Organizations that want to capitalize on their competitive position or improve their performance must consider the best way to take full advantage of the potential inherent in their people. These authors describe the Four Pillar Model™, which provides an innovative, well-grounded process for measuring and managing worker performance and involvement.
Almost 40 per cent of all operating expenses incurred by Canadian organizations involve people. In fact, the huge costs of payroll, benefits and training make people costs the single largest expense category for most employers. Although several methods exist that allow companies to measure and manage other assets, such as physical and financial capital, the same cannot be said about human capital. Without these tools, a company’s leaders may not get the best return on investment from their employees.
Traditionally, organizations measured their investment in people through employee satisfaction surveys and HR metrics such as absenteeism and turnover. Unfortunately, these are “lag indicators” for measuring the heath of a workforce. In other words, if employee satisfaction is already low, the information obtained from the satisfaction survey or other metrics comes too late to be useful. In contrast, The Four Pillar Model™ described below helps organizations shift their focus toward lead indicators of their workforce, allowing them to identify concerns before they impact customers or financial performance.
Years of research have established that a satisfied workforce is not enough to drive performance, just as it does not increase individual productivity or corporate prosperity. ( M.T. Jaffaldano and P.M. Muchinsky, (1985), Job satisfaction and job performance: A metaanalysis,” Psychological Bulletin, vol. 97, pp. 251-273).
We can each think of examples of highly satisfied and engaged employees who contribute little to the success of the organization. The Four Pillar Model™ suggests that leaders must move beyond engagement to enable employees. By both engaging and enabling employees, organizations reach productive engagement and position their employees for success.
The four pillars
1. Alignment. In the context of the Four Pillar Model™, alignment is the extent to which employees know what they should be doing to make their organization successful. First and foremost, the business strategy must be effectively communicated to employees. Too often, executives rely exclusively on videos, staff newsletters and annual reports to communicate strategic information to employees. Those forums are valuable, but aligning employees around the strategy also requires face-to-face communication by mid-level and front-line managers. The reason that managers play such an important role in this kind of communication is that strategy must be translated into role clarity. Employees must understand exactly what they are to do when they walk in the door that will make the business more successful. They have to be armed with the information they need to make wise decisions.
An example of the importance of alignment comes from research into innovation. A study of communication and team dynamics within 37 cross-functional new-product development teams showed that the more individual members communicated about business strategy with people outside the team, the more successful the product development outcomes, both on ratings of product quality and innovation process. (Liane Davey, 1999, unpublished doctoral dissertation). In subsequent focus groups, team members commented on the value of strategic information in guiding the types of decisions they make routinely throughout an 18- to 24-month development process.
2. Capability. Capability focuses on the ability of employees to do their jobs. Narrowly, this element pertains to the effectiveness of targeted, work-related training. From a broader perspective, capability encompasses the job-relevant competencies of employees. Capability in technical skills is enhanced through professional accreditation, multi-skilling and training in the use of technology. Soft-skill capability is enhanced by developing communication, coaching and managerial competencies.
Leadership ability is another component of capability. Effective leaders create a compelling vision for the future, marshal and allocate resources and, through their behaviours, set the tone for the entire organization. Organizations can enhance leadership capability through formal leadership training, informal mentoring and systematic succession planning.
3. Resources. Resources are the tools that employees need to do their jobs. The physical resources used by employees, such as equipment and machinery, are obvious. But resources such as furnishings and fixtures also make the working environment conducive to productivity. Workload represents the convergence of two other resources: time and people. When employees feel stressed due to excessive workloads brought about by too many demands, too little time and too few workers, the sense of engagement declines and both productivity and quality suffer. Finally, information is a critical resource, particularly in our knowledge economy. Access to technical, competitive and customer information contributes to quality work and informs decision making.
4. Motivation. Motivation is the desire component of productive engagement, the extent to which employees want to perform well. Effectively motivating employees requires attention to both intrinsic and extrinsic motivators. Intrinsic motivation is maximized in companies with powerful cultures when talented and committed employees strive to contribute to a strong company, to support their colleagues and enjoy the satisfaction of a job well done. One of the most important ways to enhance intrinsic motivation is to ensure that there is a good fit of the between the employee, their organizational role and the organizational culture.
Extrinsic motivation takes many forms. Well-designed compensation can reinforce the behaviour of risk-tolerant people, but money only encourages the desired behaviours when there is a direct link between pay and performance. Accountability is another indispensable aspect of motivation. For accountability to take root, organizations must set clear expectations, measure performance and communicate consequences such as rewards and recognition for good performance and negative outcomes for poor performance. Negative consequences such as counselling and reprimands are effective in dealing with the behaviour of poor performers (e.g. laziness or low-quality work); in our experience, these same negative outcomes also motivate good performers because they see that their efforts are worthwhile.
Combining the Elements
Reaching productive engagement requires that an organization have all four pillars firmly in place. Consider the following example. A parent tells her teenage child to take out the garbage. The child knows what to do (alignment), knows how it to do it (capability), and has the tools to do it (the latest and greatest garbage pail on wheels). However, if the teenager doesn’t want to do it (motivation), the garbage doesn’t get 75 per cent of the way to the curb! In today’s knowledge economy, capable, motivated employees are often given the best resources, but they are not aligned with one another or with the business strategy. The result is akin to organizational entropy-employee work toward different goals and the energy of the company is diffused.
Using the Four Pillar Model™ to reach productive engagement
First, conduct an employee survey to collect employee perceptions of each pillar. A four pillars survey is different from a traditional employee satisfaction survey because it assesses whether employees know what to do, know how to do it, have the tools to do it, and want to do it. Satisfaction may be included, but it is measured as an outcome along with employee commitment and intention to stay with the organization.
Subjective measures such as the employee survey should then be validated using objective measures for each pillar. Objective measures tend to be unique in each organization, but some examples include: the number of employees who have participated in team strategy meetings or the percentage of job descriptions that have been revised to include links to strategy (measures of alignment); the percentage of employees who have received six sigma accreditation or the number of managers who have completed a managerial skills course (capability); the number of vacancies within various business units or the duration of computer network downtime (resources); and the response rates on employee surveys or the number of comments submitted in a suggestion box (motivation).
By measuring the four pillars, organizations may find deficits or challenges in one or more areas. There are many simple and effective approaches to strengthening the four pillars.
Addressing weakness in Alignment: A starting point in improving alignment is to better educate managers on how they can effectively communicate strategy to their employees (making links to employees’ roles and day-to-day tasks). A second and more comprehensive approach is to improve business literacy so that all employees have a clear picture of how the organization will be successful (i.e., how the organization makes money) and their specific role in contributing to that success.
Addressing weaknesses in Capability: The steps required to enhance capability depend on the specific areas that are lacking. In the case of technical skills, the most obvious solution is to provide employees with improved learning, that is, more specific, more relevant, more timely knowledge in the areas of knowledge transfer and application. In the case of soft skills, the solution might involve employee training or, alternatively, a longer-term approach based on experiential learning, supported by mentoring and coaching.
Addressing weaknesses in Resources: In many cases, organizations can readily resolve resource requirements once they are identified. Provision of tools, equipment and information can quickly help employees to be more productive. In other cases, inefficient processes or insufficient people are the true underlying causes of perceptions of resource deficiencies. In these cases, the solution may require more substantial investments such as process improvements, workforce planning or even job redesign.
Addressing weaknesses in Motivation: All too often, organizations try to solve motivational issues by linking performance to financial outcomes. Although this approach can be effective as part of an overall solution, relying solely on money as a motivator is costly and unsustainable over the long term. By adding other, non-monetary rewards such as recognition and developmental opportunities, and by focusing on intrinsic motivators such as an improved organizational culture, greater autonomy and respect for work-life balance, the organization maximizes employees’ desire to succeed.
Applying the Four Pillars
Management Training: With respect to building the four pillars, the most important group in an organization is the mid-level and front-line managers. They are responsible for ensuring that their employees are aligned, capable, motivated and equipped with the right resources. The first step in strengthening the four pillars is to make the model a part of management training.
Performance Management: An organization’s performance management system is a key tool for improving the four pillars, and a critical component of talent management strategies. At the start of the year, performance planning should focus on individual goals that will align with those of the team, department and organization. Performance plans should include an inventory of any resources or additional skills that employees require to achieve their goals, as well as the consequences of completing and failing to meet the goals. During the year, feedback conversations build accountability by providing an update on performance. Mid-year feedback should be used to ensure that additional resources can be brought to bear if required, and to ensure that talent management goals are still appropriate and aligned with business directions. At year-end, the focus should be on each person’s accountability for the past year’s results and on building capability for the next year. Performance management is one of the most comprehensive tools that organizations have for improving the four pillars.
Rewarding Development of the Four Pillars: To continue to motivate people to build alignment, capability, resources and motivation in the organization, it is important to reward them for successfully developing the pillars. At an organizational level, the creation of indices of the four pillars, as part of a Balanced Scorecard, is an excellent way of increasing their visibility; they can be used as part of the formula for a bonus distribution. Corporate-level indices should be translated into specific, measurable goals within the business units and departments. Furthermore, managers’ performance appraisals should assess the extent to which they have engaged and enabled their employees. Those who demonstrate improvements should be rewarded financially, or through recognition or promotion.
The Four Pillars in action
Organizations that use the Four Pillar Model™ have seen the difference it makes in how they think about their investment in people. MDS Inc. is a Canadian-based global health and life sciences company with more than 10,000 employees in 24 countries. MDS began using the four pillars three years ago as a way of measuring its success in building a high-performing culture in its rapidly growing company. At that time, MDS had recently acquired a number of businesses, including one acquisition that added 3,000 employees. This growth through acquisition meant that particular attention needed to be paid to integrating the new employees into MDS’s dynamic culture.
For Jim Reid, executive vice-president of Organization Dynamics at MDS, the Four Pillar Model™ was a way to expand the company’s focus beyond satisfaction by incorporating lead indicators of productivity. Through a global employee survey, MDS was able to gauge the extent to which employees were aligned, capable, motivated and equipped with the right resources. A combination of organization-wide and local action planning focused on improving challenges identified by employees. In just two years, scores on measures of the four pillars have increased significantly, with the concomitant outcome that commitment and satisfaction have also improved.
Niagara Credit Unit has gone even further than MDS in integrating the four pillars into their organization. As Ontario’s largest credit union, NCU has not only been measuring the four pillars but has made the model a part of the way it communicates with managers. Bob Hague, vice-president of Service and Sales for NCU, says “the Four Pillar Model™ has helped me communicate to branch managers what their role is. As leaders of the branch team, they are there to ensure employees know what they need to do, that they have the skills and tools they need, and that their team is motivated to succeed. The four pillars fit perfectly with our “Niagara Way to Lead” managerial leadership program and help to support our managers in the quest to align and engage employees. The four pillars help create an environment where our managers can build respect and trust.”
Organizations that want to capitalize on their competitive position or improve their performance must consider the best way to take full advantage of the potential inherent in their people. The Four Pillar Model™ provides an innovative and well-grounded process for measuring and managing worker performance and involvement. As many firms have already learned, financial success ultimately flows from employee success, and productive engagement is the key.