Sustaining high performance through self-managed work teams.

"Self-managed work team" is fast becoming the corporate catch phrase of the 1990s, not because corporations are becoming kinder and gentler toward employees, but because they want to survive in a globally competitive environment. Self-managed work teams have been credited with saving hundreds of millions of dollars, achieving conceptual breakthroughs, and introducing an unparalleled number of new products. FORTUNE magazine calls self-directed or self-managed teams "the productivity breakthrough of the 90s." Management guru Tom Peters calls them a "basic organizational building block." In fact, more than 50 percent of all FORTUNE 500 companies utilize them, and it is estimated that by the year 2000, 90 percent of all North American organizations will have at least some type of self-managed work teams.

Self-managed work teams are linked solidly with empowerment. In some companies, "empowerment" is the umbrella term for increasing employee involvement in decision-making using self-managed work teams. Actually, empowerment should be more than simple involvement; it should mean allowing employees to make decisions themselves. According to Pert and Miller, employee empowerment is the concept of subordinates having the authority and capacity to make decisions and act for the organization so that individual motivation and organizational productivity are improved. Fisher likens this to a mathematical function with four variables: authority, resources, information, and accountability. All the variables must be integrated and offered, or the task of empowerment becomes void. Thus, Empowerment = f (Authority, Resources, Information, Accountability). Conger and Kanungo add that empowerment is more than just the delegation of authority; it possesses the essence of motivation and self-actualization. They define the process as follows: "a process of enhancing feelings of self-efficacy among organizational members through the identifications of conditions that foster powerlessness and through their removal by both formal organizational practices and informal techniques of providing efficacy information."

Employee empowerment did not become a business concern in the U.S. until the 1960s and 1970s. Now, managers like CEO John Welch of GE are preaching the power of empowerment. Welch, who once had an autocratic reputation, states, "The idea of liberation and empowerment for our work force is not enlightenment - it's a competitive necessity." Jon C. Madonna, CEO of KPMG Peat Marwick, stated at a recent symposium that unpredictability, the global marketplace, and the accelerated speed of change have made attention to quality a necessity. Such an environment calls for a more dynamic, adaptable, and creative system. Many feel that employee empowerment through self-managed work teams is the solution.

Two broad types of self-managed teams are popular today: work teams and problem-solving teams. A problem-solving team is similar to a task force: it is formed for temporary purposes. Work teams, which are used by two-thirds of U.S. companies, tend to be permanent. Rather than attack specific problems, a work team does day-to-day work activities. It is usually composed of a group of employees (between 5 and 12) with all the technical skills and the authority needed to direct and manage themselves. That is, they are appointed to manage themselves because the team members are those employees most familiar with a particular aspect of the company. Their activities are expected to lead to improved working conditions, greater opportunities for expression and self-development, as well as increased productivity, increased market share, improved pricing, and cost reduction.

Despite the frequency with which self-managed team programs have been adopted in work organizations, there is a paucity of knowledge generated by independent evaluators on the effects participation in a self-managed team has on employee attitudes and behaviors. The available studies are limited to testimonials from managers and consultants who have implemented self-managed teams' programs. This article addresses the benefits and limitations of self-managed team approaches to organization. It examines those factors that may lead to either a failed or successful implementation of self-managed team programs. The implications of the successful introduction and implementation of self-managed teams are also discussed.

Rewards and benefits

In current forms of organization, often the employees are controlled by managers, the managers are controlled by higher-level managers, and they are controlled by someone else. No one in the company is in control of themselves - they only control others. This leads to a feeling of powerlessness. Empowering the employees gives them control and gives their jobs meaning. According to Macher, cynicism about work and membership in organizations is not a natural emotion. Neither is apathy. These are psychological protections against chronic frustration or a sense of betrayal. Empowered people, first of all, take personal responsibility for their work, ensuring that it has meaning so that they do not become cynical. A recent seminar by Career Track Group provides a comparative analysis between traditional work groups and self-managed (or directed teams). Table 1 presents a brief summary of this analysis and benefits of self directed teams over traditional work groups.

When employees are involved in the creation and progress of their operations, they are more interested in their jobs. Also, they are more likely to remain involved and committed to their work. This creates a work environment where the employees know their mission and have a vested interest in its success. Supervisors then have more time to focus on being creative and innovative. Leadership concepts "such as integrating, envisioning and synergizing replace controlling, directing, deciding, and executing." In this environment, organizations become more horizontal in regard to leadership. The managers are more than just the next supervisor in the chain of command. They must earn loyalty and have credibility within their teams.

Studies support the common belief that the use of self-managed teams' programs generally improves organizational effectiveness. Sirkin argues that self-managed team programs can produce greater satisfaction, reduced costs, faster and better decision-making, improved pricing, and increased market share. Stokes stated that there are at least eight sound business reasons for organizations to adopt the self-management approach:

* reduced costs;

* reduced workforce;

* increased productivity;

* getting closer to customers;

* fewer layers of managerial bureaucracy;

* shorter time to market for products and services;

* increased employee motivation and commitment; and

* increased recognition of individual employees' contributions.

Flanagan demonstrates that self-managed team participation led to improvement in employee productivity, efficiency, quality, and a steady stream of innovations at the IBM plant in Lexington. Another study indicates that attitudes, behaviors, and effectiveness all improved as a result of self-managed teams at Texas Instruments Inc. Yet another reports that the real key to reengineering momentum at Union Carbide Corp. was the work force empowerment. "Our employees correctly credit themselves for reaching a $575 million cost-reduction target on schedule," claims David Brucker, Union Carbide's vice-president for engineering and operations at Union Carbide Corporation.

TABLE 1

COMPARISON OF SELF-MANAGED TEAMS AND TRADITIONAL WORKGROUPS

Traditional work groups           Self-directed teams

Take directions                   Take initiative
Seek individual rewards           Focus on team contributions
Focus on blame                    Concentrate on solutions
Compete                           Cooperate
Stop at preset goals              Continually improve & innovate
Demand more resources             Work with what they have
React to emergencies              Take steps to prevent them
Spend money                       Save money
to improve quality                by improving quality

Strategies for successful implementation

Case studies also indicate that many companies are successfully using self-managed teams. At a General Mills cereal plant in Lodi, California, teams schedule, operate, and maintain machinery so effectively that the factory runs without managers during the night shift. At a weekly meeting, a team of Federal Express clerks spotted and eventually solved a billing problem that was costing the company $2.1 million a year. 3M turned around one division by creating cross-functional teams that tripled the number of new products.

Saturn Corp., a subsidiary of General Motors, is a particularly ideal example of how empowerment can work in a modern U.S. corporation. Saturn is well publicized as "a different kind of company." Part of this claim is based on how they view their employees. "Saturn defines its self directed work teams as units that accomplish tasks within their area of responsibility without interaction. Each unit makes its own job assignments, plans its own work, performs equipment maintenance, keeps records, obtains suppliers, and makes selection decisions of new members into the work unit. Leadership roles are rotated among the team members."

Eastman Kodak Co., a film manufacturer, remains successful today, thanks to the empowerment techniques of Team Zebra, the film-making division of the company. Employees were encouraged to brainstorm for techniques that would make their processes more efficient. Management supported them and used positive reinforcement and rewards to encourage quality work and team problem-solving and decision-making. The environment at Kodak encourages continuous quality improvements because new ideas are welcomed and an atmosphere of open communication exists.

Even the IRS has initiated employee empowerment. In this case, it is used to combat a reputation for poor customer, service. Their goal is to improve communication and work processes. They established specialized teams to handle specific problems and tasks. Team members were encouraged to share knowledge and technical skills with one another. Undoubtedly, management support and encouragement are necessary for the success of the teams. Today, the IRS is continuously moving toward higher service quality.

Texas Instruments uses self-managed teams to increase productivity. Within six months of implementing self-managed teams, they achieved dramatic results. These results included a 50 percent reduction in cycle time, a 60 percent reduction in scrap, and 30 percent improvement in productivity. Productivity may not grow that much in that amount of time for all companies, but companies like Saturn and Chrysler have realized some type of increased productivity. Table 2 presents other examples of benefits in several major corporations in the global markets.

TABLE 2

EXAMPLES OF SELF-MANAGED TEAMS RESULTS

Organization                  Results

Proctor & Gamble          30-50% lower manufacturing costs
Federal Express           Cut service problems by 13% in one year
AT&T Credit Corporation   Applications processed per day doubled
General Electric          Productivity increased 250%
Xerox                     Teams at least 30% more productive
Volvo                     Production costs decreased 25%
Honeywell                 Output increased 280%

Limitations of self-managed teams

Although self-managed team programs have long lists of possible benefits, they can have some limitations. The first is a shortage of planning and time consideration due to unrealistic expectations. "Some organizations fail to think through the process, reflect on potential problems, ask a few questions about their goals, and consider how these goals would be received and interpreted by employees." Teams may often fail because people expect to see results without investing time and effort into the team.

Another limitation is poor judgment or abuse of authority exhibited by some employees. Empowerment may not always be the best approach for an employee who has poor decision-making skills or who lacks keen judgment, for it could lead to bad decisions or wasted time. Employees may also have trouble defining the limits of their authority, which can lead to even greater problems.

Lack of employee motivation can be a big problem when empowerment is implemented. Not all employees make good team players. If there is an outsider or misfit in the group, it may be difficult to build trust and function smoothly. Other employees may not want to be empowered. If they are used to reporting to a member of higher management, they may not want more responsibility or what seems to be a heavier workload. Employees may also fear that the new strategies are only a fad and that they will disappear as other management strategies have in the past. Employees with this attitude are often reluctant to put the time and effort needed into the implementation of the new strategy. Companies that have implemented self-managed team programs have learned that these programs are long-term strategies. The large amount of resources needed in the early stages of implementation and inconsistent customer service during transitional periods do not allow for many short-term rewards. Other limitations include resistance to change, costly mistakes, and the tremendous amount of time involved in planning, implementing, directing, and controlling such a large project. In a recent survey by Arthur D. Little, only 36 percent of the respondents felt that TQM and the team approach were assisting them in their ability to compete. A lack of proper planning and implementation is cited as the cause for failure.

Understanding the obstacles

Self-managed teams, with their promises of higher performance, lower costs, and greater employee satisfaction, have become very attractive to businesses. These designs are so attractive, in fact, that the self-managing team concept now runs the risk of becoming a fad as companies implement teams without adequate preparation or continuing support. Failures in many self-managed team programs have made it clear that self-managed team programs should no longer be considered as a simple set of tools or practices. Although specific approaches exist, like those of Deming, Juran, and others, the implementation of those tools requires fundamental changes in the practices, values, and beliefs of the organization utilizing them. One of the first considerations faced by every company is whether self-managed teams are the correct form of empowerment for that particular company. Self-managed teams are not appropriate for every organization. Before designing these teams and establishing expectations for them, the organization should first conduct an environmental analysis to include strengths, weaknesses, opportunities, and threats (SWAT analysis). This analysis should focus on three basic sets of considerations.

The first consideration is whether or not a company is in a competitive environment. The more competitive the industry, the more conducive it will be to self-managed teams. Second, consideration should be given to the management style that already exists in the organization. If the company follows an autocratic style of management, it will be difficult to integrate the self-managed team system immediately. Management's response to its employees also plays a key role in successfully promoting SMTs. Finally, a company should consider what type of technical capabilities under which they operate. Highly specialized and automated production technology is designed to function most effectively with limited intervention by individual production operators. As one CEO stated, "There are areas where we don't need or want people operating with much discretion." In this instance, a self-managed team is not advised.

In addition to these considerations, there are a number of other factors that must be considered to help ensure successful efforts at self-management. The task of setting up work teams among employees should originate with members of top management. Trust is a major component in this process. If top management effectively communicates with their employees, mistrust between ranks can be avoided. Employees should be told the objectives for the self-managed teams, the benefits they can derive from being a part of these teams, and what will be expected of them. "We are more convinced than ever that unless an organization recognizes and deals with the trust factor from the very outset, the net result will be an empowerment effort that continues to struggle, that lacks any real depth or hope of sustaining itself."

Once teams have achieved self-management, the company must develop a climate that sustains and builds on their progress. One of the biggest mistakes companies make is removing the authoritative figure to whom the self-managed team reports. The company assumes that since the team is capable of managing themselves, there is no longer a need for a higher report. In reality, this key person is still needed to answer questions and receive information from the team when it runs into difficult situations. Also, for long-range success, the company must continually monitor the work of the self-managed teams and keep them focused toward company objectives.

Implications

United States business leaders are realizing, to a greater extent than ever before, that they must take decisive action to preserve our position as a world supplier of goods and services. Increasing numbers of firms are revamping their management styles and work processes in favor of those more effective in meeting the needs and expectations of customers. The topic of employee empowerment has been one of much discussion, including the effects of its implementation on managers and employees. Self-managed team programs often fail because of tactical errors made by management. Before employee empowerment programs can be introduced, management must analyze the areas that will be overseen by the self-managed teams. They must prepare for possible problems, evaluate their objectives, and ready themselves for employee reaction.

There is a new empowerment paradigm that consists of five principles that aid the implementation of self-managed teams. The first is tackling the basics. This includes defining terms, setting objectives, developing a plan, and communicating this plan to all affected employees. The second is learning to do things without making mistakes. This can be accomplished by insisting on the mastery of a task before moving on to another. The next guiding principle is confronting a new task only after mastery, consistency, and uniformity have been achieved with the last task. The fourth principle is to perform new tasks as well as the basic ones. The final principle is to repeat these processes over and over again.

Managers must also reorganize long-term management strategies. Building heterogeneous self-managed work teams requires reengineering of organizational structure and management strategies. Structural features should include formalization, socialization, training, and decentralization. Management strategies, meanwhile, hinge on communication, shared values, and trust.

Successful managers of self-managed teams delegate managerial duties to employees, but still provide adequate incentives to compensate for the extra work. They also outline a broad vision to guide the SMTs, while providing clear-cut action plans. This strong commitment to the employee empowerment process is quite possibly the most important aspect of a long-term successful empowerment program.

Employees also play a major role in the success or failure of an empowerment program. Self-managed teams give employees the responsibility of making decisions and initiating changes with less supervision. This compels employees to become more responsible for their tasks, which can spark a sincere desire to produce a high-quality product or service. A common way to reduce supervision has been the introduction of a peer review process. These groups of employees:

* evaluate performance;

* obtain insights on team's success; and

* develop schedules, vacation cards, team meeting schedules, and cross training programs.

Many firms are integrating TQM fully into the structure of self-managed teams along with such management enablers as a specific goal setting and review process, training in team dynamics, and a method for monitoring improvements.

Conclusion

The introduction of employee empowerment through self-managed teams' programs can provide the necessary edge needed to remain competitive in today's global market. However, no empowerment program can be successful in the long-term if management does not take adequate steps before the program is introduced. Once the program has been initiated, they must utilize an adequate management strategy. The pre-program steps and the management strategy must be more than words on paper. Management must be sold on the idea of employee empowerment and develop a management strategy that fully supports the empowerment program or it will eventually fail. If management supports its self-managed teams, they will foster its success.

The implementation of empowerment programs and their development into successful entities takes time, training, communication, and a lot of hard work and support. However, many examples have been cited of companies that have lived up to the challenge and reaped great rewards for their efforts. Self-managed teams can increase productivity, efficiency and effectiveness, customer satisfaction, the quality of employee job satisfaction, and eventually lead to a competitive edge that will lead to a greater market share. Team efforts have brought such improvements to Master Industries that they are in place to stay, says systems expert Santino DiGirolamo. As best put by Brian Dumaine, "Yes, teams have troubles. They consume gallons of sweat and discouragement before yielding a penny of benefit. Companies make the investment only because they've realized that in a fast-moving, brutally competitive economy, the one thing sure to be harder than operating with teams is operating without them."

For further reading

Andrews, Gerald, "Mistrust, the Hidden Obstacle to Empowerment," HR Magazine, September 1994.

Ankarlo, Loren, "The Best Value in Training," Career Track, 1994.

Barry, David, "Managing the Bossless Team: Lessons in Distributed Leadership," Organizational Dynamics, Summer 1991.

Bennett, Steven, "Turnaround at Kodak Park," Business Quarterly, Spring 1994.

Bowen, David and Edward E. Lawler III, "The Empowerment of Service Workers: What, Why, How, and When," Management Review, Spring 1994.

Brucker, David, "Spurring on Reengineering," Fortune, June 26, 1995.

Burrows, Peter, "Playing Ball Without the Coach," Business Week, July 1993.

Caudron, Shaft, "Are Self-directed Teams Right for Your Company," Personnel Journal, December 1993.

Dean, James and James Evans, Total Quality: Management, Organization, and Strategy, St. Paul, Minn.: West Publishing Co., 1994.

Dumaine, Brian, "Who Needs A Boss?," Fortune, May 7, 1990.

Dumaine, Brian, "The Trouble With Teams," Fortune, September 5, 1994.

Ferero, Matthew, "Self-directed Work Teams Untax the IRS," Personnel Journal, July, 1994.

Fisher, Kimball, Leading Self-directed Work Teams, Chesterfield, Mo.: McGraw-Hill, 1994.

Flanagan, Patrick, "IBM One Day, Lexmark the Next," Management Review, January 1994.

Giordan, Judith and Angela Ahem, "Self-managed Teams: Quality Improvement in Action," Research Technology Management, May/June 1994.

Grates, Gary F., "The Subtlety and Power of Communications in Corporate Renewal Initiatives," Public Relations Quarterly, Spring 1994.

Holpp, Lawrence, "Applied Empowerment," Training, February 1994.

Holpp, Lawrence, "If Empowerment is So Good, Why Does it Hurt?" Training, March 1995.

"Implementing Self-directed Work Teams," Career Track, 1995.

Lawler, E. E., "Measuring the Psychological Quality of Working Life," in L. Davis and A. Cherns, eds., The Quality of Work Life, vol. 1, New York: Free Press, 1975.

Macher, Ken, "Empowerment and the Bureaucracy," Training and Development Journal, September, 1988

Madonna, Jon C., Paul A. Allaire, and Ernest H. Drew, "Leadership and Empowerment for Total Quality," The Conference Board, 1992.

McKee, Bradford, "Turn Your Workers into A Team," Nation's Business, July 1992.

Overman, Stephanie, "Saturn Teams Working and Profiting," HR Magazine, March 1995.

Pasmore, William A., "An Approach to Successful Integration," Self-Managing Work Teams, July/August, 1994.

Pasmore, William A., "Developing Self-managing Work Teams: An Approach to Successful Integration," Compensation and Benefit Review, July/August 1994.

Pett, Timothy and Thomas Miller, "Employee Empowerment: Old Wine in a New Bottle," Southwest Academy of Management Proceedings, March 1994.

Sirkin, Harold Laurence, "The Employee Empowerment Scam," Industry Week, October 18, 1993.

Spanbauer, Stanley J, "A Quality System for Education," Quality, 1990.

Stokes, Jr. and L. Stewart, "Is Without Managers," Information Strategy: the Executive's Journal, Fall 1991.

Stein, Robert E., Next Phase of Total Quality Management, Marcel Dekker, Inc., 1994.

Thibodeaux, Mary and Sandy Faden, "Organizational Design for Self-managed Teams," Industrial Management & Data Systems, 1994.

Wellins, Richard, "Texas Instruments Gets from Here to There," Training & Development, June, 1995.

Dean Elmuti, Ph.D., is a professor of management at Eastern Illinois University's Lumpkin College of Business and Applied Science, located in Charleston, Illinois.