Archive for February, 2012

Company Culture after M&A

Recognize This! – Merging cultures and is as critical as merging “the books.” Be sure to give it the attention it deserves.

Yesterday, I offered a review of the book Building a Magnetic Culture. Nowhere is that more difficult – or more necessary – than in an organization that has just completed a merger or acquisition. One reason this is true is because culture is a constantly moving target, and one that moves faster under stress.

A recent article in HRZone.co.uk pointed out:

“As soon as a merger or acquisition is announced, the culture of both entities begins to change as people start to think about, and behave towards, their immediate environment in a different way.”

That change begins to happen as soon as the M&A is announced. The fear factor kicks in almost immediately (a topic ably addressed in this article speaking to the impact of evolutionary psychology on employees going through M&A).Employees start to worry about their positions, redundancies, changes in reporting structure or responsibilities, and an number of other factors.

One such major concern is the culture of the company. Most people are at least accustomed to the culture they work in if not actively fond of the culture. The fear of how “they” do things in the other group is almost palpable. One client of ours tells the story, after several acquisitions in a short period of time, you could walk into a meeting and see people picking out “one of them, one of us… I’ll sit with the ‘one of us’ person.”

Often the best solution is to work with all employees across the merged organization to create a new culture. The HRZone article goes on to point out:

“Creating a new culture is not about ‘creating a new culture’. It is instead about establishing the right processes and capabilities to lead to a new culture. It starts with forming a senior leadership team that understands this proposition and is prepared to show others what the new organisation is really going to be about.”

Often this requires respecting the cultural mores of both organizations. A wise approach can be to begin again with defining the core values of the merged organization, re-establish the strategic objectives, and then clearly communicate those changes to all employees. A baseline requirement – involving people from multiple functional areas and levels and definitely both organizations. As HRZone reiterated:

“By involving staff from all areas of the new entity as well as all of the former brands from each country, employees quickly began to see how the newly-integrated organisation would really work. They were also provided with some real evidence to this end and as back up to an extensive and professional communications programme.”

A final point to make this real is to use positive reinforcement via strategic employee recognition to bring those new core values and strategic objectives to life within the daily work of all employees. I’ve briefly outlined 5 steps to do so in this post.

Have you gone through a merger or acquisition? What was the impact on the culture in your organization? Did one entity dominate and force their culture onto the other, or do a truly new culture emerge?

Building a Magnetic Culture – A Review and Recommendation

Recognize This! – Great books on organization culture are few and far between. Building a Magnetic Culture is a must read.

Readers of my blog know that organization culture is passion of mine – especially how to build a culture of recognition and then proactively manage it. I’ve heard many discount the ability to manage a corporate culture, but indeed you can. As my CEO Eric Mosley and I said in our book Winning with a Culture of Recognition:

“To say that corporate culture cannot be managed scientifically, with rigorous and authentic processes, is a myth with damaging consequences. An organization’s culture can be learned, encour­aged, ingrained, and applied to every business process, in many forms and across many different parts of the organization. Applied correctly, culture management through recognition is one of the most powerful, effective and, most critically, positive ways to drive the success of your organization as measured by improvements in operating margins, income, and customer satisfaction.”

Kevin Sheridan’s book Building a Magnetic Culture is a perfect example of why this is true and an excellent guide for how to create a culture in which employees would choose to engage. Fundamental to this are the 10 Key Drivers of Employee Engagement, identified through the decades of research and analysis of millions of employee surveys conducted by the Research Institute within Mr. Sheridan’s company, HR Solutions. These are the 10 key drivers because 84% of employee engagement can be attributed to them. Of these 10 drivers, recognition is the one most responsible for engagement.

Throughout the book, Mr. Sheridan points out several interesting findings relative to recognition and organization culture:

  • “Employee’s feelings about the Recognition she receives accounts for 56 percent of the variance in her level of engagement.”
  • “Only 59 percent of employees say their supervisor lets them know when they have done a good job, revealing that many employees do not feel as though their managers acknowledge their accomplishments.”
  • “When employees feel recognized in the workplace, they are statistically more likely to be Engaged employees, meaning they will work harder and produce a higher quality result… Even the most hard-nosed supervisors should be able to see the value in providing regular and meaningful Recognition since it is indirectly tied to revenue through Engagement.”

Building a Magnetic Culture addresses several other areas critical to employee engagement that strategic recognition strongly contributes to including making work more meaningful, communicating more effectively with employees, proper onboarding (“only 59% of employees believe their orientation was adequate!”).

Why Should You Care?

To combine and paraphrase several points addressed by Mr. Sheridan: 80 percent of employees never make it beyond the two-year mark. There is a steep decline of Engagement levels from 36 percent to 17 percent after one year of service. Appreciation is a key element to help those employed 1-5 years stay engaged. Millennials like to be recognized an average of seven times a day (even if just acknowledgement that an email was received and read).

And, critically to the bottom line: engaged employees are 10 times more likely to feel good work is recognized and 7 times more likely to feel they receive regular performance feedback. In terms of performance and productivity, nearly 80 percent of engaged employees received the best performance rating on their evaluation.

As you can see, Mr. Sheridan packs a great deal of knowledge, insight and analysis (as well as numerous informative case studies and application suggestions) into a highly readable and helpful volume. I encourage those who care about organization culture, employee engagement and recognition to give it a read and – more importantly – apply the principles in your own workplace.

One parting thought – Mr. Sheridan spends a good deal of time speaking to the importance of incorporating fun into the workplace. I couldn’t agree more, especially after reading this stat:

“Five-year-olds laugh an average of 113 times per day. As we get older, this number continues to decrease until it bottoms out in adulthood – from age 44 to retirement with only 11 times per day.”

Laughter is important to our well being in countless ways. It’s also core to a culture of recognition and appreciation in which everyone understands their value within the organization and to their colleagues. My challenge to you – laugh more every day. Give those around you reason to laugh and smile. Recognize and appreciate their efforts … and you may just change your culture in the process.

Webinar 29th February: Unlocking Performance – Engagement through Recognition

Recognize This! –Learn from the best in this webinar on Aberdeen’s research results showing the direct and profound connection between employee recognition and engagement.

My colleagues at Globoforce are participating in a webinar on Wednesday, 29th February, with Aberdeen Group, discussing Unlocking Performance: Engagement through Recognition.”

Aberdeen studied more than 400 organizations and their employee engagement and performance management strategies, covering a wide variety of industries and geographies. As a result of the research, they found:

  • Organizations with the highest levels of engagement and performance achieve more
  • Employee recognition has a dramatic impact engagement, recruiting and individual performance
  • Reporting tools are critical to avoid unintended consequences
  • Social recognition plays an important role in recognition adoption and culture proliferation

I hope you can join Thad Peterson from Globoforce and Mollie Lombardi from Aberdeen Group, as they lead a discussion on the connection between an engaged workforce and organizational performance, including:

  • Aligning employee behaviors with the drivers of business performance
  • The links between engagement and improved retention, and performance
  • Building a culture of recognition by making engagement a core competency
  • Ways to tap into the power of social recognition

Thad and Mollie also plan to discuss:

  • The business case for employee engagement
  • Tips for improving employee productivity
  • How top performing companies retain their best employees

Be sure to register for the webinar today!

What Wells Fargo Gets Right: Know Your Employees, Customers and Business

Recognize This! – Knowing your business, defining your culture and – critically – ensuring every employee understands both are fundamental to success.

Banks and bankers have been much in the news the last few years, usually taking the heat for poor or questionable business practices that have inarguably hurt the economy at large as well as the average homeowner. Yet Wells Fargo’s story is different. A recent Forbes magazine cover story highlights what makes Wells Fargo different and worth more than any other American bank (with the largest market capitalization of $161 billion).

“Let those [other] banks trade wantonly and race to beat each other to marginally profitable investment banking business. Wells does what banks are supposed to do: take deposits  and then lend the money back out.”

But Wells Fargo does more than just focus on its core business. It does so by focusing on the needs of its employees and customers – not its shareholders (of whom Warren Buffett is the largest). A sidebar in the Forbes article notes several elements of Wells Fargo’s Vision & Values, including:

“We believe shareholders come last. If we do what’s right for our team members, customers and communities, then—and only then—will our shareholders see us as a great investment.”

Shareholders will suffer if customers aren’t happy. Your employees are the front line in making your customers happy. You must start with your employees. You must create a culture in which your employees can thrive – which leads to this Vision & Values statement from Wells Fargo:

“We define ‘culture’ as knowing what you need to do when you get up in the morning without having to be told what to do.”

But being able to do that means every employee has to know what business you’re in. Wells Fargo defines its primary business this way:

“At Wells Fargo, sales and service are inseparable. More sales do not always lead to better service, but better service almost always leads to more sales. Money is a commodity. We’re in the service business.”

A service business with a culture of serving fellow “team members” and customers, which turns into shareholder value — it’s not hard for me to understand from that why Wells Fargo is the most successful American banking institution today.

Do your employees and customers take precedence over your shareholders? Does every employee know what business you are truly in? Can they articulate your culture in how they perform their work every day?

Core Values and Belief Systems * Lessons from The Corner Office

Recognize This! – Without a foundational “belief system” in your organization, you cannot align employees with your goals and objectives.

Regular readers of Recognize This! know that the New York Times “Corner Office” column is a perennial favorite of mine. Every Sunday, Adam Bryant interviews a CEO discuss the challenges they see, how they address those challenges – essentially, how they lead.

I was particularly impressed with last Sunday’s column, featuring Steve Stoute, chief executive of Translation LLC and chairman of Carol’s Daughter. Mr. Stoute addresses several fundamental issues of leadership, including the importance of having a foundational “belief system” (which I typically refer to as the core values of the organization):

“You have to set a belief system in your organization. Once you do that, if you have people who have not bought into the philosophy, you need to identify them and move them out quickly. It’s to their benefit and your benefit. If you ask most executives, they know within the first 30 or 60 days if a person is going to work out, but it takes them seven months to a year to get them out of the organization. That’s a waste of time.

“I think that it’s very important, no matter how big you get, to have checks and balances to know when somebody has not bought into the culture, because at some point in your organization, something is going to backfire and something’s not going to get done because somebody’s not paying attention. The beliefs of the organization are not going to be passed along because you have people who have not even bought into the belief system. And here’s the biggest problem: Bad behavior is contagious. And once that starts hitting a company, no matter how big you are, no matter how small you are, that will start the demise of a great organization.”

Mr. Stoute makes the very important connection between defining your belief system and being willing to take hard action to enforce that belief system. You have to be just as willing to dismiss employees who do not buy into your belief system as you are to recognize and reward those who do. Not doing so is the fastest way to undermine your core values (your belief system) and create a culture opposite of what you likely want to see. Mr. Stoute continues on this point:

“Bad behavior is the blatant act of ignoring the belief system of the company — it means not paying attention to the strategic intent of the company and not being aligned around the goals of the organization. So when somebody has not bought into the system, that becomes very contagious, it becomes a cancer in the organization, especially when you’re talking about midlevel talent. Because any organization is not going to move forward unless mid-tier management helps foster young talent to become better. And then you are actually going to lose talent.”

Aligning your people with your goals is another favorite topic of mine. How can you expect to achieve your strategic objectives as an organization if your employees do not understand how to contribute to those objectives in their daily work or – as Mr. Stoute points out – they simply do not buy into it?

Does your organization have a clearly defined belief system or set of core values? Is senior management willing to both hire and fire based on that belief system? Are your employees aligned with those goals and beliefs?

Hermes CEO on Employee Engagement and Brand

Recognize This! – Communication and “Face Time” are critical to building employee engagement and strong brands.

If I asked you what industry you think would be the most difficult to create an environment in which employees would want to engage, which industry would you name? Retail is an industry that quickly comes to mind for many reasons, not the least of which is the mercurial nature of customers in a retail setting.

So when I saw this video of Bob Chaves, the president & CEO of Hermes US talking about the importance of employee engagement and brand, I had to share it with you.

Mr. Chaves speaks to the importance of organizational culture to brand and engagement saying:

“At Hermes, we have a very strong service culture geared towards service and quality. And that is something we extend throughout the entire customer experience.”

But how do you do that? You can’t without very intentional and robust employee communications methods.

Importance of Communication

When asked, “How do you strengthen that culture and build the bond between the employees and the brand?” Chaves replied:

“It’s about communication. This sounds so simple and easy, but it’s so very important. We have a very open and communicative company. This starts with the senior management team and how they communicate on down the line. It’s also about how I communicate with the whole company in general. One of the ways we do that is the ‘State of Company’ address doing a review of what we did in the past year and what we’re focused on in the next year. That way everyone knows what the goals of the company are. We’ve been doing this for years and years now, and it’s very effective. So that’s how we strengthen our bond and relationships among all of our employees.”

That active element of sharing successes as well as plans for the future is critical. Obviously, Hermes is committed to communication. My only quibble with this approach is that it is once a year. If Hermes implemented a system to communicate these successes and plans regularly in a way that is meaningful to employees in their daily work, then think how much more the employees would feel connected to the organization and the “service and quality” brand on a daily basis.

Importance of Bringing People Together

One last point I enjoyed in the video was Mr. Chaves explanation of shutting down all 24 Hermes stores in the US to bring all employees together at one location for a “family reunion.” Mr. Chaves explains, “The bonding and motivation that resulted from that has been astounding.”

Building the “team” is critical, but it’s simply not possible for many distributed organizations to shut down to bring everyone together. But the reward of being able to put that “face to a name” is exponential. This can be accomplished through Social Recognition in which employees can recognize and congratulate their colleagues on their achievements, interacting with them much as they would in familiar social networking tools.

How do you strengthen your team? What methods do you use to communicate past successes and plans for the future regularly and frequently to all employees?

Find Your Talent before You Accidentally Let Them Go

Recognize This! Every organization has critical, but hidden, talent. Finding and utilizing them creates significant competitive advantage.

The U.S. sports world has been abuzz with “Linsanity” – hype about the excellent performance of Jeremy Lin, an NBA-league basketball player who came off the bench and immediately displayed stunning numbers.

Regular readers of my blog are likely asking, “Derek follows U.S. basketball?” No, not really. But I do follow research out of Cornerstone and Jason Corsello’s Human Capitalist blog. Last week, Jason wrote about Jeremy Lin, pointing out that – based on his stats from college basketball – Jeremy was predicted to be a star. Yet he was very close to being released from his team, the New York Knicks, before getting his chance in the spotlight. In fact, two other NBA teams had already cut Lin.

“That begs the question – why aren’t most companies analyzing their employee data to find the rising stars. One could argue that Jeremy Lin’s heritage (Chinese) and experience (Harvard) didn’t necessary sound the bell in an industry where pedigree and success looks very different. Every company must have many Jeremy Lin’s running around their offices. The answer, though, is most won’t be found (and likely lost) until performance focuses on the outcome instead of the process.”

I tend to think, however, there isn’t enough performance focus on the outcome OR the process. The essence of the challenge is simply not enough data points. I don’t need to hash through (again) the failures of the annual performance review as one-time feedback from one point of view.

The question becomes, how do you build the data on your talent so you can find your Jeremey Lins? What’s the RSB40 score (a critical basketball stat) for your talent?

You need more data. A strategic employee recognition program can give it to you. When all employees are encouraged to praise their colleagues in very specific and detailed ways, you get far more data points on performance and therefore a much broader picture of your talent on both an individual and aggregate basis.

Do you need your most innovative product designers for a huge new product development push? Simply parse the data to find which product designers – anywhere in your organization – have been recognized the most for innovation. If you structure your program properly for what matters most in your organization, you can turn your recognition data into your own form of “moneyball” for your hidden talent.

How do you make sure you’re not cutting your star talent before you even give them a chance to succeed?

War for Talent in the Midst of High Unemployment

Recognize This! – Your employees are more skilled in more areas today than before the recession, making them far more valuable in the employment market.

How often do you hear this refrain: “Employees should be grateful to just have a job.” Or “There’s a lot of people looking for work right now. I’ve got my pick of the cream of the crop.”

Recruiters I know cringe when they hear this. Appropriately skilled employees are harder to come by now than ever before. Why? BizCommunity recently featured results of Deloitte’s 2011 best company to work for survey that gives some insight into this challenge, including these comments from Ricky Robinson, CEO of performance agency LRMG:

“He suggests that what is happening is employees are being required to multi-skill and do more. In doing so, these employees are becoming more competent and hence more valuable to their organisations, and are suddenly finding themselves more mobile. At the same time, employers are far more reticent to employ inexperienced people, albeit that they may be well educated. Hence, a further talent vacuum is developing. The talent pool has suddenly become richer but at the same time a lot shallower.”

In essence, because employers have cut staff, employees are taking on multiple roles, learning more and constantly growing their skills. As a result, companies can’t afford to lose the talent they have. The reality is, retention is a key issue today, even in the midst of high unemployment.

Mercer found the same thing in research released late last week:

“Mercer’s HR & Mobility Challenges of Emerging Markets Survey found that more than half (59%) of participating organizations cite scarcity of local employees with the required technical skills as the most critical human resources challenge in emerging markets.”

So, how should organizations focus their efforts to retain staff in this environment? Robinson continues:

“According to Robinson, a successful talent strategy should ultimately ensure that talent is aligned to the organisation, is loyal to the organisation and wants to be part of the future success of the organisation. This can be achieved by taking certain organisational environment factors into consideration. ‘A culture of high performance, where good performance is consistently and equitably recognised and rewarded and consequences for poor performance are clearly understood, is a good starting point,’ he suggests.”

Consistent recognition is the key. Consistently, specifically, and authentically praising employee behaviors and achievements in line with your core objectives helps your employees understand that your company needs for success so they can align their efforts and contribute to that success. In fact, Robinson put it this way:

“Employees should know where the company is going, why they are going there and what their specific roles are in this plan. There also need to be regular and robust feedback loops ensuring ongoing alignment.”

What are you doing to ensure your key performers aren’t on the front line in today’s war for talent?

Valentine's Day, Mistakes, Bonuses, & Seats at the Table at Compensation Cafe

A few of my colleagues teased me that I didn’t write a post about “loving your employees” on Valentine’s Day earlier this week. Indeed, I did! But the teasing reminded me I haven’t shared with the Recognize This! community my recent posts on Compensation Café.

3 Reasons Valentine’s Day (and Poorly Designed Employee Rewards) Often Goes Badly (14th February 2012)

Valentine’s Day is certainly not a beloved holiday by many. Yet it persists, year after year. The same is true for poorly designed employee recognition and reward programs for similar reasons: it’s a Hallmark holiday, appropriate gifts are prescribed, and it can create the opposite of the desired effect.

You Made a Mistake? Great Work! (2nd February 2012)

Sometimes, mistakes move us forward. Smart businesses (and business leaders) know that. But what are the ingredients of a good mistake? I add my own ingredients to the “two prime ingredients of a brilliant mistake” offered in an Inc. magazine article, suggesting a truly brilliant mistake also requires:

  1. A culture in which people are expected to be curious and to pay attention to mistakes – to the “what just happened” moments – and make out of them what they can.
  2. A commitment to recognize and reward mistakes, not just successes.

Yet Another Reason to Rethink a Bonus Culture (24th January 2012)

In this post, I discussed recent research highlighted by Dan Pink that found raising the issue of money makes people more single minded and harder working, but also makes them less likely to help others. I question if the trade-off is worth it – especially when I keep in mind the research showing that hearing a simple “thank you” made the recipient 100% more likely to help again in the future.

Who Needs a “Seat at the Table” When You Can Do This? (11th January 2012)

The articles, posts and discussions around “HR getting a seat at the table” are too numerous to count. In this post, I recount the approach of Randy MacDonald, senior vice president of HR at IBM, in taking HR beyond administrative functions to truly strategic, transforming the culture of IBM in the process.

Appreciation Shouldn’t Ever Be Put on Layaway (28th December 2012)

I was powerfully moved by reports in the U.S. before Christmas of people going into stores and paying off the layaway balance of perfect strangers, in some cases making Christmas possible for many families. In those stories, I saw three clear lessons we can all learn from and apply in the business world:

  1. Do something nice.
  2. Inspire others to do the same.
  3. Inspire others to do even more.

I greatly enjoy participation in the Compensation Café community and learn from my colleagues in every post. I recommend it highly to those interested in HR, management and leadership.

Employee Engagement Round-Up

Recognize This! –CEO leadership is crucial to creating work environments in which employees will choose to engage.

In the last couple days, I featured very interesting research on the difference between Employee Engagement and Sustainable Employee Engagement from Towers Watson as well as research from Kenexa on declining employee engagement levels globally. It would be impossible for me to give that kind of in-depth consideration to the multitude of excellent posts and writings on employee engagement. So in today’s post, I’m featuring just a few that I found particularly interesting in the last several weeks.

From People Management magazine: “CEO buy-in crucial to boosting engagement levels”

Reporting on last month’s CIPD Employee Engagement and a discussion of the change programmes led by senior leaders, this article includes several stories of executives changing the culture in their organizations to one in which employees would want to engage. Click through for the stories – including powerful results.

From NBRI: “Employee Engagement: Leading by Example”

I believe every person at every level in an organization has a role to play in employee engagement. But without leadership from the top demonstrating expectations for behaviors that lead to engagement, it’s difficult to expect the average employee to understand what they should do. This article makes a good argument for the role of the executive in employee engagement.

From Bersin: The Employee Engagement Primer

Though it’s a term that has become much more common during the last several years, they myriad of definitions of engagement; the difference between actively engaged, engaged, disengaged, etc.; and multiple survey and measurement instruments lead some to give up on working to improve engagement before they start. This introduction from Bersin makes it more clear.

What are you doing in your organization to increase employee engagement? Do your executives lead by example?

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