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March 2010

Employee Ownership & Leadership

Leadership, says the Chartered Institute of Personnel Development (CIPD), is one of three enablers of sustainable organisation performance. It is thus a key theme in its Shaping the Future interim report, "Sustainable Organisation Performance: What Really Makes the Difference," published in January 2010.

The report identifies leadership as being responsible for:

  • Vision and values: communication of the bigger picture, making the vision and values real for all.
  • Senior management capability: role modelling and empowering others.
  • Line management capability: support and help for employees through change.

Nothing new or earth shattering there then, is there? Nor does the report give any insight into how to enhance leadership or make the communication of the vision and values any easier. This is very disappointing if you are looking for solutions.

This shortcoming is most likely due to the constraints of the format which is a series of case studies looking at organisations as they go through the process of implementing organisational change. So it is hardly surprising that there is nothing new forthcoming. It is highly debatable whether any organisation pioneering new approaches would be willing to open its doors during such an initiative.

Thus there is no suggestion that employee ownership might be the best way of spreading vision and values through an organisation. This is very disappointing when the report acknowledges shared purpose and distributed leadership as 2 essential components of their identified enablers. Employee ownership makes the employees co-owners of the business and so builds in shared purpose, which in turn provides the framework for creating the vision and establishing the values and making them "real for all." And thus for creating better employee engagement.

Indeed I would suggest there is no better way. Employee ownership makes leadership so much easier because, it helps makes the vision and values part of the fabric of the organisation. This makes leadership less dependent on the charisma or personality of the person at the top.

>10 Billion Reasons for Talent Management

If you are not yet convinced that talent management should be high on your agenda perhaps this will convince you.

Figures just released by Her Majesty's Revenue & Customs (the Tax Man) reveal that UK employers will have paid out £6.0 billion in redundancy pay for the year ending 31 March 2010. This is 25% up on the £4.5 billion for the same period last year and means that in the past 2 years employers will have paid out a total of £10.5 billion for people not to work!  Amazing!

Now I don't know about you, but I find this mind-boggling. After all, businesses only incur costs in order to make money and ideally should expect to earn more than £1 for every pound spent. Yet here they are spending money - when they can least afford it - without expecting a penny in return, simply so as not to have to pay it in future! You have to agree it is weird logic!

"Ah!" you say, "But it is not only businesses that are making these payments." Well, that depends on your definition of 'business' but it does not make it any less ridiculous. In fact if it is a non-profit or a public sector organisation making the payment it is even more dubious, because it means donor or taxpayer money is being expended for no return and that is even harder to justify.

Now don't get me wrong. This is not an argument against redundancy pay. Employers making people redundant, depriving them of their livelihoods and submitting them to the indignity, emotional and psychological stress that goes with losing their jobs, are morally obliged to pay compensation for that. No, I am simply questioning the non-alignment of commercial and economic wisdom. It simply does not make economic sense to pay people to do no work. Yet that logic is very rarely challenged.

Consequently more has to be done to better align economic and commercial imperatives. This requires employers do more to:

  • Ensure that they employ the right talent when they recruit.
  • Recognise the investment they have made in hiring and developing that talent.
  • Understand what it is they are losing when they consider making that talent redundant.

It might not be possible to avoid making people redundant, but a more thorough approach to recognising and acknowledging the value of talent and managing it properly, is likely to make it far less likely. This is not least because awareness of your talent pool gives you a stronger platform for redeploying rather than retrenching your people. This will ensure that you minimise the long-term impact of any downturn and recover sooner.

Employee reward programmes - key drivers challenged

The results of a 2009 study by Hay Group into the "Changing Face of Reward" have just been released. It found that the "War for Talent" has narrowed into 3 fronts focused around high performers, high potentials and 'mission critical' roles. Of course there is no way that one can challenge the findings but they certainly point to a potential disaster in the making.

One needs look no further than these three terms for the first inkling of this. Why? Because there is no recognition here whatsoever of the loyal 'foot-soldiers' who ultimately do all the unsung work on which the organisation relies.

What is a 'mission critical' role? Where do the boundaries lie between mission critical and mission non-critical? Not for nothing are the receptionist and telephonists sometimes referred to as the "Directors of First Impressions." How much potential business is lost if they don't do a good job? That might just make the difference between survival and failure. In this day and age a clerk who misdirects an important email with a key customer file attached can "unleash the dogs of war!" Every day the newspapers are full of stories about people who have not done their job properly and, at the very least, exposed the organisation to a maelstrom of bad PR.

With strategic thinking like this the HR profession is ensuring that it will NEVER effectively solve the employee engagement problem, which is one of the biggest challenges of the times.

This is highlighted by the finding that "The focus on pay for performance has never been greater." Maybe not, but that doesn't mean it should be. The tragedy is that no-one has recognised that pay for performance conflicts with the goal of building an effective team. And at the end of the day any organisation is ultimately a team. Thus pay for performance is a root cause of employee disengagement and organisational inefficiency.

There is nothing intrinsically wrong with the 3 categories identified by the Hay survey, but these people are already recognised through higher salaries. In order to optimise their contribution - and everyone else's - you would do better to offer a key reward programme that rewards everyone for the way the team performs. The fallacy of performance related pay has already been discredited by recent executive performance. It is high time it was finally exposed and kicked into touch. If you want to optimise organisational performance you have to recognise and reward team performance.