Reference no: EM131416212

Hypertherm Chief Executive Organizes for Teamwork Richard Couch is the chief executive of Hypertherm Inc., a closely held maker of metal-cutting equipment in Hanover, New Hampshire, with annual revenues of approximately $200 million. He has long promoted cooperation with a company-wide profitsharing plan that pays the same percent of salary to each employee. As Hypertherm grew in the 1990s, Couch saw increasing friction between departments such as engineering and marketing. In 1997, he reorganized the company into crossfunctional teams based on Hypertherm's five product lines. He forced the teams of researchers, engineers, marketers, and salespeople to sit together in closely bunched circles. He wanted the teams close to the shop floor, but retreated in the face of safety rules requiring that manufacturing be shielded by a wall. The plan met resistance at first. One engineer complained about "sitting next to this marketing guy. I don't have anything to say to him," Couch recalls. "I thought, precisely my point. Maybe you will actually say something to him." Some employees quit, he says, although the onceunhappy engineer is still at Hypertherm. Today, Couch credits the reorganization with helping Hypertherm grow faster and more profitably. Instead of having only one productdevelopment team, Hypertherm has five, which helps the company introduce new products faster. Couch says the new organization is also more efficient, because salespeople and marketers, who know customers best, are more involved in product development. The company heavily emphasizes technical training to develop the workforce it needs. Toward this end, the Hypertherm Technical Training Institute was opened in 2007 to train future machinists and employees. The company recently paid $6.7 million in profit-sharing, equivalent to 26 percent of salaries, to its 612 employees. Couch acknowledges that the team approach doesn't appeal to everyone. "The star can make more money going somewhere else," he says. But with attrition below 5 percent annually, Couch believes Hypertherm is doing a good job screening out non-team players before they are hired.

Case Questions

1. In what way did cross-functional teams fit the purposes of Hypertherm?

2. How do you think the company screens out non-team players before they are hired?

3. What is the difference between a star and a team player?