Workers need incentives, too

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ONE OF the oddities of modern business is the widespread assumption that executives' motivations are different from those of the workforce.

We are continually told that, of course, the only way to get the right people for the top jobs is to "incentivise" them with a heady mixture of high base salary and wonderful bonus - so wonderful, in fact, that in many cases individuals have to do extraordinarily badly not to receive them.

For employees, in general, though, no such inducements are apparently necessary. They are being exhorted to "buy in", to demonstrate huge commitment, loyalty and the rest of it, in return for a few scraps.

The now rightly discredited profit-related pay is perhaps the most crass of these efforts to give the impression that employees' rewards are linked to the success of the business. In effect, it was a tax dodge whereby the government funded pay rises that were often hardly dependent at all on improvements in performance. These days, many employees do not get even that, though. Delighted by repeated findings that people are motivated by more than money, companies are instead claiming to motivate their "greatest assets" through "missions", "visions" and - most recently - "values".

This is bound to fail, with the result that already high levels of cynicism will soar still further. After all, how can executives who are repeatedly telling us how complex the modern business has become claim that any success their organisations enjoy is down to their efforts alone? And how can they claim that they are being rewarded for the risks they take when it is becoming increasingly obvious that compensation for loss of service tends to mean that the reward for failure can be greater than that for success?

Coincidentally, just as the global financial turmoil is leading many to question the wisdom of the markets and even whether capitalism can survive in its current form, two books appear arguing for an extension of ownership in business.

In The Ownership Solution (Penguin, pounds 20), just out in the UK, Jeff Gates argues that one of the biggest problems holding back business is that there are not enough true capitalists. In other words, the "us and them" attitudes that were supposed to have been washed away by the demise of union power live on.

In fact, if anything they have moved up the organisation. Management guru Peter Drucker, for instance, argues that many middle managers are frustrated that their bosses get the credit, and the rewards, while they have to do the often dirty work that is necessary. Spreading share ownership among employees, rather than just creating a nation of short-term Sids, as Britain's privatisation programme did, is the solution for this avowed enthusiast for employee share-ownership plans.

Though Richard Koch's The Third Revolution (Capstone, pounds 16.99) aims to be more political in attempting to put some meat on the bones of Tony Blair's Third Way, it essentially covers the same sort of ground.

It claims that society will be better off if the two past revolutions - capitalism and democracy - are fused to create "democratised capitalism", whereby society gains through everyone being in a position to create wealth.

Even if companies do not go so far as making their employees shareholders but instead put them in genuine profit-sharing schemes, they can, as the likes of Nucor Steel and Hewlett-Packard have proved over the years, produce some impressive results.

The principle is simple. People will feel involved if they really are. No clever schemes can create what is not there.