The SHRM 2011 HR Survey and Employee Engagement: Shocking News!

Well I am all geared up for SHRM’s annual extravaganza, which promises to be quite amazing this year.  Why is that?  Last year in my home town of San Diego we were pleased to welcome some 11,000 SHRM people.  This year, 13,500 will be coming to the Vegas event.  OK a better economy helps, but Vegas and 103 degrees versus the cool and relaxing temperatures we gave 11,000 of you last year?  Right, we dont have the roulette wheels (not downtown anyway), the craps tables….we dont have the “what ever happens in San Diego stays…..” etc.  I know, I know.

Vegas temperatures start later today for me after my flight lands there…but that’s not the reason I am already getting heated up for SHRM11.  First of all the annual conference is a blast, which I detailed last year as a proud member of the Blog Squad.  But not only that, I just received a SHRM e-mail with details of their new HR survey, and it stated that employee engagement was #1 on the list of HR challenges in the next 3-5 years (see slide 9).  So far, so very VERY good.  But the thing that got my blood well over 98.6 was this:

When asked how they measured engagement, 71% said:  employee exit interviews

Excuse me?  You ask people who are leaving about engagement and depend on that to know what is happening?  Where did you learn such a….sophisticated…methodology for measuring engagement?  Don’t you know that people who leave might have had a different level of engagement than those who stay, and that’s why they leave?  A v-e-r-y different level?

OK thats bad, very very bad, but maybe there are as many people who use something more..scientific?  Lets take a closer look:  #2 method, used by 65% of respondents, was: employee retention levels.

At this point I am starting to reach Vegas temperature levels and I am still in cool San Diego.

You look at how many people have stayed with your company to see how many are engaged?  But…but…what if they just stayed because there was nowhere else to work?   What if they were a teacher with tenure just cruising through to retirement, having already “retired on the job”? Or what if they had found a safe and lazy and very unproductive way to work without being seen (like the guy in the Dilbert cartoon who is always carrying a coffee cup)?

Just as I was about to check myself into the local cardiac care unit, I found out that, finally, there are some people who know what to do:  43% and 40% respectively reported that they used outside vendor surveys or did their own.   Some sense at last.  The survey, when done well, is unequalled as a method of measuring engagement, and knowing whether and where to change course or to stay on course in an organization.  Its incredible to me that 50% more organizations use the methods of exit interviews and retention rates over a survey.   It might be cheaper but quite honestly, the data is almost worthless.

That’s my opinion.  If you feel the same or quite differently, I want to hear from you.  Comment here or find me at SHRM and let me know!  I’d love to hear what you have to say.

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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

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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.

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Women as Leaders: Good for Worker Engagement and The Performance of Our Organizations!

Some interesting information came over my favorite evening TV news show the other day: it was about the role of women at work, something in which I have been interested ever since I was a young recruit at the Hay Group, an international HR consulting firm which specializes in compensation programs, among other things.  My job as a junior level consultant was to learn the Hay System, a method of evaluating jobs for knowledge and skills needed, and responsibility placed on the person in the job.   Each job then came out with a single score of “Hay points”.  It was interesting because it was capable of separating the job from the person in the job.  The system allowed clients to pay women equally based on what was being paid in their market or locality for a given complexity or “size” of job regardless of male or female incumbents.  As such it enabled our clients to tell their female workers that they were being paid, not on prejudiced pay scales for “womens’ jobs” but on something “gender neutral”.  I got a lot of satisfaction from that.  When I soon moved into Hay’s research business (employee opinion surveys, culture, worker morale etc.) I didn’t forget the lessons learned on the compensation side, and have always been interested in data about women at work.

So on NBC News the other day, this piece came on about how many women are now in the US workplace and what positions they hold, how many go to college and so on. Data was also shown as to how they are being paid, which is always a depressing figure.  The employment and education numbers are far from depressing, however. Sixty percent of women now work outside the home; they occupy more than half the professional and managerial jobs in the US, which is an astounding statistic.  There are now more women in college than men in US, and 40% of women are primary breadwinners in their families.

This was mostly great news for women, but it got better: the part which really caught my eye was about top management jobs and womens’ impact when they occupy them. NBC quoted a study, not a new one but one I had not seen before, that looked at 2000 of the biggest US companies. This was done by David Ross of Columbia Business School and showed that when women were senior managers in a company, it performed better.** Ross was interviewed and he said that is because as leaders women are more democratic, less dictatorial and more collaborative. I would add, also more compassionate. Now the jump to engagement here is an easy one: the traits which Professor Ross mentions are clearly ones which are related to creating a more “engaging environment”, that is one in which workers will choose to engage.

The idea that women are having more and more positive influence on work cultures is gaining ground in both books and the blogosphere. In Enlightened Power: How Women are Transforming the Practice of Leadership, Barbara McMahon states: “In the new form of leadership, it is no longer doctrine that creates a following; it is dialogue. It’s more valuable to be able to engage than to influence. Command and control has shifted to collaboration and empowerment.” As blogger Mitch McCrimmon points out: “Regardless of whether more women make it to the top, organizations are becoming more feminine. There is now more emphasis on relationship skills, emotional intelligence, the ability to nurture talent, listening skills, collaboration and partnership. These skills are essential for success for both male and female executives.” At the same time he points out that mens’ competitive nature is essential and that “In any case, this issue should focus, not on men versus women, but on organizational culture. At that level, a mixture of feminine and masculine traits are required. But there is no doubt that we are in the midst of an unstoppable shift to more feminine cultures”

With women now going to college more than men, and that trend accelerating, they will continue to get more of the top jobs. This study would indicate that this bodes well for US engagement and resulting organizational performance levels. That is good news in an otherwise still quite gloomy post-Crash hangover!

** Note: I am aware that correlation is not cause, and the fact that there may be a third element in this story, which “causes” both women being hired to top jobs and great performance by the organization. I was not able to check if Professor Ross had allowed for this, but he talks as if he has. It is certainly worth further research.

Data source: NBC Nightly News (US), “America in Transition”: March 4th 2011

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Twitter and Facebook as Agents of Revolution in Cairo, Tunis….and Your Workplace?

I was reading a piece by Daniel Henninger in the Wall Street Journal yesterday about the emerging situation in Egypt. After a brief intro he made the jump from Cairo to Silicon Valley, saying that without the invention of the microprocessor’s predecessor (the transistor) Egypt and Tunisia would not have happened. The chip has allowed for Twitter and Facebook, along with so much more, and these programs are the basis of communications for protesters on the streets.

Henninger makes the point that this is the end of what he calls “stability”, where governments can control their people via the control of information. Whereas a few people would gather in the past in Cairo to quietly chat over who had been arrested, now such information is blasted across the ether to everyone around the world. As he says “instability is the new status quo”.

From this, I got to thinking about work and engagement, and the effect of Twitter and Facebook there. If such things as happen in Cairo happen in the workplace, what will be the effect? Revolutions at work? Maybe yes, perhaps not so dramatic, but significant nonetheless. Here are the reasons:

–Social media are a very democratic form of communication. Anyone can get an account and anyone can tweet. Such democracy is very welcome to some companies (Google comes to mind with its constant feedback programs and surveys for workers there)…but in some workplaces it is the last thing they want! I’m not going to say that some companies are run like a police state…but some aren’t so far off either, with high levels of fear as the driver.  An ego-driven CEO will not tolerate democracy in his Kingdom! Heaven forbid that the peasants find a way to use Twitter to revolt! Yet revolt they will, if not on that company’s official intranet or corporate Twitter feed, then in other places over which the CEO and his communications staff have no control. As we see, voices want to be heard and they will be heard. Social media is their outlet.

–Social media are extremely engaging. That’s right, people love them so much they can hardly hold a normal conversation while holding a smart phone…(did someone say addictive? Let’s not go there this time, but you have a point). This engagement is the reason why most companies now reach out to social media users…to tap into this. So if Facebook and Twitter are opening us all up to communicating much more with each other and with the companies with which we do business, can we really go to work and experience something so radically different? Can we go from a heavily engaging experience outside work to something which feels like traveling back through time to the unconnected past? Trust me, as someone who has surveyed many people at work, many people do work under these conditions, even now. So the answer is that these organizations will survive in the dark ages for a while, but the pressure will build, as it built in Cairo and Tunis. This will require more than a shallow effort on the part of these organizations, but a fundamental shift to a level of workplace democracy and communication the likes of which many have never had.

So social media are a disruptive force indeed: not only do they allow for whole societies to try and grab freedom for themselves but they are also methods of engagement for the rest of us at a level which human history has never experienced. Organizations which do not reflect this level of engagement in how they treat their people will be Mubaraks of the working world….and like him, they will be hounded out of the marketplace.

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Is “High Morale” Always Good? For Whom? The Case of the LA Teachers.

I try to avoid even the appearance of being political on this blog, but I can’t resist telling you about what I read a couple of days ago and how it made me think about the subject here. Living in southern California I often read the “local rag”, the Los Angeles Times, and one morning recently there was a front page article about how the LA public school teachers had been forced by a court to give up some of the protection of their union contract and to accept that in the future, in some of the LA public schools (but not all), layoffs would no longer be based on seniority only. Anyone who knows that city and its teachers union (UTLA-United Teachers Los Angeles), knows that this is far, far from what they would have wanted, in fact something which they did fight tooth and nail against…..and lost.

Seniority is the basis of many union contracts, not just in the US but also in Europe and elsewhere. It is based on a reasonable premise: that those who have invested their careers somewhere should have some protection, especially if they are older and close to retirement, etc. The arguments in its favor are significant, when looked at on face value. However, there is a downside, and it is a big one: when layoffs occur based on only seniority, young, enthusiastic, often recently minted teachers, with all the new ideas which come from recent college courses and all the high morale and engagement which derive from not having had time to become jaded…and just from being young….these people are GONE! Left behind are those who have been there the longest, whose morale is lower simply because of the opposite effect of what I have described above (as if by gravity over time, morale sinks over the years, until right before retirement, then takes a leap as people realize, “another year and I’m FREE!”). Firing teachers under the LA (or nearly any teachers’) contract is difficult, to say the least, whether for a layoff or any other reason.  This means that less than competent individuals, those who have retired on the job years ago but still show up in the classroom every day, those whose students’ performance in math and reading had barely budged under their tutelage…those people are often not removed after the relatively short period of time which runs before they receive “tenure”. 

So this is the basic dilemma, and it’s a difficult one: protecting older, more “senior” teachers, regardless of their performance, or doing something radically different and basing layoffs on performance only. What does the latter strategy achieve? It achieves something remarkable, something which the parents of some children in the LA schools woke up to and acted upon: laying off teachers based on performance puts the children first and not the teachers!

Yes that’s right, for all these years the teachers’ contract has been geared…surprise!….overwhelmingly towards the teachers, not the kids.  This has protected those teachers who cannot perform now and perhaps have never performed that well. It’s a revolution…but should not be…to suggest that the children being educated should be front and center. Its also a strong legal argument, especially when put forward in a civil rights context, and that is what happened in Los Angeles: the parents of children in poor performing schools essentially said to the court “we believe that laying off based on seniority is leaving us only with the longest tenured teachers, not the best ones, and as a result has deprived our children of the best teaching available to them”. The judge agreed and with a stroke of the pen, changed the system for many of the LA schools. Of course, the union was furious at having this “agreement” forced on them and vowed to appeal; it was quoted as saying that this will “demoralize” the longer-tenure teachers, since they will no longer be in a totally 100% secure job regardless of how they perform (try getting that deal in a normal enterprise!)

“Demoralize”:  I almost fell off my chair with the mis-use of this word. Yes the teachers will be upset at the loss of this deal, one which has been in place for decades and which is still in place throughout the US (although under attack for all the reasons we have discussed here in many other states). But “demoralized”? The people who are demoralized are the kids who are getting a sub-standard education from teachers whose continued employment by the LA Unified School District has only to do with the possession of a pulse, and nothing to do with their performance for those students.  Besides, think of what this move away from senority-based employment will do for the great performing teachers:  it will totally “re-moralize” them, the opposite effect of what decades of seniority-based employment practices have done.

I am not anti-union.  I grew up in England and studied management and business psychology in the birthplace of the Industrial Revolution, Manchester.  I know about the gruesome conditions which workers endured and the way the unions grew to protect people from this explotation.  Under the best of conditions in the private sector, there is usually a balance of power between unions and management;  but in the public sector we have the additional need to consider the ”customers” being served by government entities, whose interests are sometimes far from front and center.   In this case the balance has been far too much in favor of the teachers and their union, and not on the children being educated, and the court is redressing that.  Indeed the situation is so serious that the court agreed that seniority-based practices actually deprived some children of their civil rights….and to top it all off the American Civil Liberties Union (ACLU), long the scourge of right wing rhetoric and usually painted as a loyal friend of the left, including unions, filed in favor of this lawsuit and the kids.

I feel for any teacher who is laid off in this difficult California financial climate.  But they have had a good ride, for decades. They have had bulletproof employment regardless of performance, fantastic (and far more generous than private sector) pensions. They have done very well. Now is the time for the students to benefit from this system, not just the teachers. This legal case is the first crack in the dyke which will bring the flood of better education to the children of Los Angeles….and hopefully elsewhere.  Listen to the mayor of New York, Michael Bloomberg, as quoted in the same LA Times article:

“This year, if we are forced to lay off teachers, we will be forced to lay off some of the most effective, and keep some of the least effective……It’s not right. It’s not fair. And it’s not something we can allow to happen.”

This story is just beginning.  As with many things in the US, California often leads the way.  Maybe children in our public schools can look foward to their morale, and their performance, being raised as a result? 

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Employee Engagement’s Big Issues for 2011

It’s a New Year so time to take a fresh look at the state of engagement at work, employee/partner/associate engagement, whatever you might call it. How is this field doing and what are the big issues facing it and its practitioners? What challenges do we face moving forward? Has engagement met its potential in terms of acceptance by the larger organizational community and its leadership?

First of all, 2010 has brought more evidence of the importance of morale and engagement at work as more and more data are added to the extensive set which Cary Cooper and I detailed in our late 2009 book on the subject. No one should now be doubtful that engagement at work is not only a correlate of performance (customer satisfaction, productivity, profitability and even worker health) but more importantly, a driver of this. So this our starting point, the fact that worker engagement is mission critical.

Again this background, there are several issues which this field faces in 2011, and we will look at three of them here:

–Trends in Engagement: Are We Improving? Getting Worse?: depending on whom you talk to there might be good news or bad news. If you talk to Gallup, it would seem that engagement has not gone down during this Great Recession, which would seem incredible until you remember that this means that engagement of employed people has not gone down. Those who still have work perhaps feel so relieved that the downsizing machine has missed them, that that translates into some form of engagement. There are also some very well managed companies which have avoided layoffs by shortening the work week of those who work for them, and they indeed have benefited from stable engagement levels as a result. Some would suggest workers are now engaged only as long as the job market is bad, and they will then fly out of their jobs like out of a cannon, as soon as things turn around. Nonetheless, this is pretty good news and not as depressing as what we hear from others who collect data in this field, namely that both engagement and job satisfaction have suffered badly in the recession. The fact that these data do not agree is something we will cover in more detail next.

–Definition of Engagement: as strange as this may seem, the fact that trend data detailed above differ so much (Gallup has engagement flat while some have a minus 9% shift in the last year) means only one thing, and that is that they are defining engagement differently and this is reflected in their questionnaires used to collect this data. This is troubling for the industry and I have talked about it before, but it is still the case. The field is quite fragmented and each practitioner seems to have different definition of what engagement “is”. Can we imagine what would have happened in the physical sciences if someone said water was H2O and others said, no its HO2…? But in the social sciences we are used to disagreements in definition (witness the arguments about intelligence when it was a very inexact and fairly new concept), although this does not mitigate the problems which this brings to the field of engagement. Somehow and in some way we need an industry standard definition so that all can get on the same playing field and know that we are talking about, measuring and tracking the same thing.

–Professionalism of Practitioners: there has been an explosion in this field and it seems like everyone and his brother is now an employee engagement consultant. This is a bit like when your taxi driver gives you stock tips, and its time to pull back from the stock market. Maybe the field is a bit crowded and buyers of professional services in this area need to remember one of the few phrases I remember from my 5 years of English grammar school Latin: caveat emptor (buyer beware)! I am not saying that there are not great people in this field and I consider it very positive that many wish to help organizations improve in this area. However there is a two-part skill-set which is required to help an organization measure and/or improve worker engagement and morale. First a real professional in this field must have a knowledge of business issues derived from experience and learning in actual business settings, not just academic. Secondly, since engagement is about emotion and human behavior, it is essential to have a background in the social sciences, especially psychology, to really add value. I do not consider a background in communications sufficient, valuable yes but not sufficient for this. There have been too many times where I have seen great communications programs put together for the workforce which had a wonderful message but which in no way represented the way the organization culture really “lived”.

Hopefully 2011 will bring some improvements in these areas which will move engagement forward and into more and more organizations, where it should be. By most accounts the number of organizations which have ongoing and extensive worker engagement efforts is still quite low and I have never seen a number of more than 30% put forward for the US and the UK. The percentages in France, Germany and other European countries are lower even than this. This is pitifully low (given the huge benefits which accrue from it) and anything which can improve it is to be encouraged and welcomed. Part of the issue here is that some of the practitioners whom I have discussed above take a far, far too “touchy-feely” approach to the subject with prospective clients, which puts them off the subject.  As I discuss elsewhere here, morale and engagement are and should be focused on the ability of the organization to achieve its mission, and that is something any CEO can get behind given the overwhelming morale-performance connection to which this blog is dedicated. A second reason for low levels of engagement at work is that engaging workers means coming down off one’s high horse, letting go of ego-based behavior and fears, and some leaders find that hard, if not impossible, to do.  As I have pointed out, ego is probably the greatest destroyer of engagement at work.

So that is where I see this field as we begin 2011, and clearly there is lots to do.  The three areas I have discussed above would be a good start!

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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.

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.