CONDUIT

Employee recognition as a competitive advantage with Generation Y

We've been talking a lot about the aging workforce here at CONDUIT, and the role recognition can play in retaining key talent.  But there's another side to this story.

Much has been said about Generation Y in the workplace - namely their sense of entitlement, relationship to authority, insistence on autonomy, and flexibility.  A recent NPR feature highlighted how important recognition and acknowledgement of accomplishments is to them.  And there's a lot of research out there to support these claims, including Jean Twenge's book Generation Me.  In essence, she states that the pampered upbringing of this segment of 32 million (born between 1976 and 1989) rendered a sense of self-importance which translates into an aversion to criticism, and a yearning for constant praise.

This recognition can take many forms, from supervisor-to-direct report, peer-to-peer, team-based, or organization-wide.  The more creative, the better the impact.  In all, ongoing recognition provides the extrinsic motivation that can sustain employee performance and engagement across an organization's value chain.  And, it's a key ingredient to Gen Yer's sense of self-fulfillment - which is a big deal for them.  But perhaps it's even a bigger deal for compaines, as Gen Yers tend to question their employers (norms, values, and culture) as much as they question the life decisions of their parents (behaviors, values, and practices).  As a consequence, the implications for retention and morale are quite significant.

Therefore, a company's people strategy should incorporate different types of recognition, and with greater frequency.  It behooves managers and the larger system in which these employees exist to acknowledge this tendency and relate to these workers accordingly.  Yet, we're finding that there's often a disconnect between knowing and doing.  Few firms are actually putting this practice to work, but the ones that do are realizing significant gains.  And the best part is that it doesn't cost much money.

So why isn't recognition being used more?  Well, it's hard to point the finger at anybody in particular, because it's really nobody's fault; yet, herein lies the source of the problem.  Traditionally, this responsibility has not resided within any one function in an organization.  But by formalizing, consolidating, democratizing, and promoting their recognition and reward programs to all-employees, companies are laying the foundation for a culture of recognition to be adopted and, most importantly, supported by every employee.  This inclusive, empowering spirit is what has fueled the popularity of sites such as myspace.com.

This trend is not only here to stay; it's on the rise.  Not only are Gen Yers the future of your organization, but this high-performing, high-maintenance group also values companies that are committed to their personal and professional development.  So firms that visibly exhibit such principles will become more attractive to prospective and current employees alike.  This helps boost brand equity to all internal and external stakeholders (including the all-powerful customer...see Can recognition help the CMO? blog from June 7), resulting in a true competitive advantage.

The secret sauce of engagement

“What keeps you up at night?” Ask that question around the C-suite today and you will hear the bulk of executives talk of the need to build, manage, develop, optimize and empower a high performing work force.

Talent. It’s the most precious of all resources and the imminent time bomb that’s ticking away in the minds of all business leaders. For the first time in history, the supply slope of incoming workers is inverted. Over the next decade population figures suggest that more people will be leaving the workforce then entering it.

That concern is no surprise to anyone that’s kept an eye on workforce demographics. But the difficulty goes beyond the numbers.

Different expectations of younger workers and new skill requirements in our knowledge and service based economy complicate the impact of a rapidly shrinking funnel of talented workers. Toss in global expansion, virtual workgroups, change velocity and the continued pace of mergers and acquisitions and you have the formula that exacerbates the problem exponentially. Even with the writing on the wall, some organizations have been slow to prepare for the complex challenges that are brewing in our global economy.   

So what’s the remedy?  Part of the answer is in reducing turnover. When people stay they don’t need to be replaced and the firm retains intellectual knowledge.  When employees see their jobs as their business and coworkers as colleagues they are more likely to be emotionally and intellectually invested in your franchise and with it the temptation to look elsewhere for what’s missing in your environment is removed. 

The secret sauce of engagement is mutuality. In our competitive world it is inevitable that change will follow. For every new business strategy implemented make certain you have taken the care to communicate and reinforce the value of change through the eyes of your employee constituency. Use employees as role models and celebrate, on a large scale, individual commitment to the brand.

Not only will you ignite innovation and foster better customer care you will be creating the type of employee environment that today’s worker will call home for a long time.

The formula for appealing to modern day workers

If you read the recent No Schedules, No Meetings, No Joke article in the December 11 of Business Week you shouldn’t be surprised by the effectiveness of this approach at Best Buy. Today’s workers don’t live to work they work to live. They crave an atmosphere and environment that meets their practical and personal needs. Open calendars, flex time, work at home schedules, even no schedules are all part of the formula for appealing to modern day workers.

But how do you convert this contrarian viewpoint to improved productivity? Modern day workers want independence. That’s apparent in the way some companies balance the façade of some paradigm measures like attendance against the real measure of productivity.

In my opinion independence really translates to empowerment. Engaged employees think of their job as their businesses and this self-employed entrepreneurial attitude guides their professional approach. Trust employees to get the job done and they will not only deliver they will most likely exceed expectations.      

The key for all companies is to turn the bulk of their workers into highly engaged employees. If that’s on your agenda then follow this simple formula: Use your intranet or recognition portal to tell the stories of your top people. Focus not on their successes (what they have done) but also elaborate on how they did it. Chances are they used a key tool or technique that you are also tying to introduce or reinforce.

This will create role models in the organization, promote best practices and generate ambassadors for change while igniting a cultural transformation that supports and reaffirms that employee judgments are respected and valued. With a new level of “independence” more employees will begin to think of the customer as the boss.  The results will surprise you just like they surprised Best Buy.

Fortune Small Business Magazine’s January cover story: The Next Big Thing, is a celebration of American ingenuity and entrepreneurship. More than a collection of new and ground-breaking innovations, the article speaks to the American workers’ capacity to thrive outside of the traditional corporate environment.

There is no doubt that small business is big business in America. According to the U.S. Census over half of the 102 million people who work do so at firms that has 500 or less employees.  Think about this for a second; there are over 616,000 firms in the U.S. that have less than 19 employees. 

Small businesses are the heartbeat of economic growth. Small businesses mean innovation and growth. And while small businesses benefit the economy we all share, they do pose a new set of challenges for Human Capital executives in bigger firms.  Back in a 1994 article published in the Harvard Business Review (“How Entrepreneurs Craft Strategies That Work”), author Amar V. Bhide claimed that 71% of all business innovations are from the direct result of an idea replicated or modified from previous employment. In other words when people walk out the door so does your latest competitive initiative.   

Any business must watch its intellectual property carefully, but bigger business can be especially susceptible. That’s why larger companies must pay particulate notice to retention by developing and sustaining cultures that promote mutuality and shared commitment. Recognition programs can help organizations close the emotional disconnects that can fester and drive employees to seek satisfaction elsewhere.

Getting the Right People on the Bus

I recently completed a recruiting junket. I came across dozens of energetic and promising college candidates who are eager to make their mark.  I was thoroughly impressed with the skills, passion and professionalism being demonstrated by the younger—yet to fully emerge—work force.  And while all the candidates I interviewed showed personal potential, what was most promising (at least to me anyway) was their collective understanding of “fit” as being a mutually critical decisive factor. 

Imagine the implications of that for a second.  “Fit” has always been a critical issue in evaluating prospective new employees. Key issues to examine are whether a candidate’s skills, personality, and work style are a good blend with an organization’s culture. Listen closely and you will hear the tables turning. This new generation is actually challenging potential employers to prove that they are the best fit for them.

Worthy of what you may ask? Their passion, drive and attention for starters. This young crowd is engaged right out of the box and is eager to align themselves with a firm that shares their passion and personality. This new generation is not a 9 to 5 crowd. They fully expect to “live” their jobs. They want to make sure you are the one that’s committed to success and are willing to empower them and everyone else in the enterprise to get there.

As a group they seem to be in search of an experience—a world that’s as fun as it is challenging. They are on the lookout for a fair and trusting work environment. And above all they want work that’s interesting and to them that means having the latitude to put their own personal stamp on your brand.   

Jim Collins talked about “getting the right people on the bus” in his best seller Good to Great. This next generation gets that concept and sees “fit” as a common imperative.  The key to fueling the successful growth strategy of any organization has always been in selecting the right people. Now candidates are as keen on selecting the right company.

If your recognition strategies promote the type of environment that works for the next generation of leaders than good for you.  If not then don’t expect the bus to stop in your neighborhood anytime soon.   

Here’s more on the power employees have in building your brand…

In Eric Krell’s article in October edition of HR Magazine we see rising evidence that employees are powerful allies for the brand’s image. Krell makes the case that employees are both constituents and customers of the brand. They must connect with it; believe its underlying promise, own it, and commit to delivering it if the brand is to develop, resonate and gain value as a corporate asset.

Want evidence that employees are critical? Look at the side story on United Airline’s “Rising” campaign. Hostile workers—even those who are only marginally uncommitted—can doom the best marketing effort.  Also consider the impact employees have on brands that are not heavily advertised. Even in the absence of marketing rhetoric some brands grow in value—like Starbucks for example. 

In his report Krell carefully lays out the communication and operational components he believes must be addressed to ignite and sustain brand-building behavior. One element that seems to be missing (from this and other articles I have read on the subject) is the role employees can play in influencing on one another. The term social networking describes how individuals make decisions. How the behavior of peers can influence one another is critical. Peer influence has  more impact than messages delivered from distant senior management. Peer-peer recognition plays a vital role in building ambassadors for the brand and creating those very types of employee evangelists Krell deems as critical in the re-branding process.

Decoding Employee Engagement.

At the recent Motivation Show in Chicago almost every other workshop had the word “engagement” in its title.   Why the focus? A higher level of engaged employees is more than an aspiration for progressive businesses; it is a necessary requirement if sustained competitive advantage in the new information economy is to be realized.  As a result HR is being pressured by other stakeholders within the enterprise to devise conditions and tools that foster engagement.

Employee engagement is shaped by a number of distinct variables: individual attributes i.e. personality, role characteristics, the quality of work relationships, and perceptions of the ethos and values of the organization and how the individual employee feels he/she fits in. 

Recent research has focused on developing a better understanding of how these variables interact and their link to important work outcomes. From the perspective of the employee, 'outcomes' range from strong commitment to disaffection. 

Watson Wyatt found that high-commitment organizations out-performed those with low commitment by 47%. In a study of professional service firms, the Hay Group found that offices with engaged employees were up to 43% more productive, based on a comparison of revenue generation. Other studies confirm that organizations whose employees are more engaged than not are more likely to outperform peers in key financial areas (productivity, customer equity, and market valuation).

Separate studies by Wyatt's The Human Capital Index and John Kotter and James Heskett (Corporate Culture and Performance) confirmed that engaged employees are 4 time more productive, turnover less, drive increased customer equity (defined by increased share of spend, frequency of spend). Most importantly companies that have emotionally and intellectually committed employees have significantly higher market valuations. 

Drill down deeper and we see according to The Society of Human Resources Management and The United States Bureau of Labor Statistics cost estimates for turnover range from 33% to 150% of base salary. For a midsized company of 1,000 employees (average base salary $50K) with 10% annual rate of turnover, the cost is $1.7 million to $7.5 million.  It's no wonder engagement has everyone's attention.

As employee productivity is clearly correlated with employee engagement, creating an environment that fosters and encourages engagement is considered to be essential in the effective management of human capital.

Brazilian firms are investing in employees

On a recent fact finding trip to Brazil, I was quite surprised to see that Human Capital planning has become a major plank in the business growth strategy. Over a busy and jam-packed 4 day excursion, I visited several companies across a variety of industry groups including medical devices, energy production, insurance, and transportation logistics.

Across each business model I found that both individual and team-based pay-for-performance variable pay schemes are being utilized. I listened as executives spoke of safety and wellness programs being used to not only slash operating costs, but to instill and sustain a “caring” and “paternal” culture across the firm. In both office and plant work environments, I was told that idea generation programs are important because they not only encourage suggestions, but the open solicitation of new ideas also generate a sense of inclusion and involvement among all workers. Most surprising was the wide spread use of co-worker recognition programs. Peer-peer nomination programs, ranging from web-based to traditional paper programs, were designed with the intent of promoting best practices across work groups while acknowledging local leaders. 

In the U.S. economy it’s not uncommon to hear companies say that their people are their greatest source of competitive advantage and the source of continuous innovation. What a revelation it was to see such highly supported and visible Human Capital initiatives in action so far from home. Should I have been so surprised? “No” said my hosts. To a person they all acknowledged that the world has indeed become flat and that doing business successfully in the global arena requires a productive and highly engaged workforce. Said one executive, “If you are not treating your employees as your most precious resource, then do not plan to be in business for too long.”

To that I can only add, “O direito que você são!” 

Employee ingenuity—the new value engine

Ok, we are a few years removed from the dot.com boom and some web-based business models have fizzled. But most enterprises took advantage of the new internet tools to ignite growth spurts. But with technological solutions now ubiquitous, what is going to drive the next wave of productivity? Where is the next spurt of value expansion going to come from? The question begs asking. There appears to be no killer app on the horizon and growth pressures fueled by rising investor expectations have not subsided. 

Some pundits don’t think the next wave of growth will come from technological advancement, but rather will result from personal innovation. Richard Florida (for one) in his recent book The Rise of The Creative Class, suggests that the next wave of value creation will not come from invention but from innovation. Florida sees employee imagination as a growth catalyst.

That transforms the meaning of “application” doesn’t it?   When employees apply the right side of their brains big things can happen. Want proof? Look at all those Ipods (ummm… MP3 players). It was innovation that led to the commercial viability of that technology.

What does all this have to do with employee reward programs? Compensation and reward systems set the cultural tone and can foster or undermine an employee’s emotional and intellectual commitment to the firm. Reward systems that encourage and celebrate creative exploration as a best practice are building the foundation for future growth. Employees that think of their job not simply as a place they go or a thing that they do but as their business are more likely to come up with schemes that give the organization a competitive advantage. Today ingenuity and not technology is the new value engine.

A Manager's role in employee turnover

Often overlooked in the equation of employee turnover is the role of the local manager (field, sales, branch etc). Smart companies are doing more to help managers retain, motivate and optimize employee commitment and productivity.
 
The manager’s role has become increasingly complex of late. Mergers, acquisitions and the resulting downsizing have often led to more people to manage. Factor in changes in product offerings, competitive responses, business regulations and  shifting customer expectations it is no wonder that the manager’s ability to nurture, train, and direct those working under him/her are comprised. These circumstances not only frustrate managers (after all they get paid based on the productivity of reports) but it leads to employee turnover.

When employees join a firm they are doing so with expectations in mind that transcend salary. Factors include culture, work environment and chances for education and advancement.  When managers become preoccupied and unavailable, employees reconsider their choice. Often they become disenfranchised with their decision and check out either physically or emotionally.   Recent research indicates that 46% of rookie employers will actually leave their company after 18 months. In fact 53% of managers brought into a company will also leave within the year

We have seen progressive companies stem that tide by introducing reward and recognition platforms that give managers complete discretion on how to set goals and reward individuals locally. The tool allows managers to better address the nuances of local business performance in support of corporate objectives. More importantly these solutions fortify the working partnership between managers and employees. Companies that have done so are seeing reductions in attrition, improvements in critical business metrics, and higher levels of employee engagement.