The paradox of empowerment.

Effective empowerment means letting go and taking control. CEOs who thrive in this paradox tap people power--the only sustainable competitive advantage.

Empowerment is the mantra of the 1990s. Many CEOs chant it; fewer achieve it. A chief reason is the paradox of empowerment: Empowerment means letting go while taking control. These two actions seem contradictory. Indeed, this paradox traps many CEOs and undermines their attempts to transform their corporations.

Successful CEOs embrace the paradox of empowerment. Such leaders understand their responsibility to create the right environment in which people flourish on behalf of the company. They transform the company by intervening--sometimes in drastic ways--to change the way people work, relate, think, and feel. Yet they also step back to let empowerment take root, grow, and thrive.

Like any paradox, the paradox of empowerment is full of traps. It ensnares CEOs who cannot accept or live in the contradiction of taking control and letting go. Such CEOs become abdicators or meddlers. Those who thrive in the paradox become coaches who learn how to cultivate true empowerment.

ABDICATOR, MEDDLER, COACH

Abdicators fail, because they let go but don't take control. These CEOs inform their people, "You're empowered," but forsake their responsibility to intervene and make fundamental changes.

Abdicators talk empowerment with great enthusiasm, spreading the word in speeches, memos, videos, and press conferences. But it's still business as usual. They don't establish clear goals, shared values, or empowering mechanisms. The CEO of a large bank, for example, declared 1992 the "Year of Empowerment," but did nothing to transform the organization--no changes in basic work processes, no reorganization into teams, no re-education and skills training. Two years later, the company remains a traditional hierarchy, a dysfunctional assortment of silos.

Meddlers fail, because they grab control but can't let go. In their hearts, such CEOs fear genuine empowerment. Self-managed teams, for example, don't fit their view of the CEO's role. An empowered work force appears to leave no role for the chief executive. So, they micromanage, demand immediate results, ride herd, and second-guess. People quickly learn to "delegate upward," never taking ownership of processes, products, and tasks.

Coaches understand their paradoxical role. They set the game plan: mission, goals, strategies. They make changes in infrastructure to create an empowering environment. They enable their people to be the best by providing the support the team needs. But coaches don't play the game.

Coaches know the critical difference between intervention and interference. Consider Jerre Stead, CEO and chairman of Dayton, OH-based AT&T Global Information Solutions (formerly NCR Corp.), whose business card reads "Head Coach." (Employees are called "associates.") "I work hard at transferring ownership," Stead says. "I work very hard at not getting down into the details. Not from not knowing the details, by the way, and that's hard for people to figure out. But not getting into the details. Because if you do, you take away empowerment."

THE NEW PHILOSOPHER-KINGS

Empowerment demands a new breed of CEO, one who thrives in the paradox of empowerment. If the CEO of yesterday's command-and-control corporation was the military chieftain, then the CEO of tomorrow's corporation is the philosopher-king.

As a philosopher, the CEO develops a comprehensive theory of the corporation as a society. This theory includes an ideology or system of beliefs about human nature, superordinate goals, and shared values, and it encompasses a vision of a better society--a model of the company of tomorrow.

As a king, the CEO acts decisively to put theory into practice. This demands not just business but social re-engineering--all the deep interventions necessary to transform the corporation. For example, General Electric CEO and Chairman Jack Welch first intervened by fixing GE's "hardware" problems. He downsized, delayered, and reorganized into 13 focused global high-technology and services businesses.

Next, Welch addressed the "software." He created the vision of Fairfield, CT-based GE as a boundaryless company. He instituted empowering mechanisms--Work-Out, best practices, and process mapping. And he coached and instructed via massive re-education and resocialization efforts.

IDEOLOGY AND MOTIVATION

CEOs who thrive in the paradox begin with a system of beliefs. Details differ, but these CEOs operate with high opinions of human nature, and with lofty superordinate goals and shared values.

Human nature. Empowering CEOs share remarkably similar beliefs about people and their vast potential. "The great companies of the future," says Jerre Stead, "are companies that will have really opened up the people power for an organization. I literally believe the only sustainable competitive advantage a company has is its people."

Coaches believe it is human nature to seek work and responsibility. People desire fulfilling and productive jobs. In the right environment, people flourish on the job, and exercise self-control and self-direction in service of the enterprise.

Meddlers hold a bleak view of human nature. People dislike work and responsibility, and, therefore, must be controlled to put forth effort in the interests of the company. Meddlers don't trust their people. Without trust, they can't let go--and are trapped by the paradox.

CEOs who empower recognize the potent motivating forces beyond money--the needs for belonging, mastery, self-esteem, achievement, respect--and create the environment in which people meet these higher-order needs on the job. "People want to be challenged," says Bob Cantwell, president of Hadady Corp., a Lansing, IL-based diversified manufacturer, whose customers include Caterpillar in Peoria, IL. "They want to look forward to a challenge. Money isn't everything. I want to create a culture where people look forward to coming to work in the morning and feel good at night when they leave."

Coaches believe every person is an expert. Toledo, OH-based Dana Corp., an empowerment practitioner long before the term came into vogue, uses only a one-page corporate policy statement (most of which is devoted to "People"). A key policy belief: "The people who know best how the job should be done are the ones doing it."

Superordinate goals. High-level goals provide the company with a unifying focus. Without them, the CEO becomes an abdicator, letting the company wander, because it lacks unity.

The best superordinate goals are clear, simple, and inspirational. At Schaumburg, IL-based Motorola, for example, it's quality, quite simply; all else revolves around it.

Superordinate goals emphasize being the best--the world's best or best in class. For example, AT&T GIS' goal is to be "the world's best at bringing computing and communications solutions together to provide people easy access to information and to each other--anytime, anywhere."

Shared values. Lofty shared values--social principles and standards--create a cultural center. Values are guidelines for personal and organizational conduct. They provide a clear image of what it means to be an outstanding citizen in the new society--and they inspire people to excel.

Without shared values, a company can't hold together, especially a large, diverse, global company. Abdicators fail to create shared values, so the company disintegrates. Meddlers, with their dim view of human nature, don't believe in the validity and usefulness of high-minded values.

Coaches create clear shared values. Jerre Stead articulates "Common Bond" values that guide and unite AT&T GIS: "respect for individuals, dedication to helping customers, highest standards of integrity, innovation, and teamwork."

In the 1980s, GE's shared values emphasized "honesty, candor, openness, integrity." In the 1990s, values also include "create a clear, simple, reality-based customer-focused vision, have a passion for excellence, hate bureaucracy, empower others, and behave in a boundaryless fashion."

A BETTER SOCIETY

Empowering CEOs have a clear vision of a better society--a blueprint or model of the company in the future. Specifics vary, but all models break with traditional ways of doing business and emphasize the redesign of both external and internal relationships.

Jack Welch's model is his now well-known "boundaryless company." At Hadady, Bob Cantwell promotes the "network model" of organization. "Key to our transformation," he says, "was the understanding of vital networks within the organization. Hadady studied the formal and informal networks, using process mapping and network analysis. Understanding our networks has been essential to team building within Hadady."

Like all new designs, Cantwell's network model embraces customers. This enables Hadady to be a "source for solutions" rather than a mere parts supplier. Consider Hadady's development of a new marine cooling system for Caterpillar. "By using concurrent engineering and networking with a core group of Caterpillar engineers and many other Caterpillar suppliers," recalls Cantwell, "product development and prototyping time was slashed by a factor of three--five months versus 1.5 years." Other benefits include: "the personal relationships that developed from this project, and the hunger to do it again."

Jerre Stead's model of a better society begins with customers. "We need to become customer-centric--placing the customer at the heart of everything we do," he says. With this emphasis, AT&T GIS plans to be "the world's best at delighting customers."

The new order at AT&T GIS is the Customer Focused Business Model, which makes the Customer Focused Team (CFT) the company's basic building block. To date, over 530 CFTs have been formed. Each is a dedicated, empowered, multi-functional group, with common objectives, focused solely on the customer. Each has full decision-making authority, accountability, and full-stream profit responsibility.

CFT members and resources are dictated entirely by customer requirements. Each CFT has a "Leadership Circle" that establishes direction and priorities, gets input from and provides feedback to functional areas, and works closely with customers to identify and prioritize issues, review progress, and celebrate accomplishments.

Like all blueprints of the new society, the new Business Model integrates the company inside and out. Says Stead, "Our job is to maximize our Value Equation: Delighted associates cause delighted customers which create delighted share owners."

PUTTING THEORY INTO PRACTICE

Implementation is the crux of the empowerment paradox. The risk of not letting go is high, because implementation demands forceful action. Many CEOs are trapped here, becoming meddlers.

Empowering CEOs take decisive control, insisting on conformity to the new model of society. Within this stricture, however, people are free to act, do their jobs as they see fit, and prosper.

* Removing barriers. CEOs who empower believe human nature is fully expressed only when "barriers" are eliminated. "Everybody goes to work to do a good job, but stuff gets in the way," says Wendell Baker, district administrator (CEO) of the Matagorda County Hospital District in Texas. "It's up to the leader to get this stuff out of the way." Meddlers, in contrast, erect barriers to prevent the expression of base human nature.

Common barriers include conflicting goals, counterproductive rules, excessive organizational layers, departmentalized structures, and traditional "this-too-shall-pass" attitudes.

* Setting strategy. Removing barriers doesn't mean people can choose what to do. Empowerment doesn't mean "anything goes." Dana Corp., for example, avoids the word "autonomous," because it implies free reign. Dana employees don't set strategy, but they have a great deal of latitude in their areas of responsibility.

At AT&T GIS, says Jerre Stead, "people still believe today that they have the right to pick and choose between which strategies we're going to implement and which ones we're not. That doesn't work very well. That's why our strategic framework is so important--so everybody understands this is the game we're going to play."

Jack Welch defined "the game to play" when he reorganized GE into his famous "Three Circles": core (traditional lines such as appliances), services, and technology. Each business in a circle had to be No. 1 or No. 2 in its market--or get there quickly. Those outside the Three Circles were sold or closed.

Setting strategy doesn't imply rigidity or a blind top-down approach. Coaches recognize the value of consultation. As Jerre Stead says, "We get |our associates'~ input as we create that framework--input, not decisions, input." Strategy remains flexible to respond to unforeseen circumstances and events.

* Creating social mechanisms. CEOs who thrive in the empowerment paradox invent and institute social mechanisms that release human nature and implement the new blueprint. Abdicators don't see the need for social mechanisms. Meddlers create disempowering mechanisms.

Effective social mechanisms manage the conditions of interaction, the ways in which people interrelate and work. Bob Cantwell arranges personal contacts with customers. "Whenever there's a quality problem," he says, "we send the Hadady operator to resolve the issue. Now, the operator has a sense of ownership. Once you send the operator to the customer, the chances of having the same problem are slim to none."

Jack Welch uses Work-Out, modeled after the New England town meeting, to build trust, empower, eliminate unnecessary work, and implement the boundaryless model.

Recently, AT&T GIS fostered networking with and among its strategic allies by convening over 125 partners in its first-ever Global Alliance Conference.

Best practices--learning from the best companies in the world--is a boundary-busting, relationship-building mechanism many CEOs employ. AT&T GIS, for example, examined the use of team concepts at Stamford, CT-based Xerox; GE; and Motorola before establishing its Customer Focused Business Model.

Empowering CEOs create high-level networks to unite the company. Jack Welch established the Corporate Executive Council, a network of top business leaders from GE, who convene regularly to exchange information, ideas, and advice. Jerre Stead created two leadership teams to guide overall activities across businesses: the Quality Council and the Global Operations Team.

* Open communication. CEOs who empower practice open communication. "I operate with an open book," says Cantwell. "I share what used to be confidential information--sales, profits, costs. I trust them to use it to the company's benefit."

Stead uses several mechanisms to create an environment of openness and trust. "Juice with Jerre," a practice he has used since 1972, is an informal gathering of 20 to 25 people who engage in open and candid discussions. With two sessions a week, he makes over 2,000 personal contacts each year. In the "Ask Jerre" program, associates ask questions and get answers within 48 hours. "Transition Times," a newsletter, is an open forum for associates on the new Business Model.

* Shared objectives, measures, rewards. Empowering CEOs establish an infrastructure that conveys, promotes, and reinforces desired behaviors. "I don't think you can create an environment of empowerment," says Stead, "if you don't have your objectives, measures, and rewards in place, all of which are consistent and part of an overall strategic framework."

Objectives, measures, and rewards must be shared to promote cooperation and synergy. Stead is now instituting the practice of "one-over-one" objectives and rewards sharing: Fifty percent of a person's compensation is based on individual performance, and 50 percent on collective performance (such as a CFT). Eventually, everyone will be measured and rewarded one-over-one.

* Resocialization. CEOs who empower supply the tools necessary to thrive in the new society, such as education and skills training. But they also promote resocialization--the inculcation of new values. To educate and resocialize, coaches often establish learning centers, such as Dana University and GE's Crotonville Management Institute.

True empowerment is possible only when the CEO--and the company--learn to live in the paradox of empowerment and thrive on its contradictions. This is epitomized in an ancient Chinese poem: "Go to the people. Learn from them. Love them. Start with what they know. Build on what they have. But of the best leaders, when their task is accomplished, their work is done, the people will remark: We have done it ourselves."

Wayne E. Baker is associate professor of business policy and sociology at the University of Chicago Graduate School of Business. This article is based on his new book, "Networking Smart: How to Build Relationships for Personal and Organizational Success," published by McGraw-Hill.