COST REDUCTION AND CONTINUOUS IMPROVEMENT: A
LONGITUDINAL CASE STUDY
Be nabe Escoba Pe ez
1
Jose Ma ia Gonzalez Gonzalez
2
An onio Lobo Galla do
3
1
D . Be nabé Escoba Pé ez. P o esso . Uni e si y o Se ille. Dp o. Con abilidad y Economía Financie a.
Uni e sidad de Se illa. A da. Ramón y Cajal, 1.41018 – Se illa (España). T no.: 0034 954557608. Fax: 0034
954557569. E-mail: bescoba @us.es.
2
José Ma ía González González. Uni e si y School Assis an . Uni e si y o Se ille. Dp o. Con abilidad y
Economía Financie a. Uni e sidad de Se illa. A da. Ramón y Cajal, 1.41018 – Se illa (España). T no.: 0034
954557608. Fax: 0034 954557569. E-mail: [email protected]
3
An onio Lobo Galla do. Uni e si y Assis an . Uni e si y o Se ille. Dp o. Con abilidad y Economía
Financie a. Uni e sidad de Se illa. A da. Ramón y Cajal, 1.41018 – Se illa (España). T no.: 0034 954557608.
Fax: 0034 954557569. E-mail: [email protected]
COST REDUCTION AND CONTINUOUS IMPROVEMENT: A
LONGITUDINAL CASE STUDY
Be nabe Escoba Pe ez
Jose Ma ia Gonzalez Gonzalez
An onio Lobo Galla do
Abs ac :
In oday’s en i onmen one o he op p io i ies o o ganiza ions is o cos s wi hou
a ec ing d ama ically o ganiza ion su i al. The e o e, he aim o his pape is
p o ide e idence on (1) he impo ance o Managemen Accoun ing in o ma ion o
cos educ ion pu poses and (2) he ole o some Con ol Sys em componen s in
o de o ca y ou his s a egy. A longi udinal case s udy has been conduc ed o his
pu pose a a Spanish subsidia y o a mul ina ional chemical g oup. This chemical
plan in oduced a cos educ ion p ojec in he mid 1990s. The mos salien esul s
we e on he one hand, he implemen a ion o quali y ci cles and in e nal
benchma king p ac ices and, on he o he hand he impo ance o bo h o mal and
non- o mal Con ol Sys em componen s in o de o success ully achie e he p ojec ’s
objec i es.
Key Wo ds: Con inuous Imp o emen , In e nal Benchma king, Con ol Sys ems,
Longi udinal Case S udy.
COST REDUCTION AND CONTINUOUS IMPROVEMENT: A
LONGITUDINAL CASE STUDY
Be nabe Escoba Pe ez
Jose Ma ia Gonzalez Gonzalez
An onio Lobo Galla do
1. INTRODUCTION
The de ini ion o he concep o Managemen Accoun ing (Saez e al., 1993; Sie a
and Rod iguez, 1997; Mallo e al., 2000), om a b oade pe spec i e le s us o
conside i as an in o ma ion sys em capable o p o iding ele an in o ma ion o
business managemen , conside ed as an ongoing planning and con ol p ocess
aimed a achie ing o ganiza ional goals, which akes place a a gi en social and
o ganisa ional se ing we mus ake in o accoun .
In his con ex Fe nandez (1994) iden i ied ou p inciples p esen in he new
managemen echniques: Con inuous imp o emen , Value addi ion, S a egic ac ion
and Non- inancial measu es. Likewise, he al eady no ed ha in o de o achie e
ongoing imp o emen a new app oach o Managemen Accoun ing was needed,
basically because he a iables o be measu ed and con ol a e subs an ially di e en
om he adi ional ones.
Mo eo e , he need exp essed by Ripoll and Balada (1993) o managemen
accoun an s o be able o design and implemen new accoun ing in o ma ion sys ems
be e sui ed o he new en i onmen o business managemen emain ully alid.
They made a special emphasis on he use o Managemen Accoun ing as a con ol
de ice o imp o e o ganisa ional p ocesses wi h he ul ima e goal o inc eased
pe o mance.
In o de o a ain such goal and since benchma king in an ins umen used o achie e
Con inuous Imp o emen , which consis s o “emula ing he bes known p ac ices in a
gi en ield in he ou e o excellence” (Pe ez-Fe nandez, 1996, p.301)
4
. Using i as a
4
I s a ionale lies in lea ning om hose ha achie e he bes esul s in some hing – p ac ice, p ocess, ask – in
which he business s i es o imp o e. Thus, he bes way o doing hins is aken as a e e ence, and i is
compa ed wha he business is ac ually doing, in o de o ob ain a be e pe o mance (Pe ez-Fe nandez, 1996,
p.301).
managemen echnique by means o an ongoing p ocess o acking and compa ing
he bes business p ac ices, leads us o di e en ou comes, among hem he mos
ele an ones, acco ding o Elna han e al. (1996, p. 41), a e imp o ed quali y,
educ ion o de ec s, be e p oduc dis ibu ion and om a inancial pe spec i e,
inc eased e enues and educed cos s.
Howe e , we mus men ion ha in a global en i onmen wi h he esul ing inc eased
compe i ion, he abo e-men ioned cos educ ion canno be achie ed o he expense
o p oduc quali y, since his would endange he company’s su i al. In his line,
B o o (1996, p.659) says ha his su i al will necessa ily equi e achie ing
excellence by he implemen a ion o quali y ci cles. Acco ding o Leal (1997), hey
mus be p omo ed by he op managemen , which mus y o in ol e he employees
wo king in all business a eas, bu such in ol emen mus be olun a y and wi hou
inancial pay. No wi hs anding, i would seem con enien o de ice some ype o
incen i e, since s a mo i a ion and ac i e in ol emen is c ucial (Ripoll and Balada
1993, p.30).
In his same line, his pape pu sues wo main objec i es: One he one hand we
in end o b ing up e idences on he impo ance o Managemen Accoun ing in cos
educ ion p ocesses by means o he implemen a ion o quali y ci cles and he
in oduc ion o benchma king p ac ices wi hin a con inuous imp o emen a ionale.
On he o he hand we will y o analyse he ole played by he di e en elemen s o
he con ol sys em in acili a ing o hinde ing he implemen a ion o his s a egic
ac ion.
In o de o achie e hese objec i es, we ha e conduc ed a longi udinal case s udy
5
ollowing he p ocess pe spec i e
6
, in which we ha e analysed he de elopmen o
he Ho izon P ojec in Onuba, a Spanish subsidia y o a mul ina ional g oup (Onuba
G oup) ope a ing in he chemical indus y. The pu pose o his p ojec was o con ol
and educe cos s, especially manu ac u ing cos s, in Onuba G oup, and mean a
signi ican change p ocess o he company, cha ac e ised by con inuous
imp o emen and he implemen a ion o in e nal benchma king p ac ices.
5
This me hod allows he obse e o con ac di ec ly wi h he eal si ua ion o he o ganisa ion unde s udy,
s udy ion dep h all he ele an issues and use mul iple sou ces o e idence o e a long s ay, unde s anding he
social, poli ical and his o ic con ex o he e en unde s udy (Yin, 1987; Scapens, 1990). On he o he hand, i
allows o iangle he in o ma ion collec h ough hem o in e nal alida ion.
6
Following Pe ig ew (1997), we ha e paid special a en ion o he indi iduals in ol ed, o he g oups hey a e
pa o – Managemen Commi ee, depa men s, e c. -, o he o ganisa ion – posi ion wi hin he g oup and in i s
So, in he ollowing chap e we will p esen he heo e ical app oach we ha e adop ed
o his s udy. The hi d chap e discusses he esul s ob ained in he case s udy, wi h
e e ences o he echniques used o collec in o ma ion. The hi d chap e add esses
(1) he mos ele an cha ac e is ics o he chemical indus y, he Onuba G oup and
i s subsidia y in Spain, needed o p o ide he app op ia e con ex o ou s udy; (2)
he Ho izon P ojec , wi h an analysis o he mos ele an objec i es, s ages and
ac o s in i s implemen a ion, which will allow us o achie e ou i s objec i e; and (3)
Onuba’s con ol sys em, in which we conside he a iables in i s en i onmen , bo h
he ones he company can con ol and hose i canno con ol, i s o mal and in o mal
elemen s, as well as i s o ganisa ional pe o mance acking and e alua ion sys em,
in o de o achie e ou second objec i e. The ou h chap e analysis he ou comes
based on a p e iously conduc ed li e a u e e iew. The i h chap e p esen s he inal
conclusions we ha e a i ed a and inally, he six h lis s he li e a u e e e ences
used.
2. THEORETICAL APPROACH
To al Quali y managemen is an in eg a ed managemen philosophy and a se o
echniques ha makes emphasis among o he s on con inuous imp o emen ,
cus ome sa is ac ion, educ ion o ep ocessing, a long e m app oach, inc eased
s a in ol emen and eam wo k, p ocess edesign, compe i i e benchma king,
p oblem sol ing in g oups, cons an measu emen o ou comes and keeping close
ela ionships wi h supplie s (Ross, 1993). Along he same line Ja a and Aspinwall
(1999) cha ac e ised To al Quali y Managemen as ollows:
Table 1: Cha ac e isa ion o To al Quali y Managemen
S a ed by
Common sense and con en ional know-how
S a ing poin
Exis ing p ocesses: Analysis, s anda disa ion and
imp o emen
F equency o change
Con inuous and inc emen al
App oach
Sys em componen s: P ocesses, indi iduals, ac i i ies
Focus on clien
Same emphasis on in e nal and ex e nal clien s
Le el o change
Inc emen al imp o emen o exis ing p ocesses
(E olu iona y)
ma ke segmen as compa ed o compe i o s, e c. – which has allowed us o de ec he mul iple in e ela ionships
exis ing among he di e en le els o analysis.

In ol emen
To al in ol emen o anyone is essen ial, all indi iduals,
wo king g oups and some eams
Pa icipa ion
Bo om-up (buil wi hin he cul u e)
Empowe men
Ve y impo an
Disad an ages
Di icul o achie e exci emen and commi men o e ime,
since i in ol es many small imp o emen s
Ad an ages
App op ia e i low le el o esou ces. P o ides consis en
imp o emen o e ime
Typical ou each
Na ow, wi hin asks. P ocess imp o emen e o s a e
made by simple imes o jus a ew asks
Risk
Mode a e
P ima y acili a o
S a is ical con ol p ocess
Payback ime
Slow small con inuous imp o emen
Sou ce: Ja a and Aspinwall (1999).
As e idenced by Fuen es and Lopez (1999), we canno bu de ine To al
Quali y Managemen as a managemen philosophy in eg a ed by a se o ideas,
p ac ices and p inciples, since hey ha e been de eloped o e mo e han h ee
decades and í em om di e en au ho s and cul u es. As Leal (1997) says, he main
consequence o his ac is ha al hough some pape s ha e ied o each an
ag eemen on i s de ini ion and con en s, he e a e s ill impo an di e ences among
he a ious specialis s. Thus, o example Leal conside s Con inuous Imp o emen o
p ocesses as a To al Quali y Managemen ool, whe eas K ie e (1996) says ha
B ocka and B ocka (1992) s a ed ha i is jus a way o imp o ing on an ongoing
basis. The issue becomes mo e complex wi h he eme gence o he concep o
P ocess Reenginee ing.
When analysing his ques ion a li le mo e in dep h, we ind ha he mos
widely sha ed iew in he li e a u e (Dean and Bowen, 1994; Leal, 1997; Fuen es and
Lopez, 1999; Ga cia, 2001; among o he s), pe haps because i is he mos
in eg a ed, is he one ha conside s To al Quali y Managemen as a managemen
philosophy o app oach ha can be cha ac e ised by i s p inciples, p ac ices and
echniques. I s h ee basic p inciples a e: Clien Focus, Con inuous Imp o emen and
Teamwo k. In u n, each p inciple can be implemen ed by means o a se o
ins umen s, among hem benchma king. Wi h ega ds o Clien Focus, hei
sa is ac ion is he mos impo an equi emen o long- e m o ganisa ional success
and such sa is ac ion equi es he whole o ganisa ion o ocus on clien s’ needs.
Con inuous Imp o emen means a commi men o con inuously examine
adminis a i e and echnical p ocesses in a sea ch o he bes me hods and
p ac ices. Teamwo k mus imply collabo a ion be ween manage s and all o he
employees, among he di e en business unc ions and e en wi h clien s and
supplie s (Kelada, 1999). As we can obse e, all h ee p inciples a e closely ela ed
o each o he .
Focusing on Con inuous Imp o emen , we mus indica e ha i is essen ial o To al
Quali y Managemen , since o ganisa ions a e no hing else bu se s o in e connec ed
p ocesses and an imp o emen o such p ocesses is needed o achie e an imp o ed
o ganisa ional pe o mance. I is usually p omo ed by he Manu ac u ing and Quali y
Con ol unc ions (Da enpo , 1993).
In p inciple, any ask can be add essed by an imp o emen eam, which is made up
by ew people wo king in he same wo kplace and ca y ou imp o emen asks on
hei own ini ia i e. No wi hs anding, in mos cases he Top Managemen p omo es
imp o emen p og ammes (Fuen es and Lopez, 1999) s uc u ed acco ding o
Ruchala (1995) wi h a bo om up app oach, since i s is he wo ke s mos closely link
o each speci ic ask who iden i y and implemen imp o emen s in hem and se up
he scena io o a mo e global imp o emen o p ocesses.
In mos cases benchma king is associa ed o compa ing he company o i s
en i onmen , Ha ing on (1991, p.222) p oposed a classi ica ion based on he
e e ence used, making a dis inc ion be ween: (1) In e nal, which implies looking in o
he o ganisa ion i sel o de e mine whe he he e a e o he cen es implemen ing
simila ac i i ies in a be e way and de ine he bes p ac ices obse ed; (2)
Compe i i e, which equi es an in es iga ion o p oduc s, se ices and p ocesses o
compe i o s in o de o iden i y he bes p ac ices; (3) Wo ld Ope a ions, in which
benchma king goes beyond he indus y in which he company ope a es, obse ing
gene ic unc ions o p ocesses ha can p o ide us wi h signi ican knowledge, e en i
hey a e used in some o he indus y; and (4) o Type Ac i i y, ocusing on some
speci ic ac i i ies wi hin a gi en p ocess, ega dless o he indus y in which he
company ope a es.
Depending upon he ype o pe o mance we in end o emula e, Pe ez-Fe nandez
(1996, p.302) makes a dis inc ion be ween di e en ypes o benchma king: (1)
S a egic, ela ed, o he ma ke posi ion o compe i o s; (2) Func ional, o he mos
ele an p ocesses wi hin a unc ion; and (3) Ope a ional, connec ed o he speci ic
aspec s o an o ganiza ional uni .
The e o e, benchma king can be conside ed as an analysis echnique ha allows
companies o iden i y he di e en a eas in which i can s i e o imp o e, se ing as
a e e ence o achie e he bes known p ac ices. So, acco ding o Ea l (1994), we
mus unde line he abili y o benchma king o become a s imulus.
F om a mo e p ac ical iewpoin , Ruchala (1995) conside s ha benchma king is
mos e ec i e when he company has es ablished p e iously inc emen al p ocess
imp o emen s. The eason gi en by Fu ey (1993) is ha such inc emen al
imp o emen s a e al eady imp o ing he exis ing p ocess, as we mo e along he
expe ience cu e, wi h a educ ion o cos s and de ec s (Cha 1).
Cha 1: Expe ience Cu e Be o e and Al e Benchma king
High
Today
Cos s Imp o emen o exis ing p ocesses
and
De ec s
Iden i ica ion o
inno a ion al e na i es
h ough benchma king
Low
Expe ience gained along he p ocess
Sou ce: Fu ey (1993, p.22).
Howe e , in o de o implemen benchma king in an o ganisa ion and imp o e i s
esul s
7
, we need quan i iable da a we can compa e (Elna han e al., 1996, p. 50),
among o he issues, on clien needs, ope a ional p oblems and success o
imp o emen a emp s; i has been e en sugges ed ha he o ganisa ions ha collec
and analyse in o ma ion mos e icien ly a e he ones ha achie e he bes esul s
(Dean and Bowen, 1994). Likewise, acco ding o Banke e al. (1998), wi hin he
benchma king p ocess i is essen ial o make he s anda d se ing p ocess mo e
lexible, and he e o e ecommends he use o da a en elopmen analysis.
Thus, Managemen Accoun ing mus se up a sys em capable o supplying he
in o ma ion needed – including quan i a i e non- inancial and quali a i e in o ma ion –
o decision-making in such an en i onmen (Iglesias, 1992; Cas ello, 1996; Sie a
7
Ca pine i and Melo (2002, pp. 250-251) ha e p oposed a i e-s age model o he implemen a ion o
benchma king p ojec s in o ganisa ions: P oduc and ma ke analysis, analysis o imp o emen a eas, analysis o
p ocesses o be imp o ed, measu emen o pe o mance and de ec ion o p io i ies o be imp o ed in he u u e.
and Escoba , 1996), which poses a ue challenge o p ac i ione s (Ripoll and
Balada, 1993; Gimeno and Lopez, 1999).
In ou case, i mus p o ide he in o ma ion needed o implemen his s a egic ac ion,
in he sense mean by Fe nandez (1994, p.868) when he s a ed ha i should allow
o “cap u ing, measu ing, analysing and communica ing in o ma ion on each and
e e yone o he ac i i ies pe o med in he company in o de o e alua e p ecisely he
achie emen s made in implemen ing such imp o emen ”.
Finally, since mo i a ion and an ac i e pa icipa ion o s a om all company a eas is
c ucial in he success o such an ini ia i e (Ripoll and Balada, 1993; Leal, 1997), we
mus ake in o accoun ha Managemen Accoun ing, being pa o he o mal
elemen s o he O ganisa ion’s Global Con ol Sys em, i is subjec o he in luence o
i s in o mal elemen s (Flamhol z, 1983; Flamhol z e al., 1985; Ama , 1991), which
can help o p omo e, o doom o ailu e, any ac ion en ailing a change in he
o ganisa ion. Among he in o mal elemen s we can unde line o ganisa ional cul u e,
leade ship s yle and in e pe sonal ela ionships (Jones, 1992; G anlund, 1998;
Blanco and Aiba , 1999; Escoba and Lobo, 2000).
3. THE ONUBA CASE
The case s udy was s a ed in June 1997, when he Ho izon P ojec s a ed, and
las ed un il Ma ch 2000. The ollowing asks we e ca ied ou h oughou his pe iod:
a.- In e iews o membe s o he managemen eam, conduc ed o he Human
Resou ces, Technical and De elopmen , Accoun ing and S a Adminis a ion,
Dis ibu ion, P oduc ion, Da a P ocessing Cen e, Sa e y and Heal h and
Main enance Manage s; o he wo indi iduals in cha ge o epo ing, o he Heads o
Cos s, T easu y, Clien Con ol and Adminis a ion, P ojec s, Black and Whi e
P oduc ion A ea
8
, Sales and Ma e ials (Cha 2).
b.- Di ec obse a ion wi hou pa icipa ion a he Ho izon P ojec , in which a new cos
sys em was designed and implemen ed wi h he pu pose o p oducing in o ma ion in
o de o imp o e he company’s managemen , by con olling and ying o educe
hem. Likewise, a (1) mee ings and daily wo k o he Depa men s o Accoun ing,
S a Adminis a ion and In o ma ion Sys ems, mo e speci ically a discussions on
T easu y and Clien Managemen , main enance issues, esolu ion o inconsis encies
The Ho izon P ojec s a ed as a pilo es in G imsby – one o he Onuba
G oup plan s in B i ain. The inal objec i es o he plan we e o achie e (1) a
p og essi e educ ion o he p oduc ion cos s un il eaching a 40% cu in ixed cos s
and an 8% cu in a iables cos s
9
, (2) quali y imp o emen by means o a con inuous
imp o emen policy aimed a achie ing a 40% educ ion in p oduc no mee ing he
g oup’s s anda ds and (3) imp o emen o p oduc ion e iciency by educing losses
caused by plan p oblems by 40%.
This p ojec aimed a cos con ol and educ ion in he company has mean a
signi ican change in he wo king p ac ices o Onuba’s employees. The c ucial
elemen s used in his o ganisa ional change p ocess a e ideas linked o con inuous
imp o emen , in e nal benchma king p ac ices, and abo e all, he change in a i ude
o all hose in ol ed owa ds in e nal managemen in Onuba, because o despi e he
ini ia i e being p omo ed by he op managemen , i was only he high in ol emen o
he employees wo king in p ocess implemen a ion wha made i possible o achie e
i s ull implemen a ion and he esul ing imp o emen s.
He e we mus highligh he ac ions unde aken by Onuba o p e en po en ial
indi idual and g oup esis ances wi hin he o ganisa ion. A e he i s news on he
p ojec , i s de elopmen and implemen a ion, he op managemen publicly s a ed i s
ull suppo o he p ojec and ied o in ol e he highes possible numbe o
employees om di e en ca ego ies and depa men s, aking ad an age o he goo
exis ing in o mal ela ions and he eiled h ea o a po en ial sale o he subsidia y by
Onuba G oup.
Comp ehensi e and de ailed in o ma ion was deli e ed o he employees using
di e en in e nal, e ical and ho izon al, communica ion channels, such as he
In ane , pe iodical bulle ins, p esen a ion mee ings bo h a company and a unc ion
le el, as well as in o mal alks, in which he local op managemen played a e y
ac i e ole. A u he impo an measu e o p e en u u e con lic s was he
ag eemen eached by he local op managemen and he wo ke s’ ep esen a i es
speci ically s a ing ha he e would be no layo s esul ing om he applica ion o he
ideas o imp o emen included in he Ho izon P ojec , which educed o a g ea
ex en in e nal esis ance o change.
9
The main p oduc ion cos s in Onuba a e: (1) ixed: ma e ials used in main enance, wo k o ce, a el and
ex e nal con ac s; and (2) a iable: aw ma e ials, na u al gas, elec ic powe , wa e and o he chemicals.

Con inuous imp o emen eams we e es ablished o implemen he p ojec . They
we e made up by up o i e wo ke s om di e en a eas o he plan whose pu pose
was o de elop, analyse and implemen ideas o imp o emen in each o he asks
ela ed o he eam’s speci ic goals.
Team componen s we e selec ed by he op managemen among he olun a ies,
ollowing bo h objec i e c i e ia, such as hei p e ious expe ience in simila p ojec s
and hei knowledge o he di e en asks ele an o he speci ic p ocess o be
imp o ed, and poli ical ones, indi iduals wi h o mal au ho i y and epu a ion among
he wo ke s.
The i s h ee eams we e o med on Ap il 4 h 1997. Al eam membe s wen h ough
se e al aining cou ses on di e en eam-wo king and quali y imp o emen
echniques – b ains o ming, SWOT analysis, e c. These cou ses we e augh by a
consul ancy i m hi ed by Onuba G oup o p o ide counselling especially du ing he
ini ial p ojec implemen a ion s ages. Likewise, a pocke guide was p oduced o each
eam, which included a summa y o a ailable echniques and ools, as well as a ime
plan wi h he main deadlines in e ms o objec i es o be achie ed.
Du ing his ini ial s age i was said ha as incen i e, a he end o each pe iod
h oughou he implemen a ion o he Ho izon P ojec , he Managemen Commi ee
would app aise he ideas p esen ed by each g oup in o de o gi e a p ize o he bes
eam, keeping in mind ha implemen ing some o hem would equi e se ing up a
new ad-hoc eam o i s implemen a ion. Likewise, his Commi ee was esponsible
o e alua ing he di e en p oposals on he basis o he cos and ime sa ings hey
would b ing abou , hei o iginali y and he e o hei implemen a ion would equi e.
The p ize p omo ed in e nal benchma king p ac ices in Onuba G oup since i
consis ed on a ip o a di e en plan o obse e how he bes p ac ices esul ing
om he Ho izon P ojec in o he coun ies, and also, o imp o e he ela ionships
wi h employees om o he plan s, which would also help o dissemina e a con inuous
imp o emen cul u e.
The Top Managemen o Onuba pe o med he i s p ojec implemen a ion
assessmen in July 1997. F om he 717 ideas gene a ed by he h ee imp o emen
eams in he di e en uni s in which he plan was di ided and app o ed by he
Managemen Commi ee, 85% ha e been implemen ed by he planned deadlines.
Among hem wo g oups s and ou : (1) hose ega ding he educ ion o in e media e
componen s necessa y o manu ac u e he inal p oduc , such as Idea 121 whose
pu pose was he minimisa ion o eac i es used in coa ings; and (2) hose ocusing
on he imp o emen o in o ma ion p oduc ion and communica ion o managemen
pu poses, such as Idea 158 se ing up a new in e nal mail sys em.
Acco ding o he ini ial planning ou new imp o emen eams we e o med in 1998,
allowing o new ideas o be used o achie e he Ho izon P ojec ’s objec i es (Table
3). Bu la e 1998 85% o he app o ed ideas had been implemen ed in Onuba; 345
had been success ully implemen wi hin he planned deadlines, accoun ing o mo e
han 6%% o he o al ha had o be pu in place a he end o he Ho izon P ojec by
he end o 1999. In o de o implemen such p ac ices in es men s accoun ing o 549
million pese as (3.3 million ¼DSSUR[ZHUHUHTXLUHGIURPZKLFKPLOOLRQSHVHWDV
(0.92 million ¼DSSUR[ZHUHDOUHDG VSHQWDWWKHHQGRI
Table 3: Si ua ion o he Imp o emen Teams in Janua y 1998.
Team
Membe s
Objec i e
Tools
1
5
New iden i ica ion sys em o
ma e ials and was e
SWOT Analysis
GANTT Diag am
2
4
Reduce numbe o wo k o de s
by
50%
SWOT Analysis
GANTT Diag am
3
4
P e en ime losses caused by
he
issuing o wo k o de s
SWOT Analysis
GANTT Diag am
4
4
Imp o e he managemen o he
elephone cen al
SWOT Analysis
GANTT Diag am
5
5
Imp o e eliabili y condi ions
B ains o ming
GANTT Diag am
6
3
Imp o e wo k sa e y signs
B ains o ming
GANTT Diag am
7
4
Inp o e condi ions o
subcon ac o s a ea
Decision pending
Sou ce: Own D a ing.
The ou come in e ms o cos s was ha he plan achie ed sa ings accoun ing o
605 million pese as (3.64 million ¼ DSSUR[ LQ   RI WKH WRWDO VDYLQJV
o ecas ed o he end o 1999.
By he end o 1998 1500 ideas had been implemen ed in all o Onuba G oup’s plan s.
To al sa ings a g oup le el accoun ed o 4750 million pese as (28.5 million ¼
app ox.). No wi hs anding, in he wo ds o he manage esponsible o he Ho izon
P ojec “ he g ea es sa is ac ion has been o e i y ha he changes we ha e
in oduced ha e no s ayed a he su ace, bu ha e a he led o a subs an ial
change in he company’s and he wo ke s’ cul u e and philosophy.”
The Ho izon P ojec was con olled a ow le els. On he one hand he e was an
in ensi e use o in o mal con ol sys ems, such as con inuous moni o ing o eam
esponsible employees by he Top Managemen a mee ings no speci ic o he
p ojec and in in o mal alks. On he o he hand, he e was also a o mal con ol o he
ou comes achie ed by he eams a he end o he yea . Likewise, he in o ma ion
ob ained a each o he plan s was used o compa e and e alua e p ojec
implemen a ion a g oup le el.
A he end o each yea o he Ho izon P ojec a s udy was conduc ed a Onuba o
con ol he imp o emen eams’ pe o mance. All hei membe s illed ou a
ques ionnai e and we e in e iewed by he Managemen Commi ee; his helped o
iden i y a se ies o s eng hs and weaknesses du ing he i s wo yea s o he p ojec .
La e , his Commi ee discussed wi h hose in cha ge o he imp o emen eams
po en ial solu ions o o e come some o he weaknesses – lack o ime o mee ings,
incompa ible schedules, less collabo a ion by some junio manage s, lack o
expe ience in sel -managemen , e c. – as well as o p omo e s eng hs desi able o
imp o e be e eam pe o mance – sho e m esul s, en husiasm, lea ning o new
ools, imp o ed communica ion be ween employees and be ween di e en co po a e
unc ions, e c.
The inal esul in Decembe 1999 a he end o he Ho izon P ojec was he
implemen a ion o 77% o he ini ially planned ideas, wi h a inancial esul o sa ings
accoun ing o 1605 million pese as (9.65 million ¼ DSSUR[   PLOOLRQ ¼ LQ
ixed cos s and (4.05 million ¼LQYDULDEOHFRVWV
We can s a e ha Onube has achie ed he bes esul s wi hin Onuba G oup o wo
easons: (1) I is he only plan ha has comple ed he Ho izon P ojec in he planned
ime-pe iod; and (2) i has con i med i s posi ions as cos leade wi hin he g oup,
which was con i med by he p ojec manage a Onuba when he decla ed ha “we
al eady had he lowes cos s in he g oup be o e inishing he Ho izon P ojec and he
di e ence be ween he es o he g oup and us ha e g own bigge .”
Finally, as a consequence o he Ho izon P ojec o he quali a i e imp o emen s has
been de ec ed and acknowledged by he Top Managemen and eam membe s
hemsel es ela ed o he de elopmen o skills and cul u al alues among
pa icipan s, such as imp o ed communica ion, implemen a ion o a eamwo k
cul u e, p omo ion o ini ia i es, inc eased mo i a ion, wo k in mul i- ask g oups, e c.
3.3. CONTROL SYSTEM IN ONUBA
In o de o achie e ou second objec i e, analysing he ole o he di e en
componen s o Onuba’s con ol sys em du ing he implemen a ion o he Ho izon
P ojec , we will go on o conside he en i onmen al a iables, bo h he ones he
o ganisa ion con ols and hose i does no , as well as i s o ganisa ional pe o mance
moni o ing and e alua ion sys em.
Among he con ingencies Onuba can con ol he ollowing we e analysed: (1)
The s a egy ha is condi ioned by he g oups measu ing o ganisa ional
pe o mance, by means o he bo om-line and he di idend pe sha e. The e o e
Onuba’s objec i es a e exp essed in e ms o bo om-line, cash low and cos
educ ion. On he o he hand, such as ma ke s o ope a ion and in es men policy all
beyond he policy-making powe s o he local managemen ; size, which in e ms o
e enues has expe ienced a sus ained g ow h in ecen yea s, 60% o e 1994 in
1999. Howe e , numbe o employees has gone down om mo e han 500
employees in 1989 o less han 390 in 1998; and (3) echnology, which is pa ially
con olled by Onuba. P oduc ion echnology is de e mined by Onuba G oup;
howe e , each plan has some ma gin o ac ion o in es in main enance and
imp o emen o p oduc ion acili ies. In o he a eas such as Resea ch and
De elopmen he e a e di e ences among he plan s. Thus, we can say ha Onuba
has de eloped new echnologies o emission and was e ea men ha a e being
expo ed o he g oup.
Wi h ega ds o he a iables he o ganisa ion canno con ol, we can unde line
ha : (1) The en i onmen is mode a ely unce ain; howe e , he e a e some ac o s
ha signi ican ly a ec s abili y: changes in aw ma e ial p ices on he one hand side,
and he e olu ion o some indus ies, like au omobile on he o he ; (2) om a
echnological pe spec i e, “i is a ma u e indus y and i is di icul o imp o e cu en
le els”. Howe e , inno a ions in o he suppo echnologies, such as in o ma ion
ones and hose used in pollu ing emission and was e ea men s, a e allowing o
di e en ia ion wi hin i s segmen ; (3) his indus y is an oligopoly; he wo ld leade
accoun s o one ou h o he o al p oduc ion and he i s ou p oduce s accoun ed
o 63% o he ma ke in 1998. This si ua ion is e idenced by some aspec s o ma ke
ope a ions, such as announcemen s o pigmen p ice inc ease issued almos
simul aneously by he main p oduce s (Anonymous, 1999; Tullo, 1999). On he o he
hand, (4) he e olu ion o he legal amewo k applied o chemical indus y ope a ions
is ending owa ds s ic e con ol o emissions and was e.
A u he aspec o be conside ed is he e olu ion o cu ency exchange a es,
e en wi h he simpli ica ion b ough abou by he in oduc ion o he eu o. O he mo e
global ac o s a e in e es a es, which may d aw in es men s o a sec o ha
adi ionally has go ex e nal unding, o he o e all e olu ion o he economy, since
expansion cycles in he indus ies supplied by Onuba G oup, such as au omobile,
pain s, e c. inc ease hei demand o pigmen .
3.3.1. INFORMAL ELEMENTS OF THE CONTROL SYSTEM
They a e highly cohe en ; he local o ganisa ional cul u e e lec s he ac ha
he membe s o he Managemen Commi ee ha e been wo king oge he o mo e
han 15 yea s, making up a closely kni - oge he g oup. This is why con ol p ocesses
ope a e unde a pa icipa o y managemen s yle and luen in e pe sonal
ela ionships. In his cul u e he main alues a e commi men o and iden i ica ion
wi h he o ganisa ional goals, us among wo ke s which makes i possible o wo k in
a iendly en i onmen , and inally, a high awa eness among employees allowing o
sel -managemen a he di e en esponsibili y a eas.
These alues a e ansmi ed among employees, echnicians and plan
ope a o s, by means o luen in e pe sonal ela ionships ha se e as a means o
ans e and con i ma ion. This ela ionships esul in mul iple spon aneous mee ings
on any wo kday: co ee b eaks, lunch a he can een, e c.; hey a e e y help ul in
making he ou comes o many o mal mee ings mo e sa is ac o y o daily ope a ions,
as well as in p e en ing con lic s.
3.3.2. FORMAL ELEMENTS OF THE CONTROL SYSTEM
The o ganisa ional design is de e mined by Onuba G oup; decisions on s a egy,
budge ing and in es men s a e cen alised. No wi hs anding Onuba’s managemen
has go a subs an ial au onomy, as long as he objec i es es ablished by he g oup
a e me , making e ec i e cen alisa ion much less.
Decision-making is highly o mal and bu eauc a ic, some epo s a e e en duplica ed
wi h he same in o ma ion in di e en o ma s depending upon who hey a e
submi ed o. Likewise, we ha e iden i ied he ollowing mechanisms wi hin
Cybe ne ic Con ol Sys ems: Budge ing, In es men Delega ion – E alua ion and

Con ol, Cos Con ol, Cash Flow and Wo king Capi al Repo ing, Quan i a i e Non-
Financial and Quali a i e Managemen Indica o s
10
, and O ganisa ional Pe o mance
Repo ing. The epo s p oduced by means o he abo e mechanisms a e lis ed in
Table 2.
In gene al e ms, he e is an o e all dissa is ac ion wi h he budge nego ia ion
p ocess, because he pa en g oup asks o a p oposal which i la e adjus s
downwa ds. He e o, a manage s a ed he ollowing: “We send o London he igu es
we conside necessa y o Huel a e e y yea , bu he usually hey cu hem down by
10% o 15% and hen hey a e all yea long pu ing p essu e on us because we do
no mee hei budge ”. Likewise, hey decla e ha he e is o e lapping and
ei e a ion in he epo s o con ol budge de ia ions, indica ing ha : “We spend he e
a lo o ime d a ing epo s, some o he h ee o ou imes, which akes ou
a en ion away om wo k, in addi ion o o e whelming us wi h so much con ol o he
same hings”. Logically, his si ua ion gene a es con lic s be ween g oup and local
managemen , because acco ding o a membe o he Managemen Commi ee “a
he end all he Accoun ing and con ol o he di e en plan s o he g oup wo k o
London, and i should be he o he way a ound, con ol sys ems speci ically designed
o he di e en plan s.”
Wi h ega ds o cos calcula ion, budge o ecas s a e d a ed acco ding o unc ional
a eas and based on hem ixed and a iable cos s a e es ima ed
11
and hen he
o ecas ed mon hly analy ical esul is calcula ed. In o de o con ol and educe cos s
speci ic epo s a e p oduced, p o iding in o ma ion o each depa men ’s ixed and
a iable cos s, wi h a special ocus on p oduc ion cos s, bo h o he Black A ea and
he Whi e A ea. Mo eo e , we mus unde line ha cos s da a a e included in he
mon hly and qua e ly epo s d a ed o he local and g oup managemen .
10
Pigmen quali y, ene gy use a es, p oduc ion plan e iciency, absen eeism, sa e y in he wo kplace and
con ol o en i onmen al impac a e included in he mon hly epo submi ed o he gene al manage o he
plan , he Ope a ions Manage , called T a ic Ligh , whose con en is c ucial o Onuba’s managemen p ocesses.
Indeed, al hough i does no bea he name i is ac ually a Command Boa d o he Top Managemen , since i
displays i s main cha ac e is ics.
11
The manage s esponsible o his a eas insis ed du ing he in e iews on he di icul y caused in some cases
by ha ing o comply wi h such cos classi ica ion c i e ion, one o hem e en said ha “all cos s a e semi- ixed
o semi- a iable”. Wi h ega d o his, B o o (1996:659) men ioned ha he inco po a ion o new echnologies
had c acked he bases o he me hods adi ionally used in Cos Accoun ing, especially he indi ec cos
alloca ion c i e ion based on s anda dised global a es.
3.3.3. ORGANISATIONAL PERFORMANCE MONITORING AND EVALUATION
SYSTEMS
The a iables used o moni o and asses o ganisa ional pe o mance a e
consis en wi h he o ganisa ion’s objec i es and ocus mainly on ou magni udes:
P o i s, Cos s, Quali y, and inally Sa e y and En i onmen . As we can see, bo h
quan i a i e – mos ly inancial – and quali a i e measu es a e used, wi h a clea
p edominance o he o me . This end becomes e en clea e i we analyse mo e
agg ega e epo s and he da a bases o Onuba G oup, o example, he so-called:
Eu opean Regional O ice (ERO) which includes he alued o he main inancial
indica o s in each subsidia y, as well as any de ia ions om hem;; Bes Ope a ing
P ac ices (BOP), which includes he quan i a i e da a o he Ope a ions A ea; and
Team Eu opean Measu emen (TEMs), o indica o s on sales and dis ibu ion.
Based on he in o ma ion p o ided by hese da abases in e nal benchma king
p ac ices a e de eloped, esul ing om he sys ema ic compa ison o he igu es
achie ed by each o he subsidia ies o he abo e-men ioned indica o s, he s udy o
any de ec ed de ia ion and he analysis o he p ac ices ha allow he leading
subsidia ies o achie e he bes ou comes, in o de o apply hem ac oss he g oup.
In o de o assess he pe o mance o he echnical s a , some 60 junio manage s,
he Managemen Commi ee p oduces a pe sonal epo called Pe o mance
App aisal, which is basically an assessmen o he wo k pe o med based on he
deg ee o achie emen o a se o objec i es ha acco ding a Managemen
Commi ee membe a e “ ealis ic, measu able and subjec o e alua ion, e c.”. The
epo lis s o each pe iod he objec i es, he esul s achie ed by he employee as
compa ed o such objec i es, a classi ica ion o pe o mance acco ding o a six-le el
scale – om excep ional o unaccep able -, a global app aisal, he opinion o he
indi idual unde e alua ion, objec i es o he ollowing e m, aining ecei ed and
expec ed, analysis o he skills e idenced a he job, and inally u u e de elopmen
chances o he indi idual unde e alua ion in his cu en job. I s mos impo an
aspec is ha i s is possible o achie e and moni o he objec i es se o each job
and he ac ha is a pa icipa o y e alua ion each in consensus wi h he employee.
4. ANALYSIS OF RESULTS
We will now p oceed o analyse he esul s ob ained in he longi udinal case s udy on
he Ho izon P ojec implemen ed in Onuba on he basis on he li e a u e e iew we
ha e pe o med and ollowing he s uc u e p esen ed in Cha 4. I includes he main
ac o s ha ha e in luenced he de elopmen o he p ojec , he ins umen s used by
Onuba o achie e he p oposed objec i es, as well as he esul s ob ained, bo h
explici and implici .
Cha 4: Global Pe spec i e o he Ho izon P ojec .
Sou ce: Own D a ing.
Fi s o all, Onuba G oup ope a es in a ma u e indus y wi h a mode a e deg ee o
unce ain y and a s ong p ice compe i ion Du ing he 1990s i accumula ed nega i e
inancial esul s, which lead i s o me main sha eholde o pu i o sale, e idencing
he ele ance o business concen a ion p ocesses in his indus y a wo ld scale, as
a s a egic esponse.
These condi ioning ac o s led he managemen o conside an inc emen al and
e olu iona y p og amme, such as con inuous imp o emen (Ja a and Aspinwall,
1999), de eloped wi hin he wide amewo k p o ided by To al Quali y Managemen ,
as Leal (1997) p oposed. The e o e, i is an in en ional change p ocess as p oposed
by Dean and Bowen (1994), which can be in e ed om i s planned cha ac e . A sign
o ha is he p e ious s udy ca ied ou by a consul ancy i m on business
managemen and pe spec i e, h ee yea s be o e he Ho izon P ojec s a ed, as well
as he implemen a ion o a pilo es a he G imsby plan (Uni ed Kingdom).
Nega i e end
in Onuba’s
esul s
Succes ull
implemen a ion o
he Ho izon P ojec
Explici esul s:
- Cos educ ion.
- Quali y
imp o emen
Implici esul s:
- Employee
mo i a ion.
- Teamwo k.
- Con inuous
imp o emen
cul u e
Imp o emen o
inancial si ua ion
Elemen s
condi ioning
change:
- Th ea o sell
Onuba.
- Ag eemen
gua an eeing jobs
Change acili a o s:
- Suppo o Top
Mananagemen .
- Employee in ol emen .
- Widely communica ed.
- Con inuous imp o emen
eams.
- Elemen s o con ol
sys em: in o mal and
o mal.
Ins umen s used:
- Quali y ci cles.
- In e nal benchma king.
The Ho izon P ojec is pa o he s a egic esponse o he Top Managemen o
Onuba G oup o ackle he ie ce p ice compe i ion exis ing in he i anium dioxide
business a wo ld scale. I s implemen a ion aimed mainly a educing cos s (one o
he main indica o s o o ganisa ional pe o mance in Onuba G oup) using
benchma king echniques, in acco dance wi h he indings ob ained by Chenhall and
Lang ield-Smi h (1998, p.257). Likewise, he P ojec was communica ed o he Local
managemen o each o he subsidia ies, which we e made esponsible o i s
implemen a ion, since a u he in en ion was o make a compa ed cos con ol o
each o hem. This s a egic aspec , oge he wi h hose connec ed o con inuous
imp o emen , abides o he p inciples ha acco ding o Fe nandez (1994) shall guide
he new managemen echniques.
I we analyse i s ou comes, he Ho izon P ojec has been a success since i s explici
objec i es o educing cos s and imp o ing quali y ha e been achie ed, bu in he
opposi e o de , as p oposed by Elna han e al. (1996, p. 49) i s he e is a quali y
imp o emen – non- inancial measu e o o ganisa ional pe o mance – and hen a
cos educ ion – inancial measu e o o ganisa ional pe o mance. Fu he mo e, o he
implici objec i es ha e been achie ed, among hem he in oduc ion o a con inuous
imp o emen and eamwo k cul u e, bo h in Onuba G oup and, especially, in i s
Spanish subsidia y.
We can men ion se e al ac o s ha ha e con ibu ed o he success o he Ho izon
P ojec in Onuba, in e ms bo h o implemen a ion and esul s. Thus, he unce ain y
c ea ed by he nego ia ion p ocess aimed a he sale o Onuba G oup esul ing o m
i s pe o mance o e he p ecious yea s lead bo h Onuba’s Local Managemen and
wo ke s en isage he p ojec as an oppo uni y o u n a ound he inancial si ua ion
and ul ima ely, o keep hei jobs. This wo ked as a mo i a ing and con incing
ins umen .
The implemen a ion o he p ojec ollowed a op-down app oach, s a ing om he
Top Managemen and hen down o he lowe le els. In u n, pa icipa ion, p oposal
o ideas and hei app o al and implemen a ion s a ed a he lowe le els, hose
di ec ly in ol ed in pe o ming he asks, and hen up o he Top Managemen
(bo om-up app oach). These p ocesses a e in he line wi h he indings o Ja a and
Aspinwall (1999). Mo e speci ically, we can say ha :
a. - The Top Managemen o Onuba G oup and Onuba showed a all imes hei ull
suppo and commi men o he Ho izon P ojec , making i isible o he employees