Posts Tagged employee incentives
Economic recovery depends on restoring middle class workers to the prominence they once had. Many large firms have moved operations overseas leaving holes in the market both from the absence of middle class jobs and tax revenues lost from large companies that moved overseas. The logical choice to fill these holes comes from small business. Small businesses quickly adapt to market voids and offer the creativity to fill holes, but small businesses grow into larger firms and lose their flexibility. Schumpeter (1975) coined the term “creative destruction” to describe when large firms falter and lose their adaptability to create. A blurred line exists about when “creative destruction” happens, but this condition is a normal part of the business cycle.
Most of the goods and services produced in the United States up to the mid-19th century came from small business. By 1914, firms with 500 or more employees accounted for about a third of the industrial workers with another third working in firms with 100 to 499 workers. Smaller firms developed market niches or supplied larger companies with 500 or more employees to compete in the markets until the mid-20th century (“The Limits of Small Business,” 1992).
From 1952 to 1979 the percentage of business receipts from small businesses plummeted from 52% to just 29%, but by the late 1970s and early 1980s the United States experienced a resurgence of small businesses. For example, out of 17 million businesses less than 10,000 firms employed more than 500 workers. By 1986 small firms produced 64% of the 10.5 million new jobs created (“The Limits of Small Business,” 1992). History repeats itself.
The time has come for another resurgence to replace the void left by large firm that have migrated overseas and take the country back to its roots. Small business is in the right place because small business is closest to consumers and has the ability to adapt and create what consumers want and need. The resurgence takes time to gather steam to propel the United States economy out of the recession. Small business entrepreneurs can sense holes in the market and will rebuild what the market has lost to “creative destruction.”
Are you up for the challenge? Learn more.
The Limits of Small Business. (1992). Available from EBSCOhost lkh. (03633276). Retrieved Summer92, from Woodrow Wilson International Center for Scholars http://search.ebscohost.com/login.aspx?direct=true&db=lkh&AN=10129578&site=lrc-plus
Schumpeter, J. A. (Ed.). (1975). Creative destruction from capitalism, socialism and democracy. New York: Harper.
About 10 years ago the owner of Bimba Manufacturing Company located in Monee, Illinois decided to sell 90% of his stock to employees through an employee stock ownership plan (ESOP). The company produced aluminum cylinders and had two classes of employees. These classes included the managers who made policies and workers who obeyed the policies and performed the work. Under the ESOP instead of workers just obeying the orders of the managers, the company formed cross-functional teams to address problems and improve quality. The teams decided to meet regularly with customers to consider their needs and improve working relations (Jones, 2004).
The ESOP plan changed the workforce orientation improving working relations, accentuating excellence, and leading to a high quality products. Each cross-functional team hired its own workers and socialized together creating a cooperative new culture in the company. Employees effectively relearned their jobs by actively listening and interacting with each other instead of focusing on managers and workers. Managers acted more like advisers and workers gained a more cooperative spirit. Because of this organizational change the company increased sales 70% and the workforce grew 59% (Jones, 2004).
Although when first starting a business an owner can design a hierarchical organization for expedience, the firm stands to improve performance by reconsidering the organizational form. In my experience, hierarchical organizations in a small business can stymie the growth of the organization. I have personally experienced the difference and realized the benefits of redesigning the organizational form.
A more nimble team orientation can improve performance and cross-functional communication. The organization can respond better to the companies’ customers and better address their needs. The case of Bimba Manufacturing offers a good lesson in organizational change designed to improve worker and customer relations.
Have you reconsidered the organizational design in your firm? I would like to hear your ideas about changes that can benefit the organizational design in your firm. If you need help I urge you to act now and we can start to help you. Learn more.
Jones, G. R. (2004). Organizational theory, design, and change (4th ed.). Upper Saddle River, NJ: Prentice Hall.
Scholars widely acknowledge entrepreneurs as the engine driving innovation and creativity. In this article I want to examine what facets contribute to a successful setting for driving innovation and creativity.
A vision has to propel the entrepreneur to pursue a cause or solve a problem. The vision often comes from a gap between what consumers want and what is currently available. The entrepreneur must persevere to fill the gap. Overcoming setbacks, frustration, and ambiguity is a critical part of the entrepreneur’s mindset (Quinn, 1985).
An entrepreneur has a long-term mindset to overcome obstacles and keep costs low. This mindset takes risks and obsesses to achieve the end goal. The innovator has to have autonomy to let imagination take over and find workable solutions. Experimenting with new ideas allows the entrepreneur to see what works and what does not (Quinn, 1985).
Breaking accepted rules, challenging authority, confronting risks, and causing conflict are part of the behavior of innovators (Baucus, Norton, Baucus, & Human, 2008). These ingredients are all part of the entrepreneur’s toolbox. A founder values people who can thrive in chaotic environment (Quinn, 1985).
A setting conducive to these attributes avoids excessive rationalism, bureaucracy, and intolerance. Employee incentives should avoid control motivations. A flat organizational structure helps avoid control motivations (Quinn, 1985).
Does your work setting have these characteristics? How can your firm support a setting to foster innovation and creativity? Want to know more? Click here.
Baucus, M. S., Norton, W. I., Jr., Baucus, D. A., & Human, S. E. (2008). Fostering creativity and innovation without encouraging unethical behavior. Journal of Business Ethics, 81(1), 97-115.
Quinn, J. B. (1985). Managing innovation: Controlled chaos. Harvard Business Review, 63(3), 73-84. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=8500002474&site=ehost-live