Culture of Entitlement Saps Morale, Profits

NEW YORK (TheStreet) -- The fallout from the global financial crisis has focused heavily on the entitlement culture in large businesses, from Wall Street to Main Street.

Executives at once-revered institutions like Bank of America ( BAC), General Motors ( MTLQQ), AIG ( AIG), Citigroup ( C) and Goldman Sachs ( GS) are now reviled over what is seen as inherent entitlement within their executive ranks.

But small businesses aren't immune from this often-fatal infection. As a matter of fact, smaller companies suffer more when this enters their cultures and is left to fester.

The culture of entitlement is a "you owe me" attitude, one in which people believe that society, a company or government owes them something, and they do not have to earn or deliver value for what they receive. These people believe they are owed something because of who they are or what social group or union they belong to.

People who feel entitled focus more on what they feel they are owed than what they contribute. In a culture of entitlement, peer pressure to perform is replaced by peer pressure to conform to the lowest common denominator; looking good is more important than doing the right thing.

Companies exist to make money. Companies employ people because it is necessary to reach the goal of maintaining and growing the business, and bringing value to customers. Yet, you see people trying to hold their company hostage with that "you owe me attitude," like the company owes them a job. Unfortunately, this attitude exists at many levels of the American workforce.

How do you know if you are creating a culture of entitlement in your company? A few of the signs would be giving employees raises just because it's that time of year or giving promotions based on how long someone has worked for the company as opposed to how well they perform. Since when did poor performers get reassigned instead of being asked to leave?

We would be better off as business owners and members of society if we foster a culture of merit as opposed to entitlement. Transitioning from a culture of entitlement to one of merit is not easy -- it takes tough decisions, tough conversations, and it takes consistency.

How to create a culture of merit at your company:

1. Put your employees on commission, or profit sharing. They should be "invested" in the success of your company, rather than just collecting a paycheck regardless of their performance.

2. Reward employees for going above and beyond, not just for doing their job. While monetary rewards are motivating for many employees, make sure they are not expected, but respected when they are received.

3. Be honest with your employees on their performance. If they are not doing their job, their paycheck should reflect that. If they are doing more than their job, their paycheck should reflect that as well.

4. Foster a culture of merit in your small business, and you will see performance, quality and morale quickly go to new levels, and the value of your company will quickly multiply.

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