The Pitfalls of Incentive Pay

Motivation is key in any organization and its needed across all areas of the organization. The more important question is how to motivate employees. Many firms do this through systems of incentive based pay either through bonuses based on performance metrics and or profit related pay. However, a recent study published in the Harvard Business Review seems to suggest that incentive based pay comes with a lot of baggage.

These motivational tools have been seen to affect motivation negatively as they can promote contentious behaviour amongst employees and increased complaints over overtime and stress. These are outcomes that no organization desires and through the study it is clear that these payment motivators are not as effective as people make out them to be. Incentive based payment methods often lead to people chasing results which only comes in useful for certain jobs, these may include sales workers. However, these schemes may not be effective in other scenarios.

I personally believe that these schemes are not the way forward towards intrinsic motivation of employees which I think should be the desired outcome of any organization. Any motivational tool solely based on extrinsic factors will lead some level of dissatisfaction because people will never be satisfied with the stuff they get. For an organization to sustain long term sustainability and motivation of its employees they need to provide employees with intrinsic motivators by giving them a purpose to look up to and to provide an environment that caters towards that purpose. Motivated employees should not give up their jobs even though they might get better extrinsic rewards elsewhere. The only way to achieve that is to obtain loyalty and trust with your employees. An example of this would be Apple, I have spoken to so many apple employees and I ask them will you move to Microsoft if I offer you better pay and perks and the answer I always get is why should I, I am perfectly happy here. The reason for this is because Apple hires employees who believe in their purpose, breaking the status quo of industries.

Therefore, I do not advocate for incentive based pay as a motivational tool as I personally think it will not lead to long term sustainability and motivation of employees as those I believe can only be achieved through intrinsic motivation tools.

Article Link: – https://hbr.org/2017/03/research-how-incentive-pay-affects-employee-engagement-satisfaction-and-trust

Picture: – From the article

Word Count: – 377

The Realization and Reduction of Power and Politics Within Organizations

Power and politics are within most large organizations and can be useful towards the sustainability of an organization however, only when used effectively. Leadership plays a key role in the realm of power and politics and great leaders recognize their power however do not allow politics and ego to affect their decision making. A recent article posted on Forbes written by Roger Trapp discusses how two leaders realized this important realization the hard way. In fact one of them, Brandon Black the CEO of Encore Capital who took the reigns when the company was facing a crisis and was tasked to turnaround the situation looks back on his experience towards his realization.

Black recalls that when he took over the organizational executive leadership went into extreme conflict with one another and ego was playing a big role towards the conflict. Things got so bad that the team was not just fighting on issues of the organization however, were personally attacking each other. Black got so sick and tired of the fighting and the team loosing their focus and unable to get out of the storming phase that he decided to go to the begin, the norming stage by organizing leadership seminars to resolve the conflict. However, he soon realized that this was ineffective and organization’s crisis was worsening. He kept scratching his head on how to make the team work together and through that he came to the important realization “when you see everybody else as the problem maybe its you who has the problem” This is when he realized that maybe its his own ego that is causing the problem.

Through this he realized the evil of ego and he decided to try and fix this problem by changing the way he leads the team. To do this he decided to work on his ego and to try and accept responsibility instead of blame others to maintain his ego and status to set an example to his team that acceptance and moving on towards fixing the crisis is the only way towards the turnarounds success. This eventually worked with his team coming back on track and getting out of the storming stage and onto to the performing stage and the turnaround was successful.

In my opinion, I think this is a powerful lesson that all leaders can learn from. Power and politics do not limit an organization success however when ego takes over and power is miss used then the consequences can be devastating. I truly believe that great leaders acknowledge their power however, when they exert it they do so without their own ego getting in the way and only use it when thinking of the organizations long term sustainability. As the article ends, ” Working on yourself is the highest act of leadership” showing that when leaders acknowledge their power and their mistakes they will lead an organization towards success and sustainability.

Article Link: – https://www.forbes.com/sites/rogertrapp/2017/03/27/why-your-organization-needs-you-to-check-your-ego-at-the-door/#7b187b161bb6

Picture:  – Taken from the Article

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Organizational Culture and Leadership

A recent Forbes article discusses how improved organizational structure is linked to values based leadership. The article discusses recent studies that suggest almost all organizational culture shifts or changes fail however, the ones that succeed are those where the leaders of the organizations stay true to the values of the organization and seek not to compromise them while undergoing the change. I find this interesting because I believe that the organizational culture of organization is one of the most important part towards that companies success.

Throughout the article, the author uses his military background as a former navy SEAL in the United States Military as an example of an organization that went through rapid change over four wars but what kept them at the best of their capabilities was the SEALs ethos. He states as a navy SEAL he was clear on the purpose, what and who the organization is and the people that are in it. I found this interesting because when I think of the military i think of an organization that only ares about results considering the life and death nature of their work. However, here the author suggests that the reason for the unparalleled success of the SEAL corp was because their ethos was so clearly defined.

I found this extreamly compelling as I personally believe the bedrock towards an organization succeeding or failing heavily depends on the environment the organization’s leadership provides because thats what drives trust and loyalty amongst the members of the organization. With trust and loyalty people will give blood sweat and tears towards the organizations success without expecting anything in return meaning they are solely doing this from intrinsic motivators. This is the reason I believe that only 1 navy seal has been killed in the line of duty since the founding of the organization, its because these men and women have such trust and loyalty towards each other and the people they serve. Therefore, values based leadership in my opinion is extreamly powerful towards providing the right environment for an organization and in my opinion if leaders provide the right environment the results will follow as demonstrated by  the track record of the navy SEALs.

Finally the reason why I advocate for this is because when you take care of people majority of them will reciprocate the gesture in return when an organization goes through a rough patch and when organizations can develop that level of loyalty they will see long term success and sustainability of that success. Another, great organization that achieved this was South West Airlines who was the only airline to not make losses after the horrific 9/11 attacks because they took care of their customers through providing the right environment and the customers took care of them during hardship. Therefore, I think values based leadership is a style of leadership that is extreamly underrated but has some powerful implications when it comes to the long term sustainability of an organization.

Article Link: – https://www.forbes.com/sites/brentgleeson/2017/03/10/how-values-based-leadership-transforms-organizational-cultures/#d6aa09a1fbd6

Picture from the article.

Word Count: 500

 

The Unexpected Downfall of Companies

Communication is key towards the success of any organization venture or project that requires a team or multiple teams. However, getting communication ‘right’ can be extreamly difficult and it has lead to the downfall of many large organizations. An article in the Harvard Business Review called The Silent Killer of Big Companies identifies five large organizations in five different industries that failed because of ineffective communication. For example, the article uses Nokia to show how their downfall in the phone industry was mainly caused because communications of ideas was restricted by management meaning new ideas such as the development of the smartphone were left in imagination and never made into tangible ideas.

The article explains that the downfall of Nokia and the other five companies were not because they had ineffective financial management or product management or operational management nor marketing management but because the leaders of Nokia failed to embrace new ideas and shut of any communication and dialogue concerning new ideas. This relates to selective perception as the leaders were only hearing ideas that catered for their needs and ideas.

Additionally, a major problem that lead to ineffective communication within these five companies were that their direction of communication was downward meaning that ideas from the boss and executives would flow down the chain of command in the company. However, a company like Apple who uses a upward direction of communication in that the leaders allow the flow of ideas to also come from their employees made the idea of a smartphone into reality.

The article goes on to make a point that leaders that effectively manage the flow of ideas build communications methods to build trust in their employees through promoting dialogue instead of  monologue. The leaders who best do this is by building their communication through the values of the company and they align their communication with the organizations strategy.

In my opinion, I think there are multiple layers in effective communication and its not just on building communication channels that allow for dialogue. Building of trust is the most important aspect of effective communication. Building transparency through a value driven approach will automatically make employees and co workers feel like they can implement and share ideas and that the rest of the organization will respect their ideas. An example of this is allowing a mid level employee to head a branch that is in his neighborhood as he has extensive understanding of the behaviour of that area rather then giving it to a senior level job. The management should trust that he or she can effectively run the branch but that only comes when the organization is driven by values and the senior management understand the reasoning of using the mid level employee as they understand the common goal of the organization. In my opinion companies where leadership work on building norms and practices that adhere to their values and use that as the framework to build a communication strategy are the ones that build trust and allow for the effective flow of ideas and information.

Article Link: – https://hbr.org/2012/10/the-silent-killer-of-big-companies

 

Picture Link: – http://aib.edu.au/blog/5-steps-towards-effective-communication/

 

 

Moral Licensing Effect

According to a study published in the Harvard Business Review called “Pushing Employee’s to go the Extra Mile can be Counterproductive”  suggests that moral licensing through pushing employees to far can cause counterproductive behaviour in an organization. The research team conducted two studies, one in China where they surveyed a range of organizations who were persuading their employees to go above and beyond their requirements and one in the US where they surveyed organizations that were externally motivating their employees to go the extra mile.

The study in China revealed that initially pushing employees to go beyond their requirements lead to behaviour of ‘good citizenship’. However, in the long run it led to irregular behaviour where workers were making fun of their team workers or co workers and taking office equipment without permission. The study in the US showed that the effect of pushing employees the extra mile led to deviant behaviour inside and outside work such as cursing at a stranger or at a co worker.

The researchers believe the theory of ‘moral licensing’ can explain these rather counterintuitive outcomes in behaviour. The theory suggests that doing something good gives us a license to do bad things later. It’s like having a bank account where good acts build up credit that can be used when a bad act in committed to convince that we balanced the equation and we are still good people. In both studies observations of employees who were motivated by extrinsic factors led them to develop a phycological entitlement by going the extra mile. This entitlement acts like the moral license to engage in deviant behavior,  basically “Compliance leads to Deviance”.

The researchers believe to avoid the negative effects of moral licensing is to create an organizational environment that values and pushes for intrinsic behavior of good citizenship. In my opinion I think intrinsic motivation is more effective at motivating your employees because  if people want to do work instead of have to it will lead to trust being formed within the organization and would yield more productivity. I also believe that majority of leaders understand it but the reason why extrinsic factors are appealing are because of the short term gain in productivity and its implementation is much easier. Organizations who have been sustainable over the long run are those who have built trust amongst their employees and motivating people to work through intrinsic motivation. This build employee loyalty and leads to the person wanting to work because they want to not because they have to increasing productivity.

Article Link: – https://hbr.org/2016/09/pushing-employees-to-go-the-extra-mile-can-be-counterproductive

Picture comes from the article.

Simon Sinek’s Take on ‘How Leaders Inspire Actions’

Leadership is extremely important in business and the world in general. When I think of  leadership direction, guidance and visionary are the words that come to my mind however, Simon Sinek a author, motivational speaker and marketing consultant has a very unique and simple perspective on how leaders inspire actions. He uses his golden circle theory to explain how leaders who inspire start with the question why rather than what. He talks about how inspirational leaders from Dr. Martin Luther King Junior, Apple and the Wright Brothers act, behave and think completely oppositely to others and that there is a pattern to their behaviour. Before going further I recommend you watch his Ted TalkWhen I first watched his Ted Talk it reminded me on our first exercise as a group in defining a good leader where we picked characteristics that we best thought defines a good leader. Simon Sinek seems to have a much simpler approach in identifying good leaders that inspire actions.

 His model explain’s that inspirational leaders always ask the question why they are about to undertake an action and then develop the how they are going to do it and that leads to the what. He uses Dr. King really well as an example to explain how the leader managed to get 200,000 people to come to his speech without one flyer/poster and with no effort to get people to know he was speaking. He said that Martin Luther King went around and said what he believed in and by doing that people who believed in what he said took his cause to be their own. He then went on to explain that none of the people showed up for the leader but for themselves because it was fundamentally what they believed in. Mr Sinek believes that leaders who start with the why and go down to their beliefs and reasoning to doing something are those who inspire action, “people buy why you do it not what you do”. It is nothing to do with being visionary or ‘Machiavellian’ but about understanding why you are doing something and preaching that and followers who in return will give their blood sweat and tears and results will automatically be achieved. 

Personally I resonated with this as leaders are not responsible for the result but for creating the right environment for their followers to get that result. Most leaders forget this and it what leads to non action by followers. Take education as an example, Leaders in education are more focused on results and performance of their students that they are creating an environment where students only go to schools to get results and not to learn. If the leaders in education begin to change their perspective and focus on providing an environment that stimulates the desire for a child to learn for the sake of learning instead of results students will naturally become more engaged in class. This is because they have an intrinsic appreciation for what they are learning through seeing the benefit of learning beyond the result. This is true not only for education but for any leader that wants people to be highly engaged within their organizations.

 

Picture Links: –

http://coachingforleaders.com/podcast/223/

http://coachingforleaders.com/podcast/223/

 

Ted Talk Link:

 

 

 

 

 

The Rise of Low Cost Airlines in Africa

Over the recent few years the African middle class has been growing rapidly increasing the demand for low cost air travel across the continent giving rise to low cost carriers (LCC). In Angela Zhou’s blog she talks ab1out a Canadian LCC called JetLines and on it’s direct sales business model meaning their strategy is simple. One type of aircraft, one type of class and multiple hubs which is the hallmark of the LCC model as it provides convenience without all the ‘bells and whistles’ other carriers provide saving costs enabling them to charge lower fares. Another UBC blogger, Ferdinand Billard talks about how Air France and KLM are launching their own LCC as currently they are unable to compete with EasyJet and Ryanair. How does this link to Africa?

Currently in Africa the middle class is growing and demand for flights is increasing. However, airline fares are some of the highest in Africa and current carriers are unable to tap into the
growing middle class market, therefore, LCCs are becoming popular within Africa. This lin2ks to Ferdinand’s blog as he talks about how EasyJet and Ryanair took the growing middle class market in Europe away from the mainstream airlines like Air France and KLM and this is what is happening in Africa.

The model Angela Zhou talks about has been widely adopted by new LCCs such as FastJet and Mango Airlines in Africa. FastJet is a LCC established in 2012 based out of Dares-salaam, Tanzania. Mango Airlines is based out of Johannesburg, South Africa and operates in Botswana and South Africa. Both airlines have caused market disruptions by  lowering fares by almost 100%. FastJet broke Kenya Airways monopoly route between Dares-salaam, Tanzania and Nairobi, Kenya where tickets were about $300 -$500 and FastJet is charging between $50 – $150. This has doubled the amount of people flying between the two cities showing that FastJet is tapping into the middle class in both countries.

However, LCCs in Africa do face large challenges politically and economically which hinder their growth. The LCC model works best when the airline has multiple hubs across their network however, in Africa many governments are not giving permission to airlines like FastJet and Mango airlines to set up hubs within their countries in a effort to protect their national carriers. These issues have hit FastJets income statement negatively with them posting a loss in 2015 due to politics hindering their growth and disrupting their strategy.

In my opinion, LCCs will take over the African continent and tap into the middle class over time as in Africa dealing with politics always takes time but at some point the governments will realize the economic gains.

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Sources: –

http://centreforaviation.com/analysis/low-cost-airlines-start-to-penetrate-african-international-market-led-by-fastjet-134416

Jetlines: Canada’s Ultra-Low Fare Airline

Air France-KLM Taking Off Again?

 

http://www.fastjet.com/img/stand_alone_files/file/original/2015-fastjet-annual-report-web-96.pdf

 

Pictures From: –

http://www.fastjet.com/us/en/destinations

http://www.fastjet.com/tz/en/blog/live-blog-mbeya-launch-day

 

 

CSR: – The Importance of CSR in the 21st Century

red_blocks_corporate_social_responsibility1

Corporate Social Responsibility (CSR) is a form of self – regulation integrated into a business model. Over the last few years CSR has been put into the spotlight as a way to drive business forward rather then hold it back. The Forbes CSR Blog Post Six Reasons Companies Should Embrace CSR  the author James Epstein Reeves provides six key reasons why companies should embrace CSR as a way to grow their businesses. Epstein believes companies should embrace CSR because it increases the rate of innovation, it’s effective at cost saving, it provides brand differentiation, long term sustainability, customer engagement and employee engagement. Epstein does say at the end of his post these are the reasons why companies should embrace CSR however, in the real world companies have other reasons. This blog post provided me with ideal insight of CSR as Epstein brought out the benefits of CSR which directly impact companies. Therefore, companies should embrace it as not just way to give back to society and a burden on them however, as way to grow their businesses.

In the 21st century self sustainability is no more the the sole focus of companies as the world and society are demanding companies to develop approaches that are not just for the sustainability of their company however, of society as a whole. The role of CSR within a company is becoming a integral part of a business’s success and the companies that have coca_cola embraced it rather then taken it as a burden have showed that. For example Coca Cola have taken an approach to CSR as way to reduce costs through using cans that can be easily recyclable and reusing glass bottles. This saves costs as their packaging costs reduce from obtaining recycled aluminum cans and glass bottles to reuse them to package new product reducing the amount of new cans and bottles to be produced.

In my opinion, I agree with James Epstein Reeves that companies should begin to embrace CSR as a way to grow their businesses. Society is beginning to pressure companies to engage in CSR by not consuming goods and services from companies that are not socially responsible. Take the recent scandal with VW and them falsifying emissions, they began to loose sales and are now facing a crisis. Therefore, CSR should not be an after thought, however, a integral part of a business model in the 21st century.

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Picture Links: –

http://www.fahrenheit-212.com/coca-cola-freestyle/

http://www.jasteca.org/mr-ian-dias-abeysinghe-corporate-social-responsibility-csr-award/

Fintech Taking Over

fintech-1Financial technology (Fintech) is an economic industry composed of companies aimed at making financial services more efficient and is one of the most lucrative industries for startups as its catching momentum. Companies such as Borowell are becoming increasingly popular with consumers as they charge lower interest rates and there are fewer processing barriers compared with regular financial institutions.

If you go on Borrowell’s website their value proposition is  to “use technology to make financial services fast, fair and friendly. We believe that Canadians deserve more choice and more transparency when it comes to their personal finances.” From this they are targeting people rather then cooperations as they said personal finance and their points of difference are creating a fast, fair and friendly financial services through technology that is transparent. This is exactly what consumers want in this industry, a quick affordable way to obtain credit with transparency. Therefore, financial analysts have predicted that regular financial institutions will loose about 60% of their retail sales to fintech according to McKinsey and Company.

This new age of digital finance is going to rapidly change how people interact with their finances. However, I must add that Fintech was seen in Africa much earlier then in Europe and 6America. Countries such as Kenya Fintech is being used through services such as M-PESA and M-Shwari which are mobile based services that allow Kenyans to obtain credit/loans manage their finances and so fourth. Fintech in my opinion was developed in Kenya as a way to provide rural Kenyans access to such services. For more visit my post on M-PESA.

On another note, the conventional financial services sector should be vary of Fintech companies as people today are getting more connected and are looking for easy and affordable ways to obtain credit. I would urge banks to diversify their range of services and consider opening up services that are easier to connect to and that are application based. If I were a banking executive I would move away from universal interest rates and into personalized rates in conjunction with creating more accessible services. As a bank I would then market it is as being more secure and more reliable as they have more capital to maintain services as well as providing other services that Fintech firms can’t such as one on one  financial services. This is what conventional banks in Kenya are doing with some even partnering up with services such as M-PESA.

All in all, Fintech in my opinion is the way forward due to the convenience and affordability it provides consumers and many banks will struggle to stay a float if they do not get on this wave before it’s to late.

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Article Link: – http://www.canadianbusiness.com/innovation/the-new-connected-world-finance/

Pictures from: –

http://www.thedbagency.com/?clients/broadcast-production-projects/safaricom-m-shwari.php

http://leave.eu/en/media/2016-08-01/uk-fintech-funding-startups-raised-40m-in-july-showing-brexit-hasnt-killed-the-hot-sector

 

 

Mobile Banking In Kenya

lipa-na-m-pesa-blog

Paying for goods and services via mobile money in Kenya is easier then most places thanks to the country’s mobile money platform, M-PESA. Launched by Safaricom in 2007 the country’s leading mobile operator has around 25% of Kenya’s GDP circulating through the system. The system allows users to open up an account where they can deposit and withdraw money at one of safaricom’s 40,000 agents typically little kiosks and it allows Kenyan’s to transfer funds between accounts. In addition, this is done without the use of the internet instead it uses a mobile network. This is extremely beneficial to Kenya as in many parts of the country people have no access to internet. Furthermore, It allows Kenyans working in the cities to send funds  to their families living in rural areas. Therefore, M-PESA is the world’s leading mobile money platform which is allowing Kenyans to transfer, deposit and withdraw funds conveniently, securely and without the use of the internet.

Around the world there are so many mobile money platforms but none of them as successful as  M-PESA and you might wonder why. There are several reasons, firstly the cost of other methods of transferring funds electronically are more expensive than M-PESA and most of them require the internet. Moreover, Safaricom has a dominant market share in the telecoms market in Kenya where majority of Kenyans are using their network. Finally, Safaricom has has a successful marketing campaign in that they target men and women working in the cities as tell them this is a easy way to send money back to their families. Therefore, M-PESA’s value proposition is providing middle class working Kenyans an easy solution to keep money safe and transferable electronically to provide connivence and peace of mind.

In my opinion M-PESA has changed the way Kenyans interact with one another and has allowed middle class Kenyans to move funds around at ease as well as pay of their bills allowing them to focus on more productive activities stimulating economic growth. Furthermore, I think M-PESA would be beneficial for the government as it allows them to monitor who is paying taxes and keep track of incomes. There is also opportunity for other services to be developed in conjunction with M-PESA such as banking services to allow Kenyans to obtain small loans via the system. There are also projects that are being developed for the government allowing Kenyans to pay their taxes, bills for electricity and water which provides connivence to the people and the government. Therefore, I personally think that M-PESA has a value proposition that is centered around providing connivence for the Kenyan people which is what they want and is the reason why it is so successful.

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Article Link: – http://www.economist.com/blogs/economist-explains/2013/05/economist-explains-18

Picture from: – http://www.safaricom.co.ke/blog/2015/04/