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(originally published by Booz & Company)


It’s Not about the Money

To improve employee morale and productivity, increasing compensation may be precisely the wrong tack.

The chief operating officer (COO) of a leading international manufacturing company recently called me with a problem: He was under considerable stress because he was facing a union drive at one of his plants in Ohio. It was clear to him that employee dissatisfaction was high and that the union had made significant inroads. He wanted to know how much he had to increase pay and other benefits to make sure the union vote didn’t pass.

My colleagues at Core Practice Partners and I spent the following weeks researching the company’s labor practices and employee attitudes. The COO was right about one thing: The workers were unhappy, with 72 percent saying that conditions were getting worse on the job. But he was surprised to learn that 77 percent of the employees felt the current pay and benefits were perfectly fine. Increased compensation would not solve the problem. If salaries weren’t right, attrition would be a key indicator, but employees weren’t leaving or threatening to.

So what did the workers want?

Over the past 10 years, we’ve conducted an in-depth study into the attitudes of more than 100,000 shift workers at more than 150 companies around the world. Through face-to-face surveys taken during work hours, we sought primarily to gather information about what employees like and dislike about their work environment, the changes they hope to see, the health and safety issues they face, and how their work schedules affect their personal lives. Of all the thousands of pieces of data we collected, one stood out: Eighty-one percent of employees surveyed felt that their pay and benefits were adequate. In fact, when we determined what really affects productivity, compensation paled in comparison to good management–employee communications. In other words, although most companies try to inflate employees’ morale by shoveling more dollars at them, less expensive strategies will do.

Thus, when we looked into the problems at our client’s company, we were not surprised by our findings. Forty-seven percent of the employees surveyed were working more than 11 hours of overtime each week. At some companies, that can be an attractive aspect of the job, because it brings in extra income. But in this case, 56 percent said they were working more overtime than they wanted. And they were particularly negative about the extra time at the plant because, according to 62 percent of the workers, their schedules weren’t sufficiently predictable to permit them to know when they would need to work and when they would not. In an employee base populated primarily by single parents, workers were struggling both to maintain adequate child care and to find time to spend with their kids.

Based on this information, we were able to convince the COO to implement plans for more consistent schedules that met the needs of the employees, as well as the imperatives of flexibility and cost for the business. We rejiggered the traditional eight-hour, five-day workweek into 12-hour shifts over six days, and staggered employees among the shifts. In so doing, the COO could be certain of having enough people available to put in the extra time necessary to produce a new product that was in high demand. Fluctuations in volume could be handled by adding a Sunday shift, while still giving employees three days off each week. The employees, in turn, would know precisely when they would be putting in their 40 hours. In addition, the COO could offer those with special child-care concerns the option of volunteering for weekend shifts. Within months of implementing this policy, cost per unit and output per employee improved and absenteeism and labor costs dropped.

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  1. John Frehse, “Shift Worker Productivity Need Not Be an Oxymoron,” s+b Leading Ideas Online, 06/05/07: The causes of low productivity and why management teams lack the appropriate knowledge and skills to solve this problem.
  2. Timothy H. Monk and Simon Folkard, Making Shiftwork Tolerable (CRC Press, 1992): Examines the experiences of and problems encountered by shift workers.
  3. Tom Rankin, New Forms of Work Organization: The Challenge for North American Unions (University of Toronto Press, 1992): Details the changing world for unions, new compensation practices, and the difficult environment for shift workers in North America in the late 20th century.
  4. David Wainwright and Michael Calnan, Work Stress: The Making of a Modern Epidemic (Open University Press, 2002): Explores the unhealthy shift work environment and the psychology behind the epidemic of work stress among those with low-paying jobs.
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