Employee Involvement:Parallel Structures, Multiple-level committees

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Organization Development MGMT 628

Lesson 36

Employee Involvement

Changing Michael Dell's DNA

Dell Inc. is one of the world's largest PC manufacturers, with a marketing and manufacturing system that is

repeatedly studies and copied. Of the Fortune 500 companies, Dell topped the list in 10-year total return to

investors. However, despite Dell's success year after year, Dell's CEO and founder, Michael Dell, still

manages with the urgency and determination he had when he started the company out of his college dorm

some 20 years ago. "I still think of us as a challenger. I still think of us attacking," says Dell.

But not all is well in Camelot. A recent survey of Dell's employees revealed that half of them would leave if

they got the chance. Internal interviews of the subordinates of Michael Dell and the firm's president, Kevin

Rollins, revealed that they felt Dell was impersonal and emotionally detached, and Rollins, autocratic and

antagonistic.

Michael Dell believes that the status quo is never good enough. Once a problem is uncovered, it should be

dealt with quickly and directly. In the 1990's, when the company was rapidly growing, it recruited seasoned

managers from IBM and Intel. Some quickly bailed out because they were not willing to work in Dell's

demanding culture. An executive coach who has worked with Michael Dell since 1995 says, "They need to

work a lot on appreciating people."

Michael Dell, facing the results of the employee surveys, took a page out of his own book. Fearing an

exodus of talent and a tearing apart of the company by antagonized employees, Dell went before his

management team and offered an honest self-critique.

He acknowledged that he was shy and made him appear removed and not caring.

He promised to build tighter relationship with his team. Within days, a videotape of meeting was shown to

every manager in the company.

Like Dell, a growing number of today's companies are not only concerned but doing something about the

way they manage their employees. They recognize that empowered employees are the difference between

success and failure in the long run. Faced with competitive demands for lower costs, higher performance

and greater flexibility, organizations are increasingly turning to employee involvement (El) to enhance the

participation, commitment, and productivity of their members.

Employee involvement is a broad term that has been variously referred to as "empowerment"

"participative management," "work design," "industrial democracy," and "quality of work life."

Empowerment is giving employees power to make decisions about work. Firms that have transformed their

culture claim to have increased productivity and number of clients, made each employee feel a sense of

ownership, and increased profits. OD interventions in this area are, therefore, aimed at moving decision

making downward in the organization, closer to where the actual work takes place, i.e. delegation of power.

The following major El applications are discussed in this chapter: parallel structures, including cooperative

union--management projects and quality circles; high- involvement organizations; and total quality

management. Two additional El approaches, work design and reward system interventions, are discussed in

Chapters 16 and 17, respectively.

Employee Involvement: What is it?

Employee involvement is the current label used to describe a set of practices and philosophies that started

with the quality-of-work-life movement in the late 1950s. The phrase quality of work life was used to stress

the prevailing poor quality of life at the workplace. As described earlier, both the term QWL and the

meaning attributed to it have undergone considerable change and development. In this section, we provide

a working definition of EI, document the growth of El practices in the United States and abroad, and

clarify the Important and often misunderstanding relationship between EI and productivity.

A Working Definition of Employee involvement:

Employee involvement seeks to increase members input into decisions that affect organization

performance and employee well-being. It can be described in terms of four key elements that promote

worker involvement:

1. Power: This element of EI includes providing people with enough authority to make work-related

decisions covering various issues such as work methods, task assignments, performance outcomes,

customer service, and employee selection. The amount of power afforded employees can vary enormously,

from simply asking them for input into decision that managers subsequently make, to managers and

workers

jointly

making

decisions,

employees

making

decisions

themselves.

2. Information. Timely access to relevant information is vital to making effective decisions. Originations

can promote El by ensuring that the necessary information flows freely to those with decision authority.

Organization Development MGMT 628

This can include data about operating results, business plans, competitive conditions, new technologies and

work methods, and ideas for organizational improvement.

3. Knowledge and skills. Employee involvement contributes to organizational effectiveness only to the

extent that employees have the requisite skills and knowledge to make good decisions. Organization can

facilitate El by providing training and development programs for improving members' knowledge and

skills. Such learning can cover an array of expertise having to do with performing tacks, making decisions,

solving problems, and understanding how the business operates.

4. Rewards. Because people generally do those things for which they are recognized, rewards can have a

powerful effect on getting people. Involved in the organization meaningful opportunities for involvement

can provide employees with internal rewards, such as feelings of self-worth and accomplishment. External

rewards, such as pay and promotions, can reinforce El when they are linked directly to perform outcomes

that result from participation in decision making.

Those four elements power information, knowledge and skills, and rewards contribute to El success by

determining how much employee participation in decision making is possible in organization. The farther

that all four elements are moved downward throughout the organization, the greater the employee

involvement. Furthermore, because the four elements of El are interdependent they must be changed

together to obtain positive results. For example, if organization members are given more power and

authority to make decisions but do not have the information or knowledge and skill to make good

decisions, then the value of involvement is likely to be negligible. Similarly, increasing employees' power

information, and knowledge and skills but not linking rewards to the performance consequences of changes

gives members little incentive to improve organizational performance. The El methods that will be

described here vary in how much involvement is afforded employees. Parallel structures, such as union-

management cooperative efforts and quality circles, are limited in the degree that the four elements of EI

are moved downward in the organization; high-involvement organizations and total quality management

provide far greater opportunities for involvement.

How Employee Involvement Affects Productivity?

An assumption underlying much of the El literature is that such interventions will lead to higher

productivity. Although this premise has been based mainly on anecdotal evidence and a good deal of

speculation, there is now a growing body of research findings to support that linkage. Studies have found a

consistent relationship between El practices and such productivity measures as financial performance,

customer satisfaction, labor hours, and waste rates.

Attempts to explain this positive linkage traditionally have followed the idea that giving people more

involvement in work decisions raises their job satisfaction and, in turn, their productivity. There is growing

evidence that this satisfaction- causes-productivity premise is too simplistic and sometimes wrong.

A more realistic explanation for how El interventions can affect productivity is shown in Figure 47.El

practices, such as participation in workplace decisions, can improve productivity in at least three ways.

First, such interventions can improve communication and coordination among employees and

organizational departments and help integrate the different jobs or departments that contribute to an

overall

task.

Second, El interventions can improve employee motivation, particularly when they satisfy important

individual needs. Motivation is translated into improved performance when people have the necessary skills

and knowledge to perform well and when the technology and work situation allow people to affect

productivity. For example, some jobs are so rigidly controlled and specified that individual motivation can

have little impact on productivity.

Organization Development MGMT 628

Figure 47

Third, EI practices can improve the capabilities of employees, thus enabling them to perform better. For

example, attempts to increase employee participation in decision making generally include skill training in

group problem solving and communication.

Figure 48 shows the secondary effects of EI. These practices increase employee well-being and satisfaction

by providing a better work environment and a more fulfilling job. Improved productivity also can increase

satisfaction, particularly when it leads to greater rewards. Increased employee satisfaction, deriving from EI

interventions and increased productivity ultimately can have a still greater impact on productivity by

attracting good employees in join and remain with the organization.

In sum, El interventions are expected to increase productivity by improving communication and

coordination employee motivation, and individual capabilities. They also can influence productivity by

means of the secondary effects of increased employee well-being and satisfaction. Although a growing body

of research supports these relationships, there is considerable debate over the strength of the association

between El and productivity. Recent data support the conclusion that relatively modest levels of Ph

produce moderate improvements in performance and satisfaction and those higher levels of El produce

correspondingly higher levels of performance.

Employee Involvement Application:

This section describes three major El applications that vary in the amount of power, information,

Knowledge and skills, and rewards that are moved downward through the organization (from least to most

involvement): parallel structures, including cooperative projects and quality circles; high-Involvement

organizations and total quality management.

Organization Development MGMT 628

Figure 48

Parallel Structures:

Parallel structures involve members in resolving ill-defined, complex problems and build adaptability into

bureaucratic organizations. Also known as "collateral structures," "dualistic structures,' or "shadow

structures," parallel structures operate in conjunction with the formal organization. They provide members

with an alternative setting in which to address problems and to propose innovative solutions free from the

formal organization structure and culture. For example, members may attend periodic off-site meetings to

explore ways to improve quality in their work area or they may be temporarily assigned to a special project

or facility to devise new products or solutions to organizational problems. Parallel structures facilitate

problem solving and change by providing time and resources for members to think, talk, and act in

completely new ways. Consequently, norms and procedures for working in parallel structures are entirely

different from those of the formal organization. This section describes the application steps associated with

most parallel structures; discusses two specific applications cooperative union-management projects and

quality circles; and reviews the research on their effectiveness.

OD in Practice: A Work-out Meeting at General Electric Medical System Business

As part of the large-scale change effort, Jack Welch and several managers at General Electric devised a

method for involving many organization members in the change process. Work-Out is a process for

gathering the relevant people to discuss important issues and develop a clear action plan. The program has

four goals to use employees' knowledge and energy to improve work, to eliminate unnecessary work, to

build trust through a process that allows and encourages employees to speak out without being fearful, and

to engage in the construction of an organization that is ready to deal with the future.

At GE Medical Systems (GEMS), internal consultants conducted extensive interviews with

managers throughout the organization. The interviews revealed considerable dissatisfaction with existing

systems, including performance management (too many measurement processes, not enough focus on

customers, unfair reward systems, and unrealistic goals), career development, and organizational climate.

Managers were quoted as saying:

I'm frustrated. I simply can't do the quality of work that I want to do and know how to do. I

feel my hands are tied. I have no time. I need help on how to delegate and operate in this new culture.

The goal of downsizing and delaying is correct. The execution stinks.

The concept is to drop a lot of `less important" work. This just didn't happen. We still have to know all the

details, still have to follow all the old policies and systems.

In addition to the interviews, Jack Welch spent some time at GEMS headquarters listening and trying to

understand the issues facing the organization.

Based on the information compiled, about fifty GEMS employees and managers gathered for a five-day

Work-Out session. The participants included the group executive who oversaw the GEMS business, his

staff, employee relations managers, and informal leaders from the key functional areas who were thought to

be risk takers and who would challenge the status quo. Most of the work during the week was spent

Organization Development MGMT 628

unraveling, evaluating, and reconsidering the structures and processes that governed work at GEMS. Teams

of managers and employees addressed business problems. Functional groups developed visions of where

their operations were headed. An important part of the teams' work was to engage in "bureaucracy

busting" by identifying CRAP (Critical Review Appraisals) in the organization. Groups were asked to list

needless approvals, policies, meetings, and reports that stifled productivity. In an effort to increase the

intensity of the work and to encourage free thinking, senior managers were not a part of these discussions.

At the end of the week, the senior management team listened to the concerns, proposals, and

action plans from the different teams. During the presentations, senior GEMS managers worked hard to

understand the issues, communicate with the organization members, and build trust by sharing

information, constraints, and opportunities. Most of the proposals focused on ways to reorganize work and

improve returns to the organization. According to traditional Work-Out methods, managers must make

instant, on-the-spot decisions about each idea in front of the whole group. The three decision choices are

approval; rejection with clear reasons; and need more data, with a decision to be made within a month.

The five-day GEMS session ended with individuals and functional teams signing close to one

hundred written contracts to implement the new processes and procedures or drop unnecessary work. The

contracts were between people, between functional groups, and between levels of management, and

organizational contracts affecting all members. One important outcome of the Work-Out effort at GEMS

was a decision to involve suppliers in its internal email network. Through that interaction, GEMS and a key

supplier eventually agreed to build new-product prototypes together, and their joint efforts have led to

further identification of ways to reduce costs, improve design quality, or decrease cycle times.

Work-Out at GE has been very successful but hard to measure in dollar terms. Since 1988,

hundreds of Work-Outs have been held, and the concept has continued to evolve into best practice

investigations, process mapping, and change-acceleration programs. The Work-Out process, however,

clearly is based on the confrontation meeting model, where a large group of people gathers to identify

issues and plan actions to address problems.

Application Stages:

Parallel structures fall at the lower end of the EI scale. Member participation typically is restricted to

making proposals and to offering suggestions for change because subsequent decisions about implementing

the proposals are reserved for management. Membership in parallel structures also tends to be limited,

primarily to volunteers and to numbers of employees for which there are adequate resources. Management

heavily influences the conditions under which parallel structures operate. it controls the amount of

authority that members have in making recommendations, the amount of information that is shared with

them, the amount of training they receive to increase their knowledge and skills, and the amount of

monetary rewards for participation. Because parallel structures offer limited amounts of EI, they are most

appropriate for organizations with little or no history of employee participation top-down management

styles and bureaucratic cultures. Parallel structures typically are implemented in the following steps:

1. Define the purpose and scope. This first step involves defining the purpose for the parallel structure

and initial expectations about how it will function. Organizational diagnosis can help clarify which specific

problems and issues to address, such as productivity, absenteeism, or service quality. In addition,

management training in the use of parallel structures can include discussions about the commitment and

resources necessary to implement them; the openness needed to examine organizational practices,

operations,

and

policies;

and

the

willingness

experiment

and

learn.

2. Form a steering committee. Parallel structures typically use a steering committee composed of

acknowledged leaders of the various functions and constituencies within the formal organization. This

committee performs the following tasks:

· Refining the scope and purpose of the parallel structure

· Developing a vision for the effort

· Guiding the creation and implementation of the structure

· Establishing the linkage mechanisms between the parallel structure and the formal organization

· Creating problem-solving groups and activities

· Ensuring the support of senior management

OD practitioners can play an important role in forming the steering committee. First, they can help develop

and maintain group norms of learning and innovation. These norms set the tone for problem solving

throughout the parallel structure, second, they can help the committee create a vision statement that refines

the structures purpose and promotes ownership of it. Third, they can help Committee members develop

and specify objectives and strategies, organizational expectations and required resources, and potential

rewards for participation in the parallel structure.

Organization Development MGMT 628

3. Communicate with organization members. The effectiveness of a parallel structure depends on a

high level of involvement from organization members, and Communicating the purpose, procedures, and

rewards of participation can promote that involvement. Moreover, employee participation in developing a

structure's vision and purpose can increase ownership and visibly demonstrate the "new way" of working.

Continued communication concerning parallel structure activities can ensure member awareness.

4. Form employee problem-solving groups. These groups are the primary means of accomplishing the

purpose of the parallel learning structure. Their formation involves selecting and training group members,

identifying problems for the groups to work on, and providing appropriate facilitation. Selecting group

members is important because success often is a function of group membership. Members need to

represent the appropriate hierarchical levels, expertise, functions, and constituencies that are relevant to the

problems at hand. This allows the parallel structure to identify and communicate with the formal structure.

It also provides the necessary resources to solve the problems.

Once formed, the groups need appropriate training. This may include discussions about the vision of the

parallel structure, the specific problems to he addressed, and the way those problems will he solved, As in

the steering committee, group norms promoting openness, creativity, and integration need to be

established. Another key resource for parallel structures is facilitation for the problem-

solving groups. Although this can be expensive, it can yield important benefits in problem-solving

efficiency and quality. Group members are being asked to solve problems by cutting through traditional

hierarchical and functional boundaries. Facilitators can pay special attention to processes that require

disparate groups to cooperate. They can help members identify and resolve prob1em-solving issues within

and between groups.

5. Address the problems and issues. Generally, groups in parallel structures solve problems by using an

action research process. They diagnose specific problems, plan appropriate solutions and impalement and

evaluate them. Problem solving can be facilitated when the groups and the steering committee relate

effectively to each other. This permits the steering committee to direct problem-solving efforts in an

appropriate manner, to acquire the necessary resources and support, and to approve action plans. It also

helps ensure that the groups' solutions are linked appropriately to the formal organization. In this manner,

early attempts at change will have a better chance of succeeding.

6. Implement and evaluate the changes. This step involves implementing appropriate organizational

changes and assessing the results. Change proposals need the support of the steering committee and the

formal authority structure. As changes are implemented, the organization needs information about their

effects. This lets members know how successful the changes have been and if they need to be modified. In

addition, feedback on changes helps the organization learns to adapt and innovate.

Cooperative Union-Management Projects:

Cooperative union-management projects are one of the oldest El applications of parallel structures. They

are associated with the original QWL movement and its focus on workplace change, although more recent

approaches have broadened that focus to include productivity improvement. Cooperative union-

management projects are relatively new to OD in the United States, but such dual involvement has a long

history in other countries, particularly the Scandinavian countries. These interventions tend to have the

following structural characteristics:

Steering committee. This top-level labor-management committee serves as the basic center for planning.

It is created during the project start-up phase and comprises key representatives from management, such as

a president or chief operating officer, and each of the unions and employee groups involved in the project,

such as local union presidents. The steering committee's mandate is to begin activities directed at

improving both the quality of working life and the effectiveness of the organization. Members are

encouraged to be open about the need for improvements in productivity. Unionists are told that because

projects are jointly controlled efforts, they need not fear an organization's productivity motives. Indeed,

many unions distrust a management philosophy that does not express concern for higher productivity or

the quality of its product or service.

Multiple-level committees. Because the steering committee may not be able to oversee all aspects of a

project, it often is necessary to establish more than one labor-management committee at a number of

selected levels in the organization to reflect the differing interests and knowledge. For example, the steering

committee can be amplified and assisted by working committees at the plant, department, and shop-floor

levels. These lower-level committees deal with day- to-day project activities.

Ad hoc committees. In many instances, labor-management committees initiate particular projects that

involve the workers and managers in a specific part of the organization. At the same time, employees

themselves frequently initiate action toward a particular goal. In such cases, an ad hoc committee is

established to bring about change. Such committees are charged with a specific task and have a limited

lifetime.

Organization Development MGMT 628

External consultants. External change agents act as third-party facilitators, offering guidance and

assistance to the labor-management committees and prob1em-solving and teamwork training for all

participants. In most projects, the steering committee selects the consultants.

External researchers. In some projects, researchers are brought in to assess the overall results of the

intervention. In those cases, separate roles for the change agents and the evaluation researchers are created.

It is assumed that keeping these functions separate enables consultants to be concerned with client needs

and researchers to do a more objective assessment of the intervention.

Excellent descriptions of cooperative union-management projects are available in the literature, featuring

longitudinal discussions of problems, successes, and partial failures. The projects include a large

metropolitan hospital, a large international company called the "National Processing Case," and the Bolivar

plant of Harman International Industries. Union-management cooperative projects have been carried out in

most industrial and public sectors in the United States. Both managers and unionists realize that their fates

are positively correlated and that both parties must be jointly involved in enhancing the quality of work life

and productivity. Almost every major union and corporation has become involved in these efforts,

including UAW, Communications Workers of America, Ford, General Motors, and AT&T.24

Application 7 presents an example of a cooperative union--management program at GTE of

California.

Application 7: Union-Management Cooperation at GTE California

GTE of California (GTEC) and the Communications Workers of America embarked on a cooperative

union--management project during the fall of 1984. This OD effort was in response to the court-ordered

breakup of AT&T, which forced firms in the telecommunications industry to rethink the way that they

conducted business. Over time, the deregulation of the industry would remove the protective shield of

guaranteed returns on investment, monopoly territories, and "cradle-to-grave" employment that had

characterized operations.

Under the new conditions, GTEC management and union leadership believed strongly that the company's

usual way of operating in the regulatory environment would need to change. The traditional approach to

managing the business was characterized by centralized decision making and work planning, lackadaisical

service orientation, and little cross- functional teamwork. The advent of deregulation was coupled with

tremendous technological changes in information processing and service delivery and a broadening of the

belief that workers should have more say in decisions that affect them. The old way of managing produced

low morale and mediocre service in this changing environment. Consequently, management and union

officials felt the need for improved adaptability and productivity and a more customer-oriented workforce.

For some time, union leadership had been researching worker participation and union--management

cooperation at its national office in Washington, D.C. This research was limited, however, because no one

had implemented such interventions during a period of rapid deregulation. At the same time, GTEC senior

management had been meeting with other telephone companies to discuss how to meet the challenges

posed by deregulation, technological change, and increased worker sophistication. These discussions

consistently pointed out that effective organizations in deregulated environments were more decentralized

in their decision making. But, given decades of regulatory tradition, the means to accomplish such an

organizational change were not clear.

Working with OD consultants from the University of Southern California's Center for Effective

Organizations, senior managers and union leaders began discussing how to increase worker participation

and decentralize decision making without treading on traditional collective bargaining issues. These

discussions resulted in a cooperative union--management partnership called Employee Involvement. The

purpose of the El process was to improve employees' quality of working life and productivity. The group

of senior managers and union officials became the steering committee for the project and developed a

vision of the El process and its objectives.

The steering committee established a parallel structure to guide implementation of the El process with the

twenty-six thousand employees at GTEC. It comprised three area coordinating committees responsible for

implementing the El process in their respective geographic regions. Each coordinating Committee created

support committees for the functional areas in its region. The support committees, in turn, established El

teams that would identify and solve work-related problems in the different units of the company. Each

committee and team was staffed with both union and management personnel as appropriate.

As part of the early implementation activities, all organization members attended a two-hour

orientation meeting that described the goals, structure, and implementation of the El process. This

orientation was conducted by both GTEC management and local union presidents. In addition, a three-

day union--management training program was conducted for all supervisors and union officials (local

presidents and stewards). During the first two days of training, union leaders and GTEC managers were

Organization Development MGMT 628

trained separately in their respective roles and responsibilities in the El process. On the third day, the

managers and union officials were brought together to discuss how the implementation of El would

proceed in their particular departments. Members of the support committees and employee involvement

teams attended a five-day training program focusing on meeting-management skills, problem- solving

techniques, and group dynamics. They were also provided with internal facilitators if needed.

Over the next several months, the El teams focused on quality-of-work-life issues, such as the provision of

bottled drinking water, rather than on productivity-related changes. Responsible Committees were

concerned about this limited focus and modified the process to align it more closely with El's productivity

objectives. For example, the problem-solving training was changed to emphasize performance issues. In

addition, the composition and responsibilities of the different committees were revised to increase senior

management and union leadership involvement and accountability. At the organizational level, a new

incentive compensation system was initiated. This system rewarded cross-functional teamwork and

generated many ideas for employee involvement. Finally, facilitators were assigned permanently to

functional areas to focus on operating problems.

The El process produced many successes. One team, established in early 985, worked for more than two

years to simplify the way field employees reported their time at work. These efforts produced savings of

more than $3 million by increasing the amount of productive time that employees spent in the field and by

consolidating several offices that had been used to collect, collate, and report work-time Information.

Between 1987 and 988, an evaluation of the El process concluded that the program had produced a net

savings (after the costs of training and dedicated personnel) of more than $1 million. In 1991, GTEC

surpassed its competition in measures of customer satisfaction for large- and medium-sized businesses to

become the benchmark for others. In addition, several cost measures also decreased significantly. The El

program survived through two union contract negotiations and massive corporate changes that reduced the

size of the work force by consolidating work functions and business units and standardizing systems and

equipment.

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