You Can't Afford to Fixate on Results at Any Cost
There's an upside to giving employees freedom to reach company goals on their own terms, but it isn't all upside.
This article is included in Entrepreneur Voices on Strategic Management, a new book containing insights from more than 20 contributors, entrepreneurs, and thought leaders.
If you’ve been in the business world for any period of time, you’ve likely heard someone say, “Results matter.” And they do, yet focusing only on results can be a recipe for disaster.
When results are all that matter, people will do whatever it takes to achieve them. That’s just one of the problems with the Results Only Work Environment, otherwise known as ROWE.
What is ROWE?
ROWE is a management strategy that pays employees for the results they deliver rather than the hours they work. The model traces its origins to 2003, when enterprising human-resources executives Jody Thompson and Cali Ressler floated the idea to Best Buy. The electronics giant became the first major corporation to implement the strategy. Gap followed suit. Since then, hundreds of businesses, large and small, have adapted ROWE to fit their specific industries and organizations.
ROWE, along with coworking, telecommuting and flex time, is intended to empower workers through autonomy. The mission is to co-create a happier, hungrier and more effective workforce.
In many cases, ROWEs deliver the results intended. Employees feel a greater responsibility and no longer think of their positions as a jobs. Instead, they identify with it as a career. Likewise, ROWE itself often is successful. Teams operate more efficiently and typically perform well.
What's the downside? There are issues with ROWE, however. Very real ones.
Trust and accountability
If you’ve assembled the right team, trust and accountability are a given. But complete freedom affects people differently. Getting a project done on time and under budget can be stressful, and the pressure only builds as expectations grow greater. Even good people can resort to cutting corners or dabbling in unethical behavior as a way to continue delivering results.
In environments where collaboration or frequent communication is necessary, it may not be enough to Skype or text remotely. Sometimes walking across the room and asking a quick question can solve an immediate pressing problem. Communication in a ROWE can be complicated and messy -- especially if teams or team members are on different schedules.
Some employees don’t do well in a ROWE. Employees transitioning from a traditional workplace may find the new rules confusing or threatening. Even for those embracing the idea, wrinkles can turn into creases with mixed messages, unclear directives or results that are moving targets.
If the workplace allows executives to work remotely but requires customer-service team members to keep standard hours, the ROWE also may need to address issues of jealousy and resentment. For a ROWE to work, everyone at every level needs to buy in. It’s a major culture shift. In many cases, well-liked staff might need to be let go if they fail to keep up. This can have a deleterious effect on the team's morale.
Investing in your staff is an important building block for any business, and that means occasionally holding team-building exercises or company trips. In other words, it’s more than just delegating. Managers in traditional workplace environments are part coach, part motivator and part director. In a ROWE, managing is essentially boiled down to organizing. Unfortunately, this can prohibit growth.
If results are the only focus, what happens if those results are poor? Live by results; die by results.
Best Buy’s stock valuation peaked in 2006 but then tumbled steadily downward. In 2012, Best Buy hired new CEO Hubert Joly. He took a hard look at the company and its declining numbers. A year after taking the helm, Joly abandoned the ROWE strategy. The effect on the stock price was immediate. By the end of the year, Best Buy shares soared more than 28 points, from $11.67 per share on Dec. 21, 2012, to $40.17 per share on Dec. 27, 2013. Best Buy has enjoyed considerable success after reverting back to a standard 40-hour workweek.
Although many leaders who have switched from a traditional workplace extol the virtues of the ROWE, this type of management strategy probably works best when it’s incorporated into corporate culture from the beginning. Before you embark on the road to ROWE, be sure to take a top-down look at your operation. Ask whether ROWE really is the right fit for you, your team and your clients or customers.
The answer could surprise you.