Creating a stimulating work environment that allows staff to take risks is more important to business growth than pay or bonuses, according to new research.
The RMIT University study surveyed 253 owners, founders and CEOs of Australia’s fastest-growing SMEs and found that encouraging risk-taking among employees was one of the key factors that differentiate fast-growth companies from those that fail to grow.
As well as encouraging employees to take risks and think outside of the square, the study found that other key drivers of growth included fostering a culture of open communication and experimentation.
The research found that firms that adopt such a risk-taking and learning-orientated approach are able to boost their competitive edge by responding quickly to changing markets and unpredictable events – readily discarding old competencies and developing new strategies.
“We found an open workplace culture, where staff can experiment, take risks and question fundamental beliefs and work patterns, is critical to learning,” said lead researcher Dr Carol Tan.
The results of the study also suggest that organisations that focus on pay alone, without taking measures to motivate their staff, risk falling behind their better equipped competitors.
“Benefits and bonuses have their role, but they do not necessarily mean employees are committed to learning or to the goals of the venture,” said Dr Tan. “In contrast, our study indicated that learning orientation in a firm is only enhanced when high levels of motivation are maintained and employees are treated as valuable resources.”
These recent findings come on the back of previous research by RMIT’s School of Management, the results of which suggested that companies that fail to implement a risk-taking and learning-orientated approach are at risk of losing their best talent.
Speaking to Risk Management, Dr Tan explained that engaging keen employees in all aspects of the business can help to aid staff retention and reduce the risk of a workforce exodus.
“I have done a study recently where I interviewed the CEOs of all these fast-growing companies, and what I have realised is that staff actually stay with the company for a very long time,” she said.
“They want to stay because they get an opportunity to learn all aspects of the business,” she added. “They’re not kept out of the loop; this is really important for staff retention.”
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