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The Importance of Behavior-Based Recognition and Reward – A Goldman Sachs Illustration

Recognize This! – Deeply embedding your core values in how employees are rewarded is critical to overcome too much emphasis on results achievement to the detriment of company reputation.

A foundational tenet of strategic employee recognition is recognizing the “how” as well as the “what” – in other words, acknowledging and praising the manner in which results are achieved as much as recognizing the results themselves. This is a critical point as simply recognizing the “what” (the results) without recognizing the “how” (the values demonstrated in achieving the results) can quickly lead a company down the Enron path. After all, one of Enron’s core values was “integrity” but that surely wasn’t apparent in how their employees were encouraged to achieve end results.

Another company in the news during the recession for too much focus on the “what” was Goldman Sachs. Now, I’m pleased to see the investment bank in the news for promoting a new reward approach based on demonstrating “cultural” behaviors in line with their company mission and reputational goals. From their Business Standards Committee Impact Report:

“We also changed our annual employee performance review and rewards processes to include an assessment of reputational excellence, linking “cultural” behavior to how our people are recognized and rewarded…

“Now, as part of the review questionnaire for all professionals, reviewers are asked to rate the reviewee with regard to their focus on trust, transparency and long-term orientation in connection with client relationships. These changes have reinforced four key messages to all of our employees regarding (1) the importance of serving our clients, (2) the importance of protecting the firm’s reputation and upholding our culture and values, (3) the link between ‘cultural’ behavior and how people are recognized and rewarded in our organization and (4) individual and collective accountability…

“These changes have impacted our decisions about compensation and who we reward. Moreover, our review and reward processes more powerfully communicate and reinforce to our professionals the need to focus on our clients and our reputation and to always act in accordance with the highest standards of the firm.”

Incorporating your core values into the formal performance review process directly is certainly one way of effectively driving home the importance of the “how.” Doing so more informally and frequently through timely, specific recognition throughout the year is also necessary to make living these “cultural behaviors” become second nature in how the work gets done every day.

How does your organization reinforce your core values in how employees are measured, recognized and rewarded?

2 Factors Critical to Building Trust (and Engagement) at Work

Recognize This! – Managers must be willing to engage in the difficult aspects of managing others in order to help all employees achieve to their best ability.

As I continue to catch up on a backlog in my readers and research feeds, I’m seeing themes emerge. One is around the importance of trust for employee engagement. Employees who do not trust company leadership will not (indeed, cannot) engage as deeply in their work. They do not give their best efforts because they do not see the value and benefit of doing so.

Just a couple of key factors to building trust in the workplace jumped out at me.

1) Managers must be willing to have the hard conversations with low performing employees.

Many were surprised at recent survey that low performers are often more highly engaged than high performers. I was not, simply because low performers too often don’t know they are low performers. Therefore, they are quite happily skating by at work. It’s the effect on the high performers who see their lower producing colleagues getting away with it that dramatically impacts trust in the organization. Or, as Mark Murphy, CEO of Leadership IQ (the company that did the survey behind these results) said, “It shows high performers that the organization is not a meritocracy.”

Managers must be willing to have the difficult conversations with low performers, not only to help them improve their own skills and productivity, but to also help build trust with top performers that leadership will do the right thing to reinforce best effort from everyone.

2) Managers must appropriately value employee effort as well as achievement.

Let’s be honest. Every innovative approach and thought doesn’t work. We know that to be true at Globoforce where our core values are Respect, Imagination, Determination and Innovation. The four together drive our success. While it’s all well and good to imagine new ideas and approaches, unless we have the determination to see them realized and the respect for each other as we do, we will never truly deliver the innovation that pushes our industry ever forward.

And yet, part of that approach means we sometimes imagine something that doesn’t work as expected. But we can always learn something from that effort and apply those learning to continue to imagine and innovate. That’s the determination needed to keep moving forward. Without validation of and respect for the effort and encouragement to find the lesson (even in the failure) and move forward, employees would lose trust in our values and our goals as an organization.

What other elements are critical to building trust?

You Cannot Document Your Cultural DNA. You Must Live It.

Recognize This! – Your culture is alive. You must breathe life into it daily through timely recognition of those living your cultural DNA (your values).

Today, I’d like to share with you a case study on the importance of values and how you make them real. I’m using as my case study company Guidewire Software, which I learned of through a New York Times “Corner Office” interview with CEO Marcus Ryu.

In the interview, Mr. Ryu shares how the six founders of the company created their values and their culture:

“We said we have to consecrate our principles in a document that we will refer to over and over. This will be our DNA and every new person who joins the company will read the document. We put a great deal of thought into this, thinking of it almost like a constitution that will guide our future actions.”

They also not only identified their values, but also gave each one a simple, easy to understand definition.

“We wanted to create an enduring business with a very strong set of values. We chose integrity, rationality and collegiality. Integrity is: simply tell the truth… No. 2 is rationality, which is to make decisions based on facts and logic… The final one is collegiality, which means minimum hierarchy.”

And yet, Mr. Ryu goes on to share this challenge:

“The thing I most dislike in an employee is two-facedness, where they manage up in a very diplomatic and collegial fashion, but they’re a tyrant down. That’s a very common duality that you see in the business world, and it’s pernicious because you may not realize the problem for a long time. One of the great dangers for people in my kind of role is that people are always so deferential to you. They’re always so solicitous and careful about your needs that you may get the false impression that this is just the way they are, when in fact they may be just doing that only in this very narrow context, and they are indifferent elsewhere.

“We’ve had a couple very painful examples where I thought someone seemed very competent, doing a great job, really responsive, and then found out that their team was in agony and ready to quit the company. It was almost a Jekyll and Hyde kind of situation. It was just shocking to me because I would never have detected it on my own. It’s a great challenge in organizations to make sure you somehow provide a conduit for people to get that across.”

Clearly, this kind of behavior violates the value of “collegiality.” So where did the founders’ plan to create a strong, values-based culture that would “guide our future actions” fall apart? They relied on a document as the primary means of conveying the culture to new employees.

While it’s certainly important to codify your culture and what is most important to you for the organization to succeed, you cannot – indeed, you must not – rely on a document new employees read (and likely promptly forget). DNA is alive – if you want your cultural DNA to live and thrive, you must breathe life into every day. You must empower all employees, everywhere, to notice and appreciate those values being lived by others.

This makes your values come off a cold document and become real in the daily work – to truly guide the actions and behaviors. The management aphorism “You get what you recognize and reward” is very true. So recognize and reward your values being vibrantly lived, every day.

What values do you see being lived (or violated) in your organization?

Case Study: Culture Fixes a Troubled Company

Recognize This! – A powerful, positive, appreciative culture is critical to a company’s recover.

Earlier this week, the Wall Street Journal published a quite interesting article case study of Dynegy, Inc., in the article “Can a New Culture Fix Troubled Companies?” As the article points out:

“Increasingly, leaders of troubled businesses try to fix the company’s culture along with its bottom line. Since the financial crisis struck in 2008, CEOs have sought to improve collaboration and decision making, recognizing that a strong culture is ‘a critical component of their long-term success,’ says Nick Neuhausel, a partner at consulting firm Senn Delaney, which advised Dynegy.”

Throughout the article, using Dynegy as the example, I see three key components of how to change your culture while keeping a focus on strategy guidance.

1) Rebuild Trust through Honest Conversations (and start at the top)

Dynegy CEO Bob Flexon began his culture overhaul by rebuilding trust within and among his senior leadership team:

“In June, the company’s 37 highest-ranking executives participated in a two-day offsite meeting led by Senn Delaney, which included trust-building exercises. In one drill, a pair of managers spent one minute expressing appreciation for each other’s work, then spent the next giving constructive criticism.”

Think about how you receive information such as this from others. Do you tend to push off praise or do you accept the positive feedback as emphasis of what you do well and where you excel? With constructive criticism, do you accept it in the spirit it is given or do you see it as an attack? Both versions of feedback are critical to honest conversations and healthy rebuilding of a company culture built on trust and recognition.

2) Base Performance Reviews on Your Cultural Hallmarks (Core Values)

Dynegy first focused their energy around specific core values and then looked for ways to bring those values to life for employees:

“Then, executives tried to carry out their pledges. Employees got performance reviews for the first time in two years, with bosses judging their subordinates in part on whether they embraced the core values.”

Building your core values into the performance review process is a key step in carrying your values throughout the work. However, an opportunity remains for Dynegy to do better in this area by not limiting this feedback to once a year from one person, but expanding the opportunity for all to contribute positive feedback on everyone else who lives the values throughout the year. (This is the essence of the crowdsourced performance review.)

3) Establish Culture Champions

Let me be clear. Every employee owns your company culture. All are equally responsible for contributing to the culture. That said, establishing culture champions is a smart move. Empower these champions to reinforce your culture and your goals. Here’s an example from Dynegy:

“Meanwhile, 15 specially trained ‘culture champions’ are attempting to reinforce the message. At meetings, one such champion, Chief Administrative Officer Carolyn J. Burke, says she sometimes chastens a colleague for tapping on his BlackBerry by declaring, ‘Hey Joe, be here now.’”

Has your organization undergone a culture revolution? What steps were taken and how was the new culture implemented?

Why CEOs Must Lead Organization Culture to Avoid Culture “Pockets”

Recognize This! – One consistent culture across an entire organization relies on leadership and example setting by the CEO.

Your CEO must set your company culture. He or she must demonstrate by example and reinforcement the culture they want to see permeate the organization. Alexander Kjerulf, the Chief Happiness Officer blogger, explains it this way in reference to creating a culture of happiness:

“If you want to create a truly happy workplace, you need a leader at the top who is 100% committed to this ideal. Someone like Richard Branson at Virgin, Tony Hsieh at Zappos or Ingvar Kamprad at IKEA. If such a leader is not present in the organization, you can still create local pockets of happiness in one division or one department, but it will never permeate the entire organization.”

Without executive leadership of your culture, it’s inevitable you’ll end up with culture “pockets” – some good, some terrible – throughout your organization. Regardless, you will not have all of your employees marching in the same direction, working towards achieving the same goal.

Profiled in the New York Times, Ryan Smith, co-founder and CEO of Qualtrics, commented on the importance of his role in creating a culture of transparency:

“We’ve been extremely transparent, but not so that we can be cool. And it’s not about an open environment, because that’s not what makes a company transparent. It’s more around the fact that everyone needs to know where we are going and how we are going to get there…

“We want to be transparent because we want to encourage our people to have all the information to keep them focused on what really matters — our objectives and how they’re going to contribute…

“When everyone’s rowing together toward the same objective, it’s extremely powerful. We’re trying to execute at a very high level, and we need to make sure everyone knows where we’re going.”

Mr. Smith uses transparency as a means of focus, as a tool to keep everyone working on what matters most to the organization – achieving their objectives. Transparency and this singular focus on clearly understood objectives is the key to his company’s success.

That doesn’t mean it’s easy. Sometimes CEOs need to make difficult decisions based on the culture their trying to create. It’s when those decisions are consistently made by the CEO, then the senior leaders and on down the chain of command make similar decisions reflecting the CEO’s desires for the organization.

That’s the only way to achieve one culture across your entire organization – leadership by example from the CEO, replicated by leadership down through the ranks. Then you engage everyone from the grassroots on up to put that culture in action through their everyday activities, encouraging, reinforcing and recognizing individuals and teams when they live aspects of your desired culture.

Do you have one culture in your organization or culture “pockets?”

Culture Matters for All Employees in All Roles

Recognize This! – Culture must reach outside the office walls to impact, inspire and direct the actions of all employees.

HR Pros out there – do you read TLNT? It’s one of my daily go-to sources for news and insights on all factors of the Human Resources world (which is why I voted it the best Human Resources website and encourage you to do the same).

The latest article to peak my interest dug into why company culture isn’t “warm and fuzzy.” Author Kimberlee Morrison is responding to a comment on an earlier post about culture development. The commenter said:

“Culture may seem warm and fuzzy. Emergency service workers, shift workers, construction workers and those who don’t inhabit an office cubicle are generally uninterested in ‘cultural evangelism.’”

Kimberlee disagreed with the commenter, as do I. Indeed, it is precisely with these employee communities – those outside the office cubicle – that culture should matter most. What else is it that binds these distributed and literally disconnected employees to the organization? (Just look at the heat Marissa Mayer is taking for ending flexible work arrangements in an effort to restore company culture.)

Let’s look more closely at those employee communities Kimberlee’s commenter specifically mentions and see why culture matters more to them.

Emergency service workers – These heroes work in very difficult conditions to save lives, usually for relatively low pay. While it’s unclear what we’re referring to here (firefighters, EMS/ambulance drivers, police), culture defines the attitude by which they do their job. EMS workers, for example, can be working within a culture of “just get people to the hospital fast” or one of “spend time to do what needs to be done in the field.” Those are very different cultures that direct the behaviors of the workers. Culture matters.

Shift workers – These people are working off-hours without as much direct supervision or broad oversight. Yet their work is critical to complete (otherwise, why would you have them working in shifts). The way in which they complete the work during their shifts (the behaviors they demonstrate) need to align with those during “regular hours” or the end product will be different. The culture must carry through for all employees, regardless of shift. There are ways to ameliorate this, such as overlapping shifts by a half-hour for transition meetings or celebrations of successes.

Construction Workers – I am sure a culture of safety pervades any organization involved in construction. On site, in the field, all workers must focused on safety at all times. Yet many programs to reinforce safety fail because they are rewarding the wrong thing. Safety is a narrow example of a broader culture that employers should be consciously working to proactively disseminate and reinforce among their employees, wherever they are.

What other roles do you see in which culture is particularly important, especially when the employees involved aren’t located in a traditional office setting?

5 Steps to Smooth the Merger & Acquisition Process through Strategic, Social Recognition

Recognize This! – Merging the people and the cultures of two organizations is the most difficult and crucial element of a M&A event.

The long anticipated merger of two major US airlines is now official. American Airlines and US Airways will merge their operations, their customer bases, and – most critically – their employees. Yet every merger, no matter how well planned or how well aligned, is fraught with potential roadblocks along the way.

An article in yesterday’s Wall Street Journal highlighted the major challenges facing these two storied airlines as they merge:

“A marriage of American and US Airways would represent a much greater challenge. American is almost twice as large as US Airways by traffic but would be run by the management of the smaller carrier, which is expected to move into AMR’s headquarters in Fort Worth, Texas. The cultures are different. Tempe, Ariz.-based US Airways is scrappier and more relaxed and has rebounded financially and operationally from hard times after its merger. American, a proud and button-down company that was king of the skies for decades, had been in a downward spiral for years and had a bad experience with its ill-timed 2001 purchase of Trans World Airlines.”

The business details of a merger are rarely the stumbling block to completing a merger successfully. No, it’s merging the cultures and the people that usually presents the greatest challenge. This is because employees on both sides need validation, consistency and a clear plan for the future – all of which can be addressed through a strategic, social recognition program, easing the transition period and keeping employees engaged and performance high.

Outlined below are five steps to smoothing the M&A transition process through strategic, social recognition.

1) Merge the two companies’ vision and values into a new statement that is meaningful to employees from both organizations. Then use the strategic recognition program as a positive communication tool of the vision and values to all employees. When done correctly, recognizing behaviors, actions or attitudes that are tied to a specific value will help those values come alive for all employees, creating a more meaningful and memorable impact. Designate recognition ambassadors within both merging companies to encourage and demonstrate appropriate use of the recognition program.

2) As with any strategic program, secure executive sponsorship of the recognition program, but be sure to include key senior leadership from both companies in the initial roll-out. By seeing familiar and trusted leaders encouraging positive appreciation moments throughout the merged organization, employees from both companies will begin to notice and acknowledge the valuable efforts and contributions from their colleagues in the other company.

3) Any strategic program requires measurable goals to track success. Frequency, timeliness and appropriateness of the recognition and rewards are critical in recognition programs. In the special case of M&A, specific goals should be included to track the progress of the merger of the two cultures into one of appreciation across the global workforce.

4) Carefully track progress on the cultural merger. Prior to program launch, confidentially survey employees on current job satisfaction; engagement level in their current roles; level of concern with the M&A relative to job retention, potential culture change and leadership; understanding of the values of the merged entity; and how those values translate to daily behaviors. Conduct the survey again periodically to measure improvements in these and other predetermined critical-to-success areas.

5) Launch the program soon after the M&A is announced to engage all employees in this new culture of appreciation, help them understand their continued value to the merged organization, and unite all employees behind the new vision and values.

Have you been through a merger or acquisition? How did your organization leaders handle the impact of the merger on employees?

Data Is Just Information Unless You Put It to Work

Recognize This! – Gathering data on people management processes does little good unless you use it to ask the right questions and solve the right problems.

“Big data” is the latest buzz word entering HR lexicon. I’ve used it myself to explain how the “big data” now possible through strategic, social recognition can be used to better inform talent and performance management and help in proactive management of your company culture. (See my article in Talent Management magazine for more.)

What Data Can Do

But “big data” will remain nothing more than a buzz word until we fully understand what the data enables us to do. I’m excited about David Brook’s promised analysis of the “data revolution” throughout 2013. As he explained recently in The New York Times:

“Over the next year, I’m hoping to get a better grip on some of the questions raised by the data revolution: In what situations should we rely on intuitive pattern recognition and in which situations should we ignore intuition and follow the data? What kinds of events are predictable using statistical analysis and what sorts of events are not?…

“But at the outset let me celebrate two things data does really well… First, it’s really good at exposing when our intuitive view of reality is wrong… Second, data can illuminate patterns of behavior we haven’t yet noticed…

“In sum, the data revolution is giving us wonderful ways to understand the present and the past. Will it transform our ability to predict and make decisions about the future? We’ll see.”

Translating that to the world of people management, data can transform how we view individuals, their capabilities and their work by giving us more information to correct flawed or incomplete perceptions and, as David said, “illuminate patterns of behavior we haven’t yet noticed.” This is particularly powerful in terms of employee behaviors related to what we say is most important to our organizations – our core values.

Data, Unapplied, Is Useless

In his blog post yesterday, Steve Boese further emphasized the importance of putting your data to work. It doesn’t matter how well you organize and present your data if you’re not using it to ask the right questions and solve the right problems. (Steve is pointing back to this article on SAP’s use of analytics.)

“The goal of these analytics and Big Data projects, as the SAP article makes plain, is not just the ability to organize, describe, extract, and present workforce data (which in truth are necessary and important steps), but to leverage that data, to have the data lead to the asking of the right questions, to illuminate a path towards answering these questions, and to help the organization understand and relate the story that their human capital data wants to tell.”

What data are you collecting on your people management processes? How are you using that data to ask the deeper questions? What problems are you solving with that data?

Culture Drives Employee Engagement, Not the Other Way Around

Recognize This! – Executives are still missing the mark on understanding what employees need if they’re going to choose to engage fully in their work and achieving the organization’s objectives.

I greatly enjoyed the summary of Deloitte’s Core Beliefs and Culture survey in ChiefExecutive.net. The importance of company culture and it’s foundation – the core values and beliefs – are indisputably important to employees and their ability to engage in the organization and their work. Yet executives are still missing the mark on several points.

Thankfully, executives (94%) and employees (88%) alike agree company culture is important to business success. But there are big misses on several fronts, too.

Employees Say Strategy Is Nothing without Culture

I’ve written several posts on this point. Without culture, strategy cannot be fully effective. Employees agree, yet executives are still missing the point a bit.

“However, there’s more work to be done to close the gaps on other business priorities. The study indicates executives tend to prioritize a clearly defined business strategy (76%) above clearly defined and communicated core values and beliefs (62%), whereas employees value them equally (57% and 55%, respectively). Also, 70% of employees who agreed that their companies had performed well financially said their boss speaks to them often about culture. But only 19% of executives and 15% of employees believe strongly that their organization’s culture is widely upheld.”

Unless all employees – at every level – are committed to living the culture by demonstrating the core values in their daily work (and are reinforced, praised and recognized for doing so), then that last point above will remain lackluster.

What Employees Need to Be Engaged Is Different than Executive Expectations

In nearly every survey that even comes close to this topic, executives, leaders and managers always rank money in some form as most important to employee engagement, yet employees always rank better management (communication, recognition, opportunities to grow and learn, etc.) as what they really need if you want them to engage.

“The Core Beliefs and Culture survey found a consensus (83% of executives and 84% of employees) that having engaged and motivated employees is a top factor substantially contributing to company success. However, executives ranked tangible elements such as financial performance (65%) and competitive compensation (62%) most highly as drivers of employee engagement, while employees rated more highly the intangible elements of regular and candid communications (50%) and access to management/leadership (49%).”

Someday, the cumulative weight of all these surveys will have to sink in for executives. It’s part of my mission to speed that process along.

Executives Don’t Do as Well as They Think at Living the Core Values

Your employees are watching, closely. Are you really living the core values? They are following your lead, so be sure you as a manager as setting the right example.

“Deloitte’s survey indicated a significant gap between executive belief and employee perception, often punctuated by executive overstatement. For instance, 84% of executives believe senior leadership regularly communicates their company’s core values and beliefs. Only 67% of employees feel that is true. In terms of “practicing what one preaches,” 81% of executives compared to 69% of employees believe senior leadership acts in accordance with the company’s core values and beliefs.”

Please chime in in comments, but tell me if you’re in management or are an individual contributor – what do you value most? What do you most need to be engaged in your organization?

The Negative Side of Leadership Influence on Company Culture

Recognize This! – Leaders must promote, encourage and demonstrate themselves an attitude of appreciation and support to create a positive, engaging culture of recognition.

Senior executives have the most influence over culture. Yes, all employees contribute to the culture, but we all look to senior leaders and follow their example.

In most cases, this is a good thing, especially when executives promote, support and actively demonstrate their commitment to a culture of recognition and appreciation. But this is not always the case. When executives promote the opposite – an attitude of arrogance, unhealthy competition and incivility – employees (and the culture) will follow

In SmartBlog on Leadership, Chris Edmonds points out:

“Recent research from Weber Shandwick indicates that more than 4 in 10 Americans have experienced workplace incivility, and 38% of Americans believe that the workplace is becoming more uncivil and disrespectful than a few years ago…

“Who is to blame for the lack of workplace civility? In the Weber Shandwick study, 65% of respondents put the responsibility on the shoulders of workplace leaders. That’s in line with my assessment; I believe leaders condemn or condone behavior in the workplace, by proactive action or intentional disregard or something in between.”

Note in particular Chris’ last point – leader inaction is just as strong in promoting a negative culture. Leaders, by nature of being called leaders, have a responsibility to encourage and demonstrate themselves the behaviors and actions they want to see from all employees. Ideally, this will be in line with the organization’s core values, but again, this is not always the case.

Research presented in Harvard Business Review tells the story:

“In our current HBR article, we present research findings that about one in four people are rude because their bosses are rude. Employees notice what seems to be working then they follow that lead, for better or worse. Some of you wrote to us that your bosses were rude as a way of creating distance — a way to show who’s boss, to set themselves apart. Others reported that managers had encouraged them to be rude.

“We heard, for instance: ‘[B]eing respectful of others is a part of our culture [but] I have been told by my C-level management to step up and be a b**** and an a******. They even asked me to repeat it after them in the meaning. I actually had a manager advise me to … make my employees feel more uncomfortable around me.’”

It doesn’t matter one whit what you say your culture is if everyone –from leadership on down – does not live that culture. “Integrity” was part of Enron’s culture, and all know how that ended up when leadership actively promoted unethical behaviors.

Do your leaders promote a healthy, positive culture through their own actions, or an unhealthy, negative culture?

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