When Richard Teerlink Became president, the differences between Harley-Davidson and its competitors were striking. For example, only 5 percent of Honda's motorcycles failed to pass inspection; over 50 percent of Harleys failed the same test. Honda's value added per employee was three times that of Harley's. Harley's relations with its dealers were poor because they were forced to provide customers with free service because of factory defects. So what did Teerlink do? He set out to create a learning organization.

First, he began emphasizing organizational and individual learning at all levels through a Leadership Institute. The institute was designed to introduce new workers to Harley's goals and culture while providing current workers with a better understanding of the organization's design and effects of competition on Harley's performance. Managers prepared a series of nontechnical explanations of how cash flows and flexible production affect financial success. Line workers were taught how products, sales, and productivity affect profitability. Substantial changes in employee job descriptions, responsibilities, and production processes were undertaken in an effort to increase job enrichment and worker empowerment. These efforts were implemented through cross-training and expansion of job responsibility. Teerlink eliminated the positions of vice president in marketing and operations because these jobs didn't add value to the product. Teams of employees, such as a "create-demand team" that is in charge of producing products and a "product-support team," now make these decisions. Employees formed quality circles that became a source of bottom-up ideas for improving quality. Employees created a peer review system to evaluate each other's performance instead of relying solely on first-line supervisors' evaluations. These evaluations help determine an employee's pay.

Second, to recapture the Harley mystique, Teerlink revitalized the Harley Hogs, a customer group formed to get people more actively involved in motorcycling. To attract women riders, "The Ladies of Harley" group was formed to increase ridership and interest among young women motorcyclists. Teerlink and his staff regularly attend road rallies and help clubs sponsor various charitable events. Harley also issued a credit card to its more than 60,000 riders and encourages them to use the card for the purchase of a motorcycle, service and accessories. The sale of merchandise, including T-shirts, clothing, jewelry, small leather goods, and numerous other products, permits customers to identify with the company. As Teerlink noted, "There are very few products that are so exciting that will tattoo your logo on their body."

Source: Organizational Behavior, 9th edition, Hellriegel, Slocum, & Woodman, South-Western College Publishing, 2001, pg. 522-523.

Also read Video case page 108 in your text, "Organizational Behavior & Management"

Harley - Davidson Learning Organization

THE WORK ITSELF: developing, producing, and selling products and services