Here’s a fascinating Swiss study into the effects of raises and pay cuts. The result:

Wage cuts had a detrimental and persistent impact on productivity, reducing average output by more than 20 percent. An equivalent wage increase, however, did not result in any productivity gains.

The cool thing about this study, is that it was done with actual employees in a workplace – not in a lab.

Danish electronics retailer Fona is losing money so they just announced that all store employees must accept a 5-10% pay cut or face termination (Danish article via Google translate).

That’s a mistake and here’s why:

1. This is bound to make employees unhappy and frustrated leading to bad customer service and lower sales.
2. Those employees who can find a better job somewhere will do so. Fona will be left with only those who can’t get away.

Circuit City tried something very similar in the US a few years ago and saw exactly those two effects. And they went bankrupt a very short time later.

And if you’re in retail, staff is NOT the place to save money. A study found that:

… every dollar in additional payroll led to somewhere between four and twenty-eight dollars in new sales. Stores that were understaffed to begin with benefitted more, stores that were close to fully staffed benefitted less, but, in all cases, spending more on workers led to higher sales.

What could they do instead? Here’s a fantastic example: In 2000 computer chip maker Xilinx was facing massive financial problems and they introduced a pay cut that was progressive and voluntary. Read the whole story here – it’s a fascinating case of facing a serious crisis with creativity, instead of with layoffs.

I wrote about this in my 3rd book – you can read the whole story of Xilinx here.

I just want to make it very clear, that I’m not saying that Fona’s decision is “mean” or morally wrong. They are well within their legal rights as employers. I’m saying that it’s a bad business decision that will end up costing Fona much more money than it saves them.

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Companies waste huge amounts of time, money and energy on practices that pretty much everyone hates, not because these practices deliver any value but out of habit and because “everyone else does it.”

Here’s my list of the top 10 things companies should stop doing right now.

10: Competitive team building events
Californian home security company Alarm One Inc. had a team building event where winners poked fun at the losers, throwing pies at them, feeding them baby food, making them wear diapers and swatting their buttocks with rival companies’ yard signs.

The good news: Alarm One Inc. got swatted in court when an employee sued them and had to cough up USD 1.7 million.

The bad news: A lot of team building events borrow elements from this approach, setting up artificial (and often meaningless) contests pitting coworkers against each other. Let’s stop that kind of thing once and for all.

More: The top 5 reasons why most team building events are a waste of time.

9: Performance reviews
Performance reviews are fundamentally broken. Managers hate them and fear them and resent the drain on their time. Employees often leave reviews demotivated, cynical and with no clear idea of how well they’re doing and how to improve.

In the words of Sammy Culbert, professor of management at the UCLA Anderson School of Management in Los Angeles

To my way of thinking, a one-side-accountable, boss-administered review is little more than a dysfunctional pretense. It’s a negative to corporate performance, an obstacle to straight-talk relationships, and a prime cause of low morale at work. Even the mere knowledge that such an event will take place damages daily communications and teamwork.

More: Top 9 Reasons why Performance Reviews Don’t Work.

8: Job titles

When you ask people what they do for a living, most people will give you their job title. As in “I’m an engineer” or “I’m a project manager” or “I’m a developer”.

But that’s not what you do – that’s just your title. It really says nothing about you or your job, so I always find myself asking follow-up questions. “So what kind of projects do you manage?”

And make no mistake: A lot of energy is spent in organizations on trying to give people the right titles and fighting over who gets be X and who gets to be senior X. I think we’ll be fine without’em.

More: Death to Job Titles

7: Org charts
Seriously – when was the last time you needed your workplace’s org chart for anything?

6: Staff satisfaction surveys
I am thoroughly skeptical about job satisfaction surveys. Here is one reason why:

I’ve been with my current company for 9 years, and our “engagement score” just hit an all time high in a year when I have heard more employee concerns about the company than ever before.

Over the last five years, I have personally seen a combination of rewriting survey questions and “teaching to the test” that I believe solely explains the reason for the current score that clearly doesn’t match reality.

For those who might think I’m just cynical, a member of our executive team responsible for the largest part of the company told the HR team to check their math when they showed him this year’s score.

More: Do Staff Satisfaction Surveys do Anything?

5: Job descriptions

Job descriptions are almost always incomplete and/or obsolete. When was the last time you even read yours?

Also, if your job can be adequately described in one page, it will soon be outsourced to India.

More: 5 reasons why job descriptions are useless.

4: Corporate values
Having a conversation about your workplace’s identity and mission can be very inspiring. But typical values programs aiming to define and instil corporate values like respect, openness, excellence, team-work etc. rarely work.

More: Why corporate values often have no value.

3: Employee handbooks
Employee handbooks are usually long, boring and useless. They gather dust on the shelf or linger unread on the company intranet.

Let’s abolish them. Or alternatively, do as computer game company Valve did and let the employees write it. The result is the coolest and most useful employee handbook ever.

More: The Top 10 Most Awesome Things from Valve’s Employee Handbook.

2: Rules and red tape
Alabama A&M University has this policy in case of a death in an employee’s family:

Staff members shall, upon request, be granted up to three (3) days annually of bereavement leave for the death of a parent, spouse, child, brother or sister, grand parents [sic], grand parents-in-law, grandchild, son or daughter-in-law, mother-in law, father-in-law, brother-in-law, sister-in-law, step children, children-in-law, aunts, uncles, nieces, nephews, and first and second cousins. Other relationships are excluded unless there is a guardian relationship. Such leave is non-accumulative, and the total amount of bereavement leave will not exceed three days within any fiscal year. If additional days of absences are necessary, employees may request sick or annual leave, after providing an explanation of extenuating circumstances.
(source)

Got that? Contrast that with Nordstrom’s rule book:

Rule #1: In all situations, use your good judgement. There are no further rules.

Let people do their jobs – don’t put endless rules, regulations and bureaucracy in their way.

1: Pointless meetings

Meetings are one of the most hated workplace activities. Studies show that the more meetings people attend, the less happy they are at work and that meetings are the biggest time waster keeping people from actually, you know, doing their jobs.

I’m not saying we can abolish meetings entirely, but we should abolish all meetings that don’t lead to tangible results. Fortunately, you can fix all problems your workplace has with meetings with one decision: Make all meetings voluntary. You’re welcome.

That’s impossible!!!

Most of the time we advice our clients on what they can do to become better and happier workplaces. But an equally important question to ask is this: “What can we stop doing that is making employees unhappy?”

If you look at the list above and think “That’s impossible! There’s no way we could abolish X,” I want you to ask yourself this: When was the last time, you could only do your job, because you had X?

For instance, when was the last time the org chart was incredibly useful to you? When was the last time you could only complete a project on time because everybody working on it had just the right job title? When was the last time you could only make an important decision by referring to the corporate values?

Your take

Are any of these indispensable to you? Or conversely, did we miss any on the list? Has your workplace abolished some of these already? What was the results?

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