Case Study – International Compensation Management
A Universal Consensus Case Study of International Talent Retention at a Multinational Accounting Firm in Austria
Due to the social democratic nature of Austrian culture, employees are much less motivated by financial incentives than in more capitalist countries such as the United States. As such, alternative methods need to be utilized in order to change employee behavior.
Historically, there are two proven ways to motivate employees in such circumstances: non-financial incentives and leveraging social status. Austrians generally emphasize family life and believe in “working to live” rather than “living to work.” As such, incentives that allow employees to spend more time with their families and improve their life/work balance are the most effective way to provide motivation.
In addition to explicit incentive systems, Austrians are frequently intrinsically motivated by social status. By creating a social hierarchy that can be climbed through accomplishing specified goals and objectives, cultural change can be adopted over time.
Establishing better external relationships with customers can be accomplished by focusing on leveraging an understanding of Austrian culture. Traditionally, sellers who engage in hard selling practices are seen as desperate; as such, it is important to educate potential customer on the client’s services outside of ‘cold call’ sessions in order to drive demand. Moreover, because customer interest is more likely to generate new business than modified selling practices in this atmosphere, it is imperative that the client delivers a clear and consistent message about product offerings to consumers.
The client is exploring avenues for generating increased sales revenue. They have identified the social democratic country culture as an inhibitor to sales both internally and externally. Internally, employees are not motivated to produce sales because they generally lack the confidence to leave their comfort zones, model those who are successful, and seek constant and never-ending improvement. Austrians try to fulfill goals to the best of their ability but never try to exceed them. Externally, employees are not proactive in building business relationships; the Austrian business culture is transactional. It is customarily to simply react to current need; indeed, professionals identify themselves as technicians instead of salespeople.
Strategy One: Non-Financial Incentives
Research has shown that non-financial incentives can have equal effect on employee motivation when compared with standard financial incentive systems. In a society that does not allow for significant income disparity, non-financial incentives can play a key role in motivating employees to sell.
Non-financial incentives for employees include:
- Reserved preferred parking spaces
- Increasingly flexible work hours (e.g. late start)
- Additional vacation hours
- Reduced work hours on Fridays
- Free meals or gym membership
- Access to a company vehicle
- Tickets to popular events
The specifics of these incentives can be tailored to fit the available incentive budget. In addition, management should query the employees to determine other areas of interest for future incentives.
Strategy Two: Public Recognition
In order to emphasize the desired corporate culture, recognition for high-performing employees should be public; moreover, attendance for public recognition events should be mandatory for all employees. By providing such recognition, a social structure can be established that intrinsically motivates employees to perform and thus gain status.
Public recognition can be combined with non-financial incentives in order to establish a focused strategy for motivating employees to perform to their utmost.
Since the societal nature of Austrians promotes herding of people, there is a danger of social rejection if an employee is seen as different from the group. Hence, the employee must be perceived as being rewarded for contributing to the collective good.
Strategy Three: Teambuilding
When establishing culture change, it is critical that employees be comfortable with management so that they have confidence in the path forward and are not afraid to raise new ideas and objections, which can often be incredibly helpful to the process. It also increases the likelihood that employees will “buy in” to the new culture.
In order to conquer the gap between both multi-national backgrounds and between management and employees, teambuilding events that mix cultures and job functions should be established. The type of events can be tailored to the employees’ interests (e.g. lunches, company retreats, sporting events, or other activities).
Cross-functional collaboration between various service departments is essential for client to implement core mission value and transition from a service based company to a solutions based company.
Managers and employees must be educated on the various offering in other departments. Cross-functional team projects and activities will ensure that employees get to know their counterparts in other departments and understand the benefits of solutions based offerings.
Strategy Four: Building External Relationships
Building external relationships is an extremely difficult endeavor; however, ensuring emphasis on key areas can increase the likelihood of success. The client should focus on the following areas:
- Ensure consistency and clarity in Marketing Communications (answer the “what” and “why” for consumers)
- Participate in nontraditional advertising events (e.g. community events with employee participation)
- Emphasize to employees the power of building relationships through networks and connections (much preferred to ‘cold calling’ in Austrian culture)
Tribalism in Austria has historic roots. Austrians have always had to look after their own. This attitude is evident in their policies on welfare. If a foreign company does not have an effective conditioning program for new employees they revert to tribalism to preserve their identity. The employee would take risks on building an external network if it benefits the entity he associates with his group/tribe. The key here is identifying the entity be it his department, team or self and reward the entity. There are many ways to identify the entity.
- Leverage existing business partners to establish new relationships
- Identify key goals (e.g. arranging meetings with potential new customers) and align non-financial and public recognition incentives with them in order to increase employee motivation in building new relationships
- Work with employees to identify specific disconnects in external perceptions and internal product offerings, then utilize this information to focus marketing activities
- Further educate consumers through seminars, conferences, and other awareness events
- Approach customers on a level playing field and be straight forward and transparent
The Austrians respect transparency, honesty and openness. The customer believes that U.S. companies tend to push unnecessary services at premium rates. The client has to make sure that the customer has a clear idea about the services offered, rates charged and benefits gained. Avoid overselling and using American approaches to pitching to customer. Using references from past successful Austrian clients may be advantageous.
Finally, the culture drives people to be perfect. The Austrian will give 100% effort to meet the goal but he will never exceed it. The concept of delivering more than expected is not understood. Hence, the goals set should reflect this characteristic. Hard to reach goals may impact the morale of the employees by discouraging them and putting them on the defensive. A mistake is considered as a fault and not an opportunity to learn. For people who are afraid to make mistakes, their managers need to set their goals by defining specific actions and desired behavior. The effective way to change culture is not to change how people think, but instead to start by changing how people behave. If necessary, managers need to provide training to change their behavior. In Austrian culture, as people try to meet the goals, you can change their behavior by showing what they do and setting achievable goals. The culture will change as a result.
Prepared By: Aditya Chinnareddy, Deputy Director of Business Development at Universal Consensus, with Chris Mortham, and Yoriko Sakamoto