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Chapter 9

Chapter 9 Top Performance through Empowerment.docx

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Department
Rotman Commerce
Course
RSM100Y1
Professor
Michael Khan
Semester
Fall

Description
Chapter 9 Top Performance through Empowerment/Teamwork/Communication Empowering Employees An important component of effective management is the empowerment of employees. Organizations promote this goal by giving employees shared authority, responsibility, and decision-making with their managers. Empowerment uses the brainpower of all workers to find better ways of doing their jobs, serving customers, and achieving organizational goals. Empowerment frees managers from hands-on control of workers. It motivates workers by adding challenges to their jobs. Empowerment also gives workers a feeling of ownership. Sharing Information and Decision-Making Authority One of the most effective ways to empower employees is to keep them informed about the company’s financial performance. Research suggests that companies should provide regular reports to their employees on key financial information, such as profit-and-loss statements. Firms show their willingness to practise open-book management by using the company’s internal website, or intranet, to post financial statements, training schedules, policy documents, and other information. In this way, employees can understand more about the organization’s strategic thinking and how their own work fits into the overall plan. Employees who are trained in how to read financial statements can understand how their work contributes to company’s profits. These employees are better able to direct their work efforts to make use of company resources. Using information technology to empower employees carries some risks. One risk is that private company information may reach competitors. The second way that companies empower employees is by giving them broad authority to make decisions that carry out a firm’s vision and its competitive strategy. Even among non-management staff, empowerment extends to decisions and activities usually handled by managers. Employees might be responsible for such tasks as purchasing supplies, making hiring decisions...etc. Linking Rewards to Company Performance The ultimate step in convincing employees of their role in the success of their firm is worker ownership. Companies offer worker ownership in two ways: employee stock ownership plans and stock options. Employee Stock Ownership Plans About 7 percent of Canadians participate in employee stock ownership plans. These plans are growing in popularity in Canada. ESOPs benefit employees by giving them stock ownership in their companies. These stocks can lead to profits when the value of the firm increases. Under ESOPs, the employer buys shares of the company stock on behalf of the employees as a retirement benefit. The accounts continue to grow in value tax-free. When employees leave the company, they can cash in their stock shares. Employees are motivated to work harder and smarter because, as part owners, they share in their firm’s financial success. About 60 percent of surveyed companies that offer ESOPs report an increase in employee productivity. When ESOPs are used for retirement funds, they must follow government regulations designed to protect pension benefits. ESOPs have one danger: If the majority of an employee’s retirement funds are in company stock and the value falls dramatically, the employee may lose financially. Stock Options Another popular way for companies to share ownership with their employees is by offering stock options, or the rights to buy a specified amount of company stock at a given price within a given time period. In an ESOP, the company holds stock for the benefit of employees. In stock options, employees can own the stock themselves if they choose to exercise, or use, their options by purchasing stock. Options were once limited to senior executives and members of the board of directors, but some companies now offer stock options to all employees. An estimated 9 million employees in thousands of North American companies hold stock options. Of all the stock options issued by these corporations, about one-third goes to the top five executives at each firm. Much of the remainder goes to other executives and managers, who make up only about 2 percent of the workforce. Stock options motivate regular employees to perform better. Stock options have turned hundreds of employees into millionaires as such firms as Research in Motion, The Home Depot, Microsoft and Google. Stock prices drop during economic downturns, and similar to ESOPS, employees face risks when they rely on a single company’s stock to provide for their retirement. Teams A team is a group of people with certain skills who share a common purpose, approach, and performance goals. All team members hold themselves responsible and accountable for reaching their objectives. Teams are widely used in business and in many not-for-profit organizations, such as hospitals and government agencies. Teams are one of the most frequently discussed topics in employee training programs because teams require that people learn how to work well together. There are five basic types of teams: work teams, problem-solving teams, self-managed teams, cross- functional teams, and virtual teams. About two thirds of firms use work teams. These teams are relatively permanent groups of employees. In this approach, people with complementary skills perform the day-to-day work of the organization. In contrast to work teams, a problem-solving team is a temporary combination of workers who gather to solve a specific problem. After this problem is solved, the team is no longer needed and is disbanded. Problem-solving teams differ from work teams in important ways. Work teams are permanently groups designed to handle any business problems that arises, but problem-solving teams have specific missions. A self-managed team is a work team that has the authority to decide how its members will complete their daily tasks. A self-managed team works most effectively when it combines employees with a range of skills and functions. Members are cross-trained to perform each other’s jobs as needed. Distributing decision-making authority in this way can mean that members can concentrate on satisfying customers. A cross-functional team is a team made up of members from different functions, such as production, marketing, and finance. Cross-functional teams usually work on specific problems or projects, but they can also serve as permanent work teams. The value of cross-functional teams is their different perspectives and the range of skills that they bring to a work effort. Virtual teams are groups of geographically or organizationally separated co-workers who use telecommunications and information technologies to accomplish an organizational task. Because they use e-mail, video conferencing, and group communication software, members of virtual teams rarely meet face-to-face. The main advantage of virtual teams is their flexibility. Employees can work with each other regardless of physical location, time zone, or their organizational relationship. Because of their very nature, virtual teams that are scattered across the globe can be difficult to manage. Firms that are committed to virtual teams believe that the benefits outweigh the drawbacks. Team Characteristics Effective teams share several characteristics. They must be an appropriate size to accomplish their work. In addition to size, teams also can be sorted according to the similarities and differences among team members, called level and diversity. Team Size Teams can range in size from as small as two people to as large as 150 people. Most teams, though, have fewer than 12 members. Although no ideal size limit applies to every team, research on team effectiveness shows that teams achieve their best results with six or seven members. A group of this size is big enough to benefit from a variety of diverse skills, yet small enough that members can communicate easily and feel part of a small and supportive group. Groups smaller or larger than six or seven can be effective, but they create added challenges for team leaders. Participants in small teams of two to four members often show a desire to get along with each other. They tend to like informal relationships marked by discussions of personal topics, and they make only limited demands on team leaders. A large team with more than 12 members poses a different challenge for team leaders. With this size of group, decision-making may work slowly. Participants may also feel less committed to the team goals. Larger teams also tend to lead to disagreements, absenteeism, and membership turnover. Team Level and Team Diversity Team level is the team’s average level of ability, experience, personality, or any other factor. Businesses consider team level when they need teams with a particular set of skills to do their jobs. Team level represents the average level or capability on a team. Team diversity represents the team’s differences in ability, experience, personality, or any other factor. Strong teams have talented members-as shown by their team level. Team diversity is an important consideration for teams that must complete a wide range of different tasks or complex tasks. Stages of Team Development Teams typically progress through five stages of development: forming, storming, norming, performing, and adjourning. Not every team passes through each of these stages, but teams that use each step are usually better performers. Stage 1: Forming Forming is the orientation period when team members get to know each other and learn what behaviours are acceptable to the group. Team members begin with curiosity about what they are expected to do and whether they will fit in with the group. An effective team leader provides time for members to get to know each other. Stage 2: Storming The personalities of team members begin to emerge at the storming stage. Individual personalities come out, as members clarity their roles and expectations. Conflicts may arise, disagree about the team’s mission and compete for position and control of the group. Subgroups many form because of common interests or concerns. At this stage, the team leader must encourage everyone to participate. Members need to work through their uncertainties and conflicts. Teams must move beyond this stage to achieve productivity. Stage 3: Norming During the norming stage, members resolve their differences, accept each other, and reach broad agreement about the roles of the team leader and other participants. This stage is usually brief. The team leader can use this stage to emphasize the team’s unity and the importance of its objectives. Stage 4: Performing While performing, members focus on solving problems and accomplishing tasks. They interact frequently and handle conflicts constructively. The team leader encourages all members to contribute. Stage 5: Adjourning The team adjourns after members have completed their assigned task or solved the problem. During this phase, the focus is on wrapping up and summarizing the team’s experiences and accomplishments. The team leader may recognize the team’s accomplishments with a celebration, perhaps handing out plaques or awards. Team Cohesiveness and Norms Teams tend to maximize productivity when they form highly cohesive, or unified, units. Team cohesiveness refers to the extent to which members feel attracted to the team and motivated to remain part of it. The cohesiveness, or feeling of unity, typically increases when members interact frequently, share common attitudes and goals, and enjoy being together. Cohesive groups have a better chance of retaining their members than groups that do not achieve cohesiveness. As a result, cohesive groups typically experience lower turnover. Team cohesiveness promotes cooperative behaviour, generosity, and a willingness of team members to help each other. Team-building retreats are sometimes used to encourage team cohesiveness and improve team member’s satisfaction and retention. Team retreats allow members to participate in team-building exercises and games away from the office. These retreats provide time and space for people to get to know each other outside of the workplace. These retreats can lead to team members creating bonds with each other. A team norm is a standard of conduct shared by team members that guides their behaviour. Norms are not formal written guidelines; th
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