How can meaning and authenticity impact performance?

Business bookshelves are groaning under the weight of single ideas padded out to 250 pages, recycled and repackaged messages and occasionally, some ground breaking insights. I recently read a book that falls into the last category – “ Meaning Inc. – the Blueprint for Business Success in the 21st century” by Gurnek Bains. Bains is founder and CEO of YSC, a corporate psychology consultancy with global offices.

This is not another “In Search of Excellence” or “Built to Last”, books that looked back and analysed the precursors of success. Many of their successful companies floundered. Bains, using the widespread research of YSC, has delivered a concept that is enduring that is, creating meaning for employees, customers and stakeholders. His premise is that bringing meaning into the workplace is the best way to motivate staff and achieve sustainable high performance, and uses a number of corporate examples on the journey.

Bains argues that the following attributes are present in companies who create meaning:

• An invigorating sense of purpose that goes beyond business success and which makes people feel that they are changing society as opposed to servicing needs
• The courage to set extremely challenging goals and to be ground breaking in the pursuit of the core purpose
• An innovative approach to benefits and the treatment of people which makes them feel special
• A culture that allows people to be themselves and to feel that they are personally making a difference and utilizing their distinct talents
• A rigorous and at times almost aggressive approach to evaluating performance and contribution
• Clear and authentically grounded values which are lived through thick and thin
• A concern for the sider and particularly, the environmental and societal impacts of business activities
• Through all the above, an excellent reputation with consumers and other political and social stakeholders
• Excellent long term performance coupled with a preparedness to sacrifice short term gains if their achievement conflicts with the core purpose and values.

I must say that from recent experience, particularly working with people under 35, this series of prerequisites really resonates. It is all about being authentic.

I am lifted by these insights in the context of the potential contribution that Acelero can make within these prerequisites. Firstly, the Acelero approach is about tailor made alignment to the organisation’s strategies and values. So a company wanting to follow Bains insights on creating meaning, can set on the journey and measure progress. It is easy to measure behaviours and values, as well as competencies and objectives using the Acelero system. Putting the company in the wider social context is also achievable, depending on what is set up to be measured. Secondly, the “rigorous approach to evaluating performance” can’t be adequately achieved using pen and paper, spread sheets, or transactional HR systems stretched to measure performance  – ones that the majority of corporate Australia currently uses.

Measuring performance effectively provides the mechanism for people to have an impact through agreed goals.

Of course, a clear sense of purpose and the leadership vision to set a course based on Bains approach very much depends on the CEO and her executive team, but once established has a much better chance of success if reinforced through measurement, something which will, in its own right, make a significant contribution to productivity and performance.

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Take steps now to re-engage and retain high-value employees

Despite foregoing pay rises and perks throughout the downturn, most employees now require very little from their employers to become re-engaged at work. In fact, many workers were exploited or ignored during the downturn and people have done a lot with less. Now, the risk is that employers have used up their engagement capital and returned to business as usual without considering the impact on their staff. Some are not even at ground zero when it comes to engaging their workforce - with employees either passively or actively disengaged.

The good news: Initiatives to re-engage these employees don’t need to be expensive or time-consuming. Workers have been exhausted from that pressure to perform for no reward. But when asked what they mean by reward, employees’ most common response is: “I just want someone to say thank you. I just want someone to say, ‘Man, you just put in such a massive effort over these last three months; I really appreciate it’. In most cases, recognition and encouragement is all people really want.

Beware disengagement events

As the employment market continues to recover, many employers should expect to face a rush of resignations, and “disengagement events” cause this to happen, including bonus time, or the resignation of just one employee. It’s the beginning of ‘musical chairs’ - when a key colleague leaves, it really destabilises the team dynamic.

Employers should act quickly when this occurs. Low-cost initiatives might include changing the seating arrangements; giving certain members of the team a different project to work on (and instilling a sense of urgency to complete it); holding social events to get people bonding; and celebrating team successes.

The key is to think about what employees will say when they go home at night to their partner, You want people to say, ‘it’s a real shame that Sarah’s resigned, but I’m getting to know Mary really well because we’re working on this new project’.”

Disengaged employee alert

Once employees become actively disengaged it’s usually too late for an employer to do anything about it.

However employers can be alert to several signs, including employees who:

• arrive late and leave early (if this is a departure from the employee’s normal behaviour);
• stop volunteering for projects;
• make a jobsite their internet homepage;
• are unusually well-dressed (to attend interviews);
• start taking unaccounted-for leave; and
• withdraw from their social bonds. One of the biggest connection triggers at work is people - people at work make people stay at work. So if someone is thinking about leaving, they have to start withdrawing from social contacts at work - ‘I can’t meet you at the pub tonight’ or ‘No, you go to lunch without me’.

Prepare now

All of the major disconnection events at work have completely different solutions. To convince senior executives of the need to take action, I recommend that HR managers build a business case that outlines the extent of the possible damage to the organisation. They should identify high-value people first, and attach a value to their loss - pricing the risk, effectively, of people leaving.

The business case needs data, so you need to understand why people join your organisation, and why people quit. Look at your exit interviews, and if you don’t have them, get good data from the last 20 people who’ve gone. Next, go to your high-value people and ask them, why are you still here? How long do you want to stay? What do you want more of? What do you want less of?

Get some really rich data, because there’s going to be a lot of no-cost to low-cost solutions that you can put in place, but you have to be targeted.

Lisa Halloran is Director of Retention Partners, which she founded in 2000 to focus on exit interview outsourcing, retention surveys and manager retention skills training. Lisa is an expert on employee retention, with 14 years’ experience in HR management roles, and has provided HR policy and strategic planning consulting services to blue chip financial services firms, FMCG, television, pharmaceutical and education as well as the NSW public sector. Lisa will be speaking at Acelero’s upcoming free Thought Leadership Events: register your interest here.

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Business is a people game (and you can’t fake it)

People go to work to be paid for performing certain tasks - this of course is the basis of western economies. A person has skills and time which they sell to an organization in return for a salary. People must be paid for what they do. It puts Wheeties on the table, keeps children in school shoes and all the essential things that we have because we work.

The thing is that those people selling their skills and time ie employees -  have a choice. In-fact they have many choices:

•     Do I choose to work here - or work somewhere else for the same money (or in some cases less) because I feel better about myself and what I achieve at the place. Does my employer notice what I do?
•     Do I work hard when I’m at work and use my initiative or do I do the bare minimum?
•     Do I want to fit in and assist those around me - or make life hard for others?
•     Do I tell people outside of the organization about what a good company I work for - or that I hate my boss?
•     Do I recommend it as a great place to work - or am I asking my friends if its better at their work?
•     Do I want to continue to learn, grow and develop so I can add more for my employer and in return myself or do I do the minimum I can get away with?

This is fundamentally the question of discretionary effort. An employee can either choose to participate fully or not. They can simply go to work - do what they are told and go home without thinking about it - or thinking they will be fired. Or they can use their ‘discretionary’ effort for the good of the whole business and ultimately its profitability.

I am am constantly listening to business leaders and HR directors, all wanting and needing to do more with less. As Ann Sherry noted at the recent HR Leader awards - if you  mention the word ‘productivity’ then you are really talking about ‘people’ they are in fact one in the same thing - people doing things to improve, innovate, and grow a business.

This is simply a question of commercial return. I really like the people I work with; the RedBallooners, I am interested in what drives them, what they are passionate about, I love discovering what journey they are on and what is important to them. This cannot be faked. I like people.

The first step to being an effective manager is to like people.  And be truly interested in them. If you’re a manager and don’t like people, perhaps you’re in the wrong job. Business is a people game. I am not alone in seeing great commercial returns from listening to my team, and responding in the same way I do with customers. I leave you with some powerful statistics - let the numbers speak for themselves:

Companies that raise employee satisfaction by 20% will increase financial performance by more than 42%.
Global Study by David Maister, Practice What You Preach: What Managers Must Do to Create a High Achievement Culture (2001). Sourced from www.vault.com December 2008

A detailed study of 40 global companies found that firms with the highest percentage of engaged employees collectively increased operating income 19% and earnings per share 28% year-to-year. Those companies with the lowest percentage of engaged employees showed year-to-year declines of 33% in operating income and 11% in earnings per share.
Towers Perrin Global Workforce Study. Sourced from  www.humanresourcesmagazine.com.au December 2008

“Companies that utilised an effective employee recognition program enjoyed a 109% three-year median return to shareholders vs. a 52% return for those companies that did not.”
Watson Wyatt Study of 3 million employees, as quoted  in Forbes magazine (2004)

Hays Group research shows that 70% of engagement is determined by the employee’s direct manager.
The Hays Group, www.hayscompanies.com (2008)

Naomi Simson is Chief Experience Officer at Red Balloon Days, and has recently achieved an employee engagement score of 97%. She  will be speaking at a special Acelero lunch in November on engaging your workers - please get in touch via our website if you’d like to come along.  

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Unprepared for Growth? It’s not too late…

While the downturn had some people believing “security fears” had done away with competition for talent, the skills market hadn’t actually improved. “It’s just that the mobility of the workforce had died down,” Sork says.

Now, as mobility increases, employers that have worked to retain talent will be in a position where “anyone they bring on board is actually growth-related”. Further, the employees that have been retained “are actually going to be fairly highly engaged and want to perform at a high level”.

Employers that need to replace existing talent will suffer a lag time, Sork says, as every person that leaves adds “an extension to the timeline for them to be business-ready”.

He suggests that HR managers who have not prepared for growth should go into damage control now, taking four important steps.

1. Look for the warning signs

Discretionary effort - or a lack of it - is the first warning sign to look out for, says Sork. By examining people’s behaviour patterns, employers can seek to discern whether workers are “demonstrating a willingness to apply themselves to the best of their ability and for the good of the company” or just achieving “minimum performance standards” until “something better comes up”.

Meanwhile, Sork suspects the biggest warning sign - resignations - is yet to be fully realised. “The interview process for existing employees will take a little while and then I think real mobility will start kicking in [during] February and March.” Only then will some businesses realise they are entering a “danger zone”, he says.

2. Prepare for what’s ahead by acknowledging what’s past

One of “the biggest issues” for organisations post-GFC is the way they focused on survival at the expense of engagement during the downturn, says Sork. In order to address this, employers should acknowledge their mistakes to employees and explain why their actions were necessary “from their perspective, at the time”, he says.

It is about acknowledging, not justifying, their actions, he says, “resetting the commitment to people and therefore, hopefully, resetting the commitment of people to the business”.

3. Compensate workers according their value

Even those organisations who were “doing the right thing” by their employees all along may have had to stop handing out bonuses or doing salary reviews during the downturn. “Knowing now that the business is potentially going to enter into a phase of growth and will capitalise on better performance, they do need to make sure there is at least a review of how they are going to acknowledge the commitment their people have given during tougher times,” he says. Whether that’s financial or otherwise, there is a need to demonstrate appreciation for employees’ commitment during difficult times.

Sork says managers should ask themselves: “Do I want to hang on to this person? What do they see as their perceived value? Am I compensating them according to their perceived value? Do I think I’m getting value out of them?”

“If all of those answers are ‘yes, I am,’ then you’re likely to have a secure employee,” he explains. “If the employee thinks they’re being undervalued at the moment then there’s a risk they’re going to seek out environments other than yours.”

4. Prepare managers to be good primary carers

A manager’s ability to create a welcoming environment can be the difference between avoiding the “revolving door” and attracting and retaining talent, says Sork. While all employees need to accept their role in welcoming a new member, the manager is the key.

“In our experience, the majority of managers are not good at attaching and onboarding, and so we’re likely to enter into a phase where there is a reasonable level of placement and fallout,” Sork says.

Sork suggests building awareness and readiness by helping managers to understand what attachment is, and the impact they will have during the critical attachment period (the first 120 days).

Their performance will affect the discretionary effort and performance of all new employees - and the overall risk of attrition - so it must be measured and managed well, he says. 

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The true cost of unplanned employee turnover

I don’t know the exact numbers for your organisation, so when I tell you that unplanned employee turnover is probably costing you between 3% and 5% of your annual revenue and up to 40% of your annual profit I’m basing that on statistics taken from averages across many industries and organisations.

Hopefully you do know your numbers.

For example, what percentage of your employees leave every year, what proportion of this is made up voluntary departures, what is the average cost of an unplanned loss, how does that affect your bottom line?

If you do know your own statistics you can plug them into the calculations at the end of this article to discover how just much unplanned employee turnover is costing you. When you do you’ll almost certainly find that those numbers are just plain frightening, assuming I’m even close to being right (and I’m pretty confident I can demonstrate that I am). Or they represent a huge opportunity, if you can do something about them

For the moment, let’s assume “regretted departures”, i.e. the loss of people you’d rather not lose, costs you 3% of your annual revenue. That’s money straight off the bottom line being poured down the drain. To put it another way, if your annual revenue is $100 million, unplanned turnover could be costing you $3 million, possibly more. If your EBITDA is 10% of revenue that’s the equivalent of $30 million in sales. (If you’re number oriented all the figures to back these assumptions are laid out for you below).

Scary isn’t it?

So, what, if anything, can you do about it?

Obviously you can’t eliminate it totally. People will always leave for their own reasons; moving away, getting married, retiring, dying, etc.

But if you could reduce it by even 1% you could make a significant contribution to your bottom line – perhaps 4% or more, equivalent to selling another $4 million for a $100 million revenue company.

And you can, for less than the cost of a cup of coffee per employee per week.

The first step is to understand the scale of the problem. If you can’t measure it you can’t fix it.

The second step is to implement a program of human capital risk management. To understand which of your employees are most at risk of leaving, the impact on the business if they do leave, their level of performance, their future potential and what plans you can put in place in case they do leave.

The third step, at least for those with a moderate to high flight risk and moderate to high business impact, is to do something about it. That doesn’t necessarily mean spend more money, it could be as simple as giving increased recognition, offering more flexible hours, providing better training, maybe just a quiet conversation. What you do in step three depends on many things. To be honest we probably can’t do much to help you there – but your own team certainly can once they know where to focus.

And that’s where Acelero can help you. By giving you the tools to measure the scale of the problem, identify which employees are at greatest risk of leaving, identify which employees have the highest impact on your business and put plans in place to minimise the risk of their leaving and what to do if they do leave.

Acelero specialises in on-line performance management and human capital risk management systems and provide the technology that makes it easy for you to recognise the problem, quantify it and take steps to fix it.

The rewards are potentially huge. Even if you only reduce unplanned turnover by 1% you’ll break even in a few weeks and your potential Return on Investment could be anything from 400% upwards. And that isn’t even counting the additional benefits from improved performance, better succession planning, more effective talent management and so on. It’s just looking at one thing, reducing unplanned employee turnover.

Now, I promised you some facts and figures so here they are, along with references to show where they came from. If you substitute my assumptions with your own figures you’ll come up with the true cost of unplanned turnover in your organisation.

Assumptions

Average cost of an employee per year                                               $82,250

(Based on ABS average salary of $62,500 plus 30% for additional costs)

Average cost of a “regretted loss”                                         $41,125

(Based on 50% of average salary. According to many estimates the cost of a “regretted loss” varies from 30% to 250% of annual salary. The Saratoga Institute – part of PWC – estimates the cost at between 25% and 150% with the % increasing as the salary and seniority increase. It costs a lot more when a highly skilled or senior person leaves.  I’ve taken a very conservative 50% as my figure. See below for how this figure is calculated).

Average turnover                                                                    15%

Average unplanned turnover                                                  10%

Number of employees                                                             1000

Revenue                                                                                  $100,000,000

Profit as % of revenue                                                                        10%

Profit                                                                                        $10,000,000

Calculations

Unplanned losses @ 10%                                                        100 employees

Cost of unplanned turnover 100 employees @ $41,125         $4,112,500

Cost of unplanned turnover as % of profit                             41%

Amount of sales needed to generate $4,112,500 @ 10%      $41,125,000

Potential savings - reduce unplanned turnover by 1%

Unplanned losses @ 9%                                                          90 employees

Saving in retained employees                                                 10 employees

Saving @ $41,125 per employee                                             $411,250

Saving as % of profit                                                               4.1%

Equivalent in additional sales                                                   $4,112,500

Steve Hall is Principal of Acenet and has 30 years of senior management experience in professional services, sales, marketing and global account management and has worked with customers ranging from small private companies, through ASX 100 organisations and government departments to multi-billion dollar multinationals.

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