Find out what it means for your employees and your organization.
By Jack Wiley
With Wall Street analysts from Morgan Stanley and UBS predicting anemic growth for the U.S. economy in 2012, some organizations are concerned about how they’ll keep their staff motivated and engaged, especially if they can’t afford to offer them a pay raise.
The good news is that Kenexa research shows that only 25 percent of employees are primarily motivated by the salary and benefits they receive. That means that three-quarters of your workforce are motivated and engaged by something else.
Over the past 30 years, we’ve surveyed more than 200,000 employees around the world, asking them: What is the most important thing you want from your employer? Surprisingly, we found that workers in different countries, different industries and different job roles all want the same seven things:
• Recognition. Employees want to be recognized and appreciated as
a valued team member, particularly by the person who should be most familiar with their work—their line manager. The organizational challenge is to ensure that every employee is commended for the work they do.
• Exciting work. Workers strive for a job that’s challenging, interesting, and fun. They want a sense of accomplishment and they want to feel the time they’ve spent at work has been worthwhile. According to our research, employees are significantly more likely to feel excited about their work if they are learning something new, if they’re involved in a pioneering project, or if they are empowered to operate with autonomy. The organizational challenge is to ensure that employees have a chance to discuss what they do—and don’t—like about their roles. And if there are parts that are disagreeable, adjustments should be made, if possible.
• Security of employment. In tough economic times, its especially important that employees feel confident about their organization’s future and its ability to provide them with steady work so they can meet their financial obligations. HR practitioners, leaders and executives should have consideration for the morale, welfare and well-being of employees.
• Pay. Staff members want to be compensated fairly for the work they do and the contribution they make through base pay, bonuses, and benefits.Yet, pay isn’t the prime motivator as long as employees feel they are being treated fairly and that performance is evaluated on merit. But there is a fine line—stopping short of reasonable expectations in terms of pay increases deeply affects an employee’s sense of goodwill at work, striking a severe blow to their work output and their commitment to the organization.
• Education and career growth. Opportunities should be made able
to develop employee skills and to advance career development. HR practitioners, managers, and executives should provide necessary training and—where possible—‘stretch assignments’.
• Conditions. We don’t work in a vacuum; what happens around us matters. Employees want a well-equipped environment that is comfortable, healthy, and safe. For most, the social working conditions are even more important than the physical conditions. Social activities can promote interaction and teamwork. Allowing individuals to achieve their own work/life balance is also crucial.
• Truth. Transparency and honesty have critical roles in the workplace. All members of the senior team should openly communicate, provide honest feedback, and set clear goals. Regardless of how bad things are, employees should always be told the full story. They’ll know if things are bad. Lying will only undermine your credibility.
We often refer to these elements as R.E.S.P.E.C.T. Which led us to wonder: Do organizations that provide these seven things outperform those that don’t? The answer is a resounding yes. Organizations that fulfill the RESPECT needs of their employees have an average employee engagement level that is 117 percent higher than the average for organizations that don’t meet the RESPECT needs of employees. Their operational performance is 64 percent higher and their customer satisfaction levels are significantly greater.
But how does this affect the bottom line? To answer this, we correlated our RESPECT data against three financial metrics—diluted earnings per share, total shareholder return and return on assets— for more than one hundred companies worldwide. (Diluted earnings per share takes into account standard earnings per share (income divided by outstanding shares) and also accounts for what earnings would be if all outstanding stock options and warrants were exercised. Total shareholder return is a measure of the change in a company’s stock price plus dividends paid. Return on assets is net income divided by assets. )
These companies represent all major industries, including retail, finance and banking, manufacturing, hospitality, healthcare and business services. We found that high RESPECT companies outperformed both average and low RESPECT companies on all three key financial performance measures.
High RESPECT companies on average produced $3.56 more diluted earnings per share than low RESPECT companies. For total shareholder return, the results are equally dramatic. During 2009, a time of market volatility and higher than average returns due in part to the bottoming out of the stock market in 2008, high RESPECT companies delivered to their shareholders an average return of 49.8 percentage points more than low RESPECT companies. An examination of return on assets produces the same conclusion: high RESPECT companies outperform low RESPECT companies by up to ten times.
And There’s More …
Delivering RESPECT contributes to the retention and overall satisfaction of employees. Giving them what they want not only enables them to lead more fulfilling and rewarding lives, it also means they’re more likely to go the extra mile for your organization.
Embedding the elements of RESPECT into your workplace can also help you to attract skilled employees. Organizations compete for talent and those that fail to deliver RESPECT risk being left behind.
Another crucial benefit is that the principles of RESPECT can help an organization shift its culture and practices from bureaucratic to dynamic. Bureaucratic organizations are well suited to a stable business environment. With centralized decision making and standardized procedures, they can scale quickly, reduce costs, generate profits, and satisfy mass needs. A key characteristic is that problems aren’t solved on the front lines where they actually occur, but in the executive suite. A few smart people make all the important decisions. Silos exist and these bring with them complex territorial issues whereby one unit’s success might be at the expense of another. Turf wars are not uncommon. The manager’s job tends to be focused on implementation, monitoring, motivation and control over others.
Given that a stable business environment is a thing of the past, this type of organization has to evolve to be more dynamic. Dynamic organizations offer a more flexible workplace. Employees typically work in cross-functional teams and are empowered to solve problems and to work where they are most efficient (which may be at home or during nontraditional work hours). Our research shows that this way of working drives employees to be more committed to their jobs because they are typically given more challenging and complex assignments. The manager’s job is to facilitate smart, creative solutions and to make sure employees are contributing at their highest level and living up to their potential.
Dynamic organizations are more innovative. Companies need to innovate and adapt to a changing environment in the current economic climate. Concentrating on the seven elements of RESPECT can help HR practitioners, managers, and executives transform their organizations through fundamental cultural change.
If you lack the scope to raise salaries, remember there are other ways to maintain a committed and loyal workforce. The majority of the seven RESPECT principles don’t cost a lot—if anything—to implement. For example, providing recognition and telling the truth cost nothing. Finding exciting work for employees just requires executives and managers in the organization to be in touch with what motivates each individual. Improving on these three areas alone would most likely have a positive impact on the engagement level and the performance of the entire workforce. It just requires effort and dedication. Giving employees what they want is good for them and good for the organization.
Jack Wiley, Ph.D, is executive director of the Kenexa High Performance Institute and co-author of RESPECT: Delivering Results by Giving Employees What They Really Want.