CEO's still not seeing (or believing) the link between employee engagement and the bottom line?

According to research published this week by Ashridge Business School some CEO’s are still struggling to “engage with engagement”.

This despite the fact that the UK clearly has an employee engagement problem.  Survey after survey in recent years shows that only about a third of UK workers consider themselves engaged – a figure which leaves the UK ranked ninth for engagement levels amongst the world’s twelve largest economies as ranked by GDP (Kenexa 2009).

In November last year Dr Bruce Rayton, from the School of Management at the University of Bath, co-author of another report entitled ‘The Evidence’ – concurred with this figure and suggested this effectively means that two thirds of UK workers (20 million people!), feel they have “more to offer” at work, that they’re not performing to their full capability and potential.

Incidentally, I still hear discussions about whether the business case for employee engagement is proven!  Well if it’s not common sense that workers not performing to their capability isn’t good for any organisation, ‘The Evidence’ report also concluded that the total cost to the UK economy of poor levels of engagement is £26 billion.   And Dr Rayton said: “Engagement predicts future performance better than performance predicts future engagement. In particular, engagement predicts performance several years into the future.

“Engagement occupies a central role in “service profit chains”, with employee engagement leading to improved customer satisfaction, customer loyalty and customer advocacy which in turn drives future sales, operating profits and other financial outcomes”, he added.

And just in case there’s still any doubt, according to Hay “94% of the world’s most admired companies believe that their efforts to engage their employees have created a competitive advantage”.

Back to the latest Ashridge research, entitled ‘Engagement through CEO eyes’.  The research explored the topic of engagement during a year long study with 16 UK CEO’s.  It sought to find out how leaders define engagement, what stops them from leading in an engaging way and why engagement is not happening more in the UK.

It indicated that CEOs define engagement as an “organisational climate in which people choose to give the very best of themselves at work”.  No surprise there.  The CEO’s concluded that “being an engaging leader is hard and requires special skills and attributes” and that there is no single ‘right way’ to lead to achieve engagement, although a ‘command and control’ leadership style has declining relevance in a leaders job.  The report suggested that some leaders feel the difficult economic conditions of recent times is being used as an excuse for poor leadership behaviours.

One CEO said that “It is very easy when companies or countries are in crisis to have command and control and a belief that it needs a hero leader who is telling people what to do to actually get the thing moving forward”.  And several indicated that the challenges of the economy make it easier to ignore engagement, suggesting that it’s tempting to ‘;do what you’ve always done and wait for things to get better rather than do something different, and perhaps uncomfortable.

In terms of the things that stop leaders from leading engagement, the culture and system of UK business was seen as one of the main challenges.  CEO’s believed that organisational hierarchy and a focus on short-term* results are diametrically opposed to creating engagement.  Some leaders clearly still don’t see (or perhaps believe) the connection between engagement and the bottom line.

Other barriers identified in the report were shortcomings in leadership capability, for example poor self-awareness and having limited “emotional connections”, such as being open to feedback and sharing power.  Also traits like ‘leader pride’ may lead to behaviours inconsistent with creating engagement.  One CEO said: “There’s a whole set of worries that goes on with people, most of us like to be popular and actually you can’t.”

However, the good news is that some of the CEO’s talked about how the future of leadership needs to have engagement at its core, particularly given the differing expectations of a multi-generational workforce.  One said: “I think big corporations have got a massive challenge if they think they’re going to retain talented people through command and control and not including them into decision-making and creative processes early on.”

The report concludes that engagement is the better way to release the full capabilities and potential of people at work and in so doing to enable organisational growth and ultimately economic growth for the UK.

I agree - but more CEO's need to 'get it' first.

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*I wrote about the problems of short termism almost 18 months ago.  First here: http://www.inaccord.co.uk/a-customer-engagement-manifesto-for-2012/

and a few days later here: : http://www.inaccord.co.uk/short-termism-the-dumbest-idea-in-the-world/

These issues are still current, and still a big problem!

Who owns culture?

I was reading an article on the BBC website yesterday about the Maasai people in Africa.  It reported how the Maasai are organising themselves and hope to prevent companies using the Maasai brand without their permission.

In it Isaac, a Maasia leader, elder and chair of a new organisation, the Maasai Intellectual Property Initiative (MIPI), is quotd as saying: “I think people need to understand the culture of the others and respect it.  You should not use it to your own benefit, leaving the community – or the owner of the culture – without anything.”

The problem is that until now there hasn’t been a unified Maasai body to approach to seek permission to seek permission to use the brand, though the inititative seeks to change that.  And MIPI hopes that selling the rights to use the Maasai brand might earn the Maasai people millions of pounds of income each year.

In this instance MIPI is seeking to establish ownership of the brand and the culture which is associated with it on behalf of the Maasai people.  But in business, who ‘owns’ culture?

It’s clear that responsibility and accountability for culture rests with the board and senior management team of any organisation.  Failure to recognise that has cost some business leaders dearly in recent years.  Bob Diamond lost his job because of it.  So did Rebekah Brooks.  And Sir David Nicholson still might lose his.  Some have argued that they understood their responsibility for it but that their knowledge of it wasn’t sufficient, that they didn’t understand it with sufficient clarity, a clarity that enabled them to act to manage the risks inherent in it and which, when they came to fruition, couldn’t be mitigated.  Others claim that they understood their responsibility but didn’t want to accept accountability.  In truth, there may be an element of all of those, but I think all indicate very strongly a need for large organisations to have a unit responsible for monitoring culture and being the conscience for it within the business.  Reporting in to a member of the executive, it also needs to have a degree of independence so that it doesn’t become part of, and subject to, the culture of the business.  If it lacks that independence it loses impartiality and as a result, value.

But responsibility is different from ownership.  Culture is about groups rather than individuals.  As Hofstede said: “Culture is the collective programming of the mind distinguishing the members of one group or category of people from others”.  Consequently ownership cannot lie with an individual, instead it rests with the group who constitute it.  They may not recognise it, or want to accept it, but they own it nevertheless.

The distinction is an important one for leaders to understand.  They must accept their responsibility for culture and that they are accountable for it whilst also accepting that ownership lies elsewhere – with the group as a whole.  This understanding is key to the process of changing culture.  Accepting responsibility means mitigating the risks (and maximising opportunities) of the current culture and failure to do so may see them held accountable for the consequences.

But they must also accept that the actions they take to adapt and evolve culture will very rarely produce the immediate and intended result.  It’s not like shifting the track and changing the direction – as a signal operator might do with a train.  There is no lever to pull to produce a guaranteed response.  A leader must instead take actions that affect the environment in which the group works so that it collectively engages and moves.  The leaders role is to create the conditions in which those who own it make it happen.