The Quiet Revolution
Enterprise - Spring 1990 - By Anita MicossiSelf-managed teams - born on the factory floor - are starting to perform remarkable feats in the white-collar world.
What form of work organization can best exploit information technology? That, of course, is the question of the hour, perhaps the age. Few are willing to bank on a specific organizational strategy - after all, it took decades for the Industrial Revolution to achi3eve a felicitous fit between work ways and technology.
But the cross-functional, multi-skilled, self-managed work team is a provocative contender. For years it has been slowly, surely penetrating the factory floor. Today, an estimated 200 teams work the factory floor at large companies such as Boeing, Champion International, Digital Equipment, Ford, and General Electric.
Today, the self-managed team is gaining visibility in the white-collar world - aworldwhere information technology has taken its firmest stand. The 20 or so companies experimenting with white collar teams may, in fact, have an accurate picture of what tomorrow's technology-rich organization will look like.
Ask Jack Cochran what he sees. Cochran is the assistant vice president of customer service for Shenandoah Life Insurance, a $400 million asset Roanoke-based outfit that serves customers in 20 states. He's convinced that self-managed teams offer `'the best marriage between technology and the social systems.
Cochran's conviction is based on experience. Shenandoah's combination of technology and teams vastly improved customer service - typical policy processing time dropped from 27 days to one day - and cut costs simultaneously.
In 1980, after 22 years In c .ata processing at Shenandoah, Cochran was shifted to methods and procedures to help the company improve productivity. The move followed the installation of $2 million worth of new computer hardware. `'We had the technology," recalls Cochran, "and we weren't using it properly."
A five-year search through committees, "attitude" surveys, outside consultants, and quality circles led Shenandoah Life in 1985 to reorganize the entire customer service operation into teams. Now the head of that operation, Cochran moved 33 employees from functional groups to crossfunctional teams organized by geographical regions.
fender the old system, Shenandoah, like many service organizations, used an assembly line approach. When a new policy application came into the mail room, it was sent to one station that screened it for completeness, added a code, and sent it to l a second station that keyed l the information into a computer.
Somebody at a third station assembled the policy and readied it for mailing, a fourth compared the form with policy requirements, a fifth certified it with a registrar's stamp, and so on, in sequence. Each worker had a single specialized task that she repeated day in, day out. Absence at one station could cripple the whole line.
Julie Duffy, for example, worked in the policy holders service group for 12 years before j oining a team. "I was an automatic change | clerk, which means I noti| fied a customer about such things as a premium increase or benefit expiration. I did the same task every day. And even when we automated in 1977, I gave the information I'd collected to a data entry clerk, rather than inputting it into the computer myself."
Under such a system, when a field agent called in with questions or requests from a client (issue a new life certificate, change an address, add a baneficiary), the agent was bounced from station to station.
From the agent's point of view, the organization of ten felt like a faceless bureaucracy in which the right hand had no idea what the left was doing.
In planning the shift to geographical teams, Cochran and his workers identified 144 skills required to handle customer service, from soup to nuts. To maximize the combined skill set of the group, people from each of the old functional units were brought together in teams of six to eight. A "Pay for Knowledge" system was developed to encourage the teams to learn all the customer service functions.
Workers were then trained on how to train each other so that they could back up one another. "In addition to making policy changes," says Julie Duffy, "I've learned how to do a lot of new things, like issuing policies and dealing with banks. I used to own a few narrow tasks. Now I own the customers I serve through the life of their policies.
Agents praise the new system because only one phone call gets answers to all their questions, and those who serve them are a small, consistent group of people they actually get to know.
Teams were also given authority and responsibility for making decisions affecting their own work. They had to figure out how to divide the work, organize work flow, schedule vacations, rate each other's performance, discipline shirkers, select new team members, and put out local fires. Thus, training was provided in the delicate arts of communication and interpersonal confrontation. The new role of the old-line supervisor became facilitator of group interaction.
Finally, the teams were given training in stress management to help weather the change.
Survive- and thrive - they did. Before reorganization, a typical new insurance policy was shuffled through three departments, nine sections, and 32 hands, and took 27 days to process. Today, it goes through one department and three sections, and can take as little as eight hours to process. Worse-case scenerio - where the policy requires underwriting and a medical exam - still takes only half the time it did before.
Most impressive is how the teams, through self-management, have upped productivity. Comparing current operations with the earliest team experiments in 1985, there's been a 38 percent increase in total transaction volume, a 65 percent increase in individual work volume, and a 37 percent decrease in the average service time spent on each policy. At the same time, through attrition and a record companywide downsizing, the teams have been streamlined, decreasing their numbers from 33 to 22, saving Shenandoah $250,000 per year.
However, teams that run themselves and crank computer technology up to full tilt boogie do not spring overnight from a presidential memo. They require careful planning, transitions, and ongoing support systems, including clearly articulated new roles for management and sustained training for workers. The basic premise for planning at I DS, an American Express subsidiary headquartered in Minneapolis, was that those closest to the work must help design how the work is to be done. LikeJack Cochran, Bill Scholz, vice president of the mutual funds operation at $45 billion IDS Financial Services, began by looking around and concluding "Hey, I'm not getting all the benefits from my computers."
So, in early 1988 he asked a design group composed of clerical workers from each of 11 functional units to come up with a plan for how best to organize their jobs, reduce errors, and, hopefully, improve productivity.
They proposed cross-functional teams of 20 to 35 people who manage themselves and are responsible for geographical regions. A trial team was set up to fine-tune this concept. And over the next six months the major logistical planning was done: spatial layouts, automatic routing of incoming phone calls, and redesign of parts of the computer system.
Friday, September 16, 1 988 was packing day for 350 people representing 18 functional units in mutual funds. Over the weekend, movers hauled the workers' belongings to their new group quarters. NIonday morning, teams, formed on the basis of personal choice and skill fit, went into action.
Like Cochran, Scholz saw substantial benefits within a year: "Take any standard of measurement - less errors, fewer people, improved timeliness, lower costs per account - we're doing far superior. And we aren't even half way to our major paybacks." But his biggest gratif~cation comes from seeing, "for the first time in 27 years, goal alignment between top and bottom. Before, a worker's goal was tO simply get his or her task done. Now both management and workers want to see client satisfaction and bottom-line results."
Of course, there were some obstacles. Managers, in particular, weren't keen to hand over their responsibilities. "They think, 'if I give up power, what will I have left?' But we actually have a different kind of power now," says Scholz. "For example, since I don't have to focus so much on internal matters and putting out fires all day long, I have the opportunity to think about the big picture issues more. My role is not as autocratic as before, but I'm no less needed."
The 24 supervisors reorganized along with the 350 workers were assigned to teams in pairs and given the new title "facilitator." Facilitators clarify corporate goals - what the organization is about - so that the team can plan and execute the "how." They stand at the team's boundary, mediating with the outside world and procuring resources. When a team needs to stop work and meet for three hours to hammer out a problem, the facilitator contracts with a neighboring team to pick up the slack. When a team has to hire a person not planned for in the budget, the facilitator finds the money somewhere. When a team decides they want to learn a particular skill, the facilitator brings in a trainer.
Facilitators plan changes (change is now a modus vivendi) so that they'll be minimally disruptive to the team. No longer absolute authority figures, they're more like coaches.
IDS customer service rep Randy Koback describes how he got help in balancing a faltering teammate: "No matter what we did, the person next to me just wasn't achieving good results in learning a new task. So I went to our facilitator for some insight. She gave me tips on how to confront her, which I did."
Some employees wince at having to evaluate and discipline the folks they work with. "I have a good friend," says Koback, `'who just wants to do her data processing and not be bothered what she calls the rest of that 'nonsense'." Bill Scholz concedes that, after the transition to teams, 20 to 25 percent of the workers left because they didn't like the new system or couldn't handle it.
Another common complaint is that the new system eliminates paths to upward mobility within the company. And, despite elaborate pay-for-learning schemes, some workers complain that their wages do not reflect the additional managerial responsibilities they've assumed.
The majority, however, believe, like Randy Koback, that job enrichment, opportunities to learn, and control over one's work far outweigh the negatives. "Nobody," says one teammate, "wants to go back to the way it was."
Training is key in the team process. The mutual funds group at IDS had almost no training budget before reorganization. Today it has eight full-time trainers and a seven-figure annual training budget.
Employees typically spend three to four hours each week expanding their job description, learning the latest computer technology, and sharpening their interpersonal skills. They attend orientation on "sociotechnical systems" (the theory that describes the link between work tools and social setups), seminars on new insurance products, and classes in problemsolving, decision making, and conflict management.
Shenandoah and IDS are by no means the only examples of the blissful gains resulting from the marriage of technology and teams. Virtually every one of the 20 or so organizations experimenting with the match has a success story to tell.
Jo Jacobs directs three of the 10 teams (embracing 300 employees) set up by AT&T American Transtech in 1983 to service the 3 million shareowners of AT&T and the seven baby Bells. Within a threeyear period, says Jacobs, productivity increased by as much as 140 percent. "Workers have more pride in their jobs," she adds, "and customers are much happier" - as evidenced by the fact that after the first five-year service contracts expired, all eight customer companies signed up for another five years.
Ofthe 1,000 employees at AT&T Credit Corp., which provides financing for AT&T equipment, 250 have worked in self-managed teams since 1986. These teams in the general markets division produce the highest financial results in the corporation.
And the Aid Association for Lutherans, the largest fraternal benefit sociery in the U.S., reports that teams have significantly reduced the time to issue new insurance contracts and to pay claims. "If we didn't have teams," says Jerry Laubenstein, VP of insurance product services, "we'd need 1 00 to 150 more people today than we had in 1986 to keep up with the volume of work coming In.
AAL's shift of 500 insurance workers to teams in August I ~x7 was part of a massive organizational downsizing, which also saw the elimination of 40 supervisory jobs. Successes like AAL led Mike Rosow of the Work in America Institute to suggest that "the downsizing occurring across corporate America is leaving voids in decision making that can be filled by self-managed teams."
So why are there so few examples? Rosow, whose nonprofit research group advocates employee involvement, contends that, unlike the manufacturing sector, the American service industry isn't hurting enough - yet. He also points out that management finds the whole concept terribly threatening.
Nevertheless, "after 15 years of experimentation, studies consistently show that team organizations, in the plant, in the office, are 30 percent to 40 percent more productive than traditional organizations," says Rosow. And he is heartened by the fact that while there are only 20 whitecollar cases to talk about currently, there were a mere two or three several years ago.
Shenandoah Life has been so overwhelmed by companies like Proctor & Gamble, Mutual of New York and some 30 others who want to see their experiment in action, that they've taken to charging $l,200 for a tour! And education professors from the University of California at Berkeley recently spent several days at Shenandoah Life, interviewing and observing, in an attempt to determine what kind of college curriculum would best prepare young people for the organization of the future. The quiet revolution is growing.
