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W.L. Gore and Associates (W.L. Gore) is a successful company that uses non-traditional management processes, leadership concepts, organizational structure, and organizational design. Describe how W.L. Gore operates in terms of management, leadership, organizational structure, and organizational design. What lessons from W.L. Gore could be applied to work groups, such as project teams, virtual teams, and contractual and contingent workforces? What lessons from W.L. Gore should not be applied to work groups, such as project teams, virtual teams, and contractual and contingent workforces? Include at least five scholarly or peer-reviewed articles. Include a title page, section headers, introduction, conclusion, and references page. 4 pages, New Roman Times 12 pt, double spaced - APA Use this Reference: Shipper, F., & Manz, C. C. (1992). Employee self-management without formally designated teams: An alternative road to empowerment (Links to an external site.). Organizational Dynamics, 20(3), 48-61. (This is a classic article.) Management practices at W. L. Gore & Associates give a new dimension to employee empowerment. Other organizations can learn from the experience. Employee Self-Management Without Formally Designated Teams: An Alternative Road to Empowerment FRANK SHIPPER CHARLES C. MANZ To make money and have fun. -W. L. Gore Words like "self-management" and em-ployee "empowerment" are quickly be- coming the contemporary battle cry of Amer- ican industry. The emphasis has shifted from a focus on management control of employees to a decentralization of power and the provi- sion of opportunity for workers, at all levels, to exercise increasing influence over themselves. The idea behind employee self-manage- ment, as the term implies, is for workers to become, to a large degree, their own man- agers. In attempting to use their human re- sources more fully, many organizations have moved beyond the mentality that managers make dedsions and employees are simply ex- pected to do what t h e / r e told. Self-manage- ment involves an increasing reliance on work- ers' creative and intellectual capabilities, not just their physical labor. Although questions may linger about how to put this once-radical idea into prac- tice, self-management is clearly becoming a 48 respected competitive advantage. In many companies, organizing work around small groups of workers empowered to perform many traditional management functions (as- signing tasks, solving quality problems, and selecting, training, and counseling fellow team members) has become a way of life. Ap- plications of the team approach have spanned industries and taken root in a variety of man- ufacturing and service organizations. These include some of the best-known companies in the world—Procter and Gamble, General Motors, Ford, Digital Equipment, IDS, Hon- eywell, Cummins Engine, Tektronix, General Electric, Caterpillar, Boeing, and LTV Steel, to name just a few. Reports from the field cred- it this work design innovation with many positive benefits, including higher productiv- ity, better attendance, less turnover, and im- provements in both product quality and the quality of working life for employees. In many ways, empowered worker teams seem to be emerging as the major new Amer- ican industrial weapon to fend off interna- tional competitive threats from such countries as Japan. The team approach has become highly visible: Conferences center on the con- cept, consultants specialize in applying it, and well-known business publications (Business Week and Fortune, among others) make it cov- er-story news. In fact, it has become visible to the point that companies may begin to con- clude that this is the only way to successfully meet the business pressures in the 1990s and on into the 21st Century, especially when those pressures demand fuller involvement and utilization of human resources. Almost always, employee self-manage- ment is introduced in organizations through the establishment of formally designated em- powered work teams. When employees are hired, they are assigned to a work team as a condition of their emplo3/̂ ment. In this article v/e vnR suggest an alterna- tive: An approach that promises to deliver many of the advantages and benefits of for- mally established empowered employee work teams—^but v/ithout formally designat- ed teams. Instead, the whole work operation becomes essentially one large empowered team in which everyone is individually self- managing and can interact directly with ev- eryone else in the system. To illustrate this al- ternative, we will describe W. L. Gore & Associates, a company that relies on self-de- veloping teams without managers or bosses— but with lots of leaders. HISTORICAL BACKGROUND W. L. Gore & Associates is a company that evolved—^personally, organization,ally, and technically—from the late Wilbert L. Gore's experiences. He was born in Meridian, Idaho (near Boise) in 1912. By age six, he had become an avid hiker. He received a bachelor of sci- ences degree in chemical engineering in 1933 and a master of sden<£s in physical chemistry in 1935, both from tlie University of Utah. Af- ter working for two other companies, he joined E. I. DiaPont de Nemours in 1945, where he held several positions, induding re- search supervisor and head of operations re- search. While at DuPont he worked on a team to develop applications for polytetrafluo- roethylene, frequently referred to as PTFE in the scientific community and known as "Teflon" by consumers. On this team, Wilbert Gore (called Bill by everyone) felt a sense of ex- cited commitment, personal fulfillment, and self-direction. He was knowledgeable abdut the development of computers and transistors and felt that PTFE had insulating characteris- tics ideal for use with such equipment. He tried a number of ways to make a PTFE-coated ribbon cable without success. A breakthrough came in his home basement lab- oratory. He was explaining the problem to Ms son. Bob. Bob had seen some PTFE sealant tape made by 3M and asked, "Why don't you try this tape?" The senior Gore explained that everyone knows you can't bond PTFE to itself. Bob went on to bed, but his father lin- gered in the basement lab, willing to try "what everyone knew would not work." At about 4 a.m., he walked into his son's room waving a small piece of cable. "It works, it works!" he shouted. The following night fa- ther and son returned to the basement lab to make ribbon cable coated with PTFE. For the next four months Bill Gore tried to persuade DuPont to make a new produdl— PTFE-coated ribbon cable. By this time in Ms career. Bill Gore knew some of the decision makers at DuPont. After some preliminary dis- cussions, it became dear that DuPont wanted to remain a supplier of raw materials and not a fabricator. Consequently, Bill began to dis- cuss with his wife, Genevieve, known as "Vieve," the possibility of starting their own insulated-wire and cable business. On January 1,1958, their twenty-third wedding annivBr- sary, they founded W. L. Gore & Assodales. The basement of their home served-as the ficst facility. After finishing their anniversary dih- ner, Vieve turned to her husband of twerjty- three years and said, "Well, lef s clear up tlie dishes, go downstairs, and get to work." Bill Gore was forty-five years old with five children to support when he left DuPont. He left behind a career of seventeen years, a good salary, and a secure position. To Bnariee the first two years of the business. Bill ajnd Vieve mortgaged their house and took $4,ij)00 from savings. AU of their friends told theim not to do i t 49 Frank Shipper is a professor of manage- ment at the Franklin P. Perdue School of Business at Salisbury State University. He received his B.S. from West Virginia Uni- versity and his M.B.A. and Ph.D. from the University of Utah. Before returning to school to pursue his graduate degrees, he worked in biomechanical and structural engineering. Since receiving his Ph.D., his consulting, teaching, and research inter- ests have focused on leadership effective- ness, work teams, and strategic responses to legal and political issues. He received a Federal Faculty Fellowship for work on organizational effectiveness. Shipper has written three books and numerous articles. His most recent books are Task Cycle Management: A Compe- tency-Based Course for Operating Man- agers (plark Wilson Publishing Company, 1990) and Avoiding and Surviving Law- suits: The Executive Guide to Strategic Legal Planning (Jossey-Bass, 1989). 50 The first few years were rough. In lieu of salary, some of the employees accepted room and board in the Gore home. At one point eleven employees were living and working under one roof. A few years later, the Gores secured an order for $100,000 that put the company over the hump. W. L. Gore & Assodates has continued to grow and develop new products derived pri- marily from PTFE, induding its best-known product, GORE-TEX®. Today W. L. Gore makes a wide range of products in four cate- gories—electronic, medical, fabrics, and in- dustrial products. In 1986, Bill Gore died while backpacking in the Wind River Moun- tains of Wyoming. Before he died he had be- come chairman, and his son. Bob, president, a position the latter continues to occupy. Vieve remains as the only other officer, secretary- treasurer. As in many organizations, the early ex- periences of the founder continue to mold the corporate operations and culture. As wiU be illustrated a number of times, the informal, non-bureaucratic, low-overhead style that characterized the company at its founding has stuck^even though the firm now has over 5,000 employees and is rapidly ap- proaching $1 biUion in sales. ORGANIZATION WITHOUT BOSSES: EMPLOYEE EMPOWERMENT BASED ON SELF-INITIATED TEAMWORK W. L. Gore & Associates is a company with- out titles, hierarchy, or any of the conven- tional structures associated with enterprises of its size. The titles of president and secre- tary-treasurer are used only because they are required by the laws of incorporation. The Gore management style has been referred to as "un-management/' an approach to man- aging that has its roots in Bill's experiences on teams at DuPont and that evolved over time to adapt to current needs. For example, in 1965 W. L. Gore & Asso- ciates was a thriving and growing 200-em- ployee company with a facility on Paper Mill Road in Newark, Delaware. One warm Mon- day morning in the summer. Bill Gore was taking his usual walk through the plant, when he suddenly realized he did not know everyone. The team had become too big. As a result, the company developed a policy that no facility could have more than 150 to 200 employees, thus giving birth to a distinctive expansion strategy: "Get big by staying small." The purpose of maintaining small plants is to accentuate a close-knit and inter- personal atmosphere. Today, W. L. Gore & Associates consists of 44 plants worldwide with over 5,300 as- sociates (the term used instead of "employ- ees," and alwajî s spelled with a capital A in company literature). In some cases the plants are clustered together on the same site, as in Flagstaff, Arizona, where the com- pany operates four plants on the same site. Twenty-seven of those plants are in the United States and seventeen are overseas (locations include Scotland, Germany, France, and Japan). Compensation at W. L. Gore & Associates takes three foriris—salary, profit sharing, and an Associates' Stock Ownership Program, or ASOF (legally similar to an employee stock ownership plan, or ESOF). Entry-level salaries are tn the middle ranges for comparable jobs in the industry. According to Sally Gore, daughter-in-law of the founder, "We do not feel we need to be the highest paid. We nev- er try to steal people away from other com- panies with salary. We want them to come here because of the opportunities for gro îvth and the unique work environment." Associ- ates' salaries are reviewed at least once a year and more commonly, twice a year. For most workers, the reviews are conducted by a compensation team drawn from individuals at the employee's work site. All associates have sponsors who act as their advocates dur- ing this review process. FWor to meeting v/ith the compensation committee, the sponsor checks with customers (or whoever uses the results of the person's work) to find out what contribution has been made. In addition, the evaluation team will consider the associate's leadership ability and willingness to help oth- ers develop to their fullest. Charles C. Manz is an associate professor of management at Arizona State Universi- ty. He was awarded the prestigious Marvin Bower Feliowship at the Harvard Business Schooi in 1988-89 for "the outstanding quaiity and quantity of his pubiished work" in the area of self-managed work teams and empioyee self-ieadership. He is co-au- thor of SuperLeadership: Leading Others to Lead Themselves (Prentice-Hall, 1989), a book widely acclaimed by experts in the field. One review proclaimed that the book should be a "classic of the '90s." He and co-author Henry P. Sims, Jr. were recently described in an article in the Academy of Management Executive as "the leading writers in the area of self-management." Manz has served as a consultant, ex- ecutive education leader, or researcher for many organizations. He has written arti- cles, as well as several books, on the top- ics of employee self-leadership, self-man- aged work teams, and the leadership of self-managed employees. Manz received B.A. and M.B.A. degrees from Michigan State University and a Ph.D. degree from Pennsylvania State University. Charles Manz completed the majority of his writing for this article during his year as a Marvin Bower Fellow at Harvard Business School. The generous support he received is gratefully acknowledged. W. L. Gore has profit-sharing and ASOF plans for all associates. FroHt sharing typi- cally occurs twice a year, but is dependent on profitability. The amount awarded to each associate is based on his or her time in service and annual rate of pay. In addition, the firm buys company stock equivalent to 15 percent of the associates' annual income and places it in an ASOF retirement fund. Bill wanted the associates to feel that they were owners, and after being with Gore for one year, each associate does indeed become a stockholder. The principle of commitment is seen as a two-way street. W. L. Gore & Associates tries to avoid layoffs. Instead of cutting pay, seen as disastrous to morale, the company has used a system of temporary transfers within a plant or cluster of plants, as well as voluntary layoffs. It should be clear that Gore is an unusu- al company by many standards. It has also been a highly successful and profitable com- pany. In fact, it has been profitable for 31 straight years. Sales jumped from $6 million in 1969 to $660 million in 1990, the growth fi- nanced entirely without debt. Some of the primary features that charac- terize Gore wiU be summarized in the follow- ing pages as a series of organizational themes. We will draw from these themes to prescribe some possible lessons for organizations that want to enjoy some of the benefits that Gore has obtained. Those benefits apparently stem largely from the company's distinctive em- ployee-empowerment centered approach to managing (or "unmanaging") an organization. THEME 1 Culture and Norms Supporting Employee Empowerment and Success Bill Gore wanted to avoid smothering the company in thick layers of formal "manage- ment," feeling that such layers stifled indi- vidual creativity. As the company grew, he knew it had to find ways to assist new peo- ple in getting started, as well as ways to fol- low their progress—a particularly important 52 concern in compensation decisions. Thus, the firm developed its "sponsor" program. When people apply to W. L. Gore, person- nel specialists conduct an initial screening, as in most companies. Those candidates who meet the basic criteria then interview with selected associates. Before anyone is hired, an associate must agree to be the new em- ployee's sponsor—no sponsor, no job. The sponsor is to take a personal interest in the new associate's contributions, problems, and goals, and to serve as both coach and advo- cate. The sponsor tracks the new associate's progress, providing help and encourage- ment, and coaching the new member to cor- rect weaknesses and concentrate on strengths. Sponsoring is not a short-terrn commitment. AU associates have sponsors and many have more than one. When an in- dividual is initially hired, the sponsor comes from that person's immediate work area. If he or she moves to another area, a new spon- sor will be appointed from that work area. As associates' responsibilities grow, they may acquire additional sponsors. Because the sponsor program goes be- yond conventional views of what makes a good associate, some anomalies occur in the hiring practices. Bill Gore proudly told the story of "a very young man" of eighty-four who walked in, applied for a job, and spent five very good years with the company. The individual had thirty years of experience in the ind ustry before joining Gore. His other as- sociates had no problems accepting hirn, but the personnel computer did. It insisted that his age was 48. As in this example, the Gore system of "unmanagement" attracts individ- uals from diverse backgrounds and creates unique success stories. An internal memo by Bill Gore described the three kinds of sponsorship he expected, and how each might work in practice:. 1. The sponsor who helps a new Associate get started on his job. Also, the sponsor who helps a present Asso- ciate get startled on a new job (starting sponsor). 2. The sponsor who sees to it that the Associate being sponsored ̂ efe ered- it and recognition for contributions and accomplishments (advocate sponsor). 3. The sponsor who sees to it that the Associate being sponsored is fairly paid for contributions to the success of the enterprise (compensation sponsor). A single sponsor can perfomti any one or aU three lidnds of sponsorsliip. A sponsor is a friend and an Associate. All the supportive aspects of the friendship are also present. Often (per- haps usually) two Associates sponsor each other as advocates. In addition to the sponsor program. Gore asks its associates to follow four guiding princi- ples: 1. Try to be fair. 2. Use your freedom to grow. 3. Make your own commitments, and keep them. 4. Consult with other Associates prior to any action that may adversely affect the reputation or financial sta- bility of the company. The four principles are often referred to as Fairness, Freedom, Commitment, and Wa- terline. The waterline terminology is drawn from a ship analog]?. If someone pokes a hole in a boat above the waterline, the boat will be in rela^vely little real danger. If someone, however, pokes a hole below the waterline, the boat is in immediate danger of sinking. In other words, associates can (and are en- couraged to) make dedsions on theilr own as long as the downside risk does not threaten the orgariization's survival. The operating principles were put to a test in 197 .̂ By this lime, word about the qual- ities of GQRE-TEX fabric were being spread throughout the recreational and outdoor mar- kets, and shipments began in volume. Then it happened. At first, a few complaints and oc- casidnal returns. FinaEy, large amounts of the clothing were being returned. GORE-TEX was leakirig. Having high-quality waterproof pro4ucts was one of the two major charac- teristics responsible for GORB-TEX's success, and the compan3^s reputation and a-edibUity were on the Mne. Feter W. Gilson, who led Gore's fabric di- vision, said of the situation, "It was an in- credible crisis for us at that point. We were re- ally starting to attract attention, we were taking off—and then this." In the next few months, Feter and his associates made a num- ber of those "below the waterline" decisions. First, the researchers determined that cer- tain oils in human sweat were responsible for dogging the pores in GORE-TEX fabric and altering the surface tension of the membrane. Thus, water could pass through. They also discovered that a good washing could restore the waterproof property. At first, this solu- tion, known as the "Ivory Snow Solution," was accepted. A single letter from "Butch," a mountadn guide in the Sierras, changed the company's position. Butch wrote that he had been lead- ing a group and "my parka leaked and my life was in danger." As Gilson says, "That scared the hell out of us. Clearly our solution was no solution at all to someone on a mountain top." All of the products were recalled. As Gilson says, "We bought back, at our own ex- pense, a fortune in pipeline material. Any- thing that was in stores, at the manufactur- ers, or an5rwhere else in the pipeline." In the meantime. Bob Gore and other asso- dates set out to develop a permanent fix. O'ne month later, a second generation GORE-TEX fabric had been developed. Gilson, furthermore, told dealers that if at any time a customer Be- tumed a leaky parka, they should replace it and bill the company. The replacement progiram alone cost Gore roughly $4 million. THEME 2 The Lattice Organization Structure: The Keystone to the Team Approach VMthout Formally Designated Teams W. L. Gore & Assodates has been described as not only unmanaged, but also as unstruc- tured. Bill Gore referred to the structure as a lattice orgaruzation. (See Exhibit 1.) The p:d- mary characteristics of this structure aret 1. Lines of communication are direct — person to person—^with no intermediary. 2. There is no fixed or assigned authorift}?. 53 EXHIBIT 1 THE LATTICE STRUCTURE \ Associate 54 3. There are sponsors, not bosses. 4. Natural leadership is defined by foUowership. 5. Objectives are set by those who must "make them happen." 6. Tasks and functions are organized through commitments. The structure within the lattice is complex and evolves from interpersonal interactions, self-commitment to responsibilities known within the group, natural leadership, and group-imposed discipline. Bill Gore once explained this structure by saying, "Every successful organization has an underground lattice. If s where the news spreads like lightning, where people can go around the organization to get things done." Another phenomenon within the lattice is the constant formation of temporary cross-area groups. In other words. Gore has "teams without formally designated teams." The cross-level and cross-functional interpersonal accessibility created by this structure enables all kinds of teams to self-develop, as spedfic needs arise. Assodates can team up vdth oth- er associates, regardless of area, to get the job done. When a puzzled interviewer told Bill that he was having trouble understanding how planning and accountability worked. Bill replied with a grin, "So am 1. You ask me how it works. [The answer is, it works] every which way." The lattice structure does have some sim- ilarities to traditional management structures. For instance, the thirty to forty assodates who make up an advisory group meet every six months to review marketing, sales, and pro- duction plans. As Bill Gore has conceded, "The abdication of titles and rankings can never be 100 percent." One thing that strikes an outsider is the informality and pervasive sense of humor. Words such as "responsibilities" and "com- mitments" are, however, frequently used in meetings. This is an organization in which members take what they do seriously, but not themselves. For a company of its size. Gore may have the shortest organizational pyramid found anywhere. The pj^amid consists of Bob Gore, the late Bill Gore's son, as president, Vieve, BiU Gore's widow, as secretary-treasurer, and aU others— t̂he associates. (Words such as em- ployees, subordinates, and managers are tabod in the Gore culture.) THEME 3 No Bosses or Managers, Lots of Leaders One pf Bill Gore's internal memos described the kinds of leaders that would be needed and t|he roles they were to play. (Note how he frequently used the term "team," yet his organization then and now is based on the lattice structure, not formally designated teams—again, the team approach, but with self-developing rather than formalized teams.) 1. The Associate who is recognized by a team as having a special knowl- edge, or experience (for example, this could be a chemist, computer expert, niachine operator, salesman, engineer, lawyer). This kind of leader gives the team guidance in a special area. 2. The Associate the team looks to for coordineition of individual activities in order to achieve the agreed-upon objectives of the team. The role of this leader is to persuade team members to niake the commitments necessary for suc- cess (commitment seeker). 3. The Associate who proposes necessary objectives and activities and s^eks agreement and team consensus on objectives. This leader is perceived by the team members as having a good grasp of how the objectives of the team fit in with the broad objective of the enterprise, 'fhis kind of leader is often also the "commitment seeking" leader in 2 above. 4. The leader who evaluates the relative contributions of team members (i:̂ consultation with other sponsors), and reports these contribution evalua- tions to a compensation committee. This leader may also participate in the ccjmpensation committee on. relative ccintribution and pay and reports changes in compensation to individual Associates. This leader is then also a compensation sponsor. 5. The leader who coordinates the research, manufacturing and market- ing of one product type within a busi- ness, interacting with team leaders and individual Associates who have com- mitments regarding the product b/pe. These leaders are usually called prodtict specialists. They are respected for their knowledge and dedication to their products. 6. Plant leaders who help coordi- nate activities of people within a plaifit. 7. Business leaders who help C(30r- dinate activities of people in a business. 8. Functional leaders who help coor- dinate activities of people in a "furtc- tional" area. 9. Corporate leaders who help coor- dinate activities of jDeople in different businesses and functions and who try to promote communication and coop- eration among aU Associates. 10. Intrapremiiring Associates wko organize new teams for new businesses, new products, new processes, new! de- vices, new marketing efforts, new Or better methods of all kinds. These lead- ers invite other Associates to "sign uip" for their project. It is clear that leadership is widespread in our lattice organization and that it is continually changing j^ ttd evolving. The reality that leaders late frequently also sponsors should ^ibt confuse the fact that these are dififer- ent activities and responsibilities. Lefad- ers are not authoritarians, manager^ of people, or supervisors who tell us wjhat to do or forbid us from doing thir^gs; nor are they "parents" to whom |we transfer our own self-responsibil|[ty. However, they do often advise u^ of the consequences of actions we h^ve done or propose to do. Our actions! r6- sult in contributions, or lack of conjtEi- butions, to the success of our enileir- prise. Our pay depends on \}\& magnitude of our contributions. TJhis is the basic disdpline of our lattice oiiga- nization. 55 Many other aspects of organizational life are arranged along similar lines. The parking lot does not have any reserved parking spaces except for customers and the handicapped. There is only one area in each plant in which to eat. The lunchroom in each new plant is designed to be a focal point for employee in- teraction. As Dave McCarter of Fhoenix ex- plains, "The design is no acddent. The lunch- room in Flagstaff has a fireplace in the middle. We want people to like to be here." The lo- cation of the plant is also no accident. Sites are selected based on transportation access, a nearby university, the natural beauty of the surroundings, and appeal of the climate. Land cost is never a primary consideration. McCarter justifies the selection criteria by stating, "Expanding is not costly in the long run. The loss of money is what you make happen by st5rmieing people into a box." In many ways the leadership approach used at Gore might be compared with the re- cently coined concept "SuperLeadership"— Leading Others to Lead Themselves (a book by C. C. Manz and H. P. Sims, Frentice-Hall, 1989, Berkley, 1990). The focus is on empowering and enabling others to perform on their own, and to the best of their ability. In a sense the only real bosses for Gore employees are them- selves. THEME 4 Successful Associates Can Work Without Structure and Management Not all people function well under such a sys- tem, espedally initially. For those accustomed to a more structured work environment, there are adjustment problems. As Bill Gore said, "All our lives most of us have been told what to do, and some people don't know how to respond when asked to do something—and have the very real option of saying no—on their job. It's the new assodate's responsibili- ty to find out what he or she can do for the good of the operation." The vast majority of the new assodates, after some initial floun- dering, adapt quickly. For those who require more, structured 56 working conditions. Gore's flexible work place is not for them. According to Bill, for those few, "It's an unhappy situation, both for the associate and the sponsor. If there is no contribution, there is no paycheck." Ron Hill, an associate in Newark, has pointed out that the company "will work with associates who want to advance them- selves." Associates are offered many in- house training opportunities. These tend to be technical and engineering focused, be- cause of the type of organization Gore is, but the training also includes in-house programs in leadership development. In addition, …