PERSON OF THE WEEK: At a time when the economy is stalling, the very last thing that business owners and their managerial teams need is a malcontent workforce. In his new book ‘The Power of an Internal Franchise‘ (published by Third Bridge Press), business consultant Martin O'Neill argues that companies need to foster a stronger sense of entrepreneurial value in their employees. MortgageOrb spoke with O'Neill to learn how this form of motivation can be instilled.
Q: Many corporate cultures seem to divide the space between management and the workforce into something of an us-versus-them environment. What are the key steps to getting everyone on the same team, rather than existing with this divided schematic?
O'Neill: The overall objective should be to focus on the culture. We call the most appealing, productive and adaptable culture an ‘ownership culture.’ Managers should focus on developing the right kind of culture so the employees can prosper.
Many leaders and managers say, ‘How can I get my employees to do this?’ The approach should be, ‘What can I do to allow and encourage the workforce to become more engaged?’
Managers should strive to develop a ‘line of sight’ between what their employees do every day and the performance of the company. They should work on developing environmental and cultural attributes that will encourage productivity and performance while engaging employees. The goal is to get employees to live the mantra of the entrepreneur: ‘What is good for the company is good for me, and what is good for me is good for the company.’
Q: In the mortgage banking industry, the drive to push the quantity of output during the run-up to the housing bubble resulted in deficiencies in quality. Is it possible for high-quantity output to also be of a high-quality caliber?
O'Neill: Of course. Remember, if it is good for the employee, it has to be good for the company. Many misinformed leaders forget to balance production and production capability. This results in killing the goose that laid the golden egg. If production constantly stresses production capability, cracks in the system will develop, quality will suffer and employees will burn out.
An internal franchise suggests that you are going to be doing this for a long time, and burning out workers early and often never allows the organization to build the depth or production capacity necessary for long-term success.
Q: Accountability is an elusive commodity in many organizations, and the lack of it can be deleterious in the financial services world. How can a company ensure that employees take ownership of their actions?
O'Neill: Managers that simply expect the workforce to be accountable are dreaming. Certainly, it is important to keep expectations high, but that also means you have to teach employees what it means to be accountable, what they are accountable for and how they can do that.
Some organizations value customer retention more than profits so that employees are accountable for satisfying their customers, while other companies value profits over everything. Neither of these approaches is incorrect, but every company must make explicit what the values of the company are and what takes priority.
Then, the leaders and managers have to teach employees how to go about being accountable for achieving the results they are looking for. Leaders have to be explicit about what they value, teach employees how to achieve superior results, and then reward them for their performance.
Q: What incentives do you recommend to reward jobs well done?
O'Neill: We look at rewards as the outward signs that reinforce the desired behaviors in the organization. For employees to make changes, they must view an outcome as possible. If an objective is too far-fetched, they will never try to reach it. It is also critical that the work be meaningful, complex and autonomous to keep the workforce engaged.
Leaders must first define the behaviors they desire, and then they need to measure those behaviors. The rewards must be clear, consistent, fair and supportive of the desired behaviors and company objectives. We break rewards into psychic income and pocketbook income.
Psychic income makes the employee feel good (e.g., note cards, spot bonuses, an afternoon off, tickets to a ball game), while pocketbook income represents the total compensation package offered to the employee. We've found that rewards can be almost anything, as long as they strictly meet the above criteria.
Q: What qualities should employers look for in recruiting new workers – especially in regard to working in a financial services company?
O'Neill: Consider the attributes of your most-valued employees. Then consider the attributes of the typical entrepreneur. With the exception of risk management, the attributes of your most-valued employees will match the attributes of an entrepreneur.
You want folks on your team who get the job done, are focused on results, finish what they start and think of the customer. You also want folks on your team who understand the importance of the brand. For example, if an employee makes a series of bad mortgage originations that may ultimately cause the brand of the financial services company to suffer, then that employee is not acting like an entrepreneur, because he or she is putting personal compensation (or short-term business results) ahead of the reputation of the firm.
So when hiring, make sure the candidates will be able to execute the organization's operating model according to the long-term goals of the company. Make sure they can understand, execute, teach and then improve the operating model. Can they understand that what is good for the company will eventually be good for them?
