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CHAPTER 8: MOTIVATION AND EMPOWERMENT 245
as capable and influential, and recognize the impact their work has
on customers, other stakeholders, and the organization’s success. 62
Understanding the connection between one’s day-to-day activities and the
overall vision for the organization gives people a sense of direction, an
idea of what their jobs mean. It enables employees to fit their actions to
the vision and have an active influence on the outcome of their work. 63
5. Employees are rewarded based on company performance. Studies have
revealed the important role of fair reward and recognition systems in
supporting empowerment. By affirming that employees are progressing
toward goals, rewards help to keep motivation high. Leaders are careful
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to examine and redesign reward systems to support empowerment and
teamwork. Two ways in which organizations can financially reward
employees based on company performance are through profit sharing and
employee stock ownership plans (ESOPs). Through an ESOP at Reflexite,
for example, three-quarters of the equity of the company is in the hands
of employees, including managers, professional staff members, and factory
65
floor workers. At W. L. Gore and Associates, makers of Gore-Tex,
compensation takes three forms—salary, profit sharing, and an associate
66
stock ownership program. Unlike traditional carrot-and-stick approaches,
these rewards focus on the performance of the group rather than individuals.
As Joe Cabral, CEO of Chatsworth Products Inc., says, an ESOP “gets
everyone pulling in the same direction. Everybody wants the company to do
the best it possibly can.” Furthermore, rewards are just one component of
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empowerment rather than the sole basis of motivation.
Empowerment Applications
Many of today’s organizations are implementing empowerment programs, but
they are empowering workers to varying degrees. At some companies, empower-
ment means encouraging employee ideas, whereas managers retain fi nal authority
for decisions; at others it means giving frontline workers almost complete power
to make decisions and exercise initiative and imagination. 68
Current methods of empowering workers fall along a continuum as shown in
Exhibit 8.7. The continuum runs from a situation where frontline workers
have no discretion (such as on a traditional assembly line) to full
empowerment where workers even participate in formulating orga- Action Memo
nizational strategy. An example of full empowerment is when self- Have you felt empowered in a job you
directed teams are given the power to hire, discipline, and dismiss have held? Take the quiz in Leader’s Self-
team members and to set compensation rates. Few organizations Insight 8.3 on page 247 to evaluate your
have moved to this level of empowerment. One that has is Semco, a empowerment experience and compare it to
$160 million South American company involved in manufacturing, the experience of other students.
services, and e-business. Majority owner Ricardo Semler believes that
people will act in their own, and by extension, the organization’s best
interests if they’re given complete freedom. Semco allows its 1,300 em-
ployees to choose what they do, where and when they do it, and even how they get

paid for it. Semco has remained highly successful and profitable under a system of
complete empowerment for more than 20 years. 69

Empowerment programs can be difficult to implement in established organi-
zations because they destroy hierarchies and upset the familiar balance of power.
A study of Fortune 1000 companies found that the empowerment practices that
have diffused most widely are those that redistribute power and authority the
least, for example, quality circles or job enrichment. Managers can keep decision