THE HAPPINESS PAYOFF

higher profits

While traveling a few weeks ago, the USA Today appeared under my door. It’s Money section cover story was Do Happy Workers Mean Higher Profits? Looking at stock prices and earnings, the evidence suggests the answer is sort of, YES. You see the real payoff is not just how happy people are, it’s how engaged they are.

As we have often heard, engaged employees tend to do a better job, work harder, put in extra hours and stay longer. When you dig a little deeper, the article cites some real evidence to support this:

 

      • Companies on Fortune’s list of 100 Best Companies to Work for tend to have significantly lower turnover. In the IT industry, which is known for frequent job moves, companies on the list have a 5.9% turnover vs. a 14.4% rate industrywide. In professional services, it’s 11.3% vs. 24.7%.
      • In the past year, many of the publicly traded companies on Fortune’s list beat the S&P 500 by a mile. While the S&P was up 13%, Whole Foods rose 31%, Marriott gained 28% and AmEx was up 22%.
      • While benefits and financial perks definitely have an impact on happiness and engagement, according to Julie Gebauer of Towers Watson, it’s those things without significant cost that really make a difference, “What makes the biggest impact are things that don’t have significant costs. How expensive is it for a senior leader to give an employee a pat on the back, or give someone the opportunity to work from home for a day or two?” (I’ve spoken many times about the impact meaning, autonomy, competence and the ability to make progress at work all have sustained engagement)

So, what do you think. How do happy employees impact your bottom line?

 

It’s the Little Things…

Great Performers offer Solutions

It’s the little things….

Earlier this week I was suffering from a case of mild laryngitis. By yesterday, my voice was about 50% of the way back. At a restaurant last night, the waiter took our order and when I asked for water he heard the quality (or lack of quality) of my voice. He asked if, in addition to my cold water, he could bring me some warm water for my throat. I said yes and was impressed.

In that same situation, some other waiters would have noticed my voice and asked if I had a cold or somewhere in the conversation would have wished me better health soon. What impressed me about this waiter was that he offered a solution to my problem. That’s what great performers do. When they see a problem or an area for improvement they don’t just recognize it, they take action to address it. Often, when I work with middle managers, they’ll talk about how ineffective their leadership is at communicating a vision or managing change or understanding what the sales team is really facing in the marketplace. My first question is usually, “Have you talked with them about it? Have you asked for more information or clarity? Have you suggested a better way?” Occasionally, an individual will say yes, but most say no and give a myriad of reasons why they haven’t or can’t.

Early in my career, during my first conversation with the partner who had just arrived to take over leadership of the project, I was one of those managers, pointing out all the issues and obstacles others were creating. She cut me off and said, ‘So, there are issues. Let’s talk about what you and I can do about them and move forward. And, I want you to tell me if I ever become one of those obstacles” For that and many other reasons, she was one of the best leaders I ever worked for.

About Edith Onderick-Harvey

Edith Onderick-Harvey is a highly regarded consultant, leadership and talent expert, and speaker. Edith is frequently quoted in the media including The New York Times, CNN.com, HR Executive, and American Executive. As the President of Factor In Talent, Edith works with leaders to take performance — their own, their team’s and their organization’s — to the next level.

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What is High Potential?

I am often asked to take a look at company’s talent review processes. The talent review process usually involves plotting talent in the 9-box matrix on the basis of performance and potential. Invariably, potential is described as “ability to move up 2 levels within the next 3-5 years.” My question is what do you base that assessment on? Usually it has to do with how well the individual is doing in his current job and his track record. Or it may be based on something similar to the definition of obscenity “I just know it when I see it.” Too often this causes high potential identification to be a bit of a beauty contest. Various ideas of what creates high potential go into the decisions when in reality these characteristics may have little to do with the ability for someone to grow rapidly in the organization.

I believe there are five key characteristics that differentiate high potential talent from other talent.

The individual wants to be a senior leader: There is always at least one person on a company’s high potential list who has no desire to move to ever higher levels in the organization. He may be very talented and meet the rest of the criteria I have listed here but if the desire for increased leadership responsibility is not there, he is not a high potential.

Adaptability: high potential talent is able to quickly adapt and adjust to changing circumstances. When a high potential is placed in a new situation, she is able to quickly assess the situation, learn what is critical to success in that situation and adjusts to it.

Continual learning: high potentials are always learning. He continually wants to grow and expand his understanding of where the industry may be going, how the business environment is changing, different approaches, different perspectives, and different components of the business. The high potential then integrates this understanding into how he gets results.

Impact on others. Being a senior leader means getting things done through others and leading others who often have more expertise than you. This requires the capacity to create a compelling vision and strategy that engages and motivates others to go on that journey with you.

Performance: This is usually the first characteristic people list as what differentiates high potentials. Usually, a high potential is a consistently high performer. Her performance is distinctly different from others. That said, high potential talent is at times in the wrong job. Yes, it’s true, even high potentials are not successful at everything. You may have a high potential that performs poorly in a role because of a mismatch. It is important to look at that situation and determine if it’s an anomaly or a new pattern.

Look at the high potentials in your organization that have been successful as they’ve moved up in the organization. See if these characteristics are what made the difference in their trajectory and how others moved in the organization.

Expectation Busters

What kind of expectations do you set for your team? Most people I speak with believe they set clear, concise goals that help their people focus on what’s important. For some people, that is probably true. For others, setting expectations does not seem to be working as well.

Setting expectations is about more than just setting goals or objectives at a point in time. Expectations are set and reinforced every day by your actions and reactions to situations that arrive. When that reinforcement doesn’t happen, you have what I often call expectations-busters. Have you ever experienced one of the following expectation-busters?
 

    • Goals are set and within two to three months most of the goals are completely irrelevant or have been re-prioritized to the bottom of the list. Business priorities change. That’s a given. However, if this is a regular occurrence in your organization it sends the message that leadership really isn’t sure where things are going or can’t make up its mind. The result is an attitude of “I don’t really need to put a lot of effort into whatever the stated goals are because they’re just going to change anyways.”
       
    • Once a goal or expectation is set, it’s never discussed again. If I’m given a goal and we never discuss progress against the goal, I will assume it’s not a very important. I’ll assume you are really interested in other things. 
       
    • Objectives are set but rewards and recognition are given for things completely unrelated to achieving them. Remember the adage what gets measured, gets done. Well, when an expectation is set I assume it has some relevance to my performance and, in turn, my salary increase, promotion consideration, and general recognition. Nothing busts expectations like seeing people rewarded for things that have nothing to do with meeting expectations and achieving results.
       
    • There is no differentiation in recognition when expectations are achieved. This is a corollary to rewarding things that are unrelated to achieving goals and objectives. If people who meet expectations and those who exceed expectations and those who do not meet expectations are not recognized and rewarded in distinctly different ways, a high performer will become disengaged quickly and you’ll see overall performance migrate to mediocrity.

Setting expectations is not a onetime event. The relevance of those expectations is established on a regular basis. How you integrate those expectations into your leadership approach will mean the difference between achieving expectations and moving towards excellence and mediocrity.

Innovation=Conflict

All innovation, big and small, involves conflict. Innovation is about coming up with what I call the ‘third solution.’ It’s not my solution or your solution but a third solution that may or may not have elements of our original solutions. The problem is that getting to that third solution can be really, really hard because it involves conflict.

Most people don’t like conflict so they avoid it, sugar coat it, see it as a necessary evil, or quite frankly, just handle it badly. That’s a problem when there are statistics that show 42% of a manager’s time is spent dealing with conflict and
when one of the key characteristics of innovative firms is a culture of robust conversation and debate.

A framework developed by Elias Porter, PhD. is a helpful tool for taking a more effective approach to conflict. The foundation of this approach is that relationships are based on motivation under two conditions. These two conditions are when things are going well and during conflict. The four premises are:

1. Behavior is driven by the motivation to feel worthwhile as a person. The first question we should ask ourselves about why someone else is behaving is ‘what in this situation may seem threatening?” How is what is being proposed threatening to the other person?

2. Motivation changes in conflict. Early in a conflict we focus on ourselves, the problem and the other person. If the conflict isn’t resolved, soon we are only focused on ourselves and the problem. When we’re at loggerheads, it’s only about me. The more quickly we work on resolving a conflict, the less likely we are to lose our focus on others’ needs.

3. When our strengths are overdone, they become weaknesses. Someone may be very flexible and in many situations that can be a strength. If it’s overused in conflict the individual can be seen as wishy-washy or unable to commit to a course of action or solution. Someone whose self-confidence makes them an effective leader can be seen as arrogant when they seem overly confident in conflict. Ask yourself if you are relying too heavily on a strength when you are faced with a conflict and how could it be perceived negatively. What impact is that strength having on achieving the third solution?

4. Our personal filters add color to the situation. We often believe that people are doing things for the same reason we are doing something and when we think it’s different, we assume it has a malicious or negative motivation. Our filters make us focus on certain factors because of our reasoning but miss important information about where the other person is coming from. Think about what questions you are not asking in a situation. Are you making assumptions that aren’t true?

Issues 2012: Creating a Culture of Excellence

Back in 1982, Tom Peters went In Search of Excellence and profiled 40+ companies who were examples of excellence. If we look back at that book some of the companies are gone now or are not what we would hold up as examples of excellence. That’s because excellence is not an end state. It’s an organizational state of being that’s characterized by continuous movement in pursuit of ever-higher achievement. In a culture of excellence, you are never done or…you never quite arrive.

The drive for excellence — for continually improving on even our most outstanding achievement — when paired with compelling clarity, sets the stage for achieving or even exceeding the goals defined in the strategy. The question is how do you create a culture of excellence and performance?

Excellence is about self-reflection: Without knowing who and where you are in your journey, it is difficult to continually pursue ever higher levels of personal or organizational achievement. What values are of core importance to me? How do I add value? What values are core to the organization? How do we add value for our customers? Am I clear where I am taking my organization? Am I communicating a standard of excellence?

Excellence is about continual, personal growth: Without professional growth, our performance, and that of our organization, will not be characterized by excellence. Leaders need to be a role model for their teams. They should ask “how can I use my strengths more fully to achieve the results we need to be successful?” It’s equally important to ask yourself and others, “What do I, as a leader, not know and need to learn? What skill do I need to develop and how should I apply them?”

Excellence is about setting the expectation for excellence: In environments that achieve excellence, the standard for it is communicated broadly throughout the organization. The communication isn’t just verbal. It’s communicated in goals and objectives. It’s communicated in everyday actions. It’s communicated in the quality of anything that’s produced, from emails and meeting agendas to products and services. It’s communicated in processes that focus on continual improvement.

Excellence is about creating a culture that looks at behaviors and results: Cultures that only look at results can become toxic. It can be too easy to turn a blind eye to unacceptable behavior because “hey, he/she gets results.” Leaders need to be as concerned with how people achieve results as with the results they are achieving. How do we meet our customer’s expectations, meet our business goals and behave ethically and with excellence? What behavior do we hold up as the gold standard in the pursuit of results? What behaviors are completely unacceptable?

Excellence is about tapping into each person’s drive for excellence: The neuroscience of excellence tells us that higher and higher performance comes from the need to direct our own lives, to create new things and to improve ourselves and our world. In his book, Drive, Daniel Pink talks about tapping into the third drive — the drive produced from engagement in the task itself when the task allows us to experience autonomy, mastery and purpose. Too many of our organizations are using what Pink calls the second drive – the carrot and the stick – to try to create higher levels of achievement. What we know is that this only takes achievement to the level of what one needs to do to get a reward and to avoid a negative consequence. It doesn’t lead us to excellence.

Excellence is about improving those around you and managing performance: As the saying goes, the tide lifts all boats. In order to instill a culture of excellence, leaders need to manage performance and development proactively by praising excellence and having the difficult discussions that are needed to improve performance. Too often we short circuit the ability to achieve excellence because we are unable to give the difficult feedback that allows others to build their capacity to contribute. Unfortunately, many of our performance management practices also drive a trend towards mediocrity by relying too much on the carrot and stick.

As Tom Peters did almost 30 years ago, go in search of excellence in your organization. Model it, practice it, celebrate it and watch the impact on performance.

Performance Management and Unintended Consequences

Last year, the state of Georgia published a report showing that cheating on a statewide exam was occurring at 80% of the schools in the Atlanta school district. It had become a regular practice to change answers on student exams in order to meet the performance standards set for the schools and district. Some educators even had ‘cheat parties’ where they would get together on the weekend to change the answers on the tests. A statistical analysis showed that the probability of the type of performance improvement shown year over year was one in quadrillion.

Former Superintendent Dr. Beverly Hall, who retired in June 2011 as head of the 48,000-student district, is accused of creating a culture of fear, pressuring faculty and administrators into accepting ever-increasing targets of achievement, and turning a blind eye to the way those goals were achieved (USA Today, July 12, 2011).

If you were to ask Dr. Hall if her goal was to create a culture of cheating, I’m sure she would tell you that her intent was to create a culture of high performance and student achievement. Cheating was an unintended consequence.

One of a leader’s core functions is to build high performance. We set goals, create accountability, give feedback, and provide praise or other consequences. However, we rarely stop to think about the unintended consequences. We don’t ask whether we’re driving behaviors that we don’t want by the way we approach performance.

Those familiar with the Atlanta situation say that Dr. Hall was ‘data-driven’. The numbers were the results that mattered. Sound familiar? Managing by the numbers alone opens the door for people to behave in ways that we may not want or expect (think Enron, Lehman Brothers) I recently saw a posting by a sales manager who found that one of his sales reps performed well one day a month — the day before the sales results needed to be turned in. That’s all he needed to do to reach his goal and get his commissions. The manager was concerned that he wasn’t doing much the other days. Rather than driving performance, the numbers-only approach was limiting it.

Rather than focusing purely on the numbers, we need to focus on both the results and the behaviors that lead to those results. What’s acceptable and unacceptable behavior on the way to the numbers? Do we turn a blind eye to bad behavior because, ‘she gets results’? Are we creating expectations that cause people to spend their time “gaming” the system or to focus on achieving real performance? What are the unintended consequences of how we are leading?

Five Reasons Leaders Don’t Succeed

LeadershipJessica had been on the high potential list every year since she started with her biotechnology company. She was moved into a variety of roles, taking on different responsibilities and succeeding each time. She was known as a strong leader because of her ability to achieve results. When she was moved into the Director of Operations role things started to change. Within 6 months of taking the role, she wasn’t delivering the results everyone thought she was capable of delivering. Her team was contentious and morale was wavering. What was going on? Had Jessica topped out her potential, a living example of the Peter Principle? Had she lost her ability to lead?

Of course she didn’t lose her ability to lead. Her abilities and skills had not just simply vanished but other parts of the situation had changed. I’ve seen five common reasons why a leader who has been effective in the past is now failing.

1. Some skills, critical skills were overlooked before. Let’s talk about the obvious reason first. Some leaders have not developed key skills that they need to be successful. Just like brilliant students who breeze through school, sometimes people climb to positions of leadership because they are brilliant marketers, brilliant scientists, or brilliant (put your profession here). But along the road to success, the people around this leader choose to overlook a key skill (or two or three) until it can’t be overlooked any more and causes huge issues. For example, if we go back to Jessica, throughout her career it was noted in talent reviews that she could be abrasive and often got things done through force of will rather than by building relationships and coalitions. She thought of herself as ‘results-focused.’ When she moved into her Operations role, it became imperative for her to build relationship with peers in other parts of the organization to get results. Interestingly, her ‘results-focus’ is what got in the way.

2. Cultural mismatch. This is a common reason why leaders who have been wildly successful in one environment for a long time, fail miserably in a very short time in another. The way a person operates and becomes successful in one culture can be very different from another. For example, a leader may have been very successful in a culture that valued quick decision making and risk taking. Put that same leader in an environment driven by consensus and a desire to explore issues from every angle before moving forward and wait for the results.

3.  Process and system mismatch. In the 1800’s, some people did very well in the wild, wild west and others went back home to the security of their established communities. Some leaders are very adept at working in environments with less defined processes and systems. They either work without them or really enjoy putting them in place. Others thrive in environments where processes and systems are clearly defined. Think of the serial entrepreneur who is put into a large, complex organization that has acquired his firm. Change was a way of life in his entrepreneurial firm but isn’t in this large organization. Leading change in the former was easy; everyone thrived on it. In the new organization it takes real work. The processes that exist are meant to maintain the status quo not change it and people in his new organization wonder why he was once perceived as someone who drove change.

4.  Lack of management support. Even the most seasoned executive needs people in her corner. She needs people who support her success. She may need coaching and mentoring to navigate the new role. Even the best CEO won’t succeed if the Chairman of the Board decides she is not the person for the job and needs to go.

5.  Organization structure. We all have been in situations where roles aren’t clear, responsibilities are redundant, unnecessary internal competition is the norm, resources aren’t available or decision making is lost in layers of management morass. Leaders can find themselves in the same situations. I worked for an organization once that routinely pitted leaders against each other by giving them the same issue to address or initiative to lead in different parts of the organization without each leader knowing about the other’s charge. There could only be one winner in this situation so one of them automatically was going to fail.

What’s a Key Driver of Performance?

If you’re serious about improving performance and driving growth, focus on how happy and engaged your people are. That may seem very mamby pamby, but there is growing evidence that it’s not such ‘soft stuff’.

Here are a couple of Gallup statistics to consider:

 
Actively disengaged employees erode an organization’s bottom line.  Within the U.S. workforce, Gallup estimates this cost to be more than $300 billion in lost productivity alone. (Source: Gallup website) 

Beyond the significant differences engaged workgroups show in productivity, profitability, safety incidents, and absenteeism versus disengaged workgroups Gallup’s research shows that engaged organizations have 3.9 times the earnings per share (EPS) growth rate compared to organizations with lower engagement in their same industry. (Source: Gallup website)

Now the question is what really drives engagement? Teresa Amabile, a Harvard Business School Professor and Steven Kramer researched that question. What they determined is this — of all the events that engage people at work, the single most important is simply making progress doing meaningful work. In a September 4th New York Times article, Anabile and Kramer note “As long as workers experience their labor as meaningful, progress is often followed by joy and excitement about work.” Interestingly this positive ‘inner work life’ (as the researchers call it) has a profound impact on creativity, productivity, commitment and collegiality.

The leader’s role, then, is to help people make progress — remove obstacles, provide support, recognize progress and provide feedback on what’s not working. Unfortunately, almost all managers don’t see making progress as a compelling motivator. When Amabile and Kramer asked 669 managers from around the world to rank five employee motivators,they ranked ‘supporting progress’ dead last. Ninety-five percent of these leaders failed to recognize that progress in meaningful work is a far more important motivator than raises and bonuses.

So, next time you are trying to create motivating environment, don’t automatically think about traditional rewards. Think about whether your people feel like they are moving up the mountain or if they feel like their pushing a boulder up the mountain only to have it roll back down on them.