Zealise Blog

Employee Ownership & Leadership

Leadership, says the Chartered Institute of Personnel Development (CIPD), is one of three enablers of sustainable organisation performance. It is thus a key theme in its Shaping the Future interim report, "Sustainable Organisation Performance: What Really Makes the Difference," published in January 2010.

The report identifies leadership as being responsible for:

• Vision and values: communication of the bigger picture, making the vision and values real for all.
• Senior management capability: role modelling and empowering others.
• Line management capability: support and help for employees through change.

Nothing new or earth shattering there then, is there? Nor does the report give any insight into how to enhance leadership or make the communication of the vision and values any easier. This is very disappointing if you are looking for solutions.

This shortcoming is most likely due to the constraints of the format which is a series of case studies looking at organisations as they go through the process of implementing organisational change. So it is hardly surprising that there is nothing new forthcoming. It is highly debatable whether any organisation pioneering new approaches would be willing to open its doors during such an initiative.

Thus there is no suggestion that employee ownership might be the best way of spreading vision and values through an organisation. This is very disappointing when the report acknowledges shared purpose and distributed leadership as 2 essential components of their identified enablers. Employee ownership makes the employees co-owners of the business and so builds in shared purpose, which in turn provides the framework for creating the vision and establishing the values and making them "real for all." And thus for creating better employee engagement.

Indeed I would suggest there is no better way. Employee ownership makes leadership so much easier because, it helps makes the vision and values part of the fabric of the organisation. This makes leadership less dependent on the charisma or personality of the person at the top.

>10 Billion Reasons for Talent Management

If you are not yet convinced that talent management should be high on your agenda perhaps this will convince you.

Figures just released by Her Majesty's Revenue & Customs (the Tax Man) reveal that UK employers will have paid out £6.0 billion in redundancy pay for the year ending 31 March 2010. This is 25% up on the £4.5 billion for the same period last year and means that in the past 2 years employers will have paid out a total of £10.5 billion for people not to work!  Amazing!

Now I don't know about you, but I find this mind-boggling. After all, businesses only incur costs in order to make money and ideally should expect to earn more than £1 for every pound spent. Yet here they are spending money - when they can least afford it - without expecting a penny in return, simply so as not to have to pay it in future! You have to agree it is weird logic!

"Ah!" you say, "But it is not only businesses that are making these payments." Well, that depends on your definition of 'business' but it does not make it any less ridiculous. In fact if it is a non-profit or a public sector organisation making the payment it is even more dubious, because it means donor or taxpayer money is being expended for no return and that is even harder to justify.

Now don't get me wrong. This is not an argument against redundancy pay. Employers making people redundant, depriving them of their livelihoods and submitting them to the indignity, emotional and psychological stress that goes with losing their jobs, are morally obliged to pay compensation for that. No, I am simply questioning the non-alignment of commercial and economic wisdom. It simply does not make economic sense to pay people to do no work. Yet that logic is very rarely challenged.

Consequently more has to be done to better align economic and commercial imperatives. This requires employers do more to:

• Ensure that they employ the right talent when they recruit.
• Recognise the investment they have made in hiring and developing that talent.
• Understand what it is they are losing when they consider making that talent redundant.

It might not be possible to avoid making people redundant, but a more thorough approach to recognising and acknowledging the value of talent and managing it properly, is likely to make it far less likely. This is not least because awareness of your talent pool gives you a stronger platform for redeploying rather than retrenching your people. This will ensure that you minimise the long-term impact of any downturn and recover sooner.

Employee reward programmes - key drivers challenged

The results of a 2009 study by Hay Group into the "Changing Face of Reward" have just been released. It found that the "War for Talent" has narrowed into 3 fronts focused around high performers, high potentials and 'mission critical' roles. Of course there is no way that one can challenge the findings but they certainly point to a potential disaster in the making.

One needs look no further than these three terms for the first inkling of this. Why? Because there is no recognition here whatsoever of the loyal 'foot-soldiers' who ultimately do all the unsung work on which the organisation relies.

What is a 'mission critical' role? Where do the boundaries lie between mission critical and mission non-critical? Not for nothing are the receptionist and telephonists sometimes referred to as the "Directors of First Impressions." How much potential business is lost if they don't do a good job? That might just make the difference between survival and failure. In this day and age a clerk who misdirects an important email with a key customer file attached can "unleash the dogs of war!" Every day the newspapers are full of stories about people who have not done their job properly and, at the very least, exposed the organisation to a maelstrom of bad PR.

With strategic thinking like this the HR profession is ensuring that it will NEVER effectively solve the employee engagement problem, which is one of the biggest challenges of the times.

This is highlighted by the finding that "The focus on pay for performance has never been greater." Maybe not, but that doesn't mean it should be. The tragedy is that no-one has recognised that pay for performance conflicts with the goal of building an effective team. And at the end of the day any organisation is ultimately a team. Thus pay for performance is a root cause of employee disengagement and organisational inefficiency.

There is nothing intrinsically wrong with the 3 categories identified by the Hay survey, but these people are already recognised through higher salaries. In order to optimise their contribution - and everyone else's - you would do better to offer a key reward programme that rewards everyone for the way the team performs. The fallacy of performance related pay has already been discredited by recent executive performance. It is high time it was finally exposed and kicked into touch. If you want to optimise organisational performance you have to recognise and reward team performance.  

Who knows best?

The expression "Span of Control" surfaced from the murky mists of my mind the other day. I remembered having learned no manager can expect to directly manage more than 7-10 people effectively. This made me wonder if this term was still used and whether the theory still applied.  So I had a quick look at the internet. The results certainly made for interesting reading.

Rather surprisingly, the term stills seems to be widely used - another indication that the concept of command and control is not quite as passé as we would like to believe. Wikipedia confirmed my recollection of 7-10 being the ideal number. It also informed me that corporate leaders' efforts to flatten organisation structures since the 80's had caused the average span to increase to about 100. As you would expect, this was made possible by "the development of inexpensive information technology." Nonetheless, with a span of control this wide it is hardly any wonder that employee engagement is the problem it is.

As you would expect, however, the concept of span of control has become "less salient." This is apparently due to the shift away from hierarchical structures to self-directed cross-functional teams. Since responsiveness and adaptability are hardly compatible with hierarchical organisational structures, this shift makes perfect sense.

However, one aspect of business continues to be doggedly hierarchical: the development of strategy and operational tactics. This remains exclusively the domain of the executive team and perpetuates top down, command and control management. Conventional wisdom says this is unavoidable. But the problem with this is that the executive team is:

• The furthest removed from the customer; and
• The furthest removed from day-to-day operations and the challenges people face.

This means that the people who know the business needs best are not involved in the process. Furthermore, in most organisations the executive management team comprises only a small percentage of the business thinking capacity. Thus it is illogical that they should have such a disproportionate say in charting the direction. Clearly this is risky and lack of strategic alignment and lack of employee engagement - different sides of the same coin - are a clear indication of an executive management team that is out of touch.

Good communication goes some way towards addressing this, but only if it is a two-way communication. Management has to be prepared to listen and be guided by people "lower" in the organisational hierarchy. You may not be able to dispense totally with the hierarchy, but you must have some means of utilising the full "business intelligence" of your people. Clearly this is not possible with disengaged employees. You need to move away from "span of control" to "span of contribution."

Is Redundancy Losing Favour?

Is the workplace becoming more humane? Recent reports show that output in the UK has fallen by 6% while unemployment has only gone up by 2%. This interesting statistic has been used to suggest that unemployment is not going to be quite as big a problem as had been forecast.

Yet is this really de facto evidence of management doing more to hang on to their employees and looking for more alternatives to redundancy? Certainly there is ground for optimism. Indications are that many employers did try to find alternative solutions. But it could just as easily be argued that this is simply the inevitable consequence of a more technology based society.

The last recession was more than 16 years ago, and the lengthy interval makes comparisons so much more difficult. New technology revolutionised the way business is conducted and global competition has led to a fixation with the need to cut costs and improve efficiency. Initiatives like 6 Sigma and "Lean" have seen businesses re-engineer operations. Much of this has been at the price of jobs. Indeed, reduced headcount has been the primary justification for many technology initiatives. So much so that redundancy has been a common feature of the boom, and job losses occurred at a level never before seen in good times.

In light of this it is hardly surprising that job losses have been fewer than forecast. After all organisations that had already optimised staff levels simply would not have the capability to reduce their staff any further. Consequently a cynic might argue that the redundancies made during the recession showed that nothing had changed and that people remained the first target for managers looking to reduce costs in troubled times. Thus optimism about a more humane workplace may be misplaced. As ever, statistics are open to interpretation.

It is a cliché to say that redundancy is a last resort, but my argument against redundancy has always been based on two key principles:- 

• The organisation as a whole is a team; and
• The pain suffered to enable the organisation to survive any economic or business downturn should thus, as far as possible, be borne equitably by the whole team.

Until we have measures in place that incorporate these principles I remain unconvinced as to the progress that has been made in properly valuing people or the contribution they make as human assets. What do you think?

How to Improve Training Effectiveness

What is your reaction to a headline that reads "Quarter of all training fails to deliver significant performance improvement?"

I am pretty sure it would be one of amazement, but I am not so sure I know why. Are you amazed that as much as "a quarter" of all training is effectively wasted? Or are you amazed that it is only "a quarter" - i.e. as little as 25%?

I have to confess I fall into the latter camp. (I should make it clear that I am talking here about formal work-related training only and not all education.) I believe training is considerably more than 25% ineffective. I find it fascinating to observe how quickly lessons get forgotten and we fall back into our old ways. It’s rather like New Year Resolutions. No matter how good our intentions, we fall short.

Anyway, whatever the percentage there is a problem. The headline, from HR Magazine, was for real! And even more disturbing is that they report this 25% 'failure' costs £9.5 billion a year, which is a steep price to pay. And if you share my more sceptical view, then this cost is likely to be even greater. This makes proposals to make regular training an employee's legal right a real concern. You see, this reduces the likelihood of proper cost-benefit justification.

Cost-benefit justification for training is already weak. Yes, you devote effort to training needs analysis, which arguably equates to benefits, but the emphasis is on costs. You don't permit training unless there is a budget and/or the expense is approved. That is fine, but how much effort do you put into post training assessment to measure its effectiveness? The figures themselves say it is not a lot.

Yet a large proportion of this training waste can be avoided. All it requires is more emphasis on measuring the benefits - the return on investment.

Now you may argue that this is fine in theory but in practice measuring this is too difficult, time-consuming and costly, and so would make the problem worse. You might even claim that some of the benefits are intangible anyway in so far as they simply improve employee engagement. Perhaps, but that's hardly relevant here.

Certainly it is not easy, and it would be naïve to say it was. But, if training costs or a portion of them were capitalised and added to the individual's asset value, in the manner I propose, then you would have a basis for more effective negotiation between manager and employee to justify the training as well as a measure of gauging its effectiveness. The net change in bottom line over the gross increase in Human Asset Value, gives you a perfectly empirical formula. It may not be perfect, but it is at least as good if not better than anything we currently have. Furthermore, if the rules are properly defined and agreed, it is not subjective and cannot be easily manipulated. And, even better it provides a basis for HR and Finance to communicate more effectively, which has to be good for business.

That's what I am putting on the table - a powerful training effectiveness measure. Can you trump that?

Powering the Light

This amazing picture was emailed to me by a colleague earlier today. It is of a human representation of the Statue of Liberty, made up of 18,000 soldiers preparing to go to war, and was taken in 1918 at Camp Dodge in Iowa. However, while the picture is interesting it is the facts that are amazing.

FACTS:

Base to Shoulder: 150 feet
Right Arm: 340 feet
Widest part of arm holding torch: 12 1/2 feet
Right thumb: 35 feet
Thickest part of body: 29 feet
Left hand length: 30 feet
Face: 60 feet
Nose: 21 feet
Longest spike of head piece: 70 feet
Torch and flame combined: 980 feet
Number of men in flame of torch: 12,000
Number of men in torch: 2,800
Number of men in right arm: 1,200
Number of men in body, head and balance of figure only: 2,000

Total men: 18,000

Notice the proportions - two thirds of the total number make up the flame alone! By contrast only one ninth makes up the head, body and rest of the figure.

I couldn't help but wonder if this isn't symbolic of life. Could this be a metaphor for the effort it takes to achieve our life purpose or to succeed in meeting a goal? Whether success is to develop a useful business or a popular brand or simply "to make a difference"? If we draw the analogy that the flame is employee engagement or strategic alignment it certainly seems to be about right. What do you think?

Employee Recruitment: The Blame Game

In a coincidentally convenient follow up to my last blog, HR Magazine this week published a report that 75% of employers feel "ripped off" by recruitment agency fees. I cannot help but think that this is a variation of the theme that it is hard to find good people.

There is an old adage that says, "Always remember, when you point your finger at someone there are 3 pointing back at you!" Employers would do well to remember this, because they are probably just as much to blame as the recruiters, if not more. After all, at the end of the day, the agency simply selects candidates to fit their requirements and they:

• Determine the job description and what they are looking for in a candidate;
• Make the final candidate choice and accept the candidate put forward;
• Accept the recruitment agencies terms for finding a candidate.

The major explanation given for this employer dissatisfaction is the quantity of "poorly-targeted CVs that don't meet their requirements." This also points to a failure to fully understand the recruitment process, and the choices of recruitment available. After all there are 2 types of recruiters - retained  recruiters - who get paid a fee to find a suitable candidate, and contingency recruiters, who only get paid when a candidate they put forward is employed. So in both cases the ultimate onus is on the employer.

Perhaps the article itself is just extremely shallow or the survey it was based on flawed. However, I cannot help feeling that employers are misdiagnosing the problem and blaming the recruitment industry for what is effectively a poor process. Rather than pointlessly criticising, they should be more proactive and take steps to ensure that they recruit the right people and improve employee retention rates.

Specific problems that they might look at to improve the recruitment process include:

• Looking to recruit people rather than just fill job descriptions;
• Look to recruit for employee personal development rather than expecting the recruit to continue doing what s/he was doing previously;
• Recognising that a new person requires support and time to grow in comfort in the role and accommodating that need;
• Eliminate the problems that caused the previous employee to leave in the first place.

Recruiters on the other hand, should take this report as an early warning and take a lead in working with employers to address the problem. Ultimately their livelihood may depend on it.

Are Good People Really So Hard to Find?

In a recent blog I came across the writer claimed he would be a rich man if he had received a pound for every time he had heard business owners and executives say, "Good people are hard to find." Don't you find that remarkable? I certainly do!

Just think about it. Recruiters only respond to applicants that they are willing to put forward to their clients because they apparently get so many applicants for every position. Let's be conservative and say that is 10 applicants for every job. (You can appreciate that has to be very conservative for otherwise they would surely be able to respond to every applicant!) From those 10 let's say they decide to interview 5. That means that 50% of the applicants are deemed to meet your criteria for the position.

The recruiter will interview them, verify qualifications and check references. They may even subject them to a battery of tests to further prove their mettle. From there they will create a shortlist of 3 for you to make your final choice.

In your organisation they may well be subjected to any or all of the following:

• A number of preliminary interviews;
• A screening process of some description that tests their psychological profile, aptitude, capability and cultural fit;
• A second, and possibly even a third, interview.

From that you will then make a decision and offer the ideal candidate the role. Providing you haven't taken so long over this entire process that they have accepted a position elsewhere, you now have to negotiate all the terms of employment to ensure you meet their aspirations. Assuming there are no glitches there you now have someone who is:

• Definitely capable of doing the job; and
• Prepared to work for you on terms that have been agreed by you both and that therefore must be considered satisfactory by both parties.

In light of all this it is clearly ludicrous to say that there are no good people.  Particularly when you consider that my conservative numbers are likely to be considerably understated. How can there be a 'War for Talent'

On top of that, you will agree that everybody wants to do a good job. A new position is always stressful because new employees are anxious to please and at the same time have to learn the way "things are done around here!" So consequently, attitude is not a problem either; certainly not initially.

Why then do statistics show a recruitment failure rate of 42% within the first 6 months of employment? Rather than being an indication good people being hard to find, is perhaps rather an indication of there being few good employers?

So what are you going to do about it?

Corporate Branding, Employer Branding and Employee Engagement

Happy New Year everyone! I hope it is a particularly enjoyable and prosperous one for you all.

Of course to be so means, for most people, that it also has to be a successful and prosperous New Year for your employer organisation. Anything less and life's uncertainties become more onerous and stressful. Yet, I wonder if, like me, you question whether your employers really understand the link between employee engagement, employer branding and corporate branding? 

I started thinking about this after a friend sent me this link this morning. I was particularly struck by the term 'brand engagement' as it is one I had not previously registered. It fuses the concepts of corporate branding and employee engagement rather neatly.

The term 'employer brand' is a relatively new one and seems to have been coined by consultants as a response to the war for talent and intended to keep employers on their toes. I'd be interested to know how successful you think it has been because I certainly don't think "improving our employer brand" figures high as a strategy for many employers.

I'd also be interested to know your thoughts on the correlation between employee engagement and corporate branding, for 2 reasons.

Firstly, the list of the bottom 25 lowest-rated companies included in this survey includes some pretty well known companies. Thus, despite the undoubted link between engaged employees and corporate performance, I have to question the link between employee engagement and corporate branding.

Secondly, the list comprises only companies that have 25 or more people complain about the company they work for. This must:

• Preclude a large number of companies that might otherwise make the list;
• Skew the results towards the larger companies with the greatest number of employees and the greatest brand awareness.

Since not everyone works for a great brand this therefore suggests that more people are unhappy in their work than we would like to admit. On the other hand, there are a great number of people, such as hospital workers, firemen or policemen, who provide exemplary service without in any way identifying or being identified as part of a corporate brand. In which case, it is possible the attempt to link corporate brand and employer brand may be tenuous at best. What do you think?

Hopefully you can still have a happy and prosperous New Year even if you don't work for a prestigious corporate brand.

Whose Head is in the Clouds?

I don't know about you, but industrial disputes just slay me. However you look at it, a business, by definition, is a group of people working together for a common goal. These people, with no coercion or compulsion, have come together for mutual benefit to fulfil a specific purpose. So, how can any business reach the kind of impasse where people feel compelled to abandon their jobs and take strike action?

Nowhere is the sheer lunacy of the situation more blatantly demonstrated than in the current situation at British Airways, where cabin crew have voted for a 12 day strike at the busiest - and the company's most profitable - time of the year, jeopardising the holiday plans of an estimated 1 million customers. For any outside observer the situation is absolutely flabbergasting. 

I have no more information about this strike than any other newspaper reader, and clearly there are some major issues at stake here for the situation to have escalated to such an extent. Even so, one cannot help feeling that a little bit of reason would go an awfully long way to eliminating the deadlock. As such I feel like any parent trying to resolve a fight between their children - unable to get to the bottom of things and simply wanting to knock heads together.

On one hand you have Willie Walsh, the CEO, reported in the newspapers as saying, "This just proves to me that the unions just do not understand just how difficult things are." On the other hand, even allowing for the company's legal challenge on the validity of the poll, you have somewhere in excess of 80% of the employees involved voting to take action that, if it goes ahead in the manner they are threatening, could very well jeopardise the entire future of the company.

One assumes that the people voting are reasonably intelligent so, if this is not brinksmanship of the most cynical order, it suggests that they perceive having no job at all as preferable to making the sacrifices they are being asked to make. Thus one could counter Walsh's logic by saying that, "Clearly he does not understand just how galling the company's offer to its employees is."

So who has their heads in the clouds? Each party clearly thinks it is the other and I would say that they are both right!

Whichever way you look at it, the crux of the matter appears to be a complete lack of effective communication. If the employees don't understand how bad things are, as Walsh says, then surely he is at fault for not communicating it better. Similarly, if the employees cannot get their concerns across by any means other than the threat of strikes, it is once again a communication issue.

Poor communication is, however, the non-thinking person's answer that always gets the blame for everything, when it is really a symptom rather than a cause. Thus simply improving communication would not do a great deal for the current situation, and certainly would not prevent further industrial conflict in the future. The real problem is an obvious lack of organisational alignment. And that is itself a legacy of traditional command-and- control management. It is evident that - at the end of the day - Walsh expects his employees to do what he tells them. Clearly that is never going to happen, and so the games will continue.

It is time to break the deadlock, and that requires coming back to earth and finding a new approach.