How I Learnt to Let My Employees Lead

In 1980, the Johnsville Sausage Company was headed by Ralph Stayer. Profits were above average for the industry and the financial statements showed every sign of health. The company was growing at 20% annually. Nevertheless, Stayer faced stiff competition. National competitors could outpromote, outadvertise, and underprice Johnsville, while local/regional producers could provide superior customer service. Stayer was also concerned about employee attitudes at Johnsville. Employees did not take responsibility for their work. The company could not face competitive challenges with such low level of employee attentiveness and involvement. Stayer realized that he had to change his authoritarian management style. He also discovered that the company had no clear goals. He then envisioned Johnsville as the most expensive sausage while maintaining the largest market share. However, he had to change employee attitudes in order to achieve his goal.

Stayer conducted an employee attitude survey. He was surprised to find that employee attitudes were average. Stayer realized that this was due to his authoritarian management approach. Stayer created the agenda and his employees blindly carried it out. Since this approach could pose a serious risk in the face of increasing competition, Stayer decided to decentralize decision-making in the company. But this change was abrupt and almost forced on employees. Employees still did not make independent decisions. After 2 years, Stayer replaced his top 3 managers. Stayer needed people who were strong enough to confront him and make independent decisions.

In those 2 years, Stayer also worked on detailed strategic and tactical plans, as well as organizational structures. Stayer then realized that such changes had to grow from day to day working realities. Nobody could dictate them from above and certainly not in advance. Stayer also recognized that he could not give responsibility to employees. They had to expect it, want it and even demand it. To achieve this objective, Stayer trained himself to be a better coach.

Don’t Manage People – Manage Systems and Structures Instead: Strayer worked on 2 contextual frameworks: systems and structures.

Systems: Stayer learnt 2 valuable lessons. First, just start and make the change. Don’t wait until you have all the answers. Secondly, start by changing the most visible system that you directly control. He first addressed the quality control department. Stayer announced that line workers in plants (not senior managers) would now be responsible for product quality. Workers readily accepted ownership and formed teams to resolve quality problems. Team workers in other areas also started contributing to product quality. Management began to forward customer letters directly to line workers. As a result, quality rose. Later, workers began to identity fellow workers who were underperforming. Workers took on the responsibility for dealing with performance problems and actually fired non-performers. Eventually, line workers assumed most of the traditional personnel functions. Stayer also changed the compensation system. He eliminated the annual across the board raise and substituted a pay for responsibility system. He also instituted the “company performance share” in which a fixed percentage of pre-tax profits was distributed among employees based on performance.

Structures: Strayer seized opportunities to make structural changes based on successful system changes. Teams gradually took over a number of functions previously performed by individual managers; hierarchical layers went from six to three. The personnel department was replaced by a learning and personal development team. An educational allowance was also introduced for each employee.

Influence Employee Expectations: Stayer tried to use every available