How to Bounce Back from Extreme Downsizing

What’s your biggest concern in the next six months? WorldatWork recently reported the results of ComPsych Corp. survey asking just this question of HR managers. The answer itself is not surprising: “Maintaining employee productivity and morale” (31%). I do have to admit, however, that I was surprised that this outranked “Dealing with health-care costs and new legislation” (26%). Admittedly, I listen to my US colleagues and follow the US healthcare debate through the lens of my own lifetime experience with the Irish healthcare system, but it’s clear to me that these changes are of serious concern to employees, HR Pros and company leaders alike.

And yet, employee morale and productivity remains the greater concern. Why is this? The obvious answer is the fallout from actions taken during the recession. US National Public Radio (NPR) recently commented on research out of the University of Colorado, Denver, which found:
“With extreme downsizes (in workforce) in the long term, companies really do suffer relative to competitors in the same industry facing the same sets of economic conditions. Extreme downsizers are companies that cut their workforce by more than 20 percent. … Most of them lag their industry for as long as nine years after a recession.”
The obvious findings from the research? “Cutting a workforce so deeply can have a negative impact on the morale of employees who remain.”

More importantly, what’s this mean in the workplace? Even for those still employed, the atmosphere itself is toxic. An ex-employee of Alcoa, a producer of aluminum, noted:
“Anxious workers can create problems. Especially if your job is in a dangerous workplace. … Your mind’s not going to be totally committed to focusing on what you’re doing, when in the back of your head you’re thinking, ‘Man, am I getting laid off?’”
And don’t think you can rest easy if your workplace managed to keep layoffs to a minimum (or avoided layoffs altogether) in the last couple of years. Your employees are well aware of the actions taken elsewhere and now the threat of a “double-dip” recession. Their fears are still impacting their work.

So, considering this very real atmosphere of fear in many workplaces, what are you doing to reassure employees and help them stay focused on the job at hand? The most effective, most positive action you can take is to reassure employees of their value to your organization by recognizing their efforts that are contributing to your objectives.

Retaining Recognition and Rehiring in the Recovery

What’s your investment plan for workforce improvement programs? An Accenture survey of CxO level executives (and a few HR pros) found recognition, incentive and training programs held steady or actually increased in the last 12 months.

As Incentive magazine reported on the study:
“In the United States, 39 percent of respondents made no changes to their recognition programs, while 28 percent increased them. … On average, about 24 percent of respondents cut those programs. International companies showed even more support for retaining or growing recognition, incentive, and training programs, with just 15 percent and 19 percent cutting recognition and incentive compensation programs, while about 75 percent maintained or grew them.”

This is well in line with similar findings from our own market research “Restarting Recognition: Tap into the Power of Recognition during the Recovery,” which includes results of research on how companies changed their employee recognition approach in response to the recession and how they are now adapting their recognition programs during the economic recovery. The paper also offers seven recommendations to properly calibrate your program for the recovery.

Another interesting finding is that 54% of US companies and 35% of global organizations that reduced staff plan to rebuild their workforces to pre-recession levels. This is great news, but as I’ve said before, companies must first resolve any lingering negativity and reinvigorate their current workforce or they’re bringing new hires into a very tough situation.

Are you planning on rehiring? What are you doing to restore trust and loyalty in your current employees?

Strategic Recognition * The Fastest Path to Talent Management Metrics that Matter

What do you think? Are we in for a double-dip recession? Seems to me that the economic pundits are waffling hard on this topic. In a Bnet article, Margaret Heffernan seems to think so, but she offers great advice for what to do in a double-dip – grow! Click over to read her case study of Timken and how they, “Invest when times are tough so we can capitalize on those investments in the good times.”

A Towers Watson survey found many US and Canadian companies are following this advice, at least in terms of their investment in “talent/performance systems,” citing these as the most critical HR Service delivery issues in 2010 (quoting):

• Talent/performance management systems (42% versus 35% in 2009)
• Streamlining processes/systems (35% — unchanged from 2009)
• Increased involvement in strategic business-driven issues (27% versus 23% in 2009)
• Defining human capital metrics and dashboards (22% versus 17% in 2009)

It’s great to see companies beginning to invest again, but it’s still important to remain frugal and wise in those investments. That’s why I advocate strategic recognition as the fastest, most cost effective means to talent management data. Within just months (not years), you can track and analyze trends in performance against your key objectives and values based on the wisdom of crowds through recognition, you can streamline processes by blending recognition and performance management metrics, you can create on-the-fly dashboards that report on the metrics your CEO and CFO care about, which increases your contribution to strategic business issues – and you can prove it.

Stop investing in talent management and invest in your talent instead. How are you beginning to invest?

Where’s the Merit in Merit Pay?

I’m a fan of Ann Bares’ Compensation Force blog. She writes cleanly and clearly on what are often complex topics. She’s called herself a “spreadsheet jockey,” but she is uniquely talented at taking the information out of a spreadsheet and bringing to light the most pressing issues to those not immersed in employee compensation matters.

Last month, she broke down the challenge of merit pay. Click over and you’ll see at a quick glance why she concludes:
“There we have it, for what it's worth. All I can say is, no wonder we're looking beyond merit pay, and even cash rewards, to drive performance.”

A Workspan magazine article (“Does Merit Pay Still Have Merit in the New Economic Reality?”, access requires subscription) earlier this month really brought home the challenges of merit pay today. As the article points out, the practice of merit pay began in the 1970s when merit budgets where 6-8%, not today’s much lower 2-3% that must be divided up between all employees. Why are we still relying on a tool created 30 years ago in a much different economic and workplace reality?

Equally important, the article points out:
“Note, too, that merit pay in its current form is often the primary (and sometimes the only) vehicle that organizations use to pay for performance, and therefore, their only formal way to recognize good performers.”

That’s the critical problem rarely acknowledged – companies must diversify their forms of recognition. Think of recognition like cooking your favorite recipe. You typically include five spices to make the dish just so. Think how different – and how bland – that dish would taste if you only used one spice. The same is true in organizations with bland programs that use only one form of recognition: the review.

In many organizations, the performance review and subsequent promotion or raise is the only form of recognition employees receive for their hard work. Strategic recognition eliminates this narrow “recognition platform,” creating continuous positive feedback “events” that recognize employee accomplishments, show appreciation for efforts that advance critical projects, and reward mastery.

With merit pay practices effectively dying out on their own, what are you planning to do to replace them? How are you diversifying your recognition practices?

Irrationality * It’s What Makes Us Human

Irrational. Some days, does it seem like that’s the best word to describe the workplace? I tend to like Dan Ariely’s research on irrationality. Initial research showed, “In eight of the nine tasks, the promise of a bigger bonus actually significantly decreased people’s performance.”

Paul Hebert recently reviewed Ariely’s latest book, The Upside of Irrationality on his i2i blog. Paul highlighted this very interesting twist on the impact of cash bonuses:
“In the experiment they told the participants that they already earned the 5 month bonus – and gave them the money, but told them they would have to return a portion based on their performance. If they maintained a certain level of performance they could keep the 5 months pay – but if they fell below they would start to “lose” their money.

“In this instance the negative effects on performance were even more pronounced – the first participant was so nervous he couldn’t complete the tasks and the second, when he started to fail immediately – ran out of the experiment with the money. In other words (my opinion) his loss aversion to such a high reward caused him to act in irrationally – to the point of stealing. Sound familiar?

“When awards are too big – and too expected – rational thinking is short-circuited.”

Why was the study structured this way? Because cash bonuses become an expectation. People begin to factor it into their “earned income” budgets. They expect to receive those bonuses at the end of the year, and the threat that the bonus might not materialize is enough to trigger deviant behaviors.

I can’t say I’m surprised by the findings. And that’s why I so strongly advocate against “If/Then” rewards – if you do this, you’ll get that. We’re in the business of “After/That” recognition – a surprise you’re not expecting when you do a job well. A sincere, specific appreciation of those efforts, but never something that you can come to expect.

Irrational. We’re human. To some extent we’re all irrational. But our job as HR pros in the workplace is to ensure that we’re not actively feeding that irrationality to the detriment of our firm.

Alignment * Linking Desire with Ability and Outcomes

Meaning and purpose. It’s critical to employee engagement and productivity and it’s also what everyone wants in their work. Last week, the informal (highly un-scientific) poll on the GloboBlog showed that 53% of people are happiest at work when they know their work has contributed to a meaningful goal. Another 40% are happiest when someone appreciates their work – another form of showing meaning. (It’s also interesting to note that not a single person said they’re happiest at work when they get paid.)

Critical to meaning and purpose is having a sense of alignment -- understanding your company’s objectives and values so well, you know the work you do contributes to those objectives and the values are in agreement with your own personal ones.

So what’s the problem? Ann Bares wrote about it well on her Compensation Force blog, based on recent Hewitt research.
“The large majority (73%) indicate that goals are somewhat aligned, that corporate goals are communicated and then left to local managers to translate. So for most employees, it all rests on effective coaching and direction from the local manager. … And how’s that working for us?”

As I pointed out in my comment to Ann’s post, the Corporate Executive Board found:
"Simply put, almost two-thirds of all employees are 33% as productive as they can be because they don't understand what they are now asked to do."

Unbelievable! 64% of employees are not working to full effectiveness, not because they don't WANT to, but because they don't know HOW to.

They don't know or fully understand your strategic objectives (which likely changed due to the recession), don't know how this affects their personal jobs/functions, and don't know what they should be changing. Even more frightening, they don't know that they should even be thinking about this.

And you lose out. Tremendously.

If you’re going to improve your business results, then you must get all of your employees aligned with your changing/changed business strategies. One of the most effective and positive methods for creating alignment is through strategic recognition. These highly structured programs communicate clearly through positive reinforcement the desired changes you need your employees to make in their everyday work and focus to achieve your new objectives.

What are you doing to create alignment?

Power to the People * How to Improve Performance Appraisals

Performance management appraisals/reviews – it’s time for the mid-year “assessment.” And so the news and magazine articles are ramping up, too. Last month’s issue of Talent Management featured an opinion piece that puts the burden on you, the employee, to prove your performance worth during the review process.

Ugh. While I agree that the performance review process, in its clinical form, is a good idea (talk to people on a bi- or semi-annual basis to set goals and review progress), it quickly gets awfully messy as soon as you add humans to the mix. Why is that? The reason seems obvious to me.

If I’m sitting in the seat of the person receiving the performance appraisal, I feel the feedback I’m hearing is coming from one person’s perspective and may be calling up “old news” – stuff that happened ages ago. As the author of the Talent Management article says: “Without assistance, managers are unlikely to remember all of each employee’s valuable accomplishments.”

And if I’m sitting in the seat of the manager giving the review, I feel pressure to give meaningful, helpful feedback (both good and bad) to numerous employees, and balance that feedback objectively between them. That’s often not fair as people on my team perform very different roles.

What’s the recommendation of the article author? “You know best what you achieve. Record your accomplishments with results. When the time for your review arrives, send, in advance, a well-documented synopsis of what you have achieved to help your manager assess you fairly.”

I agree, sort-of. You are still just one data point on your achievements. I would say instead, no one knows who’s doing the best job like the people doing the job.

People – the group around you. Those you help every day and those who help you to achieve your project goals.

The challenge with the performance appraisal process is the feedback of the people is rarely captured at all, much less well. And that’s where strategic recognition comes in, especially if you apply the power of social to the recognition mix. Don’t stop at just letting employees recognize the efforts of their colleagues. Pay close attention to what they’re saying. Track, measure and report on who is recognized, how frequently and for what reasons. Now you’re gaining a much more complete picture to color your performance appraisal process.

Engagement Video Fun

It’s the dog days of summer. People are enjoying their last days of vacation. Here’s a bit of laughter for you on a Summer day.

Think your company is above average (or possibly below) when it comes employee engagement? How do you stack up against “The Office?” 

A bit more serious, but I like the attitude as well as the message. Listen in to why employee engagement is so important at Red Balloon, a member of our global Ex*change network of recognition experiences in Australia.

How does your organization demonstrate the importance of engagement?

Moving Beyond Engagement to Enablement

Why should you care about employee engagement and enablement? Hay Group in the UK recently released these numbers:

• 59% of UK employees started 2010 planning to find a new job
• Organizations that engage and enable employees reduce voluntary turnover by 54%
• Employees who are both highly engaged and enabled are 50% more likely to outperform expectations

That’s great… But what’s enablement? Hay group defines an enabling work environment as one that “empowers employees to ‘go the extra mile’ and provides the tools and processes to actively deal with employee frustrations.”

Sounds a lot like what I talked about in my last post on removing obstacles so employees can make progress – which they define as their own greatest factor of engagement.

What’s that look like in real numbers?
"Revenue: A typical company with $5 billion in revenues in an industry with average revenue growth of eight percent would see revenues increase by $400 million. A company with top quartile levels of employee engagement could expect an increase of $1 billion. And a company in the top quartile on both engagement and enablement could anticipate an increase of a full $1.8 billion.

"Turnover: For an organization with 20,000 employees and an annual voluntary turnover rate of eight percent, the cost of turnover is approximately $56 million (assuming an average salary of $35,000). Reducing the voluntary turnover rate by 40 percent would yield annual savings of $22.4 million. But reductions in turnover through high levels of engagement and enablement would yield savings of over $30 million annually, a difference of more than $7.5 million.

"Employee performance: For an organization producing $10 billion of product with 20 percent of employees exceeding performance expectations, increasing the percentage of high performers by 1.5 times (by transforming average performers into superior performers) would increase output by $350 million (ie, if 10 percent of population improves performance by 35 percent, overall performance improvement across entire population is 3.5 percent)."

I’ve often argued that you cannot engage employees; you can only create a work environment in which employees want to engage. Enabling employees – listening to them, removing obstacles, resolving frustrations – is one way you can create that environment. And it will pay off.

Remove Obstacles to Progress to Achieve Happiness at Work

Happiness at work. I hear that all the time. People are always talking, blogging, writing about how to achieve happiness at work. While of course I believe happiness at work is not only possible, but something every employee and employer should strive for, I think it misses the broader point – people are happiest when they are doing work they believe in.

I’ve read similar research reports on this topic (here’s one), boiling down to this main point. People who are busy at work, in control of what they are working on, and cognizant of the purpose of what they are doing are happier than those who largely idle away the work day.

In another study at Harvard Business School, a professor found:
“Progress ranked No. 1 on the list of engagement factors related to performance. Analyzing 120,000 journal entries, Amabile found that workers reported feeling most engaged on days when they made headway or received support to overcome obstacles in their jobs. They reported feeling least engaged when they hit brick walls. Small dents in work meant as much as large achievements.”

The lessons for management?

1) Remove obstacles. Make it easy for your employees to make progress.

2) Recognize progress, not just results. Be sure your employees know you notice and appreciate the advances they’re making that will ultimately bring your project to a successful conclusion.

It’s really not any more complicated than that. Help your people make progress. Thank them for their efforts that achieve progress.

The Benefits of Blending Recognition & Performance Management Data

Intuit was recently featured in Workspan magazine (“Performance Management Rewired for the Recovery,” requires subscription log-in) speaking to their performance management approach. One factor deserving of special focus is their blending of evaluation, compensation, recognition and opportunity to reward performance.

Blending – that’s the operative word. Too often, companies implement these performance management tools or practices (or just some of these) as stand-alone efforts. What’s the result? As recent research I’ve referenced twice before points out:
“Employees were particularly dissatisfied with the performance of their companies in three broad areas:
• Performance management, which includes the processes and systems that set targets, collect feedback, and link actions to results
• Recognition, which includes formalized ways of acknowledging and rewarding strong performance
• People manager capabilities, which include people skills and leadership behaviors throughout the organization”

Much of the dissatisfaction stems from the use of the wrong tool for the job. Too many still assume that an annual performance review – the key tool of a performance management system – is all the feedback and recognition an employee needs. On the flip side, companies that implement an employee recognition solution don’t do so strategically, missing out on the hard employee data that can strongly complement performance management systems. Both scenarios are strongly influenced by the capabilities of the people involved – managers who don’t know how to use either program effectively (or don’t care to) will sabotage even the best efforts.

Let’s make this clear. A performance review, regardless of how frequent, is not recognition. And recognizing an employee – showing them your appreciation – is not the time to give them negative feedback (ignore the silly advice for a “compliment sandwich”). BUT -- and this is very important – the information gleaned from recognition practices should feed performance management initiatives, and vice versa.

This is easy – if your recognition program is strategic. Now you can easily track who is recognized, how frequently, for demonstrating what values or contributions to which objectives. And you can also see the correlation between the amount of recognition received by individuals and their ranking based on your performance management system. You may even find hidden power players. You can also prove the value of your programs by showing how increased recognition results in reduced turnover, for example.

Blending. Get the most from your data.

Give the OPPORTUNITY for Recognition to All, Regardless of Performance

I’ve been thinking over an article I read in Talent Management a couple of months ago. In “When Unequal Is Better,” Mike Prokopeak makes the well-reasoned argument that high performers deserve greater attention, career opportunity and compensation in organizations, but relying too heavily on compensation misses the point for top performers.

“Every pure talent I’ve ever dealt with has been motivated to enhance self-esteem,” said Steven Berglas, psychologist, executive coach and management consultant. “They are more or less immune to the pull of external rewards. They’re not in it for the money. They ask for money, but that’s more confirmatory. They were the chosen kids, the select kids, and they always shall be. They want that notoriety. They want to be declared No. 1, and that’s their burning desire. Most everything else is secondary or tertiary.”

Agreed. I’ve written frequently on the hazards of focusing on cash as a motivator. The author goes on to point out other industry experts speaking to the importance of knowing your employees, knowing what is rewarding to them and, critically, having conversations with them – talking with them, meaningfully and personally. I agree with all of these points and am glad to see them being raised into the discussion spotlight again.

But the part I liked best was when Beverly Kaye, CEO of Career Systems International, called out companies who target just their high-performers for development and recognition:

“Organizations are looking at engagement only through high-potential glasses, and it should be much wider. Critical talent can be anyone whose departure from the organization would cause significant problems or pain, whether it’s the janitor or the COO.”

Exactly right. And that’s why the OPPORTUNITY to be recognized -- and to recognize others -- should be equally open to everyone. That doesn't mean every employee will receive that "great job" recognition, of course. The top performers will receive the most, naturally. But all employees deserve the opportunity to be recognized for work they do that is worthy of recognition. Setting artificial limits only serves to deter some mid-level performers from wanting to work harder. Why should they? From their perspective, they're efforts aren't appreciated!

This interaction between performance and recognition is important and must not be underplayed. Be sure to come back on Friday for a deeper discussion of this angle.

Why Values Matter … And How to Get the Most Out of Them

Quick. Tell me your company’s values. No peeking at the poster on wall. Can you recite them? You can? Good for you! Now, can you tell me what those values mean – what they look like – in your everyday work? In the work of your boss? In the work of the people who report to you?

There is great value in company values – but only if they become so “real” for employees, they know what it means in their daily work. A couple of months ago, Rosabeth Moss Kantor wrote in the Harvard Business Review the “Ten Essentials for Getting Value from Values.” The entire list is a must read, but today let’s focus on just two.

“Actions reflecting values and principles – especially difficult choices – become the basis for iconic stories that are easy to remember and retell, reinforcing to employees and the world what he company stands for.”

Yes, I agree. But Rosabeth doesn’t go far enough. HOW do you do this? What’s the process for getting these iconic stories shared and discussed in your organization? With strategic employee recognition, it’s easy. You encourage all employees, at every level, to notice and appreciate the efforts of their colleagues that reflect and demonstrate the values. You require a detailed message to highlight these points. You share the messages of recognition broadly throughout the company so others can learn “what the values look like in the work” as well.

Does this really matter, you ask? According to recent research published by the Boston Consulting Group and the World Federation of People Management Associations, the executives surveyed highlighted six areas as especially weak at their companies – “Clear consequences for individuals not living the company values” is one of them.

This is why your STATED values – those you’ve put on the plaque on the wall – must become stronger than your TOLERATED values (as I’ve written about in detail before). Or, as Dr. Kantor put it:

“As they become internalized by employees, values and principles can substitute for more impersonal or coercive rules. They can serve as a control system against violations, excesses or veering off course.”

How can you expect consequences for employees not living the values if they don’t understand how to “live the values” in their work in the first place? By creating an understanding of company values in their own, personal work through recognition and appreciation, you give your employees a positive context for understanding and repeating those values on an ongoing basis.

What could be more powerful?

Image credit: Wikimedia Commons