How Organizational Capital Boosts Financial Performance

Companies have significantly better financial performance when they create a culture of consultative and challenging leadership, skill development, and collaboration. These factors also support bottom-up innovation, and positive and inclusive work environments, that McKinsey referred to as building “Organizational Capital.”

Sustained Excellence

McKinsey’s Global Institute looked at the impact of investing in human capital and skill development on company performance. Looking at 1,800 large companies across 15 sectors they assessed how much these companies focused on human capital and whether they financially outperformed their sector peer.
It turns out there is a significant impact.  The study identified what McKinsey calls People + Performance Winners. These companies excel at creating opportunities for employees to build skills, which they measured by looking at internal mobility, training hours, and organizational health scores. They also consistently clear the highest bar for financial performance. P + P Winners achieve more consistent results and have greater earnings resilience, along with the ability to attract and retain talent.
McKinsey asked, ‘How did they succeed on both fronts?’ The additional key element for these companies is what McKinsey calls Organizational Capital – their management practices, systems, and culture. It’s not enough to simply hire and train the great talent, it’s essential to create the environment where they can thrive. Think of it as the car that surrounds a driver. Even the best drivers are able to perform at higher levels when they have the best steering, braking, engines, and safety features in their cars.
As McKinsey noted in their report, “P+P Winners have a distinctive signature characterized by consultative and challenging leadership styles; bottom-up innovation and collaboration; positive and inclusive work environments; and rewards and advancement opportunities for employees.”
This research is important for all HR professionals and leaders who care about performance. It reinforces the view that we at NextBridge have always held:  People and company performance are a “both/and”conversation. Investing in one while not investing in the other will move the needle on some indicators of company success, but it won’t create sustained, consistent success in a variety of economic environments. Those companies that have the highest success are those that excel at balancing their investments and building organizations that thrive.

 

4 Must-Do Items on Every Leader’s January Checklist

We’re starting another year. Like any other, it will be filled with opportunities and challenges, achievements and disappointments, zigs and zags. During these first couple weeks of the year, position yourself and your team for success in the months to come. Here are 4 actions that will help you start the year personally centered, organizationally aligned, and ready to go.
How can you and your team get off on the right foot in 2023?
Reconnect to your North Star.  What is your big “why?” Why do you do the work you do? How is it helping you live your values? How does your work advance your personal and career goals? Your business goals? What needs to change to move you further along this year?
  • There are hundreds of tools online to help you do this.  Here’s one.

 

  • If you’re already sure of your North Star, here’s a quick tool for moving you forward: with your north star in mind, create a “Start-Stop-Continue/ Improve” list. Focus on specific behaviors like “start spending 5 minutes preparing for every meeting/discussion by writing down how it aligns with my purpose and my goals and the top three things I want to accomplish.” Or “stop complaining in front of my team and focus on solutions.”

 

  • No matter what you do, write your thoughts down and put an alert in your calendar to check in with them on at least a quarterly basis. As this year ramps up we will be distracted by fire drills, urgent requests, and changes in plans. Aligning to your North Star will allow you to focus more fully on adding value and saying no to non-value-add activities.
Clarify goals.  For many of you, December and January are about setting annual goals for yourself and your team. Make sure you and your team are clearly aligned. Engage your team members in individual conversations about how frequently they want to check in on goal progression and the best way you can support them. Also, decide how you will reprioritize when inevitable change comes along. Even if you did this as recently as December, a quick check-in is important. People lose focus over the holidays, things change quickly and clarifying expectations at the beginning of the year leads to better alignment and happier team members.
Assess your personal routines.  Research shows that having routines can allow us to be more creative.  By creating routines around repetitive leadership tasks, we are able to direct our free cognitive resources to learning and creativity.  What are your current routines? What else could you routinize? For example, set up ‘do not disturb’ on your messaging while you’re doing concentrated work.  That way, responding to messages becomes routinized, and you’re able to respond at a time when you can focus more fully on the messages. Another way to improve your leadership is to consider your daily habits… what do you do almost without thinking or planning? What should you start/stop/continue?  Here’s a great list shared by 21 executives.
Do a mental health check.  How are you feeling as you start the year? Take an honest look at your emotional and mental health. Many of us are energized and ready to go. Many others are still feeling overwhelmed, burnt out, and daunted by what lies ahead of us. Commit time each day to taking care of yourself. Go for a walk. Connect with friends. Read. Do something that feeds your energy. Your company likely has confidential resources that you can access to help you understand and improve your health.
Being intentional around these four areas, you’ll position yourself for a great start to 2023.
What else do you do to start your new year with intention?

Does Your Business Discourage Dissent?

Diversity of experience and ideas, like other types of diversity, are critical to the success of your business. Even with a deep connection to your mission and strong leadership, an insular approach to strategy and decision-making can leave you vulnerable. It can hinder your ability to see early warning signals in the market or changes in customer profiles, and it becomes too easy to believe that past success will almost guarantee future success.
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In her recently published article from Harvard Business Review, Edith Onderick-Harvey provides some practical insights into how to ensure your organization stays resilient. The article was written for the family business audience, but the challenges and solutions are applicable to virtually all organizations.
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By Edith Onderick-Harvey

What’s Going On With You? A Little Introspection Can Improve Personal Performance

Recently, I’ve been talking with leaders, including mid-level leaders, about the challenges they are facing with staff shortages, continued ambiguity from COVID, and end of year pressures. In these conversations, the underlying theme is the toll these issues are taking on their emotions and their continual effort to push those emotions away or to simply plow through them.

The context for these conversations is a broader discussion about leading with emotional agility. Susan David and Christina Congleton, in their Harvard Business Review article, define emotional agility as the ability to manage one’s thoughts and feelings in a mindful, productive way. When most of us get hooked by our negative thoughts, especially at work, we have one of two reactions. We buy into them (“I always do something stupid that gets in the way of my success.”) and avoid the situations that may evoke them. Or, we rationalize them away (“I shouldn’t have these thoughts. Just get on with it.”)

When we get hooked and choose one of these two common reactions, we are not giving ourselves the opportunity to respond effectively and intentionally. To choose to respond rather than react, the first step you must take is to recognize what is going on with you.

When I talk with these leaders, I ask them how many times a day they check in with themselves to assess what they are feeling. The overwhelming response is never. Some will say rarely. A very small fraction will say regularly. Then we do the following exercise:

First, we pause the conversation right there and I give them 30 seconds to just stop and check in with themselves.

Before the pause, I encourage them to work hard to accurately name what they are feeling. Don’t just tell themselves they are feeling stressed. Rather become more granular in the assessment. Are you angry? Frustrated? Overwhelmed? Constrained? To respond, rather than react, the first step is to accurately identify and understand what you are feeling. You can’t create an effective response or strategy if you are unable to clearly define what you are responding to.

At the end of 30 seconds, I ask them about their experience. They often say it makes them feel more centered, have more clarity, and are better able to manage those emotions than have the emotions manage them. It provides them the space to choose a response.

We then discuss how pausing 1-2 times a day – taking 1 minute out of an 8, 10 or 12 hour workday– can significantly impact the ability to become more emotionally agile and the impact of that agility on their ability to lead in challenging times.

Over the next few weeks, take a moment or two throughout the day to check in with yourself. What are you feeling? How are you reacting to those emotions? What opportunities do you have to pause to make the choice of how you will respond?

These are stressful times. You’ll find that this technique also works quite well at home.

Has Your Team’s Leadership Been Tested in 2021?

The Hard Truth: It’s Not Going to Get Easier.   Here Are the Trends and What You Can Do…

Adapting to rapidly changing market, technology and client-demand trends will consume organizations in 2022.  Which means that the risk of change burnout for employees and leaders alike is soaring.  Leaders at all levels will need to improve their change leadership capability quickly and continually.

Consider the following trends:

  • Hybrid work models are here to stay and will continue to evolve. 63% of high-growth companies already have enabled hybrid work models.  While 69% of negative or no-growth companies are focused on complete on-site or all-remote models.  McKinsey
  • Hybrid models will fail for 30% of businesses on their first try.  Why?  According to Forrester, shifting to a permanent hybrid model won’t be easy.  There are significant, competing demands between face-to-face and remote work along a myriad of dimensions: including roles, processes, and promotion opportunities.
  • The “great attrition” will continue.  64% of workers said they are at least somewhat likely to leave their job in the next 3-6 months, according to PwC.

What talent development strategies are most organizations focused on?

  • Skill building is the number one action taken by businesses to close pandemic-era skill gaps – for 69% of businesses.  That’s 13 points higher than redeploying, 17 points higher than hiring and 33 points higher than contracting.  McKinsey.
  • Social, emotional, and advanced cognitive skills are the most focused-on development targets.  What’s #1? Leadership and managing others.  McKinsey.
  • Top two priorities for 2022 according to 550 HR Leaders surveyed by Gartner?  #1 is Building critical skills and #2 is organizational design / change management.
  • Start with strategy.  How will your organization respond to both the business and talent changes coming your way? Link team objectives and people development to your strategy. Be sure to set expectations that priorities will shift over the course of 2022.
  • Increase engagement.  Seems like you’ve heard this before? It gets more important in 2022. To ensure your hybrid model works, make sure you have a thorough DEI plan.  Get a balance of both office and remote voices when you consider policy, plans, and assignments. Align your reward and recognition strategy with your DEI objectives.
  • Don’t fall behind. This is not the year to be playing catch up.  Your 2022 organizational strategy and planning must account for the massive market and talent changes taking place. Uncover what’s worked over the last 18 months, what hasn’t worked, and build some projections about how things will be different in 2022. And that includes assessing the leadership skills necessary to implement and continually adapt your hybrid model.

To continue to be successful, organizations will need to do some or all of the following:

  • restructure jobs
  • figure out how to organize work processes differently
  • rethink how your teams need to work together
  • build trust and rapport with your employees
  • work hard to maintain or recreate a better business culture
  • address the change burnout problem we’re all facing
  • develop new leadership mindsets and skills

Could You Use a Partner to Help Boost Your Team’s Leadership Capability and Business Culture? 

We’ve been working with our clients for over 20 years to help solve these kinds of challenges. As your leadership team develops your 2022 plans, we’re here to partner with you.

In recent months we’ve seen an uptick in inquiries into how we can help leaders and their organizations work, lead, and organize differently. Our clients have been benefitting from our newest suite of programs and consulting services, Solving the Hybrid Puzzle.

Or contact us for more information. 978-475-8424 info@nextbridgeconsulting.com

 

When Your Team Needs to Redefine Itself

Most organizations are either operating in a permanent hybrid model or they’re planning to go there early in 2022. That means redefining who you are as an organization and as a team. How will you do that successfully?

Lots of Questions

How’s your team adjusting to hybrid work or planning for a hybrid future? This next-new-normal way of working will be most successful if you start the transition by deeply reflecting on who you are now and, often, redefining who you will be 

 –as an individual and a team. What goals are a priority? How will you prepare for the inevitable shift in priorities? How will people really work together? How will you navigate and build our relationships? Even in ‘normal’ years, these questions take center stage during the business planning cycles many of you are immersed in right now.

Recently, I had the pleasure of working with two executive teams. Their businesses are very different. One is over 20 years old with almost 4000 employees. The second is a start-up driving towards commercializing its first product. While different, both of them were exploring a common question…

Who are we today and who do we want to be?

In both cases we started with who the team wanted to be so we could frame that sometimes more difficult conversation – who are we now?

Answering this question requires that these executives become aware of and more comfortable with the answers to several other, deeper questions about themselves and the team:

  • Do we fully understand who each of us is?  Do we understand how each of us filters information, makes decisions, and communicates?
  • Are we aligned around a common vision of where this company or department is going? And how are we, as a team, are leading it? This may seem obvious, but misalignment amongst leadership is a common cause of organizational dysfunction and average performance.
  • Are we role-modelling the characteristics we want this organization to exhibit?
  • How are we pushing each other to step out of our comfort zones in a productive and effective way? Innovation doesn’t happen when everyone is comfortable.
  • How do we provide impactful feedback to each other so that we increase the team’s effectiveness rather than diminishing it?
  • What about when the inevitable happens – when we’re sometimes annoying each other? Are we avoiding certain people? Aggressively confronting them? How well is it working? Is there a another option that gets better results.
Why so many questions? Because good answers require good questions… and these are all stones that need to be turned over.  In today’s environment, personal and organizational curiosity is a prerequisite for leadership and business growth. And if you’re not digging deeply enough, you’re limiting the depth and speed of your growth.
Want some guidance on asking the right questions and ensuring you get meaningful answers? We’ve been helping individual leaders, teams and organizations do just that for over 20 years.  Let’s talk.  978-475-8424 or e.onderick-harvey@NextBridgeConsulting.com

 

5 Powerful Tools for Quick Situation Analysis

Today’s leaders need to rapidly understand evolving situations. How can analytical tools help you make these assessments? By providing a structure to help you brainstorm and organize your thoughts in a relatively timely manner… which in turn provides the building blocks for better decision-making. While many of these tools are meant to provide in-depth assessments, they can also be used for more abbreviated uses, including “back of the envelope” type analysis when speed is important. Here are five tools that can be used to help you analyze a variety of situations.

Analytical tools are a staple of business. They are available to assist with everything from strategic planning to problem solving to communications planning. You can use these tools by yourself, as a team, or at an organizational level. They range from conceptual frameworks to highly structured models that include formal step by step processes. Here are five tools that give you a wide range of options:

1. People-Process-Technology/Tools (PPT): This is my personal favorite because of the simplicity and flexibility it offers. Originally, this framework was used to understand and maintain balance between those three dynamics in business situations, particularly with process design and reorganization… and typically related to technology impact. However, it also can be used quickly to frame up any number of things; for yourself, or when brainstorming with teams.

I add Financial to this to make it more robust. Hundreds of times, I’ve used this construct as a “white board” exercise. I’ve used it to understand the implications of a new client satisfaction initiative for my own teams, to prepare a recommendation about adopting a new technology, and with clients to help them work through potential organizational changes. It’s amazing what you can uncover with this exercise… including downstream impacts, important ancillary issues, and traps to avoid. And yes, I have literally done this on the back of an envelope in “emergency” situations, where I had less than 10 minutes to prepare. I wrote the situation (or question) at the top of the page or envelope, drew 4 swim lanes with category headings and jotted down some quick details. I went into the meeting better prepared and mentally more organized.

There have been numerous updated versions of this construct over the years. Here is some additional information on the original People Process Technology.

2. MOST: stands for Mission, Objectives, Strategy, Tactics. A lot of leaders have a hard time understanding (or, at least, explaining) how lofty mission statements become specific processes, actions steps or behaviors on the part of their team members. This powerful alignment tool helps you analyze how mission translates into action. It’s effective for both leadership teams and work groups alike. MOST helps refocus teams or business areas on organizational goals and better alignment from one level to the next. Again, while it’s an effective in-depth tool, it can be used to do a “quick study” of a situation. Here’s more on MOST.

3. STEEPLE: is primarily used as an external environmental scanning construct. The acronym stands for Social, Technological, Economic, Environmental, Political, Legal, Ethical. It helps you look, as an organization, at all these factors in a structured way to better understand the external forces impacting your organization. For example, what are the trends around emerging technologies that could force major changes in your business, like your own early adoption, service delivery models, or pricing implications? For more on STEEPLE.

4. The 5C Analysis model is used for marketing purposes. It helps you analyze both internal and external factors impacting your marketing decisions. 5C stands for Customers, Competitors, Company, Collaborators, Climate. This is usually meant for in-depth assessment and strategic planning. Each one of these factors has you focus on multiple sub-factors. For example, Customers looks at: market segments, customer requirements and demands, market size and growth, retail channel and information sources, buying process, consumer trends, etc. I haven’t used this approach, but I know that it can be highly effective for those taking a deep dive. For more on 5C Analysis.

5. McKinsey 7S Framework: This is the ultimate organizational alignment tool. It guides you through a process that to understand where seven key internal elements are in sync and where they’re not. This framework was originally developed by Tom Peters and Robert Waterman, who once worked for McKinsey. Terminology commonly used to discuss organizational dynamics has changed since then, but the basic construct is still very effective. It has been used for performance improvement, to aid strategy implementation, and for organizational change initiatives. The model is broken down into three Hard elements; Strategy, Structure, Systems, and Soft elements: Shared Values, Skills, Style and Staff. There’s a great Mind Tools article on how to use this model that includes worksheets.

I didn’t include tools like SWOT Analysis and Stakeholder Analysis because they’re very well-known and you’ve probably used one or both of them at some point in your careers. I also didn’t cover things like mind-mapping for similar reasons. However, the links above provide good explanations and tools.

For each of these analytical constructs, you can literally find dozens of sites that provide good content and supplementary tools for each of them. And there are many more analysis constructs to explore. Some people blend concepts or steps from one construct into another for a tool that better fits their unique business needs or analytical styles. Whether you use them to do in-depth assessment at an organizational level, a 10-minute “emergency” exercise, or anything in-between, you’ll develop a more thorough analysis of the situation at hand. And that typically leads to better decision-making.

11 Decisions To Make About Your Hybrid Team

What does it mean to return to work? For a lot of people, it means their organization is implementing a hybrid model. My question is — what does that mean? I’m sure you’re grappling with this question, too.


At one level, it’s about flexibility. Organizations are allowing more flexibility about who needs to be in the office, and when. On another level, it’s cost – financial, psychological, emotional. The hybrid solution is not one-size-fits-all. An organization I partner with is implementing a hybrid model that means everyone is in the office Tuesday through Thursday with flexibility on Monday and Friday. Others are viewing it as some people come back to the office full-time and others stay remote full-time. For others, the model will vary by work function. I could fill the better part of this blog with the various options that will be implemented.

No matter the option, the question leaders and their teams should be asking on a deeper level is what does this really mean for us? For how we operate? For how we build our team?

As you and your team move into the next new-way-of-working, here are some decisions you need to make:

11 Key Decisions About Hybrid Teams

  1. How will we fulfill our vision or purpose working this way?
  2. What does success look like for us in our hybrid model?
  3. How do we ensure we don’t slip back into patterns that no longer serve us?
  4. How will we apply the lessons learned from how we worked during the pandemic?
  5. How will we communicate to our customers – internal or external – about our work arrangements?
  6. How will we ensure strong collaboration across boundaries and silos?
  7. Will we need to be more intentional about how we build or maintain our culture?
  8. How will we measure performance?  Does our current approach to measuring performance give an advantage to people who are in the office? What if it was built for a completely onsite workforce?
  9. How will we ensure career growth?  How will we create visibility for those who are remote?
  10. How will you onboard remote team members?  Will it look different from team members who are in the office?  How do you make it feel highly engaging for both?
  11. How will we increase our diversity, equity and inclusion in our version of the hybrid model?
It’s a lot to think about.  How many of these decisions have you already made?
We partner with leaders who know they need to change how their teams or organizations operate and need help making it happen more quickly. Working with teams at inflection points is one of the things we do best.

When is Bad News Better than Good News?

When is bad news better than good news?

When you put off communicating important information to your organization until you have something “good” to say to them.

There’s an old saying that “no news is good news.” That may still apply to some things in life, but it’s decidedly untrue when it comes to communicating important information to your organization.

When people don’t have any or enough information about what’s important to them, what happens? One typical result is that they get anxious. And anxious team members are more distracted and less productive. In fact, in a recent business survey reported by McKinsey, “Employees who felt included in detailed communications about what’s decided and what’s still uncertain were nearly five times more likely to report increased productivity.”

Employees (and leaders) who don’t have enough information will also begin to develop their own ideas about what’s going on. They suppose something is true without having evidence to confirm it.  And then you’re playing defense against a difficult foe with multiple tentacles: the rumor mill.

Decades of leadership research and best practice application support the “over-communication” of information to employees when an organization is facing change, particularly during the most trying of times. That means direct, open communication on the status of what’s important to employees on a regular basis through multiple channels from all levels of management.

Some leaders have a difficult time dealing with uncertainty themselves and assume others will too. For them it’s tempting to “wait until we get it all figured out before we let people know what direction we’re going in.” What these leaders often fail to realize is that it’s a lot easier as a more senior leader to deal with uncertainty when you have much more real-time information available to you; and this is especially true if you have some control over the decisions and direction the organization is heading in.

It’s better to be frank with your teams about what the challenges are, what decisions have been made and what is still pending. Explain the competing variables the organization faces and trust them understand the complexity. It allows people to process information along the way. That makes the eventual decisions that are made easier for people to accept and adjust to because they will have felt involved along the way.

The competition for talent is never over and the best talent wants to feel that their leaders are making them part of the dialogue about what’s important. It’s up to leadership at all levels to share the news… good, bad, or incomplete.

3 Ways to Improve Your Strategic Thinking

You may have heard the story of the truck that was immovably stuck under a bridge and how the solution came from an unlikely source. If you don’t know it, I’ll share it at the end of this newsletter.

I was thinking about this story when recalling a professional meeting where the topic was developing a global mindset. One of the speakers was talking about their company’s research showing that experiencing another culture has a significant impact on one’s strategic thinking. “Experiencing” didn’t mean going there on a vacation. It was an immersive, longer-term experience, like ex pat assignments or managing a global team where you had to travel to work within their culture somewhat regularly.

The speaker noted that these assignments have this profound impact because they challenge your perceptions and perspectives of the world. These different perspectives allow you to be more nuanced in your thinking about how different parts of a whole interact, the variables that impact it, and the resulting implications. Your competitors are increasingly global, not just national or local. Therefore, such experiences help you to think more like (and outthink) your competitors, to anticipate trends, and to consider solutions and strategies from a broader array of possibilities.

How, then, can you stretch your perspectives to help develop your strategic thinking when working globally isn’t a possibility (or, at least, not yet)?

  • Regularly interact with people in a different function or area of the company. Marketers and engineers don’t think alike. Operations people think differently than researchers. See how someone different from you may experience the same issues or the organization itself.
  • Interact with those outside your industry.  For years, benchmarking was the buzzword when you wanted to get a more strategic perspective and to gain some competitive advantage. Benchmarking is often practiced with a closed-system approach. Life science companies benchmark other life science companies. Tech firms benchmark other tech firms. That’s important, but it’s also somewhat limiting, especially in a world where industries and disciplines are bleeding together like never before. The perspective of someone in a different industry about your issue or situation will cause you to think about the variables and interactions more broadly, more strategically. One of the things that made Steve Jobs so successful at product design was that he included perspectives he gained from things as diverse as digital animation, calligraphy and architecture.

When we hire people who are mostly like ourselves we multiply our strengths… but also our weaknesses and blind spots.

  • Hire people who are different from you. We’re all familiar with research which shows that diverse organizations are generally more successful. In addition to the typical diversity categories we’re used to thinking about (gender, race, age, etc.) we should look for diversity of thought, experience, and education, among many other factors. When we hire people who are mostly like ourselves, we multiply our strengths… but also our weaknesses and blind spots. Make sure to regularly ask those you’ve hired for their perspective and input on the business issues you are working to address.

Thinking about your daily business interactions expansively will help you develop the broader perspective needed for strategic thinking.

So, the story of the truck goes like this. The top of the truck was wedged against the underside of a bridge, and it could go neither forward nor backward. It just wouldn’t budge. Traffic was backed up and police and tow trucks were trying to figure out how to get it out. A little boy walked up and asked what was going on.  The police officer explained the dilemma. The little boy looked at him and said, “let the air out of the tires.”