Workplace performance
This is Take 2 of my last post, Salary versus performance. I’ve had a rethink about the topic, or more specifically, about workplace performance. Let’s start with a few thoughts:
What does it mean to work at capacity?
Capability and capacity relate to more than just potential physical energy. For example, I could apply 100% of my physical energy to lifting tiles onto a roof, and by day’s end, move 500 of them. Or, I could use 10% of my mental energy and 10% of my physical energy to move 5000 tiles by hiring a conveyor belt (hypothetically speaking). The combination of mental and physical energy can move mountains.
How productive do you think you are?
I find that people are rarely honest with themselves about this question. Ask yourself how productive you are (in percentage terms of mental and physical capacity on an average day) and then ask yourself again. Remember, at 100% capacity you’ll be moving figurative mountains. So, imagine the mountain you’re capable of moving and compare that to how productive you think you are. Then, once you know you’re being honest with yourself, compare that to the productivity of your team and your expectations of your team.
How does salary affect workplace productivity and output?
In my last post, I lamented that managers don’t realise how unproductive underpaid people can be. However, this is only an issue when employees aren’t fully engaged (and inspired and challenged and appreciated). The problem is, I think most employees feel somewhat disengaged most of the time. So, when they cross a certain level of disengagement (even if only for a day), salary becomes an issue very quickly. Then once it does come up, it generally remains an issue until rectified.
My suggestion isn’t to grant six-figure bonuses; I think you can get much more value from being genuinely fair. Keep an eye on market rates and adjust your employees’ salaries without them having to ask. The average employee doesn’t expect you to be proactive with pay rises, so this token gesture can actually make a tangible difference to productivity, loyalty and even engagement.
But, what does that really have to do with productivity?
You’re hedging your bets. In the rare (likely) case you don’t provide a fully engaging environment for your employees, at least they’ll know they’re being paid fairly. And maybe, just maybe, they’ll look to themselves to find the reasons for their disengagement. It means one less issue, a little more trust and a lot of potential upside.
Okay, protection is in place, but what about increasing workplace productivity?
This question is like asking “how do I lead a team?”… while there is so much subjectivity involved (borne by human emotion and irrationality), the underlying solution is still the same: communication. Don’t just sit their like a typical scheming, self-interested, self-conscious manager, ask your people what they want. “What do you need to be fully engaged, to think of the business like your own, to get the most out of yourself, to gush about your position to your friends, to think of new ideas when walking your dog, to figuratively move mountains; what do you need?”
If they look at you with contempt and put up a stone wall, give it a day to settle and try again. And, if you still get those looks tomorrow, fire them. You’ll be doing both of you a world of good.
Image: What on Earth to do? [source: Shutterstock]
Well said. Now, there’s a business media company that was bought by private equity a couple years ago, and the employees are basically all underpaid, and most of the workforce is desperate to leave. The feeling is always that the PE guys are keeping costs down – the people are one of the major cost factors, so they get paid very little (or: as little as they can get away with) and management and PE owners are laughing through their teeth at the employees. I just imagine how that place could be transformed if the owners would decide that yeah, for a media company, having enthusiastic, well-paid and 100% engage employees would actually be worth their money.
But that’s one of the things an Excel spreadsheet can’t compute – quality.
Alex
26 Nov 09 at 11:36
PE, I think I am now starting to understand where you’re comming from.
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I’m in a violent agreement with your second point. Salary is unlikely to be a great motivator, but can turn to be a great demotivator very quickly – especially if it acts as a catalyst on the non-financial (de)motivators (not feeling appreciated, and now they even cut my salary).
Re your suggestion, the standard case studies in this are SAS, AES and SouthWest
Salary is interesting in the sense that it’s probably the most visible tie between the employee and the company. It is also the one most easily adjusted and measurable – all of which I suspect makes it the prime candidate for being on the top of the list of things to tweak (up or down). I’m sometimes amazed though that people don’t consider the utility function in the salary (meaning a dollar spent on lower earning employee has probably better effect than a dollar spent on higher earning one), and the human propensity to value what we have and dread loss (loss of a dollar can rile for days, gain of a dollar is forgotten in minutes). Of course, that needs to be combined with the productivity – at least in IT people it’s often better to hire one pretty good person than two average (at the same outlay), but nothing is easy in life.
For the last point, I find it best to ask these questions over a second or third beer (or your favourite tipple) at the end of the week.
P.S. I’d be very interested to hear your version of Utopia, if you’d be willing to share it via an email.
vlade
26 Nov 09 at 15:38
@vlade, now that you mention it, I remember a situation where I couldn’t put my finger on why I wasn’t content at work, so then it became a case of salary. The people were nice enough, I was given ample responsibility, but there wasn’t any cohesion in the team, no spark. At the time I didn’t pick up on this, so I rationalised that I didn’t like the role because I was underpaid compared to the market, which I was, but that was more a product of not pushing salary negotiations in the first place. I don’t blame anyone else for this, but if my salary was kept around market rates as a matter of courtesy, I wonder how it would have turned out for the employer (maybe better, maybe worse).
As for my version of workplace Utopia… I love a fast-paced environment. One in which the team is really cohesive and communicative and inspired by one another. One in which the team has starkly different, yet complementary, skills (for a PE firm, I’d only hire 1x person with PE experience to manage the fund reporting to LPs). But most of all, I love to be around productive people; not necessarily smart, just output-focused with an open mind. Most of the self-professed “smart” people I know are pretty much useless.
The Private Equiteer
26 Nov 09 at 22:51
@alex… yes, “if you can’t model it, it obviously doesn’t exit”. A couple in my team would say, “Sure, there’s value in things you can’t model, but why bet our investments on them if we don’t have to.” Then, others here would say, “those models mean absolutely nothing anyway; they’re never true, no one follows them, and they’re based on rolling the dice.” As always, there’s probably a middle ground. But I agree, PE is too often oblivious to how the world (especially people) really work. They think they’re giving the people an opportunity of a lifetime to work for a PE-backed company, so they should be eternally grateful to us.
The Private Equiteer
26 Nov 09 at 23:04
@PE: oh, it was an opportunity alright, and a much better, more dynamic place than the privately-owned company I worked at before, which was simply complacent and over-staffed (that’s something PE-backed companies never are: overstaffed). But loyalty? Nope, no more.
Time to update that LinkedIn profile and send out applications; if I get treated like “human capital”, I can at least command a higher pay cheque elsewhere. And I’ll look very closely at ownership structure and private equity related issues. In my experience, I’d much rather work for a company that is a “growth investment” rather than a ridiculously geared LBO. A growth investor understands, in my experience, the need to 100% engage the workforce to achieve the best results. An LBO shop only pays the management and fires them if they don’t play ball and don’t seem to care the slightest about anything happening below board level as long as the excel spreadsheet looks okay.
Whatever I do next, I’ll look very closely at the track record of whatever owner happens to own the place I’ll work for next. Sorry for pouring my bitterness out in your blog.
Alex
30 Nov 09 at 15:25
No problem about the bitterness; much better than complacency. I’m sure you’re thankful that you’ve experienced these different workplaces sooner rather than later. At least you’re on track to find something enjoyable. I think most people can go a lifetime without really knowing (or caring) what makes them tick.
The Private Equiteer
30 Nov 09 at 23:19
PE, thanks for sharing, so I will share mine…
It’s working in a team where learning is part of “what you do”as opposed to “waste of time”, where you do something that is interesting and you can make a difference (as a team, not necessarily just individually recognizeable). Yes, and where doing something doesn’t take half a century…
vlade
1 Dec 09 at 20:57
Yes, and I like the idea of learning together. If someone has domain knowledge, grab everyone for 20 mins and hold an impromptu educational.
I also like the idea of the computer as a secondary tool. I don’t like the idea of a team sitting with their backs to one another in front of computer screens all day. Push the computers to the side; the centerpiece of the workplace should be tools conducive to fora. This obviously isn’t universal, especially for full-time engineers, but hey, we’re talking about Utopia.
And agreed; if you’re not making a difference, it’s difficult to really engage if you have even an ounce of ambition.
The Private Equiteer
2 Dec 09 at 00:15