Sun Hydraulics - Bob Koski

Summary

Bob Koski developed an innovative organizational design and practices for his start-up company Sun Hydraulics, his vision was to build a company where the typical issues encountered in the more traditional organizational structures and practices were counteracted.  He showed that his company could achieve success by supporting some radical concepts in the areas autonomy, mastery and empowerment.

Why it worked? Koski was able to make his concepts work for a number of reasons:  

The ideal employee or likeminded individuals:  Koski not only hire the right person to job fit but, the right person to organization fit.  The company made sure that every person who was hired could flourish in an organization where the ability to self-manage, self-schedule and self-mastery were key competencies.

Size of the company:  The size of the company allowed Koski to introduction the most radical of his concept - the horizontal management structure where no one had a job title but, they knew based on the family they belonged to what goals they had to achieve that day and in general what was needed to run the company. There was also the lack of scheduled formal meetings to discuss issues or resolve problems. Because of the size it is relatively easy to call an impromptu meeting or collaborate on process efficiencies when you are interacting with fewer people.  

Job Enlargement or Enrichment:  Koski correctly determined that by enlarging and enriching people’s job’s you can keep things interesting and in essence keep them motivated.  The fact the Sun allowed the employees to cross train and work within other family group allowed the natural growth of new skills and opportunities within Sun this kept things new and interesting leading to increase job performance and satisfaction.

Empowerment:  Sun introduced a lot of concepts that empowered their employees, decisions were moved to the lowest level thereby giving the employees that do the work a deciding factor in the when and what they produced.  

The right formula:  Reading the case the one stand out theme was the fact that Koski correctly identified that the outcome for his job characteristics model that would correct counteract all the issues that he had seen at Dynamics i.e., lack of motivation, turnover, performance and job dissatisfaction by doing this he was able to put in place principles and practices that would reverse these issues.  Koski implemented a marriage of autonomy (Group management), skill variety, feedback and responsibility to perfect his desired outcome people who would live up to the philosophy and believes of Sun Hydraulics Corporation.

It is true that Sun was able to reach and exceed its 10 year goals with very little attrition; but, Sun was still a relatively small company whose concepts were more suited to a family run business.  I do not believe that the core issues identified by Bob Koski and form the basis for the development of his concepts could not have been resolved under a more traditional organization hierarchy.  Traditional organizations are constantly performing surveys, reviewing policies and procedures to keep employees motivated and attrition down.  Consulting firms typically perform job rotations for new hires and encourage job enlargement and enrichment by offering the ability to work on firm initiatives that not only benefit the firm but support employee growth.  Consultants are encourage to network and come up with new concepts and services that benefit the firm and also reward the consultant through some form of recognition.  The main difference is that recognition is typically rewarded by stock, promotion or monetary rewards.  It is safe to say that Sun was slowly reverting to more traditional concepts as it grew e.g., the awarding of stock options, the recognition that a few were more worthy than others introducing a pay for performance concept by 1985.    The Sun concepts did not consider globalization, collaboration, cultural differences and the need for a diverse work force.  Although this study was written in the mid 1980’s any company including Sun trying to adopt these concepts and include a growth plan that includes expansion beyond a single location would need to address the following issues in order to remain competitive in the current market.

Cultural differences: In the current global market any company wishing to take advantage of the global talent pool either through collaboration, or the creation of manufacturing or office locations in other countries, must first address the differences in what motivates employees to perform.  In the case of Sun, the company assumed that they would be able to find employees that had a proactive personality and were self-motivated.  To expand, the company would have assumed that they would find like-minded people who would thrive in this new organizational culture (false consensus error).  Some cultures required power distance and are comfortable in this type of organization. Sun did not believe that this was a behavior that would be required for their success.  It is clear that during the 10 years of growth hiring processes were lengthy in order to get the right person-to-organization fit which was more important than the person to job fit.  This would have been even more difficult outside of the state or country.