The PwC Saratoga US Human Capital Effectiveness Report for 2009-2010 reports that even though “the recession has resulted in voluntary turnover decreasing across the board, these rates are not expected to last. Organizations seeking competitive advantage should focus on the reasons underlying turnover of their top talent by examining what is driving key employees to depart in the midst of the current economic environment.”
Texas CEO Magazine, in conjunction with Austin company RFG, an employee engagement advisory firm, conducted a CEO roundtable with companies that are consistently voted as the best places to work in the Austin area and are trying new top-down initiatives designed to keep employees engaged, develop better leaders and increase retention rates.
WHY THE DISCONNECT?
Workforce motivators have changed substantially in the last 20 years, and keeping employees engaged and motivated requires not only changes in leadership practices, but also a commitment to develop individuals in a holistic way. The bottom line is: If your employees aren’t engaged, your initiatives are bound to fail.
To facilitate this roundtable discussion, we brought in experts from LeaderLabs, an organization dedicated to Leader Development and cultural effectives whose founders, facilitators, and faculty are largely made up of graduates and former professors from the United States Military Academy at West Point.
When most people think about military leadership, they think authoritarian, autocratic, command and control—as in “do what you’re told and don’t ask questions.” Similar to most corporations, this leadership style has been around for decades. But the Military Academy, long considered the preeminent leader development institution in the world, and, according to a Forbes magazine article in March, boasting more Fortune 500 CEO’s than any other institution, has begun looking at leadership and engagement in a different way.
LeaderLabs and its facilitators, drawing from their West Point, business and military experiences, have developed a model based on character, empathy, trust and accountability to develop the “whole person” as opposed to an attrition model. In many respects they have moved well beyond the traditional 20th Century “Management” practices still so pervasive in industry.
At one recent CEO roundtable, LeaderLabs quizzed CEOs about developing employees.
Facilitator: In military leadership training, we talk about the whole person concept. When a cadet comes into West Point, they may identify themselves in a one-dimensional way, such as, I’m an athlete, or I’m a math whiz. But there are many facets to every individual—we classify them as social, intellectual, physical, moral/ethical. Our job from the onset is to develop all of these simultaneously to move them away from the one-dimensional identification.
What are you doing in your organizations to develop individuals beyond training for the jobs that they perform?
Henrik Johansson, CEO, Boundless Network: Industrial era leadership treated employees like followers, in that they did not need to know what was going on, they were there to do a job, and they either did it or not. But these people are not stupid—they run families when they leave the office, and they take on many responsibilities, and you have to treat them accordingly. Micromanagement is over.
Facilitator: How do you develop leadership in your organizations that achieve these goals?
Henrik Johansson: Cultural initiatives require a top-level commitment. If you communicate something once, no one is really going to care about it, hear it or incorporate it. We’ve made that mistake in the past by having one big webinar or company meeting where everyone gets fired up and ready to go, and then it gets quiet and not much happens.
Brett Hurt, CEO, Bazaarvoice: One of the first things that we have our employees and managers read is the book, “Total Leadership” by Stewart D. Friedman. It’s about developing one’s self as a total leader, and it contains many of the same concepts that the military has identified. It’s not a fast read, and the concepts are challenging, but it’s all about achieving work/life balance and if your leadership takes it seriously, it will have a big impact on your organization.
Facilitator: We know from surveys and experience that many people come to work unhappy. What initiatives have you implemented in your organizations to curb this?
David Rubin, CEO, ProfitFuel: We decided early on that we had to create a great environment to work in because most of the work that we do (mostly telesales) is difficult, and there’s not a lot you can do to make cold calling fun.
So, all sales managers in our company are required to get on the phone and lead by example. We have a cook that prepares free food for our employees every day, and that came from a suggestion that said that if they didn’t have to leave the facilities for lunch every day, they could be more productive. We have a full-time person whose job is to figure out how to make this place fun, and come up with creative ideas.
We also ask in surveys what our management team can do to be better, and ask for real feedback on an individual basis of what they do to keep you motivated every day, and then aggregate the responses.
Facilitator: So what were your managers’ responses to these ideas?
David Rubin: Naturally, our managers were very nervous about this program, but I told them that no one would be fired over this. I didn’t really care about how the responses came back in the beginning, because it was simply a starting point. We wanted to take a long-term view and have incremental improvement along the way.
Brett Hurt: We also do quarterly surveys where every employee ranks specific managers by name (me included). They are ranked on what we call the five stars of leadership: passion, execution, excellence, teamwork, and openness. Every manager in the company can articulate the five stars, and it’s really important for our culture. Over time, if you have a B player, you’ve got to move on.
Bjorn Billhardt, CEO, Enspire Learing: I think the easy part of this scenario is to identify when you have a B player and take steps to remove them from the organization. What I’m struggling with is how to acknowledge the top 10 percent for their performance and continue to motivate them at a high level without alienating the other 90 percent who are still really good and engaged?
Brett Hurt: Just to clarify, we don’t publish the staff rankings and no one sees that except the executive team. As far as motivating the top 10 percent, they get by far the biggest raises both in equity and cash, and then they win a lot of the awards that we have publicly so they serve as a beacon for the others as we publicly celebrate them.
Facilitator: How do you define culture in your organizations?
Henrik Johansson: We’ve been fans of the book, “Good to Great” by Jim Collins, and we try to do everything according to that book. In my experience, the most important thing that you can do to define culture is to be very clear about what the objectives of the company are, have a very clear plan, and break those into team goals and individual goals, so that every individual on your team knows how they are contributing to the overall success of the company. If people know that, then they come to work, they’re engaged, and they work hard.
Paul Bury, CEO, Bury + Partners: I agree—we’ve done the happy hours and the charity events, but what we’ve figured out is how to be transparent about company goals and continuously communicate those to employees. There isn’t a financial document in our company that our employees can’t see (with the exception of payroll). We’ve found that not many employees actually review the information, but when we show up at staff meetings and hand out financial statements, everyone understands where we are and where we need to go. We’ve gotten better results out of this transparency because everyone understands what we want to achieve and how we are doing in that process.
Facilitator: What other initiatives have you found successful in motivating and engaging participation?
Paul Skeith, managing partner, Richards Rodriquez & Skeith: Lawyers are by nature difficult to manage. Even though a big part of our lawyers’ compensation is based on new revenue that they generate, we find that 80 percent will not generate much new revenue. So we decided to test out a competition. The prize was a flat screen TV, which as a portion of their revenue, was very small. But we found that these people were more motivated by the thought of winning a flat screen TV than the fact that they could be buying a new car out of their increased revenue.
Facilitator: What are your markers for employee satisfaction?
David Rubin: There are lots of ways to measure it, including having outside firms conduct interviews with individuals in a non-biased way. It’s also important to interview people early on in their tenure and have honest conversations to establish a baseline. For example, during their training period before we’ve indoctrinated them, what are your first impressions of the company? Then we are able to track noticeable improvements in the quarterly surveys. We’ve also found exit interviews to be extremely informative, because that’s when you get the most honest feedback. And I think the ultimate measurement comes across in your long-term turnover rate.
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