Ownership Thinking vs. The Productivity Gap

Do a quick survey of business news headlines on any given day and you’re sure to be reminded of an ominous innovation and productivity gap weighing down the Canadian economy.

Pundits have made careers out of debating the root causes, but I believe there’s a challenge facing business owners and managers that’s killing innovation, battering bottom lines and sapping this country’s growth prospects — and it has nothing to do with macro- or microeconomic factors.

The problem is a widespread sense of entitlement in the workplace, and its effects are being felt among Canadian companies — small to medium-sized businesses and major corporations alike.

A sense of entitlement is nothing new. It has been around forever, but became more entrenched after the Second World War when entitlement programs became the norm and many of us came to regard employment as an inherent right rather than a performance-based privilege. In many cases, the drive to exceed expectations, spur innovation and propel an employer’s success was replaced with an emphasis on doing “good enough.”

A focus on winning the race was out. Feeling good about merely showing up — and walking away with a medal no matter how you placed — was in. In the end, everybody won, but in reality, no one did. For many, this was a bitter pill to swallow, particularly in a business world where strong employee performance spells the difference between success and failure.

But if you think employees are to blame for this phenomenon, think again.

Many chief executives have become complacent when tasked with building engaging workplace cultures. This dawned on me when I worked as a C-level executive in the 1980s and 1990s.

Many of the workplaces I oversaw were staffed by people who were disengaged and unmotivated. The reason was simple: they weren’t being pushed to perform. In turn, they lost the connection between their work and the company’s overall financial success and from there, human nature took hold. “If I still receive a paycheque regardless of my performance,” these pragmatic employees justifiably questioned, “why should I break a sweat helping my employer grow?”

The problem both confounded and infuriated me to the degree that I began developing the Ownership Thinking business-management system then devoted my professional career to transforming workplace cultures. I later wrote a book of the same name.

In my work in Canada in particular, it became obvious that what business owners really wanted employees to demonstrate, beyond basics such as hard work and operational acumen, was the same degree of passion they injected into their companies every day. When those owners lost sleep over a poor month of sales, for example, they wanted to know their employees were so connected to the company they, too, were kept awake at night.

Trouble is, many business owners feel employees should exude this passion on their own: “I gave you a job, now make my company your life.” Call it entitlement on the part of entrepreneurs, and it never works.

What does is empowering employees to think, feel and act like business owners by giving them important responsibilities, tying a portion of their compensation to the company’s performance and educating them on how to interpret key financial indicators.

That last part is particularly important, because as I’ve witnessed time and again, in the absence of information, people simply make it up. While working with one large company I once asked an employee to estimate its annual profit margin. He guessed 50%. The real figure was actually 0.02%, but he hadn’t a clue because management kept employees in the dark about key performance indicators.

Of course, changing your workplace culture and empowering employees this way requires the right type of worker. Finding them can pose a major challenge. It’s the reason recruitment processes should be designed to single out employees who are entrepreneurial, embrace risk and view challenges as opportunities. Those people can succeed when asked to think for themselves and act in their company’s best interest at every turn.

But they must also be willing to tie part of their compensation to an incentive-based model. The trick is to avoid designing plans that are overly complicated and tied to metrics that most people lack the financial wherewithal to understand. Incentive-based plans — everything from profit-sharing structures to target-based bonuses — are successful when they have attainable goals and when they remain tied to performance.

Handing out cheques at regular intervals doesn’t do much to transform employee behaviour. What does is engaging workers on a different level, building their self-esteem and hunger for success by ensuring that promotions and bonuses are awarded when deserved. Some will embrace the challenge and succeed, while others will be asked to move on.

Erasing that innovation and productivity gap in the Canadian economy, in my view, starts by turning workplaces into productive, profitable and fun environments. Because when employees are empowered to feel, think and act like owners, we all win.

— By Brad Hams, founder of Ownership Thinking and author of the best-selling book of the same name.

Until next time,

Perry Phillips, President

Ownership Thinking Canada

Visit www.ownershipthinking.ca to learn more about Ownership Thinking Canada and the upcoming conference in Colorado in October 2012.

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