Incentive Interview: Contented Cows Moove Faster Co-authors Bill Catlette and Richard Hadden
June 09, 2008
By Andrea Doyle
In their book, Contented Cows Moove Faster, co-authors Bill Catlette (far left) and Richard Hadden (far right) describe companies that include Marriott, Southwest Airlines and Chick-fil-A as organizations that "get it." They are companies whose employees put extra "oomph!" in their work, the pair says. Unfortunately, the majority of today's companies don't "get it."
"The challenge is having the ability to see beyond the next quarterly report," explains Hadden. "We must have the philosophy that we are in business for the long term and that, although treating employees right may cost more in the short term, the return is going to be many times over."
As the country faces economic challenges, now seems a good time to be concerned about sustaining motivation in the workplace, according to the pair. When budgets get tight, incentives are generally the first to go—a big mistake, they say.
"The only way organizations are going to survive an uncertain economy is with the willing and enthusiastic support of a focused, fired-up and capably led workforce. The threat of losing one's job has lost a lot of its power. In general, workers are less loyal to their employers than in the past. Many already have entrepreneurial aspirations, and we've talked to many who are of the mind that 'if I lose my job, I'll go out and do my own thing, and compete favorably with my former employer,'" says Catlette.
There are many ways to get employees engaged, according to Catlette and Hadden. They include:
• Make sure people have what they need to do their best work.
• Train, train, train.
• Make sure the systems and policies work for, not against, the organization's mission.
• Recognize the need for people to balance their work and their personal lives.
• Show appreciation in small, routine, everyday ways, plus in more systematic, strategic ways, by having a system that provides clear targets and valuable rewards for hitting and exceeding those targets. Say thank you, something not enough leaders do.
• Recognize that when it comes to rewards, recognition and incentives, one size does not fit all. One size fits one. The more flexible and tailored an incentive program is, within reason, the more effect it will have on individuals' motivation.
• If, as a leader, you expect people to go above and beyond on behalf of the business, you must be willing to go above and beyond for them. Go out of your way, especially when people are having a hard time, individually or organizationally.
• Give clear, honest, helpful feedback.
• Be more visible and present.
Catlette and Hadden are big proponents of incentive rewards and programs. There is the potential for them to foster undesirable competition, but when managed well, they foster healthy competition and kick up performance, the two say. Misguided rewards are those that are not well-conceived, and that, in fact, result in behavior counter to what we want. For example, a zero-sum reward system that allows individuals to be rewarded only at the expense of a coworker's reward. Or a system that causes people to do things for their benefit, but which are detrimental to the organization, they say.
They believe the whole purpose of rewards and incentives is to motivate people to better perform, for the benefit of themselves, the organization, its customers and its owners. "It is not to emulate a socialist state that theoretically distributes resources evenly to all, without regard to contribution. We believe that the death knell for the rewards and incentives industry would be to cheapen the concept of incentives by, in effect, having a system that distributes recognition to everyone, whether or not they've distinguished themselves. When that happens, strong performers will ask what's the point of knocking myself out if everyone gets the same thing?" says Hadden.
If the recognition system unduly favors certain people, or groups of people, on the basis of irrelevant factors, and not on performance, then the system needs to be fixed to provide a level playing field. In the same way that strong performers will ask "what's the point?" if the system is faulty, then everyone will ask "what's the point if the system doesn't even provide the chance to earn recognition?"
Contented or Uncontented Cow
Speaking of contented cows, how can unhappy employees make customers happy? The two use the scenario of Southwest and Northwest Airlines.
Southwest employees are, say Hadden and Catlette, for the most part satisfied with their deal at work. As a result, they spend their energy taking care of their customers. Northwest Airlines employees, on the other hand, spend so much of their time grumbling about their deal that they have neither time, nor emotional energy, to satisfy customers.
And the respective financial statements of the two carriers tell the tale. Bad customer service happens because the employees who are expected to satisfy customers haven't satisfied their own needs first, and their managers haven't instilled in them that their work matters, say the pair.
Similar to the comparison of Southwest and Northwest, the two have several pairs of well-known publicly held corporations that contain a "Contented Cow" company and a "Common Cow" company. These companies were selected based on reputation and strategy. The "Contented Cows" have well-established reputations as being employers of choice. Many have been repeatedly featured as a "Best Company to Work For," by leading business journals. The Common Cow companies are not necessarily the worst companies to work for, but they have neither the reputation of being employers of choice nor any strategy that the pair found that recognizes the connection between people and profits.
In steel manufacturing, the contented cow is NUCOR, the common cow is U.S. Steel; financial services, Goldman Sachs vs. Lehman Brothers; food service, Starbucks vs. Wendy's; biotech and pharma, Genentech vs. Bristol-Myers Squibb; IT, Cisco Systems vs. Nortel, and automakers, Toyota vs. GM.
The "Contented Cows" outgrew, in terms of sales revenue, the "Common Cows" by about six to one. From 2001 to 2007, in aggregate, the "Contented" group earned $192 billion more in net profit than the second group. Its members had 20 times the net income per employee and created 17 times more wealth for their investors, according to Hadden.
The bottom line, they say, is that work is contractual, but effort and "oomph!" is personal. Successful incentive programs make the effort even more personal and loyalty even greater. And they create "oomph!"—nothing to "moo" about.
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