Compensation Cafe, September 3, 2010, Friday

Compensation Cafe

September 3, 2010, Friday

Compensation Cafe

The Value Gap

Bored at work The Cornell University Center for Advanced Human Resource Studies (CAHRS) recently published a research paper exploring the correlation between employee satisfaction and the bottom line.

It turns out there isn’t a direct correlation, which supports that assumption that making your employees happy for the sake of happiness won’t lead to profit.

There is, however, an indirect correlation between employee satisfaction and the bottom line that can be measured. Leaving out the more technical details, which are available in the report, it goes like this:

* Satisfied employees stick around longer.
* They gain valuable experience, meaning they can work a problem more effectively and provide better – not necessarily more enthusiastic, but more knowledgeable - customer service.
* Customer satisfaction tends to be higher when the workforce has sufficient experienced employees who don’t have a chip on their shoulder.
* Customers buy more and tell their friends.

It seems overly simplistic (and fairly obvious) but the point is, just keeping your experienced employees from hating you and leaving has a positive impact on the bottom line beyond the cost savings of not having to replace them.

Which is nice. But common sense dictates that satisfaction and retention alone aren’t enough to drive outrageous performance, which is needed if companies want to transition from the cost cutting strategies of the last year or so to creating value.

There’s a missing piece, which is passion. Or engagement, or drive, or commitment or whatever you want to call it.

Consider Jay, an experienced senior technical architect and father of four near the top of his pay range. He’s pretty satisfied where he is, albeit frustrated by office politics that prevent progress on what he feels are critical issues. Because his salary is high and two of his kids are nearly college age, he's not interested in offers to do something more interesting for less money. Of course, his tepid monetary satisfaction won’t stop him from accepting a more lucrative offer, but he’s not an immediate flight risk.

Wanda’s situation is slightly different. She used to earn more as a consultant but has three kids and appreciates the flexibility of her current job. She’s diligent and punctual but doesn't feel challenged. Still, despite bouts of boredom she’s satisfied with her work life balance and is also not an immediate flight risk.

Both Jay and Wanda are competent, conscientious and complacent – the 3 C’s of stagnation when taken together - but neither of them are passionate about their work. There are several signs:

* They aren’t shy about stating their opinions but they avoid conflict.
* They respond promptly and superficially to direct requests but don’t go out of their way to help others.
* They produce high quality output as a matter of course but don’t try to exceed their goals.
* They have friends at work but they don’t actively mentor or seek out new communities or information.
* They don’t complain about work but they also don’t rave about how great their company is.

Should we fault them for their lack of passion? Maybe. But if they work for a company where passion is neither encouraged nor rewarded, we can’t really blame them for going with the flow.

There's no dire scenario here. Both Jay and Wanda are satisfied enough to stay in their current jobs and their work has a positive impact on the bottom line. That's the good news.

The bad news is that there’s a sizable gap between the value they add today and the value they could add as thought leaders, mentors, evangelists.

That's the value gap and everyone's got one, although few companies try to bridge the gap by assessing people's skills and interests, encouraging their passion and helping them maximize their potential.

Great companies mind the gap.