Changing Culture of Empowerment

8/18/2019 Changing Culture of Empowerment

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Executive DevelopmentThe leadership challenge of changing to a culture of empowerment

W. Alan Randolph

Ar tic le information:To cite this document:W. Alan Randolph, (1995),"The leadership challenge of changing to a culture of empowerment", Executive Development,Vol. 8 Iss 1 pp. 5 - 8Permanent link to this document:http://dx.doi.org/10.1108/09533239510079482

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5THE LEADERSHI P CHALLENGE OF CHANGI NG TO A CULTURE OF EM POWERM ENT

The need to change the way organizations conduct theirbusiness has never been greater than it is today. Withglobalization of the business and political worlds,increasingly rapid changes in the technologies of work,changing demographics of the workforce and customers,organizations are finding that they must continuallychange their ways of operating to keep up with theirinternal and external worlds. The previous management

model of “the manager in control and the employee beingcontrolled” just does not work today. Instead, top-levelmanagers are finding it necessary to empower theworkforce with the opportunity to achieve high quality,low cost, flexibility, and excellent customer service. Suchshifts in management philosophy create the need formassive changes in all aspects of an organization, andthese large-scale change efforts are at best difficult.

I will try to shed some light on the leadership challenge of changing to a culture of empowerment, utilizing theexperiences of the East Bay Region of Pacific Gas &

Electric (PG&E) in Oakland, California as a focal point.Since the mid-1980s, PG&E has been dealing with amonstrous need for change and has been in the process of moving to a culture of empowerment.

This article is organized around three issues:

(1) Environmental forces creating the need for changeat PG&E.

(2) Corporate decisions that enhanced the need forchange in the regions.

(3) The process of change and key learnings from theexperience at PG&E’s East Bay Region.

Envi r onm enta l f orces for change at PG& EThe past: a regulated monopoly

The world in which PG&E operated prior to 1978 wasvastly different from the world in which it operates today.Prior to passage of the Public Utility Regulatory PoliciesAct of 1978 (PURPA), public utilities such as PG&Eoperated as regulated monopolies. Rather than being

concerned with efficiencies, the focus was primarily onsafety and reliability to the customer. If costs went up, theutility asked the Public Service Commission for a rateincrease to ensure a set return on the investment of stockholders. There was little downside risk for investorsin the long-run, even though the upside potential waslimited.

The situation was also quite secure for employees. Thosewho performed at a modest level and who were loyal tothe company were virtually assured of lifetimeemployment. Indeed, many employees with utilities

worked their entire career with the same company. PG&Ewas a very well-run company in that stable environment.

The present: a world of competi ti on

With the passage of PURPA in 1978 and the NationalEnergy Policy Act in 1992, the nature of businesschanged radically for PG&E. Both acts require utilities tobuy electricity generated by independent powerproducers at a reasonable price. Smaller companies canenter the utility business and can usually operate at lowercosts than the large utilities. The environment for PG&Ehas thus become more competitive, complex, anddynamic, creating the need for a more flexibleorganization and more responsible and empoweredemployees.

Executive Development, Vol. 8 No. 1, 1995, pp. 5-8 © MCB University PressLimited, 0953-3230

I wish to thank the people of the East Bay Region of PG&E forteaching me so much about empowerment.

The l ead ershi p cha l l enge ofcha ngi ng t o a cu l t ur e o fempowermen tW. Alan Randolph

The emp ower m ent pr ocess can eas i ly resul t in a lead ership va cuum whi ch, par ad oxica l l y , becom es anasset


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Decis ions f ro m the corp ora te o f f i ces of PG& EDownsizing

In response to the need for greater flexibility andempowerment, many management jobs at PG&E wereeliminated, primarily through a programme of earlyretirement. This downsizing was coupled with ade-emphasis on the utilization of corporate staff innormal operations. Instead, efforts focused on pushingresponsibility and authority for decisions and analysis of problems out to the regions and as much as possible tothe field divisions, which have direct contact withcustomers. These realignments have resulted in dramaticchanges in the jobs of line managers. The managers are:

closer to the decisions that affect operations;

less burdened by complex communication andcontrol systems; and

more focused on the delivery of service to thecustomer.

More challenging jobs

While these changes in the job of line managers soundexciting, there is, however, another side to them. The new

job of manager requires a higher level of expertise in bothtechnical and people skills. The problem is that throughthe downsizing at PG&E many of the most experiencedmanagers took early retirement. And because of the past,

more controlling and paternalistic form of management,those who remained have sometimes not been wellprepared for the new job of manager. Managers are nowasked to decide what needs to be done to serve thecustomer reliably and also make a profit. At the sametime, responsibility for quality of service and cost controlhas been relocated from the top of the organizationalpyramid to the point of service delivery – the employee.Hence, managers have also been asked to focus on thedevelopment and empowerment of a workforce that haslearned, over many years and generations, to:

play it safe;

do what you are told; and

do not take risks.

Personnel changes and training

The human resource challenge created by these changeshas been addressed head-on by redesigning performanceevaluation systems to be consistent with strategic planswhich focus on customer service, profits, and employeedevelopment. PG&E has provided training for itsmanagers in both customer service and leadership skills.Managers have been taught how to set goals with their

people which focus on measurable results in customerservice and cost control.

The managers have also been taught to assess people interms of their present competence and commitment tocarry out a specific job and then provide the leadership to

both get results and develop the employee. Theunderlying leadership challenge is for the manager andemployee to work together to reach the point where theemployee has both the competence and commitment to dothe job with very little direction and support from themanager. When this point is reached, the employee cantruly be empowered.

After several years of effort along these various fronts,efficiencies have risen with reduced personnel. Customersatisfaction has risen steadily from 88 per cent to 98 percent. Employee suggestions have lead to increasedproductivity at lower costs. And union grievances aredown sharply. Empowerment is taking hold at PG&E andthe results are exciting.

The pr ocess of change and the l earn i ngs atPG&EThe vision

Any organizational change to empowerment, to have achance at being successful, must include a vision of where the company wants to go. PG&E has provided thisvision. In December 1981, a new “Statement of keycorporate goals and direction” was issued. Thisdocument laid out the company’s mission and a set of

nine goals designed to lead to achievement of the mission.Over the next three years, a study of PG&E’sorganization was conducted, and in February 1984, “Areport to “PG&Eers” was issued. This report explained anew organization design and the focus on customerresponsiveness and cost control. A fact sheet “Divisionorganization study” summarized the changes and statedfive key aspects of the vision for this new divisionaldesign:

(1) Permit timely decision making.

(2) Ensure that as many decisions as possible

regarding service are made by those closest to thecommunities and customers we serve.

(3) Improve communication within the company.

(4) Reduce bureaucratic structure within thecompany which hinders efforts to become moreefficient and productive.

(5) Provide the flexibility to enhance and enrich manyemployee career opportunities.

But a key learning at PG&E has been that it is one thingto state a big-picture vision (which is not easy), and it is

yet another to translate and implement it at all levels of the organization (create the little pictures). Questionssuch as the following must be answered: “What does thisvision mean for a lineman at PG&E?” or “How do thedivisions really provide better service to the customers?”

There must be strategies for change that complement the

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goals and vision, and these strategies must help theorganization in:

pattern breaking which frees the system from itsold ways;

experimenting to generate new behaviours thatare consistent with the new vision; and

harmonizing the movement of employees towardsthe new vision.

The training

An analysis of the new vision for PG&E reveals thatmuch more is expected of the managers in the newculture:

make decisions they have never before had tomake;

perform analyses they have never before had toconduct;

deal more closely with the customer; and

become developers of their people.

The problem at PG&E has been that most of themanagers:

had a low tolerance for ambiguity;

were hesitant to make critical decisions since theyhad little experience with such responsibility;

were fearful of accountability (given thepaternalistic history of PG&E); and

were locked into old patterns of behaviour.

Another key learning is that there was a clear need forleadership training to aid these managers in the changeprocess. Approximately 400 management andsupervisory personnel, beginning with seniormanagement in the East Bay Region, went through a two-day training programme designed to teach the skills of goal setting, leadership, and feedback. At the end of theprogramme, participants were asked to set application

goals and to work with the leadership concepts back-on-the-job. After a six-week back-on-the-job period, a one-day follow-up was held focusing on their experiences andtheir use of various bases of power.

An overall learning expressed by the managers andsupervisors was that most of them had a tendency tooperate almost exclusively using a supportive leadershipstyle – high on encouragement and low on guidance. Thiswas a style which had been compatible with the oldculture and situation at PG&E and many thought itappropriate for an empowered workforce. But the

movement towards the new culture had created asituation where most of the employees had only somecompetence for an empowered job and were low incommitment, because of concerns of facing a new worldof empowerment and responsibility. To traversesuccessfully the change to the new culture at PG&E, the

employees needed to learn many new ideas, and theyneeded to learn to be self-confident in a world of accountability and responsibility. In order to do this, theyinitially needed direction and support from theirmanagers so they could begin to develop the highcompetence and high commitment levels whereempowerment could occur.

The phases of change

Moving to this world of empowerment was a majorcultural change at PG&E, as it is in most organizations.Initially, people had to disengage from the old culture.

They had to give up their identity as defined in the oldPG&E system. For example, in the past the regional staff were viewed as the experts and the division staff weremerely the people out in the field. In the new culture, thedivision people are where the action is – close to thecustomer and in control of costs – whereas the regionalstaff are there to help if needed. Such redefinition of identities does not come easy. At PG&E, the regional staff grieved about the loss of their prestige, while the divisionpeople were overwhelmed with responsibility andaccountability, creating a state of disenchantment.

This state led to the second phase of change, which couldprobably best be labelled the “free-fall” phase, becausenobody really seemed to know what to do next, includingtop management. People felt disoriented. They felt asense of disintegration of everything they had known andhad nothing new to hang on to yet. The only positive lightwas in the new vision, which was continually reinforcedto everyone.

The third phase of change overlapped this “free-fall”stage, as the new direction began to take hold, but it wasa slow process. At PG&E, this new direction stage beganwhen people started to understand the new corporatevision. Still, the problem remained for employees and

managers to translate that vision into terms that madesense at the region and division levels, and indeed, at thelevel of each and every employee and manager – not aneasy task, and clearly one that called for solid leadershipthroughout the hierarchy.

The leadership vacuum

One of the most important learnings in this analysis of PG&E is that organizations must continually be analysedas a whole for their competence and commitment to takethe next steps needed to keep the change toempowerment moving. There are many losses which can

inhibit the ability and motivation to make changes.Indeed, the loss of competence-based identity, such asexperienced by the division people who were asked totake on new responsibilities for which they were notprepared, was quite profound. The loss of previousorganizational linkages and the loss of meaning as people

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disengage from the old world and search for how they fitinto the new can create a sense of loss of a future – that is,“the new organization may not be a place for someonewith my skills”. At PG&E, the large number of earlyretirements probably reflects people dealing with theselosses in the best way they knew.

What was called for at this point of low organizationalcompetence and commitment for empowerment wasleadership that provided both strong direction andsupport. The basic problem in PG&E though, and inother organizations that I have witnessed undergoingchange to empowerment, was that the very managerswho had to lead this transition were not always sure of

the guidance to give or the best way to provide thesupport that was needed. They, too, were products of theold PG&E system. Hence, a leadership vacuumdeveloped.

The paradox is that this leadership vacuum has actuallyhelped PG&E to make progress in the culturaltransformation to employee empowerment, largelybecause the managers have understood that the journeyis long and have accepted that they do not need to possessall the answers. Such a situation tends to draw employeesand managers together as they work to operationalize the

new culture of empowerment. The leadership vacuumhas lead to improved communications in the East BayRegion and a sense of shared learning. Influence based onexpertise, relationships, and respect has become more thenorm than influence based on position, certainly a desiredresult in an empowered organization.

SummaryIn reflecting on the experiences of the East Bay Region

of PG&E and its efforts to deal with this challenge of changing to a culture of empowerment, let mesummarize several key learnings that may be helpful toother organizations undergoing such change efforts:

For movement to empowerment to occur, peoplemust understand both the little and big picturesof the empowerment vision.

Leadership skills training that expands the rangeof styles leaders use is a must for developing aculture of empowerment – a supportiveleadership style is not always what is needed.

The change to empowerment is long and involvesdisengagement from the old culture plus “freefall” before empowerment begins to take hold.

Managing the change to empowerment calls forcontinual assessment of the organization’scompetence and commitment for the new cultureand application of appropriate leadership styles.

The journey to empowerment will almostcertainly involve traversing a leadership vacuum,that is a positive, though uncomfortable, force formoving to empowerment.

Many changes are already evident as the people of EastBay Region work together to create a culture of empowerment, but the job is ongoing. Indeed, whenevera change to empowerment is undertaken, it is importantfor people to learn from and enjoy the process, becausethe journey will never be completely finished.

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W. Alan Randolph is Professor of Management and Director of Leadership and International Programs in the MerrickSchool of Business, University of Baltimore, Maryland, USA. He is co-author with Ken Blanchard and John Carlos of a newbook titledEmpowerment T akes More than a Minute .


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This article has been cited by:

1. Steven H. Appelbaum, Robin Karasek, Francis Lapointe, Kim Quelch. 2015. Employee empowerment: factors affecting theconsequent success or failure (Part II). Industrial and Commercial Training 47:1, 23-30. [ Abstract] [Full Text] [PDF]

2. Steven H. Appelbaum, Robin Karasek, Françis Lapointe, Kim Quelch. 2014. Employee empowerment: factors affecting theconsequent success or failure – Part I. Industrial and Commercial Training 46:7, 379-386. [ Abstract] [Full Text] [PDF]

3. Manish Kumar, Shailendra Singh. 2012. Roles of perceived exchange quality and organisational identification in predicting turnover intention. IIMB Management Review 24, 5-15. [CrossRef ]

4. Akiko Ueno. 2009. Which management practices are contributory to service quality?. International Journal of Quality & Reliability Management 26:8, 761-777. [ Abstract] [Full Text] [PDF]

5. Akiko Ueno. 2008. Is empowerment really a contributory factor to service quality?. The Service Industries Journal 28,1321-1337. [CrossRef ]

6. Julia K. Schneider, Michael Dowling, Sumita Raghuram. 2007. Empowerment as a success factor in start-up companies.Review of Managerial Science 1, 167-184. [CrossRef ]

7. Andrea D. Ellinger, Alexander E. Ellinger, Scott B. Keller. 2004. Supervisory coaching behavior, employee satisfaction, andwarehouse employee performance: A dyadic perspective in the distribution industry. Human Resource Development Quarterly14:10.1002/hrdq.v14:4, 435-458. [CrossRef ]
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Changing Culture of Empowerment