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BUILDING A MAGNETIC CULTUREHow to Attract and Retain Top Talent to Create An Engaged, Productive Workforce
By KEVIN SHERIDAN
McGraw-HillCopyright © 2012 McGraw-Hill, Inc.
All right reserved.
Chapter OneWHAT IS A MAGNETIC CULTURE AND WHAT ARE THE BOTTOM LINE BENEFITS OF EMPLOYEE ENGAGEMENT?
You can take my business, burn up my building, but give me my people and I'll build the business right back again. —Henry Ford
Engaged employees possess an intellectual commitment and emotional bond (e.g., pride, passion, enthusiasm) to their employer, an eagerness to exert both extra discretionary effort and creativity, as well as a willingness to accept some personal ownership for their own level of Engagement, all leading to maximized outcomes for customers, the organization, and themselves. Engaged employees are likely to recommend their organization as an employer of choice, as well as promote the organization's products and/or services. Employee Engagement matters. Engaged employees are:
Ten times more likely to feel good work is recognized.
Ten times more likely to feel Senior Management is concerned about employees.
Eight times more likely to feel their supervisor encourages their growth.
Seven times more likely to feel they receive regular performance feedback.
Four times more likely to be satisfied with their job.
Four times less likely to think about leaving the organization.
Engaged employees are also linked to satisfied customers at a Pearson correlation coefficient of r = +0.85, meaning that these two variables are strongly related. A Pearson correlation coefficient is a mathematical index used to describe the direction and size of a relationship between two items or variables. A correlation can range between -1.0 and 1.0, with -1.0 being a perfectly negative correlation (every time one item increases, the other item decreases, and vice versa) and 1.0 being a perfectly positive correlation (both items increase and decrease together). A coefficient of 0 represents a completely random relationship. Most items measured using this scale fall somewhere in the middle of -1.0 and 1.0, but rarely exactly on 0. It is important to note that this correlation does not imply causation. Instead, it shows the relationship between two variables. In essence, the more engaged employees you have on your team, the more satisfied customers you will have as well. When it comes to Employee Engagement, there are three types of employees in the workplace: actively engaged, ambivalent, and actively disengaged. Understanding these levels of Engagement and how they affect one another is essential to managing an engaged and productive workforce.
Actively Engaged Employees
Go above and beyond, frequently doing more than what is asked of them
Are net promoters: they proudly represent and promote the company's brand
Are passionate about the mission, vision, and values of their organization
Have awareness and personal commitment to their Engagement level
Are self-motivated and driven to perform at a high level
Are welcoming and supportive of new employees
Contribute new ideas, often, to better the organization
Adapt to and facilitate change
Are optimistic about their future with the organization
Are not apt to "go the extra mile"; they do what is asked of them and are not inclined to do much more
Volunteer rarely, if ever, for extra assignments or to take lead roles
Display lower energy and lackluster performance on assignments
Focus, day to day, on simply "getting by"
Can often feel unappreciated or unimportant
Go to work primarily for the paycheck
Are more likely to have a haphazard attendance record and "watch the clock" for the time their shift ends
Are not overly excited about their current work situation
Actively Disengaged Employees
Have negative attitudes about their employer and job duties
Are malcontent; they sometimes openly show their distaste while on the job
Focus on problems
Can cause more harm than good with their behavior and actions
Are not personally invested in the success of the organization
Badmouth supervisors consistently behind their managers' backs, either in the workplace or to friends and family
Actively seek to share their negative personal viewpoints with new and ambivalent employees
Figure I.1 summarizes the frequency of Engagement levels in the workplace.
The Spread of Engagement Levels
People are often influenced by those around them, and the workplace is no exception. While many think the social pressure to adopt other's viewpoints ends after our teenage years, that certainly is not the case. My grandma actually used to say one of the great benefits of getting old is "There is a lot less peer pressure." That always made me laugh heartily, but she definitely made an important point that transfers to the workplace. Although managers cannot completely control the spread of Engagement levels at their organization, they can make decisions that will promote an increase in Employee Engagement.
Ambivalent employees are the most easily influenced by their coworkers' Engagement levels, so pairing them with engaged employees for group projects and assignments is a great tactic to increase Engagement. Engaged employees generally enjoy being leaders and mentors, and will set a great example for Ambivalent employees to take personal ownership of their Engagement level.
Actively disengaged employees can be toxic to other employees, especially those who are ambivalent. Other organizations, such as Gallup, have deemed disengaged employees to be workplace "vampires" who suck the life out of those around them. When ambivalent employees befriend disengaged employees who are infectiously negative about their position and the company, that negativity will spread like cancer. Since misery loves company, disengaged employees often seek out other employees and drag them into the malaise of negativity. Managers should also be aware that these vampire-like employees can quickly suck positivity from coworkers if given the chance.
Casey Stengel, baseball Hall of Famer and former manager of the New York Yankees and New York Mets, has a quote that hits this situation right on its head: "The secret of successful managing is to keep the five guys who hate you away from the four guys who haven't made up their minds." It sounds like a funny strategy, but it honestly works when it comes to Engagement. Managers should try to limit the interaction between disengaged employees anmbivalent employees, as well as new employees. Instead, encourage all employees to get to know the employees who are engaged. Engaged employees aren't negatively affected by their colleagues' Engagement, so it is a good idea to use them as mentors.
Actively disengaged employees are prime candidates to consider transitioning out of the organization. Millions of managers waste boatloads of time coaching these Engagement arsonists, hoping for improvement to no avail. Venturing down the path toward yet another coaching or disciplinary review session, managers are falsely optimistic that meaningful improvement will occur. In reality, this is taking managers away from spending valuable time with their A Players. It is often better to cut your losses and spend more time with the employees who are deserving of the coaching, mentoring, and development, than deal with the entirely disengaged.
In order to protect the workplace environment from negativity, sometimes it can be best to simply get rid of the source of the problem. Do not count on disengaged employees to show themselves to the door; research has shown they are likely to stay, although they produce the worst outcomes for your organization.
Actively managing the Engagement bookends is a critical step toward building a Magnetic Culture. Identifying how employees with different levels of Engagement affect one another is crucial for heading down the path to organizational success. Creating a workplace environment where Engagement thrives and Disengagement dies should always be a management priority.
Although it is widely believed that engaged employees produce a higher quality of work than ambivalent and disengaged employees, I wanted to see data to understand exactly how Engagement impacts the bottom line to statistically prove whether Engagement initiatives will have a return on investment (ROI). Personally, I am a numbers guy.
By correlating 117,868 of our clients' individual Employee Engagement Survey scores to corresponding annual performance reviews, we uncovered a strong relationship between Engagement levels and performance. Nearly 80 percent of engaged employees received the best performance rating on their annual evaluation. Approximately 55 percent of disengaged employees obtained the worst performance rating on their annual review. This data certainly says a lot about what Engagement means for an organization. Eighty percent of the time, engaged employees will meet or exceed the highest standards you have in place. Fiftyfive percent of the time, disengaged employees will fall into the bucket of the lowest performance ranking you offer. To me, such low performance means an employee is not even fulfilling basic job expectations and is subject to probation or termination.
In a nutshell, the overwhelming majority of engaged employees are your top performers, and the majority of disengaged employees could, and probably should, be terminated. To make your organization as successful as possible, you should be interested in getting more engaged employees. This study should be clear motivation for organizations to focus on Engagement as a way to increase performance. As employees become more engaged and committed to their jobs, the more likely they are to be high performers.
Engagement and Repeat Customers
On average, it costs five times more to attract a new customer than to retain a repeat customer. Customers come back when they are satisfied with their experience and the level of service or product quality they have received. Employees' interaction with customers, therefore, plays a crucial role in whether customers will want to return. In fact, customer service can be more important to people than the actual product or the convenience of doing business with the organization.
For example, suppose you live near two dry cleaners that provide the exact same quality in cleaning and tailoring. One dry cleaner is right around the corner from your house, but the employees are not at all friendly. They make you feel like a burden when you come in, and they take their time before helping you because they are not concerned with making you wait. The other dry cleaner is a mile away, but the employees are extremely nice, remember your name, and seem genuinely happy to see you. They also provide speedy service because they care about respecting your time. Which business are you going to frequent?
Think about how the situation would change if both dry cleaners had equally friendly employees, but one business had a higher quality of cleaning and tailoring because employees cared more about doing a good job. I bet you would probably go to the dry cleaner that provided a better quality service, even if the dry cleaner was slightly less conveniently located.
Customers are faced with decisions like this hundreds of times each day. Research has shown that 70 percent of buying experiences are based on how customers feel they are being treated. In addition, about 90 percent of unhappy customers will not buy again from the company that disappointed them. In a world with so many options for any given product or service, Engaged employees will set your business apart and give you an edge on the competition.
The Power Dimensions and Becoming Best-in-Class
Our organization considers clients Best-in-Class when they score in the top 10 percent favorable for overall scores from their Employee Survey. Earning such favorable scores is no easy feat; we have millions of responses from thousands of organizations in our Normative Database, so the competition is stiff. Gaining Best-in-Class status means that employees responded in the top 10 percent favorable of all organizations. Best-in-Class organizations have the most Engaged staff overall, but we wanted to see what else they have in common.
We analyzed Best-in-Class survey data by dimension, which is the general topic that survey items are grouped under. Our survey dimensions are as follows:
Dimension 1: Overall Job Satisfaction
Dimension 2: Satisfaction with the Work
Dimension 3: Coworker Performance/Cooperation
Dimension 4: Pay Satisfaction
Dimension 5: Benefits Satisfaction
Dimension 6: Promotions/Career Advancement
Dimension 7: Supervisory Consideration
Dimension 8: Supervisory Promotion of Teamwork and Participation
Dimension 9: Supervisory Instructions/Guidance
Dimension 10: Communication
Dimension 11: Human Resources/Personnel Policies
Dimension 12: Concern for Employees
Dimension 13: Productivity/Efficiency
Dimension 14: Training and Development
Dimension 15: Physical Working Conditions
Dimension 16: (Concern for) Customer Service
Dimension 17: Strategy and Mission
Dimension 18: Job Stress
Dimension 19: Importance to Job Satisfaction and Employee Productivity
Out of all of these dimensions, we found a glaring similarity between Best-in-Class organizations that was completely absent from non—Best-in-Class organizations. Every single one of our Best-in-Class clients scored above average on the same three dimensions:
Dimension 10: Communication
Dimension 16: (Concern for) Customer Service
Dimension 17: Strategy and Mission
Not one of the hundreds of HR Solutions' clients was subpar or at a deficit to the norm on these three key components of a Magnetic Culture. It is not a fluke that so many world-class and créme de la créme organizations have the exact same things in common. It shows that these three ingredients are a crucial part of the recipe for a highly productive, engaged Magnetic Culture. We call Dimensions 10, 16, and 17 the Power Dimensions.
Another distinctive quality our research uncovered about Best-in-Class organizations is that they can charge 10 percent more than other companies (without adversely impacting revenue growth) and commonly make twice as much in profit. While price and quality are important purchasing factors, these profits come from employing a great staff that has the organization's best interest at heart.
Disengagement = Bad PR
The importance of Employee Engagement has been amplified by social media. When customers or employees are unhappy with an organization, it is now easier than ever before to spread that message to hundreds, if not thousands of people within mere seconds. This general principle is called "the Multiplier Effect." On average, one happy customer will tell five other people about his or her experience. Thus about five others will learn of the compliment. On the flip side, one unhappy customer will voice his or her dissatisfaction to 10 potential customers who, in turn, will tell at least five other people. Thus about 60 others will eventually learn of the complaint. Essentially, bad news travels faster and farther than good news.
When social media is involved, however, the message spreads exponentially. Think about how easy it is to post a status update on Facebook that says you went to a new restaurant in town. Whatever you think about the new business becomes an instant restaurant review for all of your friends. If you had a great time, your friends might consider going there. If you experienced bad food and rude employees, your friends will likely avoid the restaurant if they remember your comments. More than ever, people are starting to rely on customer reviews as major influencers in consumer purchases due to the widespread capabilities of social media. As an organization, this means it is essential that employees provide excellent service to current customers to build the pipeline for future customers.
United Breaks Guitars
Perhaps you are familiar with the United Breaks Guitars YouTube video. This video, which has had over 10 million hits, chronicles the real-life experience of how David Carroll had his guitar broken by careless employees during a trip on United Airlines in 2008 and the subsequent reaction from the airline. The song immediately went viral when it was released in 2009, and it was a public relations humiliation for United.
Excerpted from BUILDING A MAGNETIC CULTURE by KEVIN SHERIDAN Copyright © 2012 by McGraw-Hill, Inc.. Excerpted by permission of McGraw-Hill. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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