The client was a nationwide insurance company and the darling of the industry in California. Over the years it had consistently received high ratings for service and price.
But recently they had fallen on hard times. For a couple of years before we joined them they had received the lowest possible score in customer service from a major performance rating agency and were on the brink of losing their position as an insurer of choice.
Their revenues were down by $1 billion, and they had just laid off 10% of their workforce, their very first layoffs in their 52 year history. Yet, in spite of all of this they were still paying out millions in annual bonuses.
The VP of HR brought us in to assess a) what changes needed to be made in order to raise employee performance, and b) since past attempts at making performance-based changes had always failed, what they needed to do to make sure that this time they would be successful.
The CEO generously offered to make the entire management team available to us, because, “They could tell us what we needed to know.” Truth is, often executives are the last to know what’s really going on, so we asked to do a more extensive assessment.
We interviewed the executives and conducted accelerated focus groups with middle managers and with employees. From this we determined what the pressing issues were including what impact bonuses and raises really had on productivity and how existing management styles impacted performance. We designed a survey that we administered company wide to measure these things, as well as the quality of communication companywide, and level of employee engagement and commitment.
We found that the employees liked working for the company: nice but no big deal. What was a big deal was the fact that the company was paying out millions in bonuses almost NONE of which was contributing to productivity. In fact, at times the bonuses and raises were actually demotivating the best employees! In addition, the company was spending money on gifts and awards that the majority of employees thought were silly and didn’t want.
But most importantly, we discovered that what lay hidden underneath the “liking“ that employees had for the company was a laid back feeling of entitlement, a result of the current system: they expected to get their raises and bonuses but didn’t want to put out to get them and really didn’t want to be responsible for their results.
As a result of this assessment, the company is completely revamping the way it rewards employees, tying bonuses and raises closely to performance, especially customer service linked performance. After less than one year, from last place, they have moved up to the twentieth percentile and are on track to their goal of the thirty fifth percentile by the publication of the next rating report.