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250 PART 4: THE LEADER AS A RELATIONSHIP BUILDER

Employee ownership
Employee ownership Employee ownership occurs on two levels. First, empowerment can result in a
giving employees real and
giving employees real and psychological commitment to the mission of an organization, whereby members
psychological ownership in the
psychological ownership in the
organization; as owners, people
organization; as owners, people act as “owners” rather than employees. Second, by owning stock in the companies
are motivated to give their best
are motivated to give their best for which they work, individuals are motivated to give their best performances.
performance
performance Hot Dog on a Stick is wholly owned by its 1,300 employees, 85 percent of whom
are women and 92 percent of whom are under the age of 25. “They schedule their

locations, order the food, look at the profit-and-loss statements,” says CEO Fredrica
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Thode. “It’s like being CEO of their own store.” Giving all employees ownership
is a powerful way to motivate people to work for the good of the entire company.
Employee ownership also signals that leaders acknowledge each person’s role in
reaching corporate goals. Employee ownership programs are usually supported by
open book management, which enables all employees to see and understand how the

company is doing financially and how their actions contribute to the bottom line.
Gainsharing
Gainsharing Gainsharing is another approach that motivates people to work together
motivational approach that rather than focus on individual achievements and rewards. Gainsharing refers
motivational approach that
encourages people to work
encourages people to work
together rather than focus on
together rather than focus on to an employee involvement program that ties additional pay to improvements
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individual achievements and
individual achievements and in total employee performance. Employees are asked to actively search for
rewards; ties additional pay ways to make process improvements, with any resulting fi nancial gains divided
rewards; ties additional pay
to improvements in overall
to improvements in overall
employee performance
employee performance among employees. One example is a gainsharing program at Meritor. Since it
rewards employees for improvements in their own unit as well as companywide,
the program has proven to be a powerful incentive for teamwork. 80
Pay for knowledge
Pay for knowledge Pay for knowledge programs base an employee’s salary on the number of task skills
programs that base an
programs that base an he or she possesses. If employees increase their skills, they get paid more. A work-
employee’
employee’s pay on the number of
s pay on the number of

skills he or she possesses force in which individuals skillfully perform numerous tasks is more flexible and ef-
skills he or she possesses

ficient. At BHP Copper Metals, for example, leaders devised a pay-for-skills program
that supported the move to teamwork. Employees can rotate through various jobs to
build their skills and earn a higher pay rate. Rates range from entry-level workers
to lead operators. Lead operators are those who have demonstrated a mastery of
skills, the ability to teach and lead others, and effective self-directed behavior. 81
Pay for performance Pay for performance, which links at least a portion of employees’ monetary re-
Pay for performance

a program that links at least
a program that links at least wards to results or accomplishments, is a significant trend in today’s organiza-
a portion of employees’
a portion of employees’ tions. Gainsharing is one type of pay for performance. Other examples include
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monetary rewards to results or
monetary rewards to results or

accomplishments
accomplishments profit sharing, bonuses, and merit pay. In addition to the potential for greater
income, pay for performance can give employees a greater sense of control over
the outcome of their efforts. At Semco, described earlier, employees choose how
they are paid based on 11 compensation options, which can be combined in vari-
ous ways. Exhibit 8.8 lists Semco’s 11 ways to pay. Semco leaders indicate that the

flexible pay plan encourages innovation and risk-taking and motivates people to
perform in the best interest of the company as well as themselves.
Job enrichment
Job enrichment Job enrichment incorporates high-level motivators into the work, including job re-
a motivational approach
a motivational approach sponsibility, recognition, and opportunities for growth, learning, and achievement. In
that incorporates high-level
that incorporates high-level
motivators into the work,
motivators into the work, an enriched job, the employee controls resources needed to perform well and makes

including job responsibility,
including job responsibility, decisions on how to do the work. One way to enrich an oversimplified job is to en-
recognition, and opportunities
recognition, and opportunities large it, that is, to extend the responsibility to cover several tasks instead of only one.
for growth, learning, and
for growth, learning, and
achievement
achievement Leaders at Ralcorp’s cereal manufacturing plant in Sparks, Nevada, enriched
jobs by combining several packing positions into a single job and cross-training
employees to operate all of the packing line’s equipment. Employees were given
both the ability and the responsibility to perform all the various functions in their
department, not just a single task. In addition, line employees are responsible for
all screening and interviewing of new hires as well as training and advising one
another. They also manage the production flow to and from their upstream and

downstream partners—they understand the entire production process so they can