#427  from Innovative Leader Volume 8, Number 10          October 1999

Four Essentials for Motivating Employees in a Changing Environment 
by Joseph H. Boyett, Ph.D. and Jimmie T. Boyett

Dr. and Ms. Boyett are principals in Boyett & Associates (Alpharetta, GA; fax 770-667-9906; joe@jboyett.com  www.jboyett.com).  They are co-authors of Beyond Workplace 2000 (Penguin, New York, 1995) and The Guru Guide (John Wiley & Sons, NY, 1998).

In the past, business and workers had an unspoken, but very real, agreement.

Business said to the worker, “If you will sacrifice your mind, body, and spirit for the good of the corporation—or at least to what your managers say is for the good of the corporation—then we will keep faith with you.  We will provide you with a sizable measure of job security and predictability and we will seek to provide you with a steadily improving standard of living.”  Motivating employees was relatively straightforward, although seldom easy.  It was a matter of a simple exchange, the employee’s loyalty and commitment in return for job security.

In the new economy, the days of lifetime jobs and simple commitments are over.  Employers readily announce layoffs.  Employees just as readily leave for better offers.  In an ironic twist, the new-economy knowledge organization proclaims people to be its most important asset then treats them like they are disposable.  Balancing the corporation’s need for flexibility with employee demands for respect and fair treatment is becoming increasingly difficult, and effective management of human resources is critical.  How do you motivate your people to higher and higher levels of performance when all of the rules have changed?  How do you motivate your employees when the simple exchange of the past isn’t simple any longer?

Last year, we completed a project designed identifying the best ideas shared by top management thinkers about workplace best practices to deal with a changing environment.  And, as we enter the 21^st century, we can guarantee that continual change will become the norm. Here are four practices most management experts feel are essential for getting the best performance from employees.  These practices all focus on motivation.

1:  Provide Meaning and Purpose in Work

Employees need to have a reason for their organization’s existence that extends beyond the stock price, next month's sales, and year-end profits.  Companies must have a product, a mission, or simply a vision of the industry that employees find exciting and energizing.  These employees may not be with you for the long term but, while they are part of your workforce, they want to accomplish something worthwhile.  

Merck is a good example of a company that provides such a purpose. This pharmaceutical manufacturer promotes itself as a company that puts people before profits and backs up that commitment with action such as putting a below-market price on its anti-AIDS drug and giving away medicine to developing countries.  Maybe that's why in a recent survey, 97 percent of Merck’s employees said they were proud to work for the company and 86 percent said they thought their work had special meaning.  Merck demonstrates a higher purpose than profits. 

2:  Be Work/Life Friendly

Given that an estimated 87 percent of the American workforce has some kind of family responsibility and 78 percent say that finding work/life balance is a major priority, it’s little wonder that a key to motivating employees is being work/life friendly. Offer your employees a range of benefits such as flextime, compressed work weeks, telecommuting, job sharing, on-site child care, banking and dry cleaning.  More importantly, it means working with employees in a genuine effort to be flexible.  The best companies today recognize that employees have lives outside the workplace and that they can no longer neatly separate work and family, career and the rest of life.  These companies don't just help employees manage their lives outside of work, they allow employees to bring their life into their work.

First Tennessee National Corporation reported that supervisors rated by their subordinates as supportive of work-family programs retained employees twice as long as the bank average and kept 7 percent more retail customers.  The bank estimated that this higher retention resulted in 55 percent more profit for the bank over a two-year period.  Other companies found similar results.  At Johnson & Johnson, 71 percent of the company’s workforce cited the its family-friendly programs as one of the key reasons they stay with the company.  Aetna Insurance cut its turnover by almost 20 percent after it introduced a parental leave program and halved its rate of resignations among new mothers by extending unpaid parental leave to six months.  These two programs alone are estimated to have saved the company over a million dollars in hiring and training expenses. 

Researchers from MIT and the Families and Work Institute examined the consequences of reengineering work with the family in mind.  They concluded:
Our project demonstrates that linking work and work-family issues is a strategic opportunity to redesign work in fundamentally creative, innovative, and equitable ways that benefit business objectives and people’s lives.  Furthermore, it shows that failure to make this link has negative consequences for workers, the business, and the goals of an equitable workplace for women and men.

3:  Share the Rewards

In our knowledge economy, time is becoming increasingly disconnected from value.  The number of hours a person works today doesn't count except when these hours add delay or unnecessary expense, and then they count against the company and not for it.  Today, value lies in the knowledge and skill which are applied to create, innovate, produce, service, entertain, and excite—not in hours expended.  This change in perspective is leading best-practice companies to replace traditional compensation systems that tie base pay to hours, position and job content with compensation systems that tie base pay to skills and/or competencies, and to provide incentives tied to group and/or company performance rather than to individual performance.  The latter practice usually consists of some combination of corporate-wide profit sharing and/or stock ownership or options coupled with gainsharing and/or group incentives in major operating units.  Employees today want to share in the financial rewards of what they produce, and they want to be compensated for the value they deliver, not the hours they invest.

4:  Open the Books

If you really want to motivate your employees, you have to quit keeping secrets.  You have to “open the books.”  Two practices that are not typically found in most organizations are critical:

Business and Financial Education. You must make a concerted effort to educate your employees about the business.  This usually involves mandatory training for everyone in the company.  Wabash National, a trailer manufacturer and open-book company, has its employees take six hours of training, covering topics such as how to read financial statements and balance sheets, how the company makes money, and the meaning of terms such as “gross profit,” “net profit,” and “depreciation.”  Other companies have employees play games to learn the meaning of financial terms such as “assets,” “liabilities,” and “equity.”  The idea is to make everyone in the company “business literate.”

Of course, to know the score and get excited you not only have to know how to read the financial reports, but have to have access to them.  That’s where the second major open-book management practice comes into play.

Information Sharing.  By definition, open-book management means just that—opening the books, sharing information, giving every employee access to the financial and operating data.  The very idea of opening up the company’s books strikes terror in the hearts of many CEOs.  They are terrified that a competitor will get hold of the numbers.  Relax, if you are worried about sharing the numbers, your fears may not be totally unfounded, but they are most likely exaggerated.  If your competitors get some of the numbers, so what?  If yours is a publicly traded company, they probably already have access to a lot of numbers anyway.  And if you are privately held, the amount of information you can hide may be a lot less than you think it is.  Even if your competitor finds out something new about you from your open books, that doesn’t necessarily mean that anything bad will happen.  He might be able to use the information to beat you on a contract, but he still has to deliver on the contract.  To do that, he has to be either the low-cost producer or offer something that you can’t offer.  

At best, anything your competitor can learn from your open books gives him only a short-term tactical advantage, and that pales alongside the benefits that come from educating your employees about the numbers. Quit worrying so much about what your competition might find out about your business, and start worrying about how much your employees don’t know.  Your employees’ ignorance is going to do you a lot more harm than your competitions’ smarts.  Just get the numbers out.

Conclusion

As we conducted our research, we were repeatedly struck by how different the expert’s “ideal” workplace is from the one most of us know.  In the old workplace, few workers expected meaning and purpose from their work.  At most, they hoped for a measure of job security and a slowly rising paycheck.  Most workers assumed that they had to adjust their lives to their employer’s demands and could expect little, if any, accommodation in return.  Work and one’s personal life were to be kept completely separate.  A share in the rewards?  Not likely.  If so, not much.  Of course, an employee might occasionally get a small bonus, but it normally amounted to very little and was presented more as a gift from his employer than as a earned share.  Finally, every company kept secrets.  Only those with “a need to know” were allowed to know, and the prevailing wisdom was that most employees needed to know very little.  Times really have changed.  Employee expectations are certainly much different.  You can’t motivate them any longer with the offer of a simple exchange—their commitment and loyalty in return for a job.  Maybe that is why these four essentials are so essential.