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.

Second Life Still Alive and Well

Many big developments in technology seem to follow the same pattern: launch, hype, boom, more hype, backlash and, too often, bust. Or at least rumors of bust. But usually this pattern is more hyperbole than reality. Take Second Life as an example. When Second Life emerged a few years ago the hype was deafening, and a host of companies (including Dell, where I worked at the time) rushed to build virtual islands. Then the buzz gradually died down. Some companies left, disillusioned about the difficulty of generating revenue or leads through their island. Others stayed on but struggled to find value or purpose in their investments. Many just stayed away, confused by the technology. Some in the media and blogosphere suggested Second Life was heading towards the crowded bone-yard of technology.

Well, Second Life is alive and well – if you’ll pardon the pun. In terms of size and reach, Second Life shows some pretty strong numbers – though it must be said there are skeptics regarding these statistics. But beyond the crude numbers, I would argue Second Life is showing resilience and relevance through the innovation of its inhabitants. With the benefit of virtual experience, many are finding the benefits of Second Life may be more nuanced than pure marketing – for example cutting communication costs or developing new learning modules.

For a look at some of the creative uses of Second Life – ranging from e-learning to virtual meetings and collaborative design – check out these recorded sessions from the Gronstedt Group, a consulting firm that has long advocated the benefits of 3-D online environments like Second Life. [Disclosure - Anders Gronstedt is a friend and did work for me when I was at Dell.]

Perhaps the most important recent development is the announcement of Second Life’s new platform for the enterprise – which will allow companies to deploy their own, customized virtual environment behind their firewall. This beta program – set to formally launch in Q1 next year – addresses concerns about security and firewalls that have caused many organizations (including the last one I worked for) to stay away from Second Life. Check out Fast Company’s take on this development here.

As this coverage notes, the potential for companies to leverage a “closed” Second Life platform to improve and expand their internal communications is huge. The interactive, graphic and multi-media properties of SL lend themselves well to everything from virtual meetings to project collaboration and training. This particularly holds true for global companies with dispersed or telecommuting workforces. The possibilities are exciting…and endless. Yesterday I participated in a briefing in SL that featured an architecture firm that develops designs using a wiki “tree”, which allows visitors to propose and rank design additions or changes on existing projects. If companies are paying attention, I suspect some of those who avoided or left SL may take a second look. It would be well worth their time.

More Than Ever…The People are the Brand

Communication guru Shel Israel touches on a compelling idea in a recent post on the relationship between personal brand(s) and corporate brand(s). I was particularly drawn by his comment on how people are becoming a central element of the corporate brand: “Personal brand is changing corporate and product brand in an increasing number of cases. This changes who shapes brand and why and how it is done. It changes how markets perceive brands and this is an area where little thought and conversation has emerged so far.”

Israel argues that traditional marketing messages focusing on “big brand” themes positioned through a corporate and/or homogenous voice are giving way to increasing personalization…and the humanization of corporate brands. This is being fueled by the advent of social media platforms that are based on individual participation and contributions. It’s interesting  to note Israel uses Dell as an example – which I experienced first hand as a member of the Dell social media team. Dell started to turns thing around when it started listening – really listening – to the online conversation but also because individual employees jumped into the conversation. All the platforms – both internal and external – were populated with real people who answered questions, shared ideas and tried to resolve complaints. Some of them – like Direct2Dell moderator Lionel – became key representatives of the Dell brand online.

This trend toward personalization is likely to gain momentum. After all, companies are engaging individual leaders (and sometimes employees) as blog authors, Facebook friends and Twitter voices.  Videos and podcasts feature company experts and guests in informal settings. Discussion boards are hosted by groups of company experts, some with large followings. Even websites are less impersonal, often featuring profiles and individual guides or hosts. As Israel notes, marketers are eager to leverage this movement towards the humanization of brands – since it’s inherently more credible and resonant with customers – but the very notion of diverse, individual voices makes this difficult. And that’s not a bad thing. For better or for worse, company reputations and identities will become more closely identified with the collective actions and voices of their employees, rather than paid advertising or impersonal PR campaigns.

Is Cloud-Computing The Secret to Internal Communication Progress?

A recent post by the folks at Melcrum in the UK provides evidence that more companies are adopting cloud-based collaboration platforms (in this case Google Apps) for their internal communications. Last week Jaguar and Land Rover announced they were also switching to Google. And Google isn’t the only big player in this emerging field: IBM recently introduced its own cloud collaboration suite.  (I haven’t even mentioned the host of new providers that offer services that go well beyond email, calendars and file-sharing – notably internal micro-blogging and networking tools.)

Anybody who has worked inside an organization is familiar with the debates that occur on this issue. For the cons, there are typically concerns about information security and integration with firewalls, while on the pro side the main motivations tend to be lower cost and a more efficient, integrated platform that is accessible through any Web connection. In  my experience, the naysayers are often in IT while proponents are employees looking for better ways to collaborate and communicate with peers. Coincidence? For many companies – slowed by balkanized email networks, weak IT governance and outdated infrastructure – going to a cloud platform is an easy way to start fresh using external resources, often at much lower cost than an infrastructure overhaul. For smaller companies, it’s almost a no-brainer. I’ve been involved in several start-ups in recent months and all of them are using cloud-based platforms for their email, file storage and collaboration needs – at no cost.

So why so much resistance? Likely a new version of the proverb that you can’t be fired for buying IBM – many prefer to play it safe. I’m certainly not a technical expert, but I suspect that the popular chestnuts about unreliable cloud networks and data risk are overblown. I’ve experienced far more problems with internal systems than the occasional blip with cloud-based applications. And is there a network anywhere that is more robust than Google? Companies should certainly do their due diligence, but when the status quo for many employees is working on creaky, inefficient systems – if they even have access to their network – there is no excuse for at least not considering the cloud.

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.

Fun Not Dirty Word in Social Media

An article in USA Today yesterday provides a good overview of the popularity of online games on social networks and related Web sites – or “social gaming”. According to the  article, the rapid growth and huge audience numbers of some games and applications is shaking up the gaming industry. Gaming is now the most popular category on Facebook and MySpace. The difference between the new games and perennial online favorites – like World of Warcraft or Sims – is that they are free, widely available and easy to play.

What struck me about this article is not the growth of these virtual games – I’ve been inundated with invites and suggestions on Facebook and Twitter that range from whimsical to ridiculous – but rather the increasing focus on having fun. This trend is repeated in the thousands of apps available for the iPhone and other mobile devices…where bite-sized, novel games or tools (many of them good mostly for a laugh) are a popular download for many users.

For years the communication profession has frowned on fun, inferring that information can’t be credible or understood unless it’s serious and laden with facts. I’ve long believed that fun – injected in the right measure and manner – can make communication more memorable and effective. It’s worked well in advertising for years, but PR has mostly shut the door except for soft product marketing campaigns. Now that social media has further blurred the lines between work and play – and corporate and personal information – the battle rages on. The same debate is happening in training, where some e-learning advocates push for creative, interactive modules that feature plenty of smart humor, and more traditional HR practitioners who continue to promote face-to-face sessions supported by pedantic slides and toolkits. Fun need not be trivial, of course, but rather an attempt to inject some excitement, imagination and intellect into the training exercise. Somebody I worked with in my Dell days, Anders Gronstedt, has been promoting the use of virtual worlds like Second Life and on-demand digital content as a better alternative for training and communication. [Full disclosure, Anders is a good friend of mine and once shared my tent during a two-week climb of Kilimanjaro.]

We’ve all heard the axiom that people absorb  information better through a combination of senses – pictures, sounds, touch and words – than just speakers or words on a slide. I would argue the same logic should apply to adding an element of fun to traditional communication content – whether it be on a website, a memo or even an activity. Clearly, consumers are telling us they value entertaining content and modules, even if they serve a useful purpose. It’s time to pay attention to what our audience is telling us.

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.

Crisis Fosters Innovation at Ford

Sometimes a crisis fosters greater innovation and risk-taking in organizations…and that’s a good thing. As exhibit A check out the latest developments at Ford, which is making some impressive strides in social media.

Ford’s comprehensive efforts include posting content and commentaries on sites ranging  from YouTube and Facebook to Twitter and Flickr. Nothing revolutionary there, but they’re apparently also allowing unusual freedom on how their content is used – notably allowing folks to share and adapt photos and videos. And they’ve recruited a number of consumer bloggers to drive their cars and provide updates – with no apparent restrictions on content. Perhaps the  smartest thing they’ve done is to develop a social media hub – The Ford Story – which acts as an online clearing house for the various platforms and features links to relevant third-party sites and content. Ford is also working to enlist employees in the online outreach, hoping most of them will act as advocates for the company and its products.

Though some critics say Ford’s recent efforts are not perfect (can they be?) you can’t argue with the strong effort and intent. In fact, Ford’s digital communication manager himself answers some of these criticisms on various blogs. Nice touch. Implicit in this campaign is an understanding that consumers ultimately own the reputation of a company…no matter how much a company would wish otherwise. Ford may become a great case study of rehabilitating a brand through dialog and crowd-sourcing rather than  just traditional marketing and advertising.

Successfull Change Requires Employees to Participate…Not Just Follow

In the midst of a recent consulting engagement, I came across a 2008 survey of global executives by McKinsey on successful change efforts that provides more evidence that employee participation is critical in the process. Sounds like a truism, but then why are some senior executives still pushing back and using a top-down, just-do-what-you’re-told change strategy?

The article reaffirms some of the best practices that have garnered currency in recent years – including the need for a clear and compelling aspiration and a highly involved and visible CEO – but the results suggest active and sustained engagement of the whole organization is equally important to success. In another interesting twist, successful companies are more likely to communicate the need for change in a positive context, rather than focusing on just fixing problems. That’s particularly relevant these days, when many companies are changing out of necessity (to address financial problems) and could be tempted to use fear and imminent disaster as prime motivators.

Other interesting findings in the study:

• The top two reasons for change are going from “good to great” performance and reducing costs
• The most successful companies defined success through detailed financial and operational targets that represented a genuine stretch in performance (not just a small improvement)
• The degree of visibility and involvement of senior leadership is often in direct correlation to the success of the change effort
• Successful companies were more likely to engage staff early and foster large-scale collaboration and conversation
• The goal of ensuring front-line employees feel ownership of the change process was an elusive but important ingredient, with successful companies using far more tactics to involve and inform their staff than others

None of these findings are really surprising, but they are still the exception rather than the rule (the McKinsey survey found only 1/3 of respondents were successful in their change efforts.) The most relevant lesson here may be the confirmation that employees that feel included in the change process – not just as recipients of information but perhaps even helping to define the vision and/or strategy – are much more likely to support the initiative.  In the age of social media and ubiquitous communication, is there any excuse for not fully engaging employees in any discussion on the fate of their organization?