According to Gallup and other employee engagement polls, only 13% of the global workforce is truly engaged and happy at work.
Why? Because I believe most traditional management practice is based on two false assumptions:
- All employees must be given tough stretch goals and managed closely so to achieve them
- If left to their own devices, employees will do no more than the minimum and productivity will nosedive.
The problem with these assumptions is that they ignore a universal law of nature – the 80:20 rule, or the Pareto Principle.
In 1906, Vilfredo Pareto, an Italian economist and sociologist, observed that 80% of land and 80% of wealth in Italy was owned by 20% of the population. He also noticed that 20% of the pods in his garden produced 80% of the peas. When he looked around, he found the same thing everywhere. Subsequently the 80:20 rule was found to be applicable in almost every sphere of life, including sales, customer service and manufacturing defects. The 80:20 principle has stood the test of time.
When it comes to human performance, a refinement of the Pareto Principle is the 20:60:20 rule. This says that in any group, 20% will be high performers, 60% average, and 20% low performers. The top 20% will produce 80% of the results.Ironically , though, when setting goals and expectations with employees, management completely ignores this fact of life. It insists on assigning tough stretch goals to ALL employees, only to be disappointed at year end when despite close supervision only the top 20% of employees achieve them. Organizations do this year after year in the hope that employees will go above and beyond, but in vain. Einstein told us many years ago that doing the same thing over again and again and expecting a different result was the definition of insanity. Unfortunately, both Pareto and Einstein continue to be ignored, putting unnecessary pressure on both employees and managers.
For some people, work is their main purpose in life. They make work a priority and end up in the top 20%. Even if only minimum standards are set, they insist on going above and beyond. They consistently produce 80% of the results.
For others, work is important, but so is balancing other priorities. They typically end up in the average category. Suppose you’ve been performing at the top of your game for several years; but have just become a parent. You go to your manager and say: Boss, I’d like to take my foot off the pedal for the next year or two. Can I please perform at average level for now and undertake to step on it again when my kid grows up a bit? I totally understand that my compensation will take a hit in the meantime, and I’m fine with that.
Would this be an honest and reasonable conversation to have with one’s manager? Absolutely. Does it ever take place? Hardly.
For others again, work is just a means to pay the bills because their passion is elsewhere, like the performing arts. Imagine this conversation: Boss, I’ll be totally honest with you. I like this company, but this job is not my #1 priority. I am doing it to pay the bills. So please give me the bare minimum work that will allow me to keep my job. I understand that my compensation will be pegged at the minimum level, and I am fine with that. I also understand that if my performance drops below the minimum standard, I will be fired, and I am fine with that too.
Again, another honest conversation that almost never takes place. The fact is, like it or not, the 20:60:20 rule is here to stay. So, why not legitimize it?
The conventional argument against is that if we don’t motivate and manage employees to go the extra mile, most will not make the effort and the organization’s performance will suffer. I understand the concern, but the reality is the opposite. Whether we have stretch goals or not, the top 20% of employees will always go above and beyond. And as for the remaining 80%, if we replace the stigma of non-performance with an honest contract between manager and employee, they will be happier and less stressed at work – so overall productivity should go up, not down.
There is ample proof that this works. With freedom, both motivation and performance increase. For example, in a survey 78% of Uber drivers (full or part-time) said they were satisfied with their work, and 73% said they preferred a job where they were ‘their own boss,’ to 9 to 5 employment reporting to someone else. 78% is 65 points higher than the global engagement average. Clearly, despite recent bad press, Uber has learned the lesson of motivation and organizational performance, by enabling workers to work as much or as little as they want based on their own unique circumstances.
In contrast, New York Taxi drivers are given a universal daily revenue target – a practice designed to keep drivers on track, which in fact results in demotivation and reduced earnings rather than the reverse. The demand for taxis in NYC significantly increases on rainy days, yet the supply of decreases, particularly at night. This is because when it rains drivers achieve their daily targets more quickly, and since there is no incentive to work extra hours, they knock off when the target is met, irrespective of demand.
In short: to maximize both individual and organizational performance, and bump up employee engagement at the same time; instead of exercising more management control, give employees the freedom to do as little or as much as they want to. Let the 20:60:20 law take its course. To maximize performance, set them free.
About the author:
Rajeev Peshwaria is CEO, Iclif Leadership and Governance Centre
Kuala Lumpur, Kuala Lumpur, Malaysia
This article first appeared in the Drucker Forum Series on Linkedin Pulse