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September 2012

Maximising Employee Engagement through Employee Ownership

You may think the link between employee ownership and employee engagement was well established. Yet, if you judge by the ongoing research into the subject, this does not appear to be the case. Such research suggests there are many who still have to be convinced. For that reason, if no other, the latest findings from a study carried out by Loughborough University are a welcome addition.

Link_000014188881XSmallEven so, the findings that three quarters of employees who participate in their employer’s share ownership scheme were more engaged, motivated and committed to their employer, are hardly surprising.   

Of course as an employer, manager or HR professional you would jump at the chance to improve your organisational culture to that extent. After all if 71% are more likely to consider the cost implications of what they do and 66% produce as higher quality of work, you inevitably have to benefit from a performance improvement, don’t you?

Yet while no-one in their right mind would refuse an opportunity like this, perhaps the most interesting aspect of this research is, “Why does share ownership only have this effect on 75% of the employees?”    

Could the answer possibly be in the term “share ownership?” You see there are several problems with shares that could diminish their desirability for the lower echelons of employees.    

  • They come at a cost. This means that for lower earning employees the marginal income they have to forego – even if they understand the longer-term advantages – is too great for them to be able to sacrifice the income. For them cash is king.
  • They may not have the educational or social background to understand the benefits of share ownership.
  • Share schemes are complicated to set up and administer and thus they might not understand all the details of belonging, or they might even feel it is not worth the hassle.
  • The inequitability of the scheme. It may be all very well offering shares to employees, but if the relative offerings are disproportionate or are perceived to favour managers and high-earners, they may simply fuel or exacerbate resentment. This will certainly do nothing for employee engagement.

There can be a huge conceptual difference between share ownership and employee ownership. The former may be a nice to have, but does it engender the empowerment that comes with a true the sense of ownership and belonging?  The likelihood is that the disengaged employees in the survey are members of share schemes that do not create such a sense of empowerment. If you are looking to engage your employees more you need to come up with an ownership scheme that is:-

  • Universal;
  • Fair and equitable; and
  • Empowering.

How does your employee ownership scheme measure up against those criteria?     

Talent Management versus Employee Engagement

Do you sometimes wonder if HR has a split personality?

It certainly seems that way at times. For instance take the following 2 statements taken from the same talk by Vance Kearney, Oracle EMEA HR Director.

Statement 1:

“Talent is less available and the only way you can recruit talented staff is if their current employer has made a mistake with them [and they want to leave].”

Statement 2:

“Engagement is a good thing, but we are often ignoring skills and talent. If you engage poor talent in your organisation, you are not going to get the outputs you want.”

There are any number of points that you can take issue with, not least the perpetuation of the prevalent HR tendency to separate talent and people. Is there really less talent today than there was 5 or 10 or 20 years ago? Have people really become less talented? The fact that there are no longer 30 pages of recruiting in the Sunday Times is surely more indicative of the changing nature of the recruitment market than anything else.  

However, you can see the inherent contradiction here, can’t you? If there are truly less people on the market today than there were previously, and people only leave because “their current employer has made a mistake with them” is this not de facto evidence that employee engagement efforts are becoming more effective? Of course that would seem to be the logical conclusion. However, it is not borne out by the latest Gallup survey results which indicate that only 11% of employees are engaged – or to put it another way 89% are disengaged. Nor is the UK, where Kearney is based, excluded from this as this recent report also shows.

It would therefore seem that Kearney’s stark warning that “talent management should take precedence over engagement” is totally misdirected. Not only is the science questionable, but:-

  • Talent comes in the guise of people;
  • People are more engaged when they are fulfilled and their talent is recognised and appreciated.

Infinity ring 000010184406XSmallThus it should be obvious to any manager worth his salt – especially an HR manager – that developing talent and engaging people are one and the same thing! HR will never get it right until they realise this, and headlines like "Internal talent is best - and better than engagement" certainly won't help!  

Hanging on to your elephant's tail?

Elephant's Tail_000016874894XSmallWhat on earth?

I was re-reading Ricardo Semler’s “Maverick” the other day, when I was tickled by his question, “What would you rather have, the tail of an elephant or an entire ant?”

Of course it helps to know the context. After all, unless you are the elephant or an old-school maharajah wanting an elephant’s tail to keep the flies off you, there cannot be much demand for elephant tails!

Actually, the quote comes at the end of the chapter in which Semler talks about profit-sharing and the fact that employees at Semco are entitled to 23% of the profits. Effectively he was the principle “donor” in this arrangement, and he conceded that he felt 23% was “awfully high.” However, he explains his decision to go along with it by saying, “But I kept telling myself I stood to make at least as much money in partnership with a motivated workforce as I would as the sole beneficiary of the fruits of less inspired workers.”

Wow. Here’s someone who really understands the power of ownership and the glorious, potent effect it has on employee engagement.

His point is that employee ownership is what unleashes the true economies of scale and unless you have a fair and equitable basis for sharing profits you are basically operating with at least one hand tied behind your back. And, in case you think this is latent or blatant socialism, he makes the point elsewhere that “Few ideas are as capitalist as profit-sharing.”  

So where do you stand? Do you want to hang on to your elephant’s tail, or do you want the ant?

3D Motivation!

Individual Objectives = Organisational Objectives

This simple equation encapsulates the essence of employee engagement. Doesn't it? After all isn’t that what you as a manager or business leader want? You want your employees to have objectives aligned with those of the organisation. And you want them to realise the success of the business and its survival depends on them achieving their objectives. Don't you?

This may possibly even be the biggest challenge you face. Unfortunately, trying to create this alignment all too often leads you down the track of thinking that you are responsible for motivating your people in order to create that effect. This is a track that can be a dead-end.

From the time of Aesop we have traditionally recognised two fundamental forms of motivation – the carrot and the stick. Even now these underpin all marketing efforts, only in modern parlance they are called ‘toward motivation’ and ‘away motivation’ respectively.

Yet there is a 3rd motivational force that is not widely enough recognised or acknowledged.

The missing linkIn my book “Lean Organisations Need FAT People” I used this diagram to depict it. This looks at motivation from the perspective of the above equation. So instead of looking from an away or toward perspective it looks at it from the individual and organisational perspective. Thus you have individuals looking to fulfil needs and wants, while you have the organisation looking to stimulate such desires through traditional carrot and stick methods.  

However, individuals actually have a level that transcends needs and wants. For example think of a marathon runner. What makes them persist in heading out to train in all weathers and at all times of the day or night? There may be any number of terms for that, but I have called it devotion. (In the context of the individual and their relationship to the organisation, you may call it engagement.) Whatever it is it is both personal and innate to the individual.

This makes it very difficult for the organisation to try to address. What can you do to create devotion to the organisation? You have to find something that reaches the individual at an intrinsic rather than an extrinsic level.

That is why I am so excited by the research undertaken by social scientists and psychologists and championed by Daniel Pink. In highlighting autonomy, mastery and purpose as the primary, universal intrinsic motivators this work underscores precisely the points I was making in "Lean Organisations Need FAT People." Not only does my model of employee ownership embed the equation: Individual Objectives = Organisational Objectives through a sense of common purpose and shared values, but it also lays a solid foundation for greater autonomy and mastery.

If you are serious about business success you have to build employee engagement and this offers you the perfect recipe. It is motivation in 3D!