Money Not Enough to Motivate Employees

The folks at McKinsey issued a timely article that brings fresh data to the quixotic search for the right formula to attract and motivate talent. [FYI - You may need to register to view the article.] Based on their own research, the authors suggest non-financial incentives are more effective at motivating employees than traditional financial incentives like salary hikes and bonuses. These findings concur with other surveys that confirm that for employees with satisfactory salaries, financial incentives offer mostly fleeting motivational benefits. But although most companies are cutting back on financial incentives due to the ongoing financial crisis, it doesn’t appear many of them are shifting to other (more effective) reward and recognition programs. For many the adjustment of incentives remains an exercise in management of costs.

According to the article, the most effective non-financial motivators are:

• Praise from direct managers
• Leadership attention (one-on-one meetings)
• Opportunity to lead projects

Anyone with management experience is likely familiar with these incentives – and understands intuitively why they would work. As the authors write: “The survey’s top three nonfinancial motivators play critical roles in making employees feel that their companies value them, take their well-being seriously, and strive to create opportunities for career growth. These themes recur constantly in most studies on ways to motivate and engage employees.”

So if all this seems logical and backed by research,  why do so few companies emphasize non-financial incentives? The McKinsey authors suggest the biggest reason is old habits are hard to break – traditional wisdom is that money talks louder than anything else. Another reason – which I’ve witnessed in my own corporate experience – is that non-financial incentives often entail more time and commitment from managers, and many companies are hesitant to juggle or stretch the agenda of their managers. Another theme woven through the article is that some companies equate basic communication (such as town hall meetings) as automatic motivators, while in reality the outcome is highly dependent on the specific information, format and occasion.

Perhaps this is another example of how some companies under strain tend to resist dramatic change or new ideas, rather than embrace the opportunity for innovation…or the inability of many leaders to seriously consider the preferences of their employees. Certainly, there is no shortage of publicity and plaudits for progressive employers who leverage a wide range of benefits to engage their employees – think Fortune’s Best Companies to Work For.  But clearly, this has not been enough to alter the core incentive programs of many employers.

Who Suffers Most After Layoffs?

I read a provocative article this week in BusinessWeek about a study of Boeing workers that suggests those laid-off from the company in recent years actually fared better – in terms of their morale if not pocketbook – than the so-called survivors. It’s long been accepted that after layoffs those left behind can have trouble adjusting to the staff turmoil and need careful attention to remain productive, but this study argues they often suffer more than those who are let go.

Based on my experience (which includes work for Boeing during the tumultuous years mentioned in the research) the critical factor in this equation is the workplace environment, rather than any staff changes. If the corporate environment is tense and depressing, the survivors may indeed be worse off than those who get a fresh start. And though the unemployed certainly have to face the myriad stresses that come with finding new jobs – often at lower pay – many benefit from a more positive, less stressful working environment. In effect, money and security can sometimes be outweighed by personal satisfaction and well-being.

Other factors that play a role in which side suffers most include:

• Who leaves and who’s left behind – are the layoffs perceived as a talent drain…are popular, talented stars part of the exodus?
• How are the layoffs communicated – are employees kept well informed of the process (and rationale) and given a chance to air their concerns and questions?
• Do the layoffs appear to be part of a logical, solid business strategy or a knee-jerk move to cut costs?
• Is there a transparent, credible process for determining who gets laid-off, or is the process capricious and opaque?
• Has leadership laid out a clear timetable and strategy for addressing market challenges (and reducing the need for future layoffs?)
• Can the remaining employees rally around a compelling vision and benefit from a dynamic, positive culture?

Many successful companies navigate through layoffs without long-term damage, so cutting staff is not a corporate death sentence. The key is for companies to handle staff changes in a humane, candid way and sustain their culture and employee value proposition through good times and bad.

Most U.S. Employers Shutout Social Networks

In a recent post, noted communication blogger Shel Holtz highlights the findings of a recent survey of U.S.-based CIOs that found 54% of companies do not allow their employees any access to external social networks, and 19% do so only for limited “business purposes”. Check out a summary of the original research by Robert Half here.

Holtz argues this stance is fueled more by irrational fear than logic, and furthermore that it undercuts the external social media strategy – since in many cases employees are the best ambassadors or advocates for an organization. One of Holtz’s key points is “the presumption of most companies blocking access is that employees are being unproductive, wasting time. In fact, the lines have blurred so much that even an employee spending a few minutes online to take a break from work could wind up having an interaction that benefits the company“.

I would add that a fundamental flaw in the logic of these restrictions is that they focus on the channel, rather than the underlying rules on communications and disclosure – which should theoretically apply to any communication platform. The issue is not Facebook or Twitter – though the immediacy and reach of those platforms is certainly relevant – but rather ensuring employees understand what they can/can’t communicate externally and the policies on online conduct – whether as employees or outside of work.

Add this survey to the pile of empirical data suggesting organizations have decidedly mixed feelings about social media. In this case, the dichotomy is that while more companies are increasingly keen to engage in dialog with external audiences (notably customers) they are still reluctant to allow their own employees to participate in these same conversations. And based on my experience many companies are even hesitant to allow networking and conversation within their organizations. Many employees probably see this as lack of confidence in their ability to do the right (and smart) thing, and a not-so-subtle message from management that they can’t be trusted. Not exactly the message you want to send while simultaneously asking for more productivity and loyalty.

Lessons from Companies in the Social Media Trenches

Two recent surveys of leading companies point to the progress and potential – but also the challenges – of engaging in social media. Great context for those wondering  what everybody else is doing.

First up…a new survey of 400 global companies by Deloitte, which focused on the perceived benefits and potential of online communities – or “tribalization of business”. The headline of this study is: good progress and plenty of promise…but it’s tough to find the right formula for maximum success.  As the survey puts it: “While enterprises are effectively using online tools to engage with customers, partners, and employees for brand discussion and idea generation, organizations are continuing to struggle with harnessing social media’s full potential.”

Key takeaways include:

• There are signs that company use of social media is maturing,  with the notable example of a shift to consider online “lurkers” (or observers) rather than just active users in online communities
• Companies still struggle with the main obstacles of building online communities – getting users to join, stay engaged and return – and use participation as the main metric for success (the study suggests there are more useful analytics, such as search engine rank and links/citations on other sites)
• The  top business objectives for online communities are (in order): increasing word-of-mouth, customer loyalty and brand awareness

The Deloitte authors provide an interesting prescription to companies engaged in social media that reflects the need for a new perspective and approach:

• Think tribe – not market segment
• Think network – not channel
• Think customer-centricity – not company-centricity

The folks at McKinsey have also spent a considerable amount of their grey matter studying the implementation and impact of social media. One of their most interesting products is an interactive report on Web 2.0 featuring results from their annual survey of 1,700 business executives. (FYI – You may need to register to access the full report.) The survey provides a great snapshot of where companies are investing, what they’re trying to achieve and what technology they are deploying.

Too many findings to show here, but here are some highlights (I’m sticking to Top 3 for each):

• Most important technologies and tools: Blogs, social networking, wikis
• Technology/tools being used internally for developing products & services: wikis, blogs, social networks
• Technology/tools being used internally for managing knowledge: wikis, blogs, RSS
• Technology/tools being used internally for enhancing company culture: blogs, social networking, podcasts
• Technology/tools being used internally for fostering  collaboration: blogs, social networking, wikis
• Technology/tools being used internally for training: videos, wikis, podcasts
• Technology/tools being used internally for finding and recruiting  talent: social networks, blogs, videos

Not surprisingly, the mix of tools used to interact with partners and customers differs from the internal recipe…as do the objectives. In fact, it’s interesting to look at what McKinsey has categorized as main objectives for each audience:

• Partners: achieving better integration, lowering purchase costs, developing  products, solving problems
• Customers: acquiring new customers, improving customer service, developing products, helping customers interact, marketing
• (Employee objectives are noted above.)

There were a couple of surprises for me in the findings. One is the relatively low ranking for micro-blogging…which belies the hype for Twitter and similar internal applications (e.g. Yammer). The other is the low profile of “prediction markets” – which I take to include crowd-sourcing platforms popularized by Dell and Starbucks. Perhaps the most disappointing  (though not surprising) finding is that senior executives are the lowest users of Web 2.0 technology. Therein lies one of the biggest challenges for communication and marketing professionals – it’s hard to sell Web 2.0 strategies to executives who don’t use or understand the technology.

Social Media Requires Planning…Not Just Flash

A recent post by David Armano suggests companies will face five core challenges due to social media – whether or not they embrace or delay the transforming impact of the new technology: integration, governance, culture, HR and ROI. I agree with David’s argument; as I’ve written in several posts, in my experience most organizations considering social media focus on the technology and content but drastically underplay the more pedestrian topics like organization, process and even resources.

Most organizations have to create new roles, structures, routines and policies to efficiently manage their social media program(s) and this can be a laborious process in companies just entering the game and/or reluctant to change their existing infrastructure or funding model. In one recent personal experience, I spent as much time on logistics – forming new cross-functional editorial teams, defining policies, building a process, training key staff, securing adequate resources – as on the technology itself (though that wasn’t without learning pains.) Changes usually require disparate teams and functions – notably marketing, PR, IT and HR – to work much more closely together and ignore the historic silos or job descriptions. Inevitably, some departments will resist the changes without strong leadership directives. Going back to Armano’s model, the area that seems to really lag is metrics, which requires an organization to decide if and how it wants to measure the impact of its social media initiatives. This is not an easy topic to address even for the most progressive companies – since there is no accepted blueprint or easy empirical formula – so its no surprise many just choose to set it aside and hope for the best.

Ultimately, companies have to make a fundamental decision about their cultural DNA and perspective on communication. That will typically fuel the strategy and deployment of new resources and platforms. Without consensus on that core value, progress will remain elusive.

Corporate Social Media Policies Balance Freedom with Common Sense

The folks at PR Squared recently posted their take on a basic corporate social media policy. I think their example is solid, and similar to other best practices I’ve worked on or seen. Importantly, they put a premium on transparency, protection of confidential information and avoidance of any legal issues – all critical requirements. And I like their caution about protecting personal information and thinking long-term.

But the devil is in the details in any policy, even good ones like this. The key is careful monitoring and nimble interpretation and decision-making to ensure the policy is understood and applied consistently. Typically, a few areas provide most of the questions and problems in these situations. For example, what constitutes a crisis? And who decides when something is a crisis? Easier said than done in the “canary in a coal mine” environment of the web where rumor and fact are often hard to confirm and news can break quickly. Another grey area is information that is not obviously confidential but may be material, or at least relevant, to competitors and investors. Another issue I would clarify in this policy is the distinctive role of trained subject experts who blog/post on behalf of the company – they have a different mandate and road-map than employees surfing the web on their own behalf.

Many companies are understandably leery of formally sanctioning their employees’ activities online – after all some employees may be critics rather than fans – but the reality is many are already on the web. So the smart thing to do is not ignore the reality, but develop clear, simple policies to guide the activities and address the egregious abuses. Beyond that, enlightened companies recognize that the fundamental issue is not trying to control or direct employee comments online,  but taking steps to foster a strong culture and ensure employees become productive, enthusiastic performers and positive advocates for the organization.

Workforce 2.0 Still Work in Progress

Judging by what I’m seeing and reading, an increasing number of companies are considering how they should leverage social media to communicate with their customers,  influential journalists or even critics. Many are engaged in outreach programs using some of the available applications and tools. But surprisingly fewer companies seem to be applying the same diligence and effort to their internal audiences beyond ensuring their employees are somehow informed or involved – in some capacity – with their external programs.

A cursory look at the available research and some case studies provides some hints on the reasons for this ambivalence.  A Watson Wyatt report suggests social media can improve internal communication and employee engagement…but also confirms many companies focus on potential risks and inhibit access to tools. A survey by Avanade (a global IT consulting firm) found more than half of the 500 top executives surveyed resist the adoption of social media out of fear it would sap worker productivity. A survey by IABC/Buck found 4/5 of respondents use social media frequently to drive productivity & engage employees – but 56% of executives are not using social media.

There is ample anecdotal and empirical evidence, however, that supports the premise that providing a robust forum for internal dialogue and collaboration should pay rich dividends for organizations and drive employee engagement. MIT research shows 40% of creative teams’ productivity is directly explained by the amount of communication they have with others to discover, gather, and internalize information. Other MIT research shows employees with the most extensive digital networks are 7% more productive than their colleagues, and those with the most cohesive face-to-face networks are 30% more productive.

With this background, I would make the following arguments:

1.The best social media strategy is proactively integrated across audiences, objectives and platforms

2.Your internal audience should not be an add-on – your employees are potentially your biggest fans & best advocates…or biggest critics

3.Every company should provide a robust forum for employee conversation & collaboration

I would further advocate that all companies should strive to develop their own Workforce 2.0 culture – defined as an organization shares information/content freely – allowing employees to help create and share content – and provides employees with platforms/tools to engage in candid conversation, work together, solve problems and contribute to the evolution and success of the organization. This 2.0 culture entails four key attributes – transparency, trust, empowerment and innovation. Perhaps it is these philosophical and cultural requirements that are the stumbling block for many companies, rather than technology or myopia.

I’m certainly not suggesting that all companies should follow the same social media strategy or dive in without careful diligence and planning. The formula need not be complex or expensive, but it should be smart and driven by business objectives. But organizations that don’t address this issue are missing a huge opportunity…and risk becoming increasingly irrelevant in the marketplace.

Why are So Many So Bad at PR?

Over the past year or so, there’s been no shortage of examples of companies (and their leaders) showing an incredible propensity to stumble into media scandals or PR fiascoes. Let’s start with the Big 3 U.S. automakers going to Washington to beg for money in private jets and with their nascent rescue plans written on the back of a napkin. Or AIG stubbornly going ahead with lavish training or recognition trips as if they were flying high and the economy was humming. Or leaders of humbled (if not bankrupt) investment banks arguing for their typical million-dollar bonuses.

How could this happen, one might ask. These executives are presumably very smart people. These companies likely have large PR staffs that monitor the media and political winds. How could they not have anticipated and prepared for these events when it was so obvious to most observers their actions were ill-advised and smacked of delusion and hubris? I chalk it down to three critical flaws – call it my “axis of PR evil”.

• Insularity – Though it seems unbelievable that a company (or culture) can become detached in this 24-hour, multi-media, mobile Web environment, it would appear some of these protagonists either ignore, dismiss or don’t comprehend what is happening outside their doors. That is more likely in a cultural environment that beats the drum loudly and limits candid dialogue and external input. In other words, they drink a lot of cool-aid and listen to themselves rather than outsiders.
• Arrogance – A good way to get into trouble is to start believing you’re smarter than everybody else. Or don’t have to follow the same rules. Or deserve a better fate (and paycheck) than mere mortals. I don’t personally know any of the executives embroiled in the scandals I’ve listed above, but they all appear to have very healthy egos – even as their companies crumble around them and they go hat in hand to Washington. That may be good for their self-esteem, but good leaders need the humility and self-awareness to recognize mistakes and accept good advice. With these folks as leaders, arrogance can easily become a cultural virus spreading across an organization. It all adds up to a toxic mix.
• Greed – It’s clear that a common thread in many of the recent  PR scandals is the most basic of human flaws – some people like to make as much money as they can…sometimes much more than they deserve or is legal. Nothing new here, perhaps, except for the brazen, delusional extent of the greed as the economy crumbled around them.

What’s the lesson for PR professionals? Be the voice of reason in spite of intense pressure to conform or be silent. Help to break through the insularity and arrogance. Bring the outside in. And never drink the cool-aid…or at least, too much cool-aid. If all of these efforts fail on a consistent basis, it may be time to reevaluate whether you should stay in your job.

Defining a Relevant Vision…Not Just a Business Goal

In the past few weeks, I’ve been involved in wide-ranging discussions about developing a vision for a company. Usually, this process is slow and painful, largely due to lingering confusion about the differences between a mission (what you do and how you do it) and vision (where you want to go…who you want to become). No, this time the sticking  point is on how broad the vision should be.

At the outset of these discussions, somebody proposed a vision statement that was heavily focused on business goals. The formula: If we make X, our objective is to make and sell more X to more people by doing Y.  I realize some companies use financial targets as aspirational goals – I’ve been in a few of them - but I’ve always found these to be ephemeral and shallow as vision statements; they seem to imply that making even more money is the beginning and end of any vision and good enough reason for me to stay with the company. I think this narrow perspective misses the point that companies are more than just an organization for selling goods and making money. Companies are members of the community. They are (potentially) forces of social and economic change. They are home to employees and guardians of a distinctive culture and workplace environment.  In that context, developing a true corporate vision requires a holistic perspective that defines the company not just as a business entity or provider or products and services, but also as a corporate citizen and employer. Companies striving to appeal to the intellect and emotion of employees – and customers – are likely to get more traction from this well-rounded approach.

Counting Work not Hours

One of the ongoing mysteries of modern business for me is the reluctance of American corporate leaders – particularly in Human Resources – to fully embrace the management credo that focuses on work output rather than hours worked (the old “butt in the seat” mentality.) This movement has picked up speed as technology expands the opportunity to do work and stay connected pretty well anywhere in the world. I’ve had the good fortune to work at organizations at various places on this continuum,  ranging from total autonomy (a truly mobile, virtual office environment) to a much more regimented office environment…where the hours when you arrive and leave are seen as a litmus test of dedication and productivity. Unfortunately, the latter is more the norm, particularly in the corporate environment. (I recall one job where leaving before 8 pm was seen as such an affront that colleagues would avert their eyes to avoid any semblance of silent collaboration with my “early” departure.) Agencies and consulting firms can also demand long hours, but they tend to be based more on business and client requirements and staff are typically given much more autonomy to decide where, when and how to complete their work.

The authors quoted in this recent BusinessWeek article suggest that the problem is not just an executive aversion to risk, but an outdated and unfounded logic based on the false premise that hours worked equal productivity. That argument has been so thoroughly debunked by many companies (Cisco, Best Buy and REI come to mind) you’d think resistance would be eroding. Yet, many leaders and board members continue to look askance at any suggestion that the traditional 9-to-5 model be changed. I think another factor is that deep down, many managers still do not trust their employees to do the right thing and do their jobs. I would argue that assumption is equally questionable – and the problem is not the working environment or rules but the lack of commitment and productivity of the individual employee. The problem is the person, not the rulebook.

True, not every company, job or person are well suited to an autonomous, flexible model. There are important considerations when dealing with a blue-collar workforce, for example, and some jobs require on-the-job presence, but for many positions the work can be done just as well from home, the road or even the beach or coffeeshop – whether in groups or solo. And even for manufacturing gigs, there is room to give staff more freedom to decide their routine and hours…as long as the production stays on track. In an age where there are increasing productivity expectations on workers, and where work demands continue to encroach into personal time, it’s neither fair nor realistic to for companies to demand flexibility from employees without affording them the same commitment in return.