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.

 

That elusive employee engagement

I just completed a very unscientific poll regarding whether people would be in another job or have another job title at this time next year. While the survey group was biased and the questions were simple, the end result of over 2,500 respondents is about 50% felt they would be in another job or have a new title.

Setting aside the veracity of the survey, many employees are eager to do something different. This is one sign the economy is percolating better, but it also sign that employee engagement continues to be largely elusive. Employees have become free agents since the turn of the century and employers have only one group to blame for it – the employers themselves. Employee engagement is lacking because employers killed it.  

As a retired manager, employee and consultant, I have witnessed countless layoffs, downsizings, rightsizings, reductions in force, offshoring, etc. I have also witnessed countless communications of how we have to keep the salary increase budget down because of a recession, downturn, not a full recovery, or because we need to simply watch expenses. With the recession, I have seen the elimination or curtailment of broad-based benefits and perquisites, on-job training, travel budgets, party budgets, office kitchen budgets, etc. that are like an ice-pick chipping away at a sculpture.

The end result is employees do not feel valued. Employers say employees are our most important asset, then the employees see examples of the above and they realize these are merely words. They witness long time employees unceremoniously walked out the door after a downsizing. They see such employees denied the ability to say goodbye. They do not learn of others in different offices in large companies who have been similarly treated until they reach out and the others are gone. What happened to Susan or Michael?

So, the fact employees have always been free agents, becomes even more true, and the employees execute on their newly discovered freedom. The result is employers are searching for ways to try to keep people. They did not have to worry about it as much until the last couple of years, but with an improved economy, others are now hiring. Yet, when a company shows by actions it does not care as much as they should for these assets, then the remaining assets are difficult to engage.

Here is a huge tip to employers. Treat your employees like you want to be treated. Improve communication up, down and across your organization seeking and using input on process improvements. Pay them fairly and include incentives that will make a difference to them and the organization. Teach your supervisors how to lead employees. Help the employees further their careers through training and offer internal movement within your company. Recognize these employees value their families and hobbies, so offer flexible schedules and paid time off.

There are other ideas, but one I will close with is how you treat employees when you must make cuts matters a great deal. The others who remain see this. If you treat people like they committed a crime, the people who remain start polishing their resume. The movie “Up in the Air” with George Clooney starring as a consultant for an outsourced firm that helps companies fire people is highly offensive to me that companies would do this. The company does not have the compassion to do this themselves.

Treat people like you want to be treated. Be fair and communicate as appropriate. Then, you can start looking for ways to attract, retain and reward employees.

 

 

If leaders want to help the middle class, let’s start with a raise

Having been a human resources consultant, manager and supervisor for over 33 years, let me state a truism. There is always a reason for employers to want to depress salary increase budgets. The reasons vary over time, but employees have been continuously counseled on their employer’s need for holding down the salary increase budget. So, if we really want to help the middle class in America, we could start by giving people deserved raises. I am not talking about an across the board same percentage raise for everyone, but let’s begin with freeing up a little more of a salary increase budget and leverage those dollars wisely.

Having seen this issue from the three perspectives noted above, it is truly amazing how much more money can be allocated to employees if you go from a 2.0% or 2.5 salary increase budget to a 3%, 3.5% or 4% budget. These extra one-half percentage points will permit further delineation between good and average performers and those who are further beneath their market salary median, which is the goal for most employers’ compensation plans. Middle class Americans have been treading water for several years now and it is long over due to begin to pay them more than we have.

One of the dilemmas for employees in a down market or with a struggling employer, is the employee downsizings are done in concert with the salary increase budget. What do I mean by this? If you have a salary increase budget of 3% of payroll and do not let people go, the supervisors will manage to the 3% giving “less than meets expectations” employees below 3% increases with some poor performers getting 0%. This will enable the better performers or the relatively underpaid good performers to be allotted more than 3%. As a sidebar, one constant challenge with this is everyone believes they are above average, which is quite difficult to be true.

However, if a company decided to downsize letting their lesser performers go – the ones who would get the 0% increases – then with the same 3% budget, the better performers will have to get less as the 0% increase employees have been let go. In essence, the company has moved the pay bar median downward and has to force fit the performance process to meet the budget. Which means the better performers will get less and the average performers will get below 3%. And, when this process is done poorly (as it almost always is), the truly better performers are upset by being told they are only “meets expectations” and by getting a lesser than expected raise.

Throughout the recession, many companies were forced to do this, so salaries became depressed. If you worked for a company in trouble and were a good performer for several years in a row, the dampened raises you received would compound, leaving you further behind. If you were an average performer, these steady Eddie’s were at best treading water or may have lost ground.

So, with the recovered and further growing economy, 2014 has been the start to the mindful retention of key employees. 2015 will likely see a greater need to retain key and average employees. More employees are updating their resumes and are looking for what the market has to offer. Employers would be wise to help the middle class by giving them a raise. I can assure them the cost of turnover in a bubbling economy is greater than those targeted salary increases if you don’t.

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For employees who are testing the waters, two pieces of advice. Don’t leave a job until you have one. And, be prepared to leave (or consider options) if you ask your employer for an increase (either with or without another offer) and the employer says no to your request. If you are not prepared, then you may not want to ask the question. It goes back to every employee believes they are better than average, when that is difficult to be true. However, even solid performers have fallen behind, so your request may be justified. You should be able to make more money if you leave, but the questions are (1) do you want to leave and (2) are the skills you have more intrinsic (related to where you work) or extrinsic (easily transferable to a new employer)? If the former, you need to tread more carefully. Either way, be diplomatic in your request.

 

Monday morning you sure look fine, but Friday I got traveling on my mind

With due credit to Fleetwood Mac, I thought I would borrow a song lyric from Lindsey Buckingham to start off a post of potpourri topics on employment and wages. Here are a few musings from this Old Fart the last day off before your Monday at work that may cause you to think differently come Friday per the song.

Why do people against increasing the minimum wage not earn a minimum wage salary? Over 70% of Americans in a recent polls want to increase the minimum wage and I listen to all the mumbo jumbo about how it will affect jobs, yet none of the speakers are making the minimum wage. There is also data that shows people will turn over less from jobs and productivity will rise. There is a great quote from a CFO in the book “The Rich and the Rest of Us” which notes that companies chase cheap labor. They always have. He notes that if they could get by without employees they would.

Have you ever wondered why companies lay people off later in the fiscal year? It is important to mention this topic next, as companies tend to lay people off when they head into performance review season with a limited budgets. By moving on higher priced people who may not be an A employee anymore and have declined to only a B or C employee, they save money from the salary budget. Plus, by moving on lower performers, they in essence are moving the normal curve of ratings but not the salary budget. What I mean by this is if someone was not performing and deserving a lesser raise, by taking that person out, they are now giving the lesser raise to slightly better performing people.

Have you ever noticed slow but steady may win the race, but usually lose the raise game? This is one of the unfair things in life that does not get talked about enough.The people who tend to get the highest raises are less likely to be the slow and steady workers who show up every day and do a good job, but not a great job. These solid B, B- or C+ employees are the backbone of every organization. They know how to get things done due to a combination of intrinsic and extrinsic experience. Yet, they tend not to blow the doors down, so they do not get rated “Exceeds” are “Far Exceeds” expectations. These latter folks are more marketable and unless opportunity exists internally, they will leave for greener pastures. The best thing the steady Eddies (and Edwinas) can do, is to every once in a while, look for another job for which they would be prepared to leave, and let their employer know it.  Don’t play this card too often, but be sincere and ready to move if needed. Also, be wary, as your employer may have a different sense of your performance than you do.

Have you become aware that it has been the employers who have broken the loyalty contract? Let me close with this observation. We used to work in a world where loyalty to a company mattered. If you worked hard, you may not be able to buy a castle, but you could have a nice roof over your head. Maybe it is just my awareness of this, but beginning around the late 1980s when the information age truly began to heat up, analysts started predicting the profits a company might expect each quarter. My previous post spoke to this, but managing to short-term expectations caused leaders to treat employees more like expenses rather than assets. So, employees would be let go in a heart beat. Now, we are workforce of free agents. My father would have never given me the advice I noted in the previous observation as loyalty mattered and it should matter. Yet, the employers have broken the loyalty contract, so you are in charge of your career now. The employer is not.

So, where does that leave us? My advice is to do the best job you can anywhere you work and make yourself indispensable. Keep a mindset of continual development. But, always keep your resume fresh and listen and look for opportunities to grow yourself or make more money doing what you want to do. Finally, be honest with yourself. Are you good at your job because you know the intrinsic parts of the job (how to get things done in this company) or because you have extrinsic knowledge that will help you in any job? If it is more the former, be careful as you look, as you may be leaving a place where your skills are more valuable.

There is one final caveat to the loyalty equation, which is of most importance. Loyalty is more for your teammates and immediate working group than the company. The companies that are “more than profits” are able to expand this loyalty feeling, yet time and again, people will say after they leave or are asked to leave – “I don’t miss the company, but I miss my colleagues and/ or clients.”  This is an important part of any decision to leave or stay, provided you have that choice.

2014 – the year employers try to keep employees from leaving

I was reading an article on a trade website with a reminder for human resource professionals that 2014 will be the year of retention. With the economy improving, a key indicator is people will begin to move from their current job. The article touched on this, but did not say it as directly as I will now – employee loyalty to an employer has been broken, and the employer need only look in the mirror for the reason. We are now a workforce of free agents.

This has been a trend since the turn of the century, but the recession put the final nails in this coffin. Real wage growth for the average Joes and Josephines has been pretty stagnant for some time, even before the recession. Coupling that with continual downsizing and employees have become dispirited. Especially, when they saw colleagues sometimes walked to the door the same day (or hour) they were let go. And, for those in other offices or locations, you did not hear that Betty or Steve were let go, as the company did not want to send out a widespread information release saying they just let the following 250 people go. So, you found out through the grapevine.

I worked for a company that had about twenty-five reductions in force over a fourteen year period that I was there. Some were small, some were in a different lines of business, but they occurred with agonizing routine. Oftentimes, the cuts were done around salary increase time, so they would not have to give a miniscule raise to someone. The reasons varied. This area is not growing fast enough. This idea did not work out as the leaders who sold it have left and now you must. We bought this company and now we have to find savings in other areas as we promised the old headquarter city we would need not cut too many there. We have a tight budget on salaries, so we need to cut the higher paid people who are on the downward side of their greater success (they would never say this, but this was a key reason).

The downsizings got more pronounced during the recession. Plus, other cutbacks occurred such as 401(k) plan employer matching contributions, greater healthcare plan cost sharing, training budgets and salary freezes. Yet, how these changes are communicated and executed matter a great deal. The companies that are more forthcoming and share information behind the causes benefit from a more understanding workforce. These tend to be companies who value employees more in the first place.

Yet, employees see how others were treated. When they see a pretty darn good employee get walked out the door, they have three reactions. One, they are sorry for the person. Two, they feel the company should not treat the terminated employee like that after twenty years of service. Third, they think that they could be next. Then, they put their resumes together and get their financial house in order. They start networking more, little by little. They have officially begun the disengagement process, whether they end up leaving or not.

Having to make cuts is one thing. But, doing it in the manner it has been done by so many, is poor form.  One of the more depressing movies I have ever seen is “Up in the Air” with George Clooney. In essence, he worked for an outsourced firm who fired people for the company. In other words, the company needing to downsize hired another firm to fire its people. As a HR professional and consultant, this movie offended me. These are human beings for Christ sake.

So, this will be the year of retention. HR will be looked at to solve the puzzle. Why are they leaving and what can we do about it? Well, for starters you can reread the last line of the preceding paragraph. How you treat people matters. And, for the most part, employers have treated their employees with less dignity and respect. The employers have broken the loyalty of their people. Your employees see this and they remember.