Tom Mahan - Engaging with employees to gain high impact workforce intelligence

Steve

Hi, this is Steve Hunt with People Performance Radio. This week we spoke with Tom Mahan of The Work Institute, and The Work Institute is a workforce intelligence research company, but really specializes in giving companies very in-depth information about their employees’ attitudes and views by actually interviewing the employees. It is, Tom points out, “Surveys have a lot of limitations, you really don’t learn what’s on an employee’s mind, you really can’t probe and get to the really interesting information simply by having people respond to multiple choice questions, and even if you do, by the time you get the information back, it’s outdated”, and he talks about how The Work Institute has worked with companies to actually set up where they interview employees on a regular basis, it’s very impressive, but it leads to some very phenomenal results in terms of increased employee retention and increased engagement, decreased problems having to do with counter-productivity, so a fascinating interview from a very innovative and forward-thinking company, and a man named Tom Mahan at The Work Institute.

Hi, this is Steve Hunt with People Performance Radio. Today we’re talking to Tom Mahan, who’s the President CEO of The Work Institute, which is a workforce intelligence company. Tom, welcome to the show.

Tom Mahan

Hello Steve, thanks for having me.

Steve

So, right off the bat, what do you mean by “workforce intelligence”? What is workforce intelligence?

Tom Mahan

Oh boy, workforce intelligence is basically information that companies, we would argue, need to have, that gets them well beyond just the data or the descriptive data that they might be pulling from their current employee surveys, but actually drives to sufficient information so that companies can know (a) what they need to do in order to solve a problem, and all of that within the context of the financial opportunities in increasing productivity, productivity being a financial measure.

Steve

I see, so can you give an example maybe of a company that wasn’t using workforce intelligence? – I guess workforce intelligence and then started using it, and the changes it created?

Tom Mahan

Well, I appreciate you bringing that up, I think that’s critical, because really what it does is it gets us to start looking at perhaps some of those things that organizations are doing today that are either not working, or are part of historical mythology, whether it be business mythology or HR mythology.

Yeah, let me give you a couple of examples, great places to work would be an example of that to me, a lot of companies out there are trying to figure out how to re-brand themselves, and in trying to re-brand themselves in whatever category they’re calling it, as a better employer, as the best employer, or however they want to do it, a lot of times what they’re doing is instead of looking at what the intelligence they can derive from their workforce population, what they’re doing is they’re going and looking at what other people have done, and so one of the core mistakes that I believe is out there right now is people jumping on other people’s bandwagons, trying to copy other people’s best practices, instead of recognising that their best practices probably come out of the voice of their current employee population. I think that’s a major mistake we’re making right now.

Steve

I’ve seen that, I’ve seen that comments like best practices are often best in somebody else’s company. At the same time I do think that …

Tom Mahan

There you go, right.

Steve

… you can learn from looking at other companies, and they’re certainly probably necessary practices, so when you’re working with a company to try to say, let’s make you more intelligent about your workforce, what is it that the knowledge, what is it that the companies operate from a position of workforce intelligence, what kind of information do they have that a company that isn’t operating at that level is lacking?

Tom Mahan

Well, I think they would have, to start with I think they would have a really good idea of what their manageable human capital expenses are. I think that they will start by taking a business perspective on this, the business perspective being the financial perspective, and before they start jumping through other people’s hoops, they’ll get a real good clear observation of what costs they’re spending that they can manage in better ways, and I don’t mean shooting people, I don’t mean firing people, I mean getting in control of those human capital expenses of an organization that when properly managed will increase productivity.

Where we are, Steve, is back to some of our current mythology, quite honestly, people operate on budgets, and even though we’re arguing out there that we’re interested in productivity, in essence we’re operating to a zero-balanced budget headset, companies budget certain expenses, and then people spend that money, whether they need to spend it or not. Good examples of that would be hiring costs, we keep spending money on hiring, whether it’s advertising or referral bonuses, or employment office overhead, and since we’ve budgeted for it, we continue those practices, and often times we don’t need to continue those practices. We build policies around absenteeism, and then set in motion expectations of absenteeism, but what we’re not doing is looking at the costs of absenteeism in our organization.

Steve

So it sounds like you’re saying, one of the problems is historically the way HR is often done is we set the budget first, and then we constrain ourselves, based on what that budget is and the budget drives, so we have this amount of money to hire, all we focus on is we’re not going to spend more than that amount of money or we’re going to spend all that money.

Tom Mahan

There you go, and we think that’s the cost of doing business, and we make excuses with company money, saying that this is our budget, and so this is what we’re going to spend.

Steve

When we talk about workforce intelligence, can you give an example, maybe the most enlightened practice you see, and where it’s a company that’s been operating from more a mythology basis, as you call it, kind of doing things the way we’ve always done it, to suddenly getting information and insight that really changed the way they did things, so they became more effective – what would be an example of a company that really had that “aha” moment?

Tom Mahan

Yeah, let me just change the question a little bit, because clearly I’ve got an example of a great company that is doing some great things, but I’m also going to own, that I don’t think they got started in mythology, I think that they looked at this through a responsible business lens, and I can give you that example without talking about them having started with making mistakes, and made drastic changes, let me just take you down a trail of what they did that was right, is that OK?

Steve

Yeah, absolutely.

Tom Mahan

There’s a large renal dialysis company nationally-based, basically had its origins in start ups and in assimilating other renal dialysis companies together, a company called Renal Advantage here and they’re actually home-based in Tennessee. This is an organization that has a very serious, very solid person in the HR role who is a business person first, she is well connected with the executive team, the executive team is very committed to the human capital experience of the people at Renal Advantage, and they look at it through several lenses, the first lens they’re looking at it through is the return to the company, they want to make sure that they are doing what needs to be done in order to reduce their human capital expenses, and that doesn’t mean getting rid of people, it instead means what are those things that we’re spending money on that we don’t need to be spending money on, so that we can either improve the patient experience, or the employee experience, or the business outcome.

Steve

What would be an example of something that they identified that they had been spending money on, they realized this really isn’t adding value?

Tom Mahan

Turnover is just the absolute easiest one on that, we’re living in a world where everybody’s whining about the fact that there aren’t enough nurses to do the work that needs to be done, and Renal is basically taking the attitude that there are plenty of nurses out there that Renal Advantage needs to do all the work they have that needs to be done, they’re just working somewhere else, right? And so what they’re doing is building a model where they are becoming an absolutely evidence-based preferred employer, and they are communicating that preferred employer status and what they’re doing to the environments wherein they operate.

In that way, they have incredibly reduced their hiring costs, they’re not having to deal with agency and search fees and internal referral bonuses and travel or travel nurses or the whole applicant experience cost, because what they’re doing is they’re constantly taking the pulse of what’s going on with the employee, what the employee preferences are, what the employee expectations are, and what their employee intents are, and they are realigning their organizations, and I make that plural, because they genuinely know that what is needed in Seattle, Washington, may be very different than what’s needed in El Paso, Texas, and they are aligning their organization with employer preferences at the most local level, their turnover in a very tough industry is the lowest of all the dialysis companies, and they dropped it an additional 12 or 13% even last year.

Steve

So you’re looking at nursing retention, which is such a big issue, because it’s such a scarce labor set, and it sounds like you’re saying, turnover ultimately is an individual’s decision, why somebody decides to leave the company is personal to that individual, yet there are certain trends, are they finding, are they crafting retention plans individually designed for every employee in the company? – or how are they efficiently zeroing in?

Tom Mahan

Yeah, most efficiently what they’re doing is they’re holding local management accountable for turnover, I expect that most of our audience here is in the HR or the HR-ish arena, and one of the other mythologies that’s out there is that HR all of a sudden thinks they’re responsible for turnover, or they’re responsible for retention, when indeed people aren’t quitting HR, people are quitting their organizations at the local level, but what we haven’t done in many organizations is started holding people at the local level accountable for retention, so the first thing Renal did is said, “You know what? – HR’s going to manage this”, and the head of HR at Renal Advantage does an incredible job managing this, and but part of that management is expecting operations to be accountable for creating an environment that supports the preferences, expectations and intents of the people at the local level, that's the first thing they do.

Steve

And so the first thing is making managers accountable, it makes tons of sense. I think a lot of managers will really struggle, they don’t know why people are leaving?

Tom Mahan

Well, and that’s where intelligence kicks in, what Renal Advantage does is they, on a monthly basis, properly randomize, properly sample, they have an intentional scheduled conversation, they use an outside objective research organization to do this, and there is actually an intentional conversation with every single employee in that company and they are keeping their hand on the pulse of everything that’s going on. Part of our mythology out there is that we do these silly annual surveys, so what we do is a lot of times we’re setting our expenses, or we’re setting our objectives, based on what some population had to say was important to them, some Tuesday afternoon in July, they collect all that data, they sit on the data for a couple of months, they wait a couple more months for the data to come back, three months later you’ve got the executive team there deciding what they will and won’t communicate, then by the time they’re ready to roll the data out or make decisions on it, they’re (a) ready to do the next study, and they never do anything; or they’re acting on the data that might be four, five, six, seven months old.

What Renal Advantage is doing is they have built, with a research provider, they have built a reporting technology where when these employees of theirs have an intentional conversation with a workforce researcher, that information is, not only is it quantitative, but it’s qualitative data that actually gives reasons, and most important reasons why people will choose to stick around or not stick around or what their recommendations are for improvement, or what their recommendations are for patient safety or a better patient experience, they collect that data and that technology that they’re using to get their data back to both the people that are managing their human capital intelligence, and to the operations people in the field, that data comes back to them instantaneously, so they know at any give point what the immediate pulse of that workforce is.

Steve

So, just so I understand, what it sounds like, if I can describe this, is rather than doing surveys or some method like annual surveys, Renal actually has a third party person, I’m guessing it’s The Work Institute? -

Tom Mahan

That’s correct, yes.

Steve

- call their employees and say, “We’re going to have a third party conversation to take you through a structured discussion about your job satisfaction, engagement, career interests, and then we’re going to provide this information back to the organization”, and that sounds really powerful, I guess a couple of questions though that I have, one is, it sounds expensive. The second thing though is a question is, is there a risk that this is a conversation the manager should be having, instead of a third party organization, or this is something managers are unable to have?

Tom Mahan

Well, there’s a couple of questions in there. One of the questions is, is there a difference in the data that comes from a conversation with the manager and a conversation that comes from an outside objective third party? The answer to that question is yes, there’s a difference, and that the validity of that data, when it comes from an outside third party objective person, tends to work over time, where when you’re looking at the differences between an inside conversation and that answer’s over time, they don’t work – does that make sense? So there is a science that tells us yes, if you’re going to conduct this kind of business intelligence workforce, workplace intelligence, there is an advantage to using an outside objective third party, because the answers that you get from internal are very different from the answers you get from the outside objective.

Steve

Yeah, which I think is what we would do, the reason people do employ these surveys, and you’re saying, let’s just take that one step farther beyond just doing a survey, if you actually talk to a person who’s trained to interview effectively around these topics, the employers will really open up and people always talk on the surveys, the real valuable information is the written feedback, well you’re getting nothing but written feedback in a sense.

Steve

Can you give an example of some information that’s been gleaned from these interviews that was a real “aha” for the company, for reducing turnover, that would not have been picked up in a survey?

Tom Mahan

I tell you what, let me take us out of the world of Renal Advantage for a second, and let me talk about an anonymous company, is that all right?

Steve

Yeah.

Tom Mahan

Incidences of sexual behaviour, people talking about theft, fraud, abuse that’s going on in the organization, and that could be the theft of soap suds from a retail store, or the fraud, the incredible amounts of fraud that are going on today related to Medicare billings, those are the kinds of things people are able to present.

Other things that we’re able to capture are, what is their perception of what’s going on in their current ecology, as it relates to occupational opportunity? “How long do you plan on, when do you plan to look for a new job?” “Well, I plan on looking for a new job within the next three months.” “OK, what is it that’s causing you to look for that new job?” “Well, you know, these things are going on here.” “OK, well what else, what else, what else?” “Well, OK, this, this, and this.” “Well of those things, what’s the most important?” “Well, you know, if my supervisor would just pay a little bit of attention to me, I would probably be perfectly content sticking around here.” Well, we can capture that information, and we can get that back to the organization and we can get it back quickly. We’ll also do it confidentially, because we’re looking for grouped data, we’re not going to violate the experience of the single employee, we’re going to start looking for trends in that employee population, so that the company again at the local level can figure out what needs to be done.

Steve

So let’s have a quick question on it, the key to this, I think, is in between, somebody says, one, I’m thinking of leaving, and then be able to probe, well why, what’s leading to you, you get much richer information, how quick are people to open up? Do you have to do these interviews for a while, do people trust that I can speak my mind in this, and it’s not going to hurt my career? How do you get people to open up?

Tom Mahan

Yeah, there’s two pieces to that, first of all we do let them know that it’s confidential, certainly if there’s a fraud or an abuse issue going on, we will let them know that that will have to be disclosed. The big key to that is the employer trusting the employee, the big key is employer trust, and what that means is that when employees provide this kind of disclosing information, and we collapse it, and we put together these meaningful useable reports for organizations, it is critical that the organizations then, either through The Work Institute, or through their own communication vehicle, then communicate back the employee population, that this is what the employee voice is saying right now, here are all the problems that are identified, here’s what we’re going to work on, here’s the problems you identified that we can’t work on right now, but we’ll get to them when we can, here are the strengths, and basically communicating back, helping people know that their voice is heard, and that they respect and honor and trust that employee voice. There is the first key to increasing employee participation, and a response rate.

Steve

So the longer the system is in place, the more effectively I guess is people do realize this is a safe way for me to express my views, or make a difference?

Tom Mahan

Absolutely.

Steve

Now, one thing I’m sure that people are thinking about, wow, this would be great, I’d love to have a third party coming in and interviewing all my employees, and thinking, “But my goodness, this has to cost a lot”, and my question, I’m sure you get that question, how do you justify the expense? Because certainly this is going to cost more than just having people fill out a survey?

Tom Mahan

There you go, and that’s exactly correct, we’re able to capture much more personal, much more occupationally-relevant information from these people, and put it in categories and provide that information back to the workforce, turning into intelligence that people can use to operate their business.

Tom Mahan

Well, the bottom line answer to that is, that if it costs more than it provides, don’t do it. That’s the core issue, so then what you’re getting into is, what does The Work Institute do to, are we just selling a gig? Are we just providing a service? – absolutely not, we have got to help them understand the business case, and help present to people, and primarily the buyer primarily is the HR organization, we need to be able to share with them exactly what their current cost models are, where are those human capital costs that are manageable, meaning when properly managed, will increase profitability, meaning that productivity advances, when organizational dollars produce more profit with the same or less expense.

Steve

Well yeah, it sets an example, I would just say the example of turnover is a good one, to say in reality, especially dealing in nursing, if you can reduce turnover by 2%, or 3%, that the bottom line impact’s huge.

Steve

It is, and then willing to invest in that to create that, which goes back to the point you said, this very innovative process.

Tom Mahan

Absolutely.

Steve

With things like theft or fraud, if you can reduce these things very slightly, there’s huge benefits?

Tom Mahan

Yes, and they tend to stay, there’s some great science around, there’s a predictability to people’s expression of intent to look for new work, and actually leaving, so if you start looking at this through a forward mirror, and we’ve got a sense of the percentage or the dollars, more importantly the dollars, that are involved in people’s intent to exit affiliation with that organization, then the cost of intelligence is easily managed within the context of saving all of those manageable human capital costs that they’re at risk of.

Steve

Well I think this makes sense, so you think a little bit about it, companies invest in having customer service or salespeople fly out and meet with customers one on one all the time, spend lots of money on it, because they believe that drives higher sales, which is correct, spending all that money on travel, that people meet directly with customers drives higher sales, a little bit you’ve taken it sounds like that philosophy, and saying, it also makes sense to have good relationships and conversations with your internal employees, because that drives higher productivity and retention?

Tom Mahan

Absolutely.

Steve

You really have to believe there’s value in this conversation?

Tom Mahan

You’ve got to believe it, and we’ve got to constantly violate this conspiracy of politeness that we’re living in. I’ll give you one – engagement, we keep talking about employee engagement – who cares? We keep living in employee engagement thinking that we’ve got to get engaged employees, and what we do is we keep victimizing our employees, when the fact of the matter is, what we’ve got to figure out is how to convert our organizations into engaged employers, especially in environments where employees still have a choice, healthcare being one of those places, between now and 2012 we’re going to go back on a ramp up of specific occupations, there being an absence of enough people to do the work that needs to get done, right? Well we don’t need to be talking about employee engagement without first confronting the issue of employer engagement, and employers need to be the ones that are in the engagement seat right now, they need to be working hard to figure out what they need to do, what kind of conditions they need to create, so that that employee chooses to exercise their occupational purpose at their organization. Does that make sense?

Steve

Yeah, it does, let’s say the focus should be on how’s our company reaching out to people, not trying to get the employees to reach out to us, we need to reach out to them.

Tom Mahan

That’s exactly right, we need to quit laying the blame on the employee, we need to start assuming competence and we need instead to be in the business of creating those conditions in the organization that support an individual’s choice to deliver their competencies in our organization, so it’s about employer engagement.

Tom Mahan

As long as when we’re thinking of investment, that we’re thinking of something that has a return, we’re not talking about a cost, that kind of investment in employees because there’s a return.

Steve

Right, absolutely, that makes lots of sense, I think, and part of that is having to believe that in fact we can, there are certain investments that, if we do it, it will lead to a higher employee return, such as really understanding what employees what from their job, which as you pointed out, you can’t just get from doing a survey.

Well Tom, this has been a fascinating conversation, I think, you’re definitely exploiting a very aggressive, but sounds like effective, approach to employer engagement, going out and reaching out to employees. I’m sensitive to your time, but before we leave, are there any last comments or suggestions or thoughts that you have for our audience?

Tom Mahan

I just think that, especially today, it’s real easy for companies and people to be beating themselves up, and there really are some very good things that are going on out there right now, I think there are some things that are scary, that are probably additional conversations related to legislation that’s pending out there that’s going to cause the workforce to do some pretty significant changes, but I think especially right now, and especially if we are talking to a talent management community, sometimes what we don’t need to do is just the same old stuff.

Right now what we need to be doing is communicating back to our employees that we’re listening to them, that we’re hearing them, and we need to be communicating back a lot of the good news that’s going on in our organizations right now, it’s not just the time for shooting people, it’s also a time to celebrate the fact that there’s a lot of good stuff going on.

Steve

Yeah, and we’ve got good news just today, right? – newly laid-off workers filing applications plunged to the lowest level in 14 weeks, that report came out yesterday.

Tom Mahan

Good, well here’s hoping that we’ve rounded the corner, I hope.

Steve

Well, me too.

Tom Mahan

Well, Tom, thank you so much for appearing on People Performance Radio, and again we’ve been talking with Tom Mahan of The Work Institute, and hopefully have a chance to get you back on, maybe for a future show, and I’m sure that you’re learning more all the time, just by the virtue of the kind of work that you do.

Steve

OK Steve, I appreciate it, and we sure appreciate what People Performance Radio’s doing.

Speaker

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