A path to performance
The drivers of employee engagement and employee enablement can be organized around four major themes, representing a “path to performance” for generating business results through enhanced levels of employee effectiveness.
Organizations first need to clarify strategic objectives to promote understanding and line of sight at all levels. They need to instill confidence in leaders and ensure appropriate market positioning and focus on customers and quality. Next, organizations need to align structures with strategy and ensure that resources, decision-making authority and support from co-workers are adequate to put employees in a position to succeed.
With the structure in place, organizations then need to attend to getting the right people “on the bus,” providing training to enhance employee skills today and development opportunities to build capability for the future. Finally, organizations need to motivate high levels of employee performance through appropriate performance management systems, along with compensation and recognition approaches that reward employee contributions.
Below we highlight key considerations in each of these areas in challenging economic environments.
Key considerations in a downturn
Leadership and direction:
Leaders need to help employees understand that the company has a coherent strategy that will allow it to succeed in the current business environment. They must communicate that both the company as a whole and its individual divisions are making progress relative to strategic objectives, and that all employees have a role to play in helping the organization carry out its plans. To win trust and confidence in a downturn, leaders are well advised to:
• Communicate, communicate, communicate: In the midst of change, communication channels in organizations often dry up. Yet in times of uncertainty, employees are most in need of communication. If leaders are not meeting this need with credible messages, gossip and rumor often fill the vacuum.
• Be transparent: As employees are asked to make sacrifices for the organization, it is important that they have a sense that decisions are being made rationally and equitably and that the changes will result in increased organizational effectiveness and the eventual betterment of the work environment.
• Enlist supervisors: If middle managers and first-line supervisors are supportive of senior executives, they can foster high levels of confidence in the organization’s leadership and direction. If, on the other hand, middle managers and supervisors signal to employees through their words or actions that they lack faith in organizational leaders, employees’ trust can be expected to decline rapidly.
Faced with challenging economic environments and competitive pressures, many organizations have reduced headcounts without reducing the amount of work to be done, resulting in higher workloads for remaining staff. To promote efficient execution of key tasks, leaders need to ensure that employee efforts are backed by efficient processes, adequate resources and support from co-workers:
• Solicit broad input: While effective job and organization design is part of the solution, so too is harnessing the creative ideas of employees at all levels. To draw out improvement suggestions broadly, organizations need to ensure that leaders and the organization’s overall culture encourage employees to come forward with innovative suggestions for improving the way work is done and reinforce the value of employee creativity by appropriately translating ideas into action.
• Clarify must-win battles: In high-workload environments, leaders must clearly state which personal goals and priorities are critical. Doing so allows employees to focus their efforts on essential, value-added tasks.
• Make sure managers wear “enterprise hats”: In transition environments, some managers and employees may be inclined to hunker down and focus on the achievement of individual or departmental priorities. It is imperative that organizational cultures, performance management systems and hiring and promotion processes reinforce the need to balance local concerns with broader organizational concerns.
Faced with a difficult economy, some organizations may be tempted to shift their focus away from training and career development activities. But doing so is a big mistake. Recognizing that personal development and growth are among the most important drivers of engagement and enablement, organizations should instead:
• Be surgical in training and development cost reduction: In tough times, organizations are often forced to make cuts in training budgets. In doing so, however, organizations should identify and protect high-value training offerings and training that is focused on high-potential employees.
• Emphasize the role of line managers: Through coaching and regular performance feedback, supervisors can help employees identify developmental needs and enhance their skills. Supervisors also serve as mentors and sponsors for employees by helping them understand organizational expectations, develop supportive networks and work the informal systems that are a part of every organization.
• Promote equity and fairness: Where promotion opportunities are constrained, it is important that leaders effectively communicate the resources that are available to help employees manage their careers and clarify how promotion decisions are made. These messages build employee trust that development processes are fair and equitable.
In high-workload environments, employees are very sensitive to compensation issues. Acutely aware of all they are contributing, they can be expected to pressure their organizations to balance rewards and contributions. Managing rewards in a downturn requires that organizations:
• Focus on rewards, not just ratings: Many organizations spend an agonizing amount of effort to ensure that managers comply with prescribed distribution curves for performance ratings. But what is the value if the highest performer still receives only marginally more in merit or incentive pay than the average performer? Instead, organizations need to ensure that performance ratings translate into differentiated rewards.
• Clarify reward philosophies: In partnership with WorldatWork, Hay Group recently undertook a study of compensation practices and policies by surveying top compensation managers in member companies. Notably, more than two-thirds of more than 1,200 respondents rated their pay-related communications to be “not effective” or only “marginally effective.” Not surprisingly, these respondents also expressed much less favorable views of the motivational impact of their compensation systems. While 91 percent of respondents indicated that their companies have a pay philosophy, nearly two-thirds indicated that “about half” or “less than half” of employees understand it.
• Leverage tangible and intangible rewards: Especially when compensation budgets are tight, organizations need to think more broadly about the value propositions they are offering to employees—that is, the totality of financial and nonfinancial returns employees can expect based on their contributions.
Organizations that manage dynamics in all four “path to performance” areas successfully during the downturn are likely to foster the engagement and enablement necessary to cope with economic challenges and set the stage for enhanced performance when the economy recovers. When it comes to employee issues, a downturn is not the time to take your eye off the ball. For organizations as for individuals, character is revealed in tough times. The organizations that continue to put people first in tough times will win loyalty for the future.