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Do the Right Things Well

Timeless words applied to the business world by management guru Peter Drucker showed up in the WSJ today with the headline, “The Key Factor Driving a Company’s Results: Its People.” What continues to puzzle me, a practitioner in the human development field for nearly 30 years, is that this is idea is neither new or novel and yet continues to be dismissed from the Board Room to the front line.  What is it that makes attention to the workforce the last rather than the first priority when all of the evidence points to vastly superior and sustained performance for the few companies that excel in employee engagement and development

An annual ranking of corporate performance called the Management Top 250, is produced through a partnership between the Drucker Institute and The Wall Street Journal. This year’s study examined the 50 biggest gainers and 50 biggest losers from 693 companies across the six-year period 2012 to 2017.[1] Here are the average changes on a 0-100 scale in the period for five dimensions of organizational performance.

It is clear from the data that the domain of Employee Engagement and Development is the most important influence upon total effectiveness over time. While it is very important for any manager to give attention to all five dimensions, it is clear from examining both the losers and gainers, that taking care of the workforce yields the most significant swing in all of the dimensions.

Workplace culture drives all forms of optional and discretionary behavior by each employee. Culture is shaped by how people behave and experience being in the workplace together. Character researcher, Pam Boney expresses this important discovery. A person can be competent, intelligent and driven but who they are when they show up with others determines the nature of their influence and contribution. The missing element is Character.

Character development is essential to fuel a culture dedicated to organizational learning and coaching. The data presented in this paper builds the business case for investment in character development, especially in leaders, in order to drive a learning and coaching-centered workplace culture. There are specific direct and opportunity costs from ignoring this investment that will cause any CFO pause. Research is also offered about attitudes and preferences for each generation of the workforce. The data reveals insight about what employees want in today’s workplace environment. Here are some of the most important evidence-based principles for making culture investment decisions.

■       Investing in people can generate value for organizations over time that significantly exceeds initial financial outlay.

■       People represent value generation capability to organizations in two ways: potential and appreciation.

■       Well-crafted learning and coaching interventions, that focus on character-development, boost critical leadership competencies 20%-30%.

■       Happier and more productive teams are correlated with great managers, defined as being a good coach and one who empowers without micromanagement.

■       Scalable learning is essential and occurs in teams rather than functional groups, making effective team leadership a critical development priority.

■       Millennial personnel comprise more than 50% of the workforce and more than 50% are in leadership roles with three to four direct reports.

■       For two-thirds, an organization’s purpose is the reason a Millennial will choose an employer and, even then, only one-third believe they are truly used to their full potential at work.

The ultimate measure of leader effectiveness is the performance of the team and organization. Effective leaders enable a group to outperform other groups. The best show higher levels of integrity – to create a fair and just culture – and are generally more emotionally intelligent / use empathy – to stay calm under pressure and have better people skills. Well-crafted learning and coaching interventions boost critical leadership competencies between 20%-30%. Data from this 2016 study[2] raises the importance for focusing on leadership development in earnest.

■       Only 30% of employees are engaged costing the US economy $550 billion a year in productivity loss.

■       82% of people don’t trust their boss.

■       50% of employees quit their job because of their managers, confirming the anecdotal hypothesis that ‘people join companies, and quite their bosses.’

■       30%-60% of leaders act destructively with an estimated cost of $1-$2.7 million for each failed senior manager.

70% of the variance in employee engagement is driven by the manager-employee dynamic according to talent management research conducted by the Human Capital Institute in 2016 with 252 companies.

96% of HR leaders report that managers are vital to driving business success, increasing employee productivity, improving team functioning and increasing engagement levels. Yet only 48% agree they adequately invest in front line manager development.

A new way of addressing engagement is needed. Engagement is currently evaluated by the quality of the relationship between an employee and his or her manager. Diversity of the workforce today has raised the complexity and therefore the sophistication required from leaders to be consistently effective.  In particular, the recipe for success requires focusing on interpersonal communications, sensitivity and creating a welcoming client for learning. All of these factors are included in the scope of character development.

The top priories for employees today are: 1) work that is fulfilling given skills and experience,

2) opportunities for personal growth to grow skills and experience, and 3) meaningful work that creates a positive impact in the world. Pay has fallen behind meaning in the workplace for the first time. Meaning has become so important that the Institute for Healthcare Improvement holds it as important as cost, quality, and safety in its new Quadruple Aim.

Implementing these approaches requires a commitment to character development, the source for strengthening excellent interpersonal presence and emotional resilience. This information foreshadows a new frontier for leadership development, achieved through a culture dedicated to learning and coaching.

In conclusion the evidence shows that culture drives all forms of optional and discretionary behavior. Culture is shaped by how people behave and experience being in the workplace together. Character drives behavior, especially in relationships. Culture evolution through character development that results in a learning and coaching organization is a strategic imperative for organizations who seek sustainable excellence.

 

[1] Data Sourced from Drucker Institute, American Customer Satisfaction Index, the Bloomberg Finance L.Pl, Clarivate Analytics, CSRHub, Glassdoor, HIP Investor, PayScale, Satmetrix Systems, Supply Chain Resource Cooperative, Sustainalytics, Temkin Group and wRaitings.

 

[2] Science of Leadership reported in HBR Blog 9/21/16 by Tomas Chamorro-Premuzic, faculty Columbia University

Janet Harvey, MCC

Janet Harvey, MCC ,CEO inviteCHANGE, has 30 years of executive and entrepreneurial experience with 12,000+ coaching hours, primarily in organizational and executive leadership engagements.