The Myth: Whether workers should be treated as thinking human beings depends (is "contingent") on the type of work they do. For example, it is useless -- even counterproductive -- for employees doing routine, highly standardized work to be involved in decisions about the work.
The Finding: There is a widely accepted theory that the way people should be managed depends on the type of work they do. While this makes sense in principle, it breaks down when examined with respect to where the theory has most frequently been applied, namely, the application of participative management methods in different work settings. The basic idea is that when there is no apparent need to think, don’t ask workers to do it. This makes participative management inapplicable to most blue-collar manufacturing jobs but highly relevant for professional tasks. The authors of The Enthusiastic Employee say that the problem with this bit of "common sense" is that it is contradicted by the legion of extraordinarily participative initiatives in manufacturing plants throughout the world. For example, what is one to make of the extensive use by Japanese manufacturing companies of worker participation in shop-floor decision making and the large positive productivity and quality results that have thereby been achieved? The fact is, the authors claim, there is no category of worker for whom involving workers in decisions -- asking them to help through thinking -- is not appropriate.
The Myths: Traditional merit pay systems work; profit sharing is a major motivator of employee performance
The Findings: The survey data reported in The Enthusiastic Employee show that large numbers of employees working under a traditional "merit pay" system feel that, contrary to the promises of the system, their pay increases have little to do with their performance. By definition, then, the system is not working for these employees because unless employees believe there is a connection between what they do and what they earn there is none! How can a reward be a reward if the recipient doesn’t see it as such? There are a number of reasons for these results, such as the fluctuating nature of salary increase budgets and the leveling off of salary increases -- no matter what the employee’s performance – as pay grows, There are different, but equally dysfunctional, problems with other payment systems, such as piecework. The research reported in the book clearly demonstrates that for many types of work the most effective pay-for-performance method is "gainsharing," through which a group of employees share in the financial achievements of their group (such as the increases in the efficiency that they achieve). The research shows improvements of 5% to 78% under gainsharing, the average improvement being about 25%. Profit-sharing, a superficially similar but really very different approach, often does not produce discernible improvements, and when it does, are in the neighborhood of 2-6%.
Senior Management and Worker Compensation
The Myths: Workers object to a large difference between their earnings and the earnings of senior management; to survive in today’s fiercely competitive marketplace, companies should keep wages as low as they possibly can
The Findings: It is a common belief that workers resent the very high compensation that senior executives often earn. But the authors find this is not an issue when the organization is doing well and the workers feel that they are also benefiting from that success: "Let him earn as much as he wants -- he deserves it and it’s been good for me." Resentment becomes acute when the company is doing poorly, workers are suffering in their pay and job security, and senior levels continue to rake it in.
As regards the level of worker pay, the research findings strongly suggest that wages paid to workers should be competitive (not "as low as possible") and, if at all possible, somewhat above competition. The long-term returns to the company in increased performance will, everything else being equal, exceed the cost.
The Immediate Manager
The Myths: Most employees dislike their immediate managers; it is the immediate manager that is the cause of most employee morale problems
The Findings: It is very often asserted that when there are employee morale problems, the fault lies in first-level supervision. It makes sense intuitively to target those managers because they are in direct contact with the workers and might be relatively inexperienced in management. Yes, they are a big influence, but usually for the better! The surveys reported in The Enthusiastic Employee demonstrate that, on the whole, immediate managers are among the highest rated elements of the employee’s work environment. The surveys show that 78 percent of employees are positive toward their managers’ technical skills (knowing the job). Although the rating on their human relations skills is lower (66 percent), it is still much higher than the ratings obtained on issues such as bureaucracy. In almost all companies, only about 10 percent of managers receive ratings that can be described as unfavorable. That 10 percent can do much harm and require attention, but, by and large, first-line managers are bulwarks of organizations, even of those organizations that otherwise might be dysfunctional almost to the point of collapse.
Therefore, intuition fails here and improvement steps, to the extent that they target the first level, are often misplaced. The major problems, as seen by employees, are usually in the "middle" (below senior management and the organization as a whole and above the immediate manager and immediate work environment). The "middle" is where coordination and control among the parts of the organization take place. When employees complain about "bureaucracy," they don’t usually see the villain as their own boss or the CEO, but rather middle management and staff departments, such as Finance. When they complain about a lack of cooperation, they most often see the problem stemming from departments other than their own and not being dealt with -- in fact, sometimes magnified -- by the middle managers to whom their and those other departments report. A complaint about disorganization is usually directed at inefficient work processes that cut across departments, such as the way staff groups and the line don’t communicate or coordinate well with each other.
The Myth: No matter how nicely a manager does it, correcting an employee’s performance will be resented by the employee
The Finding: Many managers avoid performance appraisals like the plague; the same often holds true for giving day-to-day performance feedback. While it is true that employees enjoy being praised and prefer praise to criticism, it is a myth that they have no interest in learning what they don’t do well and what they must do to improve. Doing better on the job gives an employee a greater sense of achievement and pride; the problem is that managers often give feedback in a way that deflates employees’ self-esteem. The Enthusiastic Employee provides concrete guidance to mangers for providing feedback to employees in a way that does not spur resentment (or, at least, minimizes it) and results instead in learning and improved performance.
The Myth: Telling people they’ve done a good job makes them complacent
The Finding: Far from encouraging complacency, a common misconception, recognition for good performance is one of the most powerful inducements to continued good performance and high morale in general. It is a lack of recognition that depresses the motivation most people have to perform. To receive recognition for one’s achievements is one of the most fundamental of human needs. When employee performance is taken for granted by management, as in, "that’s what we expect, why mention it?," employees and the company both lose.
The Myths: Companies that have no hesitation laying off surplus workers do better than companies that go to great lengths to keep their workers employed; people who feel secure in their jobs become complacent; young people today are much less concerned with job security than were previous generations
The Findings: The authors of The Enthusiastic Employee contend that the way many American companies now seem to operate, by essentially using downsizing as a strategic maneuver rather than as a last resort compelled by economic necessity, is largely misguided and self-defeating. It violates a fundamental need of workers and, in so doing, severely damages the sense of equity that’s necessary for effective organizations.
Some people urge that this argument is old-fashioned. They say that a "new generation" of workers has entered the American workforce, young people who readily move from company to company and for whom job security is a low priority. This view of American workers’ priorities became popular in the late 1990’s, a boom time for the economy and a period of plentiful job choices.
But the high technology sector then imploded and the country experienced its first economic downturn in a decade. Hundreds of thousands of workers were laid off and, once again, the media were filled with tales of high anxiety in the workplace. Surveys clearly showed that job security rose to its usual high position on the list of worker concerns.
The authors ask their readers not to believe for a moment that stable employment -- the predictability, not just the size, of a paycheck -- is ever a trivial issue for workers. For most people most of the time, the employment stability that a company offers is critical. When a company downsizes, it’s a major event and, for many employees, it is traumatic, even if they have not been laid off (at least not yet).
The research evidence on the impact of downsizing on business success (not just on employees) is quite surprising and not at all in accord with "common sense." Yes, a layoff often results in a short-term spike in a company’s stock price. However, the impact on the long term can be quite different. The authors show that there is now a mountain of evidence that casts doubt on the efficacy of downsizing for many companies as a cost-reduction strategy. Research done in the mid 1990s discovered that downsizing companies outperformed the S&P only slightly during the 6 months following news of a restructuring, then lagged badly, netting a negative 24 percent by the end of 3 years. The theory of keeping a company "lean and mean," then, may really be only "mean." Another study found that, on average, a 10 percent reduction in workers resulted in only a 1.5 percent reduction in costs. Among the highest performing companies in America are those that go to great lengths to preserve employee job security, companies such as Federal Express and Southwest Airlines.
The Myth: Loyalty between employees and their employer is -- and should be -- dead; companies that are loyal to their employees are less successful as businesses
The Finding: The authors argue that loyalty is dead -- and must be -- if it derives from the old parent-child model of paternalistic organizations; that model cannot survive in today’s highly competitive environment. However, the paternalism of the past does not have to be replaced with a value-neutral transactional relationship where, in essence, employees "are owed nothing but a paycheck" and are removed from the payroll as soon as they are no longer needed. (In fact, if at all possible, they are not put on the payroll and are instead employed as "independent contractors.") The gains from a transactional relationship are usually temporary, in part because such organizations receive from most of their workers little beyond what is absolutely required and monitored. For example, can a company expect its employees to treat customers with individual care and concern -- the care and concern that create loyal customers -- when the employees themselves are treated as invisible, interchangeable and expendable parts? A transactional relationship is therefore often a prescription for short-term success (in terms of cost reduction) and long-term mediocrity.
The authors therefore maintain that neither a paternalistic nor a transactional relationship is the most effective way to create high levels of long-term organization performance. The policies and practices they describe in their book represent, in their sum, a third alternative, which they call partnership. The loyalty in a partnership relationship is not the kind that parents and children have toward each other, but rather the bonds that develop among adults working collaboratively toward common, long-term goals and having a genuine concern for each other’s interests and needs. As the authors use the term, partnership is a business relationship plus -- the plus being the human dimension, the trust and goodwill, that allows people to perform above and beyond what is required by monetary calculations, formal contracts, and very short-term interests. It is characteristic of the most enthusiastic, high-performing organizations.
Resistance to Change
The Myth: Most employees resist change, whatever the change is
The Finding: That "people resist change" is almost a truism that few dare deny. The authors of The Enthusiastic Employee are among those few. The authors’ argument is, simply, that people resist changes that they see as harmful to them or the organization, but they gladly welcome changes that they see as helpful. When was the last time anyone saw a worker turn down a salary increase? Or upset because his new manager treated him more respectfully than his previous manager? Or complain about management adjusting the work pace to allow workers to turn out higher quality work? Those are changes and if workers naturally resisted change, they would resist those changes, too. The notion that people have a difficult time with change is a way to explain "psychologically" why workers often don’t want to do what management wants them to. They don’t want to do those things because they consider them harmful! Does a worker resist a new technology that will replace him because he "resists change?" Is he upset about a transfer to a less interesting job because he resists change? He resists getting hurt.
The belief that people naturally resist change causes managers to act in counterproductive ways, such as secretly developing plans and springing them on workers at the last minute; not listening to the genuine and specific concerns that people have about changes (after all, why listen, if they’re "just resisting change"?); needlessly overselling changes to workers; and, not doing the necessary planning to buffer the ill effects that change might bring ("they’ll complain whatever we do"). Because of these behaviors, people do, indeed, act as if they resist change. It’s the self-fulfilling prophecy at work again: employees’ behavior reflects the way they are treated. The last chapter of The Enthusiastic Employee is devoted to methods for introducing a partnership culture in an organization. The authors’ advice is to ignore the assumption of "natural resistance," assume that most employees welcome the changes that partnership will bring, and proceed with its development and introduction in ways consistent with that belief.
Competition vs. Teamwork
The Myth: It is best to foster internal competition to improve performance
The Finding: There is no question, the authors say, that competition between employees can have a positive, short-term effect on individual performance. But research demonstrates time and again that the performance of the whole -- the whole department, the whole company -- is much better served by encouraging teamwork. For one, almost all tasks require teamwork for their optimum performance. Second, given the social nature of human beings (the need for "camaraderie"), morale is boosted in a team setting and this, in turn, boosts performance. The survey data show clearly that, on average, working as a team is much less of a problem within units, such as departments, than across units. The conflicts between units (such as between IT and its user divisions) can be severe and debilitating for the individuals involved and for the company as a whole. People come to work to work, not to fight. The authors suggest a specific method for overcoming the misperceptions and distrust that are at the heart of most conflicts within companies.
Traditional Management Principles
The Myth: Traditional organization principles -- such as the need for hierarchy -- are stifling and outmoded in today’s "new economy."
The Finding: Loyalty is not dead, and, the authors assert, neither are certain traditional management principles. These principles are important to both the organization and its workers because both the effectiveness of organizations and worker satisfaction require that there be clear and decisive direction from leadership; clarity of responsibilities, authorities, and accountabilities; authority that is commensurate with responsibility and accountability; unified command (each employee has one boss); a clear approval process; and, rules governing acceptable employee behavior.
These principles are familiar and uncomplicated, and they encompass key aspects of what is normally termed bureaucracy. Although they are familiar, the principles deserve to be repeated because they are fundamental and because they are seen by some influential modern theorists as largely out-of-date and dysfunctional, especially in the "new economy" or "post-industrial age" and with so-called Generation X workers. These theorists talk about recasting traditional hierarchical organizations into all kinds of new forms, such as "spider’s webs," "starbursts," "wagon wheels," or "shamrocks."
To seriously advocate the destruction of any semblance of hierarchy shows a lack of experience with the debilitating consequences of working in a directionless organization, or getting conflicting instructions from different bosses, or being unable to decipher who is responsible for what, or not having the authority to carry out one’s responsibilities. These severe obstacles hinder the performance of workers, whether they work in the "new" or "old" economy and whatever their "generation."
The Myth: Whether a company is ethical and a good corporate citizen is of little concern to most of its employees
The Findings: The ethics of their employers are of great importance to the large majority of workers. Except for gangsters and other sociopaths, people don’t feel good about a day’s work that requires lying, cheating, or stealing. And, people don’t want to work for companies that act that way. The authors of The Enthusiastic Employee find that there are four main sources of pride in a company, all of which reflect different facets of a single attribute -- excellence:
– Excellence in the organization’s financial performance
– Excellence in the efficiency with which the work of the organization gets done
– Excellence in the characteristics of the organization’s products, such as their usefulness, distinctiveness, and quality
– Excellence in the organization’s moral character
People want to work for an organization that does well but also does good. Roughly speaking, the first two of the factors listed relate to doing well (working for a business that is profitable and well run), and the latter two relate to doing good (providing something of real value to its customers and conducting its business ethically). "Excellence" means that employees want their companies to do very well and a lot of good. The four aspects of excellence are, of course, interrelated. It is difficult to produce excellent long-term financial results without providing value to customers, or to succeed for long with unethical business practices. There is considerable research evidence that a strong moral component in corporate behavior is certainly not inconsistent with long-term business success and, in fact, appears to significantly contribute to it. Thus, the pride that employees feel working for a good corporate citizen is reinforced by their pride in the business success such citizenship helps to achieve.
People are Different
The Myth: You can’t generalize about people at work because every individual is different
The Finding: Of course, no two individuals are precisely alike and these differences need to be taken account in the management of people. But it is also true that there are broad and useful generalizations -- grounded in empirical research -- that can be made about people at work. For example, it is clear that, while there are differences in degree, the overwhelming majority of people do want to be proud of the work they do and the company they work for (Achievement); do want to be treated fairly (Equity); and do want to work harmoniously and productively with others (Camaraderie). When these goals are frustrated, the company pays the price in an indifferent workforce and generally mediocre performance. There are very few individuals to whom these principles do not apply.
Copyright © 2005 David Sirota, Louis A. Mischkind, Irwin Meltzer
About the Authors
David Sirota is founder and leader of Sirota Consulting, a firm with a national reputation for improving performance by systematically measuring and managing employee, customer, and community relationships. He previously served as IBM Director of Behavioral Science Research and Application. Sirota has taught at Cornell, Yale, MIT, and Wharton, and was a study director at the University of Michigan's Institute of Social Research. His work has been featured in Fortune and The New York Times. He holds a doctorate from the University of Michigan.
Louis A. Mischkind has researched organizational effectiveness for 30 years. Prior to joining Sirota Consulting, he was Program Director of Executive Development at IBM and Special Advisor on Human Resources to the President of IBM's General Products Division. He has taught courses in social and organizational psychology at NYU, Santa Clara University, and San Jose State University. He holds a master's degree in experimental psychology from Columbia University and a Ph.D. in organizational psychology from New York University.
Michael Irwin Meltzer joined Sirota Consulting full-time in 2001, after serving as its attorney for 20 years. He has advised businesses ranging from financial consultancies and real estate developers to sales, distribution, and construction organizations. He has also served as an Adjunct Assistant Professor at Pace University, teaching business organizations, real-estate law, and trusts and estates. He holds a J.D. from Brooklyn Law School.
For more information, visit www.enthusiasticemployee.com