here are two laws I really like: the first is Murphy’s Law: If anything can go wrong, it will. You can bank on that. The other I call Bardwick’s Law of Entitlement, and it says, Whatever people get for free stops being a delight and very quickly becomes an entitlement.
I recently learned of a situation in which people weren’t grateful for a particular benefit they received at work for the simple lack of the information that would make them appreciate what they were getting.
Warren Egnal is the founder and principal consultant of Engagement Strategies, a firm that excels in increasing engagement through change management and communication strategies. As Warren was describing what he was doing for some of his clients, he mentioned a problem at a famous and hugely admired Fortune 100 company. The company is accurately described as employee-centric and makes every list of Best Companies to Work For.
But, despite all the accolades, over the last couple of years employee griping has been rising while gratitude has been falling. Why, Warren asked, do you think that’s the case?
As I note in One Foot Out the Door: How to Combat the Psychological Recession That’s
Alienating Employees and Hurting American Business, the answer is so simple it’s frightening: the employees of this extremely generous company took their company’s practices for granted because they had no comparative data with peer companies or, for that matter, with any other company. They didn’t have the facts that would make them aware of the generosity
of their organization.
The moral of this story is this: don’t assume that people know what they need to know about what’s going on in an organization—especially when it comes to pay, benefits, and employee-centric policies. Relevant, focused information that explains what is happening and why is fundamental to building gratitude and is absolutely essential to creating and sustaining high rates of commitment and engagement.
The Psychology of Entitlement
Woe befalls the endlessly generous givers who never require that rewards be something to be earned. Instead of receiving gratitude and love from those they’ve rewarded so generously, their offerings are quickly taken for granted and therefore have no motivational value. My message to organizations and their Human Resource Departments—and to really generous parents, grandparents, teachers, or friends—is beware of unfettered generosity; it leads to a psychology of Entitlement, or the assumption, “I’m owed everything I get,” along with the accompanying, “What have you done for me lately?”
There’s a very old and widespread belief that if employees are happy their gratitude will be equaled only by their productivity and retention rates. In other words, as morale climbs, performance will soar. As a result of this heartfelt belief, Human Resource Departments have generated a long list of things that will make employees happy. This point if view is so widely accepted that virtually every midsized and large organization offers most of these things to all of its people.
There is nothing controversial or debatable in these offerings, so I call them Mother’s Day and Apple Pie benefits. Every thoughtful and conscientious organization offers some variation of the following (listed in no particular order): competitive compensation and benefits, health insurance, tuition reimbursement, flex time, and parental leave. I could easily create a longer list but this is enough for the reader to get the picture.
Alas, these offerings, which are widely believed to motivate and gladden employees, generate almost no significant payoff for the organizations that offer them. Several years ago, Watson Wyatt conducted a survey of American employees. The goal was to get at the heart of what the key drivers are of employee commitment. The results were as surprising as they were telling.
When Watson Wyatt asked employees what makes them committed to their work, no one factor stood out. In fact, the top seven factors each earned 14 percent or less of survey responses:
- Employees trust senior management (14 percent).
- Employees are able to use their skills on the job (14 percent).
- Rewards and recognition are competitive with other firms (11 percent).
- Jobs are reasonably secure (11 percent).
- The company’s products and services are of a high quality (10 percent).
- There is little stress related to work (7 percent).
- The company’s business conduct is honest and based on integrity (7 percent).
- All other factors (26 percent).
Traditional benefits generate almost no significant payoff.
Two factors explain this picture: First, the same things are available for everyone irrespective of what anyone wants, and those things are given and not earned. As a result, they are not valued. Second, what really matters for an individual is determined by what that person most needs or wants now.
The message is that there is no one magic bullet for building employee trust or for driving employee commitment. Each person is different, and leaders must consider individual needs and wants when trying to increase employee trust and commitment.
I am not advising a major take-away of things employees take for granted. That would be an invitation to active disengagement and plummeting performance. No, this is a warning not to expect a big payoff from working conditions or rewards
- That are taken for granted
- That everyone gets
- That people get just for showing up
- That have been in place for a long time
- That are just like those offered by every other company
Those conditions create an attitude of entitlement— and entitlement is based on the idea you owe these things to me. Entitlement does not generate positive emotions.
One Size Doesn’t Fit All
On the other hand, Do expect a big pay-off when working conditions and rewards demonstrate the organization’s view that this individual is a major asset and working conditions and rewards are
- Customized to meet that individual’s preferences or needs
- Earned through performance
- Specifically targeted to an individual
- Based on the specific needs and priorities of employees in this company
- Involve a commitment for a year or two and then priorities and needs are reassessed
Commitment and engagement are not new terms for morale or satisfaction.
Rewards can and do have a major impact on employee attitudes—including engagement and commitment— when they are customized to the individual and not merely handed out in a one-size-fits-all manner.
Many employees in many companies in many countries are discontented and fearful because the changes that are occurring destroy security and are disruptive, swift, and major. One of those critical changes is that employees who used to be regarded as key assets have become mere costs to be cut. This change, beginning with the massive layoffs in the 1980s, was the beginning of what I call the “Psychological Recession.” That basic attitude of seeing employees as anonymous costs to be eliminated does not foster employee commitment to the organization or engagement with its work. But hundreds of studies tell us that strong positive feelings of commitment and engagement are the key to success, specifically financial success.
In my experience, few members of management know the facts about commitment and engagement. This is a serious lack of information among leaders about very simple but powerful variables, and this lack of information has helped to create the Psychological Recession: the idea among many of today’s employees that things are going badly and the future will be worse. The lack of actions to increase employees’ feelings of being valued left people feeling devalued and insignificant.
Commitment and Engagement
When employees are very enthusiastic and involved, the organization prospers far beyond its peers. The current terms for these emotions are commitment and engagement. When people are committed they are proud of their organization and the fact that they’re in it. When people are engaged they see their work as contributing to the organization’s mission and they strongly believe the mission is important. (Many people don’t make this distinction and simply call the variable commitment or engagement.)
Commitment and engagement are not new terms for morale or satisfaction. Morale and satisfaction measurements have never correlated strongly with business outcomes. But commitment and engagement scores measure powerful emotions, and they are predictive. High positive scores predict financial success and strong negative scores—Not Committed and Actively Disengaged—predict poor financial results.
Unfortunately, we now have a financial recession as well as a psychological one. Today the levels of fear (which involves specific ideas like I might lose my job) and anxiety (which involves nonspecifics like I can hardly think, I’m so worried) are way too high and joy and optimism are scarce. That’s seriously bad. While success and recognition generate positive attitudes and energy, failure and nonrecognition deplete and exhaust people. Organizations must get fear and anxiety levels down and replace them with a sense of hope for a better future.
Gaining those feelings of commitment and engagement requires responding to employees as individuals who really matter to the organization. That means leaders need to be able to relate to and motivate people, and people who are hired need to fit into the organization’s culture so they’re likely to succeed. Perhaps the key way that organizations can achieve commitment and engagement is by meeting an individual’s most important needs or preferences at this time. The task is much easier than it sounds because at any time there are only between two and six categories of things that people really want.
From 1986 to 2001 people wanted challenge, empowerment, success . . . and last, money. That changed with the dot-com bust and economic stagnation that followed. By 2005, people wanted six things: security (now they no longer regarded it as a given), challenge, and success, along with three new items: they wanted both their work and family to flourish, they wanted to like and respect their peers and bosses, and they wanted meaning in both their work and life.
Except for the 1990s—when risk taking was glorified— security was always important to employees but rarely mentioned because job security was taken for granted. Today there’s little promise of absolute security but organizations can still provide some semblance of job security to valuable employees by offering them conditional security. Conditional security is the agreement that if someone’s performance is outstanding and their knowledge and skills are up to date, and if the organization needs what they know and can afford to pay them, that person has a job.
What Leaders Must Do
To truly gain employee commitment and engagement, leaders must offer rewards that are both contingent upon performance and customized to what matters most to the individual employee. When the number of choices fall into a few categories, it is not hard to satisfy individual preferences and in that way demonstrate that individuals are important assets and their work and welfare really matter to the organization.
To learn what really matters to an employee now, managers need to know a lot about the work employees do, and they must also know something about what’s going on in life outside work. You get that information by first having a relationship based on respect and trust between the employee and the manager. Then, both parties are free to ask questions and be responsible for listening hard to the answers.
The data on people’s preferences are put into categories and management and employees assess their viability, effectiveness, level of appeal, and cost. That becomes the initial version of what a particular organization will be able to offer employees. Every year or two, the question of current preferences needs to be revisited and revised appropriately. That’s it; the key to success is customizing rewards, recognition, and working conditions to fit the priorities of valuable individuals who have earned recognition.