There is a puzzling phenomenon at play.
Recent years have seen movement toward a re-visioning of capitalism - Capitalism 2.0 - which Harvard Business School strategy guru Michael Porter describes as the concept of shared value. Charles Green does a wonderful job of describing and examining this movement in a series of posts at his Trust Matters blog: Is Capitalism 2.0 a Mirage? (Part 1 and Part 2).
More than 70 years ago, a new kind of pay approach was introduced in the U.S. Gainsharing is a program of employee participation in the financial performance of a company - also referred to as "shared capitalistm" - by which employees are directly involved in improving the productivity and performance of their employer, and then have the opportunity to share in the financial gains they help create.
My friend Brad Hill has deep expertise in employee gainsharing, having served on the Board of Directors of the Scanlon Leadership Institute, a nonprofit organization whose members pioneered the concepts of gainsharing, open-book management and servant leadership. Brad's exciting work in the field of gainsharing was highlighted in a Fast Company article a couple of years back. The article Bonuses Aren't Just for Bosses described Brad's work teaching rank and file employees how to devise their own incentive plans.
In a pork-processing plant in Milan, Missouri, amid the hog carcasses and pig fat, workers who operate fast-moving disassembly lines are assembling a new approach to compensation and motivation. The 900 people who work at Premium Standard Farms, many of whom are paid $10 an hour to perform some pretty old-fashioned jobs -- slaughtering, slicing, and cleaning -- are working in some pretty new ways. They have instituted changes that are saving their company tens of thousands of dollars a month. They have improved employee-retention rates by more than half (in an industry where 200% annual turnover is common). And they are being rewarded for their efforts through an incentive program that is yielding substantial payouts.
The central lesson of the article - and behind the notion of gainsharing overall - is about the power of such efforts to do good, for both workers and the companies that employ them.
Isn't this the core of the idea behind Capitalism 2.0?
And yet, data showcased in a recent Aon Hewitt webinar (drawn from Aon Hewitt salary increase surveys and 2011 VCM report) on variable pay suggests that gainsharing plans are practically on the verge of extinction.
So what gives? Does this strike anybody else as a missed opportunity?
My theory is this: Despite the recent surge in popularity of broad-based variable pay plans, employers still harbor a strong preference for simply dropping an incentive plan into the picture, rather than deal with the significant commitment to employee education and involvement that a gainsharing plan demands. Short-term, low investment thinking, I guess.
What's your take?
Ann Bares is the Founder and Editor of the Compensation Café, Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations. She earned her M.B.A. at Northwestern University’s Kellogg School and is a bookhound and aspiring cook in her spare time. Follow her on Twitter at @annbares.
Somehow I think it boils down to the fact that we just don't want to treat everyone like adults.
That is, there is a desire - conscious or unconscious - just to have labourers who should come to work and smile and work work hard without knowing why the company is doing what it's doing and without getting a chance to share in its risks and rewards.
Posted by: Darren Bond | 11/05/2011 at 07:50 AM
Many years ago, Richard Palmer took a leave of absence from the totally employee-owned company where he was president, Western Textiles, to attempt to carry the beacon of enlightened open-book management to others. The concepts and practices that were tremendously successful at Western Textiles were absolutely terrifying to the owners and executives of traditional enterprises. It involved permanent and total transfer of power from the status quo top management to "their people." Despite the paens of praise about their human resources otherwise boringly routine in annual reports, those in power could not bring themselves to release control... anywhere.
Posted by: E. James (Jim) Brennan | 11/06/2011 at 06:50 PM