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Employee Involvement

Employee Involvement Changing Michael Dell’s DNA

Dell Inc. is one of the world’s largest PC manufacturers, with a marketing and manufacturing system that is repeatedly studies and copied. Of the Fortune 500 companies, Dell topped the list in 10-year total return to investors. However, despite Dell’s success year after year, Dell’s CEO and founder, Michael Dell, still manages with the urgency and determination he had when he started the company out of his college dorm some 20 years ago. “I still think of us as a challenger. I still think of us attacking,” says Dell. But not all is well in Camelot. A recent survey of Dell’s employees revealed that half of them would leave if they got the chance. Internal interviews of the subordinates of Michael Dell and the firm’s president, Kevin Rollins, revealed that they felt Dell was impersonal and emotionally detached, and Rollins, autocratic and antagonistic. Michael Dell believes that the status quo is never good enough. Once a problem is uncovered, it should be dealt with quickly and directly. In the 1990’s, when the company was rapidly growing, it recruited seasoned managers from IBM and Intel. Some quickly bailed out because they were not willing to work in Dell’s demanding culture. An executive coach who has worked with Michael Dell since 1995 says, “They need to work a lot on appreciating people.” Michael Dell, facing the results of the employee surveys, took a page out of his own book. Fearing an exodus of talent and a tearing apart of the company by antagonized employees, Dell went before his management team and offered an honest self-critique. He acknowledged that he was shy and made him appear removed and not caring. He promised to build tighter relationship with his team. Within days, a videotape of meeting was shown to every manager in the company. Like Dell, a growing number of today’s companies are not only concerned but doing something about the way they manage their employees. They recognize that empowered employees are the difference between success and failure in the long run. Faced with competitive demands for lower costs, higher performance and greater flexibility, organizations are increasingly turning to employee involvement (El) to enhance the participation, commitment, and productivity of their members. Employee involvement is a broad term that has been variously referred to as “empowerment” “participative management,” “work design,” “industrial democracy,” and “quality of work life.” Empowerment is giving employees power to make decisions about work. Firms that have transformed their culture claim to have increased productivity and number of clients, made each employee feel a sense of ownership, and increased profits. OD interventions in this area are, therefore, aimed at moving decision making downward in the organization, closer to where the actual work takes place, i.e. delegation of power. The following major El applications are discussed in this chapter: parallel structures, including cooperative union—management projects and quality circles; high- involvement organizations; and total quality management. Two additional El approaches, work design and reward system interventions, are discussed in Chapters 16 and 17, respectively.

Employee Involvement: What is it?

Employee involvement is the current label used to describe a set of practices and philosophies that started with the quality-of-work-life movement in the late 1950s. The phrase quality of work life was used to stress the prevailing poor quality of life at the workplace. As described earlier, both the term QWL and the meaning attributed to it have undergone considerable change and development. In this section, we provide a working definition of EI, document the growth of El practices in the United States and abroad, and clarify the Important and often misunderstanding relationship between EI and productivity.

A Working Definition of Employee involvement:

Employee involvement seeks to increase members input into decisions that affect organization performance and employee well-being. It can be described in terms of four key elements that promote worker involvement:

1. Power:

This element of EI includes providing people with enough authority to make work-related decisions covering various issues such as work methods, task assignments, performance outcomes, customer service, and employee selection. The amount of power afforded employees can vary enormously, from simply asking them for input into decision that managers subsequently make, to managers and workers jointly making decisions, to employees making decisions themselves.

2. Information.

Timely access to relevant information is vital to making effective decisions. Originations can promote El by ensuring that the necessary information flows freely to those with decision authority.

This can include data about operating results, business plans, competitive conditions, new technologies and work methods, and ideas for organizational improvement.

3. Knowledge and skills.

Employee involvement contributes to organizational effectiveness only to the extent that employees have the requisite skills and knowledge to make good decisions. Organization can facilitate El by providing training and development programs for improving members’ knowledge and skills. Such learning can cover an array of expertise having to do with performing tacks, making decisions, solving problems, and understanding how the business operates.

4. Rewards.

Because people generally do those things for which they are recognized, rewards can have a powerful effect on getting people. Involved in the organization meaningful opportunities for involvement can provide employees with internal rewards, such as feelings of self-worth and accomplishment. External rewards, such as pay and promotions, can reinforce El when they are linked directly to perform outcomes that result from participation in decision making. Those four elements power information, knowledge and skills, and rewards contribute to El success by determining how much employee participation in decision making is possible in organization. The farther that all four elements are moved downward throughout the organization, the greater the employee involvement. Furthermore, because the four elements of El are interdependent they must be changed together to obtain positive results. For example, if organization members are given more power and authority to make decisions but do not have the information or knowledge and skill to make good decisions, then the value of involvement is likely to be negligible. Similarly, increasing employees’ power information, and knowledge and skills but not linking rewards to the performance consequences of changes gives members little incentive to improve organizational performance. The El methods that will be described here vary in how much involvement is afforded employees. Parallel structures, such as unionmanagement cooperative efforts and quality circles, are limited in the degree that the four elements of EI are moved downward in the organization; high-involvement organizations and total quality management provide far greater opportunities for involvement.

How Employee Involvement Affects Productivity?

An assumption underlying much of the El literature is that such interventions will lead to higher productivity. Although this premise has been based mainly on anecdotal evidence and a good deal of speculation, there is now a growing body of research findings to support that linkage. Studies have found a consistent relationship between El practices and such productivity measures as financial performance, customer satisfaction, labor hours, and waste rates. Attempts to explain this positive linkage traditionally have followed the idea that giving people more involvement in work decisions raises their job satisfaction and, in turn, their productivity. There is growing evidence that this satisfaction- causes-productivity premise is too simplistic and sometimes wrong. A more realistic explanation for how El interventions can affect productivity is shown in Figure 47.El practices, such as participation in workplace decisions, can improve productivity in at least three ways.


, such interventions can improve communication and coordination among employees and organizational departments and help integrate the different jobs or departments that contribute to an overall task.


, El interventions can improve employee motivation, particularly when they satisfy important individual needs. Motivation is translated into improved performance when people have the necessary skills and knowledge to perform well and when the technology and work situation allow people to affect productivity. For example, some jobs are so rigidly controlled and specified that individual motivation can have little impact on productivity.

Figure 47 Third

, EI practices can improve the capabilities of employees, thus enabling them to perform better. For example, attempts to increase employee participation in decision making generally include skill training in group problem solving and communication. Figure 48 shows the secondary effects of EI. These practices increase employee well-being and satisfaction by providing a better work environment and a more fulfilling job. Improved productivity also can increase satisfaction, particularly when it leads to greater rewards. Increased employee satisfaction, deriving from EI interventions and increased productivity ultimately can have a still greater impact on productivity by attracting good employees in join and remain with the organization. In sum, El interventions are expected to increase productivity by improving communication and coordination employee motivation, and individual capabilities. They also can influence productivity by means of the secondary effects of increased employee well-being and satisfaction. Although a growing body of research supports these relationships, there is considerable debate over the strength of the association between El and productivity. Recent data support the conclusion that relatively modest levels of Ph produce moderate improvements in performance and satisfaction and those higher levels of El produce correspondingly higher levels of performance.
Employee Involvement Application:

This section describes three major El applications that vary in the amount of power, information, Knowledge and skills, and rewards that are moved downward through the organization (from least to most involvement): parallel structures, including cooperative projects and quality circles; high-Involvement organizations and total quality management.

Figure 48 Parallel Structures:

Parallel structures involve members in resolving ill-defined, complex problems and build adaptability into bureaucratic organizations. Also known as “collateral structures,” “dualistic structures,’ or “shadow structures,” parallel structures operate in conjunction with the formal organization. They provide members with an alternative setting in which to address problems and to propose innovative solutions free from the formal organization structure and culture. For example, members may attend periodic off-site meetings to explore ways to improve quality in their work area or they may be temporarily assigned to a special project or facility to devise new products or solutions to organizational problems. Parallel structures facilitate problem solving and change by providing time and resources for members to think, talk, and act in completely new ways. Consequently, norms and procedures for working in parallel structures are entirely different from those of the formal organization. This section describes the application steps associated with most parallel structures; discusses two specific applications cooperative union-management projects and quality circles; and reviews the research on their effectiveness.

OD in Practice: A Work-out Meeting at General Electric Medical System Business

As part of the large-scale change effort, Jack Welch and several managers at General Electric devised a method for involving many organization members in the change process. Work-Out is a process for gathering the relevant people to discuss important issues and develop a clear action plan. The program has four goals to use employees’ knowledge and energy to improve work, to eliminate unnecessary work, to build trust through a process that allows and encourages employees to speak out without being fearful, and to engage in the construction of an organization that is ready to deal with the future. At GE Medical Systems (GEMS), internal consultants conducted extensive interviews with managers throughout the organization. The interviews revealed considerable dissatisfaction with existing systems, including performance management (too many measurement processes, not enough focus on customers, unfair reward systems, and unrealistic goals), career development, and organizational climate. Managers were quoted as saying: I’m frustrated. I simply can’t do the quality of work that I want to do and know how to do. I feel my hands are tied. I have no time. I need help on how to delegate and operate in this new culture. The goal of downsizing and delaying is correct. The execution stinks. The concept is to drop a lot of ‘less important” work. This just didn’t happen. We still have to know all the details, still have to follow all the old policies and systems. In addition to the interviews, Jack Welch spent some time at GEMS headquarters listening and trying to understand the issues facing the organization. Based on the information compiled, about fifty GEMS employees and managers gathered for a five-day Work-Out session. The participants included the group executive who oversaw the GEMS business, his staff, employee relations managers, and informal leaders from the key functional areas who were thought to be risk takers and who would challenge the status quo. Most of the work during the week was spent

unraveling, evaluating, and reconsidering the structures and processes that governed work at GEMS. Teams of managers and employees addressed business problems. Functional groups developed visions of where their operations were headed. An important part of the teams’ work was to engage in “bureaucracy busting” by identifying CRAP (Critical Review Appraisals) in the organization. Groups were asked to list needless approvals, policies, meetings, and reports that stifled productivity. In an effort to increase the intensity of the work and to encourage free thinking, senior managers were not a part of these discussions. At the end of the week, the senior management team listened to the concerns, proposals, and action plans from the different teams. During the presentations, senior GEMS managers worked hard to understand the issues, communicate with the organization members, and build trust by sharing information, constraints, and opportunities. Most of the proposals focused on ways to reorganize work and improve returns to the organization. According to traditional Work-Out methods, managers must make instant, on-the-spot decisions about each idea in front of the whole group. The three decision choices are approval; rejection with clear reasons; and need more data, with a decision to be made within a month. The five-day GEMS session ended with individuals and functional teams signing close to one hundred written contracts to implement the new processes and procedures or drop unnecessary work. The contracts were between people, between functional groups, and between levels of management, and organizational contracts affecting all members. One important outcome of the Work-Out effort at GEMS was a decision to involve suppliers in its internal email network. Through that interaction, GEMS and a key supplier eventually agreed to build new-product prototypes together, and their joint efforts have led to further identification of ways to reduce costs, improve design quality, or decrease cycle times. Work-Out at GE has been very successful but hard to measure in dollar terms. Since 1988, hundreds of Work-Outs have been held, and the concept has continued to evolve into best practice investigations, process mapping, and change-acceleration programs. The Work-Out process, however, clearly is based on the confrontation meeting model, where a large group of people gathers to identify issues and plan actions to address problems.

Application Stages:

Parallel structures fall at the lower end of the EI scale. Member participation typically is restricted to making proposals and to offering suggestions for change because subsequent decisions about implementing the proposals are reserved for management. Membership in parallel structures also tends to be limited, primarily to volunteers and to numbers of employees for which there are adequate resources. Management heavily influences the conditions under which parallel structures operate. it controls the amount of authority that members have in making recommendations, the amount of information that is shared with them, the amount of training they receive to increase their knowledge and skills, and the amount of monetary rewards for participation. Because parallel structures offer limited amounts of EI, they are most appropriate for organizations with little or no history of employee participation top-down management styles and bureaucratic cultures. Parallel structures typically are implemented in the following steps: 1.

Define the purpose and scope.

This first step involves defining the purpose for the parallel structure and initial expectations about how it will function. Organizational diagnosis can help clarify which specific problems and issues to address, such as productivity, absenteeism, or service quality. In addition, management training in the use of parallel structures can include discussions about the commitment and resources necessary to implement them; the openness needed to examine organizational practices, operations, and policies; and the willingness to experiment and learn. 2.

Form a steering committee.

Parallel structures typically use a steering committee composed of acknowledged leaders of the various functions and constituencies within the formal organization. This committee performs the following tasks:
Refining the scope and purpose of the parallel structure
Developing a vision for the effort
Guiding the creation and implementation of the structure
Establishing the linkage mechanisms between the parallel structure and the formal organization
Creating problem-solving groups and activities
Ensuring the support of senior management OD practitioners can play an important role in forming the steering committee. First, they can help develop and maintain group norms of learning and innovation. These norms set the tone for problem solving throughout the parallel structure, second, they can help the committee create a vision statement that refines the structures purpose and promotes ownership of it. Third, they can help Committee members develop and specify objectives and strategies, organizational expectations and required resources, and potential rewards for participation in the parallel structure.


Communicate with organization members.

The effectiveness of a parallel structure depends on a high level of involvement from organization members, and Communicating the purpose, procedures, and rewards of participation can promote that involvement. Moreover, employee participation in developing a structure’s vision and purpose can increase ownership and visibly demonstrate the “new way” of working. Continued communication concerning parallel structure activities can ensure member awareness. 4

. Form employee problem-solving groups.

These groups are the primary means of accomplishing the purpose of the parallel learning structure. Their formation involves selecting and training group members, identifying problems for the groups to work on, and providing appropriate facilitation. Selecting group members is important because success often is a function of group membership. Members need to represent the appropriate hierarchical levels, expertise, functions, and constituencies that are relevant to the problems at hand. This allows the parallel structure to identify and communicate with the formal structure. It also provides the necessary resources to solve the problems. Once formed, the groups need appropriate training. This may include discussions about the vision of the parallel structure, the specific problems to he addressed, and the way those problems will he solved, As in the steering committee, group norms promoting openness, creativity, and integration need to be established. Another key resource for parallel structures is facilitation for the problemsolving groups. Although this can be expensive, it can yield important benefits in problem-solving efficiency and quality. Group members are being asked to solve problems by cutting through traditional hierarchical and functional boundaries. Facilitators can pay special attention to processes that require disparate groups to cooperate. They can help members identify and resolve prob1em-solving issues within and between groups. 5.

Address the problems and issues.

Generally, groups in parallel structures solve problems by using an action research process. They diagnose specific problems, plan appropriate solutions and impalement and evaluate them. Problem solving can be facilitated when the groups and the steering committee relate effectively to each other. This permits the steering committee to direct problem-solving efforts in an appropriate manner, to acquire the necessary resources and support, and to approve action plans. It also helps ensure that the groups’ solutions are linked appropriately to the formal organization. In this manner, early attempts at change will have a better chance of succeeding. 6.

Implement and evaluate the changes.

This step involves implementing appropriate organizational changes and assessing the results. Change proposals need the support of the steering committee and the formal authority structure. As changes are implemented, the organization needs information about their effects. This lets members know how successful the changes have been and if they need to be modified. In addition, feedback on changes helps the organization learns to adapt and innovate.

Cooperative Union-Management Projects:

Cooperative union-management projects are one of the oldest El applications of parallel structures. They are associated with the original QWL movement and its focus on workplace change, although more recent approaches have broadened that focus to include productivity improvement. Cooperative unionmanagement projects are relatively new to OD in the United States, but such dual involvement has a long history in other countries, particularly the Scandinavian countries. These interventions tend to have the following structural characteristics:

Steering committee.

This top-level labor-management committee serves as the basic center for planning. It is created during the project start-up phase and comprises key representatives from management, such as a president or chief operating officer, and each of the unions and employee groups involved in the project, such as local union presidents. The steering committee’s mandate is to begin activities directed at improving both the quality of working life and the effectiveness of the organization. Members are encouraged to be open about the need for improvements in productivity. Unionists are told that because projects are jointly controlled efforts, they need not fear an organization’s productivity motives. Indeed, many unions distrust a management philosophy that does not express concern for higher productivity or the quality of its product or service.

Multiple-level committees.

Because the steering committee may not be able to oversee all aspects of a project, it often is necessary to establish more than one labor-management committee at a number of selected levels in the organization to reflect the differing interests and knowledge. For example, the steering committee can be amplified and assisted by working committees at the plant, department, and shop-floor levels. These lower-level committees deal with day- to-day project activities.

Ad hoc committees.

In many instances, labor-management committees initiate particular projects that involve the workers and managers in a specific part of the organization. At the same time, employees themselves frequently initiate action toward a particular goal. In such cases, an ad hoc committee is established to bring about change. Such committees are charged with a specific task and have a limited lifetime.

External consultants.

External change agents act as third-party facilitators, offering guidance and assistance to the labor-management committees and prob1em-solving and teamwork training for all participants. In most projects, the steering committee selects the consultants.

External researchers.

In some projects, researchers are brought in to assess the overall results of the intervention. In those cases, separate roles for the change agents and the evaluation researchers are created. It is assumed that keeping these functions separate enables consultants to be concerned with client needs and researchers to do a more objective assessment of the intervention. Excellent descriptions of cooperative union-management projects are available in the literature, featuring longitudinal discussions of problems, successes, and partial failures. The projects include a large metropolitan hospital, a large international company called the “National Processing Case,” and the Bolivar plant of Harman International Industries. Union-management cooperative projects have been carried out in most industrial and public sectors in the United States. Both managers and unionists realize that their fates are positively correlated and that both parties must be jointly involved in enhancing the quality of work life and productivity. Almost every major union and corporation has become involved in these efforts, including UAW, Communications Workers of America, Ford, General Motors, and AT&T.24

Application 7 presents an example of a cooperative union—management program at GTE of California. Application 7: Union-Management Cooperation at GTE California

GTE of California (GTEC) and the Communications Workers of America embarked on a cooperative union—management project during the fall of 1984. This OD effort was in response to the court-ordered breakup of AT&T, which forced firms in the telecommunications industry to rethink the way that they conducted business. Over time, the deregulation of the industry would remove the protective shield of guaranteed returns on investment, monopoly territories, and “cradle-to-grave” employment that had characterized operations. Under the new conditions, GTEC management and union leadership believed strongly that the company’s usual way of operating in the regulatory environment would need to change. The traditional approach to managing the business was characterized by centralized decision making and work planning, lackadaisical service orientation, and little cross- functional teamwork. The advent of deregulation was coupled with tremendous technological changes in information processing and service delivery and a broadening of the belief that workers should have more say in decisions that affect them. The old way of managing produced low morale and mediocre service in this changing environment. Consequently, management and union officials felt the need for improved adaptability and productivity and a more customer-oriented workforce. For some time, union leadership had been researching worker participation and union—management cooperation at its national office in Washington, D.C. This research was limited, however, because no one had implemented such interventions during a period of rapid deregulation. At the same time, GTEC senior management had been meeting with other telephone companies to discuss how to meet the challenges posed by deregulation, technological change, and increased worker sophistication. These discussions consistently pointed out that effective organizations in deregulated environments were more decentralized in their decision making. But, given decades of regulatory tradition, the means to accomplish such an organizational change were not clear. Working with OD consultants from the University of Southern California’s Center for Effective Organizations, senior managers and union leaders began discussing how to increase worker participation and decentralize decision making without treading on traditional collective bargaining issues. These discussions resulted in a cooperative union—management partnership called Employee Involvement. The purpose of the El process was to improve employees’ quality of working life and productivity. The group of senior managers and union officials became the steering committee for the project and developed a vision of the El process and its objectives. The steering committee established a parallel structure to guide implementation of the El process with the twenty-six thousand employees at GTEC. It comprised three area coordinating committees responsible for implementing the El process in their respective geographic regions. Each coordinating Committee created support committees for the functional areas in its region. The support committees, in turn, established El teams that would identify and solve work-related problems in the different units of the company. Each committee and team was staffed with both union and management personnel as appropriate. As part of the early implementation activities, all organization members attended a two-hour orientation meeting that described the goals, structure, and implementation of the El process. This orientation was conducted by both GTEC management and local union presidents. In addition, a threeday union—management training program was conducted for all supervisors and union officials (local presidents and stewards). During the first two days of training, union leaders and GTEC managers were

trained separately in their respective roles and responsibilities in the El process. On the third day, the managers and union officials were brought together to discuss how the implementation of El would proceed in their particular departments. Members of the support committees and employee involvement teams attended a five-day training program focusing on meeting-management skills, problem- solving techniques, and group dynamics. They were also provided with internal facilitators if needed. Over the next several months, the El teams focused on quality-of-work-life issues, such as the provision of bottled drinking water, rather than on productivity-related changes. Responsible Committees were concerned about this limited focus and modified the process to align it more closely with El’s productivity objectives. For example, the problem-solving training was changed to emphasize performance issues. In addition, the composition and responsibilities of the different committees were revised to increase senior management and union leadership involvement and accountability. At the organizational level, a new incentive compensation system was initiated. This system rewarded cross-functional teamwork and generated many ideas for employee involvement. Finally, facilitators were assigned permanently to functional areas to focus on operating problems. The El process produced many successes. One team, established in early 985, worked for more than two years to simplify the way field employees reported their time at work. These efforts produced savings of more than $3 million by increasing the amount of productive time that employees spent in the field and by consolidating several offices that had been used to collect, collate, and report work-time Information. Between 1987 and 988, an evaluation of the El process concluded that the program had produced a net savings (after the costs of training and dedicated personnel) of more than $1 million. In 1991, GTEC surpassed its competition in measures of customer satisfaction for large- and medium-sized businesses to become the benchmark for others. In addition, several cost measures also decreased significantly. The El program survived through two union contract negotiations and massive corporate changes that reduced the size of the work force by consolidating work functions and business units and standardizing systems and equipment.

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