And Now What? The phase that we all thought will come and go, is here to stay. Adjustment and a shift in perspective in terms of caring for people and employees is needed and how we address such topics as operators of small and mid-size businesses has tremendous consequences on people and on stakeholders. Are we finally ready to look at that?
We have learned and are truly good at measuring organizational health through numbers. We look at P&Ls, at margins, at productivity rates, at growth, at NPS, at projections, at engagement scores, at performance ratings. All this is important data. But as important as these numbers are in their own right - they are also simply outcomes. They tell us what has happened or predict data trends, but they do not identify the root causes of our successes or failures. And those causes mostly come down to people.
So to really understand what makes our organizations tick, we need to look at and understand what motivates people within the company. The answers we seek are all around us, every day. We just need to ask the right questions.
My attempt is to offer you a small glance into the window of the science and the business case for a deeper understanding - alerting you to the forces of disengagement impacting employees everywhere and suggesting ways to set your organization up for success and productivity. My intention is to enlighten you and shift some of your perspectives. We need to realize now that our employees and colleagues have options and the companies that are not adjusting will be left behind in the competitive field and lose their talented and creative people.
Let’s start with the elephant in the room - From time to time you may encounter people who will dismiss industrial and organizational psychology as irrelevant or a “soft skill.” The reality though is that thoughts and behaviors directly impact “hard” business results like productivity and profitability.
Behavioral psychology - understanding the drives and abilities of your employees - is not “soft” science. It is people science. And people science can make or break your bottom line and directly impact all stakeholders of the business.
We invest millions of dollars and hours into sharpening our understanding of the tools of our businesses. If you were a manufacturing company, you’d have a crystal-clear understanding of how your assembly machines work, so you can maximize productivity and uptime. If you’re a SaaS company, you have optimized your software and servers down to each line of code and application. So do you ever wonder if we can we do the same with people while keeping the human factor 100% alive and real?
Science helps us predict how machines behave. But are you equally able to predict how your employees will behave? Have you leveraged that science? Salaries constitute on average 43% of the total company operating expenses—so we also must account for the investment we make in employees themselves. What if you could make people 10%, 20% or even 30% more productive? And all that while they’re happy and engaged!
In one of the most recent quarterly reports of the Middle Market Center, the most common business challenges are listed as Business Performance, Talent and Cost. And depending if you look at short- or long-term challenges, Talent and Business Performance outrank each other as the top internal concern. One of the most concerning factors and often referenced topics, especially now, is employees dis-engagement and the challenges in managing a remote workforce. Over the course of years, we have identified some of the most significant factors of disengagement. We see four main forces of disengagement that plague modern organizations. Any one of them alone can crush productivity. More than one can damage your organizations health. Teams and entire departments can be crippled.
The 4 Forces of Disengagement
Misalignment with Role
Nothing can cause a new hire or existing employee to sour faster than discovering a person/role mismatch. And yet, nearly half (46%) of newly hired employees fail within 18 months, while only 19% achieve what can be considered unequivocal success. What happens? 82% of hiring managers in that study admitted that in hindsight, they had focused on the wrong things in the interview - prioritizing resume and skill checkboxes over stronger indicators of person/role fit, such as “coachability, emotional intelligence, motivation and temperament.” But that’s not where it ends. Often employees will flounder in existing roles when they are not adequately defined or have not evolved to fit the changing duties or needs of the business. According to numerous academic studies, job fit is a significant contributor to employee levels of engagement and productivity, so it is critical that we get this right.
Misalignment with Manager
In the US, 75% of employees see their manager as the worst part of their job, and 65% would take a pay cut if they could only replace their boss with someone better. Yes, you read that correct. The relationship with a manager is widely agreed to be one of the most critical contributors to employee engagement. So what causes this misalignment? According to Gallup, “a mere 21% [of employees] strongly agree that their performance is managed in a way that motivates them to do outstanding work” because managers are ill-equipped to coach and communicate with employees. In other words, managers are not equipped with the information they need to manage effectively.
Misalignment with Team
Teams have changed a lot over the past few decades, as we’ve added global, remote, and cross-functional groups, technology and other complexities into the mix. One thing that has not changed: Challenges can arise when different personalities come together. According to one study cited by Salesforce, 97% of employees believe lack of alignment on a team directly impacts the outcome of the project, and 86% blame lack of collaboration and ineffective communication for workplace failures. 75% of employers rate teamwork and collaboration as “very important”, but only 18% of them make communications evaluations part of performance management. This is important, because companies that don’t promote and enable collaboration are 5 times less likely to be high performing.
Misalignment with Culture
When an employee is misaligned with the corporate culture, they lack a feeling of belonging that can impact performance and can even create a toxic environment across the organization. This can be as simple as not feeling in tune with company values, feeling a lack of meaning and purpose, or a lack of trust in company leadership. But it can also be a profound disconnect and feeling of isolation and loneliness which can lead to disengagement. There’s a reason ‘belonging’ ranks third on Maslow’s hierarchy of needs (it’s more important than self-esteem). Studies have shown that a feeling of not belonging can be experienced as acutely as physical pain - and it can result in anxiety, task avoidance, loneliness, and other hallmarks of active disengagement such as uncooperative or undermining behavior. Here are some examples:
According to HBR, studies have shown that disengaged workers have “37% higher absenteeism, 49% more accidents, and 60% more errors and defects.” Actively disengaged employees also report more health problems, including stress, high blood pressure, depression, and pain.
Scholars have found that disengaged workers exhibit a “toxic” ripple effect on peers and teams. According to an HBR study, 78% of employees said their commitment to the organization declined in the face of toxic behavior, and 66 percent said their own performance declined.
According to an Axial study, companies with high disengagement were 40x less likely to identify their culture as a great place to work, compared to fully engaged employees. Scholars have associated disengagement with lack of trust, increases in bullying, lack of creativity, poor interpersonal relations, conflict, and loss of cultural values—among many other effects.
According to Gallup and other studies: “In organizations with low employee engagement scores, they experienced 18% lower productivity, 16% lower profitability, 37% lower job growth, and 65% lower share price over time.” Low engagement businesses also receive 100% fewer job applications and disengaged employees generate 40 percent less revenue than their engaged coworkers. In 2017, The Conference Board estimated that disengaged employees cost global companies between $450 and $550 billion a year.
So, what is this costing you?
One way to measure the cost of disengagement is through the most common end result: turnover (whether voluntary or involuntary). Often we think of the cost of turnover as cost-to-replace. But recruitment costs are just the start. The costs are staggering - roughly 40% of an annual salary – but note that they don’t take into account all the lost productivity. We must also consider the tremendous impact from the employee’s lack of productivity, the spill-over effect on peers who need to step in, and the time spent onboarding and bringing the replacement employee up to speed.
Why Engagement Matters
We’ve spoken a lot about the pathology of organizational challenges, which are of course quite frightening for those who are staring down the barrel of disengagement and lost productivity. But there’s also a massive upside to addressing engagement. Addressing engagement through employee insight can help you not just fix problems, but actually increase discretionary effort and productivity—taking your team or company farther than you may even have dreamt you could go.
One of the biggest benefits of an engaged employee is the application of discretionary effort—or the decision of employees to do more than they strictly have to, in order to do good work. This is referred to alternately as “exceeding expectations”, “going above and beyond”, or “going the extra mile.” It is clear that the benefits of engagement are connected on every level to the success and profitability of our organizations. A few examples are turnover reduction, absenteeism, safety, quality defects, patient safety, customer metrics and many other areas.
Engagement is also part of the larger picture of employee well-being and positive psychology. By focusing on the right things— addressing employee needs as individuals and opening productive lines of communication among managers, employees and peers—you will also see a positive impact other well-being metrics such as: employee happiness, positive relationships, health and wellness, optimism, hope, alignment to your mission, trust, resilience and positive emotion.
Final Take Away
As we established in the previous section, engagement can be a key to unlock exponential success in any organization. But how do you get that key?
Every organization and how it builds engagement is unique, but there are certain commonalities. Four key building blocks for driving engagement are:
Transforming your culture and maximizing employee productivity through employee understanding is always a good conversation to have. More than ever before employee engagement is about listening and active engagement with empathy on all levels, as the challenges as well as the opportunities we are being presented with are unique and are evolving in real time.
So, stay genuinely connected with each other, serve and support each other and embrace either the creation of a new culture or re-creating and adjusting what is already there.
Stephan K Thieringer is the Founder and CEO of The Human Innovation Garage. He is a Business Thinker and Innovation Strategist and Executive Coach. His Company, The Human Innovation Garage, is a leading coaching and advisory firm, working at the critical intersection of talent and business. Stephan has been recognized by the WHRC and WCC as a 2020 World’s 101 Top Coaching Leader and received various other global and national accolades.
For almost a decade The Human Innovation Garage has empowered organizations and individuals by creating an Organizational Optimization Blueprint - providing a roadmap for radical impact in areas of employee engagement, employee satisfaction, innovation patterns, executive trauma, executive alignment, leadership strategies and overall stakeholder management. The proprietary and unique methodology in combining traditional coaching, the research of neuroscientific patterns, augmented with deeply scientific assessment programs, provides clients rapid transformation and positions organizations for high impact.
Working with a variety of industries, some recent brands and companies include Bank of America, Boeing, Keller Williams, Comcast, IBM, Giunti, Cisco, Shields, CNN, City of Boston, Banco de Santander and Clipper Ventures to name a few. The Human Innovation Garage operates global and is headquartered on the East coast of the United States in Boston.
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