Empowering Service Employees

In the 1970s, Theodore Levitt presented a “production-line approach to service” as the remedy for the sector’s problems of inefficient operations and dissatisfied customers. He argued that the secrets of the production-line approach could be discovered, quite simply, by looking at the world of manufacturing. Industrial practices such as the simplification of tasks and the substitution of technology, equipment, and systems for employees could be transferred to the service sector. Levitt encouraged service managers to think in technocratic rather than humanistic terms.1

In the 1990s, the “employee empowerment approach to service” is being touted as the remedy for problems of poor customer service and inefficient operations. The guiding philosophy of empowerment is nonbureaucratic and participation-oriented.2

Despite its claims, there is considerable vagueness about what actually constitutes empowerment, where and how empowerment works, and how to implement it.3 For some, it means allowing employees to decide how they will greet a customer, while for others, it includes giving employees almost unlimited discretionary spending power to recover from any service problem.

In this paper, we give an overview of the management practices that create what we refer to as an “empowered state of mind.” We then consider the complex issues concerning its effectiveness and implementation. Although we believe that employee empowerment is often the approach that will best fit a service firm’s situation, we also believe that managers need to examine more fully the evidence of empowerment’s effectiveness and the challenges and dilemmas surrounding its adoption.

Creating an Empowered State of Mind

Employees don’t just suddenly feel empowered because managers tell them they are or because companies issue statements saying it is part of the culture. Organizations must change their policies, practices, and structures to create and sustain empowerment. Employees may get a brief rush of adrenaline after a charismatic leader’s speech about how they are the front line of the company and critical to its effectiveness. However, unless all the structures, practices, and policies send the message that employees are empowered to deal effectively with customers, empowerment will not be an ongoing force.

Research suggests that empowerment exists when companies implement practices that distribute power, information, knowledge, and rewards throughout the organization.4 This happens when companies have abandoned the traditional top-down, control-oriented management model for a high-involvement or high-performance approach. High-involvement organizations use multiple management systems to create work environments in which all employees (not just management) are encouraged to think strategically about their jobs and the business and assume personal responsibility for the quality of their work.5

Companies can redistribute power by giving employees latitude in how they perform their daily tasks and deal with unforeseen problems. Giving this power to employees in service organizations is important because the customer is often physically present during service creation and consumption. Customers are immediately and directly affected by service delivery mistakes and witness firsthand whether employees are willing to correct them.

Giving service employees more power may help them to:

1. Recover from service failures. Failures to get it right the first time are inevitable; i.e., zero defects are impossible in service. However, empowering employees to fix mistakes quickly can be part of a recovery strategy in which the service goal of zero defections, i.e., no lost customers, is realized.6
2. Delight customers by exceeding their expectations. Empowerment in this case results in pleasantly surprising customers with the initial service delivery, instead of recovering from a service failure. For example, a Ritz Carlton guest tried to find a specialty grocery store while staying at the hotel in Atlanta. The empowered concierge not only located the store but arranged for the doorman to drive the guest when he couldn’t get a taxi.

Many empowerment programs fail when they focus on “power” without also redistributing information, knowledge, and rewards. The result is that frontline employees have the power to act as “customer advocates,” doing whatever it takes to please customers, but don’t have the training to act as responsible businesspeople. To help frontline employees fill both roles well, companies need to disseminate information by sharing customer expectations and feedback and financial information. Employees need to know about the business’s goals and objectives as well as the full-service delivery process of which they are a part.

Service firms should allocate rewards based on how effectively employees use information, knowledge, and power to improve service quality and the company’s financial performance. Rewards can be stock options, profit-sharing plans, gain sharing, and other plans that tie employees’ financial rewards to the organization’s success.

In short, the empowerment equation is: empowerment = power x information x knowledge x rewards. A multiplication sign, rather than a plus, indicates that if any of the four elements is zero, nothing happens to redistribute that ingredient, and empowerment will be zero. The formula reminds managers to avoid the common error of giving employees more discretion (power) but not the necessary support to exercise that discretion wisely.

Management practices that disseminate power, information, knowledge, and rewards give employees an empowered state of mind, which mediates the relationship between objective management practices (e.g., job redesign) and business results (see Table 1). Based on research in job design and our work with service managers and their employees, we have found that an empowered state of mind includes:7

• Control over what happens on the job, i.e., freedom of choice among different ways of doing a job; freedom to act spontaneously in meeting customer expectations; input into how the job is designed; and ability to respond if something goes wrong.

• Awareness of the context in which the job is performed, i.e., understanding where a task fits into the various downstream and upstream activities in the service delivery system.
• Accountability for work output, i.e., recognizing the linkage between the quality and quantity of work (e.g., satisfied customers) and rewards.

Table 1 emphasizes the importance of both management practice and employees’ state of mind for implementing empowerment. Empowered employees’ feelings about themselves and their work are a result of well-designed, systematically implemented organizational practices and procedures. The procedures are difficult to produce and hard for competitors to match, making them a sustainable source of competitive advantage.

Evidence of Effectiveness

During the past five years, a large amount of anecdotal and case evidence has accumulated to show that empowerment does produce more satisfied customers and employees. The successes of Xerox’s customer service units, Taco Bell’s restaurants, Ritz Carlton, and Federal Express are well-known stories. However, still lacking are definitive survey data to show that service firms that adopt empowerment are more effective than firms that do not. So any organization that chooses empowerment as a management strategy must make a leap of faith. However, in our view, it is not that great a leap for most businesses, based on results from three areas of study:

1. Research on individual management practices associated with empowerment. For example, considerable research on practices such as gain sharing, communication programs, work teams, job enrichment, skill-based pay, and so on has shown the results of these practices are consistent and positive. For example, in research on job enrichment, task characteristics such as skill variety and autonomy are associated with higher employee satisfaction and work quality.8 Self-managing work teams typically produce positive results in terms of quality and costs.9 Similarly, gain-sharing plans produce substantial cost improvements as well as better service.10 For a long time, the research focused mainly on manufacturing situations, but now data show these practices also work in services.

2. Studies of employee empowerment/involvement programs. The Center for Effective Organizations at the University of Southern California surveyed Fortune 1,000 companies in 1987, 1990, and 1993 to determine the degree to which firms are adopting practices that redistribute power, information, knowledge, and rewards, and the effects.11 The 1990 and 1993 data from this sample, a mixture of manufacturing and service firms, suggest that empowerment may have a positive impact on a number of performance indicators. Respondents report that empowerment improves worker satisfaction and quality of work life. Quality, service, and productivity are reportedly improved as a result of employee involvement efforts in about two-thirds of the companies. Approximately one-half of the companies also report that profitability and competitiveness have improved; this is supported by the finding of a relationship between empowerment and the firms’ financial performance.

Interestingly, the data on the benefits of empowerment for service firms were positive, but the impact was less than that for manufacturing firms. Further, empowering management practices have been adopted less frequently in service firms than in manufacturing. In summary, the case for empowerment has been better documented in manufacturing than in service, so perhaps services should look to manufacturing to learn about the benefits and challenges of empowerment.

3. Research on “the service profit chain.”12 Observations from many companies, including Banc One, MCI, ServiceMaster, Taco Bell, Southwest Airlines, and USAA Life Insurance, established positive relationships across the linkages of the solid boxes in Figure 1. There is also empirical support for the linkages in a number of service-sector studies that have found a positive correlation between employee satisfaction and customer satisfaction.13 The latter studies support the idea that how employees feel about their work spills over to customers, influencing their satisfaction with the service they receive.

Research on the service profit chain has not established, however, that empowerment is a necessary link in the chain. The chain starts with “employee satisfaction,” which, according to Heskett et al., is most strongly affected by how much “employees feel able to produce results for customers.”14 The critical question is whether employees are more likely to feel this way in an empowerment approach or a production-line approach. We speculate that the production-line approach at McDonald’s is the key factor that enables employees to feel that they can produce results for customers. Employees who confidently perform specialized tasks according to established procedures see that the service delivery system rarely fails and customers are almost always satisfied. At ServiceMaster, employees must also follow a very detailed, step-by-step approach to mop a floor or wash a wall. In both cases, the production-line approach seems to link to the service profit chain. Yet empowerment seems to be what creates the “I can produce results for the customer” feeling for employees at Southwest, Banc One, and Intuit.

In summary, research in three areas indicates employee empowerment can be associated with positive outcomes. However, the research does not promise positive results in all cases and suggests that implementation should be based on an analysis of the firm’s situation.

A Contingency Approach to Empowerment

We believe that firms should adopt a contingency approach to empowerment. Decades of research on every management issue from leadership to organizational design and so on have concluded that there is no one best way for everyone. We believe the same is true for empowerment. For example, the amount of task discretion for a Southwest Airlines flight attendant should be different from that for a ServiceMaster cleaning person.

The key contingencies that should govern the choice of service delivery approach are shown in Table 2.15 The business conditions in the production-line column favor that approach to service; the business conditions in the empowerment column favor that approach. This means that our framework for empowerment in Table 1 will be more valid in situations like those in the empowerment column and that empowerment is the appropriate first link to the service profit chain.

· Assessing Empowerment’s Effectiveness.

Given that empowerment’s effectiveness appears to be contingent on the situation, organizations need to empirically assess their empowerment activities to increase their effectiveness. They must develop data-based answers to such questions as: Are our new work designs and structures making employees feel more empowered? Are increased levels of employee empowerment associated with increases in customer satisfaction? Since efforts at employee empowerment tend to incur higher employee selection and training costs, it is important to track whether there are returns on these investments.

One obvious way to assess whether employees feel more empowered is simply to ask them. For example, Xerox wants an empowered employee to feel that “I can do what is needed, subject only to boundaries of morals, ethics, law, process capability, and price exposure,” so Xerox asks employees whether they have this feeling. Other companies ask about whether a boss will approve if an employee exceeds the budget or breaks a rule to help a customer.

Firms can also survey customers to determine if they view employees as empowered. Xerox wants customers to have a certain desired state of mind about empowerment — “that frontline employees can and quickly do take action to do the right thing for them as customers, thereby making it easy and pleasant to do business with Xerox.” Customer perceptions over time can be correlated with customer satisfaction to see if empowerment produces results.

Another method for assessing empowerment strategy is to track changes in the percentage of employees who are “covered” by empowering management practices. For example, suppose an organization relates empowerment to the number of employees receiving customer feedback, participating in a service quality circle, and covered by a gain-sharing plan. Empowerment in that organization then rises or falls each year depending on changes in the percentage of employees exposed to these practices. The firm should also assess if there are corresponding percentage increases in employee and customer satisfaction.

Another measure is to monitor changes in organizational structure. Some companies, including Xerox, IBM Canada, and Taco Bell, feel that decreasing management levels and increasing spans of control are important indexes of empowerment success. Taco Bell has attributed much of its resurgence during the past few years to the empowering effect of flattening its management structure.

A Source of Sustainable Competitive Advantage

Service firms may adopt empowerment: (1) as a strategic initiative to improve its products or services, i.e., like emphasizing total quality or innovation; (2) because everyone else has and they fear falling behind contemporary management practice; and (3) to create a unique organization with superior performance capabilities that derive from adopting a new way of organizing.

We believe that the best reason for adopting empowerment in terms of durability and success is the third, to create a unique organization. The organization can then become the basis of sustainable competitive advantage. For example, Southwest Airlines and Nordstrom have made their management philosophy and organizational capabilities a basis of strength. Those capabilities are an enduring source of advantage because they are not easily imitated. The winning edge comes not from characteristics of the products or services, but in how they are delivered. This capability is embedded in an organization that is based on employee empowerment.16

Other reasons for empowering may yield impressive returns but have limitations or vulnerabilities. If empowerment is adopted as a strategic initiative, it will be viewed as a tool like TQM. While tools serve organizations, they do not necessarily define them. Often they are used in special activities, rather than being fully integrated into the organization’s fabric or culture. Tools are easily discarded if the organization feels they are not useful enough; witness the fate of TQM in many firms. In addition, other firms can easily acquire the same tools to quickly level the competitive playing field.17

If a company implements empowerment just to copy the alleged best practices of the day, it is likely to abandon the effort because no real, intrinsic conviction is driving the effort. Managers’ beliefs in the underlying assumptions of the production model may never really change, so they may be tempted to regress to tight employee control at the first sign that empowerment may be difficult.

Competitive advantage in the service industry comes from developing capabilities and competencies that are not easily duplicated and provide superior value to the customer. Ultimately, this is the most important, sustained reason for adopting empowerment; the organization must see it as a significant, sustainable competitive advantage.

Empowerment Diffusion and Competitive Advantage

The slow pace of adopting empowerment in the service sector has left room for firms to capture “early adopter” advantages. There are a number of reasons for this slow pace, including the competitive pressures in service organizations. Manufacturing organizations, particularly those facing foreign competition and speed-to-market issues, are readily adopting empowerment practices because they have to change to survive. In the service sector, although there is some foreign competition and increasingly difficult domestic competition, there is not the same pressure to change. As a result, change is slower and, indeed, often occurs because organizations are trying to gain competitive advantage, rather than trying to survive increasing competition.

In many respects, the slow rate of change in service organizations can be an advantage to an early adopter of empowerment because it can gain a competitive advantage. Ultimately, if empowerment becomes the preferred management style for many services, then it will be a competitive necessity. This explains why Nordstrom overwhelms its competitors when it opens a new store. We believe that other first-movers can also achieve this advantage.

Empowerment Options

What empowerment options, if any, are available if the contingencies (in Table 2) favor a production-line approach or are mixed in the approach they favor? Is it still possible to implement some form of empowerment?

In many jobs, certain activities must be done in procedurally defined ways, often required by law, as in hospitals and airlines. Sometimes there are necessary steps in using particular technologies and working with certain customers. Sometimes technology demands that employees do repetitive work, like toll collectors, telephone operators, check processors, and so on.

In these cases, it may be best for organizations to use the production-line approach, subcontract work that cannot be managed effectively with the empowerment approach, or automate it out of existence. AT&T and other telephone companies, for example, are automating operators’ jobs so rapidly that soon they will be eliminated.

But there are other available options that might make empowerment possible: (1) use a production-line approach in those jobs where the contingencies favor it and an empowerment approach for jobs facing different contingencies; (2) adopt a modified production-line approach that retains its essential operational characteristics but also adopt more high-involvement approaches to supervision, governance, or training; or (3) attempt to redesign the contingencies to create a situation in which empowerment is a good fit. For example, change the underlying work design or the type of people so that they favor using empowerment. Of these three options, we strongly discourage the first and offer some insights into implementing the other two.

The first option, using both approaches, results in an organization with a mixed model of management practices and philosophies. Some employees will be highly empowered and expected to innovate, while others will be assigned to the routine, boring work and managed traditionally. This approach creates a number of problems. Employees in tightly controlled, routinized jobs will want to know why they can’t have the enriched work found elsewhere in the organization. Clear value and philosophy statements and a common sense of purpose and mission will be difficult to develop.

A mixed model also complicates human resource management practices. For example, selection, appraisal, training, and reward systems that support employee flexibility in service delivery (to fit an empowerment approach) are very different from those that support employee consistency in service delivery (to fit a production-line approach). As Lawler has observed: “An organization that uses two different approaches has to have two of everything, and this not only is more expensive, it may also leave employees with no real sense of how the organization intends to operate.”18 An empowered department in an organization may find it frustrating to interact with more control-oriented departments in which no one seems to have decision-making authority.

Relative to the second option of a modified production-line approach, Drucker has suggested the type of empowerment desirable for service employees doing procedurally driven, repetitive work.19 According to Drucker, even they can be empowered to “work smarter,” the real key to productivity improvements in the service sector. A firm can make these frontline employees into partners in productivity improvement by getting their input on such issues as: Why do we even perform this task? If we have to do it, what’s the best way of doing it? Drucker points out that Frederick Taylor, the father of the production-line approach, never asked the workers he studied how they thought their jobs could be improved. He told them. If certain service jobs have to be routinized and procedurally driven, the employees should at least be empowered to answer Drucker’s questions.

NUMMI, the Toyota-GM joint venture, provides an example of management practices consistent with Drucker’s suggestion (recall our earlier point that services can sometimes learn from manufacturing). NUMMI’s work organization follows what two researchers labeled the “democratic Taylorism” model.20 Jobs are specialized and work processes are standardized to fit the requirements of the production task, and the workers are trained extensively in exactly how to perform these tasks. The researchers comment:

But unlike traditional “despotic Taylorism,” . . . methods and standards . . . are determined by work teams themselves: workers are taught how to time their own jobs with a stopwatch, compare alternative procedures to determine the most efficient one, document the standard procedure to ensure that everyone can understand and implement it, and identify and propose improvements in that procedure.21

Interestingly, the researchers found that NUMMI, with a lean production model based on revised Taylorism, outperformed Volvo’s Uddevalla plant, which was organized around a “human-centered model” of empowered autonomous teams with substantial latitude in how to perform their jobs. The conclusion is that the lean production model is better than the human-centered model in organizing labor-intensive, standardized production.

What lessons can we learn from the NUMMI example and apply to services? Even though service and manufacturing firms are clearly different, nevertheless, many service firms are also involved in the labor-intensive production of standardized products and services — with little customer contact or contact of short duration or low complexity. Disney, McDonald’s, and ServiceMaster have excelled because they too have developed their own unique, superior production-line approach — not because they have created empowered jobs in which employees have large amounts of task discretion. At ServiceMaster, for example, jobs are very standardized and procedurally driven, but, at the same time, employees are trained to grow both personally and professionally and treated with enormous respect. But the ServiceMaster approach is not empowerment; it’s a production-line approach via a sort of a family-oriented Taylorism.

Finally, the third option is to redesign the contingencies to fit an empowerment approach. For example, compare the fairly routine and predictable technology of back-office operations to the front office. Should the back office be a production-line model and the front office empowered?

The Body Shop, which uses job sharing and job rotation to perform back-office operations with little or no customer contact in an empowered work design, has creatively resolved this issue.22 When The Body Shop opened its third branch in London in 1991, it designed an empowered team approach in which the shop staff collectively handled all the sales plus all the accounting, staffing, and administrative activities. All employees are primarily sales staff (“onstage”) but also have secondary responsibility in another specified area: stockroom (“backstage”), cash office (“box office”), personnel management (“auditions”), and organizing merchandise on the stage floor. Each area has five to six people who rotate every two or three months. The Body Shop totally redesigned the conventional retail store technology so an empowered atmosphere could pervade repetitive, back-office work with limited customer contact.

Redesigning technology may be feasible, but is it possible to also redesign another contingency, “types of people”? The empowerment approach requires employees who can be motivated by challenging work designs and requires managers who can involve employees and manage teams. At start-up, a firm can use a selection approach to identify the right people, but what about current employees? One approach is to simulate a start-up situation by requiring all existing employees to reapply for jobs and assessing their degree of fit. Often the major problems of fit seem to occur with managers who are accustomed to traditional command and control; an estimated 50 percent fail the selection process. When no selection is done and an organization simply shifts to an empowerment approach, many managers fail to make the needed behavioral changes, despite training and coaching. In the work-force as a whole, most can and do adapt with training.

Empowerment and Service Recovery

Heroic stories of employees doing exceptional things to satisfy a customer abound and have become an important tradition in many organizations that celebrate and reward service recovery. However, this does not mean that anything goes with respect to service recovery.

Setting Boundaries

The challenge in managing empowered acts of recovery is setting reasonable boundaries for employee heroism. Boundary setting amounts to establishing the difference between “good” and “bad” heroic acts of empowerment. Employees sometimes don’t realize the impact of their heroic act on upstream or downstream activities. The helpful hotel desk clerk who allows a disgruntled guest to check in early doesn’t always think of the implications for the day’s housekeeping plan. Companies can address this by giving employees what Xerox calls “line of sight” or “line of visibility” training in which employees are familiarized with how their jobs fit into upstream and downstream activities.

Companies can also do service blueprinting or mapping to help employees picture their role in the overall service delivery system.23 These process flow diagrams depict each step from initial customer contact through service production to saying goodbye to the customer. They clearly show employees the other service encounters that customers have with fellow employees after their own contact. Blueprints or maps can help employees remember two things: (1) “I should do what I can to make certain that my encounter is not a fail point, because I don’t want to pass along an angry customer to others”; and (2) “I have to exercise some restraint in what I do so that I don’t disrupt the overall process flow in a way that would just create a different fail point for the customer later.”

Marriott works with its employees to identify “safe zones” — situations that call for empowered actions. Marriott employees spend a day learning about empowered employees and discussing the merits (or demerits) of the employees’ actions. Williams Sonoma collects good examples of empowered actions and sends them to employees by e-mail.

After increasing employees’ awareness of their action’s context, companies can set boundaries in dollar limits. For example, Ritz Carlton limits employees’ responses to $2,500. Obviously, this is more than most employees need to satisfy a customer, but it limits the employees’ expenditure. If a truly extraordinary situation occurs, employees can go beyond this, but it serves as a guideline.

Hampton Inn makes a 100 percent satisfaction guarantee. If guests are not completely satisfied with their stay, they are not expected to pay. Employees at every level are empowered to use the guarantee as a tool to deliver total guest satisfaction without asking the general manager for permission. In addition, all employees receive extensive training about the concept behind the satisfaction guarantee and how to implement it — both after a customer complains and when a customer has not complained, but the employee thinks a failure warrants invoking the guarantee. In this case, the movement of power, information, and knowledge to employees is systemic. Hampton Inn claims the program has increased job satisfaction and the feeling of ownership for all its 7,000 employees.

“Empowerment to recover” differs from “empowerment to delight.” Each requires its own budget and behavioral limits to guide employee actions effectively. An organization’s business strategy should determine the relative emphasis and limits on each category. Taco Bell, which competes on price in very short service encounters, might be wise to empower employees for recovery only. Ritz Carlton, however, may empower employees to do both, perhaps even emphasizing delight more than recovery.

Boundaries can also be fine-tuned so the dollar limits vary according to the value of the customer. The frequent business traveller may warrant a higher dollar limit than the one-time tourist.

Learning from Service Recovery

The real challenge is to fine-tune the service delivery system so that employees get it right the first time and don’t need to scramble to recover. An important step is to better integrate employee empowerment programs (which glorify recovery) with TQM efforts (which sanctify doing it right the first time). The company should use the “hard” tools of TQM such as Pareto analysis, fishbone diagrams, and so on as acts of recovery become more frequent.

Another step is to have employees focus on redesigning delivery systems, rather than reacting to system failures. At SAS Airlines, surveys revealed that passengers’ most frequent complaint was that SAS did not keep its promise of giving them the newspaper of their choice. SAS personnel tried to recover by finding more newspapers or offering something to make up for it, like a free drink. Meanwhile SAS management had no idea this was happening. Since frontline employees had not reported this frequent, annoying failure point, an unnecessarily long period of time passed before the problem could be systemically fixed.

Service organizations need to convince frontline managers that part of empowerment is enjoying the right and responsibility to pass information along and develop better systems and procedures. Bill Marriott nicely summarized the dual aspects of truly effective empowered acts of recovery, “Do whatever is necessary to take care of guests. Also, track, measure, and follow up how to handle it better next time, the first time.”

· Empowerment and the Learning Organization.

Capacity to learn is frequently mentioned as the key variable in determining which organizations will be most effective.24 Is the learning organization more or less easily created by using an empowerment rather than production-line approach to the design of service work?

In the study that compared NUMMI to Volvo’s Uddevalla plant, the researchers concluded that a job designed for latitude and empowerment has the most potential for individual learning, but that a procedurally driven, lean production design is more effective for organizational learning. In lean production, the short work cycle, about sixty seconds, and standardized performance of the cycle make it easy to identify problems and improvement opportunities and implement improved processes. Standardization can lead to the adoption of best practice ideas that easily diffuse throughout the organization.

In contrast, the empowered design at Uddevalla had a two-hour work cycle that made it difficult to track performance in detail. Also, the craft model encouraged workers to think that they should have considerable latitude in performing each cycle and that their teams should be autonomous. This design had considerable opportunities for individual learning that, as the researchers found, had no counterpart in organizational learning. The researchers concluded that a “fundamental fallacy,” operative at Uddevalla and in much of western industry, is the assumption that an increase in individual learning automatically leads to an increase in organizational learning.25

The implications of this fallacy for creating a learning service organization are twofold:

1. If a service firm adopts an empowerment approach as the best fit for the situation (as in Table 2), it must also adopt strategies to convert gains in individual learning into enhanced organizational learning. There must be procedures and occasions for empowered individuals and teams to learn from each other, e.g., rotating team memberships, regularly scheduled idea exchanges, and so on.
2. If the firm adopts the production-line approach to service as the best fit for the situation, it simultaneously offers considerable potential for organizational learning. The firm should also offer employees opportunities for individual growth, such as ServiceMaster’s ongoing education opportunities.

Compatibility with Other Change Initiatives

The particular approach to empowerment must be strategically fitted to other organizational change efforts. Management literature is full of “packaged” change programs to improve organizational effectiveness. The learning organization, TQM, and reengineering are currently very popular approaches to organizational change. An important part of all three is the idea of empowerment. There is no evidence that suggests any one of these is consistently superior to the others. Ultimately, any program of change targeted toward empowering individuals has to deal with the four areas of power, information, knowledge, and rewards. The potential starting place can be changing any one of the four, or changing a combination. Reengineering, for example, emphasizes changing structure and job design and, as a result, influencing information and power. It pays very little attention to rewards.

TQM programs also emphasize rewards less than employee empowerment approaches do. Another difference is that the implementation of total quality tends to be more top-down than does employee empowerment. And there is debate on whether TQM approaches to job design are intended to enhance or limit employee power and discretion on the job. Despite the empowerment rhetoric found in TQM, job redesign in TQM often results in tightly controlled, simplified work.26

Recent research on the relationship between empowerment (or employee involvement) programs and total quality programs offers four conclusions:

1. Employee involvement programs typically start before quality programs.
2. There are comparable numbers of firms using each of three approaches to managing the two programs — as two separate programs, as separate but coordinated programs, and as one integrated program.
3. The image of the relationship between the two is usually that employee involvement is part of a TQM program; far less often is TQM part of an employee involvement program. This may be partly due to managers’ perception of TQM as a more acceptable initiative, because it emphasizes work processes rather than issues of power and management style.
4. TQM and empowerment can reinforce each other to make a change effort that uses both programs more successful than one that uses either alone.27

The challenge for any organization is to diagnose its situation and decide which change process or combination of activities is most likely to be successful. If, for example, it is innovating with information technology, reengineering may be exactly the right place to start. On the other hand, if the organization is operating a relatively stable, high-volume service business, TQM may be the place to begin. The challenge is to identify opportunities for change and match them to particular change efforts.

Labor Unions’ Role in Empowerment Initiatives

The U.S. labor union movement has not strongly supported or encouraged companies’ efforts to create empowered work organizations. Admittedly, some unions are moving toward acceptance and a few have advocated it for a long time, but the landscape is cluttered with failed empowerment efforts that were undermined by lack of union support or commitment.

One possibility for a company is to go ahead without union support, but this is extremely difficult and probably unwise due to potential legal problems and trust and credibility problems. As we noted earlier, empowerment is implemented by changing an organization’s reward systems and work structure and practices. Many of the items that need to be changed are covered by union contracts; altering them without union support is not only difficult, but potentially illegal.

The challenge is to get union cooperation in creating an empowered work setting. There is evidence of success with unions representing the steelworkers, communication workers, and autoworkers. Getting union support for empowerment efforts requires a combination of making unions partners in the process and finding the right union leadership. If empowerment is perceived as only management’s program, it is very hard to get union support. A joint activity that will make things better for the workforce and the company will encourage many union leaders to provide support.

Some progressive union leaders, such as Irving Bluestone of the UAW, argue that having a union is a necessary condition for having a truly empowered organization.28 Their argument rests on the idea that, without a union to prevent management from backsliding, it is always possible that management will cancel the empowerment activities whenever it feels they are inconvenient or not in management’s interest; the only way to prevent this is for the union to hold management to its previous commitments. While this is a valid point, it is a long way from the viewpoint that empowerment can be effective only in situations where there is a union.

We believe that companies without unions can often move more quickly to empowerment because they do not need to negotiate changes. Admittedly, there is always the risk that management can move just as quickly away from empowerment when there is no union. However, an important point that managers should remember after moving to empowerment is that abandoning empowerment may instigate employees to organize or join a union because they will feel that a union is necessary, given management’s untrustworthiness.

Management’s Role: From Command to Coordination

Managers who rely too heavily on employee empowerment to solve their service problems fall into what Schneider and Bowen call the “human resources trap.”29 The HR trap occurs when managers expect their frontline people to provide better and better service without simultaneously trying to improve the core service offering itself, enhance the tangibles, make available state-of-the-art technology and market research, and so on. It can result in unreasonable responsibility for damage control placed on the frontline workers in a poorly designed, inadequately coordinated service system.

To avoid the HR trap, Schneider and Bowen advise managers to create two related, but different, organizational climates within their companies. A “climate for well-being,” in which employees sense that practices in selection, training, and rewards meet their needs, can create satisfied employees whose positive feelings spill over to customers. A “climate for service” per se is also necessary. Employees need to experience a setting in which practices and procedures in the areas of systems support (e.g., R&D, marketing) and logistics support (e.g., equipment, paper forms) emphasize that service quality is a core value and facilitate its delivery. Empowered employees also need a well-designed service system if they are to be satisfied and productive.

Effective service management requires the active management of both the empowerment process and the overall service delivery system. Management’s responsibility is to coordinate all the elements, human and otherwise, that must be woven together to deliver the “seamless service” that customers value.

Conclusion

We predict that more and more firms will empower employees. The production-line approach to service is still the most common because it is more widely understood than the employee empowerment approach. Yet this is changing as the benefits of empowerment become clear.

Evidence indicates that empowerment can have positive returns for employees, customers, and the bottom line — when it is right for the situation. However, empowering service employees also brings new challenges, such as setting boundaries for service recovery, ensuring organizational learning, and integrating empowerment with other change initiatives. Fortunately, as more firms continue to adopt empowerment, their experiences will suggest strategies for managing these challenges. As the returns on empowering employees continue to prove both beneficial and manageable, more firms will, and should, find it the best approach for gaining a sustainable competitive advantage in service.