The employee experience was not something I was thinking about when I began the research for my book, Leveraging the Genetics of Leadership, cracking the code of sustainable team performance. Yet when I was reviewing the research, the power of the employee experience just exploded in my face. The more I studied, read, and talked with organizations of high-impact, I realized that the experience of the employee is the “code” of long-term and sustainable transformation.
Why is the Employee Experience is Critical to Building the Brand
Organizations that have undergone a massive transformation, did so because they radically transformed the employee experience. High-impact organizations are realizing that the day-to-day experience of employees eventually makes its way into the customer experience. Millennials are especially interested in their own experience. Today’s millennials can open a web browser and within seconds know if their salary is competitive, if better opportunities are available, and read reviews of current and past employees. This knowledge gives them enormous leverage as an employee. The HR department can no longer just design a program to enhance the employee experience. Millennials are not looking to be the object lesson of a program. They are looking for the daily experience of interacting with supervisors and colleagues. Only a designed system of leadership can scale a common experience across the organization.
An all too Common Experience – Still
My grandfather was born in 1900. When he married my grandmother in 1919, he had an 8th-grade education. Together, they moved from the farm to the big city of Topeka, Kansas, and started a family. During the grueling days of the depression, he was a taster in the Beatrice Creamery. Employees had an arrangement with management. To keep the creamery in business, every worker gave a day to the company. So my grandfather worked seven days a week and got paid for six. Twice they brought him home on a stretcher. Both times because of heart attacks. After the second one, they said, “thanks, don’t bother coming back.” The company held all the power in the relationship. They did not have to care about the employee experience. After nearly thirty years with the company, he was not even offered a wristwatch as a thank you. With national unemployment at 25%, he was lucky even to have a job.
Surveys Show that Today’s Contract Employees are in the Same Predicament
While it may sound harsh and from another time zone entirely, contract workers are in the same “boat” as my grandfather. Surveys show that twenty percent of the U.S. workforce are independent contractors. This number is expected to rise in the coming years. Some are saying contract workers will soon comprise fifty percent of the workforce. Google alone has more contract workers on their payroll than actual employees and they can be terminated at a moment’s notice. At 5:00 PM on Monday they can be told their contract is being terminated so don’t show up on Tuesday.
How Companies are Missing Opportunity with Contract Employees
The compensation for a contract employee being terminated at a moment’s notice is that they do enjoy a higher income. This coupled with the independence of being a contract employee is thought to adequately compensate the contract employee for the lack of employment security. However, studies are clear that financial compensation does not intellectually and emotionally engage the employee. It is the day-to-day experience of the employee that captures their intellectual and emotional engagement. Treat employees well, and they will give back their best.
Why Employee Initiatives Fail to Intellectually or Psychologically Engage Employees
The accountants working for Google can easily show that highering contract workers is more economical than hiring traditional workers, However, what they cannot account for is the full value or lost opportunity of workers who are partially engaged. When a worker knows they can be terminated at any time for any reason, their loyalty is only to themselves. They have no reason to give their best creativity or passion for a customer. They get paid to do one thing (probably write code), and everything else can be left at the door.
Gallup on What Drives Engagement
Furthermore, many companies, in a vain attempt to engage their employees, will ask the HR department to design a program. So the HR department passes out a few recognition trinkets or an intranet site for employees. The thought is that to increase internal communication about the company brand, the nobility of its purpose, and a few stories about supporting local charities will somehow capture the imagination of employees. What they fail to understand, in spite of countless studies, is what fully engages the employee is the day-to-day experience with their manager and team. Do they feel appreciated? Do they feel they can speak up with a new idea and not be ridiculed? Do they feel psychologically safe? In short, is their daily experience one where they feel like they made an important contribution? According to Gallup, this daily experience with the manager and the team makes up 70% of the engagment levels of employees.
How a Company Fails to Engage a New Employee – A Failed Onboarding Experience
I friend recently took a new job. Initially, he was really impressed with the company. On his first day on the job a pastry cart was delivered and sat right outside his office. It was a good way to get people to come around great the “the new guy”. It was a nice solution to the question of employee engagement. However, the novelty wore off as he soon realized his experience and expertise were not the reasons why he was hired. It was so the company could look good if anyone investigated their diversity and “inclusivity.” He stayed just long enough to keep his hiring bonus and left for a place where his experience was fully appreciated.
An Example of a Transformative Experience Designed for Employees
I had the privilege of working with a rural hospital. It was a project to help them design an intentional and unique system of leadership and management. As the system began to unfold one of their objectives was to create a culture where fear was NOT part of the employee experience. But how to create an employee experience that was absent of fear? The solution was leadership. Or more precisely, the leadership system. Every individual leader had to know exactly what they could do to extract fear from the workplace. Furthermore, we needed a way of measuring fear in the workplace. Measuring fear was a way to determine if the system of leadership was working as designed.
Solutions were already in place
Turned out the solution was already in place. They had a software program that allowed staff to self-report an error or near error. For example, a nurse could self-report a near error in giving a patient the wrong injection. By self-reporting, they were assured there would be no discipline. I was thinking that this was a great way of tracking operational issues, which it is. However, the senior leaders realized it was also a way of tracking fear within their organization. They realized that the number of self-reported errors and near errors was an indication of fear. Therefore, they wanted to see the number of reported instances go up. When they looked at their data, they saw a steady increase in reported instances since they had started working on developing a work culture, absent of fear.
The Employee Experience Millennials are Searching for
Today’s workforce is radically different than my grandfather’s generation. Millennials and the generation following behind represent the smartest and best-educated generation in the history of humanity. According to the PEW Research Center, 67% of today’s millennials have at least some college experience, and 39% have a bachelor’s degree, as the chart illustrates. Because of this, millennials have a totally different expectation of work than their boomer parents. They fully expect to be heard, to be valued, and their value to be respected. The average organization does not understand this reality. Consequently, six out of ten millennials are looking for a new job, right now!
Generational Factors Influencing Millennials
Today’s emerging generations have a strong sense of entitlement. Contrary to prior generations, those entering the workforce today have had very different experiences with older adults. Instead of disciplinarians, adults have reached out to them, been their mentors, and coaches. Adults have encouraged them, and told them ” dream big don’t let anyone stand in your way.”
Consequently, they fully expect their supervisors to give them the same level of respect. They see no need to wait their turn and work their way up the corporate ladder. They don’t have the same attitude to a job as my grandfather. Millennials are more inclined to feel that their companies should be happy they accepted the job. And why not? Millennials are smart enough to know they are better educated than their supervisors.
The Power Shift With Management
Couple this with a tight job market and the balance of power has shifted to the employee. The employee experience is vital to retaining top talent. Today’s employees can leave a job today, and take a month off to travel. When they return, they will have multiple job offers within a few days.
Consequently, forward-thinking employers need to consider the employee experience if they will attract and retain the best talent. While the HR department may have a say in the experience, it is really management who owns the responsibility. The Gallup organization reports that 70% of the engagement levels of employees is directly tied to the relationship with the manager.
Millennials Will Pay for the Right Employee Experience and Culture
People entering the job market today have very different attitudes towards work than their boomer parents and grandparents. For example,
- Millennials take a consumer approach to a job. They treat a job search much like they were buying a new phone. They are looking for an experience. If they don’t have a great experience, they don’t buy (the job).
- Young people are looking for meaning, value, and significance from their job. Expecting meaning from their job makes their parents shake their heads in bewilderment. A job for their parents meant a stable income, higher the better, and social status. Today’s millennials do not equate income and social status.
- Generations hitting the job market today are the first generation willing to give up salary. Based on a 2016 study completed by Fidelity Investments, Millennials will give up $7,600 per year in compensation to work in an employee experience that “aligns with their values or passions or improves their work/life balance.”
- They are not looking for leadership. However, millennials are passionate about development. They want their organizations to recognize their strengths and develop those strengths.
A True Story of Designing the Daily Experience for Employees
Jeff had just taken over a small manufacturing company that his father and started. The company had built a reputation for delivering high-value custom made commercial furniture. Not long after, his largest and most prestigious customer came to him and told him to adopt Lean, (or the Toyota Production System). Over the next several years, Jeff and his leadership team traveled to Japan several times to watch how Toyota built cars. They would try to implement what they had learned, but their success with limited. Finally, in 2006 Jeff had seen enough to know that Lean could work. Consequently, they formally adopt Toyota’s Production System (TPS). Over the next several years, quality, production, customer satisfaction, and employee engagement all went up. Conversely, costs went down.
A Super Simple Solution to Engage Employees – Do we care about their experience?
During my interview, I asked Jeff what the deciding factor in adopting TPS? He was blunt, “when I finally decided, did I give a shit?” He went on to say, “did I care about the value my customers were receiving when I knew we could do better,” and “did I care about my employees and the value they received by working here?” As he explained to me, the more he and his leadership team demonstrated and modeled care for their employees, the more engaged they become. Today, employee engagement is so good that 200 employees initiate 1000-1250 kaizens (process improvement) each year. Each kaizen saves the company $1,000 or the equivalent of 4%-5% of gross sales.
By 2012 there were so many requests to see what they were doing so differently that they started giving tours. By the time of my interview in 2018, 40,000 people had taken their tour. Furthermore, they were spinning off a consulting firm to handle the demand for help. In addition, 200 employees initiated over 1,000 kaizens (process improvement initiatives) each year on their own initiative. Each kaizen saves the company an average of $1,000. The total annual savings is the equivalent of 4%-5% of gross sales
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In researching my book, Leveraging the Genetics of Leadership, cracking the code of sustainable team performance, I built case studies of high impact organizations. They included such groups as the U.S. Military, healthcare, manufacturing, education, a Ford Dealership, and others such as the New York Mafia, and the Salvation Army. Though the sequences may have been different, I found the same core elements as they approach the design of an employee experience. I also discovered it was their experience that drove the engagement of the workforce.
- Intentionally designing the employee experience to create a competitive advantage
One of the surprises in my research was how high-impact organizations linked their business strategy directly with the experience and engagement of their employees. However, I would also add that many understood giving their employees positive and rewarding work experiences a moral decision. Yet it eventually becomes one of the key drives of business success.
This is a similar finding as the Gallup organization discovered in their recent article on Designing the Employee Experience.
- Determine what drives the engagement of employees relative to organizational mission.
While this may sound complicated, from my observation, a lot of it is simply common sense. For example, an elementary school determined that the best path to high academic outcomes for their students was a culture of collaboration among teachers. In the same way, a large industrial giant thought employee safety was the best experience for their employees. When employees are working around 2000 degree molten aluminum and machinery that can kill a worker, safety was the common experience everyone was looking for.
- Designing foundational behaviors
Ultimately, the experience of employees comes down to the way humans interact with one another. Gallup has calculated that 70% of the engagement off employees is directly tied to the relationship of the employee and their manager. One of the surprises in my research was that high impact organizations put as much focus, if not more, on foundational behaviors as they do core values. For example, because an award winning hospital sets a course of respect, they cannot allow physicians to verbally abuse nurses. If it happens, a formal investigation is launch and discipline may be in order.
- Developing organizational charters of how workers and leadership will interact.
Anyone working in an organization learns that having core values listed on a website is very different than modeling them. Developing a charter that links foundational behaviors with actual conduct is mostly the responsibility of leadership. For example, the elementary school principal referenced early, worked with her entire faculty to develop a charter that outlined how the team would work together to create a shared understanding of collaboration. The advantage of this was that if someone chose not to behave according to the charter, they effectively took themselves off the team.
Captain David Marquet did the same thing when he took command of the USS Sante Fe, a nuclear-powered attack submarine. It was the laughingstock of the fleet. She was the last ship a submariner want to sail on. When he took command he had to design a new system of leadership. One of the components was a list of “Guiding Principles,” which clearly defined behavioral expectations for officers and sailers.
- Hire to fit the experience
A hospital in Seattle, Washington is consistently ranked as one of the safest hospitals in American. Some have even speculated, the world. By rules, leaders and managers are not allowed to be the go-to problem solver, which flips the traditional model of a great manager as great problem solvers. However, they have learned that the best people to solve problems are those doing the work – those closest to the problem. A leader can help frame the problem, but they are not solve it. There are a lot of highly experienced and competent managers who have made their careers on being problem solvers. However, this hospital will never hire them, nor should they.
- Change the narrative of errors and mistakes
Changing the narrative about employee failure and success removes the stigma of failure and the fear it represents. Several years ago, in the hospital referenced above, a much-loved grandmother was being prepped for surgery. However, instead of being injected with a contrast dye for the procedure, she was injected with chlorhexidine, and antiseptic. She died within a few days. However, instead of disciplining the operating room nurse, a review of the process was conducted. The issue was not a sloppy nurse but a sloppy process that was easily fixed.
In his book, A System of Profound Knowledge, W. Edwards Deming famously said, “I should estimate that in my experience most troubles and most possibilities for improvement add up to the proportions something like this, 94% belongs to the system that is the responsibility of management, and 6% to special causes outside the system.”
- Develop the whole person – create better human beings
Few would disagree that no institution in the world does a better job of developing leaders than the military. It is not that they just create better military leaders, they also create better human beings as well. Ask ten veterans and I am confident nine of them will tell you they are the person they are today because of the Army, the Airforce, the Navy, the Marines, etc. They recognized that military success on the the battle field is directly tied to the character of the the individual leader giving orders and executing the battle plan when bullets start flying.
- Determine who is responsible for the employee experience
After twenty-five years as a management consultant and working with hundreds of organizations, the prevailing attitude towards employees is much like it was when my grandfather was working in the creamery. “People should be thankful they have a job.” While the statement may be true, the hard reality is that managers and leaders are responsible for the employee experience.
The adage is true, “workers don’t leave their company, they leave their manager.”
- Measure the employee experience and design the reward system accordingly
Point eight above states that leadership is most responsible for the experience of the workforce. If so, then the reward systems need to reflect this. As Jeffrey Pfeffer of Stanford University states, ” when leaders’ own jobs and salaries depend on how well they look after others, they will do so.”
Case Study – Designing a Better Employee Experience
In their book, An Everyone Culture, authors Robert Kegan and Lisa Laskow Lahey, both of Harvard, profile three elite companies—Bridgewater Associates, The Decurion Corporation, and Next Jump, Inc.
Each of these organizations takes a unique approach to designing the employee experience. For example, Next Jump, a $2 billion (2016) e-commerce company that seeks to revolutionize the workplace
The NextJump Story – How the Experience of the Employee is Driving Customer Value
Next Jump has a focus on “self-development above all else.” Self-development includes an emphasis on behavior, character formation, and leadership development. Visit their website, and even though they are a very successful technology firm, the home page has little about their technology or the products they provide. It is all about the engagement of employees’ personal growth. One of their critical messages is this: Better Me + Better You = Better Us. In other words, they have made self-development a critical component of the employee experience. Their feeling is that additional value will eventually find its way into their software by creating a better human being. Their focus on developing a better “you” is directly tied to their business strategy. Want to work there? You had better value the dynamic of working in an environment where personal growth is a priority. If not, do bother applying
About the Author
Dan Edds is the author of Leveraging the Genetics of Leadership, cracking the code of sustainable team performance. He has spent the last twenty-five years as a practicing management consultant. A complimentary Special Report titled, “Four Strategies and Sixteen Steps to Engage the Workforce” is available on the resource page. He invites your comments to this blog and if you want, you are free to call his personal phone, (425) 269-8854