Benefits of Empowerment of Sales Personnel: Results of a Pilot Study. Miranda J. Smith and John W. Wilkinson, University of South Australia.

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1 Benefits of Empowerment of Sales Personnel: Results of a Pilot Study Miranda J. Smith and John W. Wilkinson, University of South Australia Abstract Empowerment offers major benefits to sales organisations. Various aspects of empowerment have been studied previously, including relationships between different elements of empowerment, and effects of empowerment on factors such as employee motivation. This paper provides a summary of findings of a pilot study replicating aspects of previous studies, but focusing on salespeople, undertaken as an initial step toward comparing levels of empowerment in Australian and overseas sales organisations within the business-to-business marketing field. Such comparisons should assist company management to assess the advantages of retaining or increasing levels of empowerment within sales organisations. Results of this pilot study indicate moderate levels of empowerment within the research site, the sales division of an industry leader in Australia and New Zealand. Analysis of results also has identified the need for improvements in the validity of the research instrument, however. Empowerment What it Comprises and What it can Deliver Empowerment involves management practices that distribute information, knowledge, power and rewards throughout the organisation (Bowen and Lawler, 1995). Although empowerment is related to prior concepts of participative and high-involvement management, the term also implies the freedom and ability to make decisions and commitments, not just to suggest them or be part of making them (Forrester, 2000, p 67). According to Zemke and Schaaf (cited in Bowen and Lawler, 1992, p 33), empowerment means turning the front line loose, encouraging and rewarding employees to exercise initiative and imagination. An empowered employee has the necessary competence required for her/his job, has control over her/his work and is likely to be motivated by company goals (Bowen and Lawler, 1995). Access to information is an important element of empowerment. For example, Randolph and Sashkin (cited in Melhem, 2004) argue that transparent sharing of information is an essential requirement of empowerment, since employees cannot act responsibly even if they wish to do so without adequate information. Adequate internal communication is likely to affect the empowerment of employees who deal with customers, ensuring that employees obtain necessary information to plan and deliver effective customer service (Melhem, 2004). Employee initiative and responsibility are likely to be increased by granting power to employees, delegating decision-making and discretionary action to employees, and enabling employees to significantly affect outcomes (Menon, 2001; Mills and Ungson, 2003). Jan Carlzon, former CEO of Scandinavian Airlines Systems, believed that to free someone from rigorous control by instructions, policies and orders, and to give that person freedom to take responsibility for their ideas, decisions, and actions liberated hidden resources that would otherwise remain inaccessible (Bowen and Lawler, 1992, p 33). Those potential outcomes seem especially relevant to sales and customer service operations. Empowerment programs often fail because of a focus on issues relating to power instead of issues relating to information sharing and employee knowledge (Bowen and Lawler, 1995).

2 When information sharing is inadequate, employees could be given authority or power to demonstrate initiative, but would lack the necessary training to identify or develop effective and responsible solutions to problems. Firms need to share information about customer expectations and feedback, the organisations financial position and corporate strategic plans, for example (ibid.). Sharing of information about the firm s vision is also important as this helps to create a sense of meaning and purpose, and enhances an employee s ability to make decisions that are aligned with the firm s mission (Lawler, Mohrman and Ledford, 1992). Various factors are linked or related to empowerment. Gatewood and Riordan (1997, p 44) suggest that the following two practices develop employees knowledge, skills and appropriate frame of reference : (1) management communication of organisational policies and goals, and (2) exchange of information about work activities between employees and managers upward, downward and horizontally. The frame of reference enables employees to align their own objectives with organisational objectives, so that all employees work toward common goals (Moller, 1994). In addition, employees accept responsibility when they are aware of their own goals and feel that they can influence the situation on the way toward achieving their [own] goals (ibid., p 5). Based on results of a longitudinal study conducted from 1987 to 1990, Lawler et al. (1992, p 16) conclude that, without the right skills it is impossible for individuals to participate in the business and influence its direction. Complete knowledge and understanding of her/his job and what it entails, enables an employee to answer customer questions and to solve customer problems efficiently, saving time and effort for the customer, the employee and, possibly, her/his manager (Melhem, 2004). Greater knowledge also increases the employee s confidence in her/his ability to serve customers and to make decisions (ibid.). Similarly, clear goals, task specifications and lines of authority are perceived by employees as important factors contributing to empowerment (Spreitzer, 1996). Conversely, flexible or unclear lines of authority, and informal goals and tasks are perceived to be disempowering (ibid.). Trust between employees and managers is an important contributor to goal congruence (Mills and Ungson, 2003), and a determinant of both the long-term success of the organisation and the well-being of its employees (Cook and Wall, 1980). Without trust, employees become self-protective and defensive. Therefore, managers need to demonstrate trust in their employees by distributing power, exhibiting confidence in employees, providing necessary resources and accepting new ideas (Melhem, 2004, p 77). Initiative cannot be achieved without some degree of responsibility, since employees would not be motivated to use their initiative to improve organisational outcomes if they did not feel some responsibility for organisational performance. Employees who feel responsible are more likely to demonstrate loyalty to the people and goals of the organisation, and to contribute to creating and maintaining a team spirit. They also are more likely to take the initiative to achieve performance outcomes and to improve organisational capabilities. (Moller, 1994) Empowerment of Salespeople and Customer Service Staff Carson and Carson (1998) report that job attitudes are influenced by employees perceptions of empowerment. Specifically, those researchers found that empowered employees have higher levels of job satisfaction and organisational commitment than unempowered employees. Those findings are important because employees attitudes toward work have been empirically linked to consumers attitudes toward the organization (ibid., p 140).

3 Indeed, during the 1990s, employee empowerment was widely advocated as a means of remedying poor customer service (Bowen and Lawler, 1995), and for its potential to improve outcomes for individuals and organisations (Liden, Wayne and Sparrowe, 2000). Potentially, as asserted by Ligerakis (2003, p 16), employees can be a company s staunchest brand advocates. According to Steve Cornwell, principal of a brand management consultancy, effective employees can breathe life into a brand and, frequently, memories of interactions with employees can last longer or have more impact on customers than the colour of the company s logo (cited in Ligerakis, 2003, p 16). Brand identity can be enhanced by employees acting as ambassadors of the brand strategy when believing in a higher vision and meaning associated with the brand and organisation (Jacobs, 2003, p 24). Salespeople usually have some ability to adapt the marketing offering and, thereby, to tailor the brand and its promise to specific customers. However, appropriate tailoring requires management to provide salespeople with relevant information about customers, prospects, and organisational capabilities and goals. Salespeople also require adequate expertise to develop successful adaptive selling strategies and tactics. In addition, they need to feel responsible for the success of, and sufficiently competent to implement, those strategies and to be granted the necessary latitude to do so. If salespeople do not feel empowered (that is, if they do not feel they have adequate access to information, expertise, competency, responsibility and latitude), they may avoid risks associated with adaptive or flexible sales approaches. The resulting inflexibility and lack of initiative often creates negative customer perceptions. Clearly, empowerment comprises a complex set of components. This pilot project is the first phase of a study to assess the degree to which those components occur in Australian, New Zealand and overseas business-to-business sales organisations, to analyse relationships between components, and to assess the impact on performance. Comparisons with overseas organisations also are planned, so that some form of bench-marking is made available. The pilot research instrument is based on factors identified in the review of prior studies. Methodology Based on a review of the literature, factors considered to be essential components of empowerment were identified (including those mentioned above). Those factors were included in a research instrument designed to assess the level of empowerment perceived by salespeople within an Australian manufacturing firm, which is the leader within its industry in Australia and New Zealand. The firm markets directly to large and medium-sized business firms, and through resellers to small firms and households. Questionnaire items incorporated a four-point Likert-style scale, with 1 indicating Almost never and 4 indicating Almost always. Thirty-one items of a larger battery of questions related to the study reported here. Pre-testing of the draft questionnaire was undertaken with three marketing executives who previously had worked as salespeople in the firm. Each executive was interviewed separately after completing the draft questionnaire. Minor editing of the questionnaire was undertaken as a result of the pre-testing. The final questionnaire was mailed to all 117 members of the company s salesforce. Up to two reminder messages were sent to potential respondents to increase the response rate. In total, 71 usable responses were received, representing a response rate of 61%, which is within the range of response rates reported for prior research in this area. Response rates from within each state sales office were fairly similar, suggesting that findings would be reasonably representative of the firm nationally.

4 The number of responses is low due to the modest number of salespeople in the research site. Therefore, the ratio of responses to variables in the final factor analysis and cluster analysis (3:1) is well below the minimum level (5:1) generally recommended (Hair et al., 1998). Therefore, results of this pilot study need to be treated as provisional. Results and Discussion Questionnaire items were categorised into six sets during data analysis, based on similarity of issues within the items. Factor analysis of the 31 items relating to this study yielded eight components, accounting for 69% of total variance. Seven items loaded onto different components than the majority of items and, therefore, were excluded from further analysis. The remaining 24 items loaded on one component in a final factor analysis, that component explaining 37% of variance. Several items, relating to authority and initiative (Composite items 5 and 6 in Table 1), had secondary loadings on another component. Several other items, relating to respondents being informed (Composite item 1), had a secondary loading on a third component. The other items (Composite items 2-4) had no secondary loadings. The three components with primary or secondary loadings explained 55% of total variance. Thus, there is reasonable validity within the six categories, but the categorisation is not ideal. Further work appears necessary to develop an improved construct. Composite means of responses to the 24 items are shown in Table 1. Comparisons of means for the six state offices identified no significant differences at the 95% confidence level. Cluster analysis of the overall sample identified three clusters, the means for which are also shown in Table 1. Analysis of the distance coefficients at each step within a dendogram produced using the Ward method in an initial hierarchical cluster analysis suggested selection of four clusters to be most appropriate. Analysis of variance (ANOVA) and comparisons of mean distances between final cluster centres in K-means cluster analyses confirmed four clusters to be more appropriate than three or five clusters. However, one cluster of just three respondents was rejected since those appear to be outlier respondents. As shown in Table 1, Clusters 1 and 3 have significant differences in the means of all composite items (at the 95% confidence level), suggesting that there are differences in perceptions of levels of empowerment, based on the indicators used in this pilot study. Overall, 62% of respondents have a mean score of 3 or above (on a 1 4 scale), the remainder having a score of only slightly less than 3. This suggests that the salesforce is reasonably empowered overall. Composite item Total* (n=68) Composite mean score Cluster1 (n=26) Cluster2 (n=23) Cluster3 (n=19) 1. Respondent is informed Respondent believes management listens to her/him Respondent receives feedback from management Respondent receives adequate resources, support & training Respondent is encouraged to use initiative Respondent has authority to make decisions and take action Mean of composite items Table 1: Mean Scores of Composite Items Scale: 1 Almost never 2 Sometimes 3 Often 4 Almost always * Excluding three outlier respondents

5 Table 2 shows responses regarding several measures of pride and loyalty toward the firm, the clusters being derived from the prior cluster analysis. Cluster 3 has significantly higher means than Cluster 2 for five of the eight items, while there are no significant differences between means of Clusters 1 and 3. While the cluster with the highest mean scores for empowerment factors also has the highest mean scores for pride and loyalty factors, there is no significant correlation between the two sets of factors. Analysis of results from much larger studies might clarify the existence of any relationships. Possible relationships with factors more clearly associated with sales performance also could be analysed in future studies. Given the potential benefits of empowerment identified by various practitioners and researchers, some of which are indicated as possibilities in the findings of this pilot study, it seems warranted for the research firm to identify reasons for some salespeople feeling less empowered than others. (Issues could be identified in a separate survey of employees.) Since the organisation is the leading Australasian firm within its industry, it is likely that many other Australian (and, perhaps, New Zealand) firms also have sizeable proportions of their salesforces experiencing modest (or even low) levels of empowerment. Research into empowerment practices of a range of Australian and New Zealand firms seems warranted to clarify this situation, and to assess whether there are higher performance levels within salesforces that are more empowered than others. Additional research also could focus on customer service staff, recognising that there are likely to be differences in the effects of components of empowerment on customer service staff and salespeople, and in the linkages between empowerment and performance factors. However, improvements in the design of the research construct seem necessary before the suggested research is undertaken. Questionnaire item Total* (n=68) Cluster1 (n=26) Mean score Cluster2 (n=23) Cluster3 (n=19) I am proud to be able to tell people that I work for [the company] I feel that I am part of [the company] It pleases me when I know my own work has made a contribution to the good of the company In my work activities I like to feel that I am making some effort for the company and not just myself I am flexible about switching job responsibilities to make things easier for other salespeople In busy situations, I volunteer my efforts to help other salespeople If [the company] wasn t doing too well financially I would think about changing jobs** The offer of a little more money with another company would make me think about changing my job** Overall mean Table 2: Mean Scores of Selected Questionnaire Items Cluster membership is derived from Table 1 * Excluding three outlier respondents ** Scores are reversed for the analysis of this item, given the negative aspect of the relevant statement, so that 1=Almost always and 4=Almost never

6 References Bowen, D.E., Lawler, E.E., The empowerment of service workers: What, why, how, and when. Sloan Management Review 33 (3), , Empowering service employees. Sloan Management Review 36 (4), Carson, P.P., Carson, K.D., Does empowerment translate into action? An examination of service recovery initiatives. Journal of Quality Management 3 (1), Cook, J., Wall, T., New work attitude measures of trust, organizational commitment and personal need non-fulfilment. Journal of Occupational Psychology 53 (1), Forrester, R., Empowerment: Rejuvenating a potent idea. Academy of Management Executive 14 (3), Gatewood, R.D., Riordan, C.M., The development and test of a model of total quality: Organizational practices, TQ principles, employee attitudes, and customer satisfaction. Journal of Quality Management 2 (1), Hair, J.F., Jr, Anderson, R.E., Tatham, R.L., Black, W.C., Multivariate data analysis (5th ed), Prentice-Hall, Upper Saddle River, NJ. Jacobs, R., Turn employees into brand ambassadors. Bank Marketing 35 (3), Lawler, E.E., Mohrman, S.A., Ledford, G.E., Employee involvement and total quality management: practices and results in Fortune 1000 companies, Jossey-Bass, San Francisco. Liden, R.C., Wayne, S.J., Sparrowe, R.T., An examination of the mediating role of psychological empowerment on the relations between the job, interpersonal relationships, and work outcomes. Journal of Applied Psychology 85 (3), Ligerakis, M., Building brands from the inside out. Professional marketing May/June, Melhem, Y., The antecedents of customer contact employees empowerment. Employee Relations 26 (1), Menon, S.T., Employee empowerment: An integrative psychological approach. Applied Psychology: An International Review 50 (1), Mills, P.K., Ungson, G.R., Reassessing the limits of structural empowerment: Organizational constitution and trust as controls. Academy of Management Review 28 (1), Moller, C., Employeeship: The necessary prerequisite for empowerment. Empowerment in Organisations 2 (2), Spreitzer, G.M., Social structural characteristics of psychological empowerment. Academy of Management Journal 39 (2),

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