All posts by pdonehue

The Ripple Effect of Disengagement

Our previous post focused on ways of reducing the costs associated with disengaged workers. While the most obvious course of action might simply be to increase the percentage of engaged workers, doing so is no easy feat! It’s also important to recognize the specific ways in which disengaged workers impact an organization’s bottom line or, stated another way, to identify and quantify the waste!

During meetings with our Partners in Improvement, these costs were discussed in detail. The Partners concluded that disengaged employees create a negative and expensive ripple effect throughout an organization, and drive-up costs in numerous ways:

Higher turnover: Disengaged employees leave their employers as soon as they see a better opportunity. The turnover increases the costs of recruiting, on-boarding, and training, (1.5-2x annual salary as explained in a recent post), and significantly more for higher-level executives based on a Center for American Progress study. Every new hire brings a risk of a bad fit, and every employee leaving an organization takes with him or her some organizational knowledge that might have been helpful to that organization in future decisions.

Lower productivity: Disengaged employees don’t go the extra mile; they do not make an extra effort when faced with a challenge, and don’t put forth the same discretionary effort that an engaged person will make. A 2013 article from the Harvard Business Review concluded that organizations that cultivate high employee engagement yield a 22% increase in productivity over the norm.

Lower profitability: Similarly, McBassi & Company has compiled data which shows that the Engaged Company Stock Index (comprised of 43 companies with high engagement scores), outperformed the S&P 500 by 21.4 percentage points since it’s inception in 2012.

Little or no process improvement: Improvement requires engagement — a willingness to design and conduct experiments, a willingness to take risks to try something new and potentially better. Often times, disengaged employees focus on their personal agendas and see little upside in trying something new to forward the organization’s goals. The associated cost of lost opportunities is difficult to calculate; but it is significant and probably far greater than the direct replacement costs outlined above.

Higher pay: When we say about someone, “They are only in it for the money,” we are observing disengagement. While money is important to nearly everyone, if that is the only motivation, there is no genuine engagement. As the behavioral economist, Dan Ariely, said, “Money is the most expensive way to motivate someone.” Organizations that are unable to create an environment that intrinsically engages their employees must pay them more to keep and motivate them.

Reducing the Cost of Disengaged Workers

Our previous post focused on the cost associated with disengaged workers and the often-unrecognized lost opportunities associated with turnover.

Fortunately, there are proactive steps that can be taken to avoid these costs and the collateral damage to team morale and brand that is a regular side-effect.

Based on research and data shared by the Enterprise Engagement Alliance (EEA) and The Chartered Institute of Personnel and Development, the following five steps can drive employee engagement, and reduce the number of disengaged workers and the associated costs:

  1. Enhanced recruiting and on-boarding — At a recent Engagement World Conference leaders from several organizations explained how they had increased employee engagement and retention beginning at the recruiting stage. The first steps involved the inclusion of the organization’s mission and vision into interviewing conversations, and a more conscious effort to identify and hire people with aligned goals. Adding a mentor program to the on-boarding process helped new hires assimilate faster so they became more productive in less time. Enabling people to achieve higher levels of productivity and success early-on promotes greater engagement levels, and reduces first-year attrition rates. Early churn tends to demoralize everyone, so in addition to reducing re-hiring and re-training costs, the costs associated with negativity within the existing workforce are also reduced.
  2. Consistent performance management and communication — People need to have meaning in their work, and understand how their work aligns with organizational objectives. This point was well made by several speakers in an episode of TED Radio Hour, called The Meaning of Work. If managers communicate a shared purpose or sense of direction, and encourage employees to openly share their perspectives and input, then they can increase employee engagement.
  3. Learning and development — a past post shared the fact that, for the first time in two decades, the percentage of engaged workers in the US rose in 2019. The increase was due to positive changes in how organizations were developing people. In addition, a recent article in Human Resource Executive magazine identified “continuous learning opportunities and personal development” as being two of the four key criteria (scheduling flexibility and social responsibility being the other two) recent graduates value most as they evaluate career options.
  4. Recognition and rewards — Recognizing and rewarding employees is not a new concept, but if the goal is to engage people rather than simply acknowledge milestones (such as length of service), then the approach must be aligned with what is meaningful to each recipient. An EEA article outlines an effective approach, which begins by stepping-back from the traditional monetary rewards.

    “To receive a deeper level of benefit that can come from sincere recognition, look beyond monetary rewards and get to the human connection – reward employees in ways that connect with them
    emotionally and psychologically,” the article suggests.
  5. Flexibility and work/life balance — Employer/employee relationships, expectations, and engagement criteria have evolved significantly over the past decade. In the Human Resource Executive article referenced above, data from a PwC survey of 44,000 workers who had become less-engaged indicated that “71% said their jobs interfered with their personal lives, and 70% said they wanted to be able to work from home.” The current pandemic, which has necessitated higher-levels of working from home, will no doubt add to the number of people wishing to do so more often.

Lost Opportunities: The Hidden Cost of Disengagement

We all know that engaged workers are more productive and loyal. Conversely, disengaged workers are less productive and are among the first to “turnover.” And we all know that turnover can be costly considering it involves hiring, onboarding, training, ramp time to peak productivity, the loss of engagement from others due to high turnover, higher business error rates, and general culture impacts.

But how much does turnover “really” cost?

A 2017 Deloitte study stated the cost of losing an employee can range between 1.5–2.0x the employee’s annual salary. But the costs can be even higher based upon skill level. For example, a paper from the Center for American Progress determined that the average economic cost to a company of turning over a highly skilled job is 213% of the cost of one year’s compensation for that role.

Then there are some of the less tangible considerations, as illustrated by the following example: A young, seemingly fast-rising junior executive had been working at a large bank for just over six years. When he was asked about his job and how he felt about it he said, “The job’s OK.”

His lack of enthusiasm was evident, and when pressed to say more he added, “Well, I’m not really learning much anymore.”

When asked if he was fully-engaged he said probably not but went on to say that he still did a great job. “I still give 100% and consider myself to be a great employee,” he said. Then, after a short pause, he added,” But I don’t give them 110% and there’s a big difference between 100% and 110% — at least for me.”

When asked if he was out looking he responded, “No…, but I’m listening.”

When asked whether he told his boss how he was feeling he said, “Yeah, but….”

How many people in how many places feel like he does? He is bright, educated, skilled, well-liked, and might be an ideal candidate for a senior leadership position…if he stays.

But is he being made to feel like an important part of the team? Does anyone realize that he could be giving more? Is he being engaged?

As stated above, among the many documented advantages of an engaged worker is loyalty. But so too is the discretionary effort that they put forth; going the extra mile; the above-and-beyond attitude… giving 110%! How many innovative ideas might that extra 10% yield? How much more productivity? What impact might it have on customers or coworkers?

And if he doesn’t stay, the simple replacement costs are not the real issue. He is a potential super-star! He is a known-entity… trustworthy, dependable, low-risk.

What are the real (or hidden!) costs associated with disengagement; the costs of not getting 110%… the costs of not only lost workers, but also of
lost opportunities? As we’ve discovered over the years, the biggest waste in most businesses is the lost opportunities…

The Trust Triangle

A past post summarized the importance of trust and trustworthiness within our organization and within our leaders.

A recent Harvard Business Review article, “Begin With Trust” reinforces this concept, and also suggests that building trust requires thinking about leadership from a new perspective.

“The traditional leadership narrative is all about you: your vision and strategy; your ability to make the tough calls and rally the troops,” the article states. “But leadership really isn’t about you. It’s about empowering other people as a result of your presence, and about making sure that the impact of your leadership continues into your absence.”

Unfortunately, as illustrated in the article’s real world example, people are too often put in leadership roles without having had the proper training or mentorship to be effective. This perspective aligns with our observations and experience over many years of helping people at all levels develop leadership skills and applying those skills to bring about change and continuous improvement; and certainly, many have struggled to build or inspire trust.

The Trust Triangle
One way to better understand how to become more trustworthy is to understand the three key drivers of trust. Thus, the “trust triangle” illustrated below.

“People tend to trust you when they believe they are interacting with the real you (authenticity), when they have faith in your judgment and competence (logic), and when they feel that you care about them (empathy). When trust is lost, it can almost always be traced back to a breakdown in one of these three drivers.”

Just as the first step in improvement is to identify waste or opportunities, to build trust as a leader you first need to figure out which driver you need to improve and take corrective action.

Read the full article…

Continuous Improvement Drivers

Our previous post identified common impediments to Continuous Improvement (CI), noting that most “programs” tend to peter out after making a few initial gains.

Fortunately, there are specific steps organizational and CI leaders can take to prevent the downward spiral that can so easily plague improvement efforts, such as:

  • Success! The first principle is that nothing succeeds like success. So start out with carefully selected projects staffed with highly qualified people to ensure they are successful.
  • Communication! The second principle is “advertising.” If a team applies the CI methodology to great success but no one hears about it, the methodology as “the way we do things around here” will be slow to catch on. The goal is to communicate success and make sure that everyone learns from it and is ready to try for some more.
  • Rely on data! Use data to really understand the current reality and to test theories about underlying causes. The data will help you minimize the red herrings and wrong turns. People will want to substitute opinions for data because that is the way they have always worked. But the facts and data will help the team zero in on the real cause and the best solution more quickly than trial and error based on opinion.
  • Train at all levels! People readily believe that CI teams need some basic training. But team leaders need to be very well trained as well, so that they can ensure that the team follows the methodology, asks the right questions, gathers the right data, stays on track, and keeps the interest and engagement of the rest of the team. Organizational leaders should also be trained to understand their sponsorship, their role, and the soft side, making sure they meets with the teams and individuals regularly.

Continuous Improvement Impediments

People most often agree that the “hard” part of Continuous Improvement (CI) isn’t making improvements, but rather making it “continuous!”

In a past newsletter we entitled this reality as “Discontinuous Improvement,” noting that two things common to a high percentage of CI efforts are:

  1. They produce some improvements
  2. Then they peter out

For an organization to go through a cultural change so that “continuous” improvement becomes the new way of working and not just a one-time program, we need to pay close attention to the softer part of the improvement model. This will enable us to smooth the path, remove the obstacles, and continue to lead, communicate, and motivate both emotionally and intellectually.

Following are six common causes of discontinuous improvement, which hopefully your organization can avoid:

  • Neglecting aligning individual or team goals with those of the organization
  • Insufficient communication between management, the workforce, project teams and CI leaders
  • Delegating leadership, which is a responsibility that should stay with senior management
  • Manager’s or Sponsor’s failure to remove obstacles
  • Lack of quick success
  • Letting-up on the “gas” when initial results are made

Focusing on Internal Customers

Communication is a vitally-important component of Continuous Improvement (CI) within an organization. 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.

Good communication can also be a key driver of profitability as, if nothing else, it can reduce or eliminate the cost of miscommunication.

For example, an article published by the Society for Human Resource Management (SHRM) referenced a survey of 400 companies with 100,000 employees each that cited an average loss per company of $62.4 million per year because of inadequate communication to and between employees.

Even smaller businesses of 100 employees suffer the impact of miscommunication, the article suggested, as it went on to quote Debra Hamilton’s article “Top Ten Email Blunders that Cost Companies Money,” in which she stated miscommunication cost these smaller businesses an average of $420,000 per year.

Clearly miscommunication is expensive!

Yet 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 internal communication efforts, leaders might do well to focus on employees as “internal customers.” Maybe then it will become easier to formalize and value internal communication protocols.

Driving Team Engagement & Productivity During the Crisis & Beyond

As noted in recent posts, many of us are struggling with the sudden shift to working remotely. Among the challenges involved is lack of clarity with respect to expectations and, in some cases, organizational mission.

In fact, reestablishing expectations or mission, and providing the tools necessary to get the job done are two of today’s most important leadership tasks according to a recent Gallup article.

Silver Lining?
Certainly, these realities pose a challenge for leaders at all levels. But might there also be a silver lining?

Consider that over the past decade the majority of workforce engagement efforts have failed to yield tangible results and have failed the sustainability test. Current research shows that because these efforts tended to be ad-hoc, lacking defined, measurable objectives, they were prone to failure.

However, a more focused approach of improving both the work and the workplace in a measurable way can result in high-levels of productivity, profitability and engagement; and now might be the ideal time to launch such an effort, as remote team members struggle to maintain both productivity and engagement levels.

Even better, this more focused approach to productivity/improvement and engagement can (and should!) continue when we all “return to work,” thus transforming yesterday’s workplace into a more highly engaged and productive one.

To accomplish this, organizational leaders should focus on two key objectives:

  • Providing productivity and continuous improvement tools and programs as catalysts to engagement
  • A strong focus on measurement and recognition

If this approach resonates, you might like to download a free white paper entitled, “Engagement Around the Work” from our website.

3 Managerial Best Practices for Engaging Today’s Teams

In our previous post we shared reasons why leaders at all levels (as opposed to “just CEO’s or Senior Management”) must step-up to engage their team members during this time of need.

While that post identified important areas of focus based on employee surveys and polls, this post identifies three key managerial best practices that will help leaders improve the effectiveness of their efforts to help and support team members:

  1. Communication is critically important. A recent Harvard Business Review article states, “Communication is often the basis of any healthy relationship, including the one between an employee and his or her manager… consistent communication – whether it occurs in person, over the phone, or electronically – is connected to higher engagement.”

    However, Gallup research also indicated that “mere transactions between managers and employees are not enough to maximize engagement. Employees value communication from their manager not just about their roles and responsibilities but also about what happens in their lives outside of work.”

    This perspective aligns well with the data shared in our previous post
  2. Effective performance management is also important, but it must go beyond the “annual review.” Given the significant and rapid changes we are all experiencing in day-to-day protocols, many people do not clearly understand their goals or what is expected of them. They may feel conflicted about their duties and disconnected from the bigger picture.

    Consequently, managers must more frequently discuss and possibly redefine mission, priorities, achievement and expectations.
  3. Focus on people’s strengths. Given the above-referenced changes in protocols, this might involve some reassigning of responsibilities – especially for those who are struggling to maintain productivity while working remotely.

    Gallup researchers have discovered that building employees’ strengths is a far more effective approach than a fixation on weaknesses. In the current study, a vast majority (67%) of employees who strongly agree that their manager focuses on their strengths or positive characteristics are engaged, compared with just 31% of the employees who indicate strongly that their manager focuses on their weaknesses.

Leadership: “Cometh the Hour, Cometh the Man?”

An English proverb says, “Cometh the hour, cometh the man.” It’s the idea that the right leaders will emerge or step up during times of crisis.

In numerous posts we have shared data substantiating the fact that the greatest work-related impact comes from our direct supervisor. So, it’s not just CEO’s or top management, but rather leaders at all levels that must step-up to help people during this time of need.

A March 23rd Gallup article reinforced this point. “The supervisor or manager is the key conduit…” the article stated. “Only the direct manager can know each employee’s situation, keep them informed, and adjust expectations, coaching and accountability to inspire high performance.”

The question then becomes, how might we lead and inspire employees during this pandemic that’s creating anxiety and uncertainty everywhere?

The article provided some straightforward guidelines. “Global citizens look to leadership to provide a path — and to provide confidence that there is a way forward that they can contribute to. In times of crisis, there are two directions human nature can take us: fear, helplessness and victimization — or self-actualization and engagement. On the latter, if leaders have a clear way forward, human beings are amazingly resilient.”

The piece went on to share meta-analytics, which have found four universal needs that followers have of their leaders:

  • Trust
  • Compassion
  • Stability
  • Hope

“These needs are especially urgent during crises,” the article said. “People look for these traits in their leaders as a signal that their life will be OK and that they can be part of the solution.”

Surveys Say: Room for Improvement
Among the most important actionable organizational practices to address these four needs, Gallup listed the following along with the results of their most recent tracking:

  • Identify a clear plan of action: When asked if their company leadership had a clear plan of action, 39% of U.S. employees strongly agreed that their employer had done so.
  • Make sure people are prepared to do their jobs: When asked if they felt well-prepared to do their job, 54% strongly agreed.
  • Orchestrate a plan for supervisors to keep people informed: When asked if their immediate supervisor was keeping them informed, 48% strongly agreed.
  • Make sure employees know that the organization cares about their well-being. Gallup has found five elements of well-being that each organization can act on: career, social, financial, community and physical. When asked if their organization cared about their overall well-being, 45% strongly agreed.

This data might be useful to us all as we navigate our way forward during the COVID-19 crisis. It also shows there is room for improvement.

Read the full Gallup article.