It’s a generally-followed practice for managers to make reward decisions about their direct reports. This encourages a manager’s direct reports to withhold (in part, or in total) certain information from their managers. Information that is withheld often relates to their ambitions, to any mistakes they may have made, or to any challenges they may be experiencing. As there is only a defined size of the reward (“the pie”) to share among all employees- be it salary or bonuses, employee actions often breed competitiveness and non-collaborative behaviour. Each employee’s individual pursuit of win-lose outcomes collectively drives negative sentiments such as fear and suspicion. This can be both unhealthy and value-destructive.
- Our solution that might bring about this environment is a fully transparent mechanism of reward decisions. Under this model the criteria for awarding monetary and non-monetary rewards would be fully transparent to all employees, have no ‘discretionary element’ in the hands of the manager. Further the criteria will promote open, honest and free communication where any stakeholder promoting such an environment will benefit from a ‘ratchet’ on his/her award. This would free-up the manager who could concentrate on the task of steering his or her part of the company.
- We propose a mechanism within companies that allows employees to own up to mistakes readily in a safe continuous learning environment, without fear of any reprisal. This can be achieved by promoting examples of problems identified and solutions suggested. The employees will therefore have tangible evidence that the blame culture does not apply.
- An environment where learning is incremental and transferable by sharing of experiences amongst peers and supervisors. Reports on a frequent and regular basis will be generated amongst employees and minutes written as a way for creating an ongoing knowledgebase for future referral.
- Build a healthy and productive relationship between the subordinate and manager where the manager
- Encourages his subordinate to realize as many of his ‘ professional dreams’ as possible
- Removes any shackles of reprimand or punishment for a subordinate sharing his professional ambitions
- Build a productive and healthy work culture based on trust and freedom of expression
- Breaking the annual appraisal cycle and its unnatural link to budgets and bonuses
- Move away from a blame culture to a learning environment
- Raising the continuous development and improvement of employees to eminence
The experiment can be conducted in three steps:
- Pre implementation: select a department within an organisation, e.g. sales or customer service, and use a qualitative research approach to have an anonymous record of current practices on sharing information between employees and superiors. Use findings of the research to fine-tune the implementation plan details.
- Implementation: conduct the experiment over a period of one year at the department. During this phase, monitor and record actual number of planned and ad-hoc events called to discuss learning and action items carried out of the meetings that lead to modified processes or changed SOPs.
- Post implementation: conduct a quantitative survey among all employees from the department to assess if the new process of an open, transparent and fear-free environment has made a quantifiable impact on the key performance indicators of the department.
Javier Munoz, Sudhanshu Patwardhan, Guido Goldmann, Martin Rellstab, Adam Grainger, Amine Berraoui, Atreya Chaganty
All students at London Business School (Executive MBAs)
Team 4 Capstone project