines, and so forth.
The cells were successfully implemented and continued for many years to yield
significant improvements with respect to lead time, quality, and cost.25
In contrast, Carnelian Electronics’ earlier ventures into cells illustrate a
common, and often less effective, approach. In the late 1980s, a cell was created
by a team of managers and engineers, without input from workers themselves.
Workers disliked the new work routines and resented the way managers seemed
to ignore their ideas for improvements. About a year later, and partially in
response to employee concerns, the cell was disbanded and operators were dis-
persed back to their functional groups. The manager’s unsatisfactory experience
with this initial cell foray was one of the reasons Carnelian Electronics later
adopted the participative approach to the redesign of their assembly and test
operations.26
As the Carnelian example illustrates, companies often err in their initial

cells by relegating design to the hands of engineers and managers, overlooking
the need to involve those who will be most directly affected by the transforma-
tion.27 “Our transition would have been easier if we had paid more attention
to the people aspects,” noted a manager at “Quetzal Automotive Components.”
“We rearranged the equipment over the weekend and when the workers
showed up on Monday morning everything was different, without much expla-
nation or training.” These cells were short-lived, but later Quetzal changed its
implementation tactics, just as Carnelian had done.
Involving operators in cell design and implementation accomplishes sev-
eral important objectives. First, operators who have a hand in the design are
more likely to feel invested in the new work structure. This can ease resistance
and smooth implementation. Second, no one knows the details of work tasks
better than those who actually perform the job. This familiarity with the process
and its problems makes an invaluable contribution to effective cell design, par-
ticularly at the point where detailed design decisions are being made. Third,
involving operators in cell design helps educate them about cell concepts and
objectives, and they will be well positioned to improve and adapt it as time
goes by.
Leverage the Cell’s Power for Continued Process Improvement

For cells in many of the organizations we studied, employee-based
continuous improvement was a priority. As the following examples illustrate,
these organizations viewed creating the cell as the point of departure for perfor-
mance improvement and recognized continuous improvement as essential to
sustainability.
In the early life of the “Shiva Precision Parts,” machinists and engineers
worked for over a year on various set-up reduction projects. As part of these
efforts, operators developed standardized documentation representing the
agreed-upon “best” practice for each manufacturing step. They also developed
dedicated tooling and fixturing, allowing them to avoid the need for adjust-
ments. These and other changes contributed to an improvement in the cell’s
ability to build in small quantities. After operating for some time, cell operators
volunteered to expand their ownership of the product value stream by taking on
final assembly tasks performed in another area. This expansion of responsibilities
resulted in decreased part costs, reduced inventory levels, and significantly
improved delivery performance. Managers at Shiva Precision Parts recognized
that these changes would not have been possible in a functionally oriented
process design. They also recognized that the cell’s longevity was dependent on
managerial responsiveness to employee-generated improvement ideas.
At “Wodo Equipment Company,” a manufacturer with over 40 cells in
place, each cell is given a cost-reduction target for the next six months. Opera-
tors are challenged to develop and implement improvements that will contribute
to cost reduction, while meeting safety, delivery, quality, and other targets as
well. Bonus pay for each cell is directly tied to meeting these targets (the cell
bonus is divided equally among the cell’s operators). Wodo managers believe the
cells’ success in lowering costs has been a key element in the company’s contin-
ued profitability.
At the “Terra Health Hospital Trauma Care Cell,” physicians collabor-
ated in developing over 60 work protocols governing the process of caring for
patients with particular conditions. A 360-degree camera installed in the ceiling
records team actions in crisis response situations. The tapes are reviewed with
an eye to improving the specific processes. Prior to the cell’s creation, trauma
care was provided on multiple floors in the hospital and by nurses assigned to
those floors—nurses cared for trauma patients as well as those with other condi-
tions. Moreover, trauma physicians traveled throughout the hospital and inter-
faced with whichever nurses were assigned to their patients. Consolidating all
adult trauma care in one place created a venue where similar work justified the
development of work protocols, where communication was both simplified and
improved, and where those delivering care could learn from repetition and from
one another.
Organizations that leverage the natural tendency for improvement in
cells typically build in systems and protocols to support and enhance it. At “Vul-
can Auto,” “Esplenade Medical Systems,” “Diamond Life Systems,” and “Agate
Health Enterprises,” for example, cell team members note problems on a flip
chart as they arise in the work area. Every day, at a specified time, cell teams
meet to discuss these problems and find solutions. In all of these cases, improve-
ment is an expectation—employees are equipped with the problem-solving and
communication skills that permit them to contribute to solving group problems,
they are given the resources (e.g., time, engineering support) to make improve-
ments, and improvement efforts are recognized and rewarded. Table 2 illustrates
these principles as they have been applied at one of the study sites, Quetzal
Automotive Components, where management has made a concerted effort to
build a culture of continuous improvement in support of cells.
Without an improvement culture, a cell team can lose its focus on meet-
ing customer needs for quality, delivery, cost, and other priorities. This loss of
focus can erode team discipline to stick with critical operating principles, leading
to a drift back to previous, less-effective operating practices. In other words, if
the cell isn’t moving forward, it is likely to move backward because of a loss of
discipline.
Ensure that Design and Climate Are Primed for Adaptation

Cells with staying power are designed for flexibility. Virtually all organi-
zations face a changing environment. Customers come and go, old products are
phased out and new ones introduced, and, for many organizations, product life
cycles continue to become shorter. A cell must be able to adapt. In our study,
cells that fared well were designed at the outset to anticipate future changes
and build capabilities to accommodate them.
Consider the case of Esplenade Medical Systems, a manufacturer that
made a complete conversion to cells. The company operates on a contract basis,
TABLE 2. Supporting Cell Improvement: Building a Culture of Continuous Improvement at

Quetzal Automotive Components
Elements Actions at Quetzal
Make Improvement an • Mandatory suggestion program in place.

Expectation – Each employee must submit 24 suggestions each year.
– Suggestions must be linked to monthly improvement theme.
– The plant has a well-defined process for reviewing and taking action on
suggestions.
Provide Skills and • Operators receive a minimum of 40 hours of training per year.
Training to Support – Mandatory training reflects monthly training themes.
Improvement – Operators may select some of their training.
– Operators may opt for more training if desired.
Recognize and Reward • Annual recognition ceremony acknowledges “breakthrough” contributions and
Improvements provides awards.
• Monthly ceremonies recognize good improvement ideas throughout the year.
Provide Time and • Cells have weekly hour-long improvement meeting.

Resources to Support • Monthly five-day “improvement events” target specific cells and processes for
Improvement Efforts focused, intensive improvement. Cross-functional teams, which include cell and non-
cell representatives as well as the appropriate content experts (e.g., engineering),
address targeted areas.
• Each cell’s extended team includes engineers and quality personnel dedicated to
support the cell’s operations and ongoing improvement efforts
using its FDA approval status as a selling point for client companies that have
developed new products but do not have approved manufacturing facilities.
Most of the products it contracts to build have five- to eight-year lives, although
some are produced for far fewer years. When contracts expire or are cancelled
without renewal, the cell is disbanded and another one formed for a new prod-
uct. This dissolution and creation of cells is a fairly routine event for the highly
involved cell operators. Equipment in this plant consists of lightweight assembly
tables that can be moved easily. In addition, electrical power connections extend
from the ceiling and can support virtually any arrangement of cells on the plant
floor. The plant’s 32 assembly operators, many of whom have worked at the
company more than 10 years, are fully cross-trained on all assembly processes.
Thus, with respect to people and equipment, the cell architecture is designed for
adaptation and evolution.
At “Malagosa Footwear,” fitting cells (where the shoe uppers are sewn
together) are designed to be redesigned. Each cell is capable of building any of
the frequently changing shoe styles produced at the plant. Equipment on wheels
can be reconfigured to match the processing requirements of the shoe styles
assigned to a given cell for a particular time period. Operators are skilled in
multiple operations and team members are trained to work together. Managers
make every effort to keep teams of workers together while varying the products
they build as dictated by demand. (Research suggests that teams with constant
membership have performance advantages over teams with changing member-
ship, advantages that are attributed to the power of collective team learning.)28
The flexibility inherent in the design and operation of the Malagosa Footwear
cells is critical given the rapidly changing demands of a fashion business.
Achieving flexibility in a slightly different way, Wodo Equipment Com-
pany, our electrical products manufacturer, maintains two separate and highly
flexible cells designed to handle overflow demand for products built in existing
cells. In these “remainder cells,” highly skilled operators are poised to handle
products from several product families. These remainder cells aren’t quite as
efficient as those dedicated to single families, but they allow other cells to oper-
ate effectively by absorbing excess demand plant-wide.
At Quetzal Automotive Components, flexibility has been the guiding
light of the cell design and improvement process. Managers, line workers,
and support personnel all share a mindset that says “equipment can be moved
whenever needed.” Extensive operator cross-training, coupled with visual docu-
mentation systems, make it possible to staff a cell up or down as needed. More-
over, all operators are educated on cycle time and line balancing concepts so
they themselves can make on-the-fly adjustments to production-volume fluctu-
ations or absences. For example, during a recent business downturn in demand
for a particular product, the plant was able to rebalance a cell in the space of a
shift—reducing operators required from four to one and re-assigning the extras
to other work areas.
When the need for flexibility outstrips the capability of the cell, it may be
restructured or even disbanded. We found several examples of this in our study
sites. At Agate Health Enterprises, which produces medical equipment, demand
for one member of a product family increased substantially. In response, man-
agement converted the cell to an 18-operator assembly line (a “super cell” in
the company’s terminology) focused on this single product.29 The demand for
another product family at Agate fluctuated in an unending pattern of ups and
downs. The designated cell was having trouble dealing with the changes, so the
firm created two additional cells that were identical to the first one. These were
used during times of peak demand, but remained idle at other times. High prod-
uct margins, plenty of available floor space, inexpensive equipment (primarily
microscopes, hand tools, and work benches), and a market-driven imperative
to deliver rapidly prompted the company to develop this equipment-intensive
option. Moreover, the presence of fully cross-trained employees, many of whom
were certified as trainers, put Agate Health Enterprises in a position where they
could scatter skilled associates into the spare cells and assign them to train and
manage temporary contract workers when demand rose. Thus, the core team of
six permanent cell operators worked together in a single cell when demand was
low. When demand rose, they would split the group so that each of three cells
had two permanent lead operators and four temporary operators.
Sometimes companies come to the realization that cell flexibility is a

huge benefit, only after suffering initial (and sometimes costly) setbacks. Crystal
Meters, a manufacturer of electronic measurement devices, designed cells to
meet requirements of narrowly defined product families. When demand for
some products diminished, the company discovered it was very difficult to rebal-
ance the cells for lower-volume production. The company’s response was to run
the cells at short intervals, moving team members to other work areas when
orders were filled. Both equipment and labor utilization rates suffered, the latter
because cell employees were asked to perform a wider range of assembly tasks
on a wider array of products in several locations. Although the company consid-
ered consolidating product families, the testing equipment developed for each
cell was so specific it could not be easily modified to accommodate a broader
array of products. Faced with this situation, the plant manager began moving
equipment out of cells and into functional groupings—thus returning to the old
job shop arrangement that had preceded the move to cells.
We found the “Crystal Meters” story to be a prime example of the
functional drift phenomenon—when cells aren’t working out, organizations
re-allocate resources back to the “comfort” of functional affiliation. A larger
corporation recently purchased Crystal Meters and has introduced a complete
redesign of the existing cells. This time, the cells have been designed with a sig-
nificant amount of flexibility and with considerable input from the operators.
SIDEBAR 3
Recurring Theme: Operator Job Security
Among our study sites with long-life, flexible cells, operators were willing to re-balance cell
lines, frequently changing staffing levels to meet fluctuations in demand.This willingness grew
from their understanding that demand changes were a natural part of business and product
cycles.They felt sufficiently confident in the viability of the company and had formal or informal
employment agreements assuring them that if they supported cell re-staffing they would not
lose their jobs as a result.They knew they would be needed elsewhere within their employers’
dynamic enterprise.30
Design and Maintain a Supportive Infrastructure

Cells do not exist in a vacuum: they are part of a larger organization and
must work effectively within that organization. The presence of a supportive
infrastructure is a critical characteristic of cells with staying power. As one con-
sultant has noted: “Cells simply don’t work well, if at all, when they are not part
of overall strategy of change undertaken by their users. . . . cells don’t fit into the
traditional scheduling, product costing, or operational parameters established for
the rest of the facility. The combination of cells and overall change to peripherals
provides the users with the significant competitive advantage enjoyed by the
originators of cells.”31 In this section we highlight five important infrastructure

elements, illustrating how they must be aligned with cells.
Supportive Human Resource Policies

The experience of our study sites suggests that supportive human
resource policies (such as pay, performance evaluation, hiring, and so forth)
are key elements of cells with staying power. Most notably, compensation sys-
tems frequently emerged as an important issue for cells in our research sites.32
When Wodo Equipment Company moved to cells, they added cell
bonuses and skill-based pay to their existing compensation system of hourly
wages. Team bonuses are based on how the team performs with respect to goals.
A key manager close to the situation believes the system of cell bonuses has
helped build team cohesion and ownership for cell outcomes and has been
the key driver in the cells’ ongoing (and successful) continuous improvement
efforts. Skill-based pay has helped in developing the multi-skilling that allows
employees to move to where they are needed within the cell.33 At Agate Health
Enterprises and Quetzal Automotive Components, multi-skilling boards, dis-
played prominently on the shop floor, identify employees by name and highlight
their capability levels for the full set of cell skills. This information is useful to
the team in making decisions about task assignments and workload balancing,
but it also serves as a form of recognition for operators. Vulcan Automotive took
this a step further by displaying photographs of operators along with skill
information.
In addition to instituting skill-based pay, Quetzal Automotive Compo-
nents made other changes in its compensation system to accommodate cells.
They developed a bonus pay scheme whereby employees could add as much
as 10% to their base pay. The bonus hinged on three factors: individual perfor-
mance (measured by attendance), cell-level performance (measured by lead-
time reduction goal attainment), and plant-level performance (measured by
defective parts per million, supply spending, and expediting costs). The three-
level approach encouraged operators to take a systematic view of company
performance.
Not all companies change their compensation systems when they adopt
cells. About a year after Carnelian Electronics established cells, operators began
to express dissatisfaction over their pay. They felt they did more work, but were
paid the same as employees elsewhere in the plant. Managers responded by
having cell operators’ jobs analyzed for potential reclassification. As a result,
many employees moved to higher job classes and earned more pay. This allowed
the company to appropriately reward the work of cell operators without chang-
ing its overall compensation system.
A compensation system such as an individual piece rate will not support
a multi-operator cell with interdependent tasks.34 For example, at “Walhalla
Shoes,” one of our footwear study sites, employee, supervisor and management
reluctance to move away from the piece rate system contributed to the organ-
ization’s decision to abandon its cell program, despite a successful cell pilot.
However, at Malagosa Footwear the piece rate system was modified to pay
workers based on the number of good shoes produced by the entire cell. This
team-oriented compensation change supported cell work and emphasized the
dual importance of productivity and quality.35
Maintenance
In traditional functional architectures, large inventories serve to
de-couple successive production steps. Moreover, clustering similar equipment
together means duplicate processing capability is available to buffer the effects
of machine problems. Large in-process inventories and redundant processing
capability are not available in cells, which are designed and operated to run
“lean.” If a machine goes down, cell throughput comes to a halt. This places
greater pressure on maintenance personnel, and often requires employees to
become more involved in preventive maintenance.
At Malagosa Footwear, cell operators, whose pay depended on daily
good output, were hampered by frequent machine breakdowns; they stood idle
while maintenance people were called to their cells to fix problems. Manage-
ment’s response was to increase the skill level of maintenance personnel—
sending them offsite for additional training and instituting a pay-for-skill
compensation scheme for maintenance personnel. In addition, cell operators
received training in routine preventive maintenance and acquired the skills to
make simple repairs. Up-time increased as did cell output, operator earnings,
and team morale. Similarly, problems with cell equipment up-time prompted
management at “Sapphire Climate Control,” a manufacturer of air conditioners
and heat pumps, to introduce a Total Productive Maintenance program. Like-
wise, Vulcan Auto, an automotive manufacturing plant with cells in its axle
division, dealt with the need for high equipment reliability in cells by giving
operators the skills, resources (including information in the form of very clever
visual controls), and responsibility for cell equipment maintenance.
Had the companies in these examples not taken these steps, there is a
good chance operators would have lobbied for a return to a functional arrange-
ment. As previously noted, the tendency to push for functional drift is most
pronounced when something goes wrong—even when a functional arrange-
ment is not the best solution, it is often the most comfortable one.
Engineering Support
In manufacturing environments it is not unusual for cell operators to
place higher demands on engineering and support personnel. Others have
noted that “transformations to lean also require deep engineering skills.”36 There
are at least two reasons for increased reliance on engineering. First, cell teams
following “lean” or JIT principles normally are instructed to stop work when
there are production problems (e.g., faulty parts, tooling glitches, awkward
assembly methods). If they cannot quickly resolve the issue themselves, they are
expected to notify members of the engineering staff. Moreover, cells bring about
a greater sense of awareness of the whole process and often a resulting pride in
performance. Consequently, operators in cell environments frequently call on

company engineers to make changes that support increased manufacturability.
Effective cell operations require engineering support personnel to arrive quickly
and have the creativity and technical know-how to find effective, simple
solutions.
Wodo Equipment Company instituted a system in which cell team mem-
ber bonuses were tied to meeting specific cost reduction targets, while maintain-
ing performance on other important metrics (e.g., quality, delivery, and safety).
When this program was first implemented, the vast majority of changes opera-
tors wanted to make in pursuit of these goals required some level of engineering
support. There simply were not enough engineers to support the numbers of
changes operators wanted to make. At this plant, the short-term solution was for
engineers to work overtime; but over the long haul, engineering resources were
strengthened. At “Topaz Electronics,” one manager of cells noted: “we need bet-
ter buy-in from engineering. To some extent they have been a barrier.” At the
same plant, another cell manager observed, “getting the tooling better and better
has been a real challenge for us. This is one place where we could really have
used more engineering support.”
As organizations develop their capabilities to serve the engineering needs
of cells, some are introducing innovative approaches that provide extra staying-
power support. For example, two of our study sites have implemented what
they call “moonshine shops” to build equipment that specifically supports cell
operations.37 These shops are staffed by interdisciplinary teams of engineers and
mechanics who build tools, fixtures, loading devices, and simple machines to
SIDEBAR 4
Recurring Theme: A Mindset Problem for Engineers?
At several of our study sites, we observed that engineers don’t always appreciate being tied
directly to the shop floor in manufacturing environments. After all, they say (or at least think):
“I went to college so I wouldn’t have to work in a factory.” In several organizations, we have
seen empty desks adjacent to production areas. Engineers assigned to serve the cells had once
occupied these desks. Given the mindset issue and the absence of appropriate incentives, they
had, one-by-one, drifted back to their functional homes and office spaces. One company with
cells instituted an on-site tuition reimbursed MBA program, an in-house workout facility, on-
site travel agency, and a 4.5 day work week—benefits designed to overcome resistance to the
company’s policy of locating engineers on the shop floor adjacent to the cells they support.38
At several of our study sites, the organization created opportunities for plant-based engineers
to meet regularly with their peers in process councils or to rotate into cells for periods of
three to six months, then return to their functional homes for six to nine months before
rejoining a cell. An organization wishing to provide cells with the appropriate engineering
support would be wise to anticipate the kinds of responses we have witnessed.
make work easier for operators. (Note that these shops also support cells as a
setting for continuous improvement.)
Production and Materials Planning and Control

Production and material planning and control procedures may require
adjustment to better support cells. At Topaz Electronics, production planning
and control procedures lacked the flexibility to release parts based on part
families. To remedy the situation, operators worked with support resources to
develop a spreadsheet that provided basic demand and inventory information,
as well as part-family affiliation. Operators used this information to determine
which parts to produce in what quantities, thus working around the formal sys-
tem. However, this “phantom” production planning and control system took
time away from production, placing some limits on the cell’s ability to achieve
its optimum performance.39
Several of our study sites had problems adjusting their material delivery
systems to accommodate cells. In keeping with lean operating routines, cells
typically need to have material delivered to point-of-use frequently and in small
quantities. Materials personnel, operating under an efficiency-oriented mind-set,
prefer few trips that deliver larger quantities. “They (materials personnel) over-
fill the bins all the time” commented a supervisor at Esplanade. Not only does
this inflate incoming inventory levels for the cell, it also can encourage building
in larger batches (after all, the material is already here), moving the cell away
from lean operating disciplines and effectively eliminating cell benefits. We
saw this phenomenon at several study sites. In contrast, at Quetzal Automotive
Components, lines were frequently down because material was not available
when operators needed it. Operators were leaving the line in search of material,
which took time away from production and resulted in lower output.
The bottom line here is that an organization must design the material
delivery (and, in fact, all infrastructure support systems) to best support the
work of production operators who, after all, are engaged in value-adding activi-
ties for the customer. The convenience and efficiency of material-handling per-
sonnel, who do not directly add value to the product, should be a secondary
concern. Our study firms who successfully dealt with this issue did so through
educating the material handling group, creating new work routines emphasizing
frequent delivery of small lots, implementing visual controls (such as shelving
units with maximum allowable incoming material levels clearly marked), and
changing performance metrics. Quetzal Automotive Components, for example,
implemented a “30-minute circuit” for material handlers.40 Additionally, “cell
down time because of materials unavailability” is a negative factor in the perfor-
mance evaluation and bonus determination for each cell’s material delivery
personnel.
Information Systems
The role of information goes beyond the boundaries of the cell and
is important for long-term viability. Cell team members typically have more
responsibility for full process performance than their counterparts in function-

ally organized operations. As a consequence, their roles often extend beyond cell
boundaries to include links with suppliers and customers (who may be internal
or external). This extended role in the value stream leads cell team members to
require access to more information than they may need in other work configu-
rations. For example, they may require links with suppliers so that they may
specify order delivery times and post notifications regarding the quality of
incoming materials.
The importance of information system support became clear to Diamond
Life Systems shortly after it implemented cells plant-wide. Each cell had been
outfitted with a computer terminal, and operators were expected to communi-
cate material usage to buyers and suppliers. The idea was good in theory, but
operators became impatient with the increasing slowness of the computer and
reduced the frequency of their usage. This reduced plant-wide performance
somewhat. Why did computer speed go down? Diamond Life Systems managers
had not stopped to think that more users would add a significantly increased
load on the centralized system. They responded with an expensive, but worth-
while, upgrade in order to keep cells running effectively.
Not all information shared between the cell and outside entities needs to
be digital. Many of the most effective cells we have seen use visual controls to
communicate material needs and material availability. For example, at “Drum-
mond Engineered Products,” an organization with the engineering change order
cells described earlier, employees can glance up at a reader board to know the
demand level they must meet that day and that week. Likewise, at Diamond Life
Systems, electronic assembly cells place empty material bins in a designated aisle
space outside the cell. Once each hour, a robot affectionately known as “Robbie”
delivers materials and picks up empty trays, returning them to the stocking area.
An empty bin, rather than any sort of electronic communication or telephone
call, signals the need for more parts.41
Maintain an Appropriate Measurement System

Our work with companies suggests that getting the right performance
measures in place—metrics that assist in planning, controlling, evaluating, and
improving performance—is among the most important longevity-supporting
issues for cells. Thus, although it might be considered part of infrastructure, we
treat it separately and show it as the pinnacle of our pyramid (Figure 2) to pro-
vide emphasis. Appropriately focused metrics, visible to employees and updated
regularly, provide an important cornerstone of cell performance. When cell
operators are given visible performance information, they know what is impor-
tant. Even without an incentive system, they will feel motivated to perform well
on designated metrics.42 The old saying “you get what you measure” clearly
applies here.
Performance measures that support cells are often different from the
measures used in more functionally oriented operations. For example, managers
at Crystal Meters did not initially rethink performance measures when cells
were introduced—the key focus, as it had been in the prior functional shop, was
equipment utilization. After several months of operation, cell production vol-
umes began to increase while demand remained constant. In part, the higher
than needed volumes resulted from informal decisions on the part of operators
to deviate from the suggested build quantities in order to keep equipment oper-
ating at near capacity. After all, utilization was the shop floor mantra. The result
was higher inventories, longer lead times, and lower quality—outcomes that
were at odds with the stated reasons cells had been created. A similar situation
existed at Diamond Life Systems where poor performance on “old” measures
almost forced the abandonment of the company’s initial cells. Fortunately, an
astute manufacturing executive recognized that the problem was the measures
and not the system. He led an effort to develop appropriate cell-level measures
and to educate higher-level managers about the cells and their new performance
measures.
When cells were created at Carnelian Electronics, on the other hand,
developing appropriate performance metrics was recognized as an integral part
of the cell design effort. A team with representatives from affected production
areas and support groups (accounting, production control, quality) developed
a set of common performance measures that reflected the objectives of the cell
design effort, linked cell performance to company-wide objectives, and could be
used to assess day-to-day operations and guide improvements. Similarly, Wodo
Equipment Company, where cells are viewed as the key component of the
plant’s sustained financial success, also developed a new metrics system as part
of the transition to cells.
The system of cell measures in place at Quetzal Automotive Components
is particularly instructive. The plant’s ten cells focus on assembly and post-
assembly (finishing) processes for families of automotive components. At the
entrance to each cell is a primary visual display board featuring charts and
graphs depicting the cell’s performance on key metrics. Measures include inter-
nal/external cell returns, environmental/safety audit performance, attendance,
scrap, unit cost of each product made in the cell, changeover minutes, down-
time, throughput time, overtime, supply spending, labor cost per unit, and
“unaccounted for” time. In addition, the visual display includes a cross-training
matrix, a U.S. map showing the location of key customers of the cell’s products,
and a matrix that reports the cell’s current performance and goals with respect
to a set of corporate-wide “keys to success” (e.g., safety, preventive mainten-
ance, quick changeover, quality assurance approach, employee commitment,
and work standards). Near the board is a stand that includes photos of the cell
products and the vehicles in which they are used, as well as photos of the cell’s
support and management team. The visual displays and the measures tracked
are common across all cells. Moreover, each operator in a given cell is responsi-
ble for maintaining a subset of the metrics (actually calculating and then record-
ing by hand the latest information), sometimes on an hourly basis. “When the
operators have to track it themselves, they own it,” notes one key manager.
Our observations in our field study sites have led us to recognize three
important principles for metrics in cells. (In fact, these principles have implica-
tions for many types of operations.)
▪ Measurements should focus on aspects of performance that are important
to customers (e.g., quality, delivery, and cost) and which the cell can
directly influence.
▪ Measurement systems should involve a parsimonious set of metrics, visi-
ble to and, if possible, tracked by the cell team. Too many measures can
overwhelm and confuse the cell team—as a consequence, they may not
pay attention to anything.
▪ Measures should be balanced. A balanced set of metrics leads to balanced
behavior, reducing the likelihood that operators will sacrifice quality for
speed or safety for cost.43
Cells Without Staying Power: Strategic Redirection

and Functional Drift—The Forces That Break Cells
We have focused on factors that explain the staying power of cells, but
not all cells stand the test of time—and sometimes that is just fine. For example,
an organization may abandon a cell because of unforeseen business develop-
ments such as the off-loading of a product line or the decision to focus on core
competencies. At Topaz Electronics, for example, the cell structure created in the
early 1990s was sharply reconfigured several years later when demand surged
dramatically. Cells making simple components that could be out-sourced were
disbanded. Equipment from these cells was reassigned to the cells making higher
volumes of newer, more complex items. Among our study sites, cells also were
disbanded because of declining product volumes, shifting top management pri-
orities, changes in technology that obsoleted cell processes, and ergonomic con-
cerns (e.g., an automated process replaced a cell when it was discovered that cell
processes were linked to cumulative trauma disorders in several workers). These
experiences support the conclusion of one recent investigation of cells, which
noted: “Inevitably, however, some cells cease to exist due to structural and/or
strategic changes driven by market forces.”44
Among the companies in our study population, we also encountered
numerous situations where there was no formal business-related decision to
abandon cells, but where they just didn’t perform very well over time. In many
instances, these cells fell victim to functional drift. Functional drift, as explained
earlier, is the tendency for lateral or process-complete organizational forms to
drift into functionally oriented forms. It occurs at a macro level as companies
grow from entrepreneurial to bureaucratic forms and is considered a normal part
of organizational evolution; it appears to be a natural response to the need for
specialization and control.45 However, as any observer of organizations knows,
these kinds of structures can distract people and their processes from core cus-
tomer values.
Cells designed with the right foundation (space, time, and information
linkages) and supported by the five dynamic principles we have described
TABLE 3. Work Cells with Staying Power Five Dynamic Factors at Study Sites
Design foundation criteria

(space, time, and infor-
Company Industry mation linkages) met?
Agate Health Enterprises heart-related medical technologies YES

Carnelian Electronics electronic assembly and test YES
Colter Butte automotive electronics YES
Crystal Meters industrial electronic measuring devices YES
Diamond Life Systems medical electronics YES
Drummond Engineered Products large complex industrial equipment YES

Esplenade Medical Systems medical electronics YES
Malagosa Footwear footwear YES
Sapphire Climate Control air conditioning equipment /heat pumps YES
Shiva Precision Parts precision machining YES
Terra Hospital Trauma Care Cell adult trauma care YES
Topaz Electronics precision machine shop YES
Vulcan Auto axle manufacturing YES

Walhalla Shoes footwear YES
Wodo Equipment electrical equipment YES
Quetzal Automotive Components automotive components YES
(employee involvement, improvement culture, infrastructure, adaptability, and

metrics) are less likely to fall prey to the forces of functional drift. Moreover,
they are likely to deliver performance that supports strategic objectives over the
long-term.
Summary
A summary of how work cells played out in our 16 study sites is pre-
sented in Table 3. As shown, all of the organizations we studied met the first
criterion: disciplined cells with the appropriate time, space, and information
linkages. Beyond that, the most successful long-term cells employed all five of
the dynamic attributes, but some did fairly well with three or four out of five.
Full implementation of cells takes time, and it is reasonable to expect that an
Dynamic Attributes
Employee Continuous Supportive Appropriate
Involvement Improvement Adaptability Infrastructure Metrics
★ ★ ★ ★ ★
★ ★ ★ ★ ★
✔ ❍ ❍ ❍ ❍
✔initially ✔initially ✔initially ✔ ✔initially
★later ★later ★later ★later
✔ ★ ★ ✔ ❍ initially
✔ later
★ ★ ★ ★ ★
★ ★ ★ ★ ★
✔ ✔ ★ ★ ★
✔ ✔ ✔ ★ ✔
✔ ★ ★ ✔ ✔
★ ★ ★ ✔ ✔
✔ ✔ ★ ❍ initially ❍ initially
✔ later ✔ later
★ ★ ★ ★ ★
✔ ❍ ❍ ❍ ❍
★ ★ ★ ★ ★
❍ initially ★ ★ ★ ★
★ later
Legend: ★ Strong Evidence: Cells at this study site strongly adhered to/applied this dynamic attribute.
✔ Some Evidence: Cells at this study site applied, in limited way, this dynamic attribute.
❍ No or Very Limited Evidence: Cells at this study site did not apply this dynamic attribute.
organization may work incrementally to install all of the necessary support fac-
tors over a period of several months or years.
Conclusions
Cells have tremendous potential for improving productivity, throughput
time, cost, quality, and employee satisfaction. They have served manufacturing
organizations well, and a number of service providers are beginning to success-
fully transfer the manufacturing cell metaphor. Cell design is really just the first
step in a long and complex journey to nurture process-complete organizations.
As the principles of cells with staying power underscore (see Table 1), companies
wishing to implement and sustain cells must focus on human issues, continuous
process improvement, adaptability, infrastructure, and metrics. When problems
arise because an organization has failed to attend to these critical cell elements,
those involved are likely to feel disenchanted with the cell concept. This disen-
chantment may lead them to lobby for a return to the comfort of a functional
orientation, falling into the trap of functional drift.
Notes
1. For an in-depth summary of cell benefits and their sources, see N. Hyer and U. Wemmerlöv,
Reorganizing the Factory: Competing Through Cellular Manufacturing (Portland, OR: Productivity
Press, 2002a). See, especially, chapter 3, “Why Cells Improve Performance.”
2. For a summary see Hyer and Wemmerlöv, op. cit., pp. 6-7, 18-20.
3. P. Strozniak, “Rising to the Challenge,” Industry Week, December 11, 2001, downloaded from
web site, <www.industryweek.com>.
4. P. Swamidass, Technology on the Factory Floor III: Technology Use and Training in U.S. Manufactur-
ing Firms (Washington, D.C.: The Manufacturing Institute/National Association of Manufac-
turers, 1998); R. Montagno, N. Ahmed, and R. Firenze, “Perceptions of Operations Strategies
and Technologies in U.S. Manufacturing Firms,” Production and Inventory Management (Second
Quarter 1995), pp. 22-27; P.E. Waterson et al., “The Use and Effectiveness of Modern Manu-
facturing Practices: A Survey of UK Industry,” International Journal of Production Research,
37/10 (1999): 2271-2292.
5. For a discussion of cells in service settings, see N. Hyer and U. Wemmerlöv, “The Office that
Lean Built,” IIE Solutions, 34/10 (October 2002b): 37-43.
6. This definition adopted from Hyer and Wemmerlöv (2002a), op. cit., p. 18. Chapter 2, “A
Closer Look at Cells and the Forms They Take,” provides an in-depth discussion.
7. In locations where volume is lower, cells may operate only one or two days per week. On
non-cell days, team members work in their functional roles at other locations.
8. J.R. Galbraith, Competing with Flexible Lateral Organizations (Reading, MA: Addison-Wesley,
1994).
9. A. Majchrzak and Q. Wang, “Breaking the Functional Mind-Set in Process Organizations,”
Harvard Business Review, 74/5 (September/October 1996): 92-99.
10. Henry Mintzberg, The Structuring of Organizations: A Synthesis of the Research (Englewood Cliffs,
NJ: Prentice-Hall, 1979).
11. N. Hyer and K. Brown, “The Discipline of Real Cells,” Journal of Operations Management, 17/5
(1999): 557-574.
12. For more information about these linkages, see Hyer and Brown (1999), op. cit. For a differ-
ent, but complementary, framework for understanding cells and why they generate
improvements, see Hyer and Wemmerlöv (2002a), op. cit., pp. 22-30, 48-59.
13. Some would argue that in white-collar environments, co-location is unnecessary because of
e-mail. We have not found this to be the case. In fact, we find e-mail is used in an attempt
to replace needed face-to-face communication, resulting in lost effectiveness.
14. In their popular workbook, Rother and Harris note that cell arrangements with batch pro-
cessing that build up inventory between stations are producing what they call “fake flow.”
M. Rother and R. Harris, Creating Continuous Flow (Brookline, MA: Lean Enterprise Institute,
2001).
15. G. Rummler and A. Brache, Improving Performance: How to Manage the White Space on the Orga-
nization Chart (San Francisco, CA: Jossey-Bass, 1995).
16. For a more complete discussion of the relationship between size and the time, space, and
information linkages in real cells, please see Hyer and Brown (1999), op. cit., see, especially,
pp. 563-564.
17. The number of communication channels in a group grows geometrically in relation to arith-
metic increases in group size, based on the relationship: #Channels = [n (n-1)]/2, where n is
the number of group members. Thus, a five-person team involves 10 channels, but a 10-
person team involves 45 channels.
18. R. Moreland, and J. Levine, “The Composition of Small Groups,” in E. Lawler, B.
Markovsky, C. Ridgeway, and H. Walker, eds., Advances in Group Processes, Vol. 9 (Greenwich,
CT: JAI Press, 1992), pp. 237-280. See, also, J. Katzenbach and D. Smith, The Wisdom of
Teams (New York, NY: HarperCollins, 1993), pp. 45-47.
19. P. Yetton, and P. Bottger, “The Relationship Among Group Size, Member Ability, Social
Decision Schemes, and Performance,” Organization Behavior and Human Performance, 32/2
(October 1983): 145-159.
20. K.M. Eisenhardt, “Building Theories from Case Study Research,” Academy of Management
Review, 14/4 (October 1989): 532-550.
21. R. Yin, Case Study Research: Design and Methods (Thousand Oaks, CA: Sage, 1994).
22. Most multi-operator cells, in fact, are designed with high levels of interdependence—“the
amount of interaction that is required for team members to complete their work tasks.” G.
Stewart, C. Manz, and H. Sims, Team Work and Group Dynamics (New York, NY: John Wiley &
Sons, 1999), p. 32. Operators in cells may be sequentially interdependent, where one opera-
tor’s outputs become the input for the next step but work tends to move one way. This type
of interaction is typical for direct labor tasks such as building a product. Operators may also
be reciprocally interdependent where they must continually react to one another’s inputs
and there is a lot of back and forth—typical of problem solving and other indirect labor tasks
(and needed for some direct labor tasks, as well). As observed by Brown and Mitchell and
later confirmed by Shafer et al., the need to rely on coworkers rather than operate indepen-
dently can be a source of employee dissatisfaction and resistance. K. Brown and T. Mitchell,
“A Comparison of Just-in-Time and Batch Manufacturing: The Role of Performance Obsta-
cles,” Academy of Management Journal, 34/4 (December 1991): 907-917; S. Shafer, B. Tepper,
J. Meredith, and R. Marsh, “Comparing the Effects of Cellular and Functional Manufactur-
ing on Employees’ Perceptions and Attitudes,” Journal of Operations Management, 12 (Febru-
ary 1995): 63-74.
23. In a study conducted in a fish-processing plant, Doerr et al. found that pull-type material
flow disciplines were not necessarily in line with human nature. Even though operators saw
in brief experiments that the pull system led to slightly better throughput time and less work
in process, they reverted to a push system whenever they were allowed to choose their own
flow discipline. See K. Doerr, T. Mitchell, T. Klastorin, and K. Brown, “Impact of Material
Flow Policies and Goals on Job Outcomes,” Journal of Applied Psychology, 81/2 (1996): 142-
152.
24. For a more complete discussion of resistance to cells, see Hyer and Wemmerlöv (2002a), op.
cit., pp. 486-491.
25. For more on this case example, see N. Hyer, K. Brown, and S. Zimmerman, “A Socio-Tech-
nical Systems Approach to Cell Design: Case Study and Analysis,” Journal of Operations Man-
agement, 17/2 (January 1999): 179-203.
26. Ibid.
27. See U. Wemmerlöv and N. Hyer, “Cellular Manufacturing in the U.S. Industry: A Survey of
Users,” International Journal of Production Research, 27/9 (1989): 1511-1530; U. Wemmerlöv
and D. Johnson, “Cellular Manufacturing at 46 User Plants: Implementation Experiences
and Performance Improvements,” International Journal of Production Research, 35/1 (1997):
29-49; and U. Wemmerlöv and D. Johnson, “Empirical Findings on Manufacturing Cell
Design,” International Journal of Production Research, 38/3 (2000): 481-507.
28. S. Berman, J. Down, and C. Hill, “Tacit Knowledge as a Source of Competitive Advantage in
the National Basketball Association,” Academy of Management Journal, 45/1 (February 2002):
13-31.
29. This represents a move away from the cell concept, but is an example of a situation in which
the change was strategically appropriate. The organization is sufficiently “cell savvy” to be
able to re-convert this assembly line to a cell if demand declines.
30. For an anecdote-filled discussion about operator resistance to process improvement and
sharing of ideas about best practices, see T. Aeppel, “Trucks of the Trade: On Factory Floors,
Top Workers Hide Secrets to Success,” Wall Street Journal, Monday July 1, 2002, p. A-1.
31. P. Nyman, Making Manufacturing Cells Work (Dearborn, MI: Society of Manufacturing Engi-
neers, 1992), p. iii.
32. Of course, other human resource policies (e.g., job designs, selection, training, and develop-
ment) may also require revision in light of cells. For a discussion of these issues, see Hyer
and Wemmerlöv (2002a), op. cit. See, especially, chapters 12-14, pp. 369-471.
33. Multi-skilling was a recurring theme in all of the sites where cells had been sustained effec-
tively.
34. For example, Doerr et al. [op. cit.] demonstrated in a field experiment that pull systems,
central to most cell operations, are best supported by group goals.
35. Majchrzak and Wang observe that a reward structure promoting joint accountability is one
of the factors that helps develop a collaborative culture in process-complete operations.
“People who feel collectively responsible are willing to work especially hard to avoid letting
the team down.” Majchrzak and Wang, op. cit., p. 95.
36. J. Liker, “What We Have Learned About Becoming Lean,” in J. Liker, ed., Becoming Lean:
Inside Stories of U.S. Manufacturing (Portland, OR: Productivity Press, 1998): 508.
37. The name “moonshine shop” comes from the idea that makers of illegal moonshine whiskey
would often use anything they could find to piece together their distilling equipment. In
modern factory environments, the idea is to use inexpensive materials to assemble jigs,
fixtures, and simple machines that make work easier for operators.
38. J. Owen, “From Suits to Cells,” Manufacturing Engineering, 122/6 (June 1999): 62-67.
39. Hyer and Brown (1999a), op. cit., p. 565.
40. Personnel who cycle through the plant delivering materials in small lots as needed are
sometimes referred to as “water spiders” in reference to insects that optimize their efficiency
by taking many small loads.
41. This is part of what is known as a kanban system. These systems are embedded in pull-style
material flow disciplines but are beyond the scope of this article. For more information on
kanban systems, see Hyer and Wemmerlöv (2002a), op. cit., pp. 330-349.
42. Deming, in nearly everything he wrote, emphasized the fundamental role of performance
metrics as an employee motivator. In contrast, he continuously stressed the demoralizing
effects of quotas and incentives, encouraging managers to take a more positive view of the
human desire to perform well. See W.E. Deming, Out of the Crisis (Cambridge, MA: MIT
Center for Advanced Engineering Study, 1986).
43. R. Kaplan and D. Norton, “The Balanced Scorecard: Measures that Drive Performance,”
Harvard Business Review, 70/1 (January/February 1992): 71-79.
44. Wemmerlöv and Johnson (2000), op. cit., p. 502.
45. Mintzberg, op. cit.

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CMR267

Work Cells with Staying Power:

© 2003 by The Regents of

Nancy Lea Hyer

CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003 27

Following, as points of reference, are descriptions of two cell

28 CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003

Human and Social Factors Driving Functional Drift

Business and Technical Factors Driving Functional Drift

CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003 29

What Is a Work Cell?

30 CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003

FIGURE 1. Functional versus Lateral Organization Types

as the pharmacy or laboratory. In the course of care, patients typically receive

Space,Time, and Information Linkages

CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003 31

Thus, closely locating equipment but continuing to build in large batches

32 CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003

CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003 33

FIGURE 2. Building Blocks for Cells with Staying Power

Design and Maintain a

Leverage the Cell’s Power for

Cell Design Real Cell Design:

Cells with Staying Power: Key Research Findings

34 CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003

TABLE 1. Principles of Work Cells with Staying Power

To Create and Sustain Cells over Time:

CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003 35

As the Carnelian example illustrates, companies often err in their initial

Leverage the Cell’s Power for Continued Process Improvement

36 CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003

Ensure that Design and Climate Are Primed for Adaptation

CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003 37

TABLE 2. Supporting Cell Improvement: Building a Culture of Continuous Improvement at

Elements Actions at Quetzal

Make Improvement an • Mandatory suggestion program in place.

Provide Time and • Cells have weekly hour-long improvement meeting.

38 CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003

CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003 39

Sometimes companies come to the realization that cell flexibility is a

Design and Maintain a Supportive Infrastructure

40 CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003

originators of cells.”31 In this section we highlight five important infrastructure

Supportive Human Resource Policies

CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003 41

42 CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003

performance. Consequently, operators in cell environments frequently call on

CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003 43

Production and Materials Planning and Control

44 CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003

responsibility for full process performance than their counterparts in function-

Maintain an Appropriate Measurement System

CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003 45

46 CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003

Cells Without Staying Power: Strategic Redirection

CALIFORNIA MANAGEMENT REVIEW VOL. 46, NO. 1 FALL 2003 47

Design foundation criteria

Agate Health Enterprises heart-related medical technologies YES

Diamond Life Systems medical electronics YES

Drummond Engineered Products large complex industrial equipment YES

Vulcan Auto axle manufacturing YES

(employee involvement, improvement culture, infrastructure, adaptability, and