Let’s say your machine runs at 98% efficiency. That’s pretty good. But this machine produces everything you make. Even a 2% improvement could provide a worthwhile return.
Now assume your machine runs at 32% efficiency. In this scenario, there is little doubt your machine needs a lot of work and attention. In fact, you would probably realize it’s time to completely rethink how your machine runs. You’d take the time to look into the mechanics of your machine so you can develop a formal strategic plan to increase performance.
Each organization has a machine that touches every aspect of your business: it’s your People Machine. The People Machine produces, sells, and services your product. It even manages itself and helps set its own direction. This incredibly powerful machine is fundamental to your success.
In the United States, Gallup measured employee engagement at 32%. This means that 68% of employees are either disengaged or outright toxic at work. Even if your company has twice the engagement levels of the average company, is 64% efficiency really acceptable?
The term employee engagement is often perceived as a measurement of an employee’s happiness with his or her job. But you need more than a happy machine - you need a high-performing machine. What if you could have both?
Gallup has been studying employee engagement for decades while also collecting hard financial data. This means they can compare similar companies in similar industries to see the true impact of having highly engaged employees. The results are staggering.
Employee engagement activities like leadership team development or team dynamics workshops do much more than create happy employees. The chart below shows differences in various key performance indicators when comparing companies that perform in the top quartile in employee engagement versus companies that perform in the bottom quartile.
The impact of connection and engagement on organizational performance is borne out in various studies. Compared to organizations with connection/engagement scores in the bottom quartile, organizations with top quartile scores experience 2.5 to 4.5 times greater revenue growth, according to research from the Hay Group. In addition, organizations in the top quarter had 17% greater productivity, 21% greater profitability, 10% higher customer service metrics, 40% fewer quality defects, and 41% lower absenteeism than organizations in the bottom quartile, according to Gallup research.
Active disengagement costs the U.S. an estimated $450 - $550 billion annually.
And there’s more. Gallup research found that the top 25% of teams (those who are the best managed) versus the bottom 25% in any workplace have nearly 50% fewer accidents. Teams in the top 25% incur far less in healthcare costs than the bottom 25%. That means having too few engaged employees makes our workplaces less safe and disengagement drives up healthcare costs. These percentages have a significant impact on the bottom line, with active disengagement costing the U.S. an estimated $450 billion to $550 billion annually.
Employee engagement has such a profound impact because it makes everything work better. There is an amazing difference between an employee who is just punching the clock and the same employee who is all in on the job.
Graphic: Employee Engagement & Key Performance Indicators
Source: Gallup’s 2017 State of the American Workforce
Every organization has a culture. Some cultures demand high-performance practices while others work against your success. Are these common work culture disorders hindering your team?
Culture of Blame: When something goes wrong, the fingers start pointing and people start hiding. This culture prevents people from learning from change and leads to people hiding their mistakes.
Culture of Silos: The word “they” overwhelms the word “we” as departments become independent and look at other departments and teams as separate entities or even rivals. This creates barriers to a high-performance culture and to improvement opportunities that could be realized through cross-functional cooperation between departments. It can also create internal problems as departments have a negative impact on each other.
Culture of Top-Down: The people at the top make all the decisions and the people at the bottom just try to keep up. This encourages disengagement and mediocrity amongst employees.
Culture of Nice: Conflict is looked at as negative and is avoided at all costs. Key issues are not discussed in public but might be whispered in private. These organizations often change direction constantly to maneuver around difficult issues.
Culture of Self: Employees tend to keep to themselves until someone has been there for a long time. Even then, meaningful work relationships are scarce.
Culture of Inferiority: The organization still thinks of itself as a small business in spite of its growth. Change is resisted because “we’ve always done it this way.”
Clearly define the company’s Core Values and Mission. Engaged employees are excited to be part of a larger, shared purpose. Does your company have clearly stated Core Values and Mission Statement that defines why the company is in business? Companies are good at defining what they do, but often fall short when answering why.
Develop a clear strategy for engaging employees. Employee engagement is not the result of a single initiative or event, but is determined by a comprehensive strategy that keeps employee engagement top of mind in everyday activities.
Communicate well throughout the organization. It is one thing to develop core values or an engagement strategy, but an entirely different thing to put those plans into action. A company must be able to effectively communicate values and integrate engagement initiatives into the workflow of the business.
Hire and promote employees according to cultural fit. Companies that hire new employees based first and foremost on cultural fit build a happy and dedicated work force. Zappos, for example, integrates a cultural fit interview into their hiring process. They also train new employees on the company’s core values and prioritize company culture in promotion opportunities. Other companies have specific budgets and task forces that promote community or other employee bonding events as part of a larger engagement strategy.
Empower employees to be able to do what they are best at without layers of bureaucracy. Employees are more engaged when they feel empowered to do their job well. The employees at Southwest Airlines bucked the “grumpy employees and poor customer service” stereotype by empowering employees to go the extra mile to make customers happy. When employees feel they are able to work to their strengths and their voices are heard, they will be more confident and satisfied with their jobs, thereby improving morale.
Leaders of a nonprofit organization realized that the board of directors had developed a culture of not getting involved. Most of the members attended the minimal number of board meetings—just two per year—and didn’t engage in nonprofit events or even help with fundraising. The director of the nonprofit identified this as a problem and led the board in discussions on getting more involved. A few board members responded, but most didn’t. It wasn’t long before it was back to business as usual.
Then the nonprofit asked People Centric for help. Instead of trying to beat the desired culture into the heads of the board members, we focused on the systems that created the culture. For example, as we looked at the board recruitment process, we found that board members were often told that the board commitment was “no big deal” and “wouldn’t take a lot of time.” Many were even told that there was no expectation for attending events or helping with fundraising. The recruitment process created the culture.
Another finding was that the board meetings themselves were designed in a way that didn’t engage the members. Minutes were read. Budgets were reviewed. Updates were given. Both the team strengths as a whole and the individual strengths of each board member were effectively ignored.
After consulting with People Centric, the nonprofit changed its recruiting process and implemented a different meeting structure that engaged board members in meaningful discussions that utilized their insights and strengths. The culture very quickly shifted from disengaged to high levels of engagement.
If you want to change your culture, you need to look at the systems that influence your culture and change them.
In other words, achievement-oriented people want to be part of an organization that encourages success. These employees want to understand the culture so they can help the company succeed. Once they have put in the time to earn respect, they want to feel respected by management and receive constructive, regular performance feedback.
If you’re looking to develop a talent management strategy that will improve your culture and attract more talent, implement these three tips:
Purpose. Expose employees to the outcome of their work. Let them see, at least from time to time, the fruits of their labor. This could be the happy customer or the impact on the company. Your employees need to know they are winning.
Play. By way of purposeful employee engagement activities, give employees some opportunities to make decisions and explore ways to help the company. This doesn’t mean total freedom, but rather a freedom within a framework. Give them opportunities to improve things or develop something new. Give them new experiences.
Potential. When and where possible, work to develop your employees and build on team strengths to help them advance in their career. This doesn’t necessarily mean moving up the organizational chart; it can also be challenging your employees by setting goals they can accomplish. Have your supervisors meet regularly with their employees to find out where they are going and what they need to get there.
While there are many performance appraisal methods, few of them work. How do you have a frank and open conversation with employees when they know there is bag of money on the line? Moreover, relying on a single performance appraisal every 365 days leaves employees demotivated, deflated, and surprised by any negative reviews.
Here are some methods to make your performance appraisals more effective. For starters, we generally don’t call these performance appraisals processes—we call them check-ins:
Increase Frequency: We recommend check-ins at least once per quarter. It’s best to schedule check-ins more often for new employees, those transitioning to new roles, or for employees who are struggling.
Don’t Link It Directly to Pay: Here is a shift in philosophy. Instead of assuming your team is one large bell curve of performance, what if you assumed everyone in your organization was a high performer? Pay is a poor motivator anyway. Sure, it gets people to do something, but pay also decreases employee engagement level when it becomes too much of a focus.
Train Your Managers: Stop thinking of a performance appraisal as a form that can be filled out by anyone and start thinking about it as an ongoing conversation between a highly trained manager and an employee. Managers need to be trained to lead and motivate employees. Companies with effective performance appraisal processes see higher employee engagement and better accountability. Overhaul your process for a high performance culture.
Even negative feedback can be a positive, constructive experience when feedback is focused on behavior rather than the person.
Example: Terry often repeatedly arrives to a weekly meeting about 15 minutes late, and the meeting cannot begin without her, so the group never completes its full agenda.
Person-based feedback: “Terry, you are consistently late and the group is really tired of how inconsiderate you are.”
Behavior-based feedback: “Terry, in the past 3 weeks, you have twice arrived at least 10 minutes late to our weekly meeting. Because we cannot begin the meeting without you, that wait time has prevented us from completing all of our tasks. The group requires all of its members, including you, to be on time every week. If I can help you remove some of the obstacles to being on time, I want to help you succeed by doing that.”
The first example focuses on Terry as a person, not on her behavior. Terry may feel attacked or disengaged by this kind of message. Further, when people believe their abilities (like the ability to be on time or behave considerately) are fixed and stable, they rarely make an effort to change them.
The second example provides Terry with an example of a specific failure in behavior that can be solved. She sees how this failure threatens the group’s performance. Rather than ostracizing her from a group who considers her inconsiderate, this form of feedback reminds her of her commitment to the group and its success.
Behavior-based performance appraisals allow you to serve as a messenger or reporter who simply relays information rather than an accuser or judge who must issue an indictment about someone. By clearly stating the expectation, and how the behavior failed to reach that expectation, you can remove the people from the equation and focus the conversation on behavior that can be fixed.
People: Get the right people in the right roles. This usually means hiring, onboarding, and role design. Make sure you have passionate people who know what their roles are and how they can use their skills to best exemplify your company’s mission and purpose. This is an essential part of culture.
Communication: Ensure people get the right information at the right times. Don’t waste time with ineffective meetings and monotone cadence. From brainstorming sessions to budget meetings, the right tools will allow you to get the most out of any meeting.
Management: Develop and challenge your people while holding them accountable. These processes require a certain kind of balance between leadership team development, management training, and employee check-ins.
Process: Create reliable, efficient, and effective processes that are steadily improving. Be continually looking for ways to evolve your sales, marketing, and production processes. If you get stuck, consider using a business development consultant to offer a fresh perspective.
Strategy: Make sure everyone knows what “winning” looks like for the organization and for their own role. Communicate your formal strategic planning and goal setting processes to your team and organization.
People Centric Consulting Group, LLC works with you to find long-term and valuable solutions. We collaborate with your company and, together, discover how we can support and hold each other accountable throughout the process. By setting a clear direction with your team, we help you install intuitive processes that engage your team. As your team becomes engaged, your culture shifts to a ‘we’ culture that drives real results.
"You can't build a strong culture just by talking about culture. Instead, you need to focus on building systems that support a strong culture."
Don Harkey CEO, People Centric Consulting Group
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