Employee empowerment is allowing workers to make decisions that would otherwise come from management. By empowering employees who have direct knowledge about the the matter at hand, services are delivered efficiently. Also a decentralized decision-making process is cost-effective because it streamlines the firm by getting rid of excess manpower, mainly in the middle management.
Employees on the ground are a repository of knowledge on the situations they deal with on a daily basis. Empowering a worker to make decisions motivates him and makes him feel more attached to the organization. Instead of using his hands to discharge his duties, the employee is able to use his brains by making decisions on behalf of the company. By empowering workers, you create independent entrepreneurship throughout the company structure. In most knowledge-based firms, for instance, the company hierarchy is flattened with a multi-skilled workforce. So, the essence of employee empowerment is to have a lean and highly motivated workforce that will give the company a competitive edge.
Corporate decentralization also changes the way a manager functions. Instead of issuing orders, today's manager has assumed more of leadership and coaching roles. When the workers are properly trained and empowered, management also has enough time to engage in thinking about the objectives and vision of the firm while the worker is bringing in results.
In his "18 Principles of Leadership" Colin Powell, former Secretary of State and an accomplished soldier who rose to the rank of Chief of Staff summed up the objectives of employee empowerment: "Experts often possess more data than judgment. Policies that emanate from ivory towers often have an adverse impact on the people out in the field who are fighting the wars or bringing in the revenues. Real leaders are vigilant – and combative – in the face of these trends."
Toyota Corporation is the world's number one motor vehicle manufacturer. It has managed to expand its business while Detroit motor industry, for instance, has been shrinking by doing more with less staff. Toyota Corp. realized setup time was costly because it tied labor, equipment and added no value. Setup time is the time required to put in place equipment or device in readiness for production. It is usually considered part of the production cycle. By training its employees to do their own setup, it reduced the setup time from days to hours, if not less. The company formed teams, providing them with the skills necessary to do specialized tasks. The result was a more cost-effective and efficient production system, which in turn was good for the company's competitiveness.