Companies are haemorrhaging money everyday making avoidable mistakes that cause employees to become disengaged, which reduces customer satisfaction and harms profitability.
According to Gallup, only one in twelve employees are considered engaged in their work and costing on average £30,000 to replace a single staff member.
What’s the impact of current engagement levels within your business?
Blinkered Focus on Sales
The drive for profitability and growth distracts leaders and boards from applying principles that develop their people.
A blinkered focus and drive is a huge asset when it comes to making sales and gaining market share, but has a detrimental impact on culture when sales are prioritised over employee wellbeing.
Companies wasting money losing staff are also the ones that scrimp on training and development.
Driving sales at the expense of people has detrimental consequences.
A great feedback mechanism when it comes to people and culture is Glassdoor ratings.
High performing companies found in the best places to work 2018 have a minimum average score of 4.1 out of 5. It’s no surprise then that those same companies are industry leaders.
Satisfied employees correlate with high industry performance. And with so much transparency for talent seeking their next role, companies need to do more to avoid these mistakes significantly affecting the bottom line.
So here’s the mistakes.
Mistake One: Attempting to motivate staff with financial incentives
We live in a society that subscribes into the idea that extrinsic motivators (e.g. money) work at motivating people to do their best work. This is simply a lie.
Daniel Pink in his famous Ted Talk about motivation and in his book Drive evidences that our fundamental models of motivation are flawed. Numerous scientific studies have revealed that extrinsic motivators actually hinder increased performance when it comes to any kind of complex task.
Now I know what your thinking, “but look where financial incentives have gotten me!” or “look at where it has got this person or that person”.
Hear me out.
I’m not going to talk about the two types of motivation, because that has been covered in detail by others, I want to talk about how this applies to your company.
Most companies primary method of motivation is pay. This external motivator gets you so far, however the effect is short lived and has actually been shown to hinder performance. Interesting. And counter-intuitive.
You get a pay rise or a bonus, which is great until, you’ve spent it, which doesn’t take long, then the extra motivation fades.
In all of my conversations with wealthy and successful people, they are not motivated by the money. Ever. They might even sometimes think that they are motivated by money, but dig a little deeper and it is really about contribution, or recognition, or status, or adventure, or security. Beneath the extrinsic motivator of money is the intrinsic motivator of purpose and contribution.
What Does This Mean for Your Company?
People want to do worthwhile work, they want to be valued, recognised, involved. Yet many companies expect them to be engaged without connecting the dots between the work that they are required to do, and what they really want in life. We assume that a paycheck is enough.
Ask yourself this, do you want to be a mediocre company with mediocre results? or do you want to be a high performing company with industry leading results?
When I’m working with a leader or team, I’m exploring what really motivates them and seeing how that aligns with their job role. It’s almost always about family, or relationships, or security. It’s never about the money.
If it’s only about getting the next pay check then their tenure is in jeopardy. They are ripe for headhunting or will walk. Companies that understand the deeper motivations of their employees focus on paying fairly (relative to the person’s value to the organisation) and then spend more time to really understand and link the role to autonomy, mastery and purpose.
Understanding what’s important, how we can enable that person to do their best work, what support they need, and what’s most important to them, then aligning the purpose of the organisation to their personal objectives and purpose is what draws out the best of people. This does not mean letting people off the hook, or accepting mediocre performance, I’m talking about a no bullshit, this is what you’re here to achieve kind of leadership, but in a way that calls out the best of people, not contracts and diminishes them.
In this way we get the best out of people and create a culture of ownership and responsibility.
I’ve spoken before about tapping into the wealth within your business, which occurs through listening and responding. So many leaders are busy telling, too caught up in their own egos to spend any time actually listening. When they do listen they eagerly awaiting their turn to speak, to tell the other person what they should be doing or thinking.
Purpose driven organisations have a clear objective that is communicated consistently and their teams are trusted to deploy their skills to solve the problem.
Great leaders know that the more autonomous their teams are, the more it frees them to focus on strategy and steer the ship. Think of it like the captain of a vessel spending half his day down in the engine room trying to tell the engineers how to best manage their maintenance schedule. It would be madness, but yet that’s what many leaders do. Don’t be that guy (or girl).
Mistake Two: Promoting managers with little training
Just because someone is an effective technician (sales, delivery, analyst, developer) does not qualify them as an effective manager. In fact, many effective technicians promoted to management fail, because they are presented the opportunity to take the most difficult leap in the world of leadership with little to no training and development.
Management and leadership are separate skills entirely from what it takes to perform well in a job.
Technicians are suddenly thrust into a world where they are responsible for their output plus the output of a team, and they may have no idea how to get the best out of other people. They need to motivate, inspire, listen, solve problems, coach, deal with politics, understand the bigger picture of the business, manage stakeholders, report on KPI’s, deal with grievances, performance management, etc, etc.
What typically happens is that little to no concession or support is offered to plug the skills gap. They are expected to maintain and grow their own personal output, whilst also being responsible for the growth and output of others. A recipe for disaster!
The data shows that people leave managers not jobs. So the danger of promoting without training is that a lack of leadership experience pisses off the people that are in their team, leaving them so disillusioned that they end up voting with their feet. So you lose a great potential leader plus a swathe of others.
Companies are haemorrhaging money in this way. It costs on average £30,000 to replace one staff member, which is an insane amount of money, yet companies allow people to leave self-righteously justifying that these people ‘aren’t the right fit’ or we’re better off without them if they aren’t truly committed. Which is a great way to cover up leadership failures.
Is your company allocating a similar amount of budget for training and development as they are wasting losing staff?
I bet the answer is no.
Self righteousness is the enemy of high performance.
The good news is that it doesn’t need to be this way. Some companies attract and retain top people, and when those people get a LinkedIn message or phone call from a headhunter offering the 5-10k increased salary to move, they say ’no thank you’, I’m quite happy where I am. Because they realise that the grass isn’t greener on the other side and what’s the cost of earning more money. They may be jumping out of the frying pan and into the fire.
By investing in training and development, treating those that are up for the challenge of management with care and attention, we can ensure that we give them the best chance of success. There is a quote that says “there are no bad teams, only bad leaders” because it is the role of leadership to ensure that teams have the support and resources to perform at their best.
If leaders complain because their teams aren’t performing then they need to look at themselves. It is their responsibility, they need to inspire that responsibility right down the chain.
The Way we Learn
The new way that learning is digested is in bitesize pieces as required, when you want something you will go find it. A simple web search, a book, a report, a course that tells you how to do what it is that you want to do. Gone are the days where we need to digest and retain loads of information, we live in the information age. Beyond the technical skills required to perform a specific and complex task, management training can be given on an ongoing basis. The skills can be broken down, taught in relation to the challenges faced as they arise in the course of work.
It is so much more effective when people learn as they apply, they don’t need to try to remember everything, they experience it and it becomes part of who they are and what they do. So training courses are great, but how does this then filter into the ongoing culture of the organisation, there needs to be a wider ecosystem of support.
Training delivered in conjunction with support and as part of leadership strategy is incredibly effective, training that responds and supports the ongoing development of those involved. Gone or the days when a two day training course once per year will suffice. You might scrimp on training and development with the false idea that you are saving money, the reality is that it’s costing you dearly.
Scrimp on training and development at your peril. I’ve met directors who would rather lose people, costing them in lost revenue, lost time, lost productivity, increased stress, than invest a solid percentage of revenue in developing people. Don’t do that. You’re not saving money and as I’ve highlighted, every person that leaves is money wasted.
Mistake Three: Failing to structure teams effectively
Leaders love hiring in their own image, this guy is a ‘great guy’ they might say. Many leaders are so unaware of their own biases that they end up hiring people because they like them, which is actually a very poor basis to hire someone, it makes up part of the reason for the decision, but only part.
Hiring lots of people that are the same isn’t the way to develop a balanced and effective organisation. Effective teams are a blend of focuses, personality types and attributes that compliment each other across a range. Hiring lots of people that are the same leads to conflict and narrow perspective.
Karen Blackett, the CEO of Mediacom rose to success during the 90’s when every other CEO was white and 90% were male. They would hire more white males that all echo share the same perspective. What Karen saw was that they were missing and ignoring a huge and growing BAME (black, asian and minority ethnic) population. No other companies were speaking to or engaging with this audience because they were blinded by their narrow perspective. Karen took advantage of this and rose to fame as one of the most successful CEO’s in Advertising and PR today.
Narrow perspective within leaders and teams results in missed opportunities.
Hiring bias is a huge challenge, and the thing about biases is that you don’t know you are being biased because it feels so good, it feels safe, it feels like ‘trusting your gut’.
Hiring Based Upon Values
It much more effective to hire based upon values rather than just skills. Obviously you need the person you to perform the task at hand to an acceptable level, but within that too many employers focus on skills over values and personality. I’ve seen many companies that end up with team members who are technically proficient to perform the task, but is a poor fit for the team and organisation.
By looking at the makeup and profile of your existing team in line with the objectives of the organisation you can then hire someone who is not only a fit in terms of technical skill to perform the job, but they also fit with the culture and compliment other people. A thoughtfully balanced organisation will trump a narrow one every time.
Mistake Four: Failing to care for needs and values of your people
Many companies and leaders are so ill equipped to listen. They are so busy ‘telling’. Which is fine if you want a culture of blind compliance and little initiative. The trouble is that those same leaders report that they want a culture of responsibility and initiative. You can’t have both.
Company culture can become so toxic when leaders fail to listen for so long that negativity breeds negativity. Staff turnover increases, targets get stricter, managers get tougher, listening further diminishes, responsibility and ownership are non-existent.
We have to live and lead by the qualities that we want to instil. If you want ownership then you need to take ownership, if you want people to take responsibility then you need to develop trust and listen to their ideas.
Employees know what they want and need deep down. Discretionary effort and high performance exist within what people really desire. If you can attach the needs and values of your people to the objectives of the organisation then you are a long way to creating a high performing culture. But you need to first listen.
Instead many leaders spend all their time ‘telling’ and expect employees to magically own the vision of the business as their calling in life. Unfortunately getting paid is not enough, great people already know how to get paid.
By listening to your people, it’s quite simple, by actually asking and being curious, you can find out all the information that you need to understand motivation. The best people managers I’ve ever met do this with a grace and ease that might trick you into thinking that it’s easy. It’s simple, but not easy, because it requires the person doing the listen to actively listen, which most people are pretty poor at, many managers and leaders are terrible at!
When you understand and align the organisations goals with your employees goals it allows people to become more engaged with their work. Everyone isn’t just coming to work for a pay check, yes this is a part of the puzzle, but a much smaller part than most people think, most companies focus on pay and benefits rather than making the work worthwhile, when you’re dealing with high performing talent they will always be able to find another job, they will always be able to get an offer from someone else for a bit more salary,
So yes you need to pay fairly relative to the value a job provides to the organisation, but beyond that it’s about creating a culture that connects with what people really want. It is almost always about contribution, security, family, service, meaning, legacy, it’s not really about the money.
Mistake Five: Thinking that company culture is created through hiring choices
I don’t think this is an action as much as it is inaction, many companies just aren’t purposefully taking responsibility for the culture of their organisation. They employ a lot of effort on hiring, training and sales, but many fall down when it comes to culture.
Culture is the idea of ‘what we do around here’. It is the habits, principles and practices that permeate throughout the organisation.
If we live by the mantra that ‘there are no bad teams, only bad leaders’, then it is up to the board or senior leadership team to purposefully create an environment that promotes habits, principles and practices that you want to see. It’s all about training, language, frameworks and habits, which start at the top.
So many times I’ve seen leaders complaining about things not being the way that they want them to be with regards to engagement, sales, customer satisfaction, but the reality is that they are responsible for steering the ship. If it’s not going in the right direction then they can’t blame anyone else! But that doesn’t stop them trying.
Culture can become a tangible asset that increases the value of your company, not only with the richness of the experience of the people, but the experience of the customers interacting with those people through to bottom line value of the organisation.
Companies that are desirable places to work will attract high performers, and high performers actively engaged will offer a great experience to your customers, which has been shown to increase NPS (Net Promoter Score) and customer lifetime value.
A companies financial valuation also takes into account intellectual property. Most modern businesses are based upon IP. What is Facebook or WhatsApp than a collection of code held on a server? It’s IP. It has a tangible and measurable value.
The culture of your organisation, if created, formalised and written down becomes an asset of your business.
As you scale your organisation, if their are cultural issues on a micro scale then you can guarantee that these will scale too. A company can be profitable and a fast growth company, but yet still have some cultural issues that amplify as you grow, they weren’t an issue in the beginning, but as the growth curve naturally slows it becomes more and more important to relax into something. The thing that the employees settle into is the culture.
“What got you hear won’t get you there.”
Just because something has been effective up to this point doesn’t mean that it will always be effective. A culture of fear and strict targets may get you to a certain level of success, but the point will come where this becomes a hinderance. There is only so much time in the day to ‘manage people’.
Effective culture is the asset that allows you to continue to adapt and change at scale. The principle of Kaizen was adapted and enhanced by Toyota and Honda. They used it to create a culture of collaboration, where the customer became the next person or process in the production line.
Kaizen is fundamentally about listening, its about gathering the collective wisdom that exists within your organisation. This can become a huge asset. People in your organisation see problems as they arise and have ideas about how to solve them, except most companies are too busy telling rather than receiving information, they are too busy dictating rather than asking.
A directive approach to leadership is actually applicable only a small percentage of situations, in event of a fire people need to be told what to do and when, but the rest of the time the dictatorial style of leadership will only get you so far.
Creating culture is about listening, receiving, then responding to what’s required. By trusting and empowering people to tell you what’s up, means that you don’t have to work as hard, you’re continuously getting feedback and information to make choices.
Many companies are great at using data to make decisions around finance, but are poor at using qualitative data from the thoughts and experiences of their people. The most effective companies that have the most valuable culture asset are not always the ones with meditation pods and table tennis tables, sometimes it’s just about the desire to collaboratively reach a common objective.
For example Physio co. got voted Australia’s best company culture, however not because of the office furniture or bonus structure, it was about the attitudes, practices and habits of the people.
We help companies develop their culture asset, by understanding the mission, connecting with what people need and want and creating an environment that promotes and supports ownership, effective communication and greater collaboration.
Mistake Six: Focusing on short terms wins at the expense of long term strategy
Making decisions under pressure is an important part of taking effective action. However just because it works under certain circumstances doesn’t mean that it works in all circumstances.
A friend of mine who is a former navy submarine captain said that a dictatorial short term style of management was appropriate about 0.1% of the time. When faced with an emergency there is no time to consider the thoughts and feelings of those that are required to take action, you must take immediate and decisive action to avert the danger. However this is only applicable a fraction of the time. For many leaders and eventually organisations this becomes the default style. So they apply a style of leadership that is effective only in crisis 99% of the time.
This does a few things, it puts everyone in the organisation under immense pressure and tension, which sharpens the senses in the short term, but leads to detrimental consequences over the long term, just because a strategy calls someone to immediate action in the short term doesn’t mean that it offers the same benefit over the long term.
When employees are under constant demand of pressure and tension, they will bias short term wins over everything else. Now again, this has some benefit if you take a zoomed in view of performance, however it has been my experience that consistency trumps zeal every time.
A good metaphor is that of an engine, let’s say you blast your racing car so hard that you win the one race by a large margin, except the engine is meant to last an entire season is toast after one race. Yes we may look at the short term view and think that we have performed incredibly well, but then get frustrated when we can’t perform in subsequent races or run out of engines.
This kind of thinking and planning would be obviously flawed, right? Well, you would be surprised how many companies I have worked for or interacted with that take this view. They burn through people, they piss of customers, people leave and long term profitability dwindles. But yet the leader is still attached to the view that winning the one race, if we could do it that time then why can’t we do it all the time.
Another factor is also not really celebrating the wins, we just build ever increasing expectations. Whenever an expectation is met we simply raise the expectation.
Whether you like it of not your resources within your organisation have a maximum effective output, going back to the engine metaphor, you can’t just keep pushing and pushing and engine beyond its tolerances, well, you can, but it will break.
How does this show up for companies? Unfortunately companies receive feedback when it’s too late. When their Glassdoor rating has tanked, when ex-employees tell 50 of their friends about their shitty experience, when you become known as not a great place to work.
Reputation takes years to develop and moments to destroy. So it baffles me how many companies are not taking care of this in foresight, rather than hindsight.
The solution is to stop sacrificing resources for short term performance. ‘Resources’ meaning people. Stop pushing and pushing. Yes, ask for high standards, call out the best of people and don’t settle for mediocre. But at the same time understand what’s possible based upon the people, resources, processes and culture. Don’t sacrifice your engine for one blinding win, build consistency, satisfaction, commitment and discipline. Speak about and live into the season win, the decade win. After all, powerful, sustainable and profitable business is a marathon, not a sprint.
Mistake Seven: Implementing change strategy with token gesture buy-in from senior leadership
There is good data to support that most change initiatives fail. One of the major contributing factors to failure is that senior leadership buy-in with only a token gesture. They know that other people need to change, because they think that other people within the organisation are causing all the problems, but they fail to look at themselves. They are so attached to their position and their awesomeness that they aren’t taking an honest appraisal of themselves.
They bring in expensive consultants to tell them what they need to do, they map out a restructure and then prescribe the restructure to others, rather than taking responsibility for leading the change. If a company isn’t working then they need to start with themselves. Maybe they need to fire themselves, which is probably a sobering thought. Many seniors leaders are actually the reason the company is under performing in the first place.
The first place to start with any kind of change strategy is at the top, but the problem is that the people at the top are more interested in protecting their position. To look at themselves would open them to the scrutiny that maybe they are the ones that need the change strategy. Look at high profile tech CEO’s that have reached the limit of their effectiveness within the organisation, they are receiving poor press and should step aside, but they divert the attention to others and try to blame anyone but themselves. There is a saying that when you are pointing at others you are pointing three fingers back at yourself.
My suggestion is that any change strategy firstly appraises the people leading the strategy, or initiating it, the captains the ship, if the ship was piloted into a rock then you probably aren’t going to blame engineers in the engine room. Why did you propel the ship onto the rocks they might say? Yet they couldn’t actually see where they were going and the ship is being steered and piloted elsewhere.
I love these kinds of metaphors because they paint such a picture of the insanity of hierarchy and how leadership structures fail. There has to be a healthy feedback mechanism to prevent tyrannical leaders. Or maybe you don’t really care about any of this stuff and you just want to get what you want at all cost?
Kaizen Effect work with leaders that are willing to put themselves under the microscope, for their benefit, for the benefit of the company and their customers. So before implementing any change management first start by appraising those prescribing the solution. There may be no need for change management at all.
We are hired because these mistakes have become such a hinderance to company performance that leadership teams are motivated to spend money to take the problem away. But we understand that in order for any of this to work that we start from the top, always.
If you want to understand why your companies underperforming then first start by look at yourself.