Downsizing, mergers, acquisitions, divestitures, restructuring, consolidation—buzz words for the 1990’s. While they may bring short-term profits, do they represent long-term solutions to corporate growth and sustained profitability?

Hand in hand with these buzz words, in the late 1980’s, organizations started looking to self-directed teams, re-engineering and total quality management (TQM) to increase productivity and improve quality in order to enhance long-term profitability. But many of these companies are discovering they are not realizing the gains they expected.

What went wrong? What are the pitfalls? What are the solutions?

TQM has evolved into continuous quality improvement (CQI). Those companies that could afford it have "re-engineered" their organizations. But what has come of "self-directed teams"? Let’s take a look at this much-touted management concept.

Self-directed teams are a group of highly trained employees, from all levels of the organization, who have total responsibility for turning out a segment of work (i.e., a part, a process, a service, an ad campaign, etc.). In contrast to traditional teams, self-directed team members develop a wide range of cross-functional skills, possess greater decision-making authority, and have access to a broad spectrum of information.

In theory, the concept is excellent. In practice, the concept has a myriad of pitfalls. Only the most extraordinary organizations, under the most visionary leaders, can overcome the pitfalls and realize the benefits.

So what are the pitfalls?

Insufficient training

Too often, management does not provide the professional development, continued education, and cross-functional skills necessary to make the teams work.

Supervisory resistance

Management does not practice what it preaches. The supervisors fear they will lose authority and their "role" in the organization. They resist change and the potential loss of their "status."

Lack of executive and corporate support

Company leaders institute self-directed teams "for others" and fail to realize they also must "buy into" the concept. This is invariably followed with lack of necessary financial support. In reality it doesn’t take a lot of dollars, but some funding is necessary along with a lot of blood, sweat and tears.

Lack of union/labor support and employee skepticism

Unfortunately, labor believes that the teams are just another gimmick to break up unions or control their destiny. Employees also fear that their career growth and income potential will be limited. In fact, if the teams work, labor and all employees will have a greater say in the operations of the company and their position will become more secure. As the company profits, their careers and income will skyrocket. Microsoft operates in a self-directed team environment. There are more millionaire employees in Microsoft then in any other company.

Incompatible pay systems

In a self-directed team environment, there must be a change in the compensation system. Pay must be based on team performance, breadth of skills and personal knowledge as opposed to traditional pay systems based on individual performance, type of job and seniority.

Management expects too much, too soon

Results cannot be expected overnight. Typically, it takes about five years before results are maximized. In fact, within the first two years, expect a decline in employee performance, productivity and profits. But hang in there, the end result is worth the growing pains.

So what are the benefits? What end results should be expected?

1. Increased productivity. The productivity increase will be felt throughout every department in the company. This is not just a manufacturing concept.

2. Flexibility. The teams will be able to respond more quickly to any crisis, competitive challenge or new business opportunity.

3. Quality improvement. Self-directed teams are an extraordinary tool to facilitate TQM or CQI programs as well as ISO 9000 or ISO 17000 standards.

4. Commitment: A sense of ownership and high morale. Employees’ self esteem and pride in the organization is dramatically increased. The company is no longer a hierarchy of managers, but rather a partnership where everyone strives to achieve peak performance for the benefit of the team.

5. Outstanding customer service. The team partnership goes far beyond the walls of the organization. From suppliers to customers to the community, the company will be recognized for their leadership and contribution to society.

It is important to recognize that self-directed teams are not a panacea for all problems and will not, by themselves, guarantee the growth and profitability of a company. But for those organizations that make the commitment to the success of self-directed teams, the benefits can be extraordinary.