Drive to Work and Social Safety Nets

Presentation to
High Level Conference of the Economic and Social Council, United Nations
July 9, 2012

What do we know about what drives people to work, to contribute to groups or organizations to which they belong? It turns out to be quite a bit. Beyond subsistence, one key component of what drives people to contribute through work is the need that people have to feel that their life, their existence is of value, that it has meaning. Humans, by-and-large, have a strong desire to feel valued, and part of what drives that sense of being valued is belonging to and contributing in a meaningful fashion to societal groups.

Societal groups, be they for-profit companies, charitable organizations, governmental organizations, religious organizations, sports teams, nation states or neighborhood beautification committees are all simply various types of organizations to which we belong. And certainly it is possible to belong to multiple kinds of organizations simultaneously.

That feeling of “being valued”, of being considered a worthwhile member of an organization is driven by the interactions that individuals have within the groups to which they belong and how members are rewarded by those groups for their contributions. Rewards at for-profit organizations for instance, involve salaries and bonuses, benefits, psychological recognition, opportunities for advancement, and developmental experiences.

Rewards for belonging to other kinds of societal groups may be very different. Almost 70 years ago, in the midst of World War II, President Roosevelt in his State of the Union proposed an Economic Bill of Rights, providing for a strong social safety net stating that true individual freedom cannot exist without economic security, independence, and that political rights, as characterized by the initial Bill of Rights, are inadequate to assure us equality in the pursuit of happiness. Among the rights included were:

• The right to a useful and remunerative job in the industries or shops or farms or mines of the nation;
• The right to earn enough to provide adequate food, clothing and recreation;
• The right of every family to a decent home;
• The right to adequate medical care and the opportunity to achieve and enjoy good health;
• The right to adequate protection from the economic fears of old age, sickness, accident and unemployment;
• The right to a good education.

Many of these economic rights and rewards are achievable when people gain decent employment. But one question that arises is if a social safety net is provided, regardless of employment status, does it affect people’s drive to work? A partial answer to that can be found by examining how satisfied people are when reporting themselves to be over-worked or under-worked on their jobs.

First a preliminary question. If you survey a cross section of employees from within a country, are the findings generalizeable or predictive of broader conditions within that country? A test of this was undertaken from June, 2008 to October, 2009 by surveying quarterly, 16,000 people across the 12 largest global economies using an index called Employee Confidence which I developed. In a nutshell, Employee Confidence examines two aspects of employee attitudes, confidence in their respective organizations and confidence in their personal situation.

By treating countries as large organizations, with each country’s respective head of state filling the role of CEO, research techniques such as survey linkage can be applied to entire countries. This approach allows you to “link” attitudinal data from employees to measures of performance at the country level, such as national or state unemployment levels and GDP growth, among others.

Perhaps not surprisingly, the results we would expect to find at an organizational/company level also apply when you sample a representative cross-section of citizenry and look at country-level performance indicators. For example, within the USA, for one over-sampled iteration, each state was treated as an organizational unit. Comparisons of citizenry attitudes by state on the Employee Confidence Index to unemployment levels by state showed that Employee Confidence was a leading indicator of what unemployment levels would be within that state the following month.

In other words, the strongest relationships found were between Employee Confidence attitudes now, and what officially reported state unemployment levels would be 1 month from now. This relationship was marginally stronger than the relationship between current attitudes compared to the previous month’s unemployment levels and current attitudes compared to current unemployment levels.
Additionally at the country level, Employee Confidence was found to be strongly related to change in GDP growth during this timeframe, with employees in India, Russia, China and Brazil achieving top scores and employees in Japan, Italy, France and Spain scoring the lowest. The rank order correlation was found to be .87 between Employee Confidence at the country level and GDP growth.

This would seem to give some indication that asking a cross section of employees about their levels of Employee Confidence might be a leading indicator of whether unemployment levels among citizens and potentially other economic metrics such as national GDP were heading upwards or downwards in the near term.

Now, given that the evidence suggests that certain citizenry attitudes at a country level can be used in a similar fashion to employee attitudes in predicting organizational performance, we can begin to draw some conclusions using employee survey data not only about “people at work” but also about “people as citizens”.

For instance, one study I undertook looked at the relationship between workload and satisfaction. Employees who consider their workload to be “about right” tend to be the most satisfied with their jobs, while those who say they are underworked are less satisfied than employees who complain of being overworked.

This study examined the level of job satisfaction of more than 800,000 employees at 61 companies worldwide. Of the companies surveyed,
• 75% had operations in North America,
• 11% had operations in Europe,
• 14% had operations in Asia.

Employees participating in the survey were asked to rate their overall satisfaction with their jobs, and their perceptions of their workload. Respondents who described their workload as “about right” rated their job satisfaction at an average of 73 percent favorable, while employees who said they had “too much work” rated their satisfaction level at 57% favorable. By contrast, those who said they had “too little work” had the lowest average job satisfaction rating of 32% favorable.

By slicing the data geographically we can examine how workers in different parts of the world felt about their workloads and how that relates to job satisfaction. Employees in North America who said they had “too little work” had an average job satisfaction rating of 36% favorable, whereas European workers in this category had a satisfaction rating of 12% favorable, and Asian employees a rating of 13% favorable.

Job Satisfaction and Perception of Workload are not related to the degree in which a society spends on Social Safety Nets. For instance, according to the OECD in 2012 the USA will spend 20% of GDP on social spending, while in Europe, in general, greater amounts are spent on social safety nets, and in Asia, with the exception of Japan, which will spend 23%, spending on social safety nets is generally lower.

Some conclusions that can be drawn by looking across these studies include:
• Given the linkages found between country level performance metrics and employees attitude data, there does seem to be generalizability between employee attitudes at work, and given a large enough and a representative sample, citizenry attitudes at a country level.
• And while we did not survey people working in sweatshop-like conditions, people tend to be most positive when they have about the right amount of work to do, but on a whole, prefer being busy over not having enough to do. One could surmise that among people who are not given enough to do, there is a tendency to feel that their contributions are not valued.
• The notion that creating societies with strong social safety nets, as has been done in some European countries to a greater extent than in the USA, diminishes the desire to work does not bear out.

So where do statements such as, “those lazy people will find jobs once their welfare checks run out”, come from? There is a tendency for humans to make decisions and draw conclusions representing their world-view based on heuristics, or rules of thumb and to consider only evidence that supports their point-of-view. The down side of this evolutionary derived shortcut to speedier human information processing is that it can play into stereotypes, bias and bigotry.

Let’s apply some evidence-based decision making to the notion that by having a safety net that societies are creating benefits that are so generous that those who are unemployed will have less of a desire to work.
• The evidence suggests that the majorities of people are happy when working, and in fact are happier when they feel that they have too much to do rather than too little.
• The evidence suggests that in societies with strong social safety nets that there is no diminution of satisfaction for the majority of workers that the work itself brings.

It is possible to go into the general population and at the extremes of the distribution find individuals who fit the worst-case scenarios and stereotypes of people who prefer not to work, living off of social safety nets, but they are exceptions rather than the rule.

In sum, based on a review of multiple databases that include both the private and public sector, the evidence is clear, most people want to work, to do a good job at work and want to feel that they are contributing in a meaningful fashion and this is independent of geography and the type of social safety net that is in place.

© 2012 by OrgVitality, Jeffrey M. Saltzman. All rights reserved.
Visit OV: http://www.orgvitality.com

Sweet Dreams

I want to build a shining city on a hill. Day-to-day sometimes you wonder what all this activity we engage in means, why are we here, what are we supposed to be accomplishing? Any rational thinking being will have thoughts like that at some point. I had a professor who once told me that neurotics build castles in the sky and psychotics live in them. Well I don’t think I am neurotic or psychotic, but I want to build, to create, a shining city on a hill. What do I mean by that? I would like to be part of creating an environment where people are excited about being part of something truly special. Where each and every member has opportunities excel and to develop to their fullest potential. Where they can not only contribute organizationally to the fullest extent they can and are not simply rewarded for their efforts but feel rewarded by their efforts. Where people feel like their efforts have an impact on benefiting humanity broadly. I want to build an organization where people can be intellectually stimulated to question and probe why things are done the way they are in the spirit of continual improvement not only for the organization but for those served by the organization as well. I want them and I guess by extension myself to feel like what we are doing really matters in the greater scheme of things. I want people to laugh to have joy at and in their work. Is this a general path to fulfillment or simply my own path? 

The other night we were traveling out of town for a family event. When we got to the hotel I was pretty exhausted by the long drive. We had dinner with some relatives and after that I was more or less ready to put my head on the pillow and get some shut eye. At the hotel our room had one king sized bed. So my wife and I along with my 8 year old decided to all just share one bed rather then opening the couch up. We all fell asleep rather quickly and after a few hours I was awakened by my daughter laughing in her sleep. I lay there listening to her laughter and realized that I would be very content to listen to her laugh, listen to her sweet dreams all night long. I was pretty sure I would be up in the morning feeling refreshed from that experience. Even now as I think of it, it brings a smile to my face.

Building an organization where people can laugh, where there is a joy to the work may be a critical aspect of organizational development that is often overlooked. There are however some advocates of laughter at work. For instance the Global Coaches Network on their website claims that:

• laughter increases productivity
• those who laugh out loud are more creative at problem solving than those who don’t
• those who laugh have better memory retention than those who don’t
• those who laugh have less stress, and miss less time from work than those who don’t
• laughter is a major coping mechanism
• those who laugh together may work more effectively together than those who don’t.

I don’t know if these statements are backed up by research but they certainly feel right. It reminds me of the old vaudeville joke. A man walks into the doctor’s office saying, “doctor, doctor it hurts when I do this” (picture man bending his arm) and of course the doctor’s response is “don’t do that”. Well when we laugh at work we are running into the doctor’s office saying “doctor, doctor I feel better when I laugh” and the response from the doctor (in this case I like to picture the doctor as an Industrial/Organizational Psychologist) is “you should laugh more”.

I can’t imagine that I am alone in wishing for this sweet dream and I hope there are many of you out there who are interested in laughing some more and finding joy in and at our work.

The Center of the Organization

I asked a physicist friend of mine a question. Since the prevailing wisdom is that the universe started with a singularity, is it possible to look at the current shape of the universe and to trace back to that point of origin, in effect to find the center of the universe? He answered me without hesitation that is was a nonsensical question. The current shape of the universe is unknown and the singularity actually created space/time, it did not expand into it. We then engaged in the kind of discussion that makes my head swim.  

Is it possible to find the center of an organization or is that a nonsensical question as well? It is very common within organizations to have the various silos view themselves as the center of the organization. Manufacturing/Operations will feel that without us the organization has nothing, no products we are the center. Sales retort that without us you would have no need to manufacture anything, we are the heart of this organization. R&D and Engineering are designing new products and throwing them over the fence almost daring Manufacturing to be able to produce the product and Sales to able to sell it, without us they proclaim you would have nothing to sell and nothing to manufacture. Management feels that without them overseeing the operations, demanding advances and pushing the organization nothing would happen, they feel they must be the center of the organization. Each of these functions can be duplicated across product lines creating even more silos.

A comparison to the human body might be apropos. The body while evolving some duplicative functions to help ensure survival and having tremendous healing power over time has a large number of critical components, the failure of any one of which  would result in death. The heart or the brain thinking that they were the center of the body’s universe without realizing the true interdependence might be very surprised to find that they could not go on without the other components.

Unfortunately many organizations find themselves in the middle of “turf” wars with various management teams trying to consolidate their power base and looking only inward, inside their own organizations, thinking about what can they do make their part, their silo the strongest possible sometimes at the expense of the other components. Senior management often times does their organizations no favor, creating reward systems and setting goals that reinforces that kind of narrow thinking rather then broader thinking on the part of their executives.

You get what you reward. CEO’s need to ask themselves what are they rewarding, what behaviors are they getting from those rewards, what behaviors do they need to have prevalent throughout the entire organization for the organization to be successful and then how do we set up reward systems that will accomplish that? How can we reinforce the kind of behavior that should be prevalent in the organization? How can the silos be broken down to serve the best interests of the organization as a whole? At the same time organizations need to be careful that they are not substituting unique one-off kind of rewards for not delivering the kind of motivational working environment that will obtain the best out of people day in and day out. First and foremost an environment needs to be created, provided, that allows and motivates people to perform to their full potential. Some organizations will back away from creating this environment because it can be more expensive to give people what they need to perform their jobs day in and day out adequately than it is to provide unique one-time rewards and to view those as motivational – as a substitution for what really should be done.

I am reminded of an organizational myth that seems to continually raise its head – that pay is not really motivational and what you need to do is to find what really motivates people and then pay is really not that important. (This is simply wishful thinking on the part of people who are tasked with keeping expenses associated with pay low). Pay is very motivational and will show up as a key driver of a whole host of organizational outcomes when it is deemed to be low. Pay will drop out as an organizational driver when people feel they are paid fairly. In other words once you meet my needs I stop worrying about it, but until then it will be key.

An associated myth is that people never rate their pay positively – it will be rated poorly so as to give employees perceived leverage in their struggle to get more pay. The norm on pay is somewhat lower then the norm on other items, however pay will be rated favorably when it is favorable. One retail organization was benchmark on pay in the top few percent of all organizations. A large portion of their population could be described as low skilled, the kind of workforce generally paid minimum wage. Yet their ratings of pay were very positive. They were benchmarked by another client who also had a large population of low skilled employees. They were hoping to find the magical elixir that this organization had found and importantly determine if it could be bottled and transferred to their organization. The magical elixir ended up being something quite simple. This organization paid their people 25% over market for comparable jobs and had a number of associated reward systems that all employees enjoyed. They received a better score on pay then others because they paid more.   

The story of how rewards have been used throughout history to control the “masses” is a fascinating one. One that often times played off of people’s innate tendencies, fears and weaknesses and one that has all sorts of conspiracy theories associated with it.   

I can remember one client, a well known hospital, which wanted to give out lottery tickets, one to each person who completed an employee survey. They wanted to award very substantial prizes, a new refrigerator, a vacation in the Caribbean etc., in order to motivate people to complete the survey. (Hospital populations are notoriously difficult to get them to complete an employee survey, with response rates averaging about ½ what you see elsewhere).  I counseled against it. In this case you were creating a special reward for what people, with the right environment surrounding them, should be expected to do as part of their normal job – that is giving management feedback on the performance of the organization so as to allow it to improve; a goal which is in everyone’s best interest. 

Another organization in attempting to create a “new” environment where silos were broken down changed their definition of “high potential” employees. High potential managers traditionally were those that could “hit their numbers”, often times completely to the exclusion of that was going on in other parts of the organization and often times without regard to what was being done to the people in the trenches actually responsible for making those numbers happen. Managers would move around a lot and it was not uncommon for an organization to hit their numbers several years in a row and then to have a new manager come in only to find the organization in need of a complete overhaul, with demoralized burnt out employees and processes that were propped up by a host of band aid like fixes. This organization wanted to change the paradigm.  They changed their definition of high potential to be those that not only could run their own organizations well, but could reach out to other parts of the organization and bring them along. Who would you want as your next CEO, someone who was inwardly focused, self absorbed, or someone who can reach out to others within the organization and help them to accomplish their goals as well?

Another organization created rewards and recognition programs that were more heavily weighted towards group performance rather then individual silo performance, all the while fretting that they were diluting the sense of accountability they had worked to install within the silos. All of these approaches are of course a balance between local accountability and a group focus.

Silo thinking is not limited to the corporate world of course. It raises its head anytime you have humans interacting with other humans. From a broader perspective I can’t help but think about China which just launched a missile blowing out of the sky one of their weather satellites near the end of its life span. The rationale for this was multifold from the various analyses that I have read. But many countries are up in arms, not because of the new military capability that this represents for China but because of the hazards this has created for everyone else’s satellites in orbit. It is estimated that there are now 300,000 small bullets, the remnants of the weather satellite, orbiting the earth, any one of which now has the ability to destroy inadvertently other country’s satellites including communication systems now critical to the world’s economies. It would be ironic if with silo thinking the Chinese upon destroying the weather satellite have created conditions whereby satellites vital to their own economic success were destroyed.

Each country, each person, each organizational silo thinking that they are the center of the universe without realizing the true interdependencies and collaboration opportunities that exist, or without organizations creating conditions for those collaboration opportunities and interdependencies to be enhanced and benefited from, creates conditions that can result in unforeseen negative circumstances not just for themselves but for everyone. Let’s hope that the new Chinese space junk does not drive home this point.

As I finish writing this piece, I can hear the center of my universe, my family, calling me to dinner. (I hope we are not having singularity tonight).