45 A CARROT IS ALWAYS BETTER THAN A STICK

Adam Smith writes, ‘The experience of all ages and nations, I believe, demonstrates that the work done by slaves, though it appears to cost only their maintenance is in the end the dearest of any… Whatever work he does beyond what is sufficient can be squeezed out by violence only.’

DEFINING IDEA…

If the frontline people do count, you couldn’t prove it by examining the reward systems in most organisations.

~ KARLALBRECHT, ENTREPRENEUR

Sadly, slavery or ‘forced labour’ is still prevalent in modern society. In 1997, police in New York discovered what the pressed dubbed ‘The Jackson Heights Deaf-Mutes’, a network of sixty-four Mexican immigrants, mostly deaf-mute, forced to sell trinkets in the city’s subway system. The group, including children and pregnant women, was subjected to horrendous living conditions and frequent abuse. Like so many, these modern-day slaves were lured to their doom by the promise of well-paid jobs and good conditions.

According to US government estimates, between 700,000 and two million women and children are sucked into slavery every year around the world. In the US, forced labour exists in low-wage sectors without regulation, such as prostitution and sex services, domestic service, agriculture, sweatshop/ factory and restaurant and hotel work. But this is not just a US problem, nor is it limited to women and children. Truly modern-day slavery, especially sex slavery of women and children, is a devastating example of how capitalism without ethics is pure evil.

In business, too, there are still throwbacks from a dominated workforce that Smith believes counter-productive to progress. He warns that ego can be bad for business, ‘The pride of man makes him love to domineer, and nothing mortifies him so much as to be obliged to condescend to persuade his inferiors.’ While this remains the norm in business, things are changing. Progressive management understands the economic and social benefits to be achieved from encouraging with a carrot rather than beating with a stick.

There can be no better example of progressive management than Ricardo Semler, head of Semco, a Brazilian business renowned for its radical industrial democracy and corporate re-engineering. To start with, Semler has, ‘an added 30% faith in human nature’, which translates to an extraordinary working environment. He trusts his people and encourages them to pursue their own personal goals ahead of their corporate goals.

Semler recognises that if you treat your staff like adults and give them the opportunity to seek personal satisfaction and challenge, the contribution they make to the business is far superior to any you might demand of them. It’s a brave environment that has yielded a 900% growth in ten years, with the number of employees increasing from a few hundred to over 3,000, with a miniscule turnover of less than 2%.

As Smith reminds us, ‘Avarice and injustice are always short-sighted.’

HERE’S AN IDEA FOR YOU…

If you want something to be done really well in your business, reward it. Consider how you might share some of the profit with staff as an incentive toward better performance by rewarding innovations and new ideas on how to improve efficiency. Most people want to be recognised and rewarded for good performance and if others can see that reward, the performance of the entire operation is likely to improve.