Linking pay to performance

Some firms like to link pay explicitly to performance – with a direct link.(the ‘carrot approach’)

Some like to rely on post-poor-performance sanctions ( the ‘stick’ approach).

Those who think of themselves as enlightened pay good basic pay and expect good performance (the ‘faith’) approach).

Others pay poor wages but still expect good performance (the ‘ miserable fools’ approach)

….  but the majority have never thought about it (the ‘ignorant fools’ approach)

 

Which one(s) do you think work?  Can you prove it?

New government, new impact?

In the UK, we have a new government … similar to the last one… but without the need for a coalition.  I make no political comment on the government we have … only that I am glad we have a single-party government that should be capable of directing its own strategy.

In another context, wearing another hat, I have been ruminating on the degree to which governments influence productivity.  My starting point was that governments have little long-term effect on productivity, though they can have an impact in the short-term.  Long-term trends though tend to proceed irrespective of government intervention until there is some revolutionary event that triggers a ‘great leap forward’.

However, as I started to think – and to draft the paper I am working on – I started to change my mind.

I started thinking about the infrastructure elements that underpin high productivity – health, education, skills, transport, communications ….. in addition to the macroeconomic and research/innovation culture.  Clearly these are all factors where government has a major role to play … and major influence to bear.

So, perhaps governments do have a major role to play … in creating the potential for high productivity that industrial and commercial organisations can build on. 

So, if you are in the UK, I hope you voted – for the greater productivity good – and not personal economic well-being.  Only the former can deliver the latter in the longer-term.

Are managers ready for their new workers?

I am a governor of a secondary school in the UK.  We are preparing our pupils for a world of work in which many of the jobs do not yet exist … and even many of those that do now exist will have changed substantially.

Our pupils will go through ‘portfolio careers’ in which they will have several jobs – often multiple part-time jobs at the same time. 

This means we are trying to instil flexibility and resilience into our pupils – alongside knowledge, understanding and core skills, of course.

What does all this mean for the future productivity of the UK?  Well, knowledgeable, flexible, resilient workers should form a good basis for a high productivity organisation – if that organisation is willing and ready to work with that flexibility, exploit it and allow it to underpin organisational flexibility and innovation. 

My fear is that managers who are of a previous generation will continue to create inflexible, rigid structures that fail to exploit these new skills and attributes.

Does diversity make a difference?

Diversity is a bit of a buzz word.  We are all, as employers, encouraged to monitor and manage diversity in our workforce.  But is there any evidence that having a diverse workforce makes any significant difference to an organisation?

Anecdotal evidence is fine.  And, of course, there is a degree of ‘intuition’ about making sure you exploit the talents and skills of all parts of the potential workforce.  But ‘real’ difference?

I don’t know … BUT… I came across something the other day that make me think.

A paper was published recently in the journal  Proceedings of the National Academy of Sciences suggesting that when plant biodiversity declines, the remaining plants have lower productivity.

Can we draw a parallel with human diversity.  Probably not … but it does make you think, doesn’t it?

Time for Turkey

Turkey has been through an economic transformation in recent years.  They have learnt well from incoming Japanese firms and Japanese management teams and have some indigenous companies that now rank as world-class in terms of manufacturing performance.

However, there is an odd situation.  In terms of developing SMEs and creating small-scale entrepreneurs (ready to move into becoming large-scale entrepreneurs), Turkey has done less well.

It has learned well where it has an established model to learn from but significantly less well where it has to develop its own ideas on an appropriate infrastructure and culture to support business start-up and early growth 

If Turkey cannot unlock this puzzle, it stands to enjoy a few years of success before slipping back down the slope to economic mediocrity.

Allow (a little) failure

Being frightened of failure can be a motivating influence.  However it can also be a constraining factor causing people to ‘play safe’ and avoid risks.

Most change involves some risk – that things won’t go to plan or as we expected.  But if we don’t take those risks, we don’t get the change – and the benefits it brings.

So we have to encourage people to take a few risks – but managed risks.  We don’t want  people taking unplanned, unmeasured and unmitigated risks with our resources, our business.  So we have to train them to assess the risk – and to ensure they know how to recognise when all is not going to plan-  and what to do  about it.

Sometimes they will get this wrong – and we get a failure.  But if we have the right mix of risks – and especially the right mix of people – then our successful risks should far outweigh our failures.

As they say…. “Nothing ventured, nothing gained!”

Its not about the basketball hoops!

We’ve all heard of the kinds of facilities that really forward-looking (and generally rich) companies provide for their employees.

So, have you thought what you might provide for your employees.

Well, I’m here to tell you that if you are considering new staff facilities – standing desks, write-on walls, table-tennis tables, free coffee, basketball hoops, or whatever – you are probably wasting your time.

What really interests and motivates employees is ‘good work’ – work which fully exploits their skills, provides a challenge, has a role in the overall company mission (and a role they understand), has a social dimension – and which gives them satisfaction, pride and personal reward.

If you can’t provide such work, the other ‘add-ons’ aren’t likely to help.

Change in strategy for the UK?

The UK seems to have lost productivity – but gained jobs.  This seems about right.   

Has it done the right thing? 

Well, in the short term governments have to make decisions and adopt strategies to solve a problem, to get out of a crisis.

The UK government seems to have adopted policies that are enabling the UK to climb out of the pit of the financial crisis …. and since competitors are doing less well, the lower productivity is not a problem.

But in the longer-term productivity IS important – it drives competitiveness and it drives wealth-creation, without creating inflation.

So the UK has to find ways of improving productivity but as part of a growing economy so it doesn’t result in job losses. 

Only time will tell whether the next government (after the election in May) can do this.

The Secret to Higher Productivity

Did that title grab you? 

Do you want to know what the secret is?

Sorry to disappoint you … but there isn’t one …. and anyone who says there is is a snake-oil salesman.

The nearest I can get to giving you a ‘secret recipe’ is that you have to consider both processes and people.  Creating ‘efficient’ processes doesn’t work unless you also have a skilled and motivated workforce operating those processes.

My ‘secret’ is that:

Engaged employees with improved skills result in improved productivity.

Sorry if you are underwhelmed.

Has the UK made the right decision?

Recent economic figures show that unemployment has fallen in the UK – there are more people employed than there have been for many years.

Yet, over this period of jobs growth, productivity has fallen.

The UK seems to have chosen jobs over productivity as the way out of the economic crisis.

This might be a sensible short-term approach … but there is a danger that the country ends up as a low cost, low skill economy.

if the rest of Europe starts to pull out of its current poor economic shape the UK might find itself uncompetitive.