John, a few thoughts:
In a message dated 97-10-20 00:00:42 EDT, you write:
> There is no substitute for quality; of a product, a process, a procedure,
> a set of shared values. Whether it is in a "team-based" compensation
> system or for an individual, the success of the overall organization is
> the success of the members. Where it seems to break down is in the
> well-ingrained feeling in American management that people need to be
> controlled in order to maximize profit potential.
>
> Thus, the system yields to the accounting which, instead of being a
> reporting mechanism, more often than not tends to be the controlling
> force, the major factor which drives the rest forward. This is surely not
> the best way to "run an airline", but it is the norm.
When the stated (or even implied, albeit strongly) goal is in fact to
"control", then it is arguably not the best way. In varying degrees, you'd
find people being uneasy and paranoid about Big Brother peering over your
shoulders. But if the intention is really to "measure" performance
(company, team, individual) to whatever extent it may be measured, then
mangement is in effect really establishing a way to be fair and equitable.
> A great deal has been written attacking and defending goal-setting and
> management by results/objectives, but all seem to ignore a fundamental
> concept - corporations are by definition inanimate entities. They are not
> designed to be concerned with those "inside" or their desires. They are
> designed for a purpose which has little to do with the niceties of team
> effort and so forth; they exist to minimize the tax impact on
> individuals.
True that corporations as they developed from the industrial revolution
were by definition inanimate entities. But new definitions have evolved
and have been propounded since then, as we glean from the literature
developed by the Human Relations School and their successors. Corporations
are indeed run by people and it is these people, in their varying roles,
that make up the character and personality of a corporation. The inanimate
entity being personified. So they may not have been designed consciously
to be concerned with "human niceties", but these human niceties were
precisely phenomena within corporations that the early Fords or
Rockefellers could not simply wish away, until their successors just had
to acknowledge, perhaps grudgingly at first, the human quality within
their midst..
> It is a rare and wondrous thing to have an individual make the kind of
> community impact which you refer to as an extended team, the kind of
> example set by Malden Mills. For those who do not know, there was a great
> fire which destroyed an entire operation, putting several thousand people
> out of work. The owner, a senior citizen himself, took it as his
> responsibility to ensure that families did not go hungry, and to ensure
> that a new mill would be built. This he did, to his everlasting credit.
>
> This points out the possibilities which can exist, wherein the team (mill,
> community, workforce) benefits by the clear vision of its leader. In this
> context, the focus is not on compensation but rather on holism, on the
> benefit accruing to the entire community as a result of not being
> restricted to the accounting as being the raison d'etre. Resources have to
> be wisely used, and wisely distributed, but it is not often wisdom which
> gets much play in modern business, IMO.
Holism in the context you propose apparently has not been completely
absent especially in the last decade or so. Most of us would know of one
or two corporations within our own communities who do not fail to provide
support to local efforts and activities (the schools, senior citizen
services, etc., either by means of money donations or employee volunteer
efforts on company time, and the like). More than this there has certainly
been no lack of stories about national corporations allocating fixed
percentages of their after-tax profits for worthy community projects and
concerns (the arts, health research, scholarships, training for jobs,
etc.). Malden Hills has been a good story, but it is certainly not the
exception and we can recognize this fact in our own communities in varying
degrees.
A point about compensation: it should definitely not be the focus of
corporate and community concerns. But it is most often a key concern and
cannot be downplayed easily. "Compensation", for the employee, is code
word for how much milk we can buy, whether we can pay the rent, if we'll
have dental care, etc. For the employer, it is code word for income vs.
labor expense, performance/productivity vs. pay, profits vs. losses. So it
is factored into questions of company goals and team and individual
performance: Will we have enough work done to meet our revenue
objectives, so we can have enough to pay our people their salaries and
wages (and hopefully expected bonuses), to pay our creditors, and leave
some for our investors and the community at large?
> Can we get to the point wherein the goal is increasing knowledge and
> longevity to the benefit of all, including the inanimate corporation and
> its shareholders? Then perhaps one can structure pay based on the value
> inherent in a long-term employee who knows a lot, and is worth a lot more
> than what he knows. Success is never a given, but I would bet that the
> workers in Malden Mills feel a unique blessing has come their way and they
> would be happier than most to be working at all.
Agree that pay structures should factor in the value inherent in a
long-term employee who knows a lot and is worth a lot more than what he
knows. And most salary structures I've seen reflect this norm. Entry pay
for a position, is normally less than the pay of say, a five year veteran
in the same position. Benefits are structured, too, so that vesting a
matchpay for a 401(k) comes after a certain period of employment. In other
words, pay and benefits do recognize the value inherent in a long-term
employee. Admittedly, they have not been written explicitly enough in pay
manuals or articulated enough in employee meetings. This is perhaps where
HR and management has so often failed and continue to do so. I'd love to
hear of companies that have in fact done this (anyone?), that is, at least
have pointed out in their pay manuals or compensation policy statements
that "pay inherently reflects etc., etc., including one's presumed level
of learning as a result of continued employment or perceived value as a
long-term employee." (So it's not just the hours I put in!) We mostly hear
of these factors being discussed in relation to pay during job evaluation
meetings, but rarely outside this once-in-three-years activity.
> If efficient systems are less costly, and more productive, it stands to
> reason that the goal should be to make cooperation one of the major foci,
> as opposed to competition, especially when it comes to compensation for
> individuals within a team, or for multiple teams within the organization.
> As such, I would not want to make accounting the prerequisite for doing,
> or learning, or cooperating within the organization. It takes a good
> person to do what was done at Malden Mills, a person who is equally
> committed to making the business successful as he is to to those who can
> do so. That kind of thinking is what can sway shareholders in this
> "quarterly return" economy, and I would love to see more of it. My thanks
> to Dennis for asking some very interesting questions.
Agree that cooperation should be a conscious concern and goal. It is in
fact key for meeting team goals and company goals. We can't have members
of a "team" working at cross purposes. But, John, I am not sure that we
can set aside "accounting" if we want the team to continue cooperating and
meeting their goals quarter to quarter, year to year. We have to measure
whether we've gone as far as we planned. In turn we have to reward those
who've contributed to the effort: more for those individuals who gave more
and more for those teams that pushed the company further to its limits;
and less for those who have not done as well, presumably for not being
"team" players enough. In the absence of measurements and their
corresponding levels of rewards, how can one reasonably expect people to
go to work day after day, not knowing where they stand and what's in it
for them after all. (I have a family to feed(!))
Finally, I strongly agree that vision is a beacon that we should continue
to f ocus on (here's hoping it has really gone beyond the "fad" phase) in
our study of pay, performance, learning, and employee value. For me, it is
the glue that puts together the various components of the corporation:
whether it is the vision of the Malden Mills owner or that of Coke's
Goizueta. Vision sees profits and building shareholder value, among other
things, as essential code words of a corporation. The essential point,
however, is that vision looks beyond these and sees hard-working and
learning employees, motivated employee-owners, and the larger appreciative
and supportive community, consumers or not, as the props (in a good sense)
that make the corporation viable or not down the road.
Except, of course, if you have bad government that turns a blind eye or
even actively accomodates corporate citizens that do not mind being called
polluters, sexual abusers, exploiters, and all-around ogres. But that is
another story.
I hope I haven't taken too much of your space.
Chuck Gesmundo in Minneapolis
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