The Performance Improvement Blog

Employee Engagement Is Not Employee Commitment

Retaining talent might be the single greatest challenge companies have in this recessionary economy. Management-Issues blog cites research by The Conference Board that argues that organizations need to find a way to attract, grow, and keep knowledgeable, talented, innovative people who can position their companies for a turnaround. Nic Paton writes:

The difficulty, of course, is that managers will need to spend the next eight to 12 months walking a tightrope between continuing to curb and control costs while ensuring they don't emerge blinking into the economic sunlight bereft of the top talent they need.

As organizations try to do more with less, managers should not assume that simply because they have highly engaged employees that those employees will stay with the company and continue to be productive indefinitely. Thomas Britt, professor of industrial psychology at Clemson University, says that a worker can be engaged but not committed. Scienceblog writes:

According to Britt, there is a difference between an engaged worker, meaning one who invests himself or herself in superior job performance, and organizational commitment, a worker's psychological attachment to his or her organization or employer. Britt's research found that an engaged employee isn't necessarily committed to the organization.

In an interview on mefeedia.com, Britt says that highly engaged employees, although very productive, might be more susceptible to frustration from negative factors in the workplace. These factors include many of the things that happen in a down economy, such as budget cuts, inadequate supplies and equipment, not rewarding employees for success, and pay raises not tied to performance. Highly engaged employees are highly motivated to do well. When they believe that the company is blocking them from performing at that level, they become disappointed in the organization and themselves and will seek other opportunities.

One of the key negative factors that Britt identifies is “insufficient guidelines for what’s expected.” This makes sense to me, given that humans need to feel in control of their lives. Clarity about what is expected gives talented employees a feeling (even if it is illusory) that their work is predictable and manageable. If they don’t have this sense of control, they will either do their jobs less effectively or go somewhere where they know what is expected and can perform at the highest level.

The State of Trust

It’s hard to have trust in anyone these days. Governors John Edwards, Elliott Spitzer, Rod Blagojevich, and Mark Sanford all violated the trust of their States.  The senior leadership of AIG, GM, Chrylser, Bear Stearns, Bank of America, Citigroup, Fannie Mae, Freddie Mac all violated the trust of their employees, shareholders, and customers. And the 65 billion dollar Madoff-Ponzi scheme has shocked the world and made us suspicious of all private investors. According to the 2009 Edelman Trust Barometer, trust in institutions has declined in the U.S. and around the globe. The report states:

This year, the world had more reasons than ever before to suspend its trust—and for the most part, our data reflect this. Nearly two in three informed publics—62% of 25-to-64-year-olds surveyed in 20 countries—say they trust corporations less now than they did a year ago. When it comes to being distrusted, business is not alone. Globally, trust in business, media, and government is half-empty; and trust in government scores even lower than trust in business.

Without trust in their institutions and leaders, people everywhere will stop using these companies and stop listening to government officials and captains of industry. This will make everyone’s job more difficult and threaten the very existence of these organizations. Much of commerce depends on trust and leaders who can build trust. Stephen M.R. Covey, author of The Speed of Trust, says that leaders can't be effective unless they have the trust of their employees and customers. He writes:

The first job of any leader is to inspire trust. Trust is confidence born of two dimensions: character and competence. Character includes your integrity, motive, and intent with people. Competence includes your capabilities, skills, results, and track record. Both dimensions are vital.

Trust can be restored, but it will take hardwork, time, and a commitment to telling the truth and communicating frequently and clearly with all stakeholders. Sean Murray offers specific suggestions for building trust in an organization. I think these behaviors boil down to three simple things that will go a long way toward building trust: 1) tell the truth; 2) do what you said you would do; 3) treat everyone fairly (Sounds a lot like what I learned in Kindergarten.). However, these behaviors don’t mean much if you don’t communicate; let everyone know what you’ve done to earn their trust.

First, Select the Metrics that Measure Success

Yogi Berra said, “You can see a lot by just looking.” Jacqueline Kosecoff, CEO of Prescription Solutions, a pharmacy benefit management company, makes “looking” a key aspect of her leadership. She believes that effective leadership includes measuring organizational performance and using that information to improve.

In an interview conducted by Adam Bryant for the New York Times, Kosecoff said:

I’m a great believer in measurement. So before I begin the execution phase of any project, I sit down with my team and we ask ourselves: “What are the metrics against which we’re going to measure our success?”

We do two things: We measure where we’re succeeding, and where we succeed we celebrate. And we also measure where we’re not succeeding, and where that happens we ask ourselves, “Can we go back and fix something?” And if so, we do it. And if not, we make sure that we understand where we went wrong, put it into the corporate DNA, so the next project won’t have that flaw.

Another thing I learned was that when you’re involved in a large development project, projects often morph. And when people become advocates of their project, they change some of those metrics so that they can claim success when perhaps it’s not 100 percent legitimate to do so.

So creating the metrics up front, and having a discipline of saying, “O.K., this is where we want to go, and if we don’t achieve it it’s O.K., we’ll try in another way to get there,” is very helpful. Not just for me, but for the whole team.

It sounds like common sense: “create the metrics up front.” However, often this is not what many companies do. They tend to choose a metric out of convenience rather than because it is the best indicator of the success they want. Take customer service for example. Is the goal a positive customer attitude toward the company, customer satisfaction with a buying experience, few customer complaints, a timely response to a question or complaint, a low number of product returns, on-time delivery, customer retention over time, customer referrals, or something else? A hospital can achieve high customer satisfaction scores on a customer survey if nothing bad happened during the patient visit, but is that what you want, merely adequate service? Or, should the service be outstanding? In that case other metrics are needed that require a little more effort, such as measuring the extent to which nurses and doctors treat patients with understanding and compassion (See: If Disney Ran Your Hospital: 9 ½  Things You Would Do Differently)? As Kosecoff suggests, first decide what you mean by “success” and then design a metric that will help you determine when and how that goal is achieved.

 

Customer Service at Enterprise Rent-A-Car

Examples of outstanding customer service, where an organization truly puts the customer first and it’s not just marketing rhetoric, are rare these days. Often, a company’s complicated automated phone system is what they try to pass for a commitment to the customer. So when I was given “royal treatment” by an Enterprise Rent-A-Car company employee this week, I was taken aback. This employee managed to keep my day from turning into what could have been a disaster.

It all began with a car in my garage that wouldn’t start. AAA sent a tow truck driver to my house. He arrived promptly and, knowing the peculiarities of my 2000 Volvo, got the engine going in a matter of minutes. So far, so good. Not wanting to take a chance on the battery dying again, I immediately drove the car to my dealership, expecting to replace the battery and be on my way in a short time and back to my office for a full day of work. But once the car was up on the rack, the mechanic found a number of other serious problems (all legitimate) and he said that he needed to keep it for the whole day. The dealership offered to arrange a car for me to use. I accepted the offer but I was thinking that this was going to set me back hours. Within a few minutes, Tom Cosgrove showed up with a van to take this frustrated car owner to the Ann Arbor office of Enterprise. Once in the office, Tom immediately began to do the paperwork to set me up with a car and get me on my way as quickly as possible. The only problem was, I couldn’t find my driver’s license which was missing from my wallet. I was a bit frantic thinking about the legal implications of this situation. “No problem,” Tom said. He would drive me to my house to look for my license. All of the other employees at Enterprise looked like this was normal operating procedure. So back into the van we went, drove across town, and arrived at my house only to discover that I didn’t have my house key with me. “No problem,” Tom said. “I’ll wait while you get a key from your neighbor.” Fortunately my neighbor was home, found the spare key, and I got into my house.

After a frantic house search, going through the pockets of anything I had worn in the past several weeks, I failed to find my license. I went back to the waiting van, expecting to see annoyance in Tom’s face. To the contrary, he couldn’t have been more understanding. “No problem,” Tom said. “This isn’t the first time this has happened. I’ll drive you to the Secretary of State’s office and you can get a duplicate license.” At this point, I didn't want to ask him to waste any more of his valuable time due to my mistakes, so I said that I would stay where I was. “No problem," Tom said, and back to his office he went. He couldn’t have been more cooperative and gracious the whole morning. I don’t know if Enterprise hires well, or trains well; it’s probably both. Enterprise lost money on me that day, but gained a loyal fan. (My driver’s license turned up the next day in my fax machine. Don’t ask.)

Matthew Effect Hits the Glass Ceiling

Women are not filling the executive ranks at the same rate as men and the reasons appear to be arbitrary and unrelated to performance. DDI’s Center for Applied Behavioral Research conducted a study of women executives and summarized findings in the report, “Holding Women Back: Troubling Discoveries and Best Practices for Helping Female Leaders Succeed.” They write:

…a review of the demographic data revealed that organizations were not evenhanded in their treatment of male and female leaders. The women—more than one-third of the global sample of over 12,800 leaders—had not progressed nearly as far up the management ladder as the men. This discrepancy isn’t a surprise; it has been reported frequently in popular media. What caught our attention was how the deck is stacked against women from the start of their management careers.

Structural discrimination starts early. Men are more likely than women to be considered management material. Far more men in line management positions receive the coveted but often secret designation, high potential (HiPo). The HiPos receive more encouragement, sometimes being directed into special training and multi-national management experiences. As these managers move up the ranks, the gap between the percentage of men and women at each level continues to increase. Women who are promoted without the grooming that HiPos receive are set up for failure.

This is the “Matthew Effect” first identified by the sociologist Robert Merton and explained in Malcolm Gladwell’s best-selling book, “Outliers.”  (To paraphrase Gospel of Matthew 25:29:  the rich get richer and the poor get poorer.) Gladwell uses the example of many young Canadian hockey players who are unlikely to achieve stardom simply because of having the misfortune of a late-in-the-year birth date. So too, many talented women managers will not break through the glass ceiling simply because they had a boss who did not consider them high potential at the beginning of their careers.  

What should companies do to correct this situation?

Employee Engagement at Best Buy

Some companies continue to make employee engagement a priority even in this recessionary economy. It would be easy for a company to take the position that it can’t afford to increase its investment in employees. This is not true for Best Buy, the 43 billion dollar appliance and consumer electronics retailer. A year ago I wrote about how Best Buy empowers its front-line employees by giving them the authority to make local merchandising decisions and do what is best for their local customers.  Now, Best Buy is empowering employees with choices about the method, time, and place of training. This is part of the company’s new Results-Oriented Learning Environment (ROLE) program and its three pillars: freedom to choose the training that they need; co-creation of the training programs by employees, customers, and vendors; and an online library of learning materials. John Congemi, senior manager at Best Buy, describes the purpose of ROLE:

We’re opening up learning opportunities inside and outside of the store, and empowering employees to decide how, where, and when they’ll learn best. Co-creation is all about harnessing the expertise and creativity of our employees, our vendors, and our customers. We’re no longer developing training in a vacuum, but rather side by side with experts and end users. The robust library of content makes all of this possible. We’re ensuring our employees can not only access training materials on any topic they choose, but can pick from a wide variety of learning vehicles to do so (e-learning, audio training, videos, paper-based, etc.).

The Best Buy online library includes a wiki which, similar to Wikipedia, allows employees to make changes in the content and to comment on content as well as upload videos and other content that they think might be helpful to co-workers. Using a wiki to provide useful information when and where it is needed is an innovative approach to employee learning. RealTime Performance provides pre-populated wikis that companies can modify over time to fit their learning needs.

Best Buy’s approach to training and learning is certainly innovative, but, oddly, its approach to measuring the results of this “results-oriented” program will probably not tell them very much about results. Apparently, they are relying on customer satisfaction scores and employee satisfaction scores. While these scores are indicators of impact, and I commend Best Buy for trying to link training to business results, these scores do not tell the whole story.  The company will not know what had the effect on the change in ratings, nor will it know how ROLE affected these ratings, nor will it know what could have been done to increase the positive impact of ROLE. I would challenge Best Buy to be as innovative in its evaluation of ROLE as it is in how it is engaging employees in their own learning.

Reinventing GM

It’s about a week post-bankruptcy and billions of dollars more in tax-payer bailout, and I still don’t have any confidence that GM management can lead the company towards long-term success. GM’s “re:invention” Web site is downright scary. The CEO’s message is, “We’re going to get the job done.” Mark LaNeve says, “We’re going to build cars and take care of our customers like we always have.”  Neither of these messages talks about real change. I don’t want GM to continue doing more of the same, albeit smaller and leaner.

The company must change its culture and how it does business if it truly wants to be successful for customers and employees over the long-term. John Kay’s column in the Financial Times points out the fundamental challenges facing GM:

The factors that had once been the company’s strengths were now weaknesses. Mass production and piece-rate incentives created a workforce with little pride in the quality of the product. The cadre of professional managers became a complacent, inward-looking bureaucracy. The diversified corporation became a collection of competing baronies.

The Saturn story is a good example of how GM’s culture gets in the way of its success.  A comment to Dan Muhern’s blog post, GM and You, includes a reader's description of the problem from a customer’s point of view:

GM gave up a good thing, and decided to waive the white flag a decade ago. GM had decent fuel economy with the GEO metro and Saturn SL series. Now 15 years later GM can’t break the 34 mpg barrier with out going hybrid. What happened to R&D? I drive a 00’ Saturn SL. It has been a wonderful car. For the 1st 100,000 miles I was achieving 38-46mpg. The 2nd 100,000 miles achieved 37-41mpg. I’m still working on the 3rd 100,000 miles but I’m still getting 35-40mpg. It is plastic so it will never rust and is lighter than standard metal cars. The car is 95% made in USA. We can make good cars domestically. I would buy another new 00’ Saturn SL in a heart beat today, but after 9yrs of R&D GM doesn’t offer a car with equivalent gas mileage.

Now GM is selling what was once one of the best-managed, most successful divisions in the company. Saturn was known for customer service, high quality, and a satisfied workforce, in part due to great training for employees and autonomy from the mothership. I’m pleased to hear that Penske is buying the division, but it is very sad that the GM culture couldn’t allow the company to learn from Saturn. I remember back in 1990, at the time Saturn was created, the word on the street was that GM would never let it succeed over the long term...and here we are.

My GM

Now that I own 60% of GM, I would like to know how the automaker is going to become profitable and pay back the loan I gave them. Workforce.com reported that on June 1, in a videoconference for all employees, GM CEO Fritz Henderson talked about:

… the “new GM” that would emerge from bankruptcy with more competitive labor contracts, reduced operating costs, fewer plants and a leaner production capacity focused on small, fuel-efficient cars.

That’s all well and good, but unless GM transforms its culture, it won’t be long before the “new GM” begins to look like the “old GM” again. David Leonhardt, economics columnist for the New York Times, writes:

General Motors has been hemorrhaging customers for decades. For the last 30 years, it has been losing almost one percentage point of market share every year. It sold 45 percent of the new vehicles in this country in 1980, 35 percent in 1990, 28 percent in 2000 and 19 percent so far this year.

So why should I believe that GM will be able to achieve something going forward that it hasn't achieved over the past 30 years? In an interview with NPR’s Robert Segal, Henderson said, "We've made mistakes, there's no question we've made mistakes. We need to learn from those mistakes, and we will.” I would like to know how GM will learn from those mistakes, as well as future mistakes. Will employees tell their managers when mistakes are made? Will managers tell executives when mistakes are made? Will they all look for root causes without placing blame? Will they discuss the undiscussable? Will employees be rewarded for continuous improvement? Will organizational silos disappear between functional areas so that employees can share information and learn from each other?  These are just some of the questions I would like to ask GM execs.