Need to know:
- Involving employees in the growth and success of a business not only affects the bottom line, but can build engagement and loyalty, forming the basis of a positive culture.
- Share schemes and employee ownership models are one method of aligning employees directly with business results.
- Recognition schemes can also encourage employees to feel invested in an organisation; both financial and non-financial rewards have benefits, depending on context.
When Rhys Williams and Simon Grover were thinking about the future of their business, writing, training and strategy firm Quietroom, they realised they did not want to 'sell out'; their priority was to preserve the special culture they felt they had created.
Williams, strategy director at Quietroom, says: “We think the most important thing about the future of Quietroom is its sustainability. It is not a valuable business if it doesn’t endure after the reign of particular individuals.”
In January 2020, the organisation transferred to an employee-owned trust, with the trust owning the business on behalf of its 18 employees. Succession planning was not the only factor that prompted this move, explains Williams: “You absolutely view things differently when you are a shareholder in a [business]. It gives you a really rounded view of what is important. You are trying to make decisions which benefit the long-term sustainability of the [organisation]. Now, everyone will have a little bit of that roundedness.”
A piece of the pie
There are many reasons why employers might choose to offer employees a share in their success, so it is important to first establish what a business aims to achieve by giving out a slice of the cake. For some, it is about giving employees a different perspective, says Stuart Hyland, associate partner at Aon: “If it was your business, what would you do? Would you spend this money in this way?”
Giving people a stake can, alternatively, serve to strengthen the link between individual performance and the organisation's productivity, says Nick Throp, co-founder of employee communications firm Like Minds. “Yes, there is a direct relationship between what employees do and business performance, but sometimes that link can feel distant. It is about making those links really explicit.”
Jonathan Fletcher Rogers, partner at Addleshaw Goddard, adds: “Share schemes can be a really good way of providing the corporate glue, making employees feel part of the whole organisation, particularly if [it is] an organisation which is quite disparate and made up of lots of different business units. It also gets people interested in the [organisation]. If they are participating in the scheme, they have got a stake in the [business] and they are going to be paying more attention to things like the share price.”
The other dimension is cultural, says Hyland, citing John Lewis’ partnership model as an example. “Some organisations have a set of values and beliefs, which is really about [saying] ‘we are all in this together’. What [the employee is] joining when [they] join that sort of firm is almost a family.”
Power of recognition
For employers with reservations about giving out a piece of the pie, there are other ways to encourage employees to feel personally invested. Bonuses and pay rises are one way to incentivise people. Aliya Vigor-Robertson, founding partner of Journey HR, says: “Recognition is ultimately one of the big reasons people want to go to work.”
However, this approach comes with its own complications and questions. For example, which is more effective: giving everyone the same bonus, or incentivising individuals according to achievements and performance?
The answer will depend on each business’ objectives and structure, says Vigor-Robertson: “Ultimately, it is wonderful to give everybody a bonus; we all have a role to play and sometimes people on the operational side of the business don’t have a role where they are bringing money in. But I also believe if [an employee is] in, for example a new business role, [they] might expect a performance-related incentive. For people who are used to working on commission, a set salary isn’t going to be motivating for them.”
Beyond hard cash
For employers which are struggling financially or are in the process of growing, paying generous bonuses for great performance might seem like a far-off prospect. The good news is that there are many non-financial ways to make employees feel valued.
In fact, bonuses may not make that significant a difference to staff retention, says Throp. “I am less convinced about pay and short-term bonus-type arrangements impacting on that sense of alignment between [an employee's] objectives and the [employer's]," he explains. "Clearly, in certain kinds of cultures, such as sales, bonus structures have a role. But what is more interesting, particularly in today’s environment, are actually things that are slightly more about helping people in their lives.
“An employer that is flexible enough to understand an employee's needs and create a structure where [they think], ‘if I worked for anyone else, I wouldn’t be able to live my life the way I do now’, creates much more alignment than a 5% pay rise this year compared to 3% last year.”
One of the biggest motivators, therefore, is a flexible approach to where people work; demonstrating that a business is willing to align with individual needs can help create a link that goes both ways, adds Vigor-Robertson. “Flexibility is being talked about everywhere; it is the thing that everyone wants," she says. "Whether that’s coming in later to avoid rush hour or being able to work from home sometimes, it is such a benefit, especially if it is flexibility which supports mental wellbeing.”
Training and development opportunities are also key, says Iain Thomson, director of incentive and recognition at Sodexo Engage, which has its own internal coaching initiative. Anyone in the organisation can apply, goals are set by the individual and are outside the realm of their normal objectives, and conversations are treated confidentially. “People feel it is a platform to talk to someone that they might not get the opportunity to normally talk to, to get a different view on the world and how to tackle issues,” Thomson explains.
Finally, communications can go a long way towards building up a set of shared values, and being sure to showcase consistency and fairness is particularly important. “We saw it in the recession," says Hyland. "[Employers] said, ‘the business has just not performed, we can’t afford to give pay rises.’ We saw people accepting that. Where people struggled is where they then found out the chief executive got given a quarter-of-a-million-pound bonus.”
Brand ambassadors
In today's world of work, it is all too easy for employees to vent about negative experiences on social media, or websites like Glassdoor. The more positive side of this coin is that, when staff feel like they are part of a bigger whole, they are also likely to project that to the outside world.
Creating moments that employees will want to talk about is one way to harness the power of brand ambassadors. Hyland describes one example from his experience: “They have set up a vending machine which is giving out free prosecco. People will talk about that for much longer than a £100 bonus, and it is a lot cheaper to deliver. Creating memory points gives people a sense of being a unit, as they have a lot of shared memories.”
Recognition projects are another way to tell happy stories and reinforce a positive culture, while also capitalising on the motivational benefits of the perks themselves. For example, Like Minds carried out an exercise whereby employees were asked what feels special about working for their employer and to share photos as examples.
During a workshop, employees talked about why they had chosen their photos and discussed how to group them into themes. “We then saw people converting each other into ambassadors for the [organisation],” explains Throp.
"[Employers] can start to communicate something very distinctive about [their] culture and find interesting insights, which can lead to a share ownership model or reward recognition model which will help people to feel like, ‘yes, this is why we love it here.’”
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