Corporate Structure, Compliance, and Compensation Plans Can Stifle Employee Engagement

By Michael Houlihan and Bonnie Harvey, EO Octane blog contributors and Barefoot Wine Founders

Corporations today say they want a more entrepreneurial culture. Some of the top search terms coming out of the C-Suite today are: entrepreneurial culture, employee engagement, and employee empowerment.

But all culture and all change starts from the top, and the top execs have to be willing to change in order for these tools to work their magic. Many C-Suiters are fearful of change. They feel that it might cause a “revolution,” result in legal challenges, or run-away costs. So they stifle methods that can empower and engage employees that, in their minds, step on the three sacred corporate cows:

1. Corporate Structure: The basic structure of most corporations resembles a pyramid and is ipso facto top-down by its basic architecture and function. Within the pyramid are silos which are mini-pyramids. Each mini-pyramid’s turf is fiercely defended from perceived infringements by the other mini-pyramids. This top-down, turf-war-prone structure can prevent the upward mobility of good ideas and interdepartmental cooperation necessary for real breakthroughs. How can employees be empowered and engaged if they think their boss will sit on their idea, change it, or claim it as his or her own? How can employees come up with comprehensive solutions that involve changes to other departments if they are perceived as “off-limits?”
2. Compensation: Most corporations today pay a salary which is basically paying for attendance, not necessarily production. Raises tend to be based on tenure, not great ideas, sales, or profits. This results in employees being viewed as “labor,” and as a cost center to be reduced, not as an asset to be appreciated. If two or more employees are responsible for doing the same job, they get equal pay regardless of the imbalance in their production. This discourages employees from working harder or being more engaged. Why bother? It’s not going to make a difference in their paycheck, or even in the appreciation and recognition they receive. Real producers tend to leave for better pay commensurate with their production. How can employees be truly engaged if their compensation plan discourages them?
3. Compliance: Corporate legal departments, in their well-meaning effort to mitigate liability, want “everything” to go through compliance. They look for reasons why things should not be done rather than ways in which things can be done. Of course this takes a long time, because when everything must go through compliance, which creates a backlog. Corporate employees know this and are discouraged from requesting approval for an idea or project. Legal doesn’t want to offer “safe” parameters inside of which ideas can flow without formal review since legal also gets paid by the hour. Some legal departments even recommend against any public written acknowledgement for a job well done in the fear that it may be used against the employer in a wrongful termination dispute. Yet public acknowledgement engages employees by validating their productive behavior, increasing respect from their colleagues, and demonstrating to others what garners appreciation.

We recommend corporations achieve an entrepreneurial culture by removing the fear and replace the sacred cows with a few new Mustangs!

For related complimentary business resources and graphics, please visit: www.barefootbonus.com.

By Michael Houlihan and Bonnie Harvey, EO Octane blog contributors and Barefoot Wine Founders. The Barefoot Wine Founders are New York Times Bestselling Authors, International Keynote Speakers and Corporate Trainers