BW Communities

Analysis: Metrics Of Motivation

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[You can't expect your employees to exceed the expectations of your customers if you don't exceed the employees' expectations of management." — Howard Schultz, CEO Starbucks Nayan Shorey of Kosha International did two things wrong. One, his reaction to introduce incentives schemes to counter competition was knee-jerk. Two, he equated money to be the major motivating factor for increased productivity and performance. In a people-centric business, it is important to have each member of your team feel invaluable. Feeling valued is the key to employee loyalty. In situations like this, it is best to avoid anything that sets up a winner and a loser. Shorey turned to incentive programmes to counter expected competition pressures from Silky Weiss. Even if it was a route to take, it was necessary to create the incentive programme after getting into details about how it will best suit the participants. Any successful incentive program requires clearly defined rules, suitable rewards, efficient communication strategies and measurable success metrics. This was clearly missing in Kosha. Mubina was pro-active, loyal and displayed great commitment in a crisis. Money does serve as a metaphor in telling your employees that you value them. However, one must explore other currencies to buy loyalty and commitment as well. The incentive-earners in an organisation are seen as high performers, while low incentive earners are seen as laggards. Shorey made the mistake of not syncing the rewards programme with the efforts required, and used sales as the only measurable metric to evaluate performance. This often demotivates employees. While challenges in a larger store are high — with more walk-ins, larger transactions, larger teams and possible higher competition in a high street, a smaller throughput store has its own set of unique challenges of developing the catchments and working aggressively to build consumer equity. But, for a consumer, the experience with a retail brand, whether in a high street or otherwise, should not be any different. Every business wants to build an enduring relationship with the customer; mom-and-pop shops thrive despite the advent of big-brand retailing. Therefore, an inclusive incentive programme that rewards everyone, including the cashier and packer, is crucial. In short, every effort in "making a consumer experience a delight" would need to be recognised. Shorey did not factor these into his incentive scheme to encourage true performers and reward them for their efforts in building the business. Yet, to be fair, it is a huge challenge to be able to put in place an incentive scheme with so many variables. In my own experience with a reputed FMCG organisation, we had incentives designed keeping in mind the overall short-term brand objectives and the ultimate objective of dominating retail shelves. The incentives were driven from top. The managers were required to give weekly updates to their respective sales teams. This helped us understand targeting better; identify good performers; help weaker links to improve progressively; weed out non-performers; and, most importantly, get managers involved in their teams' earnings. Incentive was one of the key strategic tools to dominate the brands in the market, and to retain good employees. Kosha's is clearly a failure of leadership. It is also, in some ways, a failure of understanding human nature. Poorly structured incentive programmes can be seen as a shift in the company's perception of what makes a valuable employee — as was amply illustrated by Mubina. For her money was not as motivating as being valued by the employer. It took nine months and a Darius to come and realise that the sales numbers have just not moved, while costs have escalated. Bottom line apart, there is also erosion of employee morale that one cannot put a value on. More Mubinas can be lost if not already; and these are the very employees Kosha needs when it is growing. Very often the problems are not easily perceptible to top management. Unless one is hands-on, these problems do not come to the surface so easily. However, in this case, they have had valuable inputs from their current and ex-employees, leading to an accurate picture. Once the problem has been identified, it is best to act as Darius has suggested. One has to take some hard calls that send the right signals to employees at large — that performance is valued, and loyalty and commitment are paramount. This may lead to some short-term repercussions on the business. However, it is also equally important that the right employees get motivated, so that the organisation grows into a healthy business. Therein lies the message for building a bigger and better business. Murali Krishnan is the chief operating officer of Nilgiris chain of supermarkets <script type="text/javascript"> var intro = jQuery.trim(jQuery('#commenth4').text()) var page = jQuery.trim(jQuery('#storyPage').text()) if (page.indexOf(intro) < 0) { jQuery('#commenth4').attr('style', 'display:block;') } </script> (This story was published in Businessworld Issue Dated 11-10-2010)