This guest post is by Edward E. Lawler III, Christopher G. Worley and David Creelman, authors of “Management Reset: Organizing for Sustainable Effectiveness.”
A large number of companies in the United States are trying to support — and stay in front of — the green movement in ways that make sense for their businesses. Certain companies are forging ahead, implementing recycling initiatives and organizing [corporate social responsibility] activities, while larger organizations are making a big splash with the launch of eco-friendly product lines, such as Clorox’s Green Works.
Mission accomplished, right? Not so fast. To be sustainable for the long-term, organizations will need to completely restructure and rethink their approach to management, including their reward strategies. A soccer team provides a valuable metaphor and an important lesson of how rewards can be managed differently within a company. Manchester United is one of the most successful sports teams in the world, with fans from Manchester to Malaysia to Madagascar. Manchester United doesn’t provide annual merit increments, doesn’t pay people doing the same job (for example, goal tender as opposed to forward or midfielder) even remotely the same, and ignores hierarchy by paying the boss (the coach) less than many of the players.
But to what extent should an organization model its reward system based on how Manchester United rewards its players?
Granted, a soccer (football) team is a very different type of organization than a complex global corporation, but the Manchester United approach to rewards shows that organizations can break away from the entrenched traditions of pay that exist in most organizations and still be successful.
So what about sustainable management organizations (SMOs — i.e., companies designed around economic performance, positive social benefits and ecological health)? Just like Manchester United, they require reward systems that are very different from what either command-and-control organizations or high involvement organizations have because they are structured differently and have different employment relationships.
Designing reward systems for SMOs is a major challenge because the employment relationship is different. SMOs need to create a reward system that motivates and attracts individuals even though they do not have a secure long-term employment relationship. SMOs need individuals to commit to their long-term success while not promising them that they can spend their careers working for them. At DaVita, the Fortune 500 kidney dialysis company, the patient technicians could get higher salaries in more traditional facilities, but often stay with the company because of the profit-sharing plan that encourages everyone to lower costs, reduce waste and build local communities.
The situation with respect to rewards is further complicated by the diverse workforce that SMOs employ. It is clear that: individuals in different stages of their careers value different kinds of rewards, people in different countries view rewards quite differently and different types of work designs require different approaches to rewards. One of the traditional design principles of reward systems is to treat people the same, yet this desire for similar treatment is incompatible with the diversity that today’s organizations face and must deal with. In SMOs, the absence of traditional job descriptions, along with more flexible work assignments and rapid organization change, create additional challenges and opportunities that reward systems must take into account.
While this approach to rewards might seem foreign (and let’s face it, quite scary) for most U.S. managers, it’s about time they took a page from Manchester United’s playbook. This means paying much more attention to the individual value a player contributes and counting on employees’ enthusiasm for the purpose of the work they do. Sustainable management is no easy job, but in the long run — it’s certainly worth the time and effort.
Reprinted by permission of the publisher, John Wiley & Sons, Inc.