Build ERGs as an innovative business resource!

The proposed business model for ERGs forms a foundation for continued innovation, strategic alignment and measurable results. It turns an ERG into a true and sustainable business resource for its members as well as the hosting organization.

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Summary – The increasing diversity of employees at the workplace led to employees gathering along affinity dimensions like birds-of-a-feather to form networking groups within organizations. The next step goes beyond affinity and establishes employee resource groups (ERGs) strategically as a business resource and powerful driver for measurable business impact and strategic innovation bottom-up.

Limited to social?

Employee resource groups (ERGs) emerge for various reasons. They tend to start with a social underpinning that naturally unites and organizes like-minded employees. ERGs come in different flavors mostly along the traditional lines of diversity characteristics such as ethnicity, skin color, age, gender, physical (dis)ability, sexual orientation, military veterans, etc.

For ERGs, a ‘social stickiness’ is important and can be the key integrating factor of employee populations within organizations. It may also influence the choices of ERG goals and activities to a large extent. This may result, however, in possibly limiting the ERG and its members to be seen as a ‘social club’ of sorts by others. Management, in particular, may not see the direct (or even indirect) positive business impact that an ERG can have.

This is where ERGs can fall short: when they fail to tie a strong business-focused bond that ensures continued support by leadership that in return ensures the ERG can sustain and proper for the better of its members as well as the hosting organization.

Becoming a business resource

From a management perspective, ERGs can provide social ties within the workforce that are mostly seen favorable ‑ at least as long as it does not affect the employee performance; whether perceived or real.

Better off is the ERG that demonstrates an unambiguous contribution to the bottom line. A clear business value proposition sets a solid foundation that makes it easy to communicate with and convince executives securing their continued support. The company benefits from positive business outcomes as a direct result of the ERG activities, while it engages employees broader and deeper. This uses more of the employees’ true potential to ‘maximize the human capital’ as an important element also of employee engagement, development and retention.

This approach serves not only the company but has advantages also for its employees and the ERG in return. The ERG members benefit directly in many ways such as by interesting work outside the immediate scope of their job, by developing new skills and by increasing their visibility within the organization and continued ‘employability’, i.e. their personal market value as an employee.

So what is the key to success, how do you ‘build’ an innovation-driven and business-focused ERG?

A ‘business model’ for ERGs

My proposal is to establish the ERG as a self-propelling and sustainable system, an ongoing process that continues functioning quite independently from changes in the ERG leadership and consistently delivers innovations. Individual leaders are important for operations and make valuable contributions, but the ERG must be able to continue functioning even if key players become unavailable and replaced.

The following dimensions are generic and apply to any organization. Here, we use them to describe a general business model for the ERG:

1.       Strategy

2.       People

3.       Processes

4.       Organization

5.       Metrics/Rewards.

Dimensions of a business model
The five dimensions of an ERG business model

To illustrate the model and making it more tangible I use a generic example. It is based on NxGen (for Next Generation at the Workplace), a generational-oriented and business-focused ERG that I founded. NxGen was recognized in early 2010 as a best-practices approach by the National Affinity Leadership Congress (NALC).

1. Strategy

The strategy brings to the point the ERG’s goal and objectives. A well-thought-out value proposition is the foundation for the ERG.

For example, NxGen is a forum to develop leadership skills, networking and problem-solving that aims to open up cross-functional/cross-disciplinary opportunities for its active members through strategic business projects with measurable results. As a goal, NxGen aims to become a sounding board for management as a valued business resource.

2. People practices

People, active volunteers, are the life-blood of every ERG. Staffing and selection are crucial and continued activities to induce fresh ideas and prevent burn-out of established ERG members. What you are looking for are active volunteers who are passionate and energetic. You want members who become active change agents, role models, within the organization. Value a diverse set of backgrounds and capabilities that can complement another.

Rather than trying to recruit new members, focus on how to attract new members to engage and actively participate (in contrast to the ones signing up to receive email updates or a periodic newsletter, which is a passive form of membership). NxGen membership is open to all employees.

There is a broad range of benefits for active ERG members that can include (but are definitely not limited to):

  • Insight and work in other business functions and departments
  • Members lead a relevant project possibly in another business function
  • Experiment and learn in a safe and nurturing environment
  • Develop and apply skills like leadership, consulting, problem-solving
  • Build an open and supportive network with members coaching each other
  • Increased visibility within the organization
  • Potential to open new career opportunities
  • Making a measurable change in the organization here and now.

At NxGen, we see that younger employees (primarily Generation Y also called Millennial, born after 1980) tend to drive the ERG activities most. The explanations I offer is that GenY’ers, in particular, enter the workplace as well-educated professionals, optimistic and motivated to make a difference. GenY was brought up to believe they can achieve anything and are interested to explore lateral career moves. They are used to collaborating in teams to overcome obstacles and network while leveraging technology effectively to this end. At the workplace, GenY typically is not (yet) part of the decision-making bodies due to their junior positions ‑ but they do want to be heard (and should be listed to given their increasing numbers in the demographic shift of the population that has reached the workforce).

3. Processes

The ERG acts through business-relevant projects. At NxGen, the member ‘grass-roots’ identify otherwise un-addressed or under-served business needs that the ERG chooses to pursue. Based on a clear value proposition (return-on-investment, ROI) for the organization the ERG seeks executive sponsorship for each project. The executive sponsor ensures strategic alignment with the organization’s goal, expertise in the functional area, political support and funding for the project (since the ERG has no funds of its own).

The project scope often lays outside of the immediate job description of the ERG-appointed project leader allowing for broader hands-on learning opportunities. Applying professional project management methods to all projects ensures the projects deliver the specified deliverables.

The ERG core team steers and administrates the ERG project portfolio which is documented in an annual business plan and shared publicly. As resources are limited, not all imaginable projects can be conducted at once but are staged. Projects can build upon and leverage each other while making use of synergies whenever possible.

In the beginning, it might be challenging to find meaningful projects that make the best use of the ERG’s resources and capabilities with favorable business impact. It takes time and persistence to develop a trustful relationship with executive management and to gain credibility as an ERG to attracts more complex and important projects from management in return.
NxGen works and communicates openly, it acts transparently and leverages (social) media to inform and connect with its members and non-members displaying operations and result of the ERG’s work.

4. Organization

The NxGen ERG operates within a general framework set by a company’s office to ensure all ERGs abide the company policies. This office also provides an organizational home for ERGs within the company. It generally coordinates and supports the different activities across ERGs and ensures each ERG has a distinguished executive sponsor to connect the ERG with senior management.

A charter defines basic roles and processes of the NxGen ERG in more detail and is posted publicly. A core team of active members guides the ERG activities and ensures ERG operability. The core team is lead by the ERG’s elected chair and co-chair(s); it further comprises the project leaders, distinguished role-holders, and liaisons to key functions in the organization. The core team members support and advise each other. The ERG provides a safe and social environment that relies on trust among the members to connect, to build relationships, to network and to run projects.

NxGen actively reaches out to other ERGs, innovative groups within the organization but also other operating units and companies to cooperate, share, benchmark and collaborate on common goals.

5. Metrics and rewards system

How do you measure success, i.e. the effectiveness of an ERG? An annual business plan covers the portfolio of ERG projects. It serves as an instrument to measure the ERG performance across all ERG activities that the ERG chair is held accountable for.

What are the rewards for active ERG members? Besides the benefits listed in above section ‘People’, accountability and success for individual members derive from their projects or their input to other ERG activities that all have clear objectives and a success metrics attached. Driving the change and making a difference is a reward in itself.

NxGen and individual members received several awards and recognition for their work inside and outside the company which the ERG celebrates in public. Some members list their ERG involvement and experience proudly on their résumé which is an indicator that the ERG’s value proposition is effective for its members, i.e. the members value the ERG membership, projects, recognition and awards as means of their ‘employability’.

Building the ERG as an innovation incubator

The business model positions the ERG clearly as a powerful business resource for the organization but it can be even more. The ERG can serve as an ‘innovation incubator’ by combining an attractive system with creative space in an effective governance framework. The processes create measurable value for the individual and the organization that can significantly contribute to process innovation and also drives product innovation.

In an empowering bottom-up movement, the ERG directly connects its active members from any level of hierarchy with the decision-makers high up. This bears the potential to cut right through established or perceived boundaries such as hierarchy, bureaucracy, and red-tape or functional silos that may severely limit the effectiveness and innovative effectiveness of other units that were created top-down within the organization.

Herein lays the deeper potential of ERGs as a true business resource and going beyond possible self-inflicted limitation to social affinity. ERGs can well be the means that contribute to driving the future success of an organization for an organization that understands and value how ERGs open opportunities to tap into its workforce and unleashes hidden potential.

Additional reading

Generation Y for managers – better than their reputation?

GenY for managers: look beyond the labels! Understand the drivers and grasp opportunities that Generation Y brings to your workplace!

It’s a long list to describe Generation Y with a commonly unfavorable preconception. This  youngest generation at the work place (born after 1980, also called Millennials) is said to be: lazy, impatient, needy, entitled, taking up too much of my time, expecting work to be fun, seeking instant gratifications, hop from company to company, want promotions right away, give their opinion all the time and so on. But is it really that easy to characterize a new generation?

Generational clash has changed
Clashes between generations were always present to some degree: Young people want to prove themselves, probe the boundaries and seek opportunity. The older are in power, hold the wealth, make the decisions and are typically reluctant to change and letting go of their well-established and comfortable status quo.

However, something significant has changed: Where in the past three generations used to live at the same time, we now see that four generations are working together simultaneously.  A conflict that used to predominate the homes is now also present in the workplace (as a result of several factors that include demographic change, geo-economical impact, longer life expectancy and increasing retirement age).

While in our personal lives we may be able to avoid or by-pass some areas of generational friction these same ways may not be possible in the workplace. Here you have to get along and collaborate with your co-workers. This is challenging not only for the multi-generational workforce but also for the managers facing the new need to mitigate generational conflicts, integrate the staff, and provide a constructive and collaborative work environment.

Why managers struggle with the mysterious Generation Y
For managers it is important to take a close look at GenY, since GenY outnumbers the significantly smaller GenX (born 1965 to 1980) and is the largest workforce generation. The Baby Boomers (born between 1946 and 1964) retire from the regular workforce leaving a gap. Nonetheless, given the typical career progression, higher management positions are still firmly held by Baby Boomers or their preceding Pre-Boomer generation (born before 1946) – the generations farthest apart from GenY.

Ignoring the differences between generations or addressing them in a ‘one-size-fits-all’ manner backfires. It also misses to leverage particular traits of the young generation that become critical for an organization to sustain in the face of change coming at ever faster pace and with increasing complexity (see my earlier blog: ‘Complexity’ is the 2015 challenge! – Are leaders prepared for ‘glocal’?).

It is Generation Y that people seem to have the hardest time wrapping their heads around. Simply pigeon-holing GenY does not do them justice and doesn’t help understanding and managing them either.

‘Kids’ entering the workplace?
It is even a common misconception that GenY have not yet arrived at the workplace and that they are ‘kids’ just coming out of school or college. If you consider the demographics, however, the early GenY’ers are 30 years old now, so they are hardly ‘kids’ anymore. They come well educated and already gained some experience at the workplace for several years now. They are not ‘out there’ anymore but ‘in here’ now!

Instant gratification and fast promotions?
It is true that GenY seeks fun (who doesn’t?) and grew up with high-end video games in which the players typically rack up points in fast progression opening up new levels or challenges to continue the game. But that’s only one side of the coin. It also forms a mindset to figure things out, address challenges with optimism in a playful way, master technology, compete in ever-changing surrounding as well as hooking up with a network of friends to play and succeed together – don’t be fooled, these are the critical basic skills in the world we live and do business in!

Entitled?
Look at GenY’s parents that determined the up-bringing: The generation of Baby Boomer parents indulged in perks and benefits like only few before them; the succeeding GenX only saw these goodies going away when they started entering the workforce. Fortunes were racked up or inherited by Baby Boomers.

GenY kids often grew up in a world of abundance; nothing was too good for them or out of reach – and sponsored freely by the parents with enough cash in their pockets to offer their kids any imaginable aspect of a ‘better life’.

Instead of flipping burgers during summer holidays to earn their own money, many GenY kids had spare time on their hand to learn and have fun while ‘helicopter parents’ took (and continue to) care for their well-being and even professional advancement as adults. Who would say ‘No’ if you are young and your parents offered to pay for your car, your shopping dreams or set you up for a prosperous and promising career?

This way many Baby Boomer parents did their part to breed a generational culture of entitlement or at least high expectations while reinforcing the message “You can do anything and succeed!” – It does not seem fair to hold this upbringing against their kids.
(Instead, it provokes the questions why Baby Boomers, in particular, seem to have such a hard time letting go to let their kids live their own lives without excessive parental hand-holding? – But that is a topic for another time…)

GenY is prepared, assertive and speaks up. They know what they want and how to get it. Don’t underestimate them as customers either, since GenY is a serious economic power and probably even more so than any previous young generation in history!

Lazy, impatient and needy?
Let me share with you my first-hand experience with GenY at the workplace. I gain my insight as the founder and chair of a generation-oriented employee resource group (ERG) which gives me ample opportunities to work closely with GenY’ers on various projects. It made me probe my own biases and assumptions based on practical work experience (which, by the way, I don’t always see reflected in articles written about GenY).

What I learned is quite different from most preconceptions: The GenY’ers work hard and with ambition, they are not a bit lazy.

When we coin GenY ‘needy’ or ‘taking up too much of my time’ we are actually ignoring that they want to contribute to a meaningful cause in the most effective way. What they are asking is to understand the ‘why’ before going to work. This questions and challenges the status quo in a constructive manner – which is good! If we cannot answer their question satisfactory or insist that we already know the best way ‘how-to’ then it is us (the non-GenY’ers) standing in the way of innovation and change. As a general truth it is not their questions that can be compromising but rather our answers.

Some tasks require not only book-smarts but also experience (including managing people) that many GenY’ers cannot have made at this time in their careers. Therefore, they can be over-confident and over-estimate their abilities and effectiveness; support them and offer them learning experiences as a reality-check and growth opportunity.

Empower GenY to put their specific inherent qualities to best use given that they tend to be natural networkers and solvers of complex problems, they user modern technology effectively and approach different ethnicities and cultures with an embracing ‘color-blindness’. – Are these not exactly the qualities that we need in the world we live and work in today and tomorrow?

If you plan to start an ERG that addresses generational differences, you can find great research for free:  Next-generation ERG learn from U.S. Army recruitment!

Engagement and empowerment drives loyalty
A short while back I wrote in this forum about How to retain talent under the new workplace paradigm? It comes down to approaching the workforce differently by offering flexible career paths, support staff to remain employable and accommodate benefits to their needs instead of hiding behind archaic one-size-fits-all models.

As managers we need to consider GenY’s particular needs and expectations to attract, engage and retain them. We need to leverage their unique talents and skills for the better of the company while helping them to development and grow. Empowerment includes guidance and creating opportunities for GenY to make mistakes, learn and get active ‘their way’ in areas that wakes their interest and that are meaningful to them as well as to your organization. – Then relax, sit back and see beautiful surprises unfold!

Leverage employee resource groups (ERG) as an opportunity
Some managers may ask on how to get started, what could be a first step to engage and leverage GenY? One way of doing it is by founding an inclusive ERG to focus and organize your emerging workforce.

As an example, I founded the Next Generation at the Workplace (coined ‘NxGen’) ERG that has already changed the company’s perception of employee engagement, increased ERG credibility and raised the business value seen in ERGs among managers. Our NxGen approach is to address opportunities in business-relevant projects with measurable results for the business (such as return-of-investment, ROI). Our projects often focus on relevant topics are outside our immediate field of work but are always sponsored by an executive to ensure governance and strategic alignment. These projects provide an excellent and safe training ground for up-and-coming leaders. NxGen supports the organization directly through the project’s immediate deliverables as well as indirectly by establishing a free and hands-on management development program that comes with networking, coaching, and skill development already built-in. Everyone wins!

No matter if you have a dedicated ERG or not, don’t discount GenY based on labels. Dig deeper to find the treasures that this generation has to offer. Your organization’s future relies on them!

* * *

Additional information
NxGen was nationally recognized as a ‘cutting-edge’ approach to employee resource groups by the Network and Affinity Leadership Congress 2010 (NALC), a national conference focused on training ERG leaders to align with the business goals of their organizations.

Please leave a comment and, if you are interested in ERG topics, feel free to join our ERG Leaders group on LinkedIn.com to discuss, share and learn!

Why too much trust hurts innovation

Research shows that too much trust decreases innovation. Read what ‘trust’ is and how it affects your workplace and innovation.

Most managers understand that trust is a key ingredient to effective collaboration and innovation yet few actively try to cultivate and nourish trust in their own organization to achieve the right mix between trust and constructive tension.

The trust gap between theory and practice
Over 80% of managers believe trust is important to have good work relationships that enable effective collaboration and superior results. So why do only 40 or so percent actually take action to build and maintain trust within their organization? Obviously, there is a disconnect between the theory and the practice. Why is that?

My assumption is that ‘trust’ is perceived as an ‘intangible’ that managers like to stay away from because they find it hard to measure and to manage. It further requires an individual to open which comes with vulnerability. Perhaps we also fall easily into the only so human trap of making over-confident assumptions when it comes to ourselves and our single-sided perception of the trust we believe to have established with people we work with….

What is trust?
Let’s take a closer look – what makes up trustful work relationships? Trust is the degree that people trust one another, so trust is an interpersonal phenomenon. It comes down to three factors that make up trust at the workplace as Karen Sobel Lojeski, NYU professor at Stony Brook and CEO of Virtual Distance International, identifies:

  • Benevolence  –  co-workers have your best interest at heart
  • Ability  –  co-workers have the knowledge and ability to get the job done
  • Integrity  –  co-workers will do what they promise.

Trust is the ‘glue’
Trust is the social ‘glue’ that holds together teams and organizations. It is critical for success of virtual teams, i.e. the increasing trend of co-workers worked separated from another and spread across different countries and time zones. With a lack of trust productivity dwindles as does the willingness to share information. Instead, our energy gets wasted every day on avoiding perceived threats from others.

Innovation needs trust
High trust correlates with more successful innovation – why? When colleagues trust another they open up and share information. Besides the obvious benefit of cross-fertilization that leads to more ideas and creative approaches, by giving away your views and knowledge you become vulnerable as an individual and even more so in a competitive professional environment. This openness comes with a risk to fail that people are only willing to take if failure is acceptable among colleagues and does not come with repercussions.

Sharing ideas alone is not enough though. Asking thoughtful questions, constructive criticism and mutual support lead to better solutions while curbing hostility and competitiveness. Opening up happens when a task-related conflict will not easily deteriorate into a personal conflict. Innovation within an organization relies on trust among colleagues as a key ingredient that cannot be substituted.

Too much trust impedes innovation!
So, how much trust is needed? And can there be too much trust? The MIT’s Sloan School of Management (MIT Sloan Management Review, Summer 2010, Vol. 51, No. 4) offers some answers. An increasing level of trust leads to more effective innovation, as we expect, but the researchers also observed that there is a limit after which the correlation negates and where innovation declines with too much trust. What happened here?

Too much mutual trust deteriorates the innovative effectiveness of partners. Where trust sparked creativity and led to better solutions earlier constructive criticism and challenging each others ideas now suffers. Finding the ‘sweet spot’ is the tough part where a high level of trust consistently fuels innovation and leads to best results.

Take-home message for managers
Should managers reduce investing in trust? Certainly not!

A high level of trust remains the most crucial requirement to build a solid relationship between people that becomes the basis for effective collaboration and innovation. Most organizations seem to suffer from a lack of trust more than anything. It makes collaboration a drag and leads to poor results and mediocre solutions.

Actively building trustful relationships is an important part of a manager’s role and even more so in virtual teams, when the team members work separated by barriers of location, time, culture, language and others. Trust must be built and nurtured actively especially when face-to-face communication is not possible and becomes replaced by using less-rich digital media (video conferencing, phone, email, etc.).

When trust is getting very high, however, we need vigilance and a reality check. You do not want to lose constructive argument and challenging dialogue between team members that turn creative ideas into innovative solutions.

Leadership vs Management? What is wrong with middle management?

Is ‘middle management’ to blame? About the differences between managers and leaders, two conflicting roles that are both needed in an organization.

What is wrong with middle management?
Listen around, ‘middle management’ gets blamed all around for many things and even more so, for the big disconnect between executives and the staff and managers in the trenches.

A colleague just asked me again today – what is wrong with middle management?
Is there a systematically flaw that affects so many organizations?

Management versus Leadership?
The confusion originates from a lack of clarity over the roles: We need to look first at what the difference is between a manager and a leader: Is there one at all and are these roles exclusive or do they overlap?

Don’t be mistaken, significant differences exist between managers and leaders; yet an organization needs both, managers and leaders. It is necessary to distinguish these roles, since their focus and goals are quite different. Not only can they conflict to some degree, they actually have to for the better of the effective organization overall. ‑ Let’s take a close look at both roles:

Management role
A manager typically supervises a unit that produces an output consistently (such as a product or service). The manager’s job is to improve the input (resources) and output (deliverables) and make tactical adjustments. Most changes are moderate and of an evolutionary character focused on optimization by refinement of the here-and-now.

Given their tasks and responsibility, managers do have a professional tendency and even obligation to resist changes that disrupt their well-oiled and optimized “machine” whose output is also their immediate measure of success in most organizations.

For an effective manager it is all about “doing-things-right”. The ways often get documented in procedures to solidify and guard the established processes to guarantee the reliable delivery of results. Focused on preservation and functional optimization, managers can also easily fall in the trap of judging too soon and then making an adaptive decision too late.

Leadership role
In contrast, a leader takes a step back and looks at the bigger picture that aims strategically at the organization’s future. The effective leader shakes up the established structures and “does-what-is-right” by bringing about change that will position and optimize the organization for future success through transformation. (Read more on Innovation Strategy: Do you innovate or renovate?)

Leaders must stay flexible and willing to deviate from the current path to drive the needed change to successfully shift or even turn the course of the organization. Consequently, the leader must take into account major disruptions of otherwise smooth and sub-optimized operations.  (Read more on How to become the strategic innovation leader)

The farther a leader is removed (usually way up in the hierarchy) from the level where the output is produced, the more abstract the work appears. It becomes easier for leaders to make game-changing decisions flexibly that may turn out unfeasible on the factory floor or other real-life business settings or that confuse the staff.

A good leader follows guiding principles and keeps the staff in the loop to prepare them for upcoming changes. Removing elements of surprise where possible is an effective early step of successful change management when it comes to implementation.

We need both!
The goals of leaders and managers conflict and create a constant tension field. It requires active balancing and healthy negotiation to prepare the organization for the future while not sacrificing the ability to deliver results reliably as the organization moves ahead on the bumpy road of change and uncertainty. (More on Mastering the connected economy – key findings of IBM’s 2012 CEO study)

This makes clear that an organization needs both, effective managers and visionary leaders. It also makes clear though that both roles may not be best united in one person to avoid a conflict of interest that compromises best results for the organization overall.

Where middle management gets stuck
As you move farther down in a hierarchy from the leadership level and closer to operations, the harder it becomes for managers to balance the high-flying leadership vision with the demanded production or service targets on the ground.

So here is where you find the clash and overlap between leadership and management: The middle management gets caught in the middle, literally!

Middle management needs to bridge the gap even for self-preservation by negotiating and brokering between the workers and the leaders. It’s a tough job! Middle managers deserve some sympathy as they get torn by the conflicting needs of the organization every day and often enough not fully included by leaders while yet having to make sense of the dilemma and translating it for their staff.

Can’t do without…
Thus, there is no ‘systematical flaw’ but only the reality of conflicting needs of an organization that requires both, effective managers and visionary leaders. This comes with accepting the entailing tensions and conflicts to deliver results reliably and consistently while readying the organization for meeting the challenges of the future – which puts the middle management in the hottest spot!

Fear of change?

Do people fear change? I doubt it. See how fear relates to ‘change’ and how to harness it.

Fear of change?

An interesting discussion I got involved in recently is about ‘What gets in the way of embracing change?’
It quickly revolved passionately around whether employees like change or not.

People love change!
From my experience, people love change! – Not convinced? Look around you: People love fashion, wearing different clothes and hair styles, driving a new car, using gadgets with cool new features (look at the success of iPhone, iPad, etc.!) and so on. These are all changes we embrace all the time!
Obviously, ‘change’ as such is not the issue; so what is?

Angst or fear?
‘Angst’ describes “an acute but unspecific feeling of anxiety”. There is no specific source, however, so angst is based on the abstract, the unknown.

In contrast, ‘fear’ is anxiety about a “possible or probable situation or event”. Strangely, fear of change hints at something specific and not at some unspecific angst the general term ‘change’ leads up to. Nobody seems to use the term angst relating to change. – So what is the mix-up about?

When it comes to fashion or hair styles the fear is not about the new color or cut but about how others will respond to it and how this will affect me.
Will the person I fancy secretly finally notice me and be attracted to me? Will I appear more daring, more professional or more ‘me’ branded – or what ever else it is you wish to symbolize or achieve through the change that you initiate.

People fear uncertainty of the consequences!
What people fear are the consequences for them that the ‘change’ entails and even more so if they have no control over the change. Translated into the workplace this comes down to what changes for the individual employee: First of all, their gotten-used-to equilibrium gets disturbed by an outside force – not by free choice of the individual. This type of change typically induces much uncertainty for an individual with little or no control over how it will play out for them. Instead, the well-established and familiar routine stops. It is replaced by something different, possibly something they don’t know or understand fully.

Now, where the fear comes from specifically for the employee is that one day the employee is competent in doing their work and delivering results, while the next day (i.e. when the ‘change’ takes effect) they may need to learn, adapt, give up comfortable routines, figure things out the hard way, may not know how, fail and struggle ‑ and be inhibited during this period to produce results again so this comes with a lack of satisfaction and appreciation or other forms of acknowledgment.

Other colleagues may adapt better, learn faster and surpass them in the ability to the work done in the new way. Then, the employee may find they got left behind and may no longer be needed by the new organization. This potential lack of professional competency is the origin of the fear possibly combined with loss of certain perks or proprietary knowledge acquired over time that helped them staying afloat and ahead of others in the good old days.

Ask yourself if you would like to be surprised today with a major reorganization, for example, that let’s you hanging in the limbo with uncertainty about your fate within the company for months or by a new process thought out in some remote ivory-tower that is unlikely to work in the reality of your workplace…

This is where the major opposing force to effective change comes from: the employee resistance. If resistance is high also the chances are high that the change will not be implemented effectively, not efficiently or not even at all.

Change as an equation
Change can be expressed in an equation called Gleicher’s Formula (after David Gleicher and Richard Beckhard, 1969). Several variations of the equation exist but they all include the same three factors, which multiplied need to exceed the amount of resistance (=cost) on the other side of the equation for the change to be implemented successfully.

According to the streamlined formula (by Kathleen Dannemiller, 1992), change (C) is the product of

  • The dissatisfaction with the status quo (A),
  • The desired state (B) and
  • The practical steps taken towards the desired state (D).

These factors multiplied must outweigh the amount of resistance represented here by the cost of change (X). Here is the formula:   C = (ABD) > X

In practice, there must be significant pressure present from dissatisfaction with the current state (status quo), a clear description of what the new state should look like in the future (vision) and effective measures taken to get from the current to the desired state (action plan).

Overcoming resistance in the change equation
Resistance may include different elements but a major contributor is the resistance originating from the people affected by the change. It is crucial for reaching sustainable results to keep this friction low by engaging these vital stakeholders actively and early on where possible.

What it comes down to in practice is having a sound plan and excellent execution of change management together with the people affected by the change. Include them to work issues out as they arise early on when alterations cost little and to buy in to the change and drive it. Don’t underestimate the impact and potential of employee empowerment and the pay-off that it can have for the organization that does it right!

Including and empowering employees effectively in organizational and procedural change projects becomes a powerful differentiator between an effective change implementation and a costly disaster.

How to retain talent under the new workplace paradigm?

The paradigm of work has changed – how does it affect employees and what can be done to retain them?

How to retain talent under the new workplace paradigm?

Most of us grew up with a clear understanding of how ‘work’ and ‘careers’ works: As an employee you could generally rely on job security and a pension guarantee for your loyalty and obedience to the employer. Practically, the organization ‘owned’ a human asset in a voluntary symbiosis that would end with retirement.
– This paradigm changed fundamentally and even more so in our turbulent and globalized economy. Since my current work focuses on employee retention and engagement, let’s see what has changed and how it affects employee retention.

The ‘old deal’ is gone!
When it comes to employment today, employees understand that they stand alone (though this awakening may have come only recently to the more established generations). Organizations now hire people for their specific skills only as long as they need them and then move on to hire someone else for the next task.

This may well be the reason talent acquisition is often valued higher than talent retention. However, this approach also comes with losses through attrition and may not make best use of the added value that an individual can give the organization over time with through learning, personal growth, developing networks and gaining experience.

One way or another, the old paradigm no longer holds true. And the GenY streaming into the working world have not even experienced it to start with, so don’t expect them to respect and live the outdated rules!

One-dimensional career paths are out!
Under the old paradigm career paths were fixed and oriented ‘upward’ following a pre-defined and linear course of advancement in the position line-up. Deviations from the laid-out career model were rare exceptions.
More likely, an employee had to leave the organization to break out of the scheme when seeking growth in a new or different dimension of interest, to apply newly acquired or dormant skills or to make ends meet along their personal needs. There was not much room to move sideways out of the fixed career track slot into a career up through a choice of other avenues.

While the fixed model made it easy for HR and management, it neglected the potential of the individual employee who can evolve and grow, who may change interests and who may seek new challenges outside their immediate or next-up job description.

Retention is more than offering money!
Employers who wish to retain their precious talent need to offer more than a paycheck and blanket perks ‑ but this does not mean necessarily that they have to spend more money. A competitive salary is expected, of course, but not the #1 driver. Key drivers for the new workforce are career opportunities and customized benefits – money follows.

What today’s workforce is looking for are choices: flexible career paths that broaden the options and offer development opportunities instead of narrowing them down. They want to take control and influence where they are heading in a multi-dimensional space of opportunities and receive recognition for their achievements – empower them! Set clear goals and allow employees to experiment and learn on the way – don’t micro-manage them!

It becomes crucial for every employee to be ‘employable’ meaning to stay attractive for the current employer as well as the next employer under the new paradigm.

When it comes to benefits the time is over for one-size-fits-all perks! Consider non-monetary benefits that cater to the individual’s needs, preferences and independence: Non-monetary benefits may range from education opportunities over a free trip with family or friends as an incentive to flexibility along the work schedule and venue including remote working options.

This flexibility and consideration of an individual’s lifestyle is becoming even more important with GenY, who entertain closer social ties to families and friends than GenX. Networking and leveraging personal connections come naturally to GenY and extend seamlessly also in their professional world.

Shared values and inclusion
Employees increasingly chose employers by the values they share and reflect what they believe in.

Does your employer talk-the-talk or also walk-the-walk? Management tends to rely on communication channels to communicate to their employees that derived from marketing. These channels were originally developed to promote products to consumers through messages broadcasted one-way in a propaganda-like fashion. This practice was extended using new social media but still following the traditions of the old paradigm and without making use of the potential associated with the ‘social’ aspect, which is the power-engine behind the new media boom.

Give it a reality-check! – If your company has a Twitter account, for example, does your company account have only followers but follows nobody else? Here we are back to broadcasting!
If your company follows others, does it genuinely connect and communicate with its employees as well as with people outside the company? Does it engages in open discussions and learns from it?
How many managers and companies truly use social media tools to their full breadth as a two-way street of communication?

Transparency for talent retention
Retention does not have to be ‘rocket science’ even when the work paradigm changed.
What it takes is a degree of honesty and respect from an organization to treat employees fair and help them to stay ‘employable’. Authentic and open communication goes both ways and forms the basis for building trust, employee inclusion and engagement that result in employee satisfaction, innovative creativity and retention.

There is no need to fear transparency and open communication for an organization; failing to do so though is harmful to the organization’s reputation with word spreading fast and employees avoiding workplaces that do not live up to high standards and authenticity.

‘Complexity’ is the 2015 challenge! – Are leaders prepared for ‘glocal’?

In IBM’s 2010 CEO study, the high-profile interviews revealed a game-changer for the next 5 years: mastering the increasing ‘complexity’. Yet, less than half of all CEOs feel prepared for the challenge! – Read what is meant by ‘complexity’ and what the CEOs look for in successful future leaders!

‘Complexity’ is the 2015 challenge! – Are leaders ready for ‘glocal’?

What is the key challenge in the coming years and how to prepare future leaders.

IBM released its high-profile annual CEO study with interview results from 1,541 CEOs worldwide. The focus is on ‘complexity’ as newly identified challenge that CEOs face increasingly over the coming years.

(Note: the study results are no secret and available in the public domain:  http://www-935.ibm.com/services/us/ceo/ceostudy2010/index.html)

Complexity is what develops when a company tries to make their product and services easier to use for their customers and clients. – Why? Look at what we customers expect of the products that we buy these days:

Example – let’s take cars: New cars these days are highly integrated products that go far beyond only ‘taking you from A to B’. As added features we find WiFi and DVD players installed for entertainment. The radio receives traffic reports feed into the car’s navigation system to guide you around heavy traffic. There are distance sensors that automatically sound alarms and engage the brakes should we get too close to an obstacle too fast. Collision detection systems adjust your seat belt and deploy airbags to keep you safe and then call help through the car’s mobile phone system automatically while directing emergency rescuers to the car’s crash scene.

Integration entails inter-dependencies
These technological marvels in a car are integrated to run smoothly ‘behind the scenes’. They also pose significant challenges for the manufacturer that needs to keep the features as easy to use as possible for the customer or run even completely invisible to the customer. Nonetheless, all these components must work together seamlessly in an integrated way that create complex inter-dependencies among them.

This requires the manufacturer to integrate services and products outside their typical ‘automotive’ spectrum and ability. They need to collaborate with other suppliers that may not even have established ties to the car industry.
Note that the traditional product ‘car’ has undergone change to become an integrated ‘mobility and lifestyle’ product.
This increasing technological complexity at an increasing speed translates into the manufacturer’s organization and challenges its leadership.

Is there a ‘magic bullet’?
“The vast majority of CEOs anticipate even greater complexity in the future, and more than half doubt their ability to manage it.” – This fundamental statement strikes me most IBM’s 2010 CEO Study though it does not hold true though for a minority of outstanding organizations, which found ways to deal with complexity and produce 20% profits over their competitors nonetheless!

The ‘magic bullet’ facing unpredictable uncertainties seems a mix of

  • Creativity (it’s the highest ranked leadership quality by all CEOs!) that allow to react fast to a changing environment
  • Integrating customers into their processes
  • Simplifying what organizations do and produce.

Perspective of CEOs in Life-Sciences
Now, how does this translate into our daily work? Most of my professional life I spent in different areas of the Life-Sciences industry in Germany and the USA that I chose as an example. What caught my eye here are the responses by CEOs from Life-Science organizations in Germany and the USA in comparison. – How do they rate the upcoming complexity challenges, how prepared do they feel and what do they look for in future leaders over the next few years?

The 3 Needs
US CEOs (86%) more than German CEOs (81%) expect higher complexity in the years to come but only 45% (in both countries) feel that they are prepared to cope with this new challenge successfully. This opens a larger-than-ever ‘complexity gap’ reflecting the uncertainty on how to operate in the volatile and murky waters of the new business environment.

1. Creativity
Interestingly, the German CEOs rely confidently on creative leadership making decisions quickly (over thorough decisions) in the future by 18% above all CEOs sampled. The US CEOs, in contrast, seem more pessimistic by relying on quick decisions slightly less that CEOs overall. Both, the German and US CEOs equally make integrating customers to better understand the customers’ needs their highest priority

2. Simplification
The CEOs take different approaches to how and how much to simplify: While the Germans seem more radically simplifying products and operations more than CEOs overall, the US CEOs focus on reducing fixed costs willing to increase variable costs to allow for up-scaling ability as need arises.

3. Focus in Emerging Markets
The study including all CEOs proves that 76% aim at the rapidly developing markets. It is not surprising that market factors is their #1 external focus followed by technological and macro-economic factors.

Key Attributes of Future Leaders
What kind of leadership we need to manage complexity successfully over the next 5 years?

The CEOs agree on the following three attributes:

  • Creativity (60%) ranks highest overall followed by
  • Integrity (52%) and
  • Global thinking (35%).

What CEOs are looking for are leaders that understand and collaborate closely with the customers, show strong people skills and have a deep business insight with intelligence data.

The future leaders are innovators able to think on their feet and open to experiments when speed needs to rule over correctness. The capacity to simplify for the customer is crucial. This entails reducing the resulting complexity by stripping what matters down to the core and focus on that. Sound planning may have to give way to situational yet strategic management to avoid information paralysis and gain competitive advantage.  – The coined term ‘glocal’ means to integrate globally using all resources available worldwide while doing locally only what is necessary.

What do you think – are we ready for the complexity challenge? Any suggestions how to prepare?