Beyond Toaster Ovens:
Paul Revere's "Quality Has Value" Program

By Tom Campbell

"The company that believes its employees' enthusiasm can be bought with toaster ovens has some other problems to solve before starting a quality process," writes Patrick L. Townsend in his book Commit to Quality. People will not do good work just to get a $50 premium, argues Townsend, who is director of Paul Revere's Quality Team Central. "They will, however, willingly work, and do exceptional work," he continues, "for a company that expresses its gratitude for their efforts--even if the most expensive symbol of that gratitude is a $50 item."

The Paul Revere Insurance Companies have a program, described in Townsend's book, that incorporates some elements of traditional Quality Circles and participative management models, but with significant differences. The seeds of the program were in what In Search of Excellence author Tom Peters, along with others, has called a "skunkworks"--as Townsend explains, "a quasi-revolutionary, slightly smelly, bootleg operation run in just one department of a company."

Mike McCool, had of Paul Revere's Information Services Division, instituted an Employee Achievement Award Program in 1981. The program worked fine until McCool was promoted into another department. Then, without official management sanction, the program died.

Then in 1983, a letter from the chairman of Avco Corp., Paul Revere's parent company at the time, outlined a philosophy of quality in a general policy letter. (Textron, Inc. has been Paul Revere's parent since late 1984.)

The book Quality is Free by Philip B. Crosby, which describes improvements in manufacturing operations, guided Revere's Quality Improvement Team, later named the Quality Steering Committee. This group was the core of what became the company's Quality Has Value program.

President Aubrey K. Reid and those reporting to him "made a conscious decision to really buy into this whole idea and to change the culture of the company," recalls Townsend. In 1984, realizing that its leading position as a provider of disability insurance was in danger of slipping, Paul Revere instituted the Quality Has Value program. Savings by the end of that first year totaled $8.5 million.

Skunkworks
Townsend says a "skunkworks" operation was valuable for Paul Revere. "It helped jump-start the whole process," according to Townsend, "the idea being that if you can demonstrate throughout the company the willingness of top management to back some non-standard activity, it sends a message saying, "Hey, maybe we can do the things we've been thinking about."

A "skunkworks," however, is not necessary for every company. "Whatever you need to transmit the message," says Townsend. He advises companies to adopt the concepts he espouses and adapt the techniques.

"The biggest decision," says Townsend, "the key to the whole process, was the decision to involve everybody right up front. The approach that results in the classic quality circles is to ask, 'Who can we get involved in this?' And the answer is about 10 percent of the folks, because you can get 10 percent to volunteer for anything.

"If you ask 'Who wouldn't we want involved in this?' the answer to that is obviously 'Nobody.' Therefore you must have 100 percent involvement."

Not Quality Circles
Townsend makes three basic distinctions between traditional quality circles and Paul Revere's Quality Has Value program. "First of all, ours are non-voluntary. We have 100 percent of the company on a Quality Team, everybody from the president of the company to the person in the mailroom to the clerk in the office out in East Overshoe. They are all encouraged and called upon--and expected--to take an active part in the continuous improvement of the company, rather than the quality circle arrangement, which is only about 10 percent."

Second, Paul Revere's quality teams have more autonomy than most quality circle programs allow. "Once a quality circle has defined a solution to a problem," says Townsend, "they make a presentation to management, and management says yes or no. Management shares the responsibility for the solution, but not the authority for the implementation."

Because Paul Revere has so many teams, there is not enough timefor them all to make presentations to management. Plus, according to Townsend, that would defeat the purpose. "The guidance is that if whatever you are looking at is your responsibility--which is roughly defined as 'you get blamed if it goes wrong'--then you may assume the authority, and just do it."

This approach not only cuts red tape, Townsend asserts, but it also builds morale. "What it requires on the part of management," he says, "is a conscious belief that the personnel department has been hiring adults, and you have to trust them." He credits Tom Peters and In Search of Excellence for guidance in this area.

"The employees have a tremendous investment, psychologically and financially, in the success of the company," says Townsend. "They're not going to go out and sabotage you. If they do, you fire the bum. The Quality Teams are trusted to proceed and implement everything within their area of responsibility."

The third difference between quality circles and Paul Revere's program is "the type, and the amount, and the form of the gratitude," Townsend says. "In quality circles the recognition tends to be fairly narrowly defined. They tend to think the satisfaction received from doing a better job and having control of your own job, plus the recognition from plaques, posters, and such things, is sufficient."

Management usually thinks such rewards are sufficient for everyone, says Townsend, because for upper-level managers making six-figure incomes, they are enough. "However, not everybody in the company is at the same level of needs," Townsend continues. "You have to recognize that different people hear the phrase 'thank you' in different ways. So you have to build a recognition system that says 'thank you' several different ways, and then offer those several different thank-yous to each person. They'll accept all four; one will strike home, and they'll honestly believe that the company is grateful. The other three they'll accept as nice."

Productivity Happens
Paul Revere's program shies away from making productivity a goal in itself. "Productivity happens," says Townsend. "Productivity is part of quality. We don't talk about it much, partially because of the bad name productivity has gotten, rightly or wrongly. Productivity is looked at by many people as the same output with fewer resources. You and I are resources."

On the other hand, quality, he says, is "the same resources and better output. If your quality improves, your productivity goes up. It's one of the things that happens automatically."

Townsend is optimistic about the future of Paul Revere's program. "It turns out that if you install a quality process anywhere near correctly," he says, "not only will it make money, but there will be a rollback of positive impact on the employees that is just flat inevitable. All that happens as a result of simply maintaining your focus on quality. If you keep that focus firmly on quality, the company makes money and the employees make out. Everybody wins."

Beyond Toaster Ovens:Paul Revere's "Quality Has Value" Program

Beyond Toaster Ovens:
Paul Revere's "Quality Has Value" Program