Ownership and Quality

Here’s something that is perhaps rather obvious – Ownership Improves Quality. As in, if a person is given ownership of the work-product, the quality of the result is much higher when compared to the situation where he is told to do something “for the company”. Quite obvious, right?

Why is it then, that most companies do not recognize and foster this? Take a look at any medium-sized or larger company. You will find employees engaged in turf-battles, political-struggles and playing the game. Essentially, employees are mostly either in-fighting over inconsequential issues or attending fruitless meetings. Work gets done in between all these activities, if time is available for any. If this wasteful behavior could be eliminated, productivity could increase by an order of magnitude or more.

You don’t see this type of dysfuctional behavior in small companies. Why? What happens when companies grow in size? What happens between the time when a bunch of smart and motivated people come together to form a new company and the time when the company grows to beyond a certain number (about 150, according to popular research)? Why does this company then become a candidate for ridicule, typically?

Here’s what I think happens. The people who start the company are the ones with the real passion to create something bigger than themselves. So they do everything right. They also hire the right people and infuse them with similar passion. This chain-reaction continues for a short while. And at some point, this transferrence just isn’t effective anymore. After all, what is to *really* motivate someone who has worked at five other places before joining this company and has heard it all before? Metrics to measure “performance” are now needed where earlier, none were needed because doing the best one possibly could was the way of life. No performance metrics can really measure anything real and because of the reflexive interaction between workplaces and metrics, people simply adjust their work patterns to chalk up the right numbers for themselves. In any case, true enthusiasm is often lost.

Once the wrong (or at least sub-optimal) people start getting hired, pretty much all is lost. All the afflictions described above start flaring up. And the place of work becomes a game of chess and also a mockery of anything it is meant to be. And yes, Dilbert cartoons start getting pinned up on people’s walls.

Is there a solution? Many people have tried employee ownership through stock with varying amounts of success. It does work upto a point. And this point is much farther along the line than where the pure transferrence of passion stops working. So that makes it indeed a step forward. But after a point, it really just becomes a component of one’s salary – almost like a form of variable pay – because the amount it contributes to total compensation isn’t really all that much. And when this happens, it once again, stops being an effective motivator. In the end, the thinking becomes: one person’s effort can not really make all that much difference to the share price, and it just isn’t worth busting ones ass beyond “regular” work (or more likely, non-work) – just do enough to not get fired.

I’m not saying stock as a component of compensation is bad, but merely that although employee ownership is a neccessary condition for higher quality, it is by no means a sufficient condition. Neccessary but not sufficient.

What are the other aspects of things needed? In the end, the employee needs to belong. This is probably not valid for the merely mercenary type of employees – for them, money alone is the motivator – and that is either easily taken care of or not. For those who want to be a part of something greater than themselves (and are not the enterpreuner types themselves), the only effective way to get them onboard the real-value train is empowerment.

Empowerment means ownership of a different kind. It means ownership of ideas, work-products and initiatives. It means being recognized for doing successful things and for being able to do what they think of to make things better. This is the only kind of employee ownership that truly works at the grass-roots level. I say this from experience at various clients – places that understood this had a much larger percentage of non-pointy-haired-bosses-type folks. After all, people are not born sub-optimal, they merely adapt to their enviroment and do what works best for the situation. In the end, the answer is to create an environment where the best thing to do everyday is simply the right thing.

My two cents on what motivates employees.

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