In summary
Organisations have a tendency to focus most of their energy on the highest and lowest performers, often neglecting the majority who fall in-between. By not focussing enough energy on these mid-performers, they may easily slip down into your lower performance category and ultimately leave the company. Implementing reward and motivation schemes designed to engage all employees might be one solution. Case studies: Bacardi-Martini, Pannone & Partners, Hart Worldwide.
Article in full
Do we need to shift the way we approach business performance? It seems that our focus has always been about inspiring high achievers and motivating under achievers, but what about the majority in the centre? Leading thinkers believe that we are missing part of the big picture, but how can you go about initiating it? Gallop's Q12 engagement index poll conducted in 2001, confirmed what many of us thought to be true. It concluded that most organisations are divided into three types of worker. There's the 'actively engaged' at the very top - 17%. There's the 'acutely disengaged' at the very bottom - 20%. And there's the 'not engaged' in between - the 63% who do no less than a reasonably good job; but then do nothing more either.
Penny Tamkin, associate director of the Institute for Employment Studies confirms that "most organisations largely ignore this group, massive as it is". Research conducted by Mercer Human Resource Consulting entitled Saboteurs and superheroes: delivering the new psychological contract, reveals the extent of the apathy. It interviewed 3,500 employees across various industries. When it came to being coached on performance improvement, only 25% of respondents felt that they received this regularly. And when it came to being rewarded for performance improvement, just 20% felt this happened at all.
The implications of this trend are serious says Paul Cronin, a consultant with think-tank The Work Foundation. "It inhibits organisations from getting the very best out of their human capital." In the absence of any suitable support, many employees carry on as they are, but never reach their full potential; others deteriorate and slip down to a lower level and some actually leave, in search of a more challenging opportunity. All this can expose an organisation to contracting a toxic work culture where disenchantment and lack of engagement spreads throughout. Together, these effects can substantially reduce the bottom line says Petra Cook, head of policy at the Chartered Management Institute. There is the opportunity cost of not fully realising the capacity of your employees, the financial cost of having to replace them when they resign and of then having to wait for the new recruit to get up to speed with the role and the management cost of having to coax those who fall by the wayside. Lastly, there is the unfathomable cost of being exposed to an unhealthy work culture where employees' satisfaction, attendance and ultimately output falls and falters.
But hang on. None of this seems like rocket science, or even management science for that matter. In fact, most of it seems like common sense. So why do so many companies continue to operate like they do? "It's a very good question, and it's one [that is] not easily answered," says Colin Hunter, a director at the people development consultancy Hunter Roberts. He points out that historically this is how organisations have been run. Another reason is that the status quo seems to get good results; the most profitable companies do tend to have the biggest carrots and sticks for those at the top and the bottom. These minorities also tend to draw attention to themselves - either in a positive or negative way - and it is human nature to focus on this noisy minority rather than the relatively silent majority just quietly 'getting on with it'. This is particularly so when line managers are stretched. There may also be one other influence going on.
Off the record, one industry insider argued that the people getting the biggest rewards are also the people deciding how the reward pie should be divided up. "For them to alter the ratio would be like turkeys voting for Christmas." Despite all this, leading thinkers are calling for change. Richard Reeves, author of Happy Mondays - putting the pleasure back into work, is one of them. In a column in Management Today magazine, he argued that business performance should not be about "tickling the tummies" of the over and under-performing. Instead, it should be about "motivating the majority". To be clear, he says this involves, "understanding what makes each individual tick, helping them to flourish, and making the whole team greater than the sum of its parts". And if you do that? "If each of these people raises their game by just a little bit, the cumulative lift would be enormous," suggests Reeves.
He adds that the potential benefits that could be reaped from focusing on employees in the middle are greater than those currently achieved by focusing solely on employees at the two extremes. Of course some organisations have already realised this. Every year the Sunday Times lists the top 150 top companies to work for - the common factor linking these organisations is their inclusive approach to people management. It seems that every single employee, not just those on the fringes, is encouraged in what they do and valued for what they contribute. Tellingly, the best example of this is technical development firm W L Gore, which was number one in last year's survey. The firm, famous for the invention of the Gore-Tex textile, prides itself on fairness.
Not only is everyone entitled to benefits like health and dental care, parental leave and childcare, life insurance and a final salary pension; everyone is also entitled to an annual profit-share bonus and the opportunity to secure a pay rise. Interestingly, the latter is determined by colleagues, rather than superiors. Each team annually scores the effort of everybody else in their team. Those perceived to be punching above their weight are duly given more money. To help all and sundry achieve this, mentors offer one-to-one advice and guidance throughout the year. To cap it all, W L Gore has a very flat hierarchy, creating a sense that everyone is important. And to ensure that in this relatively democratic organisation everyone works hard and plays hard, the company lays on various social events. Naturally, all this helps to make for a satisfied, stimulated and productive environment. To be sure, however, not all efforts at inclusive people management deliver results.
Paul Osgood, a consultant with Hewitt, explains: "By their very nature they can be generic. Due to restraints on resources, they are not necessarily tailored to the needs of each employee and therefore they are not necessarily effective." One of the most popular solutions to this problem seems to be to introduce flexible benefits and attach a performance target to an additional spend on those benefits. Everyone can pick and choose something extra if their yearly appraisal indicates they have made jointly-agreed improvements. Mark Dixon, business solutions manager for the HR software company 4th Contact, says: "This could be an incentive that is manageable and successful on a mass scale". Crucially, the options open to the employees would have to be relevant. Research from Aon Consulting reinforces this. Its Benefits and communications at work report published last year found the choice of benefits available to employees directly impacts on commitment and motivation. Further to being relevant, these choices would also have to be well communicated.
Tim McTigue, divisional managing director of JLT Benefit Solutions, says: "If not, the value of the initiative would be vastly underestimated and its purpose would be lost." Finally, the appraisal system, which determines whether an employee can receive an extra flexible benefit spend, would have to be rigorous. Hewitt's Osgood explains: "[The system] would have to be detailed enough, and fair enough, to really get the essence of someone's performance." Clearly implementing such a programme would take considerable, and ongoing time and energy, and therefore money. But employers that get all this right, can expect to see widespread progress. Among this optimism there is, nonetheless, a warning. It comes from Angela Baron, an adviser with the Chartered Institute of Personnel and Development and a co-author of the book Performance Management. She warns that "not all employees will want to progress". Of those that do, she adds "it is a mistake to think that any type of incentive or any combination of incentives will, alone, raise standards. More often, what really inspires people is a good working relationship - one where they feel recognised, respected and nurtured. Very rarely will something else compensate for its absence."
CASE STUDIES
Bacardi-Martini
offers a raft of initiatives to boost staff engagement. Colleen Potter, employee engagement manager at the drinks giant, says: "There are 101 things we do to try to keep all our employees feeling motivated and valued. We seek to live by our company values, encapsulated as Pact - productivity, accountability, creativity and teamwork." Equality is also important. "We treat everyone fairly. We are very consistent and very democratic. We don't differentiate between roles. Wherever people are - in the boardroom, sales, marketing, IT, warehouse - they are all valued. Each and every person is entitled to a company pension, plus health insurance and subsidised gym membership, maternity and paternity pay. Plus, there is profit-related and performance-related pay," she adds. The company runs regular employee surveys to ensure that its policies remain relevant to staff. These also give employees the chance to suggest further areas for improvement. "We are always keen to listen. And to act, and also to get people involved in deciding appropriate action. At every opportunity we praise. And of course we have fun. We do a lot of charity projects, a great deal of social functions and some one-off events that include everybody," explains Potter.
Pannone & Partners
employs a wide range of strategies to help inspire employees at all levels. Rachel Dobson, equity partner and head of human resources at the legal firm, explains: "We know that our achievements depend on the talents of our people and that means all our people - secretaries and lawyers alike, so we go to great lengths to make sure every person feels appreciated. We are very egalitarian. Everyone receives a company pension, health insurance and subsidised gym membership, maternity and paternity pay." All employees also share in the company's successes. At the end of the year, everyone is entitled to performance-related pay; last year it was a year's salary. Throughout the year, whenever Pannone & Partners wins a new client or meets a target, a mini-firm-wide celebration is held. All 515 employees receive the odd days extra holiday, chocolates or champagne, or an in-house afternoon tea with cream buns. Charity events and all-inclusive social occasions add to a sense of camaraderie. "I think it's fair to say we all feel valued," says Dobson.
Hart Worldwide
proves that anything a large corporate can do an enlightened SME can do also. The fresh fruit supplier's HR officer, Betty Turner, explains that at the centre of their success is a policy that first of all recognises everyone's contribution and then tries to build on it. "Everyone is entitled to a series of set benefits - we are looking at introducing flexible benefits; all [employees] receive a pension, private healthcare, subsidised gym membership, maternity and paternity pay." Employees are also given the opportunity to increase their skills: "All [staff] receive an annual training allowance, which can be spent on anything they like - whether it be a professional-improvement course or just an interesting evening course. They can also benefit from the resource room which has books, videos and a couple of computers with access to online learning. Plus we all have an annual, individual appraisal so we can see specifically where we can improve. And we all get individual support from a line manager to do this." Its policies also include a more light-hearted side. "Our Ministry of Fun [team] runs several social and charity events, which everyone gets involved with, often with their partners and family. It all makes for a very inclusive and encouraging place to work," explains Turner.
