2012
Five “must haves” for effective change management
Most of us want to work for a “Good Company” – one that prospers because it is a good to its employees, customers, and the environment. But most of us also know how challenging it can be to make the necessary changes.
Over the past decade, we have learned a great deal about what it takes to get (and stay) good, both from companies that have succeeded, and maybe even more importantly, from those that have failed.
There are five components essential to successful change management:
- A CEO who “gets it” and commits the resources necessary for change to occur. If your CEO doesn’t fit this description, then this is where your change management work has to begin. You have to make the case for change in the language of the “C suite” – by presenting a compelling business case for change, based in evidence and hard-nosed analysis.
- Managers who are skilled in the behaviors needed to make change happen from the ground up. Achieving this requires a systematic, disciplined approach to change management. (Remember that “hoping” is not an effective change management strategy!)
- A performance appraisal system that supports the desired change. If you want people to change their behaviors, then that message needs to be reinforced through your performance appraisal system. For example, if the only performance that is appraised and rewarded is achieving short-run business results, then that is what will get done.
- Smarter measurement systems. Ditto on #3 above. In order for an organization to change, the metrics it uses to measure its progress must include some that focus on the desired change. In particular, they must go beyond short-term measures of productivity and profits.
- An HR strategy that supports all of the above. Change is about getting people to behave differently. As a result, HR has a critical role to play.
Change management is a subset of human capital management. Those organizations that build this competence are better positioned to be the good companies that will survive and prosper for years and decades to come.
(This post was sent this month via email to subscribers to the McBassi & Company monthly newsletter.)
2012
How to create more value from your employee survey
In case you missed it – in a recent Talent Management article, Good Company co-authors Laurie Bassi and yours truly (with discussion from Larry Costello as well) explore how your organization can create additional value from your employee survey.
2012
3 steps to help your company navigate the new economic era
In my latest guest blog post for ASTD, I summarize what I see as the most important elements of the rapidly-changing economic environment and explore practical implications for companies, including 3 concrete steps every company can take right now.
2012
Proposed human capital reporting standard released
Are you an investor who’d like more (and better and more comparable) information about companies as employers? You may indeed have more to chew on in the coming years.
The Society for Human Resource Management (SHRM) Investor Metrics Working Group has released a proposed voluntary standard for what information publicly-traded companies should release about their human capital. It is now open for public comment.
Good Company co-author and McBassi & Company CEO Laurie Bassi is chair of the workgroup, and discussed the standard in an article on CFO.com.
2012
Drag race
Work is a drag in the U.S. right now.
It is literally dragging down American’s well-being, according to the latest numbers from research firm Gallup Inc. This is so even despite evidence that both the economy and hiring are picking up. Still, there’s a bright spot for employers amid the gloominess. With so many workers glum on the job, companies have a great opportunity to stand out from the pack with a healthy, happy work climate.
The dispiriting numbers I’m talking about come from the Well-Being Index produced by Gallup and consulting firm Healthways. The index is made up of six component indexes: life evaluation,emotional health, work environment, physical health, healthy behaviors, and access to basic necessities. The work environment index, in turn, has four items: job satisfaction, ability to use one’s strengths at work, supervisor’s treatment (more like a boss or a partner), and whether the work environment is an open and trusting one.
From Jan. 1 to Feb. 1, the overall Well-Being Index skidded 0.2 to 66.4 out of a possible “ideal wellbeing” score of 100. Work environment was one of four components overall that fell during the month. All of these declines were less than a point. But work environment is the component that has fallen most since the Well-Being Index began in January 2008. It’s dropped 3.9 points to 47.4. That’s roughly four times the decrease of the second-greatest drop, a 1.1 decline in access to basic necessities. The only other component that is lower now than in January 2008 is physical health, which has slipped just 0.2 points.
And work environment is the component with the lowest absolute score. Life evaluation is second-lowest at 49.6, and the rest are at least 63.9 or more.
Is it a surprise that work is bumming out Americans more than any other factor? Not really. Trust is down after years of layoffs and continued worries about the overall economy. Job satisfaction has taken a hit amid the “work-more economy”—the flip side of the job-less recovery in which many workers have been charged with extra duties. And endless restructurings have weakened bonds with ever-busier bosses.
Given that work makes up such a large part of life overall, it’s probably a fair guess that grim, often grueling days at the office are pulling down Gallup scores in other categories such as physical health and life evaluation.
But there’s a silver lining in all of this for employers. When everybody’s happy across the economy, it’s hard to stand out as an attractive, productive employer. But gloomy times are when a glowing culture can get you noticed and give you a boost against the competition. Positive reviews—whether by word-of-mouth, formal awards or online accolades—attract new talent and help retain excellent employees. And an effective, inspiring work climate can fuel strong, sustainable business results.
What are you doing in this dark work climate? Are you paying attention to employees’ job satisfaction and career goals, training managers to be effective, cultivating trust? Are you creating a workplace that’s not a drag, but which boosts workers’ spirits?
A version of this post originally appeared at Ed’s Work in Progress blog at Workforce.com.
2012
Warrior workforce wisdom
The Golden State Warriors basketball team is about the last place you’d expect to find lessons about smart workforce management. But despite years of lackluster performance and a losing record so far this season, the franchise has some surprising insights to offer.
Let me cop to my bias from the get-go. The Warriors, who play in Oakland, are my home team here in the San Francisco Bay Area. I’ve been rooting for them for a decade or more.
During this stretch they’ve stood out for nothing so much as ineptitude. The team has made the playoffs just once in 18 years. Their talent decisions have been generally awful. They’ve drafted bust after bust. And management has traded away or simply released good player after good player.
The latest, infamous case: Jeremy Lin, who is taking the world by storm as the point guard of the New York Knicks. The Warriors cut him earlier this year in a failed bid to attract a better player at the center position. The franchise has been so troubled that it now has difficulty attracting star talent—two prominent centers declined to sign with the Warriors this summer.
Speaking of the center position, the Warriors stumbled there in choosing to retain and pay their current center, Andris Biedrins, a 7-foot player who has barely been visible on the court much of the past three seasons amid an apparent crisis of confidence.
But despite all these foibles, the team has shown key signs of a turnaround since late 2010. That’s when a new ownership group led by venture capitalist Joe Lacob and film producer Peter Gruber took over. The new owners took a risk in hiring former player and TV analyst Mark Jackson as coach. Jackson is untested as a coach, but has leadership chops as an ex-point guard and as head of a church. Although he doesn’t have a winning record so far, Jackson has shown poise and promise. For example, he avoids criticism of specific players in public while praising their achievements—taking a page from the playbook of successful San Francisco 49ers football coach Jim Harbaugh.
Jackson makes decisions based largely on a 17-year career in the league. But the Warriors as an organization are blending his intuitive approach with the latest in workforce data analytics. Among the new owners is software executive Vivek Ranadive. Ranadive’s company, Tibco Software, makes sense of mounds of data for customers in fields such as insurance, pharmaceuticals and manufacturing. And he’s bring his analytical know-how to the Warriors.
“We have data that tells us what combination of players produces the best results, where you should shoot from and how to defend opponents better,” Ranadive told the San Francisco Chronicle earlier this year. “We can find all kinds of patterns based on the data, and we have very spirited discussions about it all of the time.”
Ranadive is the latest sports industry leader to tap the power of metrics. And he’s got a proven ability to turn basketball thinking on its head. Despite never having touched a basketball until asked to coach his 12-year-old daughter’s team, he led the squad to the National Junior Basketball national championship tournament. He employed a full-court press extensively—a success detailed in a Malcolm Gladwell article on how Davids can beat Goliaths.
To be sure, the Davids on the Warriors have a ways to go to challenge the current Goliaths of the NBA. Teams like the Los Angeles Lakers, Boston Celtics, Miami Heat and Oklahoma City Thunder. But like the Thunder—a team that has blossomed by nurturing a core cadre of young players over time—the Warriors are quietly putting in place the foundations of success.
A key to the team’s success is point guard Stephen Curry. And with Curry, the team recently showed yet another important management quality: restraint. Curry has suffered a series of ankle and foot injuries in the past two years. After his most recent mishap, the Warriors had him rest for all but three seconds over the course of four games. Those four games were crucial to the Warriors chances of making the playoffs this year. Without Curry in the starting lineup, they lost three of the games. But unlike many organizations that are pushing workers to the breaking point these days, the Warriors protected Curry and his foot. The Warriors demonstrated a long-term, rather than a short-term, mindset.
Time will tell if my Golden State Warriors will get back to being a playoff or championship team. But don’t be surprised if it happens. They are showing the workforce ways of a winner.
A version of this post originally appeared at Ed’s Work in Progress blog at Workforce.com.
2012
Apple and Foxconn: beginning to see the light
Apple and Foxconn blinked. And those blinks are big in the shift away from worker abuse—even in low-wage nations—as a legitimate business model in the 21st century.
I’m talking about the way electronics giant Apple and its major supplier Foxconn recently gave into public demands for better treatment of the workers who assemble iPads and iPhones inChina.
Apple said it would invite an outside labor rights group to audit its suppliers, which could lead to problematic factories being publicly identified for the first time. Foxconn, meanwhile, said it would raise salaries for many workers in China 16 to 25 percent, to about $400 a month, before overtime. Foxconn also said it would reduce overtime hours at its factories.
These developments are remarkable. As our writer David Ferris notes in an upcoming Workforce article, “Seemingly overnight, Apple, one of the world’s most secretive computer companies, declared its intention to become one of the most transparent.” Foxconn, meanwhile, is the 800-pound gorilla of electronics manufacturing. It employs roughly 1.2 million Chinese workers, and assembles an estimated 40 percent of the world’s smartphones, computers and other electronic gadgets.
Raising wages by as much as 25 percent is the kind of change that can move the needle. Don’t be surprised if Apple and other electronics products start costing more as a result.
Could Foxconn’s move simply mean Apple and other companies will shift work to still-lower-wage nations? Maybe. But that could be difficult given the thick web of electronics industry suppliers inChina. What’s more, the same forces that pushed Apple and Foxconn to promise reforms are likely to make a low-road labor strategy difficult anywhere.
Those forces can be summed up as technology-fueled people power. People care more about good behavior from the companies in their lives. They are speaking up about their opinions and experiences. And they have the tools to be loud and effective in an era of Twitter, Facebook and YouTube. In the case of Apple and Foxconn, media reports about harsh, dangerous working conditions at factories making Apple products prompted online petitions with hundreds of thousands of signatures as well as coordinated, worldwide protests at Apple stores.
Here’s how the New York Times characterized the effect of an empowered public on Foxconn: “Foxconn has conceded that employees and consumers have gained a sway once possessed only by Chinese bureaucrats and executives at the global electronics firms that hire Foxconn to build their products.”
Foxconn and Apple aren’t alone. Other firms in the past decade that have seen less-than-savory labor and supply chain practices challenged online include video-game maker Electronic Arts, Target and McDonald’s—which recently declared a new policy for pork suppliers after a video about the use of “gestation crates” in the industry went viral on YouTube.
Increasingly, businesses will have to work closely with their supplier to make sure they are humane besides cost-effective. Even the world’s most powerful companies are rubbing their eyes and starting to see the light.
A version of this post originally appeared at Ed’s Work in Progress blog at Workforce.com.
2012
Bad Apple: could the era of exploitation outsourcing be near its end?
Recent scathing stories about working conditions in the creation of iPads and iPhones are a telling moment for Apple Inc. and other global corporations. Could this latest episode of outrage over worker mistreatment at an outsourced factory signal that the age of exploitation outsourcing is waning? I think so.
You’ve probably heard about one or both of the stories that have rattled Apple’s massive customer base and the rest of the public. First, This American Life broadcast the first-person account of Mike Daisey, a self-proclaimed Apple enthusiast who traveled to China to see how Apple products were made—and was horrified at what he found.
Then the New York Times published a long story about harsh, dangerous working conditions at factories making Apple products. Daisey says he met with workers whose hand joints have “disintegrated” from repetitive work, while the New York Times piece centered on the tale of a young employee killed in an explosion of aluminum dust—not long after an advocacy group warned Apple of aluminum dust problems.
Apple is far from alone in tapping cheaper overseas labor employed by third-party firms. Many U.S. companies have tried to wash their hands of the actual making of things. They may have decent or enlightened labor practices for their direct employees. But by farming out production to suppliers in China and other low-wage countries with few labor protections, they often have outsourced not just work but worker abuse.
This is not a new story. In recent decades, the public has heard withering tales of clothing-makers such as Nike Inc. outsourcing to third-party firms that took advantage of workers in the developing world. Even in consumer electronics, substandard labor treatment in the supply chain has been proclaimed in the media since at least 2006. That’s when a British publication reported harsh working conditions in the making of the iPod at Apple supplier Foxconn—the same company at the heart of the recent allegations.
But for the most part, U.S. consumers have been willing to turn a blind eye to Apple and others. ANew York Times survey of Americans late last year found that only 2 percent mentioned Apple’s overseas labor practices as a concern.
In essence, consumers have focused on Apple’s remarkable products rather than how they are produced. That goes for me, too. I have written critically about labor issues at Apple. But I’ve had a series of Mac laptop computers for more than a decade. And as I compose this blog item, I’m listening to our family’s iPod.
Apple has addressed supply-chain problems in recent years to some degree. But our collective apathy about working conditions behind iPods, iPhones and the like has allowed the company to prioritize speed and profit over decent treatment of people.
“You can either manufacture in comfortable, worker-friendly factories, or you can reinvent the product every year, and make it better and faster and cheaper, which requires factories that seem harsh by American standards,” a current Apple executive told the Times. “And right now, customers care more about a new iPhone than working conditions in China.”
But that’s changing. In recent years, there has been a shift in attitudes among consumers toward a desire to do business with companies that show “kindness” in their operations. People also are increasingly identifying as “global citizens,” meaning they have more empathy for people on the other side of the world. What’s more, tools such as Facebook, Twitter and YouTube give people more opportunities to express themselves. This means companies increasingly face penalties for mistreating people—whether those workers are direct employees or not.
The New York Times story on iPad working conditions, for example, generated 1,770 reader comments. Many, if not most, blasted Apple or the overall system of cheap labor. And an online petition prompted by the This American Life piece that calls for Apple to protect Chinese workers has garnered roughly 166,000 signatures—and counting.
“We care about every worker in our worldwide supply chain,” Apple CEO Tim Cook reportedly wrote in a memo to employees in the wake of the stories. But the public isn’t buying it. It sees some rotten labor practices at the core of Apple. And, increasingly, people, including Apple’s own employees, will demand better of the company.
The bottom line for Apple and other companies is that a shameful supply chain is less and less viable. Happily, the age of farming out worker exploitation is coming to a close.
A version of this post originally appeared at Ed’s Work in Progress blog at Workforce.com.
2012
“The Business Buffett Rule”
Here’s a way executives can get in front of the mounting frustration about income equality and corporate greed: Restrain your pay.
What if your firm announced that top executives would not make more in total compensation than 100 times the lowest-paid worker?
For a company paying the federal minimum wage of $7.25 an hour (about $15,000 a year for a full-time worker), that means income of about $1.5 million. And that figure would include the stock awards CEOs often get.
As pay goes, $1.5 million is not peanuts. But it also is a far cry from packages that have ballooned for many execs into the tens and hundreds of millions of dollars.
Beyond-the-pale CEO pay is part of what’s making Americans angry these days. It and other factors are fueling the sense that the nation is slipping into a place that has lost its bearings about what is fair and decent. We also have a tax code where millionaires can pay less than 15 percent of their income in taxes, a recovery in which corporate profits are up but unemployment remains high, and average wages that are stagnant even as companies demand more from workers.
President Barack Obama’s “Buffett Rule” is based on billionaire Warren Buffett’s observation that he pays taxes at a lower rate than his secretary. In the State of the Union address this week, Obama said those making more than $1 million annually should pay at least 30 percent in taxes. A majority of the U.S. public supports the concept.
Call my 100x compensation-restraint plan the “Business Buffett Rule.” And limiting executive pay in this way could pay off for your firm. A dramatic, personal commitment to go against the greed grain would likely boost employee morale. This includes among high-potential workers. Such workers often have been asked to shoulder large loads in recent years with little in return—which helps explain why1 in 4 were seeking new jobs last year compared with 1 in 7 in 2005. These key employees may be more willing to stick around if they see executives making sacrifices, too.
More concretely, containing pay at the top would allow raises for the rest of the workforce. And it would burnish the company’s reputation among potential workers and consumers who want, more and more, to do business with socially responsible companies.
There’s evidence that more equal societies tend to be healthier and happier. Companies are societies in miniature—and too much inequality between corner suite and standard cubicle frays a fabric of trust and common purpose that organizations need to perform at their best.
Doubters will claim the best executives will flee pay-limiting firms for pastures offering more green. But research has dented the theory that high executive pay corresponds with outstanding performance. Instead, the incentive packages crafted for C-level employees in recent decades have contributed to a short-term mindset and hyper-risky behavior.
By showing moderation in CEO compensation, companies are likely to find leaders focused on accomplishing the company’s mission instead of executives primarily out to amass a fortune. What’s more, CEO pay under the Business Buffett Rule has no absolute ceiling—it can rise as long as the lowest-paid employees also see their boats lifted.
There’s already momentum to rein in executive rewards. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires that companies show the relationship between executive pay and corporate performance. And some organizations already have adopted a version of pay restraint.
Executives of auto companies bailed out by the federal government had their pay capped. The California State University system recently agreed to limit salaries for new campus presidents, and there is a bill in the Golden State to restrict the pay of those presidents to 150 percent of what the chief justice of the state Supreme Court makes. In the private sector, financial services firms including Bank of America Corp. reportedly are capping cash bonuses.
And during the recession, a number of executives agreed to annual salaries of just $1, including Apple’s Steve Jobs.
On the other hand, Jobs’ successor Tim Cook recently was given a restricted stock grant currently valued at some $440 million. To be sure, Cook has helped Apple take the world by storm. But does anyone really need $440 million? Especially given the sickening evidence that Apple’s products are made by workers often toiling in harsh, sometimes-unsafe conditions.
In fact, a more dramatic version of pay restraint would be to limit an executive’s compensation to 100x the pay of the lowest-paid worker in their supply chain. But let’s just stick with direct employees for the moment. I suspect Apple—and other companies—would shine brighter among employees and would-be customers by adopting the Business Buffett Rule.
A version of this post originally appeared at Ed’s Work in Progress blog at Workforce.com.
2012
When “agility” becomes A.D.D.
Authors Teresa Amabile and Steven Kramer have coined a useful term: “strategic attention deficit disorder.”
It refers to leaders lurching from one priority to another in short order, and I suspect this morale-melting shortcoming is on the rise.
“We see too many top managers start and abandon initiatives so frequently that they appear to display a kind of attention deficit disorder (ADD) when it comes to strategy and tactics,” Amabile and Kramer write in the January issue of the McKinsey Quarterly. “They don’t allow sufficient time to discover whether initiatives are working, and they communicate insufficient rationales to their employees when they make strategic shifts.”
The authors say strategic attention deficit disorder—let’s just call it SADD—is one of several ways that leaders routinely “kill meaning at work.”
Have you had a manager with SADD? I worked at a media company where every few months we received a new directive. “Focus on consumer technology.” “Wait, let’s turn up the volume on our coverage of business technology.” “Whoops—back to consumer tech.”
The yoyo-ing eventually had us reporters rolling our eyes. Amabile and Kramer make a similar point about what some call initiative fatigue: “If high-level leaders don’t appear to have their act together on exactly where the organization should be heading, it’s awfully difficult for the troops to maintain a strong sense of purpose.”
To be sure, companies need to have a degree of agility. The pace of business has increased. New competitors in many fields can appear almost overnight. Stock market volatility soared last year.
In response to the tumult, the mantra one hears most from executives and consultants these days is some variation on “innovate,” “change is the one constant,” “we must be nimble.”
But agility is overrated. In his newest book, Great by Choice, business researcher Jim Collins found that high-performing companies changed less in reaction to a radically changing world than other companies. “Just because your environment is rocked by dramatic change does not mean you should inflict radical change upon yourself,” Collins and co-author Morten T. Hansen write.
This point jives with what we discovered in writing Good Company: a long-term perspective, in combination with an all-win mindset, is increasingly important to business success. Course corrections may be needed at times, but there’s a steadiness to the overall mission.
To respond smartly to changing business conditions, companies may want to employ a democratic, bottom-up kind of agility. That’s been the formula for success at India-based HCL Technologies, where employees have contributed valuable ideas in recent years.
Traci Fenton, the CEO of advisory firm WorldBlu makes the case that organizational democracy may lead to slower decision-making but overall change that’s just as fast as top-down dictates, because employees buy into the moves.
So edgy execs, take a deep breath. Be wary of SADD. It could make your workers, and ultimately all your stakeholders, sad.
A version of this post originally appeared at Ed’s Work in Progress blog at Workforce.com.