I wanted to get his opinion on all things Engagement – What is it?  Why don’t companies understand it? What can they do about it?  He offered some great insight, even better sound bites, and a compelling argument as to why this is THE business challenge the will separate the winners from the losers during the economic recovery.

Seven questions and answers that will be sure to lead your organization to Engagement bliss, or simply scare you to death.   One thing is for sure, if your company wants better execution, then your organization better address the engagement issue now or it will address your organization later.

Take a look and let us know what you think.  I’ll make sure Brad responds to any questions that you may have.

Many books have been written about the topic of Employee Engagement.  What makes this one different?

(Answer) First, most books on Engagement tackle a piece of the subject, but do not take a holistic view providing the reader with a less than realistic view of what engagement really is.  It would be the equivalent of educating someone on small business loans and giving them the impression that they understand everything there is to know about the economy.  Second, this is not an HR book.  This is a business book for managers, leaders, and executives who want to grow their organization regardless of their function. 

Why do you think so many companies still have a problem grasping this concept?

(Answer) The entire economy has been turned upside down, the employer-employee relationship has been turned on its head, a generational shift is occurring in the workplace, technology has dramatically altered how we communicate and perceive one another, yet most of our tools, structures and research we use as well as the habits we live by come from the 80’s and 90’s.  We have yet to catch up to our current reality.  Some don’t recognize the changes, others hope things return to what they coin “normal”, and many that recognize and grasp our new reality struggle with how to act on it.

World at Work recently released a study stating that Engagement has decreased 9% worldwide and 20+% among high-performers.   Did this surprise you?   What do you think the implications are for companies trying to navigate what appears to be a slow moving economic recovery?

(Answer) No it does not surprise me about this study.  The implications are simple and straightforward.  Those that focus on engagement now will recover faster and stronger than those that do not.  Many organizations are still healthy because they never lost sight of engagement during this difficult period.  When the economy does recover, the floodgates will open at certain organizations and they will lose their intellectual capital.  But that is not the scariest part.  The scariest aspect is that that there are companies right now that do not realize the bad shape they are in with their business. They blame their ills on the economy.   My question for those organizations is…You may have the bodies, but how many souls have left the building?  Without spirit they don’t have a business. 

What do you consider the top three reasons for decreased engagement?

(Answer) Fear, Control, and Self Interest starting with senior leadership then cascading down from there.  The ingredients that create strong, productive relationships are also the same ingredients that create healthy, dynamic organizations – Trust, Transparency, Authenticity, Ownership (accountability), Creativity and Resourcefulness.  Unfortunately difficult circumstances cause many organizations, specifically senior leadership, to neglect what is important.  During difficult economic times people tend to act or make decisions based on fear, concerns, or anxiety.  All of us have fears, concerns, and anxiety but if we are able to admit when we are falling prey to them and work through those issues with others then we are able to make healthier decisions.  When stress and fear take over we look at the world in exclusive terms and in limiting ways.  We become focused on mitigating risk and lose sight of opportunity.  We decide to put in a number of controls to create predictability and political jockeying goes into overdrive because everyone wants to keep their job.  These types of behaviors not only spread and change the culture of an organization, but they hamstring the very people who can help us survive these challenges and come out of the other end.  Stress and fear can either be our jailor or our counselor.  It is our choice.  Too many leadership teams during downturns like this one choose, consciously or unconsciously, the jailor and then rationalize it to make themselves feel comfortable.

Many CEO’s still view Engagement as Soft and HR-ish.   Assuming one of them gave you 30 seconds to convince him/her that this is important, what would you say?

(Answer) First of all I would love to have more CEO’s give me 30 seconds.  Any takers?  More importantly, I would like to see a CEO convince me that it is not important.  But since you are asking the questions, here it goes…I would ask them “What factor(s) is most paramount to their success? “  Is the answer is product innovation, sales, service. My next question is going to be “How do your people impact service, sales, product innovation?” Then I would ask them “Why it is acceptable to only 11-24% of their employees proactively helping the organization toward that goal?”  Last I would ask them “What do they think the impact is?”  Seriously, we would not settle for a manufacturing plant at 70% capacity, so why would we settle with our people.   We shouldn’t. We should invest in them.  

Can you share a success story from a company that has made significant improvements in Engagement and the business impact of doing so?

(Answer) We worked with a high tech firm.  They were using a home grown survey that had too many questions, was not tied to research, and was not adding any value.  The survey was seen mainly as an HR activity.  They decided to make a change and they went with our survey the Engagement Index.  The first year that we worked with them the feedback illustrated very low levels of Engagement.  We were very clear with them about which issues were needed to be resolved in order to get an ROI from this process.  We also helped them with follow up, focus groups, and action planning.  Leadership was seen as a large portion of the issue.  There was a real lack of trust in their senior leadership.  First came a bit of shock, then regret, and then the excuses.  We helped them process the feedback and they came to the realization that not only did the organization have to make changes, but their leadership had to as well.  We have worked with them for four years now and their engagement levels have significantly improved.  There leadership is now trusted, and people believe in the mission and direction of the company.  Many employees shifted from being angry, complaining, sabotage – to pulling for the company even during difficult times.  Financials had been going south, but one year into our efforts they were able to create an 11M positive shift in profit and the engagement numbers and financial numbers have continued to go in the right direction.  They have taken the shackles off of their employee’s hands, allowed them to get back to work, and work passionately together along the way.  

Shameless Plug Time – Say anything you want here to convince readers as to why they should purchase this book.

(Answer) This is a book about business, but more importantly, it is a book about life.  The book will help you improve your relationships, team, division, organization, or strengthen customer relationships.  Any professional, manager, or executive would benefit from this read, but don’t take my word for it.  Here is what others have said:

“This will be the definitive book on employee engagement for years to come.”

“I know this sounds crazy, but this book has more to do with navigating life than improving employee loyalty, etc. I was surprised at how much I gleaned from this “business” book.”

“If you read one book on Engagement, make it this one!”

“Thoughtful. Brilliant. A genie in a bottle!”

“It will give you insight into the language and concerns of the decision-makers.”

But, successfully promoting a paperless office and shifting people from the office to the home, requires systems that support these activities. Goal alignment, ensuring that people are working on the right things for the right reasons, is very important. People need to feel like part of the team, even if they aren’t physically present. Traction, not action is the mantra for successful execution. Goal alignment ensures that people are moving in the right direction downfield to score, and not just gaining yardage. In fact, if your players are moving in the wrong direction, they are moving farther away from the goal. Goal alignment helps ensure that this doesn’t happen. It is not a substitute for supervision from a manager, but keeps the team working toward the overall company strategy.

Human Capital Management is a critical to earning green, and going green, enabling people to work from home, in global teams, anywhere, anytime. How green is your organization?

Well, not really. What employees truly want is the amount of work they have to do to match the expectations they had when they took the job. During the on-boarding process and throughout the early years, every employee continuously re-evaluates the “deal” between themselves and the company. When the “deal” is still fair, employees are satisfied (even enthusiastic), when the “deal” sours, they become highly attuned to dissatisfiers.

Part of most employees’ “deal” is to feel valued. This has a personal and performance component. They want to certainly be treated fairly and with all the common courtesies (like management not ignoring them, not being treated as a second class citizen, etc.) as well as having their current and future development needs met (so they can achieve their own personal work-related goals – whatever they may be).

Employees who are bored (reporting “too little work”) are often doing work for which they are ill-suited, or have jobs that are poorly designed. As a result, they have by far lower job satisfaction, sense of accomplishment, and pride in their employers compared to all other workers. All in all, they feel less valued.

Feeling overworked – a condition that could lead to job burnout – is far more prevalent than feeling bored and spikes during 2-5 years with the company. Employees who complain about being overworked often feel they are not receiving adequate support from co-workers. In addition, they contend that the quality of their work suffers (because of this inefficiency), resulting in greater stress and tension, and their feeling that they have sacrificed their personal lives for their jobs.

The complaints of both overworked and bored employees should be taken seriously, yet being bored has far more serious consequences for an organization than being overworked. Complaints about being overworked can be an indication of poor quality or work processes, and it can be difficult in certain circumstances to retain employees who feel they are overworked and out-of-balance with their work-life. But bored employees have an even greater negative impact on an entire organization, lowering morale and productivity, and draining resources.

One mechanism of action at play, as previously indicated, is employee perceptions of the “deal-delivered.” Work-life balance is almost an afterthought to people who feel their employers are meeting their end of the “deal” by being fair, providing interesting and meaningful work, and recognition or rewards for a job well-done. Work-life balance becomes a real issue when employees feel that their employers aren’t holding up to their part of the partnership.

However, when employee don’t feel valued (like when they feel bored) or feel overworked (because the company is being inefficient or cheap vs. dealing with an unexpected – or expected – rise in demand) issues like work-life balance, commuting, etc. become highlighted in their minds and become true dissatifiers.

Sense of urgency, attention, and understanding the reason for change are of course the ingredients required to help change something. It doesn’t hurt if you know where you’re going either to funnel the change in the wanted direction. I think Sam nailed it. Win or lose – that’s the game.

In some European countries a lot of businesses carry a huge cost for people on sick leave. This cost in most European countries is a shared responsibility between each company and some kind of government funded insurance system (most employers must pay this insurance anyway – in many places it is mandatory).

How much of a burden is this for organizations? There are many consequences when employees overuse sick leave:

• Need to carry extra staff to cover for the absence levels
• Cover the absences with temporary staff that is both costly and not always fully productive in wider-scoped roles
• Lose business – which might be the worst of all alternatives since it will hit both the top and bottom line

Let’s look at this example from a financial service company in Holland:

The employer is legally responsible for paying 70% of the normal salary, after 2 sick days for a full 2 years. In a majority of industry sectors, this is legally raised to 100% through deals with unions. Our research indicates that the sick leave in Holland is about 6% (Sweden, Norway and the UK between 4-6%, France 3%, Italy, Ireland & Germany about 1.5%)

For a global financial service company with about 2 Billion Euros of labor cost and 35K employees there is an average cost per employee of 57K Euros. With 6% absent for sick leave that would mean that 2100 employees are absent at a cost of 120M Euro per year. If that sick leave could be reduced to 5% this company would have 350 more people working while directly saving 20M Euro. This example though showing significant cost savings is only looking at the direct cost of this absence, and not at the more strategic impact of lost business opportunities, or the individual human costs. Though there are arguments for fixing systematic problems caused by over generous sick pay, there is really nothing organizations can do about it in the short term… or is there?

To find the answer I turned to one of SuccessFactors Research Thought Leaders Ken Scarlett who has been researching this, and the conversation left us with some very real solutions.

Aggregately speaking, the higher the Engagement level (as measured by an engagement index) the lower the sick leave rates, and there is no better way to predict the likelihood of abusing sick leave than by the responses to the questions “Do you look forward to coming to work?” and/or “Do you feel you work is important to others?” Ken’s research shows that the group who answered negatively to those questions has the highest propensity to max out/abuse sick leave. With the specific questions above, you can actually create a highly accurate forecast within 10% margin of error.

In any country and any industry your job as a leader is to increase the likelihood that your people answer the question “Do you look forward to coming to work?” positively.

By and large, studies have found execution is the clear driver of company value and financial performance. How much? Well, about 15% of company’s performance is attributable to strategy – the remaining 85% is attributable to execution, as found by Becker and Huselid’s “ High performance Work Systems and Firm Performance.” Joyce, Nohria, Roberson found a similar ratio in “What really works.”

That’s right – Execution of the strategy is 6 times more important than the strategy itself!

How do you execute on a strategy? In a word: People. At the end of the day, it is the employee who makes things happen, who gets results – not machines, strategies, vendor relationships or what have you. People are your real differentiator and now typically make up 70% of a company’s cost (and growing). This is doubly true in today’s knowledge-focused economy. We see today that about 80% of a company’s valuation cannot be explained by the balance sheet, which shows the growing importance of intangibles and people performance to future cash flow. The value of a company is no longer in its factories, IT systems, or physical assets – it is created by the company’s people.

Your company is in fact already on the field, fighting for customers, revenues, and a competitive position. Instead of “picking out the best play”, focus on what will most help you move downfield toward your goals: people performance, 85% of your success depends on it. Goal alignment, individual accountability, and engagement equal strong execution. Build up these strengths and capabilities of your company to help ensure you can make the big plays. So yes, people performance does matter, because their ability to execute is the key factor in creating value and driving results for your company.

Max’s Note: As part of our quest to post more and more often, I’m proud to present this guest post by Sammi Nuttall.

According to a new survey completed by Korn/Ferry International, nearly 73% of executive level employees believed that they could outperform their manager. Surprisingly, 42% of those surveyed also believed that their boss was doing an “excellent” or “above average” job.

That’s an interesting contradiction.

One interpretation is that employees, even at the top levels, are not leveraging all they have to offer their employers – and as a result are feeling somewhat less than challenged. This puts the onus on managers and strategic HR groups to understand who their high potentials are and to discover and cultivate their strengths. It’s only by developing employees that their full potential can be released, and if you can do that – the sky’s the limit.

The Atlantic Monthly has been running excerpts from old issues as part of their 150th anniversary celebration. Reading over an issue this weekend, I came across an article written by a Colonel R. Williams about a decade after the civil war ended – in 1878. His issue? That the military’s practice of promoting those with the longest tenure was “fostering apathy” rather than bravery or a commitment to excellence.”

Amazing that the same battles we fight today for meritocracies were equally well articulated 150 years ago.

Here’s an excerpt:

Our army presents the only known example of a business or profession, either public or private, in which incompetency and want of zeal bring the same substantial rewards as energy, capacity, and active attention to duty. Such a system of promotion is in violation of all the rules of common sense by which men are governed, as well as of those by which they are incited to strive for superior excellence, and the condition of our army at the outbreak of the rebellion affords an excellent example of its inevitable result. At that time the superior grades of the army were filled by old men, who, having outlived all above them, had been regularly promoted, in accordance with this system, to the positions which they occupied, regardless of the well-known fact that in the majority of instances they were unfitted, both by age and infirmity, to perform any military duty whatever. The spectacle was so pitiable, and the lesson it taught so apparent, that it might be supposed the government would have profited by such crushing experience, and been led by it to the adoption of wiser measures. Such, however, was not the case. Our system of army promotion is the same to-day as before the rebellion, and we are slowly, but surely, approaching the same result, from which the same experience, disastrous as it was to the country, must necessarily follow. At the close of the rebellion, and with the sad experience it had taught still before us, some effort at a change was made. The army was reorganized, and many young officers who had acquired experience, both of the regular and volunteer force, and who had especially distinguished themselves, were deservedly placed in high positions; but this spasmodic effort at reform was deemed sufficient, and we have again fallen back into the system of promotion by seniority, which, unless some dire necessity forces a change, must render the condition of our army equally as deplorable as when the rebellion commenced, by filling its superior grades by worn-out and superannuated old men. It seems needless to describe the effect which this system must produce upon the subordinate and junior officers of the army. In most instances it is deadening to all effort at improvement or professional skill, and suggests the natural conclusion: that, as superior rank is obtained only by longevity, each should strive to avoid all exposure, hardships, or dangers by which health may be impaired or life risked.

He’s got a new book coming out next month called “The No Asshole Rule – Building a Civilized Workplace and Surviving One That Isn’t.” Today, at our all-hands company meeting, we got a chance to hear Bob speak on the topic.

The No Asshole Rule is something we actually have, use and abide by at SuccessFactors. We have a “rules of engagement” document which is posted all around our offices and on our website (#5) that reminds us of some of the basic tenets of working at the company. This particular rule, now softened a bit to “No Jerks,” understandably gets the most attention.

Why are assholes such a big deal? According to Bob, a professor of management and engineering at Stanford, they can easily take the wind from the sails of an otherwise successful company. Assholes can lower engagement, raise turnover and cost companies a lot of money. One guy Bob spoke about cost his company an estimated $160,000 over the course of a year – factoring in the costs of time spent by management, hr and executives in dealing with him – as well as anger management and training classes, overtime spent by other employees responding to his last minute requests and so on.

But its likely you don’t need any data points beyond ones from your own experience to make you aware of the preponderance and impact of assholes in the workplace. We’ve all dealt with them at some point and been the victim of behavior that makes us feel awful. According to Bob, there are two tests that identify the presence of an A-hole:

1. – “After talking to the alleged asshole, do their “targets” feel oppressed, humiliated, deenergized or belittled by the person?” and

2. – “Does the alleged asshole aim his or her venom at people who are less powerful or people who are more powerful.”

There are a few things to be careful of with your newfound A-hole identification powers. An important one is to be mindful of rushing to a-hole judgement – once you accuse someone of being one, you may quickly find you’ve created a monster.

So what do we do about the a-hole problem? Bob counsels us to simply avoid working at places where the a-hole factor is high (if you’re an employee), and to avoid hiring them (if you’re a company). He notes that “asshole poisoning is a contagious disease. Get out and stay out of asshole infested places – they will change you, you wont change them.” And the opposite effect is true as well – hire too many and it wont be long before your whole company is acting like an ass.

Another answer is to me mindful of “moment to moment conversations.” Be aware of asshole behavior – both yours and that of others. Noting and making small adjustments in response can make all the difference in whether a colleague perpetuates the -Ass-holishness.

We were lucky enough to get a copy of Bob’s new book today and I’ll be reading it soon. I hope to be back with further reflection once I work through it, but in the meantime, you should take a look at his blog for more thinking on the topic.

I’m left wondering why questions like “is this place a meritocracy?” or “does this company pay for performance?” or “what’s my chance of being promoted here?” or “how many jerk managers work at this place?” get lost.

While perks like free basketball games (Quicken Loans) or grocery delivery (Microsoft) or on-site laundry (Google) are great – studies have shown that they aren’t the most critical components of job satisfaction. So I’m left wondering – is this really a list of the best companies to work for?