Creating information-rich environmentsCreating businesses of engaged business people Connecting people and their work to goals Aligning measurement, rewards and recognition with business strategy

Chasing Shiny, Bright Objects

One of my early consulting engagements was in Kansas City with a team of smart people from Hallmark. The team was charged with improving business processes that were critical to getting new products to market faster. The work took months off the process. It made the company more nimble, giving it a decided competitive edge.

I was back at Hallmark recently when they hosted one of our “Managing Communication for Results” workshops.  Corporate communication people from a number of companies were there to learn how to transform their work so it adds more measurable value to their companies.

Like the human resources departments of 15 years ago, today’s communication departments are under pressure to prove their worth. For years they’ve been performing the same work—distributing news and information. Each decade has brought its shiny, bright objects that distracted them—video, the Internet, intranets and now social media. The tools have added some value but that value was difficult to measure.

The opportunity for change in the communication function is huge.

It needs to start by embracing a different mindset. That means doing what HR, manufacturing, marketing, sales, finance and other disciplines have done: rethink the business they’re in.  Should the communication department be exclusively in the news and information dissemination business or would it add more value by identifying and eliminating communication barriers that make it difficult for employees to get their jobs done?

Embracing a different mindset brings the realization that communication in any organization is far greater than newsletters, posters, videos, blogs and other formal channels. The communication that really matters is what leaders say and do, what gets measured, rewarded and recognized, how customers are treated, how priorities are set and how resources are used.

There are plenty of opportunities to improve. It starts by eliminating communication breakdowns that cause people to under-perform. Here are real examples that’s I’ve dealt with.

  • John in the Dallas sales office is losing customers because he can’t get pricing information out of the marketing department to pass on to his customers before his competitors get their prices to his customers.  A big communication issue. Downside: loss of revenue.
  •  Mary in Columbus can’t process insurance claims accurately or quickly enough to meet her goals because she hasn’t received proper instructions on how to process claims. A big communication issue. Downside—mistakes that cause rework and loss of productivity.
  • There’s overuse and scrap in the commercial bread bakery because Jose rarely knows how many bags will be needed to wrap the loaves coming off the end of the line. A communication issue that if fixed, will save a ton of money in terms of scrap and lost productivity every time the line goes down.
  • The sales force in Denver has a $76 million productivity shortfall because it can’t retrieve information about current product features and benefits and products in the pipeline.  A communication problem that hurts sales and productivity.
  • A new product development cycle cant be shortened to get medicines to market faster because of silo wars that exist among divisions and departments. A communication problem that could impede new product introductions and contribute to lost market share

These are huge communication issues that are avoided by many communication departments because they–and often their leaders–view their roles narrowly as the formal channel managers not as business problem solvers. Many lack the skills and knowledge needed to assume more of a strategic business counselor role. Many don’t understand how their own organizations make money.

But that’s changing, as evidenced by our workshop attendees and others I work with. Many communication professionals are working to broaden their roles, making business cases to their leaders about the value that can be created by expanding the reach of their work and partnering with other operations leaders to attack communication defects that hurt performance.

There are both intrinsic and extrinsic rewards for making this move. Communication people who do so tell me they feel an increased sense of value when they go home at night knowing they helped make getting the job done a lot easier for some of their fellow employees, or that they were able to solve a customer problem that was hurting sales. And beyond feeling valued, they’re also being paid better because they’re adding more value.

Dooming Culture Change to Fail – 5 Common Mistakes

If I didn’t know better I’d be firmly convinced that many leaders get up in the morning and deliberately try to confuse the hell out of their employees.

I’ve been guiding business leaders through major and minor change processes for more than 30 years. Some target the whole company; others focus on improving branch operations, distribution centers, business units, sales forces, or manufacturing plants. In every case, the goal is to measurably improve operating and financial performance.

Huge success stories such as GE and Ford are well documented. So, too, are the many failures that well outnumber successes.

I worked with a company a few years ago typical of an organization that believes it can smile and slogan its way to increased prosperity. The leaders there seemed to think that if they just print, pass out and post enough rah-rah blather, their employees will mindlessly obey, change the way they work and within months become a best company to work for or most admired company in its industry.

Some leaders are learning from the mistakes of others. But by and large more still ignore or are unaware of the most common mistakes made by organizations needing to go through significant change efforts.

Here are the five most common mistakes leaders make when trying to guide their organizations through “culture change.”

If you’re reading this as the CEO, consider this fair warning: The people who are in positions to support you in a change effort have a responsibility to politely say NO when asked to repeat the mistakes of the past. They can then help you set the organization on the right course. Don’t make the following mistakes.

1. Try to change the culture.

Culture is loosely defined as “the way we do things around here.” It’s driven by the combined values of the organization. Values drive what gets done. But, leaders make the mistake of trying to change this huge amorphous thing called the culture when they should be focusing on changing how work gets done. Results don’t change unless work changes. When you change how work gets done you can start to change the culture. Start by changing something more manageable—the work. Read on.

2. Make changes without direction from customers.

Some leaders begin by cleaning up internal systems and processes without first gathering rigorous data about customer requirements. This can create a flurry of activity that lulls people into believing they’re “changing the culture.” Change should be externally driven. Employees want to do great things for customers and customers want your people to do great things for them. Friction, however, often gets in the way. Friction comes in many forms—mixed messages, poorly designed reward systems, lack of or improper training, misdirected goals, lousy leadership, lack of employee involvement, etc. To make lasting change, identify customer requirements, then eliminate the friction.

3. Name the change effort.

This might sound like a small thing. But naming your change effort “Creating the Culture for Growth,” or anything else represents a symbolic first step toward disconnecting your change effort from real work. Employees in many companies are tired of programs du jour. They don’t need another program supported by expensive slogan-laden posters, brochures and banners. They need a serious, well directed effort that improves organizational performance in a proper way. Naming your change effort facilitates compartmentalizing it. When that happens leadership meetings often take on two different agendas: one focused on operating and financial issues; the other focused on the change program. They should be one and the same or you’re doomed.

4. Let the “say communication” get ahead of the “do communication.”

Change programs often are launched with all employee meetings, culture clinics and offsite retreats to create vision statements, appoint change ambassadors and take superficial action that promotes the change effort. It’s more about the talk than it is about the walk. Eventually employees get “cultured out” because they don’t see the walk matching the talk. Leaders begin to lose credibility. This is usually fatal. It’s far easier to begin managing the walk and the talk consistently than it is revitalizing a change effort with leaders who are no longer credible.

5. Implement the change effort from the top down.

Change needs to be about WE, not me and not you. It starts with a clear, shared vision and a sense of urgency. A vision is the equivalent of the box top to a 1,000 piece puzzle. The box top depicts what the puzzle looks like when it’s completed. People who know what the puzzle looks like in the end will likely put the puzzle together faster than those who don’t.

Leaders need to engage people in the puzzle building process, providing resources to improve work on behalf of customers and then guide the overall effort. All throughout the process, people in the organization need to know how they will benefit from the improvements they’re making. That’s the critical “what’s in it for me” that we all need.

The Purest Form of Transparency

Why do business leaders talk a good game about being open and transparent, but do a half-assed job of it?

Here’s how I see it, based on my working with leaders for 30-plus years.  Most have never seriously thought about openness or transparency, although they say they want to be totally open with their people.

They don’t know what open means.
When I suggest that “open” might mean that leaders communicate all pay-related information to everyone, they (unlike others who have been successful with the concept), opt out of that definition fairly quickly. We then discuss other levels of openness until the leadership team is comfortable with their definition of it. Usually, they end up with “semi-open.”

They don’t trust their people
Leaders don’t come out and admit it, but they proffer excuses for their lack of trust in their people with phrases like “Employees don’t want that kind of information,” or “They wouldn’t understand it anyway,” or “I’m afraid what they’d do with it.” Imagine the coach of an athletic team not sharing the game plan or the next play with his players! An unwillingness to share is an unwillingness to trust.

They don’t understand the power of openness and transparency.
If those same leaders had been with me last week, they would know what purpose-driven, financially literate people can do to take an organization to unheard of heights. I was at the “Gathering of the Games” hosted by SRC Holdings. Its CEO, Jack Stack, pioneered the concept of open book management in his spectacular book The Great Game of Business, which is enjoying its 25th anniversary this year. I believe it is among the two or three best business books ever written.

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.

Engagement scores are incredibly high. And because they focus their engagement on improving business results not improving engagement scores, a mistake many companies make, engagement drives high levels of business success.
As products of our own experiences, I find that many leaders or their communication or HR people can’t envision a truly open culture because they’ve never seen one. But when I escort them on a field trip to SRC, they tell me they are blown away.

“This is the purest form of transparency,” one senior communication person told me during one such field trip. ‘I’ve never seen anything close to this level of openness in all my years in business.”

So? Why open the books?
First, because people with information related to the goal—realizing a vision and generating cash to continue doing it—perform better than people who don’t have that information. To someone like me, that’s only common sense.

Second, opening the books builds trust. Trust builds teamwork. Teams that focus on the right things are apt to win more often than teams that don’t.

Third, it provides a daily sense of purpose—a goal far greater than “put these 1,000 nuts on these 1,000 bolts.”
Businesses that choose to play it close to the vest are clearly underpowered. In a competitive world I can’t imagine why a strong leader would put up with that condition when there’s a clear alternative.

Notice, I said a strong leader.

Level Conscious? You’re Underpowered!

The young man in the Indianapolis Colts ball cap sitting at the end of the table had something he really wanted to say.

I’ve facilitated thousands of focus groups over the years. I know the people who are itching to tell their story from the look in their eyes.  On this day, we were talking about how people are treated differently depending where they sat in the organizational hierarchy.  It’s called level consciousness and it represents a severe form of friction that damages performance.

Mr. Ball Cap blurted out his story.  “I was on the elevator and missed my floor. It took me to 26 where the carpet got real thick—almost hid my shoes. I just peeked around, never been up there before. It’s where all the top dogs work. But I didn’t see anyone working. It was real quiet like no one was there. Well, pretty soon a woman comes and asks what I was doing up there. She just looked down her crooked nose and said, ‘Are you supposed to be up here?’

“I said I guess I wasn’t, turned around and high-tailed it back to the elevators. It seems like it took a week and a half for that damned elevator to come back up those 26 floors,” Ball Cap said. “Left a real bad taste in my mouth. Not sure I want to bust my rump for those assholes, wherever they were.”

  • Is the carpet thicker where your bosses work?
  • Do people dress better on your equivalent of Ball Cap guy’s 26th floor?
  • Do people refer to the “C-Suite” with reverence?
  • Do people dress a little better on days when they know they’ll have meetings on the 26th floor?
  • Is more urgency and attention given to requests from the C-Suite than requests from employees who have direct customer contact?
  • Do people refer to others by level, as in, “She’s director level and he’s a manager so….”
  • Are certain meetings for “directors and above” or other such titles?
  • Do meeting dynamics change when the boss leaves the room?
  • Are parking spaces reserved by level with “top dogs” getting the choice places?

What’s so bad about all this level consciousness?   Other than it devalues people, if winning and losing is based on meeting or exceeding customer requirements, then the answer is  just about everything.

Sure we need some order, but a leader’s role is to clarify a vision, make sure people understand that vision and then make sure people have the resources they need to take the organization to unheard of heights so they can realize that vision. A leader should be an enabler—serving the members of the team.  Ego trips and a need for power aren’t part of this equation.

Focusing on the customer is about empowering people. This increases entrepreneurship.  Focusing on the boss is about focusing on control. Excess control creates bureaucracy.

Where in your organization is level consciousness stifling performance? Where are people acquiescing to bosses because it’s safer than presenting fact-based cases that argue on behalf of the customer?

Where in your organization were people put on the black list because they weren’t afraid to challenge the boss in a meeting—especially when the boss was dead wrong?

Where is level consciousness getting in the way of transparency—where employees are afraid to tell the truth to each other because it might reveal flaws in their omniscient leaders?

Who do you want to send this to because it makes a point that you’re uncomfortable making but needs to be made!

Good luck!

Getting to the Heart of Employee Engagement

I’ve read most every book on engagement that’s out there. But if I had to choose only one to read, Getting to the Heart of Employee Engagement: The Power and Purpose of Imagination and Free Will in the Workplace by Les Landes would be it. Here’s why.

Most books on the subject say the same thing. They define engagement, summarize the 100 or so studies reporting how much better engaged people perform than disengaged people and then describe techniques and tools organizations have used to improve engagement and results. There’s nothing wrong with this approach. But what I like about Getting to the Heart of Employee Engagement is that Les explains the basics—the why behind the subject of engagement—better than others.

I think understanding the basics— “why things work the way they do”—is the best way to equip someone to master a subject. Understanding the basics of photography, sailing or cooking, three of my avocations, gives me more creative latitude. This gives me a larger inventory of options to work with.

Same, too, with engagement. If you understand the connection between imagination and free will or employee perceptions regarding control n the workplace, you’re more apt to be able to adjust your thinking and techniques to accommodate a wider variety of real-time situations.

Les gets the job done using a fictional story of a thoughtful and insightful consultant who takes a human resource and communication manager on a journey of discovery. Over the course of time Tom, the manager, and David, the consultant, share their thinking about Barney the purple dinosaur, Henry David Thoreau, continuous improvement, performance development, communication and many issues in between.  It’s a fun ride.

I’m typically not a big fan of using fictional stories to make a point because they often feel contrived. But the story Les has created is beautifully crafted. The dialogue is realistic and lessons are incredibly relevant and useful to today’s CEOs as well as HR newbies.

Here’s some of the content that runs through the chapters:

  • A counterintuitive approach to optimizing employee involvement and continuous improvement while generating maximum performance improvement
  • A process for working with employees to contribute to their fullest
  • The importance of dumping the traditional appraisal process in order to foster growth and development
  • Criteria for an effective communication system that might surprise traditional communication practitioners (Hint: It’s not about more activity or publications.)
  • What works and what doesn’t when it comes to employee engagement

Getting to the Heart of Employee Engagement is a fun and fast read. It will give HR and communication people an argument for recommending results-driven processes to their CEOs. And, reciprocally, it will give CEO’s an argument for recommending results-driven processes to their HR and communication people.

Everyone wins.

A CEO’s Lost Connections

The CEO of a large company recently expressed frustration to me because he had a sense that his people weren’t connected to his vision and the strategy—“despite having explained it maybe a hundred thousand times,” he said.

“We need to connect people,” he said. “People in the field need to understand that if they keep doing the same things, we’ll just get the same results. That’s not good enough.”

Lack of connectedness, both vertically and laterally, is rampant in companies. It represents a form of organizational friction that prevents people and the business from achieving performance levels that are otherwise achievable. Many employees don’t know how their work directly affects company goals (vertical connection), or they are beset by organizational silos that practically dare people to work together (lateral connection).

Everyone reading this Report is part of an organization dealing with this type of friction. No company is immune. Many companies, however, have done a stellar job making the connections.

One of the best places to start improving connectedness is by building business and financial literacy. It arms people with the information they need to make better decisions. Better decisions lead to smarter actions that produce better results. The more you properly connect, the better your operation gets.

Business literacy teaches people about the competitive marketplace, customers and their requirements, the company’s products, services and market position. Financial literacy teaches people about the real game. The money game. If we don’t make money, we won’t be around no matter how noble our cause.

Real-Life Example

A high tech engineering company we work with has taught its employees how they can influence cash flow.  The parts inventory manager knows she needs to maintain just enough inventory to make sure the machine operators on the manufacturing floor can meet the promised customer delivery date. If she can’t get a needed part to the machine operator in time, she’s messing with cash flow because the customer isn’t going to pay for the product until it’s received.

Is it an extreme concept to think that every person should understand their impact on the business? Is it an extreme concept to think that every member of a given sports team or orchestra should know their role in winning the contest or playing the symphony? Of course not.

Why don’t more businesses teach people the real game? Because it’s hard work.

It’s easier to tell people what to do and hope “they get it,” but that ends up frustrating both employees and their CEO.  Doing what’s easy doesn’t help people make smarter decisions, create ownership, or change work so results skyrocket.

By taking on the more challenging approach to creating connectedness through business and financial literacy, you will see business performance get jacked up to unheard of levels.

Have a Trust Issue? Open the Books!

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?

Is There a Best People Measure? Maybe Not.

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.

Incentives Must be Done Right

Incentives can play a huge role in driving results upward, but only if they’re part of a larger continuous improvement system.

Last year, I worked with a company that had a gain-sharing plan for hourly people. Employees worked to create gains that they, in turn, shared. It was a relatively decent design but its implementation was flawed. As a result, it became perceived as a form of entitlement—something employees deserved. Even worse, they had no idea how to create the gains.

Here are some characteristics of good incentive plans:

The right targets
There should be a clear line of sight between what people do and what they can influence. Expecting hourly people to connect to an earnings-per-share goal is a bit of a stretch. But connecting them to reducing scrap or re-work in their area provides line of sight. The incentive needs to focus on targets that drive results because results fund the payout. If there’s no gain, there’s no payout.

High involvement

People are more apt to actively participate in an incentive plan that they’ve helped design and set targets to achieve. They will work like the devil to hit the stretch targets that they have set. In most cases, people will beat their own goals, even if they are high.

Leaders at all levels, but especially first line leaders, need to promote high involvement and a disciplined continuous improvement process that fosters root cause identification, problem solving, solution testing and refinement.

An information-rich environment

Goals and actual performance information should be as available to the incentive plan participants as a sporting event scoreboard is available to the players on the field. And they should have the information they need when they need it to improve work and results. This includes information about the workings of the business and what it takes to “improve the score.”

The right payout at the right time
Payouts should be large enough to get attention, yet frequent enough to connect the work that was improved with the results that were created. For example, if the incentive is paid annually, the line of sight between work and results is so long that most employees forget the plan exists. Monthly or quarterly payouts (with a form of hold-back in case the company tanks late in the year) keep the effort, results and payout connected.

Darden—Great Company

I think environment says everything about a company. I don’t care what industry you’re operating in, the parking lot tells your first story. That’s followed by the front door and the first person you meet inside that door.

Everything that comes after is merely repetition.

Not long ago, I spoke at Darden, the big full-service restaurant company and a Fortune 100 Best Places to Work.

Darden screams, “Great Company!” even from the highway.

My Darden host, knowing I fancy myself as somewhat of a foodie, took me back stage into the Olive Garden test kitchen where I watched the chefs create some new entrees. I was like a kid in a candy store.