The Problem of Empowerment

(Excerpted from the book Behave! How to get 100% of your employees fully engaged) 

To get employees to give you their discretionary thinking and deliver ideas that boost margin, you must empower them to implement their ideas.   Empowerment is about giving employees the ‘power’ to deliver changes.  Empowered employees are authorized and enabled to do what they determine is needed to achieve company goals.  

For a CEO this can be scary stuff.  What happens if an employee gets an idea to build a perpetual motion machine which violates the laws of physics!  Do you let that employee pursue an obviously flawed idea?  The answer to that question is the marketing answer: “It depends!”  Sometimes the by-product of a crazy idea is a great idea.  As you’ll see in a moment, we do put a governor on ideas, which makes it less likely that truly stupid ideas will be pursued. 

Explicit empowerment is key. At Gore “teams organize around opportunities and leaders emerge.” We’ve seen that 3M pioneered the idea of giving employees the ability to set aside time to work on special projects. Google gives its engineers 20 percent time, so that they’re free to work on what they’re really passionate about.  Likewise, Toyota did this with the employees in the famous NUMMI assembly plant.  And today, Morning Star employees clearly enjoy this level of empowerment. 

Unfortunately, lots of large companies use stage-gate processes to control ideas. Stage-gate processes are about reducing risk, but they can kill innovation.  Many of the most interesting innovations of the past century would never have made it through the stage-gate decision process.  

A key to allowing people to pursue ideas is to establish a flexible Risk-gate™ process. This process facilitates the least expensive, but best use of resources to pass an idea through primary risks. The basic purpose of the flexible Risk-gate™ process is to vet the idea in terms of what knowledge is missing.  Select the next easiest, cheapest, but meaningful risk to resolve and come up with a strategy to remove that risk. Such risks could be about what form factor a product should have,  or will customers accept the product,—or perhaps a prototype is needed; or perhaps a manufacturing step is needed that’s never been done before—find a way to test the step or develop alternatives; or perhaps you don’t know if the technology will work when it’s put together with other parts—test building a working model. 

This leaves the issue of deciding which ideas to pursue.  The best way to do this is to implement a method that removes management from the decision altogether.  Asking management for permission is equivalent to asking for a ‘no’.  Managers often have no motivation for taking on the risk and employees often will get an answer like “We already tried that and it didn’t work.”    

Chris Galvin, the former CEO of Motorola, described how he and his father would deal with this kind of question.  If someone came to him with an idea that had already been tried, the Motorola CEO wouldn’t say, “We already tried that.”  Instead, he would encourage the innovator to pursue the idea and give some guidance where to look first.  If the reason the idea didn’t work the first time was valid, the innovator would see the problem fairly soon, report the issue back to Galvin, and then go off to pursue some other idea.   

If you just shoot an idea down with “we already tried that,” then you make it very difficult for that person to move off that idea and onto a new one.  They will keep thinking about it, believing the people that went before them just didn’t see the problem right, or perhaps made some error.   They will waste a lot more time thinking about this problem than they would have if they’d been allowed to work on it.  A side problem is that you also diminish their level of engagement. 

 You can take out the need for management decisions by establishing a flexible Risk-gate™ funding pool.  We provide a simple computer program to manage this activity (eMail THNK@thnk2grow.com).

The governor here is that no-one can get funding without getting at least one other employee to sign onto the idea.   You limit the number of ideas any individual can sign onto in a six month period.  Employees will only sign onto projects which they deem worthy, thus you build in a certain level of control.  Will you have ideas that fail? Of course you will.  But just letting the employee pursue the idea is a far better factor of engagement than paying an annual bonus, and far cheaper.   

The amount of funding available depends on the nature of the business.  For some businesses it might be $5,000 for others $500.  If more money is needed as risks are eliminated, then more people must join the project.   If you got $500 when two people joined perhaps you fund an additional $500 when a third signs on and an additional 1,000 when a fourth joins, and so on.   

A flexible risk gate process enables you to establish project-specific milestones while remaining flexible about what those milestones are and who needs to be involved. The employees involved identify what the next critical risk factor is, and determine what they must overcome and which approach has the smallest possible investment. Some ideas need a couple of hundred dollars to move to the next stage, but others may need thousands. The mantra for all employees is to preserve cash and look for creative ways to move an idea along without creating an unnecessary financial risk. 

Engaged Employees Do It For Their Self-Worth.

Muhammad Yunus, who shared the 2006 Nobel Peace Prize, understood the idea of linking personal values to the work performed. His Grameen bank established a set of stars signifying achievement of a particular goal for a branch. If the branch achieved all five goals, the branch received all five stars. The staff pursued these stars with a passion, even though the bank attached no financial incentives to the achievement. In his book Banker to the Poor, Yunus wrote, “They are not doing it for any monetary benefit. They are doing it...to prove their worth to themselves.”

Yunus understood that people come up to, or down to, the level set for them by their environment. He wrote, “One cannot but wonder how an environment can make people despair and sit idle and then, by changing the conditions, one can transform the same people into matchless performers.” He saw this remarkable aspect of the human condition, just as Toyota had seen it. People respond to the environment into which they are thrust. To let them be their best, leaders need to establish the right environment to allow people the opportunity to prove their worth to themselves.

Proof: Higher employee engagement results in better financial performance.

Yesterday I sat down with an executive in transition over coffee and in the course of our conversation he described a study he’d participated in at a former employer -- a national fast-food chain. This well known chain maintains great data on the financial performance of each of its stores across the nation. It also tracks all kinds of other performance indicators having to do with road traffic patterns, demographics surrounding the stores, competition in the immediate area, foot traffic in the stores etc.,. Finally the chain performs regular employee engagement and satisfaction surveys at the individual store level.

But, as with many large organization these data sets were tracked by different departments on different systems -- the finance guys tracked financial performance, the marketing guys tracked demographic data, and HR tracked the engagement data. The systems were independent of one another and the HR piece was mostly held in the systems of the external vendor who executed the surveys. Eventually, some wise guy thought it might be informative to combine the data to see what patterns emerged. Using the marketing information to create grouping of similar businesses they compared financial result to employee engagement. It turned out that within every marketing group the pattern repeated that above average financial results correlated with above average employee engagement results.

Now you could claim the correlation was purely coincidental. Or you could claim that better financial results drove higher employee engagement. Or you could claim that higher employee engagement drove stronger financial results.

To sort out these claim, they went back and looked at historical trends within the marketing segments. It turned out that where employee engagement went up, stronger financial result followed. Those of us who deal with innovation and competitive advantage already know this is true. But it’s nice to know that someone out there has good data proving the case.