December 22, 2009

There are two laws I really like:  the first, Murphy’s Law says, If anything can go wrong, it will.  You can bank on that.  The other, Bardwick’s Law of Entitlement  says, What ever people get for free stops being a delight and very quickly becomes an entitlement. 

I recently had two experiences, one right after the other, in which people weren’t grateful for what they received for the simple reason they didn’t have the information that would make them appreciate what they were getting.

December 22, 2009

There are two laws I really like:  the first, Murphy’s Law says, If anything can go wrong, it will.  You can bank on that.  The other, Bardwick’s Law of Entitlement  says, What ever people get for free stops being a delight and very quickly becomes an entitlement. 

I recently had two experiences, one right after the other, in which people weren’t grateful for what they received for the simple reason they didn’t have the information that would make them appreciate what they were getting.

Warren Egnal is the founder and principal consultant of Engagement Strategies, a firm that excels in increasing engagement through change management and communication strategies.  As Warren was describing what he was doing for some of his clients, he mentioned a problem at a famous and hugely admired Fortune 100 company.  The company is accurately described as employee-centric and makes every list of Best Companies to Work For.

But, in the last couple of years, employee griping has been rising while gratitude has been falling.  Why, Warren asked, do you think that’s the case? 

The answer is so simple it’s frightening: the employees of this extremely generous company took the company’s beneficence for granted because they had no comparative data with peer companies or, for that matter, with any other company.  They didn’t have the facts that would make them aware of the generosity of their organization.

Actually, I now realize, I have never worked in or consulted to or heard of an organization that supplied its employees with this kind of information.

The second example came from Jack, a small business owner who’s a friend.  When I saw him he was viscerally upset and the stress was showing.  Due to a number of major interrelated but independent occurrences he had just had a month in which revenues were triple his average monthly take – but expenses were equal to revenue.

Jack’s company has a bonus program based on revenue and not on profit.  Because the month’s revenues were so extraordinarily high, all of his employees got bonuses, in some cases amounting to a 50 percent increase in their paycheck for that month. 

Were the employees grateful?  Of course not.  As far as they were concerned they had earned the extra money.

Did any of the employees say something like Thank you?  Again, of course not.  As far as they were concerned “the company” had simply paid them what they had earned and it owed.

Who or What is “the company” to employees?  Usually, they don’t know.  Who guides, builds, adapts and grows the business?  Who is mostly responsible for the company’s success – or failure?  What happens when revenue falls or costs soar?  Who has to pay the bills irrespective of what’s in the till?  What does it cost to keep the business running or growing?  What does the business pay in taxes, in utilities, in IT software and hardware, in employee salaries and benefits? 

Typically, employees have no answers to these questions.  In most cases they don’t think about the obligations and responsibilities of “the company” which, in this case, happens to be Jack and his wife.  Nor would employees know that the month’s expenses had equaled revenues.  Employees, therefore, could not know that because revenue and costs were equal, their bonuses came out of “the company” – that is, the owners private, and not so deep, pockets. 

The moral of this story is this: don’t assume that people know what they need to know about what’s going on.  Relevant, focused information that explains what is happening and why is fundamental to building gratitude and is absolutely essential to creating and sustaining high rates of commitment and engagement.

The Psychology of Entitlement
Woe befalls the endlessly generous giver who never requires that rewards are something be earned. Instead of receiving gratitude and love from those they’ve benefited so generously, their free offerings are quickly taken for granted and therefore have no motivational value.

My message to organizations and their Human Resource Departments and really generous parents, grandparents, teachers or friends is, beware of unfettered generosity; it leads to a psychology of Entitlement, or the assumption, “I’m owed everything I get,” along with the attitude of, “What have you done for me lately?”

There’s a very old and widespread belief that if employees are happy their gratitude will be equaled only by their productivity and retention rates.  In other words, as morale climbs, performance will soar.  As a result of this heartfelt belief, Human Resource Departments have generated a long list of things that will make employees happy.  This point if view is so widely accepted that virtually every medium and large organization gives most of these things to all of their people.

There is nothing controversial or debatable in these offerings so I call this list of “give-aways”  a Mother’s Day and Apple Pie list.  Every thoughtful and conscientious organization offers some variation of the following and (in no particular order) they include, competitive compensation and benefits; tuition; opportunities to improve and use your skills, admirable leadership; a culture emphasizing transparency, trust and inclusion, flex time and parental leave. I could easily create a longer list but this is enough for the reader to get the picture.

Alas, these offerings which are widely believed to motivate and gladden the heart of employees, generate almost no significant pay-off for the organizations which offer them.  Among my favorite pieces of information in my recent book, One Foot Out the Door , are the sets of results on pages 92 & 93 that give us the percent of employees who find these working conditions or forms of recognition significantly valuable. A glance at the data swiftly reveals how much is given – and how much is taken for granted.

Gaining Employee Trust Relies on Seven Key Factors
1.  Management explains the reasons behind major decisions - 10%
2.  Management works to gain support for the business direction - 10%
3.  Management strives to motivate employees to high performance - 10%
4.  The most qualified employees are promoted - 10%
5.  Management acts on employee’s input - 9%
6.  Management strives for job security - 9%
7.  Employees are encouraged to participate and be involved - 8%
8.  All other factors - 34%

Key Drivers of Employee Commitment
1.  Employees trust senior management - 14%
2.  Employees are able to use their skills on the job - 14%
3.  Rewards and recognition are competitive with other firms - 11%
4.  Jobs are reasonably secure - 11%
5.  The company’s products and services are of a high quality - 10%
6.  There is little stress related to work - 7% 
7.  The company’s business conduct is honest and based on integrity - 7%
8.  All other factors - 28%

Would these percentages be higher if we just kept giving employees more rewards and even better working conditions?  The answer is, no.  There are several reasons why there’s no bang for the organizational buck:  first, the same things are available for everyone irrespective of what anyone wants, and those things are given and not earned.  The result is they are not valued.  Second, what really matters for an individual is determined by what that person most needs or wants now. 

I am not advising a major take-away of things employees take for granted.  That would be an invitation for active disengagement with performance plummeting.  No, this is a warning not to expect a big pay-off from working conditions or rewards

• that are taken for granted.
• that everyone gets. 
• that are not earned in any way.
• that have been in place for a long time.
• that are just like those offered by every other company.

On the other hand, Do expect a big pay-off when working conditions and rewards demonstrate the organization’s view that this individual is a major asset and working conditions and rewards are

• customized to meet that individual’s preferences or needs
• customized outcomes that are earned through performance
• customized outcomes that are specifically targeted to an individual
• customized outcomes that reflect the specific needs and priorities of employees in this company
• customized outcomes that are a commitment for a year or two and then priorities and needs are reassessed.

Many employees in many companies in many countries are discontent and fearful because the changes which are occurring destroy security and are disruptive, swift and major.  One of those critical changes is that employees who used to be regarded as key assets have become mere costs to be cut.  That basic attitude does not foster employee commitment to the organization or engagement with its work. But hundreds of studies tell us that strong positive feelings of commitment and engagement are the key to success, specifically financial success. 

Gaining those feelings of commitment and engagement requires responding to employees as individuals who really matter to the organization.  One of the key ways that organizations can achieve commitment and engagement is by meeting an individual’s most important needs or preferences at this time. The task is much easier than it sounds because at any time there are only 3-5 categories of things that people really want.  That while it’s not hard to satisfy these preferences and in that way demonstrate that they and their work really matter to the organization.

That’s it; the magic key to success is customizing rewards, recognition and working conditions to fit the priorities of valuable individuals who have earned recognition.