The Power of building a Skin-in-the-Game Culture for Modern Workplaces
In today's rapidly changing business environment, companies face unprecedented levels of macroeconomic volatility. According to Accenture's Global Disruption Index, this volatility has increased 200% since 2017, compared to only 4% from 2011 to 2016. As a result, companies that prioritize outcomes and agility will be better equipped to navigate this uncertainty and succeed in the long term.
As the business cycle reaches another inflection point in 2023, many companies are facing two major challenges: a renewed focus on the bottom line and abysmal engagement scores from their employees. To address these challenges, leaders need to re-align their definition of performance and personal growth. One way to do this is by creating a skin-in-the-game culture, so that employees feel more connected to their work, increase sense of ownership, and ultimately drive better business outcomes.
What is a Skin-in-the-Game Culture?
A skin-in-the-game culture is one in which employees are fully invested in the success of the company. They have a sense of ownership and are accountable for their work, which makes them more likely to go above and beyond to ensure their work is done well. In a skin-in-the-game culture, employees feel empowered to take risks, make decisions, and innovate, knowing that their contributions will be valued and rewarded. This type of culture is especially important in today’s fast-paced business environment, where agility, creativity, and innovation are critical for success.
Why Companies Need a Skin-in-the-Game Culture?
According to a study conducted by Harvard Business Review, companies that have a culture of ownership, where employees feel they have a stake in the company's success, outperform their peers. Specifically, these companies had 10% higher customer satisfaction scores, 22% higher profitability, and 21% higher productivity.
Among other benefits, a culture of ownership helps boost productivity, retention and innovation:
· Increased Engagement and Productivity: According to a Gallup poll, only 15% of employees worldwide are engaged at work. Disengaged employees can have a significant impact on a company's bottom line, leading to lower productivity, higher absenteeism, and increased turnover. However, when employees feel a sense of ownership and investment in their work, they are more likely to be engaged, productive, and committed to the company’s success.
· Retention of Top Talent: Attracting and retaining top talent is crucial to a company's success. In fact, Fortune reports that it is the number one challenge for many CEOs in the next decade. By creating a skin-in-the-game culture, companies can offer their employees a sense of ownership and investment in the company's success, which can lead to higher employee retention rates.
· Improved Innovation: Companies that have a skin-in-the-game culture are more likely to foster innovation, as employees feel empowered to take risks and make decisions. This can lead to new ideas, products, and services that can give the company a competitive advantage in the market.
How to Develop a Skin-in-the-Game Culture?
Developing a skin-in-the-game culture requires a fundamental shift in how companies view their employees. Instead of seeing employees as a cost center, they need to view them as an investment in the company's success.
One company that understood early the power of a skin-in-the-game culture is Starbucks. Starbucks Bean Stock program is an equity reward program that provides eligible employees with an opportunity to own a stake in the company by earning shares of Starbucks stock. The program was introduced in 1991 and has since become a key component of Starbucks' overall approach to employee engagement and ownership mentality. By providing a financial incentive and sense of ownership, the program helps to create a more invested and engaged workforce that is committed to the long-term success of the company.
Another example is the software company Atlassian, which has implemented a unique approach to ownership. At Atlassian, employees are encouraged to take ownership of their work and are given the freedom to pursue projects that interest them. In addition, the company offers a unique program called "ShipIt Days," where employees can work on any project they choose for 24 hours. At the end of the 24 hours, teams present their projects to the company, and the best projects are implemented. This approach has led to a highly engaged and motivated workforce, and Atlassian is consistently ranked as one of the best places to work in Australia.
It's important to note that implementing a skin-in-the-game culture is not a one-size-fits-all solution. Each company will need to find its own unique approach to ownership. However, there are some key principles that can help guide the process. These principles include:
Transparency: Employees need to understand how their work contributes to the company's success and how their contributions are being rewarded.
Accountability: Employees need to feel accountable for their work and its outcomes. This means giving employees the autonomy to make decisions and take ownership of their work.
Trust: Companies need to trust their employees to make decisions and take ownership of their work. This means giving employees the freedom to pursue projects that interest them and trusting them to make the right decisions.
Recognition: Employees need to feel recognized for their contributions. This can be through formal recognition programs or simply acknowledging their contributions in team meetings.
Collaboration: A skin-in-the-game culture is not just about individual achievement, it's about collective performance. Companies need to foster a culture of collaboration and teamwork to ensure everyone is working towards the same goals.
Developing a skin-in-the-game culture is an effective way to align employees' and companies' definition of performance and personal achievement. It involves giving employees a stake in the company's success, and can lead to better business outcomes, including higher customer satisfaction, profitability, and productivity. While implementing a skin-in-the-game culture requires a significant investment of time and resources, the benefits are well worth it. Companies that are able to create a thriving work environment that rewards ownership and accountability will be better equipped to attract and retain top talent, and ultimately achieve long-term success.