I had a chance to read an article in the September 2014 edition of the Harvard Business Review that I found alarming and disappointing. The author talked about the fact that in a ten year period from 2002 to 2012 members of the S & P 500 had reinvested close to 60% of the profits they made in re-purchasing their own stock and close to another 30% in dividends to shareholders.

His point is this is why we are seeing a “jobless” recovery. Rather than investing in growth or compensation for the average employee we see distribution of the fruits of increased performance going to very few- the shareholder versus stakeholder mentality.

This is I suspect a large part of why we see that employee engagement has pegged at about 30% and remained there for years. We still don’t look at employees and their appropriate recruitment and retention as a strategic initiative.

There is quite a bit of buzz these days as to whether or not the traditional human resources function should be disbanded or minimally separated into two distinct components; an administrative function responsible for compliance, payroll, benefits administration, etc. and and function which is responsible for talent acquisition, training and development, succession planning, and other strategic components.

I am not a fan of this model. I believe that strong performing organizations are based on alignment and systems that integrate and reinforce that alignment, separating the functions disperses the synergy and responsibility.

I advocate a different model where the management of talent is a core responsibility of everyone in leadership. Human resources provide the technical expertise and facilitation, but managers in every function actually manage the talent assigned to them.

The relationship component is critical at every level. I read a couple of pieces today that I think really illustrate that point.

In one piece the author was describing to young people the importance of playing well with others, building and sustaining relationships over a lifetime not just transactionally.
As recently as this weekend I heard from someone that as they aren’t currently in a job search they don’t see the value of investing in networking or using social media systems like Linked In. That to me is a perfect example of transactional thinking.

Another piece talked about one of my favorite topics- trust.

The piece explored the trust relationship not only between organization and customer and employee and supervisor, but employee to employee.

In my over 30 years as a human resources professional, C level executive, and management consultant it has been interesting to see emerging and current “leaders” bridle at the idea that they have to earn trust. For many it is an expectation that trust is embedded in their role, they shouldn’t have to earn it.

Stephen MR Covey does a great job of exploring and defining what he considers to be the three critical levels of trust we encounter:

  • Deterrence, is the trust we invest in authority based on position or statutory regulations.
  • Competence, as implied is trust based on perceived expertise, training, or skills.
  • Identity, the highest level of trust in Covey’s hierarchy is the trust that comes from shared experiences and mutual respect.

I think understanding and building all three of these levels of trust into your approach and interactions with all stakeholders is the only meaningful recipe for long term performance for organizations and building engaged environments.

Unfortunately in my experience most of our leadership training and organizational models incorporate only the first two levels and in fact many new leaders assume an entitlement to competency based trust with their position.

Malcolm Gladwell’s book, David and Goliath, explores another concept we don’t discuss much in our leadership training- legitimacy. 

While I enjoyed the entire book the part that most spoke to me was Gladwell’s discussion of legitimacy.

According to Gladwell legitimacy occurs when three elements are present-

  • Those that are governed have a voice in the process; their input is sought and heard.
  • There is a dimension of predictability and consistency in the application of the law or standards.
  • The application of the law or standard has to be administered fairly and objectively, you can’t have disparate treatment without a clear and compelling reason.

Like all of his books that preceded it I enjoyed it a great deal. I see Gladwell as kind of a social facilitator and observer. He doesn’t try to present himself as a behavioral scientist with countless reams of data to support his conclusions, he makes comments and observations. The reader has the choice to accept or reject them.

The reason I find this discussion about legitimacy so interesting is in its application to the work environment.

For the last three decades I have been promoting and teaching the merits of an employment relationship based on Commitment rather than compliance. When the employment environment is optimized in a commitment based model it results in employee engagement.

It is very chic today to dismiss collective bargaining and unions as passé, but any student of the relationship between employer and employed realizes that up until the 1940’s the concept of employers need legitimacy through the input of their employees was considered ludicrous.

Unions fought very hard to legitimize their right to bargain with employers over hours, wages, and working conditions. I am not going to say that I believe collective bargaining is the preferred methodology or relationship structure between organizations and employees, but the concept of participating as equals didn’t come from management enlightenment.

When I look at the engagement numbers and correspondingly the lack of trust in senior management it would be hard to argue that the two aren’t related.

The emerging generations are pretty intolerant of assumed legitimacy and identity based trust, when we add fuel to the fire on where “management” is choosing to reinvest the rewards of increased profitability and organizational performance I can’t say I blame them.

I don’t think you need to negotiate your culture with employees, but I do think they are entitled to clear expectations, constructive feedback, and fair treatment.

When you provide that kind of context you are allowing employees to join up with you. On that foundation when change is introduced you do it with rather than to people.

I call that building relationships...


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