In this past Tuesday’s video post I related the story of fast food employees bemoaning the arrival of a charter bus full of customers. And, what a powerful metaphor it was for employee attitudes we see frequently. From VP’s at the corporate office to hourly employees on the floor, we all to frequently witness a strong desire among them to maintain the status quo. Real opportunities for the corporation or organization are missed because of the fear of change, or the desire to remain within their comfort zone. This may be costing you millions of dollars of cost reduction, new business and profit. A Baptist preacher once said his job was to comfort the afflicted and afflict the comfortable… well stated.
From an organizational point of view there are fundamental reasons why a strong desire may exist to maintain the status quo, or to take timid steps towards new opportunity.
What’s in it for me? The employees at the fast food restaurant received $8.50 an hour whether the bus showed up or it didn’t. The bus just meant more work for the same money. That attitude exists throughout organizations. It may be manifested differently or in a more sophisticated fashion, but the same non-the-less. Employees at all levels must participate in the performance of the business to achieve industry-leading results.
It is human nature – we are predisposed to desire stability and resist change. I have seen exec’s upset that someone parked in “their” spot and they had to move over a space or two! In today’s market, leadership needs to send a powerful and consistent message to their people, that the status quo is inverse to stability… that true stability is the result of embracing change and the ability to see and react quickly to opportunity. This requires re-orienting people’s reaction to change 180 degrees. The good news is that rocket science is not required to do this, consistency is.
The exchange of time for money – there is a very fundamental challenge that we have to find a solution to. The conflict is startling. Nowhere on the financial statement is there a mention of hours worked, or individual wages earned. What is detailed on the financials is the total cost of compensation, versus the total result of the enterprise. YET, employees ARE compensated for time (hourly or salaried) with a fuzzy connection to performance at best. Many attempts have been made over the years to more closely link compensation to either individual performance or the performance of the business (or both), such as incentives, bonus’s, gain sharing, profit sharing, and the now popular phrase… total rewards.
Fatal flaws – However, in our experience the vast majority of these attempts typically have two fatal flaws- (1) the definition of performance is much to complicated…from the 80 page description I highlighted in a previous video post, to a new client, whose management compensation formula has 15 steps to calculate the bonus pool. (2) The “reward” is much to far away. Promises of some reward 12 months from now, or maybe next quarter, is ineffectual at driving performance today…period. Human nature.
Complication and delay in distributing variable compensation (incentives, bonus’s, rewards, etc), is always symptomatic of senior managements legitimate fear of paying bonus’s when the profit, ebitda or cash flow isn’t there. However in attempt to build in protection, the original intent … to motivate employees and drive organizational performance… is subverted.
We have practical and effective solutions to these dilemmas that I will detail in future posts, beginning next week. Lastly, if you have found these posts of interest, please recommend them to your business associates. Have a great weekend! Karl