Reward ‘Persistent Bloody-Mindedness’ – Not Luck. Part 1.

Market forces, as evident recently, are difficult to control or defy. Much of a senior executive’s business success can be put down to luck – to being in the right position when market forces are moving positively. Not me speaking:  I’m paraphrasing a recent interview with a retired chairman of one of my country’s more successful companies. He attacked bonus systems that focus only on rewarding achievement of short-term financial outputs: his point being that sometimes managers ”win”  mainly because the tide of the times turns in their favour, while others make  carefully considered decisions, for the all the right reasons, but lose out because the market moves against them.  Reviewing his company’s 100 year history, besides “good luck”, he saw the factors that had allowed it to survive and prosper as boiling down to diligence, persistence and a certain bloody-mindedness about making key client relationships work.  From this perspective, the rewards systems in many companies favour the “lucky”, and may actually stifle qualities of diligence and persistence. Is this relevant to Market Research?

I think that there is more than good fortune involved in achieving profit and growth targets in MR (even in good times), but I strongly agree that the focus is wrong and that as we emerge from recession, MR companies need to rethink their remuneration and recognition systems. Put simply, as an industry, we have failed to align reward systems with the type of work we do.

Compared to buinessess like ad agencies, we are less dependent on a “grand pitch” or a few super salesmen or creative geniuses to make or break our companies.  Overall MR is driven by relationships and revenue streams that ebb and flow over the course of years.   In this setting persistence, planning and on-going client contact may be the key drivers of long-term success.

Remember that, despite all the talk of “globalisation”, we remain an incredibly local industry.  Not just where we source our work from, but also in terms of localisation of design and implementation. Most of our work  is still customised. Even highly structured “global” services (a Nielsen Retail Service for instance) usually ends up needing  local market customisation and support from managers with an intimate knowledge of local conditions. Most MR employees spend most of their time interacting with local contacts and most purchasing decisions remain at local or regional level. Sure, major corporations are increasing the number of global research deals they commission, but this trend is far from universal and is counteracted by the rise, throughout the growth markets, of large local clients looking for intensive, locally based servicing.

No-one doubts that big global deals can drive cash-flow and ease overhead management. But many also involve discounts or offering concessions in growth markets to subsidise weaker markets. Over the long-term, are they are really more profitable or worthy of recognition than, for instance, the efforts of a local director who works quietly to build an on-going relationship with Banko do Brasil or PT Telekom Indonesia? (BTW, In case you doubt the significance of companies like these, consider that in June the latter paid a cash dividend of 50% of its net profit to shareholders – US$584m). Significant profitable growth, in most MR companies, comes from the additive effect of lots of little incremental decisions made by local executives as they work with their clients every day.

So, do we recognise this incremental effect: the role of everyday diligence and persistence? Obviously local MR companies should be better at recognising this kind of  “grass-roots” effort simply because they are closer to it. Yet often a lack of formal review process means that even in such smaller companies the director who trumpets his/her wins the loudest triumphs. In the bigger companies the setting is more difficult. Many big MR companies have moved from having few systematic performance review processes at all, to the complete opposite, where a mix of over-complex bureaucratic HR procedures combine with broad but rigidly enforced financial targets (the type which, as argued above, may measure luck as much as good management). This creates a setting where bonuses simply fail to motivate the behaviours that actually drive sustainable growth. To improve on this we not only have recognise that the rewards and recognition process needs much more local involvement, but also to get a clear grip on what kind of individual effort is really driving MR success. More of that in my next post.


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