Employee Empowerment Programs - Research Paper Example

Employee Empowerment Prepared for of CEO, Chief Executive Officer by November, Company Table of Contents Executive Summary 3 Introduction 4 1.1 Definition 1.2 History 4 5 1.3 Purpose 5 2 Findings 7 2.1 Well Being 7 2.2 Organizational Performance 8 3 Discussion 10 3.1 Implications 10 3.2 Challenges 11 4 Recommendations 14 4.1 Implementation 15 References 17 i. Executive Summary The purpose of the following report is to provide information and insight into employee empowerment programs. Employee empowerment decentralizes some of the decision making from managerial to non-managerial employees. The report gives an overview of employee empowerment definitions, history, and application. The report also analyzes the efficacy of employee empowerment initiatives in the areas of well being and organizational performance, using a review of selected research studies into employee empowerment programs in various industries. The report concludes with several recommendations regarding implementation of employee empowerment programs at Company Name. 1. Introduction The following report provides an overview of employee empowerment, including definitions and a brief history. The report analyzes the effectiveness of employee empowerment practices in the areas of well being and organizational performance, using a review of selected research studies into employee empowerment programs in various industries including food services, hospitality, and enterprise. The report offers some insight into the implications of employee empowerment programs on cost and firm culture, and concludes with some recommendations as to how employee empowerment practices might be implemented at Company Name. 1.1 Definition Employment empowerment refers to the system of authorizing non-managerial employees to make choices regarding their jobs or tasks; in essence, employee empowerment confers some of the power typically reserved for management to lower level workers. In a firm that applies employee empowerment programs, non-managerial employees assume some of the responsibility and power of their direct reports. As Swamidass (2000) explains, employee empowerment is “a form of decentralizing managerial responsibility to lower level employees. Empowerment allows the employee to take on responsibility for tasks normally associated with management or staff specialists (p. 183). Examples of employee empowerment in action include when a firm that operates a large call center urges and assumes that its front line call center agents and representatives will resolve the greater part of the customer service calls on their own, as opposed to escalating the customer’s queries or concerns higher up the chain to management (Krema, 2003; Lagace, 2000). Other examples include decision making in areas that may include purchasing, scheduling, quality control, and process design (Swamidass, 2000) 1.2 History The concept of employee empowerment has existed since the 1950s (Maxwell, 2005). At that time, Eric Trist, a social scientist, organizational development specialist and co-founder of London’s Tavistock Institute for Social Research conducted several experiments in an attempt to put the idea of employee empowerment into practice (Maxwell, 2005). Trist’s efforts gave birth to the appearance of self-directed working teams; however, the first real manifestation of employee empowerment occurred in 1988 when the Colgate-Palmolive company implemented autonomous teams at its Cambridge, Ohio plant (Maxwell, 2005). Employee empowerment programs begin to be implemented in earnest in the late 1980s (Sprietzer and Doneson, 2008). As of 2008, more than 70 percent of firms in the United States operated some type of employee empowerment program for one or more sections of their labor force (Sprietzer and Doneson, 2008) 1.3 Purpose Employee empowerment allows firms to accomplish multiple business goals while streamlining the reporting structure. There are several essential purposes of employee empowerment: to save time, cut down on bureaucracy, maintain agility in the business environment, promote employee retention, and improve organizational performance. Sprietzer and Doneson (2008) attribute the explosive growth in employee empowerment programs over the past 15 years to increased competition between firms for market share and talent acquisition. “Faced with competitive demands for lower costs, higher performance, and more flexibility, organizations have increasingly turned to employee empowerment to enhance their performance (Sprietzer and Doneson, 2008, p. 311). As Swamidass (2000) explains, employee empowerment helps businesses to achieve “zero defects, zero breakdowns, and supplier coordination, which are essential in an agile business environment” (p. 183). Employee empowerment remains a key player in the implementation of “business process engineering, total quality management, statistical process control, and just-in-time manufacturing” (Swamidass, 2000, p. 183). Another important purpose of employee empowerment programs is to encourage employee buy-in for change management initiatives (Sprietzer and Doneson, 2008). Firms often implement employee empowerment programs during organizational change as a means of giving employees agency. As Sprietzer and Doneson (2008) explain, “rather than forcing or pushing people to change, [employee] empowerment provides a way of attracting them to want to change because they have ownership in the change process (p. 311). Retention represents another vital function of employee empowerment. Self-managed teams provide an example of employee empowerment that fosters employee retention. When employees witness that the firm values them enough to allow them to assume ownership and responsibility for a project, design, or business goal, they “develop a high level commitment that salary alone cannot buy” (Heskett, 2006, n. pag). In essence, employee empowerment programs create buy-in – in the same manner that the CEO endeavors to generate buy-in for his or her initiatives designed to take the firm to a higher level, so too do employees strive to generate buy-in for their personal contributions to business goals. As Heskett (2006) explains, “hen employees get the sense that they are not appreciated, and only receive negative feedback about their performance, they recoil into their own cocoon, lose interest in their work, and get demoralized. This scenario may lead to a dangerous situation from which few employees survive” (n. pag). 2. Findings Employee empowerment positively affects the bottom line. According to Marketing Weekly News (2011), research from a 2011 Gallup poll indicates that firms which implement “higher-than-average employee engagement also had 27 percent higher profits, 50 percent higher sales and 50 percent higher customer loyalty” (p. 179). Research indicates that employee empowerment programs promote employee well being, retention, and organizational performance also. 2.1 Well Being Research demonstrates that employee empowerment reduced job stress in employees. Employee empowerment “has been found to encourage flexibility and give more control to employees to perform their duties, which in turn, reduces job stress” (Bhutani et al., 2010, p. 6). Job stress remains a key component that affects employee well being across multiple industries. Bhutani et al. (2010) studied the impact of employee empowerment programs on hospitality workers; similar to workers in other industries, hospitality workers “are subjected to a dynamic, multinational, multi-lingual, and many times, to unplanned or unforeseen peaks in their working environments, all contributing to higher levels of work related stress” (p. 4). Based on the employees’ responses to the researchers’ surveys, Bhutani et al. (2010) determined that “the degree of reduction in job stress is associated with the improvement in the degree…empowerment” (p. 9). Bhutani et al. (2010) also found that the degree of employee empowerment correlated to a reduction in job related stress. Thus, research supports the implementation of employee empowerment programs to promote employee well being and to encourage job satisfaction. 2.2 Organizational Performance While traditional organizational structures entail management practices and styles that tend to control the behaviors of their employees, Heskett (2006) argues that “the organization that will stand the test of time in a volatile business environment will be one that acknowledges the quality of employees and empowers them to take ownership and be held accountable for their functions” (n.pag). Firms that invest in employee empowerment programs will represent a new breed of companies differentiated as market rulers; their cultures will foster dynamic leaders who demonstrate the ability to “acknowledge and encourage employees to think for themselves and learn from their mistakes” (Heskett, 2006, n.pag). Heskett (2006) views leading firms as those that conscientiously and continually “invest in improving the quality of learning and thinking…[they] are capable of developing the capacity for reflection and introspection amongst and within teams, encourage team learning, and include the capacity to mobilize their teams around shared visions and values in the understanding of complex business issues” (n. pag). The primary organizational benefit for firms that choose to decentralize decision making then becomes increased performance and increased agility; decisions take less time, and those closer to the front lines of the business becomes stakeholders in the firm’s success. In the correction industry, employee empowerment demonstrates utility for corrections officers. Boyer (2008) studied the impact of employee empowerment initiatives at an Oklahoma correctional institute. Boyer (2008) found that teams of employees were successfully “working on issues and problems related to offender suicide prevention, nurse scheduling, food service, officer uniforms, escapes in community corrections, communications in community corrections, co-occurring treatment disorders, [and] case management” (p. 39). The employee empowerment programs resulted in the institution being “recognized with a Governors Commendation and the Quality Crown Award of Excellence” (Boyer, 2008, p. 40). Cui and Yao (2010) empirically analyzed the high rate of employee turnover in small and medium enterprises in China. Talented employees remain the lifeblood of the knowledge economy; thus, the continual employee turnover not only costs these enterprises financially, it also undermines the corporate culture and destabilizes in human capital. Cui and Yao (2010) applied “the structure variable and the environment variable influencing the employee turnover tendency, and the employee psychological empowerment” was introduced as the moderating variable (p. 28). The goal of the study was to investigate the effect of employee empowerment on employee turnover propensity. Cui and Yao (2010) found that the test results revealed that employee empowerment has an impact on some of the other variables involved in employee’s decisions to leave the firm. As Cui and Yao (2010) explain, The structure model by the empirical research shows that the fair allocation, the promotion opportunity, the monotonous work, the social internal support, and the exterior work chance are main factors to influence the employee turnover tendency, and the employee psychological empowerment could adjust enterprise employees turnover tendency. Finally, this article suggests that enterprises should harmonize the relationship between the leaders authorization behavior and the employees psychological empowerment to create healthy enterprise culture and promote effective talent encouragement (p. 28). 3. Discussion 3.1 Implications Romero (2011) posits that three essential elements must exist in order for employee empowerment programs to function successfully in organizations. The first is sound governance. Romero (2011) believes that the work undertaken by non-managerial employees under the auspices of employee empowerment programs need to well designed and well defined. Firms need to employ sound governance to ensure that the work remains “possible and practical” (p. 186). The second element required for successful employee empowerment programs is effort on the part of the firm to provide employees with the “knowledge, skills and competencies required to do the work” (Romero, 2011, p. 186). This means that non-managerial workers need to receive the training and mentoring that they need to excel (Romero, 2011). Firms interested in applying employee empowerment procedures must also be prepared to change employee roles and functions to find the right fit. “Workers must be prepared, equipped and then tested to determine if they are suitable and fitting to work on a process team” (Romero, 2011, p. 186). The third required for successful employee empowerment programs is the allocation of power and answerability; this represents the most difficult element for most firms, as Romero (2011) explains, because “the final dimension of employee empowerment is to get out of the way and let employees do their jobs” (p. 186). Firms need to trust that their front line employees have the success of the firm in mind as they perform their tasks and make decisions. 3.2 Challenges The main challenge for employee empowerment programs represents the main reason why many employee empowerment programs do not achieve their intended goals – tradition. As Maxwell (2005) explains, “many of the change programs that are implemented in companies…crush employee innovation, motivation and drive rather than stimulating it. Managers love the sound of employee empowerment; but, they are much more accustomed to the traditional command-and-control model” (p. 67). Employee empowerment needs to be taken literally in order to be of value to the business; it cannot simply be a nice idea. Often management will give lip service to the idea and business benefit of non-managerial employees becoming empowered; however, traditional top-down management structures need to soften in order to make employees truly feel empowered to make decisions on their feet and without the input of a superior. As Bukovinsky et al. (2006) explain, “this step is often difficult to achieve, especially when members of management are unwilling to delegate or relinquish some of their decision-making authority” (p. 39) According to Maxwell (2005), two forms of commitment exist in the labor force: internal commitment and external commitment. The former emanates from within the employee; it represents a form of commitment that results when the employee feels connected to and empowered by his or her role (Huq, 2010; Maxwell, 2005). Internal commitment is what senior management seeks when it implements an employee empowerment initiative, namely, the involvement of employees “in defining work objectives” (Maxwell, 2005, p. 67). External commitment, on the other hand, occurs when employees have no internal sense of commitment to their roles; the job becomes a paycheck and nothing more. External commitment is “what a manager gets when workers have little or no control over what they do. The result of external commitment is that employees will only do what is expected of them and they will put no effort or passion into their work” (Maxwell, 2005, p. 67). Thus, the triumph of any employee empowerment initiative depends solely on the actual authority vested in employees to handle specific decisions free of management say (Jha, 2005; Karakoc and Yilmaz, 2009). In order for these decisions to be made, “management must be willing to allow employees the freedom to make decisions. In many cases, however, management, either correctly or incorrectly, does not have faith in the employees decision-making ability. When this happens, the empowerment program is stripped of its very reason for being” (Bukovinsky et al., 2006, p. 39). Micromanagers and faithless managers therefore become the antithesis of employee empowerment. While it is true that empowered employees may sometimes make a decision that is wrong, the same is true of management. As Bukovinsky (2006) explains, “employees who are hamstrung by micromanagers cost the company money and also can negatively impact revenues through poor customer service” (p. 39). A secondary challenge that some employee empowerment initiatives may face in the labor face is the unwillingness of certain employees to add decision-making to their roles. Byrnes et al. (2002) conducted a qualitative study of the effects of employee empowerment programs on government employees. While the participants in this study did value certain element of employee empowerment programs, namely “being given what the participants perceive to be adequate skills and tools [and] …being given what the participants perceive to be sufficient autonomy or independence,” the researchers found that many respondents were less than enthusiastic about the increase in decision making that the programs encouraged (Byrnes et al., 2002, p. 391). As Byrnes et al. (2002) explain, “the dimension concerning involvement in agency or office-wide decision making showed mixed results. Long perceived to be a vital component, employee involvement in decision making – and a commitment to increasing it – drives many of the empowerment proposals in the literature…However, some of the study participants placed little if any value on such involvement. Indeed, some participants were openly negative toward it” (p. 391). Similarly, Chua and Iyengar (2006) found that managers in the process of implementing employee empowerment programs at their firms need to take into account the socioeconomic background of their non-managerial employees. Cultural and individual differences in employees affect how employees view choice; some will be motivated by it and use it effectively to make decisions in teams or individually, whereas others will not be imbued with the same sense of agency (Chua and Iyengar, 2006). As Chua and Iyengar (2006) explain, “individuals from lower socioeconomic status may not perceive the provision of choice as critical to their sense of personal agency because their focus is not on expressing uniqueness and control. Thus, whereas high socioeconomic status employees may react negatively when denied the opportunity to choose, those from lower socioeconomic status may not care whether or not they get to choose” (p. 72) 4. Recommendations In order for an employee empowerment initiative to take flight truly at Company Name, training will need to be conducted in both managerial and non-managerial levels. Managers will require the training necessary to support them as they relinquish the traditional top-down management reporting structure and chain of command. Managers will especially need to be reassured that the decentralization that occurs in employee empowerment programs by no means reflects poor performance, demotion, or the threat of reduced compensation. In essence, employee empowerment reflects the changes taking place across society with the advent of globalization, the Information Age, and the rise of user-generated social networks. As Troughton (2008) explains, “employees with instant access to unprecedented amounts of information are far more independent than ever before – and as likely to look to their peers for answers as they are to their managers. Successful managers in the 21st century will be distinguished less by what they know and more by how well they teach effective collaboration and lead a dispersed, multi-disciplined, and multicultural team” (p. 13). Leadership styles of existing managers and management teams may not initially support employee empowerment programs; this is particularly true of autocratic or authoritarian type leaders who will have grown accustomed to centralized decision making. Training in leadership styles that are more conducive to employee empowerment programs such as authentic leadership styles and democratic leadership styles will need to be implemented. Communication styles for both managerial and non-managerial staff will also need to be adjusted in some cases during the implementation stage. As Emerson (2008) notes, “for an organization to practice and foster employee empowerment, the management must trust and communicate with employees. Employee communication is one of the strongest signs of employee empowerment in an organization. Management must be willing to communicate every aspect of the business to its employees in an open and honest manner” (p. 8). Managers need to deliver their directives in a clear and comprehensive manner to employees newly appointed to decision making roles. In order to facilitate this transition, managers who once led teams will not be expected to train the employees newly appointed to decision making roles. Similarly, employees who are not accustomed to decision making roles will require support as they find their voice and authority and take ownership of their tasks. Communication styles that need to be managed may include mumbling, avoiding eye contact, communicating exclusively through electronic networks in order to avoid face to face communication, and ineffective instruction. 4.1 Implementation Non-managerial employees will require training in order to take ownership of their work and make decisions independent of their manager. Non-managerial employees will need to be assured that taking initiative in decision-making will not result in punitive action on the part of their direct managers or the firm. Coaching and mentoring for non-managerial employees new to decision-making will also be necessary. As Campbell (2009) explains, “coaching, training and providing the necessary information to make…decisions...will help employees develop skills, talent and decision-making competency” (p. 8). References Bhutani, S. et al. (2010) The impact of transformational leadership and empowerment on employee job stress. 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