“What are we doing to invest in ourselves, and what are we doing to invest in our people?”

Companies never remain static. They are either moving forward or going backward. A critical element in determining the direction is the development of their people. Where investment is made, it is often at the middle management level that can have minimal effect if Executive Management is not involved. CEOs who condone this by delegating (or abdicating) this responsibility to HR or individual managers do so at their peril! A high return on the investment in human capital needs to be modelled by starting at the top.

Effective leadership is about positive influence, about having followers – the art of achieving excellent results through others. If the followers are on the average 50% effective, what does this say about leadership? The challenge is much of the “good” leadership development is often aimed at middle management, while senior executives are “too busy” or claim they “don’t need it” or make some other excuse.

Having “good” middle managers does little to change engagement levels if not strongly supported by executive leadership. It all starts at the top. Some executive managers would not like to hear this. Some would be justified as they do “walk the talk” support their managers, get involved and have high expectations and achieve great outcomes. But too many don’t. The numbers don’t lie. Often when discussing mentoring and coaching opportunities, these folk think it’s a great idea – for someone else!

So what makes for effective leadership and its many forms? At its core, it necessarily includes the ability to:

• Articulate a strategy
• Establish guiding principles
• Make decisions quickly, efficiently and effectively
• Earn the trust of your people, include them in the process, treat them fairly, keep them informed and above all else communicate effectively
• Keep the organisation focussed on the positive outcomes 

Therefore a definition of Leadership –

“To maximise the expectations, the positive hope of the outcomes that come from change – while minimising the fear of change for those involved.”

100 employees averaging 70% engagement. It would take 116 employees averaging 60% engagement to get the same result of those 100 at 70%.

That is 16 more employees to do the same job!

The cost of 10% disengagement @ basic minimum weekly wage of $544 = $452,608 per annum!

(Imagine what this figure might be if it were to include on-costs and more senior employees, middle and executive managers)

The following is taken from current research that highlights the chronic condition of workplace engagement, or should we say, disengagement.

1. The Disengagement Gap – Management Issues, 2007

“It’s impossible to overstate the importance of an engaged workforce on a company’s bottom line,” said Julie Gebauer, managing director and leader of Towers Perrin’s Workforce Effectiveness consulting practice. “The Global Workforce Study establishes a definitive link between levels of engagement and financial performance and, for the first time, begins to quantify that link.

“At a time when companies are looking for every source of competitive advantage, the workforce itself represents the largest reservoir of untapped potential,” she added. The most striking data about the linkage between employee engagement and financial performance come from a study of 40 global companies that involved a regression analysis of company financial results against engagement data. It found that firms with the highest percentage of engaged employees collectively increased operating income by 19 per cent and earnings per share by 28 per cent year-to-year.

2. Understanding the True Cost of Disengagement – Hewitt Quarterly, 2009

All organizations recognise that employees are a business cost – materials, equipment, depreciation of plant and salaries appear as an item on financial statements. Beyond these tangible costs, there is another seemingly indirect cost that few organizations measure – the impact that underperforming employees have on the business. This trend can be reversed, and profitability improved, by focusing on changing employee behaviour. To help organizations understand the impact employee behaviour has on businesses, Hewitt recently  considered the issue of disengagement as part of the Best Employer in Asia 2007 study’s ongoing research.

The analysis found that organizations with high engagement are 78 percent more productive and 40 percent more profitable than those organizations with low levels of engagement. Those with disengaged employees had an average profit loss of $8,000 to $10,000 profit each year for each disengaged employee. Treating employees well may seem like common sense, but our research shows just what impact low engagement can have. Put those costs per disengaged employee into your financial analysis and you can assess the impact it has on your organization. The good news is that if the engagement issue is addressed properly, employees once again rightly become an investment, rather than a non-refundable expense.

3. Work Force Analysis – a Business Reality Check – Profiles International, 2008

What is an Engaged Employee?

• Our studies found that when employees are “engaged”, they are excited and enthusiastic about the work they do and they are focused on accomplishing the task at hand.
• They are not easily distracted and will work extra hours if that’s what it takes to complete a project.
• They eagerly volunteer for difficult assignments, routinely producing significantly more than the job requires.
• They also encourage co-workers to achieve higher levels of performance and seek ways to help them accomplish projects and tasks.
• Engaged employees are proud to be members of their organizations. They are advocates of their company’s products and services and they are very likely to stay with their company.

Competitive Advantage – a business with a highly engaged workforce has many advantages over its competitors:

• On average, they rate 86% higher with their customers
• They have 70% more success in lowering employee turnover
• They are 70% more likely to have higher productivity
• They enjoy higher profitability, have better safety records and deliver greater earnings per share to their stockholders

The Cost of Disengaged Employees – conversely, companies that lack a workforce that is highly engaged suffer with a multitude of problems that never go away. Too often they
surrender to their condition and accept it as the normal way to do business:

• They tolerate excessive employee turnover, average job performance, and situations that cause conflict and stress.
• It is estimated that employee dissatisfaction and disengagement cost American businesses between $254 billion and $363 billion every year.

4. Workers as Disengaged as ever – Australian Financial Review, February 2009

Fiona Smith reports that modern Australian management still fails to motivate workers, and it’s both infectious and costly. Here are some of her statements:

• Surely it can’t be that hard to make sure your people are happy in their job and motivated. Yet, despite the commonsense nature of the requirements of an engaged workforce, business leaders still can’t get it right. Not even nearly right.
• The most recent Gallup poll of 1000 workers showed 79% as not engaged, or actively disengaged. This poll is taken every two years. Previous year’s results were 2006, 82% disengaged and 2004, 80%, stifling productivity with a $33.5 billion cost to business!
• As the recent interviews were done last September – while people still believed recession would be avoided and before many of the retrenchments and cutbacks – these results are not likely to improve in a hurry.
• It is this depressing reading that leads Gallup to conclude that Australian managers are not an inspiring bunch … it is really scary stuff!
• Gallup consultant Dan Olson says it takes five fully engaged workers to cancel out the impact of one actively disengaged colleague.
• Another alarming revelation showed that the most experienced employees, those most likely to be used for mentorship, have the lowest engagement.
• A reason put forward for poor engagement was that managers were unable to give their attention to making sure the environment was right for their people.

They are so busy doing other things that they do not have time to talk to their people let alone mentor or develop them.

So who is responsible for such depressing reports?

In a word – leadership. Everything begins and ends with the person at the top. In their outstanding paper The State of Employment Engagement, 2008, BlessingWhite make the following recommendations:

• Maximise managers – they need to know what engagement looks like and be able to model it themselves
• Build a strong foundation – managers need to get to know their people, align personal and organizational goals, provide coaching, recognition and feedback and match missioncritical projects with employee skill sets and aspirations
• Ensure managers are engaged – If they are not inspired themselves, how can they inspire others?
• Hold managers accountable for results and development
• Weed out bad managers – Remove managers who are not willing to learn to carry out the above
• Align, Align, Align – ensure daily priorities fit with company objectives, mission and vision
• Communicate – employees need to know the “big picture” – and how their tasks fit in the greater scheme of things.
• Start at the top – Senior managers need to be crystal clear – and in complete agreement – about the organization’s priorities
• Keep talking – Strategy translation requires two-way dialogue. Employees need to know what this means to them and how they can make a difference.

What can be done?

Carnegie Management Group can assist you in developing the competencies to address the above by working with you to assist maximize the performance of your people. As mentioned earlier, at a time when companies are looking for every source of competitive advantage, the workforce itself represents the largest reservoir of untapped potential.

What strategies and skills must you employ to make the most of this potential? What is the best way to lead a crop of great people?

By assembling a great team, you’ve already put yourself ahead of the game. Rather than jump-starting the company on your own, you’ll have the easiest time, the most fun, and probably the most success by developing the team and letting the team develop the business. You just have to organize them and point them in the right direction.

Have you ever worked in a really high-functioning team? In great teams, each member brings their best to the party. They only do the things they’re best at, and they do them superbly. The work gets divided to play to each person’s strengths.

Identify your team’s strengths

Get the team together and explore each other’s backgrounds, expertise, likes, and dislikes. Match your discoveries to the work, so tasks go to whoever is most likely to finish them well and quickly.

Does a team member have contacts, industry experience, or experience in specific companies that will be valuable to the group? Put them on related tasks. Experience in a functional area or two can make a resident expert in those areas. Those with great people skills should be doing people work, while those who prefer to work behind the scenes can do research and build infrastructure.

Mental traits become great strengths when matched with the right challenge.

Don’t limit yourself to obvious business strengths. Mental traits can be even more valuable over time: long-term thinking, short-term thinking, idea orientation, data orientation, comfort with stress, technological comfort, people skills, strategic thinking, ability to challenge assumptions. There are hundreds of ways to slice mental traits, but whatever your framework, know that mental traits become great strengths when matched with the right challenge.

For example, some people prefer to follow established procedures. The business press worships “innovation,” “disruption,” and “destroying old paradigms.” Well, guess what? “Out-of-the-box” disruption is great for occasional big conceptual leaps, but it’s the established procedures that drive a successful business. And when boarding a plane, who really wants a disruptive, out-of-the-box pilot, anyway? Give me a pilot who loves completing their sixty-point safety checklist today with the same precision and care they used the first time they went through it.

A strength is nothing more – and nothing less – than a skill so well matched to a task that the results are stellar. Know your team’s skills, and you can all begin turning those skills into strengths.

Use your team to hone direction

Once you have the right “who,” the team can pool resources to choose the “what.” You’ve chosen a business, and your team can hone the strategy and tactics you’ll use to make it successful. In the book Good to Great, Jim Collins suggests that a team choose a single concept—your “hedgehog concept” —to unite the business. The hedgehog does only one thing: roll into an ironclad ball. But the strategy works so well that it’s invincible on its own turf. Your hedgehog concept comes from a brew of your individual values, skills, competencies, and a healthy dose of business sense.

Passion

Rally your company around something you can be passionate about. If you’re all deeply devoted to children, youngsters, and family, for goodness sake, don’t concentrate on publishing HTML reference manuals. Publish books for teens, young adults, and families. Choose a strategy that unleashes your collective inspiration!

Being the best

Your hedgehog concept should be something at which you can be the best in the world. It doesn’t mean you are the best, just that you can become the best. This can be trickier than it seems. Your team members and their skills will contribute to deciding where you can excel. Competition can also affect your choices. Even if you have the perfect team, existing players may have locked up areas of opportunity. If I were starting a grocery store, for instance, I’d be careful about hedgehog concepts that put me head-to-head with Wal-Mart. “Huge stores with great service” is a concept that’s taken. Even a superb team probably couldn’t be best in a world dominated by Wal-Mart.

Economic viability

Your hedgehog concept should make money. You should also be able to identify your economic drivers in the form of a measurable “profit-per-x.” Often, the “x” is not obvious. For your strategy to make sense, you may choose a subtle “x.” Collins relates the story of a company whose strategy was to cluster stores in one geographic area to be most convenient for customers. Rather than measuring profit per store, the company realized that profit per neighbourhood was the key to driving operations, compensation systems, and organizational learning in pursuit of convenience for their customers.

Monitor the commitments your team makes

As you begin implementing your strategy, pay close attention to the commitments you make. Commitments provide flexibility and focus, but can also bind you to a long-term course of action. Since your venture is quite young, you don’t have a lot of operating knowledge to choose commitments wisely. So keep yourself as flexible as possible until you’re fairly sure of your course of action.

Commitments come in all shapes and sizes, but some of the most powerful are the agreements you make on how to frame the world. Your beliefs about what customers want and how they behave, if propagated throughout your company, are a very powerful frame. Ken Olsen, founder of Digital Equipment Corporation, was famous for rejecting IBM’s frame that computers meant room-sized boxes that were only useful to large corporations. He built DEC and revolutionized the industry by inventing the minicomputer. Unfortunately, he got caught in his frame of the minicomputer being The Answer. Oops. In the late 1990s, his once-leading company was acquired by upstart PC maker Compaq.

Supplier and distributor relationships can become commitments. Decisions to vertically integrate (or not) can become commitments. Deeply held cultural values can become commitments. Large capital expenditures can become commitments. One entrepreneur recently told me his company had perfected the ability to open a new market and quickly achieve a 25 percent-plus profit margin.

Unfortunately, while going up their learning curve, they built factories several times their optimal size. The company’s survival is still touch-and-go – not because it’s a bad business, but because early commitments have saddled the company with unproductive, expensive assets.

Become a leader, not a manager

Finally, spend regular time leading rather than managing. You’ve got a good team, and you’ve jointly chosen a direction. Now your job is keeping the company on track. Keep your team working well together, and make sure you’re building a company where everyone plays to their strengths. Know your hedgehog concept, discuss it regularly, and make sure it guides the company’s daily decisions. Spend time thinking strategically with your management team. Have them project the hedgehog concept out one, three, or five years into the future, and steer the company and its commitments towards that reality.

Know your team’s skills, and you can all begin turning those skills into strengths.

Your job is creating an environment where your employees can do their best. Give them all the credit. Recognize and celebrate their accomplishments. When they screw up, lead an “after action review” to help them learn. Remember that you’re building a culture that brings out and amplifies everyone’s strengths, so use mistakes as an opportunity to re-examine the strengths of the team and change your tactics, your assumptions, or your organization.

For now, focus on getting your company off the ground. You’ve hired the crew; together you’ve charted the course – and as a suggestion print out the next page as your navigation guide of the 12 key cornerstones of a successful and dynamic start-up. And don’t forget – you can’t do it all yourself. So for all you entrepreneurial “buy & sell” creative folks, a good CEO/GM would not astray either – as your “Chief Implementer”.

Now stand back and let them bring the dream to fruition.

These were not Paul’s employees, bosses or friends. They included corporate or government leaders, business owners and executives who engage him as a business mentor (and coach) and who felt free in a one-to-one setting, to confess how they were really feeling about their jobs. Big pay packets and titles are no buffer to human needs and emotions.

It’s a cliché, but life at the top really can be lonely or isolating, says Paul, because few employees can imagine that their “superiors” might sometimes feel vulnerable and bewildered. He’s been there too!

Few employees realise that they might lock their bosses into a projection in which they become a figment of someone else’s imagination, he says. “Leaders can be ascribed all sorts of motives and circumstances that they just don’t want to have.”

As an executive goalkeeper™ and Chief Executive of the Carnegie Management Group, the Sydney-born Smith, 55, is hired by leaders to be the “deep, tough friend”, with whom they can develop enough trust and rapport to allow them to navigate the issues of leadership – both personally and professionally -hired by both the organisation and the individual alike.

“They benefit by getting stuff off their chest. I often find myself caring for people that others don’t care for. If we can talk about an issue and then isolate the source, we can then work with it”, Paul says.

He also leads workshops on the question of how to bring more meaning, more heart, into a working life. He individually mentors employees who have suddenly been elevated into tough new roles – or help them to get there.

“Not everyone is immediately perfect for a new job, so I help them to get the job under their belt.”

He is well qualified for this role, as he has experienced these dynamics first hand over the earlier part of his career. Graduating from Sydney University as a Bachelor of Economics he rose through the ranks of the Oil Industry with a heavy bias towards Marketing, Corporate Planning and profit centre accountabilities involving “big numbers” he proudly says. These General Management roles were followed by senior executive roles in the Logistics Industry.

Paul therefore understands workplace pressure and the need to perform – particularly in a multifunctional role that requires the leadership of managers.

However then his transition occurred, shifting his passion to work with the “real people”, he says. Hence his drive to assist executives as their third party support base, their work colleague “removed”.

“Sometimes I used to recruit them, so my background, by definition, also involved career transition.” he says. “But then my focus shifted and I became more interested in what was happening to individuals, rather than what was happening to organisations in the first instance. Hence clients also include business owners in their own right. They are no different!”

As an Executive Goalkeeper™ Paul consults with men and women from all walks of life, in those existing leadership roles – including those aspiring to leadership – “by bringing another way of looking at things that should matter.”

The ability to seamlessly transfer from mentor to coach is the cornerstone for him, and for them.

Some of the relationships, conducted in regular two-hour meetings that encourage reflection and feedback, have lasted for years. “Human change doesn’t happen overnight.” This includes empathy, passion for the job, future vision, life balance and vulnerabilities.

The soft stuff is that which allows connection to the client and to the colleagues. It allows connection on the basis of feedback. A simple example: asking a client how they feel.

It allows people to reveal their vulnerability to him and, in some cases, to employees. “It’s a risky phrase nowadays,” he says, “but to get to empathy with employees and clients, a person has to do an awful lot of hard, intimate work on themselves, particularly the leader.

“It sounds benign, but it is necessary for leaders to do the soul searching that brings them back to the specifics and that leads to new insights.”

This then culminates in goal setting, milestones and ongoing review – particularly important in an ever-changing world. However as far as possible, stick to the game plan he says.

“They do have to be willing to fumble and to get to the fuzzy edges where they discover something and create new models and potentials. Also they need to be able to embrace new behaviours perhaps. Followers pick up on the authenticity of the leader.”

Coming from such long experience within corporate Australia, Paul now sees here a rather adolescent working culture that is under-confident and that still emphasises skill-based competency above all else.

“Most people tell me their organisation is only interested in their competencies, when what they really want to feel is some more purpose in their work.”

“Some of the briefs I’ve had from organisations have requested me to help people to bring more of their heart to work. They want to know how to breathe life into their work.”

This can happen if an organisation permits and nurtures whole human beings at work. “When that occurs, and an individual starts to seek more meaning, they become more creative, passionate, engaged and empathetic. They are happier and more fulfilled,” he says.

This is an adult working culture where there is a balance between work and culture and where “love” does play a part. The baby boomers (executives) are moving into adulthood (parenthood) at work and they are beginning to deal with issues of “generativity” and care.