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Guest Commentary

The Economy Is Bad, Change Everything—Wait, Let's Talk

Sid Scott

February 2010

(Sid Scott)We have been in crisis mode for many months and it has changed the way we do business. But, like in times past when things got bad, there were voices saying things like "We have to change everything—the old rules don't apply" or "People will understand—all bets are off."

While some business practices obviously and probably need to change in order to keep up with the macro economic trends, on a person-to-person basis, tried and true approaches as to how we interact with each other, how we build relationships. and how we manage the human side of our businesses still have merit. I would like to explore some of these truisms with you by looking at the flawed comments we are hearing.

The New Word Is Human Capital—People Are Just Assets

Actually, it is an old word, coined by Adam Smith, the 18th century economist who classified people as another one of the "fixed" assets of an organization along with buildings, machines, and land. Unfortunately, many others since Smith then seem to have forgotten that people are neither fixed, nor are they long term assets (like land, machines, factories, etc.) unless properly nurtured and engaged.

In recent good times, surveys indicated that at any given time about one-fifth of the workforce was looking for opportunities elsewhere and the percentage increased in companies where little training or "nurturing" occurred. Today, polls show that up to 60% of the workforce says it will consider looking for a new employer when the economy gets better. At present, there are limited job opportunities, but that will change and the percentage of those seeking jobs outside our companies will hold true again when the economy improves. Guess who we will lose first? You got it—the best, the brightest, the marketable—those with the most "personal human capital" that would be appreciated by many employers.

Please think of your employee owners as "borrowed assets" who are lending you their time and talent in exchange for a job and the rewards that go with it—pay, benefits, security. It is a bargain that needs both parties participating and fulfilling their obligations. If we forget to hold up our side of the agreement, they will leave us for more lucrative offers.

We Don't Need to Worry About Engaging People—They Are Lucky to Be Employed

In 2006, The Conference Board defined employee engagement as "A heightened emotional connection that an employee feels for his or her organization that influences him or her to exert greater discretionary effort in his or her work." So, in spite of the tough sledding economy has this really changed? Do people still want and need to feel engaged?

I believe we all want to feel engaged, and we do this by showing positive behaviors (do not confuse behavior with attitude). A lot of folks learn early on that they can play the game by using "rah-rah" platitudes when they are around the bosses. These cheerleading comments get translated into others observing what they call a "good attitude." Actually, many employees who look good in public may have poor attitudes and only put on a show when others are watching. The true test of engagement cannot be faked since it is reflected in how we act and behave while doing our jobs. When people are engaged, they show it in their actions, their body language, their interactions with others and their willingness to go the extra mile even when people are not watching them.

Another fallacy of many is to judge those who question things as having a bad attitude or not being part of the team. People who ask the tough questions want to know why certain actions are being taken and those who offer ideas are often the most engaged employee owners. Just because their questions and comments might make us feel a little uneasy, frustrated, and unsure of ourselves does not mean they are not good participants in the game of making the organization successful. Far better ideas come from those who question, suggest, and try to make things better than from those who say, "Boss—great idea" and who never question what is being said or done.

Are People Motivated to Work Harder in the Bad Economy? Is Money Really the Best Motivator?

Yes, we all need money—it buys us things; it offers some security in a dangerous world; it makes us feel successful—it does all those things and more. However, let me explain something that we often fail to grasp: money is not the motivator it is cracked up to be—never has been, never will be—and that goes for those in sales as well as those not peddling the company's wares and services. In today's economy, the money as motivation model would suggest that people will be more motivated than ever because they will value their jobs more. Not so. In fact, job satisfaction is the lowest it has been for a very long time and more people say they want to look for a new job than in any poll in recent memory.

If we think about motivation, we realize a lot of it comes from within ourselves. Sure, external factors can play into the equation because our work environment, our training or lack of it, our autonomy, our opportunities to do meaningful work, etc. can all set the stage (or not set the stage) for good job performance. It has often been said by this author that managers and bosses can de-motivate others far more easily than they can motivate them. I often use myself as an example. In my long career, it has been rarely the case that a rare bonus or a pay increase has made me work harder or longer hours. While I have not turned them down, I have found that our (my) internal self gets motivated by what we perceive as being challenging and fun—irrespective of the associated monetary rewards. On the other had, I have found myself feeling pretty negative when someone in higher authority said or did something that made me feel less engaged and less good about myself or my work. I imagine each of you can give similar examples.

Recently, I was delighted to discover that the concept of money as a motivator is still being challenged and debated. The Wall Street meltdown has shown us how little money had to do with performance and integrity. In a Forbes online commentary posted in March 2009, Charles S. Jacobs made this insightful statement, reflective of what social scientists have been trying to tell us for decades:
"Working for the carrot displaces the human need for purposeful achievement, and it comes at a huge cost—both in results and in satisfaction. When people are totally engaged in their work, the neurotransmitter dopamine is released, which sharpens focus and increases performance while creating a profound sense of well being. We are motivated by the work itself, not the reward."

Successful Organizations Take Advantage of What Has Worked Well

I am intimately aware of several employee-owned companies that have survived in these dreary times. Two are in the media business—an industry that has doubly suffered because of disruptive changes and challenges posed by the innovative communication venues—the Internet, Craigslist, Facebook, Twitter, et al. happening simultaneously with the bad economy. While they have had to reluctantly make tough, sad, and necessary decisions to stay in business—pay freezes, pay cuts, and job changes and eliminations, both have continued to engage employee owners in helping identify the troubling issues and help make decisions to improve things going forward. Working through groups of employee owners, they have launched new digital and traditional media products, made strategic acquisitions, identified innovative ways to save expenses, maintained necessary cash to pay debts and meet bank covenants, experienced growth in newspaper subscriptions and realized better-than-average profits when the majority of their peers have experienced huge losses in profitability. While I know both companies have strong leadership, if you ask their President/CEOs about their successes, they will tell you it has been the result of engaged employee owners working together to solve the big problems—strictly a team effort.

So please be slow to make changes in how you interact with and treat employee owners. Bad times and good times wax and wane, but people still need good treatment, positive relationships, and opportunities for engagement in order to be good employees.
About the Author

Sid Scott of Scott Consultants is the former vice president of human resources for Woodward Communications, Inc., a multimedia corporation located in Dubuque, Iowa. Woodward Communications has been an ESOP company since 1992. He has served on the NCEO's board of directors and is a frequent presenter/facilitator at conferences. He has a MBA from Bradley University and a BS in liberal arts from Illinois State University, and he has been a faculty member at Clarke College in Dubuque and the University of Wisconsin-Platteville.

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