An organization's success depends on the people who populate it Individual development, employee empowerment, and socialization are important topics related to organizational behavior and the speed at which a company can use personnel for maximum effectiveness.
Competition is a method by which opposing elements bid for resources and power. From victories earned at the Olympic Games of centuries ago through which men gained status and riches, to contemporary trade shows at which manufacturing companies compete for emerging markets, competition leads to winners and losers. What separates the winners from the losers in corporate America is the ability to provide customers exactly what they want in a manner that is profitable.
More then ever, staying competitive means maintaining a constant focus on market demands and rival forces. Increased pressures due to globalization and participants once foreign to U.S. markets have necessitated a re-evaluation of the key behaviors in an enterprise that can lead to success.
There are three elements crucial to staying competitive: maximum quality, minimum cost, and on-time delivery. This triumvirate of quality, cost, and delivery, often referred to as QCD, is what allows companies to thrive, whether they are service industries or manufacturers. The key organizational behaviors that affect QCD are abundant and offer an endless supply of opportunities for improvement. Some of these behaviors include:
Incremental continuous improvement and innovation
Unification of the culture
Managing critical variables
Individual development, employee empowerment, and socialization
Forming, developing, and optimizing teams
Innovation isn't everything Since the 1970s in the United States, innovation has been viewed as the answer to staying competitive. Large-scale improvement of existing processes, such as the rollout of an ERP system or the acquisition of new equipment, provided management with returns on investment that were difficult to ignore. It is a safe bet that, without innovation, companies will eventually be left behind or even eliminated.
The Japanese believe that innovation alone leaves a company unstable. Although innovation offers a one-shot, largescale improvement, a company is destined for a steady decline in performance until the next innovation arrives, which may never happen. Reliance on innovation alone has inherent risks (Figure 1).
For years, the Japanese have believed in complementing innovation with continuous improvement. Indeed, many U.S. companies are seeing the value of that strategy today Continuous improvement in Japan is referred to as kaizen and is believed to offer a stable source of improvement, with or without innovation. A company does not have to rely on innovation for success and job security since kaizen, as depicted in Figure 2, keeps profitability steadily on the rise.
Continuous improvement activities range from quality control circles and short-term, focused activities to incentive suggestion programs and the regular use of statistical process control charts. All of these can and should be incorporated into the business model and made an integral part of company culture.
Effective change management is vital to any organization. Typically, vast amounts of resources are expended to adjust employees to a new way of achieving the corporate mission. Frustration can abound when a manager is not prepared to deal with the inevitable resistance to change. Many different models for change attempt to provide a path for facilitating change and affording a company the opportunity to go quickly from idea generation to implementation.
John Kotter, the Konosuke Matsushita Professor of Leadership at the Harvard Business School, has a contemporary model for effecting change that involves an eight-stage process:
1. Establish a sense of urgency
2. Create a guiding coalition.
3. Develop a vision and strategy.
4. Communicate the change vision.
5. Empower employees for broad-based action.
6. Generate short-term wins.
7. Consolidate gains and produce more change.
8. Anchor new approaches in the culture.
A sense of urgency is critical. Too often, employees who are far removed from the front lines don't feel as though the competition is close and, as a result, are complacent and less likely to want to act differently when needed. A guiding coalition consists of a group of individuals, leading by example, with sufficient authority to steer the change effort. Just as a vision and strategy are important to a company as a whole, they are essential to a change effort.
By definition, change represents something different from what employees are accustomed to; therefore, a clear, well-communicated vision and a path to achieve the change are needed. Asking employees to change must be paired with giving them the tools to achieve it and removing all obstacles. Careful planning will ensure that all aspects of the project have been accounted for and that unexpected roadblocks will be avoided or minimized.
Creating short-term wins allows the workforce to see the benefits of the change effort early on in the program and acts as a motivating factor for the remainder of the change evolution. In addition, during times that it may be difficult to justify a change project to upper management and approval is contingent upon quick returns, consolidating short-term gains can be invaluable. Quick wins help eliminate doubt about the effectiveness of the change and increase everyone's confidence when unforeseen changes are needed.
Anchoring the new approach in the culture is the stage that, if not done correctly, will lead to backsliding and wasted effort. Every company's business model must be an integral part of the company culture or else the change is destined to fail.
Window to the soul
Culture is something about which many managers don't give a second thought, and yet, it is the window to the soul of a company. If you want to predict what a company will give you, whether you're a prospective customer or an interested candidate for employment, look at the company's culture for insight.
If you are in the automotive industry and want to work for a company that values design quality over cost, are you more likely to choose DaimlerChrysler or Yugo? Aligning the company culture to the goals of the business model is a matter of necessity, not choice. How one goes about doing that can represent a monumental challenge. However, many companies have made significant cultural transformations with highly profitable results.
According to a Harvard Business Review article, Carol Lavin Bernick, president of Alberto-Culver North America, was asked how she was able to meet the challenge. "We changed our culture by taking four major steps. First, we made an issue of culture, focusing attention and resources on something we had not previously thought much about. Second, we made fixing our culture a job - actually, about 70 jobs. Third, we fashioned ways to measure our gains on the cultural front and did so obsessively. And fourth, we reinforced our stated values by celebrating everything we wanted to see happen again," she said.
Bernick's approach to cultural transformation is evidence that, in attempting significant change, a company will often have to devote significant time and resources to the cause. However, the effort is worth the investment when one considers what some companies such Alberto-Culver gained as a result.
Another key organizational behavior that directly affects competitiveness in the marketplace is the management of critical variables and performance metrics. Measurement is vital. The trick is to know which variables to measure. When you want to ensure that the product you are shipping is of the highest quality, should you inspect a sample of the product just prior to shipping or is it more prudent to inspect the work-in-process inventory at key locations throughout the process? The latter would involve critical variables and would discover defects sooner, minimizing the production of defective material. In addition, it gives the engineer more opportunity to resolve issues prior to the creation of defective products. This is similar to the benefits provided by statistical process control and control charts. However, both "results" and "drivers" have value. Investors and upper management may look toward results to gauge how the enterprise is doing in relation to the competition, while engineers tend to look toward drivers when assessing whether or not a process is in control. Drivers put you closer to root cause than results do.
The actual metrics available are often quite confusing, and choosing the correct ones to be used can be a challenge. The balanced scorecard approach was developed to correlate results with their associated drivers, leading one closer to the root cause of key processes. In addition, the balanced scorecard promotes the analysis of critical variables outside of the financial arena, bringing greater emphasis on customer, operational, innovation, and learning as well as human resource metrics.
Individual development, employee empowerment, and socialization are three important topics related to organizational behavior and the speed at which a company can utilize its personnel for maximum effectiveness. Training and increased responsibility are not burdens on the employee. These things give an increased sense of self-worth, pride, and ownership to individuals who often feel positioned too far down the corporate ladder to be of much influence to their company's success or direction.
Efforts to place workers in positions of influence such as quality control circles or incentive suggestion programs empower them and often allow them to contribute far beyond what was expected at the time of hire. Toyota has a formal incentive suggestion program called "Soikufu" that has been successful since it was introduced in 1951. According to Yasuhiro Monden, writing in Toyota Production System, in 1985, "each worker suggested an average of more than 40 improvement plans each year, most of which (95 percent) have been adopted."
As they do at Toyota, empowerment programs can add to the paycheck in addition to the morale. Socialization - how quickly and adequately employees adjust to the culture should be an area of focus for companies. The time between the hire date and the time an employee is fully adjusted equates to a considerable amount of loss to most firms. After relocation expenses, training, and other accepted costs, some companies don't recover their hiring expense or consider an employee an asset until a year or two after the hire date. Therefore, minimizing the effect of socialization has a tangible benefit to the bottom line as well as the value of the individual employee.
Optimizing the team's performance is critical to gain full participation by all members and make the best use of the human resources in the team environment. Ways to do this include reflection, actively asking questions, and discussing errors. It's also a great benefit if team members share the belief that open communication should not be dampened and clear team goals should be compelling.
Another natural element to teams that starts as a challenge until mastered is conflict resolution. Every team has differing personalities; therefore, every team has conflict. Dealing effectively with conflict is where some teams falter while others become effective.
Unless the organization has a monopolistic hold on a segment of the market and no intentions of branching out into uncharted waters, the individuals who lead the organization will be continually tasked with formulating strategy to address the competitive nature of their market. The risks associated with a failure to do this are enormous. Conversely, the benefits associated with altering organizational behavior in an effort to remain competitive are immense.
A company needs to re-evaluate how it approaches a multitude of behaviors, the cumulative effect of which separates world-class enterprises from those destined for failure. As W Edwards Deming stated more than 15 years ago in his first of 14 points for management, "Create a constancy of purpose toward improvement of product and service with the aim to become competitive and to stay in business, and to provide jobs."
For further reading
Bernick, C., "When Your Culture Needs a Makeover," Harvard Business Review, June 2001.
Deming, W, Out of the Crisis, M.LT., Center for Advanced Engineering Study, 1982.
Imai, M., Kaizen: The Key to Japan's Competitive Success, McGraw-Hill, 1986.
Kotter, J., Leading Change, Harvard Business School Press, 1996.
Monden, Y., Toyota Production System: An Integrated Approach to Just-in-Time, Engineering and Management Press, Institute of Industrial Engineers, 1998.
Swenson, C. (Ed.), Tools for Teams: Building Effective Teams in the Workplace, Pearson Custom Publishing, 2001.
Bill Ahls, CRIM, is a product engineer with Solectron Corp., Charlotte, N.C. He holds a bachelor's degree in industrial engineering from the University of Tennessee and is currently working toward an M.B.A. in technology management from the University of Phoenix. Ahls is a member of IIE and APICS.…