Examining the Social Contract

The Social Contract Part Deaux

I have been following a thread for the last few days on LinkedIn that intertwines two concepts I find very relevant and timely.

The title of the post was Is Engagement Dead? The author argues that as the traditional relationship between employer and employed continues to break down and become more transactional and temporary that concepts like employee engagement have lost both their relevance and their efficacy.

I disagree on both points, but I think it requires a bit more examination.

Employee engagement means many different things to different people. For many you see it described in terms of happiness or morale and by others in terms of tenure.

I define engagement as alignment between the organization and their employees as well as other stakeholders. I think that things like increased satisfaction, reduced regretted turnover, and other factors are positive, but ancillary outcomes of a strategy to create and reinforce that alignment.

Much of the discussion in the thread talks about programs and processes typically led or managed by the human resources organization, and why they fail to achieve their intent. The engagement survey is singled out for particular focus.

I agree that engagement is a culture rather than a program and that surveys are a snapshot rather than a strategy.

I don’t agree that redefining the social contract means that engagement is no longer necessary or important, in fact quite the contrary.

Much of our old social contact was based on an outdated relationship model that in my mind reinforced a form of corporate codependency. If you are loyal to the organization (spelled compliant and obedient) the organization would take care of you.

The advent of international marketplaces, the internet and a variety of other factors has blown that model up. I also believe that creating a mindset and referring to your employees and their combined talents and abilities as human capital contributes to that. It is a transactional not a relationship model.

In my opinion true engagement can only occur between willing and able partners, it is an exchange of value or as Ken Matejka, in his book Why This Horse Won’t Drink describes as where an employee feels psychologically, emotionally, and physically impelled, they willingly give up other choices.

They are not complying, but rather are sharing commitments with the organization based on perceived shared values and desired outcomes. There is no unequal power relationship here.

My own experiences with engagement are grounded in some personal beliefs that I have developed and believe in-

  • The most critical elements for the foundation of any relationship, personal or professional are trust and respect.
  • Everyone is entitled to respect for their personhood if nothing else.
  • Relationships are the most important systemic dimension in every organization.
  • People who share your values and are congruent with them will perform at a much higher level than those who are neutral or don’t share them.

Studies also show that when employees join a new organization unless specific actions are taken they go through stages beginning with the potential to be engaged and then diminishing over time. The stages look like this-

  • Stage one- enthusiasm and excitement about the new job
  • Stage two- they begin to question their decision
  • Stage three- they are disillusioned
  • Stage four- they consider leaving
  • Stage five- they begin exploring options
  • Stage six – they receive an offer
  • Stage seven- they are forced to decide whether to quit or stay
  • Stage eight- they quit and stay

I don’t think most organizations want to live in this space, especially stage eight so I recommend an alternative strategy that I think incorporates both the new social contract and can properly executed create an engaged environment.

The first thing you do is to identify the core value proposition of your organization and develop a strategy to clearly communicate it to all of your stakeholders; this includes employees, suppliers, customers, shareholders, and communities where you do business.

The second thing that you do is that you develop hiring and selection processes that ensure that the people you invite to join your organization share the value set of the organization and that the connection between their personal values and your organizational values is transparent.

The third thing that you do is ensure that anyone in a management or leadership role has the competencies and skills to create and reinforce that line of sight.

The fourth thing that you do is make sure all your other systems reinforce the values as well. By that I mean your hiring and selection, training, compensation, performance management, and your succession planning, and promotional decisions.

The fifth thing you do is to benchmark your progress and recalibrate as needed. Perception is reality, if your employees don’t feel aligned with your core mission and objectives they will not perform at peak.

Realistically all of your employees will not be with you forever and that is a good thing. You need to constantly refresh your talent pool and get new energy and new ideas. The key is that while employees are in your employment they are engaged. In many cases they represent your best resource for attracting the new talent you need.

My colleague Michael Beck posted a great piece on why the majority of employers worldwide are doing the engagement thing wrong, addressing it reactively rather than proactively and I couldn’t agree more. Much better to build engagement into the fabric of your organization through appropriate selection and hiring, but it doesn’t stop there.

He pointed out that the latest Gallup poll provided some pretty eye opening statistics, including the fact organizations with high employee engagement saw a 147% advantage in earnings per share over non highly engaged organizations in 2011 and 2012 and the fact that the Department of Labor estimates that disengagement costs the U.S. economy between $450 and $550 billion dollars annually and for me at least that garners some attention.

Add to that recent studies indicating that voluntary turnover was up 45% year to year from and cost per hire is up 15% for the same period and you might think that more organizations would be examining their strategies and taking action. The interesting thing is that we have seen at best incremental improvement over the last five years.

So in conclusion given the potential upside I am not prepared to declare failure and walk away from the concept or criticality of employee engagement.

Let’s embrace the new social contract and engagement and let’s commit to doing it right!

 

Creating Winning Teams

Creating a Winning Team

I had a chance to catch a few shares by others that really reinforced for me the critical elements of an organization that performs in a sustained way.

The first was an article on leadership training that not only discussed content, but more importantly timing.

The article titled The Lego ® Blocks of Leadership, published by international consulting firm BlessingWhite  points out some key considerations that bear repeating, and often.

The first factoid from the Center for Creative Leadership points out those organizations who prioritize leadership and focus on it proactively enjoy a 66% increase in business results. To me this is similar to what organizations that focus on employee engagement recognize better selection and management yields better business results.

The next tip is what is really important. Most organizations do not begin to invest in that leadership development until the person is already in a leadership role. Their research and my experience conclude that taking that approach results in a significant dip in productivity for those new leaders while they try to master their new responsibilities. Other research indicates that 40% of newly promoted or newly hired leaders fail within their first 18 months. The primary culprit for this failure is interpersonal or so called soft skills. They simply don’t fit with their new team.

The reality is that foundational leadership skills like setting clear performance expectations, giving and receiving feedback constructively, taking appropriate corrective action, coaching, and delegation never become unnecessary or don’t apply at every level of management.

Teaching those skills to people who are well into their career is more difficult and expecting managers who have never mastered those skills themselves to coach and reinforce others is a lousy strategy.

There are probably a lot of reasons organizations don’t do this training and development proactively. I hear that they are concerned about creating false expectations of guaranteed promotion; they are concerned that employees will immediately expect increased compensation for this new “capability”, and the other big one is time and expense.

The other big one is expediency. We have a need so we plug someone in and hope for the best.

In my experience leadership is about both capacity and skills. Some people will emerge as great leaders, but in my opinion most people are capable of being trained to be competent managers.

I have contrasted previously the difference in philosophy and approach between the private sector and the military.

In our military academies every graduate is exposed to and evaluated on leadership competencies as well as particular technical capabilities. Leadership isn’t an option. Not all graduates will achieve flag rank, but competence is expected.

On the contrary in the private sector we hire people largely on their technical capabilities with little emphasis on leadership capacity. When I describe technical I include skills like marketing, finance, etc. not just people with technical or science backgrounds.

Contrary to popular opinion I don’t believe an MBA prepares people for leadership. It exposes candidates to systems and integrative thinking and how the disciplines interact together, but there is little emphasis on the management of talent.

I have long held the belief that organizations with superbly trained front line and middle managers will outperform their counterparts who don’t make that investment. I have had a chance to validate my belief multiple times both as an executive and a management consultant.

The data is very clear that in the majority of instances where employees leave a position voluntarily their relationship with their manager is a critical factor.

The reason that building this skill sets into the foundation is so critical is that research also shows that the shelf life of most training is around 18 months. After that unless the learning and development is reinforced the retention rate is less than 10%. Given that in the U.S. alone we spend $100 billion annually on training that isn’t very good return on investment.

At New Paradigms LLC we agree whole heartedly with BlessingWhite. That is why we offer our Leadership Series which we break down into foundational and advanced leadership skills.

We want to build leadership capacity for our clients, a reservoir of leadership talent that can be deployed as needed.

The other great share I happened on was a republishing of an article from Inc. Magazine on why the annual pay raise is dead. This piece really reinforced my own viewpoints so perhaps that is why I liked it so much.

Here are some of the key thoughts-

  • Pay is a crucial part of every company’s employee motivation and retention. And the reality is, how we structure compensation is as important as how much we pay—if not more so.
  • Every position at every company has a specific value. This value is composed of what the position does for a company in and of itself (regardless of who occupies the position) and also what the person hired for that job brings to it. Seniority, cost of living, or social constraints should never be a part of the equation. Output is what matters.
  • Before I hire, I determine what each position is worth in terms of its importance to the success of my company. Setting this guideline helps to insure that all compensation is fair. Tying changes in compensation to contributions above and beyond the job description then becomes easy—both for employees to accept and for management to enact.
  • Waiting for an annual review, or until an employee asks for additional compensation, is not only frustrating and de-motivating for the employee but also dangerous for the employer, because it gives the employee time to think that her contributions are going unnoticed or that she might be better treated elsewhere.

I totally agree with these points. As I have put it previously compensation is not a reflection of an individual’s worth as a person, but rather the rent we pay them for the application of their skills and abilities on our behalf.

I want to be clear that I support the concept of a living wage and I have been a lifelong advocate of compensation that is fair and equitable based on the skills, market conditions, and the ability of the organization to distribute compensation relative to other expenses related to operating the organization.

In the models I have constructed I have always tried to create very clear line of sight for employees about what we ask them to do and what we pay. I am very open about how we make decisions around pay both for the total organization and on an individual basis.

I think it critical to talk with employees about how they can increase their compensation by increasing their value to the organization.

I have clients who hire people who are minimally skilled and they pay those people appropriate to their competitive market and those skills. What we also do is make it clear that we try to create and expect employees to increase their skills and value to the organization and increase their compensation accordingly.

We also have employees who are transitional. They work for us while they are in school or other developmental activities and sometimes we don’t have the capacity to retain them in their new career. We don’t resent them; we applaud them and feel grateful that we got to partner with them in their journey.

We hire whole people, but we don’t make promotional or compensation decisions based on their personal situation or desired lifestyle. That is a cognitive choice they make and we respect them too much to parent them or create a codependent situation.

Maslow’s hierarchy is very real. Compensation is a very critical component of safety and security. If you can’t feed yourself or afford meaningful shelter that is a critical focus. As we move up the hierarchy I find that compensation becomes more of a hygiene factor unless I manage it properly.

A simpler way of putting that is if you feel underpaid you likely resent it and withhold contributing at your highest level, but once you feel fairly paid or more you don’t perform at a higher level just for the money. You are looking for a higher level of alignment.

I also believe that once you cross a certain economic threshold “cost of living” isn’t a meaningful factor. Do we really think highly compensated executives feel the impact of a slight increase in the Consumer Price Index?

I also like the idea of compensation tied to market and organizational performance because to paraphrase another quote –

“Teams don’t win, teamwork wins”

It isn’t enough to have great talent; you have to have great talent that has a clear line of sight between organizational objectives and their own goals and works toward them collaboratively. That is where that leadership thing applies.

Doing these things well and building them on a foundation of trust and respect is how you create and sustain engaged organizations, and engaged organizations outperform their peers every time…

Being Aligned

An interaction with a number of clients and other people over the past couple of weeks has reminded me about how important alignment is, both personally and professionally.

As many know I am an advocate of and hopefully catalyst for engagement. To me engagement represents that sweet spot where the goals of the organization and the goals of the individual are aligned. I recognize that many other would describe engagement as high morale, happy employees, or a number of other factors. I don’t discount any of these I just see them as some of the ROI of engagement rather than engagement per se.

I am still puzzled and a lit disappointed in the fact that our body of knowledge about engagement has grown enormously over the last ten years or so, but our application of the concepts hasn’t moved nearly as quickly.

There is enough data to demonstrate that engagement isn’t ethereal and something soft and intangible, the correlation between engagement and organizational performance has been clearly demonstrated time and time again.

In my opinion engagement is a culture and a deliberate process, it isn’t an event. It doesn’t belong to any particular department or position. It needs to be cultivated and deployed throughout the organization.

Engaged cultures start with some things that make many of us uncomfortable including; a foundation of trust, mutual respect at all levels of the organization and reinforcement throughout the organizations selection, reward, and performance management systems.

It is relationship oriented rather than a function of compliance, policies, and procedures. I think that is one of the reasons we struggle with it.

We don’t teach the skills that create and reinforce a culture of engagement in most of our universities and business schools. We tend to teach tactical skill sets rather than relational ones.

A young attorney who I respect a great deal elected to take part in a leadership series that I co-developed. He is doing that even though he has no employees at the current time. He has decided that skills like treating people respectfully, giving and receiving feedback constructively, setting clear expectations, and having a positive intervention model when his expectations aren’t being met will serve him with clients, coworkers, family and friends.

He mentions that those skill sets weren’t part of his educational experience in either his undergraduate studies or law school. I suspect his experience isn’t unique.

When you start with a foundation of trust and respect and you apply those other skill sets engagement and alignment come much more easily.

Engagement doesn’t look the same in any two organizations, the outcomes and benefits are similar, but true engagement fits itself to the unique organizational culture.

Aspiring to build and maintain an engaged environment is I believe a best practice and many of the elements are consistent, but there is no one perfect way.

Millennials are much more about engagement than proceeding generations. We think of engagement wistfully, they expect it and are willing to keep looking until they identify organizations that can offer it to them.

I respect that. I think that if we all decide that alignment is a superior way to do things we will create a society that makes the world a much better place.

So be mindful. Think about what values you choose to be aligned with and then commit to actively seeking relationships where that is reinforced. If you find yourself in a place where you aren’t engaged or aligned then to paraphrase Gandhi “be the change you wish to see in the world”.

Who knows, maybe it will catch on…

 

So I was Thinking…

Things That Make Me Pause

I like to think of myself as a social moderate and a bit of a fiscal conservative. I am a big believer in personal responsibility and accountability, employee engagement (because it is far superior to the alternative), and treating everybody with respect.

Over the last 30 plus years I have been a human resources professional, c level executive, and management consultant. During that journey I have learned some truths

  • The most critical elements for the foundation of any relationship, personal or professional are trust and respect.
  • Everyone is entitled to respect for their personhood if nothing else.
  • Relationships are the most important systemic dimension in every organization.
  • People who share your values and are congruent with them will perform at a much higher level than those who are neutral or don’t share them.
  • I am entitled to my values and beliefs; however I am not entitled to inflict or enforce them on others.

I spent much of the formative part of my life in Arizona. In fact unlike many of the residents I was actually born there.

I left AZ for almost thirty years before returning for just over three years recently. I had always loved the pioneering spirit of the state and many of things it had to offer, but I have to say that there are things I don’t recognize or certainly don’t align with.

As anyone who gets the news is aware a bill passed both houses of the state legislature that would allow business owners to decline to do business with an individual or organization because of their religious beliefs. I think on its face that seems innocuous, but we aren’t just talking about choosing not to do business with a company, but literally refusing service to people.

There is discussion that this is primarily focused on people with alternative lifestyles as Federal law specifically excludes discrimination against individuals based on gender, nationality, age, and several other characteristics. I think we forget that at one time in the not so distant past it was in fact legal to discriminate against people for these views. I happen to see that as a darker part of our history.

Certain religious fundamentalist located outside the U.S. would be very supportive of this position I am sure. They actually do actively discriminate against people based on the protected classes I mentioned above. I don’t see them as company I would like to be associated with.

I have seen a lot on the blogosphere saying that allowing this kind of distinction isn’t that different than business owners choosing to prohibit gun owners from bringing their weapons into their place of business even though AZ has an open carry law.

I personally find that comparison absurd. Carrying a weapon is bringing an appendage and exclusion can be based on safety and other considerations. I find it difficult to say that there are any safety considerations in preventing people from entering a business while under the influence of their religion, ethnicity, etc.

I want to be clear I am not anti- gun. I don’t personally feel the need to carry one on my person on a regular basis, but if one is inclined to and has the appropriate training and mindset so be it. I don’t believe minors should be able to carry weapons; concealed or otherwise into schools and I believe that there are venues where unless you are in law enforcement or the military you don’t need to be armed.

I don’t know why some of the members of my former state are so angry. Before this latest round of exclusion there was a lot of controversy around illegal aliens, primarily of Hispanic origin. In fact one of the most prominent law enforcement officials in the state has made protecting citizens from illegal aliens one of the cornerstones of his policy.

I am glad to see that elected officials like John McCain, Jeff Flake, and even the Governor appear to be in alignment that this is a bad law.

I think you should have the right to your views and beliefs. I think you should be able to choose to a point that you do business with unless you are serving the public.

I also don’t fully understand how proponents of this law are going to determine how someone violates their beliefs.

  • Is it how they look? Be careful because you may be violating Federal laws.
  • Is it how they dress? Same issue.
  • Is it their language or manner of speech, or what they talk about?

I just get disappointed when I feel that we have made some progress towards Dr. King’s dream and we are seeing social attitudes become more tolerant and accepting of people whose views we don’t all share and we seem to slide back.

I also think that you can be judged by the company you keep and I wouldn’t like to see too many close parallels with the views of others who we are still engaged in armed conflict with or appear frequently on the despot list.

I can’t in honesty tell you I will boycott AZ if this bill passes, but it will give me pause about considering relocating there at any point in the future.

I guess I will remain consistent with my current prejudice, I am prejudiced against assholes.

In my experience they don’t limit themselves to any ethnic or racial group, gender, sexual orientation, or age. You aren’t born one you become one and it is a cognizant choice…

What do you think…?

A New Social Contract

Engagement- Getting It Right!

So we had a pretty gnarly snow and ice storm this last week in the PNW so I had time for a lot of contemplation and catching up on my reading.

As per usual, topics that speak to the concepts behind employee engagement continue to attract my attention and focus.

I will be honest; I am perplexed with why more organizations don’t invest in a strategy that clearly leads to significantly improved performance in every conceivable key performance indicator. Especially today, when studies are recoding that voluntary turnover was up by almost 50% between 2012 and 2013 and the cost of a new hire is up 15% for the same period.

When you add those statistics to the fact that on average engaged employees contribute almost 50% more per capita and you have to ask – “what’s up”?

Engagement has taken a pretty good pounding because a lot of people still see it as some kind of a motivation tool or a survey to be conducted by the HR organization. Others see it as soft science.

The reality as well demonstrated by organizations like Zappo’s is that engagement is about culture and alignment. “Happiness” is a byproduct.

The other reality is that most employees are reasonably engaged or have the potential to be engaged when they first join an organization; their engagement level usually diminishes over time as reality sets in.

Executives tend to be more engaged that front line employees. Not a huge surprise as they make considerably more money and hopefully have much clearer line of sight on the organizations objectives and progress. The bad news is that is that this often gives them a distorted view of the engagement level of employees across the organization.

A recent BlessingWhite study indicates that the majority of employees see their next significant career opportunity as being outside of their current employer and having control over their own career.

To me that says that fully recognizing that the social contract has cycled back to where employees see themselves in the driver’s seat and no longer view careers in the linear context they have previously means great employers will be looking at a new partner style relationship with employees, especially the best and brightest.

For me that means that we should put a stake through the heart of the concept of human capital, managing people as a two dimensional asset rather than whole people.

The really bad news is that front line sales and service employees typically record the lowest levels of engagement, and it is this level where your brand meets reality.

My experience has taught me that there are a couple of key ways to create and sustain engagement:

  • Hire the right people. I talk and write a lot about things like building a foundation based on trust, respect, and congruency. The reason I do that is because those characteristics of a culture have been proven over and over again to generate outcomes we want.
  • Invest in front line leadership. The criticality of front line management shouldn’t be a surprise to anybody. Heskett talked extensively about the impact of even one bad manager in his book The Service Profit Chain, and it has been discussed extensively by others as well.  Employees have different expectations of their manager/supervisor than previously. The concept of manager as boss is severely outdated. Employees expect their manager to partner with and coach them in their career.
  • Engagement is a culture, not a program and it doesn’t belong to or live in HR. If you ask most human resource professionals what their critical contribution to their organization is the vast majority will answer compliance. Compliance isn’t engaging, it represents the bottom rung of the trust ladder being based on authority and rules.
  • Engagement is not a survey. If you have no intention of making meaningful changes don’t annoy your employees by asking them to respond to a survey. Pre-survey they might give you the benefit of ignorance. Post survey they know you are either incompetent or apathetic.
  • Although leadership and management are a continuum and every manager doesn’t have to be an enlightened leader every manager must be competent at some core skill sets among which I include; setting clear expectations, giving and receiving feedback constructively, diagnosing performance issues and taking appropriate corrective action, coaching to optimize performance, and creating line of sight between organizational and individual goals. These skill sets are critical to every management role. The bad news is they don’t teach these in business school or most university curriculums of any discipline.
  • The best organizations have a clearly defined employment brand. An employment brand clearly identifies for current and prospective employees what you are about. It is reinforced in hiring, training, performance management, and the reward system. Every organization has an employment brand; superior organizations are managing theirs proactively.

So I can’t guarantee that if you follow my rather simple prescription you will suddenly see massive productivity improvements, but you will see improvement if you do the work.

If you are a small organization I recommend you invest your resources primarily in two areas:

  • Hire the right people up front.
  • Train your frontline supervisors

Experience and the data suggest these are the two most important steps you can take…

Things to Consider

Something to Consider

I saw a quote on Facebook the other day that kind of spoke to me, it said, -

It is easier to raise strong children than to try to fix broken men

I agree with that concept and I also thought about my own interests and commitment to changing the social contract and promoting employee engagement.

This week like every other I saw a number of things that kind of make you wonder why we don’t see more organizations embracing this model.

A colleague shared a post indicating that the latest Gallup study indicated that around 13% of surveyed employees rated themselves as highly engaged. When you juxtapose that to the estimate that highly engaged employees perform at 147% of the level of their peers and that another study indicates that lack of engagement costs the U.S. economy between $450 and $550 billion annually you would think there would be greater focus on it.

The reality is that engagement scores have moved very little over the last five years.

Another post I read talked about how useless exit interviews are for the most part. The person seeking advice was leaving their toxic employment environment and was flagged by HR as a high profile departure. In English that means management actually gives a shit that this employee is leaving and they likely have credibility with other employees so their departure could be damaging so we need some spin management.

The employee mused that the only interest the Company typically demonstrated in her issues and concerns previously was an annual engagement survey whose results they ignored and a meaningless annual performance evaluation process. She felt that this was a CYA move by HR rather than a sincere effort to understand her concerns and make meaningful change.

I saw another post on how we need to make management more accountable for employee engagement. I agree and disagree with this statement. I think management, especially front line management has a role in creating and sustaining employee engagement, but putting it all on them is as ludicrous as assigning it exclusively to the HR department, it is a collective effort.

Another poster got a little bit surprised when he posted a tongue in cheek post about why everybody hates the HR department and got overwhelmed by responses agreeing and listing their complaints.

I have written and spoken at length about how and why HR departments need to change and evolve so I won’t dwell on it here, but I wonder if HR folks are listening.

To go back to the original premise I believe it is easier to build a strong culture and organization from the ground up than to fix a broken one. We call that building engagement in rather than trying to bolt it on.

We advise clients to hire not only for technical capabilities, but also for attributes and congruency. We recommend that you use assessments to validate your perceptions, not just rely on interviews and your gut.

We also feel like training every manager in core competencies like setting clear expectations, giving and receiving feedback constructively, taking corrective action appropriately when performance isn’t meeting expectations, and coaching to optimize performance and holding them accountable to do those things is critical.

We recommend hiring and managing whole people. That doesn’t mean we advocate turning managers into therapists or having therapists on staff, but it does mean that we understand and appreciate what their personal values and goals are and help them see how they align with organizational goals.

We operate in an environment of trust and mutual respect. We give the respect and we earn the trust. We aspire to a leadership model based on identity based trust, trust based on personal and professional integrity, shared values, and intimacy in addition to technical capabilities and authority.

If we start to see an employee start down the path of disengagement (see my previous post) we address it in the early stages, we don’t try to regain trust or re-negotiate in the exit interview.

We probably use surveys as a tool to check alignment and engagement. We use the surveys as a part of our engagement initiative, it isn’t the initiative. Engagement is owned by everyone including senior management and individual employees, it doesn’t live in HR.

We don’t expect more loyalty than we provide, and we measure it in terms of contribution not tenure.

Creating this kind of environment takes work and it is a process and journey not an event. You never arrive.

So you might ask why should we do this and I would provide my personal answer-

  • It is easier to build strong organizations than to fix broken ones
  • I like to win, so giving up the competitive advantages that a highly engaged workforce offers without even trying seems kind of dumb.

So what do you think?

Engagement Is A Journey

Understanding the Engagement Continuum

My colleague Michael Beck posted a great piece the other day on why the majority of employers worldwide are doing the engagement thing wrong, addressing it reactively rather than proactively and I couldn’t agree more. Much better to build engagement into the fabric of your organization through appropriate selection and hiring, but it doesn’t stop there.

He pointed out that the latest Gallup poll provided some pretty eye opening statistics, including the fact organizations with high employee engagement saw a 147% advantage in earnings per share over non highly engaged organizations in 2011 and 2012 and the fact that the Department of Labor estimates that disengagement costs the U.S. economy between $450 and $550 billion dollars annually and for me at least that garners some attention.

Add to that recent studies indicating that voluntary turnover was up 45% year to year from and cost per hire is up 15% for the same period and you might think that more organizations would be examining their strategies and taking action. The interesting thing is that we have seen at best incremental improvement over the last five years.

I think there are a number of issues surrounding organizations inability or unwillingness to address this issue. I include the idea we really don’t understand it, we don’t make it a core strategy, the fact that most human resources practitioners are still in the compliance business, and that engagement is a relationship issue rather than a technological process improvement among my big hitters.

I also think many executives and managers are in denial. If you ask executives why employees leave the vast majority (over 80%) will tell you they left for more money. However when you ask employees as a survey of almost 20,000 employees who changed employers did the result was pretty interesting. Only 12% of those employees reported more money as the primary driver.

Instead the top seven reasons employees left were as follows:

  • Number 7- they didn’t trust senior leadership
  • Number 6 – they felt they didn’t have appropriate work/life balance
  • Number 5 – they felt devalued and unrecognized
  • Number 4- they didn’t see a clear career path
  • Number 3- they didn’t receive meaningful feedback and coaching
  • Number 2- they didn’t feel like they were a good fit with the job or organization
  • Number 1- they didn’t feel the job met their understanding or expectations of what they signed on for

Here is a tip, there is not a technology or program yet invented that is going to address those issues.

Here is another tip, Millennial and next Genners put even more value on those issues than Baby Boomers and they represent the future workforce.

I am an optimist. I truly believe that the vast majority of employees show up on day one committed to doing the right work and doing it well. Somewhere in the process it breaks down.

The process of disengagement looks something like this

  • Stage one- enthusiasm and excitement about the new job
  • Stage two- they begin to question their decision
  • Stage three- they are disillusioned
  • Stage four- they consider leaving
  • Stage five- they begin exploring options
  • Stage six – they receive an offer
  • Stage seven- they are forced to decide whether to quit or stay
  • Stage eight- they quit and stay

The number of employees who quit and stay has been estimated to be as high as 20% of the employee population and ladies and gentlemen that is a problem.

Employees who quit and stay don’t do so passively. They block opportunities, they poison the well by spreading their discontent, and they utilize enormous resources in terms of managerial time, health care expenditures, sick time, etc.

The American Mental Health Association estimated in 2010 they cost our economy over $200 billion in indirect cost related to absenteeism and lost productivity.

I want to make two points here before moving on-

  • This is a huge competitive disadvantage for organizations with low engagement
  • This issue is fixable; remember 90% plus employees showed up at work on day one wanting to do the right work.

So how do we fix it?

I read a piece the other day that kind of abhorred me. It talked about whether or not to do a survey of your employees to determine their level of engagement. It recommended that doing a survey represents a social contract to make changes so if you aren’t far enough on the continuum to make that commitment doesn’t do a survey.

I agree in part. Doing a survey without the intent or resources to make changes or respond to the feedback is a pointless exercise. The part that abhors me is that if you are that far up your own ass I think there is a huge wake- up call in your future. I refer to this group as ignorant and proud. The recession which trapped many people in lousy jobs was probably a blessing for them.

So how do we fix this issue?

The first thing you do is to identify the core value proposition of your organization and develop a strategy to clearly communicate it to all of your stakeholders; this includes employees, suppliers, customers, shareholders, and communities where you do business.

The second thing that you do is that you develop hiring and selection processes that ensure that the people you invite to join your organization share the value set of the organization and that the connection between their personal values and your organizational values is transparent.

The third thing that you do is ensure that anyone in a management or leadership role has the competencies and skills to create and reinforce that line of sight.

I like the way Jack Welch describes it-

“…leaders are generally not judged on their personal output. What would be the point of evaluating them like individual contributors? Rather, most leaders are judged on how well they’ve hired, coached, and motivated their people, individually and collectively—all of which shows up in the results.”

The fourth thing that you do is make sure all your other systems reinforce the values as well. By that I mean your hiring and selection, training, compensation, performance management, and your succession planning, and promotional decisions.

The fifth thing you do is to benchmark your progress and recalibrate as needed. Perception is reality, if your employees don’t feel aligned with your core mission and objectives they will not perform at peak.

Realistically all of your employees will not be with you forever and that is a good thing. You need to constantly refresh your talent pool and get new energy and new ideas. The key is that while employees are in your employment they are engaged. In many cases they represent your best resource for attracting the new talent you need.

As a leader or employer you make a cognizant choice as to how you will lead.

It isn’t essential that you embrace an engagement mentality; I just wonder why anyone would knowingly give up the kind of competitive advantages we talked about before.

Engagement is a culture and a continuous journey. It doesn’t belong to a particular department or just to a few people. If you want to reap the rewards you have to do the work…

Need Some Leadership Inspiration?

If You Need Some Leadership Inspiration, Then Add These Five Leadership Books to Your 2014 Reading List.

Most of us have longer reading lists than available time. There are traditional hard cover books, PDFs and books saved onto our tablets, case studies our bosses have asked us to read and summarize, trade publications that continue to arrive when we least expect them via snail mail, and e-zines that appear in our email boxes in a never-ending stream. But when it comes to leadership strategies, corporate culture, and leadership development, there are never TOO many perspectives to consider or books to read. Here are five books I highly recommend you add to your early 2014 reading list.

[1] MANAGING WHOLE PEOPLE, ONE MAN’S JOURNEY by Mark Herbert
When Mark Herbert, a leadership expert and management consultant, asked a supervisor who was taking a six-month sabbatical if she were interested in the job on a long-term basis, she answered yes. So Mark suggested that she “embrace the job as if she owned it” rather than going through the motions as just the job’s caretaker. How many times have we, as employees, gone through the motions of a job – only to wonder at the time of the annual review: why didn’t we receive a raise or a bonus? Now ask yourself, do you act as if you own your job each and every day? The answer might surprise you – but you shouldn’t be surprised when your next review takes place because you can make changes NOW.

Another example emphasized corporate culture. A man went to a hospital in Texas because he wanted to meet a famous heart surgeon. As the man left the hospital one evening during his visit, he met an elderly man who was mopping the floor. The man asked, “What do you do here at the hospital?” The elderly man replied, “Dr. DeBakey and I save lives together.” The elderly man explained that Dr. DeBakey had told all staff members that hospital infections kill more patients than disease, so the elderly man was doing his part to keep the hospital clean. Have all the employees in your company jumped on the bandwagon to support each other and work toward the same goal?

What does workforce engagement mean to you and your company? More importantly, what steps do your leadership team, management team, and human resources team all take to make sure that the culture allows for respect, responsibility, rewards, information sharing and open communication, and loyalty? If you cannot answer these questions, then you need Mark Herbert’s roadmap.

[2] LEMONADE, THE LEADER’S GUIDE TO RESILIENCE AT WORK by Alan Graham, Kevin Cuthbert and Karlin Sloan
As a leader, how do you define challenges in the workplace? How do you triumph in difficult times? Alan Graham, Kevin Cuthbert, and Karlin Sloan characterize workplace challenges as “lemons” in their book. Some of these lemons or challenges include low morale, lack of resources, downsizing, and competition – but these authors explain that it’s easy to make lemonade from lemons. What’s the key? The key to turning lemons into lemonade as a leader is resilience. The examples below offer inspiration, but note, leadership development and failure are intertwined.

Leadership and resilience go hand-in-hand – and there are three domains of resilience:
1. Relationship to Self: “Leadership requires us to know ourselves…it requires self-confidence, self-management, and overall perspective that we have the power to effect positive change.”
2. Relationship to Others: “Leaders cannot lead without followers – so this domain is critical for everyone in a leadership role.”
3. Relationship to Environment: “Leaders with a positive relationship to their external environment are goal-oriented, future-minded, purposeful, and proactive. They are able to reframe whatever comes at them no matter the scenario.”

In the words of Graham, Cuthbert, and Sloan: “Make your own personal brand of lemonade…Stay inspired by reading and watching resilience stories wherever you can find them. And tell your own! Leaders who can tell their own stories of making lemonade inspire others to do the same.”

[3] THE STRATEGIST by Cynthia A. Montgomery
Readers are urged to embrace the role of strategist and confront the most compelling questions at the heart of their businesses. “The strategist is the one who bears the responsibility for setting a firm’s course and making the choices day after day that continuously refine that course. That is why strategy and leadership must be REUNITED at the highest level of an organization…What’s been forgotten is that strategy is not a destination or a solution. It’s a journey. It needs continuous, not intermittent, leadership. It needs a strategist.”

Leadership expert Cynthia Montgomery posed difficult questions: If your company disappeared today, would the world be dramatically different in the days ahead? Would your customers miss your product or service? If your customers wouldn’t miss you when you’re gone, how much do they really need you NOW? If you don’t possess this uniqueness, then you’re missing a strategy – which begins with a clear business purpose. By the time you’ve done reading the book, you will be asking: Does your company have a strategy statement that explains your purpose, means of competition, and unique advantages? If not, you know work needs to be done.

[4] ALL IN by Adrian Gostick and Chester Elton
This book lets the secret out of the bag: Culture is what makes teams and organizations great. According to Adrian Gostick and Chester Elton, “Whether you manage the smallest of teams or a multi-continent organization, you’re the proud owner of a culture. If it is clear, positive, and strong, then your people will buy into your ideas, and most important, will believe what they do matters and that they can make a difference. On the other hand, if your culture is dysfunctional – chaotic, combative, or indifferent – employees will spend more time thinking about why the people sitting next to them should be fired rather than getting fired up themselves.”

Consider this example from the book: A company recognized excellent work by employees by welcoming a band with drummers and brass instruments into the office. The band would walk around the company, and at every opportunity, more and more employees would join the “marching band.” But, best of all, the CEO actually led the band and would stop at the star employee’s desk to recognize the individual’s accomplishment. What does your business do to recognize employee achievements?

[5] SOMETHING NEEDS TO CHANGE AROUND HERE by Liz Weber
What’s the core of leadership? I have often wondered about this. Like everyone, I have worked for people with the capacity to inspire and energize an army, and I have also worked for people who would have been better off in a cave far from civilization. Liz Weber, the Dragon Lady of Leadership Accountability, shared a quote in the book, “Being a manager or a leader is a privilege. It’s an honor to have others respect your abilities enough to allow you to lead them. It’s an honor to have others trust you to guide them and support them as you work together.”

Ask yourself, how often – between meetings, conferences, projects, employee reviews, etc. – have you considered being a leader or manager to be a privilege? Ever? Be honest when answering. If more managers and leaders considered the process of supervising, guiding, teaching, training, mentoring, and managing others as a PRIVILEGE, our workplaces would run more smoothly, and employees would be more engaged. As Liz Weber writes at the end of the book, “Someone needs to change around here…you.” I challenge all leaders reading this post, alter your mindset and behavior, and then watch your employees. You just might notice a difference.

What else is on your 2014 “Must-Read” Leadership Reading List?
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Follow these authors on Twitter:
Mark Herbert: @NewParadigmer
Karlin Sloan: @KarlinSloanCo
Cynthia Montgomery: @leadstrategy
Adrian Gostick: @adriangostick
Chester Elton: @chesterelton
Liz Weber: @lizwebercmc

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GUEST POST BY DEBBIE LASKEY, MBA
Debbie Laskey has 15 years of marketing experience and an MBA Degree. She developed her marketing expertise while working in the high-tech industry, the Consumer Marketing Department at Disneyland Paris in France, the non-profit arena, and the insurance industry. Her expertise includes brand marketing, social media, employee engagement, leadership development, and customer experience marketing. Currently, Debbie is the Director of Marketing and Communications for the Exceptional Children’s Foundation in Los Angeles. Since 2002, Debbie has served as a judge for the Web Marketing Association’s annual web award competition and has also been recognized as one of the “Top 100 Branding Experts” to follow on Twitter.

Lucy, We Got A Problem!

Lucy – We Got Work To Do!

A colleague I deeply respect shared a couple of statistics yesterday that should give both employers and human resources professional pause; voluntary turnover (employees electing to seek other employment) was up 45% year over year from 2013 to 2012. Additionally the cost per hire was calculated at 15% higher than the previous year.

Given that we hear constantly from employers about the talent shortage and the difficulty many of them are having in recruiting and retaining the talent they need to drive their organizations I would think statistics like that should get management attention. Especially when you add in the fact that we have seen at best minor incremental improvement in employee engagement scores over the last few years.

At the risk of being repetitious, I want to be clear here that when I discuss employee engagement my focus is on alignment and per capita productivity, not employee morale or satisfaction. I don’t dismiss the importance of those factors, but as a business person my focus is on organizational performance.

I have seen and heard a lot of discussion that pursuing engagement is a fool’s errand and not a worthy endeavor, but most of the people who say that are poor at actually diagnosing organizational performance issues and addressing them.

The statistics about the benefits of engagement are clear and irrefutable. What is also clear is that pursuing and maintaining high levels of engagement is systemic and cultural, not a program or survey. You have to do the work.

My experience is that doing the work is actually simple, but not easy.

In my opinion and professional experience the work looks a lot like this.

  • You start with the premise of trust and respect. Those in leadership must earn the trust; respect for each person is an entitlement. Trust comes in three levels: deterrence, or trust from authority; knowledge based, the trust that comes from qualifications, education, and perceived competency; and most importantly identity based, the trust that comes from shared experiences, personal and professional integrity, and intimacy. This last level doesn’t come with a title, degree, or certification.
  • The next dimension is basic leadership competency. Basic leadership competency to me incorporates mastery of some key skills including; the ability to set clear expectations, the ability to both provide and hear feedback constructively, the ability to diagnose performance issues and take appropriate corrective action, the ability to coach employees to higher levels of performance, and understanding and practicing the concept of personal accountability to lead by example.

I consider these to be basic management and supervisory competencies, these don’t make you a leader, they make you a competent manager. These are skills, not inherited attributes or reserved to certain people. They can be taught and learned.

  • The next step in my process is what my colleague Joseph Skursky refers to as Hiring Hard, Managing Easy. As that phrase implies you need to do the work up front and hire the whole person. People aren’t just composed of skills and abilities. They also possess attributes and values. The closer they are in alignment to your organization the more likely they will fit and perform in your organization. We call this fit Congruency® from the model developed by Dr. Ron Willingham. His congruency model looks for alignment or congruency in several key areas; the person’s view of the activity, their view of their ability to do the activity, the relationship between their personal values and those of the organization, their willingness to do the work to accomplish the tasks and improve their capabilities, and their belief in the product, service or activity the organization is engaged in.
  • The last step in my process is reinforcement. Do your systems, policies, procedures, and most importantly actions and behaviors reinforce and align with your stated values and objectives. Very simply put can employees answer these questions consistently and clearly-
  1. What is my job?
  2. How am I doing?
  3. Does anybody notice or care?
  4. What is our mission or value proposition?
  5. How are we doing?
  6. How can I help?

You have to answer all those questions, and you have to answer them in that order. I read a great blog post a while back about an exchange between an employee and a consultant about Starbucks. The employee indicated that in his experience Starbucks doesn’t value one stakeholder over another. Customers or guests are highly valued, but not at the expense of employees. That sends a powerful message to both.

I am a passionate believer in the stakeholder mentality. I want to be clear that I am a capitalist, but I think when you commoditize one stakeholder over another you have built a poor foundation.

I distinguished earlier between leadership competencies and leadership. I believe that in order to be a moderately effective manager you must be competent at the skills I identified; those won’t make you a leader.

I believe that leadership has to come from others; it can only be achieved through identity based trust. Leadership is about relationships, not transactions.

When I look at where we are relative to turnover and engagement I don’t believe that we are fully embracing the right models.

You could say does it matter, so here are some reasons I believe it does:

  • The Department of Labor a couple of years back estimated that employee turnover cost the U.S. economy $5 trillion annually. That was before the 45% number.
  • It is estimated that over the next 10 years the demand for experienced talent will increase by 20%, while the supply will diminish by 15%.
  • It has been estimated that employee disengagement and presenteeism (employees who quit and stay) cost the economy another $200 billion annually in direct and indirect costs ranging from absenteeism and health care utilization to reduced productivity.
  • The U.S. spends 40% more than any other industrialized country per capita in delivering health care with mediocre results (another opportunity cost).
  • Several other countries including the U.K. have launched employee engagement initiatives to address this issue. The U.S. has not.

One could argue that the stock market is at all-time highs, but we also have chronic, systemic employment and the gap between the 2% and the rest is increasing not decreasing.

The solutions for these issues isn’t going to come from traditional human resources practitioners or departments, when surveyed the majority of human resources executives and their internal clients identified compliance as their number one priority and value add.

As an alternative I love this excerpt from a post by Michael Fertik sharing his excitement about hiring a Chief People Officer and exhorting his fellow CEOs to do the same-

•You need more than traditional HR, which centers on people, process and policies. These are important aspects and they need to get done. But a CPO’s focus should be on building culture – facilitating an environment that enables the best possible way of working. And while Human Resources falls under the Chief People Officer, calling the CPO an HR person is like thinking of your Chief Financial Officer as an accountant. They play in the same space but the strategic focus is completely different.

•A CPO will reset the definition of culture with you. Chief People Officers understand that culture doesn’t equal happiness. (Note: happiness can certainly be the byproduct of a great culture). But too often, we equate culture with lifestyle and perks, the ephemeral fun stuff that makes up the bulk of articles on companies with the “greatest cultures.” In reality, perks are the nice-to-haves. There’s nothing wrong with them but the foundation of a culture rests on business goals, not masseuses and organic meals made to order. It’s asking, what can we do to identify, attract and retain the talent we need to drive enterprise value?

Chief People Officers focus on the culture trifecta: people, value and capacity. They know it’s about who is working for you, the value they generate for the business, and what’s needed to turn that value up to its full capacity. Is it revamping the recruiting process so you hire people who feel a strong affinity for your mission? Is it coaching managers on how to inspire and reward employees? Is it exiting leaders who leach toxicity into your workplace? What changes, large and small, can you make to get to that capacity?

In my opinion Michael, like the leadership at Starbucks, Zappo’s, and others gets it.

I suspect that those are not the organizations that will suffer the 45% turnover or the talent shortage; you see they are doing the work…..

What Have We Learned…

When Will They Ever Learn…

I am probably dating myself a bit by borrowing that line from the classic Peter Seeger tune, but I find myself asking that question over and over again.

The they I am referring to are the leaders and managers who still don’t seem to get it. As most anyone who has read any of my stuff knows I have committed my career to building and reinforcing new models of how organizations and people work together.

You can call it an employment relationship, a social contract, or whatever you choose; but what I am referring to is the relationship between employers and employed.

Employee engagement, the level of alignment between individual employee efforts and goals and organizational goals and objectives remains without question one of the most powerful and significant opportunities to improve organizational performance across every key performance indicator.

I am not speaking speculatively; the correlation between those things has been well established by the Society for Human Resources Management, the Gallup organization, and numerous other academic research organizations and professional consulting firms. We still do it as a society fairly poorly, with the number of employees describing themselves as highly engaged ranging around thirty percent in the U.S.

Organizations in large part took a hiatus from focusing on improving employee engagement during the great recession because with relatively high unemployment they didn’t feel they needed to attend to it to attract or keep the talent they sought. Now that the economy is starting to pick up you hear employers whining again about the difficulty of finding and keeping the talent they seek.

Here is a tip – highly engaged organizations don’t have that issue. That is one of the myriad of reasons they outperform their competition.

I had a chance to read Joel Peterson’s blog post with installment two of building a high trust culture and it really resonated with me. Step two for Joel is investing in respect.

As he describes it – Respect is, in some sense, the currency of trust – the way it’s exchanged and circulated among people.

That idea particularly resonates with me.

A number of years ago I created my own model of creating and sustaining employee engagement; I call it moving from compliance to Commitment, or little c to Big C.

My model has five elements:

  • Respect
  • Responsibility
  • Information
  • Appropriate Rewards
  • Mutual Investment

Somewhat self servingly you can see why Joel’s pillars speak to me. Respect is the most foundational of the elements to me. Without respect all of the others fail.

Every person that we interact with has an absolute entitlement for our respect for their personhood. It doesn’t mean we have to accept at face value their talents, abilities, or authority; but we owe them respect for their personhood.

I often tell both employees and new managers that you need to respect each person and in hierarchical organizations you need to at least initially respect the position or office.

In this way this is similar to the first level of trust, deterrence, the trust that comes with formal authority.

The second level of trust or respect is knowledge based, this is the trust we receive (or more importantly earn) based on things like education, qualifications, perceived competency.

The third and in my opinion highest level of trust is identity based. This trust comes from intimacy, credibility, and mutual investment. This trust and respect is highly personal and can only be earned and given. It doesn’t come from credentials or position.

We don’t talk much about trust and respect in this kind of language. I have met many managers and leaders who inappropriately assume an entitlement to the highest level of trust based on the first two.

I differentiate leaders because again in my opinion an organization can appoint you a manager, but leadership comes from others who voluntarily accept your guidance and agree to follow your direction.

I also believe passionately in the concept of personal competence as it relates to respect. Personal competence means that we each own the responsibility to engage, to provide our best efforts, and to contribute fully to the best of our ability.

In return our employers and colleagues have a responsibility to set clear expectations, give constructive feedback, and a clear line of sight between our own objectives and goals and that of the organization.

With respect comes personal accountability and responsibility. If you are given the right tools, the right direction, and the right feedback it is incumbent upon you to do the work.

If someone can’t or won’t do the work and meet expectations I find it disrespectful to continue to leave them in a role they are not performing.

The reason I ask whether we will ever learn is that the majority of human resource professionals and their internal clients would tell you that the most important role they perform is compliance.

That sounds a lot like deterrence to me. It is about the rules. It is about systems and procedures and policies, not about relationships and character and credibility and trust.

As a former human resources executive I remain a proponent of the concept of employment at will, which at its most simplistic form is the legal standard that says that either party to the employment relationship can choose to end it without jumping through a number of hoops.

I temper that with a sense of fairness, that says it is important to me that we balance that transactional concept with the relational guidelines of respect, fairness, clear expectations, constructive feedback, and corrective action.

If you read almost anything about leadership or organizational relationships you are very likely to encounter discussion about loyalty. Employers especially like to talk about their expectation of loyalty from their employees. To me loyalty is relational and mutual, not transactional.

Rigidly embracing the concept of employment at will is not a relational employment model, it is purely transactional. Not a basis for engagement.

I am a much bigger fan of an employment relationship based on Congruency which looks for alignment between employees and organizations on these levels:

  • View of the activity
  • View of my ability to do the activity
  • The relationship between values and the activity
  • Commitment to do the “work”
  • Belief in the product or service

When you build things into your model you have a relationship, not a series of transactions.

I write this at this particular time because two very fine young people I know and care about both ended their relationship with their employers.

Those beginnings and endings happen, but both were handled so poorly that it was a reminder of how far we have to go.

So I leave you with this:

  • Listen to Joel- respect really is the currency of trust.
  • Goal for identity based trust. Yes it is more work, but 30+ years of experience assures me you will never have true engagement without it.
  • Commitment is always better than compliance, period.
  • Add congruency to your must haves when you hire, it is much easier to build it in than bolt it on.
  • Never ever forget that respect for a person’s identity is an absolute entitlement. You may have to terminate the performance; you don’t have to take their dignity.

 

Hope you enjoy the clip