Creating a culture of employee “ownership mentality”: Part II

Last month we took a general look at measures to establish that all-important culture of employee “ownership mentality;” one that once created can help impel a business to greater success.

Now, let’s see how compensation structure impacts that desired ownership mentality, beginning with short-term incentives.

Essentially, short-term incentives are performance measured and typically paid out in 12 months or less. These incentives can play a large role in engendering an employee’s sense of “investment” in an organization if they are based on the achievement of certain departmental goals and/or hitting a profitability threshold.

Most companies utilizing short-term incentive components as part of an overall “ownership” approach will “weight” the incentive based upon a tier system. As such, tiers are established for different classes of employees in conjunction with their impact on various performance measures.

For example, incentive for Tier 1 or top level management is usually based on company performance, not department or individual contribution. Incentives for Tier 3 or 4 employees, however, are heavily weighted on team and individual performance, and hardly at all on overall company achievement. The objective with both tiers is to create focus and tie incentives to specific goals that the employee is best positioned to help meet – in other words, allowing an employee to feel engaged and invested in the workplace, which translates into that coveted ownership mentality.

Long-term incentives, which can include shares of stock, stock options, phantom stock, a profit pool or incentive deferred compensation, are designed for top talent retention.

Key among the intentions of long-term incentives is to create a focus on attaining the company’s long term financial goals and engender a sense of “investment” in those goals.

Long-term incentives provide a substantive reason for top talent to both join and stay with a company. Attractive inducements can “reel them in” and likewise maintain star employees.

Sustained growth and hitting those important goal milestones occurs when key employees are motivated to focus on performance, leading to execution and a pattern of continued achievement – in the long run, a win-win for both the company and its employees.

About our Benefits Installment Author:

James E. (Jim) Moniz, CEO of Northeast VisionLink, a Massachusetts firm that specializes in structuring executive compensation. James E. Moniz is a national speaker on the topic of wealth management and on executive compensation. Jim Moniz will be presenting at this years SHRM conference in Phoenx, be sure to check out our presentation: “Creating and Sustaining a Competitive Advantage, The Role and Impact of Effective Compensation and Rewards Strategies”

Creating a Culture That Encourages Employees to Think Like Owners: Part 1

January Installment by Jim Moniz:

Success now and in the future – let’s face it; that’s the ultimate goal of any business owner. But to achieve that vision of a “bigger and better” organization, you first have to identify a few key elements for success and then make sure that your staff possesses the appropriate ownership mentality to assist in both your short and long term objectives.

Fundamental to any growth strategy are three factors: fulfilling your original business plan (mission, values and company vision); the emergence of sustainable growth patterns (revenue development); and a suitable return in capital for company shareholders.

In order to best achieve those elements for growth, employees must be on board – and the most direct line to meet that aim is by fostering a culture of employee ownership. In other words, employees have to draw the same conclusions as you about what’s important, but for that to occur, ownership mentality must be personalized.

Most employees recognize the bottom line to a company’s success is well…the bottom line; but it’s also vital that they understand how their contribution will help to make that happen. Without this important engagement on the part of employees, their focus may be off center.

That engagement occurs when an employee not only appreciates the unique talents he brings to the organization but recognizes that those skills are also appreciated by management. And that is accomplished by utilizing and amplifying those special talents to allow the employee to find meaning in his work and create a framework for both his and the company’s success. The coveted ownership mentality occurs when the employee sees that connection between his and the company’s goals.

It all boils down to employees embracing the fundamental elements of understanding, importance, contribution and connection.

But a few well-placed “atta boys” aren’t going to fully engender ownership mentality. Motivation comes in many forms, including a regular and attainable incentive program designed not as an employee entitlement, but as a means to create engagement and ownership.

A sound incentive plan – which includes both short and long term motivations – always connects the dots between performance and results. It can best be described as a conditional payment in exchange for meeting specific performance standards.

Next month we’ll break down the differences between short and long term incentives and the role each plays in creating and maintaining that all important ownership mentality.


About our Benefits Installment Author:

James E. (Jim) Moniz, CEO of Northeast VisionLink, a Massachusetts firm that specializes in structuring executive compensation. James E. Moniz is a national speaker on the topic of wealth management and on executive compensation.

Jim Moniz will be presenting at this years SHRM conference in Phoenx, be sure to check out our presentation: “Creating and Sustaining a Competitive Advantage, The Role and Impact of Effective Compensation and Rewards Strategies”

Performance Compass (Beta)

We don't usually do this, but today HR-Worldview would like to direct your attention to a useful new tool designed by HR-Meter that is still in Beta.

HR-Meter is looking for folks to Beta test this tool. This basically means "use the tool for a month and give HR-Meter feedback on it".

The tool is called the Performance Compass. Check out this little video HR-Meter sent over.

You can also view the video here.

HR-Meter has asked that we don't give out any more information than this.

So, if you are interested in participating in the Beta of this tool, click the link below to sign up and HR-Meter will give you more information.

Sign up for more information & to Beta Test Performance Compass

The New First Class Compromise

When companies cut budgets, a typical target is anything considered to be a frivolous gadget. An unneeded gizmo. There certainly are a lot of frivolous gadgets and unneeded gizmos. It all makes perfect sense.

But then I feel like I'm in the Twilight Zone when I talk to clients who have cut their annual or bi-annual on-line performance appraisals and assessments when I clearly remember them saying to me in the past that they don't know how their team, their department, even their business as a whole could continue to function and grow without them. 

They used to say stuff like “We were such a dysfunctional, uncooperative bunch.” 

So when the tools that 'functionalized' the dysfunctional and got the 'uncooperative' to cooperate are put to pasture, I always want to say “My word! Is it that bad? I hope you didn't have to get rid of the Tassimo coffee maker too!” But, inevitably, I get my head on straight and get with it again.

Here is what we need to do. 

If your team, department, or company as a whole is a dysfunctional, uncooperative bunch but you can't seem to find room in the budget for the tools and support that you need to 'fix it' then either you're company is not taking the 'human factor' seriously enough or providers are not taking your budgets seriously enough. It's probably a little bit of both.

They say that in money, a perceived need is as real a need as a real need. I don't know if they actually say that, but I think it's true. We were going in this direction anyway, and it is simply the case that the state of the economy has accelerated the HR market's need for easy to use (which is time efficient) and cost-effective (which is cash efficient) technology solutions. 

HR needs to start making the case that these tools are as necessary a part of the frictionless functioning of a business as the workstations, the network bandwidth and the Tassimo. Uncooperative people don't just start cooperating especially when they are afraid that their jobs are on the line. No company would sell all of their workstations and replace them with typewriters to save money. It would end up being more expensive... that's why we have computers. The best question to ask is, “How is that any different than getting rid of the other tool that time and again has provided stability and openness to the workforce?” 

At the same time, HR solutions providers need to start innovating and moving away from the old model that companies don't see room for in their budgets. Solutions providers cannot just weather the storm and when the skies clear up approach their clients with the same garbage that got tossed at the first sign of trouble. That is about as backward as selling off workstations for typewriters. HR solutions providers need to learn that HR is now going to want more control over implementation and management of these systems. It's a particular brand of protectionism. HR solutions providers need to have a whole new game that's easy to learn. The products need to be better than they were before and we can actually define what we mean by "better": easy to integrate into company culture, easy for the client to learn, easy to use, quick to deploy, stable, error free. Of course, some HR solutions providers will be quick to say “oh but our systems have always been like that”. But, if that were true then we wouldn't be having this conversation.  

How do you conduct 360 Feedback Follow-up? (Part 2 of 2)

As we pointed out earlier, a 360 Degree Feedback project that lacks a consistent and structured follow-up is going to lack any real and meaningful value not only for the employees who participate in it but for the company as a whole. In short, failure to properly follow-up on a 360 Degree Feedback project results in lost opportunity and wasted money.

So, as promised, we're going to point out a few steps that absolutely must be taken as a follow through or follow-up to a 360 Degree Feedback project.

Step 1) Every focus person must sit down with his or her manager to discuss the outcome of the project. During this discussion, the focus person and his or her manager need to come to agreement on a number of areas that that need to be improved upon. These areas should be easily identifiable if the 360 report is any good.

Step 2) The focus person and his or her manager must work out a "to-do-list". This should be a list of things the focus person can start to concentrate on on a daily basis that will result in improvement in those broader areas worked out in Step 1. This is the step that is almost always ignored which results in negligible improvement for the focus person.

Step 3) The employer need to work out a system to help each focus person track his or her completion of the "to-do-list". If you are a manager, this could mean routinely e-mailing the focus person to let them know that you have noticed that the focus person has been doing a great job on some items of their to-do-list and a poor job on others. Or, the employer could use a tool like HR-Meter's advanced "performance tracker system" which allows a focus person's rater group to continue to comment on his or her progress between 360 Degree Feedback projects. Step 3 keeps each focus person engaged and on top of their own improvement between 360's. This allows you to spread out the time between 360 Degree Feedback projects, save money and improve efficiency.

Step 4) Knowing that between 360 Degree Feedback projects steps have been taken to capitalize on the information gathered in the previous project, each subsequent 360 Degree Feedback project should be adapted to reflect each stage in the company's performance evolution. You should not be doing identical 360's time and time again.

If you implement these 4 simple steps after your next 360 Degree Feedback project, you will have added considerable value and meaning to your project and will have saved yourself and your company time and money.

Event Invitation - 360 Degree Feedback

On February 20th, we will be hosting a live web-event where you will learn how to cut your annual performance review, 360 Degree Feedback and coaching costs by more than 50%. Christina Dietzsch-Kley, President and CEO of HR-Meter LLC will take you through the "do's and don'ts" of modern employee evaluations and unveil an exciting new, real-time, alternative to the norm.

This should be a highly informative webinar for anyone who has been considering implementing some kind of multi-rater feedback project as well as those who currently use 360 Degree Feedback projects on a regular basis.

Workplace Confessions

As part of our series of articles by exceptional HR professionals, today we present an article by guest author, George Krafcisin.

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Leaders become more effective when they appear to be in control*.  But success or failure for an organization is often beyond the leader’s control. It’s easy for management to blame bad performance on commodity prices, the weather, or stubborn customers who inexplicably refuse to buy the company’s inferior products.

One research study tracked the share price performance for two situations. The first group studied was companies where performance problems were explained by management as due to internal problems that they planned to fix – in other words, they accepted the blame. The other group consisted of companies where management blamed performance problems on external, uncontrollable factors. The surprising result: the first group, where management accepted the blame, had consistently higher share price performance in the next year. It appears that honestly accepting blame is good policy for leaders.

But there’s more to accepting blame than just saying, “I’m sorry.” I looked to my own extensive list of personal management mistakes and recalled a small example from my corporate officer past.  A fellow manager took me aside one day and said, “You might want to talk to John. He’s a bit upset because you’re overdue on his evaluation and raise, and he’s afraid to confront you about it.” (Hmmm . . . sounds like at least two mistakes on my part!)

I checked my files, and sure enough, I had forgotten the evaluation, maybe because I was consumed with other “important” matters, maybe because I hated doing evaluations. Whatever the reason, it was definitely my fault.

I did talk with John, and for a change, I did a smart thing: I admitted my error, and I didn’t try to minimize or dismiss it. I assured him it was a case of sloppy management on my part, and not related to his performance or what I thought of him. Then I immediately moved to correct the mistake, abasing myself before my boss and the HR bureaucracy to get John a retroactive raise. Then I told John and my boss I was setting up a tickler file system with evaluation due dates for the whole staff so I wouldn’t make the same mistake again.

I’ve used that lesson a number of times in my career, accepting blame when it would have been very easy to dump it on someone else. I believe doing that consistently established some personal credibility. People knew that when I said something happened because of some outside factor, I was telling the truth, because they had heard me accept blame when it really was my fault.

So when you have to explain why things went wrong, think hard about what part of the problem was your fault.  Then do more than say, “I’m sorry.” Go on to tell what you’re going to do to correct the current problem, and what you’re going to do to prevent it from happening again. Then do it. It will pay off in the long run, even if it hurts short term. 

*“‘The Half-Truths of Leadership” by Jeffery Pfeffer and Robert I. Sutton, Harvard Business School Working Knowledge (http://hbswk.hbs.edu). This article is no longer on the site but I can make an electronic copy available. 

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About our guest Author:

George Krafcisin is the President, coach and trainer of Mosaic Management, Inc. Mr. Krafcisin has over thirty years of experience as an executive and manager, which he applies to his coaching and training services.  He holds degrees from the University of Chicago and Northwestern University and has held a number of positions in teaching and training.  He is the author of a text on quality management and many articles on technical and management topics. He currently offers coaching for business executives, strategic planning and leadership training for businesses.