CASE STUDY
Empowerment or Iron Cage?
by
Charles Lamson
Xel Communications, a telecommunications manufacturing company located in the Denver suburbs, changed its manufacturing plant from a traditional hierarchy to a flattened design, that depended on self-managed teams. Xel made this change because because vice president, Joe Painter became convinced that the company could survive in the highly competitive telecommunications market only if it was adaptive and innovative. He concluded that self-managed teams, that harnessed all employees' energy and creativity, were the most effective way to increase Xel's flexibility.
Self-managed teams are peer groups of ten to fifteen totally responsible for the manufacture of major components. Members of the team make all the decisions and undertake all the work involved in manufacturing the components; they are also responsible for hiring and firing, obtaining materials, and general management of the team. If a self-managed team has a problem coordinating with another team, members of the two teams meet to come to a workable decision. J.R. Barker, C.W. Melville, and M.E. Pacanowsky observe, "These teams fit best in organizations characterized by interdependent tasks, complex processes, time sensitivity, and the need for rapid change and adaption."
Xel implemented the new program gradually, starting with a trial team that performed well beyond anyone's expectations. Within eight months, the plant had been reconfigured to accommodate three self-managing teams; labeled the red, the white, and the blue teams. Painter's role became that of a coach, a consultant the teams would call on for advice and problem-solving suggestions. Otherwise, the teams called their own shots, and were proud of their independence. In fact, at one point, the white team encountered a crisis and sent their coordinator to ask Joe for advice. When she returned with an order from Joe about how to handle the situation the team rebelled - they were angry and resentful that Joe would order a self-managing team to do anything. They confronted Joe and aired their grievance at which time Joe told the white team that they were absolutely correct that they should make their own decisions and that Alma had misinterpreted his suggestion as an order. The members of the white team were pleased when their independence was confirmed. They felt they had learned to stand on their own two feet and take responsibility. They also had started to feel that the fate of the company rested in their hands. They were responsible for decisions that could make or break Xel.
Over time the team's empowerment confronted it with a thorny issue; what was it to do with members who had their own ideas about work and did not go along with the group's sense of what should be done? No longer were their supervisors around to write up employees who did not act as the team wanted them to. One particular problem was employees who arrived late and left work early. In theory members could set their own hours now that the team managed itself and a degree of flexibility was seen as desirable by some members however when these members worked fewer hours than other members but received the same pay it impaired the white team's ability to deliver orders in a timely fashion. At one of the team's 7 am meetings, when the day's activities were planned, and other decisions were made, the members decided that everyone should arrive before the 7 am meeting, and work until 5 pm to meet the backlog of orders. A worker who arrived five or more minutes late would be docked a day's pay. When one late arriving member protested the penalty, team-members scolded her, and refused to relax their rules. This and similar incidents had an interesting effect on the members of the white team. They noted their fellow members' strictness and became afraid of it themselves. Moreover, having seen the team be hard on its own members, they were also not inclined to let other members "get by" by relaxing the norms. Over time some members began to resent the rigidity of the white team, but it steadily increased its focus on the control system. Eventually, the team wrote more and more rules, which were more and more concrete and restrictive. They began to talk more about following their very bureaucratic rules than about teamwork and commitment to Xel.
Stitchco, a textile plant in the United Kingdom underwent a similar change. Prior to the institution of a team system, all decisions were made by managers and employees were rewarded individually, based on their output. In the early 1990s, the British textile industry was hit hard by foreign competition. Stitchco responded by closing half of its company, without a warning to the employees or the community, and converting the other half to a teamwork system. Management's goal was to increase flexibility and speed of manufacturing. One division was told that it would constantly be in competition with external suppliers, with a clear threat that manufacturing would be completely shifted outside the firm if the division failed to compete successfully. It was clear that an influential contingent of the company's top managers wanted to close manufacturing altogether, and that the division had been excluded from the decisions. To close some operations and restructure the others. a complex accounting system was implemented to monitor the performance of the division in comparison to external producers.
Teams were made up of members who were classified as high, medium, and low performers. Based on their previous records, workers were paid a flat rate, and bonuses were based on the performance of their team as a whole. Initially, the performers resisted the change, because they feared that their incomes would decline. But, once the system was in operation those fears dissipated. Team performance was monitored twice a day, and the results were posted where everyone in the plant could see them. Management hoped that the combination of team-based rewards and public displays would motivate the strongest performers in each team to teach and motivate the weaker performers to improve. Unfortunately, the strategy failed: "team members were not necessarily committed to improving or maximizing their collective output, especially if it meant compensating for other team members, or resolving conflicts over the allocation of work within the teams." In short the self-managing teams refused to self manage.
END
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