Finding good employees who know how to do their jobs, work hard, use their initiative, and are prepared to do a little more to get the job done is rare. Even if you have employees like this, chances are good that you have at least a few who are not. According to the latest research, each of those employees costs you at least 34% of your salary in lost productivity.
You can choose to tolerate that situation or you can choose to make some changes because there is a different way. A form adopted by a set of companies that consistently outperform all others. Compared to the stock market as a whole, these businesses have performed more than 400 times better.
The problem is that most companies offer their employees little more than a salary. Even those who are more informed and offer other benefits: health insurance, pension, stock options, etc. – for the most part they are still participating in a time-for-money transaction.
Human beings need more than that. They need to be involved in something bigger than themselves – there must be a greater purpose in coming to work every day; a purpose that is more than enriching shareholders with sweat. They need to know how they are contributing to that purpose and see what difference they are making. They need to connect with their colleagues around a common goal, coming together rather than pulling in different directions. They also need to be able to see how they are developing professionally, personally, and in the community. Among all this, at the most basic level, they want security. It’s not the kind of pseudo-security that comes from being told their job is safe as long as they keep doing it, but the kind that comes from participating in decision-making. And not only be informed of decisions, but actively participate in decision-making.
Few companies operate with that kind of transparency and involvement.
Employee engagement initiatives go in part to address this, but even they don’t go far enough. Engagement is just a starting point for the stellar performing companies highlighted at the beginning of this article. It is necessary, but not sufficient, for superior performance. These companies have also adopted the following practices:
- Open book management where employees not only have full access to company finances, but are also actively involved in creating budgets and forecasts – they understand how their role influences profits and the balance sheet. On the contrary, it is very likely that most of your employees do not know what a balance sheet looks like. It’s not your fault – most school curricula don’t teach it, so most people come to work without understanding how business works.
- Which brings us to the second thing these businesses do: teach all their people how the business works, how it makes money, and how it generates cash. If you tell people how to do something, they may do it. If you help them understand how it impacts business and therefore job security, they are more likely to do the best they can and do the right thing to do so.
- These companies also go one step further because you still won’t get a 100% commitment if they are working hard just to make others rich. Therefore, they give their employees a stake in the business. However, it is more than a stock plan: it involves turning employees as a whole into major shareholders. Many companies, especially those that are publicly traded, give shares to employees. However, your shareholding is so small compared to the general share capital and your ability to influence the share price is so limited that it is not a great motivator overall. Stock prices are likely to be affected by global events beyond your control much more than the work you do today. It could keep them from leaving for a while, especially if the stock price is depressed, but it rarely motivates them to higher levels of performance. However, in a company that is wholly owned by the employees, the main impacts on the share price are strategy and execution, two things that the entire workforce can influence and impact.
As a result, in these companies, employees not only do what their job description tells them, but they also do whatever it takes to increase profits and strengthen the balance sheet. They have a common goal, so they all come together as a team (those who don’t are not tolerated by the rest for long, so they go in or out). They are involved in deciding the strategy and objectives and then in their daily execution. They can see how the business is run. In difficult times, they are involved in creating plans to move to the other side. They can see the real situation instead of filling in the gaps with assumptions. While total job security may not exist, they can at least see what is happening and have a say in what is happening.
The company itself becomes the product on the minds of all employees. There is only one surefire way to instill an ownership attitude in all employees and that is to make them owners. Anything else will fall significantly short.
