Why is employee empowerment controversial? Does available evidence suggest that empowerment schemes are effective in practice?
The current paper examines implementation of employee empowerment in modern organizations. Factors that determine the need for empowerment historically and in the current environment, as well as benefits and drawbacks of empowerment strategies are discussed below. Several cases of different empowerment models in various industries are examined to present specific effective practices of empowerment.
The concept of empowerment has been elaborated for decades. Starting from its simplest form, which is required in any hierarchy, i.e. delegation of standard responsibilities and authority, and moving towards very high levels of freedom of employees and their engagement in the business, empowerment of people remains a crucial issue in success of any organization.
Successful empowerment increases abilities of employees to be initiative, take risks, and make decisions while staying within the boundaries of the corporate strategy, goals, and objectives. “The synergy resulting from a properly structured and empowered team is incredible,” says Howard Berg, a senior applications consultant for Motorola University (Calder & Douglas 1999).
The need to implement empowerment strategies often originates from the company’s situation. For instance, McGraw-Hill was once facing the problem of increased workload and insufficient workforce. The followed implementation of empowered teams increased productivity and reduced costs within the first two to three years (Calder & Douglas 1999). This success story dates back over 15 years from now. Currently, there are many instances of organizations that efficiently implement authority transition and provide greater autonomy to their employees. However, it is often a limited form of empowerment as employees still mostly act within fixed frameworks and do not have many ways to take part in strategic decisions or influence overall business performance decisions (Manville & Ober 2003).
It is necessary to note evolution of the empowerment practice has lasted for decades. Earlier empowerment served as the first ‘hygienic’ factor of personnel management that would make it possible to move towards development of motivation and realization of employees’ further needs. The organizational environment was highly standardized and generally unsupportive of change. The idea of empowerment was viewed mostly as an approach to impose responsibility and stimulate employees to take autonomous decisions and practice more control. Now, it is more usual to see a shift in organizations to higher levels of the motivational pyramid: empowerment is seen as a means to provide a sense of self-realization and encourage feelings of trust and inclusion in the employee-organization relationships.
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Empowering employees leads to organizational encouragement of entrepreneurial traits and prompts employees to make decisions, take action, and foster their belief that they can take control of their own destinies. This belief leads to self-motivation and a sense of independence that is translated into greater loyalty and extra effort for the organization. Empowered employees come to believe that they control their own success through their efforts and hard work, which in turn benefits the success of the entire institution. (Emerson 2012)
Factors that work together to build an effective system of employee empowerment embrace both organizational premises and needs of individuals, which means that conditions for effective realization of empowerment require not only organizational practices, but also employee’s attitudes and behaviors consistent with the empowerment philosophy (Foster-Fishman & Keys 1997). Regarding organizational factors, empowerment requires the ability to handle change, expand the power structure, and promote inclusion and trust in the corporate environment. Employees should in turn be ready for changes, express desire for control, as well as believe in organizational values and a need for inclusion.
There are many reasons why the concept of empowerment has gained even more importance in the current environment. The core idea is that the increased level of uncertainty and complexity requires transformation from highly standardized processes and rigid structures to highly adaptable, dynamic, and constantly-in-progress solutions. People become the main resource to handle this challenge.
Dana Anderson, the Senior Vice President for Marketing Strategy and Communications at Kraft, refers to people as the main source of flexibility, which is a principal capability for an organization to survive in the current volatile, unpredictable, and complex environment. Businesses are to take risks and to invest more in talent management: “Get the people right, give them very high goals, then give them freedom” (Rooney 2011).
John Hagel, the co-chairman of Deloitte’s Center for the Edge, describes people empowerment as an essential requirement of the current business landscape: hierarchies in organizations are bypassed, “enabling people to connect more broadly, so command structures start to get undermined” (Ludwig 2011). Specifically, this process is caused by changes in information flows and technology, which gives employees the power to connect, solve problems, and handle exceptions more efficiently.
As it will be shown below, successful implementation of empowerment strategies remains a controversial issue for many modern organizations. To provide for necessary empowerment and engagement of people, significant changes in organizational culture, corporate values, and processes are required.
When implemented appropriately, empowerment allows the company to find and develop its most valuable asset, i.e. talents. It is the critical factor needed to increase productivity of all organizational units, stimulate personnel development, and improve the company’s performance.
However, the empowerment effort often faces resistance inside the organization and introduces additional obstacles to the business instead of improving its performance. Any changes need to be supported by the corporate philosophy and to be implemented through gradual changes in the organizational environment. Without proper preparation and communication, employees may not cope with the stress of this unexpected increase of responsibility: “With empowerment comes accountability, challenges and added responsibilities which are not always welcomed” (Calder & Douglas 1999).
Managers do not always understand and welcome ideas of the employee empowerment. According to John Hagel (Deloitte’s Center for Edge), organizations are rather inert in introducing any changes to their conventional structures:
They’re deeply threatened by the notion that the tried-and-true methods are no longer effective. … There’s a fear of looking at longer-term trends that are playing out, and the implications of those trends. The tendency is to look inward and focus on the near-term, rather than to step back and rethink fundamental approaches. (Ludwig 2011)
These issues underline the fact that empowerment practices shall be rooted in organizational values and policies.
The aim to gain increased effectiveness out of empowerment requires a long-lasting effort throughout the organization, consistent communication of the empowerment strategy, and further development of specific empowerment programs via collaboration and communal decisions.
The impact of employee empowerment on success of the business depends largely on a smart balance between ultimate delegation of responsibility and involvement of senior management in the processes.
Relying too much on either side of the authority-empowerment balance may hinder organizational development in long-run perspective. In their work on strategy execution, Sull, Homkes, and Sull (2015) elaborate the notion of ‘distributed leaders’, i.e. middle managers and domain experts who are informal leaders in the organization. These employees contribute largely to the business performance and team coordination in case when the strategy is unclear or goals and objectives are not communicated properly. However, they may also introduce a high level of strategy misinterpretation, which is a reason why top managers should provide necessary guidance, yet they should not focus too narrowly on improving alignment, but rather concentrate on actual business objectives (Sull, Homkes, & Sull 2015). As the practice of authoritarian top-down decisions can be beneficial in crisis environment in the short term, over the long run it often introduces a higher level of risk, diminishes decision-making skills and initiative of medium-level managers, and finally degrades a capacity of the organization to execute.
Interviews with senior executives of large organizations have revealed that managers “did not feel personally responsible”, recognized themselves as only being in charge for “facilitating the process” and ensuring delegation of the responsibility to someone else in the organization (Dyer, Gregersen, & Christensen 2011). The key solution underlying the dramatic increase of business performance has been derived by observing tens of successful enterprises. Senior executives in these companies do not only delegate the power, but are actually engaged deeply in the processes themselves. These are inspiring leaders and people involved who make the difference combined with the organizational culture and processes that support empowerment and connect it to corporate goals and objectives instead of mere delegation and formal recognition of the employees’ right to practice responsibility.
To summarize, successful empowerment practices involve a careful balance, thorough preparation and planning, as well as proper communication of needs and benefits, understanding and support across all organizational units and levels of management, and a favorable organizational culture.
The following sections of the paper briefly present specific cases of empowerment practices in various modern organizations. Before illustrating methods and results obtained, it is necessary to outline the framework of how organizations measure effectiveness of their empowerment strategies.
There are essentially two types of evidence to confirm positive effects of empowerment on the business performance. The first one relates to the area of personnel development and includes methods used to measure the personnel turnover, employee satisfaction, and loyalty of employees. This is achieved with the help of surveys and questionnaires.
The second part of the effectiveness puzzle considers the increase of financial performance achieved due to empowerment strategies. This also includes a system of measurement and evaluation to confirm that employee behaviors and attitudes contribute to actual performance indicators. Whereas direct measurement models are rare (and probably not enough exhaustive and precise), indirect methods that connect projects and initiatives of the organization to its performance are used widely.
The paper examines specific examples of large well-known organizations as they are both more effective in implementing their empowerment strategies and open for publicity. Such approach makes the discussion somewhat biased as it is virtually impossible to detect empowerment practices that have failed to contribute to business effectiveness, nor is it feasible to track record of empowerment practices in smaller organizations. Nonetheless, this evidence should be sufficient to present the most popular and effective practices in this area.
To start with, Google is perhaps the most prominent example that is famous for its high performance and continuous development of new innovative products. The Senior Vice President for People Operations recognizes that these results stem from the company’s effort to stimulate people to generate new creative ideas and develop them into projects (He 2013). Google has adopted multiple programs to facilitate open and engaging cooperation in teams and across functions, such as Google Cafes, numerous surveys, and a possibility to ask questions in direct emails to any of Google’s leaders. A number of programs have been introduced to stimulate a productive exchange of ideas and to find solutions to technology-related issues such as Google Moderator and ‘FixIt’ sprints.
‘20% of Time’ Program
One such program of Google called “20% of time” has become particularly famous and has been used widely by technological and software engineering companies to encourage autonomy and innovation, as well as boost motivation and performance. Although invention of the idea is often attributed to Google, it originated as early as in 1948 in 3M Company as a ‘15% of time’ project and was popularized in Hewlett-Packard during the same period of time (Atwood 2012). The idea is that employees can spend on average 20% of their working time to develop their own projects, but they should be related to the business of the company. They are also allowed to use resources of the company for their projects (be it directly in the form of materials, software, capacities, people, etc., or indirectly via their timeshare cut from other projects).
The model has gotten various interpretations in different companies, ranging from well-elaborated programs with written policies and rules to the most flexible and general ‘convention’ format with different shares of working time and levels of control. The program is controversial: it is difficult to monitor time and resource assignment and to directly track results. Another problem is that employees may not have enough time in their tight project schedules or may require more resources than available for their ‘20%’ projects.
Despite rumors that Google is going to close the program, there is evidence that as many as half of all Google’s products take their origin in these 20% (Atwood 2012). The program has become deeply incorporated in the corporate culture and is associated with Google. Moreover, the idea of ‘20% projects’ has been transformed into a popular concept of ‘hackatons’ such as the Hack day in Yahoo.
The model of empowerment and virtually unrestraint engagement of employees are particularly important in businesses relying on highly non-standard and creative processes. They deal with talent management and talents represent a rare asset crucial for the competitive advantage of the enterprise. For instance, the executive director of luxury goods maker LVMH commented on his work with top designers of Dior and Louis Vuitton in his interview with Harvard Business Review in 2001: “Our whole business is based on giving our artists and designers complete freedom to invent without limits” (Ovans 2015). Unique expertise and involvement of employees define organizational culture and drive innovations. Other examples include prominent companies in the production of films or computer-animated pictures (Pixar), design and advertising (IDEO), and innovative technological giants (Apple, Google, Amazon).
Pixar studio is well-known for its unique track record in producing breakthroughs, both technological and artistic, which have been achieved with completely in-house efforts of the firm’s staff. It is a truly inspiring example of a favorable corporate environment and the real authority of all team members: “The director and the other creative leaders of a production do not come up with all the ideas on their own; rather, every single member of the 200- to 250-person production group makes suggestions” (Catmull 2008). Employees work together as peers; they are free to communicate with anyone and suggest ideas. Often, it means that managers who still retain the final word to approve decisions will not be the first to learn about all issues and news: “The most efficient way to deal with numerous problems is to trust people to work out the difficulties directly with each other without having to check for permission” (Catmull 2008). This successful model is considered to be one of decisive factors that helped to restore financial performance of Walt Disney Studio when the two companies merged.
Zappos, an online retailer selling shoes and clothing, has created a spectacular organizational culture with extraordinary high levels of loyalty of both personnel and customers. The employee turnover is as low as 5% (Moran 2013). Top managers have devoted much time to elaborate and propagate the company’s value and ‘WOW’ philosophy of the ‘internal purpose’ to serve people and achieve and give happiness with the help of their business. In 2013, Zappos went even further and declared a direction towards major restructurization. They were to transform a conventional organization structure to a new ‘self-governing’ model of Holacracy where managers cede some of their responsibilities and employees can choose any of the roles in the 400 corporate ‘circles’ (Groth 2013):
One of the core principles is people taking personal accountability for their work. It’s not leaderless. There are certainly people who hold a bigger scope of purpose for the organization than others. What it does do is distribute leadership into each role. Everybody is expected to lead and be an entrepreneur in their own roles, and Holacracy empowers them to do so.
There is also a different approach, which aims to turn the practice of creative innovation into a more reliable process. The idea is to abandon exclusivity of people resource as the core element of creative thinking and to move forward towards a standardized procedure of generating, discussing, elaborating ideas, revising old ideas, and putting them to mass production. This process still depends significantly on the employee empowerment to practice daily innovative discoveries, but it limits risks by selecting these teams in a separate R&D division or by limiting the share of time spent by employees on their experiments. The people empowerment is an important element of the strategy with the other two being standardized processes and philosophies to support proper organization and minimize risks. Successful examples exploiting this model of ‘innovation factory’ are Lego, P&G, Toyota, and IBM (Dyer, Gregersen, & Christensen 2011).
Another example from a non-technological industry is the Ritz-Carlton hotel network whereby employee empowerment has been a cornerstone of its operations and an integral part of all processes since the moment the business was established. The company’s credo is formulated as follows: “To create pride and joy in the workplace, all employees have the right to be involved in the planning of work that affects them” (Solomon 2014). Namely, employees are free to rely on their own best judgment to serve the guest. This vision would fail were it not supported by a comprehensive selection and training process, daily meetings to amplify the strategy of impeccable customer service, strong standards, and positive ‘peer pressure’ that ensures perfect quality management.
The generic concept of employee empowerment comprises many different interpretations and realizations. It has evolved significantly during the last decades with the focus shifting from providing employees with essential autonomy and control to the areas of motivation, engagement, personnel loyalty, and organizational culture. The level of empowerment practice integration in the corporate strategy and the degree of its contribution to the business performance vary largely across industries and organizations. There is only general information about empowerment strategies that have failed to provide any increase of performance and it is virtually impossible to derive any conclusions or patterns from it. However, there are many examples of companies that have built their organizational culture around employee empowerment and in this way succeeded in boosting productivity and profits, as well as dramatically increasing employees’ loyalty and achieving a sustainable competitive advantage.
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