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Enhancing Organizational Performance

Posts Tagged ‘Rewards

Why Do People Join Organizations?

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Why do people join organizations? A seemingly innocuous question that seems like it should be easily answered. To some extent the answer depends on which type of organization you are talking about. For instance, why do people join a certain employer over another? Why do they join various social or religious groups? Why do they join various charitable or other public interest organizations? Why do they join professional organizations? And today, many are puzzling over why people would join various terrorist organizations. You would think there would be endless reasons that drive people to sign up with these various types of entities, but in reality there are some fundamental underlying principles that drive those decisions. Let’s go through some of those fundamental driving forces.

Equity and Rewards: This is the notion that what you get out of the organization is fair for what you put into the organization. If the relationship is employer to employee, a sense of equity develops if you feel you are paid and have benefits that are fair. Pay is indeed a strong driver of satisfaction in the relationship, until people feel they are paid fairly, then it becomes almost non-existent. Equity can also be influenced by giving the person “things” they would not be able to get elsewhere. For instance, people may be willing to accept a lower salary level for longer-term career building experiences, being able to work with a person they admire, enhanced job security, earlier retirements than typical, the ability to travel, and flexibility in working hours, location or the willingness of the organization to adapt to their special needs.

You will almost always find for instance that remote, work-at-home, or part-timers (people who were intentionally looking for part-time work), are more positive than full-timers in a company facility. The reason is because they were given a position that met their unique employment needs. They would see the total equity equation, what they get out of the relationship with respect to what they put in as being “fair”.  The exception to this is when the organization treats these groups radically differently than the other “regular” employees, as “second-class employees”. In this case it is as though there are really two different company cultures being applied to the different groups. People are also driven by pure economics and will often accept lower salaries when they simply have no other options available to them.

When the relationship is not employer to employee there are still the equity equations that get solved for each organization that people choose to join. However, instead of money the sense of fairness may be fulfilled by other characteristics of the organization. For instance, a person may volunteer time at a food pantry or homeless shelter because of the fulfillment they receive by doing those activities.

So one aspect of why people join an organization is, in general, when fairness exists around the equity and rewards expectations of joining.

Meaningfulness of the job-itself, type of work or the type of activity: Ever notice how certain professions run in families? There are plenty of firefighters, police, tradespeople, accountants, doctors, lawyers, etc. who can trace back across multiple generations their ancestors who worked in the same professions. Why is that? One reason is knowledge about, and methods for entry into the profession is transmitted to others in the family, or the profession itself, (e.g. undertaker) is part of the family’s business. Another is certainly access and opportunity (sometimes unfair access). One aspect is that children often look up to their parents and will then strive to emulate them. There are other people, those who know what they want to do, or simply find certain kinds of work or experiences inherently interesting. For instance, some go into government or the military as a way to serve to their country, others go into healthcare to serve humanity, others into academia or research to further mankind’s knowledge base. People tend to join organizations that allow them to chase their dreams and to have experiences that fulfill them. People become full of pride in the organization when the mission of the organization, the meaningfulness of what they are doing, what they are accomplishing is held in high regard by themselves and others.

The Brand/Alignment with the Mission:  Another factor which influences people to join various organizations is the brand image of the organization. If a brand or the mission is well thought of in someone’s mind that makes joining that organization more attractive. The reasons which makes a brand attractive are varied. For instance, a company can be attractive if it has an outstanding reputation or industry dominating products. A religious organization may be attractive if it aligns with personal belief. A terrorist organization may have an attractive brand if it is seen as righting a wrong, aligned to personal or the beliefs of other family members, is seen as strengthening ones identity, or is viewed as more effective than the other parts of society in which it exists. A civil rights organization attracts people who are interesting in creating just conditions. People join organizations, of all types, when they see it as having an attractive brand image. The marines promote their brand as exclusive. “The few, the proud, the marines.” Not everyone can get into this organization, but if you make the cut, you become part of something special. This sense of exclusivity if you join is very intoxicating for many.

There are of course other factors that come into play, like convenience, a sense of long-term future opportunity, or little to no alternatives that influence why a person would join a specific organization. But one thing that research has shown has no effect, contrary to what you often read, are generational differences. People are mostly looking for very similar things when they voluntarily join an organization regardless of which generation they belong.

There are some separate and distinct factors that increase the likelihood of people leaving an organization and there are a few surprise explanations there as well.

© 2015 by Jeffrey M. Saltzman. All rights reserved

Written by Jeffrey M. Saltzman

March 26, 2015 at 6:13 pm

Selling Falsehood

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I am feeling somewhat cynical at the moment so forgive me if this seems a bit one-sided.

What organization has not tried to present itself in as favorable a light as possible through their marketing and promotional efforts? A question for deliberation is, how far can they go before they cross the line into what could be called deception and falsehood? And what causes them to do so? The pursuit of profit? Fear of failure? A win at any cost mentality? The need to attract organizational members? A desire to maintain a harmonious employee or customer base? Simple goal attainment? Hubris?

False statements by an organization fall broadly into two categories, those that are ignored or “winked” at by society and those that carry formal penalties. For instance, false statements made by a representative of the organization during the hiring of a new employee are generally viewed as not rising to the level of needing legislative remedy to prevent, though there is the occasional civil court case. Those kinds of errors when proven, which can be very hard to do, are usually explained away as being made by an errant individual and not routine or systematized throughout the organization. False or exaggerated statements to customers about the goods and services the organization provides rarely results in formal action. And while there are classes of products, such as pharmaceuticals, that are controlled to “protect” the consumer, there are many products sold as remedies or preventatives for this and that which are largely unregulated. Many of those are worthless, and some are truly dangerous. It certainly is a buyer beware marketplace, whether you are purchasing or buying into a physical thing, a service or a point of view. False statements made to investors or regulators are assumed to be more insidious, perhaps because they are harder to pass off as simply an errant individual, and fall into a very different category, a category which carries penalties which can rise to the level of threatening the existence of the organization itself. Arthur Andersen, LLP the accounting firm which made the Enron debacle possible found that out the hard way.

An organization’s behavior and reputation are determined from an aggregation of the behaviors that those inside the company deem acceptable. You want your company to have a reputation of honesty? Then get the employees within the company to behave in an honest fashion. Reward honesty, not those behaviors that lead to dishonesty. So many organizations miss this basic point. A organization that presents falsehoods has people inside of it that feel, for some reason (perhaps they are rewarded for it), that presenting falsehoods is ok. Organizations and their resultant reputation are, to a great extent, driven by the behavior of those residing within. You don’t interact with an organization; you interact with the people of the organization. Maytag, the company, has never shown up to repair the washer, not because the washers are so reliable, but because it is the Maytag repairman or woman who shows up to fix those unbreakable machines. It is the people of the organization that define the organization. The organization itself is an abstraction.

Some companies unfortunately it seems are looking for plausible deniability. They want to claim that one set of standards are in place, say honesty, while not looking too closely at the behaviors that actually get rewarded, say dishonesty. If they officially looked too closely at it, uncovering that the system actually promotes and rewards dishonesty, they might be compelled to do something about it.

And there are those that present false information not because they are rewarded for it, but because they simply don’t have the capacity to differentiate correct from incorrect information. Justin Kruger and David Dunning coined a term, the Dunning-Kruger effect, for when a person of limited ability comes to erroneous conclusions or makes poor decisions, and their limited abilities or incompetence also prevents them from being able to recognize their mistake. Due to this, these incompetent people tend to rate their own ability as above average and suffer from what is called “illusory superiority” and live blissfully in ignorance.  This is not limited to people with lower intelligence as this effect has also been demonstrated among those with significant intellectual power. It is more about a shortcoming in perception. Lake Woebegone, where all the children are above average comes to mind.

The degree to which this is happening in our society is documented in a new book by Charles Seife called “Proofiness”. The main theme of the book is that while we are used to being lied to with words, various organizations today have taken the art of lying to us with numbers to a new level. “Proofiness” is defined as “the art of using bogus mathematical arguments to prove something that you know in your heart is true — even when it’s not.” And it is related to “truthiness” which Stephen Colbert popularized and means “the quality of preferring concepts or facts one wishes to be true, rather than concepts or facts known to be true.”

Dr. Seife documents case after case of bogus numbers being used in an attempt to persuade, attempting to convince someone to sign onto a point of view, to purchase a service or product, or to simply join an organization. Those caught in the act include Supreme Court judges, (who are supposed to be above that sort of thing), politicians (which I guess is unfortunately expected), and providers of goods and services (which is called marketing).

In thinking about all this, I can’t help but be reminded of the Iraqi Information Minister at the time of the American conquest of Baghdad in 2003 who claimed that there were no American troops in Baghdad, and that the Americans were committing suicide by the hundreds at the city’s gates. At that very moment, I remember seeing news feeds of Americans patrolling the streets of Baghdad, with all opposition having apparently crumbled.

Saying something simply does not make it so, which is a concept we seem to have largely forgotten these days.

© 2010 by Jeffrey M. Saltzman. All rights reserved.

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Written by Jeffrey M. Saltzman

September 22, 2010 at 9:36 am

The Center of the Organization

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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).

Written by Jeffrey M. Saltzman

November 13, 2009 at 7:47 am

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