Giving employees what they want

May 4th, 2005 by Julie Ferguson

Many large companies that would do anything possible to outperform competitors may be overlooking a surefire path to success: having motivated, enthusiastic employees who are committed partners in achieving the company’s goals. If you are a business owner or a manager, take the time to read this excellent interview with David Sirota, co-author of the book The Enthusiastic Employee: How Companies Profit by Giving Workers What They Want – I’m pretty sure you’ll be glad you did. The article is from the current edition of Knowledge@Wharton, an online resource from The Wharton School, University of Pennsylvania. (This is a great resource – free registration may be required.)
Sirota and his co-authors, Louis A. Mischkind and Michael Irwin Meltzer, have conducted more than 2.5 million employee surveys since 1994. Their research demonstrates that companies with high employee morale outperform companies with low employee morale. In a group of 28 companies employing 920,000 workers, the share price for the high morale companies increased by an average of 16%, versus about 3% for low-morale companies.
The authors reject the “get-tough” managerial tactics that were adopted widely in the last decade in an effort to increase share price and satisfy stakeholders. Rather, they favor a managerial approach that aligns company goals with the goals of its workers. Sirota describes the three basic goals of workers as:

  • Equity, or being treated fairly – fair pay, fair benefits, and security.
  • A sense of achievement – being proud of what you do and the company you do it for.
  • Camraderie – being part of a team effort, working well together.

Every tool a hammer
Sirota states that about 16% of the companies he deals with have a hostile work force. Often, this is the result of a reactive managerial style that we frequently encounter in companies that are suffering from high workers compensation losses. Sirota states:
About 5% of every workforce is allergic to work. These employees are shirkers. But managers in many companies, especially where there are large numbers of blue-collar workers or back-office operations such as call centers, treat the entire workforce as if it is the 5%. They set up rules and punitive measures for taking too long a rest break, etc. There is close supervision, so people who come in wanting to work, and hoping to take pride in their work, find themselves treated as if they are children or criminals.
Such a punitive style of management – treating everyone like the worst performing few – is a common reactive approach to the high costs of workers comp. We see this frequently. In frustration to one or several high-cost claims, some employers react by treating every comp claim as fraud, and treating all claimants in an adversarial manner. This serves to worsen any problems, creating a corrosive air of mistrust between managers and employees. It often becomes a type of self-fulfilling prophecy, even in instances when high comp costs are actually more the result of outside market forces or a fundamental lack of basic preventive of managerial measures.
A better way: employees as partners
Sirota discusses various managerial styles that have been in vogue over the last few decades, and presents an alternative that we ascribe to:
“First there is paternalism, where workers are treated as children. Then there is adversarial where workers are the enemy. Then there is transactional, where workers are like ciphers. Management does not know what they are like as individuals. The attitude is, ‘We paid you, now we are even. We don’t owe you anything.’ That’s where most companies have gone today. Loyalty is dead.
The fourth is what we have been talking about, which is the partnership organization. It does not mean that because I paid you, we are now even. You don’t treat partners that way because you might need them to help you out sometime, and they might need you. It’s more like a relationship between mature adults — not like children or enemies, but allies.”

We endorse this latter approach fully, and have seen it work well in those companies that embrace it as a model. The breakdown in employer-employee loyalty has been pervasive in recent years, resulting from massive and repeated layoffs, outsourcing, and other organizational measures that convey the underlying message that employees are a commodity. It may take years for employers to bridge the chasm that has been created and recreate a loyal work force, but the benefits are many for those few high-performing organizations that make the effort.