Happiness at Work: 3. A Discussion with iOpener, Oxford, England

Note: this is the third in a series of posts on happiness at work. See #1 here and #2 here. For iOpener’s blog, where you can find a longer version of the discussion, please go here.

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It has been quite a wild week trying to advance the progess of my second book, while fielding some deliciously challenging questions and comments from the people at iOpener, an organization dedicated to Happiness at Work and based in Oxford, England. I have learned a lot about their approach, and I think perhaps they have learned a bit about engagement. In the end we have a lot in common, which is a big point in itself. One of the biggest things I took away from the discussion is that the happiness at work people are filling a very important need which we in employee engagement tend to neglect: helping people to be able to engage. We talk a lot about what we can do to create the environment in which people want to, choose to, engage. But whether they do or not is sort of inside the black box of the human psyche. We know that personality is involved, which doesnt make for a good outcome if we hire the wrong person who is incapable of engaging: good luck on changing a personality, right? But there are also skills, there are mindsets, which iOpener rightly points out we need in order to fully engage. This means that we can increase the chances of engagement by training people to have a particular mindset, and I for one am all in favor of that. Having said that, I do not agree, as you will see below, that happiness is a breakthorugh of the order of sliced bread or color TV. In some ways the happiness people talk as if they have re-invented and replaced engagement and its performance correlates….but have they really? They say a person can be engaged, even fully engaged, but miserable and wanting to leave. That that person needs to be happy as well, to be fully engaged. But my understanding of engagement includes a strong positive emotional connection above all else, to the organization, to one’s boss, to co-workers, to the job itself. Absent that, a person can perform but in a sort of empty, emotionless way which does not, for me, indicate full engagement. Wanting to leave, how engaged can you be? Not very, in my view. I am including my conversation with iOpener’s Dr. Simon Lutterbie below so you can see how we went back and forward and how I countered the idea that engagement is just re-packaged high performance. Anyone who knows me will guess that I did not take that comment lightly!  Here is what we said, with Lutterbie’s comments in italics:
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Simon this conversation gets more and more interesting.  Don’t worry at all about being  “controversial”, I think that is the way that knowledge moves forward, don’t  you?  As long as people listen to each other, of course!  And as I listen I begin to understand what you guys are all about and how it relates to engagement and other things.  Please also refer to what I said yesterday to Jessica on my own blog, which is that I am not an apologist or evangelist for engagement, have teased people in the field  quite a bit, and enjoy doing so (they respond in kind, all part of the fun).  It has more than a few shortcomings….like most approaches do.   There is more than one path to God and more than one path to an  engaged…or happy… workforce!

OK let me go with your format of quoting me then commenting.  Here is what you said:

What we are interested in is the mindset that make employees feel motivated to excel at their jobs,  gives them the energy and enthusiasm to perform at their best, and the resilience to overcome challenges.

 This is very important, and in the employee engagement (EE) field it is often overlooked.   There is a sense among EE practitioners that as long as conditions are right at work, then people will engage, but this is not true.  I have mentioned to you that personality is a big factor, and while I do see some people working on this, there aren’t enough.  Personality is hard or  impossible to change of course, so that has some extreme hiring implications.  So I believe that we need more of what you are doing, to give people the skills they need to be happy at work, to engage, whatever we call it.  My only question here is the age old one of nature vs. nurture:  what % of a person’s ability to engage/be happy at work is nature and what % nurture.  You muddy the waters a bit with your piece on DNA and seem to move the argument back to nature!   But like you, I do think people can change,  even when their DNA points them in one direction.

Component 2 is a feeling state. It occurs when the worker feels good, motivated, energetic, and enthusiastic. Component 2 is none other than happiness at work!  Engagement may be an acting state, but it  requires a feeling state. You can create the conditions for engagement, and you can give an employee all the resources they need to fully engage. But unless  that employee is happy at work, the employee may not choose to engage.

 I had said that when conditions are right at work, then people can make the choice to engage (“Component  2”).  What I didn’t say there, because I was not attempting to discuss the full blown psychology of engagement, was  that there is an intermediate step, and that is an emotional one, or “feeling  state”.  Cary and I did this is in our book though, where we explained that when the “psycho-social” conditions are right at work (everything from the physical environment to how your boss treats you and much much more), then people experience a sense of high morale (or “well being”) which then translates into the behaviors we now call engagement.  So now you can see the feeling state more clearly in this model, the emotional connection.  One of the most critical conditions we are talking about here, confirmed by much research, is the boss-worker relationship.  This has been tagged at  explaining more than 80% of the variance in the engagement level of workers, an amazing number.  So the emotional connection we feel is in relationship, not just to the job itself but to the people we are with day in and day out and how we are treated by them.  Now here is where we start to disagree:  Component 2 is not just a feeling state, far  from it!  People react to the conditions at work with a feeling state, but the conditions at work are the crucial driver of that feeling state;   those myriad conditions include the boss, but also all those pesky HR things like performance reviews (yuk!) and incentive pay programs, etc.  Morale and EE practitioners and consultants like me are very involved in those conditions at work, sometimes referred to under the useful heading of corporate culture (“the way we do things”).  With 80% plus of an individual’s engagement at work depending on that key boss-worker relationship, we had better see where the good and bad bosses are, and move actively to decrease the number of the latter and increase the former, and this we begin to do through the extraordinarily powerful methodology of surveys.

And when someone works to build engagement, they’re really just working to build high performance.  Which is great. But it implies that  ngagement isn’t a unique approach, it’s  just another name for what people have been doing for years.  

Oh Simon methinks you have just been “hoist with your own petard” as our own Will Shakespeare said.  I am not denying it for engagement, since I have made the same exact comments about it.   In other words,  engagement took the decades-long concept of morale, added some nice flavoring,  microwaved it and served it up as fresh!  But the same could be said for you guys:  your definitions of happiness at work are essentially what people have been saying for a long time represent the engaged worker.  The exact list which you cite for high performance is what you aim for, right?  So you have taken high performance or engagement and re-packaged it as  “happiness at work”.   You are teaching people to be “engaged”…which as I said before is a great thing and very necessary.  Look I am old enough and have been in this business long enough that there is not much new under the sun.  This happens all the time.  Engagement happens to be a word which excites people, they can use it easier than orale (she is “engaged” but not she is “moraled”), they can use it about customers, not just employees etc.  Having said this I will say that I think engagement (like happiness at work, as you describe it) goes beyond performance because it has a strong positive emotional component.   So I would disagree that engagement is simply performance, because for me, engagement means you are emotionally connected in a positive way and that is one of the reasons, perhaps the main reason, you perform so above and beyond. As you would say, you are happy. As Jessica said on my blog yesterday, she knows CEOs who are “engaged” but are miserable.  I would not really define them as engaged, I would say they perform, that’s ll.  The level of performance I am talking about simply isn’t possible when you have one foot out the door.  OK maybe for a very short time, but this is a burn out situation which I have seen several times.

So, food for thought right?  I returned your controversial (and somewhat correct!) statement with one of my own.  But I like the tone of this conversation Simon, and appreciate it. This is also very useful for a writer and consultant like me, because it sharpens and clarifies the arguments for and against key things in my field.

best to you,  David

LinkedIn profile/contact: http://www.linkedin.com/in/davidbowlesphd

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10 Things I Want To Hear About on Morale and Engagement at SHRM11

Like a lot of people I am excited to be going to SHRM’s annual conference and exhibition this year in Las Vegas, Nevada and to have a chance to blog from there as I did last year. With so many sessions, I have to focus, which is easy for me with my field of interest and the way the sessions are organized. So I can take in morale and engagement all day long, meet some of the great presenters, take their pictures and blog about their offerings. Having said that I want to make a plea for some breakthroughs this year, in that we need to go beyond the meat and potatoes stuff which has been done so many times. Let’s see if some of the speakers can reach down into their creative psyches to come up with answers to questions which this part of HR and general management needs to answer. Here are some of those which come to mind:

–we think of the US as a very open society in many ways, which is a basic building block for worker engagement; yet we only have average engagement levels according to most who measure this…..why is this?
–the UK is even worse, its engagement levels were recently described by my former employer, HayGroup, as “the worst in Europe”….why is this? Is this a sign that social class issues have a big effect on worker engagement potential in a given society? Do other societal and national cultural factors have a big effect on engagement of workers?
–even if there are societal factors which affect engagement, can universally applicable activities create work environments in which workers choose to engage at high levels, almost no matter the society in which those workers live and work?
–we have heard a lot about “happiness at work” lately; some even say we need that instead of engagement. But is “happiness” enough? Can you prove that it drives performance more than engagement? What happens when the “happy” worker meets the boss from hell?
–executive compensation levels, especially in the US, are back at strastopheric levels. Does your organziation consider this when it approaches worker morale and engagement, like Whole Foods and BMW do? Does your CEO truly get “paid for performance” like the rest of the workforce? What impacts do these things have on engagement levels and if so, what can be/is being done?
–trends in engagement are very tricky to tie down, with big differences between the “big guns” of research and consulting in this field, such as Gallup and TowersWatson. Does this mean that they each define engagement differently, and if so how do we deal with this?
–if we cannot agree on engagement’s definition (see above) how can we convince leaders to go to work enhancing the conditions to bring it about?
–similarly why do organizations still compare themselves with outside morale or engagement “norms”, given the big differences in those norms from one consultant to the next?
–there is a tendency for some people with specific skills in the morale and employee engagement (EE) business to think that they alone have the skill-set to handle things in this field; the internal communications people, the psychologists, the HR specialists, and so on. Is this one reason for all the differences in EE definitions, questionnaires and trend data? What skill or skill mix works best for those who are involved in this field?
–how does individual personality affect engagement? You can create the best work environment in the world…but some still will not engage. This is a personality issue, and we need to know much more about it so that we can avoid hiring such people and deal with the ones we inadvertantly hired.

I’d love to see our SHRM11 morale and engagement presenters cover these and other key questions. They dont have to tell us that engagement goes up when people are treated well at work; that first line managers are the key to engagement; or that morale and EE drive performance, all of which we have known for some time. Let’s go beyond the basics to see some new things, which people can really take home and use. I’ll be there asking these questions and more….and I hope to meet you if these are your interests. Contact me through this blog or on Twitter and add more question topics if you want….I’d love to hear them and can ask them for you if you cant make it to Vegas.

LinkedIn profile/contact: http://www.linkedin.com/in/davidbowlesphd

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David Bowles and Cary Cooper to Team Up Again on 2011 Macmillan Book Project

Macmillan has given the green light to a new book project from Professor Cary Cooper and myself, with research, interviews and writing to begin in January and publication slated before year end 2011.  In a follow-up to our late 2009 book for Macmillan which focused on employee morale/engagement and performance, Cary and I will look at how businesses and other organizations can create sustainable high employee and customer-engagement cultures, and we will explore the new paradigms which are needed after the near-death experience of the 2008-10 Great Recession.  As James Gorman, CEO of Morgan Stanley, recently said, Wall Street in particular needs to “change the perception that it’s the individual that is the hero”.

We have some important questions to ask and try to answer: 

–Can we afford to be brought to the brink every 20 years or so by people whose perspectives are both short term and ego-centric in the extreme?

–Have we gone too far with golden parachutes and outsize pay packages for leaders while others in the same organization toil under strict pay for performance plans? 

–Can the US sustain a CEO to average worker pay ratio of 300-400:1 while the rest of the world rarely goes above 25:1?  

–Doesn’t all this make nonsense of the mantra heard during bad times, the rallying cry from above: “we’re all this this together”? 

–Isn’t there a better way of doing things which, instead of pretending, truly does emphasize “we” instead of “me”, while still fully embracing and benefiting from the capitalist system which has been the source of so much increase in peoples’ living standards worldwide?

–Are some of these things the reasons why worker engagement levels are so very average…or below average… on a worldwide basis in major western economies like the US, UK and most of Europe? 

–Is it not imperative that in this time of global competition and emerging giants like India and China, we leverage all the advantages which we can, especially our management knowledge, to compete in this new world?

Cary and I will tap the minds of thought-leaders in business and consulting around the world, bringing in some of the best research and material from online communities, blogs, etc. as well as our own perspectives on this complex but crucial subject.  This is no idle speculation, how we do in this area…managing our organizations, our workforces…may end up deciding whether we can sustain our standard of living…or pass on something far less to future generations.

I am so happy to once again team up with my friend and colleague Cary Cooper on such an important book, a relationship which began for me 40 years ago as a student in his social psychology class at Southampton University (UK).  For those of you who do not know him, Cary was recently named one of the three most influential thinkers in industrial/organizational psychology worldwide, and has over 150 books and 400+ articles to his credit.  To learn more about him, please visit his blog here.  

I will keep you posted with more information on this book as it becomes available.

Goldman Sachs: Can Employees be both “Engaged” and Unethical?

This question has been banging around my head since the SEC charged Goldman and one of its star traders with civil fraud.  Can a company have very “engaged” employees who are at the same time highly unethical?  The allegations relate to the mortgage securities business and one particular financial vehicle, so they are very focused;  but they look like a proxy for a lot that happened in the last few years, and Main Street seems to be happy that Wall Street might be…finally…getting its comeuppance for helping bring about the Great Recession. 

As a former active stock trader (for my own account) I am very aware that every trade involves a buyer and a seller, and that shorts have as many rights as longs.  This is not the point.  The point is that the game is meant to be played on a level playing field, with equal access to information for all.  With that in mind one can take the risk and bet on the direction of a stock, mortgage bonds, etc.  So if there is fraud, the game suddenly changes and one side benefits to the detriment of the other.  This is what the SEC is charging. 

So let’s consider the Goldman culture:  don’t you think that people who work in such a successful environment, where the average bonus for 2009 was more than $700,000 and where they are among the best and brightest people in their field, in the world…don’t you think these people have high employee engagement?   Read the e-mails of the trader who is charged, the “Fabulous” Fab, he seems to be having a blast, even though he admits to not understanding what the hell he is selling.  Doesn’t it make sense that this environment would be one in which people would be extremely engaged, partly by the intense nature of the business, by the fact that Goldman can and does hire the most enthusiastic, the most motivated, the most energetic?  By the fact that they can earn what for most of us would be like winning a lottery every year?  I’d love to ask the person who has surveyed this company’s employees but I am sure he is far too ethical to tell anyone about a client, and I would never actually do it anyway.   Perhaps he is a lot more ethical than some of those he is surveying?  Why do I say that?  Because the Goldman e-mails indicate that traders regularly characterized one or more of the financial instruments which they were selling as “shitty”, as famously demonstrated in Congress the other day when the mails were read by the Chairman of the committee which gave Goldman people such a grilling.   Did the traders tell the buyers how “shitty” these were?

So it has occurred to me, and not for the first time recently, that engagement, high morale, call it what you will, and ethics…can be quite unrelated.  This goes against what I thought I knew, but life always proves me wrong when I think I am sure about something.   The reason I thought ethics was important in engagement was that there is evidence, which I presented in my book,  that ethical companies are seen as very attractive to some people, and they engage more because the company lives sustainability, fair trade, no- sweatshops, Green values.  This is especially true for younger workers for whom these things seem to be especially important.   Clearly though, as we saw at Enron, some people have values which are quite different and they find a place where those values are being lived, and those values have nothing to do with fair trade and so on;  they have to do with winning at any price, lying and cheating.  Witness the gung-ho Enron energy traders who delighted in getting large areas of California to be “browned out” (lose electricity) by their trading prowess.  They gave names to trades which have been immortalized in books such as “The Smartest People in the Room“.  They actually were thrilled that “Grandma”, three states away from their Houston offices, would have no power.

I know that some of you reading this would say, these people were out of control, they were deranged in some way.  I would say that much of the time they probably exhibited many of the traits of an engaged work force, as we currently define them.  Engagement definitions, as far as I can tell, make no mention of ethics or morals. It’s clear therefore that lack of a moral compass does not have to deny someone the chance to be engaged.  “Values” for one person can mean honesty and fairness, for another (usually unconsciously of course, most would not openly admit such a thing), hiding the truth and greed. Yes, ethics can engage certain people, those for whom this is important.  But there are obviously more than a few people who don’t care about that, who care about making money and doing what they can to advance, and whatever the company wants them to do, and to hell with ethics.  Companies and individuals with these values will, inevitably, find each other.

Perhaps we can take comfort in the fact that this never ends well.  There is a form of “corporate karma”.  Enron went bankrupt and its auditor went out of business;  sadly many innocent people who were probably very ethical and might have known nothing of the fraud being conducted on other floors of their Houston tower, lost their jobs and retirement plans.  Many Goldman people are certainly this way too, they are honest and ethical people.  But Goldman’s reputation, especially on Main Street, has been devastated by the activity of some.  How endemic this is in the firm, we may never know.  They have become the poster child for bad behavior, even though many on Wall Street see what they did as “business as usual”, and their alumni who have access to television pulpits (such as the frantic Jim Cramer) defend them, as one would expect.   So what is to be done?   I am not saying that we need to extend the definition of employee engagement to include ethics;   I am saying though that we need to be mindful of this.  We love football teams which win within the rules of the game; we hate those that cheat, those that secretly film another team’s practice to gain advantage against them.   Even Goldman has very recently said it plans to go deep into its culture and make some changes.  I hope they do.  “Engaged” employees who lack the “moral” root of the word “morale”, that’s not a long term strategy for any organization, no matter how successful they are for a while.

Work Morale and Engagement Killers: Let’s Not Take Away One of the Few Advantages We Have Left!

Let’s start by looking at some basics of the international competitive position in which western industrial countries find themselves:  can the US, the UK and Europe compete worldwide on cost?  Of course not, in most cases.  This is why whole industries have disappeared or radically downsized, such as steel, garment manufacturing, shoe manufacturing, auto manufacturing, etc.  How can we compete when the average Chinese manufacturing worker receives $134/month and the average US worker $2370 (source:  CBS News, February 16th 2010)?   Can we compete on skills?  Theoretically yes but witness the wave of outsourcing, even reaching into the medical sphere, whereby a mammogram image is whisked via high speed Internet to Bangalore, read by an expert radiologist there at a fraction of US costs, written up and whisked back to the US in time for the opening of the doctor’s office the next day.  Or look at Elance, where even self employed individuals can outsource web site design, etc. for dramatic savings compared to their western resources.  Can we compete on innovation?  Yes but how quickly can our competitors copy what we have invented?   Can we compete on speed of execution?  Yes in some cases, but again, with the telecom revolution exemplified by the mammogram example above, geography has shrunk.  This does not leave much with which the western industrial countries can compete: quality certainly but that can change (look at how Japan went from perceived low quality to best in class across all sorts of things, especially autos, Toyota’s recent troubles notwithstanding.  Maybe China and India can do the same but on a much larger scale?)

However, there is one thing on which we can always compete and which wont be taken away from us if we wake up and do things right: our people, their drive, their enthusiasm, their desire to get the job done. In other words, their morale and engagement.  Given how limited our options are, therefore, can we afford for anything in our organizations to undermine one of the few advantages which we can leverage?  Of course not.  Yet many organizations allow just that. 

To see what I am talking about lets look at the morale killers, as I like to call them.  You can think of them as engagement killers too, since the latter is a by product of morale.

–Lets start with the dinosaur of morale killers, the “boss from hell”; he or she (this is an equal opportunity creature, as The Devil Wears Prada demonstrated) can really ruin even the best intentioned and most enthusiastic worker’s morale.  Even worse, as my book pointed out, he/she can have lethal (I used that word carefully and correctly) effects on employee health.  The “boss from hell” is always my first pick as a morale killer because that is mostly where high morale and engagement are created or destroyed: at that crucial meeting point of the worker and the organization, as represented by the boss.

–The weak boss:  next we have the boss who isn’t from hell but goes to endless seminars (even ones on morale), comes back with all the buzz words, but nothing seems to change.   Failure to implement is a sign that he/she lacks the courage to do so,  lacks the willingness to override his own ego, or works in an environment which makes his efforts difficult and is not willing to fight against that. 

–The disgruntled worker:  this is the proverbial bad apple who is allowed to fester within a barrel of good ones.  In other words it comes back again to management.  This individual would be disgruntled even if he had a job on the beach at Club Med with his own comfortable ocean front cabaña to live in and a modest number of canoes to rent.  He would complain about his TV not having enough channels.  These types of people, when not handled correctly (using by “separating from them” as one of my ex clients used to say), erode the morale of their team, especially when they share equally in team rewards which they in no way deserve. 

–The toxic culture (“way of doing things”):  since culture precedes all appearances of high morale and engagement, and makes it possible for that to exist, we cannot ignore the fact that no matter how well intentioned people might be in some organizations, the cards are stacked against them.  Often found to contain many “bosses from hell” (which it sees as great people), the toxic culture has many different forms.  Such cultures are often based on the personality and past experiences of so called “leaders”, who bring their baggage with them and essentially have everyone in the organization carry it.

–The dysfunctional culture:  not necessarily toxic, but also not functioning in a way which would create a high morale environment, these organizations are often run by people who lack two of the crucial elements of leadership: courage and vision. These people really have no idea their workforce is the bedrock of the organization’s success, not the great strategy which they have dreamed up or what clever tricks they can play financially.  Maybe they play lip service to “putting people first” but it is a shallow commitment, not backed up by the heart and soul needed to really make that happen.  Maybe they also pay themselves handsomely while contributing poorly to performance, a sure fire morale killer which I have covered elsewhere.

Of course there are many other situations which kill morale and engagement; and there are many organizations which have those above.  Otherwise why is it that every time I meet someone and tell them I work in the area of morale at work, I always get the same response:

You should come to my place!!

This is NOT because things are so great, it’s more a cry for help, and it happens almost every time.  Think of the implications of this, in the context of what I said at the beginning of this post.  Can we afford to be this way?  Can we continue to have only 29% of US workers “engaged” (Gallup)?  Can we afford to be only average (UK, US) or below average in morale (France, Germany, etc.) on a worldwide basis?  The answer to this question is going to determine how we live in the future because morale and engagement are THE performance drivers we really can control and improve.  Think about that if you are in a leadership position, someone complains about a “boss from hell”, and you are tempted to say, “That’s just Bob”.  No its not.

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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.

Happiness at Work II: More Thoughts

I find this subject quite fascinating and judging by traffic here on the blog, more than a few of you do too.  Reactions to the original articles by Sue Shellenbarger in the WSJ (see my Happiness at Work I post) have also been interesting, ranging from those who say that this is fabulous, to those who seem to think this is the typical work of manipulative, scheming management out to exploit the workforce with a cynical appeal to something which appears (on the outside) so kind.  In other words, its a lot like the reaction I get when I tell people I work in the area of morale at work;  most people beg me to come to their workplace as soon as possible, but some (especially in Europe which is very interesting and the subject of a future post here) think this whole morale/engagement thing has the purpose of driving the enslaved workers even harder.

I wrote to Sue and also posted a reply to the article online at the WSJ and wanted to share one of these with you, at the risk of a little overlap with my first post on this subject.  Basically I said that happiness is fine, trying to bring something positive like that to the workplace can’t be all bad, but that it might have limited effect, based on how dysfunctional the internal culture is.  Here is what I wrote to WSJ reporter Sue Shellenbarger:

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Sue your recent work on happiness at work is very interesting,  but I have a few issues with it:

– if I overlay the world’s happiest nations like Denmark, Holland, etc. on a chart of the countries with the world’s highest workplace morale (currently China, India, Brazil), there is not much overlap. Why is this?  Maybe because workplace morale has to do with a lot more than being happy. Happiness might want you to relax or take the day off and go to the beach;  high morale and its resulting behavioral component, engagement, make you want to contribute, go the extra mile, tell others about how great your company is as a place to work or buy from, etc.

–its all very well to encourage people to take a positive view but that is not always easy.  Even Eckhart Tolle (whom I love, thanks for the reference to him!) suggests that quite a few situations require us to get out.  Lets imagine an employee furious that his CEO makes 300-400 times his pay and benefits (the US average, far far above worldwide figures) and has a golden parachute if he screws up (a la Nardelli at Home Depot), something this employee would never been offered.  Rick Wagoner at GM destroyed 96% of the GM share value during his tenure and barring bankruptcy was set to receive a nice $20 million retirement package. Should HD and GM people be “happy” about this?

–there is plenty of evidence that high morale and engagement is a strong correlate and driver of performance, and some of the studies you mention note that happy people perform better, but that happiness might be part of their overall morale, but only a part.  They didn’t get to that high morale just by learning to be happy, they got there also because management treated them well, gave them power to make decisions, a chance to grow on the job and many many other things.  Put a “happy” person in with the boss from hell for a few months and lets see what happens….

I am all for people taking responsibility for their own well being;  but we also need to shake up management in this country and improve our pitiful standing in the morale sweepstakes: Gallup says only 29% of US employees are engaged at work, and Mercer has us at below average worldwide in engagement.  In an increasingly competitive world, with all the performance benefits of high morale that we now know about, we cannot afford to stay here!

Anyway, great discussion and thanks for the chance to contribute.   FYI my philosophy is strongly capitalist and not pro government intervention, but mindful that, like football, we need clear rules and enforcement of them to ensure fairness.  Kind of like John Mackey, of whom I am a big fan.

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Lots of people writing to the WSJ wanted a job as a happiness coach, they think it is like going to a workplace with a bunch of drinks and having an instant “five o’clock somewhere” Happy Hour!  Would that it were so simple, right?  I’ll stick with my position that learning about oneself and learning to be happy is a huge part of life, and as valuable a resource for dealing with life’s ups and downs as anything I know.  Everyone should try and find a way to do this, and if they did we would have a better world.  But there is more to organizational culture and the building of high morale than this and we need to be careful that people don’t hang on to this as a superficial “fix”, especially in difficult times.  Don’t forget what I told Sue:  the “happiest” people in the world DO NOT have the highest morale at work.

Let me know what you think!

Executive Compensation and Worker Morale I: The John Mackey Blog

Back in June of last year John Mackey, CEO of Whole Foods Market, an organic grocer headquartered in Austin, Texas, wrote a piece on the Harvard Business Review Blog about excesses in executive compensation and the effect these had on worker morale, among other things.  It was titled “Why Sky-High CEO Pay Is Bad Business”, is a great read, and can be seen here:

http://blogs.hbr.org/hbr/how-to-fix-executive-pay/2009/06/why-high-ceo-pay-is-bad-business.html

Mackey is an interesting character, having started this business 30 years ago and made a huge success of it (WFMI is the largest such merchant in the world, with stores in the US, Canada and the UK).  Lately he has become somewhat of a darling of the very people you might not associate with Whole Foods and its tree-hugging image:   readers of the Wall Street Journal.  The reason for this was his 2009 op-ed piece written about the Obama health care plan and how he, Mackey, felt that such a plan was too much government and too little common-sense actions which he and his company had already taken to provide cost effective health care to all his employees (or “Team Members”, as Whole Foods calls them).  The Journal had such a huge positive response to this that they interviewed him a few weeks later, further burnishing his image.  Some on the left side of the political spectrum, WF customers, were dismayed, and thought he had gone over to the dark side;  they took their business elsewhere,  but they seem to have been replaced by Journal readers who have found a new, organic soulmate in Mackey!

I was inspired by his Harvard blog to the point that I wanted to add my two cents and thought this would be worth bringing also to this venue.  Here is what I posted in reply:

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I think this is as timely and well informed a discussion as I have seen anywhere on this subject. As someone who has a great deal of respect for John Mackey and who spent two years living in Austin and using his flagship store there almost as an office while researching my recent book (co-authored with Prof. Cary Cooper) on morale and performance, I had a chance to see the result of his management style and philosophy in action. I can say from that experience, as well at some of his other stores, that Whole Foods has a very high level of morale and that Mackey and his company live what he talks about here.  Not only that but Mackey’s recent offerings in this area and worker health care, for example in the Wall Street Journal, always use common sense practices instead of government regulation as their proposed approach.

The evidence for the corrosive effect of high executive compensation on morale may only be anecdotal but there is one related piece of data I can point out: the US has, at best, average worker morale on a worldwide basis. I observed this during 25 years of consulting around the world in this field, and Mercer’s recent data confirm it.  Not only that but our emerging competitors, India and China, are now way ahead in the morale stakes.  Gallup confirms that only a pitiful 29% of US employees are “engaged” at work (engagement being a behavioral by-product of high morale).  While this could be brushed off by those ignorant about morale’s effect on performance, or put down as something “touchy-feely” or “soft”, well informed managers now know that morale’s importance is far more than this, and is in fact “mission critical”.  The military has known this for years, but unfortunately the value of this information has taken a long time to reach some management ranks.  As my book shows, the evidence for morale not only correlating with but driving performance, is overwhelming; this includes such areas as profitability, productivity, customer satisfaction and even employee health.  Some here have also rightly mentioned that execution is the key to organizational performance, not just the underlying strategy: well, morale is one key measure of the shape an organization is in, as it prepares to execute its strategy.

Anyone who has done employee surveys or run focus groups will tell you that employees complain a lot about executive compensation. They roll their eyes when the CEO gets on a video presentation and tells them “we’re all in this together”, knowing that his 300:1 or greater compensation level belies that statement and puts him on another planet compared to the average worker.

One word which drives morale more than any other is “fairness”.  This does not mean French-style equality or any form of socialism, it is quite different. Fairness can mean a significantly different compensation level for two people in an organization, but based on job size and complexity, performance on the job, etc.  But when workers see someone at the top drain shareholder value to the extent of a Rick Wagoner at GM (96% drop in share price during his tenure), and the rewards which are given to those people even when they screw up so badly (Home Depot and HP also come to mind here for previous CEOs), no wonder they become cynical, and yes, de-moralized.  What would have happened to a GM worker in a paint shop whose work had a 96% defect rate?  Continued employment and a great retirement package?  I don’t think so. Nothing about this is fair, it is a game which is fixed so that some CEOs can win no matter the final score, and this is allowed to happen by too many passive and overlapping Boards and disenfranchised and apathetic shareholders.

We therefore know three things: 1) our morale is anything from really quite low (29% engaged) to average at best; 2) we have practices of excess and greed in the executive suite which we know from experience de-moralize our people; and 3) our emerging competition is kicking our behind in the morale stakes and this will bring them enormous competitive advantages over us unless we get our act together.  So we (not the government!) need to wake up and realize, we are in a fight for our standard of living and way of life here; lets get these excesses under control, and lets get our morale up to the world class level which it deserves to be, given the unbridled optimism and energy of the American people.  Yes that’s the same America whose early states used the word “Commonwealth”, with all that that means.  It means fairness.

Ego: The Biggest Threat to Employee Engagement

But enough about me, let’s talk about you… what do YOU think of me?

Bette Midler as CC Bloom in “Beaches” (1988)

I often get asked this question: what is the one thing which is most likely to prevent an organization from having an engaged workforce? I believe it is something which lurks deep in the hearts and minds of individuals: the ego. What is the ego?

We all start out in a pretty non-egoic state, but quite soon find out that “I” am apparently separate from the world; this passage of childhood  is something which everyone passes through, but where some linger.  Those who linger stay in an egoic state rather than reconciling with the broader world, in the give and take (part “me” and a bigger part “we”) which most of us experience as everday life.  The egoic personality usually comes about as a result of childhood trauma of some kind, where the child learns to dislike itself, and to push aside unliked and unwanted parts of itself into a hidden area, while building a false “ego” like a shell around the original, real person.  The ego-shell hides the unwanted self (what Debbie Ford in her excellent book”** calls the “shadow”) from the world and the person functions only from this false, egoic front.  Since the original trauma involved learning to intensely dislike parts of oneself, the ego-shell must be constructed of new objects which will project what its owner hopes will be a socially acceptable version of self, capable of being liked, admired, respected, even…loved.

In more extreme cases of ego-possession, the sense of simply (human) “being” almost disappears and is replaced by an egoic identity which focuses instead entirely on these objects (or what Eckhart Tolle*** calls “form”). In other words, we “identify” with things outside of ourselves, in the hope that this identification will improve our social standing in some way.  These things can include one’s house, the type of job or position one occupies, wealth, educational background and achievement, other status symbols such as cars and countless other “things” such as sports teams which enable the ego to pretend that it’s owner is “better” than others.  Of course, the deep down (and usually unconscious) fear inside this person is that they are far, far worse than others….but this is not what the world sees or what the ego’s host ever wants it to see. Know anyone who is not just disappointed but crushed when his or her football team loses?  They are under the grip of the ego, and when their team loses, its like a personal failure.

 The Princeton dictionary brings this into focus with a concise definition which is very aligned with how most people see and use the word “ego”:

An inflated feeling of pride in your superiority to others

So what does this have to do with engagement at work?  Plenty if you think about it.  Imagine the worst boss you ever had, was she/he loaded down with ego?  Here are some of the symptoms:

• she takes credit for projects which you started and carried out
• he never hires people smarter than himself
• he “licks up” and “kicks down” in the organization structure
• she cannot take criticism
• he is a perfectionist and one can never “do it well enough” for him
• she never allows anyone else to make any significant decision in her area

This is not a happy person.  The ego possession makes him/her feel extremely vulnerable because identification with all the “things” in life is like building a house on sand.  Those things have ways of going away, as all eventually do.  Money can disappear,  as can jobs, “trophy” spouses, and other status symbols.  Living on the knife edge means always having to make sure than nothing, nothing at all, upsets this fragile status-quo, which at work means always having to check up on you to make sure you will not show this person (often a boss) up in a bad light.

You can hopefully see the short step to engagement:   you are there at work to share your talents and skills and help the organization succeed.  You love your job, but your boss….oh dear, your boss is an ego-maniac!  You didn’t know that at first, your radar didn’t send out a code red alert when you had the interview, but you found out later that something was very very wrong.  All the things which I described above, started to happen.  You arrived at the job ready, willing and able to engage but now…now the thing you most want to engage in is finding a new boss there or perhaps leaving the organization for a new job.

One of the problems in the world of work is that ego-driven top management often picks those like themselves;  they call it a “nice fit”.  I call it, “extending the ego-model out into the whole organization“.  This means you are unlikely to get far by complaining about such a person, even if you describe what they do:  top management will laugh and say that that’s quite normal, healthy behavior.  From where they stand it is.

Speaking of top management, one of the most out of control aspects of CEO behavior is the arms race to get more and more compensation.  I have written at length about this because  I believe it erodes morale and engagement.  The ego loves the idea that “I” can make more than the next guy (or gal), and is horrified at the idea that I would ever make less!  The amount of ego-driven greed at the top of our organizations is staggering, with ratios of CEO pay to that of the average worker above 300:1 here in the US.  Of course the ego is canny, and needs to make sure that such excesses are guaranteed.  Heaven forbid that the ego would not receive what it is worth!  This means setting up their compensation in such a way that they are never affected by something as mundane as…performance.  Where do you think the “golden parachute” came from?   In these cases,  the ego’s ability to create real “separateness” makes it very able to totally justify this behavior and not allow its “host” to have a sense that others are affected in any way.  Only in some cases, like John Mackey of Whole Foods, or top management at BMW, have senior people transcended their egos and looked to the greater good in setting their own pay.   I love this quote from BMW’s press office, talking about how the company restrains top management bonuses in relation to what average workers receive :

“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”.

As we saw with the list of management traits above, control is another sign that the ego is lurking.  Ask an ego-driven manager to give up some control, to delegate, to flatten the structure and let some teams manage themselves, for example,  and you will be met with a show of horror…..and logical justification as to why that should never happen.  But these aren’t the real reasons:  under the surface, the ego abhors loss of control because of its fragile nature and high levels of fear, and the sense that such delegation might lead to loss of status in some way.

So what can be done about this?  Certainly try and be a bit more like BMW and introduce a sense of fairness into the “personnel politics”, as they call it.  Fairness (which does not mean equality of outcome!) is a key to high morale and engagement at work.  Try to hire those with talent but less ego….interview for this trait, become acquainted with the signs, avoid it at all cost!  There is nothing wrong with self confidence and an assured manner, but that is not what I am talking about here.  As an excellent blogger Gwyn Teatro recently said, we need more humility in the workplace,  to which I say, amen, Gwyn.   Self confidence, yes by all means, but a basis of humility.  Then we can create the conditions under which our workers feel that they are part of something, that they are respected, that they are there to perform their best in the highest interest of the organization, not to feed someone’s ego!  Feeling and knowing that, they will gladly engage.

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** Debbie Ford: “The Dark Side of the Light Chasers”

***  Eckhart Tolle:  “A New Earth”

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Welcome to the Morale/Engagement and Performance Blog

Hello I’m David Bowles and I want to welcome you to my blog on morale/engagement and performance, the theme of a book published worldwide by Palgrave-Macmillan (see tabs above and picture below), which I co-authored with Professor Cary Cooper.  Instead of just focusing in the book on “what to do on Monday morning” to improve morale and engagement, Cary and I have looked in depth at the performance connections with morale…the things which are the answer to the question: “why should I care about this touchy-feely stuff”?  As we say in the book, performance is the reason why you should care and why organizations large and small are making morale and engagement “mission critical”.  I look forward to sharing with you here the research-based data we feature in the book and discussing your reactions to, and experience with, what I have to say.  Whether you are interested in productivity, profitability, customer satisfaction, worker health or innovation…all are affected by, and our data show, driven by, high morale and engagement.  Coming at a time of unprecedented stress and upheaval in organizational life, the drive towards high morale and the workforce engagement which results from it, can be our way towards success in the tough, globalized world which is our future.  I look forward to sharing this journey with you and hope you will contribute your ideas and thoughts.

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