Why leadership can inspire employees to care like owners

3 years ago, Posted in Culture

If you want employees to act like owners, it helps if you treat them like owners

It’s been a hard year for Valeant Pharmaceuticals. The multibillion-dollar drug maker is reeling from a perfect storm of accounting scandals, regulatory investigations and public lashings on Capitol Hill. But you wouldn’t know it from their executive bonuses. Millions in retention and equity incentives have been doled out to top execs for their “continued dedication and commitment to the organization.”

Whether this will be effective in righting the ship remains to be seen. But an overwhelming body of research indicates financial incentives don’t improve people’s performance or boost their commitment.

In my experience, people perform their best and show true dedication when they feel ownership over what they do. You can’t inspire ownership with token perks and bonuses (or even substantial ones) — it only comes from having a comprehensive plan and vision for your company. This isn’t about coaxing some more elbow grease from your workers; it’s about having every member of your entire organization pull together collectively.

Money can’t buy me love

Let’s be clear: It’s naive to think team members are investing their time and energy without the expectation of something in return. But what’s critical to ask is what kind of investment are they making and what kind of return are they expecting. To use an analogy, are they “renters,” in it for a short-term quid-pro-quo and nothing more? Or are they “homeowners,” looking to make a long-term investment and build value over time?     

Traditional commissions and bonuses appeal far more to “renters” and can actually be detrimental to building a notion of real ownership. These kinds of incentives spur people to think about what they can take from the company rather than how they can contribute. In some cases people will keep chasing financial incentives even as they drive their companies off a cliff, as the cautionary tales at Enron and WorldCom attest.

I’ve seen first-hand that dangling cash diverts people from thinking selflessly about their co-workers and the business. My company, BuildDirect, changed our comp structure for our sales team a few months ago away from commission to salary. The goal was to refocus the team on quality customer service versus merely chasing a number. The results have been impressive, with our Net Promoter Score (a measure of customer satisfaction) rocketing upward almost immediately.

Invest in well being

You can’t bribe people to care like owners, but you can lead them there. Actually caring about employees – not just incentivizing them in a monetary way – creates a virtuous cycle where they feel more deeply invested in the company. For me, this starts with an investment in good leadership.

People who work with me see (I hope) how much I care for my company, its people and their long-term success. However, I don’t interact with everyone every day, so I need leaders who project this same attitude. Finding and nurturing this type of leader is key for companies working to build an ownership culture. Great leaders create an environment where commitment to improving people is the norm, and this is reflected back in morale and energy.

There are plenty of other ways to invest in well being. Take Costco as an example. The big-box outlet not only pays hourly workers far above industry norms (an average of $20.89 per hour vs. Wal-Mart’s $12.67), it helps them advance their careers. Costco promotes from within and sponsors workers to go to graduate school rather than hire graduates from business schools. Seventy percent of its warehouse managers started off pushing carts and flattening cardboard.

Inside my company, we try to show a commitment to quality of life, inside and outside the office. We help pay for employees to learn whatever they want — it could be work-related or purely for fun. We provide healthy snacks, free yoga classes and a gym. We offer unlimited paid vacations. The key distinction here: these benefits are designed to help our workers live better lives — not just reward them for hitting a target.

Make your company an open book (warts and all)

If you own a company, you pry into every detail in an effort to improve it. Extending a feeling of ownership to employees likewise requires sharing everything under the hood, with everyone. That includes all the numbers: the revenue targets hit and missed, the employees retained and lost, even the big accounts lost and the reasons why. Keeping employees in the dark only distances them from the business.

Equally important is enabling people to ask hard questions that keep the leadership team accountable. I was inspired by Google’s example to hold weekly all-hands meetings where no question is off limits. At one of these, an employee once asked me, in front of several hundred people, about the way we had let some staff members go. After answering, I thanked him sincerely for showing the courage and leadership to ask that question. Leaders make mistakes too. Hard questions can make an organization better for everyone.

I’ve found that when you create this kind of environment, people will rush in to contribute. People commit themselves when they have the knowledge and power to make decisions, and when their leaders and teammates support their success. They will make mistakes, but the company benefits in the long run because everyone learns faster.

When everyone acts like an owner, the CEO doesn’t need to make all the choices. Life gets easier. People within the company find solutions more quickly — often ones the CEO or leadership group would never have come up with. When you have hundreds of owners collectively pulling for the team, rather than just one, the results exceed all expectations – at least they have in my experience.

Did you enjoy this post?  Feel free to leave your thoughts in the comments below. To see more,  follow me on Twitter @JeffBooth


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