An organization’s greatest asset is it’s people.
We’ve heard that line before.
When it comes to assets, over the years organizations have refined the craft of optimizing for efficiency and effectiveness. We’ve learned to optimize production lines, supply chains, finance, and other functions so that every bit of productivity and scale can be squeezed out. But can we really say that we have optimized our “greatest” asset so they can perform at their very best? According to a recent Gallup study, we are maximizing about 5% of our human capital. Mind you, managing humans is far more complex than re-engineering processes, but 5%? What gives?
Gallup articulates the maximization as the trifecta of tenure, engagement and talent. The study claims that employees who are in this “sweet spot” perform 18% better than the average employee. For an organization who employs knowledge workers, getting more employees into that sweet spot can bring an economic outcome in the ballpark of $23 million per 1,000 workers. So we have the data and clear business case. A burning platform, right? It hasn’t been for lack of doing things to try and improve engagement, however, the needle hasn’t really moved and has remained consistent since 2000.
To better understand the root cause behind our inability to improve engagement, another Gallup study leads us down the path of just one lever that can potentially make a big difference. Managers account for as much as 70% of variance in employee engagement scores. The manager represents that crucial link between talent, engagement and vital business outcomes such as productivity and profitability. Gallup has found that one of the most important decisions companies make is simply whom they name manager. We get that decision wrong 82% of the time.
Despite the thousands of articles that are titled “X ways to improve employee engagement” what if we focused on just one? One that arguably makes the biggest impact and one that is straight forward enough to execute. So let’s stop here for a second (with the acknowledgment that there are many other variables that impact employee engagement). If we do a better job choosing and naming our managers, we could potentially make a considerable dent. Even if we improved by a mere 5% and put the right manager in place, the impact could be huge. So what might it take to fix just this one thing?
The first thing we need to establish a common understanding around is that not everyone makes a good manager. One in 10 people possess the talent to manage, while two in 10 have basic managerial potential, but require coaching and development to get there.
The top mistake that most companies make is to promote workers into managerial positions because they deserve it. They worked hard. They’ve been at the company for a long time, etc. This practice doesn’t work and can have adverse impact on not only the team, but also the manager as the Peter Principle begins to kick in. Rule #1 could be promoting only those who have managerial potential and capabilities. With strong support and transparency around this principle, we set people up for success and results.
Another aspect to address is the selection process. Since success in a previous (non-managerial) role or tenure in the field or company is the plain wrong criteria, applying science through the use of predictive analytics or a myriad of management assessment tools can screen and identify for potential managerial talent. The important thing here is to stick with it and be consistent.
Last but not least is knowing what makes a great manager. This very definition could differ between organizations and even departments. Often time, we’ll pick a role model and try to replicate a job description based on her background and profile, but that typically makes for a very challenging exercise. While organizations will need to adapt the criteria to their culture and expectations, here are five clear management talents that Gallup has found in their research.
- They motivate every single employee to take action and engage employees with a compelling mission and vision.
- They have the assertiveness to drive outcomes and the ability to overcome adversity and resistance.
- They create a culture of clear accountability.
- They build relationships that create trust, open dialogue, and full transparency.
- They make decisions based on productivity, not politics.
Perhaps my view is oversimplified, but just by fixing one of the root causes, we could start to see the light at the end of the tunnel in reversing the trend that is plaguing organizations large and small. What do you think?