Video Case 8.3: Seventh Generation Promotes Company Ownership

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the hardest thing we do,” says co-founder Jeffrey Hollender.

Seventh Generation was founded on the premise of sustainability—that every product it manufactures, whether it

is laundry detergent or paper towels, must be designed and

produced in such a way that it leaves little or no impact on

the environment. Sustainability includes its recruitment and

development of human resources over the long term.

Most of the 100-plus employees at Seventh

Generation have had at least some experience with another

employer. Hollender points out that these employees arrive

at Seventh Generation with all of the relationship patterns, values, and attitudes toward work they have learned

elsewhere. “Most businesses teach us not to have a voice,

not to speak up, not to challenge authority, not to unleash

the maximum potential we have as individuals,” he says.

Because Seventh Generation incorporates a different set

of values into its organizational culture, “the responsibility

at Seventh Generation is to unteach people all of those

habits and patterns, and unleash the potential that all of

those other businesses have stifled,” Hollender asserts.

Stephanie Lowe works in human resources at Seventh

Generation. She notes that when she was hired, the company had only 30 employees—now there are more than

100. The increase in the number of employees has presented

a challenge. Not only have people arrived from other firms

with a variety of experience and expectations, the logistics

of managing 100 employees are different from those of

managing 30. “We can’t do things as casually,” says Lowe

with some regret. “Things just wouldn’t get done. It’s a hard

line to walk, and it’s a challenge.” In addition, the core value

of sustainability is built into every decision the firm makes.

“How do you do compensation in a socially responsible

company?” asks Lowe. “How do you do that in a company

that values different things, where people are asked to value

themselves and bring more of themselves to work?”

Seventh Generation’s answer to the compensation/social

responsibility/sustainability question is ownership. Every person who works at Seventh Generation has a financial stake in

the company. “The most significant way Seventh Generation’s

philosophy translates into HR is ownership,” remarks

Hollender. He points out that a firm can give employees health

insurance, time off, grants for the purchase of hybrid vehicles,

on-site fitness centers, and the like—but none of these benefits translates to ownership. “The most important thing is to

let the people who are creating value by building the business

participate in the value they create,” Hollender asserts.

Stephanie Lowe echoes this philosophy. “We aren’t

trying to distinguish between the employees and the

corporation,” she explains. At Seventh Generation, the

people are the company. Employees not only participate

in company ownership, they are viewed as contributors



in ways that reach outside their job descriptions. “We are

shifting away from traditional performance management to

personal development plans,” says Lowe. “We do look at

what employees need to work on to hit company goals, but

also what each person needs to grow personally—and we

let them define that.” Employees write personal initiatives

that help the company recognize talents and potential that

may not be readily evident during the performance of a

particular job. “It’s based on the concept that you measure

what you value,” explains Lowe. “We value volunteer time,

making a difference in the world, raising more responsible

global citizens.” To that end, Seventh Generation encourages employees at every level to speak out with ideas for

more sustainable products and processes.

When speaking about the Seventh Generation workforce, Hollender sounds more like a tribal elder than a business manager. Perhaps that’s no coincidence, as Seventh

Generation’s mission is based on the Great Law of the

Iroquois, which counsels each tribe member to consider the

impact of all decisions on the next seven generations.

“The thing I’m most proud of is the success of our employees at Seventh Generation,” boasts Hollender, “their

growth, the things they have thought of that I would never

have dreamed of, the tough questions that they ask me

that I wouldn’t ask myself. Unleashing that potential—that

is the most magical thing about running a business.”



Questions for Critical Thinking

1. Visit the Seventh Generation Web site at http://

www.seventhgeneration.com and view the current job listings there. What kinds of qualities in

job candidates does the firm look for that might

be different from those at other companies?

2. What might be the potential benefits and

pitfalls of Seventh Generation’s view of performance and compensation?

3. Choose one of the motivational theories

described in the chapter and discuss how the

theory would pertain to Seventh Generation’s

approach to motivating employees.

4. Do you predict that employees at Seventh

Generation will attempt to unionize? Why or

why not? If they did, how do you think the firm

would respond?

Sources: Seventh Generation Web site, http://www.seventhgeneration

.com, accessed March 16, 2012; “Sustainability Study,” Accenture,

http://microsite.accenture.com, accessed March 16, 2012; “Study Says

Companies Should Train Managers in Sustainability,” 7GenBlog, http://

www.seventhgeneration.com, accessed March 16, 2012; Danielle Sacks,

“Jeffrey Hollender: Seventh Generation, Triple Bottom Line Entrepreneur,”

Fast Company.com, http://www.fastcompany.com, accessed March 16, 2012.



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Learning Objectives

1 Discuss empowering employees.

2 Distinguish the five types of teams.

3 Identify team characteristics.



Chapter



9



4 Evaluate team cohesiveness and norms.

5 Describe team conflict.

6 Explain the importance of effective communication.

7 Compare the basic forms of communication.

8 Explain external communication and crisis management.



kristian sekulic/iStockphoto



Top Performance through

Empowerment, Teamwork,

and Communication



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Enterprise Rent-a-Car Thrives on

Empowerment, Teamwork



W



hat harried customer wouldn’t love to hear a customerservice rep say, “You haven’t described anything we can’t

solve”? That’s exactly what happened to a couple of insurance

executives racing to make the last plane home one evening.

Frantic, they couldn’t stop to fill the gas tank of their rental car,

so the Enterprise Rent-a-Car employee who met them calmly

drove them to their gate in a company van, filled out their paperwork, and e-mailed them copies so they could make their flight.

Enterprise Holdings is a 55-year-old family-run business earning about $14 billion a year as the world’s largest car rental

firm and now includes Enterprise, Alamo, and National brands.

The company was founded by Jack Taylor on a simple principle:

“Take care of your customers and your employees first, and the

profits will follow.” Managed today by CEO Andy Taylor, son of

the founder, the company honors employee empowerment and

encourages teamwork. Andy started working for the company

at the age of 16, washing cars during the holidays and summer

vacations to learn the basics of the business.

Enterprise is the top recruiter at colleges, hiring thousands of

graduates every year as management trainees if they have the



right stuff: a passion for helping others, sales skills, a flexible

approach toward work assignments, and lots of motivation

to get things done right. To raise customer satisfaction, Taylor

instituted better hiring practices to ensure employees have

good communication skills. He insisted they know their customers’ names, offer help without being asked, and never use

industry jargon. Growth and profits increased dramatically, and

Enterprise ranks number one among car rental companies in

the JD Powers customer satisfaction survey.

The company’s strong focus on customer service and employees’ ability to make decisions on their own has been a major

reason why Enterprise has built and maintained such a loyal

group of customers. Its loyalty program, called Enterprise Plus,

was recently upgraded to provide members with rewards and

free rental days, as well as members-only check-in and special

offers through the program’s “Email Extras” e-newsletter.

The company believes that upgrading its loyalty program is

just one more way for the firm to demonstrate how much it

appreciates its customers and their loyalty. Enterprise was

recently recognized as the “Most Iconic Brand” in the car

rental category.1



Overview

Top managers at organizations such as

Enterprise Rent-a-Car recognize that teamwork and communication are essential for

empowering employees to perform their

best. This chapter focuses on how organizations involve employees by sharing information and empowering them to make critical

decisions, allowing them to work in teams,

and fostering communication. We begin by



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discussing the ways managers can empower

their employees’ decision-making authority and responsibility. Then we explain why

and how a growing number of firms rely on

teams of workers rather than individuals to

make decisions and carry out assignments.

Finally, we discuss how effective communication allows workers to share information that

improves the quality of decision making.



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1



empowerment giving

employees authority and

responsibility to make decisions about their work.



Empowering Employees

An important component of effective management is the empowerment of employees.

Managers promote this goal by giving employees the authority and responsibility to make

decisions about their work. Empowerment seeks to tap the brainpower of all workers to find

improved ways of doing their jobs, better serving customers, and achieving organizational

goals. It also motivates workers by adding challenges to their jobs and giving them a feeling

of ownership. Managers empower employees by sharing company information and decisionmaking authority and by rewarding them for their performance—as well as the company’s.



Sharing Information and Decision-Making Authority

One of the most effective methods of empowering employees is to keep them informed

about the company’s financial performance. Companies such as Virginia-based engineering

firm Anderson & Associates (A&A) provide regular reports to their employees on key financial

information, such as profit-and-loss statements. A&A designs roads, water and sewer lines, and

water treatment plants for municipalities, along with private construction projects such as Warm

Hearth Village, a retirement community, in which residents were consulted during the planning

process. The firm practices open-book management, giving every employee access to the same

financial information about A&A. Like other companies that practice this strategy, A&A also

trains its employees to interpret financial statements so that they can understand how their work

contributes to company profits. Using information technology to empower employees does

carry some risks. One is that information may reach competitors. Although A&A considered this

problem, management decided that sharing information was essential to the company’s strategy.2



Jacob Wackerhausen/iStockphoto



The second way in which companies empower employees is to give them broad authority

to make workplace decisions that implement a firm’s vision and its competitive strategy. Even

among non-management staff, empowerment

extends to decisions and activities traditionally handled by managers. Employees might be

responsible for such tasks as purchasing supplies,

making hiring decisions, scheduling production

or work hours, overseeing the safety program,

and granting pay increases.



A way in which companies empower employees is to give them broad authority to make

workplace decisions that implement a firm’s vision and its competitive strategy without

seeking managerial input. At Lebanon Valley Brethren Home, a long-term care facility in

Pennsylvania, workers at all levels are empowered to do whatever it takes to improve the

quality of their elderly residents’ lives.



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c09.indd 262



This can be an especially powerful tool in

many health care environments. At Lebanon

Valley Brethren Home, a long-term care facility in Pennsylvania, workers at all levels are

empowered to do whatever it takes to improve

the quality of their elderly residents’ lives. Each

care worker attends to the same residents every

day, so caregivers and residents form a strong

personal bond. Caregivers are responsible for

the overall management of their households,

including meals and housekeeping. They make

decisions for individual residents ranging from

sleep schedules to room lighting. As a result,

each Green House—or household within the

larger community—feels like a home.3



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Hit



& Miss

GM: Putting Workers in the Driver’s Seat



Autoworkers at GM are used to doing many things as part of their

jobs. But until recently, one thing they hadn’t been asked to do very

often is to drive the cars.

Workers at the GM assembly plant in Arlington, Texas, recently volunteered for a new program in which they could take a vehicle off the

plant lot for a night or a weekend, and drive it just as they would their

own car. The test drivers were asked for detailed feedback, for the first

time giving them a powerful voice in the design and construction of the

cars they build. “We had so much interest in [the program] we had to

use a lottery to determine who would get to be a volunteer,” reports

Enrique Flores Jr., president of the United Auto Workers Local 276, the

union representing 2,400 workers at the GM plant.

Executives and managers have participated in the test-drive

program for years, but bringing it to rank-and-file workers marks an

updated attitude toward empowering employees. “We want to engage

employees to do underground marketing,” explains Wendy Stachowicz,

coordinator of the GM Vehicle Advocate Program.



In addition to a lottery, employees were chosen on the basis of

their driving records. If they chose to purchase that vehicle or another

one in the program, they qualified for steep discounts. “This is a tool

to empower people, to get them really engaged with our products,”

explains Stachowicz.

Questions for Critical Thinking

1. In what ways does the GM test-drive program empower

workers?

2. How might GM benefit from this type of empowerment

of its assembly plant workers?

Sources: “GM Employees Getting Up-Close Look at New Line-up,” GM News, http://

media.gm.com, accessed March 17, 2012; “GM Launches Plant-City Tour to Showcase

Line-up, Empower Employees to Promote New Vehicles,” GM Web site, http://media.

gm.com, accessed March 17, 2012; Terry Box, “Arlington GM Workers to Take Home New

Cars to Try Out,” Dallas Morning News, http://www.dallasnews.com, accessed March 17, 2012.



Empowerment can take other forms as well. GM recently announced an initiative in

which GM workers could volunteer to take vehicles home and test drive them in real-life

situations, as described in the “Hit & Miss” feature.



Linking Rewards to Company Performance

Perhaps the ultimate step in convincing employees of their stake in the prosperity of

their firm is worker ownership. Two widely used ways that companies provide worker ownership are employee stock ownership plans and stock options. Table 9.1 compares these two

methods of employee ownership.

TABLE



9.1



Employee Stock Ownership Plans and Stock Options



EMPLOYEE STOCK OPTION PLANS



STOCK OPTIONS



Company-sponsored trust fund holds shares of stock for

employees



Company gives employees the option to buy shares of

its stock



Usually covers all full-time employees



Can be granted to one, a few, or all employees



Employer pays for the shares of stock



Employees pay a set price to exercise the option



Employees receive stock shares (or value of stock) upon

retiring or leaving the company



Employees receive shares of stock when (and if) they

exercise the option, usually during a set period



Sources: “Employee Stock Options and Ownership (ESOP),” Reference for Business, http://www.referenceforbusiness.com, accessed

March 17, 2012; “Employee Stock Options Fact Sheet,” National Center for Employee Ownership, http://www.nceo.org,

accessed March 17, 2012.



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Employee Stock Ownership Plans More than 10 million workers participate in 10,900 employee stock ownership plans (ESOPs) worth almost $870 billion.4 These plans

benefit employees by giving them ownership stakes in their companies, leading to potential

profits as the value of their firm increases. Under ESOPs, the employer buys shares of the

company stock on behalf of the employee as a retirement benefit. The accounts continue

to grow in value tax-free, and when employees leave the company, they can cash in their

stock shares. Employees are motivated to work harder and smarter than they would without

ESOPs because as part owners, they share in their firm’s financial success. More than 92 percent of companies surveyed that offer ESOPs report an increase in employee productivity.5

As retirement plans, ESOPs must comply with government regulations designed to

protect pension benefits. Because ESOPs can be expensive to set up, they are more common

in larger firms than in smaller ones. Public companies with ESOPs average around 14,000

employees, and private companies average about 1,500 employees.6 One danger with ESOPs

is that if the majority of an employee’s retirement funds are in company stock and the value

falls dramatically, the employee—like other investors—will be financially harmed.7



Stock Options Another popular way for companies to share ownership with their

employees is through the use of stock options, or the right to buy a specified amount of company stock at a given price within a given time period. In contrast to an ESOP, in which the

company holds stock for the benefit of employees, stock options give employees a chance to

own the stock themselves if they exercise their options by completing the stock purchase. If

an employee receives an option on 100 shares at $10 per share and the stock price goes up

to $20, the employee can exercise the option to buy those 100 shares at $10 each, sell them

at the market price of $20, and pocket the difference. If the stock price never goes above the

option price, the employee isn’t required to exercise the option.8

Although options were once limited to senior executives and members of the board of

directors, some companies now grant stock options to employees at all levels. Federal labor

laws allow stock options to be granted to both hourly and salaried employees. It is estimated

that 9 million employees in thousands of companies hold stock options.9 About one-third of

all stock options issued by U.S. corporations go to the top five executives at each firm.

Much of the remainder goes to other executives and managers, who make up only about

2 percent of the U.S. workforce. Yet there is solid evidence that stock options motivate regular employees to perform better. Some argue that to be most effective as motivators, stock

options need to be granted to a much broader base of employees.



Assessment

Check

1. What is empowerment?

2. What kinds of information can companies provide employees to help

them share decisionmaking responsibility?

3. How do employee stock

ownership plans and

stock options reward

employees and encourage empowerment?



Stock options have turned hundreds of employees at firms such as Home Depot, Microsoft,

and Google into millionaires. But such success stories are no guarantee, especially when stock

prices drop during economic downturns. As with ESOPs, employees face risks when they rely

on a single company’s stock to provide for them. In addition to stock options and ESOPs, many

firms offer their executives other perks, or special privileges.



2



team group of people

with certain skills who are

committed to a common

purpose, approach, and set

of performance goals.



264



c09.indd 264



Teams

A team is a group of people with certain skills who are committed to a common purpose,

approach, and set of performance goals. All team members hold themselves mutually responsible and accountable for accomplishing their objectives. Teams are widely used in business

and in many not-for-profit organizations such as hospitals and government agencies. Teams

are one of the most frequently discussed topics in employee training programs, because

teams require that people learn how to work effectively together. Many firms emphasize the



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9.1



Five Types of Teams



Managed Teams

Self-



This

most popular of

types comprises

knowledge workers

who gather to solve

specific problems

and then disband.



Five

Types of

Teams



An increasingly

popular type,

work teams do just

that—the daily work.

When empowered,

they are

or

self-managed

kT

ea

teams.

m



Groups of geographically

and/or organizationally dispersed

co-workers who use a combination of telecommunications

and information technologies

to accomplish an

organizational

am

Te

task.

al



In contrast to work teams, a problem-solving

s

team is a temporary combination of workers who

gather to solve a specific problem and then disband.

They differ from work teams in important ways,

though. Work teams are permanent units designed

to handle any business problem that arises, but

problem-solving teams pursue specific missions. When Toyota was faced with serious quality problems—unintended acceleration, faulty brakes, and then questions about tires—and

was forced to recall thousands of vehicles, the company formed Rapid Response Swift

Market Analysis Response Teams (SMART) to deal with the technical problems. SMART

were made up of field technology specialists, engineers from manufacturing and design, and

product engineers from the United States with specialists from Japan on call. Together, team

members worked with dealers across the country to contact customers and arrange for onsite analyses of each problem vehicle to determine what went wrong and why. Teams were

encouraged to “listen and react” to customers’ descriptions of their experiences as part of

their investigation.10 Typically, when a problem is solved, the team disbands—but in some

cases, the team may develop a more permanent role within the firm.



A work team empowered with the authority to decide how its members complete their

daily tasks is called a self-managed team. A self-managed team works most effectively when

it combines employees with a range of skills and functions. Members are cross-trained to

perform each other’s jobs as needed. Distributing decision-making authority in this way can

free members to concentrate on satisfying customers. Whole Foods Market has a structure

based on self-managed work teams. Company managers decided that Whole Foods could be

most innovative if employees made decisions themselves. Every employee is part of a team,

and each store has about ten teams handling separate functions, such as groceries, bakery, and

customer service. Each team handles responsibilities related to setting goals, hiring and training employees, scheduling team members, and purchasing goods to stock. Teams meet at least

monthly to review goals and performance, solve problems, and explore new ideas. Whole

Foods awards bonuses based on the teams’ performance relative to their goals.11

Chapter 9 Top Performance through Empowerment, Teamwork, and Communication



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Teams that are

made up of members

from different functions,

or parts, of a firm.



s



Problem-Solv



ing



Tea

ms



Teams that are empowered

to decide how they

complete their daily tasks.



W



About two-thirds of U.S. firms currently use

work teams, which are relatively permanent

groups of employees. In this approach, people with

complementary skills perform the day-to-day work

of the organization. A work team might include all

the workers involved in assembling and packaging a product—it could be anything from cupcakes

to cars. Most of Walmart’s major vendors maintain offices near its headquarters in Bentonville,

Arkansas. Typically, the vendor offices operate as

work teams, and the heads of these vendor offices

often have the title of “team leader.”



FIGURE



ams

onal Te

ncti

-Fu

oss

Cr



importance of teams during their hiring processes,

asking job applicants about their previous experiences as team members. Why? Because companies

want to hire people who can work well with other

people and pool their talents and ideas to achieve

more together than they could achieve working

alone. Figure 9.1 outlines five basic types of teams:

work teams, problem-solving teams, self-managed

teams, cross-functional teams, and virtual teams.



V ir t



u



work team relatively permanent group of employees

with complementary skills

who perform the day-today work of organizations.

problem-solving

team temporary combination of workers who gather

to solve a specific problem

and then disband.



self-managed team 

work team that has the

authority to decide how its

members complete their

daily tasks.



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Solving an Ethical Controversy

Who Benefits from Virtual Teamwork?

Virtual teams are teams of professionals, some or all of whose

members work from home or in various off-site locations, to reach a common objective or goal. They work and keep in touch using technology

including Web conferences, project management software, and voice-overInternet services such as Skype. By reducing the need for office space and



overhead, they can generate lower costs. But some companies fear that

geographically dispersed employees pose greater management challenges.



PRO



CON



1. Virtual teams let managers tap the most skilled and most

diverse members regardless of their location.



2. Team members who don’t commute can enjoy better work–life

balance and flexible schedules with fewer interruptions.



Are virtual teams good for business and for

employees?



1. Communication among team members can be difficult across

2.



different cultures, time zones, and technologies, so misunderstandings and errors can occur.



Virtual teamwork calls for everyone to learn new skills and behaviors.



Summary



Virtual teams can’t solve all problems, but with the right members, they can often achieve more than

other teams and at lower cost. For best results, managers should hire people suited to working virtually, choose an experienced team leader, set clear goals, and make sure the right technology is in place.

Occasional in-person team meetings help too.

Sources: “5 Tips to Establishing a Successful Virtual Team,” Virtual Teams blog, http://virtualteamsblog.com, accessed

February 2, 2012; “Virtual Teams: Pros, Cons, & Best Practices,” Fast Fedora blog, http://blog.fastfedora.com, accessed February 2,

2012; Maan Laxa, “Pros & Cons of Working with Virtual Teams,” Pepper Virtual Assistant, http://www.peppervirtualassistant.com,

accessed February 2, 2012.



cross-functional team 

a team made up of members from different functions, such as production,

marketing, and finance.

virtual team group of geographically or organizationally

dispersed co-workers who use

a combination of telecommunications and information

technologies to accomplish

an organizational task.



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A team made up of members from different functions, such as production, marketing,

and finance, is called a cross-functional team. Most often, cross-functional teams work

on specific problems or projects, but they can also serve as permanent work team arrangements. The value of cross-functional teams comes from their ability to bring different

perspectives—as well as different types of expertise—to a work effort. Communication is

key to the success of cross-functional teams. Chatter is a networking tool developed by

Salesforce.com that allows internal information sharing across different business units and

divisions of companies. Chatter “is an integrated view into your entire business,” says Marc

Benioff, Salesforce.com’s founder.12

Virtual teams are groups of geographically or organizationally dispersed co-workers

who use a combination of telecommunications and information technologies to accomplish an organizational task. Because of the availability of e-mail, videoconferencing, and

group-communication software, members of virtual teams rarely meet face to face. The

principal advantage of virtual teams is that they are very flexible. Employees can work with

each other regardless of physical location, time zone, or organizational affiliation. Because

of their very nature, virtual teams that are scattered across the globe can be difficult

to manage. But firms that are committed to them believe that the benefits outweigh

the drawbacks. See the “Solving an Ethical Controversy” feature for a discussion of

both sides.

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Although members of a virtual team rarely meet in person, they stay in touch through technologies such as

videoconferencing. In today’s global marketplace, the flexibility of virtual teams is a distinct advantage.



3



Assessment

Check

1. What is a team?

2. What are the five types

of teams, and how are

they different?



Team Characteristics

Effective teams share a number of characteristics. They must be an appropriate size to

accomplish their work. In addition to size, teams also can be categorized according to the

similarities and differences among team members, called level and diversity. We discuss these

three characteristics next.



Team Size

Teams can range in number from as few as two people to as many as 150 people. In

practice, however, most teams have fewer than 12 members. Although no ideal size limit

applies to every team, research on team effectiveness indicates that they achieve their best

results with about six or seven members. A group of this size is big enough to benefit from a

variety of diverse skills, yet small enough to allow members to communicate easily and feel

part of a close-knit group.

Certainly, groups smaller or larger than this can be effective, but they also create added

challenges for team leaders. Participants in small teams of two to four members often show

a desire to get along with each other. They tend to favor informal interactions marked by

discussions of personal topics, and they make only limited demands on team leaders. A large

team with more than 12 members poses a different challenge for team leaders because decision making may work slowly and participants may feel less committed to team goals. Larger

teams also tend to foster disagreements, absenteeism, and membership turnover. Subgroups

may form, leading to possible conflicts among various functions. As a general rule, a team of

more than 20 people should be divided into subteams, each with its own members and goals.

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Hit



& Miss

Team Diversity at Ernst & Young



Ernst & Young provides tax, transaction, and advisory services. The firm

has developed a new outlook on the business environment, especially how

its 144,000 employees can contribute more fully to the company’s future.

Ernst & Young is redefining the way it uses teams. A recent company

survey revealed that companies operating in 25 or more countries base

only 5 percent of their senior leadership in those countries—failing to make

the most of the diverse cultures and ideas that could propel them forward.

James S. Turley, chairman and CEO of Ernst & Young, observes, “Company

leaders need to consider how a lack of diverse perspectives . . . might

affect plans for global growth, new products, or mergers and acquisitions.”

Ernst & Young has come up with a blueprint for its new team

diversity. Managers who are planning or leading teams should consider:

• The mindset. Managers must think about how to achieve true

cultural change within the organization.

• The talent. Managers should search the organization for true

talent—including people in the cafeteria, at an assistant’s desk,

and in the human resources office.

• Anticipation. Creative managers need to use team members’

diverse talents to identify new products and services.

• Consensus. Total agreement among team members isn’t always

necessary—or even the best thing. Disagreement can boost



a team’s energy and force people to come up with new and

better ideas and solutions.

CEO Jim Turley says, “Innovation comes from constructive clashes

of different ideas, and from that, the sparks create some brilliance . . .

It’s getting all of our people to understand the direction of the world.”

Questions for Critical Thinking

1. Why is team diversity so critical for a global firm such as

Ernst & Young?

2. Based on the nature of its business, at what level would

you expect Ernst & Young’s teams to operate? Why?

Sources: Luke Visconti, “CEO Chat: E&Y’s Leader Tells How Global Diversity Drives

Revenue,” Diversity Inc., http://www.diversityinc.com, accessed March 19, 2012; “Ernst

& Young LLP Diversity Award,” BAP Forums, http://www.bap.org, accessed March 19,

2012; “Diversity Drives Innovation,” Ernst & Young Web site, http://www.ey.com,

accessed March 19, 2012; James S. Turley, “The New Global Mindset,” Bloomberg

Businessweek, http://www.businessweek.com, accessed March 19, 2012; “Ernst &

Young LLP Starts 2010 with a Three-Day Event for Minority Students and a Faculty

Roundtable Focused on Campus Diversity,” PR Newswire, http://www.prnewswire.com,

accessed March 19, 2012.



Team Level and Team Diversity

team level average level

of ability, experience, personality, or any other factor

on a team.



Team level is the average level of ability, experience, personality, or any other factor on

a team. Businesses consider team level when they need teams with a particular set of skills or

capabilities to do their jobs well. For example, an environmental engineering firm might put

together a team with a high level of experience to write a proposal for a large contract.



team diversity variances

or differences in ability,

experience, personality, or

any other factor on a team.



While team level represents the average level or capability on a team, team diversity

represents the differences in ability, experience, personality, or any other factor on a team.

Strong teams not only have talented members—as demonstrated by their team level—but

also members who are different in terms of ability, experience, or personality. Team diversity

is an important consideration for teams that must complete a wide range of different tasks

or particularly complex tasks. For instance, the British Broadcasting Corporation (BBC) routinely creates teams for a variety of events such as golf ’s Masters Tournament or the Olympic

Games. These teams involve production and broadcast groups larger than 100 people. Team

members typically come from many different countries, with skills ranging from electrician to

statistician or from scheduling to producing. And because an event at any of the sports venues

takes place only once, the BBC teams have one chance to get it right. The BBC even created

an additional temporary radio station to cover the 2012 London Summer Olympic Games.13

Team diversity is an important component of many successful companies. Read how

Ernst & Young, a global firm that provides financial services, relies on diversity, as described

in the “Hit & Miss” feature.



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Strong teams not only have talented members but also members who are different in terms of ability, experience, or

personality. Diversity is an important consideration for teams that must complete a wide range of different tasks or

particularly complex tasks. For example, the BBC routinely creates teams for a variety of major events such as golf’s

Masters Tournament or the Olympic Games.



Stages of Team Development

Teams typically progress through five stages of development: forming, storming, norming, performing, and adjourning. Although not every team passes through each of these stages,

those teams that do are usually better performers. These stages are summarized in Figure 9.2.



Stage 1: Forming Forming is an orientation period during which team members



get to know each other and find out the behaviors that are acceptable to the group. Team

members begin with curiosity about expectations of them and whether they will fit in with

the group. An effective team leader provides time for members to become acquainted.



Stage 2: Storming The personalities of team members begin to emerge during

the storming stage, as members clarify their roles and expectations. Conflicts may arise, as

people disagree over the team’s mission and jockey for position and control of the group.

Subgroups may form based on common interests or concerns. At this stage, the team leader

must encourage everyone to participate, allowing members to work through their uncertainties and conflicts. Teams must move beyond this stage to achieve real productivity.

Stage 3: Norming During the norming stage, members resolve differences,

accept each other, and reach broad agreement about the roles of the team leader and other

participants. This stage is usually brief, and the team leader should use it to emphasize the

team’s unity and the importance of its objectives.

Stage 4: Performing While performing, members focus on solving problems



and accomplishing tasks. They interact frequently and handle conflicts in constructive ways.

The team leader encourages contributions from all members. He or she should attempt to

get any nonparticipating team members involved.

Chapter 9 Top Performance through Empowerment, Teamwork, and Communication



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