Volvo's HR Practices - Focus on Job Enrichment

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"To create an environment that will give satisfaction to the employees in their daily tasks is a matter for society as a whole. Due to the advanced economic and social structure of Swedish society, we have encountered earlier than more countries new problems in the organization of jobs and the working environment. We do not look upon these problems as a threat. Our familiarity with this type of question could well lead to an improvement in competitive ability."¹

- Pehr G Gyllenhammar, Former President, Volvo Group in 1973.

"By creating value for our customers, we create value for our shareholders. We use our expertise to create transport-related products and services of superior quality, safety and environmental care for demanding customers in selected segments. We work with energy, passion and respect for the individual."

- Volvo's Mission Statement, www.volvo.com.

Introduction

In May 1993, the Swedish automobile major, Volvo AB (Volvo) announced the closure of its car manufacturing facility at Uddevalla, Sweden, barely five years since its launch in 1989. A year later, the company had to shutdown yet another world famous facility, the car assembly plant at Kalmar, also in Sweden. Reacting to the two closures within a year's gap, analysts said Volvo's human centric approach towards automobile manufacturing was no longer feasible in the fiercely competitive scenario of the 1990s, with most companies striving hard to improve production efficiency. Volvo was well recognized in the industry for its employee-friendly policies ever since its inception.

Guided by the 'Volvo Way,' the company had made conscious efforts to implement job enrichment concepts such as job rotation, job enlargement and employee work groups in its manufacturing facilities (Refer Exhibit I for the Volvo Way). In the late 1960s and early 1970s, when the company faced the problem of increasing employee turnover and absenteeism, it introduced these concepts and obtained positive results.

Acknowledging this, Gyllenhammar, in Harvard Business Review wrote, "Volvo's Kalmar plant, for example, is designed for a specific purpose: car assembly in working groups of about 20 people. If it didn't work, it would be a costly and visible failure, in both financial and social terms. We would lose credibility with our people and those who are watching from outside."²

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1] Taylor, Lynda King, Worker participation in Sweden, Industrial & Commercial Training, January 1973.

2] Gyllenhammar, Pehr G, How Volvo adapts work to people? Harvard Business Review, July/August 1977

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