Opportunity from Chaos

The Conference Board announced that employee satisfaction is at an all time low and several other studies say that based on "dis-engagement" the U.S. economy is operating at about 30% efficiency. Yet another study says that the supply of "experienced" talent is going to decrease while demand increases. So where is the opportunity? Well call me Pollyanna, but I see several areas.

In a recent article Daniel Pink, author of Drive as well as several other great management books, states that loyalty isn't dead it has been redefined. He even provides a whole bunch of ways to build this redefined loyalty into your organization and redefined loyalty can translate to engagement which directly contributes to sustainability, profitability, and productivity.

Although 25% of the workforce will be over 50 by 2020 in North America and Europe and the over 45 customer demographic will be 40% larger than the 20-45 group by 2012 these folks have more money to spend and incidentally research shows that the over 50s have as good or better skills as their younger counterparts. By matching up the customer facing workforce with the demographic shift it represents opportunity rather than loss.

Building engagement requires a strategy, but it is not necessarily cost prohibitive or limited to large, complex organizations. In fact many of the elements of an engagement strategy are pretty simple in their foundations:

• Hire the right people. Think about your organization and your values and the values of your customer base and build it into your hiring and selection processes.
• Create great jobs. Great jobs are not necessarily about compensation. They give people an opportunity to contribute and work in an environment that fits them.
• Participate in helping people build great careers. Loyalty should be based on contribution not tenure. Employees who give you 110% while they work for you are loyal. Employees who speak highly about you to customers and other potential employees are loyal.
• Re-recruit constantly. Smart employers spend a lot of time ensuring that employees understand their personal contribution to the business and where they fit in. Do you really think this is easier in organizations with thousands of employees than it is in smaller organizations?
• Take advantage of local resources. Most of the foundational element of successful engagement come down to relationship skills not technology. I am talking about things like setting expectations properly, giving feedback constructively, recognizing positive results and similar skills. Most of those skills are taught by your local Chamber of Commerce or community college. You don't need an expensive "top tier" consulting firm. Best practices and templates work great for the company who developed them and consulting firms who install them.
• Think local, act local. To a great extent most of us operate in our local community. By engaging and investing in our community we build and reinforce relationships and it relationships that drive organizations not technology or systems by themselves.

In my mind we must decide whether or not we will use the "lessons" from this latest recession as a learning opportunity or concede defeat. I am hoping it will cause us to examine root causes and to redefine how we work with our employees, customers, and communities and they we will capitalize on the benefits of commitment rather than compliance. We have to decide.

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…?