Corporate Structure, Compliance and Compensation Plans Can Stifle Employee Engagement

by Michael Houlihan and Bonnie Harvey

Corporations today say they want a more entrepreneurial culture. Some of the top search terms coming out of the C-Suite are: entrepreneurial culture, employee engagement and employee empowerment. We have been asked to write a companion to our book, “The Barefoot Spirit,” which distills out the essentials necessary to create a positive, productive and growth-oriented culture in corporations. Our new book, “The Entrepreneurial Culture, 23 Ways to Engage and Empower Your People,” has been released. This book specifically targets corporations and provides them with tools that successful entrepreneurs use to engage and empower their people.

Many of these tools can be applied directly to the existing corporate structure. But all culture and all change starts from the top, and the top execs have to be willing to change in order for these tools to work their magic. Many C-Suiters are fearful of change. They feel that it might cause a “revolution” or result in legal challenges or run-away costs.
So, they stifle methods that can empower and engage employees that, in their minds, step on the three sacred corporate cows:

1. Corporate Structure: The basic structure of most corporations resembles a pyramid and is ipso facto top-down by its basic architecture and function. Within the pyramid are silos, which are mini-pyramids. Each mini-pyramid’s turf is fiercely defended from perceived infringements by the other mini-pyramids. This top-down, turf-war-prone structure can prevent the upward mobility of good ideas and interdepartmental cooperation necessary for real breakthroughs. How can employees be empowered and engaged if they think their boss will sit on their idea, change it or claim it as his or her own? How can employees come up with comprehensive solutions that involve changes to other departments if they are perceived as “off-limits?”
2. Compensation: Most corporations today pay a salary, which is basically paying for attendance — not necessarily production. Raises tend to be based on tenure rather than great ideas, sales or profits. This results in employees being viewed as “labor” and as a cost center to be reduced, not as an asset to be appreciated. If two or more employees are responsible for doing the same job, they get equal pay regardless of the imbalance in their production. This discourages employees from working harder or being more engaged. Why bother? It’s not going to make a difference in their paycheck or even in the appreciation and recognition they receive. Real producers tend to leave for better pay commensurate with their production. How can employees be truly engaged if their compensation plan discourages them?
3. Compliance: Corporate legal departments, in their well-meaning effort to mitigate liability, want “everything” to go through compliance. They look for reasons why things should not be done rather than ways in which things can be done. Of course, this takes a long time because when everything must go through compliance, it creates a backlog. Corporate employees know this and are discouraged from requesting approval for an idea or project. Legal doesn’t want to offer “safe” parameters inside of which ideas can flow without formal review since legal also gets paid by the hour. Some legal departments even recommend against any public written acknowledgement for a job well done for fear that it may be used against the employer in a wrongful termination dispute. Yet, public acknowledgement engages employees by validating their productive behavior, increasing respect from their colleagues and demonstrating to others what garners appreciation.

Tune in next time to see how we recommend corporations achieve an entrepreneurial culture by removing the fear and introducing some wild Mustangs!

Hear more from Michael and Bonnie in their Bizcast interview on C-Suite Radio.

Michael Houlihan and Bonnie Harvey are the founders of Barefoot Wine, the largest bottled wine brand in the world, and authors of the New York  Times Bestselling Business book The Barefoot Spirit. From the start, with virtually no money and no wine industry experience, they employed innovative strategies to overcome obstacles, create new markets and foster key alliances. Michael and Bonnie now share their experience and entrepreneurial approach to business as consultants, authors, speakers, and workshop leaders. Michael and Bonnie are launching at the C-Suite Network Conference their new companion book to The Barefoot Spirit entitled, The Entrepreneurial Culture, 23 Ways to Engage and Empower Your People. Learn more at barefootspirit.com, and find them on Facebook and Twitter @barefoot_spirit.