For managers to be able to manage work, they need to understand the definition of the term group, and they need to understand that several types of groups exist in organizations. A group at Numerica Credit Union or any other organization is any number of people who interact, who are psychologically aware of each other, and who perceive themselves as a group. An organization such as Numerica is made up of formal groups, the groups that appear on its organization chart, such as the marketing department. Managers of groups act as the “linking pins” among departments. The ability of Numerica managers to coordinate and communicate with these groups and their success in dealing with their own departments are certainly important factors in the future success of the organization as a whole.

At times, managers at Numerica, from Carla Altepeter on down, can form new groups to handle some of their less routine challenges. For example, management could form a task group by choosing two people from each of several departments and getting them together to plan and implement the remodeling of a company branch. As with any other organization, Numerica also has to consider informal groups (those that do not appear on the organization chart). More discussion on informal groups will follow later in this Challenge Case Summary.

Numerica management could decide to form a committee to achieve some specific goal. For example, a committee might be formed to investigate how to enhance the quality of service delivered to new credit union members, which could allow various departments to exchange quality improvement ideas and generate related suggestions for management to consider. Such a committee could improve Numerica decision making in general by encouraging honest feedback from employees about quality issues in the organization. It could also be used to get fresh ideas about enhancing service quality and to encourage Numerica employees to participate more diligently in improving the quality of services offered by the credit union. This approach would help ensure that all appropriate departments are represented in important quality decisions so that when Numerica takes action to improve the quality of its new-member services, for example, every important angle would be considered, including service design, implementation, marketing, customer service, and so on.

In managing such a quality committee at Numerica, management should encourage the members to take certain steps to help the committee be successful because a poorly run committee wastes everyone’s time. For example, the committee should develop a clear definition of its goals and the limits of its authority: Is it merely going to come up with quality improvement ideas, or should it also take the initial steps toward implementing those ideas?

In addition, the quality committee should not have too few or too many members. Issues such as appointing a secretary to handle communications and appointing a chairperson who is people oriented must be addressed. Such a committee needs someone who can rephrase ideas clearly to ensure that everyone understands the ideas and someone who can encourage members to participate and think about the issues while avoiding “groupthink”: Original ideas should be generated by the committee members, not a unanimous opinion that the members agree to just because they are trying to avoid conflict.

Managers in organizations such as Numerica must be patient and understand that it will take some time for a new group to develop into a productive working unit. The members of any new work group must start by trusting and accepting one another and then begin communicating and exchanging ideas. Once acceptance and communication increase, group solidarity and control come naturally. Then the group members will get involved, cooperate, and try to maximize the group’s success.

With the quality committee that is being used as an example, Numerica management must be patient and let it mature before expecting maximum effectiveness and productivity. If given time to develop, the group will function as a unit, members will participate willingly and effectively, and the group will reach valuable decisions about what needs to be done to improve the quality of services that Numerica offers.

Issues regarding informal groups could affect the success of work groups at Numerica Credit Union. Employee groups form at times because of certain commonalities. For example, minority employees could get together as a group to increase the opportunities for their professional growth at Numerica. Employees also form friendship groups, which ease communication and provide feelings of satisfaction in a company. In general, such informal groups can improve the work environment for everyone involved, so it can be advantageous for management to encourage their development.

Perhaps Numerica management could accelerate the development of a quality committee into a productive unit by including individuals who already know and trust one another because of their membership in one or more informal groups at Numerica. For example, some members of the newly formed quality committee might know and trust one another immediately as a result of their belonging to the company’s bowling or softball team. Under such circumstances, the trust developed among employees through past informal group affiliations could help the formal quality committee develop into a productive group more quickly.

For a company such as Numerica to be successful, managers must be able to consider how formal and informal groups affect organizational productivity, and they need to determine what informal groups exist, know who the group members are, and understand how these groups form. Armed with this information, Numerica management can strive to make their work groups more effective.

One way management can get information about the groups at Numerica is to use sociometry. A questionnaire asking employees with whom they spend time can be designed, and a sociogram can then be constructed to summarize this information. Managers could also do a more casual analysis by simply talking to their employees and observing how they interact with one another.

Managers in an organization such as Numerica should try to understand how informal groups evolve and should be aware that an organization’s formal structure influences how informal groups develop within it. For example, assume that in one department at Numerica, 15 people work on lending. Many of them are interested in sports, have become friends because of this common interest, and work well together as a result. If a manager needed to make some changes in this department, he or she should try to accommodate such informal friendship groups in order to keep these employees satisfied with their jobs. Only with very good reason should a manager of such a department damage the existence of the productive friendship group by transferring any group members out of the lending department.

Managers in an organization such as Numerica Credit Union should keep in mind the four major factors that influence work group effectiveness. First, the size of the work group can be important to its productivity. For example, a 20-person quality committee would probably be too large and would hamper the group’s effectiveness. Remember also, however, that managers should consider informal groups before making changes in group size. The quality committee could end up being less productive without one or more of its respected members than it would be if it were slightly too large.

Another important factor that influences work group effectiveness is group cohesiveness; a more cohesive group will tend to be more effective than a less cohesive group. Ways to increase the cohesiveness of a work group might include allowing members to take breaks together or rewarding informal group members for a job well done.

Group norms, or behaviors required within the informal group, are a third factor that affects the productivity of formal group behavior. Because these norms ultimately affect profitability, managers must be aware of them and understand how to influence them within the formal group structure. For example, assume that a smaller informal group of workers within Numerica’s lending department normally maintains the quality of loans by focusing mainly on weeding out applicants with marginal credit ratings. However, because of this quality norm, the informal group members are focusing too much on minimizing risk and not enough on providing great service. Management could try to improve this situation by giving bonuses to the group members who meet service as well as risk management goals. The combination of criteria for rewards would probably increase the formal group’s productivity while encouraging a positive norm within the informal group.

Status within informal groups also affects work group productivity. For example, if Numerica managers want to increase a group’s productivity, management should try to encourage the informal group’s leaders as well as the group’s formal supervisor. Chances are that a targeted group will become more productive if its high-status members support that objective.

Overall, if the company wants to maximize work group effectiveness, management must remember both the formal and informal dimensions of its work groups while considering the four main factors that influence work group productivity.