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How do you make employees act like owners?

REWARD MANAGEMENT

How do you make employees act like owners?

In a drive to motivate employees to think and act like owners, many US organisations seem to rely simply on stock-based compensation hoping that it will inspire new heights of performance. But the stark reality is that it's not enough to pay in the currency of ownership, says the US reward magazine Workspan.

What's needed, it seems, is an environment that encourages ownership behaviours in both executives and employees.

Developing an ownership mentality

Writing in the June edition of workspan, Richard Harris and Frank Roche, consultants with William M Mercer in the US, argue that developing an ownership mentality requires three elements: communication, compensation and commitment.

When used collectively, they can drive performance and maximise a company's investment in stock-based pay, Harris and Roche say. If any one of these factors is missing from the equation, the impact may be zero.

Communication x compensation x commitment = performance

Communication to give employees information they need to make good decisions

  • Use an analytical approach to determine which performance metrics best correlate with creating shareholder value.

  • Connect these measures to employees — educate employees, link metrics to each business unit, function and, ultimately, to each employee.
  • Provide meaningful and timely information so employees can track performance.

Compensation that drives performance

  • Align the entire pay package with performance — motivate and reward short-term performance measures and longer-term value creation.

  • Use all forms of rewards — not just cash and stock.
  • Link company and employee interests.

Commitment to creating positive change.

  • Create a high-involvement organisation.

  • Remove barriers that prevent employees from contributing to high performance.
  • Create a two-way communication environment


Source: Adapted from 'C' the light: connecting employees to stock price , by Richard Harris and Frank Roche, Workspan, 06/01.

 

Want to know more?

Title: 'C' the light: connecting employees to stock price , by Richard Harris and Frank Roche, Workspan, 06/01.

Availability: Workspan is published 12 times at year by WorldatWork, formerly the American Compensation Association. Contact customer relations at WorldatWork, tel: 001 480 922 2020, post: 14040 N. Northsight Blvd, Scottsdale, Arizona, AZ 85260, USA.

For more information about WorldatWork visit . . .

www.worldatwork.org

Posted 5 September 2001