Talent Economy Managing Editor Frank Kalman talks with Ashley Goodall, Cisco’s senior vice president of leadership and team intelligence, about how the technology firm uses people analytics to determine what creates a high-performing team. Listen here or subscribe to Talent10x on iTunes, Stitcher, Google Play or Tunein.
One summer while I was in college, my dad broke his foot, forcing him into a cast and one of those weird one-leg roller crutches.
As a result, he couldn’t drive. So either my mom or I had to drive him to work each day for a couple of weeks. My dad worked for a large company with a giant corporate headquarters located in Chicago’s suburbs.
Driving up to the main building required you to wind through wavy roads saddled with plush, expansive greenery. In the end, you pulled up to a towering, glass-walled entrance. It was a beautiful building, with an equally beautiful, top-of-the-line office space, fitted with amenities every worker likely dreams of.
By and large, my dad spent most of his career working for large companies. As a kid, big employers also employed most of my friends’ parents. This was what I thought working was. You went to college, learned a professional trade, and went to work for a large corporation. It was a privileged upbringing. You might switch jobs a few times, but, for the most part, it would be between big companies.
After all, big companies are big, the thinking went, because they are successful. As a result, people who worked for big companies tended to make more money and go on to have a more long-term, fulfilling career and life. And for a long time, economic studies confirmed this idea. For most of the past century, economists have noted that similar workers at large companies earned a significant premium over their counterparts who worked for smaller firms — a premium sometimes as much as 50 percent higher.
Today, big companies still dominate. On a macro level, most of the stock market’s gains in recent years have come thanks to a handful of large companies like Facebook, Amazon, Alphabet and Microsoft. And those companies, thanks to their success, have in turn been able to hire and retain top talent at the most specialized positions that are driving their success. They do this with office spaces and amenities that are otherworldly, the promise of world-changing work and the glitz of high pay and elevated status. For workers with the most in-demand skills and desire to acquire these things in their work, this is a great match.
Or is it? Is working for a large company really as great as it seems?
Consider that pay for people who work at large firms isn’t what it used to be — at least for some workers. As Stanford University economist Nicholas Bloom and his co-authors recently found in an analysis profiled in The Wall Street Journal, the nearly 50 percent pay premium large-company workers used to experience has shriveled down to a mere 20 percent as of 2013.
According to the study, it is mostly lower-paid workers, or those without college degrees, at large firms being hit. “The bottom 50 percent of workers by pay received almost no premium for working at large companies in 2013, while the premium remained steady for college graduates,” The Wall Street Journal reported. Top earners at large companies are earning more, and low-earners are earning less or their jobs are being outsourced or eliminated entirely. Fewer and fewer workers are enjoying the career provided by large companies, at least in terms of those earning lower compensation. In a way, it’s becoming harder and harder to work from the bottom to the top at large companies. Most companies are only looking to recruit from the top of other firms.
Pay isn’t the only reason working for a large company might not be for everyone. Large companies, due to their size, face challenges smaller ones don’t. This creates a different kind of work environment for employees. Even for highly skilled, talented employees, their influence might not carry very far in a large firm than it would at a small one. How employees are managed and the relationships they’re able to build might be limited at a larger company, where layers of management bureaucracy, steadfast culture norms (even the bad ones) and decades of entrenched processes and procedures stand in the way of change.
Full disclosure: I’ve only worked for a large company in a limited capacity, so take my perspective for whatever you think it’s worth. Most of my career has been spent working in smaller organizations; Human Capital Media, Talent Economy’s parent firm, has fewer than 50 employees.
Still, this column isn’t just me brewing in my own small-company bias. I could as easily write about how working for a small company has its cons for entirely different reasons. I digress.
Ultimately, people need to think through these elements when making their career choices. For many people, working for, say, Alphabet or Facebook or Procter & Gamble or General Electric is exactly what they’re looking for. They want to work on big problems with smart people in a large, highly established organization. They want the pay and status and lifestyle that come with it.
But for many people, working for a large company may not be what they think it is. Entrepreneurial-minded people might find the experience frustrating and limiting. They might feel as if, in the end, the juice of receiving higher pay isn’t worth the squeeze of the work and related stress that goes into it. For some, pay is important, but it isn’t everything. And once their pay reaches a certain threshold diminishing returns come, leading them to move their value proposition somewhere else.
This idea is only gaining more steam, as the modern economy propelled by technological innovation enables more people to break free of large companies and launch businesses of their own, or create smaller companies with limited overhead expense.
Most important, working for smaller firms enables a different kind of flexibility and work-life balance, things that are increasingly important when it comes to solving big workforce problems like the gender pay gap and progressive parental leave for working families.
Big companies will almost always dominate the spotlight — for good reasons. But all big companies started out small, and working in one of those firms, even before they become big, remains a fulfilling and worthwhile experience for many workers.
Frank Kalman is Talent Economy’s managing editor. To comment, email email@example.com.
Like many working Americans, I put away a decent portion of my income each year toward my retirement. The idea is that, by the time I’m 65, I won’t be writing these columns or running Talent Economy any longer — as hard as that may be for you to believe. Heck, it’s unlikely that I’ll be doing this by the time I turn 45, because robots will probably have taken over by then.
At any rate, retirement for me is just like it is for most who work for a living. We work to one day stop working entirely. Instead of editing stories, producing podcasts, writing columns and coming up with new ways to engage with our readers, I will likely find a warm beach location, buy a taco stand and live my golden years selling cheap eats and cold beers to passersby. Or at least that’s the plan … for now.
But the truth is, the more time I’ve put into studying and observing the changing nature of work, the more I wonder if the retirement we are all planning for will ever come. To be sure, this isn’t necessarily because I or anyone else won’t have enough money to retire — although, if you believe the statistics of Americans’ average retirement savings, that certainly could be the case for some. It’s more because, by the time I turn 65, or probably well before then, the concept of retirement will likely be completely different from what we know it as today.
The changing nature of retirement is a topic of immense interest for us at Talent Economy. It’s something we’re planning on covering in-depth in 2018. But humor me while I tell you how I think retirement might play out in the future.
As I mentioned, currently most people sock away portions of their annual income into specifically designed retirement accounts that are invested into the public markets in the hopes of increasing in value by the time a person turns 65 and is ready to retire from work. For most people, this investment span is about 30-40 years — sometimes less, sometimes more. Once they reach retirement age, they begin withdrawing from these accounts as their income, funding their lifestyle until they die or the money runs out.
For many people, their entire working life is spent to earn a comfortable retirement. They sacrifice while they’re young, healthy and working to provide for their future. Sure, in between they may take vacations and indulge here or there, but for the most part their whole purpose is to work to generate wealth to fund their retirement.
Yet, as jobs and careers continue to change, on the heels of technology and other economic forces, it isn’t all that unrealistic to imagine a future where this sort of retirement framework doesn’t exist.
What if, instead of spending your whole working life saving for retirement, you took many mini retirements throughout your life? Given that younger generations have shown a penchant for changing companies and careers at a greater pace than generations before them, it doesn’t seem all that unreasonable to suspect that along those lines many will choose to take chunks of time off for themselves in between jobs and careers.
This idea is also supported by the facts that, as medical technology continues to increase, so will the average lifespan of a human being. Not only will people’s traditional retirement years be longer, but the possibility exists that more people will chose to work later into their lives. Retiring at age 65 may already seem out of style for some people, as more and more people chose to work not because they need the money but because they want to continue doing something fulfilling and productive.
A future of many retirements could also be supported thanks to the proliferation of at-home and gig-like work. If more and more people are working jobs where they’re afforded the flexibility to work remotely — again, thanks to the proliferation of technology and work styles that allow them to do so — then it’s not completely crazy to think that a midcareer professional could comfortably do their job while on the beach off the coast of California one week, then return to the office the next, only to head back to another remote location after that. After that contract gig or project is up, that person may decide to take a few months off before engaging with a new project with another company.
The big question becomes how will both employees and business leaders prepare themselves for this potential future? Changing the entire framework of retirement, however, is far bigger than how it will influence employees and employers. It will require a total change to the institutions that have built their existence on the very notion of delayed retirement. Companies, which used to fund workers’ retirements with pensions, may one day decide to stop offering 401(k) or other employee-contribution retirement plans altogether, leaving workers to take on even more of the savings responsibility themselves. Or maybe there’s some new savings system between the two parties, where employees are able to fund their many mini retirements over the course of their lifetimes.
Whatever the case, business leaders and employees should consider that the future of retirement is indeed likely to change. As for me, I’ll keep socking my money away for that day when I turn 65 — but I also won’t forget to prepare to take many, many mini retirements before I get there.
Frank Kalman is Talent Economy’s managing editor. To comment, email firstname.lastname@example.org.
Organizations often look to benchmarks as a key component in evaluating where they stand on various metrics in the talent industry. While this is not always a bad thing, and can certainly provide useful information, many organizations get too caught up on benchmark comparisons and it takes away from the value of the metric as a strategic tool.
To truly be effective, the mindset must change from “How do we look against other organizations?” to “What does our organization need to work on to perform better?” Analytics are now readily available to show which metrics from people data are critical drivers of business results. Instead of benchmarking, talent leaders should focus on using survey results and analytics to create positive change in their organizations.
Average is Arbitrary
Consider that a benchmark is just an average. Thus, the pursuit of outperforming a benchmark is simply a chase to be better than average against a number that may not reflect a true reality — it just reflects your particular vendor’s database. Benchmarks are also subjective. They’re a number that can change when, for instance, a vendor surveys more clients or you switch vendors. If the target is arbitrary and highly fluctuating, why spend time and money aiming for it? Shouldn’t leaders spend time and money focusing on improving metrics that have proven connections to building their business, and not just trying to outscore the average organization?
A Benchmark Chase Is Costly
On an employee engagement survey, if your engagement score is a 4.00 and the benchmark is 4.10, what exactly does that mean? Is it worth the cost to invest time and money to get engagement scores up to 4.10? What will happen for the business if employee engagement is 4.10 versus 4.00? The truth is, no one knows. So why chase that number? If you are in the 99th percentile on engagement, maybe you’re not holding your employees accountable enough or maybe your benefits plan is too rich? The pursuit of the 99th percentile might be completely at odds with making your organization profitable or obtaining high growth.
Size as a Selling Point
Often, HR is concerned with the size of a vendor’s benchmark database, and a lot of vendors use the size of their benchmark database as a selling point. But consider why it matters — exactly how big does that database need to be for it to be effective? Exactly how many other data points will help your organization make more money? Sure, large databases are good to determine where you stand, but the more important question is why does that matter and what is the value?
Benchmark High or Low — Who Knows?
When using benchmarks to set goals and assess performance, exactly how much higher than the benchmark do you need to be to have a clear competitive advantage? How much below the benchmark creates a competitive disadvantage? No one really knows the answer to these questions. That’s because competitive advantage cannot be obtained by benchmarks — it comes from being strategic and focusing resources on areas that are linked to business performance, not by beating a benchmark.
Answering the Tough Question: Why?
Some organizations want to be at the 75th percentile, some at the 90th and some at the 99th percentile. When asked “Why is that your target?” the answer is usually “That’s what the CEO wants” or wanted for marketing use. Talent leaders need to have a clear business case for creating a benchmark target. Strive for strong performance in an area if it provides a return for the business, not simply to outperform a benchmark.
Hitting the Mark with Data
Table 1 shows an organization’s employee survey results, the corresponding industry benchmark percentile and whether each category was linked to business results. By only reviewing the benchmarks, one would think that the key areas of focus should be: staffing, accountability and compensation/benefits. A typical approach would be to invest in these areas because they need the most improvement regarding the benchmark. However, when you connect your employee survey data to business outcome data via advanced analytics, you uncover that customer focus, senior management, teamwork and career development are the areas critical to business performance. These areas should be focused on no matter where they land on the benchmark spectrum. If you had focused on improving low benchmark items, you would have been off the mark and disconnected from the true business drivers.
If talent leaders want to be true business partners and have real impact in the organization, then the focus should be on driving business results and not trying to get higher survey scores. Contrary to what many assume and what thought leaders may say, employee engagement rarely drives actual business results. Moreover, survey scores do not appear on the profit-and-loss reports. Consider the following:
- Yes, you should do employee surveys, but rather than just chasing a benchmark, bring in actual business outcome data and uncover what elements of the employee experience drive business results.
- Share this analysis with both your senior team and every leader in the organization. The focus should be on “What can we work on to drive results?” vs. “How can we score higher against the benchmark next year?”
- Provide easy reports and action-plan tools so that leaders can act without having to be professional statisticians.
- Get a survey vendor that guarantees results, not just a bunch of reports. Assessment companies make a lot of claims about the connection between running a survey and generating business results. Those companies should prove those connections and stand behind whether their tools actually drive results.
Scott Mondore is co-founder and managing partner of Strategic Management Decisions, a human capital analytics advisory. To comment, email email@example.com.
As technology and globalization continue to escalate the pace of work, it’s easy to feel like everything was due yesterday and that the best way to prepare for tomorrow is to put in longer hours today. It seems like a straightforward equation: If you’re behind where you want to be, increase productivity by putting in more hours until you catch up.
The problem is, every additional hour of work doesn’t result in one additional hour of productivity. In fact, working too many hours actually makes people less productive overall. So not only doesn’t overwork result in additional productivity, it often reduces productivity. Without enough time to recover from work, employees become more and more tired and stressed, and the resulting lack of focus reduces productivity, often leading to mistakes, accidents, illness and difficulty interacting effectively with others.
The reason for the diminishing productivity can be explained by what social scientists Theo Meijman and Gijsbertus Mulder call the effort-recovery model, which says that people need time to recover after a period of extended effort or productivity will decline. Just as our muscles need time to recover after a hard workout at the gym, our minds need time to recover between work sessions to continue at the same pace.
Until recently, recovery has been built into the workweek, occurring automatically every time workers go home for the day. However, with the increased connectivity to work facilitated by mobile devices, today’s workers often never really “clock out.” For example, a survey by the Center for Creative Leadership of managers, executives and professionals found that “workweeks” generally include weekends for an average of 72 hours of work. While the per-hour cost of employees may appear lower because they are working 72 hours a week rather than 40, those extra hours incur hidden costs by reducing productivity and the productivity of others, increasing their health risks and increasing the odds of making mistakes.
One clear example of these hidden costs is sleep. When people work long hours, their sleep suffers. Lack of sleep, in turn, is linked to psychological and physical health problems such as anxiety, depression, diabetes, strokes, heart disease and risk of obesity, all of which damage performance and profitability directly through health care costs — not to mention accidents caused by sleep deprivation.
Because of this, a more sustainable way for organizations to improve productivity and profitability is to take recovery needs into account. Making sure employees have the recovery time they need can lessen the impact of the negative effects of a long-hours work culture, thus improving productivity. Business leaders should encourage employee-focused programs and services supporting recovery.
Here are five practices organizations can use:
- Educate employees about the importance of sleep and how to get more of it. Better sleep is one of the easiest and least used ways of improving productivity. Organizations can distribute sleep information to employees, provide flexibility in scheduling and discourage using communication devices late in the evening or in the middle of the night.
- Promote physical activity. Today the majority of corporate leaders are sedentary — sitting at computers, staring at devices and stuck in meetings. Exercise not only increases physical fitness but also boosts energy, mood and cognitive performance. Organizations have a variety of tools to encourage physical activity through wellness programs such as launching group exercise challenges and offering incentives to use corporate gyms. Getting up frequently to walk around during the day should also be encouraged as good practice.
- Introduce contemplative activities. A growing body of modern research confirms that contemplative practices improve mental capacity, outlook and attention. Mindfulness and meditative practices are ways to “press the pause button” during a busy day. Business and talent leaders can consider integrating mindfulness training into wellness programs and learning and development initiatives and providing online resources for employees to engage in wellness practices as they need them.
- Encourage social interaction. Spending quality time with others can lower stress levels and elevate mood, both of which are important aspects of recovery. Organizations can help employees build social connections in the workplace by fostering social interaction across business groups and by encouraging employees to do more than just be acquainted with one another.
- Express positive emotions. Psychologist Barbara Fredrickson has demonstrated that positive emotions increase energy, creativity and tenacity. The problem is that organizations tend to focus on the negative: groups that missed their goals, problematic negotiations, expense overruns and lost sales. Work cultures that identify and bring attention to successful performance and all the good and joyful moments at work are encouraging positive emotions, which fuel success. Don’t avoid negative realities and problems — just don’t make them the only news.
While people want to believe that working more hours will make them more productive, that isn’t necessarily the case. If you are invested in helping your organization become more profitable, inform the organization about how expecting employees to work too much can backfire. Not only is overwork not helpful, it is harmful to the individual and the bottom line. Help your organization bring out the best in people. It’s time to reconsider productivity in light of recovery.
Marian N. Ruderman is the director of research horizons and a senior fellow at research and advisory firm the Center for Creative Leadership. Cathleen Clerkin is a member of CCL’s senior research faculty. Jennifer J. Deal is a senior research scientist at CCL. To comment, email firstname.lastname@example.org.
When it comes to creating an organizational culture that empowers the entire enterprise to implement strategy, tackle big goals and make the changes necessary to thrive in our fast-changing world, there is no single silver bullet.
But if you could implement just one organizational development initiative, ensuring your executive team is as effective as possible might bring you the biggest return on investment for your development dollars.
Executive teams are more than just a group of senior leaders. Individually and collectively, how they function creates the template that other teams throughout the company follow. From headquarters to the front line, in every functional unit and every geographical division, individuals and groups look to the executive team not only for explicit leadership direction, but also to understand the company’s values, how they should behave, and how they should interact and engage with each other.
Executive Team Must-Dos
Executive teams have three crucial imperatives:
- Strategic focus. The top team is tasked with establishing a vision, investing time and energy at the strategic level, balancing risk and innovation, anticipating future needs and opportunities and ensuring the future sustainability of the organization.
- Collective approach. Executive teams don’t just work together; they work to achieve common goals through a common strategy. That means they must take an enterprise view, put the good of the enterprise over individual or functional area gains and model how to break down silos while creating solutions collaboratively.
- Team interaction. Finally, the executive team sets the culture that all teams in the company will adopt. To be effective, executive teams must value differences among team members, communicate effectively with each other, ask each other for input and trust and respect each other.
When the executive team consistently executes on all three of these imperatives, organizations tend to do well. When they don’t, the organization is likely to encounter rough waters.
Symptoms of Executive Team Underperformance
Most executive teams leave at least some growth potential — for themselves and the enterprise — on the table. Why? Because most members of the executive team are functionally oriented, meaning they often struggle to act collectively with an enterprise view. Often, we find that members of the executive team don’t know how to interact and collaborate collectively. In fact, many of them don’t know what differentiates being on an executive team and what that nuance entails.
Wondering if your executive team is underperforming? Here are five symptoms we often see in underperforming senior teams.
- They fail to communicate and model enterprise awareness down through their direct reports to the larger organization.
- They don’t drive cross-boundary collaboration to eliminate waste and create new value.
- They don’t leverage diverse, multidisciplinary perspectives for planning and strategy, figuring out what to keep and what to discard, what they need to learn and what to start.
- They fail to foster “bottom up” insight, awareness and ideas. Information doesn’t just flow down from the executive team to the rest of the organization, but should also flow up and across the organization.
- They don’t examine their differences well — openly, using assertions and questions.
When executive teams underperform, fixing them starts with the most senior executive — the CEO or equivalent role. One of the most important roles for any chief executive is to be the chief development officer for the executive team.
Though shaping a group of driven, high-performing senior leaders into a strong executive team is challenging, it boils down to a handful of key tasks.
Diagnosis. The chief executive and executive team members must understand themselves and each other. The CEO must also understand what drives each individual on the executive team and what makes them work as group.
Set the leadership model. Executive team members must understand how to explicitly lead beyond their circles of personal influence in a way that’s consistent with the organization’s culture and strategy.
Establish the mindset. High-performing executive teams have a shared growth mindset. They know they must learn, grow and lead in areas beyond their technical expertise, becoming true enterprise leaders.
Create interaction rules. Executive teams should set explicit expectations about how they will behave and interact. That includes being transparent and vulnerable, being comfortable learning in public and coming equipped with strong dialogue skills.
Diffuse the DNA. Finally, executive teams are most effective when their actions and decisions — and the thinking behind them — are spread quickly and accurately throughout the organization, to teams and individuals they don’t interact with personally. The “how we think” and “how we do things around here” starts with the executive team but becomes a core part of the organization’s cultural DNA.
Alice Cahill is the director of the organizational leadership practice at the research and advisory firm the Center for Creative Leadership. Lawrence R. McEvoy II is an executive-in-residence at CCL and former CEO of Memorial Health System in Colorado. Laura Quinn is a member of CCL’s organizational leadership practice. To comment, email email@example.com.
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