Eight North

Many of the world’s corporations today suffer from low employee morale and productivity, which lead to poor quality of products, excess waste and higher costs.  In part it has to do with the job or the organization itself, in part it has to do with the general poor economic situation.

People are constantly reminded of how bad things are - high fuel prices, higher prices for food and consumer goods, and the numerous crisis financial institutions face.  It is hard to stay focused and motivated when the walls seem to be crashing down around us.

With all the negatives surrounding every person in the workplace, how can we expect our employees to give more, do more and expect less?  A difficult challenge for the leadership in many organizations.  And yet, if American Organizations want to stay in business and help to rebuild a stable economy, they need to invest time, energy and money in developing a strong commitment from their employees.  Employee development is not a cost - if people are the organizations biggest asset, does it not make sense to nurture and grow this asset?

An organization can elect to “limp along” in the hopes it could weather the economic storm, or it can elect to set itself apart from its competitors and be proactive.  There is not one organization today, big or small, that does not feel the “pinch”.  It makes sense to investigate areas for improvement and cost-cutting.  Unfortunately, companies often cut costs on things they should invest in, and invest where they should cut costs.  In an economic downturn, it is not uncommon for organizations to curb spending on training and development or advertising, when these are the areas that they should invest in. 

Getting employees to understand how they are part of the success or failure of the organization, how their contribution makes a difference, and how the quality of their own work helps the company (and therefore themselves) succeed, is a far better strategy than laying off people to cut costs.  Ofcourse it is vital for organizations to run lean, and to analyse the viability of  previously created positions.   It would be easier, though, to eliminate those redundant positions in a climate where employees understand how their jobs fit in, and understand the contribution they make. 

Organizations that are serious about staying in business, and serious about ending up in the black, should consider investing in a training “event” that will create the right atmosphere for the changes the organization is making or about to make.  Change, without perspective or employee buy-in will almost always be seen as negative and demoralizing.  Only 5% of company employees understand the company’s goals, therefore it is critical to get commitment, understanding and buy-in before making significant changes in the organization.  It is not necessary to have an “event” every time changes are planned, and some programs have long-lasting benefits.

*Check out the program TOGETHER FOR PROSPERITY.  There is not a more powerful program available.

Anything that needs doing is worth doing right.  Avoid decisions made while in panic mode and always consider the long-term consequences of the decision.  It is one thing to try to survive in a poor economy, but quite another to make decisions that will pay off in the long run when the economic situation improves.

Manufacturing and production jobs are the backbone of any industry that produces products.  But the downside of these jobs is that most don’t provide much in the way of stimulation - many of them consist of performing repetitive and mundane tasks.  While frontline workers are an integral part of the organization, their motivation often deteriorates, which can lead to decreases in productivity, costly mistakes and high turnover rates.

It takes more than money to motivate employees.  Here’s how ten companies increased employee involvement and productivity:

1.  To prevent miscommunication between management and employees, the CEO of Phoenix Textile Corp., an institutional linens distributor in St Louis, Mo, invites one employee from each of the company’s five departments every month to join her for breakfast at a local restaurant.  Since employees get to know her and each other, they’re often better able to work out problems.

2.  Employees who attend fourth-quarter meetings at Physio-Control, a producer of cardiac care equipment in Redmond, Wa, are treated to a pancake breakfast served by senior managers.

3.  Domino’s Pizza, based in Ann Arbor, Mi, conducts an annual employee Olympics that includes competition ranging from veggie slicing and dough-making to driving and telephone skills.

4.  To keep employees up-to-date on the company’s performance, management at Atmosphere Processing, an automotive supplier in Holland, Mi, conducts an annual jobholders meeting where employees listen to reports on company profits, expenditures, investments and strategies.

5.  During the busiest time of the year, executives at Cigna Group, an insurance company based in Hartford, Ct, push coffee carts around the office to frontline workers.  It gives them a chance to coach them while listening to real consumer issues.

6.  To recognize the difficulties presented to employees’ families when workers are required to work long periods of overtime, BurJon Steel Service Center of Springboro, Oh, sends flowers and free dinner coupons directly to employees’ spouses or significant others along with a personal note of thanks.

7.  The CEO of Rosenbluth International, a chain of travel agencies headquartered in Philadelphia, Pa, encourages employees to call his 800-number voice mailbox with suggestions, problems or praise.

8.  Worthington Industries, a steel processor in Columbus, Oh, has coffee and other refreshments always available to employees, who determine for themselves the best time to take their breaks.

9.  Thomas J Lipton Company, maker of food products in Englewood Cliffs, NJ, has an Open Vending Machine Day.  Employees are allowed free access to the plant’s cafeteria vending machines when certain manufacturing goals are reached.

10.  Graphic Printing Services, a printing company in High Point, NC, implemented the program Together for Prosperity, which breached the gap between management and front line, and underscored the value of each person’s individual contribution to the bottom line results.  All employees and management attended the one day program, which brought the company together as a cohesive team.  The training was followed up by incorporating good suggestions from employees, and rewarding good performance with gift certificates and extra time off.

Motivating employees and encouraging good performance goes beyond money.  With a little creativity and some research, all organizations could become the employer of choice when it comes to hiring, and retaining valuable front line talent.

Facts:

Of the 280 million workers who changed jobs since 1980, 40 million were the result of layoffs.  85% changed voluntary.

Labor is being re-deployed at an unprecedented scale and pace, straining the current system and threatening the corporation’s ability to execute its business strategy.  Every year the voluntary separation trend increases by 1.5%.

Reasons for voluntary separation, other than pay, are:

• Poor supervisory skills and attitudes
• No perceived career growth opportunity
• Inability to speak freely about one’s concerns
• The job itself
• No salary increases
• Work schedule changes
• Feeling devalued and unappreciated

The fact is that today’s employee isn’t less loyal, the definition of loyalty has changed!  The emergent workforce has different values and needs from the traditional employee. 

Traditional :  Their career is the organization’s responsibility; promotion comes with tenure;  they admire the organizational chart; they have a fear about changing jobs and seek security; and they feel training needs to provide job skills and product knowledge.

Emergent :  Their career is their own responsibility; promotion should be given based on merit;they ignore the organizational chart; they will change jobs for advancement; and training should take the form of coaching, mentoring and knowledge that will advance their careers.

IF YOUR COMPANY IS VIEWED AS TRADITIONAL, YOUR FUTURE SUCCESS IS AT RISK

Turnover: Consequences

Turnover costs.  The average turnover is roughly 16% (30% among high potentials, 20% key technical talent).  Non-exempt employees - the cost equals a minimum of 6 months pay and benefits.

Exempt employees - the cost equals a minimum of one year’s pay and benefits.

Lose 10 people = losing $1 million

Training and Development for Retention

A company’s biggest asset is its people, just look at the payroll.  If a company only invests 3% of its payroll for training and development, it will give it the edge over its competitors.

For example, Company X has 1000 employees. 

With implementing training and development, 12% will still leave within 12 months = 120

Without implementing training and development, 41% will leave within 12 months = 410

410 - 120 = 290 (turnover difference)

           290 x $50 000 = $14.5 million (based on average turnover cost calculated from the Saratoga   Institute data)

The argument for investing in employee training and development is clear.  Visionary organizations realize continuous investment in their people is a necessary business expense, and one that yields impressive returns.  Unfortunately, many more organizations look at this cost as something they cannot afford, especially in bad economic times.  And when the economy is good, they cannot afford the time, either. 

Calculate the cost of your company’s turnover, find out why people are leaving, and start developing your employees. 

New business realities require organizations to find new and innovative ways to involve employees in the workplace.  To be competitive, every company needs to get extraordinary performance, even from ordinary employees.  No matter how good or how educated management is, companies still rely on the average Joe to get the work done.  Traditional methods of motivating employees - either with carrots (promotions or cash) or with sticks (intimidation or firing) - are no longer effective in the workplace. 

As Peter Drucker has observed; “Economic incentives are becoming rights rather than rewards.  Merit raises are always introduced as rewards for exceptional performance.  In no time at all they become a right.  To deny a merit raise or to grant only a small one becomes punishment.  The increasing demand for material rewards is rapidly destroying their usefulness as incentives and managerial tools.”

Yet, in industries such as manufacturing, monetary rewards still seem to be what employees demand from their employer.  Many employees will leave their jobs for as little as 25c per hour more.  This trend, however, is symptomatic of an underlying, deeper dissatisfaction than that of money.

A major cause for employee dissatisfaction is that they do not feel valued, and a close secondary reason is that they don’t know what is going on in the company.  “But we do communicate!” management fervently claims.  One has to ask: “What do you tell them?”  Posting financial statements and other company information on a notice board is not communication.  Most employees don’t spend time reading notice boards, and cannot interpret financial information.  A study done by a major university recently reveals that out of 1010 adults tested and 1085 high school students, 49% of adults and 66% of the students failed a test on basic economics. 

So, how can we communicate effectively and how do we show we value our employees?  Start by looking at yourself and other managers in your organization.  Do you make a point of being accessible?  Do you make it a point to “catch people doing something right”, or is the only time you talk to an employee when they mess up?  Managers have fewer ways today to shape people’s behavior - coercive and authoritarian behavior is no longer an option.  To be effective, managers must create supportive work environments that can influence desired outcomes and behaviors.

Trust is an important factor, and often an event, such as a development program for the whole organization, is needed to start the trust building process.  Time and money spent on the right program has proven an excellent investment for major manufacturers such as Toyota.  (See Together for Prosperity on our website).

Some further actions required to get employees to want to perform their best, are to open channels of communication, and encourage suggestions from employees.  However, this might not work if trust has not been established first.  Employees have traditionally been conditioned to be mistrustful when asked for their input, something that will change if the correct environment has been established.  I have personally had the opportunity to witness companies saving literally thousands of dollars in production costs per day by implementing employee suggestions.

So why bother with all this?  Would it not just be easier to keep doing what we’ve always done?  The fact is that it only takes a little effort on the part of management once the scene is set in order to receive huge returns in efficiency, productivity, involvement and loyalty of employees.  It is up to you - you are the one who holds the key to unlocking the vast well of energy that drives the success of your organization.

Perhaps at eightnorth LLC we take organizational development a touch too seriously.  Could it be that we truly believe in providing our customers with value for money, that we will do everything possible to solve problems for our client companies and will work towards measuring training results?

These questions have haunted me this past week, and I felt that perhaps writing about them would bring clarification.  You see, in our business (the consulting business), we do a lot of networking.  All consultants network consistently.  Networking is not selling.  When you attend a networking function, you meet a lot of people, and only some of them might in the future become clients.  There are many more people who will never become clients, but they might know someone else who will become one.  And even if that doesn’t ever happen, you’ve made a friend.

  What really bugs me, though, are consultants who will thrust their business card at all and every unsuspecting networker, ready with their sales pitch.  What happened to good manners, where we listen with interest to the other person?  And that means listening, even if, on first impression, you have nothing in common with one another. I have found many a fascinating individual whom I could see right away will never have a need for my services, but whom I could later refer to someone who might be able to assist them in some way or another.  And in this manner, I am always fondly remembered and talked about.

That is only part of what bugs me.  The other thing is that it seems everybody out there is a consultant.  Not that that is an evil in itself, but looking at some of the services and materials they offer, it makes me want to find a different description for what I do.  Just this past week, someone in a meeting announced they are quitting their job to become a consultant.  She stated proudly that she has written a unique program that will reinforce training in the workplace.  On closer inspection (I was very excited for her at first) it turned out she was laid off and decided to become a consultant with something she had written more than 15 years ago (and it wasn’t even good then!).  And yet, anybody seemingly can be a consultant.

I used to be very proud of how we can work with our client companies to meet their unique needs, and solve a specially sticky problem.  Where the consultant is confided in, and trusted, and becomes part of the company team, because they truly care.  Long-lasting, trusting relationships between the client and the consultant is paramount.  I am concerned about some “so called” consultant spoiling it for us all, and that we will come to be seen as people usually see used-car salesmen.

So much for that.  I must confess, I feel a lot better now I’ve spoken to you.  Thanks for reading, and watch out for those who sell themselves as consultants, without real substance or integrity.  Ask who they worked with before, and check their references. 

Long live the real consultants!

It’s 8:00 Monday morning and  we’re in the boardroom of Superior Widget, Inc.  The atmosphere is tense as the Leadership Team take their seats for the meeting.

Mr Drake, the CEO, peers at the attendees over his glasses and demands: “I want to know what is going on here.  Our profits are down and we seem to be fighting a losing battle in every aspect of the business.  All I hear about are problems.”

Joe Brown, VP of Manufacturing, clears his throat and says: “Well sir, we have had a lot of employees leave in the last few months.  Just this morning two more people quit.  And when we get new ones, they don’t seem to want to work at all.”

“Wait a minute!” interjects Marge Smith, VP of Human Resources.  “Do you know how difficult it is to find qualified employees?  With unemployment as low as it is, we have to scrape the barrel just to find warm bodies to man the machines.  We are doing the best we can with the applicants we’re getting.”

“I know that, Marge, I’m not accusing you of anything”. Joe continues. “It’s not just the employees who leave who cause problems.  The ones who are staying can’t seem to understand how important it is to run qualitu checks during manufacture.  Yesterday we had to rework a whole run of widgets because the operator did not notice there was a problem with the setting on the machine.  Then there was a mis-shipment we had to take care of because someone in orders did not read instructions, not to mention the overtime we had to work just to catch up.”

“What about the new finishing machine we bought two months ago?” asks Larry Little, CFO.  “For a cost of $3million, it does not seem to give us the projected increase in numbers on the line.”

“We have trained people to operate the new machine, but they don’t seem to last long.  Either they quit, or they just don’t seem to care.”  Joe says.

Is this scenario familiar?  In a shaky economy, it is easy to lose sight of what needs to be done, and simply do what we can to stay afloat till the economy picks up again (if we can last that long).

High performing companies and companies with visionary leadership look at times like these for investing in developing their people.  The norm for lesser organizations is to cut out any “fluff”, and they often see investing time and money into people development as such, while when boom time comes, they claim to be too busy to train and develop their workforce.  So, either way, they never get around to doing any real development.

If this is your company philosophy, you will always feed from the hind nipple, so to speak.

High performance organizations develop their workforce on a continuous basis, but more so when things are not so great.  Why?  They realize the value of having an educated, committed workforce who will carry the organization through bad times, and who will be there to celebrate their company’s victory in the long run.