What is the Cost of Success?

Stephen Cain

Abstract

This discussion will analyze the impact of making structural decisions within an organization based on historic principles and modern day techniques. It will construct a chronological view of the perspective in organizations in different industries using different philosophies and techniques to succeed. Once we develop some organizational structures it will look at the results foregone by selecting certain decisions over other possible alternatives, thus demonstrating opportunity costs that some companies have experienced.

What are the Costs of Success?

Success is the motivation for any task, whether organized from a team-based standpoint or on an individual level. Now, more than ever, taskmasters demand a high degree of success, whether it is an employer, professor, or the individual. Through every decade, we observe a major shift in the way individuals and organizations try to succeed. This shift comes through changes in organizational design, the culture of the task environment, process adaptation, or implementation variants. Many times favorable characteristics are eradicated from the end results after implementing the procedures. This paper would like to take a teleological approach to examine the opportunity costs of success and discuss the losses and improvements from a chronological viewpoint.

For the uses of this paper, so there is no mistake in meaning, opportunity costs will refer to the characteristics given up in the achievement of tasks. However, keep in mind the "all or nothing" approach is not the analysis needed to be given here. Every day everyone gives up something, or at least part of something, to experience another opportunity and organizations are no different. With that approach, a combination of characteristics and involvement of the characteristics need to be analyzed. This paper will pick out common characteristics of successful organizations and discuss the opportunity costs of encouraging the supposed factors to success.

The Traditional Success
This approach was developed originally for different times and different tasks. The earliest organizational forms appeared in slave societies and progressed to the organization of the army and the Church. Even today, most organizations bear an uncanny resemblance to the model developed by the Roman Army. Although we have seen many major developments this century in science, technology and communications, we have seen less creativity in the field of organizational theory and practice until recent years, and little or no real success in introducing these new ideas in practice. Over and over, we revert to old ideas and behavior (Giodan, 1994).

Where do we start when inquiring about the factors of success? In an organizational approach do we go straight to the top and look at upper management? Does upper management hold the sacred keys to success, and are they the ones in control on how success is achieved? In the past, management was thought to be the only employees to affect the success, with the exception of the manual labor output (Davis, 1992). Their strategic planning and gift of insight was what the organizations perceived would lead companies to high performance and success. It was thought that the more levels of hierarchical structuring an organization had, the better (Pfeffer, 1995). This was evidenced by the skyscrapers highlighting the skylines of many business centers. The Sears Tower is the best example of this mindset. During that period, the number of floors represented the type of multi-leveled organizational structures that were so demanded.

Multi-leveled organizational structures presented barriers to communication. The first hint of information was always started at the top and filtered its way down. Often information found variations of its intent at the bottom of the structure, making this process mediocre at best. The trickle down effect presented many short-sided opinions and did not capitalize on the total knowledge of the organization. It stifled creativity, morale, and unity with its employees (Oechsli, 1993).

The past offers good evidence of how management thought about success, and the factors needing to be present to have success. Asking the characteristics for the success of an organization could challenge conventional wisdom. Consider the question, "What factors will lead to successful organizations and their longevity?" Then wait twenty years from now to see the result of your theory (Simmons, 1993, p. 3). This same question was posed in 1972, when a survey asked for the five fundamental attributes to the success of a firm. The five underlying factors at that time were: the entry of new competitors, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers, and the rivalry among existing competitors (Logan, 1993).

In 1992, the top performing firms over the past twenty years were Southwest Airlines (with a return increase of 21,775%), Wal-Mart (19,807%), Tyson Foods (18,118%), Circuit City (16,410%), and Plenum Publishing (15,689%). Notice all of these industries (airline, retailing, food processing, and publishing) are characterized by highly competitive markets, widespread bankruptcy, virtually no barriers to entry, little unique technology, and many substitute products or services (Oechsli, 1993). Now we consider these firms as being the leaders in their markets. Conventional wisdom was basically erroneous with every factor based on the 1972 survey.

These successful firms have some similar facets in common. They have had visionary leaders but most importantly, they have excelled in managing their workforce. This has demonstrated another shift in organizational thinking. Herb Kellerher of Southwest Airlines stated, "Tangible products such as airplanes, gates, and ticket counters can all be duplicated, but the intangible services such as culture can not be reproduced." Belief that employees are value-adding resources has become wide spread. Managing personnel is currently thought to be the key to success, so some of the common ways to mange people will be critiqued and analyzed during this discussion. It is suggested that organizations need to expand the scope of human resource responsibilities to succeed. This will allow the organizations to strategically manipulate resources through redesigning (Wolff, 1993).

Modern Team Conflicts

The modern redesigning approach of building success has come through the evolution of work places being team designed. It ranges from "pockets" of process, work, and quality improvement teams to overall organizational based teams. The uses of such designs and systems have not come without strife to the organization and the employee. Some aspects are considered growing pains, but others are considered to be wrecking business operations.

Case in point is the theory that humans are creatures of habit. Over many years of reinforcement, employees are now supposed to learn a different way to operate. They are supposed to disregard the years of work, climbing the career ladder. Everyone on the team is supposed to be co-equals and not concerned with the degrees of experience and knowledge. Employees also decide who will make job decisions, how they will make the decisions, and the allocation of rewards. All of this is a fundamental shift in the way people have learned to work. Due to the perceived loss of seniority employees will incur when teamwork is implemented, inequity is felt when the individual accomplishments are not personified as the desired action (Katz, 1995).

People go through formal educational systems as a foundation for life. It starts early with elementary schools and continues until an adequate amount is received, usually ending in a person’s early adult stages with college instruction. Our education system demands individual performance and scoffs at the thought of developing and learning through team formats. From there, the organization is supposed to mold and create an expert at numerous tasks. This learned behavior has been instilled within every organization, since the need to work together to accomplish a common goal has existed (Stott, 1992). The effects of introducing teams as an expected formulation to accomplish tasks have discouraged many employees.

Middle management has become the missing layer in reengineering the organization. In the age of streamlining structures for efficiency, managers are becoming the causalities. Even though the practice is producing higher efficiencies from a performance standpoint, the culture of the organization is suffering. Middle managers have become the glue holding management and front line workers together. They offer mentorship to developing employees while showing direct encouragement. Middle managers are also a conduit for communication. They can express the needs of the organization in simplistic terms, which some members of management are having a hard time expressing. The organization is also losing a wealth of knowledge about the organization and its intricacies.

Some instances create an incorrect allocation of resources. This is created through the inaccurate measurement process set up for teams. When promotions need to be made, who deserves to go to the next level if they are a member of a successful team? In many team atmospheres, an accurate measurement system is not in place to easily say, "promote this employee" by performance output. They usually promote from outside the company or by seniority (Stott, 1992). In both instances, low morale is created. In the first instance, it creates a message that your career path is limited. In the second instance, it is sending a message that if you just put in the time you will be rewarded regardless of performance. The latter has produced many non-deserving employment advances. This attribute is coupled with social loafing, because there is no personal accountability, just as long as the work is completed.

Employment security has created conflicts throughout history and the formulation of teams has not stopped the debate (Simmons, 1993). Unions try to scare their members into thinking companies are just setting up programs to rid the company of union workers. The everyday employee, due to his/her lack of knowledge, believes the company is trying to eliminate the people they do not want, because everyone’s job is interchangeable within the group. This makes the employee easily replaced. Unfortunately, these are not fictional occurrences and companies have used these tactics to streamline their workforce.

Gains from Successful Teams

Teams have created a great deal of success in the closing stages of the Twentieth Century. Working in teams has created success for the organization, as well as the employee. Teamwork is considered to be one of the contributing factors to success, and everyone is trying to develop and implement teams into their work environment (Holzman, 1993). The widespread attention has brought many "how-to" manuals to the forefront of managerial reading. These manuals have rules, characteristics, and formulation procedures. The characteristics of the organization are the major determinants in the success of an organization, other than performance. The question posed by many is: "What value is the organization adding to the employee?" Looking at some organizations-General Electric, Ericsson GE, Toyota, Honda, Nordstrom, Saturn, and other organizations-will constitute a reference of characteristics that have become popular while referring to the success of an organization and its team design. These characteristics involve empowerment, ownership, information sharing and job satisfaction (Edmonstone, 1993).

Employee empowerment has become the major thrust in the past decade for many organizations. Empowerment is defined as giving the worker the training and authority they need to manage their own jobs. It puts the employees in the best position to determine how to improve their performance (Greenberg, 1992). Nordstrom exemplifies this the best in their handbook. Its one-sentence handbook states: "Use your best judgment." The employees of Nordstrom have an on-the-spot expense allowance of $2,000. They can use this allowance at any time a service needs to be provided to make it the best experience possible for the customer.

General Electric, Mobile Communications, a manufacturer of mobile radios, cellular telephones and related products located in Lynchburg, Virginia, thought to empower their employees. It happened primarily, because a program evolved into a process that transformed the corporate culture. The program is called Winshare, and it helped revive a company on the brink of closing its doors. A voluntary program was set up where the employees could receive training in statistical process controls. From this program, a line employee proposed a cost saving idea about the excess around the workstations, saving the company $100,000. This appraisal occurred in just 12 weeks (Filipezak, 1993).

Ericsson GE had similar results in another plant with a similar program called Win Teams. These teams organized into task forces were also voluntary. The members were mainly line workers and the leader was an elected line worker. These teams started out with a budget of $250 to make any improvements they deemed necessary. The managers involved were only there to participate in the interdependencies between other departments and the analyzing of feasibility of the project. This structure was such a success within months the budget was raised to $6,000. Another case of empowerment has proved to be beneficial to an organization as a whole (Filipezak, 1993).

That kind of "employee ownership" exists, because instead of just talking about empowering its people, the company did it. The empowerment effort began and continues under the Winshare umbrella. The mechanics of Winshare include the gain-sharing bonus and recognition for the ideas generated by employees. However, the whole system—the whole corporate culture, in fact—revolves around the ideas employees suggest and implement. Winshare suggestions tend to fall into two improvement categories: ideas that improve the actual production process and ideas that make the work easier (Fitzgerald, 1996).

Auto industry giants such as Toyota, Honda of America Manufacturing and General Motors, specifically Saturn, have brought empowerment into its manufacturing facilities with great success. Toyota encourages workers to stop the production line if they spot a defect. Employees also manage the parts flow into the factory, reducing costly inventory buildups. Honda has an 80% participation rate in the Voluntary Involvement Program. In this program the workers form teams to improve processes and solve manufacturing problems, that is only after the company has continued the education in statistical and analytical techniques for its workers. The managers are required to annually train three subordinates to their level, thus creating an atmosphere for empowerment. Saturn has taken empowerment to new levels. The teams are developed around building a piece of a major system of the car. Each team then functions as a small-business unit responsible for its budget, accounting, and interaction with other business teams based on the product or piece they are constructing. Teams even have the final say on hiring, after management has screened the candidates. The team members also develop the job descriptions for their own jobs (Dobblelaere, 1993).

While empowerment is given on the part of the company, the employees take ownership. They must have a commitment and enthusiasm to the new system or it will not succeed. We have seen Nordstrom incorporate this philosophy of ownership with its employees. They have shown responsibility and do everything within reason to represent the company in the best light possible. Marietta Manned Space Systems has also shown empowerment through the use of teams. They have 100% employee involvement through teams (Greenberg, 1992).

Opportunity Costs of Success

For years, employees have been yearning for involvement in the decision-making process. They have wanted the chance to improve situations in the organization, which they see, as negative or inefficient. Because of this, management has given them a chance by loosening the reigns and empowering the employees to make decisions. Time after time companies are finding that just proclaiming "empowerment" is not enough. Often this comes with increased costs associated with increases in training, in conversion time to production, and costs due to lost morale. Of these, lost morale is the factor that is hardest to recapture. Analysts determine 2/3 of all team experiments fail (Holzman, 1993). Lack of management commitment is the largest contributor to failure. Another includes the misuse of teams. Some teams are designed to accomplish certain tasks, and just because one company capitalizes on a team structure does not mean it will work in another company (Keck, 1996).

Social loafing is another opportunity cost related to teams. The fact that some people will let others do the work creates an atmosphere of underachievers. This cannot be easily seen in the short run. It takes time for the high performers to move on to other job assignments or companies, before the social loafer is exposed. When this happens the performance will normally drop sharply. If the social loafer would happen to be promoted, then the results could be disastrous because of the lack of knowledge and direction (Keck, 1996).

A perception of inequity has been a cost of some mismanaged team experiences. The team must determine the dynamics of the group, so they can decide who is the leader. They must feel comfortable with the leader, as well as their individual role within the team (Katz, 1995). The biggest inequity is the pay disparity between members of the group, and an accumulation of arguments can be addressed in these situations. The seniority, workload, skill level, and other attributes leave some employees feeling wronged in certain instances.

Another factor besides differences about pay practices is stress. Stress seems to be another major consequence of working in the team environment. According to more than half the respondents (53 percent), team meetings are the major cause. Although the majority of team members claimed there is not enough time for meetings—which in itself is stressful—once the teams do meet, they have a host of other problems to contend with (Rasmus, 1994). Staying focused, having difficulty in reaching consensus, having to spend an inordinate amount of time in meetings, and leading meetings are the most troublesome issues. Working with different types of people is not a significant problem, but the actual time management of the team impedes the progress and success of many teams (Jones, 1996).

Building the Future

Management is looking for higher returns, while employees are looking for more job satisfaction. Employees are demanding the ability to enjoy their careers, but say the work atmosphere is not desirable. This is evidenced by the mass number of entrepreneurs starting their own businesses. They want to be proud of what they do, and not just take home a paycheck every day. If bigger organizations are paying attention, they will start making strides to incorporate enthusiasm within their companies, and regain the talent going into smaller businesses.

Whatever organizational design being used must be able to learn. Learning organizations must be able to adapt to ever-changing environments. The need to be flexible to market conditions and the limits of the organization are essential. The learning environment should be secure in exploring different points of view so employees need not be afraid to be creative. They need to respect what has been done in the past, analyze the present, and recognize the possibilities for the future. Teams can aid their development by challenging, not discounting, every idea (Benson, 1991).

The goals of the organization must be expressed to the entire workforce in order to determine where they can fit into the mix. Knowing the overall objectives will give the employees a better understanding of how they can contribute to the accomplishment of the organizational goals. The ways to effectively communicate the goals of the organization are through open lines of communication. Michael Simmons stated that management might as well tell their employees what is going on since the competition already knows. The fact that employees are the last to know has hurt industries over the years. The future will be the age of information and technology. Through this, the transfer of information becomes essential and often is a major contributor to success. All information is distributed along some communication channel, whether formal or informal. Communication of information becomes a focal point if organizations want to succeed (Hamilton, 1992).

The culture of business and society at large has traditionally valued individual achievement over group accomplishment. Working together is fairly new for most of us, and teamwork does not happen naturally or without significant effort. For this reason, managers must put considerable thought into the team development and implementation process. To do that well, they must seek input from team members themselves.

Although 90 percent of team members reported, they have received training in how to work on teams, a third of them claimed the training has been inadequate. Perhaps not surprisingly those team members who have received adequate training are significantly more successful in achieving their objectives than those who have not received adequate training. Effective training must be the first for setting up success teams (Hamilton, 1992). Without the initial direction and purpose, many teams will flail in a quandary.

Clearly, we need a leadership that will release the intelligence, creativity, and initiative of people. Such leaders will primarily make the decision to see that absolutely everything goes well in their organizations, without limit or reservation. This includes achieving specific objectives such as financial targets, but it also means that they will see to it that all of the barriers and limits to the effective functioning of the organization are eliminated. It does not necessarily mean doing it all themselves, but it does mean seeing to it that it is done. It does not mean being hard on themselves about what is not achieved, but rather having an attitude of being "always pleased but never satisfied," with how they are doing (Simmons, 1993).

Conclusion

This discussion has focused on impacts, aspects, and opportunity costs of teams in the organization. The concept of teams in the workplace is dominant among many industries today, creating the discussion from a team standpoint. The concept of "trying to develop a better way" has created a shift every decade. In this search for excellence, what is the right answer? Practical thinking must occur for any fundamental shift to have a positive result. Management too often has seen what works in other organizations, and tries to emulate their success by transferring the same structure and knowledge to their firm. To the dismay of management, the entire development has created more problems, as well as decreased performance and morale. Management has too often received credit where credit is not deserved. In the way the economy is established, organizations are merely role players. They carry out their independent functions as a microcosm of the whole. Management does need to be given credit when they are proactive in finding positive results for the organization (Edmonstone, 1993). This depends on their awareness of the internal and external environment, core competencies, and their direction for the future.

These attributes present many complexities within organizations, thus posing the thought that they do not happen by decision but by market demands. This suggests natural selection occurring within organizations, demonstrating the ability to evolve in regard to the market. These demands can be made through the use of individualistic means or through team-based means from a structural standpoint. Companies have found they could follow all the right intentions, directions, and philosophies, but still fail as a team-based structure (Holzman, 1993).

To ease this process, the following theories could help with the introduction of teams. Teams should be allowed more time for learning and for meetings, even when productivity suffers initially. This kind of support can be one strong indicator of true management commitment to the teams (Oechsli, p. 25). Organizations need to minimize the differences between voluntary and mandatory participation of teams and between what is regular work versus teamwork. Due to the considerable stress that results from inappropriate and/or ineffective meetings, team leaders need to intervene quickly when problems arise. To address the uneven distribution of work and enhance team creativity, firms should consider using more temporary and contract workers. While downsizing is in itself a major harbinger of stress, there are positives to be gained. Team members can benefit from the opportunities to learn new skills, to increase collaboration among team members and other colleagues, and to improve communication both within and beyond the team (Greenberg, 1992). George Wibben, of Xerox was quoted as saying, "none of us in as smart as all of us."

As the study shows, teams throughout North America are feeling the heat from a perceived lack of resources. Insufficient resources ultimately can impede a team’s continued development and success. Therefore, it is imperative that organizations

Identify the types of human and financial resources teams need and provide them to the teams on a timely basis. As the late quality expert W. Edwards Deming once said, "No one person knows as much as a team."

Yes, team based organizations are the best way to organize, and yes, individual means are the best way to structurally organize. It all is dependent on what the market and workplace will demand on the productivity and culture of the firm. It is an independent choice that a firm must practically analyze. Albert Einstein sums it up best; "The world that we have made as a result of the level of thinking we have done thus far creates problem that we cannot solve at the level as they were created." Therefore business will continue to evolve and change, but what costs are we incurring by making strides?

References