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Archive for November, 2011

Why You Should End End-of-Year Bonuses

2011 30 Nov

Recognize This! – Bonuses are too often confused with compensation.

In my reader just yesterday, I had several articles pop up on bonus compensation plans for the end of the year. At first, I was hopeful. Have organizations finally figured out that lump-sum end-of-year cash bonuses fail on multiple levels and so are turning to a rewards approach proven to be more successful?

Have organizations finally decided to overthrow these compensation holdouts in favor of:

  • Year-round recognition and rewards given in a timely manner
  • Recognition and rewards linked to individual performance and effort, not just results

Sadly, no. At least not in the U.S. This MSNBC article makes it clear bonuses on Wall Street are indeed projected to be less this year, but only because corporate results are also down – not because of a re-evaluation of this misguided approach.

There is perhaps hope, however, in the U.K. Thompsons reports bankers bonuses are set to fall, even as they anticipate an increase in base pay. I agree with this approach. Bonuses, which can play an appropriate role, have become such a derided rewards strategy (and appropriately so) because they have been misused for decades as compensation (especially in the banking and finance industry). I’ve long argued that base compensation must be increased to appropriate levels so bonuses are not the expectation of entitled compensation they have become.

Then additional UK news from Employee Benefits about Deloitte further raised my hopes. The article relates:

“Under a new talent and reward strategy, Deloitte is changing its bonus structure to reward employees based on performance. … The new bonus structure is not set as a certain percentage of salary, but as a commitment to include all staff in the firm’s success.”

By replacing an old system under which employees would receive a piece of the bonus pie if the company hit its annual revenue targets, Deloitte also eliminates the possibility of rewarding deviant behaviors in which employees might ignore company values in order to achieve results targets and get their bonus.

Here’s the challenging part of Deloitte’s new plan:

[Deloitte UK head of HR, Stevan] Rolls said: “Performance will be based on a number of objectives, and on the competencies, skills and behaviours staff have shown in delivering those objectives.”

I would hope Deloitte is including demonstration of its core values as part of those objectives and behaviors. More importantly, to achieve greatest program success Deloitte should not rely on the input of one manager at the end of the year for performance assessment , but rather encourage all employees to recognize and report on colleagues’ successes and behaviors throughout the year.

Of course, the greatest benefit would be realized by spreading out that “bonus” budget investment throughout the year in the form of immediate rewards and recognition, but it doesn’t sound like the program is quite there yet.

 

Case Study: How a “Successful” Company Can Fail Due to Poor Culture

2011 29 Nov

Recognize This! – A “successful” company culture in the short term can still lead to long-term organization failure if the roots are rotten.

What do you do when you’re a fast growing, innovative and profitable start-up company ready to launch an IPO, but your negative company culture is a serious threat to your future success?

That’s the challenge faced right now by Zynga, makers of online games like Facebook’s Farmville and Mafia Wars. A New York Times article on this struggle noted:

“But that culture, which has been at the root of Zynga’s success, could become a serious liability, warn several former senior employees.”

These are just three of the results of the challenging culture at Zynga noted throughout the article:

  1. Employees are ready to leave as soon as the IPO is complete so they can cash-out on stock options. Competitors are already actively recruiting to this end.
  2. Other key employees have quit abruptly mid-project due to overwhelming culture.
  3. A highly prized acquisition target was lost (though Zynga offered far more money) because of concerns about the culture.

How has Zynga ended up in this situation? The insight of a competitor in the same industry (who themselves had to settle lawsuits brought by employees due to the culture and work environment) is likely correct:

“We’ve learned that when companies treat talent as a commodity, the consequences are severe,” said Ms. Toledano of Electronic Arts. “It takes years to repair a reputation.”

It takes years to build (or rebuild) a culture, too. I outlined how organizations can do so successfully at any stage of a company’s life, and organizations with such cultures would do well to take note. As the article points out:

“Zynga has made efforts to change its ways. … Still, rivals say Zynga will have to do more to bolster its image, or risk losing its appeal as an employer at a time when resources are scarce. Zynga’s towering public valuation — a boon for investors — may only further dissuade recruits, who may turn to younger start-ups with more potential.”

It’s not too late for Zynga. The article also points out ways the organization is working to turn around its culture, including manager training and coaching (from the CEO on down) on how to better motivate, inspire and engage employees. I would also strongly encourage Zynga to look at its employee recognition programs to create a more frequent positive feedback loop that relies on the appreciation and recognition of peers as well as managers.

What kind of company culture do you work in today? Does it help employees achieve corporate objectives in a positive way (a culture of recognition) or does it crack the whip to wring the most out of employees regardless of the potential loss of talent and engagement?

What to Do with the Annual Performance Review

2011 28 Nov

Credit: WorkSimple

Recognize This! – The annual review is broken and must be supplemented with ad-hoc, ongoing feedback and recognition throughout the year.

For the last year or more, HR industry news and blogs have been full of stories about how broken the current performance review process is. (For a quick history of the performance review, check out this brilliant infographic from WorkSimple or click the image at right for a larger view.)

I’m relieved so many have finally breeched the fear of giving up “the way we’ve always done it” and are now ready to face “so what do we do now?”

For an enlightening roundtable discussion on just this topic, I encourage you to read Steve Browne’s excellent summary on TLNT for a comprehensive list of both the good and the bad of the performance review. The group’s consensus on what to do now was on target:

“Should performance reviews live or die?  Hate to say this, but . . . it depends! – When you take the overall pulse from the group, they should die (in their current state). When you get together to ‘meet with the principal’ as the overarching theme or setting of the review, they should die. The key factor in making this happen though is HR. This isn’t someone else’s responsibility. HR needs to be the leader in stepping in to handle this. It really is a great opportunity for us to reconvene and make performance reviews effective.”

Annual reviews have their place as formal, process oriented systems that provide a forum for a deep-dive into an employee’s performance over a 12-month period. Such an approach is inherently left-brained, analytically focused. The annual performance review is only half the performance story, however, and must be complemented with strategic recognition.

Recognition provides the key to social performance management by encouraging less formal, ad-hoc praise and acknowledgement of behaviors, contributions and achievements throughout the year. A people-oriented approach, strategic recognition is frequently offered by peers and colleagues, not just managers. This right-brain, emotional approach taps into the wisdom of crowds to provide democratic, crowd-sourced performance insights for a more complex and complete picture of employee contributions of which a manager may not be aware.

And yes, HR has a key role to play. What do you see that role being? How can performance reviews be made useful?

1 Key Step to Make Work Meaningful

2011 23 Nov

Recognize This! – Looking for opportunities to help and thank others is the foundation of meaningful work.

Knowing your work is meaningful – needed and valued by others – is a key contributor to employee engagement and a frequent topic

of this blog as well as others. Penelope Trunk recently wrote about five steps to make work meaningful. Her last step, however, is foundational to all the others (quoting):

5. Look for opportunities.
My step-mom had cancer for more than a decade. She had a breast removed, she went into remission, then back to the hospital, then remission. At first I thought her life was becoming crazy and how could she cope? But then I saw that the best thing for her was that she kept going to work. The stability in her life was her job. She couldn’t control the cancer, or the treatments, or her energy, but she could control her workload and she could meet her goals when she was there.

When she couldn’t be at the office, her co-workers took over her workload so her job would be there for her when she returned. Every time.

When an office comes together to support someone in crisis the whole office is infused with meaning. The strength they gave my step-mom by enabling her to come to work, in turn gave strength to the family members trying to help take care of her.

Work has meaning because it provides stability in our lives, and we create meaning by helping co-workers to use that stability to be brave and strong in the rest of life.

Look around you, all the time–look for people at work who need help with their work.  Caring for your co-workers might be the most meaningful part of work for all of us.

Getting this one point right – lifting your head up out of your own work to look around and help others – can be what you need to find the meaningfulness in your own work.

Sometimes, you can’t help those around you, but you can notice what they are doing and thank them for their efforts.

As my American friends and colleagues prepare for the Thanksgiving holidays, I’d like to take this platform to thank them for all they do that makes my work meaningful. I greatly enjoy my work with my colleagues at Globoforce and with our clients. Not only is it fun, what we do changes the way people feel about themselves and the value of their contributions.

Who would you like to thank? Who helps make your work meaningful?

The Cost of Failing to Create an Innovative Company Culture

2011 22 Nov

Recognize This! – Failure to create a strong company culture costs billions.

Yesterday I discussed some of the wisdom on why anger doesn’t belong in the workplace from Robert L. Johnson, founder and president of the RLJ Companies (in the New York Times “Corner Office” column).

Mr. Johnson’s insightful comments didn’t end there. Later in the article he pointed out the importance of organization culture:

“If you really want to build something that’s going to be around for a very long time and be stable and grow, culture has to be paramount. People have to know how your culture operates and works. … It’s easier in that kind of culture to introduce new products and new technologies or new services. When the culture breaks down, it’s real hard to be innovative because you’ve got built-up barriers to interpersonal communications. …  So innovation slows down, and changes don’t happen as rapidly as they should and you get that rigidity.

“At the end of the day, people make up companies. And if the culture allows for a lot of interaction and a lot of free-flowing ideas that are not considered threats to anybody, that company will be more innovative.”

Isn’t that the point of corporate culture – to create an environment in which employees thrive and the company meets/exceeds its success goals?

Not getting this right is very costly. A UK report by the Chartered Management Institute (CMI) found “a loss of £900 per employee and a total loss of £19.3 billion” annually due to bad management practices. Ashley Ward, director at talent management organisation European Leaders, commented on this report:

 “An efficient working culture stems directly from the very top of an organisation. If a business leader actively promotes a happy work culture based on openness, transparency, good communications and gender diversity, the organisation will be far closer to the top of its game and employees will view it as a good company to work for.”

Does your culture support the success of your employees and your business?

3 Reasons to Eliminate Anger in the Workplace

2011 21 Nov

Recognize This! – Anger does not “show passion.” Anger only hurts the bottom line.

I’ve written before about jerks at work and the negative effect of bullying and bad behavior in the workplace. In those posts, I’ve explained some of the research behind how such behavior also negatively impacts the bottom line.

Robert L. Johnson, founder and president of the RLJ Companies, explained this even more fully from a CEO’s perspective in the New York Times “Corner Office” column, especially why anger has no place in the workplace:

“The one thing is that I just don’t want people to get angry. … I just don’t understand anger and conflict in a business. If you think about it, in a business you’re working to make money for somebody … If we’re not angry, and we work together, we make more money. If we get angry and we have conflict, we make less money. So let’s not get angry. Let’s just work it out. …

“And by the way, even if you do get angry, it’s not going to solve the problem. All it’s going to do is reverberate around the office that so and so made a mistake and so and so is angry at them. Then a whole cloud of frustrations and anger pervades the office. And so all of a sudden you get a breakdown in the culture of cooperation and collegiality, and the common mission goes out the window. And it’ll take you a week or so to get everybody back together.”

Mr. Johnson succinctly teaches 3 clear lessons about why anger should be kept out of work:

  1. Anger costs you money.
  2. Anger doesn’t solve the problem.
  3. Anger breaks down your positive culture in which the work gets done better and faster.

So why do we allow people to get away with anger and similar emotions at work? I think it’s because we justify these behaviors as “passionate.” After all, someone who gets so angry must care a good deal about the work or the results, right?

Mr. Johnson gives the lie that that argument:

“I’ve never had the emotion of anger. Some people think I’m sort of not passionate or I’m kind of cold or disinterested because I don’t rant and rave and everything else. I don’t do that. And I think it’s a simple rule — more insecure, more anger; more secure, less anger. I think really great companies are populated by people who are confident, secure and less fearful.

“Just think about companies that really stay at the top all the time. They don’t have a lot of turnover. There’s a lot of continuity because the environment is conducive to people wanting to be there, and they want to stay there.”

And with that parting shot, Mr. Johnson gives us a bonus reason to eliminate anger in the workplace: increased retention.

Does anger pervade your workplace? Is it condoned or does leadership actively work to promote an environment that dissuades anger?

Invented Crisis or Good Communication?

2011 18 Nov

Recognize This! –Your employees shouldn’t have to play games to get your attention.

What lengths do you (or your employees) have to go to in order to get noticed in your organization?

Steve Boese related a telling story on the nature of being noticed in the workplace today in his HR Technology blog:

“Then as now, simply showing up on time, getting your job done quietly and efficiently, and not drawing attention to yourself might have been a little more welcome an approach to career management in the eyes of most of our managers, but to us, it never seemed like a strategy that would adequately separate you from the army of similar looking, sounding, and performing staffers that had the same aspirational ambitions as you did. Back then for sure, remaining anonymous would probably only guarantee you one thing, you’d definitely stay anonymous.

“One guy in the group my colleagues eventually settled on a personal strategy to help differentiate himself, a little plan we ended up calling ‘The Invented Crisis’. The details were fairly simple, for every problem you solved, for each even small process improvement you developed, and for any new idea to improve information quality or service levels, you first ‘invented’ and communicated a ‘crisis’, that your eventual solution, (one that you had already figured out), would be the salvation for.  As my friend saw things, there was not much value to solving problems if no one, especially some well-place managers and executives, did not have a sense of the nature and scale of the ‘crisis’, before he stepped in to save the day and deliver a solution. I think his strategy worked to some extent, over time he began to be seen as the kind of person that was a ‘problem-solver’, and occasionally would get assigned some interesting and challenging, (and higher profile), kinds of projects because of this reputation.”

I have to wonder, is this an invented crisis or just good communication (or as some would say, good “managing up”)?

Then again, I question the culture of a company in which an employee is forced to toot his own trumpet in order to get some well deserved recognition. It sounds like this organization could use a healthy dose of strategic recognition - and a total readjustment of their culture to better recognize and – ultimately – engage all employees.

What gets noticed in your organization?

4 Truths about Company Culture from BlessingWhite

2011 17 Nov

Recognize This! – Culture is not optional, so it’s best to learn how to manage it to your advantage.

Tomorrow I’m wrapping up my workshop series on how to “Build Your Winning Culture of Recognition,” so I’ve been steeping myself in news on research on the topic lately. In October, BlessingWhite published an article on organizational culture in which they defined culture as:

“The sum of an organization’s behaviors and practices. It reveals itself in big and small decisions as well as daily practices (“how we do things around here”) that tend to perpetuate themselves.”

Every company has a culture. The crux of the issue lies in asking, “What are you going to do about it?”

You do not have to passively accept the culture you have today as the one that you must have forever in the life of your organization. Cultures can be proactively managed. In fact, my CEO Eric Mosley and I wrote the instruction guide on how to proactively create and manage a culture designed to increase employee engagement, performance and productivity – Winning with a Culture of Recognition.

BlessingWhite has validated the importance of taking this strategic approach to organization culture, concluding the article with these four truths (quoting):

So, if you are a senior executive and still have reservations about investing time on your organization’s culture, remember:

  1. Culture is not optional — and letting your culture evolve organically will work against you.
  2. Defining culture is the important first step — you do not need a “culture initiative” per se.
  3. Leadership development and all employee-engagement initiatives are opportunities to reinforce and build the culture.
  4. Executives ultimately have to hold themselves and others accountable for steering the culture.

Do you manage your culture? If you could change any aspect of your company culture, what would you change?

Why You Should Stop Motivating Employees

2011 16 Nov

Recognize This! – Factors that serve to demotivate employees are stronger than those that motivate them.

For decades, “good” managers have concerned themselves with how to motivate employees – how to encourage their employees to give their best. New research from Jim Collins, co-author of Good to Great and Great by Choice, offers a new perspective (from the Financial Post):

“Collins heads up a leadership centre in Boulder, Colo., where he conducts research into what successful companies do and their leadership practices. Collins says that ‘the best leaders don’t worry about motivating people, they are careful to not demotivate them.’ He contends there are three key demotivators: Hype or the failure to acknowledge the real difficulties the organization faces; futurism, or always looking at distant goals or visions, and not being present; and false democracy, or inviting employees’ input when the leader has already made a decision. A combination of all three can kill employee motivation.”

This doesn’t surprise me based on similar research showing that bad behavior at work has a much stronger influence on company morale and productivity than good behavior does to counteract it.

Common Demotivators

All of this theory is well and good, but are there common demotivators you can eliminate in your workplace?

  1. Lack of clarity and communication– When people don’t know what you need from them, they lose motivation to work hard on the tasks at hand. They question whether their work is valid and useful to achieving end goals.How to turn it around: Recognize employees in-the-moment to clearly communicate to employees what it is you need and expect that is of value to the organization.
  2. Lack of meaning and purpose– Without this clear communication, employees lose all sense of meaning and purpose in their work, two factors often identified as critical to employee engagement and happiness at work.How to turn it around: Help employees understand the deeper value their contributions by tying recognition to core company values and strategic objectives. This lets them know how their efforts are contributing to achieving larger goals.
  3. Lack of progress– Recently identified through rigorous researchas the primary factor of employee engagement, progress is essential to motivation. Otherwise employees feel as if they are spinning in circles but never truly accomplishing an end result of valueHow to turn it around: Don’t wait until the conclusion of a project to recognize employee efforts and contributions – especially in projects that can last months to years. Keep employees focused and, yes, motivated by recognizing and rewarding progress along the way.

What other common demotivators do you see in your workplace? How could you or your mangers turn them around?

3 Steps to Engage Employees for Increased Productivity

2011 15 Nov

Recognize This! – Employees need clarity, direction, consistent communication and recognition to engage and deliver desired results.

Recent AON Hewitt research on the status of employee engagement globally tells us:

  • Worldwide, employee engagement is at 56%, which indicates a workforce indifferent to organizational success or failure.
  • The largest engagement drop is in how employees perceive performance management.
  • Globally, employees don’t think managers have connected individual performance to organizational goals.

Is anyone surprised by these findings? It’s the same results reported again and again by various sources.  Research from RogenSi (reported in MSNBC) found:

“Workers, it appears, are still relatively uninspired by their workplaces: while they are knuckling down and getting on with the job, the payback for them, judging by their responses, has been a lack of clarity and communication in where their organisations are heading and a profound sense of feeling undervalued by their leaders, leading to a lack of respect for those above them. These are sour ingredients for a fruitful workplace.”

Once again, employees are pointing their leadership to what they need in order to engage and increase productivity on things management actually cares about:

  1. Recognition for their efforts
  2. Better communication about company direction
  3. Clarity on how individual employees can contribute

The AON Hewitt research cited above provides excellent advice on how to deliver precisely that (quoting):

Following are universally applicable best practices for improving and maintaining engagement:

What should your managers do to inspire you?