Have a Trust Issue? Open the Books!

jim | March 7, 2012 | Communication, Employee Engagement, Leadership, Open Book Management

I took a client to open book management pioneer SRC Corporation last week. For them it was an eye opener. For me it was a reinforcement of what’s possible when a company shares vast amounts of the right information with its people. They make smarter decisions and take performance to unheard of heights.
SRC Scorecard
SRC has for years been my baseline for what well-managed communication should be. I’ve been taking clients and young communication practitioners there for years. After their visit I explain: “Now when you’re confronted with a communication problem, you can ask yourself: ‘What would SRC do?’”

Open book management is a leadership philosophy that’s grounded in the notion of creating businesses of business people where everyone in the organization thinks and acts like business owners.

People in open book companies are steeped in business literacy, work daily to improve the financials, have huge amounts of financial information available to them (hence, the term open book) and their rewards and recognition are tied to financial performance. People who see open book for the first time are “blown away.” Their words, not mine.

Here are some quotes from SRC people:

“VP’s and above don’t really know much. It’s the wisdom of the crowd that makes us much smarter.” (Comment from an EVP)

“In traditional organizations, leaders go to bed every night not knowing what they don’t know. We know what we don’t know because everyone is so involved.”

“Many leaders have a Santa Claus complex. They only want to share good news.”

“It’s liberating to give people the information they need to make better decisions.”

“Our leadership meetings help us identify where employees are constrained from doing what they want and need to do to get things done.”

The four key points from last week’s visit:

Communication management is, as it should be, future focused through the windshield. Most companies manage communication historically by reporting what has happened—through the rear view mirror. Sure, we want to know if we’re winning or losing but the emphasis should be on numbers we can do something about.
Don’t think about top down and bottom up. That’s old thinking. Think about lateral conversations—people collaborating to get the job done better. Ban we-they thinking and language.
Focus on the critical number you’re trying to improve—the one that provides organizational focus and that everyone can influence. So-called “messaging” becomes old way because the focus is less on talking points and more on the numbers that represent the real game that’s being played in business.
If you have a trust problem, open the books. If you won’t open the books—even a little—you’re perpetuating the trust problem. Can you continue to lead if you’re not trusted?

What’s your biggest barrier to opening the books? Leaders who don’t trust their people? Fear of exposing reality? Saddled with the myth that the SEC won’t let you?

Time Is Currency

jim | March 1, 2012 | Communication, Customer Satisfaction, Leadership, Performance Management

It hasn’t taken me 30 years to realize that great companies and great people manage time well, among other things.

I initially heard “time is currency” when I was working at Microsoft. Referring to Bill Gates’ obsession with time management, my host told me they refer to his time as “Bill capital.” “It’s a strategic asset that we monitor regularly.”

I was recently reminded of that comment when I was waiting for a client to start a weekly leadership meeting. Scheduled start time was 10 am. At 10:15, people were filing in as though it were a backyard barbeque. There was no sense of urgency. The meeting ran 20 minutes late.

Contrast this experience with one I had when I was working with GE Chairman Jack Welch at the company’s leadership institute in Crotonville, NY.

Welch and I were facilitating an afternoon session on leadership for Amtrak, who was one of my clients. Welch’s office had sent me his schedule for the event: Helicopter lands at 1:10 pm, he speaks at 1:15.

Sure enough, at 1:06 pm I heard the whop-whop of the chopper blades. It landed at 1:10 and we started precisely at 1:15.

Being on time means people can count on you.
Being on time shows you respect others around you.
Being on time communicates you have your act together.

Of course there are extenuating circumstances when you simply can’t help being late. But not chronically late.

Being late means you’re undisciplined. If you can’t manage your own time, why should I put my trust in you?

Being late probably means you’ll run late. When you run late you do so at my expense.

When a group of people schedule a time to start, they’re making a contract. When you show up late, you’re breaking the contract. Why bother to agree to a start time if you aren’t going to live up to your end of the deal?

When a television network or cable channel says a program will start at 6 pm, they don’t start at 6:03 because someone couldn’t get through traffic or misjudged how long it would take to get to work because of the rain.

6 pm is 6 pm.

Is There a Best People Measure? Maybe Not.

jim | January 26, 2012 | Communication, Employee Engagement, Human Resource Management

Measurement is a powerful communication device.

What you count counts. What you measure tells people what’s important. It drives actions people take and the results they create.

When you try to measure too many things, it may tell the people you lack priorities because “everything’s important.”

Recently, we worked with a leadership team that had 15 performance measures. In focus groups employees told us they were confused about priorities. “One minute everyone’s running after improved safety,” one employee told me. “Then it’s quality. Then it’s something else. They need to make up their minds what’s important.”

We were able to whittle the list down to four core measures. Then everything that was said and done focused on those four measures.

One of the most difficult measures to decide on is a people measure—a measure that lets us know how well we’re leading our people.

Here are two schools of thought.

One school says that measuring relevant operating and financial performance such as safety, quality, delivery and cost or productivity is the best measure of how people are performing. Open book management supporters believe financial statements are stories about people and what they do. All their employees understand the financial statement and manage pieces of it every day.

The other school acknowledges that there are specific people-related measures that can be adopted. That’s fine in theory, but you need to make sure you know what outcomes you want before you adopt one of those measures.

Take engagement, for example. Measuring engagement through the use of surveys is useful, but engagement isn’t an outcome. It’s a condition that can lead to the right outcomes if focused well.

Or take retention. Measuring retention can be helpful if you’re measuring turnover of key people. But simply measuring retention may encourage managers to keep poor performers.

Productivity is another measure, with revenue per employee being the most widely used. But measuring revenue per employee might invite some leaders to downsize over the short term in order to hit the numbers, or play the numbers games by outsourcing people.

A better measure might be output produced to total employee compensation. This measures return on compensation (investment) rather than return on employees.

A few years ago, I worked with a client who measured the number of people attending training during a year. That’s fine if that’s all you want to know. But if you want to increase the competencies of your workforce so they generate better business results, you should measure that, not training hours.

Measurement is a powerful communication force. But if you don’t use it right it will send energy in all the wrong directions.

Crazy Busy & Knowing When to Say No

jim | September 13, 2011 | Communication, Leadership, Lean/Six Sigma, Performance Management

“I’m crazy busy!”

That’s what we all say we are these days. But when is “crazy busy” a waste of time?

Well, how often do you manage your time according to the value it adds to your business?

An organization’s role is to create value for its customers and continuously improve the process, so more value can be added.

This is the concept of lean. Leading an organization using lean principles and a lean mindset is becoming a big deal everywhere.

If you’re not pruning waste out of your core process—like converting raw materials to something customers’ value—you’re likely to be at a competitive disadvantage. You can bet your competitors down the street are pruning madly.

How can you add more measurable value today than you did yesterday? How can you add more value tomorrow than you will today?

Check your calendar. Is what you’re doing every hour today adding value to your core process, or is some of it draining value from that process?

Will you say “no” to a meeting that you know will not add value to the organization’s core process?

When you’re in the throes of a petty, political conversation, are you willing to stop and ask your fellow “politicians” whether the discussion you’re having right now is something the customer would be willing to pay for?

Will you give up some sense of control by delegating a lower value-adding task to someone who makes less money than you do?

Will you prune your core process today? The other guys might be doing it right now.

Leaders: Ask What’s Important

jim | May 27, 2011 | Communication, Customer Satisfaction, Employee Engagement, Leadership

Are you asking questions that communicate that you want new ideas to help customers and the company?

In my book The Leadership Solution, I discussed how leaders can use questions to signal their priorities. If you want to improve speed to market, ask about speed to market issues. If you want to focus on customers, ask about customers.

If you want to increase innovation, ask about new ideas.

Two companies I’ve worked with recently have used employee surveys to try to surface barriers to innovation. Sure enough, the questions related to management’s interest in new ideas received low scores (56% and 38% respectively).

If you want to be more innovative, you absolutely must be viewed as someone who wants fresh new ways to take care of the customer.

The question I’ve always liked best is: “What do you think?”

What Counts is What You Count

jim | May 27, 2011 | Communication, Leadership, Performance Management, Strategy Clarification and Execution

Leaders can talk all they want about the need for people to work together, but if the numbers tell those people to work in silos they will. The “do communication” will trump the “say communication” nearly every time.

What counts is what you count.

Among the CEO’s I work with, getting people to work together across functions and departments is one of the top issues. Why then, do others guard turf and focus only on their department, business unit, function or geographic area, which is often at the expense of the company’s overall health?

With the assumption that few if any of us get up in the morning relishing another emotionally-draining day of battle with our teammates, I believe we aren’t willingly creating the silos. Systems create them and they usually start within the goal setting and reward systems. These two systems communicate what’s expected in a powerful way.

If you want integration, check to see if your leaders have shared goals. The way I do it is to use a simple Excel spreadsheet, listing the leaders down the left column and company goals across the top. Fill in each leader’s goals and weightings. You should be able to see quickly if you have a problem. The goals will be out of whack at a glance.

Here’s what you should focus on:

Keep the number of goals to a minimum—the critical numbers. Having a small number of goals clarify priorities. Having many goals confuse people as to what’s important.
Company-related goals should be shared by the leaders and weighted heavily. This makes it clear what’s important and creates interdependencies among the leaders. That is, the goals should be set so that individual member rewards come as a result of the entire team winning.
Business unit or functional goals should be secondary, so they should receive lighter weightings. They should drive the overall corporate goals.

If you’re trying to integrate your organization, start with the exercise I use and see what it tells you. Then, if necessary, modify the goals and weightings to eliminate silos, integrate the organization and improve overall results.

Get It Together!

jim | March 1, 2011 | Communication, Human Resource Management, Leadership, Organizational Design, Performance Management

Why don’t people work together?

Why don’t sales and production people work out the tension between inventories and on-time delivery? Why don’t human resources and internal communication folks create and administer one employee survey instead of two? Why don’t department heads with competing priorities work out their differences? Why do complex organizational matrices throw unnecessary political friction into an already overburdened business?

Yes, it’s true that some organizations have worked out these issues. But by my count, not many have. Huge amounts of productive time are wasted trying to negotiate the conflicting priorities, or figuring out ways to work around So-and-So who’s known as a turf-protector but has all the right contacts in high places.

How much could we get done for the customers if we didn’t have this collaboration friction?

Here are four likely root causes of condition, which in fancy-talk is known as organizational segmentation (versus integration).

The root causes:

The organizational arrangements are based on antiquated business functions, not on value streams. That is, they have little to do with meeting customer requirements.
Leaders are being paid to meet the goals of their business unit, geographic region, department or functional unit. The compensation arrangement dictates that they make the numbers, all else be damned. (It’s not that crass, but that’s really what it’s saying.)
There are no priorities, or too many priorities (one in the same), or conflicting priorities. Everyone is on his or her own and until someone figures out what it really takes to win, everything’s up for grabs.
Processes aren’t in place to enable conversations across functions. Even if the previously mentioned causes were tied down perfectly, when there’s no formal or informal way to build consensus (as in over lunch), getting together is difficult.

Most CEO’s I work with or know wouldn’t put up with what others routinely face before that nicely packaged presentation makes it to the CEO’s desk.

Connecting the Dots

jim | March 1, 2011 | Communication, Employee Engagement, Leadership

Many well-intentioned CEO’s conduct all-employee or town hall meetings, some in live sessions, some using web-based technology.

People welcome information about business strategies, competitors and customers. They want a minimum of rah-rah, just the unvarnished facts delivered in an authentic way.

The overarching context needs to be supplemented by “what it means to me” or the CEO’s message is likely to become “so what?” information as in, “That’s all well and good, Madame CEO, but what do you want me to do about it?”

If I’m sitting in the clinical development function of a pharmaceutical and I’ve just heard my CEO discuss the importance of getting new medicines into the pipeline, I want to know what my leader of clinical development has planned to get new medicines into the pipeline. More importantly, want to know what I need to do–what actions I need to take–to help us get where the CEO has told us we need to get.

The “what it means to me” needs be just as speed-driven and well orchestrated throughout the business as the CEO’s meeting.

Is Your Communication Doing Any Good?

jim | January 19, 2011 | Communication, Employee Engagement

A client recently told me he thought his company was “over communicating” to his employees.

He was right in one way. Our assessment of communication inside his operation told us that while our client had initiated a lot of communication activity, much of it missed the mark. He was over-communicating all right, just not effectively.

This isn’t uncommon. Many leaders confuse communication activities with communication. For instance, when confronted with a quality problem, they produce and distribute a video on the importance of quality and hope the quality problem goes away. Of course, a video by itself isn’t going to make much headway against a raft of other signals that employees receive daily, which send the opposite message.

Communication activity doesn’t equal communication.

The communication system in any organization is incredibly complex. It represents all the things you say and do that form perceptions that drive decisions, actions and results. That includes what leaders say and what they do, what rewards reward, what measurement systems count, who you promote, what you teach and who you recognize. Everything within the organization communicates. Hiding in your office instead of showing up at a meeting doesn’t absolve you from communicating. Your absence communicates. You can’t not communicate.

How do you know if you’re managing this complex system or not? You measure it.

You can measure the entire process or pieces of it. There are plenty of ways to do this.

You can start informally with a time-tested consulting approach called asking, listening and looking around. It will tell you gobs of stuff that’s very useful.

Or you can measure more formally. Here are some examples of formal ways we measure our clients’ communication effectiveness. The methods I’ve listed can be used alone or together, depending what you want to learn and fix.

Results and ROI

This measures actual performance improvements against the cost of creating the improvements. Here’s an example.

Our client was a software engineering company. Its sales force was having trouble selling, in part because of a number of regularly occurring communication breakdowns. Sales people couldn’t get information about soon-to-be-released products, current product features and benefits and pricing flexibility. When we eliminated these breakdowns, sales increased $10 million over a relatively short time. The total cost of the solution was a little under $150,000. This, of course, is a huge return on the company’s investment.

Engagement Index

This tool measures the extent to which people respond positively to specific questions, which either drives or defines engagement. Engagement is a condition that occurs when employees share the values and purpose of the organization and are willing to “do whatever it takes” to help the organization succeed.

Questions can relate to issues such as open and candid communication, fair and appropriate pay, autonomy, learning and development, sense of purpose and meaning.

The index is useful if you want to know who is and isn’t engaged. This is important to know as you begin efforts to improve performance. For instance, a pharmaceutical client had high engagement levels in sales but low ones in development. Because their business strategy was focused on getting new products into the pipeline, we worked to improve engagement in the development where the payoff would be the greatest.

Say/Do Assessment

The say/do assessment uncovers mixed messages and their sources. It consists of a battery of questions that invite survey participants to assess the extent to which the company or its leadership says certain principles or values (e.g., quality products, low costs) are important and the extent to which the company actually delivers on (does) those principles or values.

A say/do assessment reveals the actual culture as compared to the desired culture. One of our clients wanted to brand itself as an innovative company yet our say/do assessment revealed that 56 percent of its employees believed the company neither encouraged nor rewarded innovation. Employees thought the company said one thing to the customers and another thing to employees. This hurt leaders’ credibility. The fact that the company didn’t encourage or reward innovation made it harder for the company to deliver on its brand promise.

Performance Barrier Assessment

The performance barrier assessment identifies communication breakdowns that are hindering a company from achieving specific performance targets—such as speed to market, building brand identity or becoming a low cost producer. The assessment helps uncover where communication mismanagement, or flaws in the communication system, contributes to poor performance around something the company must do well to compete. This is a useful assessment to employ as a precursor to the Results and ROI assessment above.

Value to Cost Assessment

A value-to-cost assessment provides rich data that helps a leader identify the return the company is getting on many communication processes, activities, programs, or media. It assesses a communication portfolio much as a leader would assess a business portfolio. Using a survey instrument, it can reveal how important people in your organization believe specific components of the communication system are to achieving company goals. It reveals how effective those components are. Blended with an analysis of the cost of those components, a leader can determine the value to cost ratio of each component and the entire mix of components.

This process is an excellent way to re-deploy resources from low importance to high importance areas. This often means an organization can make improvements without additional money.

Employee Engagement: Fact & Myth

jim | January 5, 2011 | Communication, Employee Engagement, Performance Management

I empathize with those who say they’re sick of hearing the E-word. In my nearly 30 years in business, the word engagement has been one of the most abused. (One of the most.)

I’m going to use this Report to clear up a few things about the subject—or at least do my level best.

First, engagement is not a synonym for involvement, as some think. It’s not an activity, program, event or the number of meetings people attend. It’s not how many suggestions people make. (What if half the suggestions would if implemented put you out of business?)

Second, employee engagement is a condition that occurs when employees share the values and purpose of the organization and are willing to “do whatever it takes” to help the organization succeed. There’s ample research showing a causal relationship between engaged people and improved performance. Lots of it. This is not a fluffy subject.

Creating the condition of engagement is hard work. It’s not something you just turn on. It’s not something that gets bolted on to everything else. Engagement needs to be designed into the organization. Then it needs to be directed.

People who deliver unbelievable customer service certainly are engaged. But so are suicide bombers! Engaged people have knowledge and passion. Knowledge and passion can send energy down good and bad roads. It’s not enough to engage people. You have to know what to do with it.

Some say engagement can’t be measured. That’s bunk. We’re measuring it every day, quantitatively in climate or culture surveys and qualitatively in walks through retail operations or grocery stores. Using statistical analysis, we can identify factors that contribute to and drive engagement upward. Those factors include a sense of meaning and purpose, opportunity to learn and develop, fair and appropriate extrinsic and intrinsic incentives, the ability to influence results, open, candid communication and pride in the organization and its commitment to quality. When we use this information smartly, we can target efforts to increase engagement just as a physician might give an injection here or there to eliminate pain.

But creating the condition has a cost to it. It requires leadership’s time, a lot of communication, intense involvement and the right measurement, work processes, rewards, recognition and learning systems. Because engagement has a cost to it and because it can produce significant improvements in financial and operating performance, it makes good business sense to invest the engagement resources where they’ll do the most good. It’s rare that engaging everyone makes good business. At some point there’s usually a point of diminishing return where the cost to engage people is greater than the gains you’ll create.

Here’s a real example.
A call center has a 300 percent turnover rate. Turnover adds costs and affects quality and service.

Question: How much should the company invest in reducing turnover through increased engagement? Answer: Engagement investments should be made until the engagement investments no longer pay off.

It might be far less expensive to reduce the first 75 percent of call center turnover than it is to reduce the last 25 percent. Reducing all 300 percent might sound like a good idea but it’s a lousy idea if you end up throwing money at something that doesn’t produce a return. As I said, this is not a fluffy subject. It’s a business subject.

As you contemplate improving performance through engagement, here are some questions to ask yourself.

What performance am I trying to improve? Quality, service, cost, speed, productivity, safety, sales? It’s important to set clear targets.
What’s the nature of the performance problem? That is, what barriers exist to hitting the targets?
Can employees through the use of their discretionary effort influence performance? Do they have control over the outcome? (The people inside an insurance company can’t stop Katrina from hitting New Orleans, but they might be able to process the claims faster or more accurately.)
Where are the engagement gaps? For instance, do they understand the problem? Do they believe they have the authority to make it go away? Do they have the information they need when they need it to make it go away? Do they think it’s in their best interests to make it go away? In other words, do they know “what’s in it for me?” What are the root causes of the symptoms I’ve discovered?
What is my projected cost to engage people to hit the targets? Is the return on investment acceptable?
If the return is acceptable, develop and implement your plan to make the problem go away so you can hit your targets.

Your goal isn’t to increase engagement. Your goal isn’t to raise survey scores. Your goal is to improve performance through appropriately targeted improvements in engagement. If your survey scores went up but the right performance didn’t, you need to examine where you wasted resources and not do it again.