EMPOWERMENT OF EMPLOYEES IN GAINING
COMPETITIVE ADVANTAGE
Sonja Treven* and Štefan Kajzer**
Received: 25. 02. 1999.
Accepted: 28. 06. 1999.
Review
UDC: 331.5
In the paper, the authors emanate from various types of structures of the enterprise
whereby they focus their attention on the flexible form. They examine the possibilities
to encourage the employees in achieving the business objectives in enterprises with a
flexible organisational structure. They particularly deal with some of the more
important aspects concerning the employees, as for example: job enrichment, selfmanaged work teams, creativity and gathering of ideas, the question of rewarding
and recognizing the efforts of the staff. They conclude the paper by presenting the
manner of recruiting and training as well as giving suggestions for creating
“champions” in these enterprises.
1. INTRODUCTION
In the surroundings of Detroit, we recently visited one among the greatest
and professionally best companies, Electronic Data Systems (EDS), which
performs advisory activity in the field of information systems in 28 countries
around the world. We found this successful company especially interesting
because of its organisational structure that was not traditionally hierarchical as
in other companies. Its structure involves all features that may define the new
organisational structure of companies in the future, such as orientation toward
the customer, units of work teams, high rate of responsibility and independence,
encouragement of creativity in employees, etc.
*
Sonja Treven, PhD, Assistant Professor, School of Business and Economics, Razlagova 20,
2000 Maribor, Slovenia, Phone: +386 62 22 90 244, 386 62 22 90 255, E-mail:
sonja.treven@uni-mb.si
** Štefan Kajzer, PhD, Professor, School of Business and Economics, Maribor, Slovenia
Management, Vol. 4, 1999, 1-2, 113-126
S. Treven, Š. Kajzer: Empowerment of employees in gaining competitive advantage
Only companies with a flexible type of organisation are eligible to
encourage employees to help them gain a competitive advantage. In these
companies, jobs are designed in such a way as to constitute a challenge and an
important motivational factor for employees and besides, they are attractive and
heterogeneous. The employees can organise themselves and, by their own
decisions, they can exert influence on the work system. They are expected to
produce a lot of good ideas and suggestions important for the effectiveness of
the entire company. They are compensated adequately with pay and other
special benefits that reflect the attention to the personal achievement of the
individual.
The paper will emanate from various types of structures of the enterprise
whereby we will focus our attention to the flexible form. We will examine the
possibilities to encourage the employees in achieving the business objectives in
enterprises with a flexible organisational structure. We will particularly deal with
some of the more important aspects concerning the employees, as for example:
job enrichment, self-managed work teams, creativity and generating ideas, the
question of rewards and recognition. We will conclude the paper by presenting
the manner of recruiting and training, as well as giving suggestions for creating
“champions” in these enterprises.
2. STIFF AND FLEXIBLE ORGANISATIONAL STRUCTURE
2.1. Contemporary environment of the company
Transition from a sociorealistic "economy" to a normal European and
global market economy and management requires each company to establish a
firm foothold as an economic system (Belak, Kajzer, 1994). This means,
primarily, that it has to run a business according to economic criteria
determined by the world market. In the last decade, important changes in
business conditions have occurred on the world market, such as:
1. The market of producers has definitely transformed to the market of
consumers. Hence, the company that persists in a self-sufficient concept of
running business has no chance to survive (Peters, 1987).
2. The once stable business environment has changed into an explicitly
turbulent one especially because of the facts mentioned in (1).
3. In such circumstances, the key factor of business success is not a large
amount of the same line of low cost products but various, unique products
of top quality that will increasingly satisfy the individual needs of
customers.
114
Management, Vol. 4, 1999, 1-2, 113-126
S. Treven, Š. Kajzer: Empowerment of employees in gaining competitive advantage
4. The once self-satisfied principle of effectiveness (doing things "in the right
way") has become only one among the criteria for achieving success (doing
the "right" things) of modern companies (Kajzer, 1987).
Already, some of the above mentioned basic changes in the business
environment unquestionably show that the production concept of running
business is only a matter of economic history and hence, by no means warrants
the survival of the company. However, in modern societies, it is more and more
evident that a "clear" market concept of running business (as a response to
changed business environment) also is too partial. Such orientation namely
does not take into account the fact that a company does not exist merely in a
market environment but that the concept of modern environment must be
considered in a much wider sense. From practice in the developed parts of the
world, it is more and more evident that the survival of a company depends not
merely on the market environment but also on (Peters, Reimann, 1988):
1. The social and natural environment as a company is no longer only an
economic but also a social (quasi-public /Ulrich, Fluri, 1992/) institution;
with its activity it generates ever higher social expenses, as well as
expenses of ecology.
2. The human factor, as an integral part of a system and environment, has
been gaining ground recently: particularly, the vitally important highly
trained employees are increasingly aware of the environment they live and
work in – the quality of life, hence, it is necessary to treat them also as "the
internal public".
The above mentioned basic changes in the business environment and the
extention of the environment concept generally constitute an essentially altered
situation as a whole as they may entail adverse consequences at the very least:




In such circumstances, the company can not maintain any continuous
competitive advantages.
The ever greater diversity can only be combated with diversity (Ashby,
1956).
Hence, a proper proliferation of innovations occurs both in the field of
products and services and in technology.
Any isolation from the environment may be fatal for the company.
Let us try to outline some characteristics a company must feature to be
successful in circumstances described.
115
Management, Vol. 4, 1999, 1-2, 113-126
S. Treven, Š. Kajzer: Empowerment of employees in gaining competitive advantage
2.2. What type of a company would fit the contemporary environment
Business practice in the contemporary world shows that only companies
that possess the following characteristics will be effective (Peters, 1987):








they are more flat (with fewer levels of organisational structure);
they are composed of more self-managed units (less corporate staff, more
local authority for the introduction of products and setting their prices);
they are oriented to differentiation, manufactuinge of products and setting
up of services of added value as well as to gaining new markets;
they pay special attention to quality;
they provide services;
they are more responsive to the needs of customers;
they are much faster in regards to innovative processes (short innovative
cycles);
they are able to take advantage of highly educated, flexible people as the
basic element of creating added value.
To achieve this goal, they will have to reorientate their attention
completely: from being focused entirely on themselves toward establishing a
firm foothold in their environment and learning to do business successfully
within chaos in a turbulent society.
However, how to achieve this? In the first place, we have to eliminate the
production concept of running business, as such behaviour and activity may be
justified for totally different circumstances from the contemporary ones. With
such an attitude, it was namely possible to survive only in the stable market of
producers, if we belong to those that were powerful and efficient enough to
afford a monopoly position. As we know from our experience, such a market
does not exist any more, neither do such companies!
In the early ‘80s, the whole world was impressed by an unbelievable
success of the Japanese economy. A whole host of analyses of successful
companies – mostly in Japan and the USA (i.e. Peters, Waterman, 1982;
Kanter, 1983; Peters, 1987) – showed that an exceeding success in the
increasingly strained and dinamic circumstances is based on altered relations to
people. Primarily, it is a question of the renewal of the managerial and
organisational philosophy, it is a shift to "soft" factors (Bleicher, 1986), human
dimensions of formation, orientation and development of companies.
116
Management, Vol. 4, 1999, 1-2, 113-126
S. Treven, Š. Kajzer: Empowerment of employees in gaining competitive advantage
So far, the organisational structure of companies was designed as a "safety
net" against human imperfection, fallibility and idleness. Thus, the aim of
organisation was to minimize the number of mistakes by employees as much as
possible, utilising appropriate organisational structures and hence, avoiding
damage that may emanate from the improper activity and behaviour of people
(Peter, Hull, 1974). If such organisation of a company were successful, we
would obtain a centralized, self-contained company in which the actions and
behaviour of employees were to be obedient, routine and oriented entirely
towards avoiding risks as well as achieving security. All initiative and
autonomy was eventually stifled by the almighty, bureaucratic organisation
with an arbitrary style of administration. It is clear that every reorganisation
would require an extreme effort and employees consider it mostly as a disaster
that they should hide from until it blew over.
As we already know, the contemporary environment of a company has – as
it was obvious at the beginning of the ‘80s – essentially different
characteristics. Therefore, it is by no means strange if the above mentioned
successful companies show a totally different image from those described
above. They are namely based on the people, the trust in them, hence their
autonomy as well as decentralization. Only in such a manner is it possible to
establish a flexible organisation, i.e. an organisation which can be altered with
the least effort to assure the optimal organisation of a company according to the
circumstances. Of course, such an organisation cannot be prescribed
bureaucratically "from the outside". It is achievable only by self-organisation,
whereas the management has to establish circumstances by creating a suitable
"climate" and not by dictate.
Considering all this, we must specially point out the fact that "flexibility"
emanating from strategies that are feasible by the existing, stiff structures is by
no means sufficient (Pauli, 1987). Hence, in the turbulent environment, the
problem is reverse: we are looking for the optimal structure for the strategy
that we consider optimal in today’s circumstances. Margit Osterloh (1994) puts
it even more radically: "The structure follows the process and the process
follows the strategy". In order to make such an action feasible, we have to know
the opportunities and threats in the environment as well as be aware of our
advantages and disadvantages. Only such an insight into the situation allows us
to choose the strategy and to determine the necessary grade of flexibility in
individual phases of the business process.
117
Management, Vol. 4, 1999, 1-2, 113-126
S. Treven, Š. Kajzer: Empowerment of employees in gaining competitive advantage
3.
CONTRIBUTION OF EMPLOYEES
COMPETITIVE ADVANTAGE
IN
GAINING
A
In the previous chapter, we have already stated that the competitive
advantage of the company depends to a large extent on its ability to organise
and manage employees. Up to date flexible liaisons between experts from
diverse fields require a style of management that differs from a "military
model" of management which is concentrated on the planning, control and
coordination activities. What is called for is a more modern approach with an
emphasis on the development of conditions for the creative and innovative
work of employees.
3.1. Creation of opportunities for a great contribution by employees
In the last few years, a mode of organisation that may enhance the
motivation of employees and improve the effectiveness within the company has
gathered momentum. Such as organisation (High Involvement Organisation HIO) is to be based on a high degree of involvement and cooperation of the
employees in achieving goals of the company. Its roots are in the quality of
work life (QWL) movement which began in the 1970s. Tosi, Rizzo and Carol
think that both QWL and HIO approaches attempt to change the adversarial
relationship between workers and managers that dominates many companies
and to replace it with a cooperative approach (Tosi et al., 1994, p. 249).
Now, we shall turn our attention to some important points of encouraging
cooperation of employees in achieving goals of the company. Among them we
shall discuss in more detail the following: job enrichment, self-directed work
teams, the acceleration of creativity and collection of "golden" ideas as well as
compensation and special attention to employees.
3.1.1. Job enrichment
The design of work in the company has to be aimed at increasing: (1) skill
variety, (2) task identity, (3) task significance, (4) autonomy and (5) feedback.
Only that way the employees will have more meaningful jobs, a greater sense of
responsibility and more feedback.
Hackman and others distinguish five basic strategies for designing jobs to
increase the motivating potential of employees (Hackman et al., 1975). Figure 1
shows these strategies and how they are related to the core job dimensions,
118
Management, Vol. 4, 1999, 1-2, 113-126
S. Treven, Š. Kajzer: Empowerment of employees in gaining competitive advantage
critical psychological states, and personal and work outcomes:
1. Combining tasks: Small tasks should be combined into larger, more
complex tasks. Combining tasks may increase skill variety and task
identity.
2. Forming of natural work units: Tasks should be grouped into units so that
as much of the work as possible can be performed in the same unit. This
leads to a sense of ownership of the job, increasing task identity and task
significance.
3. Establishing client relationship: If possible, it is desirable to link the
employee with the purchaser of the product or the service or at least allows
the feedback. When the client relationships are established, skill variety,
autonomy, and feedback should improve.
4. Vertical loading: The job should be enriched by vertical loading, such as,
adding responsibilities from higher organizational levels. This way of
distribution increases the responsibility of the employee for work as well as
enhances the level of perceived job autonomy.
5. Opening feedback channels: There are two ways to provide feedback. The
first concerns the assessment of the performance on the basis of the job
itself, while the second stems from the supervisor or from reports about the
quality of performance.
Figure 1: Strategies for implementing job redesign and their relations to job
characteristics (Tosi et al., 1994, p. 250)
119
Management, Vol. 4, 1999, 1-2, 113-126
S. Treven, Š. Kajzer: Empowerment of employees in gaining competitive advantage
3.1.2. Self- managed work teams
So far, we found that well-designed jobs can increase the sense of
responsibility. With the development of self–managed work teams, the
responsibility of the individuals who make up the team becomes even greater.
These teams usually have responsibility for some decisions once reserved for
management. Teams may be headed by a person from the managerial ranks or
may have a member of the team designated as “team leader”. The team leader is
usually one of the more highly skilled members, but team leadership may rotate
from person to person.
Work teams are encouraged to work together as a unit, identify problems
and look for their solutions, help and train each other while maintaining high
quality production. Often they have the responsibility for controlling other
members of the team through self-regulating activities such as recommending
disciplinary action if necessary, making individual work assignments, and
sometimes deciding on member pay increases.
Let us present, in short, the activities carried out by self–managed work
teams in a large American company named Johnsonville Food. These are
(Band, 1994, p. 69-70):








Each team recruits, hires, evaluates, and fires its own people.
Team members regularly acquire new skills and train one another as
necessary.
Teams formulate, track, and adjust their own budget.
Teams make capital investment proposals as needed.
Teams handle quality control, inspection, and problem solving.
Teams are constantly improving every process and product.
Teams develop and monitor quantitative standards for productivity and
quality.
Teams suggest and develop prototypes of possible new products,
packaging, and other components.
The profit of the above mentioned company in 1981 was $ 7 million, while
in 1991, it increased to $ 130 million. Top managers in this company are
convinced that such success is, to a great extent, the contribution of employees
attempting to be "the best" and having to be included in the work teams. In
teams, it is namely possible for employees to develop their abilities to the
fullest.
120
Management, Vol. 4, 1999, 1-2, 113-126
S. Treven, Š. Kajzer: Empowerment of employees in gaining competitive advantage
3.1.3. Creativity and collection of “golden” ideas
Srića defines creativity as the production of new ideas that are the basis for
innovations. He states that each new idea does not cause the beginning of the
innovation while innovation is not possible without creativity (Srića, 1994).
Characteristic for the organization, which encourages its employees to
endeavour to achieve the aims of the company, is the orientation towards
developing the creativity and abilities of every individual.
The suggestions and the idea gathering process of the employees is most
valuable for the effectiveness of the entire company. Hence, every company
that is aware of it should bear in mind in the first place the following features:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
The employees know what is important to company success.
The employees maintain customer contact.
It invests a large amount of money in training.
It supports team work.
It values “quality of work life” suggestions such as more parking spaces
and a choice of food in the cafeteria.
It trains employees to make suggestions.
It turns suggestions around quickly.
It bestows recognition and rewards upon employees for their “golden”
ideas, such as dinner with the division manager, a valuable pen, a bottle of
good wine, perfume and so on.
It places emphasis on the volume of ideas which is characteristic especially
of Japanese companies which obtain about 17 ideas per year from each
employee.
It gives attention to each idea and monitors the performance of the
suggestion program.
3.1.4. Compensation and attention to employees
The appropriate compensation strategies in the company support higher
productivity and performance, as well as provide motivation for workers to
increase their skills and competence (Tosi et al., 1994, p. 253). Beardwell and
Holden distinguish two groups of rewards: intrinsic and extrinsic; while the
intrinsic are less tangible than the extrinsic (Beardwell, Holden, 1994).
The intrinsic rewards that often emanate from the person or job itself, are
the following:
121
Management, Vol. 4, 1999, 1-2, 113-126
S. Treven, Š. Kajzer: Empowerment of employees in gaining competitive advantage







variety of job content;
belief that they are a valuable member of the team;
increased responsibility and autonomy;
participation in setting targets;
feedback of information;
recognition;
opportunities to learn and grow.
Intrinsic rewards result from the actions of others, such as supervisors, and
are easily controlled by managers. One example of such a reward is pay which
can be used also as an important motivational factor. White outlined that pay is
important to the employee as it provides (White, 1985):




short term material enjoyment;
long term security;
social status;
recognition of personal achievement.
Besides pay, other rewards that are a sign of attention to personal
achievement of the individual can also be used. Since such rewards have
proved to be a very important motivational factor, let us mention some of them
such as for example, exhibitions with granting rewards and medals; dinners;
publishing papers in the company’s magazines; vacations; jewellery; suitcases
and other rewards.
3.2. Recruiting and training the best employees
A company that wants to encourage contribution by employees to achieve
its goals should: (1) choose the right people to begin with and (2) train them
intensively in the necessary skills to contribute to the high-performance
company. This statement also supports the insight of one of the top managers in
the Motorola company: “The 1980s was the decade of improving the quality of
our product. The 1990s will be the decade of improving the quality of our
people”.
When recruiting new personnel, it is necessary to consider several of their
characteristics. On hand of such characteristics, it is possible to find out their
ability to perform different assignments and to decide whether the particular
person suits us or not. The characteristics we have to consider are as follows:
122
Management, Vol. 4, 1999, 1-2, 113-126
S. Treven, Š. Kajzer: Empowerment of employees in gaining competitive advantage
1. Ability to learn. Learning encompasses continuous acquisition of new
information, an ability to analyze problems, an understanding of cause-andeffect relationship and utilization of sound logic.
2. Technical knowledge. Skills in one or more technical fields are desired,
such as computer literacy and application software, written and verbal
communication and basic mathematical skills.
3. Personal skills. High performers must be able to communicate with
individuals at all levels of the enterprise, they also have to have skills, such
as public speaking, collaboration, negotiation and listening abilities.
4. Emotional literacy. Advantage in selection is given to candidates who have
insight into the human component as well as their own personal
relationships. They will relate effectively and productively upon the job.
5. Intuitive abilities. Individuals who trust their intuition are capable to take
greater risk than others without such feelings. These abilities are crucial for
finding creative solutions as well as for many improvements in the
performance of various tasks.
6. Personal management. Being in control of one’s own life is an essential
skill for a self-managed employee. Besides, he must be able to set specific
goals, overcome pressures, stresses and strains that may sometimes
jeopardize performance.
New staff that suits our demands has to be involved in the training process
as soon as possible. Only then we can expect them to be capable to contribute
to the success of the company with their work.
Noe defines training as the planned effort of a company to facilitate: (1)
gaining job-related knowledge, (2) learning skills and (3) changing the behavior
of employees (Noe et al., 1994). The benefits of training the employees are
diverse. Among them we will point out the following (Anderson, 1994):




performing the job with ease;
greater awareness of self, group and the organization;
more transferable individual skills and knowledge;
greater capability to accept new ideas, practices and techniques.
The training of employees may be of a great advantage for the company
that considers it valuable, for example:
1. More effective working methods and techniques further a better way of
working.
2. A greater application of skill to a task can improve output and quality.
123
Management, Vol. 4, 1999, 1-2, 113-126
S. Treven, Š. Kajzer: Empowerment of employees in gaining competitive advantage
3. Resources, such as computing facilities, can be put to better use.
4. Widespread product knowledge can create a better external image to actual
and potential customers.
5. Better induction and skills training may reduce labour turnover.
6. Above all, the organization can become more profitable and growthoriented.
3.3. Creating “champions”
For companies that exist in these turbulent times, the managers have to be
capable to direct and empower work teams to gain a competitive advantage.
Band states that empowerment increases the people’s drive to use their brains,
to make better decisions and make them on their own. Therefore, it is necessary
that employees see the purpose of their efforts as well as the aims the company
is attempting to achieve (Band, 1994, p.93).
Let us present in short the requirements for leadership to create as many
“champions” as possible:








communicating the company’s vision and specific goals to employees;
creating a positive atmosphere for employees;
building good teams of people;
listening to the employees;
sharing the success of the company with employees;
delegating authority and responsibility;
appraising the staff fairly and promoting only those deserving promotion
reinforcing the importance of customer satisfaction and training the
employees in the skills that they need to keep customers happy.
4. CONCLUDING REMARKS
At the end of our paper, let us try to answer the following question: Do the
companies which pay great attention to encouraging cooperation of employees
achieve better business results? The answer that ensues from the practice of
different successful American companies in which they follow the mentioned
concept, such as General Motors Saturn Plant, General Foods and others is
undoubtedly positive. For these companies, it is characteristic that they have
introduced an organisation based on a high degree of contribution by
employees for a simple but important reason: capitalization of the creative
abilities of all employees.
124
Management, Vol. 4, 1999, 1-2, 113-126
S. Treven, Š. Kajzer: Empowerment of employees in gaining competitive advantage
Since these companies are very successful, we can assume that other
companies that do not adhere to the concept of encouraging the employees are
in a much worse situation. Any company is namely capable to compete
successfully in a competitive environment on hand of only a handful of top
managers. Hence, it is necessary also in these companies to learn how to
manage and connect the roles and responsibilities of all employees and, in that
way, achieve the highest satisfaction of customers.
LITERATURE:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Anderson A.H.: Effective Personnel Management, Blackwell, 1994, pp. 121.
Ashby R.W.: Introduction to Cybernetics. Chapman and Hall, London, 1956.
Band W.A.: Ten New Ideas Revolutionizing Business, John Wiley & Sons, 1994.
Beardwell I., Holden L.: Human Resource Management, Pitman Publishing, 1994.
Belak J., Kajzer Š.: Unternehmen im Übergangsprozeß zur Marktwirtschaft - mit
Fallbeispielen aus Slowenien. Linde Verlag, Wien, 1994 .
Bleicher K.: Strukturen und Kulturen der Organisation im Umbruch: Herausforderung
fuer den Organisator. Zeitschrift Führung + Organisation 55/2, 1986, pp. 97-106.
Hackman J.R., Oldham G.R., Janson R., Purdy K.: A New Strategy for Job
Enrichment, California Management Review, 1975, pp. 17.
Kajzer Š.: Je povečanje učinkovitosti OZD izhod iz krize? Organizacija in kadri,
1987, Vol. 1-2, pp. 23-31.
Kanter R.: The Change Masters: Corporate Entrepreneurs At Work. Unwin
Paperbacks, London, 1983.
Noe R.A., Hollenbeck J.R., Gerhart B, Wright P.M.: Human Resource Management:
Gaining a Competitive Advantage, Irwin, 1994, pp. 419.
Osterloh M., Frost J.: Business Reengineering: Modeerscheinung oder “Business
Revolution”? Zeitschrift Führung + Organisation 6, 1994, pp. 356-363.
Pauli J.: So wird Ihr Unternehmen flexibel. Verlag Industrielle Organisation, Zürich,
1987.
Peter L.J., Hull R.: Petrovo naèelo. Mladinska knjiga, Ljubljana, 1974.
Peters M., Reimann W.: Ausserorientierung erhoeht den Informationsbedarf des
Unternehmens. Management Zeitschrift 57/5, 1988, pp. 217-219.
Peters T., Waterman R.: In Search of Excellence: Lessons from America's Best-Run
Companies. Harper & Row, New York, 1982.
Peters T.: Thriving on Chaos. A.A. Knopf, New York ,1987.
Srića V.: Inventivni menedžer, Croman, Zagreb, 1994, pp. 264.
Tosi H.L., Rizzo J.R., Carrol S.J.: Managing Organizational Behaviour, Blackwell,
1994.
Ulrich P., Fluri E.: Management: Eine konzentrierte Einführung. Verlag Paul Haupt,
Bern und Stuttgart, 1992.
White M.: What´s new in pay, Personnel Management, February, 1985, pp. 20-23.
125
Management, Vol. 4, 1999, 1-2, 113-126
S. Treven, Š. Kajzer: Empowerment of employees in gaining competitive advantage
OPUNOMOĆENJE ZAPOSLENIH U STJECANJU KONKURENTSKIH
PREDNOSTI
Sažetak
U ovom radu, autori razmatraju različite vrste struktura poduzeća te usmjeravaju svoju
pažnju na fleksibilnu formu. Autori istražuju mogućnosti ohrabrenja zaposlenih za
postizanje poslovnih ciljeva u poduzećima s fleksibilnom organizacijskom strukturom.
Pritom se posebna pažnja pridaje nekim od važnijih pristupa vezanih uz upravljanje
ljudskim potencijalima, kao što su: obogaćivanje posla, samoupravni radni timovi,
kreativnost i prikupljanje ideja, pitanje priznanja i nagrađivanja napora zaposlenih, itd.
Rad se zaključuje predstavljanjem potrebnog načina prikupljanja i obučavanja
zaposlenih, kao i sugestijama za stvaranje “prvaka među djelatnicima” u promatranoj
vrsti poduzeća.
126