Layoffs may be the worst way to improve corporate productivity

In this struggling economy companies are desperately seeking ways to cut costs without affecting productivity. The typical solution is to cut staff, resulting in demoralized survivor workers taking on more functions and working overtime. To maintain productivity, telecom managers must deal with the messy, unpredictable realm of human dynamics. Money down During good times, when credit flows freely, companies can make investments to boost productivity, but during tough times they need alternative, low-cost approaches. “Instead of spending $1,000 to get $2000 worth of productivity, an alternative is to cut $1000 and maintain productivity – it’s the same mathematically,” says Duncan Stewart, director of research at Deloitte Canada. From a strategic perspective, Stewart says a big trend is joint ventures and other forms of enterprise collaboration to share costs. In the telecom sector, companies are sharing infrastructure with “coopetition” agreements. Instead of building two cell phone towers in the same area, companies can save money by building one taller one to serve both, he says. “Telefonica and Vodaphone are doing that in Europe, and in Canada, Telus and BCE are sharing infrastructure for new network technology. This can work because their competition is based on service, not infrastructure – these companies aren’t in the business of selling radio towers.” But the reality is that there’s very little new spending happening nowadays, and the biggest trend is cutting staff to reduce costs, he says. “So the key productivity question is: How do we keep delivering the same services in spite of the cuts?” Carrot economics Few companies handle the emotional aspects of worker motivation well, even during good times. “Surveys show the number one beef employees have in their workplace is this: ‘Nobody appreciates the work I do,’” says Adrian Gostick, a consultant with employee recognition consultancy O.C. Tanner and co-author of The Carrot Principle. Employee recognition programs are even more important during downturns. “If bosses ask for more overtime or extra efforts, they must ensure people know it’s appreciated,” says Gostick, who’s worked with many Fortune 500 companies. “Motivation is driven by recognition – you can’t ignore this human need, otherwise workers will just do the minimum to get by.” Technology staff are rarely good at the touchie-feelie aspects of team interactions, he says. Managers at telecom firms are typically promoted based on their technical skills rather than their management savvy. SaskTel is working to overcome that. Gostick says O.C. Tanner is training the company’s managers to improve their skills and implement a recognition program. “Employee surveys show that even high-tech guys say they need more appreciation in their careers. SaskTel is starting to see employee engagement scores go up, which is how you get more productivity.” Managers need to respond to their peoples’ need for public recognition of their efforts, he says. Top achievers are obvious targets for attention, but they’re often “recognition sponges” who already get praise. Front-line workers also need to feel appreciated but are often overlooked. Recognition has to be constant and consistent, he says. “Our surveys show that in the best teams with the highest satisfaction levels, people felt recognized about once a week. They got a pat on the back from the bosses in a specific way regularly.” This is typically verbal feedback but there may also be tangible awards such as movie tickets, a Starbucks card, and so on. But incentives need to be carefully managed, warns Gostick. “If you give a Starbucks card to somebody who cleans out the supply cabinet and the same reward to someone who has a million-dollar idea for cutting costs, it tells people with big ideas not to bother.” Conversely, enterprises have to stay away from giving small cash rewards. “If you give $100 for a big idea, it’s often greeted with scorn. It tends to monetize the idea, as it’s implied compensation.” Awards that have symbolic rather than tangible value can be more effective in recognition programs if they’re presented in the right way. To support this contention, Gostick cites a study conducted at Goodyear Tire and Rubber Company. Two teams were pitted against each other in meeting sales targets. One group was incented with $100 awards while the other received fishing gear in a public setting. “The fishing gear group outproduced the cash group by a 2 to 1 margin,” he says. “Employees often say, ‘I don’t care if it’s just $10 – I’d rather have the money.’ But their behaviour says the opposite.” Making Rypples with social media People are particularly anxious about their job performance during downturns, since they know non-performers are more likely to get sacked. But the typical performance evaluation process is long-winded, painful – and fundamentally flawed. “Providing feedback is an administrative process at most enterprises, but the way people learn and improve is a social process,” says Daniel Debow, co-CEO of Toronto-based Rypple, a social media provider. The company’s Twitter-like software makes giving and receiving feedback easier, he explains. “Getting feedback is often a socially awkward process. Managers may not really want to be directly honest. Also, it takes a long time to schedule a meeting and get their responses, and staff often say the feedback they get is vague and general.” Rypple tackles this problem in a novel way. People set up a trusted inner circle of co-workers, from whom they solicit anonymous feedback. Questions have 140-character limits and responses have 400 characters, which encourages people to ask focused questions and to receive direct responses with minimal fluff. “It’s easier to respond to questions like, ‘What did you think of the slides in my presentation?’ versus “How can I be a better speaker?,’” says Debow. “And Rypple reverses the onus – people ask their peers about their performance, instead of someone coming along and telling you.” Since responses are private and anonymous, people are more comfortable about asking questions they might be afraid to ask in a formal performance review where such items go on record. “Rypple doesn’t tell your boss – that would defeat the purpose. It’s self-initiated and bottom-up.” It also encourages people to ask more frequently, so they can make specific, incremental improvements, he adds. “You can take a thousand sales courses, but someone has to tell you specific things like, ‘You’ve got to stop interrupting clients during meetings.’” People are getting used to short, quick messaging and can benefit from small streams of trusted advice, but most enterprise HR tools simply automate antiquated evaluation processes, he adds. Hundreds of work groups use the free standalone version of Rypple on a de facto basis, but many companies such as Capital C and Chameleon Technologies have adopted the enterprise version, which has a small monthly fee, he says. “It helps morale, and costs less than buying pizza for all your staff.” Rosie Lombardi is a Toronto-based freelance writer. You can contact her at rosie@rosie-lombardi.com

Layoffs may be the worst way to improve corporate productivity

News | April 23, 2009

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