On one hand you could say that I am simplifying the work that goes into running a care home (and I am sure I am), but in terms of the front-end customer care, it was a lesson from which I felt our company, and others, could learn.
I)
FIRST DRAFT PROPOSAL – (WEEK 10)
With a lack of proposals from others, I had little choice but to push forward with setting out my own ideas and hoping that other people would take my lead.
However, it was clear that a negative feeling was brewing about this process and some of the changes I was suggesting. The main concern appears to be a concern that the objective of the process is to reduce salaries. I felt stuck between a rock and a hard place as I didn’t want to get involved in the everyday conversations (as it would then appear that I was trying to force my views) but, on the other hand, my words were being taken out of context and it seemed that the worst was being assumed.
I ploughed on and sent my colleagues a proposal which I had created using a mixture of my own methodologies with those of Frederic Laloux and Ricardo Semler.
J)
ACCEPTING THE COLD SHOULDER – (WEEK 11)
Last week I sent out the initial proposal, hoping that there would be other proposals submitted by colleagues at the same time. This was not the case.
So, I met my own deadline of Wednesday evening for submitting proposals and wandered innocently into the office on Thursday morning.
Let us just say the atmosphere was icy! Those who had already arrived in the office were discussing my ideas. As more people arrived, the meeting got larger until I suggested that everybody disappear to the meeting room and I would handle the phones. I felt it was important that I wasn’t involved in the meeting.
One lesson I was learning through this process is that often people won’t do anything until forced. By providing a proposal (that they didn’t like), I forced them to try to find an alternative.
What was clear, though, was that the main area of concern was related to pay and transparency. I was confused as to why this was such an issue when I was suggesting that everybody choose their own salary. In order to get people on board with the changes I want to implement, I need to get to the bottom of this.
By lunchtime it appeared that the fifteen or so people in the meeting had come up with a framework that they felt could work.
Our monthly meeting seemed a good opportunity for those who had been involved in the ‘alternative proposal’ process to present their recommendations to the rest of the company.
These centred around rewarding employees for various aspects of their job, including
1) The location of the employee
2) The number of years of service in the company
3) The level of stress within the job
4) The amount of travel required
It seemed to me that this proposal was similar to trying to determine pay scales in governmental organisations. My issue with this is that pay is set on specific criteria that may or may not be relevant to the company’s success. Either way, I was pleased that everybody had got involved in thinking about what they wanted. Now they need to work out the details. For example, Who defines stress? Is a particular job always stressful or only sometimes? Should those who thrive on stress receive more?
K)
CONFRONTING THE REAL PROBLEM – (WEEK 12)
Last week I left a group of employees to formulate their own proposal around a future pay structure. Due to the size of the first meeting, they have decided to appoint a representative from each department to work out the details and present a proposal reached by consensus.
I decided not to become involved in this, which was difficult because I felt strongly that the purpose of this change was being lost in the politics of pay scales, and people were losing sight of the main goal – namely to empower each person to take ownership of their work and the company as a whole. I was frustrated to see that transparency and choosing salaries were being seen as the goal.
The meeting didn’t go well. “We seem to have gone backwards” was the overarching sentiment. What had come out of the meeting was a deeper understanding that people’s priorities differ depending upon the stage of their career. What an established professional with children wants is a very different level of stability than that of a young person starting their career.
I decided not to try and sway the conversation, but it was becoming clear that the ongoing uncertainty and internal conversations were causing a lot of unrest, rumours of lower salaries and general negative feelings.
What I did want to do was to get to the bottom of why my proposal was seen as negative. So we undertook another anonymous survey asking for feelings towards each area of the proposal that I set out a couple of weeks ago. Overall most of the proposal was acceptable. However, about one third of the employees had an issue with the pay structure.
At this point, I spoke to a few people in an informal environment to try and gain a better understanding of why this was. It came down to two issues:
1) Change. People don’t want to change. Whilst a few people complained about their pay, the majority were happy – so why change?
2) There is a good atmosphere in the office; there is nervousness about this changing if people know each other’s salaries.
With the (I hope temporary) negativity in the office, I really hope that the team will pull a rabbit out of a hat and find a solution that they are happy with.
8. BUILDING THE WEIRD POD WORLD
“The secret of change is to focus your energy not on fighting the old, but on building the new.”
Socrates
During the first three months of our change process, much discussion and argument had taken place. The blogs in this chapter cover the subsequent three months and how, collectively, we agreed to structure the company for the future.
A)
LIGHT AT THE END OF THE TUNNEL – (WEEK 13)
Oh! The damage a few words can do.
One of my junior colleagues sent out an email showing great enthusiasm to push the conversation forward. At last, I thought, somebody was willing to get involved. So, I congratulated him, talked to a few people who were likewise pleased by his email and thought nothing more of it.
A few days later, I was chatting with one of my senior colleagues who was furious, both with me and the author of the email. The email had clearly been understood by some very differently to the way in which I had read it. As a result, my congratulations were seen as my approval that people who had been in the company for a longer period of time would see a salary reduction.
At this point, I suggested that the conflict process should be invoked and that a direct conversation was required between those who felt aggrieved and the author of the email. So, they talked and understood what each was trying to say. The power of words!
At the same time, I had a meeting with my mentor who had (at my suggestion) been approached by people in the organisation as an anonymous sounding board. His view was that the whole process was damaging the organisation and that I should close it down and move on as it was affecting people’s trust in me and the company. I was extremely opposed to doing this – the whole exercise would have been futile and, worse, the bad atmosphere in the company would continue as people would feel that their views had been sought and then ignored. Furthermore, I felt that the people who had approached him (although I didn’t know who they were) were frustrated by the situation but too focused on pay alone to appreciate the bigger picture.
I decided that by the end of the week, there were going to be some workable solutions on the table one way or another. The first thing I did was something I should have done two weeks ago; I started talking to people directly. It soon became clear that the objections being voiced were more about perception than reality. A light bulb moment arose when I mentioned in passing that it is impossible for me to lower anybody’s salary if they choose it. I also pointed out that it is impossible to make investment decisions (like hiring a ne
w person) without taking into account the cost of that person.
So, the next step was to ask everybody who had ideas to voice them. Four groups formed with different proposals, so I asked them each to pick a representative. I also asked one other person, with more life experience and a different viewpoint to the rest of us, to join. My aim was to get all the ideas aired and objections out early.
I made it clear that, at this point in the process, I was taking advice, but at the end of the day the decision would be mine.
Off to the cafe and nobody leaves until the white smoke appears from the Vatican.
B)
GETTING TO A WORKABLE SOLUTION – (WEEKS 14 and 15)
Sitting down with a fairly random group of employees, trying to find a decision that could please everybody, it appeared that some fairly interesting groups had developed:
1) The techies – mainly Spanish, who were already used to sharing salary information between each other;
2) The newbies – different nationalities, bonded by being relatively new to the company, and thus not having gained the bonuses that longer standing employees were enjoying;
3) The oldies (they liked to think of themselves as experienced) – needing more security of salaries;
4) The younguns – Americans and Northern Europeans, who had little in the way of commitments and focused on the benefits that younger workers expect;
5) The WEIRDists – myself, our US CEO and a few others.
With the proposals now on the table, and the clock ticking, it was imperative to keep the momentum running and find a solution that people could accept.
As the majority of employees (except the newbies) were in favour of choosing their own salary, that seemed to be an obvious first step. The tricky part was transparency. We finally agreed that each person could decide whether or not to show their salary. The salaries of those who chose not to were amalgamated and the average shown. This will probably be a minority of salaries, so at some point, confidentiality is going to become impossible as more people decide to be transparent.
The object of transparency in salaries is to allow peer pressure to ensure that people are reasonable when choosing their salaries. For those who don’t want transparency, it was agreed that they could choose their own salary but the HR Director and myself would have the right to veto it.
Then came the conversation about how the bonus pot should be divided. Initially we couldn’t reach an agreement on how this should be divided. However, one of the Business Development team pointed out that as we provide an ongoing service, the support, development and marketing is just as important as the sale – so the only fair way is to divide it equally, which was agreed.
But when do we pay a bonus? I took a unilateral decision on this and decided that any additional bonus should not be paid until the amount available for reinvestment (in cash, after director loan repayments, charity contributions etc. had been dealt with) was more than 15% of gross profit. Only then would 25% of the net profit be available for additional bonuses.
So, the final proposal was set out. Now all we need to do is implement it and change if required. Easy!
C)
EXPLAINING RE-INVESTMENT – (WEEK 16)
With the final proposal in place (or at least a working methodology on which we can improve), I now need to concentrate on getting people to understand and use our new methodology.
Through this process, on numerous occasions I have felt that the need for change was still not fully understood. Although it was partly to maximise the use of each brain within the organisation, by providing the freedom and an environment in which people can soar, it was also to enhance an understanding of the company’s financial situation so that employees can see the need for re-investment and make investment decisions in their day-to-day work.
Each month we hold a 90-minute meeting involving the whole company to review our financials, KPIs, previous activities and next month’s goals. I felt this was a good opportunity to explain (again!) why we needed to put more money into re-investment rather than salaries. Whilst people want to know what the revenue and gross profit is, all the other figures are well …. boring. So, I put together a spreadsheet that would get me immediately thrown out of any accountancy or bookkeeping company, which butchered a profit and loss statement by adding cash items within it.
The first item shown was
Gross profit less expenses, NOT including pay.
Then I showed the amount spent on salaries and bonuses.
I wanted everybody to see the amount we were paying out in salaries and bonuses and how much profit remained – theoretically the net profit.
But then I showed the figures that aren’t added into the net profit: loan repayments to directors and/or external lenders, loans to subsidiary companies (in start-up phase), charity payments, dividends, share repurchases etc.
What was a reasonable net profit suddenly seemed less positive, especially when I added a last line:
Actual amount available for re-investment
The response after the presentation was “Why didn’t you show that before? If you had shown that at the beginning it would have been clearer why we needed to change.”
Why indeed?
But will people remember this sheet when it comes to choosing salaries? It has been added on the intranet, so all I can do is to keep reminding people to look at it.
D)
SHOWING SALARIES – (WEEK 17)
Having set out the proposals, the moment of truth had arrived – who was willing to be transparent?
Both our HR Director and I were determined not to put pressure on anybody to reveal their salary if they didn’t want to. We had set our example by making the rest of the financial information transparent as well as my earnings, so now we just had to wait.
In the end, with the exception of two people, everybody chose to be transparent about their salary.
So why not the last two? I’m not entirely sure I understand their motivation but it seemed to be their view that people would perceive them for their salary rather than themselves. I don’t agree, but I need to respect their decision.
With only two people choosing not to reveal their salaries, it did make me wonder why there was so much initial resistance. However, on reflection, without that pain I do not believe that people would have understood or agreed to transparency.
After going through the legal requirements we presented all salaries (with the two exceptions) at the next monthly meeting.
Our HR Director was curious to see if transparency would create what some people feared: a negative environment and mistrust amongst peers. None of this happened. On the contrary, miraculously almost all the rumours and gossip regarding salaries disappeared and you could feel the sense of relief in the air…
E)
MANAGERS – (WEEK 20)
“You want everybody to be self-managing – right?”
“Yes.”
“If you have no managers then you are going to lose a lot of people.”
“I never said I don’t want managers.”
“But you are implementing self-management.”
This conversation with my mentor sums up why it is dangerous to put a label on an idea. A number of times over the last weeks, I have had to reiterate that we need to implement our own methodology, not what somebody else has done elsewhere.
I want each person to make their own decisions (after seeking advice not consensus) about the work that they are doing. So why do we need to keep managers?
I think that managers have an important part to play in encouraging people forward, liaising between departments and developing structure and frameworks in which other people can soar. What they mustn’t do is obstruct their colleagues, especially when that colleague knows more than them on a particular issue, task or project. They should often be asked for advice but should avoid making decisions.
F)
THE FIRST EVALUATION – (WEEK 21)
The evaluati
on process implemented to help each person choose their own salary, included two questions:
1) How do you rate each other person in the company (weight rating from 1–5)
2) What value do you think they bring to the company (value score from 1–5)
We also asked colleagues to leave anonymous comments about their colleagues and to answer questions about their own performance.
So how did it go?
It was much quicker and easier to complete than expected. And all the scores were above 70%. This meant that a score of 70% or less indicated that there could be an issue with the way that the person is working. What will interest me more than the actual scores, is the progression of scores for each individual.
What was disappointing was that, despite being anonymous, my personal scores were initially some of the best. I do not believe that I do my job better than my colleagues. However, people will say what they think the boss wants to hear, so I need to find a way to break this. Over subsequent evaluations my score reduced, which indicates that people are becoming more honest – or I am doing worse a worse job).
I am wondering whether we should make everybody’s score transparent. On one side, it allows people see how everybody is doing; on the other side, this could create an unhealthy sense of competition. On the surface this seems absurd as the scores are used only as guidance for each person to view their own performance. If somebody has a poor score, they should understand that it is not the right time to take a pay rise – and others will see that as well.
The Weird CEO Page 15