Short Staffing

March 15, 2014

two doctors discussingA student in one of my MBA classes made a remarkable statement the other day. She wrote, “Short staff think only inside the box.” The unusual wording made an impact, and I decided to write on the concept.

Of course, she was not referring to people of lesser stature. She was commenting on the habitual practice of numerous organizations to run so thin on staffing that they compromise the viability of the business.

Knowing the “correct” level of staff is a tricky business for sure. I have done consulting for organizations where the employees are screaming that they are totally overloaded. Later on, working with these same groups, people would grumble about how most people are not pulling their fair share of the load.

In truth, most organizations get only a small fraction of the discretionary effort inherent in the workforce. My own unscientific estimate is that a typical organization these days manages to extract only about 30% of the capability of their workforce.

Some leaders use the amount of screaming for more resources as a guide to hiring. If the whining is not there, they figure the organization is running too fat.

If people are complaining but toughing it out, they conclude things are about right. If people are becoming ill and if turnover is sky high, they grudgingly agree to put on a couple more people.

Gauging the level of staff based on the complaint level is dangerous on both extremes.

If things get so thin for an extended period, the best people will just leave. If you wait until people whine to hire anyone, then you are probably running a Country Club.

Back to my student’s comment on the impact that running thin has on creativity. I thought her observation was spot on.

You can observe overworked people in numerous venues. According to many students, one typical place to see the stress is in nursing.

According to the Gallup Organization, the nursing occupation is the highest trusted occupation category of all every year since they have been measuring trust in organizations. Yet, nurses are normally so stacked up with critical tasks that they don’t find time to eat let alone try to figure out creative solutions to problems.

I am only singling out nurses because it is easy to observe this situation, in reality the problem occurs in numerous types of jobs.

In an effort to improve productivity, leaders stretch their resources like a rubber band. The problem is that if you do that, eventually you will exceed the elastic limit of the rubber, and it will permanently deform or just snap.

In those conditions, people are going to do the requirements as best they can and not be very engaged in improving the conditions. They become case hardened and bitter.

When people feel abused, they go into a survival mode, which severely limits productivity, so the managers get exactly what they deserve. It becomes a vicious circle.

The antidote is to work on changing the culture so that the current workforce is producing at a multiple of their prior productivity instead of just a tiny percentage higher than the prior year.

That means working on trust rather than forcing existing people to work in a constant state of overload.

It means investing in the resources you have, and maybe even adding some, rather than continually cutting back in an effort to survive. You may survive in the short term, but your long term prognosis is terminal.

When I suggest to leaders that they need to invest in their culture, I often get an incredulous or outraged look in return. “How can we possibly afford to work on our culture when everybody is already at the limit of their capability?”

Well, you cannot unless you change your attitude about how people work. If you would try the alternate path, it would quickly become apparent that the road to long term health and even survival is to have the right level of resources so that you can invest in the culture.


Trust: The First Law

June 22, 2013

Yin and YangAre you dissatisfied with the level of trust within your organization? If so, recognize that you are not alone. Few organizations have achieved a state where they are delighted with the trust that exists. Part of the reason is that trust is a bit like money; no matter how much we have, we usually want more of it. Most of the organizations I see have a significant deficiency of trust that shows up in all kinds of performance issues including apathy, shaky teamwork, poor attitudes, negative morale, low productivity, high turnover, absenteeism, and even revolt or sabotage.

Leaders of the organization point to the symptoms and declare that the employees are at fault for the low trust. The leaders are expending high energy to communicate the vision and values, they are making expectations crystal clear, they are attempting to hold people accountable for performance lapses, they are making sure everyone gets paid on time, so the problem of low trust must be with the employees or first line supervisors, right? Not necessarily!

One critical nature of trust is that it is reciprocal. When you extend more trust, it reflects back to you in nearly all cases. It is the same phenomenon we often hear about with people participating in any activity: “You get out of it in proportion to what you put in.”

I have coined what I call the “First Law of Trust.” If you are a leader, and are unhappy with the level of trust in your organization, the first thing to do is find ways to show more trust in your employees. There are numerous other things that are important to do, which I have written about in other articles, but the first thing is to extend more trust to others. It seems impossible to some leaders who complain, “But how can I trust them when they prove daily that they cannot be trusted.” That attitude is at the core of why there is low trust to begin with. It is a vicious cycle.

To break the cycle, leaders need to find ways, even small ways at first, to demonstrate higher trust in employees. This will seem unnatural to both the leader and the employees at first because of the history of behaviors and reactions in the past. Leaders feel like extending any kind of trust is stupid until the workers start behaving in trustworthy ways, and workers believe the leader must be up to some kind of trick to force them into more work.

I discovered the reciprocal nature of trust many years ago when my daughter was very young. She often wanted me to “twirl” her, which involved grabbing her wrists and carefully spinning around backward (gently at first to not pull her arms out of the sockets). She would fly out horizontal, hair flying in the wind, just loving it. When I would put her down, there was always the familiar refrain “AGAIN.” So I would twirl her again, this time longer and farther.

Upon remembering the numerous times I twirled her, I realized that I had never dropped her. The reason is that her unconditional trust in me required me to reciprocate in a way that kept her safe during the process. So it is with everyone, if we extend trust to them, they will be inclined to show more trust in us.
The way to break down a dysfunctional culture of low trust is not to put the screws to people with additional demands and rules. Try the other approach of extending kindness and trust and see if the positive reaction you get is well worth the risk of extending more trust. If that works, then you will be encouraged to add more trust to others, and you will reap more back toward you.

A common question I get is, “How do I go about showing more trust in them, especially when they do not deserve it?” The answer is to be creative and find little ways to begin to show more trust. These small gestures may seem dangerous, or trivial, but they usually work to grab people’s attention. Here are a few examples of typical actions a leader might employ to demonstrate higher trust.

• Change the coffee money fund from a locked box to an open container.
• Stop walking around the shop floor five minutes before quitting time.
• Let the employees select the menu for the picnic.
• Stop micromanaging and let people use their initiative.
• Remove a needless restriction on a dress code.
• Publicly eliminate a procedure that is no longer useful.
• Cancel a report that nobody reads.
• Quit requiring proof of purchase for small petty cash items.
• Unlock the supply cabinet.

These are just a few examples of actions that could be taken to extend more trust in people. I am sure that if you think creatively, you can identify dozens of other ways to show more trust, and many of them will not involve a high risk of loss. If you try this technique, you will generally get very positive results. In some instances, the prior practices may have the population so jaded that they will be out for revenge at any opportunity, so it may take more creativity and time to develop new patterns.

Remember the first law of trust. It is up to leaders to break the cycle of tyranny and develop a culture where trust goes both ways and grows more robust with time. It takes some courage to change old ways, but the payoff is immense.


Turnover – 7 Tips

October 21, 2012

Is employee turnover killing your company? Turnover is one of the most significant, and avoidable inhibitors of profit. The US national average for turnover usually runs between 2-3% per month, whereas the top 100 companies have a turnover rate of only 2-3% in an entire year (Fortune 2012). In this article, I put a spotlight on the turnover problem and offer some antidotes that are common sense but sometimes not common practice.

For professionals, the cost of replacing an employee is roughly the annual salary of the individual. That means a company with 1000 people, each with an average annual salary of $48K, will lose more than $17 million per year due to turnover. These costs go directly to the bottom line in good times and bad.

Even in periods of high unemployment, turnover is still a problem for most groups. When jobs are scarce, workers may not leave immediately, but they are quietly planning on exiting once the job market improves. One recent estimate is that 40% of workers are unhappy and plan to move within the next year if jobs become available (National Labor Statistics). That would mean a dramatic rise in turnover costs and a significant shift of the best talent from organizations with poor practices to those with stronger reputations.

How can we fight this needless drain? Here are seven key factors that can help you reduce turnover in your organization:

Supervision – When people decide to leave an organization, it is most often the result of dissatisfaction with their direct supervisor. The most important thing to improve is the quality of leadership at all levels. Teaching supervisors and managers how to create the right culture makes a huge difference in turnover.

Unfortunately, when money is tight, the first thing that gets cut is training. Improving leadership at all levels needs to be a continual investment, not a one-time event when someone gets promoted to a supervisory role. Supervisors who are well trained recognize their primary function is to create a culture where people are engaged in the work and want the organization to succeed. These people rarely leave because they are happy where they are.

Compensation – Pay is often cited as a reason for people leaving an organization. Pay may be a factor in some cases, but it is often just the excuse. What is really happening is that the work environment is intolerable, so the remuneration for the grief to be endured is not a good tradeoff. We need to teach managers to improve the trust level within the organization. High trust organizations can pay workers non-inflated wages and still have excellent retention rates. There are numerous examples of this. One of them is Zappos, where they have such a great culture, that when employees are offered $2000 to leave, they do not take it.

In “Drive: The Surprising Truth About What Motivates Us,” Dan Pink points out that the relationship between pay and motivation is not what most people think. He cites several studies that show a pattern where higher pay can actually lead to poorer performance.  Pink advocates paying people enough so that the issue of money is off the table. Then three other conditions, Autonomy, Mastery, and Purpose, will take over as the key drivers to satisfaction and motivation, and therefore, retention.

A better future – Another key factor that causes people to leave is lack of a path forward. Employees who can visualize some pathway to a better future will generally stick around to experience it. Training and development are a key enablers for people to know there is a brighter future. Cross training is a particularly helpful way to have employees feel they are being developed to be more important to their organization. Cross training also helps make the work environment more interesting.

A family atmosphere – If you read about the culture of the top companies worldwide, there are many common themes. One of these is that employees describe their work associates as their extended family. They cherish the relationships with their co-workers. Sure, there will be some squabbles and an occasional lecherous uncle, but the overarching atmosphere is one of a nurturing and caring group of people similar to a family. Who would want to leave that environment?

Freedom – Enabling people to do their own work without being micromanaged is a characteristic of organizations that are good at retaining people. Nothing is more irritating than being ordered to do things in a certain way by a condescending boss who does not really understand the process as well as you do. The ability to use one’s own initiative and creativity to get the job done right helps build self esteem, which is a key ingredient in the retention of people.

Recognition – Knowing that someone cares about you and recognizes your efforts and accomplishments goes a long way toward building employee loyalty. A loyal employee is not out there looking for another position. Instead, he or she is thinking about how the organization’s success can be enhanced through even more effort. The collective muscle of thousands of employees who each feel that way is amazing to behold.

Safety – Many organizations live on the edge of impending disaster. The competitive world has forced legions of companies to downsize on a regular basis simply to survive. When employees witness the revolving door that occurs as a result of things they cannot control, you can’t blame them for wanting to find a safer mode of transport through their career. If the other suggestions above are followed religiously, then the organization will have a lower risk of having to lay off people, so they will enjoy a lower turnover rate.

These seven factors are not an exhaustive list, but I contend that groups who focus on these seven conditions and understand the dynamics will have consistently lower turnover rates, saving millions of dollars each year. That advantage is sustainable and scalable. It just requires leaders at the top who are skillful and relentless at applying these principles.


13 Keys to Reduce Turnover

April 4, 2010

The problem of employee turnover is a conundrum for any organization. One would think that during times of high unemployment, the turnover rate in most organizations would be at an all-time low. The reality is far from that. While there is a lot of variability from one industry to another, if you take all industries together, the total turnover rate in 2009 was a whopping 15%.

We know the cost of employee turnover is more than the annual salary of the individual lost. In fact, most estimates place the total replacement cost at roughly 150% of the employee’s salary. A quick calculation shows that for a company with 1000 people who have an average annual salary of $50,000, the annual cost for employee turnover adds up to over $10 million. These costs go directly to the bottom line.

Reducing employee turnover is not rocket science; however, many companies struggle with very high turnover year after year. The common denominator of high turnover in organizations is poor leadership. Therefore, organizations that stress leadership development have an inherent advantage that can mean the difference between survival and extinction.

Let’s examine several ways an organization can drastically reduce the level of turnover at very low cost.

1. Develop People – Organizations that focus on employee development enjoy higher employee satisfaction, which leads to lower turnover. If each employee has a concrete development plan that is reviewed at least annually and contains a variety of growth opportunities, the employee will have little reason to look for greener pastures elsewhere.

2. Recognize Good Performance – Reinforcing people for doing good work lets them know they are appreciated. Tangible and intangible rewards are a great way to show management appreciation for workers who excel. This improves morale if done well. However, understand that reinforcement can be a minefield if it is not handled properly. Make sure employees receive sincere appreciation by management on a continuing basis.

3. Build Trust – By extending trust to employees, leaders demonstrate their willingness to support them. This pays off in terms of higher trust on the part of employees toward the organization. There is a whole science on how to build trust. By creating a real environment, more trust in an organization will lead to lower turnover.

4. Reduce Boredom – Employees who are underutilized, tend to get bored and restless. If there is a vacuum of activity, people often get into mischief. It is important for managers to craft job duties and responsibilities such that people are actively engaged in the work every day.

5. Communicate More – In nearly every corporate survey on employee satisfaction, the issue of communication surfaces as either the number one or number two complaint. Communication needs to be ubiquitous and consistent. It is not enough to have a monthly corporate news letter or an occasional town hall meeting. Communication needs to take many different forms and be a constant priority for all levels of management.

6. Cross Train – Employees, who have been trained on several different jobs recognize they are of higher value to the organization and tend to be less inclined to leave. Along with the pleasure of having more variety of work, employees appreciate the ability to take on additional skills. Having good bench strength allows the organization to function well, even during times of high vacation or illness.

7. Don’t Overtax – During lean economic times, companies have a need to stretch resources as much as possible. Many organizations exceed the elastic limit of what employees can be expected to maintain long term. This leads to burnout and people leaving for health reasons or just plain quitting in disgust over the abuse. It is important for management to assess carefully how far resources can be stretched, because going beyond the elastic limit guarantees a high level of employee turnover. I believe this rule is habitually violated in many organizations, and they pay for it big time. Stretching people too far is a false economy. If you organization is guilty of this, print out this article and put it on the bulletin board.

8. Keep It Light – When managers apply constant pressure to squeeze out the last drop of productivity, they often go over the line, and it becomes counter productive. If leaders grind people down to a stump with constant pressure for perfection and ever higher productivity, the quality of work life suffers. Employees can tolerate a certain amount of this for some time, but eventually they will break down. It is smart to set very high goals, but very important to have employees believe the stretch goals are attainable. One good way to provide this assurance is to have the employees themselves participate in setting the goals. The best companies find ways to work in a little fun somewhere, even (and especially) in high pressure situations.

9. Feedback Performance – there needs to be a constant flow of information on how all employees are doing in each area of the organization. People who are kept in the dark about their performance become disillusioned and cranky. The simple kindness of letting people know how they are doing on a daily or weekly basis pays off in terms of lower turnover.

10. Train Leaders – All levels of management and supervision need to be highly proficient at creating an environment where the culture is upbeat, positive, and has high trust. This does not happen by accident, or simply by desire. It takes work and lots of emphasis by senior leadership to make sure that there are no weak links in the management chain. In most organizations there is a dud of a manager somewhere between the well intentioned and talented top brass and the worker bees. The result is that great objectives, ideals, and processes are morphed into oblivion by the time they reach the shop floor. The antidote is to improve leadership effectiveness at all levels and remove any dud who is incapable of changing.

11. Hire Right – Putting the right people into the organization at all times is extremely important. One bad apple can really do a lot of damage. Focus on the selection process with some behavioral attitude surveys and make sure you do your homework with previous references.

12. Create Ownership – When people are actually part owners of the enterprise, they have a lot more stake in sticking around. This can be done in hundreds of ways from stock options to including employees in strategy sessions.  Always seek to let people have a real stake in the action. It pays off.

13. Empower People – Actually the correct way to word this is create an environment where people are happy to engage their power for the benefit of the organization.

These are 13 ways in which leaders can lower the level of turnover in any organization. The magic here is not any new discovery; but the consistent application of these principles will make a huge difference in any organization. The good news is that the items mentioned above are not very expensive. They are all common sense – too bad they are often not common practice.

If you study the best companies to work for worldwide, you will discover they have a much lower turnover rate than the average numbers. I believe having the kind of culture where employees are locked in with no desire to leave for any reason is a sustainable competitive advantage. It is easy to achieve if you follow the 10 rules listed above.


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