Getting to the Heart of Employee Engagement

jim | April 16, 2013 | Book Review, 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

jim | October 4, 2012 | Communication, Employee Engagement, Leadership, Performance Management

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!

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?

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.

Incentives Must be Done Right

jim | November 27, 2011 | Employee Engagement, Leadership, Performance Management

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

jim | November 11, 2011 | Customer Satisfaction, Employee Engagement, Leadership

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.

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?”

Calculating Engagement ROI

jim | March 27, 2011 | Employee Engagement, Leadership, Performance Management

Engaged people outperform unengaged people, all things being equal. And some engaged people can produce greater returns than others.

For this reason, savvy business leaders target their engagement efforts where they’ll get the biggest returns and the most leverage. You can do this, too.

What do they do that you can do?

For those who missed an earlier Leadership Report, let me reiterate two fundamental, but not universally understood, notions about engagement.

First, employee engagement is a condition that occurs when your employees share the values and purpose of the organization and are willing to “do whatever it takes” to help the organization succeed. The condition must be properly directed at hitting or exceeding operating or financial performance goals that are important to your business. When you do this well, you’ll hit those goals more efficiently. It’s the equivalent of driving your car to a destination on eight cylinders instead of five.

Second, engaging people requires hard work and resources, as do so many things that are worth doing. There’s a cost associated with increasing employee engagement. But the return can be huge—or it can be small. In fact, somewhere along the line, there can be a point of diminishing returns where the cost to engage people is greater than the gains increased engagement can create. (Do you have to be at a six sigma level (99.9997 defect free) in everything? Most would say no.

Initial efforts to engage people often—but not always– should be focused where the potential gains are the greatest. Below is a Pareto chart (named after Vilfredo Pareto, which is why it’s always capitalized), representing five cities where a company maintains distribution centers. The height of the bars reflects the number of customer service complaints each facility received in a given unit of time. The percentage numbers above each bar reflect the engagement scores (on a scale of 1-100) for that facility.

The data tell us that the biggest opportunity for improvement is at the Atlanta facility where the complaints are the highest and the engagement scores are the lowest. This shows us where the potential opportunity is to improve engagement, but doesn’t necessarily tell us the size of the potential return on the investment (ROI).

To calculate the ROI, we need to know answers to some questions.

What’s the size of the problem caused by the complaints? This might be reflected in warranty costs, the cost of rework, processing customer returns or loss of contracts or future sales.
What are the root causes of the complaints and what actions and investments are required to make the root causes go away and lift to occur?
How much of #1 and #2 above do people have control over? That is, to what extent will an investment in engaging people modify discretionary effort, eliminate root causes and create the gain?
Knowing the size of the investment and the size of the gain will reveal the ROI.

It’s important to appreciate what employees can and can’t control through the use of their discretionary effort. To use an exaggerated example, insurance company employees have no control over where a hurricane hits. But, they do have control over how accurately or quickly they process the claims.

Similarly, the employees in the Atlanta facility in the example above have a lot of control over what goes on inside the four walls of the distribution center. But control over inventory levels may be dictated by a corporate supply chain operation, something employees in the distribution center may have no control over. Yet the inventory levels may be too low, causing late shipments that are spawn the customer complaints. So, it’s important to focus engagement efforts where people have control over the results that need to be improved.

Typically, the ROI is higher where the opportunity is the greatest. As a leader increases engagement over time, performance goes up and the so-called low hanging fruit gets picked. Reducing cycle time, for instance, becomes increasingly challenging as the degree of difficulty goes up. Eventually the investment/return lines can cross and leaders need to decide whether to keep improving performance at a cost that may well be higher than the cost to create those gains. That’s, as they say, a strategic decision.

However, as I’ve said many times, aiming for a 100 percent engaged workforce is a fool’s errand in almost all cases.

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.