The "First" Engagement Initiative

Those of you who know me know that engagement, true engagement is an area or opportunity that I feel pretty strongly about (sorry Laurie). I think the emphasis is on true engagement. Engagement in my mind is defined as voluntary or discretionary effort that employees bring to their job everyday. True engagement is when that phenomenon spreads to your suppliers, your customers, and your community.

True engagement is accomplished using a number of tactics and strategies, but it is not a "program", it is a culture that lives everywhere not in HR. You don't accomplish it with pep rallies and reward and recognition programs by themselves. You build the culture and then you live it.

Another area that has intrigued me for a while and is taking on new dimensions in light of the health care debate is the relationship between personal competency and engagement. Personal competency is the stepchild key principle that was embedded into the original constitution, kind of a neglected cousin to personal property. Personal competency was the idea that each of us had the right and responsibility to manage our own futures, that we were not bound by our heritage or lineage. The key is the balance between right and responsibility. In a way doesn't that sound more like a partnership than a hierarchy? Doesn't that kind of sound like engagement in a way?

I have talked about personal competency at length and how to great extent with the coming of the Industrial Revolution a variety of forces combined so that we exchanged our personal competency for a kind of "corporate feudalism", we gave up our "equality" for security like corporate or organizational pension plans, health care benefits, etc. The industrialists were all about this model. Dumbing down skill sets and creating structures based on "compliance" is easier, in the short term. Our Founding Fathers were not real big on the concept of corporations, but that is another story.

When I look at our current situation as it relates to health care I see similar potential issues related to personal competency. I want to go on record as saying that I believe access to basic health care is a right that everyone should have access to, and I do mean everyone. The fact that we have one of the most advanced and expensive health care systems in the world and our morbidity and mortality rates put as at like number 30 is embarrassing to me (think countries like Cuba and Costa Rica). I also believe that access to basic care is good business and good for the overall economy. We are spending upwards of 10% of our GNP on health care on our "stellar" results and the number is getting bigger, not smaller. A big part of that is that people without access to preventative care get their care in ERs, the least efficient and most expensive way to provide it. Since they can't pay for it the costs get passed along to those who can pay, kind of like shrinkage in retail.

Here is another data point for you to consider. According to the American Medical Association sixty percent of health issues (and therefore costs) are related to lifestyle rather than hereditary. In plain terms that means we cause it! The issue is also that if I have not;

• Participated meaningfully in paying for the costs of care for me and my dependents
• Been provided with any meaningful information about what I or my dependents can do to improve my health or reduce expenses
• Been incentivized to change my behavior
• Been educated on the impact of escalating health care expenditures on other parts of the business

then the chances I am "invested" in making changes to my behavior are pretty minimal. No personal competence or engagement here folks!

As a former HR executive I can also tell you that most organizations strategy to deal with the rising costs of benefits is to;

1. Cost shift to employees through higher deductibles, co pays, etc
2. Reduce benefit offerings
3. Eliminate categories of employees from coverage

Is it just me or do these methods seem to miss the root causes as well?

I am not going to belabor that point and make this about health care.

I guess my point is that maybe just maybe the Founding Fathers intended personal competency to be the first real engagement initiative. My personal engagement model is based on five elements:

• Respect
• Responsibility
• Information
• Equitable rewards
• Mutual loyalty

Is it just me, or do there seem to be some parallels between that and personal competency? Maybe personal competency and true engagement are both about doing things with rather than to people ?

Were the Founding Fathers really that visionary, I wonder......?

What Happened to Us?

Almost 250 years ago the United States was founded in large part on the basis of two principles:
· The right of personal property; the ability through your own efforts and sweat to own property and build your own future.
· The right of personal competency; the right and responsibility for each person to develop their skill sets and to plan and execute their own future.
These concepts were radical in view of the feudalism that had ruled most of even the “civilized” world. Your destiny was defined not on who and where you were born, but rather what you chose to do with it.
In my white paper, A Social Contract for the New Millennium, I talked about how I feel that concepts like scientific management, pure capitalism, a move from an agrarian to an industrial society and other factors contributed to the degradation of these principles, but what I see lately troubles me even more.
In the 1940’s people like Deming talked about new approaches to total quality management, which interestingly enough began being referred to as Japanese management techniques. Immediately following World War Two the United States was the undisputed industrial power in the world. I will even go further and say that it was our industrial capacity that played a huge role in the defeat of the Axis as well as our military successes. We were the place that everyone came to study business and the home on entrepreneurialism. The productivity of American workers was some of the highest in the world.
I have heard the arguments that it was the unions and government socialism starting with FDR and followed up with other Democratic administrations that gutted it, but I don’t buy it.
Let’s look at some pretty unpleasant realities facing us right now:
· A study in the Journal of Business Strategy estimated employee turnover costs the U.S. economy $5 trillion annually.
· Another study by the American Health association says we lose $200 billion to “presenteeism, a phenomenon where people “show up”, but contribute at a marginal level because of their own or family health care issues, economic insecurity, or just plain dissatisfaction with their job.
· A 2008 Gallup Consulting study estimates the U.S economy as operating at a 30% rate of efficiency because of lack of employee “engagement”.
· A Conference Board study on employee satisfaction released last week reflects that 55% of Americans are dissatisfied at work and if you look at the under 25 demographic it grows to 64%!
· We have a second class health care delivery system.
I realize that the stock market is moving back up and that Wall Street is about to announce record bonuses, but these numbers scare the hell out of me. We are talking about things like a “jobless recovery” and while Wall Street has profited they aren’t sharing the wealth. What happened to the ingenuity and tenacity that put us at the top of the world’s economies?
There are a number of factors that contribute to where we are including:
· Globalization, if you haven’t gotten the email it is here to stay.
· A lack of solid leadership. Leadership is still defined in most organizations as a “nice to have” or an HR initiative rather than a strategic focus. In my opinion what is being taught in our top graduate schools is management, not leadership. They are related, but they are different.
· A lack of alignment. We are not aligning people’s contributions with business goals and objectives. That’s why we are at a 30% efficiency rate.
· Lack of a cogent customer service model. Most organizations have old fashioned customer service models; they aren’t engaging their customers anymore than they are engaging their employees. Anybody who experienced air travel recently can give me an amen to that.
· Changing expectations. In this regard I mean customers, employees, communities, etc.
The interesting thing is that if you look at the factors I have posited is how many of them come down to relationships and trust. A survey by Punk Rock HR gives a brief summary for the biggest reasons for the “newer generations” dissatisfaction:
· We read about 8 figure bonuses for executives and you want us to accept 3% salary increases as “market”.
· You told us (and our parents) that you would provide us with employer sponsored quality health care.
· You changed our retirement plans and tied them to the stock market so we could do “better”.
· You told us that moving the manufacturing base to Southeast Asia, China, and India was good for “business” and that we would create a “knowledge based” economy.
· Your response to the recession and 10% unemployment is that those of us who remain employed should be “grateful”.
I don’t know about you, but I can kind of see their point.
Maybe I am being overly simplistic, but doesn’t it seem like much of these issues are directly correlated to the relationship between employer and employed? I have thought so for thirty years! That is why I developed my model Moving from Compliance to Commitment. I have spent years refining and testing it. My premise is that when you give employees a chance to “join up” with you they will contribute at a higher level.
Turns out I was right. A Gallup Consulting study from 2008 showed that among other positive results companies with high engagement demonstrate:
· A turnover rate 51% lower than peer groups
· 27% lower absenteeism
· A per capita productivity rate 18% higher and
· 12% higher profitability
A different study from Rhoads and Whitlark and BlessingWhite drew the same conclusions. In fact they showed shareholder returns 13% higher and the productivity and profitability impacts of increasing engagement in environments like retail is nothing short of astounding.
Global research organization ISR’s research director, Patrick Kulesa, put it even more clearly-
“Our research continues to show that a well substantiated relationship exists between employee engagement- the extent to which employees are committed, believe in the value of the company, feel pride in working for their employer, and are motivated to go the extra mile- and business results”.
Now let me tell you what really bothers me. Less than 30% of U.S. businesses have any kind of a strategy for addressing these issues. To the best of my knowledge there is not a single government led initiative exploring it either. I read about a government initiative recently- in the U.K.!
It kind of reminds me of the early days of the total quality movement. Even though it was pioneered in the U.S. we largely ignored it because we didn’t find the need compelling. It was only when our products like automobiles, electronics, and others began to suffer did we look at root causes. We just gave big banking a trillion dollars and the average American isn’t seeing much benefit. Are we seeing a trend here?
The other issue for me is that this is not a “technical issue”. While I have a lot of respect for my colleagues who have black belts in Six Sigma issues like trust and respect are not going to be solved by “process improvements”. For those of us who see ourselves in leadership and management and the fields of organizational development and human resources management this represents a crisis and an opportunity to provide real leadership.
So let’s do a quick review. We have 10% unemployment, historically high employee dissatisfaction, and an underfunded second class health care system. We lose $5 trillion to turnover and another $200 billion to “presenteeism”. Maybe I am just confused, but am I the only person seeing some opportunities here? So what is it exactly we are waiting for…?

Personal Accountability

This has always been an interesting topic to me. Some of the events of the last few weeks ranging from athletes punching one another out to kids returning to school seems to make it particularly relevant.

A colleague and I were discussing this topic the other day especially as it pertains to health care. Isn't it interesting for all the debate about whether there should be single payer, a public option, how much it will cost, etc. there is little discussion about the individuals role in the whole health care discussion other than as a beneficiary.

I have some pretty strong opinions on this topic. Among them I believe that all Americans should have access to a basic level of health care much like public education and that until we provide that the costs will never really be managed.

I also believe that individuals have a right and responsibility to participate in the management of their own well being and health. We don't talk about that very much. I would venture to say that the majority of Americans who have health insurance are also covered by a group plan- employer, government agency, association, etc. so they have little understanding of how much their health care actually costs and care less until it impacts them in the way of increased co- insurance, higher deductibles, denied claims, or related activities.

I have mentioned a couple of other related concepts regarding health care like our inefficient delivery and focus on the costs of processes rather than paying for outcome based management, but this is a different issue.

I remember years ago when a new employer arrived in town and declared a tobacco free workplace. People were outraged. How interesting? An employer who took the position that if you knowingly contributed to the detriment of your own health they didn't care to subsidize your real or potential higher expenses so they wouldn't hire you.

We tried to pass a law recently requiring all restaurants to post calorie counts for everything on their menu, luckily it failed. Would we want to extend that to homes like the dram shop laws?

Dram shop laws extend liability to private individuals for serving intoxicated people or allowing them to depart your home intoxicated without at least attempting to intervene. Can you see requiring a menu with calorie counts at dinner parties?

I think a big part of the issue is that of personal competency. Personal competency is that "other" right that constitution provides us with in addition to the concept of personal property.

When we began to industrialize and people left the "farm" many went to work for large employers. Large employers responding to both collective bargaining and offering competitive compensation began offering "fringe benefits" including paid time off, retirement and pension plans, and group health insurance benefits. A few years ago it was not atypical for employers to pay all the costs for health insurance for employees and their dependents. Employees had no idea and didn't care what they cost. Add these third party payer systems to advance health care techniques, technology, and a few other things and we created a trillion dollar health insurance industry, and very high expectations.

Very few employers to my knowledge even today talk extensively with their employees about ways they can contribute to lowering health care costs. The idea of "mandated" health screening, enforced wellness, and sliding employer contribution rates based on lifestyle health care costs would probably be seen as some type of corporate fascism. Your employer shouldn't be able to tell you how to manage you lifestyle, right? Even if they pick up the majority of the cost....

I believe until we address the personal accountability issue and employers
actively engage and educate their employees about the root causes of many of the costs we will only be addressing part of the problem. What do you think?

A Change of Venue

I have had the opportunity to spend the majority of this week in the desert. I like the desert, I think people either like it or dislike intensely. Few are ambivalent about it.

In a strange kind of a way I see the desert as a metaphor for where we can go next with the economy. Many people think of the desert as an absolute arid wasteland with nothing to offer. I recommend to people that if they are within a hundred miles of Tucson to stop in at the Desert Sonora Museum. They call it a museum, but in some ways it is much closer to a zoo where the flora and fauna of the region are viewable in their native habitat. I can tell you that the variety of flora and fauna will astound you.

Similarly I look at places like Phoenix, Las Vegas, and Palm Springs that were "carved" out of the desert. Where some saw nothing but sagebrush and cactus others saw opportunity. I am not promoting the "instant community just add water" model, but these areas until recently experienced enormous growth.

As I was reading the newspaper this morning two stories also particularly struck me. The first story was where a team of surgeons removed six major organs from a seven year old girl in order to remove a baseball sized tumor, they then replaced many of her organs. I see this as an example of American health care at its best.

The other story was about some business owners who took a stand to "pay it forward"

• A pharmacist who split $16,000 among his 24 employees. He asked each of them to donate 15% to their favorite charity and spend the rest in local businesses to stimulate the economy.
• A florist who surprises 1 to 3 random customers per week with a free bouquet to brighten their day.
• A CEO of a small business who offers each employee $2000 towards the purchase of a new car or $1000 towards the purchase of a used car. The car dealers in his community are among his customers so he is trying to help them stimulate sales.
• A city councilman in California started a prom dress drive for young women who can't afford a gown. Local businesses joined the effort donating dry cleaning and free hair styling, and the local Elks Club is collecting shoes.

What is interesting here is that in each case these are small businesses. This is an example of personal competency and responsibility. These people didn't receive a bail out. They also aren't "turtling", they decided to take a personal stand.

I have said before that maybe the current economic situation will cause us to stop, pause, and reevaluate. There is plenty of "contributory negligence" to share with how we got where we are. As you know I am a huge believer that the answer is people, and I think some of these stories make my case.

For today anyway the market is up and all the news isn't negative.

Negotiating the Rapids

Well it has been another interesting week. The market is lower, some folks are already declaring the stimulus package a failure (I think it's a little premature) and businesses and people are very nervous.
The next few months are what I am referring to as the rapids. We are going to be facing challenges that we haven't faced before and how we navigate has long term implications. Here are some of my thoughts:

• Act, don't react. Many organizations are going to look at rapidly softening markets and look for actions to take. Action is good as long as there is thought around it. Organizations will be in a position of looking at their staffing requirements, marketing expenditures, training, etc . In our service economy "payroll" is one of our largest expenses. It is necessary and appropriate to adjust our workforce from time to time. Do it carefully and methodically. Things like across the board cuts, hiring freezes, etc. are all tactics. Be sure they are the right ones. If you don't have a strong performance management and measurement methodology now might be a real good time to implement one.
• Clarity is king. I have quoted Marcus Buckingham multiple times on the most important role of leadership as being clear. At times like these the need for clear confident leadership becomes even more critical. Your employees are going to want to know that you see a future, that there is a plan.
• Involve your team. This is a time when a management team can really gel or come apart. I believe that when we are making critical decisions we need to involve all levels of management. You don't have to involve them in the same way, but retreating to a place where you make all the decisions or in larger organizations all the decisions are made at the C level does a couple of things, neither of them positive. Number one, it says we don't think you are smart or competent enough to participate. Number two, it puts them in a position where they can not explain or share accountability for the decisions that are made.
• Make adjustments to your budgets and your staff surgically. I talked with a client this morning who is struggling because they reduced the majority of their "production" staff earlier. Now they have brought in some significant orders and are struggling to meet their commitments because they don't have the staff. You may have a situation where you literally need to add staff in one area while reducing in another.
• Think before you slash training or marketing budgets. One of the first casualties I see in many downturns is training followed by marketing. My concern in this area is that as I have written previously less 30% of the organizations in the world have what could be labeled high engagement workforces. The most important part of high engagement is trust and communications. We don't do a good job of teaching that in our colleges and B schools. We need managers who are highly capable in that area. You also send a message to your high performers that you are reducing investment in their skills development and potential. Similarly with marketing if you are not looking for "blue ocean" or refining products where is your future business going to come from? I have seen organizations so consumed with a downturn or a singular initiative that they "take their eye of the ball" in other areas. The world doesn't stop, your competitors are monitoring your vulnerabilities.
• Play your game. I wrote a piece last week where I talked about best practices among other sacred cows. They may be best practices- for somebody else! Don't blindly follow "what we have always done" or "the industry best practices". This way sound overly simplistic, but after the second guy implements it, it isn't the best practice any more; it is the standard practice.

I am an optimist by nature an explorer if you will. I believe that this downturn may be the catalyst to make us re-examine many things that we have done and change them.

I have written a lot about personal competency. Personal competency is the idea that employee and employer are partners in achieving organizational and individual goals. This downturn is making us realize that our current model of corporate codependency where we "take care of employees" can't continue. Corporate America can't fund it and neither can the government. People are going to have to get involved with decisions about their health care, their retirement, and their future. Trickle down economics didn't trickle down.

I find it somewhat interesting how outraged some politicians are about the stimulus program, but they didn't say much about our "investments" in the wars in Iraq and Afghanistan

So, wear your life jacket, plot your course and you will survive this trip!