Honest Feedback is vital for Employee Engagement

If you want to create Employee Engagement you should invest in creating a culture of giving and receiving feedback. This is often confused with creating an environment of being friendly and although this is important it is more important to create relationships strong enough to be able to handle the truth (How to create a frame of honest feedback).

Gallup research has shown that a manager that gives mainly positive (based on strengths) feedback has more engaged employees versus managers that give predominantly negative feedback. What is more interesting is that giving no feedback is significantly worse that giving negative feedback.

As a leader you are responsible for growing your people which sometimes involves giving negative feedback. Research has shown that direct and honest feedback on wrong answers in tests has a bigger impact than feedback on what went well. 

When people are encouraged and allowed to grow employee engagement increases. To grow people need feedback that also means negative feedback.

Knowing that negative feedback also creates employee Engagement should be sufficient to encourage leaders to have difficult conversations with their people – ignoring the conversations are too expensive.

In the book “Crucial Conversations” the authors introduce the concept of the Fools choice: “The choice between friendship and honesty.” 

It is a fools choice because no friendship can be based on dishonesty so a crucial conversation is necessary to give honest feedback

"Our lives begin to end the day we become silent about things that matter" Martin Luther King Jr.

How are you engaging your customers?

To create satisfied customers doesn’t really make you successful anymore – apart from creating value you also need to engage your customer to grow your revenue.

Customers are not just looking for the same product or service they have only cheaper or with an extra feature – they are looking for something radically useful or something that creates meaning for them.

Every market matures and in every mature market the product/service looks more and more alike. It will be based on the same technology made on the same factory or delivered after the same principles. Not much room for differentiation other than price that shrinks the pie for all market players. All products will eventually satisfy customers but not necessarily engage them.

To engage customers you will need to go beyond the product or service itself. It is not about what you do, it is about why you do it and how you do it.

 "Always start with why" Simon Sinek

Customer engagement is an emotional relation between the customer and one or more actors associated with the company. It is certainly possible to create an emotional relationship between a customer and a product/service brand as is seen with luxury items and cars; however this is not possible in most markets.

Relationship with the product itself

When products and services become more alike it becomes more important how it is made and what the overall purpose of the producing company is. It is not anymore about transactional selling but more about a relationship and eventually being part of a movement.

Relationship with the company

Customers don’t buy from you just because you want a lot of money but they might want to buy from you if your company is trying to support society or making the world a better place. The low priority of CSR in many companies, will not work in the future. It does not inspire customers or employees. The new hyper growth companies predominantly from the US, all has a strong purpose in the centre of their activity. Google, Apple, Tesla, Facebook and similar are not in the business just to make money – they want to make a difference also. This engages not only employees but also customers.

Relationship with touch points

The rise of the internet and social media has made many companies forget that their employees are vital in creating engagement with customers. Unfortunately only 13% of all employees worldwide are engaged and hence capable of creating customer engagement. The service aspect has also been neglected even though there is a higher probability in creating an engaged customer through a service issue than there is through a normal successful delivery.

The massive advertising on social media that looks the same as the old newspaper advertising can create awareness but is not successful in creating engagement. Most companies miss the point of having their senior managers’ active on social media (Only 28% of CEO has social media accounts). CEO’s have an opportunity to engage in conversations about purpose and sustainable production that can catapult engagement. Leaders like Tim Cook (Apple), Elon Musk (Tesla) Eric Schmidt (Google) are all very active in engaging both customers and employees.

Relationship with other stakeholders

The most important consumer buying decisions are heavily impacted by people close to the consumer and different interest groups. You cannot ignore Greenpeace, Amnesty international or trade unions anymore. The company need to include all stakeholders into their strategy formation and make it transparent. A transparent company does not need to hide behind a brand.

The link between Employee and Customer engagement

Gallup has shown that there is a strong relationship from Employee Engagement over customer engagement to financial results. Companies that manage to engage both customers and employees have 240% better results on performance related parameters.

"Companies that engage both customers and employees have 240% better results on performance parameters." Gallup

The Fastest and Cheapest leadership step you will ever take.

Have you ever had a leader that had a completely different self-image to what others saw? Leaders like this are normally not very effective as they have no idea of the impact they have on others nor do they seek feedback to verify or try to change this impact. 

A key step in your personal leadership development is to get to know yourself - as in truly know yourself. This is not easy as you might not like what you see or not understand the impact you have on other people. This is however and important step and the foundation of personal growth.

“You cannot learn, what you think you know”

The best and simplest action for creating self-awareness is to ask the people you spend time with for feedback. This is also one of the foundations of the Johari Window.

"Simple does not mean easy."

The Johari Window

The two American psychologists, Joseph Luft and Harry Ingham developed a tool to help people create self-awareness. Although developed in the 50’s the Johari window is still a very effective tool for leaders and individuals to create self-awareness.

The top of the Johari window illustrates what is known to others can be divided into two areas: What you also know yourself and what others know you don’t know yourself. If you are willing to explore this area and create a frame of “Giving Feedback” you can gain some extremely valuable insight into how your attitudes, feelings and behaviours impact other people. You can then decide what change you want to make to yourself to create a different impact.

Creating a frame of “Feedback”

Normally we stay away from difficult conversations with people as we are concerned with the way it might create trouble for us later. We co create a conspiracy not to touch certain topics, that might create uncomfortable situation. We “hold the fort” or “we do not rock the boat”. The topics we are not willing to deal with stay in the room as huge elephants we pretend to ignore: We have created group think. 
To be able to benefit from feedback, it is first necessary to create a “Frame of feedback”, an environment where it is ok to speak the truth. Rather than just seek feedback yourself, you should do it as a workgroup or as a peer team, where everybody opens up.

1. Feedback as a concept

The first step is to have a conversation around feedback itself as a concept. The following sentences can help the conversation:
- People have the right intent but create the wrong impact. 
- Giving feedback is aimed at helping not criticising. 
- Robust relationships can handle feedback.
- Don’t make loyalty more important than the truth, then you have created a conspiracy
- If your friendship is not strong enough to handle the truth it is not a real friendship.
- Feedback is not true or false – it is an opinion
- Feedback gives clarity

2. The context and commitments

The second step is to discuss the context, common goal and commitments of the team that will open up for feedback. We live with each other not based on the feedback we give but on the commitments we make. The feedback will be given in support of the common commitment.

3. Rules of engagement

3rd step is to set the rules: What is acceptable, confidentiality, care and commitment. It is important to be deliberate of getting permission from everybody. Don’t create a room of criticism, create a room of support, honesty and camaraderie.

4. Rounds of feedback

4th step is do rounds where each participant receives feedback from colleagues, managers or employees as appropriate. It is important not to defend yourself against feedback – it is not about right or wrong, it is an opinion. We are not judging people; we are helping them understanding their impact

Do not respond to the feedback, just receive it and let it sink in – it could take weeks before you are ready to process it. You should thing of the person that gives feedback as somebody that cares about you enough to tell the truth. You have to be willing to interrogate your impact.

5. Use the feedback

Once you have had time to assimilate the feedback it is time to do the work. It is important to remember that it is not about right or wrong, it is about what impact you have on people. If you receive value from the exercise there are two more elements of the Johari window to go explore.

(This article is based on the wonderful work of Hendre D. Coetzee – may he soon write a book to enlighten us all.)

Are you still involved in skilled based recruitment?

For many years through the industrial and knowledge age, skills have been imperative when recruiting people. Are they capable of operating the right machine or be part of the right department. However work is changing and people are now entering corporations with a job title that are not likely to survive many years – we don’t even know what will be needed a few years from now. Marketing has gone from paper and television to online and mobile at a blistering pace rendering the entire skill base obsolete. The same thing is happening in sales, where customers has access to more information than the salespeople and are capable of identifying the best deal without even calling.

“Companies are running 21st-century businesses with 20th-century workplace practices and programs.” Towers Watson

Need for specific skills are changing at a rapid pace.

If the obsolescence of skills is accelerating, it does not make sense to hire for skills alone anymore. A better way is to combine skills with attitudes and behaviours when recruiting. Define the attitudes you want in your company – they are likely to interact with your values and culture and the basic belief system your company is based on. They should also be the first evaluation process that existing and new people are evaluated against as attitudes are hard to change. A very imortant point is that the attitude of an employee is going to decide if your culture and operating logic is able to create engagement - a key element of motivation.

"Getting an employee with the right skills is not the same as getting a motivated employee"

Secondly it is needed to look defining the behaviours you want. On LinkedIn it is possible to get a good idea of behaviours of a candidate that can be explored through the interview phase. Even though you would like certain behaviours it is more important to look for the potential of behaviour you would like to have in your company as behaviours can be coached.

Skills should really have the last priority and you need to be looking for the potential to acquire the necessary skills and the ability to acquire future skills. Whatever you are looking for right now is going to be obsolete faster than you can believe.

Pulling it all together will help you identify your high performance A Players that exhibit the desired Attitudes, Behaviours and Skills you are looking for. B Players that have the potential to become A Players and finally C Players that does not have the potential.

Using the 3 Gate process will ensure that you get the right potential people into your organisation but not that they are motivated and engaged. Engagement is an emotional relationship between the employee and the company that the company is responsible for creating. It is not a characteristic of the employee.

"With high levels of engagement, firms can see revenue growth 2.5 times that of their peers and a 40 percent reduction in expensive staff turnover" HayGroup

The 3 dimensions of Fairness that Impacts Employee Engagement

What is fairness really?

When most people talk about fairness, they talk about the concept as an absolute and objective term, things are either fair or they are not. This is also how people behave although it is blaringly obvious that even two people can disagree on what is fair. If fairness truly was objective we would have no wars, sufferings or extreme inequality – there would be enough for everybody.

Fairness is a very subjective concept and it is shaped by age, culture, religion, age and a whole host of other dimensions. Fairness also changes according to context; in scarce situations like who should have the last bottle of water in a desert, people’s perception of fairness changes dramatically.

Anybody that has been in a situation they deemed unfair knows that the response is instantaneous and can be quite powerful. This reveals that fairness is hardwired in the emotional parts of the brain, in particular the amygdala – where also anger gets trigged and the two often works in concert.

Why fairness impacts Employee Engagement

For companies the fairness concept really is a tightrope that needs to be walked. If you trip, you risk getting a powerful emotional response from people that can have a dramatic and instantaneous impact of the engagement levels – disengagement can increase very fast.

Fairness is also a positive engagement factor but it builds slowly over time as the company demonstrates that it is a fair company. Communication strategies cannot only be built around rational business strategies and decisions – it will need to respect the fact that fairness is emotional in nature.

The 3 Dimensions of fairness

Taking a deeper dive into the concept of fairness, reveals that there are three dimensions that needs to be considered when dealing with Employee Engagement and the fact that they interact.

Fairness towards Self

The relationship between the employee and the employer can be seen in the light of fairness. The tangible elements of fairness are what the employee gives in terms of presence and effort compared to what the company gives back in pay and benefits. The tangible elements of fairness are closely related to satisfaction but not much to motivation and engagement.

The intangible elements of the relationship, like how you are treated, trusted and listened to combined with other leadership and cultural elements has a high impact on how motivated and engaged the employee is. Engagement is not about money – it is about how you treat people.

Fairness compared to others

Another dimension of fairness is when employee compares their situation to those of others. This could be colleagues, leaders, similar groups outside the organisation. When employees start to compare their situation to others, their perception of fairness can change very rapidly. What they were happy with a second ago is now completely unacceptable when they have seen what the others get. This is key in designing engagement, you need to either be transparent and up front or be secretive if you have very differential pay or treat people very different.

Fairness towards others

The last dimension is about how fair the company treats others and can have a significant impact on the engagement. Companies that only focus on shareholder value are typically short term oriented and see conflicts between the shareholder and other stakeholders like workers, customers, society and the environment.

Fortunately a lot of the younger more successful companies are built on a foundation of a strong worthwhile purpose and know that serving multiple stakeholders eventually benefits the shareholder. If a company treats all stakeholders well and respect them their reputation, brand and image as an employee grows. This can significantly increase employee engagement.

If you want to create engagement in your company you need to be able to manage fairness along the three dimensions

Competitive advantage can only be created through people.

Since the financial crisis the focus of some corporations has turned from a desire to create value to a perceived need to extract value from their existing business. This has mainly been achieved by starving the existing business through headcount reductions and outsourcing of corporate support functions to cheaper jurisdictions.

 Included in the cost savings has been customer direct and indirect support functions – in reality revealing that these corporations has limited belief in these functions as assets able to deliver revenue and growth to the corporations. This also means less delivered to the customers for the same price; as a CEO of an insurance company put it: “A more disciplined offering to our customers” – a lyric formulation for less.

Reducing frontline employees is a dangerous game as automated response systems and web based support might not be able to create the emotionally connection with customers that most corporations marketing campaigns are based on. What customers expect and what they get will be quite different – automated and generic response does not create engaged customers.

These kinds of headcount reduction and reductions in funding to training programs, maintenance of equipment and R&D to improve the bottom line has not exactly been rare. There might not be anything legally wrong with doing this but ethically there can be issues.

From a governance issue, under-investing in people and under-investing in the revenue generating part of business is considered stealing from the future to benefit today. This is especially a problem when executives are paid based on P&L metrics and share compensated affected heavily by earnings per share. It could be seen as stealing from the future for own personal gain.

The increased cashflow from these activities has predominantly been reinvested in the company’s own equity as pointed out in the Harvard Business Review article: Profits without prosperity, with increases in share price as a result. The problem is that this is not an investment in the business future and based on assumption that the existing base of competitiveness is relatively safe. Companies might believe there is safety in size, like Kodak did or safety in technology as Nokia did. They might think that their brand is the strong enough – like Blockbuster or Motorola did.

Unfortunately for these companies there is a new breed of predator in the corporate jungle. Companies like Google, amazon, Netflix, Tesla and Apple are redefining the rules of the game in ways the more mature companies has no response to within their current way of thinking. 

The mature companies think that the new companies have created their competitiveness through people-less assets like computers, artificial intelligence, automation, robots and Internet based offerings and assume that reduction in headcount is the way forward.

What they have failed to understand is that all of these companies only create competitive advantage through their people and not at the expense of their people. If they wanted to take a closer look they would see companies highly focused on getting the right kind of people, making sure they are continuously developed and satisfied.

These companies know what is well established outside the economic and financial circles – probably also in these circles but not stated publicly – that human beings are not only rational people but more importantly emotional beings that are affected by the social context around them.

They make sure that their employee are not only rationally connected to the companies though satisfaction but more importantly connected emotionally through engagement. Connected to the purpose of the corporation – the “Why” of the corporation.

These companies also have a belief that employees are the only true source of competitiveness, even if it manifests itself through products, systems, knowledge or other employee made artifacts.

Employees make a difference. Employee engagement matters.

Employee engagement is not something you do to people – it is something you do with people.

For many years the logic behind the service profit chain has dominated the way corporations treat their employees. The theory behind service profit chain suggests that satisfied employees create satisfied customers that in return stay loyal and affect corporate results. 

This has changed with recent Gallup research that was unable to verify the link between employee satisfaction and results. It could have been that satisfaction used to give corporations an advantage, but failed to do so today. It could be that satisfaction has turned into a qualifying rather than a winning attribute of the organisation. 

Gallup did however identify a clear link between corporate results and employee engagement. The “Employee satisfaction” concept has its roots in fulfilling of employee’s needs, wants and aspirations and is seen as something the corporation does for its employees. As such it is, for the employee a passive arrangement, where the corporation can decide what rewards it is willing to offer in return for the employee staying with the corporation. 

The psychological contract between employer and employees is not limited to tangibles, but has been seen mainly as a rational agreement and as such something corporations impact though HR activities, predominantly compensation and benefits. Satisfaction can be improved by job safety, promotions, empowerment, appraisals, communication and similar activities focused on the employee and the job role.

The problem is that money and benefits above a certain existential minimum does not motivate people to do more as Gallup proved – the path to improved performance is not though increases in tangible benefits – but through an increase in engagement. So the bravest of HR departments has turned to measuring Employee engagement.

As in Gallup’s engagement surveys, most employee engagement survey show significantly lower results than satisfaction surveys, something that suggests a problem. No doubt a lot of management teams like the old satisfaction survey that could be done and ticked easily without rocking the boat. 

The new engagement survey could be seen as a threat and not as an opportunity to gain competitive advantage. The other problem for the HR departments are that where employee satisfaction can be improved through systems and programs focusing on the lower part of the organisations, improving employee engagement is a completely different game. 

Although in HR’s areas of influence - key elements in creating engagement, like personal growth and developments are a hard sell for HR in a rational skills focused world. Other areas of creating engagement are outside the reach of HR.

The newest neurological research of human behavior and decision making processes has firmly established the important roles that both emotions and social context plays as powerful modulators of what was once believed to be a predominantly rational process, which put us apart from the animals. 

The Merriam-Webster’s definition of engagement: “emotional involvement or commitment”, confirms this is true for creating engagement also. Research suggests that engagement is influenced by the level of which employees identifies themselves with the organisation. The purpose, vision and leadership of the organisation play a vital role in engaging employees and the connection is emotional.

Why the corporation exist and what its purpose is become a potential powerful source of employee engagement. Unfortunately the post crisis corporations have had so much focus on improving profits that they have forgotten that creating profits is not a strategy – it is an outcome of a successful strategy.

Organisations that want to survive and thrive will eventually need to focus on a higher purpose that improves the situation of customers, employees and other stakeholders than just shareholders.

So employee engagement is not just something that can be designed by a HR department and injected into the workforce, it is about changing the fabric of the department or the corporation itself.

Employee engagement is not just about improving, it is about transformation. To transform people you need to transform the organisation and its purpose and goals. Visionary companies know this.