Building a Culture of Trust

Trust: a soft concept that’s hard to beat…

Based on a recent interview with Aron Ain, author of WorkInspired, How to Build an Organization Where Everyone Loves to Work, and CEO of Kronos, a leading global provider of workforce management cloud solutions, our previous two posts have demonstrated that creating a high-trust culture is worth the investment — just as Covey predicted in The Speed of Trust.

Kronos’ success nicely exemplifies what a culture of trust can yield. But building this culture isn’t easy.

“We’ve worked incredibly hard to instill trust throughout the organization, one manager at a time, starting with me,” Ain said. “First, we give employees atypical degrees of latitude and freedom. Until proven otherwise, we assume their competence, judgement, and good intentions.”

Kronos also deploys tools that support the creation of a high-trust organization, such as Predictive Index, to help people get to know one another, and a performance feedback and rating system that gives substantial weight to an employees’ effectiveness at building trust. They also establish HR policies that demonstrate trust as an organizational philosophy, such as work-at-home options, and unlimited time off.

In addition, the management at Kronos works very hard on three specific management behaviors that support effective deployment of trust:

  1. Communication is key, as trusting your people to just do what they think is best for the organization doesn’t work out nearly as well if internal communication is weak. In fact, communication is so important that Ain devotes the second chapter of his book to overcommunication.

    “Don’t just communicate,” he says, “overcommunicate. You really can’t do it enough!” He goes on to note that inquiry and listening are just as important forms of communication as updating and explaining.
  2. The courage to lead is a high-profile concept at Kronos. Patrick Lencioni in The Five Disfunctions of a Team identifies the lack of trust among a management team as the root cause of most poor performance. At Kronos, the concept of courage has an even higher profile, as managers are required to lead with genuine courage. They have developed a Courage to Lead program, which has three major sections: Be Bold & Humble — Challenge & Support — Disrupt & Connect. And the first principle under Be Bold & Humble is: ‘Trust others, both within and outside your functional area.’
  3. Studying results is the third component of the Kronos formula for building a culture of trust. Trust doesn’t mean assuming everything will all work out as planned. Far from it! In fact, Kronos’ approach aligns nicely with Deming’s Plan-Do-Study-Act cycle: they plan carefully, try out an innovation or improvement, then study the results, and act on what they learn.

    “We measure everything,” Ain says. This is their commitment to “exposing reality” — seeing how the plans and decisions are actually working without succumbing to wishful thinking.

Read the full article…

Why Trust Matters

The Soft Concept That’s Hard to Beat!

Our previous post identified the role that trust plays in an organization’s success, and referenced it as “the soft concept producing results that are hard to beat.”

While trust may seem too soft a concept to produce a competitive edge, the facts indicate otherwise.

In fact, a high level of trust is essential to creating an agile, highly competitive organization and here are four reasons why.

1.) No Trust — No Speed
In a world where new challenges arise very quickly, it is the failure to act, failure to improve, and failure to innovate that poses the biggest risk to a company — not the risk of making a mistake. However, to an individual in a low-trust environment, by far the biggest risk is making a mistake. For these individuals, trying something new is much riskier than doing what’s been always been done. Innovation or even simple improvement is not going to happen. The whole organization slows down.

Covey, in The Speed of Trust, puts it this way: “When trust is low … it places a hidden ‘tax’ on every communication, every interaction, every strategy, every decision.” People don’t fully hear what their leaders are saying, because they factor in guesses about the leader’s intentions. They wonder how transparent their leader is being. Employees don’t buy-in to decisions that they don’t trust.

Aron Ain, author of WorkInspired, How to Build an Organization Where Everyone Loves to Work, and CEO of Kronos (a leading global provider of workforce management cloud solutions), points out that lack of trust places “a huge overhead burden on a relationship.” He insists that when you
employ someone, you should go ahead and trust them! Will you get burned on occasion when trusting people?

“Absolutely!” Ain says, “But almost always my trust in team members has proven well-founded. And the benefits are numerous.”

By building a culture where employees know they are trusted and where they trust their managers and teammates, Kronos has created an organization where it is safe for people to be creative and to aim for the best possible outcomes, continuously getting better and better.

2.) No Trust — No “Exposing Reality”
Exposing reality means trying very hard to look at things the way they really are, rather than the way we wish they were. As Ain points out, “the faster you see things as they really are, the faster you can get to work on improving them.”

But in a low-trust environment, people are especially motivated to gloss over uncomfortable truths and to declare victory and move on rather than checking to see if they did or didn’t get the results they expected. Trust enables us to admit what we don’t know, recognize and recover quickly from mistakes, and to put uncomfortable information, questions, and contrary opinions out in the open, where the team can work through them with honesty and passion to arrive together at the best strategies and decisions.

3.) No Trust — Poor Results
In a low-trust environment, employees hold back information or ideas that seem risky to share, so leaders make decisions based on incomplete information and without knowing all the potential consequences. And when employees believe their managers are making decisions without all the relevant input and information, they often question or even slow-walk the decisions.

Covey cites polls showing that only 45% of employees have trust and confidence in senior management. Lencioni, in The Five Dysfunctions of a Team, places lack of trust at the foundation of his pyramid of dysfunctions culminating in poor results. Without trust among a team, people keep their cards close to their chests. They are afraid to admit the limits of what they know, afraid to admit any vulnerabilities. Because they don’t trust one another, they fear conflict and withhold uncomfortable information and dissenting views. Without complete information, these teams make poor decisions, and the decisions they do make are poorly executed because they do not arrive at a shared commitment to the decision unless they have aired and resolved dissenting views. Thus, a lack of trust leads to both flawed strategies and poor execution.

4,) Trust Inspires and Engages
Covey observes that “trust is one of the most powerful forms of motivation and inspiration. People want to be trusted. They respond to trust. They thrive on trust.”

This is exactly what Ain sees happening at Kronos. “Because we place so much faith in employees,” he explains in WorkInspired, “they return the favor, placing a remarkable degree of trust in us. Their trust in turn leads to far better performance — more innovation, quicker recovery from mistakes, more energy and enthusiasm at work.”

The next step, of course, is identifying the best way to build a “culture of trust,” which will be the subject of our next post.

A Business “Secret” Weapon?

You might call it a “secret weapon” but, to be honest, it is the exact opposite. Because unlike a weapon, it is constructive rather than destructive; the only harm it could do a competitor is to leave them behind.

And it is anything but secret!

Trust — the soft concept producing hard to beat results

In his recent book, WorkInspired, How to Build an Organization Where Everyone Loves to Work, Aron Ain openly shares the pivotal role it has played in Kronos’s amazing growth story.

This “secret weapon” is trust — the soft concept producing results that are hard to beat.

The role that trust plays in an organization’s success has been written about before by keen observers of human and organizational dynamics.

  • Patrick Lencioni in The Five Disfunctions of a Team identifies the lack of trust among a management team as the root cause of most poor performance.
  • Stephen M. R. Covey in The Speed of Trust: The One Thing That Changes Everything passionately echoes this view, citing research indicating high-trust organizations out-perform their low-trust competitors by 300%, because a lack of trust increases costs while simultaneously reducing an organization’s speed and agility.

What’s different about Ain, CEO of Kronos, a leading global provider of workforce management cloud solutions, is that he can tell us how trust is working in action today and about the tools and methods in place to support the practice and enhance the effectiveness of trust.

At Kronos, everyone is expected to give trust both within and outside their functional areas and to practice behaviors that earn the trust of their employees, teammates, and managers. According to Ain, the culture of trust contributes to much more than high engagement and retention, as important as those are, but to amazing business results.

And the results Kronos has achieved are great! Revenue has tripled; Kronos has surpassed 35,000 customers worldwide, innovations are rolling out faster than ever, and employee engagement scores are through the roof. Kronos once again occupies the #1 spot in the Boston Globe’s Top Places to Work list in Massachusetts. It received an award from Fortune Magazine for Best Workplace for Millennials – 2018. It is on both Glassdoor’s and Fortune Magazine’s lists of top 100 places to work and has received numerous other awards for workplace engagement.

Based on a recent newsletter by our associate Sheila Julien, our next post will share four specific reasons why “trust” works and why it is essential to creating an agile, highly competitive organization.

Why Teamwork Pays!

How to Achieve Breakthrough Gains

Chartering and deploying effective project teams is one of the most important achievements for any organization.

Consider that high performing teams, by their nature, work on the right things — those that matter most to the organization. In addition, high performing teams are much more likely to bring about breakthrough gains – gains that go beyond those typically achieved by individuals — and for good reasons:

  • It is nearly impossible for a single person to possess the same amount of knowledge and experience that a high performing team possesses
  • The exchange of ideas leads to new thinking and innovation
  • The involvement of multiple people in decision-making strengthens commitment levels
  • A team environment provides mutual support and a sense of belonging

Some of the skills and behaviors that can help an organization develop high-performing teams include:

  • Strong, committed leadership
  • Alignment around a common purpose
  • Diligent task and project management
  • Effective communication and meeting management
  • Clear and measurable performance targets
  • The right process to achieve results
  • People are held mutually accountable for activity and results

“Selling” the Concept of Change

change is good, but never “easy!”

The point has been made, in prior posts, that “change” is not always perceived as being good, and instead tends to promote fear, uncertainty, doubt; and even resentment!

Consider that, in organizations of all types people tend to look with skepticism at new policies and procedures, and look with deep concern at new compensation plans or updated benefits programs. Similarly, in their daily quest for new customers, sales people constantly struggle to overcome buyers’ comfort with the status-quo; and people at all levels regularly cringe at the suggestion that there might be a different or better way to do their jobs!

Yet without change comes stagnation… and potentially worse things too. Current-day examples include Polaroid in instant photography, Blockbuster in video, Xerox in copiers, or the Yellow Pages! Each of these household name enterprises experienced significant declines, or worse, as competitors introduced new and better alternatives.

The cassette tape replaced the eight-track, but was then outdone by the compact disc, which was undercut by MP3 players… and the list can go on.

A Selling Mission…
If we’re to learn from these examples, then we must accept the fact that change — either in the form of innovation, continuous improvement or both — is a critical component of growth and ongoing success. Without innovation and change we run the risk of losing our competitive position or potential obsolescence.

“Whatever made you successful in the past won’t in the future,” said the late Hewlett Packard CEO Lew Platt.

But if people tend to resist change as previously noted, how might managers or business owners best go about getting the team to accept it — to buy in? How can we help people more readily embrace improvement programs, try new protocols, accept new pricing models or generally believe in the up-side of change?

Simply stated, we must sell it.

Just like the sales and marketing experts who create the “new and improved” ad copy, slogans and selling presentations, we must sell the concept of change to our staff members before trying to present or roll-out new policies, procedures, campaigns, programs or plans.

And just like any sales mission, this will require forethought and planning.

We might start by identifying how the team will benefit from a proposed change. What’s in it for them? What are the consequences of not changing? What will it cost? What opportunities might we lose?

What’s the competition doing?

The next step is to determine how to properly position a proposed change. Since we know there is a tendency toward defensiveness, it’s important to make people understand that they are not the problem. In other words, a change in policy or approach need not mean that the team has been doing things the wrong way. Rather, it means the world is changing and we must change too, lest we fall behind.

Finally, once the presentation is made and the new whatever is launched, there must be follow-up reinforcement and assessment. Has everything worked as we’d hoped? Should we modify the new plan? Are there unforeseen consequences? While we don’t want to send a message indicating we’re not resolved to the new program or approach, it is also a good idea to let everyone know we’re fair and open-minded — that at the end of the day we’re all on the same side.

Change may be unsettling, but without it our futures are at risk; and there are clearly ways to minimize the negative effects. It will require effort, planning and, like any selling mission, persistence, as behaviors and attitudes are not easily influenced.

Margaret Thatcher may have summed it up best when saying, “You may have to fight a battle more than once to win it!”

Confirmation Bias Part 2: Examples & Avoidance

Our previous post explained the concept of “confirmation bias,” which is the tendency to pursue and embrace information that matches our existing beliefs.

Here are some general examples of how confirmation bias can creep into our day-to-day thinking, and three proven ways to avoid the pitfall:

Decision-Driven Data
As previously noted, the inclination to look for supportive data can easily lead us to serious mistakes. Social scientists report that analyses of investments we favor inexorably take on a rosier look than investments we are doubtful about.

Many small choices go into collecting and crunching data and analyzing opportunity and risk and presenting results. Absent a conscientious effort to avoid confirmation bias, small choices — all valid on their own — tend
to be made to support our initial opinion. We think we are making data-driven decisions, but we are really collecting decision-driven data.

For example, author Daniel Kahneman once described a study of high-performing schools to determine if size played a role in quality of educational outcomes. The data indicated that the top quartile in educational performance contained a disproportionate number of small schools, supporting the hypothesis that small schools provided better quality education. This led to some expensive policy decisions that produced no educational benefit. It turned out that small schools are disproportionately represented in the worst performing quartile as well, due to the statistical tendency of larger populations to “regress to the mean” or basically become more “average” and thus to be under-represented in the top and bottom quartile.

First Impressions
Confirmation bias also plays an important role in the inordinate impact of first impressions. A first impression provides a very tiny and possibly serendipitous sample of a candidate’s qualities and qualifications. Yet,
people who believe this is a very intelligent candidate before the interview tend to notice more signs of high intelligence.

Here are three things we can do to protect our decision-making process from conformation bias and potential distortion:

  1. Recognize the bias and remind yourself to look for it in your decisions and analyses. Remind yourself that the authors of everything you read (including this article) are making a point that is supported by the data they present, but is not necessarily by data they do not present — and in fact may not even have seen if they did not look hard enough for contrary data. Remind yourself that the talented and well-meaning people providing you with analysis and recommendations are also subject to confirmation bias. Ask for contrary data.
  2. Ask “what else could it be?” Think creatively about alternative explanations and alternative solutions. Explore the whole feasible set, if possible.
  3. Encourage the expression of contrary views and ideas. “If you value the differences in people, the differences will produce value.” Aggressively seek out and try to understand contrarian views. For many people, the first impulse is to refute contrarian views and argue our own. But the best decisions are likely to be made by those who “seek first to understand rather than be understood.”

Confirmation Bias – Has it Happened to You?

CONFIRMATION BIAS AT WORK

It has happened to most of us. Has it happened to you?

That is, has there been a time when data supported a decision you knew to be the right one, but for some reason or reasons you did not get the outcome you expected?

Perhaps you find an exciting investment opportunity like the winners you have spotted before, but it yields mediocre or poor results. Or despite your experience and successful track record when judging candidates, a person you just “knew” would be a good fit turns out to be a bad hire.

With experience can come wisdom… but also confirmation bias.

Confirmation bias is the tendency to pursue and embrace information that matches our existing beliefs. We tend to seek out and enjoy people who write or say exactly what we think. We gravitate toward these sources not for information but for confirmation.

Researcher and writer Thomas Gilovich posits the “most likely reason for the excessive influence of confirmatory information is that it is easier to deal with cognitively.” It’s easier to think what we think!

Yet confirmation bias in business can be especially hazardous and costly to highly-experienced and successful individuals. These minds are adept at spotting patterns, learning from experience, scanning the horizon and connecting the dots. If that describes your talents, take a look at this classic puzzle nicely presented by the “The Upshot.”

If you attempted the puzzle, how did you do?

For those who opted out, in this puzzle participants are given a numerical pattern and are asked to determine the underlying rule. The pattern is quite simple, and participants can test their theories as often as they like before specifying the rule. Yet 77% of participants fail to identify the rule because as soon as they find a pattern that supports their theory they conclude it is the correct rule.

In other words, 77% of participants succumb to confirmation bias.

This is a common occurrence in business. When trying to solve problems or make decisions we overwhelmingly look for patterns that support our theories rather than looking for data that would clue us in that we have missed the mark. And with each piece of data that does not refute our theory, we become more confident in our belief.

This exercise shows how people tend to work at proving their theories right, instead of robustly testing the theories to prove them wrong. Once we have seen enough supporting evidence to confirm we are right, it is far more natural for us to fully embrace our premise or idea.

For instance, maybe we are tasked with determining why a certain work process is not being done well. Is the work done less well by inexperienced employees, or when the machine is overdue for maintenance, or when the materials have a certain characteristic?

We could test all three of these ideas with data. But our natural confirmation bias makes us far more likely to look for evidence that the idea we favor is correct than to look for ways it may be mistaken. So, we start testing the idea we think is most likely and as soon as we find enough evidence to support it, we risk diving into the solution and excluding the other possibilities; and we could very well be headed down a path of action that is sub-optimum for our organization.

In our next post we’ll take a closer look at examples of confirmation bias in the workplace and steps that can be taken to avoid it.

Conventional Wisdom & Utilization

As you are most likely aware, “utilization” is a measure of the actual number of units produced divided by the number possible when machines and people work at full capacity.

Conventional wisdom says that the best way to maximize profits is to encourage every department within an organization to achieve 100% utilization. Like so much of conventional wisdom, this has a ring of truth to it; and it has the added beauty of simplicity. We can evaluate and reward each department independently of one another, and if everyone is given incentives to get as close as possible to 100% utilization, then the company will surely be maximally profitable.

But this premise will fail us in the real world… a world riddled with variation.

For example, let’s say a company has three operations:
• Glass Blowing
• Filament Insertion
• Cap & Wrap

Utilization of the 3 departments is 50% in Glass Blowing, 100% in Filament Insertion, and 80% in Cap & Wrap. So where do you focus your improvement efforts? The natural conclusion is that you would focus on increasing utilization in Glass Blowing: either by increasing production (which would simply increase the inventory of bulbs waiting for insertion) or by decreasing capacity.

But if you look at the throughput of the process as a whole, you see that Filament Insertion is the bottleneck. At 100% utilization, they are unable to produce enough to keep the next operation, Cap & Wrap, fully utilized. Furthermore, Glass Blowing, despite the lousy utilization numbers, is already piling up inventories of bulbs waiting for filaments. The utilization numbers suggest that Filament Insertion is the last area needing improvement, but to improve the process flow, it must be the first area to improve.

If the world were perfectly predictable, we could reduce the capacity in Glass Blowing and Cap & Wrap to exactly match Filament Insertion to achieve 100% utilization. But if we did so in ‘Murphy’s world,’ any variation in glass blowing production — such as machine downtime, absenteeism, yield deterioration, material availability or quality issues — will not only impact Glass Blowing utilization numbers, but the bottleneck — Filament Insertion —will also be idle! Production opportunity lost at the bottleneck is lost forever. Instead of trying to optimize individual operations, identify the bottleneck and make sure there is enough capacity in the feeder operations to ensure that any disruptions do not impact the utilization of the bottleneck capacity. Instead of aiming to maximize utilization at each operation, as conventional wisdom would have us do, we must find and eliminate waste at the ‘bottleneck’ or ‘rate-limiting’ step in order to increase profitability.

Is Bigger Better?

Is Bigger Better?

Conventional wisdom holds that bigger is better, and there are numerous factors that support this perspective. Consider that when you’re an organization or a business and you’re doing better, then you’re going to get bigger — so, therefore, bigger is better!

And certainly issues such as bulk buying discounts or other economies of scale favor size.

But, the tumultuous forces of an uncertain world might just favor agility. Consider that while a cost/benefit analysis will typically reveal that unit cost is much lower for a single large-capacity piece of equipment than for several smaller machines, rarely does that analysis incorporate the impact of uncertainty and variation on total cost; and, in reality, variation in either market demand or supply (such as machine downtime), or the relative inflexibility of a single large capacity machine can drive inefficiencies that greatly offset the lower unit cost that was calculated when a purchasing decision was made.

For example, a commercial bakery could purchase one large capacity mixer that could produce 100,000 loaves for far less cost per loaf than two smaller mixers. The large mixer produces large batch sizes; that’s how it gets its great efficiencies. But if the market is looking for variety, none of which is ordered in bulk, the large mixer results in the worst of both worlds: you either produce large batch sizes and have a lot of scrap if the demand does not materialize in time, or you waste the purchased capacity by preparing batch sizes more closely tied to current demand for the product variety. Either way, you can never really produce enough variety for the market, because the equipment produces only one variety at a time.

Capacity to produce must be as flexible as the market is variable and dynamic. Often this runs directly counter to economies of scale. Optimizing the machine-cost-per-unit can sub-optimize the profitability of the process as a whole.

So, ultimately, to effectively answer the “is bigger better” question, we must go well beyond conventional wisdom or what we assume to be true, and instead consider a wider range of variables. Possibly this well-known quote, sometimes attributed to Mark Twain but also to Josh Billings, sums-it-up best: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

Does Your Organization Have a Strategic Internal Communication Plan?

Missing Link in Communication?

In a previous post we identified five ways to enhance the success of Continuous Improvement (CI) within an organization, with “communication” being one of the keys.

Consider that, even if a team applies the CI methodology to great success but no one hears about it, the goal of making CI a cultural way of doing business will not catch on.

However, facilitating consistent and open internal communication is one of the many things in life that might be simple, but not necessarily easy.

For example, Bruce Bolger, Co-Founder of the International Center for Enterprise Engagement, shared an interesting observation recently when he said, “Most organizations put far more effort into communicating with customers than with employees.”

We’ve found Mr. Bolger’s comments to be accurate. In many cases, customer communication is the higher priority, thus making it easy to put internal communications on the back burner. In other instances, the “silo” approach to operations tends to result in haphazard internal communication.

To gain the best results from its CI as well as its Engagement effort, an organization must connect these initiatives, along with internal communications, to a strategic and systematic approach.

Challenges and best practices associated with continuous improvement