Candies or Charcoal: What is Santa rating your engagement skills as?

kudos_blog_leadbanner_-01

You better watch out, you better not cry
Better not pout, I’m telling you why
Santa Claus is comin’ to town
He’s making a list and checking it twice
Gonna find out who’s naughty and nice
Santa Claus is comin’ to town

(Santa Claus Is Comin’ To Town, Lonestar)

Children around the world are told all year round that if they misbehave, On Christmas day Santa will skip the candies and give them charcoal instead.When companies carry out their annual employee engagement surveys, some managers too get their lumps of charcoal. Surveys and studies comes back with the clear message that ‘People leave managers, not companies

Continue reading “Candies or Charcoal: What is Santa rating your engagement skills as?”

Ongoing Conversations: Time to Bring Stay Interviews to the Fore

interview: /ˈɪntəvjuː/ noun
a meeting of people face to face, especially for consultation.

It is that time of the year. Annual performance appraisals are underway. The dreaded bell-curves will be created. Feedback sessions will be held with employees and then the resignations will come pouring in. And here is something that I have always found hilarious: when employees leave they are asked to attend an exit interview – or worse fill out a form – conducted by a junior employee who clearly would be just checking some boxes.

So lets see: there are multiple rounds of interviews when the employee applies to the company for a position. A single (perfunctory) round when the employee leaves. And here is ‘funny’ part – no “interviews” during her entire stint, which might run into decades! Somehow like a bad marriage the conversation just seems to dry up between the employee and her manager(s) till it really is too late.KwenchBlog_StayInterview_Banner1_

Most managers seem to be flummoxed when they get the resignation email (or instant message at times) from their team members. They seem to have no idea how the employee really felt about the work they were doing and often get upset about the resignation. Reactions range from ‘Nobody is indispensable’ to the nasty – refusing to accept the resignation, refusing to release the resource, making the exit of the employee as painful as possible citing pending projects that absolutely need to be completed.

The really smart managers avoid this situation by actively engaging their employees in a continuously ongoing conversation about their work, the organization, their engagement levels, challenges they face and everything else in between. That is, these managers conduct stay interviews regularly, get the pulse of what the employees are thinking and act on it!

First the Do-Not’s:

Do not couple with performance reviews: This is tempting and in fact many companies already do it;  but in my opinion it is not a good idea. An annual performance review in itself is an inefficient event and understandably stressful for both the employee and the manager – siince there would be a lot of ground to cover and there is bound to be differences of opinion of what did or did not happen in that time. Besides the employee is going to be focused on a single number – the rating on the bell curve and would hardly be giving honest and unbiased opinions on how they feel about work and the organization.

Do not outsource: It might be tempting to setup an online survey or tell HR to conduct the stay interviews, but that simply defeats the purpose. The primary objective of a stay interview is to determine the engagement level and immediate concerns of the team member – something that is best understood (and appreciated) by the immediate manager. Immediate supervisor(s) or someone higher up in the direct chain of command of the employee must conduct stay interviews.

Do not cherry-pick: There is no two ways about this. You have to talk to everyone in your team while doing the stay interviews. If you talk only to a select set of people – what ever be the criterion you decided, it will be perceived as discriminatory. If at this point you are wondering about how to talk to the 50 odd people reporting to you, then you have a different problem. If your span of control is more than 10, fix that first!

 

KwenchBlog_StayInterview_Banner2_ 

Now the Do’s:

Do look for what “makes ‘em tick”: Talk to everyone on your team, especially the high performers and try to ascertain attributes that make them successful. If the only common thing you can find is that they are all smokers and join you in the smoker’s zone, then you might want to take a deep look inwards. Jokes apart, find out what motivates the top performers about working for the company, how do they tackle the challenges that others are not able to, etc. This information is not only helpful for you to guide the less engaged employees but also useful when deciding new hires.

The magic of engagement does depend a lot on the personality match of the employee with the organizational culture. For example if the culture is in-your-face-aggressive then hiring the most qualified introvert won’t really help.

Do use the same questions: Ask everyone you are talking to the same set of questions. Only then will you be able to determine the differences across top performers and the rest and be able to help the others engage better.

Do wrap it up quickly: Don’t extend the exercise beyond a couple of weeks at maximum. If you take a few months to get around to talking to everyone lots of things would have changed – most of which would be out of your control. The stay interviews are like a snapshot of the present and it should be done quickly enough to be a true representation of what your team is thinking.

Do close the loop: The sales professionals live by the ABC mantra – Always Be Closing. Well it applies to you too – take the feedback you receive (directly and what the collated data tells you) seriously. The zone of engagement depends on the overlap of what the organization and the employee wants, and if your insights can help increase the overlap – everyone wins! (See the figure above)

The final word: Remember, stay interviews give you an opportunity to connect with and take genuine interest in what motivates and engages your team members. If you come across as just ticking off boxes, then a golden chance would be missed. You couldn’t do much worse than having a 1-hour conversation, take notes and then do absolutely nothing.

 

 

Employee Alignment-Zone: “The Time Element”

The Architect – Precisely. As you are undoubtedly gathering, the anomaly is systemic, creating fluctuations in even the most simplistic equations.

 Neo – Choice. The problem is choice. (Matrix Reloaded, 2003)

On this blog and in quite a few conversations, I have pointed out the risks of overtly relying on cohorts or grouping of employees to formulate an employee engagement strategy. Using segments and cohorts to understand broad behavior and drivers of engagement is okay, but trying to engage the individual based only on those conclusions is not the best approach.

As ‘Neo’ puts it in the movie Matrix Reloaded , the ‘problem’ is Choice or to be more accurate, in this case – individuality. Every employee is an individual with her own priorities, preferences, fears and responsibilities.

ZoneOfAlignment_

Work, forms an important part of an employees life – and the emphasis I place is on ‘part’ and not on ‘important’ because that aspect is the one that often gets missed out when employee engagement strategies or initiatives are designed. As an individual with family, friends, interests, hobbies, ambitions and aspirations – responsibilities at work represent just a fraction of the things that matter to the employee.

There are a bunch of things that are important to the employee (health, financial well being, spending time with family, a social life, learning new things, new experiences) and there are things are important to the organization (employee well being, profits, playing an important role in the society, innovation).

When an employee is at work, he is operating in the intersection of these two spheres – there are things that matter to him which align with what matters to the organization. When this overlap is driven by the correct factors (alignment on the larger picture, the direction the company is taking, quality of work, the work culture etc.), there is a zone of alignment that is sustaining (and empowering).

ZoneofDisillusionment_

When what matters to the organization (as perceived by the employee) starts to drift away from what matters to the employee as an individual, this overlap reduces, the zone of alignment starts to shrink and becomes unsustainable. This is when disillusionment sets in eventually leading to Disengagement if corrective measures are not taken.

GapOfDisengagement_

Too much of something:

The logical question that follows is what when there is perfect alignment – shouldn’t that be the ideal state? To borrow (somewhat incorrectly) from that age-old adage, “Too much of anything isn’t good for you”

A situation where an individual is completely (and only) aligned with what matters for the organization makes him dysfunctional in other things that should matter to him. If the last line reminds you of the uptight, always-on-the-edge, hard driving, ranting and screaming executive, you are bang-on.

ThePuppetZone_

The other (unintended) consequence of such a situation is that individual then subsumes his discretion to what seems best for the organization. Being too focused on one aspect inevitably leads to a myopic vision of what is correct. It is the healthy balance of all aspects in ones life that helps drive a balanced approach towards challenges – both personal and at work.

A ‘super-mom’ I know uses negotiation skills learnt at work with her 1-year-old infant (works most of the time) and then takes the lessons learnt from handling the concerns of parents, her husband, siblings back to work to engage with her multi-generational team. Imagine what would happen if she tried a time-sheet driven approach with her infant or never took time out to spend time with her parents or spouse but focused only fixing “issues” at work (of which there never seems to be any dearth).

 

The Time Element:

Unlike organizations, what ‘matters’ to an individual is in a state of flux. I am not talking of value systems, or ambitions – those are (hopefully) rather fixed. I am referring to the drivers of what is a priority. Companies and Institutions have stated goals at time of creation and (usually) those drive everything they do. People on the other hand have changing preferences and changing events and these affect the overlap and consequently the alignment they have with the organization.

TheTimeElement_

If the organization stays rigid on how it interacts with the employee, then the extent of alignment is bound to change. Again an increased degree of alignment is not necessarily a good thing.

A few years ago I got chatting with a senior executive at a party. He was really good what he did, and totally disengaged. He was so efficient at what he did that the organization was reluctant to consider what his own personal aspirations were and had kept him doing the same thing for years on end. “The Gap of Disengagement” was very clear and he was looking to quit because he realized that by staying on he was damaging himself and the organization through his disengagement. I ran into him two years later in a busy airport and was surprised that he was still with the same organization in the same role. When I quizzed him, he confessed that he was still disillusioned but a personal crisis had made it impossible for him to look for other possibilities. His efficiency gave him more time at home and so he compromised his ambitions to stay on with his employer. The executive’s alignment with his employer had increased, but it was driven purely by convenience.

Smart organizations would avoid this situation by being aware of various dimensions of what drives each employee. DIY Pulse surveys are a good way; Managers who listen to their team members and do something about their concerns are even better.

A static employee engagement program is not enough neither is a “one-size-fits-all” approach. Like ‘generically designed’ antibiotics can have unexpected nasty side-effects in patients, employee engagement strategies designed for ‘masses’, ‘cohorts’ or ‘segments’ can induce the reverse effect. The pharmaceutical industry has woken up to the importance of pharmacogenomics to counter the ill effects of ‘universal-design’ for medicines – its time for HR professionals to follow suit.

Acknowledgements: 

Post title inspired by the Twilight Zone series (1958)

Impact of Role Relevance-Competence Fit on Engagement

Every hour and every day I’m learning more/The more I learn, the less I know about before/The less I know, the more I want to look around/Digging deep for clues on higher ground (Higher Ground, UB40)

In my post yesterday I talked about the ABC Drivers of Intrinsic Motivation. (Achievement, Belief and Camaraderie). A sense of achievement is something you derive by, among other things, being in the job/role that is right for you and then being very good at it.

The 2×2 grid (yes, blame it on the B-school stint) below shows how where you lie on the Role-Relevance and Role-Competency axes will determine your sense of achievement.

RRRC_Matrix_Relevance:Low, Competence:Low – Disengaged Employee: If an employee is in the third quadrant i.e he is placed in a role that he doesn’t like and also does not have the skills to perform then he is effectively being setup for failure and will be highly disengaged as he has little motivation to do a good job. If an employee finds himself in this situation then it is a failure of the organization and specially his immediate supervisors more than his own.

Relevance:Low, Competence:High – Efficient Employee: If an employee finds that he has a role that he doesn’t like but is good at then he is efficient at his job but is not engaged. He will do assigned tasks well and deliver on time, but will not be motivated to put in discretionary effort. Good managers can make a difference by listening and understanding what truly motivates their team members and finding a way to move them from Q1 to Q2 or Q3

Relevance:High, Competence:Low – Motivated Employee: When an employee is in a role or team which he wants to be in but is not trained for then he is motivated (but not competent). By providing the right training and support, employees who are in this quadrant can be easily moved into the ideal situation – into Q2.

Relevance:High, Competence:High – Engaged Employee: This is when employees are motivated to give their best to the job. They are in a role they want to be in and have the required training and competence to deliver results. When employees are in this quadrant, their sense of achievement is the maximum.

 Companies on the 2013 list of Fortune 100 Best Companies to Work for, offered 66.5 hours of training annually for salaried employees, with around 70% of those hours devoted to employees’ current roles and nearly 40% focused on growth and development.

Organizations that are not bound by rigid hierarchies and siloed org-structures have the flexibility to, better engage their employees by investing in training and having the opportunity to move them to roles they prefer. These are exactly the kind of facts that a good Employee Engagement Survey should throw up.

RRRC-Transition_

It is not a coincidence that a majority of the top rated employers also have the highest investments in learning. These organizations know that investing in engaging employees with the right role and competency fit, also prevents a ‘brain-drain.’ Employees in all age-groups and roles need continuous support to expand their skills. Investing in skills and knowledge training, of employees communicates a sense of commitment by the organizations in the future of its employees and goes a long way towards fostering a sense of achievement.

The ABC drivers of Intrinsic Motivation

ABCDriversEngagement_

Yes, ‘n’ how many years can some people exist/Before they’re allowed to be free?/Yes, ‘n’ how many times can a man turn his head/Pretending he just doesn’t see?/The answer, my friend, is blowin’ in the wind/The answer is blowin’ in the wind. (Blowing in the Wind, Bob Dylan)

When we talk about Employee Engagement, the discussion is essentially about motivation. Engagement is in fact, at some level a consequence of Motivation – a sort of end state if you may.

When I meet senior executives in organizations, a common lament is that ‘quality’ talent is so difficult to find. And if it’s a group of executives, then you can be assured a passionate discussion on a broken education system, exorbitant pay packages offered by rival companies, attraction to go abroad etc. will ensue

I usually try to bring up the topic of motivation and get them to talk about it. It works sometimes, but sadly more often than not – it gets pooh-poohed. One (very smart) executive recently told me bluntly – ‘ the very act of accepting the job offer represents motivation to work here. Why should we need to keep providing additional motivation? Nobody was motivating me with badges and games all these years!’

The lady had a point. Her conclusion was erroneous but her premise was not totally incorrect.

Accepting the job offer represents the first step in a journey with the organization (and with everything else that comes as a part of the deal – managers, peers and the organizational culture.) When the job offer is taken up, chances are you have crossed the hygiene hurdle of adequate compensation, so I am not considering that in my discussion for the moment.

The paycheck only comes around once a month, but the employee has to deal with the effect of organizational culture, his peers and his managers every single minute that he is at work (and sometimes even when he is away).

In my opinion, there are three questions every executive should try to answer honestly

  • What intrinsic motivations can this candidate have to work with me?
  • What intrinsic motivations can this candidate have to work with my team?
  • What intrinsic motivations can this candidate have to work in my organization?

Note that I ask you think about the ‘intrinsic’ motivation. Compensation, Job role, Profile, Designation, Bonus is extrinsic motivations.. Focus on understanding the intrinsic motivations.

Take a few minutes and answer the three questions before reading further. Chances are when you answer each of these questions candidly; you will already know why you are not attracting top talent.

The ABC Drivers:

From all the literature I have pored over and the people (team members, managers and leaders) I have talked to, three main drivers of intrinsic motivation stand out – and I call them the ABC drivers of Intrinsic Motivation.

A: Achievement – A sense of accomplishment is a major driver for motivation for anyone who gets up in the morning and goes to work- taking time away from family and battling traffic. Its human nature – If you don’t have a constant sense of achievement, an idea of how you are contributing to the larger ‘story’, your engagement levels crash. Then you are doing ‘something’ with no clue ‘why’ you are doing it (a very common comment I hear!). Managers and leaders who want the best out of their team have a duty to set the context, explain how the tasks are contributing to a larger whole, give constant and constructive feedback and help provide a sense of accomplishment. If any of these pieces are missing, the engagement picture will remain incomplete for the employee.

At some level, your answer to Question 1 as a Manager should address this aspect. If you are a manger who is successful in providing your team members with a sense of achievement, they will always want to work with you!

B: Belief – Employees are highly motivated when they believe that the organization enforces a level playing field. They are motivated when they know that they have the authority to take a decision to solve issues. They are motivated when they know favoritism has no role in decisions taken, when team members are not promoted for being a ‘smoking buddy’ of the manager and when the organization stands behind the employee for doing the ‘right’ thing. A belief that the organization really cares about its stated mission and its employees really does wonders for employee motivation.

This driver should appear in your answer to Question 3 on why should someone want to work for your organization.

C: Camaraderie – Would you want to go to work in an organization where secrecy rules the roost? People in such organizations are afraid to share any information or to collaborate on projects because compensation and career progression depends on information asymmetry. Favoritism, Secrecy, Coteries, Mistrust drives a general feeling of apathy among the employees and engagement levels will be abysmally low. All the bonuses in the world can’t fix this problem.

A sense of camaraderie and teamwork is critical for driving engagement. Employees look forward to work when they get to work along side peers who support and empower them to achieve organizational goals.

This driver should appear in why people would want to work in your team. What kind of team-culture do you have? Do team members support each other? As a manager, do you pave the way for your teams to leverage everyone’s strength or do you ‘divide and rule’?

 

In Conclusion: If you want to increase employee engagement in your organization, then as managers and leaders – at some point, you will need to ponder over these three questions and see how aligned you are towards enabling the ABC intrinsic drivers among employees. And note that, these are in a way the only things that you need to do, but these should underpin all your thoughts, actions and efforts – otherwise everything you do will ring hollow in the long term.

The Impact of A$s*@!#% on Organizational Performance

AbusiveBoss_The Indian media is at present abuzz with discussions around the ‘Rohtak sisters’. That video, of two fragile looking girls lashing out at men who tried to harass them on a bus (while other passengers just sat there watching them) – got me thinking about the effect of another kind of harassment – workplace bullying.

At some point or the other, we have all had to put up with unpleasant people at the workplace – The kinds who seem to get away with anything because they are ‘rainmakers’ or perceived as ‘too powerful.’ Workplace bullying unlike the pedestrian kind seen on the streets comes in various shades and some of the forms take on a garb of sophistication that makes it very difficult for the victim to attribute as bullying. The term ‘workplace bullying’ often conjures up mental images of a manager who is ranting and screaming or of snide and tangential remarks directed at women in the workplace. These are but just a part of what constitutes workplace bullying and it is by no means limited to Type A aggressive ambitious men (who are incorrectly portrayed as always being extremely aggressive) playing a winner-takes-all game.

‘It is terrifying’

In a study that revealed some startling insights, psychologists at the University of Surrey compared personality profiles of high-level executives with those of criminal psychiatric patients and found that three of the eleven personality disorders were actually more common in the executives.

The executives seemed to be prone to the following three maladies:

  1. Histronic Personality Disorder: People who suffer from this disorder demonstrate a pattern of excessive attention seeking. They tend to show superficial charm, insincerity, and egocentricity and often indulge in manipulative behavior.
  2. Narcissistic Personality Disorder: People suffering from this type of personality disorder are excessively preoccupied with power, prestige and vanity. They are seen to have an exaggerated sense of self-importance and have a strong need for constant admiration.
  3. Obsessive-Compulsive Personality Disorder: These are executives who are overtly focused on perfection. They tend to come across as extremely devoted to their work and tend to be rigid and stubborn with dictatorial tendencies.

In his book Corporate Psychopaths: Organizational Destroyers, Clive Boddy identifies two types of bullying in the workplace:

  1. Predatory Bullies: These are people who enjoy tormenting others just because they can – they are no better than their roadside variants. (The ones that gang up on a soft-spoken member of the team, the ones who pass snide remarks at women in the workplace, the manager who gives a team-member lower rating for no particular reason)
  2. Instrumental Bullies: These are the smart ones. Their bullying is always to further their own goals. More often than not these bullies are narcissists.

Narcissists in the workplace usually resort to indirect (and sophisticated) bullying. Typical tactics include withholding information, leaving team members out of the loop, getting others to keep doing work below their competence level, gossiping and putting down others behind their back.

‘They walk among us’

In his book “The No Asshole Rule” (and the inspiration for the post’s title), Robert Sutton lists down twelve everyday actions that he feels Assholes use:

  1. Personal Insults
  2. Invading one’s ‘personal territory’
  3. Uninvited physical contact
  4. Threats and Intimidation: Verbal and Non-Verbal
  5. ‘Sarcastic Jokes’ and ‘Teasing’ used as insult delivery systems
  6. Flaming e-mails
  7. (IM) Status slaps intended to humiliate others
  8. ‘Status Degradation’ rituals
  9. Rude Interruptions
  10. Two-faced Attacks
  11. Dirty Looks
  12. Treating people as if they were invisible/Ignoring people.

Everyone who has been in a high-pressure situation at work has demonstrated one of more of these behaviours at some point or the other. Sutton points out that psychologists make a distinction between ‘states’ (fleeting feelings/actions) and ‘traits’ (enduring characteristics).

Surveys and research has shown that workplace bullying is not isolated or restriced to a few unlucky ones. In her dissertation titled ‘Workplace Bullying: Aggressive Behaviour and its Effect on Job Satisfaction and Productivity’, presented by Judith Lynn she says:

“The data in this study found that 75% of participants reported witnessing mistreatment of coworkers sometime throughout their careers, 47% have been bullied during their career…”

 

The (real) impact on Organizations (that put up with A&$*@!#%)

In the past companies (read top management) used to often look the other way when people reported about badly behaved superiors. There are several reasons why this happened. Maybe (and this is often the reason) the intolerable executive was delivering numbers or maybe he was the rainmaker and leadership felt they couldn’t afford to loose him. Sometimes the person is the leader and the culture then percolates down to lower levels of the company.

In his book Sutton gives the example of Linda Wachner, former CEO of Warnaco who would ‘dress down’ her senior executives and made them feel ‘knee-high’. To make matters worse former employees allege that the attacks were ‘personal rather than professional and not infrequently laced with crude references to sex, race or ethnicity’. He also talks about ‘Chainsaw’ Al Dunlap, former CEO of Sunbeam who is described as ‘like a dog barking at you for hours…He just yelled, ranted, and raved. He was condescending, belligerent and disrespectful’

How engaged do you think people working for these leaders felt?

Organizations are waking up to the risks of putting up with people that are mean or ones who sideline people to further their ‘divide and rule’ strategy.

Research has shown that at the very least workplace bullying leads to increase stress among the workforce, which causes disengagement, productivity loss and even health issues. All of these have a real measurable impact on the bottom line at the end of the day. In some extreme cases, that victims display Post-Traumatic Stress Disorder (PTSD) – usually associated with severe trauma like rape or being in a conflict-zone.

That’s not all. Companies have to put with the associated costs of increased attrition – not only of the victims but even those who witness it.

Based on replacement cost of those who leave as a result of being bullied or witnessing bullying, Rayner and Keashly (2004) estimated that for an organization of 1,000 people, the cost would be $1.2 million US. This estimate did not include the cost of litigation.

The cost of workplace bullying represents a ‘Clear and Present Danger’ to responsible organizations that are looking to foster a motivating and innovative work culture. It will be nearly impossible for organizations to attract top-talent when a lot of their energy is wasted in managing the fall-out of aggressive behavior or petty-politics.

Good leaders realize this and are starting to take the ‘bull by the horn’. Work Culture is clearly defined and those who seek to undermine it are not tolerated – no matter how important they might seem to the organization. They might be critical today, but the damage they do in the long run will far outweigh any gains they provide.

‘Do you believe your manager/supervisor indulges in manipulative or divisive behavior?’ is a question that might soon start appearing in Employee Engagement Surveys.

 

In case you are interested, here are some related Tools:

You might feel that none of this applies to you (and you might be surprised). You can take the ARSE (Asshole Rating Self-Exam) here (http://electricpulp.com/guykawasaki/arse/)

If you strongly feel that your boss is the problem, then test your theory. Take the BRASS (Boss Reality Assessment Survey System) Test here (http://goodbadboss.com)

If you want to get a peek at the Financial Cost of Organizational Conflict, check out the online calculator based on the research of Dr. Dan Dana here. (http://www.mediationworks.com/dmi/toolbox.htm#tools)

 

Acknowledgements and References:

Image courtesy of FreeDigitalPhotos.net

WORKPLACE BULLYING: AGGRESSIVE BEHAVIOR AND ITS EFFECT ON JOB SATISFACTION AND PRODUCTIVITY, Dissertation, Judith Lynn Fisher-Blando http://www.Workplaceviolence911.com

The No Asshole Rule, Robert Sutton, Piatkus

Narcissism in the workplace, Wikipedia References

People to Algorithms: “Back Off. We want to make our decisions!”

AnalyticsDeadEnd_

“It can’t be bargained with. It can’t be reasoned with. It doesn’t feel pity, or remorse, or fear. And it absolutely will not stop, ever, until you are dead.” from the Terminator (1984)

Analytics is the hottest, absolutely-must-have corporate buzzword these days. Out with the fuzzy and in with hard data. Leaders and Managers have been known to repeat Deming’s quip (and wrongly get credit for it at times) “In God we trust; all others must bring data” when faced with business proposals that are based on ‘intuition and gut-feel.’ Finance and Operations have been using advanced modeling techniques for years, fine tuning the art of showing that big revenue spike (or cost saving) just around the corner. (Hasn’t happened in the last 10 years, but next two quarters are going to be huge!) And now it’s the turn of HR. People Analytics is the next big frontier and machines are being primed to crunch numbers on human attributes and ‘go where no machine has gone before.’

Correct Data is good, Intelligent Analytics is even better. I have had enough experience with gut-feel and arbitrary extrapolation driven disasters in my life to have a deep respect for both Data and Analytics (with the qualifiers firmly in place). I also know that modeling human behavior (or worse projecting it into the future) is something best left to Ethan Hunt.

‘Let’s collect all possible behaviors about employees, get a bunch of statisticians and lock them in a room till they come up with a formula to predict who is good and who is not,’ sounds like a good idea. Only problem – seems people don’t like it. And not just any people – top notch engineers at Google who live and breathe data and analytics.

“Not only must Justice be done; it must also be seen to be done.”

Promotions are a big deal at any organization. It represents an acknowledgement of the company’s belief that you have done an excellent job in your current role and so are ready to take up further or different responsibilities. Nominating the wrong person for a role can be one of the most disengaging acts in an organization. The person(s) who lose out in the race often choose to leave the company and walk right next door to the competitors HQ.

Google has a rather elaborate process involving self-nominations, committees and appeal process for promotions of engineers. As you can imagine this process is costly, time consuming and can be tedious at times. With the rather noble intention of saving a bit of effort for everyone, the People Analytics team decided to explore the possibility of getting an algorithm, which they can use instead.

They did come up with one. And statistically it was awesome!

No possibility of bias, absolute transparency, much less effort, very accurate (based on fitment with past data). One might expect everyone (especially engineers) to love the ultimate solution to getting promotions right. All the disengagement rising from favoritism, bias, perception et.al. out of the window in one masterstroke.

Guess what happened.

The Engineers hated it!

“They didn’t want to hide behind a black box, they wanted to own the decisions they made, and they didn’t want to use a model.”

At the end of all the research, the ultimate takeaway for Google was that ‘people need to make people decisions’ Analytics serves an important role in providing the decision makers with data points and insights, but it can never replace them. It is highly unlikely that we will ever reach (or accept) a situation where algorithms and black boxes are seen as taking decisions (even if you put a human face on the screen). [See Prasad Setty talk about it in the video at the end of this post]

Speaking of algorithms and disasters: Remember the Black-Scholes Equation and 19 October 1987 (Black Monday)? And for those with shorter memories there is the Gaussian Copula function and the 2008 meltdown. And those are failures when modeling movement of financial instruments (and therefore indirectly just one aspect of human behavior which ultimately drives price of those instruments).

It has taken us decades finally realize the tyranny of the “Bell Curve” in performance evaluation though most organizations still are stuck to using what is essentially a convenient misuse of statistical formulation.

Hopefully business leaders will appreciate the pitfalls in giving into the lure of expecting everything to be boiled down to an algorithm. (Elon Musk is rumored to have referred to AI as “summoning the demon”) Even if I don’t quite share Elon’s assessment of the scenario of doom (yet), in my opinion hoping to click a button to decide people’s career path is bit of science fiction, wishful thinking and lazy management all rolled into one.

But if you are a math wiz, don’t care about what old geezers like me have to say about “free will” and social cognition, then your mission, should you choose to accept it …

(Unfortunately this blog post will not self-destruct in 5 seconds)

Acknowledgements and References for this post: 

Image courtesy of FreeDigitalPhotos.net 

Google came up with a formula for deciding who gets promoted—here’s what happened, Analyze This, QZ India, Max Nisen, November 20, 2014

Recipe for Disaster: The Formula That Killed Wall Street, Tech Biz, Wired Magazine, Felix Salmon, February 23, 2009

The mathematical equation that caused the banks to crash, Mathematics, The Observer, Ian Stewart, February 12, 2012.

Will the machines take over? Why Elon Musk thinks so, Science, The Christian Science Monitor, Anne Steele, October 27, 2014

3 Strategic Axes of Employee Engagement that Leaders must focus on

Considering the impact that disengagement can have on innovation, profitability, customers, and attrition it is clear that top leadership focus on employee engagement is as important (if not more) as on revenue and bottom-line.

But more often than not a discussion on Employee Engagement veers towards the operational aspects. The focus is on What to measure, How to measure, techniques of transparent Communication, Design of Employee Surveys, Ideas on Gamification et. al. While all of these are critical to implementing an effective engagement initiative, there is another dimension to Employee Engagement – the strategic aspect that sometimes doesn’t quite get the focus it deserves.

There are three axes that help in visualizing the strategic dimensions of Employee Engagement.

  • Leadership
  • The Larger Purpose
  • Organizational Culture/Internal Branding

3 Strategic Axes of Employee Engagement

 

I call these the “strategic dimensions of employee engagement” and not “dimensions of strategic employee engagement” because to me, by default, all of employee engagement is strategic. If one considers employee engagement to be a “project”, an “initiative” or a “To-Do Item”, then you are almost sure to fail.

All three of these dimensions have immense bearing on the extent to which employee engagement will succeed. None of them are short-term activities or projects. All three are interconnected and have to deeply embedded in the DNA of the organization to deliver. There is no way to really measure the extent or direct effectiveness of any of these dimensions on an ongoing basis. But when there is true commitment to these and the right balance is achieved, they have a multiplier effect on the effectiveness of activities undertaken to drive engagement.

Leadership:

Leaders are the ones who set the direction for the organization. (Stephen Covey’s famous jungle metaphor where the managers are down below efficiently clearing a path and the leader clambers up a tree and figures out they are in the wrong jungle) To get employees to really feel motivated about doing a good job, you should be guiding them to the right jungle in the first place. While the metaphor does serve to drive home a point, consider the impact it will have on employees when leaders walk into the first clump of trees they think “looks like the right place to go” and then a few hours later decide to survey and say “oops!” When it comes to defining and following organizational principles leaders have to get it right and stick to the path – even when the going gets tough (especially when the going gets tough).

The best leaders are those that clearly define and live the organizations principles. They enable engagement by using every opportunity they get, using every communication channel and touch point at their disposal to reinforce their commitment to employee engagement. It’s a continuous sustained two-way communication that yields results with employees believing that the leadership is truly committed to engaging with the workforce and not just mouthing platitudes.

Purpose:

 “Nobody gets Mars right on the first try. The U.S. didn’t, Russia didn’t, the Europeans didn’t. But on Sept. 24, India did.”

TIME Magazine rated the ISRO Mangalyaan as one of the top 25 inventions of 2104. One of the primary reasons the team of scientists and engineers managed this stupendous achievement is their larger sense of purpose.       Imagine what would have happened if their mission had been to “get something out there.” If the purpose had been to “try for Mars, maybe we’ll get to the Moon worst case” chances are the bottom of the Indian Ocean is where the spacecraft would have ended.

In order for employees to align their personal goals and ambitions with that of the organization they need to understand the mission of the larger whole, the very purpose of the organization. It is only when the purpose is crystal clear that the employees can appreciate the role their own job plays in achieving that purpose. When there is no clarity on what the organization stands for, what it is doing now, and where it is heading chances are the employees are confused about how they are contributing to the success of the business.

Taking the previous axis of Leadership into consideration, if employees sense that there is a difference in the stated vision, values and purpose with how the leadership actually functions, then it leads not just to reduced engagement levels, it actually fosters disengagement! You can be rest assured your ‘A’ players will want to leave at the first possible opportunity if you either don’t have a clear purpose or if there is a disconnect between your actions and the stated purpose.

Organizational Culture (& Internal Branding)

Companies have dedicated budgets (often huge) for building their brand in the marketplace. Great care is taken about what is communicated to the customers and the media. Every word is pored over and experts spend millions on A/B testing to get just the right shade of blue on the logo. But what about the employees?

To an extent there is a rub-off on all the investment in external branding on and employees sense of pride and belonging. But the real challenge is in making the employees truly attach to their organization. The “What”, the “Who” and the “Why”

The sales and marketing team of most company focus on the “What” – The products, the inventions, the innovations, and the service the company provides. This tells the customer what he can get in return for the money he spends. Companies who believe that they are more than just the products they sell and their employees truly matter also focus on the “Who” – the engineers designing the products, the customer service executives supporting the customers, the managers who make sure projects run on time and finally the leaders who steer the organization in the right directions.

Truly engaging firms additionally focus on the ‘Why’ – the raison d’etre. Why does the organization exist in the first place? And when you turn the lens of “Why” onto the organization, things change drastically. “Making money by mis-selling to customers so that we can get fat bonuses” suddenly doesn’t seem a good enough reason for a company to exist in the long run and for top talent to join it. This dimension blends in deeply with the larger purpose and mission of the company that we discussed in the previous point.

Conclusion: Employee Engagement is one of the most complex challenges that face the organization while also being the most critical. Market studies, Sales strategies, Revenue, Profit, Share price are all indicators of how well the leadership and management is tackling the challenge. Motivating employees is a complex activity that requires transparency, true-values and years of sustained effort.

Among all the questions that leaders of organizations must ask of themselves and answer in a convincing way, is “Why do we exist?” If the organization doesn’t have a good reason to exist, it cannot possibly provide a good reason to others to be a part of it!

Disengaged Workforce? Maybe your CEO’s pay has something to do with it!

EmpProppingUpExecutive_“It’s a very personal, a very important thing. Hell, it’s a family motto. Are you ready, Jerry?

I’m ready.

I wanna make sure you’re ready, brother. Here it is: Show me the money. Oh-ho-ho! SHOW! ME! THE! MONEY! A-ha-ha! Jerry, doesn’t it make you feel good just to say that! Say it with me one time, Jerry. ” (Jerry Macquire, 1996)

You might be forgiven for assuming the dialogue I picked up from the movie Jerry Macquire was a conversation between a CEO candidate and the board member sounding him or her out. The increasing disparity in compensation packages commanded by CEOs to that of, the average employee has been a source of much debate and frustration.

Ben & Jerry’s Ice-Cream Company made a social pact with their employees when the company was founded. The company put a cap on the pay ratio between the top paid executive to the lowest-earning worker at 5:1. They held on to that ratio for 16 years. Then when it was time for Ben Cohen (the Ben in Ben and Jerry’s) to retire, they went hunting for a successor. They couldn’t find a single executive willing to accept the cap. The cap was raised to 7:1. Nada. The cap continued to be raised till it reached 17:1 over the next six years. Finally the company was acquired by Unilever USA in 2000 and nothing more was heard. The shroud of corporate secrecy descended on compensation details.

All that is about to change.

A few days back the Securities and Exchange Commission finally voted (with a narrow majority) to bring into effect a rule that will require companies to state their CEO pay as a ratio of the average worker’s pay. The hotly debated Dodd-Frank Wall Street Reform and Consumer Protection Act, is making a lot of senior executives very uncomfortable. Under the section, “Investor Protections and Improvements to the Regulation of Securities”, subtitle E refers to “Accountability and Executive Compensation.” The clause in question is as follows:

Shareholders must be informed of the relationship between executive compensation actually paid and the financial performance of the issuer, taking into account any change in the value of the shares of stock and dividends of the issuer and any distributions as well as:

  • the median of the annual total compensation of all employees of the issuer, except the chief executive officer (or any equivalent position)
  • the annual total compensation of the chief executive officer, or any equivalent position
  • the ratio of the amount of the median of the annual total with the total CEO compensation

India is a bit ahead on the curve on this one. Under the new Companies Act 2013, the provision which had been incorporated by SEBI, for Listed Companies already requires them to start disclosing this information. Reporting on this, BusinessLine states that “Under the Companies Act, 2013, every listed company shall disclose in the board’s report, the ratio of the remuneration of each director to the median employee’s remuneration and such other details as may be prescribed.”

So, why have governments decided to wake up and start tracking compensation paid to top executives? The financial collapse of 2008 and the subsequent fallout did seem to have a lot of influence on getting governments to finally act. The ‘Occupy Wall Street’ movement with its emphasis on the remaining ‘99%’ forced lawmakers to sit up and take notice. The increasing disparity in compensation between a select few and the vast majority seemed to be boiling over into a social flashpoint – any government’s nightmare!

So, how exactly do the numbers really stack up?

To get a sense of how good or bad the compensation ratio is currently; let us first try to understand what an ideal ratio in people’s minds is. The late Peter Drucker, believed that the ratio should be 20:1 (a downgrade from his earlier number of 25:1). During the time of the Dodd-Frank Law debate, Rick Wartzman wrote to the then SEC Chairperson Schapiro. He pointed out Peter Drucker’s opinion on the issue:

“I have often advised managers that a 20 to1 salary ratio is the limit beyond which they can not go if they don’t want resentment and falling morale to hit their companies,”

In a 2004 interview, Drucker elaborated further: “I’m not talking about the bitter feelings of the people on the plant floor… It’s the mid level management that is incredibly disillusioned” by king-size CEO compensation.

 At the World Economic Forum, in 2010, UNI Global Union General Secretary Philip Jennings warned of ‘gathering storms’ if the CEO gravy trains are not derailed. He said that the bloated pay packets are a source of ‘systemic risk’ and added that he supported the ‘Drucker Principle’ of 20:1 pay ratio.

In this context, let us take a look at what reality is.

In their paper titled “How Much (More) Should CEO’s Make? A Universal Desire for More Equal Pay”, Kiatpongsan and Norton state that their references point that the ratio of CEO compensation to that of the average employee increased from 20:1 in 1965 to a whopping 354:1 in 2012! The ILO has a ‘slightly’ different number they arrived at from studying the ratio in the largest firms. They say that the ratio was 508:1. The corresponding ratios in Germany – the European business powerhouse was 190:1 and 150:1 in Hong Kong, China.

Actual, Estimated and Ideal pay ratios of CEOs to unskilled workers in 16 countries (Source: How much (more) should CEOs make? A Universal Desire for More Equal Pay)
Actual, Estimated and Ideal pay ratios of CEOs to unskilled workers in 16 countries (Source: How much (more) should CEOs make? A Universal Desire for More Equal Pay)

Closer home, global management consultancy, Hay Group released the ‘Top Executive Compensation Report 2013-2014,’ which analyzed 2524 jobs across 176 organizations and found that CEO’s in India earn around 78 times the salary of an entry-level professional. And as companies show an increased preference to recruit CEO’s from outside the internal senior management pool; this number seems bound to rise even further.

But if you pay peanuts you get monkeys!

 But do you really?

Writing in the New Yorker, James Surowiecki states that, executive compensation rose 876% or nearly 9 times between 1978 and 2011 in the US. By extension one would assume that, it is 9 times more difficult to do business now than it was four decades ago!

Then, what could possibly explain this exorbitant rise in pay? According to Surowiecki it’s a combination of factors. The first is a shocking side-effect of increase transparency. With increased transparency required by law and amplified by the business press, boards at companies fall for ‘peer-benchmarking’ to determine executive compensation. And boards which are too ‘cozy’ with the CEOs, are reduced to being rubber stamps who approve pretty much anything the CEO tells them – including the justification for an outrageous compensation package. To make matters worse, this system gets played by the ‘leapfroggers’ – the CEO’s who are either extraordinarily brilliant or just plain lucky to earn huge salaries. These, then become the benchmark for others and the spiral just goes on growing!

Just how bad can it get? Roger Martin, former dean of University of Toronto’s Rotman School of Management, in an interview to Bloomberg said “When CEOs switched from asking the question of ‘how much is enough’ to ‘how much can I get,’ investor capital and executive talent started scrapping like hyenas for every morsel. It’s not that either hates labor, or wants to crush their lives. They just don’t care.”

Hmm..How’s that for employee engagement?

 

But CEO’s also increase investor wealth! Surely they deserve the cut?

If the financial collapse and the bonuses handed out to top executives in ‘too-big-to-fail’ is anything to go by, the assumption that bonuses and pay are necessarily linked to performance is not true. Studies published in the Economist and by others state that there is no clear correlation between CEO pay and company performance. Quite a few studies seem to have concluded that the correlation is in-fact negative!

A paper by Bebchuk, Cremers and Peyer, in the Journal of Financial Economics, titled ‘The CEO Pay Slice’, analysed the performance of companies, in relation to the proportion of what the CEO took, as a ratio of the total pay of the top five executives. It seems that the more the CEO took compared to the executives pay, the worse the company did!

In the report by Hay Group, they found that MD/CEO’s in India take close to 3 times the pay of those in Business Enabler Roles (HR Head, CIO, R&D Head etc) and Business Core Roles (Head – Sales & Marketing, Head – Manufacturing/Operations, BU heads etc)

Just when you think things couldn’t look worse, here is one final data point. It seems CEO pay is in fact strongly correlated with one metric – the number of people they fire!

 

Long Term vs Short Term!

 SEBI in the discussion paper on CEO compensation had stated “… on an average, the remuneration paid to CEOs in certain Indian companies is far higher than the remuneration received by their foreign counterparts and there is no justification available to that effect,”

In addition to the quantum of payment, there has been much discussion around the way executive pay is structured. The incentive structure holds the key to actions taken by CEOs. Organizations in mature markets are increasingly moving away from basic incentives like, stock options and restricted stocks to performance-linked long term incentives like performance equity, performance-based restricted stock among others.

The Hay Group finds that, Indian companies unfortunately lag far behind their global peers in this aspect. The chart below on CEO Compensation mix points out the stark difference in the structuring of pay in India versus their peers in US or Europe. (The mix is fractionally better than, that for Asia on average)

CEO Compensation Mix Across Geographies (Source: Hay Group)
CEO Compensation Mix Across Geographies (Source: Hay Group)

With companies being now required by law to state compensation for top executives, and the ratio of that compensation to the average pay, the fallout on engagement levels will depend on how responsible (or otherwise) the top management is.

CEO’s who have taken over 100% pay increases in years where they have given zero or minimal pay increase to the average employee who is battling runaway inflation at home and increased pressure at work (because the company has not met its performance targets!) will find it increasingly difficult to justify their stand.

There is enough research (an visible social backlash) to clearly establish that there is widespread consensus that, the gap between the top executive pay and entry level pay in an organization has to reduce – substantially so, if the current trends are to be believed. Compensation forms an important component of the need for ‘Safety’ in Maslow’s Hierarchy of Needs but, it should not become the ultimate goal.

As Jack Ma, puts it succinctly – “We only eat three meals a day, we only sleep on one bed, how can you spend money? Where’s the opportunity?”

So if you are wondering why your team is looking despondent despite of all the effort you put into motivating them, the answer just might lie buried in your company’s annual report.

 

References and Acknowledgements:

Image in beginning of post courtesy of FreeDigitalPhotos.net.

Graphs data/image sourced from sources mentioned against the images.

  • A Sweet Solution to the Sticky Wage Disparity Problem, Aug. 10, 2013, Mitchell Weiss, ABC News
  • What Jack Ma plans to do with his Alibaba billions, Svati Kristen Narula, September 23, 2014, Quartz India
  • UNI: In Davos, UNI warns of risks from Private Equity, CEO pay, 28 Jan 2010, ITUC CSI IGB
  • Dodd–Frank Wall Street Reform and Consumer Protection Act, Wikipedia
  • Executive Excess 2010: CEO Pay and the Great Recession, By Kevin Shih, Sam Pizzigati, Chuck Collins and Sarah Anderson, September 1, 2010, Institute for Policy Studies.
  • What’s the best way to set CEO pay?, 03 June 2013, ILO
  • Study: Tech CEO Pay Doesn’t Match Performance, Baseline, 17 Jul 2006
  •  Executive pay and performance, Feb 7th 2012, Economist
  • Open Season, James Surowiecki, October 21, 2013 Issue New Yorker,
  • CEO Pay 1,795-to-1 Multiple of Wages Skirts U.S. Law, By Elliot Blair Smith and Phil Kuntz, Apr 30, 2013, Bloomberg
  • Why CEO Pay Will Keep Rising to Even More Insanely Unjustified Levels While Ordinary Workers Get Squeezed, October 14, 2013, Yves Smith, Naked Capitalism
  • Top Executive Compensation Report 2013-2014, global management consultancy, Hay Group
  • US follows India on disclosure of CEO-staff pay ratio, Sept 19, 2014, BusinessLine
  • CEOs in India earn ’78 times the salary of an entry-level professional’, January 27, 2014, NDTV Profit
  • What’s the right ratio for CEO-to-worker pay?, By Jena McGregor September 19, 2013, Washington Post
  • The CEO pay slice, Lucian A. Bebchuk,J. Martijn Cremers, Urs C. Peyer, Journal of Financial Economics, Volume 102, Issue 1, October 2011

Murmuration: Infosys gets its employee (re)engagement strategy right!

ID-100248393I got something to tell you / I got something to say
I’m gonna put this dream in motion / Never let nothing stand in my way
When the going gets tough / The tough get going

I’m gonna get myself ‘cross the river / That’s the price I’m willing to pay
I’m gonna make you stand and deliver / And give me love in the old-fashion way (Billy Ocean, When The Going Gets Tough, The Tough Get Going)

I have been following the Infosys story with fascination over the past few months. The company has been in the news, usually making headlines for- arguably the worst possible reason –record levels of attrition. The media reports would have you believe that employees, at all levels, are leaving the company in droves. There have been enough interesting movements at the top as well, with Narayan Murthy coming back for a while to find a CEO, and Vishal Sikka finally taking over as the first non-founder CEO in August. One expected things would improve from then on, and though all the right noises are being made, its early days yet. Course correction measures that NRN will have put in place, would possibly still need time to show results and Vishal has been at the helm for just over a month – even middle level managers are given 90 days to get going!

In spite of media and analyst reports stating that the company continues to be in denial about their attrition problem, I was quite impressed with the moves that the current CEO and his team seem to be doing – to stem the flow of employees and bad publicity. (Nothing saps employee motivation than, opening the newspaper everyday to find some more news about how the company is losing people at record rates).

Though I wasn’t excited with the hikes and the mass promotions (I am sure there was enough data justifying that action), the decision to crowd-source suggestions for improvement (and calling it murmuration was a masterstroke!), the call to increase frequency of promotions were all clearly the actions of a CEO who wants to put his finger on the pulse of the organization and is on the job at fixing it!

I thought things were shaping up nicely till I came across an article(reference #3), outlining how employees who “hit the exit button on the company’s internal e-separation system receive an automated mail from Sikka, that captures the transition underway to re-energize the $8.2billion IT firm.”

Now that one made me go hmm…

One wonders why only the employees who have decided to quit, are the ones getting a peek into the transition plan. Another media article had earlier reported that Vishal will unveil his growth plan in Mid October.

Maybe the article (reference #3) left out more than it told, but if this is true, then I think the auto-mailer is a mistake – one that can undo a lot of the good, that the management is doing towards engaging the workforce at this point in time. Automated mail-responses silently scream “don’t really care”, even if they have been sent with the best of intentions. In my opinion they are good for acknowledging that your complaint about the phone bill has been received, not so much for retaining an employee!

The article goes on to state the mail does ask the exiting employee to schedule a chat with unit leadership ..’should they want further clarity.’

Double hmm….

(Disclaimer: Infosys didn’t respond to queries from the paper, so its my assumption that the mail and its stated content are accurate and have been verified. That assumption of course might be misplaced.)

Employee engagement in difficult times:

The challenges of engaging with the workforce, when the company is going through a phase of internal turmoil, are very different from those that come when the market conditions are tough. A cynical view of the situation is to assume that, employees who are ‘good’ will leave a troubled organization and the those staying put are the ones who can’t get a better offer anywhere. Let’s be clear, that is pure nonsense.

A more realistic opinion is that, even when employees leave an organization in turmoil, it’s mostly because they are not able to see a clear picture of the future. It is up to the management to paint the picture and make it attractive. So those employees are literally leaving the managers, not the company. And when that is the driver for attrition, sending an auto-mail may not quite cut it.

Employee Engagement is often oversimplified by stating that, higher engagement automatically leads to better productivity. Engagement is not a unitary construct and is more an overarching theme, which includes job satisfaction – but is not just that.

There are a few things that companies can do to engage with their employees when things aren’t quite going the way it is supposed to. Here’s a short list:

Ask employees for candid feedback (and act on it!): Asking the employees candid feedback on what they think is broken and what they think needs to be done to fix it, is the easiest way to get to the root of the problems. It is imperative for the leadership to strip away the layers separating them from the ‘guy-on-the-frontline’ and get a sense of what everyone feels. Town-hall meetings are a good way to get the ball rolling, but these have limitations in efficacy, especially because a vast majority tends to be non-vocal and it’s not always the ones who talk the most who have the best ideas or feedback.

Today companies can easily leverage the power of technology and have an online feedback system where people are encouraged to post exactly what they feel and they can choose to be anonymous if they so prefer. Again, the top leadership should be seen participating directly! (Steve jobs may not have been the most polite customer service agent, but his very public email ID helped him keep close tabs on what people were saying about his company and its products.)

Having a plan to act on the feedback received is critical – especially in an organization where employees feel that the leadership is not in synch with them. When employees sense that, their concerns are not just being heard, but also acted on – it works magic for their motivation and for organizational outcomes. For feedback that can be easily fixed, the leadership should cut through the organizational red-tape (Yes! There will be plenty of that even when everybody knows it’s a crisis) and make it happen. For suggestions that can’t be implemented there has to be an open and candid explanation as to why it can’t be done. These actions will go a long way towards assuaging the immediate concern that, most employees will have that “management doesn’t listen”.

Create a long term plan and paint the picture clearly:

As I mentioned before, companies don’t become a bad place to work overnight. Uncertainty about the future is like flu – it is extremely infectious and it puts people out of action. Eventually when things get really bad, they start to quit. Nobody wants to work for an organization that doesn’t have a plan. If the only target you are looking at is the next quarter’s numbers and you don’t care if those numbers are met by writing software or selling stuffed toys, then people will leave you! (Maybe the ones good at selling stuffed toys might stay back, but you don’t get to be an industry bellwether that way)

Bad times don’t last forever. Unfortunately people tend to forget that bit and everyone paints the gloomy picture in a slightly darker shade with each passing day. As a leader your primary task is to show your dedicated and loyal workforce the light at the end of the proverbial tunnel (not just the ones who are leaving you).

Its hard work! It is not enough to paint a picture with broad brush strokes; you have to paint one that is inspiring enough for people to repose their faith in you. The challenge here is for the leader to understand that people who are committed to their jobs and are good at what they do may not be necessarily committed to the organization and those who are extremely committed to the organization may not be the right ones to fix the problems.

 Kill the “What’s in it for me attitude”, commit to your core values:

Shake-ups are good, but only when they are aligned with the core values and vision of the organization. When employees and leadership are aligned around the core of what drives their actions, the superficial concerns about pay, promotions, uncertainty about the future et. al. fall by the way side. The discussion then becomes about what the company is doing on a daily basis and how that matches up against the stated values and vision. If your base is flexible and open to interpretation depending on the latest crisis, either internal or in the market place, then there is little for employees to anchor their faith in.

Empower the managers and create a groundswell of engagement:

In times of crisis, a common reaction of leaders is to consolidate and centralize all decision making. While this approach is correct in certain times (e.g. you have been hit with a big lawsuit), in a situation where you are battling employee disengagement, this might actually prove counterproductive. In fact by empowering managers and team-leaders way down the hierarchy to recognize and reward good work will help to dispel the perception that the organization doesn’t care. As I have written before on this blog and other places, cash and large annual bonuses is not the solution. The rewards and recognition have to be open, transparent, public, relevant and timely. There is enough research to prove that employees value peer recognition much more. Companies can easily leverage technology platforms to provide, social recognition to their employees, irrespective of where they are based and dramatically improve the efficacy of their rewards budget.

One last thought on compensation. When a company is facing a problem that is expected to be fixed by pay-rises and mass promotions, it would not be a far-fetched assumption that employees have issues with pay discrepancies. When companies grow large, pay-revisions, adjustments, salary pegs to which graduate school you went to, one-time adjustments, bonus payouts, retention payouts etc all make the pay structures a convoluted mess. I have seen many cases where people go to HR complaining about they pay being (far) lesser than a colleague (usually a lateral hire) doing exactly the same task. And often the response they get is – ‘compensation is confidential information, why are you discussing it?’ You can see what this is going to do for motivation!

A crisis also offers a hidden opportunity for leadership to clean up and become totally transparent about their compensation policy. You may not want to go to the extremes of the start-up Buffer, but if your compensation policy is good, then nobody is going to have a problem with it when you make it public. If it sucks, then well, hiding it isn’t going to solve anything.

Communicate, Communicate, Communicate!:

There really is no way around it. Uncertainty is worse than bad news communicated clearly. Not telling staff and investors the realities of the situation and the action being taken to solve it, breeds mistrust, suspicion and fear. If you expect your staff to place their faith in you and stick with you while you guide the ship out of choppy waters, then it’s fair that you repose your faith in them to understand ground realities and appreciate being informed upfront. There is nothing worse for engagement than having to read, about a drop in revenue, profit or increased attrition in the morning paper while just the previous evening your manager was assuring you that everything was “just-hunky-dory.”

And finally,

Publicly support your employees:

There is no time like a crisis to reinforce the message to the employees that, the company cares. Use the social intranet (you do have one, right?) to spread messages of success stories. Make the customer wins a big deal, not just a number to be counted towards the sales target. Open up and let everyone know how the deal was won, what the challenges were, and what strengths helped the company to win the deal. These stories go a long way to help employees get over their doubts about how the company is doing and give them a constant source of motivation. The visible support – especially in tough times – builds trust and generates loyalty and goodwill for the company.

The last word:

Employees are the most critical assets a company has and involving them in the overcoming challenges that the company faces will serve to deepen their commitment and creates the foundation for long-term success. When leaders can instill a sense of confidence and accomplishment in employees during difficult times, it helps to break the downward spiral that is often fuelled by inaccurate media reports.

Engaged employees lead to better performance, which leads to increase commitment to the organization and sets in motion an upward-spiraling growth cycle.

While stemming the flow is definitely a matter of priority, the real focus should be on the ones that are staying put. They are ones who are giving the organization a second chance, the ones who believe that whatever is happening is a short-term problem and that the company will emerge better and stronger from the crisis.

Vishal and his team have their task cut out and I am sure Infosys will once again emerge as a much admired company – minor hiccups like automated emails aside.

Interesting times lie ahead.

References and acknowledgements:

Image courtesy of FreeDigitalPhotos.net

  1. Engagement special: Veronica Hope-Hailey on defining engagement, HRMagazine, 09 Apr, 2013
  2. Introducing Open Salaries at Buffer: Our transparent formula and All Individual Salaries, Joel Gascoigne, December 19, 2013, Bufferopen
  3. Vishal Sikka reaches out to exiting Infosys employees, Shilpa Phadnis, Times of India, Sep 11, 2014
  4. Vishal Sikka shortlists 70 ideas from crowdsourcing initiative, The Economic Times, Sep 11, 2014
  5. Infosys is like my middle child, says NR Narayana Murthy, Dibeyendu Ganguly, The Economic Times, Sep 5, 2014
  6. Infosys riding on Vishal Sikka’s anticipated turnaround strategy: P Phani Sekhar, The Economic Times, Sep 4, 2014-09-13
  7. Vishal Sikka inherits an Infosys with strong cultural setup: KV Kamath, Ashish K. Mishra, Leslie D’Monte, liveMint, Sep 3, 2014
  8. Infosys to unveil growth plan by mid-October: Vishal Sikka, The Economic Times, Sep 2, 2014
  9. Vishal Sikka’s 5-point strategy a hit at Infosys, Varun Sood & Jochelle Mendonca, The Economic Times, Aug 18, 2014
  10. Attrition-wary Vishal Sikka promotes 5000 Infosys employees, Moneycontrol.com, 08 Aug 2014
  11.  Confident of Infosys’s future: Vishal Sikka, Anirban Sen, liveMint, 31 Jul, 2014
  12. Infosys attrition at all-time high, The Hindu, 15 April, 2014
  13. Is employee attrition the biggest challenge for Infosys? Shishir Asthana, March 13, 2014, Business Standard