In an innovative organization, human resources – and not financial and physical capital – is an organization’s competitive edge, and management must maximize the output of highly educated workers. As the “organization man” becomes a dying species and workers owe their livelihoods primarily to professional training and brainpower rather than membership in industrial labor unions, participatory management styles are becoming increasingly important. The rise of the knowledge worker is requiring a shift from an authoritarian management style to a networking, participative style of management. Participatory management evolves into self-management – employees taking responsibility and initiative, monitoring their work, and using managers and supervisors as teachers and facilitators. Self-management presumes that workers are competent, self-confident, and independent and that people perform better when they manage themselves (Alvin, & Toffler, 1990).
The majority of today’s managers have been trained and have managed in the traditional hierarchical/autocratic style of management. They have learned to get things done using their authority through the well-defined lines of the traditional hierarchy. If employee involvement is to succeed in the long run, that management style must change. Ingrained attitudes and entrenched systems must change. Otherwise, employee involvement will ultimately be rejected by an organization whose systems and practices are unsupportive.
The critical skill that is desired in workers in the innovative organization is the ability to think – to synthesize, make generalizations, divide into categories, draw references, distinguish between fact and opinion, and organize facts to analyze a problem. Education must continue beyond early formal schooling because knowledge of any subject that is not continually updated will become obsolete.
Managers in the innovative organization must be teachers and facilitators who do not control the workers but liberate them. This is a fundamental reshaping of the traditional managerial prerogative of giving orders. To be a coach, teacher, and mentor means creating a nourishing environment for personal growth. Because this is so contrary to the traditional military-style management thinking, the big challenge is not to retrain workers but to retrain managers.
Whatever else the leader does, his/her ultimate goal is to focus the organization’s energies on learning and innovating. We say “ultimate goal” because trust, coordinating, and communicating must come first; they make or break the organization. In the long run, the organization prospers only when it innovates continually – and to accomplish this it must learn continuously (William, 1994).
Managers will increasingly be required to be innovators and intrapreneurs in addition to being teachers and facilitators. We look at intrapreneurship as a form of management that transfers resources from an area of low productivity to an area of high productivity. Control-oriented administrators will be less and less in demand.
The more the leader can turn the organization’s members into intrapreneurs, the more learning and creativity will increase – ownership and intrapreneurship support learning and innovation. An individual or team with ownership of its results and anticipating rewards for achieving them cannot afford to reject good ideas from any source. They will be motivated to learn from any and all sources as quickly as possible.
Involving people in decisions relative to their work is a fundamental principle of good management. In the innovative organization, this principle is taken even further. First, employees are involved not only in decision-making but also in the creative thought processes that precede decision-making. Second, not only are employees involved but they are also empowered. Employee involvement and empowerment are closely related concepts, but they are not the same. Employee involvement is a way of engaging employees at all levels in the thinking processes of an organization. It’s the recognition that many decisions made in an organization can be made better by soliciting the input of those who may be affected by the decision. It’s an understanding that people at all levels of an organization possess unique talents, skills, and creativity that can be of significant value if allowed to be expressed. Employee empowerment is employee involvement that matters (John & Heskett, 1992). It’s the difference between just having an input and having an input that is heard, seriously considered, and followed up on, whether it is accepted or not. The objective of empowerment is to tap the creative and intellectual energy of everybody in the company, not just those in the executive suite, and to provide everyone with the responsibility and the resources to display real leadership within their own individual spheres of competence. Most employee involvement systems fail within the first year. The reason is simple; they involve but do not empower employees. Without empowerment, involvement is just another management tool that does not work. For empowerment to occur, companies must undertake two initiatives: (1) identify and change organizational conditions that make people powerless, and (2) increase people’s confidence that their efforts to accomplish something important will be successful. The need to do both of these implies that organizational systems often create powerless employees and that these systems must be changed first. Systems especially needing change are those that specify who can (and cannot) make certain types of decisions. Even when systems are changed to permit empowerment, some individuals who have lived under the old system for a long time are not readily able to operate in an empowered manner. Everyone needs to be convinced that they can really make a difference and should therefore fully utilize their empowerment. Empowerment is important primarily because it improves organizational performance. Everyone in an organization is an asset, albeit an asset whose value is not automatically realized. If money is put into a closet instead of a bank, it will not produce results (interest). Similarly, if employees are locked into an organizational closet by restrictive rules that make them powerless, they cannot produce creative and productive results. Empowerment may sound easy, but there is a lot more to it than telling employees they are empowered (James & Porras, 1994). A number of principles are involved in successfully giving power to employees:
- Empower sincerely and completely. It should go without saying that empowerment must be done sincerely. It cannot be done superficially. To gain its benefits, managers must empower for its improvement value, not for its public relations value. This does not mean there should be no limits. On the contrary, managers must be clear on exactly what responsibility and authority rest with employees.
- Provide employees with business information. For empowerment to succeed, it must focus on making the organization more competitive. Empowerment can contribute to organizational performance only if employees have access to the necessary information about the business and its performance. In the absence of appropriate information, empowered employees may waste their power on problems that are not very important.
- Ensure that employees are capable. You cannot empower incompetence. If employees are going to take on important organizational responsibilities, they must be prepared to do so. To operate in an empowered innovative environment, employees must possess not only technical skills but also interpersonal and problem-solving skills.
- Do not ignore middle management. Managers must consider how empowering lower-level employees will affect middle managers. If the needs and expectations of middle managers are ignored, empowerment will be confusing at best and disastrous at worst. In an empowered organization, middle managers should be encouraged and assisted in taking on the following new roles: (1) acting as project team managers and network managers, (2) managing solutions to system-level problems — those that involve many functions — and (3) acting as teachers and coaches (John & Aburdene, 1985).
- Change the reward system. Rarely can substantial organizational change be created without changing the reward system. The reward system includes all of the rewards that employees receive, as well as the criteria for distributing these rewards.
- Establish Mutual Trust. The managers must trust the workforce enough to be willing to make the delegation, and the workforce must have enough confidence in the managers to be willing to accept the responsibility. Trust is not created just by saying you trust someone; it must be backed up by action. Trust is indicated to employees by opening up heretofore closed company records such as personnel, budget, and the like (Alan, 1989).
The real power of employee involvement lies in its ability to bring about cultural change by fostering a more participative management style in an organization. Participative management does not equate to quality circles or any specific involvement method. Rather, participative management is an organized set of ideas about how to manage an innovative business enterprise. While participatively managed organization certainly utilizes methods like quality circles to involve employees in problem-solving, involvement goes much deeper.
Employee involvement should be viewed as an organizational culture change effort, which must be supported by a strong management commitment, a long-term perspective, and reinforcing organizational systems. Although we should never assume that merely using involvement methods will result in employee involvement, involvement techniques do play an important part. We cannot hope to achieve a change in management style without them. Methods provide us with mechanisms that enable employees to become involved in a structured way. Ultimately, we would like to reach a state where employees are involved in problem-solving and decision-making informally on a day-to-day basis. Until we get there, we must facilitate involvement through organized, structured mechanisms so the organization can gain some experience and skills in employee involvement.
Because involvement methods are vital elements in our culture change strategy, it is important that we utilize them intelligently. There are a wide variety of involvement methods, and they vary greatly in terms of their sophistication, organizational support requirements, and effectiveness in supporting change. Given the wide variety of employee involvement methods, it is useful to organize them along a continuum from information sharing to work and organization design.
If the innovative organization is to be effective, the systems and processes put in place must be staffed by highly qualified people. People must be regarded as critical system elements that must be managed with quality and consistency. In traditional organizations, human resources managers identify, prepare, direct, and reward employees for following rather narrow objectives. In innovative organizations, human resources managers develop policies and procedures to assure that employees can perform multiple roles, improvise when necessary, and direct themselves toward continuous improvement of both products and processes. Human resources have evolved from a support function to a leadership function. This requires a significant adjustment not only on the part of human resources professionals but on that of line managers as well (Benjamin, 1990).
For an innovative organization to operate effectively, human resources professionals must recruit, develop, motivate, and retain its most valuable resource – creative people. In order to carry out their important responsibilities, human resources managers have developed a number of new policies and practices. We will explore some of the policies and practices of innovative organizations.
They integrate all their human resources plans and policies into a coherent design that supports the corporate mission, vision, values, and principles. Human resources plans must follow and support the highest-level direction of the company, the mission, and the vision. Long-term plans concentrate on developing the continuous-learning environment and developing new systems for empowering and developing employees. Periodic deployment meetings provide a means for ensuring that human resources plans are aligned with the company’s mission and vision (Tom, 1994).
They develop a comprehensive and concerted effort for hiring creative people. They develop such a reputation for having a creative, exciting place to work that the line forms outside their door. To keep up the talent flow, they encourage and reward employees for recommending new hires. They continue to recruit from colleges and universities, but they also consider work-study programs and making contact with potential hires in high school, then following the outstanding ones through college before hiring them permanently.
They continually improve key personnel management processes such as recruitment, hiring, training, performance evaluation, and recognition. A key approach to improving human resources practices is the use of employee surveys and the measurement of key indicators. Employees also participate in focus groups to identify causes and work toward solutions.
They empower individuals and teams to make decisions that affect innovation, quality, and customer satisfaction. Many companies talk about empowerment, but few truly practice it. Empowerment requires substantial training. All employees should be provided general training in such areas as communication techniques, problem-solving, statistical quality control, leadership, and team building, in addition to being provided specific training to do their jobs.
They hire individuals to make a lifetime contribution, not to fill a specific position. Many of the better companies, such as Hewlett-Packard, look for a specific set of skills, for instance, electrical engineering, math ability, or experience in dealing with the public. But the criteria that really matter to them are personal attributes and abilities that will contribute to the company for years, not just for weeks or months (Gideon, 1992).
They train constantly and integrate the training into ongoing operations. Training can solve a multitude of ills, but only if it is related to the present and future activities of the person being trained. Even when the training is designed to develop employees (management, leadership, etc.), it’s built around how work is actually performed.
They teach creativity to all employees. Most companies consider that creativity can be improved by training. Such training programs run the gamut from introductory classes in traditional brainstorming to elaborate sessions that include games and horseplay. Obvious, but often overlooked, is training in the company’s products, markets, competition, and technologies.
They measure creativity and innovation. Although creativity and innovation are not easy to measure, an attempt is well worth the effort. People tend to strive to excel in those areas in which they are measured. So even if the measurement results are not definitive, the fact that you attempted to measure will improve creativity and innovation.
They make the challenge and worth of the work itself the most important motivator for high performance — for everyone. Effective performers should earn well, but should never think of pay as the primary motivator. Everyone, from the most junior clerk to the CEO, should view his or her job as an intriguing challenge. Everyone should want to and be expected to contribute to the fullest from his or her very first day.
They are experts at balancing people and work, creative and routine work, and individual and teamwork. If companies have followed the previous guidelines, they will be flexible enough that individuals will find their places. If teams are working effectively, they will accomplish much of the balancing. The more self-managing the teams become, the more skilled they will become at balancing tasks and people.
They maintain a work environment conducive to the well-being and growth of all employees. Happy employees are innovative and productive employees. By maintaining an enjoyable, bureaucracy-free environment, one that encourages innovative thinking and honest communication, people are free to concentrate solely on the needs of the customers.
They foster new interaction patterns. They create a physical environment that (a) lets people express their personalities, (b) allows project teams to form at a moment’s notice, (c) encourages getting together and hanging out, and (d) intentionally snubs traditional functional groupings. Space is a powerful force for reflecting (and shaping) organizational culture. This fact is recognized by too few managers (Brigette, 1991).
They ensure that work is fun. We do not mean that work is a barrel of laughs, but rather that the company is a fun place to go to work, even on Monday morning. Work is exciting, and there is always something to look forward to — in short, it is enjoyable. People who enjoy their work and their fellow employees will stay with the company even under adverse circumstances. They do not motivate by money, but they ensure their compensation system is congruent with the emphasis on creativity. Creativity cannot be motivated by money alone. However, money rewards must be consistent with individual and team contributions, or they will act as powerful demotivators. Actually, in an innovative organization, money can cause more problems than it solves. A company should start with the challenge. If the employees rise to the challenge, pay them for it. They ensure that all incentives fit together to support creative performance. In the previous item, we noted that financial incentives should follow not lead, creative performance. There are many other elements of the compensation plan that should follow creativity as well, such as promotions, bonuses, key jobs, and choice assignments. In an innovative organization, employees who do not strive to be proactive and creative will find themselves at the end of the line for everything, including parking spaces.
They ensure that demotivating situations, such as the following, do not occur.
- The organization stresses teamwork and gives special plaques honoring it, but appraises and promotes it based on individual performance.
- The organization stresses the importance of front-line performers but does nothing to help them in dealing with customers.
- The organization stresses quality and innovation but gives bonuses based on profitability alone.
- The organization stresses autonomy and initiative, but key spots go to those who never make waves (Brigette, 1991).
Employee involvement requires changes in human resources practices. Monetary rewards over and above basic wages should be tied to organizational accomplishment. Additionally, skill-based compensation systems become a basis for determining compensation based on potential contribution to the organization. A person is paid based on certified skills. Usually, tiers of skill clusters are established. A new employee is paid at an entry-level pay rate when he or she first enters a work unit. Once capable of performing a basic set of functions, the employee receives the next higher rate. A third tier is reached when the employee can perform all the tasks or functions within the work unit or team. A fourth tier might reflect special skills that are periodically needed at the worksite. This is in contrast to the traditional job-based compensation systems that pay the individual employee based on the specific job he or she is actually doing at a particular point in time. Skill-based pay encourages the development of a range of skills and rewards employees for the flexibility they provide the work unit.
Cross-training becomes a significant element of employee involvement and important responsibility of human resources. It must be effective and available to all employees. In organizations making extensive use of teams, the development of technical and team competencies is a team responsibility. Usually, a team member ensures that all members have the requisite training, but the training must be planned and provided by human resources.
References
Berger Brigette. Culture of Entrepreneurship. ICS Press, 1991.
Collins James C. and Jerry I. Porras. Built to Last. Harper Business, 1994.
Kotter John P. and James L. Heskett. Corporate Culture and Performance. Free Press, 1992.
Kunda Gideon. Engineering Culture. Temple University Press, 1992.
Naisbitt John and Patricia Aburdene. Reinventing the Corporation. Warner Books, 1985.
Peters Tom. The Tom Peters Seminar. Vintage, 1994.
Schneider Benjamin (Ed.). Organizational Climate and Culture. Jossey-Bass, 1990.
Schneider William E. The Reengineering Alternative. Irwin, 1994.
Toffler Alvin and Heidi Toffler. Power shift. Bantam Books, 1990.
Wilkins Alan L. Developing Corporate Character: How to Successfully Change an Organization without Destroying It. Jossey-Bass, 1989.