That elusive employee engagement

As a former consultant in the compensation, benefits and HR arena, I am often asked about improving that elusive employee engagement, as if there is a formula. I was having a similar conversation this morning with a good friend and compensation person in a major organization. When I started to chuckle, he asked why?

The problem is employers have been after this difficult goal for years, but it has become even more elusive in the last ten years. Why? Because employers killed employee engagement. You cannot treat employees poorly and not shoot straight with them during difficult times, and then say every thing is alright now and we want you to be engaged.

During the most recent economic downturn and even before, employers, cut pay, froze pay, downsized, right sized, off shored, and outsourced all in the name of controlling expenses. It was not unusual for people to be let go and then walked to their desk to collect their things and escorted out the door.

Employers would say we have to hold the salary budget tight as things are tough, going to be tough or it is too soon to adjust pay. Or, one of my least favorite tactics is to let people go before salary increase time and not adjust the median increase forward. In other words, they would cut the bottom performers and force fit the performance metrics down making a “meets expectation” performer a “partially meets” as the distribution of performance is now out of whack.

Yet, it need not be this way. There was a company in Germany where leaders sat down with all employees during the recession. They said times are tough, but we all are going to give a little, so the CEO, EVPs, and all employees, took pay cuts that would be restored in full when times got better. The logic is the company did not want to let anyone go. Everyone pitched in. This is a strong message. You should not be surprised, these employees remain engaged throughout.

Employee engagement is not created by a panacea. Using the Nordstrom model, it would look like inverting the pyramid where customers are at the top and people who serve them are next, with shareholders at the bottom. The thesis is if we treat our customers and those who serve our customers well, the shareholders will make more money.Yet, this is a mission where everything flows from the customer. It also allowed a communication avenue for the best ideas to flow from those closest to the customer.

I have written before about Paul O’Neill who turned around Alcoa in the 1980s. He focused on employee safety first and foremost. Why? It was the only thing he could get management and the union leadership to agree on. As a result, communication improved up, down and across the organization as safety improved. But, with new found empowerment, process and customer service improvement ideas started flowing from those closest to the action.

Engage employees, glean their input, value their opinion and pay them fairly. If companies do that, the employees will also feel they have a stake in the game. If you set this framework in motion, decisions can be made in support of this mission, whether they be compensation, benefits, flex schedules, stock ownership, etc.

One final thought is the commitment has to be more than mere words. O’Neill got management attention when a few weeks into his tenure, an employee was killed in an accident. He gathered his leaders together and said “We killed this man. I want to know in 24 hours, how he died, why he died and what we can do to not letting it happen again.” I don’t know about you, but that is what leadership looks like. I would  be willing to work hard for this leader.

 

Lessons from Sully Sullenberger and Paul O’Neill for GM

I have written before that organizations take on the personality of its leaders. Earlier this week, CEO Mary Barra of General Motors (GM), reported on the findings of an internal audit of why they did not have an earlier recall when problems arose on some cars. Many heard a lot of blame down the ladder, but we did not hear much about culpability at the top. The key question asked, but not answered, is why did people not share their concerns with management that something was amiss? The unstated answer is it is in the culture of the organization, where people at the top did not want to hear of failings or heads would roll. An analyst who covers the car industry noted there was a modus operandi of “don’t mess with the launch of new line.”

I have written before about two leaders, Captain Sully Sullenberger and Paul O’Neill, who was the CEO who turned around Alcoa and later became Secretary of the Treasury under President George W. Bush. They have some good lessons that GM should emulate  going forward. Sullenberger was the right person at the right time as captain of US Airways Flight 1549 that he safely landed in the Hudson River. He not only studied accidents for airlines, he was on task forces to go to crash sites and help ascertain why the planes went down. So, he knew from his research and experience, what he needed to do to safely land in the Hudson.

He also knew what GM failed to remember. He was the leader of the crew, but he understood all to well that each member of the team has a role in the safety of the flight, including the flight tower personnel. His research showed that many accidents occurred because navigators and co-pilots did not feel comfortable offering input to the pilot or tower. A couple of examples might help. A plane crashed in Japan, because the co-pilot had to acquiesce to the pilot due to seniority. In this case, the co-pilot was on record as being correct that the plane was off course, but the pilot’s judgment could not be overturned.

In another, the Brazilian flight crew of a doomed flight did not have confidence to disagree with an American flight tower. They did not feel comfortable in countering the flight tower and the plane crashed. Sullenberger was aware of other examples that had been noted and improved over time. But, what he did every time he had a new flight crew (even one new member), was get them all together to get to know them and encourage them to speak up if they saw something amiss. Anything, even if small. He noted in his book, that what gave him great comfort during these few seconds on Flight 1549, was he could hear everyone doing their job. He got quick advice from the tower, his co-pilot and navigator. He shared his thoughts quickly and made sure everyone knew what was going to transpire. When he concluded that getting nearby Teterboro Airport was not possible, he offered up and concluded, “it looks like we will be in the Hudson” which allowed rescue crews to be alerted.

O’Neill joined Alcoa which was struggling. And, his first public comments were “we are going to make Alcoa the safest company possible.” This was an odd mission to start out with and many analysts were not impressed. One analyst told his investors to sell Alcoa stock, which he later added, was the worst advice he had ever given. O’Neill knew that the only thing he could get management and union leaders to agree on was safety. So, that is where he started. He also knew that for safety to be important, managers had to talk to floor personnel to understand better the problems, so that a plan to fix them could be developed. So, communication got better up and down the line. The empowered employees starting sharing ideas on how to improve not only safety, but process as well. The company performance and stock price took off.

Both Sullenberger and O’Neill knew that they were part of a team. They also knew the best ideas can come from anywhere, but especially from those closest to the action. So, it is not only vital, but imperative, that management create a culture where ideas can be shared. Otherwise, you would be flying in the dark. It should be noted at the same time GM was having these troubles, they missed a huge market opportunity. Why? Because they were not listening.

GM piloted the first electric car called the EV-1 in California in the early 2000’s. They did not sell them or market them, but a cult-like following was growing as people who wanted to make a difference started leasing them by the thousands. Eventually, the EV-1 was killed as the result of an alleged collusive effort chronicled in the documentary “Who Killed the Electric Car?” which can be accessed by the link below.* The drivers wanted to buy the cars, but GM collected them and shred them. They wanted no evidence. The Board of Directors of GM asked why the EV-1 pilot was being shelved at the same time they were building Hummers, and management said this is the direction America car buyers want. Hummers are no longer made as they were gas guzzlers.

Here in 2014, GM could have been the predominant player in the electric car market, which will grow as more power stations and better batteries become available. Yet, they chose a short-lived strategy, made other bad decisions and had to be bailed out and only now are seeing the failure of not having an open culture to communication. The lesson that was not said by Barra is we did not have an environment where people could offer input and we would listen to them. She needs to talk to Sully Sullenberger and Paul O’Neill and set a more open path for the future. It is not ironic, that both are known for safety.

* http://www.whokilledtheelectriccar.com/

 

 

 

 

The Power of Habit

I recently completed a book by Charles Duhigg called “The Power of Habit – Why We Do What We Do in LIfe and Business.” I have referenced a few of the themes in an earlier post called “Who is Paul O’Neill  and why should his opinion matter?” on March 20. My niece thought I might like this and she was correct. I would encourage you to read it as well, as it articulates how much of what we do each day is based more on habit that is ingrained in each of us or in our organizations.

My friend Hugh Curtler (www.hughcurtler.wordpress.com) noted a few weeks ago that Aristotle felt habits reigned supreme. In his “Nicomachean Ethics,” as referenced in Duhiggs’ book, Aristotle said:

“…just as a piece of land has to be prepared beforehand to nourish the seed, so the mind of the pupil has to be prepared in its habits if it is to enjoy and dislike the right things.”

A few examples from “The Power of Habit” might help reveal further Aristotle’s belief. The earlier post on Paul O’Neill is a great example. In short, he came in and transformed Alcoa as its CEO in a very unheard of way. It unnerved so many financial experts, they told people to sell the stock once the heard O’Neill’s first speech. One analyst later said “it was the worst piece of advice I have ever given,” as under O’Neill, Alcoa’s earnings and stock price soared for many years. What did he do that was so unusual and successful? His first focus was to make Alcoa the safest company it could be, as its safety record was atrocious. In other words, he wanted to change Alcoa’s bad safety habits.

He consciously picked this as he explained later, as it was the one thing we could get management and labor to agree on – a safer workplace. So, what happened? Communication between the line workers and management improved as accidents and how to prevent them had to be reported within 24 hours. He showed by example, after a tragic death, that this mattered to him and was not window-dressing. He changed the habits of executives, managers and line workers by insisting that we cannot condone safety problems and must avoid them at all costs. Through the improved communication, other benefits occurred – processes had to be improved to make them safer, the workers were empowered to share ideas on how to improve processes, and management’s goals could be communicated more readily. By emphasizing the importance of safety habits, the company got better. And, so did results.

Another good example about habits is regarding Starbucks. There is a moving story about how a young man had fallen into bad and even criminal habits. HIs drug problem caused him to lose everything time and time again. Then, someone suggested he try to get a job at Starbucks. Someone gave him a chance and mentored him. But, it was really the Starbucks training that transformed him. The training told him how to serve customers well. It told him how to address situations with an irate customer. It taught him the need to be organized, as if you were not, the customer would be ill-served. This consistent training replaced his bad habits with new habits. He built on his success by first building his self-esteem through better habit. And, it spilled over into his personal life. Now, he is managing a Starbucks and improving his education.

There are numerous examples in the book, but one my niece and I both found interesting is about the fabric freshening product called Febreze. Now, you may not know that Febreze was almost pulled from the market as its sales were almost non-existent. It was a flop. Febreze’s inventor had found a way to chemically remove bad odors from fabrics. When it was first marketed, the elimination of bad odors was the pitch. Yet, that pitch only sold to people whose houses were a total wreck and reeked. The average homeowner did not buy it, at least buy enough of it. Before Proctor and Gamble (P&G) pulled it, they did more research of their target buyers.

Through this research, they discovered a habit in housewives (please forgive the gender reference), who after they made their beds with new linens, they purposefully inhaled the crisp, clean laundered smell. In fact, after they did any cleaning, the desire for a clean-smelling house was habitual. P&G realized people did not crave scentlessness, instead they crave a nice clean smell after they’ve spent 30 minutes cleaning. With this focus, a new marketing effort was launched and within two months sales doubled and then took off, spawning dozens of spin-off products. P&G’s Febreze provided the reward of a clean-smelling house to someone who cleaned it, which was the cue for the reward.

I use cue and reward, as these are two of the tenets of understanding and changing habits, whether they be smoking, nail-biting, eating bad snacks, drinking, etc. In short, Duhigg articulates:

1) Identify the routine (what leads to the habit and why, when and how does it occur?)

2) Experiment with rewards (to change a habit, a new reward has to be substituted, but it has to be fulfilling, so experimentation is needed)

3) Isolate the cue (what is truly the cue; what more than any other thing is causing the habit?)

4) Have a plan (this is what am I going to do about it, this is in my control to change and if I write down my plan, I will have a better chance of success).

One example was an office worker and his craving for a mid-afternoon donut, muffin or unhealthy snack. The routine was the person would leave his desk from boredom, being tired, just to get up, etc. and would go to the vending machine for a snack. The reward was the snack. The cue was harder to find, as various paths led to the reward. It turned out the cue was the time. Invariably, between 3 and 3:30 pm, the person would get the unhealthy snack. So, he noted this in a plan to do something differently. He experimented and felt if he purposefully socialized with others for ten minutes instead of getting a snack, the new reward would satisfy him. So, he planned and executed the plan by getting away from his desk at the same tim each day, forming a new habit. Instead of eating, he would talk with colleagues.

There are other habits noted that have been replaced by new rewards.  The key is to find a new reward. If you drink, substituting something that takes the place of the drink will make it a new habit. It could be drinking fruit juices, hot tea, coffee, etc. or it could be taking a walk after dinner, when your old habit of drinking most occurred. The same would hold true with smoking. You have to find a new reward to replace the smoking reward. Otherwise, the old habit will have a better chance of returning.

Let me close how Duhigg did referencing a passage from William James’ book “The Principle of Psychology.” Note William’s brother Henry is an author of some renown.

“All our life, so far as it has definite form, is but a mass of habits – practical, emotional, and intellectual – systematically organized for our weal or woe, and is bearing us irresistibly toward our destiny, whatever the latter may be.”

Habits can be good or bad. If they are the latter and you want to change, the above steps are worth considering. The book is a good read, with many understandable examples. I highly recommend it. Let me know what you think.