Cash is king

Why employees come and go: In January, the Strategic Capability Network (SCNetwork) hosted a special event with Jack Wiley, executive director of the Kenexa Research Institute, featuring data on why employees choose to join organizations and why they leave. For more information about SCNetwork, visit www.scnetwork.ca.

Cash is king

It’s all about the money – or is it?

Cash is king

It’s money, not managers, that draws employees to an organization and it’s also the reason they’ll leave, according to a study by the Kenexa Research Institute.

“I sometimes believe the myth — well somewhat of a myth — that people don’t leave organizations, they leave bosses, is promoted by those who feel they have solutions for managerial development,” Jack Wiley, executive director of the institute, told a group of HR professionals at a Strategic Capability Network event in Toronto last month.

Kenexa, a consulting firm based in Wayne, Pa., performs annual surveys of eight to 10 million employees in 14 countries. In 2007 it asked employees why they chose to leave an organization in the past two years and why they chose to join an organization in that time.

Compensation and benefits was the number-one reason for both, according to Canadian respondents. The other top reasons for joining a particular organization included the job itself, development and growth opportunities and the organization’s values and reputation.

While bosses ranked seventh among reasons for joining an organization, they ranked third among reasons for leaving, lagging behind compensation and benefits and the job itself.

“The ‘why leave’ is the same as ‘why join’ with the addition of lousy bosses being a contributor,” said Wiley.

The survey results have implications for communicating job offers, he said. HR needs to communicate the organization’s brand to prospects, realistically portray what the job will entail, convey the competitiveness of the offer and outline the benefits package.

“It isn’t necessarily that the job has to be the highest paying but it certainly has to be competitive and it has to be perceived as fair to the person who would be joining the organization,” said Wiley.

Kenexa also measures employee engagement as part of its surveys.

An engaged employee has pride in the organization and will recommend it as an employer to others, said Wiley. She is also loyal to her employer and will apply extra effort to help her employer achieve its goals.

“We believe engagement is a precursor to a host of positive outcomes at the individual and organizational level,” said Wiley.

Kenexa’s research has found organizations with the most engaged employees have nearly twice the net annual profit as organizations with the least engaged employees and nearly a seven-times-higher shareholder return.

However, the research doesn’t show if engaged employees lead to higher profits or if employees are engaged because they work for high-performing organizations, admitted Wiley.

“What we do know is that these things go hand in hand. Higher engagement is associated with higher outcomes. Whatever the causation, it still puts an emphasis on trying to create those conditions that are associated with higher employee engagement because that’s a plus, competitively speaking, in the marketplaces in which we operate,” he said.

The top global engagement drivers (see sidebar on page 12) fall into four categories, said Wiley:

• Leaders who inspire confidence in the future.

• Managers who respect and recognize employees.

• Exciting work that employees know how to do.

• Organizations that demonstrate a genuine responsibility to employees and communities.

But Canadians’ confidence in their organizations and in themselves, which are top engagement drivers, have been shaken by recent events. Kenexa surveyed employee confidence at the end of 2008 and compared it to a similar survey at the end of September.

“Across the board, Canadian workers’ scores on those elements dealing with confidence in their organization dropped by three to five percentage points in one quarter,” said Wiley.

Employees’ confidence in themselves declined even more dramatically with a drop of three to nine percentage points on various measures of self-confidence.

This crisis in confidence is caused partly by the many negative stories in the media about the economy and a looming, or current, recession. To boost confidence, organizations need to communicate openly and honestly with employees about the economy’s impact on the organization and employees, said Wiley.

“They’re looking for this sense of genuineness and honesty and communication. Organizations that handle this effectively are probably setting the stage for outperforming their cohorts three, five, 10 years down the road,” he said.

“We know the economy is going to come back. And when it does, we’re going to be challenged to find the kind of talent that we need to populate our organizations and meet the objectives that we’re trying to accomplish.”

Engagement by country

Canada is among the top four, Japan is at the bottom

Engagement drivers

Global drivers of engagement:

1. Confidence in organization’s future

2. Promising future for employee

3. Company supports work-life balance

4. Safety is a priority

5. Excited about their work

6. Confidence in company’s senior leaders

7. Satisfied with recognition

8. Corporate social responsibility efforts

9. Satisfied with on-the-job training

10. Manager treats employees with respect and dignity

Coming soon

Would you like to attend one of the upcoming Breakfast Series in Toronto?

February: Leader to leader — How the “new” mentoring is growing the next generation of leaders, with Catherine Mossop and a panel on Feb. 26.

March: The next level — What insiders know about executive success, with Scott Eblin on March 3.

April: The intersection of social network and talent management, with Rob Cross on April 14.

Visit www.scnetwork.ca for more information.

It’s all about the money – or is it?

SCNetwork’s panel of thought leaders brings decades of experience from the senior ranks of Canada’s business community. Their commentary puts HR management issues into context and looks at the practical implications of proposals and policies.

Why is it hard to accept multiple answers?

By Dave Crisp

Two points of Jack Wiley’s useful, comprehensive data stood out starkly for me. They’re opposing variations on a similar theme.

The first came to a head quickly with a graph showing the biggest reason for joining an organization in Canada is money — compensation and benefits. This was reinforced later as the major reason for quitting. Both were instantly questioned because we’ve been told (and I often say) money isn’t the main thing people look for. I stand by my claims despite Wiley’s figures, but how can that be explained?

Well, the survey included rank and file (who outnumber the senior staff and executives that most of us spend our time worrying about) but even in the breakdown many knowledge workers and mid-managers seemed to emphasize money (and benefits) more than we’ve been led to believe. But let’s put this in perspective. Wiley wasn’t claiming money alone is the issue, especially not gross pay. He was recording the fact money must be “competitive” before someone looks at a job. If not, wouldn’t you look elsewhere?

But other key factors are absolutely necessary also. You’re also going to look at opportunity, boss, location, work-life issues and a host of others. We know when choosing a new job a lot of elements weigh into consideration, yet when a survey shows money as marginally more important, suddenly we know a certain segment of managers will say: “Told you so. Just pay enough and the rest of this touchy-feely HR stuff doesn’t matter.” Well, it does.

Why is it so hard to get some executives to recognize money is only one factor and, unless a number of elements add up, people aren’t going to be motivated? Ignoring any major factor or a series of minor ones will end the game.

The second point that stood out for me was a similar, but opposite puzzle: Why do people quit? We typically say “bad boss” is the number-one reason. But, again, money ranked as the number-one answer — especially among lower-level staff where “bad boss” ranked relatively low. But if you looked at the data, the biggest reason was “other.” People quit for lots of reasons, many of which add up. I can still make the case poor bosses are the main cause of many of those irritations.

A bad boss throws up her hands when that whopping one-per-cent salary increase comes along and says, “Those idiots at head office don’t realize what you’re worth.” In a single stroke this makes you feel hard done by financially and senior leaders in the company are stupid — two of the major reasons people give for quitting. An effective boss knows how to explain, justify and reinforce alignment with senior management decisions — even the questionable ones. A great leader can keep people happily employed because she knows how to communicate that things aren’t a whole lot better elsewhere and keep you engaged with other motivations such as growth, challenge, work-life balance — all the things they control and all reasons people cite instead of, or in addition to, bad boss as a reason for quitting. Yet bad boss, or at least poor leader, is at the root.

Dave Crisp is SCNetwork’s lead commentator on leadership in action. He shows clients how to improve results with better HR management and leadership. He has a wealth of experience, including 14 years leading HR at Hudson Bay Co., where he took the 70,000-employee retailer to “best company to work for” status. For more information, visit www.CrispStrategies.com.

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Talent management capability in tough economic times

By Karen Gorsline

Some say organizations need a “burning platform” for change. Well, we have one — whether we like it or not. Most organizations are struggling. Some have too little business and others, especially social services, have too much. How will organizations find opportunities in this challenging environment to strengthen strategic capabilities?

By understanding the key levers in the talent life cycle, organizations can respond to the economic downturn in ways that can help them both face challenges and build a stronger, more resilient company positioned for future growth. Potential areas of focus are: onboarding, engagement through performance communication and genuine leadership.

Onboarding: While onboarding seems a counter-intuitive focus during an economic downturn, most organizations continue to do some hiring. Some industries, such as social services, are hiring and face increasing service demand. It is important to ensure new hires stay and can be maximized. Other organizations have experienced significant downsizing and only hire when absolutely required. These new hires need to understand how they can contribute to the company and to their own future in the tough climate.

In either situation, that means more (not less) on-the-job training, communication on what is expected and being made to feel part of the team, rather than being thrown into a chaotic situation where employees sink or swim. Onboarding improvements made now will then be in place when growth returns.

Engagement through performance communication: Wiley’s research indicated macro drivers of engagement are: “Leaders who inspire confidence in the future, managers who respect and recognize employees, exciting work they know how to do and organizations that demonstrate a genuine responsibility to employees and communities.”

All of these areas can be addressed through performance communication. Many organizations conduct formal performance reviews or do ratings related to compensation. While important, these are not robust enough.

Do managers and supervisors have conversations that cover the areas identified in the research? If not, why? If engagement is defined as “the extent to which employees are motivated to contribute to organizational success, and are willing to apply discretionary effort to accomplishing tasks important to the achievement of organizational goals,” how can organizations afford to not build this capability?

Genuine leadership: In good times, leaders may be very competent managers but are not challenged to actually lead. Leading means there is direction setting and someone is willing to support that direction. In times of challenge, true leaders shine.

How can organizations use the opportunity of difficult times to nurture more effective leadership today and for the future? Leaders must understand engagement and confidence, at both the organization and individual level, are linked. Leaders must focus on and practice leading in two ways:

• Be seen as informative, genuine, honest and telling the truth about a difficult situation.

• Show a direction, a future that makes sense and engages employees.

While these may seem in conflict in challenging economic times, leaders must provide realistic, genuine direction and present a holistic picture for employees.

Karen Gorsline is SCNetwork’s lead commentator on strategic capability and leads HR Initiatives, focused on facilitation and tailored human resource initiatives. She has taught HR planning, held senior roles in strategy and policy, managed a large decentralized HR function and directed a small business. She can be reached at [email protected].

Plunging employee confidence an engagement concern

By Tom Tavares

The data Jack Wiley presented is truly impressive. In addressing the questions of why people join, stay and leave organizations, the survey — Understanding the Talent Life Cycle — covered all job categories across industries in 14 major economies. His methodology and analysis are endorsed scientifically.

Although there was a wealth of information, the impact of the presentation was limited by a lack of explanation, especially in addressing the persistent gaps in managing the talent life ­cycle.

For example, the study revealed 20 per cent of employees across all job categories are dissatisfied with on-the-job training in joining organizations. Although the solution to this problem is straightforward and the cost saving is significant, companies consistently fail to take action. With such a compelling business case, why is there no improvement in execution?

In the area of retention, the data revealed that, depending on job category, between 30 per cent and 60 per cent of employees are disengaged. Engagement is defined as the motivation of an individual to contribute to the success of an enterprise and apply discretionary effort. Because people have a hand in every facet of a business, this is an enormous opportunity to increase organizational performance. Unfortunately, there is no answer to the question of whether engagement drives financial performance or whether employees are simply more engaged by being part of a winning team.

While leaving these questions unanswered might partly be an attempt to do follow-up meetings with prospective clients, there is more here than meets the eye. Take the case of performance management programs: Depending on the job category, 30 per cent to 50 per cent of employees never receive performance appraisals. It is hardly good for the consulting business to point out one of its decades-old products has had so little impact in improving managerial discipline.

The most pressing question of the day emerged in the analysis of employee confidence in Canada at the end of 2008. Because a sense of the future of a business is critical to engagement and retention, Wiley rightly pointed out leadership is paramount at this uncertain time.

Although honesty and understanding are vital to credibility, a more fundamental issue has emerged from the current economic crisis. Given the buckling in the technology sector, the airlines, the North American automotive industry and financial services, the issue may be that business leaders are no longer seen as competent enough to halt the downward spiral of trust and confidence. As the pace of change accelerates, there is an increase in the frequency of institutional breakdowns. We know all too well the shortfalls in areas such as communicating vision, engagement, performance feedback, recognition and corporate responsibility.

What we need is a clear understanding of these remarkably uniform patterns of organizational behaviour and a more robust managerial framework for taking action and reducing this enormous source of inefficiency.

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