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Tuesday, December 28, 2010

Building Engagement and Profits in Tough Economic Times

In good times, employee engagement is the difference between being good and being great. In bad times, it’s the difference between surviving or not. In good times and bad, low engagement reduces performance and profit. In good times, consumer demand can disguise the lapses in productivity that disengagement causes. But in bad times, there isn’t any way to hide the performance problems of disengagement.

There are several levers leaders can pull to help employees stay positive and engaged:

    • Clarifying expectations.
    • Providing information, materials and resources needed to do work right.
    • Granting opportunities to do what your crew does best every day.
    • Giving frequent recognition and praise for doing good work..
    • Caring about your crew as individuals.
    • Planning, enabling and encouraging development.
    • Asking for opinions from your employees.
    • Communicating the company’s vision/mission.
Recognition provides employees with a personal, positive indication that they are valued and are necessary contributors. This can be incredibly powerful when the economic news is unrelentingly negative. Managers shouldn’t reserve recognition only for big wins; they should applaud small victories too. Also, when it comes to recognition individualization matters.

WOW point! Research reveals that proper employee recognition has a significant impact on operating margin. Operating margin shows how much a company makes from each dollar of sales before interest and taxes. In general, businesses with higher operating margins tend to have lower costs and better gross margins. This gives them more pricing flexibility and an added measure of safety during tough economic times. According to the data, companies in the highest quartile of recognition of excellence report had operating margin of 6.6 percent, while those in the lowest quartile report 1 percent.

It helps morale to focus discussions on employees’ strengths. Tom Rath, author of Strengths Based Leadership, recommends spending 80 percent of time talking about your employees’ strengths and 20 percent on things they should improve.

What your company’s vision or purpose? To some, that might seem like a pre-recession question, one that no longer resonates when businesses are focusing on survival. Well it isn’t. In fact, it’s essential in this climate. Mission or purpose is the strategic structure that pulls organizations through the worst of times. While nearly everyone in corporate America is cutting costs and trying to stimulate revenues organizations that have a clear vision won’t be looking for silver bullets or grasping at straws or just cutting costs with no clear focus. Instead, they will have more clarity in their cuts and more certainty on how to stimulate revenues.

·    To run an organization effectively, leaders must set visions and priorities, plan, build relationships, influence others, and make things happen. But if you ask followers what they need from leaders, the clear answer is INTEGRITY, STABILITY, CARING and HOPE.

·    INTEGRITY: trust is primarily built through relationships, and it’s important because it’s the foundational currency that a leader has with his team or his followers. Trust is built by being honest with people about the realities of the business and the realities of their performance.

·    STABILITY: In these rough economic times, leaders can’t entirely quell the fears that people feel. But they can promote a feeling of stability from day to day, and that creates a sense of security and engagement. The leader’s biggest short-term problem can be the distraction and even paralysis that comes from anxiety that employees may feel about their own jobs and the jobs of their friends and family members. Predictability is a good antidote for feelings of insecurity. Try to exude as much of a ‘business as usual’ feel and meet people’s need for stability and security so that while they may be hearing bad economic news and while everything else is changing there are some predictable elements in work and life.

·    CARING: The lifeblood of employee engagement is caring—the feeling that your boss or someone at work cares about you personally, that someone encourages your development, and that the people around you care about the work they do. While caring is always an essential aspect of engagement, when employees, feel (Whether their perceptions are real or not) insecure about their jobs, knowing that someone cares is enormously important—and individualization is implicit in caring. You can’t show people you care if don’t know them, so you have to spend with people one on one.

WOW point! Even in the best times, many leaders may be hesitant to show that they care about their employees. They may think that expressions or demonstrations of caring will undermine professionalism, make difficult decisions harder, or have a negative impact on employees’ performance.

In fact, THAT’S WRONG! Gallup research shows that the more leaders about their individual employees, the higher those workers performance will be. Yet when companies are cutting jobs, hours or raises, retreating from personal connections is a natural self-protective instinct. How can you ask a worker about her kids today when you suspect you’ll be cutting her hours tomorrow? But cutting people off can make them more insecure—and make bad news harder to hear too.

Showing you care can keep engagement alive!

·    HOPE: Hope creates an aspirational factor among all the things you are trying to do in your company, and gives people a reason to commit. Hope suggests that the future will better (if not the past) than the present, and that what we’re doing as a company now will contribute toward creating the future. You can’t build hope without trust. You can’t build hope without security and caring. But trust, security and caring aren’t enough. You do need hope to draw people toward a better future and give them aspirations. And it’s a critical aspect of leadership right now. The challenge today is managing fear, then building hope about goals that we can all believe in.

WOW point! Hope requires initiative but according to the Gallup research, leaders are far more likely to react than to initiate—even though leaders will more often than not say they are proactive and not reactive.