What Is The Ideal High Morale and Engagement Manager and How Does She Get There?

I don’t usually put excerpts from my book in here, I write original material.  But today I was inspired by a single question from someone on the Employee Engagement Network, a lively, friendly and well informed group of people brought together by Canadian David Zinger.   The question was:

In today’s workplace, what are the main levers that Supervisors can use to improve morale?

Although my book was not organized around “what do to to improve morale” (many books have done that) I did ask some questions about whether managers are born or made, and if one could make a perfect high morale manager, what traits she (in this case) would have.  As such this is not about “levers” (not sure I like that mechanistic view of things) as much as it is about how one can prepare oneself for the critical job of managing others.  It is about values, beliefs and actions….which could lead a person to having high morale, engaged employees.

Here is what I said:

“What if it is possible to create, through training and other experiences, a manager who leaves behind a trail of goodwill and enthusiastic employees, no matter where she goes?  What traits would this person have?

• She would have left behind that part of her personal background and baggage which would have poisoned relationships with her team and her peers
• She would check her ego at the door and make sure it didn’t effect her management style:
  • for example by not “stealing” credit for projects from others
  • by knowing that when people in her team are successful she too is successful, not diminished
  • by hiring or promoting people who might be smarter than her in the field and not being threatened by that
• She would have a view of people as essentially motivated, intelligent and creative
• She would believe that those qualities can be “invited” into the work environment with the right kind of management support and encouragement
• She would see her job mainly as a coach, not a controller
• She would have a profound respect for her people and treat them that way
• She would treat people with equality and fairness, not favoring some at the expense of others based on personal relationships, or other factors not related to the job itself
• She would base all measurement processes of her employees on mutually-agreed-upon, clear goals
• She would provide honest, supportive, regular and timely feedback to her people
• She would be tough enough to make difficult personnel decisions, such as helping a low performing employee to face up to that fact
• She would be a communicator of the stated values of the organization as well as living them via her own behavior
• She would not tolerate violations of those values by anyone and would protect her team from those who would violate them

 

If this sounds like superwoman, it is not: great managers do a lot of these things by instinct, but some of them can be learned. Others (like the essential ability to identify and control one’s ego) can be a long term personal growth project on which many do not wish to embark, and which is unlikely to change on a week long course in the country.”

________________________________________________________________________________________

Excerpted from Employee Morale: Driving Performance in Challenging Times by David Bowles and Cary Cooper. Copyright © 2009 by the authors and reprinted by permission of Palgrave Macmillan, a division of Macmillan Publishers Limited. All rights reserved. 

Let’s Be Clear: Executive Compensation Excess is Eroding Employee Morale and Engagement

(This is Part 2 of a three part series on executive compensation and morale).

Earth to CEOs:  Come Back Down Here with Us!

First a disclaimer:   this post is about a sub-set of CEOs, not all.  I am a business psychologist trained in social science research and understand full well that samples should not be generalized to the whole unless they are truly representative.   Many CEOs (and I have worked with a lot), are downright great people, generous, caring, and absolutely dedicated to the welfare of their workforce.  They dont have an ounce of greed in their bodies and they make sure they play by the same rules as those who work for them.   Perhaps you work for one of these people, or are one of them yourself.  This post is not about them/you!   This is a about a subset, enough of a group to make a difference in overall averages, and this subset has a mentality which is damaging US competitiveness.

I’ve been watching this new show on TV here in the US:  Undercover Boss.  Its about a CEO or COO going out in disguise and taking on some of the more difficult jobs which his (so far, all male) own people have to do.   In some cases he is so useless and the job so difficult, he gets fired after one day!  The show seems to be popular, partly because the CEOs have been humiliated.   Its also because most have so far reacted to this experience and shock at what people “out there” in the companies actually have to do, with genuine humility, often being really moved by the experience.  They are often moved enough to make changes, to promote lucky ones they come across, give raises, special gifts, etc.  Even to re-think the whole way their company does business.  I was thinking about all of this in the context of what we have been through in the last 2-3 years.  Is this the start of a trend?  Will we start to see a more real, personal CEO whose eyes are more open to what his or her people have to face every day?  Will that start to change the behavior of said CEOs?  Particularly in the area of compensation.  I know some of you are saying, dream on!  But I have a compelling reason for them to change, as you will see.

My hope is that we will indeed look back one day at this Great Recession and say, yes that was the time when we dumped this whole fad of glorifying some CEOs and brought them back down to reality.  Reality is that too many CEOs (usually, but not always men) were not all that their publicity machine puffed them up to be, but were paid as if they were.  I’m not talking about the Steve Jobs and Sergey Brins, the geniuses who founded the now-iconic companies which they lead and who deserve every bit of positive press (and dollar) they get;  I’m not talking about the hundreds of thousands of less well-known entrepreneurs who risk everything for their dream.  I’m talking about a different animal here:   the hired hands brought in as CEO.   They came in with a big blaze of publicity and then often had…mixed results.  I’m thinking of Bob Nardelli at Home Depot, Carly Fiorina at Hewlett-Packard and quite a few others.  Their Boards were acquiescent to the point of giving them a contract which no average worker could receive:  a fail-safe golden parachute which translated into “you win, you win; you fail, you win”.   Of course that is exactly what happened in my two examples; under Nardelli,  HD stock went DOWN by 8% in an up market but he made $240 in total compensation from December 2000 until his exit in January 2007.   His exit package was an additional $210 million.  That’s right, two hundred ten million dollars.  Under Fiorina, HP stock also went down, listen to Wikipedia’s summary:

“When Fiorina became CEO in July, 1999, HP’s stock price was $52 per share, and when she left 5 years later in February, 2005, it was $21 per share—a loss of over 60% of the stock’s value.  During this same time period, HP competitor Dell’s stock price increased from $37 to $40 per share.”

For this remarkable performance, a 60% drop in share price, her exit package was $42 million.  At GM, Rick Wagoner’s planned $20 million pension was interrupted by the company’s bankruptcy;  his contribution to GM’s performance resulted in a drop of 96% in the stock price under his tenure.   Even Jack Welch, once untouchable as the glorified CEO of the American giant, GE, totally screwed up his image with his outrageous $8 million/year retirement package which even included flowers in numerous luxury residences.  This was only brought to light by his divorce, and created such an uproar that even the SEC got involved with GE and poor Welch was shamed into giving a big part of it back, mumbling that it was important to “manage perceptions”.  Thats right, perceptions, forget about values, right?  Apparently it wasn’t enough that he left GE with $880 million in stock…..

Now we see the public mood swinging heavily against such excesses:  no longer able to tap rising house values, and more scared of facing unemployment, if not already there, the view from Main Street towards the corporate world’s rigged compensation game is decidedly sour.  Who can blame people, when their taxes are being used to bail out some of those who are the main perpetrators?  Unfortunately, the heavy hand of government is starting to be used to fix things, as in an ominous sounding “special master” for compensation installed by the Obama administration.

If this sounds like I am pessimistic, I do not mean it to: as a result of this orgy of excess, the most recent wave of which perhaps Welch set off as early as 2002 and which culminated in this recession, I have a more optimistic outlook.  Maybe we can celebrate that this era might be coming to a close.  It’s certainly time that it did.  The US cannot continue to be the only country in the world where the CEO pay to average worker is 300-400:1, and where golden parachutes give CEOs advantages which none of their fellow employees receive.  In other countries, including those which are extremely competitive with this one, the averages are closer to 25:1.  It is my opinion, based on quite a bit of research, that CEO pay excesses are eroding morale and engagement in the United States.  Why do I think that? 

–First because its plain old common sense that if you run a company and your pay is so far off that of your co-workers, you have already “disengaged” yourself from them in a major way.  Don’t then pretend that you can have an engaged workforce when you yourself have made that less possible by accepting, even demanding something which none of your co-workers could ever receive.  Play the game on the same field and with the same rules as those you work with:   then you will have a chance to really engage everyone.

– Second, and very tellingly, the US is far, far from top dog in the morale world.  It is average at best (see Mercer’s website for worldwide employee engagement data).  How can this be when almost everyone who lives here says it’s the best place in the world to live?  (Some Norwegians, Dutch and Danes might disagree…but stay with me here).  So yes it might be the best place to live, but…..not the best place to WORK.  Part of the reason for that is…excess, and lets say the G word, Greed at the top.  Anyone who has spent as much time as I have (25 years) interviewing thousands of people at work and surveying hundreds of thousands, will tell you:  excesses at the top infuriate otherwise even-tempered employees.   They cannot understand why they have to play by the rules but top management does not;   they resent special “executive” dining rooms, special parking (GM at its peak had a heated parking garage with special elevator for the poor executives who could not stand the cold Detroit winters); employees  boil over when these individuals then come onto to the Intranet with a special message for the “troops” saying, “we’re all in this together”.  “No we’re not”, they say.  “You are on another planet”, Mr/Ms CEO.

Smart companies with smart and more reasonable CEOs understand this, in the US and elsewhere.  John Mackey of Whole Foods, someone for whom I have a great deal of respect..and not just for his views on compensation…is a good example.   At Whole Foods no one is paid more than 19 times that of the average worker. Munich-based BMW last year also became the first big company in Germany to implement bonuses based on reasonable ratios compared to the average worker’s bonus.  The company spokesman was quoted as saying “We don’t just want to build sustainable cars. We also want to have sustainable personnel politics. We think this is good for the company culture”.  Ahh how refreshing that he places personal, selfish interests lower than that of a sustainable culture for his workforce.   Is this one of the reasons why BMW has, and continues to make, such great cars?  I think so.

Will the intense pressure which comes with such a recession, which we still seem to be in, make diamonds out of coal?  I hope so.  I hope that public opinion, and yes even outrage, will shame those who are greedy into more reasonable behavior.  Lets be clear here:  I am not talking about more government regulation, salary caps, etc!  I hope that increasing understanding of the importance of employee morale/engagement as a performance driver will convince Boards, shareholders and CEOs that it is in the interest of their organizations that these baser instincts of the human spirit are tamed.  Boards especially need some backbone and certain other body parts which I wont mention here.  They need to stand up to these demands, refuse to buy the “arms race argument” that “the other guy is making this much”, and make a stand for something new.  Its 2010, and it’s not “me” any more, it’s “we”.  China, India and Brazil are already going down this road;  their worker morale is far ahead of that of the US or Europe.  Will we let them take away one of the few real advantages remaining to us by not facing up to those who would erode it in our organizations by their own selfishness?  I certainly don’t think we should.  Our future standard of living might depend on it.

A Troubling Issue in Consultants’ Employee Engagement Trend Data: Why Do They Disagree?

As a follow on to my previous post on trends in US job satisfaction and morale/engagement, I was fascinated to come across the latest data from WatsonWyatt and World at Work (lets call them WatsonWyatt from now on) which indicated that engagement was down over 9% in the most recent period. Here is exactly what they said:

The 2009/2010 U.S. Strategic Rewards Study found that employee engagement levels for all workers at the companies surveyed have dropped by nearly 10 percent since last year

I had argued previously that two apparently conflicting databases (from the Conference Board and Gallup) on job satisfaction and morale/engagement had to do with what was being measured, but this new data compels me to share something else very important with you.

Here are the facts:

Jennifer Robison wrote in the Gallup Management Journal (as reprinted in The Free Library) on January 14^th 2010 that :

Gallup has tracked the engagement levels of the U.S. working population for the past decade. Its most recent employee engagement research shows that 28% of American workers are engaged, 54% are not engaged, and 18% are actively disengaged…..In addition, from July 2008 to March 2009 — during the heart of the recession — Gallup tracked a large sample of employees and found only slight (1%) changes in overall engagement. In July 2008, 31% of employees were engaged, 51% were not engaged, and 17% were actively disengaged. In March 2009, these percentages had changed very minimally: 30% were engaged, 52% were not engaged, and 18% were actively disengaged.

 

(emphasis added)

For several years Gallup has reported that the number of US workers who are “engaged at work”  has hovered between 26% and 30% for the US working population.  Now the WatsonWyatt data tell us that there has been a significant drop since their last survey in 2008.  Gallup data show that engagement is either up 1% or down percent in that time period, depending on which month the measurement was made, but this is nothing like the 9% drop from the WatsonWyatt group.  Unlike my previous post, both these benchmarks purport to be about engagement, both cover the same time period, and both cover the same general population. None of my previous arguments are valid here and so we are faced with something which I consider to be a significant weakness in the the morale/engagement consulting field:  the validity of these external benchmark databases.  This is so important that I covered it in my book, at the risk of infuriating some who work in this field, but I did it because of its importance.  I also had my own data in the book which had never been shared with those who did not commission the original study, a group of large utility companies.  That data showed that external benchmark databases of employee morale can differ significantly from each other, for the same industry, in the same country, on exactly the same question, and for the same time period. I was so troubled by the finding that I literally gave up using such things in my own consulting practice, even though I had spent years building them.  The reason was that I no longer had confidence in them and told my clients exactly why.  I moved entirely to internal benchmarking and built my analysis software around that function.  So my question is: if it is the case, that such differences can be found in benchmarks for a specific industry, how much will they differ when measured across many industries?  This recent data gives us a window into this issue, and an answer to that question:  they differ, and significantly so.

In my previous post I pointed out that methodological differences or errors were unlikely to be the cause of differences between job satisfaction and engagement data;  plenty of reasons for the differences could be found in the factors being measured, not the methodology.  I also said that I had confidence in both Gallup and the Conference Board;   that is true with WatsonWyatt as well. (I do not know enough about World at Work but a cursory look at its website indicates it has been around a long time, is an organization with 30,000 members which certifies professionals in compensation, benefits and work-life skills, etc. and I have absolutely no reason to doubt their competence).  WatsonWyatt is now TowersWatson, an organization of which the Towers part bought the well known survey research house ISR some years back, giving them a huge amount of data and survey research firepower.  I will use “WatsonWyatt” here because the study was first published under that name. All these organizations are therefore large, well run, and entirely competent. 

So lets look at how this happens and draw some conclusions from it.   There are several reasons for the differences between these benchmark databases, in my opinion:

–worker engagement is not like water.  Water is H2O.  Engagement is, well it is a number of things.  Each dictionary would define it differently, as might each consultant.  Who can say that one is right and one is wrong?  I defined it, as best I could, in my book, and compared it to morale.  I repeated some of this in a recent post. Based on the definition you choose, you develop a questionnaire.  The items in the questionnaire measure your engagement elements.  You then refine that questionnaire, as Gallup has done, going down to only 12 questions.  You test and test and test.  WatsonWyatt and its partner in this latest study no doubt has its own specific methodology, its own definition of engagement, its own questionnaire.

–consulting in worker morale and engagement is very fragmented.  There are stand alone research houses like Sirota Survey Research;   there are global giants like Gallup, TowersWaston, Mercer and HayGroup (where I used to work)…and these firms do many things in addition;   there are thousands upon thousands of smaller groups or individuals who work in this field, some of whom have their own benchmark “norms”.  No one firm has a lock on all the companies in one industry, or on all the best performing companies, etc.   If I am Apple and want Dell, HP, Sony, Nokia and a list of other competitors in my benchmark, I cannot find all that in one place.  A “national norm” or benchmark either has to come from firms collaborating with each other and sharing client data (it has happened but I imagine it has some anti-trust issues, and in any case some clients might be wary of sharing their strategically valuable employee opinion data).  It can also be created from sampling techniques of employees from non client organizations.  This latter method creates its own problems:  how do you get non-client employee opinion data?  With great difficulty.

–sampling the national engagement level from 1000 people at work is very tricky.  Look what happens with opinions polls for political elections: they are not always right!   This and other reasons were why I always told clients to poll 100% of the workforce and do everything possible to make sure than 90% + would respond, which they usually did.  That way I knew that the data we had really did represent the whole, and that managers deep in the organization would have enough data with which to work, which they often did not with a sample.

–as a result of the above issues, with the definition of engagement and the resulting questionnaires and with possible sampling, the companies covered by WatsonWyatt and Gallup might have been very different, in different industries than each other and they certainly received a different questionnaire.  All these things affect the data.  Watson Wyatt talks about the data representing “the surveyed companies” but also implies that this represents a national sample.  These might be quite different, its very hard to tell.

Perhaps the clearest thing that a consultant who uses client data for national or industry-specific benchmarks could say to a client about a benchmark would therefore be this:

This benchmark is based on how we define engagement, which might be different from how others define it;  it is based on our proprietary questionnaire, which is based on our definition of engagement;   it is also based on a sample of our client data, and others might have different types of organizations in their databases which will affect their data and cause it to be different than ours.  As a result we cannot guarantee that our engagement benchmark will match any other, even for the same geographic location, the same worker demographics and the same time period.

(one not using client data for its benchmark would have to add even more, about possible sampling errors and response rates).  In any case, don’t hold your breath that we will ever see such a disclosure!

Perhaps clients of all the firms which provide external engagement and morale benchmarks are quite happy with the benchmarks they are given.  Maybe they look only casually at such things, and pay less attention to them than internal benchmarks?  Maybe they just look at a group of top performers as a comparison and find that useful?  Whatever the case I think it behooves us as consultants to make clear that we might not have “THE answer”  as to what an external trend is in worker engagement.  We have ONE answer, our own.  That answer might be as much as nine times (1% change versus 9% change) higher or lower than another’s answer, as we have seen in the two firms’ data shown here.   For me that was not good enough, and so I focused on telling clients how they had shifted internally over time, how groups internally were different from each other,and what their scores were on an absolute basis.   They all found that so valuable that they did not miss the one thing which some believe is a “must have” in this business…the external benchmark.

Tell me what you think….

Job Satisfaction is DOWN but Engagement is FLAT or UP? How can that be?

Recent data from the Conference Board tell us that this Great Recession has slammed job satisfaction.  The numbers speak for themselves and reflect a long downward trend over time:  US satisfaction is at the lowest level in two decades.  From 61.1% satisfaction with the job in 1987 to 45.3% in 2009, the drop really is quite precipitous.  Should we be alarmed?  Maybe we should “wait to worry”, as my accountant once told me 5 minutes before a tax audit (I didn’t have to pay more, he was right).  We first need to look at some other data, then try to make sense of it all.  The other data comes from an equally reliable source as the Conference Board, Gallup, a company in which I have great confidence, and who were gracious enough to share their data with me for my book.  Gallup’s recent data on employee engagement in the US are quite stunning:

They show that engagement has hardly shifted at all during this recession;  if anything it has moved slightly upward.

Can these both be true?  Is there some methodological reason in the research why the data seem to contradict each other?  It is certainly true that the Conference Board and Gallup use a different questionnaire, since Gallup’s is the well-known “Q-12″, or 12 item engagement questionnaire.  As a proprietary measuring instrument, it is probably nothing like the CB questionnaire on satisfaction.   Using sophisticated statistical analysis, Gallup found that it could predict all major elements of engagement with these questions, and no more than 12 were required.  I certainly understand this, in my own consulting firm’s research we could, for certain clients, predict an entire morale survey’s result from one question:  that question was how the employees rated their manager’s ability.   For fans of correlation,  it was slightly more than +0.88, a very significant result.  The power of (local, not top) management to influence the morale of employees was demonstrated quite clearly.  Gallup can therefore easily make a good case for a 12 item engagement questionnaire.  The Conference Board no doubt also has a well-tested and stable instrument with which they measure job satisfaction every year.  In any case, knowing the quality of these two organizations, I doubt that any methodological errors drive the difference between the data.

This means we have to turn to whether “engagement” and “satisfaction” are different, and indeed they are.  Satisfaction, and in this case with the job only, is a very specific element in the overall morale at work, and in my own research I was never able to correlate that specific element very highly with overall morale, unlike the rating of the manager.  It was just one element in a questionnaire which, for us, often ran up to 110 items, and is equally just one element in morale.  Employees seem to compartmentalize feelings of satisfaction or dissatisfaction they have about the job itself, the company, and so on, and these feelings don’t have anything like the influence on their morale as how they are treated by management.

Engagement is something quiet different.  My previous post on this might interest you if you want a bigger discussion of the difference between engagement and morale, but essentially engagement is the behavior that people exhibit when the have relatively high morale.  It’s all about volunteering for tasks,  willingness to “pitch in”, “go the extra mile”, and especially talk up your organization as a place to work or place with which to do business.  So engagement is a broad brush, job satisfaction is a part of that brush.  This means they can differ from each other.  In the Gallup article linked above, the author makes the case that the recession has made managers more likely to try to engage employees, treat them better, etc. because their companies don’t have the money to make financial investments in their workforce.  They go back to the intangibles, the non financial incentives like recognition.  Things they should have been doing all along.  This would explain why, even in a recession, engagement might edge up.  So why would job satisfaction drop?  Because people are being asked to do more with less, they see others being laid off, they are scared of that happening to them…but remember the people in these surveys have jobs, we are looking at the survivors here!   That also counts towards better morale/engagement, its like “hey it’s not all bad, I still have a job, maybe I work harder but I am still here”.  If we add to that the Gallup idea that bosses are trying harder to treat people better in these hard times because that is all they can afford to do, then we can imagine why engagement might be stable in spite of loss of good feeling about the job itself.

As I said earlier, job satisfaction can be quite independent from other feelings of satisfaction:  for example (and I have found this often when surveying workers), people can like their job much more than they like the organization for which  work.  This happens when you have a skill or a profession or something you really like doing, whatever it is, and the job gives you the chance to do that every day.  Or you might not like the actual job but you like the fact that you have a job in the first place.  You can feel all this but at the same time be anything from mad as hell at the company, to simply indifferent, for many reasons.  Your commitment is to the job/profession or whatever it is, not to the organization.  Of course this is less than optimal because you are then much more likely to leave.  Your engagement is only to the job, not to the broad spectrum of things which I have mentioned above, and so you are far from an ideal employee as a result.  Companies need to counter this with all the things which drive good morale, and which are too numerous to list here;  but most of all, good management.

I’ll post more on this as more data become available.  Let me know what you think and what you see happening in your organization; I’m always interested to hear peoples’ experiences.