Employees
(FROM PAGE 27)
EBN: What prompted you to write this
book?
Heymann: We set out to answer the question of whether it was possible for companies
to do better by the workers at the bottom of
their corporate ladder and still economically
succeed. What really changed over the eight
years of global research was learning that
many of the companies economically succeeded not despite, but because they were
doing well by workers at the bottom of the
ladder.
EBN: What role do benefits play in the success of the companies you profile?
Heymann: Both benefits and wages, and
the broader compensation package, played
a huge role. What was common across these
companies was that they recognized that
there was an immense skill set amongst
these so-called low-skilled workers, who
were in fact just workers with less formal
education, workers who maybe didn’t have
a college or graduate degree or even a high
school degree. But they all had an immense
amount of employer-specific knowledge and
skills. So keeping them made the company
work better.
Giving [employees] incentives to do their
best, usually through the benefits package,
[and] through the compensation, increased
their productivity. And for many of these
firms, over 90% of their overall productivity
and effectiveness was built on these work-
ers, this large number of workers who were
commonly at the bottom of the corporate
ladder.
EBN: Coming out of a recession, many companies might not yet be in a position to increase salaries. What can they do?
Heymann: We were
incredibly impressed
by a company called
Dancing Deer in Massachusetts. It’s a bakery.
They’re a small employer
in a competitive market
and couldn’t markedly
increase wages. What
they did do, though,
was offer stock options.
Now, we’re all familiar
with stock options being common among
top management. But
they’re very uncommon
among entry-level workers in factories and bakeries. These are places where less than 1% of
employees typically have stock options.
People have argued that entry-level
employees and those with limited formal
education may not understand how stock
options work because they’re often set up
through fairly complicated mechanisms.
This was exactly the opposite of the Dancing
Deer experience. They spent time explaining it to employees. And, really, the concept
behind stock options is pretty straightforward. If the company makes more money,
you make more money. And the employees
absolutely got it. And what that meant was,
they were deeply engaged in coming up with
solutions. How do you make the cookies better? How do you package them better? How
do you make a better product that more
people want to buy? They were constantly
giving suggestions.
So there were two parts to what the company did. One, they gave
the incentive of stock options. And two, they had
forums through which
employees could come
up with suggestions and
be heard about how to
make the company more
productive.
The results were remarkable. In a one-year
period, sales increased
by 74%, and stock options increased in value
by 40%.
This notion that if the
benefits lead to direct
economic profits for line
workers and entry-level workers at the same
time as increasing productivity for the firm
is what we saw across the board.
EBN: How are other companies around the
world using incentives?
Heymann: Great Little Box is a company
in Canada that makes cardboard boxes and
packaging supplies. They came up with a
system where they provided financial incen-
tives if employees came up with ways the
company could save money. The employee
might just get $50, but that $50 was still a re-
ward and recognition. They could get a re-
ward as high as $2,500. But employees came
up with savings suggestions that led to the
company saving up to $25,000. So, the payoff
was even greater.
EBN: What role does management play in
this idea of creating profit at the bottom of
the corporate ladder?
Heymann: There are incredibly important roles for all of management to play in
this. The ideas in the book originated at all
levels: CEO, benefits managers, team leaders. It makes an enormous difference if all
levels of the company are committed.
Is it hard to do if HR or benefits managers
care about the issue and top management
doesn’t understand the value added by employees at the bottom of the ladder? Yes. Is
it hard to do likewise if the CEO recognizes
how much the business’s profitability depends on all employees, but some middle
managers are thinking that if they squeeze
