The Effect of Teams on Firm Profitability and Consumer Satisfaction by Charles, R. Emery and Lawrence D. Fredendall speaks about how the work structure group which can be traditional or teamwork based will impact consumer satisfaction and profit in an organization. The writers have used the research model named self-directed work team to analyze the effect on profit and consumer satisfaction. The article has also explained how the compensation system and leadership styles affect the performance of a team in the organization.
The firm, which has been examined under the article, is related to automobile dealer service garages. The evaluation demonstrated that the profits have been increased of the service garages which have used teamwork in organizations as comparable to the non-team organization. Not even the profits, but also consumer satisfaction has increased in companies using team work as their core for increasing their profitability and consumer satisfaction. The models applied pertained to compensation method and leadership style to know the relationship between teamwork and consumer satisfaction. Under this, when the authors initially applied job characteristics theory, then the hypothesis was that the profit and consumer satisfaction increased in the case of teamwork. Then, the second research model applicable was reward system. Under this, it was assumed the profit and consumer satisfaction was impacted moderately as compared to traditional work group.
Lastly, the two leadership styles were applied- initiating structure and consideration. Under this the hypothesis was that after applying the leadership styles, profit and consumer satisfaction was moderately impacted in the service garage. Thus, the finding concluded that the technique or the types of team which must be applied in the case of service garages are self-directed teams. This team is same like any other team. The only difference is that under this team the pieces of work or the complete work are organized under different independent tasks and on the other side, it has extensive independence over execution of different tasks. This type of teamwork has a high impact on permanence, high-to-medium impact on skill differentiation and low impact on authority differentiation.
The article is completely related to the chapter as under this, the explanation and the finding clearly demonstrated that there is an important relationship between work structure and consumer satisfaction. When the service industry is concerned, then it is analyzed that teamwork structure increases profitability and client satisfaction as compared to the traditional work groups. The technique applied was basically the combination of pay scheme on the traditional work group and team based organization and the result was that the profit was higher in the case of team structure and also consumer satisfaction was impacted at the p=10 level.
The finding in the editorial also illustrates that in some places the interactions between leadership and compensation with the team were not that effective as were implicit. There are some issues which are raised when the teams are more active in any organization such as social loafing, brook’s law and processes losses, etc. Under this social loafing is the issue under which the members of the team perform less effectively in the team as compared to individual performance. The second issue was Brook’s Law under which problem occurs when late comers are entered into the team then it becomes difficult for complete organization or team to get compatible with them and the consequences which occur are late production which result in late wrapping up. Lastly, the process loss problem occurs under the company as the utilization of resources is done in forming and maintenance of the team instead of completion of the tasks and targets.
Therefore, the combination is defined by the authors which is the sets between the group based sharing plan and individual pay for performance plan. The set stated that the superlative way to tackle is to follow the best pay scheme in an organization. Under this scheme the companies and the service garages use team structure in their organization to increase its consumer satisfaction and profitability. When few companies were analyzed to know the result, then it was suggested that the companies using team structure in the service garages have incurred higher profits by combining a leader and a combination pay scheme in its organization structure.
The advantage of the team structure under properly designed leadership will provide high quality of integrated service supports as per authors Lee, Kerr and Fry who have stated in their articles in 1986 that in independent sports the success of the teams depends on their critically designed initiate structure. To know the variables and the effect size, it is essential for the writers to investigate more on the basis of path analysis because this analysis will help the companies to know the factors which will influence the profit and consumer satisfaction. Even, it will help to know the relationship between the profits and the consumer relationship.
Here, the authors have also examined that factors like increase in employee satisfaction and increase in employee motivation will impact consumer satisfaction directly. These pathways will help to investigate that leadership and team interaction is needed in every organization but to which extent. Then, when the profit variation was analyzed, then it was found that the difference in the leadership styles and increase in the standard deviation of the profits will also impact the profit directly. Overall, the profit and consumer satisfaction research show that the organization performance is affected because of gain sharing in the team and it is quite possible that the combination of pay scheme will help the companies to generate logic of drafting team membership. Thus, employees must be motivated to have the feeling of being in the team in any organization as this mediated variable will increase organizational performance drastically.
Consequently, the authors Shea, Campbell and Guzzo in 1993 stated that the group potency is supplemented and the companies need to critically examine teamwork as it is really going to enhance the effectiveness of production. The authors explained that the study done by them indicated that the traditional leader behaviors are less satisfactory while measuring the effectiveness of the business but some are against these statements (Emery & Fredendall, 2002). Thus, finally, the research done indicated that the proposed interactions of leadership and compensation done with the team were not supported by many authors. As there are a number of researches and studies which identify that there is a direct relationship between organizational performance and compensation where forming teams and giving resources to them will make no use, just wastage of resources.
Even, Bondy and Guzzo in 1983 and Lawler in 1971 have provided the research work under which they have a quantifiable connection to explain that the relationship exists between profits and compensation. Their research studies concluded that there is a well-built relationship between organizational profit and compensation method. Overall, the main impact of the work group structure and compensation method will be justified only to 56%, when the information and research are utilized for the organization variance in profit (Yukl, 1989).
References
Emery, R.C. & Fredenall, D. L. (2002). ‘The Effect of Team on Firm Profitability and Consumer Satisfaction’, Journal of Research Service, Volume 4, No.3.
Yukl, G. A. (1989), Leadership in Organizations, 2nd ed. Englewood Cliffs, NJ: Prentice Hall.
