Measuring Invisible Talent

When we think about measurement, we usually think about measuring objects—their length or weight. The concrete nature of this sort of measurement is easy to understand and predictable: A meter is always a meter.

Talent measurement, in contrast, is not easy to understand, and it’s unpredictable. Measuring talent has its challenges, but it’s one of the keys to organizational learning and employee motivation.

When it comes to measuring talent, we look for consistent and concrete measures, just as we do in the physical world. We hope for honesty in the mathematical precision offered by measures and metrics.  We hope for less wiggle room and more candor. We hope measurement data provides less theory, better insights, and obvious decisions. 

Comparing physical and talent helps us to see the value and potential of measurement. The value is high, but if we cling to the metaphor of physical measurement, we will grow frustrated. We may also miss one of the real strengths of talent measurement.

Talent measurement is different and it is complicated. Among the complications, it has a special attribute: measurement motivates. To access the benefits of talent measurement we need to consider how physical and talent measures differ. 

Talent Is Invisible

Talent measures aren’t concrete, like their physical counterparts. Many of the most important assets of today’s world are essentially invisible—think of wealth, power, relationships, personality, or intelligence.  Because the aspects of talent that we care about are invisible, it can be difficult to know what we are measuring.    

It’s not just that talent is invisible. We also need to remember that measures are just a representation of talent. This adds complications. We all know that someone’s height in inches isn’t the person. It’s easy, however, to confuse a measure of potential with the value of a high-potential employee. The measure of potential is a representation of an underlying capability, and the measure is accurate only in a probabilistic sense.   

Invisibility and representation are two reasons that talent measures tend to be less precise, and less consistent, than physical measures. Have two managers rate how well an employee completed a difficult task, and you’re likely to get two different answers. Ask two skilled carpenters to measure the length of a cabinet, and you’ll probably get two nearly identical answers, accurate to within one-sixteenth of an inch. 

Despite this, organizations often act as though their measures are nearly perfect. For example, some management consultants recommend that employees be ranked annually. Let’s be clear about what ranking actually means: Employees will be listed in order, from best to worst. To truly rank employees, there would need to be a distinction between the 10^th and 11^th best employees. Without a perfect measure, this is impossible. Since we don’t have measures that are up to this task, we would have to use other means to rank employees, such as intuition. 

Ranking employees by a physical measure sounds easier, but even this is complicated. Let’s say you’re at a family gathering and you’re taking a photo of your grandparents, siblings, nieces, nephews, and so forth. You’d ask people to organize themselves by height—shorter people in front—so that the camera can capture their faces. We often think about employees this way: We can just line them up according to some feature, such as performance. We’ll keep the best, or the tallest, and get rid of the rest.

Of course, it’s not that simple! Even physical measurement is imperfect. Imagine trying to get 1,000 employees to stand in order, by height. I can hear the questions already. Does big hair count? Should we take our shoes off? In the end, we’d probably need to ask ourselves, "what is employee height, anyway?"

If we take physical measurement to this logical conclusion, it provides a useful lesson: measurement is more complicated in practice than in theory. We may think we understand what leadership is. When it comes to measuring it, we need to get pretty specific in our meaning.  

People React to Being Measured

In general, physical measurement has few side effects. If you measure the length of a cabinet, you don’t affect the cabinet, and the cabinet isn’t likely to react. Talent, unlike inanimate objects, is affected in complicated ways by measurement. People react to measures.

In fairness, some physical objects are affected by measurement. When checking tire pressure, a small amount of air escapes. This affects the tire pressure. This is a simple example of an observer effect, which has been well documented in physics. For example, a glass thermometer absorbs thermal energy when taking a measurement. 

Observer effects on physical objects are generally unsurprising and small. Talent’s reaction to measurement is complicated and can be large. 

The effect can be positive. Measurement can lead to motivation, increased effort, and more focus.  Feedback and reasonable goals often lead to higher levels of performance, as we discussed in past blog posts.  

Practical experience however, shows that this isn’t always the case. Unfortunately, measurement can change talent in counterproductive ways, depending on the context. Measurement can de-motivate and distract. If measures are linked to very difficult goals, employees sometimes give up, or—even worse—lose faith in the organization and disengage. 

To make things worse, reactions to measurement can also motivate talent to corrupt or game the measures. Physical measurement never has this issue. Humans, however, have a major preoccupation with gaming measures. It’s so common that the famous methodologist Don Campbell, discussing program evaluation in 1975, described what has become known as Campbell's Law:

The more any quantitative social indicator is used for social decision making, the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social processes it is intended to monitor.   

Given these complexities, perhaps talent management should steal the nickname “dismal science” from economics:

• The underlying dimension you wish to understand is invisible 
• Measuring talent is imprecise and probabilistic 
•  Humans react to measures, sometimes by changing themselves, and sometimes by changing the measure.

 

So, Do We Stop Measuring Talent?

It’s been said that since we can’t measure talent perfectly, we should simply give up and acknowledge defeat. For 30 years, some consultants have advocated getting rid of performance appraisals altogether. I’m amazed this impractical idea is still being considered.

If we don’t measure human performance, we lose a powerful motivational and learning tool. As with many aspects in life, we simply have to manage the dilemma and tension. 

Measurement is flawed and we must use it.  We can’t hide our head in the sand and hope these flaws will go away. The flaws are inherent in measuring, especially something as complicated as talent. If we step into the real world of human idiosyncrasies, measurement is a powerful tool that can help us improve organizational performance, ensure educational excellence, and motivate personal growth. 

In the coming blog posts I will further elaborate the myths of talent measurement and how we can think more clearly for organizational learning, motivation and growth.

Charley Morrow

Motivating with Measures: Accountability, Incentives and the Dark Side

The benefits and risks of using measures for motivation are amplified when employees are made accountable or incentivized.

Measurement and Accountability

Measurement is at the heart of accountability. In the dictionary, accountability has a neutral meaning: an obligation or willingness to accept responsibility for one’s actions. This is the denotative, or literal, meaning. In a work setting, the denotative meaning of accountability is a goal that defines who will do what by when.

Accountability in this sense is the basis of management by objectives  (MBO).  While MBOs were popularized in the 1950s, they remain a central element of most organizations’ annual performance appraisals. 

While some objectives are task-based, the best objectives are measurement-based. We have found that the most effective examples of accountability-based motivation use SMART goals—goals that are Specific, Measurable, Agreed upon, Realistic, and Time-bound. Describing expectations in terms of measures at the beginning of a project motivates performance. 

Accountability is a word often loaded with connotations. How would you feel if you were told in a business meeting that you will be held accountable? Queasy? The phrase suggests that you’re in trouble. This isn’t actually accountability—it’s scapegoating. This is a connotative meaning, and the connotations of accountability are negative. The fear of negative consequences can lead to all sorts of dysfunctional behavior.

If the meaning of the measures isn’t managed, then accountability is more likely to instill a culture of fear than it is to motivate employees and support the organization’s strategic goals. 

To motivate with measurement-based accountability, the meaning of the measure must be managed. Use measures to describe expectations before the employee works to achieve results.  Articulate both the formal, denotative meaning (how the measure works) and the connotative meaning (the implications for the employee).

• If you’re building a measurement system, remember that the connotations are probably more important than the measures. Consider how the measures will be seen by employees. Develop a list of actions employees could take to influence the data.  Be sure to include actions that the system intends to encourage as well as unintended actions. Adapt your system accordingly to especially encourage the intended and discourage the unintended.
• If you’re managing employee accountability with measures, be sure to talk with employees about both the denotative and connotative meanings. It’s important to develop a shared vision: This is a true leadership communication task.  If there is clear agreement on the meaning of the measure as well as the level of performance expected, accountability can be positive. 

Accountability is simply responsibility. Measurement can help top build responsibility for results and the rewards or consequences of the results.

Incentives and Measurement

If goal setting and accountability work, why not add incentives to make them work even better? Why not juice the motivation system? Many of us have worked, or currently work, in an incentive system. Sales people work on commission. Managers get bonuses and stock options.

There is a whole industry of compensation consultants trying to create incentives that work. Since the industrial revolution, we’ve been trying to get incentives right—and some of us are starting to wonder if incentives are just wrong.  

Research summarized by Daniel Pink suggests that incentives lead to lower performance in completing tasks that are complex or involve creative thinking. I’m sure we’ll find that this relationship is true in many circumstances. 

I am also sure there are many circumstances in which incentives lead to improved performance, even in complex and creative tasks. As with many aspects of human performance, there are complexities.

Life isn’t one-size-fits-all; there are individual differences and nuances of context that influence how incentives affect performance. Long-term goals, which are difficult to study experimentally, may work better with incentives.  Mr Pink presents the world in black and white; i am confident there are many shades of gray.

There is a bigger problem with linking incentives to measures, however.  Incentives, or consequences, have the tendency to put the focus exclusively on moving the needle—on affecting the data and the measure rather than addressing the underlying goal. Too much focus on the connotations of the measure, as opposed to the meaning of the measure, leads to gaming.

The Dilbert comic strip may seem ridiculous, but as is always the case in Scott Adams’ cartoons, absurdity reflects reality to an uncomfortable degree (many of his cartoons are based on real-life examples submitted by readers). Incentives can have unintended consequences, often encouraging employees to behave unethically. For example, if you were earning a subsistence wage as a packer for Green Giant, and the company announced that a bonus would be paid to every employee who could find and remove insect parts from packages of frozen peas, what would you do? Possibly what many of the employees did—bring insect parts from home to earn the incentive.

There are, of course, more troubling examples of the dark side of measurement-based motivation. In the sad story of system-wide cheating in Atlanta Public Schools, 178 employees, including both teachers and principals, are now suspected of inflating scores on standardized tests to earn the significant rewards that come with rapid improvements in school performance. Outright swindles, such as Bernie Madoff, are all too common.

In sales departments there are more subtle examples of gaming incentive systems. Sales departments have been known to count all sales in the current quarter toward commissions—even though many of the sales are not actually closed. 

Conclusion

It’s dangerous to rely too much on measures for motivation: The more you emphasize measures, the more apt the measures are to cause dysfunctional, even unethical, behavior.  If you need to use measures for accountability and incentives, be careful.  Measures can’t replace management; they are a management tool.  It is necessary to make sure that the measures are reasonable – not gamed – and that accountability is understood and positive. 

Transforming Work: Strategic HR and Competency Models

In recent weeks, I’ve blogged about competency models: why they matter, how they were invented, and how they have evolved.

In this final post of this series, I want to discuss one of the most useful types of competency models: enterprise competency models. These models have changed HR to be much more capable of contributing to strategy and support a radical change in how we think of work and jobs.  I’ll also explain why strategic HR models will become even more important in the coming years.

Enterprise Competency Models: Replacing Research with Theories

One of the most significant developments in the competency revolution was the emergence of enterprise competency models. These models outline behavioral or leadership styles that everyone in a company (or all company managers) should demonstrate. 

Enterprise competency models demonstrate a theory of the behaviors needed to implement the organization’s strategy. In other words, the competency model is a summary and vision of the company’s strategy, articulated in terms of how employees should relate and work.

The model ensures that employee and leader styles reflect organizational needs. For example, key competencies could be:
•    Collaboration, if integrated products are central to an organization’s success
•    Customer focus, if the organization is focused on sales
•    Innovation, in a fast-paced technology company.

As with other competency modeling methods, competencies are described by observable behavioral indicators, such as:

Asks questions to determine customer’s point of view before making decisions.

Enterprise competency models are an evolutionary step for managers. Management has always defined organizational structure and jobs. Competency models extend this responsibility into another aspect of the organization.  This top down approach is, however, quite different from the research-based models that “discovered” the underlying success factors for a job.  It is also quite different from a detailed task or job analysis which are considered the starting point for most legally defensible HR processes.

Of course, there are weaknesses. 

An important concern is that managers’ theories are difficult to test. If an organization is not successful, is the competency model to blame? How long does it take to implement strategy?  How can we improve a competency model if it can’t be validated?

These models can also over-generalize the importance of a competency.  Consider decisiveness, a competency that appears in many models. It’s true that managers who postpone or avoid decisions are ineffective. It is also true, however, that managers who make decisions too quickly squelch innovation and creativity.  As a result, being decisive often sub-optimizes decisions. 

Because there is no way to test the competency model, “pet theories” tend to appear in the models. The risk is that theory-based models can be wrong, and they are rarely tested.

To Transform Work, Tell Employees How to Behave

When HR/Talent departments were largely concerned with jobs and tasks, the function was bureaucratic and pigeonholed. The focus was on providing a stock of qualified people to complete required tasks.

Competency models allow HR and talent departments to manage employees’ general interpersonal and intrapersonal style by describing, rating, and even incenting specific behaviors.

This is revolutionary. Consider a typical competency: develops networks across divisions. This is really a tool for culture change; the behaviors associated with networking describe an expectation that employees exchange ideas and information with other divisions. Ultimately, adopting this competency would reduce the silo-ism that is a problem in many organizations.

Today, organizational leaders have a powerful way to describe how they expect people to relate to one another, and even how they relate to themselves. By articulating competency models, and linking HR/Talent systems to the described behaviors, organizations have a new set of tools for shaping how employees manage themselves, how they relate to each other, and how they relate to customers. 

A new era has begun. By describing, rating, and incenting behavioral performance, HR has the potential to evolve into a real business partner.

The End of Task Management

If a company manages its expectation of behaviors using a competency model, and determines the results using performance management (i.e., a Results-Oriented Work Environment, or ROWE), the change is considerable. Jobs, which are task lists, are less important.

As jobs become less important, HR will be able to focus on business results and become a business partner. The idea of supplying human resources becomes less important, while the idea of talent management becomes critical.

Integrating HR Systems with Competencies

There are many ways to direct and encourage behavior. Too often, the methods a company uses to direct and encourage behaviors aren’t integrated. As a result, the organization ends up encouraging different, or even conflicting, behaviors.

An enterprise competency model provides a general theory of employee success that can be used for a variety of systems:
•    Staffing/selection
•    Succession planning
•    Compensation
•    Development/training
•    Performance management.

An enterprise competency model reflects strategy and links all the major HR systems.

The Future

Today, a typical large organization has seven separate databases related to human resources. This makes it difficult to create a single integrated environment for analytics, reporting, and decision-making. In the coming years, many organizations plan to integrate these databases into one Human Resources Information System (HRIS).

As companies integrate various HR applications, competencies will be at the center of the solution. While the HRIS platform is important, it is the content, and the decisions made with the information, that will be the critical components. In other words, the competency model that provides the architecture of the system will be the real key to business success.  

Strategic HR/Talent professionals should be prepared to align competencies with the strategy of the organization. If you want to have a unique and differentiated strategy, I would encourage you to consider a unique and differentiated enterprise competency model.   If your organization is following the same strategies as others in your industry, it’s appropriate to buy an off-the shelf competency model. Most organizations, however, will want a competency model that represents their unique strategy.

In Summary: Using Competency Models

The so called “competency revolution,” as some call it, has come a long way in 40 years.  McClelland and his protégés, who initially proposed competency are almost historical figures. Their initial methods have been adapted to keep pace with changes in work and technology.  The standard of research based models to uncover unconscious competencies for a single job have been replaced with theories of personal success that span an entire enterprise.

In the process of this adaption, many fine methods of competency modeling have been developed.  I do find it interesting that few HR professionals consider the many approaches to competency modeling and the strengths and weaknesses of each.

This six week  review of competency models has emphasized that different competency development methods yield very different information, and that each is appropriate to a specific task. I expect that integrated HRIS platforms will force us to be more specific about differences in competency models. While I expect that enterprise competency models will become paramount, other methods will remain very useful.

Get the Most from Your Competency Models: Understand All Competency Models Are Not the Same

Since their inception 40 years ago, competency models have progressed through distinct stages, in sync with changes in organizations. As a result, there are many types of competency models, each appropriate for a specific task. But we treat them as if they are the same. 

To get the most value from this valuable tool, we need to understand and recognize the differences in the meaning of “competency.” In the last blog post I described the roots of competencies.  In this post I will describe how they have evolved, and the best use of the various competency modeling methods.

Proliferation of Competency Modeling Methods: Moving from Clarity To Confusion

Corporations have wanted competency models since about 1990. Since they can genuinely drive business results and shape culture, organizations were willing to pay for competency models. As a result, consultants got in the competency modeling business in a big way.  

Initially, competency models were only developed for high-leverage jobs such as sales executives and leaders. A $250,000 competency research project carried out over two months was a good investment because individuals in these jobs drive organizational results.  Further, interpersonal (e.g., teamwork) and intrapersonal (e.g., multi-tasking) savvy are very important in these sorts of jobs and the behavioral event interview (BEI) method was exceptionally good at capturing these capabilities. 

Competency models soon began to trickle down to other job-families. Different methods of developing competency models also proliferated. Consultants argued that their methods were unique and better. 

Many consultants used executive interviews to understand competencies.  Often, the interviews started with organizational strategy and then inquired about the human capability needed to achieve the strategy. These capabilities became the organization’s competency model.

Some used focus groups to quickly capture ideas about competencies from leaders or incumbents. Often the focus groups learned about competency models and then generated examples of behaviors that achieved exceptional results.  Synthesis of these behaviors led to a competency model.

Other methods were clearly cheaper.  An organization could purchase a standard dictionary, or a card deck, of possible competencies. By thinking about the target job, it was just a matter of picking the right cards.  Using this tool, a professional could build model in an hour.

Competency models were also published and compared. Some noticed that leadership models from different organizations were quite similar. Would you go to the trouble of building a model if 80% of  competencies are the same in all organizations? 

Standardized competency models were developed. These models were built by integrating many competency models (research) or using on someone’s ideas of what it takes to be a successful employee or leader (theory). These standard models describe good management and leadership, but note how far we have moved from research to unlock the unconscious secrets to high performance! Many of the competency models were simply theories described in behavioral terms.

Ultimately, confusion reigned.  Everyone was talking about competency models, but in fact they were talking about different things.  There was (and still is) no agreement on the meaning of “competency.” 

Some large organizations (e.g., AT&T) had hundreds of unrelated competency models built with different methods and with different underlying assumptions! Many organizations became overwhelmed.  Some went so far as to ban competency models, at least temporarily.

Where We Are Now:  Many Methods to Address Multiple Challenges

Was this a fad or something else? Three things have happened:

• We learned a lot about the inter- and intra- personal capabilities required for key positions; many leadership competencies are better understood. For example, nearly everyone in business now talks about “emotional intelligence.”  Daniel Goleman, who coined the term, trained under McClelland at Harvard, and notes that this inter-and intra-personal intelligence was influenced by competency research
• The idea of a competency changed and became vague.  Whereas competency was defined as “a pattern of thought or behavior that differentiated average from superior performance,” now it more generally means behavioral performance expectations. Beyond that, there is little agreement about the definition of competency
• We went too far.  We started to think that competencies are the only human capabilities that matter. This is clearly a mistake. Many professional jobs do not rely heavily on inter- and intra- personal capabilities  If you are hiring, developing, promoting or rewarding an engineer, use skills or tasks! 

Competencies are clearly not a fad.  After 40 years, i am confident that competencies are a key and useful tool for Talent Management. 

With the benefit of hindsight, we should have a more sophisticated understanding of competency models and what they can do for your organization’s performance. We should recognize that competency models built using different methods have different sweet spots. As a starting point, here is summary of the various modeling methods and situations when they are best used. I welcome your thoughts and additions.

I welcome your thoughts and additions.

Charley Morrow

Sage Assessments

The Nerd Competency Model: What We Can Learn?

Are you a Dweeb, Geek, Nerd or Dork?

Spend time surfing the web and you will find this Venn diagram describing the overlapping capabilities of the “not-cool” kids.   

It is fun, but recently, I had a serious conversation about it.

A friend of mine, who has a doctorate in theoretical physics from Harvard, is burning out from teaching.  Looking at the model, she said “I’m not a nerd. I’m not obsessed enough—I don’t want to spend 90 hours a week perfecting technology.”  However, she is smart; she enjoys doing complex math.  She will probably change to a career that requires lot of smarts but less obsession and people skills. 

I was surprised this internet joke provided insights!  But, upon reflection, we can we learn a few things from this model: 

1. Human performance is based on a mix of capabilities. Intelligence is never enough to be successful! Tech innovators like Mark Zuckerberg are smart, obsessed, and lack social grace.  Change one of these capabilities and you don't get the full package
2. Sometimes lower or even negative capabilities are important for success.  Consider McClelland and Burnham’s seminal finding that the most successful leaders are concerned with power--relationships and influence.  A corporate leader will only be successful if the concern for power is tempered with inhibition.  Similarly, they found that leaders that are overly concerned with relationships make poor leaders
3. The competencies underlying performance are not always obvious.  A nuanced understanding of competencies helps.   If you want to develop leadership in general, you can develop a general competency model.  If you want to develop specific types of leaders, you will be more successful if you fully research the model

Leadership Implications of a Jobless Recovery

US unemployment is ebbing; this is good news for the global economy and many organizations. But we still have a long way to go in terms of reducing unemployment—which will drive general economic growth. We also have a long way to go in terms of corporate leadership and engagement.

Successful leaders will have to address the contours of this changing environment. The recession, and business environment, has made leadership more difficult by breaking trust.



Recently, an HR leader of a Fortune 100 company told me “corporate America has changed. Now, bosses make a choice to lay you off or loose their own job. Inevitably they will lay you off.” I was not surprised. But when I started to think about it, I realized this will make leadership and engagement difficult for managers as the economy picks up.

Actually, the economy has picked up and we are seeing a jobless recovery, which has become the norm in recent recessions, according to the Bureau of Labor Statistics. Since the 1990s, we have seen jobless recoveries.

Strangely economists have been confused by this trend. Derek Thompson, of the Atlantic, weaves together several forces in his theory of jobless recoveries:

1. Executive pay is increasing linked to the stock market, and thus quarterly profitability is of increasing concern to executives. One method of continuing profitability, when faced with reduced revenue, is to reduce costs with layoffs
2. Fewer barriers to lay-offs (lower unionization, rising personnel/medical costs)
3. An increasing contingent workforce, including part time and contract workers. The BLS would consider many of these individuals unemployed. Indeed 27% of US job growth since 2007 has been temp-workers.  The real winner in the current economy are "temp-firms" like Manpower.

So, both the Atlantic and the HR executive agree on one thing—a dog-eat-dog work environment leads to layoffs.

As a consultant that spends a lot of time helping organizations develop leaders, I have to ask how to build leadership in this environment. No matter how you look at it, there is an element of trust in leadership—followers must trust leaders. Yet, in our current environment employees cannot trust their boss, well they can trust them --to lay them off to save their own job, which is the same as no trust at all!

So, the HR leader's statement seemed like a natural enough. But then I was saddened, shocked and yes concerned. I have to ask "can we develop leaders in this environment?"

Of course there are ways to address this—simply noting that the employee-employer relationship has changed is one way to honestly relate and build trust. Regardless, employers will have to develop a method of addressing this new world that requires bravery and yes, honesty.

Is your organization developing a plan to rebuild trust? Without authentic trust, I do not believe there will be employee engagement.

Engagement and the Employee Value Proposition

Speak to many consultants and you may hear the suggestion that engagement is a free resource that you should tap and that you should always engage your work-force more—for better results. I encourage you to question this assumption. I don’t think much in life is completely “free.” There is an element of reciprocity involved in all relationships—even employer-employee relationships. Dilbert offers some wisdom about this.

Different Takes on the Psychological Contract 

A psychological contract exists between employers and employees. Historically, the contract was a reciprocity of “lifetime pay and benefits in exchange for loyalty.” This month's HBR has an important article by Tamara Erickson that explains how this contract can be understood by generational differences (e.g., Baby-boomer v. Generation-X). I agree with Tamara.

It is more important, however, that the psychological contract reflects the talent management strategy. This contract is critical to understanding links between employee engagement, talent management, and leadership. In this post, I will describe these links in more depth.

Since the early 1990s, HR pundits have argued about the “new” employer-employee value proposition. The arguments goes something like this: large organizations in a more stable business environment offered continuing employment, pay and retirement in exchange for employees’ on-going loyalty and effort. As the pace of global and organizational change has increased, unfortunately this implicit agreement has been broken. The pundits, however, are still arguing about what will replace the old contract. 

The arguments about the psychological contract can be replaced with a question: “what does your organization need from employees to be successful and what does it offer in return?”   

Fundamentally, the psychological contract is about the employee value proposition.  This value proposition has two points of view: the employers and the employees.  Both must be balanced. Employees must feel like they are getting a reasonably equitable deal, or they will disengage or leave. My colleague Amy Bladen wrote about this in the the April edition of Leadership Excellence (read the article here)

The universal employee value proposition is gone.  In its place are a number of employee value propositions that vary according to organizational strategy, employee class (some employees are more critical to organizational success) and generation.

Organizations can literally balance and harmonize the employers and employees value proposition—try using two columns and write some words.  Be careful, the reciprocal relationship in employee engagement is nuanced! It is important to think about what your organization needs as well as what your employees, or classes of employees, need.  When thinking about your employees’ needs, it must be from their point of view.

Reciprocity and trust are critical to building employee engagement.  Without trust for their leaders and organizational direction employee have no foundation for inspiration let alone energy for achieving the vision.

From the Employers Point of View    

Different organizations need different types of employee engagement and as such the value proposition varies with corporate strategy. To some organizations retaining employees is critical; to others only a few years of intense effort is needed. Yet others need to retain customers and as such employee engagement with the customer is critical. Others rely on employee innovation and skill as the strategy. The list could go on—ask yourself "what does your organization really need from its employees?" In all likelihood you will need different types of engagement from different classes of employees, so you may also ask "are there groups of employees that need to have a special type of engagement?"

Some organizations have a business model based on "employee churn." Life insurance sales organizations have a reputation for paying largely on commission and accepting that a large percentage of employees will leave when they cannot make ends meet. Employee churn is a reasonable business model. Life-insurance sales organizations need producers and they can use churn to find the one out of ten applicants who can actually sell life insurance to strangers (versus selling to family and friends). 

Other organizations have an up-or-out value proposition. These organizations often provide great opportunities a highly stimulating environment and these organizations benefit from hiring younger employees with alacrity. If employees run out of engagement in a few years, more can be hired.

Companies pursuing a product innovation strategy often rely upon skilled employees who have a deep understanding of their product--for example consulting, technology and pharmaceutical firms. In these companies the value proposition has to do with retention and reward of the key talent that enables the innovation-- for example expert consultants, critical skill engineers and R&D/Commercialization professionals. Again, employee value proposition should vary with strategy. 

Also some employees, within an organization, need to be especially engaged.  Consider actuaries in the life insurance industry.  Few life insurance companies want actuary turnover—the few individuals can accurately predict mortality to set insurance rates are rare and critical to a business success.  While high turnover of sales representatives is acceptable, actuary turnover is not. 

Organizations, for cultural reasons, often have a general employee value proposition. Thus, some life insurance companies may overlook low engagement or high turnover. In many pharmaceutical companies, retention-tactics are applied to all employees; these tactics, such as higher pay, lead to higher HR costs.

From the Employees Point of View   
Employees view the world through their own eyes.  As the Tamara Erickson's article highlights, Gen-X employees believe that their employer seems them as “replaceable,” and this colors their interpretation of corporate life. Baby-boomers are more likely to believe in the old psychological contract and act accordingly.

Employees will engage in any organization, even those with a churn or an up-or-out employee value proposition. However, the value proposition must be transparent to earn engagement. 

A leader can build trust if he or she is transparent about the employee value proposition.  I consider transparency to be part of being authenticity. A young and ambition prospective employee is likely to join a leader who says “I’m going to give you an opportunity and it will be challenging. You will learn a lot that will be useful in your career.  If you are successful you are likely to make some reasonable money.”  If, however, the employee value proposition is not made clear some new hires will have other expectations and be disappointed.  This is the basis of the realistic job preview. 

High potential employees may have another worldview.  They may, realistically, see themselves as having more opportunities than typical employees.  As such, they may require more opportunities or compensation in return for their engagement and loyalty.

Implications for HR and Leaders
The challenge for organizations is to understand the links between the value propositions and strategy and then to make the contract explicit. This becomes more difficult when you have multiple value propositions in the same organization. This is where front-line leadership comes in; supervisors need to authentically relate to employees and build trust on the basis of reciprocity. Organizations need to ask themselves:

• "Are our managerial ranks are up to this task?” 
• “Does the organization support supervisors to have authentic relationships with employees?”

As ever, I would like to hear your thoughts.  Does your organization have an aligned employee value proposition? Does your organization have multiple value propositions for different employee classes, or should it?

Charley Morrow

www.SageAssessments.com

Engagement and the Workforce

From reading the news and blogs one has to ask—"is there really a crisis of disengagement in the workforce?" Many are concerned about this. As most readers will know, employee engagement is related to customer satisfaction, company productivity, and retaining good employees. So, it is a problem if engagement is down in a company. 

And, it seems like we are getting close to disengagement of crisis proportions. This is an acute concern to HR professionals. Let's look at the data in terms of employees leaving –quitting as the Bureau of Labor Statistics (BLS) calls it and in terms of engagement and satisfaction with jobs.

Engagement and Moving Jobs

Anecdotally I've heard many say – "I'd leave now if I had an option." Well, it turns out that the "quit rate" of last year was extraordinarily low. I did a little poking around at the (BLS)—last year voluntary quits (excluding retirements) is was at the lowest level since they began keeping records in 2001. Typically some 24% of American "quit" in a year. The chart below outlines the percentage of employed Americans who quit in a year—it looks like people do NOT have options—they are not leaving voluntarily right now!

Total US Total (nonfarm) Rate of Quitting

But, job security is not gone. I was surprised at a Gallup poll from August 2009 that found American workers are not as concerned with job security compared 2003. In 2009, 50% were completely satisfied with their job security. It is as if many employed workers are not threatened that they will be forced out; employed Americans do not seem terrified of being laid off.

Gallup Poll of Satisfaction with Job Security

The parallel nature of the Gallup and BLS trend lines is interesting—job security and quitting seem related. People are more apt to quit in times of higher job security.

We are slowly getting out of this recession. I wonder if increasing job security will lead to future quitting? No one knows the future, but it sure seems as if there might be a spike in quitting later this year or the next. Of course, every company is different.

Given that many feel they "can't move" jobs right now, you might think that psychological job engagement would be down. Simply put, stuck people disengage.  Everything I see is pointing to this trend—anecdotes and many converging surveys. To understand, I looked at some current surveys on engagement.

National Engagement Surveys Converge: Employee Engagement and Satisfaction is Down

A senior HR official at a fortune 100 technology company told me that when the recession first started measures of employee engagement went up—as if employees were happy to have a job. As the recession has worn on, however, engagement in her firm has dropped. It was as if the work load and stress has worn the spirits of employees down. National polls seem to echo this concern.

In a rare convergence of national polls, all data suggests engagement is down. Individuals have told me about divergent data, but I can't find it. As far as I can tell all sources say the same:

Right Management Consultants found that sixty percent of employees intend to leave and an additional one-in-four are networking and updating their resumes. They predict that turn-over will skyrocket this year. Here is the survey question/distribution of the survey of approximately 900 workers in North America:

Do you plan to pursue new job opportunities as the economy improves in 2010?
60% - Yes, I intend to leave
21% - Maybe, so I'm networking
6% - Not likely, but I've updated my resume
13% - No, I intend to stay

http://www.right.com/news-and-events/press-releases/item1954.aspx

Gallup found employee engagement plummeted in 2009, much of this driven by job satisfaction. The Gallup organization's Work Environment Index includes four items: job satisfaction, ability to use one's strengths at work, trust and openness in the workplace, and whether one's supervisor treats him or her more like a boss or a partner. Gallup only asks these item questions of respondents who are currently employed by others. American workers' decreased job satisfaction (from an average 89.0% in 2008 to 88.0% in 2009) contributed most significantly to the decline in the Work Environment Index overall.

The Work Environment Index saw the largest year-over-year drop, declining to 49.2 in 2009 from 51.4 in 2008, a loss of 2.2 points overall.

http://www.gallup.com/poll/125060/Americans-Lose-Ground-Areas-2009.aspxc

The Conference board, based on a survey of 5,000 U.S. households reports that only 45 percent of those surveyed say they are satisfied with their jobs, down from 61.1 percent in 1987, the first year in which the survey was conducted.

http://www.conference-board.org/utilities/pressDetail.cfm?press_ID=3820

Untangling Engagement

In the technology company I mentioned above, management is aggressively addressing engagement by sharpening strategy and making sure that every employee understands how they contribute to the company's success.

I've heard from other consultants and clients fearing engagement and what it means for retaining top talent. This is the time to think about it—before resumes get out there and top talent are offered good deals.

What is engagement anyway?  What can improve engagement? Is it just related to business cycles? What kind of engagement matters for different organizations? There are so many related questions. Please comment on this post and I will be back next week with more research, viewpoints and models as I attempt to answer these questions.


From Jackson NH
Charley Morrow
www.sageassessments.com