Ken Scarlett - Fully Engaging Employees

Jim

Welcome back to People Performance Radio, you are here with Jim Matheson …

Ken

… and Steve Hunt.

Jim

Steve, we haven't had a lot of feedback on our feedback line, so just wanted to remind everybody that our new phone number is 650-425-7474. Please give us a call if you have any feedback or comments on any of the episodes, including maybe the audio quality of this episode.

Steve

Yeah, this one was kind of recorded in a hurricane, so our apologies in advance for the background noise on this, but that is one of the ongoing challenges of doing podcasts, and thankfully we have Zak, who does an awesome job in both fixing the problems that we, we do a good job finding new problems, Jim, and Zak does a good job fixing them so it's a symbiotic relationship.

Jim

Definitely. So, who did you interview this week?

Steve

Ken Scarlett, he is president and CEO of Scarlett Surveys International, which are sort of known as The Survey Company, and it is a survey company that has been around for, I don't recall exactly, I believe it was 45 years, quite a long time now. As Ken pointed out, he has not been head of the survey company the whole time, so he's not quite as old as you would think if he had been running this the whole time.

Jim

He is second generation, correct?

Steve

He is second generation, but he has clearly grown up in the world of surveys and had some very interesting conversations around the use of surveys, the importance of having a look at employing talent and attitudes, and one thing in particular that he talks about towards the end of the interview, and I would encourage you to listen to, was the discussion of the growing importance of organizations to have to think about the whole person, that in fact if you are trying to maximize the productivity of your employees, if you have employees that are really struggling outside of work due to financial issues, health issues, that is going to distract them from work, and he talks that that's something that he has seen a change in organizations recognizing more and more, that if they want fully productive employees, they really have to do what they can to help people deal with the things outside of work, so they can be fully engaged when they are at work.

I found that a really interesting conversation, I think something that really has, good companies have been doing that for a long time, but more of the business community is starting to embrace this more importance of employee health in general, and that is something that he shared that he's seen from his survey research at the end, but lots of other interesting things as well around measuring engagement and talent and survey information from somebody who has been doing it for a long, long time.

Jim

Great, well it definitely seem like that's a timely topic, with all the financial news these last couple of weeks, so it will be interesting to see what he had to say. We are going to go ahead and jump into that interview right after these words.

Zoe

Hi, this is Zoe. Coming soon in the UK a new series of podcast interviews focused on talent in uncertainty. Tune in to find out more on how Cable and Wireless, Premier Farnell, LloydsTSB and the Lancaster Hotel Group are using SuccessFactors to address their business challenges.

Steve

Hello everyone, this is Steve Hunt with People Performance Radio, and today we are lucky to be talking with Ken Scarlett, who's the president and CEO of Scarlett Surveys International, sort of known as The Survey Company. So Ken, first thanks for coming on the show, and can you tell us a little bit about what you guys do as Scarlett Surveys International?

Ken

Sure, be glad to. We've been in the employee engagement survey business now for about 45 years. We basically help top management proactively manage and improve employee engagement, and we accomplish this primarily through what we call psychometrically sound employee attitude survey research, which I am sure you now a lot about Steve, given your background, and that's our trademark name, The Survey Company. Now my role as CEO is to obviously fully engage our people, keep our engagement products and services on the cutting edge, study trends, draw database conclusions and market our engagement measures worldwide.

Steve

Cool, so I guess when you talk about engagement survey, maybe to help people understand, when you say engagement survey now, everybody immediately thinks about a certain company out there that, in respect of your brand, I wont mention them right now, because I'm sure they're a competitor. How do you compare the work you do to the work of the other well known engagement survey company? What is similar and what is different?

Ken

Sure, well first of all we've been in business longer than most of those huge competitors and they've done a very good job. I think there's the distinction here that there is a lot of confusion about exactly what engagement is, and we've identified 15 drivers of engagement and we can you know quantitatively prove that there are 15 drivers, and some of the other instruments that are out there, I think they get a portion of those and they may even get to, some of them are geared for business outcomes surveys, which, in other words if you do this with employees, then it will have a short term impact here and here on your bottom line, and that's a distinction between what we do and what others do.

Steve

So you're looking at, your survey is designed to give very specific actionable direction, or are they more sort of ongoing constant things going on in the background?

Ken

Well, our instruments are firmly based, are soundly based I should say, in Frederick Herzberg's Motivation Hygiene Theory, and so we basically measure the hygiene factors and motivation factors, and we know that these factors actually have a profound influence on on the job behavior, so we can predict employee behavior by measuring attitudes towards these motivational and hygiene factors. We call them engagement factors.

Steve

So these are the fundamental things that people care about and they always care about, which is interesting because we did another podcast with another person who said the same thing, they're saying, all these generational changes and a person's like, we don't evolve that quickly and what people wanted 30 years ago is largely what they want now, and it sounds like you are kind of focusing on some of those really fundamental motives, is that right?

Ken

Sure, exactly, and subsequent to the measurement as well, we get into organizations and have them train their leaders on how to manage, how to technically manage these engagement factors, so that they can walk up engagement in their organization, and we tell them at the onset that they might be missing up to 50% additional return on their human capital by not measuring engagement and not having their people fully engaged.

Steve

Yeah, I agree, I think really what you do with a survey like that is you take this intangible concept of engagement and give people clear measurements so they can see if their leadership's affecting it. One of the things, and I am sure all of our listeners wondered this when you said there was 15 things we focus on. Can you very quickly rattle off the 15 things?

Ken

Sure, I will start with motivation factors: advancement, freedom to perform, job assignment, personal growth, recognition, work objectives. In the hygiene area: benefits, communications, company pride, comp, fellow associates, image, management, supervision, treatment and working conditions . With objectives, it's sort of double clutch there, it's a hygiene factor and a motivational factor, so it serves in both areas.

Steve

Is there a website where people could go and look up those factors? Do you have that posted anywhere, because I'm sure some people would say, I'd like to see those listed? Is that something you share?

Ken

Sure, please go to our website: scarlettesurveys.com, and just click libraryfaq, and you know we have a whole listing of whitepapers there, I would invite them to take a look at Scarlett's Law of Employee Engagement and What is Engagement?

Steve

Cool, and we'll put a link to that on our website as well. When you look at those factors, has anything changed recently?— are there certain factors that are really standing out as more important, I mean when you are looking at these large person employee population, what is happening in our workforce around engagement that maybe people aren't aware of?

Ken

Well, we're not doing a good job measuring it in most organizations, and organizations are changing whatever measure they have too quickly, so there's not a real good understanding, even with all the talk about engagement over the last ten years. There's very little understanding in the leadership and management ranks about what engagement is. So if they don't have the concept right, and they don't really have a good measurement definition, then they're sort of running around you know with fire hose and swords, so there's a lot of that going around.

Steve

Can you give an example of a client you have worked with whereby coming in and introducing measures you have kind of led to an ‘a-ha' moment for them to realize, "We really have been missing the boat on what we've been focusing on, or we've really overlooked something"?

Ken

Sure, we have a variety of examples. Normally when we go in, we find that there's incomplete measures in the organization, so managers have been prioritizing things that probably shouldn't have been prioritized in many cases, and so they are spending money and spending their time managing things that is not increasing engagement in the organization, and I think the conference board has some good data trends over the last 20 years that shows that engagement in the United States has deteriorated significantly, and this is with all the money that we're pouring into engagement. So when we've gone in to a company when we have said, "Well, we've have identified 15 drivers of engagement, in addition the way that we measure these things, we're going to give you a way to do route cause analysis to find out what behaviors you need to change as managers and what things you need to reinforce." They go, "Wow, boy, that's a lot of factors", and I said, "Well, I wish there were less but, that's the way it is."

Steve

We're complicated, people, we're not that simple. I think it's funny, sometimes people surprise you, like well do you think you're that simple? The question I have is, this thing about engagement decreasing— why?— why do you think engagement is decreasing? What's driving that, what's causing that?

Steve

But we haven't been measuring, they weren't measuring engagement 25 years ago, as a matter of fact I think we are doing it much better now than we used to. So other than the measurement, is there is some fundamental shift in the world that is causing people to feel more disengaged?

Ken

Well, the rate of change of course, the change in management, things are not static, and we're in a global economy, I don't have to tell you all of this stuff. Just take a look at your job over the last five years, I'm sure it's been a whirlwind for you and sometimes a blur. Well, that's how most employees in this global economy feel, and so in order to tap in it's very important to measure engagement, and understand in what context of running the organization that this has tremendous value, and where it has tremendous value that we've found is, something that we call in Scarlett's Law and that whitepaper that people can take a look at online, is our CEO success formula, which is the context of engagement with our CEO success formula is basically the competence times engagement times organizational opportunity equals return on human capital, and we summarize this by saying, "Ready, willing and able". So this is the frequent speak that people in everyday life can talk about ready, willing and able, and in military circles this is how we talk about competence times engagement times organizational opportunity.

Steve

I love the fact that you include that opportunity in there, because I think that's something that often is forgotten in terms of organizations, if you want to increase engagement, it's not just to have motivated confident employees, you have to give them something to be motivated towards.

Ken

I think also, to your question, there's much confusion about satisfaction versus engagement, and I think an interview that you had with Professor Morrow, I think we were reading out of the same hymn book here, where satisfaction does not necessarily relate to have a positive correlation to productivity and a higher return on human capital, the percent of work time that people are spending in positive discretionary effort and doing the job that they're supposed to do. So I think that's a big distinction.

Steve

So I want to go back to one thing that you mentioned too, which I think is an interesting aspect of your surveys. So you don't just do the survey, you also have very clear discussions to give leaders examples of what you can do to improve engagement. What would you say for just a general manager out there? What should they think about doing differently if they feel employee engagement is low? What tend to be the things that leaders are not doing a good job of when it comes to employee engagement?

Ken

Requiring all leaders of people to develop action plans and this is really a simple operation these days, it's done electronically through software, but they are not forcing this into making this a requirement of leadership in the organization, to develop action plans and implement those action plans and hold them accountable for those action plans. This can easily be tied in, it's fairly easy to do electronically from their desktops, and it can be rolled into performance evaluation systems, so it's not a big deal, but there is a big push back on, oh this is another activity, but it's a tremendous value-added activity.

Steve

So really elevating the role, if you are a leader a part of your role is keeping your employees engaged, paying attention to their motivation and their interests, and giving that equal weight as you do to having business plans and financial action plans, is that the sort of the main point? —you've got to elevate the people side and give it equal weight?

Ken

Exactly, the most success we've had in organizations, and if you look on our website we have a couple of stock trends with companies that we've had worked with over the last 15 or 20 years, nd you can see what impact their measurement of engagement managed from the top of the organization, how it had not only a positive impact across their entire company and increase the growth of their entire company, but it had an influence on the positive stock price.

Steve

Wow, so you can really tie the links, which I think is one of the cool things about surveys is the data and ability to tie human resource practices to employee attitudes to financial outcomes, and that's one of the things that I think is very exciting in our field.

I have a question here, you said you've been doing this, and let me get this right— you guys have been in business for 45 years, is that right?

Ken

Well, if you don't measure you don't get, and if you have the wrong measure, then you can be driving engagement in the opposite direction, you can be causing negative engagement.

Ken

That's correct.

Steve

What have you learned in those 45 years? What would you say are the things that, as a result of Scarlett Survey's work, this is stuff we know now we didn't know 40 years ago?

Ken

Well, let me clarify first I'm the second generation, so I've been in the company for 23 years, I hope I don't sound like I'm that old!

Steve

I would say, you sound remarkably virile and young for somebody …

Ken

But getting to your question, I sort of grew up on this stuff, because my dad was involved with the employee attitude research group at the University of Chicago and the conference board, and was Vice President of America Society of Training and Development, etc, etc, and this was after he came out of World War Two, and a network of people said, "We want to bring the same concepts of measurement of morale and engagement, what's now known as engagement into the industrial workforce, and we want to understand it and work with it and that sort of thing." So they formed this group at the University of Chicago, the Employee Attitude Research Group. As a matter of fact that was our first product, EAR (Employee Attitude Research), and out of this Frederick Herzberg was very instrumental in nailing down these factors. You had a lot of— Dr Robert L Browne, Dr Leonard Zurplus, so there was a lot of great minds that were involved in developing this and testing this and making sure —ah, these are the factors that really affect on the job behavior.'So what's changed over time is that the static mass production model, we now live in the age of mass customization and lightening speed markets, so speed to market is everything these days, deploying talent at the right time, at the right place, at the right price is fundamental to doing business these days. Rather than just selecting a person and giving them lifetime employment where you could, the benevolence was much higher at that time, because it was a static environment, you could spend more time with people, so that's changed significantly over the years.

Steve

That's interesting, so basically it used to be you had more time to sit down and talk and have a cup of coffee with somebody, and now it's like, I don't have time to talk to you, I've got to answer my 4,000 emails. Is that a good characterization of that change?— I think it is an interesting observation.

Ken

Exactly, I mean I think that's probably the biggest change and now we expect to accomplish all that through automatic systems.

Steve

The last point to talk on, and I'm sort of sensitive to your time— one of the things that Jim Matheson, my co-host, and I talk about a lot is the value of electronic media for social networking. Can Facebook and email replace face-to-face conversation, and we kind of go back and forth on that— what are your thoughts about that? Do you think that maintaining engagement requires spending more time with people directly, or do you think there's ways to use technology to create that bond and engagement without face-to-face contact?

Ken

Well, it's a little skitter going on here, I suspect— how much surrogate mother can you hand people? —and I think that is read across into the workplace these days, we know that the strongest influence on employee engagement in the organization is the person's first line supervisor, so for example, Steve, the person that has the most profound influence on your engagement as SuccessFactors is your boss, we know that, and so if your boss is not willing to spend time with you, then the chances of him fully engaging you are slim. He can give you Facebook, he can give you all kinds of automatic systems, and you might get enjoyment, you might get some rewards out of that and reinforcement and that sort of thing, but at the end of the day you really want him to look at you in the eyes and say, "Steve, this is really fantastic work that you've been doing. This is really, really good, I particularly want to talk about this, this and this and I really appreciate that".

Steve

So really, you cannot replace that, so maybe that's a good takeaway, which is if you're managing people, make spending time with them a priority, you cant get away with that, and I think Zak (Zak, our product engineer, is recording this), we'll have to see if we can find a picture of that wire monkey that you were referring to from the Skinner studies.

Steve

I think a lot of people probably aren't familiar with the Skinner reference, but it's a classic study where they raise monkeys with a wire mother instead of a real mother and they should, that it's not the same. It may perform the same functions but …

Ken

I wonder if I could get into some opportunities that I see on the horizon?

Steve

Yeah, absolutely.

Ken

OK, because I think we're really on the threshold of something really big happening in the way we manage human capital, and I think this shift is likely to happen because of a combination of factors. Companies like yours have automated the administrative processes in human resources, and this predictive human capital management tool which will soon be launched by my friend Dr Jack Vitzenz, and pressure on management to increase white collar and knowledge worker productivity will continue to intensify, so the competitive demands for quickly putting together strike teams, and I'm talking about people both inside and outside the organization, is intensifying. So I see this almost like an alignment of stars or perfect storm, however you want to term it, that this is going to cause or enable organizations to shift their HR management focus away from simple people count sort of benchmarks and administration to something I call here "Hugometrics", and what I mean is, Hugometrics is the emerging, what I call the management science focused on maximizing employee economic contribution and return on human capital through measurement prediction, cause and affect. In concept, it's he human capital equivalent of the book (? 24:14) money ball, so there's a big shift coming down.

Steve

I think that's true, we're seeing, as we're getting all the technology, what technology enables is more effective data collection, and when you have that data you can do more with it, and I really do see all these pieces coming together, the sort of service profit chain model, and is that what you are talking about, where we're going to have really effective measures of people's talents, interests, behaviors, engagement, productivity so we can use more of a data-driven approach to do more workforce planning and staffing and things like that?

Ken

Well, I think it's going to be much more predictive in nature, and I think the traditional HR function is basically going to cease to exist, and replaced by some sort of human capital management functions that looks more like the quality VP positions of the 1980s, someone who's responsible for composing and managing human capital data sets that continuously put the right people in the right place at the right time with the right skill set to maximize speed of market and human capital return on investment.

Steve

Interesting, you're talking about predictive, and maybe this last question and then wrap it up, which is, you talk about predictive— when you look at your data and the data that you have looked at over the years, what is your prediction, other than we're going to move more to very data—ocused talent management strategies, but if you looked at engagement, where do you think companies are going to be with employee engagement in five years? Do you think engagement is going to get better, it's going to get worse? Are companies going to have to radically restructure that? What do you think is the next big change in engagement? Where are we going with this?

Ken

Well, as you know Steve, attitudes are portable, and when people come to work they bring certain attitudes with them to the workplace, so even though we might find that the highly talented person that we think is absolutely right for the job, we don't know what kind of credit or debt problems they are getting into and that kind of stuff, and so this has had a profound impact on whether or not we can engage top talent in the organization, so as you know, you can have top talent, and if they are not fully engaged, you're just wasting money, they're wasting their time and you're wasting money. I think the organizations worldwide, if they want to keep top talent, they are going to have to address these issues, these attitudes that people are coming to work with that involve financial distress, what I call financial distress.

I think the other thing is, what we see with our data is that the pay-off for many employees in the organization in the western societies have deteriorated, so their feeling of achievement has slowly been deteriorating over the last, certainly since the year 2000, and there is almost a read across into society itself is, almost like a loss of happiness in market-driven societies that has to be addressed.

Steve

That's really interesting, that's very profound, Ken. I think one of the things I've seen increasing in attitudes surveys is that it has an effect on health and what, if I can paraphrase, is basically saying traditionally companies have not really taken that much attention to what's going on in people's lives outside of work, but you're saying that now we're getting to the point , well what's going on in people's lives outside of work, is very much affecting their attitudes within work, and if you want to have a fully productive person, they need to have a somewhat happy life, otherwise their mind's not all there at work, and companies need to play a more active role in helping people with that— is that correct?— am I capturing this correctly?

Ken

That is a perfect summarization.

Steve

Well, that is cool, that was a very positive spin on our future. I hope that that companies embrace us, I certainly know that I certainly would take all the help with my personal life that I could possibly get.

Ken

And I hope your boss comes to see you more often.

Steve

Exactly! All right, well hey, Ken Scarlett from Scarlett Surveys, The Survey Company —Ken, thank you very much for

Ken

Great, thanks for having us Steve, and be well, and be engaged.

Speaker

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