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.

Are you running your company like an old communist country?

It is generally accepted that the wall fell as a result of the actions of Regan and Gorbachev although it probably would have fallen anyway as a result of the systematic and serious failures that evolved inside the totalitarian system.

You would think that companies most often are managed by principles derived from capitalism and while this might be true there are a large number of companies that have adopted similar vices to those of the former communist countries in the world.

The question is if what is likely to have caused communism to fail is a good foundation for a long term sustainable strategy aimed at creating engagement with both employees and customers.

Test your company against the doctrines below and find out if you are facing obsolescence:

1. Power is concentrated on few hands

A significant issue of the communist countries was the limited number of people that had authority to make real decisions regarding resource allocation in strategic and operational situations. A culture of delegation assumes that the top leadership of the company are better qualified to make all decisions on the corporation’s behalf – in short they know better. This kind of “Politburo” structure fights empowerment like the body attacks a virus – the distribution of power that is at the core of empowerment is a sacrilegious concept that cannot even be discussed. A concentrated power structure isolates the leaders from the organisation and alienates the employees and the customers rather than engaging them. Organisations that successfully engage both employees and customers have 240% better performance according to Gallup.

2. Information access is limited and decision making processes are not transparent

A relic from the industrial age where information was key to competing it is now mainly used by poor managers to cement their power position. Very little information can be considered so proprietary it should be kept from employees. The social revolution is changing the way that information is used inside companies and it is also making it very difficult to keep decision making processes secret when all stakeholders have the possibility to instantly spread uncomfortable secrets immediately.

3. The leadership is not democratically elected.

In principle the board and though them the CEO should be (s)elected by a democratic process that operate by shareholders voting rights. In many companies this process is not as many shareholders don’t exercise their voting rights. The largest stock holders in the world are pension funds managed by professional managers, not by their true owners. This means that rather than owners voting for managers to take care of their best interest, it becomes a case of managers voting for other managers / with that the danger of managers acting in their own best interest rather than the owners. One of the signs of a “Politburo” is a board with members that has not changed for many years and always sides with the CEO.

4. The company has a lack of purpose

If you have a mission of becoming the “Very best company in the x industry” you are probably not the most purpose driven company in the world. Instead you are likely to have a focus on serving “shareholders”, which sounds a lot better that senior management serving themselves. It is important to have a strong purpose that can attract and engage employees, customers and other stakeholders if you don’t want to compete on price alone. If your leadership team are defenders of status quo – they are likely to be a Poliburo:  The society for the preservation of senior management.

5. Doctrine based thinking

The only argument for concentrating power on a few hands is the assumption that they no best and are best equipped to manage the company. When this becomes the case there is no real reason for seeking information or advice outside the power structure. As people are isolated from the real world doctrine based group think starts to kick in. Decisions are based on assumptions that might have been true once but never gets revalidated. It is particularly dangerous if it gets combined with short term financial results that can give the illusion that all is well. Short term results can be made by stealing from long term results.

6.  Strategies that benefit few

If a politburo structure enters a company so does entitlement. As the power circle constantly reinforces their own importance the companys strategy turns to serving the few that matters. In strategy creation the interest of other stakeholders will start to be underserved to give to the few. Starving customers and employees can create short term results and with that the illusion of success. When CEO’s make more than 500 times the pay of ordinary workers, it is a sign that the company has started to serve the few. These strategies are rarely sustainable in the long haul.

7. Central planning structure

The Politburo owns all the money and need to concentrate resource allocation and planning to a central point. The focus turns from investing in new equipment, people and in new business opportunities to a focus on efficiency. More effective P&L or Balance sheet control of business units is replaced with a micromanaged central structure where everybody has to make endless request to just get the minimum for the business survival. It is a great way of starving the business at the same time as being able to blame the individual units of not contributing.

8. Policies are designed to limit people, not enable them

The bureaucracy shows its face once the company’s policies turns from guiding the people to starting to control and limit them. Policies will move from enabling everybody to be a mean to only protect the company interest and money. When the health and safety policy that should be designed to protect the employee turns into a 50 page legal document that describes what will happen to an employee that does not follow the rules – then you know you have turned into an old communist country.

9. Staff functions transform into secret police

When policies change to protect the company, a similar change can take place in the staff functions. Originally designed to support the business with financial, people, legal and IS support the staff functions start to control, check and report behaviour that can be deemed dangerous to status quo. They start to resemble the security police in the old communist states. This has a significant impact on employee engagement and instead of seeking new ways of doing things and creating value, employees gets trained into low profile, low risk behaviour. Don’t spend any money, do make any requests and don’t challenge status quo.

10. Lack of engagement kills productivity, initiative and innovation

When employees understand that they are not encouraged or rewarded for taking initiative, learning and experimentation stops. Productivity growth will start to decline compared to high engagement organisations although it can be hidden by the results created though starving the company. With the concentration of information, a focus on low risk behaviour and low employee engagement – innovation will stop. Innovation can only happen if people are allowed to challenge status quo and the doctrines of the corporation – this is one of the key reasons the old communist countries did not survive.

If your company share some of the characteristics of an old communist country it might be a reason to start looking for healthier doctrines that enable employees and engage customers. 

You cannot run a 21^st century company based on 20^th century management principles.

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

Interview with Sir Richard Branson Founder of Virgin Group by Christina Lattimer

Interview with Sir Richard Branson Founder of Virgin Group

By Christina Latimer
Full article here: http://peopledevelopmentmagazine.com/2014/09/03/sir-richard-branson/

This is the final interview in this wonderful series about the 6 Challenges identified by CEO’s across the globe, highlighted by the Centre for Creative Leadership in their Report in 2013.  When I turned my attention to who I would want to interview for this important final issue,  the first person who sprang to mind was Sir Richard Branson.  To me Richard epitomises the ultimate combination of brilliant leadership and business skills.  Richard has successfully, transparently and wholeheartedly lived his values which have been demonstrated time and time again both in his unique approach to business and in his attitude to Virgin’s many faceted global success.   So you will no doubt understand how delighted and grateful  I felt when Richard confirmed he was willing to contribute to this month’s magazine.   I hope his wonderful words of wisdom, as always, help you our readers and contributors alike, I think you will,  like me, be delighted!

Here is what Richard had to say:

1) What do you consider is the biggest challenge for CEO’s and leaders in the business world today and what can be done? 

Business leaders and CEO’s have a responsibility to inspire their employees and run their business in a sustainable way.   This is difficult for CEO’s as they are judged on their performance in the short term and any long term initiatives do take time to come through.  Shareholders and stakeholders need to modify their expectations of CEO’s from short-term profits and back the leaders of businesses to create long lasting plans that will grow their businesses and tackle many of the world’s issues at the same time.

2) Can you describe your leadership culture in Virgin and why it works so well? 

When selecting people for leadership roles I believe you should have an open mind and be prepared to look out for talent which others may have over-looked.

It is extremely important to employ business leaders who are passionate about their particular area of expertise and understand that part of being a good leader is having the ability to listen.   Listening to your people and giving them the opportunity to act on any ideas they have helps foster passion in your people and deliver on their ideas, which is beneficial to your business.

3) Given your vast experience in business what is the single biggest piece of advice you would give to leaders and CEO’s reading this? 

If you look back at the most successful businesses of the past 20 years – Microsoft, Google or Apple, they all played a part in shaking up their sector by doing something that hadn’t ever been done and by continually innovating. They are now among the dominant forces.

Not everyone will achieve such great worldwide success but a good start is to create something that everybody who works for you is really proud of. Businesses generally consist of a group of people, and they are your biggest assets.

4) What is the most inspirational event, person or situation you’ve encountered so far in your career?  

I have been fortunate to have had a long and successful career in business, meeting many inspirational people along the way and attending some fantastic events full of fascinating people.

I have long admired Nelson Mandela and was so upset when I heard the news of his passing. He showed amazing courage and conviction overcoming an evil political system. Wherever he went he would make people smile, laugh and feel completely at home. A young friend, Peta-Lynn, found Madiba in the galley on a Virgin plane to New York a while back. He offered to make her a cup of tea. What an extraordinary man.

5) What is the most exciting project you’re involved in you’d like to share? 

Going into space has always been a dream of mine. I could think of nothing more exciting than looking at our planet from space. Virgin Galactic is pioneering the space tourism industry and making great progress. Our spaceship has successfully completed three powered flights, breaking the sound barrier in the process, and our mothership – WhiteKnightTwo – has flown over 150 flights. The project is looking promising and I get so excited every time the Galactic team update me on another milestone the project passes.

6) How can our readers’ best benefit from the work you are doing and how can they best engage with you (and Virgin)? 

I have been fortunate that over the years we have developed an incredibly strong management team to run the Virgin companies. This has allowed me to dedicate the majority of my time to Virgin Unite – the not-for-profit arm of the Virgin Group. Virgin Unite have incubated a number of organisations dedicated to tackling specific issues such as conflict resolution (The Elders), climate change (The Carbon War Room), ocean protection (Ocean Elders) and sustainability (The B Team). I would encourage anyone to try to engage with these organisations and be inspired by what they are trying to achieve. Go out and start something yourself that reflects what they stand for.   Virgin Unite, and Virgin.com, has a very strong digital presence and I update my blog daily at www.virgin.com/richard.

More about Sir Richard Branson

Sir Richard Branson is the Founder of Virgin.  Virgin is one of the world’s most intriquing brands and has a well known diverse and unique portfolio of companies.   There are now more than 100 Virgin companies worldwide, employing approximately 60,000 people in over 50 countries.  Sir Richard’s hallmark has been one of innovation, challenge and bravery.  Click here to read Richard’s full and inspiring biography on Virgin.com

The Virgin Way by Sir Richard Branson

Even though I asked Richard’s team if he wanted to promote or mention anything within the interview, Richard didn’t feel the need to mention or advertise his new book , which  doesn’t surprise me.  But because it looks so fantastic, I wanted to mention it here anyway, so readers were aware of it.  ” The Virgin Way”  is due to be published on the 8th September and you can find out more details by clicking on the image:

Will purpose and transparency kill your business model? Better create a new one fast.

The traditional approach to employee and other stakeholder engagement activities has been addressed predominantly on an operational level  with a focus on what the corporation is doing. By changing practices it is indeed possible to impact engagement but only if your stakeholders believe that you are doing it for the right reasons and in the right way.

Stakeholder engagement  strategies should follow Simon Sinek's golden circle model – always start with the why, followed by the how before you even start thinking about the what.

The Why

Stakeholders will forgive you for mistakes done for the right reasons – not for perfect products created by the exploitation of others. Although most companies have been started to serve a specific purpose or create value for stakeholders, the same companies often over time transform their value focus to a cost focus. A transformation that narrows the value creation to one single stakeholder – the shareholder itself. Many senior managers proudly declare their purpose as serving the shareholder – even when the other stakeholders are listening.

“Problems are just businesses waiting for the right entrepreneur to unlock the value.” Jay Samit         

Assuming that taking from the environment, society, the customers and the employees to give to shareholders is in the best long term interest of the shareholder is not logical. The shareholder will benefit when all other stakeholders benefit in a way that creates long term sustainable competitive advantage.

Most companies start like disruptive wolfs hunting apathetic market sheep busy competing for grass. Over time they themselves become sheep anxiously scanning for disruptive predators while protecting their patch of grass. Not a purpose that is likely to engage stakeholders.

Preserving or recreation of the purpose of the corporation will be increasingly important with the wave of millenials taking over as the prime stakeholders. It will be important to have a ”why” that serves many stakeholders simultaneously in what is know as super alignment.

"Make yourself sheep and the wolves will eat you" 

Benjamin Franklin                                       

The How

The rise of the millenials also makes it important how corporations operate not only as a corporate citizen with respect for society, the environment, customers, employees and other stakeholders but also with transparency.

The concept of corporate transparency is developing rapidly and can be a major source of stakeholder engagement. From being a spotlight you only pointed at the cleaner areas of the corporate exhibition halls the social media revolution is illuminating everything, including dirty laundry. Transparency is not a strategy anymore – organisations will have to work on creating sustainable business models that can withstand light rather than try and sugarcoat the existing business model.

”Transparency may be the most disruptive and far reaching 

innovation to come out of social media”           Paul Gillin

Transparency normally stops when getting close to the business model and the supply chain. Traditional companies are not comfortable disclosing their internal costs of manufacturing and similar. The official reason is that it is proprietary information that needs to be held from competitors but it could also bet that  customers would be furious knowing how they get robbed. And the other sheep are probably experts in grass anyway.

A few brave companies are taking this next step and disclosing internal costs to their customers. The company Everlane in the fashion industry have given full disclosure in a market where 8x markup is common. No doubt they will attract unwanted attention to the other sheep in that marketplace and has the potential of becoming a wolf.

It is uncomfortable for most leaders to address the why and the how of their strategy. ”Why cant we just focus on the shareholder like everybody else”? ”Why can’t we hide the true nature of our operation so we do not attract uncomfortable questions”?

Unfortunately addressing the why and the how of the strategy is seen as a negative that adds costs and not as having the potential to create significant engagement with the company's stakeholders.

“The best way to predict the future is to invent it.”

                                                              Alan Kay