The effects of continuous improvement on the working environment, and the role of leadership in this relationship

EXPLORING THE SOFT SIDE OF CONTINUOUS IMPROVEMENT

The effects of continuous improvement on the working environment, and the role of leadership in this relationship

Thomas Klopstra (S3229696) Supervisor: Dr. O.P. Roemeling Co-assessor: Dr. I. Maris-de Bresser

MSc Business Administration – Change Management

Word count (excl. references and appendices): 15.080 Word count (incl. references and appendices): 22.619

University of Groningen Faculty of Economics and Business

January 2019

ABSTRACT

Background: The aim of this study was to better understand the relationship between continuous improvement and the working environment, and the role leadership plays herein. Based on the results of the present study, it was aimed to propose a framework which explains how leadership can influence the effects of continuous improvement on the working environment.

Methods: The current research can be described as a qualitative study, performed through an explanatory case study. Sources of data that were used are interviews, observation, and case-site documentary.

Findings: Our research showed that continuous improvement affects the working environment in several ways. The influence of continuous improvement is mostly dependent on task complexity. This factor also shapes the role of leadership in the sketched relationship between the working environment and continuous improvement. Ultimately, we propose that low task complexity demands tight control and management combined with a transformational leadership style in order to positively influence the working environment in a continuous improving organization. On the other hand, we propose that high task complexity demands coaching and rather low control and management, combined with a transformational leadership style in order to positively influence the working environment in a continuous improving organization.

Originality: Research on the effects of continuous improvement projects on employees has been conducted. Yet, studies that address the role of leadership during continuous improvement in relation to the working environment appear unavailable. Even though the working environment, as well as the effects of leadership, in relation to continuous improvement implementation individually have been studied extensively. However, the combination of the three concept has, to our knowledge, not been studied before.

Limitations: The main limitation of this study is that is we gathered data in one particular industry, namely the construction industry. We observed that the processes within this industry are relatively slow, compared to for example faster businesses like IT. Furthermore, we only interviewed employees who were directly involved in the production process. Therefore, one could state that the scope of our research is rather narrow. Lastly, the reliance on third parties by the case-site appeared to be of great importance concerning waste in production. This could have a significant share in the effects concerning the employee outcomes, such as performance and employee satisfaction.

Key words: Continuous improvement, Lean, working environment, job characteristics, employee

outcomes, leadership

1. INTRODUCTION

In this research, we are interested in the influence of continuous improvement initiatives on the working environment, and the role of leadership in this relation. There is no doubt that continuous improvement methodologies, such as lean and six sigma, are highly debated concepts in the academic field as well as business environments (Hasle, Bojesen, Langaa Jensen, Bramming, 2012). Continuous improvement programs have evolved from traditional manufacturing focused systems into comprehensive, systematic methodologies that focus on the entire organization, from top management to the workers on the shop floor (Bhuiyan & Baghel, 2005).

Change initiatives based on continuous improvement methodologies aim to positively improve performance (Bhuiyan & Baghel, 2005; Linderman, Schroeder, Zaheer, and Choo, 2003), yet consequences on other job outcomes remain unclear. In other words, how do continuous improvement efforts affect the working environment? The concept of the working environment is adopted from Hasle et al. (2012), and incorporates employees health and safety, as well as psychosocial factors at work.

Since it is assumed that continuous improvement always affects the working environment in which it is introduced, it is important to understand the consequences of such methodologies in order to prevent undesirable outcomes (Hasle et al., 2012).

Within such change initiatives, emphasis is needed on the interplay between hard and soft aspects of change. On the one hand, continuous improvement will cause hard changes such as changes in content and control (Senior & Swailes, 2010). On the other hand, the focus will be on soft side of change, emphasizing the significance of people in organizations, which is embraced by the adopted concept of the working environment (Senior & Swailes, 2010).

Opponents of continuous improvement propose that its application leads to loss of autonomy, and further intensification of work (Skorstad, 1994), or that it implies management by stress (Delbridge

& Turnbull, 1992; Berggren, 1993), and eventually even results to corporate anorexia (i.e. if an organization becomes too lean) (Radnor & Boaden, 2004). What these studies have in common is that the provided arguments underline a lack of focus, our understanding of the human dimension of lean is incomplete (Kinnie, Hutchninson, Purcell, Rees, Scarbrough, & Terr, 1996). In other words, the ignorance of the working environment is what opponents point out to be the missing factor during continuous improvement initiatives (Radnor & Boaden, 2004).

Mehri (2006) states that implementing continuous improvement programs cause limited potential for creativity and innovation, workers isolation, narrowing of professional skills, and poor quality of life for workers. Mehri (2006) explains that these effects are caused by continuously pressing, intimidating, and overloading the employees, fed by the unconditional focus on improving performance.

In other words, “producing with the least amount of money in the quickest time” (Mehri, 2006:24). In

short, it is often suggested that continuous improvement programs negatively impact the working

environment (Babson, 1993; Harrison, 1994; Hasle et al., 2012).

On the other hand, it is suggested that continuous improvement “is neither a panacea nor a paradox” (Radnor, 2011:89). Moreover, “it is not the answer to all the inefficiencies, and it may occasionally be a distraction” (Radnor, 2011:89). However, it is suggested that continuous improving is helping to give greater transparency and level of service to the customer, as well as improved working conditions for staff, for example: white boards for goal setting, and daily meetings (Radnor, 2011).

Others argue that continuous improvement increases employee’s autonomy and it creates a highly motivating working environment (Adler, 1994; Womack, Jones, & Roos, 1990; Parker, 2003).

It becomes clear that the way continuous improvement initiatives change working environments remains undecided. In addition, Benders, Bleijerveld, and Schoeteten (2017) point out that there is hardly any consensus on how continuous improvement practices affect employees. From another perspective, one could state that, whether you are an opponent or advocate of continuous improvement methodologies, emphasizing the working environment of implementing such methodologies is essential in making a successful transformation to a continuously improving organization.

Since leadership can make or break a change initiative, the aforementioned outcomes are likely to depend on leadership (Bass & Riggio, 2006; Burke, 2002; Carter, Armenakis, Feild, and Mossholder, 2013). A growing body of research shows that successful continuous improvement-implementation requires a system wide change and needs effective leadership to sustain this change (Aij & Teunissen, 2017). Leadership ensures that all employees are fully engaged and involved in continuous improvement activities (Aij & Teunissen, 2017; Dombrowski & Mielke, 2013). Thus, whilst leadership is shown to be of importance in change projects, it remains unclear how leadership can play a role in the effects of continuous improvement on the working environment.

The aim of this study is to better understand the relationship between continuous improvement and the working environment, and the role leadership plays herein. Based on the results of the present study, it is aimed to propose a framework which explains how leadership can influence the effects of continuous improvement on the working environment.

Research on the effects of continuous improvement projects on employees has been conducted (e.g. Parker, 2003; Mehri, 2006; Benders et al, 2017). Yet, studies that address the role of leadership during continuous improvement in relation to the working environment appear unavailable. Even though the working environment, as well as the effects of leadership, in relation to continuous improvement implementation individually have been studied extensively. However, the combination of the three cornerstones of this study has, to our knowledge, not been studied before. Therefore, we would like to fill the gap between these key concepts and explore how continuous improvement initiatives affect the working environment and understand which role leadership plays in this relationship. Ultimately, this leads to our central research questions:

(1) How do continuous improvement initiatives affect the working environment, and (2) how does

leadership play a role in this relationship?

The contributions this study aims to make are twofold. On the one hand, because there is little knowledge on this particular field of research, we hope to contribute to the academic field in explaining how continuous improvement efforts affect the working environment and what role leadership plays in this relationship. On the other hand, this study contributes to practice. As mentioned before, we aim to propose a framework which explains how leadership can influence the effects of continuous improvement on the working environment. This framework can help managers to understand how their actions can, positively or negatively, affect the working environment in continuous improvement practices.

The remainder of this research is structured as follows: first, a literature review is presented about the cornerstones of the present study. Secondly, the methods and results are reported. Lastly, the obtained evidence is reflected upon in the discussion of this study, and future research directions and practical implications are sketched.

2. LITERATURE REVIEW

In this chapter, a literature review is given to ensure that this research will build upon important academic knowledge and address the literature gap we aim to address. First, we will provide an overview of the current continuous improvement literature. Secondly, the concept of the working environment will be explained in its relation to continuous improvement and leadership. Lastly, the final key concept, the role of leadership and leadership style, will be discussed.

2.1 Continuous improvement

2.1.1 Defining continuous improvement

There are several definitions and interpretations of continuous improvement in the academic field, such as Bessant, Caffyn, Gilbert, and Webb’s (1994): “An organization wide process of focused and sustained incremental innovation”. Bessant et al. (1994) focus on the fact that CI is an organization wide process and it, therefore, requires the efforts of all employees (Singh & Singh, 2012). From another perspective, Deming described continuous improvement as “improvement initiatives that increase successes and reduce failures (Juergensen, 2000). For the purpose of our research we adopted a more general definition from Bhuiyan and Baghel (2005). The authors describe continuous improvement as:

“a culture of sustained improvement targeting the elimination of waste in all systems and processes of an organization” (Bhuiyan & Baghel, 2005:761).

The methodology involves everyone working together to make improvements without necessarily

making huge capital investments (Bhuiyan & Baghel, 2005). Change approaches taken in continuous

improvement can vary between incremental and radical changes. It is often suggested that incremental

change and radical change are change states rather than a perspective or a spectrum of change (Cawsey,

Deszca, & Ingols, 2016). Therefore, it is important to emphasize that the perception of the magnitude of the change lies in the eye of the change recipient (Cawsey et al., 2016). For example, incremental changes at the departmental level may appear radical at an organizational level. In context of our adopted definition of continuous improvement, it could be suggested that incremental changes on a departmental level eventually lead to radical organizational changes. All in all, it is important to emphasize that radical change is not necessarily a big jump in the development of an enterprise, but rather the result of many smaller changes that consort and together pull the organization in its new form (Smeds, 1994). In other words, a radical change can be the result of many incremental changes that reinforce each other to a common direction (Smeds, 1994).

2.1.2 A brief history of continuous improvement

The roots of modern improvement programs originate from initiatives undertaken in several companies in the 1800s, where management encouraged employee driven improvements, and incentive programs were set in place to reward employees that brought about positive changes in the organization (Schroeder

& Robinson, 1991; Bhuiyan & Baghel, 2005; Singh & Singh, 2012). During the late 19

, and early 20

, century, much attention was given to scientific management. This involved developing methods to help managers analyze and solve production problems using scientific methods based on tightly controlled time-trials to achieve proper piece rates and labor standards (Bhuiyan & Baghel, 2005; Singh & Singh, 2012).

During and after the Second World War, developments concerning improvement programs were really gaining momentum, for example: the “Training Within Industry” program of the US government, the adoption of this program in Japan by management experts like Deming, Juran, and Gilbreths, and later the adoption by the US forces (Robinson, 1990; Bhuiyan & Baghel, 2005). Eventually, the Japanese developed their own ideas, and quality control, which was used initially in the manufacturing process, had evolved into a much broader term, growing into a management tool for ongoing improvement involving everyone in an organization (Imai, 1986; Bhuiyan & Baghel, 2005). Because of its simple nature, the success stories of Japan, and the minimal costs involved in the implementation and maintenance, continuous improvement was warmly welcomed in Europe (Singh & Singh, 2012). Since then, continuous improvement is adopted by many firms, and has contributed enormously to practice (Singh & Singh, 2012).

Over the decades, several continuous improvement methodologies have developed based on a

basic concept of quality or process improvement in order to reduce waste, simplify the production line,

and improve quality (Bhuiyan & Baghel, 2005). Most popular and best-known approaches are Lean, Six

Sigma, Balanced scorecard, and hybrid methodologies such as Lean Six Sigma. The aforementioned

methodologies will be used intertwined in this research, since the foundation of the approaches are very

much alike. To advocate this, we briefly describe the four best known approaches.

Lean manufacturing is often described as a systematic approach to identifying and eliminating waste through continuous improvement by following the product at the pull of the customer in pursuit of perfection (Bhuiyan & Baghel, 2005). The aim of this methodology is the elimination of waste in every area of production. Its goal is to incorporate less human effort, less inventory, less time to develop products, and less space in order to become highly responsive to customer demand while producing top quality products in the most efficient and economical manner possible (Bhuiyan & Baghel, 2005).

More recently, Six Sigma began to gain popularity. Six Sigma can be defined as “an organized and systematic method for strategic process improvement and new product and service development that relies on statistical methods and the scientific method to make dramatic reductions in the customer defined defect rates” (Linderman et al., 2003). At the heart of this methodology is minimizing defects to the level of accepting close to zero, and a keen focus on reducing variation in all the process of the organization (Bhuiyan & Baghel, 2005). This is done by setting explicit six sigma goals, in order to increase performance (Linderman et al., 2003).

Another perspective on continuously improving is given by the balanced scorecard. The balanced scorecard translates the objectives of the organizations into measures, goals, and initiatives in four different perspectives, namely financial, customer, learning and growth, and internal business process (Bhuiyan & Baghel, 2005). The methodology is used to clarify and update the business strategy, link the objectives of the organization to the annual budgets, allow organizational change, and increase the understanding of the company vision and mission statements across the organization (Bhuiyan &

Baghel, 2005). An important difference between the balanced scorecard and the other continuous improvement methodologies is that its emphasis is placed on process that must be executed successfully for an organization’s strategy to succeed, rather than improving performance of existing processes (Bhuiyan & Baghel, 2005).

Lastly, hybrid methodologies play an important role in the continuous improvement landscape.

While individual methodologies help to improve organizational operations in many aspects, they are not necessarily effective at solving all issues. In order to overcome these issues, hybrid methodologies occurred (Bhuiyan & Baghel, 2005). One of the most well-known hybrid technologies is lean six sigma, a combination of lean manufacturing and six sigma. Lean six sigma maximizes shareholders value by achieving the fastest rate of improvement in customer satisfaction, cost, quality, process speed and invested capital (George, 2002).

To conclude, continuous improvement methodologies are constantly developing over time.

Nevertheless, comparing the foundations, all methodologies strive for continuously improving operations in order to increase performance, creating an important overlap between the several concepts.

Therefore, the current research does not exclude continuous improvement methodologies, but rather

embrace all concepts. We aim for a broad perspective of the influence of continuous improvement

efforts. Not excluding certain methodologies results in a broadly applicable study and ensures that our

findings are more generally applicable.

In short, continuous improvement methodologies have evolved tremendously overtime. We discussed its history and the four best known approaches. Moreover, the concept of continuous improvement was discussed, and its change approaches were explained. In the next paragraph, previous research on the implications of continuous improvement methodologies on the working environment will be discussed.

2.2 Working environment

It is widely recognized that continuous improvement initiatives are programs for change, and it is also known that change itself may create uncertainty and stress (Kiefer, 2005; Parker 2003). Such initiatives have consequences for all personnel involved, it is therefore a substantial change, which in itself has consequences for the quality of the working environment (Hasle et al., 2012).

As mentioned before, the concept of the working environment is used to embrace employees’

occupational health and safety, including the psychosocial factors at work (Hasle et al., 2012). Popular approaches to research the effects of continuous improvement on the working environment is to study job characteristics, such as autonomy, demands, and skills, and the relation with various employee outcomes, such as job satisfaction, commitment and health (Hasle et al., 2012; Parker, 2003). In other words, the working environment can be understood as the interplay between job characteristics and employee outcomes.

In order to operationalize the concept of job characteristics, we adopted the job characteristics model (JCM) of Hackman and Oldham (1976), which argues we can describe any job in terms of five core job dimensions, namely: skill variety, task identity, task significance, autonomy, and feedback (Robbins & Judge, 2014). Table 1 provides an overview of the five core dimensions.

Job Characteristic Explanation

Skill variety The degree to which a job requires a variety of different activities, so the worker can use a number of different skills and talents (Robbins & Judge, 2014).

Task Identity The degree to which a job requires completions of a whole and identifiable piece of work (Robbins & Judge, 2014).

Task Significance The degree to which a job affects the lives or work of other people (Robbins

& Judge, 2014)

Autonomy The degree to which a job provides the worker freedom, independence, and discretion in scheduling work and determining the procedures in carrying it out (Robbins & Judge, 2014).

Feedback The degree to which carrying out work activities generates direct and clear information about your own performance (Robbins & Judge, 2014).

Table 1: Explanation of the job characteristics

In terms of the debate concerning whether continuous improvement methodologies are beneficial or not, it is suggested that continuous improvement methodologies require active employee cooperation by proposing and working out improvements. However, employee interests may be negatively affected by that cooperation. For example, the improvements might be laid down in standard operating procedures (SOPs) to which employees are supposed to conform (Benders et al., 2017). This may be seen to limit an employee’s task autonomy. However, Benders et al. (2017) emphasize in their research that participating in designing SOPs must be seen as a high level of autonomy. This discussion leads us to deepening previous research on the effects of continuous improvement on the working environment.

Hasle et al. (2012) point out that continuous improvement methodologies are likely to have a negative effect on the working environment in relative simple manual work. Still, this is not necessarily true for all cases. For example, it is argued that continuous improvement increases employee’s autonomy and it creates a highly motivating working environment (Adler, 1994; Womack, Jones, & Roos, 1990;

Parker, 2003). Therefore, it is needed to study the relationship between continuous improvement and the working environment through the lens of practice. Besides, it is valuable to understand the effects of continuous improvement on the working environment as a consequence of the implementation strategy and the industrial context, next to the practice lens (Hasle et al., 2012). In other words, continuous improvement influences the working environment by its implementation strategy, practices, and the change context (Hasle et al., 2012; Landsbergis, Cahill, & Schnall, 1999), which will have different consequences for the working environment.

If we further analyze the positive and negative effects of continuous improvement on the working environment, it is essential to recognize that the effects might be dependent on the implementation strategy, practices, and the change context, as mentioned above. For example, it is suggested by Hasle et al. (2012) that the effects of continuous improvement on the working environment depends on the task complexity (e.g. practices). They compared eleven studies and found that the studies which reported negative effects of lean on the working environment are based on manual jobs with low complexity (Hasle et al., 2012).

Apparently, the changes in manual production increase work speed and lower job autonomy,

and additional elements of team work have such limited weight that they cannot compensate for the

work intensification (Delbridge, 2005; Hasle et al., 2012). On the other hand, the effects of continuous

improvement on jobs with a higher complexity are more likely to show a positive result (Hasle et al.,

2012; Seppälä & Klemola, 2004). Furthermore, the implementation process is particularly important for

the behavioral outcome of the change recipient. Earlier research suggests that a weak change program

with little employee involvement accounted for less positive outcomes concerning the effects of

continuous improvement on the working environment (Seppälä & Klemola, 2004). This suggests that

employee involvement can positively influence the implementation strategy, which has positive effects

on the working environment.

In summary, the working environment can be understood as the interplay between job characteristics and employee outcomes. In order to operationalize this concept, we adopted the JCM of Hackman and Oldham (1976). According to previous research, it would be shortsighted to assume that continuous improvement has ultimately a positive or negative effect on the working environment (e.g.

Delbrigde, 2005; Hasle et al., 2012; Benders et al., 2017). For example, previous research has shown that that the effects, either positive or negative, can depend on the change context, practices, and the organization’s implementation strategy (Hasle et al., 2012). Therefore, further research is needed in order to set the debate concerning the effects of continuous improvement on the working environment.

2.3 Leadership style

Previous research has shown that the outcomes of the implementation of continuous improvement methodologies and the effects on the working environment are highly dependent on managerial support and employee involvement (Dombrowski & Mielke, 2013; van Dun & Wilderom, 2016). It is meaningful to know if leadership affects the implementation of continuous improvement methodologies and its effects on the working environment, since little is known about this interrelationship. If so, it is interesting to explore which leadership style is most effective. Consequently, this results in the last key concept of our study, leadership.

Considering current research on the relationship between leadership and continuous improvement practices, Laureani and Antony (2017) performed a systematic review of 179 papers of the past twenty year. They found that leadership is a requirement for continuous improvement deployment in organizations, and that it is critical in sustaining improvement. This is in line with the aforementioned articles we discussed. An interesting finding of Laureani and Antony’s study (2017) is that leadership has been recognized as a mechanism for embedding cultural values and norms into an organization (Laureani & Antony, 2017; Schein, 1983). At the same time, the idea of culture affecting the type of leadership in an organization has been advanced (Bass, 1985; Laureani & Antony, 2017), suggesting the existence of a reciprocal relationship between leadership and culture in organizations (Laureani & Antony, 2017; Waldman, 1993). This is interesting considering our adopted definition of continuous improvement, emphasizing the role of culture of sustained improvement. Lastly, they emphasized the need for more research in the effect of social constructs on the relationship between continuous improvement and leadership, such as the working environment and employee well-being (Laureani & Antony, 2017). This is very much aligned with our research, wherein we aim to explore how continuous improvement practices affect the working environment, and what role leadership plays in this relationship.

Moreover, it is argued that in order to continuously change, employees are required to modify

not only work routines, but also social practices (Carter et al., 2013). To cope with these changes,

employees have to retain effective elements of their performance routines and integrate them with new,

more efficient ones (Feldman & Pentland, 2003). What follows is that these employees often experience

constraints in maintaining their original levels of performance while adapting to their new job requirements. To overcome these tensions and facilitate effective performance, managers must exhibit appropriate leadership behaviors (Bass & Riggio, 2006; Burke, 2002; Carter et al., 2013).

We assume the same holds true in continuous improvement initiatives, since both concepts continuously change their practices. Moreover, if managers are unable to align their leadership style and skills with the circumstances they face, they are likely to be judged failures, regardless of how effective they might have been previously (Burnes, 2014). This is also known as the misalignment argument, which states that there is a lack of fit or alignment between the leadership style and the organization’s situation (Burnes, 2014). Therefore, in the following paragraphs, we will discuss the evolution of leadership styles over the years, and how leadership style is valuable in reaching a sustainable continuous improvement culture.

Evolution of leadership styles

A considerable amount of literature has been published on leadership style and its effects on change and employee outcomes. Several approaches have developed over the past, such as trait-based ‘one best way’ to lead approaches from Kanter (1991), and Dulewicz and Herbert (1996), or behavior-centered approaches as proposed, for example, by Wright (1996), and the famous Michigan and Ohio studies by Stodgill and Coons (1957) and Likert (1961).

Although trait and behavior-centered approaches of leadership have some support, there are many things that can influence a leader’s effectiveness over and above a leader’s qualities and behavior (Senior & Swailes, 2010). Therefore, contingency approaches to leadership emerged, such as Tannenbaum and Schmidt’s (1973) situational influences on leadership effectiveness, or Hersey and Blanchard’s (1993) situational theory. From another perspective, contingency theory also has its downsides. For example, there are just too many contingent variables that the theory has to account for, and studies struggled to justify why some situational variables should be included and others excluded (Senior & Swailes, 2010).

Next to the aforementioned approaches, new leadership theories and approaches emerged, such as transactional and transformational leadership. Transactional leadership is based on giving people rewards for doing what the leader wants (Senior & Swailes, 2010). Transformational leadership, on the other hand, relies on giving followers a purpose, a vision of something to aim for, and on creating follower identification with the leader (Senior & Swailes, 2010). Moreover, transformational leadership is often linked with managerial effectiveness during organizational change and improvement (Bass &

Rigio, 2006).

In line with above evolution, lean leadership emerged. This particular form of leadership is

considered to be the missing link between lean production and an enterprise with a continuous

improvement process (Dombrowski & Mielke, 2013). An important assumption that is been made within

lean leadership is that the leader is not the one who adds value to the product or service: it is the shop

floor worker (Dombrowski & Mielke, 2013). It is suggested that lean leadership is necessary to achieve a continuous improvement of the organizational system and all its processes (Dombrowski & Mielke, 2013). Lean leadership is suggested to be the missing link between toolbox lean and the learning and continuously improving organization of lean thinking (Orr, 2005; Mann, 2009). A comprehensive definition of lean leadership is given by Dombrowski and Mielke (2013): “Lean leadership is a methodical system for the sustainable implementation and continuous improvement of lean production system. It describes the cooperation of employees and leaders in their mutual striving for perfection.

This includes the customer of employees and leaders”.

As mentioned before, continuous improvement can be seen as a culture of sustained improvement targeting the elimination of waste in all systems and processes of an organization (Bhuiyan

& Baghel, 2005). Moreover, it is considered that successful continuous improvement implementation is highly dependent on firm employees (Bhasin & Burcher, 2006; Tortorella et al., 2018). In this context, leaders play a crucial role in the establishment of such continuous improvement culture (Mann, 2009;

Shook, 2010; Tortorella et al., 2018). This improvement culture encompasses all attitudes and behaviors that create an ongoing striving for perfection (Aij & Teunissen, 2017). According to Aij and Teunissen (2017:714), “all people in the organization are part of an improvement culture. Leaders have the role to coordinate the problem solving and process management of the team”.

Next to the improvement culture, Dombrowski and Mielke (2013) describe four more lean leadership principles in their study. Table 2 provides an overview of the five lean leadership principles Dombrowski and Mielke (2013) and Aij and Teunissen (2017) discuss in their studies.

Lean leadership principles

Explanation

Improvement culture

This concept encompasses all attitudes and behaviors that create an ongoing striving for perfection (Aij & Teunissen, 2017)

The need for self- development

This concept is based on awareness that the transition to lean leadership demands new leadership skills (Aij & Teunissen, 2017; Dombrowski & Mielke, 2013).

Lean leaders must behave as role models and use the necessary leadership skills (Aij & Teunissen, 2017).

Qualification of employees

This concept involves fostering employee involvement and learning (Aij &

Teunissen, 2017; Dombrowski & Mielke, 2013). It is suggested that qualified employees are better able to participate in continuous improvement, problem solving, and other lean activities (Aij & Teunissen, 2017).

Gemba This concept can be understood as the place of value-adding, the necessity for lean leaders to understand what happens on the front lines, and to understand the problems and processes that their employees deal with (Aij & Teunissen, 2017;

Dombrowski & Mielke, 2013).

Hoshi Kanri This concept uses a system approach to improvement, combining all teams to align with the same strategic goal (Aij & Teunissen, 2017; Dombrowski &

Mielke, 2013). Hoshin kanri provides the overarching direction for teams in combination to achieve long-term goals (Aij & Teunissen, 2017).

Table 2: Lean leadership principles

The conceptual model of the Dombrowski and Mielke (2013) study covers, partially, the concepts of this study, namely continuous improvement, the emphasis on the value-adding business units (i.e. gemba), and leadership style, since the model focuses on an integrated lean leadership system.

It gives an interesting view of the interrelation between leadership, continuous improvement, and the the value-adding business units. The model points out the importance of leadership in continuous improvement practices, and how important it is as a leader to be involved at the place of value-adding.

In the current study, we dig a little deeper, and explore how leadership affects the interrelationship between continuous improvement practices and the working environment as a whole.

Proposed framework

In short, it becomes clear that the concepts of continuous improvement and leadership went through quite an evolution. Based on the reviewed literature, leadership is valuable because it can enable an improvement culture, which is needed for all continuous improvement methodologies. Nevertheless, the question remains how leadership plays a role in the relationship between continuous improvement and the working environment. Moreover, it became clear that continuous improvement affects the working environment, but if it positively or negatively affects the environment remained undecided. Combining the three variables makes an interesting case for the current study, wherein it is aimed to explore how continuous improvement efforts affect the working environment, and how leadership influences this relationship. The aforementioned can be summarized in a conceptual framework, as shown in Figure 1.

Figure 1: Conceptual framework

3. RESEARCH METHODOLOGY

The purpose of this study is to gain insight in the interrelationship between continuous improvement efforts, the working environment, and the role of leadership style. This study is well suited for qualitative research, or to be more specific, an exploratory case study. As explained by Yin (1994), when delving into the how and why of a series of events, the case study offers advantages not found in quantitative approaches. Furthermore, qualitative data allows the researcher to more fully explore complex relationship between variables in their natural setting (Worley & Doolen, 2006), such as the relationship suggested in this study.

It is widely acknowledged that qualitative research is subject to biases such as research bias or over-reliance on one source. To protect the validity of this research, this study is built upon the pillars of triangulation, which will help increase research robustness (Patton, 1990). Triangulation occurs when data from multiple sources of different data collection methods support the same conclusion, or at least, do not contradict it (Miles & Huberman, 1994). From another perspective, the rational for combining data collection methods (i.e. triangulation), is to provide stronger substantiation of constructs and propositions (Eisenhardt, 1989). In order to reach triangulation, we will use three sources of data, namely: (1) information derived from semi-structured interviews, (2) information derived from observations, and (3) information derived from internal documentary and archival data of the case site.

Criteria for case selection

Our case selection has important implications for proper execution of our research. First of all, our study requires a case that has experience with continuous improvement, since this is one of the cornerstones of our study. Secondly, the organization should have the impression that their performance is different since the implementation of a continuous improvement methodology. This is of great importance since we aim to explore the effects of continuous improvement on the working environment and the influence of leadership. When there is no difference compared to the situation without continuous improvement practices, little effects and influences will be found. Lastly, we should have the possibility to analyze multiple cases (e.g. teams) to compare them with each other in order to sketch thorough conclusions.

3.1 Research setting

The subject of the case study is one of the largest construction and project development companies in the Netherlands. They have adopted Lean as their preferred continuous improvement method. This company develops and realizes large and small projects from multiple regions and more than twenty offices, ranging from homes, schools and residential care complexes to offices, shopping centers and sports and recreational facilities. The organization is also active in the maintenance industry. Facilitated by their head office, all offices work independently and with their own identity in the market.

Considering the construction industry, ever since the late 1800s, it has aroused much interest among

scholars such as Frank B. Gilbreth, and his motion study (Forbes, 2001). Its increasing competitiveness,

innovativeness, and the scarcity of (human) resources make this industry an interesting one to study (Forbes, 2001).

Considering the scope of this research, we will solely focus on one of the offices of this company. Moreover, research shows that continuous improvement can take place at three different levels within the organization: at the management, group, and individual levels (Bhuiyan & Baghel, 2005). Therefore, we aim to subtract data from these three hierarchical layers within the organization in order to get a sufficient view on their continuous improvement practices, how it affects the working environment, and the role leadership plays herein.

An interesting fact is that within the group level, there is a similar hierarchy as described earlier.

Project groups within this organization consist of a project manager, a chief executor, two assistant executors (i.e. foremen), and internal and external construction workers. The project group is especially interesting for the sake of this study. According to the organization’s lean manager, this is the part of the organization that is affected most by the continuous improvement practices. Therefore, the scope of this research will cover two project groups. First of all, because this part of the organization is most affected by continuous improvement practices. Secondly, because by selecting two cases, we can compare the outcomes and draw solid conclusions.

3.2 Data collection and analysis 3.2.1 Interviews

As mentioned before, our first source of data consists of information derived from semi-structured interviews. The interviewees consist of the lean manager of the company, two project managers, two chief executors, two foremen, two planners, two internal construction workers and one external construction workers. This results in a total amount of twelve semi-structured interviews. It is valuable to interview the whole project group, because in this way we can explore to what extent the continuous improvement principles are known and executed throughout the hierarchy, as shown in Figure 2.

Moreover, it becomes possible to really dig into the effects of continuous improvement on the working

environment, and the role leadership plays herein, since we interview employees in a managerial

position as well as shop floor workers.

Figure 2: Hierarchy of the interviewees

To be more specific, we interviewed the lean manager in order to explore what the goal of the lean implementation is, and to what extent the effects on the working environment are accounted for.

Moreover, by interviewing the lean manager, it became possible to explore what the exact role of a lean manager is, and why the methodology is implemented. After interviewing all the participants, we decided to discuss the results in an in-depth interview. In short, interviewing this key figure led us to get a broad perspective on the background of the implementation and a fresh perspective on our results.

Secondly, we interviewed employees in a managerial position (i.e. project manager, chief executors, and foremen). Interviewing these employees helped us to explore how the company’s continuous improvement vision translates to their fellow workers and what changes they expect and experienced in their working environment. Moreover, it helped us to understand how they used their position (i.e. used leadership and what leadership style) to account for possible negative outcomes, or to provoke positive outcomes concerning the working environment.

Lastly, internal and external construction workers were interviewed. These employees helped us to dig in their experiences considering the continuous improvement implementation and its effects on the working environment. As mentioned before, the shop floor workers are the ones that really experience the effects of continuous improvement. They made us clear what has happened during the transition, what has changed, why it changed, and what role leadership played in these effects.

Eventually it was most interesting to discover if the answers of the construction workers correspond with the answers of the employees in a managerial position and the lean manager. This

Lean manager

Project manager

Planner Chief executor

Foremen

Internal construction

workers External construction

workers

showed us to what extent the continuous improvement principles were translated to all lower layers in the hierarchy (see Figure 2). Information about the interviewees is presented in table 3.

Role and abbreviation Workplace and type of construction

Years of service

Lean experience

Source of experience

Lean manager (LM1) Office 1 year <10 years Training and presentations Project manager (PM1) Office, traditional

construction

3 years 1,5 years Presentation

Project manager (PM2) Office, modular construction

3 years 10 years Training and presentations

Chief executor (CE1) Construction site, traditional construction

1,5 years 1,5 years Presentation

Chief executor (CE2) Construction site, traditional construction

15 years <10 years Training and presentations

Planner (PL1) Office, traditional construction

2 years 1,5 years Presentation

Planner (PL2) Office, modular construction

1 year 5 years Training and presentations

Foreman (FM1) Construction site, traditional construction

36 years <5 years Training

Foreman (FM2) Construction site, traditional construction

28 years 7 years Presentation

Project manager at sub- contractor (EPM1)

Construction site, traditional construction

< 1 year Unknown Unknown

Carpenter (CP1) Construction site, modular construction

26 years 4 years Presentation

Carpenter (CP2) Construction site, modular construction

39 years 4 years Presentation

Table 3: Overview of participants

Data analysis

After conducting the interviews, data collected from interviews was analyzed. After each interview, the

audio-recording was transcribed verbatim. Transcripts were checked for accuracy. Listening to and

reading the transcripts several times, simplified recognition of important ideas and concepts. These

concepts and ideas were labelled in the code-book, constructed in ATLAS.ti.

Batches of similar codes were grouped into themes, which were then grouped and labelled as categories. These categories are integrated to give a full picture of participants’ experiences. By analyzing the code-book, it became possible to group opinions about the questions the participants were asked. Identifying these opinions and arguing these answers resulted in a clear view about the subjects that are addressed in the current study. Besides describing this relationship, the information conducted from interviews was used to discuss what is said in the literature with respect to the outcomes of the interviews.

The analysis of the transcripts followed the recommendations of Strauss and Corbin (1990) for open, axial, and selective coding of all interview data. Firstly, open coding can be described as the analytical process of generating higher-abstraction level type categories from sets of concepts or variables (Wolfswinkel, Furtmueller, & Wilderom, 2013). Secondly, axial coding is the further developing of categories and relating them to their possible sub-categories (Wolfswinkel et al., 2013).

Lastly, with selective coding, the categories are integrated and refined (Wolfswinkel et al., 2013). To be more specific, an inductive approach will be taken in analyzing the data conducted from the interviews.

A major advantage of this approach is its purpose. The purposes for using an inductive approach are to (1) condense raw contextual data into a brief, summary format, (2) it establishes clear links between the research objectives and the summary of findings that are derived from the raw data, and (3) it helps developing a framework of the underlying structure of experiences that are evident in the raw data (Thomas, 2006). By using the inductive approach and the approach recommended by Strauss and Corbin (1990), it was possible to categorize the transcripts of the interviews into categories, which could be disaggregated into first and second order codes. Our codebook can be found in appendix 4. Coding examples can be found in table 4.

Categories Themes Codes Description Example Participant Influence

lean on working environment

Job

characteristics

SV Skill variety This shifted a lot in the past 10 years. We actually do a lot more concerning the execution. Before, these tasks were the responsibility of the chief executor.

FM1

Leadership Leadership style

TF Transformational The good thing about a leadership style is that you can comfort people to do things their own way. From my point of view, everyone has its own personality and character. Everyone likes to handle things their own way. I think

PM2

you can get the most out of people when you take people for who they are.

Continuous improvement

CI Practices DAF Dedicated Alliance Function

The organization tried too long to provoke change from the people. That is also the reason why I had to follow certain courses, and why we appointed change managers. But that wasn't enough.

That's why the organization had chosen to go for a different approach.

They decided to hire a Lean manager, because it was suggested that it was needed to have a continuous focus on continuous

improvement in order to succeed.

PM2

Table 4: Coding examples

3.2.2. Observations

Next to gathering information via semi-structured interviews, we also collected data by doing observations. To be more specific, we engaged in participant observations. Participant observations involve social interaction in the field with subjects and direct observations of relevant events (Rynes &

Gephart, 2004). According to Rynes and Gephart (2004), in participant observation, it is common for a researcher to play a role of a member of the group studied and to use the subjective experiences as critical data. In our case, we engaged in several meetings, such as a so called lean-meeting with all the change managers of the organization, a weekly stand with the lean department of the case site, meetings with construction workers, and informal talks throughout the company. Our observation form can be found in appendix 5.

Data analysis

During the observations, an observation form was filled in systematically in order to provide a clear

overview of the observation. The topics of the observation form consisted of key topics of the current

research, namely: (1) continuous improvement practices, (2) effects on the working environment, (3)

job characteristics, (4) employee outcomes, (5) leadership style, and (6) effects of leadership. The data

derived from the observations was used to cross reference information derived from interviews and archival data.

3.2.3 Archival data

The last source of information is internal documentary and archival data of the case site. By studying internal data such as KPIs of the organization, lean-related documents, and mission and vision statements of the continuous improvement project, it became possible to uncover how organizational agreements express themselves in practice and if the case-site really lives up to their continuous improvement-principles. Moreover, the archival data helped us understand the ins and outs of the continuous improvement project. Therefore, it helped us to ask better (probing) questions during the interviews and observe with a keen eye.

Data analysis

First, we analyzed documents related to the lean program. The insights derived from this analysis were collected, which helped us shed a light on the establishment and foundations of the lean program within the case site. Later, this information helped us to better understand the respondent responses and experiences towards the program during the interviews and observations. In short, the collected data helped to get beyond initial conceptions. Table 5 provides an overview of the collected documents.

Source Pages

Overview continuous improvement structure 1

Outcomes satisfaction survey 23

KPI documents 1

A5/roadmap 1

Table 5: Overview archival data

To summarize, we obtained our data via interviews, observations and archival data collection. An overview of all the collected data can be found in appendix 6.

3.3 Research quality criteria 3.3.1 Controllability

Controllability can be described as the extent to which a study can be replicated. According to Van

Aken, Berends, and Bij (2007), controllability is the prerequisite for the evaluation of validity and

reliability. In the current study, controllability is guaranteed by explicitly describing our phases of

research, including the way how we derived and analyzed our data. In the previous paragraphs we

discussed how our data is collected, how and why our respondents were selected, and how our data is

analyzed. Moreover, as mentioned above, we recorded every interview and transcribed it verbatim, and

documented all our observations. The collected data are granted upon request of researchers.

Nevertheless, we added our codebook and observation form in appendix 4 and 5 in order to make our most important data readily accessible.

3.3.2 Reliability

The outcomes of a study are reliable when they are independent of the particular characteristics of that study and can therefore be replicated in other studies (Van Aken et al., 2007; Yin, 1994). Within the concept of reliability, previous research recognizes four sources of bias, namely: the researcher, the instrument, the respondents, and the situation (Van Aken et al., 2007). In other words, the outcomes should be independent of the researcher who conducted the study, the respondents, the measuring instrument employed, and the specific situation in which the study was carried out (Van Aken et al., 2007).

First, in order to overcome the researcher bias of reliability, we used a strategy called standardization. Standardization is the development and use of explicit procedures for data collection, analysis, and interpretation (Van Aken et al., 2007). In our case, we made an interview protocol in order to ask every interviewee the same questions and inform every interviewee equally (see appendix 1-3), we used semi-structured interviews, coded our data in ATLAS.ti, and used an observation form during the observations.

Secondly, we overcame reliability biases concerning instruments by using multiple research instruments, namely: semi-structured interviews, observations, and archival data (i.e. triangulation).

Triangulation can remedy the specific shortcomings and biases of certain instruments by complementing and correcting each other (Van Aken et al., 2007).

Thirdly, biases concerning the reliability of respondent were accounted for by letting the lean manager and project managers select our interviewees, therefore the respondents were selected randomly. Moreover, we interviewed as many as possible roles, which resulted in countering this source of unreliability (Van Aken et al., 2007). Furthermore, we interviewed two different project groups in order to overcome overreliance on one specific case.

Lastly, biases concerning the reliability of circumstances were countered by interviewing and observing at different moments in time (Van Aken et al., 2007).

3.3.3 Validity

Validity refers to the relationship between a research result or conclusion and the way it has been generated (Van Aken et al., 2007). The concept of validity consists of three different types, namely construct validity, internal validity, and external validity (Van Aken et al., 2007).

Firstly, construct validity is the extent to which a measuring instrument measures what it is

intended to measure (Van Aken et al., 2007). We ensured the construct validity of our research by

assessing our research instruments ourselves, and we asked an expert to evaluate the measuring

instruments (our supervisor). We used the obtained feedback to repair the flaws that were detected.

Secondly, internal validity concerns conclusions about the relationship between phenomena (Van Aken et al., 2007). In other words, the results of a study are internally valid when conclusions about relationships are justified and complete (Van Aken et al., 2007). In order to do so, we used multiple sources of data to view our research questions from several angles, namely: (1) semi-structured interviews in order to compare the answers of our interviewees on an equal level, (2) we executed observations on the case sites, and (3) analyzed archival data. Besides, we conducted interviews and observations on several construction sites in order to overcome overreliance on one case.

Thirdly, external validity refers to the generalizability of research results and conclusions to others (Van Aken et al., 2007). Generalizability is sought by comparing multiple project groups and different hierarchical layers with the organization. Moreover, data derived from the interviews, observations, and archival information is compared to what is written in previous research. Therefore, validity of this research is ensured.

In summary, the current research can be described as a qualitative study, performed through an explanatory case study. Sources of data that will be used are interviews, observation, and case-site documentary and archival data. The use of multiple sources of data, also known as triangulation, resulted in a robust research methodology. The phases of the research methodology are visualized in Figure 3.

Figure 3: Phases of research methodology

RESULTS

In this section, an overview of our findings will be presented. First, the continuous improvement practices of the case site will be explained. Second, the implications of continuous improvement on the working environment will be elaborated on. Lastly, the role of leadership in this relation will be presented.

During the interviews, we discovered an important distinction between the perceived implications of continuous improvement and the effects of leadership of the employees in a staff position versus the employees on the construction site. The aforementioned distinction will be made between the chief executor and foremen (see Figure 2). Several factors, such as task complexity and external contingencies, led us to this separation of staff and construction site personnel. Therefore, in our findings, we made a distinction between the staff perspective and the construction site perspective.

Observations Archival data collection

Semi- structured interviews

Transcription and database development

Data coding

and analysis

4.1 Continuous improvement practices

In order to better understand the influence of continuous improvement on the working environment, and the role of leadership in this relation, the continuous improvement practices of the case site will be explained.

According to the continuous improvement structure and our observations, the continuous improvement practices of the case site are structured as follows. First, a business plan is made by every location of the company. In this business plan, strategic, operational, and tacit goals are set. The goals are visualized and operationalized by an X-matrix, an A3, and KPIs. Next, at every location of the company, you will find an Plan-Do-Check-Adjust board. On this board, the KPIs are visualized, along with its trends and analysis, improvements, attentions, and adjustments. Lastly, next to the location boards, every division has its own Plan-Do-Check-Adjust board in order to keep track of their divisional goals.

In order to keep track on progress, on staff level, each division has a weekly stand whereby its board is discussed. Every two weeks, there is a meeting to discuss the location’s board. All in all, these meetings provide input to update the division boards as well as the location’s board, which result in valuable insights concerning the KPIs and the company’s goals as captured in the location’s business plan, which in the end helps the organization to continuously improve.

At the construction sites, there is a daily kick-off meeting with all the executors and foremen.

In these meetings, day-to-day business is discussed in order to work as efficient as possible. These meetings take place in the, so called, shack. Here you find boards which present safety concerns, a planning, particularities, and present subcontractors. Every morning, these topics are discussed.

Furthermore, change managers are appointed throughout the organization. Change managers are responsible for translating the change vision throughout the organization and communicate the current topics of continuous improvement.

All in all, our interviews, observations and archival data revealed that the key concepts concerning the continuous improvement structure are the business plans, which consists of an A3 wherein operational and strategic goals are captured, an X-matrix, and the key performance indicators to keep track on the firm’s performance. In order to visualize the goals and performance, Plan-Do- Check-Adjust boards are discussed on a location and division level. Lastly, change managers are appointed in order to translate the change vision throughout the organization.

4.2 Continuous improvement and the working environment

In this section we will present our findings concerning the influence of continuous improvement on the

working environment. Since the working environment consists of the job characteristics and employee

outcomes, we will first present the findings on the first concept. Next, we will present the influence on

the latter, together forming the effects of continuous improvement on the working environment.

Before diving into the results concerning the influence of continuous improvement on the working environment, it is essential to mention that the case company has two forms of building activities. The first form can be defined as traditional construction, which entails a process whose primary structural elements are constructed entirely or largely on-site (Designing Buildings Wiki, 2018).

The other form is called modular construction. This type of construction is a process that uses prefabricated elements that are assembled in a factory and are transported to the site as a whole or mostly complete (Designing Buildings Wiki, 2018).

This distinction is of great importance since the complexity can differ between the two types of construction, whereas building prefabricated can be considered as less complex than traditional constructions.

The interviews gave us valuable insights concerning the influence of continuous improvement on the working environment. From a more general perspective, the lean implementation at the case site led to more transparency and created engagement among the employees. The aforementioned was accomplished by organizing weekly stands or so-called kick-off meetings at the office respectively the shack. Moreover, these meetings created an opening for employees to share day-to-day business, the status of certain goals, and particularities and concerns before the day has started. Sharing such information made it possible to anticipate on issues before becoming problems. Moreover, it helped the organization to keep track of their goals as set in their business plan. Furthermore, it created a continuous feedback loop since these meetings were scheduled following a structured pattern. As one of the participants stated:

Well, in the past it was the case that, at the beginning of each day, you got a clear task from your chief executor in the shack. During that task, you only came back to the shack to ask important questions. When you asked a dumb question, you got completely burned down. Currently, you start the day with a kick-off meeting and discuss the board, you can see the planning of the day, if people are sick. What follows is that you have much more influence on day-to-day business, and you can already solve and answer a lot of issues and questions beforehand. You can really take the stage to share any concerns or particularities concerning, for example, safety, improvements, and many other things (LM1).

Taking the staff perspective, the lean implementation had several interesting implications.

Considering the influence on the job characteristics, we discovered positive effects concerning

autonomy, skill variety, and feedback. As one of the participants stated, the company decided to loosen

up, and asked all the entities ‘where to play, how to play, and show me the money’ (LM1). Every location

had to write a business plan wherein they made their action plan for success. By doing this, the

organization had the power and money of a large firm, but the flexibility of a smaller organization

(LM1). By following their own business plan, each entity created more ownership and responsibility of

its employees, since they came up with the plan (LM1, PM1 & CU1). This transition required