Productive workers need more than money

The Economy

June 24, 1996|By Jay Hancock

LEVI STRAUSS & Co.'s new employee bonus plan seems a salve for the sores of a downsized economy.

This month Levi promised an extra year's pay to each of its 37,500 employees if the company hits its profit targets by November 2001. The scheme could cost the jeans maker $750 million, and 2,000 Levi Strauss workers cheered its announcement outside the company's San Francisco headquarters.

"Motivated employees are our source of innovation and competitive advantage," Chairman Robert D. Haas told the crowd. "By acknowledging and rewarding their efforts, we not only demonstrate our appreciation but also encourage them to continue striving for new standards of excellence."

What could make more sense? Levi has gone through disruptive change, altering its corporate structure, cutting costs, "re-engineering" processes and making workers reapply for jobs that didn't exist before.

By dangling what some are calling the biggest corporate-incentive carrot ever, Levi Strauss is saying to its help: "Yes, times have changed. Yes, it's a brutal global economy. We have to cut costs. You must work harder and better. But, if the company is successful, we'll generously divide the rewards with you."

Labor Secretary Robert B. Reich said in a written statement that Levi Strauss' plan "appears to be a shot in the arm for corporate responsibility. Today's winning companies stand by their employees in good times and bad, and they share gains with those in the boardroom and on the factory floor."

Managers and workers. Pulling together. For the good of the team.

So how come management experts are so skeptical about profit-sharing and performance incentives? Richard Barker, chairman of the management department at Marist College in Poughkeepsie, N.Y., believes that the people who design incentive plans aren't sufficiently up on their corporate anthropology.

Money, he says, especially extra money, is a relatively minor force in employee behavior and is often overwhelmed by standard-issue workplace fear and loathing.

"Most workers don't really trust the managers to begin with, particularly in large organizations," Barker said. "They look at every incentive program with some skepticism. Some will accept it. Some will believe that it's a mind-control plot and reject it out of principle. Some will remain on the fence."

Surely middle managers, though, will embrace corporate goals as their own if bonus pay hangs in the balance. Right, Dr. Barker?

"Most managers aren't really interested in organizational objectives, either," he said. "They're just interested in making their own numbers and associating themselves with success and dissociating themselves with failure. That's how they get themselves promoted."

I talked with half a dozen compensation consultants, industrial psychologists and management professors, and they all expressed reservations about bonus plans and "gain-sharing" among lower- and mid-level workers.

"They are highly overrated," said Robert Pritchard, a psychology professor at Texas A&M who specializes in workplace motivation and productivity. "They are extremely complex to do well. And it is impossible -- impossible -- to put together one that is perceived as fair."

In Levi's plan, he said, "I can guarantee that there will be some people who say, 'This just wasn't fair. I didn't get enough.' "

What most workers want from their job isn't necessarily more money, psychologists say. They want respect. Security. Ability to make decisions and control their lives.

"Making money is important to people, but it certainly isn't the only thing, by a long shot," said Kathryn M. Bartol, professor of human resources at the University of Maryland College of Business and Management. "It almost gets too much attention."

In that light, financial bonus plans aren't a bad idea, but they have to be offered as part of a bigger package.

"If you still think of your people as disposable slabs of beef, paying them more ain't going to change much," said Steven Stanton, of Hammer and Co., a Cambridge, Mass., business consultancy.

"There's this huge lie out there where organizations say, 'People are our most important asset,' and that's not true. They see people as variable costs."

There's also what compensation consultants call the "line of sight" problem. You have to believe that your personal contribution can help or hinder in reaching the bonus goals. If you don't, you're not likely to change your behavior. At Levi Strauss, the line of sight from one of 37,500 workers to the profits five years from now is long indeed.

Stanton recommends a layered incentive system for lower- and mid-level workers, with some targets set up for small departments, some for business units and some for the corporation.

Fine, says Barker. But don't forget the basics, either. Respect for employees. Good working conditions. Competent bosses.

"When people see idiotic decisions being made all over," Barker said, "they don't feel like they can reach some sort of incentive goal."

Pub Date: 6/24/96

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