What’s Your Value Proposition?

I have occasion to come into contact with a number of not for profit organizations on a regular basis ranging from very large organizations like education and health care providers to local service providers with a much narrower focus.

I use the term not for profit as opposed to non- profit very deliberately. The point that I try to make with these organizations is that profit at its most basic is the amount of revenue that exceeds expenses and there is nothing fundamentally immoral or amoral about how that excess is distributed.

I find that the idea that an organization should goal for and achieve solvency on a regular basis doesn’t always make me very popular. The idea that the organization should be held accountable to have a clear and compelling reason that it exists and perform its services in an efficient manner is seen by many as an elitist or purely capitalistic viewpoint. I disagree.

I find Seth Godin to be one of my favorite business authors. I don’t put him up on a pedestal or see everything that he writes as either brilliant or that I agree with, but he provided some simple points for would be entrepreneurs that I think have application for every organization-

  • If you have never been paid for your product or service it is a hobby, not a business.
  • If the only people who have ever utilized your product or service are friends and family it is a hobby, not a business.

I have encountered as number of not for profits who believe that their first and most compelling objective is to raise funds and invite donations to their cause.

The idea that they should be able to articulate what it is they are trying to accomplish, how they differentiate themselves from others who provide the same or similar services, and how they seek to become and remain sustainable and viable often seem to be secondary at best.

On the other hand I see organizations that do provide meaningful services and a clear and compelling value proposition who are severely criticized because they do things like a successful business-

  • Create and execute a business strategy
  • Create a strategy to attract and retain the talent necessary to drive the organization and pay that talent competitively.

The most common criticism I hear is that non-profits do not pay any taxes so their spending money on marketing and human resource infrastructure is inappropriate.

The reality is that in most cases the only tax an NPO doesn’t pay is income tax. The other reality is that running a complicated NPO is not significantly different than running any other kind of enterprise and requires the same kinds of talents.

I worked as an executive in the Credit Union industry for several years and then and now heard the criticisms from banking and other financial institutions about the “unfair” advantages that credit unions enjoy.

Rarely do you hear about the restrictions that apply including a significantly higher rate of reserves, limitations on the structure of their loan and product portfolio, and depending upon whether they are State or Federally chartered restrictions on the process of expanding geographically or even within a given geography.

I happen to believe that our society and in fact our world economy has become complicated enough that no one sector is able to address all of the issues facing us and a new model has to continue to emerge. I think we have seen evidence that I am not alone in my thinking.

I am intrigued by Warren Buffet and other billionaires who have signed a pledge to invest in philanthropic endeavors with a minimum of 50% of their net worth. That means the minimum buy in is a half a billion dollars – each.

The reasoning behind it was classic Buffet, who said that once you reach a certain point in wealth the incremental benefit to you personally is minimal if it exists at all. When asked about whether it isn’t more appropriate to leave it your heirs he said no- that creating multiple generations who are further and further from the actual activity that generated the wealth is an unhealthy process.

I agree. I didn’t have the benefit of growing up in a family that endowed me with a large bequest upon my parents passing and neither do I plan to provide my children with such in the event I become rich and famous.

The discussion about why or why not a billionaire should turn to philanthropy and whether or not this allows the ultra-wealthy too much control was interesting as well.

The biggest reason they stated was ability. They have the financial means to make a difference. Several also talked about with humility about learning to play in a different world with a different set of metrics.

I like the discipline that some of these business leaders have brought to the philanthropic process. I think it is okay to expect a philanthropic organization to have clearly articulated goals and for progress to be measured as to their achievement of those goals. That to me is the most important metric- is you creating measurable results?

So I would ask that we evaluate whether to create and fund not for profits under those terms-

  • Can they articulate a meaningful value proposition and means to address the issue they identify?
  • Can they provide these services in a manner which is efficient and represents a good societal investment for individuals and organizations?

At the end of the day all organization should be judged on how well it articulates and achieves its mission. It is that simple and that complex….



Meeting People Where They Live

Read an interesting post today from Bruce Kasanoff recommending we step away from the old adage of “teaching people to fish” when they are truly hungry.

He points out that when people are truly hungry they need nourishment, not wisdom.

That really shouldn’t be news to any of us since Maslow created his hierarchy of needs decades ago, but it seems like we still struggle with it on both sides of the employment equation.

I am a really big fan of employee engagement. I believe, and the statistics bear me out, that organizations with high employee engagement outperform their lesser engaged counterparts in every key performance category.

So you might ask- Why wouldn’t every organization be investing in employee engagement strategies?

The answer is that creating and more important sustaining an engaged environment is hard work. You don’t accomplish it by administering a survey or creating a project team, or making the human resources department accountable for it.

You also never arrive; sustained employee engagement is a moving target. People’s needs and expectations evolve.

The other thing is that employee engagement is not a management initiative, but rather a partnership. Employees have as much responsibility for engagement as management does. It is something we do with people not to them.

A few years ago I published my first book, Managing Whole People, with some of this in mind. We don’t just manage two dimensional people so if we are going to create and sustain the relationships that lead to true engagement we have to manage the whole person, not just the employee.

We also need to take into consideration where the organization is and where people are and make our matches pretty carefully.

Two dimensional hiring is based on all the stuff that compliance has taught us about being very careful to describe the skills and knowledge and tasks we want performed. Many HR practitioners get very nervous when we talk about things like attitudes and attributes because they are less precise to quantify, but the reality is these characteristics play a huge role in how successful an employee is in any given environment.

Bruce’s comment caused we to think about two of the most common and often unsuccessful initiatives I see organizations embark on a regular basis-

  • Training
  • Change Management

As a consultant it is not uncommon that I receive a request to develop and implement a training program or initiative for an organization.

When I ask why they want training they usually respond – we aren’t getting the behavior or performance we are seeking.

When I respond – Why training? – They often get annoyed. My point to them is that training provides a skills base or model. If what is preventing the performance is attitudinal or other factors training won’t fix it…

Similar with change management, we usually try to do change to people rather than with them. In short we don’t meet them where they are.

That doesn’t mean that we have no right to expect people to modify their performance or behavior it just means understanding what the real impediments are is critically important.

Employee Engagement is a higher level state of performance. It requires some fundamental infrastructure to succeed. Things like trust, respect, clear expectations, constructive feedback, line of sight, and a host of others.

You can’t achieve engagement without mastering these and we still refer to many of these skills as soft in our management theories and discussions.

Worse yet there are many who have adapted the organizational brilliance that emotional intelligence and empathy are gender based and that women are inherently better equipped to succeed in those skills.

Please, for me that rates right up there with the stereotypes we used to attribute to racial or cultural groups.

We have the opportunity to return to the old social contract that the Founding Fathers conceived of when they included personal competency to balance personal property.

Over the years of industrialization and embracing the theory of scientific management, which created the concept of white collar versus blue collar, we lost a lot of the personal competency.

I believe as I covered in my book Plan B- An Alternative to Obamacare, this is a big part of the issue with our health care delivery system. We abdicated personal responsibility for managing our personal health and a very complex system grew up to manage it for us.

Now we have the responsibility back, but little education or information about how to navigate it.

As those of you who are familiar with me and my work know I am deeply committed to a few key concepts. Among them I include building your organization on a foundation of commitment rather than compliance and the concept of personal competency.

There are a lot of other things that inherently embedded in those ideas, but they really represent the foundational pieces.

In the first is the idea that when people come together with a shared set of values and clarity about our purpose proactively and willingly the amount of energy they will bring to that effort increases exponentially.

The second is the idea that people are whole. They perform best when we give them both an opportunity and an expectation of being present. My colleague Reut Hebron Schwartz describes it in part as Kind Excellence. She would tell you there is not true kindness in letting someone meander through their life or career working at 70 or 80 percent of their capacity. Neither can you achieve excellence by simply providing someone with a template and punishing them if they do it wrong.

Social gravity is the emerging concept of describing your value proposition in such a clear way and operating with such consistency that your stakeholders including customers, employees, shareholders, suppliers, and communities are drawn to you. There is a community of interests that is clear and compelling.

Social gravity doesn’t look the same in every organization. Since the dawn of the Industrial Revolution we have really developed an infatuation with best practices to the point we want to use them almost like recipes.

When I see surveys that conclude that most leadership failures occur because of organizational fit, interpersonal dynamics and relayed human factors I have to say I find the perplexity of failure of technology to guarantee sustained success ironically amusing. The answer is right there. It isn’t about processes it is about relationships. Processes can facilitate communications and tasks, but they can’t create relationships. That is a uniquely human dimension.

So I would suggest once again let’s endeavor to manage whole people and to do that we have to meet them where they are….SAM_1552

A New Leadership Model


The topic of leadership is one that consistently takes up space on every social media forum and management development curriculum, but the interesting thing is are we learning and changing anything?

If we look at the opportunity costs offered by things like employee engagement and reduced expenditures in health care from partnering with employees and health care providers to manage health not health care they are enormous, yet over the last few years we have seen minimal progress.

Employee engagement, where employees feel aligned and are contributing at their highest and best levels has pegged at around 30% even though there is an abundance of information tying higher engagement to increased productivity, higher profitability, and reductions in health care expenditures, absenteeism, and related costs.

In many cases the responsibility for increasing employee engagement is placed with the human resources department so I see a lot of criticism of that function including why it should be eliminated or minimally split into two distinct functions; administrative- which would manage payroll, compliance, benefits administration and other procedural activities and organizational development, which would lead talent development, succession planning, and other “higher end” activities.

As a former human resources and C level executives I see a simplified solution like that as an “epic” fail.

The dirty little secret that most of us don’t like to discuss is that engagement doesn’t fail in the HR department; it fails where employees and managers collide.

The problem is that society has evolved beyond our leadership models.

Ted Santos covers many of the issues very nicely in his recent blog post,

For decades, many CEOs rose from sales and marketing. They were great at knowing the product, customers, driving innovation and selling the organization on a vision. In the recent past, they rose from finance and law. They bought back their own shares, orchestrated financial reengineering, changed accounting practices and down sized the company. They have been the masters at making the organization profitable”.

For over 100 years the prevailing model was that people were at best human capital, their sole purpose was to perform a set of routine tasks. As a result they were usually marginally paid and treated as expendable.

This was the leadership model I “grew up” with. As an emerging leader the skill sets were planning, directing, budgeting, and controlling. Last time I checked these were things you do to rather than with people.

We then evolved into the technology age where technical specialists were exalted and paid very well with the key leadership skill being how to leverage their ingenuity and expertise into marketable products.

Over the last few decades the financial analyst has reigned supreme. This is where we saw aggressive downsizing, offshoring, and other techniques to maximize short term financial return.

I mentioned in a previous blog that the vast majority of the benefits of the financial recovery where “reinvested” in things like stock buybacks and dividend distributions which exacerbates that mentality.

Santos quotes several former CEOs as recognizing this model is untenable for the long term-

“…When I was younger, I worried about managing the money, metrics and processes of the company. As I became older, I realized the business was about people. Therefore, I learned to take care of the people first. When I did that, they did a great job of taking care of the money, metrics and processes. It made my job a lot easier. If only I would have figured that out when I was younger.”

He goes on to say (and I hope he is correct) that the most important skill set for emerging leaders will be that of social reengineering.

This shouldn’t be rocket science. If you look at top performing companies like Zappo’s, Starbucks, Amazon, Google, etc. they have made significant efforts to reengineer their human resources processes not only internally, but externally as well.

Jack Ma, the CEO of Alibaba, spoke directly to this when he mentioned that in his stakeholder model the interests of customers and employees come before shareholders. When he was told that isn’t the U.S. model he simply replied, “I know, they are doing it wrong.

Another very good post on LinkedIn today reemphasizes this concept with Three Ways to Frustrate Your Frontline Employees-

  • Unrealistic Expectations
  • Dictate From On High
  • Sub- Par Supervision


Now hear is the bad news.

Technology isn’t going to fix any of these issues, nor is lean or six-sigma, or other new age solutions. The other bad news is that none of these three elements live in Human Resources so splitting or getting rid of your HR department won’t fix them either.

It is going to have to get messy. We have to do a better job of hiring, selection, and deployment. We also have to rewire our Leadership paradigm.

I am not going to make any apologies for being a huge advocate for developing and implementing employee engagement strategies in every organization. The key word is strategy. Simply announcing an initiative or doing a survey annually is not going to cause engagement to spread like the Ebola virus in Africa! You have to do some real work.

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.</p>

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.

This requires a different model for both developing and defining leadership.

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.”

I guess it isn’t essential that organizations accept the need to evolve and embrace the new management model, but when you weigh the consequences-

  • 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.
  • 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.
  • 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.

Why in the world would we want to continue with a model that is obviously outdated and not generating the kinds of financial and social outcomes we deserve?

What do you think….?

Balancing Our Perspectives

I have had a chance to read a few things and to chat with a few people over the last week or so that intrigued me and caused me to think about how they interconnect.

One of the first was an article in the October 2014 HBR that discusses what the author calls the rise and likely fall of the Talent Economy.

Being that my formative corporate experience was in the human resources management field the idea that we had shifted from natural resources and capital to perceived intellectual capacity was fascinating.

To me when we look at the opportunity costs represented by employee turnover and disengagement the criticality of properly identifying, deploying, and retaining talent isn’t a huge surprise. What was interesting is how talent is described in the context of this article. The most significant talent described here was wealth creation and the creativity to create products and markets with high rates of return.

I also found it interesting that the author feels like focusing on wealth creation to the benefit of the few rather than the many is a huge issue. The most significant benefit of the shift to talent is to the people at the very top of the organization through very high salaries, stock and other equity sharing arrangements and models that benefit few rather than many.

The description of talent is more reminiscent of Michael Douglas in Wall Street, or Richard Gere’s character in Pretty Woman, than a discussion of great artists, inventors, or musicians. It does in part explain why even though the statistics on the costs and opportunities of employee engagement are so clear why we still don’t see the majority of organizations addressing it as an organizational initiative.

We don’t see managing talent as a highly critical or valuable skill set.

Another interesting perspective I got to explore this week was that of Jack Ma, the Founder and CEO of Alibaba, the highest value IPO in the world in an interview with 60 minutes. From a western perspective Ma uttered economic and organizational heresy when he stated that in balancing the needs and desires of stakeholders he put them in order of customers’ first, employees second, and shareholders third.

What a difference from our western perspective where we worship at the shrine of the shareholder. This is well represented by the fact that the vast majority of the financial benefits of the recovery have been reinvested in stock repurchases and shareholder distributions and dividends rather than talent acquisition and retention, product development, or other areas.

Earlier today I had a great discussion with a colleague about his frustration with his current organizations lack of attention to emotional and social intelligence focusing almost exclusively on intellectual intelligence.

Some of this thinking is likely reinforced by articles like Adam Grant on LinkedIn today discussing how emotional intelligence for fields like engineering, sales, and analytical endeavors is highly over rated and likely leads to distractions and doesn’t predict high levels of success, instead may distract those practitioners from the relevant data and decision making influences.

The key is that while those may apply to individual contributors once someone advances into a management or leadership role it is all about others!

Where in the process do we expose those emerging leaders to a set of skills that are different than the attributes we hired them for in a previous role!

The answer is in large part we don’t. Just as talent was described previously as creating shareholder value we typically promote based on technical talent often with little consideration of interpersonal and social intelligence skills.

We rely heavily on the trust generated by position, authority, and perceived technical competence rather than identity based trust which is much more critical in leading people.

I don’t dismiss the importance of intellectual capacity and technical proficiency in performing any role, but I think where we are relative to how organizations are investing their profits and the trillions in opportunity costs we bleed annually with minimal employee engagement and constant turnover says we need to look at the relationship side as well.

There is no one right leadership model just as there in no one right culture. The keys are alignment and reinforcement.

I think Jack Ma might be right, for sustainability it is critical we move from a shareholder to a stakeholder mindset.

What do you think……SAM_1552

What’s Your Brand?

Your Leadership Brand

I think that most organizations today recognize that beyond their product or service brand intentionally or unintentionally they have also created and promulgate an employment brand.

Your organizations employment brand is the perception by current and future employees of what working in your organization is like.

Some organizations enjoy a very strong employment brand. I would include Google, Starbucks, Accenture, and Zappo’s in this arena. People have a pretty clear perspective about what these organizations value and the profile they seek.
Other organizations fairly or unfairly occupy the opposite end of the spectrum. I would put Walmart and currently McDonalds in this area.

We live in an environment where the competition for experienced talent is becoming more and more pronounced and a recent survey pointed out that the rate of voluntary turnover; employees electing to leave their job, increased by 45% between 2012 and 2013.

Since the average cost of hiring has increased 15% during the same time period attracting and retaining talent is a key consideration for businesses and organizations of every size and in every sector.

I have written, spoken, and even publically pleaded with organizations about the importance of employment branding and its direct and indirect connections to employee engagement, so I am not going to focus on it a great deal here, but instead discuss leadership brand.

Leadership has of course been dissected and discussed ad naseum, but I would hardly put a stake in the ground and declare victory at this point.

Personal branding is also a hot new topic in terms of how you represent yourself and are seen by others.

The impetus for this particular piece is two events, an opportunity to spend some quality time with a colleague from the UK with whom I share a deep and abiding interest in leadership and other organizational dynamics and a post I read earlier this week.

The post talked about a father’s conversation with his son who had just completed a summer internship. When his Dad asked him about the experience he replied that he enjoyed the work and his colleagues, but the “big boss” was a real jerk. The father was somewhat surprised that his son had an opportunity to meet the most senior executive of a large corporation as an intern, turns out he hadn’t.

The son’s perspective was framed entirely from correspondence and the perspectives shared with him by colleagues and coworkers. I think we can say this leader has a leadership brand issue…

The discussion with my colleague goes back to a set of novels (yes I admit I read and enjoy fiction) written about the evolution of King Arthur and Camelot. I found it more interesting than most series because it actually started two generations before Arthur was conceived and outlined a leadership development strategy and succession planning that modern organization could take a page from.

Leadership as described in the Camulod context included some concept that Malcom Gladwell and Stephen MR Covey have discussed and I find intriguing.

In Gladwell’s latest book, David and Goliath, he discusses at some length the concept of legitimacy – which he defines like this:

• Those whom are governed have a voice in the process; their input is sought and heard.
• There is a dimension of predictability and consistency in the application of the law or standards.
• The application of the law or standard has to be administered fairly and objectively, you can’t have disparate treatment without a clear and compelling reason.

Legitimacy is a concept you don’t hear much about in organizations or B schools, but then I especially like to tweak it a bit further by adding a discussion of Covey’s three levels of trust.

I his hierarchy the first level of trust is deterrence, trust that comes from authority or position. This was a broadly accepted concept for hundreds of years provided first to rulers or religious leaders and embedded in Calvinism that God only allowed “good” people to create wealth and prosper so they were endowed with that trust.

Ken Follett’s trilogy about families from several countries and several generations explores this entitlement theory in a very interesting way.

The next level of trust Covey calls competency based. In many cases there is an assumption that anyone who achieves a management role has that competence, but we all know better. In most cases their competency is limited to technical proficiency; their emotional intelligence capacity and social intelligence are rarely considered.

I have encountered literally hundreds of recent MBA graduates who are supremely confident in their ability to lead based on their shiny new diploma demonstrating mastery of the concepts.

The highest level of trust in Covey’s hierarchy is identity based trust which incorporates both your competency and you character as demonstrated by your applied values and behavior to create credibility.

I personally believe that to a large extent leadership as opposed to management is founded in legitimacy. Leadership is entirely relational versus hierarchical, it was be earned rather than bestowed with a title or position.

What I found fascinating about the development of the leadership models as they evolved in the Camulod series was that although they used different language, these elements were present.

Arthur’s grandfathers realized that to be crowned the one true King of England, he would need not only position and competence, but legitimacy and identity based trust.
There are a zillion different leadership styles in the literature, I happen to be a big fan of Blanchard’s Situational Leadership® model which recognizes one size doesn’t fit all either with people or organizations.

There is a lot of discussion about servant leadership and to the extent it incorporates legitimacy and identity based trust I think it has merit.

I read the articles and posts that have taken the position that women are inherently more dispositioned to be leaders and genetically coded to have higher emotional and social intelligence and my reaction is bullshit.

The issues aren’t gender based, but I believe more a matter of aptitude and training. Our leadership models were based on competency and deterrence for generations and ignored identity so we practiced a flawed model.

So my recommendations in cultivating your leadership brand-

• Build on a base of identity based trust. You will likely have to master the first two levels to achieve that.
• Ensure that your actions incorporate legitimacy both implicitly and explicitly
• Manage people, not human capital. People are individuals, respect that and treat them accordingly.

I don’t think you need to negotiate your culture with employees, but I do think they are entitled to clear expectations, constructive feedback, and fair treatment.

There is a lot of discussion about the next generations. They are pretty intolerant of assumed legitimacy. They also represent both the future employee base and future leadership.

Incorporate the elements of respect, responsibility, information, equitable rewards, and mutual investment. Those represent an excellent foundation for both legitimacy and identity based trust.

It worked for King Arthur, and you have to admit he has a pretty cool leadership brand….

Focus On Relationships!

I had a chance to read an article in the September 2014 edition of the Harvard Business Review that I found alarming and disappointing. The author talked about the fact that in a ten year period from 2002 to 2012 members of the S & P 500 had reinvested close to 60% of the profits they made in re-purchasing their own stock and close to another 30% in dividends to shareholders.
His point is this is why we are seeing a “jobless” recovery. Rather than investing in growth or compensation for the average employee we see distribution of the fruits of increased performance going to very few- the shareholder versus stakeholder mentality.
This is I suspect a large part of why we see that employee engagement has pegged at about 30% and remained there for years. We still don’t look at employees and their appropriate recruitment and retention as a strategic initiative.
There is quite a bit of buzz these days as to whether or not the traditional human resources function should be disbanded or minimally separated into two distinct components; an administrative function responsible for compliance, payroll, benefits administration, etc. and an organizational development function which is responsible for talent acquisition, training and development, succession planning, and other strategic components.
I am not a fan of this model. I believe that strong performing organizations are based on alignment and systems that integrate and reinforce that alignment, separating the functions disperses the synergy and responsibility.
I advocate a different model where the management of talent is a core responsibility of everyone in leadership. Human resources provide the technical expertise and facilitation, but managers in every function actually manage the talent assigned to them.
The relationship component is critical at every level. I read a couple of pieces today that I think really illustrate that point.
In one piece the author was describing to young people the importance of playing well with others, building and sustaining relationships over a lifetime not just transactionally.
As recently as this weekend I heard from someone that as they aren’t currently in a job search they don’t see the value of investing in networking or using social media systems like Linked In. That to me is a perfect example of transactional thinking.
Another piece talked about one of my favorite topics- trust.
The piece explored the trust relationship not only between organization and customer and employee and supervisor, but employee to employee.
In my over 30 years as a human resources professional, C level executive, and management consultant it has been interesting to see emerging and current “leaders” bridle at the idea that they have to earn trust. For many it is an expectation that trust is embedded in their role, they shouldn’t have to earn it.
Stephen MR Covey does a great job of exploring and defining what he considers to be the three critical levels of trust we encounter:
• Deterrence, is the trust we invest in authority based on position or statutory regulations.
• Competence, as implied is trust based on perceived expertise, training, or skills.
• Identity, the highest level of trust in Covey’s hierarchy is the trust that comes from shared experiences and mutual respect.
I think understanding and building all three of these levels of trust into your approach and interactions with all stakeholders is the only meaningful recipe for long term performance for organizations and building engaged environments.
Unfortunately in my experience most of our leadership training and organizational models incorporate only the first two levels and in fact many new leaders assume an entitlement to competency based trust with their position.
Malcolm Gladwell’s book, David and Goliath, explores another concept we don’t discuss much in our leadership training- legitimacy.
While I enjoyed the entire book the part that most spoke to me was Gladwell’s discussion of legitimacy.
According to Gladwell legitimacy occurs when three elements are present-
• Those that are governed have a voice in the process; their input is sought and heard.
• There is a dimension of predictability and consistency in the application of the law or standards.
• The application of the law or standard has to be administered fairly and objectively, you can’t have disparate treatment without a clear and compelling reason.
Like all of his books that preceded it I enjoyed it a great deal. I see Gladwell as kind of a social facilitator and observer. He doesn’t try to present himself as a behavioral scientist with countless reams of data to support his conclusions, he makes comments and observations. The reader has the choice to accept or reject them.
The reason I find this discussion about legitimacy so interesting is in its application to the work environment.
For the last three decades I have been promoting and teaching the merits of an employment relationship based on Commitment rather than compliance. When the employment environment is optimized in a commitment based model it results in employee engagement.
It is very chic today to dismiss collective bargaining and unions as passé, but any student of the relationship between employer and employed realizes that up until the 1940’s the concept of employers need legitimacy through the input of their employees was considered ludicrous.
Unions fought very hard to legitimize their right to bargain with employers over hours, wages, and working conditions. I am not going to say that I believe collective bargaining is the preferred methodology or relationship structure between organizations and employees, but the concept of participating as equals didn’t come from management enlightenment.
When I look at the engagement numbers and correspondingly the lack of trust in senior management it would be hard to argue that the two aren’t related.
The emerging generations are pretty intolerant of assumed legitimacy and identity based trust, when we add fuel to the fire on where “management” is choosing to reinvest the rewards of increased profitability and organizational performance I can’t say I blame them.
I don’t think you need to negotiate your culture with employees, but I do think they are entitled to clear expectations, constructive feedback, and fair treatment.

When you provide that kind of context you are allowing employees to join up with you. On that foundation when change is introduced you do it with rather than to people.
I call that building relationships……

Never Stop Coaching!

The Importance of Effective Coaching

Over the weekend I had occasion to purchase and read Strengths Finder 2.0. If you are not familiar with it, Strengths Finders is the assessment tool first developed in 2001 by the Gallup organization.

The essential concept behind it is that people who are given the opportunity to focus in the areas where their talents are most pronounced are much more likely to be engaged and have much higher levels of productivity.
A lot of these concepts were discussed in detail by Marcus Buckingham in his series of books and it isn’t my intent to go into them in detail, but there were some things that I feel are worth mentioning and reinforcing again.

The first is data collected by Gallup indicating that individuals who feel that like their work is aligned with their talents are six times as likely to describe themselves as highly engaged at work and three times as likely to describe their overall quality of life as excellent.

The reasons this matters to us as organizations-
• Engaged employees contribute at a level 20 to 25% higher per capita than non- engaged employees
• Organizations with high engagement scores outperform their competitors in every key performance metric
• Highly engaged employees are 80% more likely to stay with their employer

Now let’s examine the role of your manager in your engagement-
If you manager’s primary style is:
Ignoring you then the chance you will be actively disengaged is 40%
Focusing on your “development needs” or weaknesses the chances decrease to 22% you will be actively disengaged
Focuses on your talents or strengths there is a less than 1% chance you will be actively disengaged!
I think it is important that we recognize that active disengagement is not a passive behavior. These are people who come to work every day and spread their negativity. Studies estimate that this group represents about 17% of the U.S. workforce.

I think it is also important that you can’t count on these people to leave. They are not necessarily any more likely to leave than partially engaged employees. These are the energy vampires who tend to be heavy utilizers of your health and time off benefits, more prone to industrial illness and accidents and just generally drain your productivity.

I have been reading a lot lately that the Human Resources function is in jeopardy of becoming obsolete because responsibilities like administering compensation, hiring and selection, coaching, and corrective action are being “delegated” to line management.
It makes me frankly laugh my ass off. In organizations I have been associated with those responsibilities have always belonged to line management. My role as a human resources professional is to be a consultant; to provide systems and training to those managers so they do those things well, in short to build capacity. The professions obsession with compliance has always been a disappointment to me.

The other thing that bothers me is that we still refer to skills like coaching, setting expectations, giving feedback, and taking corrective action as soft skills. Look at Gallup’s numbers again; is something that can have that significant of an impact really soft?

I also get frankly annoyed when we take the course that interpersonal skills like emotional intelligence and empathy are somehow gender based. They are competencies and talents that need to be identified and reinforced.
Anybody that knows me or has read anything I have written knows I am a passionate advocate for employee engagement. It is quite simply a better way to manage organizations and increase quality of work life and productivity.

My model is pretty simple:
• Manage for commitment not compliance.
• Hire and manage whole people.
• Include congruency in your hiring, selection, and coaching.
• Hire hard- manage easy.

This is a journey not a destination and as the Gallup numbers underscore it doesn’t stop with hiring or onboarding. Coaching and reinforcement is an ongoing process, but the return on investment is astronomical….

Creating Complete Solutions

The Complete Approach
My colleague Brad Federman shared a blog post today that I found interesting and very accurate. His point was that creating a great culture doesn’t mean that it is going to represent and be a great place for everyone and automatically translate to high employee engagement.
In fact in my experience this is one of the issues I observe constantly in organizations as they approach and fail in creating a highly engaged environment- they address it as a program or initiative rather than a fully integrated strategy or culture.
I remember back in the late 90’s when I had a client who had decided to “flatten” their organizational structure and embrace more of a “self-directed” workforce. The problem was that in large part their strategy was to eliminate most of their middle management infrastructure, buy everyone a book on teamwork and a team T shirt and declare that they were now embracing this new culture.
Problem was they never defined the parameters and prepared the teams, didn’t set and reinforce appropriate decision making boundaries, and the majority of the population wasn’t receptive or comfortable to this type of approach. In short the culture didn’t fit their intent.
As I mention in my book, Managing Whole People, when you try to create a high engagement culture you can never forget a couple of things-
• You hire whole people. This means their values and attributes as well as their knowledge, skills, and abilities.
• Don’t borrow someone else’s culture. Their culture is a function of their shared values, attributes, and history. You can emulate some of their practices, but culture is unique to the organization.
We also tend to glom on to good cultures and bad cultures. In my opinion the goodness or badness is determined by the people who share it and the outcomes they agree on.
Another colleague of mine, Joseph Skursky, has a model he calls Hire Hard, Manage Easy. The context of this is that every hire is a key hire and ensuring every hire fits either the current culture or the culture you aspire to is critical.
Studies show that over 40% of newly promoted or newly hired managers, including new executives, fail within their first 18 months on the job. The reason most typically cited for the failure isn’t capability, but rather fit, which to me is another way of saying culture.
So you might be asking – what is my point. I have several:
• You will never survey your way to a highly engaged environment.
• If your hiring practices don’t include consideration for cultural fit you will not create an engaged environment.
• Highly qualified, smart people who don’t fit your culture will underperform, quit, or both.
• Create and reinforce your desired culture not someone else’s.
• Culture permeates everything; hiring, training, promotion and development, communications, etc. It never stops and you can’t address a single element and expect sustained outcomes.
• You have a culture whether you intended to or not. Being intentional is better.
• Culture is shaped by leadership, but belongs to everybody.
Do the work. Define your culture, hire accordingly and be consistent in reinforcing it….

The Wrong Direction

Caught in the Circle

Over 100 years ago Frederick W. Taylor introduced the concept of scientific management to the world and unfortunately to a large extent his theories are still the foundation that much of the relationship between employer and employed are based upon. Taylor’s position is that the world is divided into two kinds of people, managers and labor. Managers think and labor does. This is also where the concept of white collar versus blue collar originated. I would tell you that much of our failure to evolve our management and leadership theories go back to this premise. Even today most managers and supervisors are promoted based on their technical capabilities rather than their abilities to select, train, develop, and deploy talent. We still buy into the concept of human capital. When scientific management really caught on we wrote a new social contract-rather than individuals learning a skill and negotiating the value of that skill the model promoted breaking tasks down into simple, easily repeatable steps that were easy to train and could be monitored for consistency. By breaking the skills down and removing the thinking part, you also lessened the value of the activity being performed. This was the model for a long time. You came to work for your employer, did your work competently and obediently and in return your employer took care of you, providing you with wages, health and retirement benefits, and other inducements that required little or no action or participation on your part. Edward Deming and others recognized the flaws in the model in the early Forties, but because the U.S. was the dominant economy and it wasn’t “broken” most U.S. based organizations rejected his theories of more worker involvement. In fact even the legal framework of collective bargaining in the U.S. has the principle of Taylorism embedded within them. Under Federal law employers are required to collectively bargain about wages, hours, and working conditions if it can be demonstrated that the employees choose to surrender their individual rights to a collective bargaining representative, typically a union. The interesting thing is in the U.S. employers are not obligated to negotiate over the means of production, like the introduction of technology or similar decisions. This model created a kind of corporate paternalism that still exists in many organizations today, a codependency. Do what we ask as an employer and we will take care of you. I personally think it is a bad model, disrespectful on its face, assuming employees are not capable of making or at least participating in decisions about their work and their employment. This is a compliance based model and after over 30 years as a human resources and C level executive and management consultant I completely and totally reject it, so a number of years ago I created an alternative model I call moving from compliance to Commitment, or little c to Big C.

There are five distinct elements to my model.

  • Respect
  •  Responsibility
  •  Information
  •  Rewards
  •  Loyalty


Respect is the cornerstone of any healthy relationship and is especially important in the employment environment. Respect means that you describe my job to me in a way that has context and I can see where my role fits into the bigger picture. It means that there are clear performance expectations and that I receive balanced, meaningful feedback as to how to improve my performance and contributions. If I am not meeting expectations, that information is presented to me in a timely and constructive manner with the objective to eliminate the variance between my expected and actual performance. It also means that I am held accountable for working up to my potential and meeting expectations. Respect means we have a social contract between equals. I do not expect you to “parent” or take care of me. I’m not just talking about diversity here. This value must be consistently reinforced by every level of management every day. We must be prepared to explicitly state to employees, “I respect you too much to tolerate less than your best performance. I respect you too much to nag you about independently executing your tasks and responsibilities. I will not be co-dependent with you.”


Similar to respect, responsibility means that I have clear expectations, periodic feedback and a reasonable level of control over as many dimensions of my work as possible. I am allowed to demonstrate personal curiosity and creativity and that you, the management or executive, measure my work in terms of the results as well as the process. In concert with respect, responsibility means that I carry out my activities independently and competently to the best of my ability. If I need assistance, I ask for it. If I am unclear, I ask for clarification. I hear a lot about empowerment. I like to say to employees that the flip side of empowerment is accountability. If you “own” the process, you also “own” the result. We should not let employees off the hook for simply appropriate performance. Employees who “own” the process and the result demonstrate higher levels of productivity, lower absenteeism and reduced turnover. All of these results increase the bottom line. This refers again to clarity of purpose: What is my job? How does it fit in the Big Picture? Management owns the responsibility for clearly answering these questions.


Information is critical to creating an atmosphere of commitment. I have often said to employees that I reserve the right to answer a question they ask me in one of three ways:

• I know the answer and it is ________.

• I don’t know the answer, but I will do my best to obtain it for you.

• I know the answer, but I am not able to share it with you for reasons of confidentiality or related concerns.

My experience has always benefited by sharing as much relevant information with employees as possible. By providing them with context, they arrived at solutions that were much more effective than what I could design working in isolation. By creating an environment of collaboration, they feel invested in the solution.


Rewards are always an interesting area to explore. In my definition, rewards include appropriate compensation as well as other areas that directly relate to employees sense of fairness and equity. I include everything from base compensation and incentive programs to awards for excellence and access to specialized training. I recommend to my clients that they ask their employees, “What represents meaningful rewards and recognition to you?”

I believe in communicating with employees the specific reasoning of compensation philosophy (i.e. who we see as our competitors, our “target” market, and other related areas). I also tell employees that “market compensation” is an artificial value that the market imposes on a particular set of skills and abilities based on supply and demand, as well as criticality to the mission of the organization.

Compensation is not meant to represent the value of the employee. Are doctors and professional athletes “better” people than anyone else? If we use the standard of compensation to determine the value of a person, drug dealers are at the top of the food chain and people like Mother Teresa at the bottom. The most important dimension of rewards is the perception of equity. In this context, I mean equity in terms of perceived fairness, not actual ownership.

One of the most important concepts we grow up with is fairness. Do I feel that my compensation, promotional opportunities, etc., are consistent with my contributions? How did you decide to pay me? Why did someone else get the promotion rather than me? Can you explain it to me? That wording is critical, explain it rather than justify it.


I often hear that the Gen X and Millennials are not loyal. I disagree. The new generations have a different view of loyalty. They expect reciprocation.

They will give their loyalty to organizations that invest in them. They understand the concept of “at will” employment at its most literal. They stay with an organization as long as they see the relationship as being mutually beneficial. They do not subscribe to blind loyalty to authority. Is that wrong?

My definition of loyalty: while someone is working in my organization or in collaboration with me, our relationship has integrity and respect. We hold each other accountable and meet our mutual obligations. I do not measure loyalty in terms of tenure or “obedience”.

Loyalty is a personal relationship. Typically we are “loyal” to individuals or groups with in whom we have shared values and whom we trust. To the average employee, his or her direct report is their “world”. If they feel that their immediate supervisor has their best interest in mind and treats them with respect and fairness, their loyalty will be earned and authentic (i.e. not political loyalty). The key to authentic loyalty: you earn it through action and time. I also submit to you that if the organization does a good job of executing on the first four elements of respect, responsibility, information, and rewards, loyalty will follow.

Information that I have garnered on the “emerging” workforce – our future employees, customers, shareholders, and stakeholders – make these issues even more relevant. From an employment standpoint, Gen X and Millennials have stated five requirements for them to form a meaningful relationship with an employer:

• Satisfying work content.

• Association with an organization that they respect and that respects them.

• Mutual commitment to them and their careers.

• Meaningful and timely feedback to help them improve their skills.

• Equitable compensation.

In addition to desiring feedback, they also describe four other elements in an optimal employment environment:

• Maximum delegation.

• Personal responsibility and “ownership” of their projects and tasks.

• Clear boundaries and a sense of the big picture.

• Shared ownership (credit) for end results.

Current Tends That Concern Me

When I watch a lot of the discussion going on these days there are a number of areas that concern me:

• The Affordable Care Act creates access to health care for theoretically everyone, but it doesn’t address the shortage of health care providers in many jurisdictions to actually see patients and provide care.

• Study after study shows that over 60% of our current health care related expenditures are related to conditions that are directly or indirectly lifestyle related, but the ACA doesn’t address lifestyle management or individual’s responsibility to participate in managing their own health.

• I see organizations like McDonalds, Wal-Mart, and other employers under assault because they don’t pay living wages. In my experience many organizations have entry level positions where the wages are commensurate with the skills and market conditions. Individuals can almost always enhance their earning abilities by learning new skills and increasing their value to the organization.

• I see jurisdictions stepping in to help – Seattle decided to impose a minimum wage of $15.00 per hour for all employers within its municipal jurisdiction. I am going to go out on a limb and suggest they didn’t do a cost benefit analysis to determine what effect this might have on pricing of goods and services and aggregate employment

– Portland, OR and other cities are interjecting themselves into the employment relationship between employers and employed and trying to dictate things like compensation, paid time off, etc.

What problem are they trying to solve and why given that there are multiple State and Federal agencies who operate in that space why do we need another player.

We aren’t talking about discrimination here; we are talking about injecting themselves into the employment relationship.

I live in the real world. Right now less than 30% of the workers in the U.S. rate themselves as highly engaged in their current employment relationship and that represents a huge lost opportunity, but I fail to see how municipalities interjecting themselves into the employment relationship is going to address even one of the factors I identified as creating or sustaining engagement. I would also submit that given the fiscal circumstances that most cities, counties, and even States find themselves in in large part because of outdated entitlement programs that there providing us with the benefit of their expertise and leadership will help any.

There are organizations like Google, Starbucks, Dutch Bros, Les Schwab, and others that are very successful and treat their employees very well because they get that the two are related. I have yet to find a governmental entity on that list, let’s not move back to organizational codependence or corporate paternalism…it doesn’t work.

An Urgent Issue!

The Problem We Need to Fix NOW!

I came across a couple of things recently that unfortunately reinforced what I have known for a long time- we need to put serious energy into how we identify, train and deploy managers and leaders.
A recent Gallup poll concluded that 82% of the time organizations fail to make the right choice in selecting candidates for leadership and management positions.
James Harter, Gallup’s chief scientist for workplace management was quoted as indicating that only 18% of the population of current managers possesses a high level of talent for managing others.
The critical talents identified by Harter include:
• The ability to motivate others
• The capability of being assertive balanced with making people comfortable
• The ability and commitment to making tough decisions
• The ability to build and maintain strong relationships
The big culprit is our selection process, in the U.S. the majority of managers are promoted based on one of two criteria-
• Their competency at previous non-managerial roles
• Their tenure in the organization
The Gallup study concluded that typically 1 in 10 employees possesses all the traits necessary to be a strong manager, but that 20% of current managers have the capacity to increase their capabilities with coaching and training.
I am not a proponent of the managers are born not taught model, but on the other hand I do believe that managerial competency is a skill set that needs to be taught and reinforced separate and apart from a candidate’s technical skills.
A recent survey conducted by the Society for Human Resources management concluded that the top three challenges facing organizations today are directly connected to the competent management issue.
The survey identified leadership development, employee retention and engagement, and re-skilling the human resources department as the big three. The reason these are linked is that previous Gallup studies concluded that less than 30% of U.S. workers rate themselves as engaged, and …managers account for 70% of the variance in employee engagement scores.
What I find personally very frustrating is how have we let this go on for so long?
If we knew that a particular flaw in our manufacturing or production process was bleeding off significant amounts of productivity and profitability and that 70% of the cause could be traced to one process would we ignore it for this long?
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.
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.
And I believe strongly that these skills can be taught. The Gallup organization may take the position that only 1 in 10 has all the attributes to be an outstanding manager or leader, but you don’t need all 10 to be competent.
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.
This entire theme correlates to Gallup’s research that most “leaders” were promoted into their roles because of their previous competency in “technical skills”.
The Center for Creative Leadership points out those organizations who prioritize leadership and focus on it proactively enjoys a 66% increase in business results.
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.
On the other hand do we really want to just accept a competency rate of 20% and a potential productivity leak of 70%?
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, so the answer isn’t to populate your management ranks with people with no managerial/leadership experience or training, but MBA’s from “name” schools…
I also agree with the perspective from the SHRM survey that “re-skilling” the human resources profession is a critical priority.
Although I have moved out of the traditional venue of human resources into first C level operating roles and then into management consulting I am disappointed when I see surveys and writing from colleagues in the profession that continue to assert that the most important role of HR is compliance with the myriad of regulations and restrictions that guide our relationship with employees.
Similarly I see tomes written on the application of technology to hire, manage, deploy and optimize performance. I am not technology phobic by any means; I do adhere firmly to the belief that technology is a tactic, not a strategy.
I don’t believe that becoming certified as a HR professional, or gaining your black belt, or Six Sigma will necessarily make you a better leader or manager or give you the capability to deploy the skills of effective management to others.
When I think of “re-skilling” the human resources profession and function I would like to see us focus in these areas:
• Technical skills. The proliferation of rules and regulations has indeed made the profession more complex as has the application of technology, phenomenon like social media, outsourcing and global workforces, and related challenges. We need to be technically proficient, not only in our craft, but to understand the businesses and organizations we serve.
• Project Management. Similar to the Total Quality Management movement I believe human resource competency in core areas needs to be deployed broadly and deeply rather than be seen as a departmental competency. It is fundamental to the management/leadership role.
• Facilitation. We need to help our client organizations recognize that by building relationships with individuals as people first and resources second we can create enormous gains in sustainability, productivity, and profitability through alignment of organizational and individual goals.
We are at a time and place in our society when we need to consider people, processes, and systems in an integrated manner and stop trying to apply analog solutions in a digital environment.
The old employment model, which largely originated during the Industrial Revolution, has been outmoded for some time. In this model, a feudal-style relationship came to pass. Employers sought the skills and contributions of labor and in return for those contributions, the employer would provide for a certain degree of economic security, career progression (as the employer saw fit), and retirement, usually in the form of defined benefit pension plans. In return, the employee was expected to provide loyalty (spelled o-b-e-d-i-e-n-c-e) in the form of tenure. The employee was expected to stay with the employer as long as the employer saw fit.
For the record that model is dead, let’s bury it!
I have a model I call managing whole people. It is a model based on five factors: respect, responsibility, information, rewards, and loyalty. It is a partnership based on trust and mutual respect. I believe it yields engagement. The latest studies would tell you that employers with high engagement outperform their peers on every key metric!
As you might suspect my model isn’t going to be widely proliferated with a management cadre composed of less than 20% of those involved in leadership having the skills and attributes necessary to manage people not human capital.
The numbers aren’t getting better, so what are we waiting for…?