Having spent the past ten years working as a consultant, coach, and start-up business strategist I am continuously researching market drivers, environmental influences, and emerging management imperatives. I cast a wide net, looking to divine what on the surface may appear to be independent currents that often coalesce into a confluence of sweeping change. Having just completed a new book on entrepreneurship, I had some time to reflect on several threads of real-world, market research that warrant further exploration.
Every year over the past decade or so, The Gallup Company conducts research on employee engagement levels. Their most recent report demonstrates the continuous slide companies continue to experience in this critical arena. Today, a little more than a quarter of employees are fully engaged with their employer, meaning they show up with passion and enthusiasm for their work. More than half are disengaged, simply going through the motions, contributing the minimal required effort, keeping their heads down, and voices low. Essentially sleepwalking, if you will. And strikingly, approximately one out of six employees is activity working at cross-purpose with their employers. The aggregate cost of this engagement crisis to businesses in the U.S. exceeds a quarter of the trillion dollars annually. More importantly to many individual businesses, however, is the fact that more than fifty percent of their payroll may be contributing little or no return on investment to the firm.
Interestingly, another recent study published in the Harvard Business Review demonstrated the next productivity breakthrough will come through cultivating the emotional engagement of both employees and customers. Also conducted by Gallup, the study explored the implications of Applied Behavioral Economics in actual enterprises. What they saw was the fact that creating rationally satisfied customers was no longer enough. The research showed that rationally satisfied customers purchased no more and were no more likely to continue doing business with a firm than dissatisfied customers. The difference in wallet share, future purchases, and customer loyalty was found to lie in creating emotionally satisfied customers. The study went on to demonstrated that companies that engage both their employees and customers on an emotional level enjoy a 240% improvement in financial performance. Apple immediately comes to mind as a company that fully understands and leverages this perspective. Their customers literally line up to buy their next product offering.
Here’s the final thread. IBM’s biennial Global CEO Study issued in 2010 indicated that creativity was selected as the single most important factor for success in the future. Not managerial discipline, integrity, or even vision. The more than 1,500 CEOs from sixty countries interviewed pointed to creativity as the critical success factor going forward. Less than half of those surveyed felt their firms were prepared to handle the increasingly complex, volatile environments in which they operated. More than sixty percent of CEOs reported that industry transformation is the top factor contributing to their uncertainty. They described an imperative need to discover innovative ways to manage structure, strategy, talent, and finances.
So let’s break these critical elements down and see if we can roll them up into a plausible solution. First, the majority of human talent is sitting idle on the sidelines in many firms. In light of the fact that we live in transformational times in which intellectual property is the driver of value creation, employee disengagement represents an astounding scrap rate of industrial raw material. How many firms would purchase millions of dollars of raw materials only to let fifty percent of it go to waste? But that’s exactly what is happening today in many firms when it comes to leveraging their talent.
Second, solid research coming out of Applied Behavioral Economics points to the emotional aspects of economic decision making. Most behavioral economist concur that upwards of seventy percent of economic decisions are emotionally driven with the remaining thirty percent based in rational thought. This is true in business-to-business environments as well as in business-to-consumer environments. It comes down to our human nature. Emotional gain matters to us. Emotions are part of our primary survival mechanisms. Core Emotional Systems are present in all mammals; it is how we evolved in nature. Genetically speaking, we haven’t changed all that much over the past fifty thousand years. To rule out emotions as a messy bi-product and ignore their economic implications disengages human beings from being human. The road to creating emotionally engaged customers is paved by emotionally engaging employees. The fact is, passion and intention resonates with others. This not only speaks to how we should view leadership but also to how we must take organizational culture into consideration as a strategic imperative as well.
Third, the consensus amongst a statistically significant number of chief executives is creativity is the single most important factor for driving success going forward. Creativity in leadership, but also in leadership’s ability to cultivate creativity throughout the entire firm. This is a far cry from the demands for conformity and standardization that emerged out of our heavy manufacturing past.
So here’s the challenge. Leadership must find a way to cultivate creativity with a highly disengaged workforce. In addition, leadership must find ways to emotionally satisfy customers in order to maintain wallet share, growth, and profitability. That sounds like some pretty heavy lifting is in order. The solution, however, isn’t so far out of hand as it may appear on the surface.
To paraphrase Albert Einstein, the problems of today cannot be solved by the same thinking that created them. A shift in perspective must occur. I’d like to reference an important book that Ronald A. Heifetz and Marty Linsky published in 2002 called “Leadership On The Line” (Harvard Business School Press, Boston, MA) to help frame a possible solution. In this book, Heifetz and Linsky point to two types of challenges companies typically face. The first are “technical challenges”. Relatively straight-forward challenges that are not terribly unfamiliar. Familiar enough that we already know the solutions. Such challenges require “technical change”, which is relatively low risk and easily negotiated. The second type of challenge is “adaptive” in nature. Challenges in which we do not have all the answers. Challenges that represent a landscape fraught with uncertainty in which we must, in many instances, discover the answers along the way. These challenges require “adaptive change”, which, by definition, requires creativity. This is what we face today.
The traditional path for leadership development, team building, et. al. is limited in its ability to solve these challenges. After all, as Einstein might have pointed out, these historical modalities are a part of the thinking that got us here. Traditional coaching models also fall short. They are built on a premise that all of the answers must come from the person being coached. This may have been effective for executives facing technical challenges, but by definition, this approach is incapable of guiding leaders attempting to navigate adaptive change. In these circumstances, the answers have yet to be discovered. What is needed is a transformational process for development that will instill a fresh perspective, tap into dormant creativity, and fully engage both associates and customers.
A new, integrated, developmental approach for addressing these adaptive challenges is the Accretive Coaching Process™. The term accretive refers to the growing together of separate parts into a single whole of greater value. The evidence-based approach integrates education, experiential learning, and coaching methods evolved from traditional modalities. The process delivers a positive shift in perspective while imparting tools grounded in emotional and social competencies, Applied Behavioral Economics, and recent discoveries from performance psychology and neurophysiology. This comprehensive approach elevates self-awareness and social awareness leading to competencies in self management, relationship management, and empathy; all keys to rekindling employee engagement. It also cultivates both non-verbal and verbal communication skills and an understanding and respect for individual boundaries. The accretive nature of the process enables leaders to fully connect and align their cognitive and emotional talents and attributes, tapping into their creative power. From this position of authentic, creative, and connective power, leaders can begin to inspire and motivate associates without dominating or coercing them. This approach is fully capable of igniting associate passion and cultivating a fresh, creative culture in organizations.
By aligning integrated, professional development processes with the challenges and opportunities companies face in today’s transformational economy, adaptive solutions can emerge. The key is to cultivate leaders, culture, and strategies that continue to fully engage associates, customers, and stakeholders. Technology will only take us so far. At the end of the day, it is the human element that will create, adapt, and shape the future of our success.
© 2011, Terry Murray