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A STUDY OF EMPLOYEE EMPOWERMENT IN SMALL

BUSINESSES
Jo Ann Duffy, Sam Houston State University

Bob Barragan, Sam Houston State University

Brenda Riley, Huntsville/Walker County Chamber of Commerce

ABSTRACT

Sixty-one employees and employers from eight small businesses responded to a survey about aspects
of employee empowerment. A statistical comparison of the two groups showed significant differences
between the employees and employers in five areas affecting empowerment. Areas of empowerment
readiness are identified as well as areas which need to be modified to create an empowerment
environment.

INTRODUCTION

Employee empowerment is loosely defined as giving employees the freedom to do whatever is

necessary to create customer satisfaction. Empowerment has been credited as a primary factor in the
phenomenal success of businesses in Japan and other countries in Europe (Benson, 1991; Byham,
1992; Navran, 1992; Pfeiffer and Dunlap, 1990). Research shows that those organizations that
empower their employees experience increased morale and productivity. While there is recognition
that empowerment has costs (Benson, 1991; Bowen and Lawler, 1992) there is consensus in the
literature that empowerment will enable businesses to thrive in the fiercely competitive marketplace of
the future (Bernstein, 1992; Dudley, 1993; Shannon, 1991).

BACKGROUND

Empowerment has been defined as giving employees: a) power to make decisions, b) rewards based
on how well the organization performs, and c) information about organizational performance and how
to contribute to the organization (Bowen and Lawler, 1992). Byham (1992) adds that recognition of
and respect for the employee adds to the feeling of empowerment. To fully utilize human capital, i.e.
employees, Spice and Gilbert (1991) advise managers to find ways to trust their workers in making
decisions. Dobbs (1993) notes that leaders in empowering organizations are characterized by openness
and receptivity to new ideas as well as by their caring and respectful attitude. He adds that
encouraging innovation in how employees do their jobs and opening access to information that helps
employees understand how to improve their performance creates the environment of empowerment.
Barriers to empowerment include: a lack of managerial commitment to the concept; an unwillingness
to change on the part of the employee and/or employer; a reluctance on the part of employees to take
on the responsibility of making decisions; poor communication between employees and employers;
and the failure to realize that in the short run, performance may dip as empowerment is implemented.
PURPOSE

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Since empowerment is linked to productivity and business success, small business has an interest in
the topic. The intent of this exploratory research was to study empowerment in the context of small
business and to examine to what extent employees and employers were in agreement about conditions
associated with employee empowerment.

METHODOLOGY

The subjects were employees and managers of eight small businesses located in a southwestern town
with a population of less than 30,000. The businesses included a pharmacy, dry cleaner, two
restaurants, a regional clothing retailer, a nonprofit service agency, and a bookstore. Employers and
employees completed similar questionnaires, composed of 11 questions which addressed conditions
associated with empowerment. These questions were not intended to be exhaustive and did not
address the two issues related to empowerment; i.e., reward systems or teams, because the businesses
studied were known to have the traditional salary/wage system with no direct pay/performance link
and because the businesses had too few employees to form teams.

Table 1 contains the employee questions and the codes used in future references to the questions. The
wording on the employer questionnaire varied somewhat to reflect a focus on the employee, e.g. the
REC employer question was "to what degree are employee recommendations listened to/incorporated
into policy?"

1. To what degree are you familiar with the concept of employee empowerment? (FAM) 2. To what
degree are your recommendations listened to/incorporated into policy? (REC) 3. To what degree are
you involved in the company's long range planning? (LRP) 4. To what degree are you allowed to
deviate from standard policy to "satisfy the customer?" (DEV) 5. To what degree do you feel trusted
by your employer? (TRST) 6. To what degree are you clear about what is expected of you? (CLR) 7.
To what degree does management conduct employee meetings to discuss customer service? (MEET)
8. To what degree does management conduct employee training sessions? (TRN) 9. To what degree
does your business satisfy customers? (SAT) 10. To what degree are you committed to making
customer service a part of your daily business strategy? (CMT) 11. To what degree would you like to
become involved in decision making within you company? (INLV)

A seven point Likert scale was used to judge the degree of agreement/disagreement with the
statement. Weak agreement with the statement was associated with a 1, 2, or 3 rating; strong
agreement was associated with a 5, 6, or 7 rating. The questions addressed the degree of
familiarization employees have with empowerment and to what extent they are empowered. In
addition, the questionnaire sought information about the employees' interest in being empowered.

The study included 54 employees and seven employers. This represented more than a 70 percent
response rate. The eight businesses were invited to participate in the study about employee
empowerment by the Small Business Development Center. It is acknowledged that these employers
probably had some knowledge and interest in the topic of employee empowerment. This, however,
does not bias the comparative study of the employers and their employees on the topic of
empowerment.

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RESULTS

Univariate, correlation, and analysis of variance studies of the data were completed. Table 2 contains
the means, range and standard deviations for items from the employee and employer questionnaires.

Table 2: Means and Standard Deviations and Range of Scores for Employees and Employers

EMPLOYEES EMPLOYERS Mean SD Range Mean SD Range

FAM 3.79 1.83 1-7 5.71 1.11 4-7 REC 4.20 1.56 1-7 5.43 0.79 4-6 LRP 3.11 2.01 1-7 4.12 1.95 1-6
DEV 4.54 1.76 1-7 5.86 1.35 4-7 TRST 6.24 1.24 2-7 5.86 1.07 4-7 CLR 6.09 1.23 1-7 5.86 0.90 5-7
MEET 4.23 1.86 1-7 4.00 1.53 1-5 TRN 3.43 2.04 1-7 3.57 1.40 1-5 SAT 5.92 1.03 2-7 4.71 1.50 2-6
CMT 6.24 1.07 2-7 6.86 0.38 6-7 INVL 5.24 1.65 1-7 6.57 0.79 5-7

The (FAM) mean scores (3.79 and 5.71) indicate that while the employees are not very familiar with
the idea of empowerment, the employers are. The employers' score of over 5 indicates that they think
they listen to employee recommendations (REC) and allow employees to deviate from standard policy
to "satisfy the customer" (DEV), but the employees are noncommittal on the issue. Both groups scores
for (LRP) show that employee involvement in long range planning is not strong. Furthermore, the
mean scores for both groups on (TRN and MEET) show that there is no strong commitment to
training sessions or to other meetings for the purpose of discussing customer satisfaction.

However, both groups are extremely committed to providing customer service (CMT); the mean score
for the employees was 6.24 and the mean score for the employers was 6.86 out of 7.00. In the area of
how well the business is satisfying its present customers (SAT), the employees are more positive
(5.92) than the employers (4.71). Employees tend to feel strongly that they are trusted by their
employer (TRST) and are clear about what is expected of them (CLR) the mean scores are 6+.
Employers shared the employees' feelings but to a lesser degree. The employees seem to agree with
the employers' interest in incorporating employee empowerment in their businesses since they
expressed a desire for more involvement in the decision making process of the company.

Table 3 shows only the significant correlations between the employees and employers. The strongest
correlation was between the degree management conducts employee meetings to discuss customer
service and the degree training sessions are conducted (r = .60) Other correlations, while significant,
had no r value above .5. The degree to which employee recommendations are incorporated into policy
was correlated with a number of other items: long range planning activities, meetings, training
sessions. Employee inclusion in long range planning was linked to meetings about customer service
and how involved they were in decision making. How trusted the employees felt was linked to how
clear the employees were about was expected of them. Both trust and clarity about their jobs was
linked to how satisfied they thought the customers were with the service.

Table 3: Pearson Correlations of Combined Employee/Employer Data

FAM REC LRP DEV TRST CLR MEET FAM 1.00 REC .46* 1.00 LRP .22 .44* 1.00
DEV .30 .33 .19 1.00 TRST .12 .09 .20 .20 1.00 CLR .18 .17 .15 .03 .39* 1.00 MEET .18 .42* .38*-

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.05 .16 .03 1.00 TRN .25 .39* .30- .11 .28 .20 .60* SAT -.13 .02 .03- .14 .35* .42 .24
CMT .15 .10 .30 .21 .28 .22 .18 INVL .03 .12 .43 .32 .04- .22 .16 * p < .01 Table 4 contains the
results of the analysis of variance comparing the means of the responses from the employer group and
the employee group. The two groups differ significantly (p < .05) on their responses to five questions.

1) Employers were mom familiar with the concept of employee empowerment than the employees
were.

Table 4: Analysis of Variance Differences by Variable for Employee and Employer Groups F-Value
Prob. FAM 7.32 .009 REC 4.14 .046 LRP 1.65 .204 DEV 5.44 .023 TRST 0.61 .430 CLR 0.24 .628
MEER 0.10 .755 TRN 0.03 .864 SAT 7.66 .088 CMT 2.30 .135 INVL 4.33 .042 p < .05 2) Employers
reported that employee recommendations to management received far more attention than the
employees reported. 3) Employees believed they were given less discretion in deviating from standard
policy than employers thought.

4) Employee judgment about the level of customer satisfaction was significantly higher that the
employer judgment.

5) Finally, employees' strong interest in incorporating empowerment in terms of increased employee

participation in decision making was surpassed by the employers interest in implementing
empowerment in their businesses.

DISCUSSION

The results of this study indicate that this group of small businesses possess a number of conditions
associated with empowerment. However, the study shows that certain changes are needed to ensure
that empowerment is implemented. Overall, this study finds these small businesses well-positioned to
create fully empowered environments. The employees and employers are united in their commitment
to the goal of providing good customer service. Since service quality is the raison d'etre of
empowerment, it is important that employees view customer service as important: these small business
employees do (Dobbs 1993; Matza, 1991). Another indicator of small business readiness for
empowerment is the employer's commitment to it: this was confirmed in the study findings. Studies
have shown that this type of managerial support and interest is critical to the empowerment process
(Byham, 1991; Carr, 1991; Dobbs, 1993; Frohman, 1992; Kahnweiler, 1991; Petrini, 1992). Since the
small business employees are interested in assuming a greater decision making role in the companies,
these companies will avoid a common barrier to empowerment, i.e. workers not wanting the added
responsibility of empowerment (Navran, 1992). These workers appear to be motivated and interested
in participating in the organizational decision making process. Moreover, the employees reported that
they have a clear understanding of what is expected of them. This clarity should help the small
businesses avoid poor employee decision making. These workers are confident in their work roles; a
necessary element for the job ownership which is identified with empowerment (Byham, 1992).
Furthermore, the findings indicated the small businesses possess an essential condition for
empowerment; trust (Bowen and Lawler, 1991; Dobbs, 1993; Frohman, 1991; Rafaeli, 1989;
Shannon, 1991; Stemberg, 1992). The employees feel very trusted by their employers.

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While the results of the study indicate that these small businesses are prepared for empowerment,
there are certain areas of concern. For these companies to successfully implement empowerment,
attention should be given to the lack of discretionary power experienced by the employees. This may
be a sign of disempowerment, as is the employees' sense that their recommendations are not listened
to or implemented. Since employee participation in decision-making is characteristic of empowered
employees, disempowerment is characterized by a lack of participation (Bernstein, 1992; Kahnweiler,
1991; Matza, 1991; Navran, 1991; Petrini, 1992; Shannon, 1991). The results showed a discrepancy in
the opinions of employees and employers on decision-making which may indicate the problem is not
disempowerment but poor communication by management. Employees may not realize that they have
been given the freedom to deviate from standard policies to satisfy the customer's needs. However,
poor communication is as great a concern as actual disempowerment since good communication
systems are essential to the exchange of information required in the empowerment process (Bowen
and Lawler, 1991; Byham, 1992; Carr, 1991; Frohman, 1992; Kahnweiler, 1991; Navran, 1992;
Rafaeli, 1989; Shannon, 1991). The unfamiliarity of the employees with the concept of empowerment
needs to addressed if empowerment is to be implemented. It is just as important for the employees to
be knowledgeable of the concept as for the employers. (Byham, 1991; Carr, 1991; Dobbs, 1993;
Frohman, 1992; Kahnweiler, 1991; Petrini, 1992) Perhaps the greatest threat to implementing
empowerment in small business is the reported lack of training. Both employees and employers agree
that training sessions and meetings to discuss customer service are few. Training is an inherent
element of empowerment to ensure the development of employee skills as well as the and the
exchange of information about job requirements, organizational performance and customer satisfaction
(Bernstein, 1991; Byham, 1992; Carr, 1991; Chase and Hayes, 1991; Coinnado, 1992; O'Brian, 1993;
Petrini, 1992; Pfeiffer and Dunlap, 1990; Shannon, 1991; Shipper and Manz, 1992; Stemberg, 1992).

In summary, this study may indicate that small business employees and employers are motivated to
move toward empowerment. It shows that there is disagreement over how much empowerment
presently exists in terms of discretionary power granted to employees. Finally the results point to areas
which will hinder the implementation employee empowerment: most notably, the dearth of employee
training.

The generalizability of this study is limited by the lack of random sampling. However, it is acceptable
due to the exploratory nature of the research. It represents a first step in the study of employee
empowerment in the small business context and serves as a guide for further research on the topic.

REFERENCES

Benson (1991). Empowerment: there's that word again. Industry Week, 240(9), 44-52.

Bernstein (1992). Why empowerment programs often fail. Executive Excellence, 9(7), 5.

Bowen and Lawler III (1992). The empowerment of service workers: what, why, how, and when.
Sloan Management Review, (Spring), 31-39.

Byham (1992). Would you recognize an empowered organization if you saw one? Tapping the
Network Journal, 3(2), 10-13.

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Byham (1991). Tapping the power of empowerment. Executive Excellence, 8(12), 10-11.

Carr (1991). Managing self-managed workers. Training & Development, 45(9), 36-42.

Chase and Hayes (1991). Beefing up operations in service firms. Sloan Management Review, (Fall),
15-25.

Coinnado (1992). Empowerment: more than a fad. Tapping the Network Journal, 3(2), 8-9.

Dobbs (1993). The empowerment environment. Training & Development, 47(2), 55-57.

Frohman (1992). The aimless empowered. Industry Week, 241(8), 64-66.

Kahnweiler (1991). HRD and empowerment. Training & Development, 45(11), 73-76.

Matza (1991). Look at your business from the customer's point of view. Retail Control, 59(4), 11-13.

Navran (1992). Empowering employees to excel. Supervisory Management, (August), 45.

O'Brian (1993). Empowering your front-line employees to handle problems. Supervisory Management
(January), 10.

Petrini (1992). The power of empowerment. Training & Development, 46(9): 29-33.

Pfeiffer and Dunlap (1990). Increasing productivity through empowerment. Supervisory Management
(January), 11-12.

Rafaeli (1989). When cashiers meet customers: an analysis of the role of supermarket cashiers.
Academy of Management Journal, 32(2), 245-273.

Shannon (1991). Empowerment: the catchword of the '90s. Quality Progress, 24(7), 62-63.

Shipper and Manz (1992). Employee self-management without formally designated teams: an
alternative road to empowerment. Organizational Dynamics, 20(3), 48-61.

Spice, M. and Gilbert A. (1991). Leadership for empowerment. The Public Manager, 21(3), 27-31.

Sternberg (1991). Empowerment: trust vs. control. Cornell Hotel & Restaurant Administration
Quarterly, 33(1), 68-72.

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