In 2002, before the Great Recession, Imberman and DeForest visited 427 companies in 17 different industries nationwide — from aircraft component-makers to farm equipment producers to iron foundries to tube and pipe fabricators — asking executives how they were trying to persuade employees to make greater on-the-job efforts, and which ways were most effective. We repeated the survey in 2008 during the Great Recession, and again earlier this year during the economy’s sullen recovery. Company efforts to persuade employees to improve on-the-job performance — and the effectiveness of these efforts — reveal the following trends:
- Due to the Great Recession’s impact, workers now focus on the basics: job security and economic motivators, i.e., the size of their paychecks.
- Short-term economic motivators like gain-sharing that match employees' short-term horizons have the greatest impact on productivity.
- Employees expect to receive “extra” rewards for any “extra” efforts asked of them. Fulfilling these expectations is critical for the long-term success of any new initiative for boosting productivity and eliminating waste. If the “extra” is absent, employee cooperation is short-lived.
- Although many employers have double-downed on their efforts to influence employee behavior with “engagement” efforts, employees consider these efforts to be only of secondary importance. Economics is their first priority.
- Jargon has gone steroid. Company efforts to improve worker performance were called “motivators” in 2005, “involvement efforts” in 2008, and, in early 2012, “the engagement process.” Not only is “engagement” the latest buzzword, it has morphed into the “science” of “engage-onomics,” at least by those promoting and trying to sell their version of this method.
What’s Behind Employee Thinking?
Eschewing jargon, Imberman and DeForest surveys show the obvious: recent events have had key impacts on workers’ attitudes and changed how to effectively influence their behavior. The Great Recession of 2008–2009 devastated American pocketbooks, and the continuing impact of high gas prices and the collapse of home values aren’t helping either. Unless Washington faces up to the fiscal situation, the non-partisan Congressional Budget Office says the United States will fall off a “fiscal cliff” early next year, triggering another recession.
Consumer confidence and workers’ attitudes have been shaken. With today’s uncertainties and tomorrow’s concerns about recession, manufacturing executives have learned that short-term, transparent economic motivators paired with supporting communications efforts are most effective in persuading employees to boost productivity and cut per-unit costs. Using these methods improves worker performance across our nation’s manufacturing base, reducing employee insecurities, increasing paycheck size, bolstering future job security, and showing workers they can control their own destinies — the smarter they work, the better their future will be.
Motivators: Which Ones Work…and Why?
Non-economic motivators have a long history and have always been used to bolster workers’ pride. These include preferred parking spots, service awards, special recognition for those reaching certain milestones, service lunches, and holiday parties. Although they offer little positive motivation, their absence or curtailment is resented. These efforts should be continued because they sustain employee morale. However, they have little direct effect on workers' daily effort or on-the-job behavior.
Most executives expect economic rewards for their own better “performance.” Their “performance” might result in improved company profitability, increased per-share earnings, or higher stock prices. However, astute manufacturing executives have learned that what is good for the goose is good for the gander, and are extending economic incentive programs deep within their organizations.
Profit-sharing plans are widespread, as are merit raises and discretionary year-end bonuses. Unfortunately, many merit raise programs are disguised general increases; if everybody receives the same "merit raise," where’s the merit? Most year-end bonuses are based on whim or ill-defined, illusory criteria.
Many executives nationwide think the discretionary year-end bonus programs they’ve developed are highly effective — perhaps because they authored them. Not surprisingly, vague programs produce vague results, rather than specifically focusing employees on daily performance. Year-end bonuses are popular — nobody rejects them. But when asked, not many employees can answer, “What specifically did you do to earn your year-end bonus, and why did you earn the amount you were given?”
Economic motivators that affect day-to-day behavior are effective if they are easy to understand and match the short-term horizons of the production workers whose efforts they are designed to influence. Few workers have a “line-of-sight” long enough to equate what they do today with an ill-defined year-end raise or bonus, to say nothing of a 401(k) plan paid 20 years from now on retirement.
Manufacturing executives interviewed note that pay-for-performance programs with frequent payouts supported by vigorous communications efforts are the most effective in “engaging” employees to focus on daily productivity requirements and to reinforce their desire to cooperate with management in eliminating waste. The fact that rewards on a short-term basis are effective is not surprising. Wal-Mart, America’s biggest retailer, says the number of customers living paycheck-to-paycheck “remains pronounced” due to “continuing economic pressures” .
Employees expect “extra” rewards when they make “extra” efforts, executives say. Recognizing this expectation is critical for the success of any productivity program a company starts, like “lean manufacturing.” In the past, the successes of similar plans like “quality circles,” “total quality management,” or “statistical process quality control” were often short-lived. When workers asked “what’s in it for me” to make “extra” efforts, they received vague answers. Based on the Toyota system for eliminating waste, “lean” emphasizes the 5S’s, the last of which is “sustainability.” When the “extra” reward was absent, employee cooperation was unsustainable, and the lean initiative soon petered out.
Next: Gain-Sharing as an Effective Program
Gain-Sharing as an Effective Program
Imberman and DeForest’s surveys found gain-sharing was the most effective short-term motivator of them all. Gain-sharing is a group pay-for-performance program under which employee performance is quantified and given a dollar value. When it improves, the value of the improvement is split with the workers. So for every dollar paid out to workers in gain-share bonuses earned by specific measures of short-term performance, a company saves a like amount in higher productivity, better quality, and improved safety. Since gain-sharing plans provide payoffs earned on a short-term basis (often monthly), employee notions that gain-sharing is an entitlement are negated.
Sadly, many executives think workers respond automatically to earn a gain-share bonus. This isn’t true; effective gain-sharing plans do require “engage-onomics,” i.e., a vigorous communications program to “engage” workers to cooperate in improving production efficiency and product quality.
Employees welcome opportunities to earn extra money — now more than ever. Although no company singled out communications as a motivational tool, it is at the root of employee satisfaction. With gain-sharing, frequent communications to employees regarding quality, productivity, and customer service “engaged” them to do their best in keeping their company competitive and their jobs secure. Workers respond to the opportunity to contribute. When they see management honestly soliciting ideas to work smarter by identifying and removing impediments to productivity and quality and then responding to them, workers realize their efforts are important — and valued. Call it motivation, involvement, or engagement, whatever! The process is effective.
Adding It Up
The subtleties of persuading employees to make increased efforts are lost on many executives who focus on computer printouts to check costs and production schedules and ignore the importance of good employee communications. Most executives in American industry have little time to debate what is effective — economic or non-economic motivators. They want immediate answers on how to influence worker behavior so their companies’ goals of high productivity and better bottom-line profits can be reached. The accompanying charts show most manufacturing executives use both means — first providing group economic rewards to employees working as a team to help achieve company productivity and profitability goals; and second, using effective “engagement efforts,” i.e., communications programs to reinforce the economic motivators and create a sense of unity.
Injured by the Great Recession of 2008–2009, scarred by the anemic recovery, and fearful of the future, today's employees are oblivious to buzzwords but can best be convinced to boost their productivity when they find their rewards in their paychecks. What is your company’s plan for boosting your workers’ productivity?