Wednesdays are special days at Springfield Remanufacturing Corp. (SRC) because 40 to 50 of the company's 780 workers play "The Great Game of Business." The focus of the game is financial performance. The SRC Wednesday players, who come from all departments and ranks, share income and expense information for the week with each other. All employees are involved even though the "players" are the ones exchanging information. SRC employees own 32 percent of the company's stock through an ESOP and SRC has been sharing financial information with employees since 1983. Profits and sales growth have climbed approximately 15 percent annually and the stock value has multiplied 18,000 percent. Learning about the financials has paid off.

All employees, from their first days at SRC, are involved in the business game and receive training in understanding the financials, including a four-hour business training course called Yo-Yo Training. Because employees learned so well, SRC began an entrepreneurial program in 1989. As of 1995, 12 employee-run companies have been formed in diverse business areas from management consulting to training to one company started by Bev Willis that makes and sells engine rebuilding kits. SRC shares in the profits of these employee-owned enterprises, which were forecasted to be $15 million for 1995.

SOURCE: A. Halcrow, "Workers Learn to Play the Business Game," Personnel Journal (January 1995): 73

SCIENTIFIC FOUNDATION

Goal Setting for Creativity?

Creativity is often considered an important source of competitive strength for organizations, especially in changing and uncertain times. This research was designed to examine the effects of three factors on creative performance by attempting to answer three basic questions. First, does the presence of others (coactors) have an effect on creative performance? Second, does the anticipation of an evaluation have an effect on creative performance? Third, does setting a creativity goal have an effect on creative performance?

Two studies were designed to answer these questions. In the first study, 84 students worked to develop creative solutions to an in-basket exercise. Some students worked alone and others worked in the presence of other students; some expected to be evaluated and others did not. In the second study, 136 students worked on a similar task. This time a creativity goal was assigned to some of the students and not to others. Two performance measures were used: the degree of solution creativity (innovativeness) and productivity (number of possible solutions).

The results indicated that high levels of creativity occurred when individuals worked alone, and productivity was high when individuals worked alone with no expectation of being evaluated. The highest creativity occurred when individuals had a creativity goal and worked alone. However, productivity was low when individuals worked alone and were assigned a creativity goal. Results were mixed with regard to the effect of expected evaluation. Under the right conditions, goal setting does lead to higher levels of creativity.

SOURCE: C. E. Shalley, "Effects of Coaction, Expected Evaluation, and Goal Setting on Creativity and Productivity," Academy of Management Journal 38 (1995): 483-503.

ORGANIZATIONAL REALITY

Major Changes in Performance Appraisals

Lyondel Petrochemical made major changes in its performance management system because the company was unhappy with its performance appraisals. One survey found 51 percent of responding companies were similarly dissatisfied, and 64 percent indicated plans to redesign their systems. Many companies redesign their appraisal systems by adopting new scales or adding new performance categories.

Lyondel Petrochemical, a Houston-based energy producer, did not follow this usual process in their redesign. In fact, they eliminated performance ratings and formal appraisals, creating a "dialogue process" instead. Using this dialogue process, supervisors and employees meet frequently and discuss goals, with a focus on the company's four goals: financial success, employee productivity, company responsibility, and customer satisfaction.

In addition, Lyondel Petrochemical separated its performance management system from its pay system. In place of performance-based pay, the company uses market-based pay. There are no caps on salary ranges and no cap on the profit-sharing. Employees receive base salaries tied to market rates for their jobs and, beyond that, profit-sharing and special awards for outstanding contributions add to their annual base.

Lyondel's innovative, major changes in performance appraisal and pay apparently have been well received by employees. The changes also appear consistent with the changing world of business.

SOURCE: Reprinted by permission of the publisher, from HR Focus (July 1995), Donald J. McNerney, et al. American Management Association, New York. All rights reserved.

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