LEADING THOUGHTS

How effective are financial bonuses in motivating employees and reducing absenteeism? To find out, two Dutch researchers, Wolter H.J. Hassink (Utrecht School of Economics) and Pierre Koning (CPB Netherlands Bureau for Economic Policy Analysis), analyzed the effectiveness of a monthly lottery incentive system established by a large Dutch manufacturer to boost attendance.

This is how the lottery worked. At the beginning of each month, the firm identified workers who had taken no sick leave in the previous three months. From this group, seven winners were selected at random. Each lottery winner received a coupon gift with a value of 75 Euros, and their names were publicized company-wide. One other feature: winners were excluded from future lotteries.

The researchers looked at the personnel and absence records of 481 workers over the two years of the program. They found that, relative to the employees’ absence records before the lottery, the monthly incidence of sickness absence decreased by 4.3 percentage points in the lottery’s first seven months and by 1 percentage point in its subsequent seven months. These effects correspond to reductions in the rate of absence of 2.4 and 1.1 percentage points, respectively. In the period in which the lottery was held, the incidence and the rate of absence were 14.8 percent and 4.8 percent, respectively.

“We speculate that the impact on absence rates declined either because workers initially overestimated their odds of winning or because they eventually realized that they were going to win one of the future lotteries anyway,” they write.

Hassink and Koning also found that among workers who won the lottery, absence rates that had declined before they won rose afterward. “Indeed, the estimates suggest a post-win increase in absence.”

On balance, the lottery was beneficial for the firm although its impact tailed off dramatically after several months.

Do Financial Bonuses Reduce Employee Absenteeism? Evidence from a Lottery, by Wolter H.J. Hassink and Pierre Koning; Industrial and Labor Relations Review (Vol. 62, No. 3, April 2009)

Email me for a copy of this paper: Alan [at] AlanMorantz.com

photo credit: CarbonNYC

Leaders who excel over time utilize organizational networks in distinctive ways to compensate for weaknesses in formal structures, says Rob Cross (U of Virginia) and colleagues who have conducted network analyses at more than 100 organizations.

In Organizational Dynamics, Cross et al map out five principles that drive productive organizational networks.

1. Manage the centre
Cross finds that 3 to 5 percent of people in a network account for 20 to 35 percent of the “value-added ties” – collaborations that generate sales, efficiency gains, or key innovations. But these hubsters are often not managed or leveraged intelligently. The lesson for leaders: locate employees at the centre of networks and manage them well.

Specifically look for bottlenecks and hidden stars. For bottlenecks, figure out if they are central because of their position on the org chart or because of their expertise and leadership qualities. If they are central because of their roles, shift decision rights or responsibilities to others. If they are experts or born leaders, identify the strengths that the network is seeking from them and build these capabilities in others.

And hidden stars? “We have found that there is only a 25 to 40 percent overlap between the individuals classified as ‘top talent’ by the organization and those who are revealed in a network analysis to be critical enablers of others.” The researchers suggest acknowledging the contributions of hidden stars with promotions or increased pay.

2. Leverage the periphery
For maximum benefit, focus on two outlier groups: newcomers and high performers who have drifted. For new hires, create initial assignments and encourage behaviors that integrate people into existing networks rapidly. For underutilized high-performers, re-engagement has to be done on a case-by-case basis. “Roughly 30 percent of the employees considered as top talent – those on high performer lists or in the top 20 percent performance category – have migrated to the fringe of the network.”

3. Selectively bridge collaborative silos
The strength of the network idea at a unit level, writes Cross and colleagues, “is that it allows us to see more precisely how to connect not everybody – but only the four, five, or six junctures that can allow the organization to differentiate itself strategically.” To bridge the “white space” created by divisional boundaries, geography, or hierarchies, a network analysis can be commissioned to show unit heads how they are connected across regional and product groups.

4. Develop the ability to surge
Cross says “surging” happens when networks sense opportunities or problems in one pocket of a network and rapidly tap into the expertise of others in the network to coordinate an effective response. Cross: “As new opportunities arise, employees need to know who has relevant expertise that can be helpful; they need to have a sense of who knows what in the network.”

5. Minimize insularity
Effective networks do not stop at “city limits” but extend out to clients and sources of expertise. For example in professional services, Cross writes, understanding touch points with key customers is a critical network view.

How Effective Leaders Drive Results Through Networks, by Rob Cross, Amanda Cowen, Lisa Vertucci, and Robert J. Thomas; Organizational Dynamics, Vol. 38, No. 2, pp. 93–105, 2009

Email me for a copy of this paper: Alan [at] AlanMorantz.com

photo credit: edmittance

The answer to this provocative question, according to John Peters and Kate Snowden of Emerald Group Publishing, is “no, but. . .” Organizations still have a role to play as centres of learning but their role of “controlling and specifying a learning environment” is on its last legs.

Peters and Snowden write that the democratisation of information, from Google and blogs to wikis and YouTube, is an “irresistible tide.” On a personal level, we can easily call up information on any subject, “and can add our own voice, usually unmoderated, to the discussion, or start a brand-new discussion of our own.” In the organizational world, a company can buy an online collection of management research and own a  library of research similar to that found in a business school.

So in this information-saturated environment, what can organizations add of learning value? The authors suggest two things: action learning and critical thinking. Action learning is essentially “learning by doing” and then reflecting on successes and failures, either with the support of other learners or a coach. Critical thinking is a particularly vital skill these days because it enables people to be more discerning about the information they consume.

“Both of these, the latter especially, will help both individuals and organizations gain more from the increasing democratisation of information, and from the increasing informality of learning.”

Video killed the radio star, but has Google killed the learning organization?, by John Peters and Kate Snowden; The Learning Organization (Vol. 15 No. 6, 2008 pp. 449-453)

Email me for a copy of this paper: Alan [at] AlanMorantz.com

photo credit: swortman53