In any organization, leaders will typically recognize the value that employees play in driving success. Yet when you observe the distribution of functions within a hierarchy, it often turns out that in practice, most people below the upper echelons exercise scant agency on the job.
C-suite leaders can gather data using sophisticated tools like Alchemer, but if they fail to engage with frontline employees, they can struggle to implement feedback-based change. In turn, employees might be receiving adequate compensation for their efforts but lack the motivation to exert more discretionary effort.
Middle management can play a vital role in resolving such issues. And that’s exactly what most companies are after when they seek to increase employee engagement. But they are often failing to address this problem at its root.
Leaders need to transform their organizations to the degree that gives each employee a reason to be truly invested in their jobs. That’s how you make them feel like they have skin in the game.
Skin in the game explained
The concept of skin in the game isn’t new. It essentially boils down that if you have something at stake in a given activity, you’ll work harder. Soldiers fight for their lives and countries and each other. Differences are overcome on the battlefield, much as they are in the more domesticated arenas of modern sports.
This idea was popularized in recent years by Nassim Taleb, in his book of the same name. And Taleb uses it to criticize modern employment practices, labeling them a legal way to enslave a person.
The author argues that companies today owe their loyalty to investors and stockholders. Employees are expendable under this model. And that creates a palpable sense of domestication. The model professional is constantly fretful of doing anything that might hurt their employability, rather than going above and beyond to risk, innovate, and bring real value to the company.
You can probably see how this effect can be harnessed in reverse. By giving employees a tangible stake in what a business is doing, you can turn things around. You can make their work meaningful and encourage them to do more than what’s in their job description.
Equity as a potential solution
One obvious and direct application of giving your people skin in the game is making them the company’s actual shareholders. If you offer equity to employees, you can truly incentivize their efforts. Their performance doesn’t just boost the company’s bottom line, but their long-term investment as well.
In fact, this strategy has been proven to work in the real world. But it’s not easy to get it right. Excluding the potential for organizational inertia, middle managers need to be highly effective at tailoring their communications to the people. They have to be transparent yet also able to leverage employees effectively to realize the potential for increased engagement.
Offering equity also has the genuine drawback of messing up the ownership structure. The example of the Empire State Building IPO is a showcase of how dissident minority shareholders can cause trouble in any plans for collective action. It’s enough to give any organization pause before seriously considering equity as a lever to pull for better employee performance.
Finding an alternative approach
Equity may be the straightforward, logical solution to giving employees a stake in their work. But its limitations shed light on the way many leaders think about motivation.
The truth is, people aren’t always driven by compensation. Money certainly matters, but only up to a point. Up to 90% of employees have indicated that they would give up a percentage of their income in exchange for the chance to do more meaningful work.
If meaning is the new money, then employers need to think beyond the paycheck as a means of rewarding people and giving them more skin in the game.
What if you could offer bigger, more diverse responsibilities or the chance to learn new skills as incentives tied to performance? Or, for those who value work-life balance, how about increased flexibility or time off?
If you feel that a given position offers little in the way of meaningful work, you could develop ways to let employees put their other talents to use. They could propose new initiatives for improving collaboration or performance or develop side projects that lead to innovation. Effective leaders will recognize those ideas and empower the people behind them.
Recognize that one size doesn’t fit all, and there are many ways to approach this issue. Get to know your people personally, and you can find the best way to give them a reason to be invested in your organization.