As the politicians both in Washington and here at home battle over the fate of entitlement programs, I started thinking about what the “entitlement culture” has done to innovation. In a word, it kills it. (see my previous blog on the critical importance of innovation)
In an article in the Wall Street Journal, 4/8/13 about the rise in those on disability insurance and how it is adversely affecting employment, a man talked about why he is reluctant to find a job he can do with his disability when he is financially comfortable on SSDI. The program has essentially quashed any spark of motivation or innovation for him to go out and actually support himself vs. being on the “dole” as it were. He said it feels like “welfare,” which doesn’t make him feel good, but he’s not sure he can do better elsewhere. There are a couple of points to consider about this – first, it is welfare, and second, his innovation quotient without welfare would likely be much higher. As they say, “necessity is the mother of invention.”
A second article on the same day, talked out how small cities are going bankrupt due to pension payouts to former Fire and Police administrators that are totally out of control. Spa treatments, dental implants, and massages, are all considered “entitlements” under the policies and as a result, the pension funds are underfunded. Basics like a new fire truck or station are not in the budget because the entitlements are killing them.
Why is this important to entrepreneurs? Entrepreneurship is one of the foundational building blocks of our culture. Building companies that provide jobs that keep our economy and country growing and going. Entrepreneurs innovate. If they want to keep a culture of innovation in their companies, they must watch out for the sign of entitlement culture creeping in.
An entitlement culture is one that rewards employees based on “time served” vs. what kind of time served. I believe an entitlement culture is actually unfair to innovators. Companies thrive with innovation and die without it, so why wouldn’t we reward innovation more highly than entitlement? Don’t get me wrong, you need to have a fair compensation policy, competitive salaries and benefits and treat all your employees well, but creating entitlements discourages innovative thinking.
Entitlement culture is rampant in the government, but also at many companies. When companies make more money with better products and services and share with their employees through benefit programs an entitlement is born. I’m not saying these are bad, but they need an “annual review” to make sure they still foster innovative thinking and won’t become a growing entitlement down the road.
It’s not about the money, it’s about the culture it fosters. A few things you can do as a cultural entitlement check on your company:
1. Review all pay and benefit policies to make sure they are in alignment with industry standards.
2. Eliminate any that pay for “time served” and replace with an incentive that fosters and rewards innovation.
3. Make sure all policies are aligned with your cultural values. If you don’t know what these are, start with identifying these.
4. Create policies that balance the employees need for security with your need for innovation. There is a happy medium that will serve everyone.
5. Have fun with it! Innovation requires hard work, but fun should always be a part of it.