Incentive Plans and Employee Profiles

One of the key steps in the process of developing an incentive plan is to identify the current level of employee understanding and expectations. Normally this is done with an employee survey and, while there are several good commercial instruments available, many organizations customize their own.

If you want your employees to be engaged in the business, a good approach is to develop a “partner” profile. You can start by defining the critical attitudes, behaviors, skills, and understanding an employee needs in order to think and act like a business partner. These elements can then be used in a survey to identify how closely the employee population conforms to the "ideal" partner.

A company moving toward a partner oriented, high performance culture may want to sort the survey into essential business categories. For example, a survey may consist of Cultural, Business, and Finance categories. The questions in each category should focus on the types of attitudes, behaviors and understanding necessary for success in that category.

Questions under the Cultural category may deal with how well the employees understand the processes that enable them to participate and become involved, or how effective they think these processes are, or how actively they participate in these processes. Other questions may focus on issues such as: Is there a team mentality? To what degree is there group and individual problem solving? Is there open and accessible communications? To what extent does respect exist in the workplace? How empowered the employees perceive themselves to be. Is there trust that permits risk-taking? To what extent are all employees involved in the goal setting and decision making?

Under the Business category questions may explore how well the employees understand the business strategy and their role in achieving specific goals. How well do they understand the industry and the company's position in it? To what degree are they aware of the competitive pressures, economic influences, and other big picture issues?

Under the Financial category questions may probe how well the employees understand how the company makes a profit and generates cash. Do they understand how their contribution affects revenue and profit? How often do they receive financial information? To what degree do they understand it? Do they participate in the collection of this data? Do they participate in goal setting as it relates to the data? How much performance feedback do they receive? How often?

The survey results compare your employee population to the profile of a mature partnership culture. The differences are obvious and they highlight opportunities for development and education which, in turn, will affect performance and the outcomes of any incentive plan.

If you’re having trouble developing good content for your culture survey, contact us.

Work as an enjoyable flow activity

"When a group, team or company has a common purpose and open channels of communication, when it provides gradually expanding opportunities for action (empowerment) in a setting of trust, then 'work' becomes an enjoyable flow activity.

Employees will focus their attention on the group or organization relationship and, to a certain extent, forget their individual selves for the sake of experiencing the enjoyment of belonging to a more complex system that joins separate consciousnesses in a unified goal."*

Making work more enjoyable has proven to increase profits, cash flow and asset value.
Are you investing in your human resource assets? Do you have a focused and dedicated workforce?
Is there an investment that can produce a better return?

*Excerpted (and slightly edited) from "Flow - The Psychology of Optimal Experience" by Mihaly Csikszentmihalyi, Harper Perennial press

Engaging Your Employee in the Business

Want your employees to be completely involved in the success of your business?
Use the following information to create a work environment where involvement will flourish.

“Complete involvement is created when goals are clear and challenging, feedback is immediate and employees have the appropriate skills. The appropriate skills are essential because they allow the employee to take control of the activity.”*

“Flow isn’t limited to golf games and crossword puzzles. You can find flow at work if you have a job that interests and challenges you, and that gives you ample control over your daily assignments. Indeed, one recent study by two University of British Columbia researchers suggests that workers would be happy to forgo as much as a 20% raise if it meant a job with more variety or one that required more skill.**

So, if you want your employees to think and act like business partners rather than hired hands you’ll need to develop a strategy and tactics for providing them with the proper education, information and training. Done properly, training is longer an expense. It becomes an investment with an expected ROI.

* Flow – The psychology of Optimal Experience, Mihaly Csikszentmihalyi.
** Money Magazine – Can Money buy Happiness, August 2006

Reward Systems Create Complete Involvement

In his book "Flow - The Psychology of Optimal Experience," Mihaly Csikszentmihalyi observes that complete involvement occurs when 4 elements are present:
1.) Rules that require learning
2.) Goals that are challenging and clear
3.) Feedback that is timely
4.) The appropriate skills to perform well

Well designed reward systems, that contain these 4 elements, help participants achieve a well-ordered state of mind that is highly enjoyable. As Maslow observed in his Hierarchy of Needs; people seek to actualize their potential...and reward systems provide the means to do so.

Meaningful Work: Element #3, Feedback, provides the opportunity for coaching and to develop skills that allow participants to address new and more difficult challenges.

If highly engaged employees are missing from your workplace perhaps you should look to the design of your reward systems.

New American Workplace

Excerpt from the book: The New American Workplace (Palgrave Macmillian) by James O'Toole and Edward E. Lawler III.

Executive Summary

"According to O'Toole and Lawler, as local retailers disappear from Main Street and old-line manufacturing companies downsize, they are being replaced by three emerging types of organizations:
1.) low-cost operators (like Wal-Mart),
2.) global competitor corporations (like Microsoft)
3.) high-involvement companies (like WL Gore).

These differ radically in terms of their business models, labor productivity and working conditions."

"Low-cost operators hire retirees, young workers and students, less-educated workers with few options, immigrants with limited English-language skills and those who are unable or unwilling to take jobs requiring more responsibility. Employees in these organizations are paid close to the minimum wage, receive few, if any, benefits, have no job security and are given only the amount of training needed to do jobs that have been designed to be simple and easy to learn."

"Global competitor organizations are enormous in terms of both size and geographic reach but they offer little stability for employees. Despite this, these organizations are often considered the "glamour companies" of the age, and employees in them enjoy the highest pay found in corporations anywhere in the world. Many are hired on a contractual basis, creating relationships that are more transactional than loyalty-based. "

"High-involvement companies can be found in many, if not most, industries and offer workers challenging and enriched jobs, a say in the management of their own tasks and a commitment to low turnover and few layoffs. They promote mainly from within, offering clearly defined career paths and extensive training and development opportunities. They are relatively egalitarian workplaces with few distinctions between managers and workers, both of whom typically share in stock ownership and profits. "

Our Comments
In our opinion, high involvement creates the most value.
Some of the best companies nurture high involvement by developing a culture of partnership.
1.) They use management practices that educate, enable, empower and engage their employees.
2.) They manage employee expectations by clearly communicating their roles, rights, responsibilities and rewards.
3.) They are dedicated to fulfilling customer expectations of commitment, cost, care and culture.

Empowerment: Part II

A Five Step Strategy for Empowerment
Empowerment requires an implementation strategy. The following 5 steps have proven successful in creating a culture of empowered employees, focused on improving the value of the business.

1. Clearly Define the Outcome
In terms of Empowerment, clearly define what the organization wants, and why.
· What: “We want employees to have the ability (skills and expertise) and authority (permission) to make decisions and take action within clearly defined job parameters with the intention of achieving the company’s objectives and to understand & accept responsibility for the outcomes of those decisions and actions.”
· Why: Insert your mission statement here. The purpose of empowering the workforce is to enable it to better fulfill the mission of your company.

Time for Introspection
Take a moment to answer the following questions:
Why do you want empowered employees? How important is it to you? What value will it bring? Be specific
What type of empowerment do you want for your company? Be specific.
Do you have a mission statement? If not, you must develop one.

2. Provide Management with the Skills
It is essential to help all levels of management develop the ability to allocate responsibility and release control. This requires education, training and may require individual coaching.

Time for Introspection
Take a moment to answer the following questions:
Which managers in your company will support empowerment?
Which managers will resist it?
How will you overcome resistance? How will you show your support for the empowerment process? Make a list and be specific.

3. Develop Your Employees
Empowerment, on an individual level, is accepting responsibility and acting accordingly. To develop an empowered workforce it is necessary to grow people’s capacity to assume more responsibility. This requires education and training that develops key skills.

Some key skills and the training necessary to develop them are provided in the following list.
· Critical thinking skills
- Goal Setting
- Problem Solving
- Decision Making
- Risk Analysis
· Performance analysis & feedback skills
- Real-time data collected locally
- Analyzed locally
- Real-time data acted upon locally
1) Action Planning Skills
· Coaching Skills
- Relationship skills
· Influencing Skills

People are empowered if they have the capacity to be a compelling force on the actions of others for the betterment of the organization. Some tactics that will help your employees develop the capacity to produce effects on the outcome by influencing others are listed below.

Understand the line-of-sight of other individuals or groups
Cross-function ScoreCard alignment discussions

Group dialogue to understand the shared destiny. Connect career, professional or financial aspirations with the aspirations of the organization.
1) Incentive pay system
2) Performance evaluation system
3) Personal development plans
Develop a knowledge, skills and abilities matrix
4) Merit increase system
5) Career path/promotion levels/growth opportunities

Time for Introspection
Take a moment to answer the following questions:
From the information you just read, make a list of tactics that currently exist for the:
- Leadership group
- Middle managers
- Front line managers and supervisor
- General workforce
Now make a list of the tactics that need to be developed for each group.
How do you plan do develop these tactics? Be specific and prioritize the list.

4. Develop a Common Understanding
Empowerment is only effective when everyone has a common understanding of the concept, the performance objectives and their part in the effort. Empowerment relies on a well defined set of Values that are subscribed to by all.

Beliefs and values create a sense of identity and clear expectations. They become the moral criteria by which decisions are made and prioritized. It is essential that the members of the group hold similar values. To nurture the proper values, we must develop a common mind-set around shared responsibility.
· Empowerment requires the personal value of Self-Responsibility! It requires self-choice; the belief that one can change if one chooses to change. It requires one to accept responsibility for one’s actions, feelings and beliefs and understand that they are the foundation of one’s behavior. It requires the desire and ability to determine and direct one’s actions and thoughts.
- Tactic: Conduct an Understanding Our Values workshop to encourage and develop understanding and personal acceptance and commitment.

Develop and communicate a unifying explanation of what your business is about. This “purpose” gives everyone direction and a way to evaluate the quality of their decisions.
· Develop line-of-sight to the purpose, vision, mission, incentive ScoreCard objectives, and values as the basis of decision making.
- Tactic: Conduct an Understanding Our Mission workshop. Mission-based decision making develops a common focus on mutually serving a clearly identified purpose.
- Tactic: Conduct an Understanding Our Customer workshop that develops an understanding of and relationship to your customers’ needs and expectations.

Reality Check: Not every employee will respond well to empowerment. Be prepared to address this issue.
· Accomplishments are a foundation of empowerment. As such it is important to recognize progress and identify role models. We can begin to empower the workforce through activities such as:
- Identify and celebrate Role Models. Develop a method for employees to see and share success stories/examples
- Celebrate accomplishments
- Document examples of empowerment
- Recognition programs and demonstrations of appreciation for contribution.

Time for Introspection
Take a moment to answer the following questions:
What values does your company currently support? Do your employees understand them? How are they emphasized in the workplace?
What values should be added?
Does your company have a unifying focus? What is the vision of what you want it to be? Do the employees understand it?
What do you currently do to show recognition for participation and contribution?
What could you do?

5. Establish Accountability
Empowerment without accountability is a recipe for chaos. Accountability is that aspect of responsibility where results and outcomes are discussed. Accountability is a form of trust and trusting people empowers them.

“As we help to raise our employees’ self-esteem, we also increase their personal power. When we encourage them to be confident, self-reliant, self-directed, and responsible individuals, we are giving them power.”
Louise HartThere are several proven tactics that can be used to develop accountability.
· Define and clearly communicate expectations for all roles.
- Examples are: purpose of the role, customers served by that role (internal and external), the deliverables provided to those customers. This list is often developed during the design stage when developing an incentive ScoreCard™
- These expectations and role descriptions should be incorporated into Individual position descriptions
· Develop and communicate department statements
- Develop statements of purpose, mission, and service level agreements for each department.
· Responsibility charting
- Identify a list of responsibilities for each role within the department as it applies to the department and company mission statements.
- Create Action Plans to increase individual responsibility
· Authority matrix: a robust Empowerment tool
- Define the decision-making authority for each position.
1) Over what? When? Under what circumstances?
- Develop criteria for expanding this authority
- Build skills and experience to expand the authority
- Authorize the authority and expand the matrix
· Develop processes that enables employees to practice and apply their empowerment
- Participate in important decisions
- Cross-functional interaction and influence
- Self-directed work teams

Time for Introspection
Take a moment to answer the following questions:
Do your employees clearly understand what is expected of them?
How do you measure performance on a company, department, team and individual level? Be specific.
Do you have a list of Value Drivers for your company?
How often do you discuss the performance of these value drivers with your employees?

Summary
Empowerment is part of a culture of partnership where each employee thinks and acts like a business partner.

In this workplace culture you invite employees to participate in a high-involvement, high-performance environment. In order to engage them it is essential to provide the appropriate rewards.

Take a moment to answer the following question:
What rewards will employees receive for embracing this change to Empowerment? What’s in it for them?


Got a problem you would like to see included in the Problem Solver Series™?
Send it to: tjmccoy@tjmccoy.com Put: Attention Problem Solver in the subject line

Empowerment: Page 1

Page 1

The purpose of this document is to:
1. Provide understanding about the concept of Empowerment
2. Present a model you can use to develop Empowerment in your company.

The Benefit
This document will enable you to:
1. Understand Empowerment
2. Encourage Empowerment
3. Benefit from Empowerment
”By surrendering control to the employees you gain control over the business.”

The Situation
Empowerment is one of the most difficult and essential elements to developing a high-involvement, high-performance workforce. It is difficult because it requires allocating responsibility by releasing some portion of control to your employees. It is essential because it is a proven method for engaging your workforce in the business. By surrendering control to the employees you gain control over the business.

The Definition
A good definition of empowerment is the authority and the ability to take independant action, within well defined parameters, which will actively influence the outcome.
A group cannot be empowered. Empowerment takes place on an individual level. It is relative. Empowerment depends on the situation and the “ability” of the individual. A wise manager does not empower an employee until the employee has shown that he/she understands the effects of his/her actions on the success of the company and has demonstrated the ability to perform appropriately.

Get the Systems in Place
The process of empowering the workforce requires systems that provide information and which encourage understanding, learning and practice.

Time for Introspection
You will get the most value out of this booklet if you take a few moments to internalize the information by answering the following questions.
Empowerment requires information, understanding, learning and practice.
Q1: On a scale of 1 to 10 with 1 being the lowest, how well do the majority of your employees understand the company’s strategy? The business plan? Their role in helping achieve success? Q2: What information would improve your employees “line-of-sight” to the company’s goals? Be specific in your list.

Look for page 2 in the near future.