Past articles have covered the importance of customer capital and structural capital as they relate to achieving nimbleness and managing market risk. Each of these has a major role to play in the quest for competitive excellence and fiscal performance.
The vehicle that enables these to become practical and focused is Human Capital. It's those pesky humans that are the keeper of the funds. They generate revenue through their interactions with customers and they create profit based on the productive use of their time during the workday. They are the true moneychangers.
The challenge is to create an environment that makes these daily warriors want to excel all of the time in every aspect of their endeavors. This is the essence of motivation, and studies show that there is a direct correlation between motivation and a company's ability to generate earnings. Motivation comes from the word motive, a term that refers to the subconscious needs that cause us to take action.
A study was conducted with 10,000 factory workers to try to better understand the drivers of the workforce and the dynamics of how motivation impacted productivity.(1) The question posed was: What do people want from their jobs?
The employee responses were summarized and their criteria and factors were ranked in order of importance:
- Full appreciation of work being done.
- Feeling of being "in" on things.
- Sympathetic help with personal issues.
- Job security.
- Good wages.
- Interesting work.
- Promotion and growth within the company.
- Personal loyalty to employees.
- Good working conditions.
- Tactful discipline.
Not surprisingly, money was not number one on their list. However, the comments revealed that the term "good" had a caveat: If the wages were considered unfair or unreasonably low compared to industry averages, then wages rose to the top of the list and job security followed a close second. In this instance, wages actually becomes a de-motivator.
The managers and supervisors of this same workforce were shown the same question and presented with a random listing of the employee responses. They were asked to list these by priority based on how they thought the employees had viewed the responses. When the results were tabulated, there appeared to be a major disparity in the order. Management ranked good wages, job security and promotion and growth within the company as the number one, two and three priorities respectively. These were the things that they believed were most important to their workforce. Full appreciation of work being done, feeling of being "in" on things and sympathetic help with personal issues were ranked eighth, ninth and tenth.
What does this tell us? One answer might be that the management had no real understanding of their employees in terms of needs, wants and desires. This often is indicative of a management mindset that views employees as expenses versus assets. The WIIFM (What's In It For Me?) question can never be answered to the satisfaction of the employee because of this communication ravine that separates the management and employee. Thus, performance reviews are invariably viewed with cynicism; productivity is sluggish by comparison to that which is possible; and turnover takes its toll. Is it an attitude problem or a misconception?
We have to look at the basic human needs to understand the dynamics. Abraham Maslow defined the human hierarchy of needs where - in order to move up the pyramid and achieve a given level - the needs on the lower levels must be satisfied (see Figure 1). These basic needs subconsciously set individual priorities for each person. For example, if a person is concerned about their safety on the job or their financial security, they are highly unlikely to be satisfied with a pat on the back as recognition, and usually they will not have developed a high level of self-esteem. If safety and security are threatened, you can bet that teamwork will be considered a threat. In this situation organizational teams will be dysfunctional.
By looking at the top three priorities set by the workforce in the study (i.e., full appreciation of work being done, feeling of being "in" on things, and sympathetic help with personal issues), you can see that these issues are related to recognition and self-esteem. For some, it's merely being recognized as a valued person, a player - an individual that is contributing something worthwhile.
You must remember, however, that the hierarchy of needs has everything to do with trust - trust that once achieving that level where security and biological needs are being met, there is no going back. The fact that job security is ranked as the number four priority suggests that employees have this on their mind, and while the management may have earned trust, there is only cautious optimism that job security will stand the test of time.
There is a direct correlation between an employee's understanding of the business of business and the sense of participation with levels of productivity and loyalty. Management cannot answer the WIIFM question for an employee, but they can create the type of environment where the individual will personally find a satisfactory answer. This is called creating the motivating environment. It's about leadership and learning, as well as real, honest and open communications. Recognizing people as capable assets that are a part of the group that we call an organization and whose common mission is to achieve the goals of the company will help them find those nuggets of recognition that justify the journey and the commitment.
What's at stake? For the company, it's profit and growth - maybe even survival. For the management, it's seeing the vision come into reality; witnessing strategies implemented and producing results; and the legacy that they leave behind. For the employees, it's stabilizing the lower levels of the needs hierarchy and attaining a state of self-fulfillment.
The following are a number of initiatives related to human capital that come from companies in the industry that have helped their organizations to accelerate results:
- Develop and implement a strategy for human capital that embraces learning, innovation and teamwork. Tie compensation, benefits, position descriptions and learning to revenue and profit.
- Engage the workforce to help develop the particulars.
- Ensure that all members of the workforce understand the vision, values, mission and goals of the organization and that each person can discern how the work that they do supports this direction.
- Establish a learning environment for managers and workers alike that focuses on both the technical side of the business as well as the business side of business. All learning must be based on human and organizational development principles as opposed to a quick seminar on balance sheets or setups. The goal is to put knowledge into action and to produce positive results. This typically requires behavioral changes. The learning content must be comprehensive and applicable. Normal business issues such as revenue and profit must be covered, but so too must conflict management, interpersonal communications and how to compute Return on Investment (ROI). Legal (e.g., ADA, diversity, harassment, etc.), HR and safety issues cannot be left out lest you forget about risk and liability.
- Engage employees and management to jointly identify and solve problems. Sometimes the process of seeking the solution produces more benefits than the actual solution.
- Establish a positive environment where employees feel free to express their ideas and are encouraged to grow and develop.
- Develop a system of rewards and recognition for a job well done and regularly praise improvement.
- Create an honest relationship with employees such that they will trust the judgment and leadership of the management team and are rewarded for that trust.
- Have employees visit customer facilities and discuss technical and business issues with their counterparts as they relate to the work that they are doing.
- Share company performance information frequently. Discuss business success drivers and solicit ideas for growth and improvement.
- Involve employees in researching and recommending new capital improvements and have them compute the ROI.
- Manage a participative work environment that acknowledges a team effort.
Management's primary responsibilities are to establish the direction, create a motivating environment and make sure that the human capital has the necessary tools to achieve the organization's goals. Employees are charged with the responsibility of working with management to enable teamwork, open communications and excel in their contributions to the company's success.
Needless to say, a positive outlook by the entire staff reduces the stress and greatly enhances the experience. When the team is focused and there is a positive energy flowing, the entire organization benefits and results are accelerated.
1. Source: Resource Associates, Corp. Summarized with permission.