1. Executive Summary
This is the second interim report covering the research activities
of the Competitive Semiconductor Manufacturing Human Resources (CSM-HR)
project, which began July 1993 as an adjunct to the CSM multi-year
research program, which studies competitive semiconductor manufacturing
The CSM-HR project has three research activities:
Analysis of the data previously collected
on fifteen fabs by the main study;
Development, collection, and analysis
of a supplemental mail-out HR questionnaire to participating
fabs about their employment (i.e., human resources) and training
Analysis of key questions, or focus
studies, on how the HR systems function. These case studies
augment the more general analysis covering all the fabs.
This second interim report is divided
into two parts. The first part presents the preliminary results
from the HR questionnaire. This section begins with an overview
of workplace practices (Chapter 1) before presenting the findings
from the fifteen fabs that returned the HR questionnaire (Chapters
2 through 7). The second part presents the focus studies, including
preliminary results from on-going focus studies on the transferability
of practices (Chapter 8), on the evolution of skills and careers
at one major U.S. company (Chapter 9), on inter-firm knowledge sharing
(Chapter 10), and on managing creativity and control in innovation
(Chapter 11), as well as completed focus studies on human capital
investment in learning-by-doing (Chapter 12), on team organization
and process (Chapter 13), and on a statistical analysis of the initial
interview data and a comparison of these data with a subset of responses
to the HR questionnaire (Chapter 14).
The CSM-HR group is led by Prof. Clair Brown and includes Prof.
Michael Reich and graduate students Melissa Appleyard, Jumbi Edulbehram
(who is currently on leave), Dan Rascher (who joined us this year),
and Vince Valvano. Past members have included postdoctoral fellow
David Bowen, and Adjunct Professor Vinay Sohoni, to whom this report
is dedicated. We have been very fortunate to have collaborated in
the past with graduate students Diane Bailey, Nile Hatch, Baruch
Saeed, and Linda Sattler from the CSM main study.
1.2 The Questionnaire and Preliminary Conclusions
In order to analyze how the component parts of an HR system work
and the relationship of the HR system (rather than individual parts)
to firm performance, a detailed questionnaire of the HR system was
developed and mailed to participating fabs. The questionnaire covered
the main components of the human resource system:
Hiring and lay offs (quantity);
Internal allocation of labor (job
assignment, promotion, shift);
Work organization (work process,
teams, functional divisions);
Training and skill development (quality);
Compensation and evaluation;
Division of tasks (across occupations)
and career ladders.
We have collected and analyzed the results
from fifteen fabs on three continents.
Our preliminary results confirm the main conclusion reported in
the first CSM-HR report:
High performing fabs will have a human resource system with integrated,
consistent parts and the system will be tailored to function in
a specific environment.
We find that successful systems not only include a seamless interplay
of internal resources, but also encourage the identification and
incorporation of appropriate external knowledge and know-how. The
effectiveness of any particular system will depend on its environment--the
product market, the economic conditions, and the institutional and
cultural system in which the company operates.
The relationship of a particular practice to firm performance must
not be studied in isolation because how a particular practice functions
within the HR system as a whole determines the relationship. For
this reason, the CSM-HR study starts with the premise that "best
practice" can take more than one path. One set of "best
practices" does not necessarily exist for all environments.
In fact, more than one HR system may perform well in any particular
set of circumstances, since trade-offs may exist between the component
parts of a system. However, not all HR systems are internally consistent,
and not all HR systems function equally well. In the former case,
firms may inadvertently create "hybrids" that use incompatible
components and result in unintended consequences. In the latter
case, some HR systems may not adapt adequately or rapidly enough
to changes in the environment or management may attempt to import
one innovation in HR practices without ensuring that other changes
are made to keep the system integrated and consistent.
The research goal of the second CSM-HR report is to document and
analyze the individual components of the employment system and examine
how they function together in order to identify prototypes of HR
systems. In our final report (winter 1997), the CSM-HR project will
also examine how an HR system functions within a given environment
and will measure the relative effectiveness of the prototype systems
in terms of firm performance.
1.3 The HR Questionnaire
Our earlier analysis of the interview data found some intriguing
results, which we compare to our findings from the HR questionnaire.
However, we did not know how representative these employee responses
were and to what extent their personal experience could be used
to document the HR system, since the data represent a few non-randomly
chosen employees (operators, technicians, supervisors, and engineers).
Also, these data were not collected as a systematic documentation
of the HR system, and therefore they did not necessarily provide
information on the systematic linkages among the parts of the HR
(or employment) system of the firm. We used these preliminary results
as a guide in developing a more systematic and comprehensive questionnaire
on employment and training practices.
Because of the rich set of performance metrics available, whenever
possible the authors have paid attention to how practices affect
particular outcomes (e.g., defect density, line yield, cycle time,
labor productivity), and these are presented in the findings. However,
we have relied on the knowledge and insights gained through our
fieldwork as well as on statistical significance in presenting our
findings. In this summary, patterns observed at the high performing
fabs are highlighted.
1.4 Innovative Human Resource Policies
Systematic differences in practices exist across fabs when they
are grouped according to their major process flows (memory or logic)
or according to region (Asia or the U.S.). Because most of the memory
fabs in our sample are in Asia (4 of 5 fabs), it is not easy to
distinguish between region-practice and process-practice correlations.
For this reason, observed differences cannot always be exclusively
related to the institutional structure or to the product type, since
both of the attributes are important in defining the environment.
Logic (and U.S.) fabs are more likely to use a variety of team structures
(cross-functional, self-directed work teams, and quality improvement).
Memory (and Asian) fabs tend to restrict their teams to quality
improvement efforts. Our site visits gave no indication that the
number or variety of teams in place at a fab is positively related
to the amount and quality of problem-solving activity. American
fabs tend to have a shorter track record with team organization
and may be trying to learn what types of teams work best. Asian
fabs use a wider range of compensation policies than U.S. fabs for
production workers, and suggestion and knowledge pay policies are
Work organization differs significantly across fabs by region. Shift
rotation for operators is widespread in Asia. Job rotation for engineers
is also the norm in Asian fabs. In U.S. fabs, operator job rotation
is not a common practice.
1.5 Employment and Turnover
Between 1990-1994, employment levels were more stable in the U.S.
than in the Asian fabs. The Asian fabs had more turnover (mostly
quits) than the U.S. fabs. This reflects the use of female operators
who leave the work force early to start families as well as the
local competition for workers. One example of an unstable work situation
comes from one fab that is trying to decrease its headcount by 40%
while it doubles its productivity.
Asian fabs have more workers of all types than U.S. fabs in our
sample. In general, memory fabs have more operators but fewer engineers
than logic fabs. There is a higher ratio of equipment to process
technicians than equipment to process engineers because of the cleaning
and maintenance activities performed by technicians. On the other
hand, engineers are the primary workers involved in process design,
implementation, and testing.
Logic chip manufacturing uses more engineers, supervisors, and managers
per operator and technician than memory chip production. In the
U.S., logic producers use fewer engineers than Asian logic manufacturers
A higher number of operators per supervisor is associated with lower
performances in defect density and direct labor productivity. A
high ratio of operators per engineer is correlated with higher defect
densities and higher stepper throughput.
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