Bill Taylor, president and CEO of Mercedes-Benz U.S. International Inc. (MBUSI), (Tuscaloosa, AL) believes it's important to make sure every person in the company feels appreciated, especially if he or she goes above the call of duty. So when one of the teams working on the M-Class vehicle recently stayed until midnight to meet production deadlines, Taylor's first instinct was to leave his executive office, head to the shop floor, and thank each team member. When he approached his employees, however, one woman said, "There's no need to thank me. It's my job."

Taylor quickly countered. "Well, your family must wonder what kind of company you work for that would make you stay until midnight!"

The woman admitted her daughter often did inquire, but said her response is always the same. "I ask her, 'Do you like this house you live in, the car we drive, the food on the table and the clothes on your back? That's why Mommy works.'"

It may seem trite, but Taylor knows that the reaction is sincere and deeply personal; he has worked hard to cultivate a culture at MBUSI where workers feel a sense of responsibility, ownership, and empowerment. Expectations are articulated up front so that everyone -- whether they work in the body shop, paint shop, on the assembly line, or in the back office -- understands that they contribute to the company's success, and therefore their own. That mood is reinforced by continual learning, compensation, and, most importantly, constant feedback. "It's about consistency and creating a culture that is better than what there's been in the past," Taylor says.

In today's highly-competitive world where budgets are tight, new factories are scarce, and innovation comes with risk, manufacturers like Mercedes-Benz are realizing that people are their greatest asset. Success hinges on a level of employee commitment that goes well beyond time and attendance and into competency development. When applied correctly, the ability to leverage human capital can be a powerful business differentiator.

Most manufacturers look to derive operational performance, production quality, and just-in-time delivery from their capital equipment and technology investments. But they often overlook the actual change agents -- the employees who, in the end, enable or restrict agility.

"If you fail to invest in the folks on the line who are working with the equipment and who are responsible for the processes, you often find you are not delivering the operational environment you are looking for," says Mark Lange, national vice president of Human Capital Management for SAP America Inc. (Palo Alto, CA).

For that reason, manufacturers are beginning to take a serious look at investing in Human Capital Management (HCM) software as a way to aid the growth of a talented and committed workforce. HCM provides a way to capture information on employees including individual skill sets, training programs they participate in, and even career goals. That information can be matched with incentive programs and performance management tools. These kinds of key performance indicators (KPIs) can show management where skills gaps exist in production and may also serve as a knowledge management tool to help develop employee competency.

"Historically, companies in the financial services and medical field have been investing in [HCM] applications because the sole asset is their people," says Judy Sweeney, research director for HCM at AMR Research Inc. (Boston). "But now we are finding companies in the manufacturing space that have already put in the core MRP system, the core financial system, and have added to the supply chain are realizing the last real benefit in terms of improving performance is in human capital."

Phase Two