Leadership Barometer 40 Turnover

March 2, 2020

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 often have a turnover rate of only 2-3% in an entire year.

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 cultures.
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, often 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.

Bob Whipple, MBA, CPLP, is a consultant, trainer, speaker, and author in the areas of leadership and trust. He is the author of: The Trust Factor: Advanced Leadership for Professionals, Understanding E-Body Language: Building Trust Online, and Leading with Trust is Like Sailing Downwind.


Leadership Barometer 36 Organization Development

February 3, 2020

OD is short for Organization Development. This is not a new term. Behavioral scientists have been writing about Organization Development for over 40 years. The science has evolved into many different approaches all aimed at the same objective: to enable massive improvements in organizational performance through specific and planned interventions.

I have been involved with hundreds of OD efforts over the past decades. Some of these have resulted in the desired improvement. Some have not. In this article I will reveal some green lights, some caution (yellow lights), and some things to stop doing, or red lights.

Let’s review four major types of OD interventions (there are others, but they are usually variations or combinations of these four):

1. Action Search
2. Appreciative Inquiry
3. Future Search
4. Whole System Intervention

Although the objective of each of these techniques is the same, the viewpoint and methodology for each is different. I will give my personal views of the strengths and problems with each method from my experience. All of these methods can work. The trick is to match the leadership style and organization culture so that the one selected has the best chance of success in a particular case.

Most OD work is performed with the assistance of trained facilitators. They have the professional training to lead groups through the chaos of change to arrive at the objective. Managers who attempt a “do it yourself” approach to OD work often create more turmoil and make things worse. This is especially true if the leadership dynamic is part of the problem (which is usually the case).

OD work is tricky. It requires the skill of someone trained in this field. Headstrong managers who decide to undertake massive organization change without help are like critically ill patients trying to remove their own appendix. It is not a smart strategy. The flip side is that the effort needs to be owned by the manager rather than the consultant. Leaders who abdicate their responsibility to be the spiritual leader of the organization pay for it with lower trust.

Action Search

Most organizations contemplating an OD initiative, do so because they are not satisfied with how things are going. If the current trajectory of business is meeting or exceeding goals, there is little impetus for change. The Action Search approach takes on a somewhat negative spin from the outset. The idea is to determine what is wrong and fix it quickly.

The first stage is to gather data. What areas of the business are falling short? How can these be changed to perform better? Unfortunately, many efforts using this technique become “witch hunts” where management looks for scapegoats. The process becomes one of uncovering ugly issues, followed by defensive tactics by those in charge.

Most of us have participated in this type of intervention. It takes place on a regular basis in some companies. Ask yourself how successful these programs have been in your experience. Do they produce positive change, or simply mask more underlying issues while creating interpersonal chaos? My experience indicates this technique should be used only under very tight constraints with ground rules supporting solid values. That does not happen very often. Hence, using Action Research has a real potential to backfire if not managed extremely well.

Appreciative Inquiry

This approach is the mirror image of the “action research” technique. The process starts by asking what is working well. Groups focus on what is going right rather than what is going wrong. The idea is to find ways of doing more of the right stuff, thus providing less reinforcement for doing the wrong stuff.

This is a much more pleasant process. It feels good to focus on strengths. It also provides a benchmark for improvement. The danger is that groups who are failing miserably can deceive themselves into thinking all they need do is clone the few bright spots to succeed.

I witnessed an example of this, years ago, and it was ugly. One business unit was on the verge of extinction, so they did a three-day exercise in appreciative inquiry. By the end of the exercise, they were celebrating, dancing, and singing about their wonderful opportunities while they were actually going out of business. Six months after the crepe paper, helium balloons, high fives, and “jive dancing,” they were all looking for new jobs.

I believe appreciative inquiry can be much more powerful than action research, but it needs to be tempered by reality. A combination of both methods can avoid a kind of “Pollyanna” view of reality.

Future Search

In this process, the focus is on the vision rather than the current state. The idea is to get groups engaged in defining a compelling view of the future. When compared to the present, this allows clarification of the gaps between current practices and organizational goals. Outstanding vision is the most powerful force for all individuals and organizations. Here are some comments on vision from my book (Whipple, 2003, p27).

Without a well-defined vision, the organization has no true direction. It is like a ship without a rudder, sailing around at the mercy of the wind, hoping to find a safe port with little chance of reaching one. Creating vision is absolutely essential for any group because it gives a common direction and provides a focus for energy.

Not all vision statements are helpful. Some are relegated to plaques on the wall and ignored. This is a tragedy because an uninspiring vision breeds apathy and is worse than no vision at all. If people point to the vision statement on the wall and say, “that is where we are supposed to be going but they don’t act that way,” you are in trouble.

Getting a great vision is not a 15-minute exercise. Some groups spend months working on developing a good vision statement. The process can get convoluted and burdensome if not handled correctly. If you are adept at facilitating group discussions, you may conduct this yourself.

If not, a professional facilitator would be worth the investment. As the leader, even if you feel qualified to lead the discussion, you still may want to hire an outside person so you can become one of the people developing this material. The danger if you lead the discussion is that you could influence it too heavily.

In general, if a leader brings in a consultant to facilitate a discussion or to assist with a particular instrument or skill set, there is usually a high value.

If the consultant is brought in to get into the trenches and do the dirty work of leadership, it is often a disaster because the consultant can undermine the leader. The leader calls in a consultant and says, “Things are a mess around here and I’m under a lot of pressure. Performance is horrible recently and morale is way down. I haven’t time to fix the problem because I am overloaded just trying to run the business and I have to attend all these management meetings. I need you to assess what is wrong and recommend a program to get back on track. If my team buys into your recommendations, we will let you handle the program.”

This leader probably has lost the ability to lead the organization effectively. As the consultant mucks around trying to understand problems, significant negative energy is unearthed but the consultant doesn’t have the authority to fix these issues. Meanwhile, the leader is “busy running the business,” and being micro-managed by superiors. Morale and performance go down even further until, finally, the leader is simply forced out.

This is why it is important for the leader to be the driving force in creating a vision for the organization. It cannot be delegated to a consultant or even a high-ranking lieutenant. The leader is responsible for making sure the vision statement is clear, compelling, memorable, actionable, and real.

Key ideas for developing a good vision statement:

• Most importantly, make sure your vision tells everyone where the organization is going. A nice sounding phrase that doesn’t have pull makes a poor vision. For a football team “We will be number one in the league within 3 years” is a better vision than “We will improve our position in the rankings every year until we become the top team in the league.”
• Avoid grandiose sweeping statements that are too broad. “We will become the best in the world at computer technology” would be too general and vast for a good vision statement. A better example might be “Our superior microchips will gain 90% market share with computer manufacturers in 5 years.”
• Make sure people can connect their everyday activities to the vision. “Every interface is a chance to bestow great customer service” would allow everyone to view daily activities with customer service getting top billing.
• Keep it short and powerful. Avoid long lists of items that sound good but don’t create a picture. For example, being “trustworthy, loyal, helpful, friendly, courteous, kind, obedient, cheerful, thrifty, brave, clean, and reverent” may be a good motto for the Boy Scouts, but it would make a terrible vision statement.
• Select colorful words that inspire rather than describe. “Our greeting cards melt the heart and transform the soul” would be superior to “Our greeting cards are better because they make people feel great.”
• Keep it short. The fewer words the better. “Absolutely, positively overnight” is better than “Our packages are guaranteed to arrive by the next day or your money back.”
• Use special words to emphasize your most significant point. “We will never, ever, run out of stock” is better than “We promise to keep our customers needs met by always having stock on hand.”
• Don’t try to be abstract or cute in order to grab attention. “We have the softest software in the nation” might be a slogan helpful on Madison Avenue, but it makes a lousy vision. Instead try “Software delivered on time, every time!”

The initial thoughts often contain the seeds of the eventual finished product. Craft these thoughts into words and images. Sometimes a picture or logo can be enough to communicate a vision, like the Rock of Gibraltar for Prudential Insurance. Other times, it can be a slogan, such as Wegmans Market’s “Every day you get our best” or General Electric’s “We bring good things to life.” The expression needs to have “pull”; it must provide forward momentum.
Communicate the organization’s values and vision to everyone in it. Do this well and often, as it forms the basis of everything to come. Frequently demonstrate your alignment with the vision by naturally working it into conversations. You might say, “Well, let’s call the customer and tell them about this situation. After all, our vision is to put the customer first.”

Whole System Intervention

This is a kind of zero-based approach to OD. In this case, the activities of the organization are viewed through a “systems” approach. The emphasis is on getting a critical mass within the organization to redefine the business. Processes become the focal point for redesign efforts. This is less threatening than the action research technique because of focuses on the “what” and “how” rather than the “who.”

The challenge with a systems approach is that can get pretty complicated. In systems thinking, we try to understand the interrelations between things. This is opposed to the usual linear way of thinking – If we do one thing it results in an effect. In systems thinking we need to understand not only the direct effect of actions but also the side effects. If leaders are unhappy with performance, they need to look at their system because it is perfectly designed to give exactly the result they are getting. Trying to untangle what is hurting the system and streamline the process for a better result can get convoluted.

The four OD interventions described in this article are the cornerstones for organizational improvement. They need to be applied with care and judgment to be effective. When OD activities go awry, the “cure” is often worse than the “disease.” With the health, or even survival, of the organization at stake, it is important to do this work carefully with the assistance of an expert.

The preceding information was adapted from the book The TRUST Factor: Advanced Leadership for Professionals, by Robert Whipple. It is available on http://www.leadergrow.com.

Robert Whipple is also the author of Leading with Trust is like Sailing Downwind and, Understanding E-Body Language: Building Trust Online. Bob consults and speaks on these and other leadership topics. He is CEO of Leadergrow Inc. a company dedicated to growing leaders.


Leadership Barometer 18 Handling a Crisis

October 1, 2019

There are hundreds of ways to test the greatness of leaders.  Here is one of my favorite measures.

Handling a Crises

One easy way to measure the caliber of a leader is to observe him or her in a crisis. Great leaders take command, but do so in a special way that weaker leaders try unsuccessfully to emulate. In the first place, they have the ability to diffuse internal crises and avoiding a kind of mob scene where workers gang up on the leader.

The distinction begins even before the crisis is evident. It is a mindset. Average leaders take rest when things are going smoothly. They focus on the little fires and beat them down so they do not spread. Other than that, “if it ain’t broke, don’t fix it” is the mentality. We might as well enjoy the way things are going, since it is smooth sailing.

By contrast, the great leader sees the world as a series of calm times and storms, some of them hurricanes. The calm times are opportunities to sharpen our skills and reactions for the next storm. For sure, it will come, so we ought to be looking at our past successes or failures in prior storms to get ready for the next one.

In business, the character or timing of the next storm is far less predictable than in nature. For example, in late summer, we can expect several hurricanes to crop up in the Atlantic and work their way toward the mainland U.S.. Once they form, computer models can predict with various levels of accuracy if, when, and where the storm will come ashore.

Most crises in business are less predictable. Some trends can be tracked, but usually the big disruptive events are things that are impossible to forecast. For example, if we are manufacturing aircraft, we can plot the seasonality and long-term trends, attempting to anticipate peak loads. Then, a fire in the factory causes a crisis that is a total surprise. The impact of the crisis on our business dwarfs anything we had been planning based on market projections, yet we are forced to deal with it immediately.

Once the crisis hits, the average leader becomes unglued for a while. There are so many things to do at once, and triage in the business world is often a neglected skill, so the leader wonders whether to call a meeting or let the front line people work on the most urgent issues without interruption.

Communication channels have not been set up to handle the chaos, so instructions or intentions come through as garbled signals. Think of the first responders in the World Trade Center after the first tower fell. Instructions were not getting through to all responders, and many additional lives were lost because of it.

The average leader somehow manages to deploy an effort to fight the situation, but it is often meager compared to the proportion of the disaster. People wonder why there was not more specific leadership coming through when it was needed most. When a leader appears to be unprepared for the disaster, then there is a loss of trust.

By contrast, the great leader has refined the procedures for communication and action ahead of time. Even though the exact nature of the crisis is not known, the preparation phase is an ongoing high priority. There are often mock “fire drills” to practice damage control and hone communication procedures to be ready in case the real thing happens.

For example, a CEO might arrange to distribute a fake internal news release that the toy being sold by his chain was causing deaths in children. This would force people to react with everything from recalls, to insurance negotiations, to government briefings, to press statements, etc.

After practicing the mock disaster, they could hold a debrief meeting and might determine the internal communication between executives was practically nonexistent during the crisis. All of the managers were doing their best to keep a lid on the damage, but the total effort was not well coordinated. This debrief would allow the team to design an information dissemination process, so if a crisis ever surfaced, they would be in a far better position.

I know one college president who had to endure three different embarrassing public issues in just a few weeks time. None of the problems were caused by the president, and none of them could have been predicted, yet he had to deal with them in a way that upheld the values of the college and gave all stakeholders confidence that the institution was not out of control.

If you are the head of an organization, you need to be prepared for these kinds of disruptions. You know there is a comet or two heading your way, you just don’t know specifically what it will look like or when it will arrive. Warren Bennis, my favorite all time leadership author, put it this way:

Leaders learn by leading, and they learn best by leading in the face of obstacles. As weather shapes mountains, so problems make leaders.

The best leaders look at these kind of crisis situations as a way to test themselves and their teams.  The best advice is to keep practicing your response and communication methods. You cannot anticipate the nature of the comet that is heading your way, but you can prepare your team to deal with anything.


Trust versus CYA

October 19, 2013

Conflict3We are all familiar with the phenomenon of playing CYA at work. There is the potential for something negative happening in the future and we take care to document the problem and give our recommended solution to it.

We put the information in an e-mail that we send out to a manager involved in making decisions. The idea is that if the dreaded situation comes up at a later date, we can produce the e-mail and say, “I told them that this would happen and even suggested the fix, but nobody listened to me.”

This is just one form of CYA activity, and I offer it as an example to illustrate why this form on one-upmanship hurts an organization because it lowers trust. It is one thing to say what “they should do” about a potential problem. Words are cheap, and one can speculate that we should spend $100K to provide additional reinforcement to the foundation of our building in case of a future earthquake.

Putting that information in a note to the manager puts her in a difficult spot. Clearly we do not have $100K lying around with no purpose so we can just shell out the cash. The risk of an earthquake may be pretty low, but it can always happen.

The reason the CYA note lowers trust is because the manager realizes if she does not take the suggested action and there is an earthquake that results in several workers being killed, then she is going to be blamed, but if she does reinforce the walls and there is no earthquake, the money will be spent only for insurance.

The manager is in a no-win situation, and that lowers trust in both directions. The manager has less trust in the worker because he is trying to entrap or usurp the leader’s judgment. The worker has lower trust in the manager because there is perceived need to document the suggested remedy for future reference.

I have been in a situation where workers wanted me to purchase an entire new facility for close to $1Million because they believed the current one might someday fail. My response was to have the facility thoroughly inspected to determine if there was a real risk and how high that might be.

The engineers came back that the risk was real, but I could test for the robustness of the facility each year, and that would detect if things were deteriorating beyond a safe level. Having that inspection was better than nothing, but it was not totally foolproof, so the workers wanted to just scrap the old facility and purchase a new one.

That expense was difficult to justify because the product being made was near the end of its life, so a new facility would never pay off.

Caught between a rock and hard place, I asked the workers to understand that the minute risk was made manageable with the yearly inspection and they need not worry, but if anything ever happened in that facility, I knew I would be held accountable, so I tried to find another way to reduce the risk.

The engineers said that if we slowed down the equipment it would probably never fail or if it did, the failure would be detectable so nobody would get hurt. I decided to run the operation at a reduced speed as a compromise position, but the workers were not happy with it.

The series of discussions, notes, and meetings did serve to lower the trust that the workers had in me. Their point was that if I truly cared for them as people, I would spend the $950K to upgrade the facility even though there was no economic payback for it. It turned out that we shut down the complex less than a year later because the volume of demand for the product decreased, but the reduction in trust was something I had to live with.

The antidote for this phenomenon is to listen to the whistleblower and not ignore the request.

That was my approach in this case, but it was not an easy pathway to a decision. Trying to figure out what to do in a marginal case like this is what keeps managers up all night. Finding the right balance between trust in the system and protection from all forms of potential problems can be a very tricky area for managers.

Spending money to prevent any potential for disaster is a never-ending proposition. It is like buying insurance policies. You can never be fully protected from all hazards, but you can go broke trying. The best approach is to involve the impacted people in all aspects of the business, including protection from possible but highly unlikely scenarios.

If the workers realize that any tradeoffs made in the operation have a direct impact on them as well as the business, they can become part of the decision making process. This usually increases the level of trust for two reasons 1) it improves transparency, and 2) it lets people be part of the process so they are aware their managers care about them.