Are Self-directed Teams Right for Your Company

December 1, 1993
Employees at the San Diego Zoo used to have very narrow and very well-defined job responsibilities. Keepers did the keeping and gardeners did the gardening. Employees in construction and maintenance constructed and maintained. This system worked as long as there were clearly defined boundaries between animal exhibits, public areas and horticultural displays.

But in 1988, the zoo began to develop bioclimatic zones, in which plants and animals are grouped together in cageless enclosures that resemble their native habitats. Instead of viewing the exhibits from afar, visitors now walk into and become part of these zones in what the zoo calls an immersion experience. Bioclimatic zones such as the humid, 3.5 acre Tiger River exhibit not only provide a healthier environment for plants and animals, they provide a better way to educate visitors about conservation issues and increase their enjoyment of the zoo experience.

Because the zones themselves are more interdependent—plants are there to be eaten, not just admired—the employees who manage them must work more closely together. This is why, instead of maintaining the new exhibits with employees from traditional functional areas, the zoo has assigned self-directed, multidisciplinary teams to manage the bioclimatic zones.

Tiger River, for example, is run by a seven-member team of mammal and bird specialists, horticulturalists and maintenance and construction workers. The 5-year-old team tracks its own budget, and members are jointly responsible for the display. "Before, the gardener may not have cared about trash on the ground because that was the groundskeeper's job," explains David Glines, who is in charge of training and development at the zoo. But today, the horticulturalist may spend a morning cleaning the paths, helping the birdkeeper chase down some geese and answering questions from curious visitors—without even looking at the plants.

Tiger River team members received extensive cross training, and together, they analyzed the work required, set goals for themselves and gradually built a sense of mutual responsibility and ownership for the exhibit.

Glines says that the move to self-directed teams was a "painful, bumpy road," but that the process is paying off. Zoo attendance is up, despite the depressed Southern California economy. Workers' compensation claims are down, and employees report a much higher quality of work life. As one team member explained, "Until I was cross trained and became responsible for a whole area, I had little regard for other job classifications. Tiger River has taught me to respect and help others for the benefit of the entire Zoological Society. This, in turn, gave me pride, which enriched my work."

Improved performance is increasing the use of self-directed teams.
Self-directed teams like those implemented at the San Diego Zoo are getting a lot of attention these days. In a survey conducted by Development Dimensions International, a human resources consulting firm in Pittsburgh, 27% of respondents reported that their organizations currently use self-directed teams, and half of those individuals predicted that the majority of their work force will be organized in teams within the next five years. This interest in self-directed teams is nothing short of phenomenal for such a new concept. The same DDI survey revealed that most respondents have two years' or less experience with self-directed teams. Most surprising, however, is that HR led the move to self-directed teams in only a tiny minority of the organizations surveyed. This finding is significant because the successful implementation of self-directed teams often involves several HR issues, including compensation, labor relations and job descriptions.

Regardless of who is leading the drive to adopt self-directed teams, why are they becoming so popular? "Because they produce extra performance results," explains Jon Katzenbach of McKinsey & Co. Inc. in New York City and author of The Wisdom of Teams. As corporate executives and small-business owners alike embrace the total quality movement, they're finding that self-directed teams represent potentially one of the most productive forms of employee involvement to ever come down the pike. As Katzenbach says, there is virtually no environment in which teams—if done right—can't have a measurable impact on the performance of an organization. How many management initiatives can you say that about?

Yet self-directed teams require an enormous amount of thought and planning, and no organization should implement them without first understanding what self-directed teams are—and aren't.

Self-directed teams aren't teams of co-workers from the same functional department who join together to foster team spirit. Self-directed teams also aren't cross-functional groups of employees who come together to solve a particular problem and then return to their regular jobs. Neither of these two approaches represents self-direction because they don't change the way the organization is structured and the way work gets done.

"Many people use the label 'self-directed teams' when it isn't appropriate," explains Barbara Kelly, an organizational development consultant in Kinnelon, New Jersey. "The move to self-directed teams requires changing not only the attitudes of people, it requires changing the organizational structure, information patterns, rewards and compensation systems and the whole concept of career paths. With self-directed teams, employees require a lot of training in team skills. They need cross training in different functions, and they require much greater business training so that they can understand the impact of their actions on the organization."

Furthermore, to create an effective self-directed team, employees on the team must be interdependent and the team must be established for tangible business reasons. Unfortunately, a lot of teams are established because of what some experts call the country club effect. "This is where one vice president finds out at the country club that his cohort has established self-directed teams, and therefore, he has to have them too," says DDI project manager Jeanne Wilson. But teams aren't an end in themselves; they're a means to an end. More appropriate and effective reasons to establish self-directed teams are to improve quality, reduce cycle time and adapt more quickly to the marketplace.

In the skin-care products division of Warner Lambert's Consumer Health Products Group, self-directed teams were established in an effort to speed new- product development and improve communication and decision making among managers. The company, based in Morris Plains, New Jersey, produces the Lubriderm brand of lotions.

Warner Lambert's decision to implement teams came after a lengthy design process in which a cross-section of management-level employees analyzed how work was done at the company. After developing a 30-foot-long flow chart that listed each activity undertaken on the journey from product development to sales, the design team pinpointed inefficiencies in the current system and found ways that employees and technology could be used more effectively. This process, known as socio-technical systems design, is used frequently by companies that are looking for ways to become high-performance organizations.

What the managers at Warner Lambert discovered was that skin-care products had been following a cumbersome design process in which a new product went from an idea in the marketing department, to research and development, on to manufacturing for a prototype, back to marketing and finance to see if the product could be made and sold at a profit, back to R & D and manufacturing, and then on to sales and distribution.

The continual back-and-forth process slowed product development considerably, says Fred Cheyunski, director of organization design and development. A better approach, the design team concluded, would be to reorganize the work into teams that contained management-level people from the different disciplines involved in the product development cycle. "Rather than handing the work off to each other at different stages, decisions now are made jointly and much more quickly," Cheyunski says.

Self-directed teams often are a result of reengineering.
The approach taken by Warner Lambert forms the essence of the reengineering concept promoted in Michael Hammer and James Champy's highly regarded book, Reengineering the Corporation. Simply put, reengineering is the single best reason for reorganizing a workplace into self-directed teams.

Hammer and Champy define reengineering as:

fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed. [Reengineering creates a new world of work in which] jobs evolve from narrow and task-oriented to multidimensional. People who once did as they were in-structed now make choices and decisions on their own... work units change—from functional departments to process teams... and people's role change—from controlled to empowered.

Teams performing process-oriented work are inevitably self-directing. Within the boundaries of their obligations to the organization—agreed-upon deadlines, productivity goals, quality standards, and so on—they decide how and when work is going to be done. If they have to wait for supervisory direction of their tasks, they aren't process teams.

Though Rochester, New York-based Kodak didn't call it reengineering, the company used this process when it instituted Team Zebra, a term that refers to the 1,500 employees involved in a massive reorganization of the company's black-and-white film products division.

In 1989, faced with declining profits, soaring costs, late deliveries, low morale, environmental problems and a dearth of new products, managers realized that to survive, the division would have to undergo a major structural change. The company began by studying the concept of a high-performance workplace. "One of the tenets of high performance is that you must perfect a smooth flow of materials through the manufacturing operation," says Stephen Frangos, executive consultant for Zenger Miller's Achieve International Division in Rochester, New York, and former manager of Kodak's black-and-white film manufacturing division. "This word 'flow' kept cropping up again and again, and we decided that to streamline the manufacturing process and boost quality, we would have to organize our work according to natural material flows."

Today, Kodak Park, where black-and-white film manufacturing is located, is organized into six flows—two for photographic paper products and four for film products—with hundreds of teams servicing those flows and addressing customer needs. The majority of teams have between six and 12 employees. "We went from a functional organization into a flow organization that was organized by product and process instead of by function."

Frangos says that all flow teams are self-directed, and that once team members understand the problems they are addressing and what the goals are, they have a huge amount of self direction in terms of how they will tackle the problem. "We went from an unempowered organization to an empowered one, thanks in large part to the team structure," he says. As is the case with other companies that are successful in implementing self-directed teams, Kodak didn't have a deliberate strategy to use teams. Instead, the company changed the way work was accomplished and teams were the result.

What has Team Zebra accomplished? A lot. The first two years after the reorganization, the division was the strongest productivity gainer in the company. Employees created about $40 million in cost reductions while producing the same or more products. They lowered inventory levels by $50 million, and sped up work processes—production time on one product was reduced from 42 to 20 days. Quality is up and morale in the division is near the top of the company.

The implementation of self-directed teams should involve HR.
The majority of organizations that make the move to self-directed teams are looking for quality improvement gains like those experienced at Kodak. In fact, the DDI survey revealed that 38% of respondents were using self-directed teams for the express purpose of boosting the quality of their services or products. Twenty-two percent of respondents are using teams to create productivity gains, and 17% want to reduce operating costs. Although improved morale and job satisfaction often are an end result of team development, only 12% of companies put teams into place for this reason.

Who spearheads the implementation of self-directed teams? According to the same survey, the decision to initiate teams is most often made by either division or upper-level management. Human resources led the move to self-directed teams in only 5% of the organizations. Yet management consultants agree that while upper management support of self-directed teams is crucial to their success, so is involvement by the human resources department.

"I think it's a crime that the HR community isn't taking a more active role in leading this effort," Wilson says, "especially when you consider the implications of self-directed teams on compensation, job descriptions, training and development, labor relations, and other HR issues."

Silicon Graphics Inc. in Mountain View, California, is a prime example of what can happen when HR isn't involved from the inception of self-directed teams. The decision to implement self-directed teams in the customer- support division was driven by the business objectives of decentralization, bringing the business closer to the customer and exceeding customer expectations. As Debbie Tenenbaum, HR representative explains, "This was not an HR decision, it was business-based."

In January 1992, the company piloted the team concept by establishing three teams of five to seven employees each. These manufacturing teams were organized around work involving particular product components (the company makes visual processing systems), and team members were cross trained to do each other's jobs. Six months into the pilot it became apparent that human resources support systems should have been in place since the beginning of the effort. It wasn't enough for human resources to develop these systems while the team was developing.

"As we implemented self-directed teams, we learned that teams are a systems approach to an organization and that there needs to be support in place through the performance evaluation, recognition, communication and training systems," Tenenbaum says. "Teams change the whole dynamic of an organization, and you need a lot of support tools—not only for the business as a whole but for the teams as well. Team members need to know how to work together and managers have to learn how to work in a team environment. If we were to do this over again, we would have the HR infrastructure in place at the front end, and we would have the tools available to support and help the teams and their managers."

But in addition to analyzing and restructuring organizational systems, such as compensation and performance management, and providing team members and their managers with skills training, HR has a crucial role to play even before teams are implemented: educating management about the benefits of self-directed teams, as well as the costs, risks and limitations. This might involve arranging site visits to similar organizations that already have teams, bringing in a successful team to speak to the key stakeholders in the organization, or bringing in consultants to discuss the team development process.

"No matter what kind of company it is, the decision to implement self-directed teams will be based on its culture and its business objectives."

At Union Pacific Railroad in Omaha, Nebraska, the decision to reorganize into self-directed teams is being led from the middle of the organization, and the company currently is piloting self-directed teams in two locations. A representative from HR collaborates with the team that's overseeing the pilot project, but the company made a conscious decision not to have HR lead the effort. Why? "We wanted to get people on the line to work through the issues related to team implementation," explains Eric Butler, director of asset and operations analysis.

Yet, while HR may not be out front leading the effort, Charley Eisele, Union Pacific's vice president of HR, is playing a crucial background role as an information conduit between team leaders and the CEO. Butler says Eisele took the responsibility of presenting research and explaining the bottom-line benefits of teams to the CEO. This involved introducing him to other executives who've had success with teams and explaining how self-directed teams differ from the quality-improvement teams that already were in place at Union Pacific. Butler says that Eisele orchestrated all communication between the teams and upper management.

Involving unions from the beginning can help self-directed teams succeed.
Another important HR role in the early stages of team implementation is to work with union leaders. "Unions can be a tremendous help in the move to teams and in the cases in which they haven't been helpful it is because they haven't been included from the start of the process," explains Wilson. "The minute you start thinking about self-directed teams you should include union leadership."

At Union Pacific, there's a union advisor on every team who offers input, insight and guidance, Butler says. "The local union chair at each of our sites will assist in and drive the team design process at those sites. We wouldn't try this without them," he says.

Still, teams can make unions nervous. For example, at the San Diego Zoo, where about 75% of the staff is represented by Teamsters Local 481, the union is concerned about the zoo's reorganization. Because job classifications are an important part of union contracts, converting to self-directed teams can present union members with an unattractive job structure. "We have 97 different job classifications at the zoo, and the team concept tends to make everyone into a generic worker," explains Tom Miller, a union representative. "I'm not sure that's good."

For unionized companies that are considering the move to self-directed teams, Wilson has this advice: "Tackle the whole investigation of self-directed teams in partnership with the union. Many companies have found it effective to visit other unionized organizations that have implemented self-directed teams and have their union leaders talk to other union leaders. With teams, there's so much potential growth for union membership—greater opportunities for compensation, increased job security and more interesting jobs—that teams are a natural fit with union needs." Because of HR's role in labor relations, it makes sense that HR lead this partnership effort.

Even with all the good reasons for HR to be involved in a team implementation, some companies may decide that the function doesn't have a role to play; that if HR were to lead the effort it would become just another flavor of the month. Such was the case at Chevron USA's Gulf of Mexico Business Unit based in New Orleans.

Four years ago, the company reorganized into cross-functional groups of employees called field management teams. "There were empires and politics surrounding the functional areas: petroleum engineering, facilities engineering, development geology and the support staff," explains Robert Tilgham, senior petroleum engineer and quality improvement advisor. "We wanted people to collaborate more, to help all the functional areas understand how their roles are aligned with the overall organizational goals."

But in making the move to teams, the company made a conscious decision that HR wouldn't be involved in the process, explains Jerry Katz, manager of HR. This was because the company wanted to force the field management teams to truly become self-managing. If the teams need advice on human resources issues, such as staffing or performance management, human resources provides it by acting as an internal consultant. "But we are highly decentralized. Issues that pertain to people in this organization are being pushed down the line," Katz says.

Clearly, no matter what kind of company you're in, the decision to implement self-directed teams will be based on the company's culture and business objectives. Warner Lambert wanted to speed new-product development. The San Diego Zoo wanted to increase guest satisfaction. And Kodak was working to turn around an ailing business unit. And as the experiences of these companies indicate, teams can work in any environment.

"The misconception is that self-directed teams only work in manufacturing environments," Wilson says. "But service organizations, such as insurance companies and banks, are similar to white-collar factories. Instead of a product being passed down an assembly line, customers get passed from department to department." By reorganizing into teams, service businesses can go a long way toward increasing customer satisfaction.

Naturally, there will be differences in team structure depending on the industry involved. Teams in a toy company, for example, may work on a new product for six to 18 months, whereas in a pharmaceutical firm, teams may be involved in new-product development for eight years. But in the end, the ways teams are formed—if they're formed at all—will depend on the strategic business needs that brought teams together in the first place. And if teams are working, you'll know it. As one member of the zoo's Tiger River team explained, "I think the difference in this exhibit is obvious. Tiger River immerses the visitor in a quality exhibit in which animals, employees and guests are No. 1."

Personnel Journal, December 1993, Vol. 72, No.12 pp. 76-84.