Key Concept ~ Here’s part two of a series of excerpts from my book, “The Transformational Entrepreneur”, exploring a mindful approach to cultivating the right organizational culture for today’s Idea Economy.
~ Reaping What Has Been Sown
Businesses have a difficult time addressing things they cannot measure, yet there are real costs associated with these veiled issues. The greatest hidden cost that erodes organizational performance is employee disengagement. Gallup®, Inc. has been measuring employee engagement levels since the beginning of the decade and reports on these surveys in the Gallup Management Journal. The study indicates 29% of employees in America are engaged (meaning they work with passion, energy, and are emotionally connected to their organization), 56% of employees are not engaged (meaning they are physically present but do not work with passion or energy), and 15% are actively disengaged (meaning they actually are working at cross purpose with their fellow associates). The study estimates the annual, aggregate cost of employee disengagement is anywhere between $237 and $270 billion in lost productivity.
A recent study published in the Harvard Business Review® indicates that during what is now termed The Great Recession the percentage of actively disengaged employees has skyrocketed to 21%!
If we extrapolate these findings into a small business environment (even using the conservative numbers from Gallop), say one with twenty employees and payroll of $1 million, the impact of employee engagement becomes strikingly tangible.
In this scenario we can anticipate six employees are activity engaged, eleven are sleepwalking through their day, and three are actively working to undermine the company’s mission. If we give the sleepwalkers the benefit of the doubt, that they’re perhaps contributing at 50% of their capabilities, we can assume that at a minimum, $425,000 of our million dollar payroll is providing no return on investment whatsoever. This doesn’t take into account the value the actively disengaged employees are actually destroying through their efforts beyond the lost wages we are paying them. Conversely, we are only enjoying a full return on investment on thirty percent of our annual payroll through our associates that are actively and passionately engaged with the mission!
Thankfully, the intentions and congruent actions of authentic leadership can re-engage many of the sleepwalkers by cultivating an atmosphere of trust and inclusion.
The fifteen to twenty-one percent that are working to undermine their fellow associates simply need to go. Their participation in the enterprise frustrates passionate associates and serves to foment further disengagement with the sleepwalkers. This is a great example of addition through subtraction.
Creating a shift in culture to one of trust and engagement begins with authenticity; the suspension of managerial ego in the daily interaction of the business. Altruistic intentions combined with congruent actions resonates positive energy and engages associates to be fully present and contributory. A genuine concern for the well being of associates that is consistently expressed will ignite the collective consciousness of a fully present team.
You’d be surprised how quickly leadership can turn around associate disengagement. In the 1990’s I was working as the Vice President of International Marketing for a major medical device company. My responsibilities brought me into close and frequent contact with the European managing directors for each country we operated in throughout the continent. Moral was very low as the corporation historically had operated as a classic U.S. exporter into the region. Products, services, pricing, and business methods were not tailored for the individual cultures and markets. Everything was developed and dictated from the U.S. corporate office. This situation was exacerbated by a veritable turnstile of senior management being assigned from the states that was not sensitive to the various cultural and operational nuances that existed country to country and quite often within the nation states themselves.
The first thing I did as the new Vice President was to begin listening to the concerns of the managing directors and repositioning our portfolio to more closely align with their particular business needs. This quickly escalated into my advocating with corporate the need to begin manufacturing products in Europe for Europeans and to expand our services within each market. The European associates began to witness my actions matching my words and a new found faith in the future of the organization began to emerge. For the first time in years the European associates began to feel the company aligning with their interests, markets, and corresponding opportunities for career success.
Within a few short months I found myself promoted to Vice President of Sales and Marketing for Europe, Africa, and the Middle East. Not only was I faced with the challenge of relating to a wide spectrum of cultural perspectives but I was also twenty years younger than all of my direct reports (European hierarchies tend to move much slower than U.S. companies when it comes to promotions). With my new level of authority I began empowering the managing directors to conduct business in the manner that best suited their opportunities and constraints. I knew I had secured their trust when my managing director for Eastern Europe and the Middle East, Thanassis Bouzabardis, spoke up during a business dinner in Madrid with all of the managing directors, “Terry, I think I can speak for all of the directors when I tell you we don’t view you as another American coming here to manage our business…we view you as a fellow European.”
To this day I feel that was one of the greatest complements I’ve ever received regarding my leadership style and abilities. By listening, expressing authentic empathy for their environments, and acting congruently I began shifting the culture of the business from a place of poor morale to re-engaging the European associates. All of this took place within six short months. The European team also increased sales by more than $16 million in that same timeframe!
Early stage companies have the advantage of starting with a relatively blank slate. Enlightened hiring practices will attract enlightened talent. Authentic leadership will attract authenticity. Sharing the Vision during the hiring process will help in this regard as will following one’s intuition.
The compensation plan offered to new hires can also weed out people simply looking for immediate gratification versus people in search of being a part of something more meaningful and of greater significance in their lives. The compensation package can reveal if a person is looking for remuneration based solely on their perceived individual value or if they are willing to work for a reasonable, competitive wage buoyed by incentives derived through team value creation and the tangible contribution of achieving shared goals.
The courage of visionary conviction will not miss out on what may appear to be the minimum talent threshold necessary for performance. It will, in fact, reveal human beings capable of continuous growth and cooperation. Fully engaged, eclectically talented associates, build the creative bandwidth necessary for adaptive problem solving along the way.
Existing organizations are faced with a more challenging task in the cultivation of positive, collective consciousness. It cannot be achieved overnight, but through the application of authenticity and consistent, conscious leadership it can happen in a surprisingly short period of time as my experience in Europe proved. The expression of empathy combined with the vibrant cultivation of trust can rehabilitate the most disengaged workforce in a few short months.
Supported by honest accountability, starting with self-accountability, a conscious leader will begin to engage associates that have developed conditioned behaviors of self-preservation that dilute creative contribution. The onus is on the leader to reach out and begin to display and communicate their dedication to the well being of each individual on the team. Leadership that chooses to serve the team as a primary approach towards serving the business.
to be continued…
© 2011-2012, Performance Transformation, LLC™.
