One Minute Manager
Empowerment is the Key
by Ken Blanchard
Empowerment can help companies
focus on cost-effectiveness, rather than just cost cutting.
Apple Computer lays off 1,300 people; Kimberly-Clark lays off 2,700
after acquiring Scott Paper; AT&T lays off 78,000 managers. And so it
goes as U.S. businesses try to slice themselves into greater profitability
and increased productivity. Unfortunately, such cuts often reduce a company's
ability to serve its customers and produce quality products-indeed its ability
to grow.
Most companies have no plan associated with downsizing other than to reduce
their cost structure using the easiest means possible, namely reduce head
count. The positive impact is questionable. A recent American Management
Association study reported that within a year, only 46 percent of downsized
companies reported increased profits, and only 33 percent reported increased
productivity.
Moreover, downsizing has negative effects on companies. Early buyouts deplete
the number of experienced, talented people, and multiple rounds of layoffs
destroy employee commitment. Employees focus on keeping their jobs rather
than on doing their best. In short, downsizing reduces a company's ability
to compete and grow.
Furthermore, employees throughout downsized companies do not have time
to think about new growth opportunities. Nor are they inclined to suggest
innovations because their implicit commitment contract with the company
has been severed.
Without a change in the organization's culture in conjunction with downsizing,
you simply wind up with a less efficient, smaller bureaucracy. And less
efficient bureaucracies cannot address the four essential demands facing
companies in the 1990s. They must be customer-driven, cost-effective, fast
and flexible, and continually improving.
Forward-thinking managers now realize that creating a culture which empowers
the work force to be accountable and use their knowledge, experience and
motivation is an essential complement to successful downsizing. Indeed,
it may help create viable alternatives to downsizing.
Empowerment helps companies focus on cost-effectiveness rather than just
cost cutting. And it helps them create new possibilities for future growth.
To create this culture takes a concerted effort. Management must start
by sharing information about its financial performance, its market share,
its profitability, its costs-everything managers use to make informed decisions.
"You have to open up your books and show everyone how your company
makes money," says Bob Argabright, president of Chesapeake Packaging
Co. in Baltimore, Maryland.
Sharing information that tells it like it really is creates a sense
of responsibility and "ownership" in employees. More subtly, information
sharing also helps restore trust between management and employees undermined
in the current climate of downsizing.
But information sharing only starts this movement toward empowerment.
An empowered organization is not just a more efficient bureaucracy. It is
a place where individuals take pride in holding themselves accountable for
productivity, innovations, cost control, customer service and other business
needs.
Surprisingly, creating responsible autonomy also means using boundaries
different from the controlling type found in bureaucracies. The boundaries
in empowered organizations encourage self-control and accountability.
For example, numerous companies we have consulted have had to redesign
their performance-management systems. The command-and-control systems typical
of bureaucracies must be replaced with systems that support self-control,
accountability and partnerships between managers and employees.
Companies like General Electric, Motorola and Chesapeake Packaging have
found that they must train people to function more effectively in teams.
Empowered cultures tend to be team cultures because empowered teams can
do more than empowered individuals. Such teams make and implement decisions
and train themselves in new, needed job skills.
In the current climate of downsizing, the companies that excel will be
the ones that look for new ways to do business and for new businesses to
pursue. Empowerment is a key tool for any organization that wants to grow,
not just cut costs.
About the authors . . .
Ken Blanchard is chairman of Blanchard Training and Development Inc.,
a management consulting and training company located in Escondido, California.
Alan Randolph is a Baltimore-based consultant and professor of management
at the University of Baltimore, Maryland. Blanchard and Randolph are authors
with John Carlos of Empowerment Takes More Than a Minute (Berrett-Koehler,
1996).
© 1996 by Blanchard Management Report. Telephone (800) 728-6000, ext.
5201, fax (619) 743-5030.
