The Performance Improvement Blog

Employee Satisfaction and Engagement Once Again Linked to Financial Success

Still another study , recently published by The Forum at Northwestern University, supports the notion that satisfied and engaged employees are essential to the financial success of companies. Dr. James Oakley, now Associate Professor of Marketing at UNC Charlotte's Belk College of Business, led this comprehensive study of these factors across a sample of 100 media companies. His research team surveyed a representative group of employees in each organization and received responses from 5,568 employees, averaging about 60 respondents from each company. They decided on doing the research within one industry in order to prevent some of the problems that occur when collecting data from a heterogeneous sample of businesses. Several different survey instruments were used to measure culture, climate, HR managerial practices, and market characteristics affecting each company.

• They used R.A. Cooke and D.M. Rousseau’s (1988) definition of organizational culture: “…the ways of thinking, behaving, and believing that members of a social unit have in common.”
• They defined organizational climate as: “…the way that organizations operationalize their culture in daily routines and behaviors.”
• HR managerial practices included selection, development, performance management, and compensation.
• Market characteristics included customer satisfaction, retention, and loyalty. And profitability was used as a proxy for financial success.

The following chart represents key factors that were identified and the positive and negative relationships among these factors.

A major finding was “… a direct link between employee satisfaction and customer satisfaction, and between customer satisfaction and improved financial performance.”

Based on their findings, the investigators recommend the following:

1. Ensure that the employee voice is being heard up and down the organization and that they feel they are making a difference.
2. Regularly survey employees about the strengths and weaknesses of the organization and take visible action based on that information.
3. Develop a healthy mix of employee cooperation and competition for the benefit of customers.
4. Establish clear performance objectives related to the customer experience and recognize employees for achieving those goals.

What I like about this study is that, unlike so many studies done by consulting firms, this research examines intervening variables that explain how and why employee satisfaction and engagement are linked to financial outcomes of companies and how culture and climate contribute to the employee experience as well as the customer experience. Of course, one could still argue that the links are not necessarily causal. It could be that company profitability causes high levels of employee satisfaction and engagement rather than the other way around. But at least in the case of this research there is a compelling theory to go with the data.

The study adds to evidence that is piling up around the impact of employee satisfaction and engagement on organization success. As we emerge from a depressed world-wide economy, the long-term financial success and sustainability of companies will be more important than ever. Therefore, we need to pay greater attention to the conditions that contribute to a positive and supportive work culture. Now, if we can only get leaders to pay attention to these factors in their organizations. 

 

What's Better: eLearning or Classroom?

We need to examine the proliferation of Web-based education before it gets out of hand (It may be
too late.). Online college courses are being promoted as the panacea for producing more college graduates and strengthening the workforce. The Obama administration has been touting the educational value of online courses since coming into office over three years ago, and many colleges, especially community colleges, have adopted that mantra.

Many companies are also convinced that “elearning” is the answer to their employee training and development needs. They are told elearning will be cheaper, faster, more convenient, and more effective than traditional, classroom training. Also, using elearning programs makes managers feel like they are staying on the cutting edge of technology. Nobody wants to be left behind.

Feeding this appetite for online programs is research that seems to support the notion that online is better than face-to-face, classroom instruction. A study by the U.S. Department of Education found a small advantage for online (blended) programs. However, they qualify that finding by writing:

Despite what appears to be strong support for blended learning applications, the studies in this meta-analysis do not demonstrate that online learning is superior as a medium. In many of the studies showing an advantage for blended learning, the online and classroom conditions differed in terms of time spent, curriculum and pedagogy. It was the combination of elements in the treatment conditions (which was likely to have included additional learning time and materials as well as additional opportunities for collaboration) that produced the observed learning advantages.

The problem is that whether online programs are better than face-to-face depends on the purpose of the course, learning goals of the program, skills of the instructor, and expectations of learners, among other things. I published an article about this nearly 10 years ago in Educational Technology. At that time, I wrote (in ilalics):

1. E-learning will not revolutionize training; it is only one instructional method among many, each better at achieving some instructional objectives than others. (I was wrong; e-learning is revolutionizing training. However, the change has been in the accessibility of information, not in the impact of instruction.)
2. Putting a course on the Web or on a CD-ROM does not ensure performance improvement.(Learning and change depend more on expectations of learners and organizational culture than on the mode of delivery.)
3. Employees learn in many different ways. (For some, online instruction fits their style of learning, but for others it is not always the best mode.)
4. E-learning is not a low cost alternative, especially if it is not aligned with the organization's strategic goals. (If the content is not aligned, it will be a waste of time and energy. No matter how cheap it is per learner, it will be too expensive.)
5. Having a vast selection of courses is meaningless. (It’s wonderful, for personal edification, to have access to thousands of courses from Carnegie Mellon, MIT, and other prestigious colleges. But if these courses aren’t related to what learners need to know on the job and can’t be applied immediately, then more is not better.)
6. Work and learning are the same. (The tendency of managers is to think that by having instruction online, employees can use non-work time for learning. But this separation between work and learning is a false dichotomy. Especially in this day and age, employees have to be continually learning; it must be part of their job.)

In the past 10 years, the technology of online instruction has evolved considerably. Interactivity has advanced. Audio and video have continued to improve. Practical mobile tools for just-in-time applications of elearning are now available (e.g., smart phones and tablets). However, the danger is that organizational leaders and technologists will assume that any learning that is computer enabled is better than direct human contact. For some learning, this could be true. For other learning, it is not. We need to align method of content delivery with intended learning outcomes.

photo credit: Mr_Stein via photopin cc

Greg Smith and Goldman Sachs Teach Us About Organizational Culture

By now you've probably heard all about Greg Smith's very public resignation from Goldman Sachs, the large and powerful global investment bank. I can't vouch for the veracity of his claims but I think he provides us with a teachable moment,when we can learn about the significance of organizational culture. 

Smith says that he left Goldman because it had become a toxic corporate culture. He writes: 

...culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.

A change in the way Goldman thinks about leadership, according to Smith, was a major factor in the change in culture. He writes:

...The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.

Smith sees that toxic culture being played out in sales meetings and in the way employees think about their customers. He describes those meetings in this way:

...I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.

If Smith is right and that is indeed the culture in Goldman Sachs, the company will eventually implode. Employees, under pressure to make money for the firm, will cross the ethical line and begin to violate the law, if they haven't already. Directors will begin stepping on each other in their ambitious climb to the next level. Customers will leave Goldman or choose not to go there in the first place. 

Fortunately for Smith he is probably a multi-millionaire, 30-something, who can walk away with a sense of security and a bright future ahead of him. Unfortunately for many others working in toxic work cultures, they feel trapped in their current work arrangements. They don't believe they can walk away. They don't have the financial security nor the career opportunities of Greg Smith. They are stuck. Their only recourse is to try to change the corporate culture, which has risks but can be done.

One example is what Atul Gawande has accomplished by using a checklist in hospital operating rooms. He and his staff have changed the culture of surgical teams and set an example for hospitals around the globe. They changed from a top-down, doctor-is-always-right, don't-question-authority culture to an accountable, quality-of-care-comes-first culture. When you don't feel you can walk away, you either have to find the levers for change or learn to tolerate the work environment, and the latter is never a satisfying solution. 

photo credit: swisscan via photopin cc

How to Keep Talent from Walking Out the Door

Are you worried about employee turnover in your company and how it might get worse once the economy improves? If you aren’t worried, you should be.

It has been estimated that as many as a third of employees are looking to change jobs. Now that the recession is easing and more companies are beginning to hire again, these employees will start acting on this desire.

My friend and colleague, Bernie Donkerbrook, retired Ford Motor Company program manager and now executive coach, places responsibility for retaining talent on the shoulders of an employee’s supervisor or manager. Bernie believes that there is much those managers can do to keep their employees engaged and productive. He writes:

In today's sluggish economic environment, companies operate lean, demanding more of employees in the process. Many are focused on surviving, not thriving. While uncertainty in the marketplace may keep employees loyal today, when the economy improves, they may be more apt to seek out career opportunities elsewhere. If organizations ignore the retention issue today, they will undoubtedly regret it tomorrow.

You should be asking yourself, “What am I doing to ensure that my key talent remains once the job market improves?” and, concurrently, “What am I doing to strengthen loyalty and build a positive work force, positive people, and good relationships with their immediate bosses?”

Here are actions you can take to increase employee retention (all of which are behaviors that can be coached, trained and developed in supervisors and managers):

• Improve relationships between employees and their immediate bosses. Many employees leave because they perceive that they are not appreciated, recognized, and valued by their immediate bosses.  Here is what you can do:
  • Have HR determine if there are supervisors/managers that have a higher than normal turnover rate in their units. Provide them with a coaching process for understanding and dealing with difficult issues. The supervisor’s/manager’s behaviors need to be understood and changed. There is usually a reason some bosses have higher turnover rates than others.
  • Make it clear to supervisors/managers that employee retention is part of their job and that long-term development of employees is part of their job, too...and part of their evaluation.
• Revitalize your organizational culture to include employee appreciation, recognition, and valuing.  “People honor a culture that honors them.” This is incredibly important…honoring, valuing, respecting and recognizing your people.  It makes a big difference in building loyalty to the company and also is definitely teachable.

• Remind your managers and supervisors of the power of the “Golden Rule” of behavior at work.
  • How would THEY like to be treated by their bosses?
  • What would THEY like to experience in their jobs?
  • How would THEY like to be recognized, appreciated and thanked for their efforts?
  • How long will THEY want to wait to be appreciated, recognized and valued?

• Tell your best people they ARE your best people. It is highly motivating to know you are well thought of. Let your best people know you want to keep them, to retain them with the Company.  Really… it makes a difference. Imagine yourself being told by your boss, or your boss’s boss, that you are important to the Company and they are counting on you.
• Ask employees what they need, want, would like to be doing. No promises, but it shows you are interested and want to make it work for them and the company.  For your best and key people, make sure they have a career development plan. This is so obvious but managers and leadership are so busy they often fail to take this seriously.  And, there is often no corporate plan to set this up.
• Ask employees for feedback on YOUR management behavior. How can you improve? What would they like to see more of and less of from you? Are you helping too much or not available often enough?
• Carve out one-on-one time with your employees.  Much successful retention and employee loyalty comes from, simply, one-on-one time with the boss.  Regularly demonstrate personal care and concern for individuals, their life and family, and what is important to them.  (Bosses may need coaching/mentoring on how to do this effectively.)
• Put people to work where they are their best.  Allow them to work at what they already do well, where they have excelled, and what they are excited about.  Ask them.  Everyone wants to be doing what they know they are good at and what they enjoy doing.
• Find out what inspires, motivates a person.  What is that person passionate about? Find that person work in these areas if at all possible.  At least, let him or her represent the company externally in the areas where there is passion.  This builds the corporate brand and demonstrates corporate engagement with the local community.    
• Find out if career growth opportunities are available for employees.  Do they have opportunities for development, growth, new challenges, and promotion? You may answer, as the manager, “Yes, of course.”  But what do your employees say about this?  There is often a disconnect between what employees experience in career development and what the company policy is said to be.  Do this:  Check it out. Find out what employees believe and what they experience on the job relating to career development. Most often, you, as the boss, will not like what you hear.
• Ensure that compensation is competitive. Eliminating any gap in compensation with the market is a great short-term neutralizer of negative energy.
• Pay for performance.  Do you reward better performance or is everyone at a similar grade-level paid about the same?  If everyone is paid the same, it is not very enticing for the highest performers when they know they are not appreciated in a financial way for their unique contribution to the organization. [Note: Plan pay-for-performance very carefully; these plans can have little or no positive effect if structured in the wrong way.]
• Pay attention to your stars, your top-performers.  Really! Stars will not wait around to be given authority, more responsibility, the opportunity to make decisions, or be promoted.
• Communicate, communicate, and communicate.  Find ways to let employees know you care about them as individuals.

Organizational Culture: Ignore at Your Own Risk

The term “culture” is getting much use these days, but I’m afraid it has become a Rorschach for whatever people want to say about an organization. In an interview for the Wall Street Journal, Mark Pincus, CEO of the fast-growing, online social-gaming company Zynga Inc., was asked, “What is the company’s culture?” He answered by talking about employee attrition, competitiveness of teams, and number of promotions. All of these things might be indicators of culture, but they don’t tell us the nature of Zynga’s culture.

So, what is organizational culture and why is it so important? Edgar Schein, in his book, Organizational Culture and Leadership, says that culture consists of the values, basic assumptions, beliefs, expected behaviors, and norms of an organization. An organization’s culture affects what people think, how people feel, and what people do. If a leader focuses on mission, strategy, and finances to the exclusion of culture, that lack of alignment will get in the way of success.

Shawn Parr, a Fast Company blogger, writes this in his post titled, Culture Eats Strategy for Lunch:

Culture is a balanced blend of human psychology, attitudes, actions, and beliefs that combined create either pleasure or pain, serious momentum or miserable stagnation. A strong culture flourishes with a clear set of values and norms that actively guide the way a company operates. Employees are actively and passionately engaged in the business, operating from a sense of confidence and empowerment rather than navigating their days through miserably extensive procedures and mind-numbing bureaucracy. Performance-oriented cultures possess statistically better financial growth, with high employee involvement, strong internal communication, and an acceptance of a healthy level of risk-taking in order to achieve new levels of innovation.

Parr argues the case for aligning culture with strategy. Strategy tells everyone what the company does and culture is how it does those things. If achieving the goals of the organization depends on cross-functional teamwork in the "white space" but management reinforces org-chart work silos, then the strategy cannot be implemented.  I found this lack of alignment to be the case in the pre-turnaround U.S. auto companies. Parr writes about this kind of cultural discrepancy in a follow-up post:

People matter. More than machinery, products, or real estate. People invent and build. People support and serve customers. Your people either create or undermine value, cultivate or kill relationships, drive or reduce success. A well-conceived strategy living in the hands of unhappy, misdirected, misinformed people is a sure way to a slow and painful death. There is no comparison to being in the hearts and hands of energized, informed, and motivated people.

Kevin Eikenberry takes a slightly different slant on organizational culture. He says that if you want to understand culture you have to pay attention to:

• How we do things around here. What are the policies and procedures that are written down, but, more importantly, what are the unwritten and unspoken ways of doing things that are learned by example?
• The stories we are told. What is the lore of the workplace, both truth and fiction? What is the narrative that gets repeated again and again over time?
• The behaviors that get you promoted. These are not necessarily the categories on the performance review form. What really is valued? Is it long hours, achieving production goals, cultivating the right relationships, not making waves, coaching others, or something else?
• The values the organization lives by. These aren’t the values posted on the conference room wall or laminated for wallets and purses. These are the values-in-action.

Every organization has values, beliefs, norms, and traditions that shape behavior. A leader’s challenge is to guide an organization in developing the kind of culture that will help it achieve its strategic goals. Without purpose and strategy an organization has no reason for being, but without a culture that is in line with that purpose and strategy, long-term success is highly unlikely.