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Donkin on Work - Innovation

March 1994 - Promoting employee creativity

Stories that cast doubts on the value of the most thorough processes of recruitment should be treated with caution, but they are very tempting to relate nevertheless. This one I am told is true and I have a name for the man involved, Dante Montalbetti, a former head of Eurobond trading in the UK at Merrill Lynch, the US securities house.

The story goes that, impressed by his mental agility at calculating the weekly quota, Montalbetti hired a milkman to work as a trader around the time of Big Bang in the mid 1980s. The milkman enthusiastically swapped his electric milk float and a modest wage for a telephone-digit salary and a Porsche. Then came the 1987 crash and he was made redundant in one of the clear-outs. Today he has returned to his Surrey milk round where the only traded options are whether his customers order one pint or two.

The story sounds too good to be true and certainly Merrill Lynch was unable to provide any supporting evidence, so it may have to be discarded into the apocryphal bin. But what is to be learned from it anyway? Does it mean that milkmen make good bond traders or that bond traders make good milkmen?

Its main point here is to demonstrate that there will always be cases of the individual whose career path has wavered from conventional routes. Surely this reflects the diversity of backgrounds that many employers would wish to encourage. Not so, apparently. A contributor at a recent business forum spoke of an Oxford college tutor seeking placements for four of his graduates taking degrees in music, history, Latin and geography. The qualifications were dismissed as useless by a company recruiter who was only interested in business studies degrees.

Such attitudes are not unique. Further evidence of a polarity of approach was volunteered by a headhunter who said that one securities company in the US designed a psychometric test to search for the principal personality traits exhibited by its most successful trader. The very idea of such vocational cloning might seem like kindling for a bonfire of vanities to some but it has attracted interest, particularly in sales areas.

Less finely tailored selective recruitment procedures, using structured interviews instead of pencil and paper tests to sift out desired personality traits, are available and used in the UK. B&Q, the UK do-it-yourself chain has started using them and Joshua Tetley, the Leeds brewer, has used them in its selection of public house managers.

The kind of structured interviews that can find successful sales people can also single out innovators, says Terry Lunn, managing director of Talent Plus (UK), a company that administers structured interviews. But some occupational psychologists believe that creative people are being neglected by recruiters and managers.

A new report from the British Psychological Society says that if we really want innovators in our organisations, we are going the wrong way about encouraging them. The authors say that modern performance-orientated incentives threaten to suffocate the individuality and creativeness which once made British industry the envy of the world.

Kay's Flying shuttle, Arkwright's loom, Hargreaves' Spinning Jenny and Crompton's mule all played their part in revolutionising the textile industry upon which much of the UK's 19th century wealth was founded. Where are their equivalents now and would we value them in our workplaces if we could find them?

Michael West, an occupational psychologist at Sheffield University and one of the report's authors, believes that innovators today are getting a raw deal. In many organisations their potential is stifled by performance appraisal and targeting, he argues. They need to be identified, nurtured, and given the time and space they need to make things happen.

He points to 3M, which gives each of its research and development staff the option to spend 15 per cent of their time at work to use as they wish in their own projects and experiments. This may help account for the fact that 30 per cent of the company's turnover is from products introduced in the last four years. 'If the project fails then their job is not on the line,' said West.

With co-authors Professor Clive Fletcher, of Goldsmith's College, University of London, and John Toplis of the Post office training and development group, West has written a paper entitled 'Fostering Innovation'*, demanding greater emphasis on identifying and encouraging innovators.

It is true, say the authors, that innovators can be unconventional people, unattracted by routine work requiring attention to detail. Their thinking may challenge orthodoxy, threaten general managers and be impractical. 'However, organisations also have to recognise that the complete exclusion of such people could lead to stagnation,' they warn.

Much of their argument reflects a growing dissatisfaction among many employers with performance-related pay. Up to now one of the main objections to PRP has been that it is divisive. Some have argued additionally that it can be demotivating. This new paper goes further, suggesting that it can actually stultify the natural creativity of individuals.

Fletcher says: 'When you look at all those companies in the private sector which have gone through downsizing and de-layering and introduced performance management practices, performance-related pay and appraisal systems, it has led to leaner fitter organisations . . . The cost has been to their capacity to innovate.'

'As you make increased demands on each individual the pressure increases and it becomes difficult to get the time to reflect on what you are doing.'

The trend in many organisations, he argues, has been to place too strong an emphasis on short-term business goals that provide the reward, with redundancy or dismissal often the price of failure.

Fletcher suggests that too much emphasis on PRP tends to shift people's focus away from the task and on to the money they receive for its accomplishment. 'A manager of a clearing bank told me: 'People here never used to think about money. Now they think of nothing else.''

'People need to be encouraged to feel confident. Managements should get rid of PRP. It has not been an effective motivator. We have to start rewarding innovation and put it on the agenda.' Fletcher's comments would suggest that while performance-related pay is by no means dead as a form of reward, it is clear that some are already digging its grave.

The report also seeks to promote the potential of teams built of diverse skills. It draws on a footballing analogy to make the point that a team will be ineffective if comprised solely of attacking players or conversely of defensive players. It needs a balance. This same observation has been made during a research programme at Roffey Park Management Institute focusing on the management of creative individuals in areas like music, theatre, sport, and corporate research and development.

Joanna Howard, director of research notes that while the idiosyncrasies and insecurities of creative people can be taxing on managers, the reward in terms of innovation for those that persevere can be incalculable. But she also warns that matching their abilities with equally spectacular financial rewards is not necessarily motivating. 'Putting extrinsic rewards to things that people do for their intrinsic love of it can be terribly damaging,' she says.

*Fostering Innovation: A Psychological Perspective, The British Psychological Society.

© 1994 The Financial Times Ltd. All rights reserved

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