AMA Quarterly Summer 2016 by AmericanManagementAssociation

AMA

JOURNAL OF THE AMERICAN MANAGEMENT ASSOCIATION

Interview with

Joel Peterson

Trust Is the Way Page 6

OTHER HIGHLIGHTS MANAGING WITHOUT PERSONALITY Page 3

SHIFTING PERFORMANCE: USING STARS TO RAISE THE BAR Page 14

FINDING AUTHENTICITY Page 22

TURN EMPLOYEES INTO INVESTORS TO POWER UP PERFORMANCE Page 32

CEO INSIGHTS BUILDING A CULTURE OF PERFORMANCE Page 35

WINNING WITH WELL-BEING Page 38

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UARTERLY SUMMER 2016 • VOLUME 2 • NUMBER 2

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UARTERLY

SUMMER 2016 Volume 2 • Number 2

JOURNAL OF THE AMERICAN MANAGEMENT ASSOCIATION

AN INTERVIEW WITH JOEL PETERSON

32 Turn Employees into Investors to Power Up Performance

Trust Is the Way Joel Peterson, the chairman of JetBlue Airways and founding partner of the investment firm Peterson Partners, talks with AMA Quarterly

38 Winning with Well-Being

about how to build and maintain trust, what makes a trustworthy person, and how to recover when trust is betrayed.

FEATURES

Managing Without Personality If you create a work environment that suits your own personality style, you may prevent your people from thriving.

By Merrick Rosenberg

Shifting Performance: Using Stars to Raise the Bar How do managers get better results from average performers? By shifting performance upward using an analytical approach to solving softer, behavioral challenges. By Micah Alpern, Damon Beyer, Kristen Etheredge, and Rodrigo Herrera

Strategies to Reward and Recognize Millennials The Millennial generation has three aspects that set it apart from previous generations. Knowing what makes Millennials unique, and how they are the same, can help in determining how to reward them at work. By Melissa Van Dyke

Finding Authenticity Developing a truly authentic mindset allows leaders to operate effectively in the digital era of freedom and fear. By Karissa Thacker

Reducing Turnover Through Motivation Organizations that want to limit turnover should pay attention to forms of motivation other than compensation. By Laura M. Graves, PhD, and Kristin L. Cullen-Lester, PhD

Turn Employees into Investors to Power Up Performance Ask the founder or CEO of any growing technology or consumer company whom he or she personally works the hardest to please. The person often lost in this equation is the employee. By Mike Lackman

Winning with Well-Being Humana’s transformation from traditional health insurance company to health and wellbeing leader is being driven through its associates’ personal journeys toward their best health. By Tim State

DEPARTMENTS

2 EDITOR’S PICK

The Trusted Path to Organizational Productivity

29 OFF THE SHELF

Excelling Under Pressure Mental preparedness is the key to performing well in stressful conditions. By Louis S. Csoka, PhD

35 CEO INSIGHTS

Building a Culture of Performance A small plastic-injection molding company in Illinois prides itself on innovative thinking in employee performance. By Peyton “Chip” Owen

42 CASE STUDY

Top Skills of Employees at HighPerforming Organizations An AMA survey details the skill sets necessary for every level of employees to raise the bar on company performance.

48 OUR VIEW

By Grace Killelea

By Edward T. Reilly

Establishing the Confidence Effect For a person to be truly confident, it’s critical to understand the delicate relationship between competence and confidence as they apply to our workplace brand as well as our leadership potential.

Maintaining Institutional Knowledge Key to organizational performance is maintaining institutional memory—both the knowledge base in archives and the knowledge of individuals’ memories.

AMA QUARTERLY I SUMMER 2016 I 1

EDITOR’S PICK

The Trusted Path to Organizational Productivity T

he never-ending quest for any company is how to work better, smarter, and faster than ever before. Companies spend a lot of time and money trying to figure out how to boost employee and corporate productivity. And this issue of AMA Quarterly explores several ways to address productivity problems. One thing is clear: Establishing trust is a major key to boosting organizational productivity. Trust is a concept that gets bandied about a lot. But it’s also essential to our lives. Every day, we place our trust in a lot of people. We trust the people that we know—our family members, friends, and co-workers—to do things for us. It could be trivial things, such as unloading the dishwasher or calling in the team’s lunch order. Or it could be more serious, such as picking up your essential heart medication from the pharmacy or printing off the report for that crucial presentation. We also place our trust in strangers—the engineer on the train that you take to the office or the cashier at the gas station who swipes your credit card. In our cover Q&A with Joel Peterson, the chairman of JetBlue Airways, Peterson talks about his book, The 10 Laws of Trust: Building the Bonds That Make a Business Great (AMACOM, 2016), the importance of trust, and how executives can cultivate it in their organizations and their lives. Merrick Rosenberg, in “Managing Without Personality,” addresses how managers need to account for the different personalities of their people by creating a work environment that allows them to thrive. In “Turn Employees into Investors to Power Up Performance,” Mike Lackman, CEO of PetFlow, wants executives to put trust into their employees to allow them a feeling of ownership in the business. Lackman talks about how he has put this into effect at his company. And in “Building a Culture of Performance,” Peyton “Chip” Owen, CEO of D&M Plastics, talks about the company’s values of responsibility, accountability, trust, and integrity that help fuel its performance and create a culture of ownership. There is no one sure way to increase productivity. But establishing a culture of trust and encouraging employee ownership can set a company on the right path.

AMA

UARTERLY

JOURNAL OF THE AMERICAN MANAGEMENT ASSOCIATION GUEST EDITOR

Christiane Truelove CREATIVE DIRECTOR

Lauren McNally COPY EDITOR

Eileen Davis GRAPHIC ARTIST

Tony Serio

PRODUCTION MANAGER

Laura Grafeld

PUBLISHER

Christina Parisi PRESIDENT & CEO

Edward T. Reilly

AMA Quarterly © (ISSN 2377-1321) is published quarterly by American

Management Association International, 1601 Broadway, New York, NY 10019-7420, SUMMER 2016, Volume 2, Number 2. POSTMASTER: Send address changes to American Management Association, 600 AMA Way, Saranac Lake, NY 12983-5534. American Management Association is a nonprofit educational a ssociation chartered by the Board of Regents of the State of New York. AMA Quarterly is an independent forum for authoritative views on business and management issues. Submissions. We encourage submissions from prospective authors. For guidelines, write to The Guest Editor, AMA Quarterly, 1601 Broadway, New York, NY 10019-7420 or email CParisi@amanet.org. Unsolicited manuscripts will be returned only if accompanied by a self-addressed, stamped envelope. Letters are encouraged. Mail: Letters, AMA Quarterly, 1601 Broadway, New York, NY 10019-7420; email: CParisi@amanet.org. AMA Quarterly reserves the right to excerpt and edit letters. Names and addresses must accompany all submissions. Subscriptions. Executive and Individual Members of American Management Association receive AMA Quarterly as part of their annual dues, a nonrefundable $50 of which is allocated for the subscription to AMA Quarterly. Single copies are available at $25 plus shipping and handling. Requests should be sent to sgoldman@amanet.org Rights and permissions. ©2015, American Management Association. No part of this publication may be reproduced or transmitted in any form or by any means without written permission. Requests should be sent to Joe D’Amico, at jdamico@amanet.org Editorial Offices 1601 Broadway, New York, NY 10019-7420 Tel: 212-903-8075; Fax: 212-903-7948 Email: amaquarterly@amanet.org Opinions expressed by the editors, contributors or advertisers are not necessarily those of AMA. In addition, the appearance of advertisements, products or service information in AMA Quarterly, other than those of AMA itself, does not constitute endorsement by AMA.

Christiane Truelove Guest Editor, AMA Quarterly

2 I AMA QUARTERLY I SUMMER 2016

MANAGING without

PERSONALITY BY MERRICK ROSENBERG

If you create a work environment that suits your own personality style, you may prevent your people from thriving. Managers regularly make assumptions about what their direct reports want and need. One unconscious assumption that drives managers’ behavior is that their staff members want what they themselves want, and need what they themselves need. This belief drives managers to create an environment in which they themselves will thrive, as opposed to one in which their people will thrive.

• Eagles represent the direct, driven, and decisive Dominant style.

Consider how this plays out from a personality perspective. There are four commonly used personality styles that people refer to as DISC: Dominant, Interactive, Supportive, and Conscientious. I’ve created a mnemonic to help people remember the styles by linking them to four birds:

• Owls are careful, concise, and critical, representing the Conscientious style.

• Parrots are Interactive, displaying strong interpersonal skills, and are inspirational and intuitive. • Doves symbolize the sincere, steady, and soft-spoken Supportive style.

Given that managers create what they crave, Eagle managers are likely to build environments that focus on achieving big AMA QUARTERLY I SUMMER 2016 I 3

Tips for Infusing Employee Personality into Management • Identify the type of environment you like to work in and consider whether you are imposing your needs on others • Identify the personality styles of the people who report to you • Accept that others may have completely different needs than you do—and that it’s a good thing • Consider how you can infuse personality style into the way you manage others (providing vision, driving change, delegating work, providing feedback, and recognizing performance) • Examine how leaders are trained in your organization and determine how style can be included as an aspect of that training

results. They are candid and expect candor in return. They seek freedom from control and external constraints. Can you imagine an Eagle creating a culture that lacks vision, innovation, and a strong focus on getting things done? Unlikely. By contrast, Doves seek to work in a collaborative and stable environment that ensures security for all team members. They prefer incremental change so that people are comfortable with new processes and technology. But what happens when a major issue arises that, if addressed directly, will ruffle some feathers? Candor will likely be stifled in the name of harmony. Visualize how an Eagle would fare in this environment. Then picture how a Dove would feel in a culture driven by an Eagle manager. Parrot managers tend to promote an open-door policy where communication flows freely throughout the organization. They seek to inspire their people with their grand, exciting vision and like to empower people to make things happen however they see fit. Owl managers, on the other hand, focus on creating clear processes that ensure quality outcomes. They strictly adhere to policies and standards of operation, and they are willing to take risks only after carefully studying all the details.

regarding what their people need may be faulty. Internally, they are guided by the thought, “My people need what I need.” Or more specifically, “My people need exactly what I wanted when I was in their position.” This unconscious assumption can lead to lower productivity and job satisfaction for team members. They key to managing others is to manage individuals individually. Managers need to create an environment in which they consider the style of each person they manage so that they don’t impose their own style on others.

SHIFTING MANAGER BEHAVIOR There are two ways to change how managers work with their people. The first involves changing how managers think. The second is based on how we train managers to act. First, managers need to change the internally held paradigm that “my needs are your needs.” By understanding the four personality styles, managers can learn to proactively anticipate what their people will want. There are four core needs that are based on the four personality styles. These needs are achievement, appreciation, acceptance, and accuracy.

In each of these examples, you can see what happens when a manager creates an environment that satisfies his or her own personality-driven needs as opposed to the needs of employees.

Eagles are driven by achievement. They want to accomplish big results, and they seek the autonomy, power, and freedom to make that happen. Parrots seek appreciation. They provide a lot of positive feedback to others and like to receive a lot of feedback in return. They desire the opportunity to express themselves and interact with people. Doves crave acceptance. They want to be valued for who they are and desire harmony and stability in the work environment. Owls expect accuracy and strive to be respected for their logic and the quality results they produce.

While managers may intend to create an environment in which their people thrive, their underlying assumption

If you manage people, consider the personality styles of your team members. You can satisfy their deepest needs—

Now, image a free-spirited Parrot in a procedure-driven Owl culture. Or how about an Owl in an unstructured Parrot environment. Both are likely to feel uncomfortable and set up for failure.

4 I AMA QUARTERLY I SUMMER 2016

regardless of whether those needs match your own—if you create an environment that matches their style. In return, you will create happy, productive, and loyal employees. Second, we need to shift how we train managers. We are training managers on important skills, such as how to delegate effectively and then provide feedback and recognition for a job well done. But these training programs often miss one critical component: personality style. In fact, when personality style is not linked to the various managerial skills, you may be wasting your training dollars. Fortunately, that problem can be easily remedied. Let’s take the specific skill of delegation. All too often, delegation is code for “dumping.” Managers get rid of the stuff they don’t want so they can do the stuff they like. Hence, the less desirable work gets dumped on the staff. This represents a wasted opportunity, as delegation offers the chance to develop staff members. Conventional management training offers the following tips on how to delegate effectively: • Be specific: Explain exactly what you want your employees to do. • Check on progress: Monitor their performance. • Fix problems that arise: Support your people throughout the process. • Offer feedback: Reinforce quality results and redirect ineffective behaviors. • Thank them: Recognize and reward good performance. This advice about delegation appears to be sound wisdom. So how can it steer a manager in the wrong direction? Let’s infuse personality into the picture and see what happens with each of the five delegation points: Be specific. Would you provide the same level of detail to an Owl as you would to a Parrot? Hopefully not. Owls want to know everything you know before they start. If you already have a successful process, they want it. If you’ve tried something that didn’t work, they want to know what you did— in as much detail as you can provide. Alternatively, Parrots seek the freedom to cut their own path. They want to be free of constraints that may limit their creativity. If you provide too much detail to Parrots, they may view you as a micromanager. Check on progress. Check in too often with Eagles, and they may feel that you are stepping on their toes. Can you hear the Eagle’s internal dialogue? “She delegated this work to me, but doesn’t seem to trust me. If she wants to be this involved in the process, maybe she should just do it herself.” Check in regularly with Doves, and they feel that you care about them. After all, what could possibly be more important than knowing your manager truly cares about you as an individual?

Fix problems that arise. If you help an Owl fix a problem, you may have just taken away the most interesting part of the project. Owls thrive during times of complexity. Interjecting yourself to solve an issue they are experiencing may deprive them of the process of figuring it out for themselves and the joy that comes with solving a challenge. Offer feedback. Each personality style needs a different kind of feedback. Eagles care about results. Therefore, when giving feedback to Eagles, focus on the results they achieved and the impact of those results. Parrots like high-energy, enthusiastic feedback. No detail required. Owls, by contrast, want the detail. Your energy level is not a factor. Doves simply want to be sincerely and genuinely appreciated. Tone is everything. Notice that what works for one style may be irrelevant for another. When training managers on providing feedback, emphasize that the personality styles play a significant role. Thank them for their effort and results. Imagine thanking Doves in front of a group of 500 people and asking them to say a few words about what they did. You may have just embarrassed and demotivated them by making them feel uncomfortable. Recognize Parrots in that same way, and they will be flying high for hours. Personality plays a critical role in managing people. We send managers off to training programs but often fail to point out that each skill may need to be applied differently depending on who you are managing. When training programs offer blanket skills that supposedly apply to all people, they can lead managers astray. There are three core aspects to applying any new managerial ability: strategy, skill, and style. Strategy is the plan of action designed to achieve a goal. Skill is the ability to do something well. Style is the visible aspect of a person’s needs, qualities, and behaviors. Management training tends to focus on developing new strategies and skills, but it’s the failure to link those strategies and skills that creates problems. It’s like a threelegged stool in which the leg representing style is shorter than the others and perhaps missing entirely. When managers change their assumptions and acknowledge that others may be driven by a different set of needs, they begin to manage individuals individually. In so doing, they create an environment in which each person can thrive instead of an environment in which only they would thrive. AQ Merrick Rosenberg is CEO of Take Flight Learning. He launched his career when he cofounded Team Builders Plus in 1991. He has created more than 20 team-building programs and a dozen leadership training courses. He is the author of The Chameleon: Life-Changing Wisdom for Anyone Who has a Personality or Knows Someone Who Does (Take Flight Learning, 2016) and co-author, with Daniel Silvert, of Taking Flight! Master the DISC Styles to Transform Your Career, Your Relationships…Your Life (FT Press, 2015).

AMA QUARTERLY I SUMMER 2016 I 5

6 I AMA QUARTERLY I SUMMER 2016

AN INTERVIEW WITH

Joel Peterson

TRUST IS

THE WAY BY CHRISTIANE TRUELOVE

Joel Peterson, the chairman of JetBlue Airways and founding partner of the investment firm Peterson Partners, talks with AMA Quarterly about his book, The 10 Laws of Trust: Building the Bonds That Make a Business Great (AMACOM, 2016). He describes how to build and maintain trust, what makes a

PHOTO: STEPHAN KUCHENREUTHER

trustworthy person, and how to recover when trust is betrayed.

AMA QUARTERLY I SUMMER 2016 I 7

Can you share your definition of trust? Why is trust routinely taken for granted? JP: Trust is really about giving up your authority or power to another. It’s the reliance on another to do something for you. And, of course, in the financial world we think of that as having a fiduciary duty to another. But more commonly in life, we just consider that we let other people act on our behalf to make decisions for us. We do that all the time with doctors, lawyers, accountants, people with expertise. So we trust them to know what they are doing and look out for our interests. Simply put, it’s giving up control. It’s taken for granted, I think, for a couple of reasons. One is that we do have these people around us, including people with fiduciary duty, and society wouldn’t work without a certain amount of trust. It’s the complex nature of getting things done in the modern world; it forces reliance and collaboration. And so it becomes an underpinning of things. The other thing is, we sort of make the mistake of thinking of trust as this feel-good, fuzzy, “Oh, I like that person, so therefore l trust them.” But I think that is conflating a couple of different notions. I think trust is a hard-edged, thoughtful management principle that you can develop. You can become intentional about building high-trust organizations. That’s actually what I was trying to address in this book.

Your book is about the power of trust. Can you share the role that trust has played in your career, and what you have accomplished because of it? JP: Everything I’ve accomplished is because I’ve been able to trust really good, capable people, and I’ve surrounded myself with and empowered them. One of the things that happen in high-trust organizations is that people empower each other. They drive trust to the lower levels. Early on in my life, and my family, my parents trusted me deeply. I was the oldest child. They just gave me lots of responsibility and assumed that I would do it, and I didn’t want to let them down. I was just always trusted. And then I tried to trust people and push trust out to people earlier in their careers than a lot of people have. Then you hold them accountable. You can read my biography, but I can say that everything I’ve achieved is beyond my natural abilities, and it’s derivative of people having trusted me and me having trusted people who’ve carried out what has needed to be done.

When it comes to building the culture of a company, what role does trust play, and how can trust be used to power a company? JP: Well, I think that if you have a low-trust environment, you really don’t have much of a culture. You kind of have this ongoing war, a political mess. So strong cultures,

8 I AMA QUARTERLY I SUMMER 2016

which build and build over time and produce innovation teams that get things done, I think are all rooted in trust— this reliance, this collaboration, people have with one another. So I think it is what powers management teams, powers collaborative groups. It’s projects done on time, on budget, because you can’t double-check everything. You can’t have people playing politics with everything. In fact, all you need to do is look at Congress and government today, with how things are run with mistrust everywhere, and see how little gets done and that costs are out of control. It’s just a mess. And it’s because the trust levels are so low. There are a lot of things people do that undermine trust in subtle ways, and productivity goes down when they do.

In The 10 Laws of Trust, you also emphasize the importance of communication with all stakeholders. Is total transparency always the best company policy? JP: There are limitations, obviously. But I think you can say to people things like, “I can’t share this with you now” or “It wouldn’t be proper to go beyond this” or “All we’re going to talk about are the following things…” You can signal to people that you’ve made a conscious decision. The things that are undermining us are when people just don’t talk about any of what’s really important. You can have things that are going on and just say, “I can’t comment on this.” We were bidding recently at JetBlue to buy Virgin America, and I had pilots come up to me and ask if we were bidding on Virgin America. The totally transparent thing to have said was, “Well, yes we are.” But that would have been highly improper. So how do you maintain this notion of transparency and honesty and yet not tell everything that you know? And so I just said that it wouldn’t be proper for me to make any comment one way or the other. I’m not going to confirm or deny. And that was quite open and honest, and I was willing to talk with him, but I set the boundaries on that. I think being overt in setting the boundaries is proper. But I think the idea that you’re lavish in your communications, that people find out the bad news from you [is important]. A lot of people whitewash things, and they spin, and they tell you only the good news, and they hide the bad news. To me, that is highly damaging to trust. People become wary. They say, “Ah, they’re just telling us this. They don’t really mean it.” We had a recent meeting with our limited partner investors, and we shared with them the deals that weren’t going well. A number of them came up to us afterwards and said, “Gosh, we’ve gone to a lot of these meetings, and nobody ever tells us about the deals that aren’t going well.” We spent at least half of our time on a small percentage of deals that weren’t going well and telling them what we’re doing about it. That increased their trust in us.

There’s this real principle for us, to be willing to talk before, during, and after events, to tell good news as well as bad news, and then to clearly set the boundaries. Ultimately, you are transparent within the boundaries that you set. Does that make sense?

It does, in that you have different groups of stakeholders that you have to be beholden to. It’s not only the people who are working for you, it’s the investors and other groups. Under law, if you disclose certain things you can be sued for it. JP: Exactly. And sometimes you may know something about another person that someone else may ask you about, and you don’t have a right—that wouldn’t be proper, that wouldn’t be elegant. Judgment and good taste and decency tell you that you are not transparent about certain things. That’s just how you operate, and then people will get to know your reputation and trust you, and share confidences with you, because they know you’re not going to violate that trust.

From your research and experiences, which companies stand out as high-trust organizations? JP: I think I will avoid naming specific companies, but I will make a comment on categories of companies.… I think smaller companies tend to have higher trust

levels because people know each other. They’ve been at it together, joined together at the hip. Once you get to a certain number of people, and I think it tends to be 100 or more, you start to get cliques. You can’t say hi to everybody. Now looking at a lot of companies in this world and country, most of the growth is in small companies. I think that there’s a lot of high trust and reliance, much like in families, in these smaller companies. Once you get to a certain size, it takes more and more work to develop high trust, and that in some ways is what the book is focusing on—how do you become intentional about building a high-trust culture that will survive getting beyond the 100 people? A lot of family companies tend to have high trust until they get to what is known as “Gen 2” or “Gen 3,” which is again when you’re bringing in people that don’t know each other. They haven’t invested in each other, and they may not have common values. I think companies that tend to be built around common values and are clear about what it is they’re accomplishing—what is winning for them—tend to give meaning to people, and meaning tends to generate trust. I always say that the great companies with high trust are where you are a respected member of a winning team, doing something meaningful. If you’ve got those three elements working for you, you tend to be working in a trust environment. If you’re not respected, trust doesn’t develop.

The Power of Trust BY JOEL PETERSON WITH DAVID A. KAPLAN

In business, as in life, trust is elemental. We all cherish it. Most of us think we deserve it. Few of us think we violate it. But what exactly is it? At its core, trust means willingly ceding a measure of control to another—be it a person, organization, or institution—and without the apparent safety nets of a binding contract or other means of coercion in place. Although we trust with an expectation that others will respond in kind, vulnerability is the psychological hallmark of trust. We’re taking a risk, sometimes based on limited evidence. Trust is a leap of faith rooted in optimism. We take trust for granted, not conscious of how it pervades relationships. Partners rely on partners; employers on employees; companies on each other; nations on other nations; families on other family members. And in a world in which the peer-to-peer economy is gaining ascendance—with individuals sharing cars, boats, and apartments—trust is all the more indispensable. Understanding the underpinnings of trust, therefore, is increasingly important as companies become more global, more competitive, more diverse culturally and AMA QUARTERLY I SUMMER 2016 I 9

hourly wage. It didn’t matter that he was an important buyer, because showing respect for other people was that value. And Trammell was going to live by that value, and people could trust that it was a value that was going to be honored within the enterprise. So it was very symbolic, and my guess is that it probably took all of about 10 minutes for the entire enterprise to know that story.

If you’re losing—you can pause on winning, you can consolidate and lose less than you did the prior period— but ultimately you have to figure out how to win. And that means you have to have a mission, something that says, “Hey, this is important. It’s a valuable thing, we’re adding to society, or I’m learning something.” There has to be some meaning. When you have all of those present, you tend to be higher trust than lower trust.

In that vein, are there real workplace examples of trust-building in action, to inspire others, that you can share? JP: There are certain examples in The 10 Laws of Trust, and here is one example that I recall vividly. Trammell Crow, who is my mentor, owned the Dallas Market Center, which is a wholesale merchandise mart in Dallas, 7 million square feet of wholesale space. Buyers used to have to show a badge to come into the merchandise mart. One buyer had forgotten his badge at the hotel and was berating this woman checking badges, just making a scene. Trammell happened to be there and see this commotion, and he walked over to the fellow and ushered him out. He was an important buyer, but Trammell just said, “I’m sorry, but we don’t treat our people this way or allow anybody to treat our people this way.”

That is a great example of the saying, “The customer isn’t always right.” JP: Exactly. Sometimes you have abusive customers, and you have customers you actually need to fire! And you have employees you need to fire, but a lot of times standing up for employees is a really profound way to demonstrate this principle of trusting each other, being a team, being collaborative, being tied to each other. And that is a pretty powerful way to build a high-trust organization.

You mentioned what’s going on in Congress. In looking at what’s happening in politics, particularly the presidential race, what would you tell all the candidates about trust and the consequences of trash-talking?

The message he sent was one of profound respect. She was an elderly woman, probably part time, and paid a low

demographically. Each new thread of well-founded trust adds strength and richness to the complex tapestry of our interwoven economic and personal lives. But trust doesn’t just happen. It takes initiation, nurture, evaluation, and repair. Trust is earned. Trust builds over time, fostered not only by decency but also by enlightened selfinterest, a recognition that trust works to everyone’s benefit. As a lubricant, trust accelerates decision making, results in agreements that are both durable and flexible, and makes life infinitely more pleasant. Trust creates a bond among an organization’s associates, customers, and suppliers, which in turn accelerates its ability to deliver on its promises to each group. But trust is neither an end unto itself nor merely a technique for achieving a desired outcome. Trust is the operating system for a life well lived.

JP: It’s discouraging to see the way that they’re all behaving. Each of us has this sense that when somebody is gossiping about another or trash-talking another, we assume that they would do the same thing to us. We think,

separate islands with no way to communicate. On one island, it’s each person for himself. On the other, everybody works together to achieve broader goals. A few generations later you’ll find two very different societies: one in a state of constant, nearpsychopathic conflict, the other successful and harmonious. Summarizing the essential argument for building trust, these scientists conclude: “Selfishness beats altruism within groups. Altruistic groups beat selfish groups. Everything else is commentary.”

There is power in being trustworthy. In the economy of trust, what goes around comes around. The more we look out for others, the more they look out for us. The more we trust, the more we are trusted. When trust is the medium of exchange, people collaborate and altruism can grow, again to everyone’s benefit.

Put simply, high-trust (altruistic) organizations prevail over lowtrust (selfish) organizations, and over time, high-trust leaders are more successful than low-trust leaders. Contrast the high trust levels of the legendary teams built by Alan Mulally at Boeing and then at Ford with those at Enron, where temporary success ended in spectacular failure. Just as important, selfish (lowtrust) groups, besides losing to altruistic (high-trust) groups, suffer misery within their ranks. One need only review Stanford University professor Bob Sutton’s bestseller, The No Asshole Rule, to see how untrusting workplace behaviors wound productivity and morale.

Evolutionary biologists David Sloan Wilson and E.O. Wilson propose a thought experiment for the relative power of selfishness versus generosity: Two groups are placed on

Like air, trust is invisible, and when abundant, it is taken for granted. But again like air, when trust is in short supply, people must find ways to cope. When suspicions arise, people reach

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“This is the type of person who would turn on you.” Even if the gossip isn’t about us, and even if we may be enjoying it at the moment or agreeing with them at the moment, we make a mental note that they are the kind of person who is nasty and says things behind another’s back. So I think it’s very dangerous. If you really think about it, a president’s job is not to unite half the country against the other half of the country. It’s to unite all 320 million Americans and find things that we have in common. There is a whole lot more that unites us than divides us. It would be so smart to build trust around those more common objectives. Two of those objectives that are pretty simple are the notion of security and the notions of economic growth and jobs. How you get there can vary, but I think having those as the big headlines and saying, “Let’s all unite around those. Let’s build metrics around what it is we’re trying to achieve. Let’s measure it, let’s have an honest conversation, let’s try things,” I think that would go a long, long way. I’ve heard people in the political realm say, “If you’re explaining, you’re losing, and the only thing that works is negative attacks. “We can kind of see it in John Kasich. He’s a guy with a phenomenal track record who’s kind of kept away from negativity, and he’s going nowhere. Don’t you think that says a lot about our sort of Twitter world, our reality TV world, with short headlines and short attention spans? I remember once teaching a junior high

for legal documents, policy manuals, and other prophylactic measures—the scar tissue of strained trust. Worse, when trust breaks down altogether, responses to the ensuing wreckage can vary from giving up altogether to grabbing power, from threatening to litigating. Make no mistake: Building and maintaining trust are hard work. Trust can be fragile. One bad actor can damage it. A single act of deceit can destroy a reputation for being trustworthy that was built over a lifetime. Be it in the boardroom or in statecraft or in literature—Hewlett-Packard or Caesar or Othello—betrayal is poison. Bernard Madoff’s investment firm and Bernie Ebbers’s WorldCom will forever live in the annals of capitalist infamy. There’s a good reason why being called an Iago is among the worst stains on a reputation. But if you live in a world of suspicion or selfishness, you may not even be aware that you and your necessarily low-trust teammates are like runners on a relay team lugging around heavy oxygen tanks in order to cope with the short supply of trust. You may not notice that your attention has shifted from the potential of posting a winning time to avoiding the risk of finishing last. Your energy is spent securing a replacement for the air you’d enjoy naturally in a high-trust environment. You look past innovation, optimization, and mutual gain in order to obsess over

school class, and I felt like every student in there was armed with a remote control. If they got bored and I didn’t get to the point quickly, they wanted to switch channels. It felt like I had to give them headline after headline after headline, joke after joke, and just entertain them. It was enervating, because we could never get beyond the superficial. We’ve trained our society to think short term. Stepping back, building trust, making connections, having conversations, showing respect, communicating clearly. Investing in trust is the only remedy, and I think it will take a real leader to do that. And unfortunately, I am not seeing much of that.

It does seem to be short-attention-span theater out there. It’s difficult to get people to read books or even read a longer article. JP: That’s right. Not too long ago, I read a speech of Teddy Roosevelt’s, the one he gave to the Sorbonne in 1910, where he talks about “the man in the arena.” It’s a phenomenal speech. It’s a 45-minute speech, and it’s so articulate. He’s chosen just the right words, and you know that he wrote it. Or if you read Jefferson or Lincoln or any of the great presidents, these were extraordinarily welleducated people who read. And now, it’s 140 characters and a dashed-off Tweet that is ugly about your competition. It obviously says more about us than it says about the candidates, that we would end up with those people at the top. But that’s where we are.

Like air, trust is invisible, and when abundant, it is taken for granted. But again like air, when trust is in short supply, people must find ways to cope. When suspicions arise, people reach for legal documents, policy manuals, and other prophylactic measures—the scar tissue of strained trust.

AMA QUARTERLY I SUMMER 2016 I 11

How do you figure out who to trust, and what do you tell business leaders to do? JP: Trust, ultimately, in the big picture. It’s people achieving what they say they’re going to achieve. People doing what they say they’re going to do. Behind that, though, there are three things that people have to have in order to be trusted. They have character—they’re honest, they have your back, they tell the truth. They value your interests above their own. Without character, it’s folly to trust somebody. The second thing is that they have to be competent. There’s no point in trusting somebody whose heart is good who doesn’t have the skill set to deliver. I could trust you to build the next terminal at JFK, but if you don’t know how to drive the piers and get approvals and lift steel, there’s no point in trusting you to do that. So you have to have character, and you have to be competent. But finally, you have to have the authority. If you don’t have the authority to do it, you can have high character and competence, but there’s no way you can deliver. If you’re not authorized at JFK to be building the building, I shouldn’t trust you to get it done. Getting it done is why we tend to trust people. I tend to find that people who have achieved a lot of things over a lifetime, who have recovered from errors, who have highquality relationships with other people, who maintain those, who have a deep network—these are typically people who are trustworthy. They earned their trust.

What do you do when your trust is betrayed? How do you recover trust and restore the damaged relationships? JP: Well, there are some instances where it’s not worth it. Betrayal is a bitter pill, and you’ll never experience betrayal if you don’t trust. That’s why some people think trust is a high-risk proposition. The point I make in the book is not to trust is to betray yourself and betray your potential. You’re better off trusting and recognizing that you will occasionally be betrayed. Recognize that it hurts and that sometimes you just can’t recover from the betrayal. The stakes may be high in some instances. I’ve seen some marriages where partners decided that the stakes for the children were so high that they were going to really work at overcoming a betrayal. I’ve seen it in business partnerships. In other cases, the betrayal is too deep. But if someone has betrayed another, they have to apologize, they have to make it right. And in any event, if you’ve been betrayed you have to move forward, which usually allows you to forgive and to focus on the future. I can tell I’ve forgiven betrayals when I’m not thinking about them anymore. You know, when you’re first betrayed or find out about the betrayal, it’s all you think about. You stew on it, and you think revenge, you think retribution, all the darker thoughts. As you work your way through it, and understand that you were probably a joint-venture partner in it—you

threats, downsides, and coercion. You look out only for yourself. As a result, low trust begets even lower trust. The 10 Laws of Trust outlined in my book, The 10 Laws of Trust: Building the Bonds That Make a Business Great (AMACOM, 2016), lay out attitudes and behaviors you can count on to increase the odds that the flow of trust in your enterprise will not be interrupted. Their implementation will arrest the decline of trust and keep you from burning all of your energy to protect against low-trust behavior on the part of others. Scientists point out that a good theory is one that predicts outcomes, giving us a sense of causality. One should expect a correlation between certain behaviors and the development of predictable trust within a team. And while no one has scientifically tested these 10 Laws, I’ve spent a lifetime assessing them to figure out what works and what doesn’t. My bottom line is that investing in trust works to create abundance and is far superior to hoarding power, harboring suspicions, or barricading oneself behind gotcha controls.

Trust: to safely and reliably allow others to act on our behalf. 12 I AMA QUARTERLY I SUMMER 2016

Being smart about whom to trust, when to trust, and how to nurture organizational trust is key to implementing the 10 Laws. Understanding the following truths about the very nature of trust— its preconditions, varieties, underpinnings, and risks—prepares a leader to undertake the job of building a high-trust organization.

“ Getting it done is why we tend to trust people. I tend to find that people who have achieved a lot of things over a lifetime, who have recovered from errors, who have high-quality relationships with other people, who maintain those, who have a deep network—these are typically people who are trustworthy. They earned their trust.” usually bear some responsibility for the betrayal—then you start focusing on the future. You overcome the betrayal, and you accomplish more in your life and become more thoughtful about looking for character, competence, and authority in people you expect to deliver.

What did you learn about writing The 10 Laws of Trust, and what would you like readers to gain the most from it? JP: What I learned was that writing a book is really hard! So I have a lot of respect for you who write and encapsulate things and boil them down and choose just the right words. Hats off to you! I’m not a professional writer, which you’ll see if you read the book, though I did have help from a professional writer and that really made a difference.

What I would like leaders to gain are a couple of notions. One is that trust is a hard-edged, important tool, and it’s something that one can develop. You can be intentional about building trust and one’s reputation, and then codifying behaviors within an organization to increase the trust levels that give you a high-trust enterprise that allows you to innovate, collaborate, achieve together, celebrate, have meaning. It’s a much happier life and a better existence for everyone concerned. Collaboration beats selfishness and mistrust. I want people to come up to me and say, “You know what, there are actually a bunch of things I can do that will increase the trust levels in the organization.” There are a lot of ideas in The 10 Laws of Trust that can increase the probability of creating a high-trust culture that can be sustained over time. AQ

Trust—well-grounded—depends on three conditions. To safely and reliably allow others to act on our behalf—which is what we mean by trusting them—we must be able to count on three underpinnings: Character, Competence, and Authority.

behavior pays dividends, if only in the harmony that comes from a lifetime of durable, high-trust relationships. Possessing a bonedeep belief that they are accountable to more than just their own interests, they are simply unlikely to betray another’s trust.

Character means that those we trust will value our interests as their own.

Joel Peterson is the chairman of JetBlue Airways and the founding partner of the investment firm Peterson Partners. He has a long history of successful growth capital investments in a variety of industries. He currently teaches entrepreneurial management at Stanford’s Graduate School of Business, and serves as director of the Stanford GSB Center for Leadership Development and Research. Peterson is also a director at Franklin Covey and Ladder Capital. He formerly served as a managing partner of Trammell Crow Company, one of the nation’s leading real estate developers.

Competence means that those we trust have the requisite intelligence, ability, and training to achieve our best interests. Authority means that those we trust are empowered to deliver on promises. When all three conditions are present, trust develops naturally, almost reflexively. But when any of the three is absent, trust must take a holiday. To trust in the absence of any of these three elements is not smart but naive—and eventual betrayal is almost certain. Those who meet these three conditions for being granted our trust (Character + Competence + Authority) almost always possess a broader view of life’s purpose than merely securing the best personal outcome in every single transaction, in every conversation, in every negotiation. People who see life as a marathon rather than a sprint, as a narrative in which everything eventually connects, are the best bets for long-term trust. These individuals tend to have an enlightened, all-things-considered self-interest. They choose to act in the belief that trustworthy

David A. Kaplan is an American writer and journalist. He worked for Fortune magazine for five years, after a 20-year career at Newsweek, where he wrote dozens of cover stories, as well as edited the annual Newsweek-Kaplan College Guide. These days, Kaplan writes for different publications and consults for a range of CEOs, financial firms and other companies. Adapted, with permission of the publisher, from The 10 Laws of Trust: Building the Bonds That Make a Business Great, by Joel Peterson with David A. Kaplan. Copyright 2016, Joel C. Peterson with David A. Kaplan. Published by AMACOM. AMA QUARTERLY I SUMMER 2016 I 13

SHIFTING PERFORMANCE USING STARS TO RAISE THE BAR

BY MICAH ALPERN, DAMON BEYER, KRISTEN ETHEREDGE, AND RODRIGO HERRERA

Every company has high performers and laggards, but most employees perform somewhere in the middle. So how do managers get better results from average performers? By shifting performance upward using an analytical approach to solving softer, behavioral challenges. The symptoms of underperformance in the workplace are common and pervasive. For example, the CEO’s leadership team is spending too much time in steering committees and not enough time on strategic decisions. Or the styles of middle managers at a parent company are not aligned with those of managers in a recently acquired company, and there is finger-pointing about who should be responsible for decisions. Or a plant manager’s frontline employees are not meeting productivity expectations. At all levels, employee performance can range widely, and managers are charged with making that performance more consistent and improving results, without the benefit of fresh talent or a new organizational structure. The answer lies in moving the middle—not the ends—of the performance distribution curve. Traditionally, time and money are invested in nurturing high performers or

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coaching low performers. But organizations actually get better results from improving the performance of the majority of employees—the average workers. The key is to identify the bright spots in the workforce (those “outliers” whose work exemplifies high performance), focus on what they do differently, and replicate it across the majority. We call this approach “Shifting Performance,” and it can have a dramatic effect on an existing workforce. It has freed up onethird of a leadership team’s capacity to focus on strategic problems, improved middle managers’ connectivity with employees tenfold, and reduced a plant’s quality defects by as much as half. Shifting Performance achieves these types of results by applying analytical rigor to “soft” human challenges. Human behavior and performance are a complex science. Fortunately, for purposes of demystifying the opportunities

to shift a workplace performance curve, it is more important that the analysis be accurate than precise. In nearly every situation, accurately evaluating problems is better than trying to identify their precise root causes for achieving actionable results. The heart of Shifting Performance is analytics in the form of a quantitative performance equation that allows a manager to understand the components that drive employee performance: what workers are doing, how efficiently they are doing it, and the results the work is delivering. Knowing this allows the manager to identify a range of workable solutions based on human variability.

IDENTIFY THE BEST BEHAVIORS The first step is to correctly identify what makes outlier employees successful. To do this, we define a multidimensional performance equation: Value to the enterprise = Focus x Productivity x Quality. • “Focus” refers to the amount of time employees are available to work on the right activities (for example, those activities that support the strategic mission of the company) • “Productivity” is about how efficiently employees are performing those activities • “Quality” refers to employees’ ability to achieve the desired outcomes through the work they are performing For a sales force, for example, we analyzed how much time salespeople were customer-facing (focus), how quickly they closed deals (productivity), and the gross margin on each

deal (quality) to get a balanced picture of value delivered through their work. Good performance equations are tailored to specific groups of employees and include both art and science. Framing them this way brings several benefits. First, it allows us to combine multiple aspects of good performance in a balanced way. A single performance metric can be swayed by one view of good performance (such as “pieces per hour,” which rewards the line worker who produces the most product but does not consider the quality or the number of available hours). Second, the results point us to the bright spots in the organization, where good performance is being delivered. Knowing this, we can investigate further to determine the sources of this good performance and take action to replicate them. Third, the equation turns the analysis of human behavior, which is often considered soft, into a quantitative and analytical metric that eliminates bias and enables identification of the sources of performance loss. In one situation, we worked with the CEO of a global vehicle manufacturer to dedicate more of the leadership team’s time to making strategic decisions. In this case, the performance equation was built on two factors: the time leaders spent on strategic priorities (focus), and how efficiently they made decisions that enabled responsiveness and agility in the market (productivity). Interviews with key executives and the application of speech act theory (the study of human communication and the actions it prompts) in meetings indicated that a greater proportion AMA QUARTERLY I SUMMER 2016 I 15

It is also important to identify the most valuable skills to transfer. Improving salespeople’s closing skills by 1% may have a greater business impact than raising overall profitability by 2%, for example. of leadership time was spent on sorting through past mistakes than on looking forward. We also found that the senior team spent significant time making decisions that should have been delegated to managers two to three levels lower. Through focused workshops designed to identify the most important strategic opportunities, we helped prioritize three areas of improvement—streamlining governance bodies and steering committees, clarifying leadership roles and decision rights, and creating a more customer-led culture—and pushed accountability and authority down in the organization. Once performance is rigorously defined, high performers are compared to low performers. The variability of factors (which can be found in focus, productivity, or quality) across the population is analyzed, and root causes are identified. Often, these causes are not what managers would expect. At a large distribution company, for example, warehouse managers universally believed that stamina, hustle, and endurance would predict high-performing warehouse selectors—frontline employees who build pallets of product to fill orders. But careful analysis of the most productive selectors determined that those who could visualize and mentally manipulate three-dimensional objects were best at efficiently assembling stable pallets. Those who were previously basketball players in school (possessing quickness and agility)—rather than football players (with brute strength)—performed better. Likewise, those who had previously been short-order cooks were particularly adept at juggling multiple tasks at once. When these insights were built into the hiring profile and training programs, the company’s performance curve shifted upward, with average productivity improving 10 points.

FOCUS ON THE MOST TRANSFERABLE, VALUE-PRODUCING SKILLS It is important to identify the best practices that are actually transferable. Some will be inherent in the individual, while others can be shared. This mix of art and science recognizes

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employees’ different strengths and provides various ways of addressing problems. One outlier salesperson may excel by managing her schedule, bringing her authentic self to meetings, and shaping high-value deals. Other salespeople can be shifted upward by encouraging them to adapt best practices for one of these strengths, or all three, depending on what suits each individual. It is also important to identify the most valuable skills to transfer. Improving salespeople’s closing skills by 1% may have a greater business impact than raising overall profitability by 2%, for example. Estimating potential value and prioritizing options occur at the beginning of the replication stage, which we discuss next.

MAKING THE SHIFT: REPLICATING BEHAVIORS Replicating successful traits across average performers should be relatively easy to achieve. Their efficacy is already demonstrated in the present environment, and they will be spread to others using current systems, rather than through structural or other disruptive changes. In Shifting Performance, we begin with pilot programs to see if new behaviors result in the desired improvement. If so, they are executed more broadly. If they do not have an impact, then we try another option. The key is instilling these new behaviors quickly and efficiently. We replicate a behavior by leveraging influence, rather than through hierarchy. Shifting Performance makes use of informal networks that are identified based on the type of change the organization wants to make. This creates opportunities for peer-to-peer interaction for sharing best practices as well as positive peer pressure. It also builds employees’ emotional commitment, which leads to genuine buy-in rather than mere compliance. Replication takes place mainly through changes in policies and procedures and the sharing of best practices. When those areas are exhausted, best-in-class models or reinvention can be used.

VALUE-FOCUSED POLICIES AND PROCEDURES Given that policies and procedures influence the way employees behave, they are the most direct way to influence performance. Companies regularly address employee performance by altering a variety of elements, including hiring profiles, resourcing, policy development, performance metrics, incentives, and training, of course. The big difference with Shifting Performance is that companies are now armed with actual numbers and a tested analysis that quantifies and defines what the most desirable performance looks like. Changes to these elements can be linked to actual top performance that supports strategy and value. In hiring, for example, most companies rely on traditional job descriptions that list desired skills, experience, and some activities related to a position. Few describe needed behaviors, however. Armed with data about behaviors that generate top performance in a position, a company can hire and train much more accurately. This change especially benefits those businesses with marked variability in performance or high turnover, such as call centers, retailers, and hotels. A Las Vegas casino faced those challenges recently. Shifting Performance was used to analyze employees’ guest-facing time (focus), check-ins and upsells per hour (productivity), and how they handled difficult guests (quality) to define high and low performance. The results led to an accurate identification of the behaviors, knowledge, and skills that would increase the performance of average workers—data that was used to create training and rewards programs for current employees. It also was used to define the ideal staffing mix, update job descriptions, and formulate interview questions for job candidates, such as describing how they exhibited the desired behaviors in the past and how they would use them in a position with the casino. Similarly, Shifting Performance analysis can be used to construct a psychological profile for hiring new employees or transferring current workers into more effective positions. Performance metrics are another way to replicate behaviors to improve workforce performance and can be informed through Shifting Performance. Using the performance equation, a company can determine what is needed to achieve certain metrics. This information can be posted on status boards in workplaces to clearly illustrate the expected behavior, which creates positive peer pressure, encouraging everyone to improve. While many companies track metrics this way through other approaches, such as Six Sigma, the quantified analysis of Shifting Performance brings another dimension and greater legitimacy to targets.

LEVERAGING INTERNAL BEST PRACTICES The Shifting Performance process identifies internal best practices. While most companies use best practices as a matter of course, once again, the value that Shifting Performance brings is in accurately quantifying those practices that truly move the performance needle. It creates

visibility that can be simplified through local language, making practices easier to relate to, remember, and act upon. When analysis identifies several performance patterns that legitimately lead to success, but in different ways, each one requires a tailored application of those practices to shift performance. For example, for a national logistics company, we found that two types of pick-up driver were successful. The first group was excellent at following their assigned route and never deviating from it until they could execute it better than their peers. The second group adjusted their route based on real-time information, such as parked cars, snowdrifts, and construction. By identifying the two types, route assignments could be matched to driver profiles. Moreover, without a Shifting Performance perspective, a manager might be tempted to insist that all drivers follow one performance path, which would diminish the ability of the other group of drivers to leverage their advantages to produce value.

BEST-IN-CLASS MODELS Once policies, procedures, and internal best practices have been used to their utmost, it may be necessary to look outside the company for best-in-class thinking. We consider the progressive ways of working that leading thinkers are testing and applying across industries and academia. Proven industry benchmarks can also be a guide, as can establishing stages of excellence based on an assessment of current internal performance against benchmarks to determine focus and targets. Shifting Performance encourages an important mental shift for managers who use these tools. When external data is brought into an organization, a common reaction among managers is to challenge its validity or applicability to their own situations. However, managers with a Shifting Performance mindset understand the importance of creating ownership for performance within the workforce. The process identifies and gathers “exemplar” employees. Exemplars almost always exist within companies but can be hard to find. However, once they are identified and given the opportunity to contribute, their creativity and energy can result in paradigmchanging ways of doing work. They welcome best-in-class models from other companies and know how to translate them for their own teams. Working with exemplars is the best way to convince workers to adopt external best practices, backed by Shifting Performance analysis.

REINVENT THE PROCESS In some instances, the process does not identify best practices to follow. This is actually an advantage, because it signals that the best course of action for a company is to create new ways of thinking and working. When this is the case, we explore potential options by creating “work cells,” led by exemplar employees. In addition to having the strengths mentioned above, each exemplar typically relishes working with a variety of ideas or tools, is known for challenging the status quo, and is focused on achieving positive outcomes. AMA QUARTERLY I SUMMER 2016 I 17

We deploy work cells and their leaders to identify problems, determine root causes, and recommend potential solutions. Working with an international telecom player that wanted to improve customer satisfaction, for example, we tracked order timing, response time to customer queries, and number of errors, using a work cell to test solutions on the spot. The work cell identified key process changes that empowered front-of-house teams to make decisions that improved communication with customers. When these changes were combined with other tools, such as a new performance dashboard and pilot learnings that communicated the new model across multiple lines of business, the company saw a dramatic uplift in customer satisfaction of nearly 80% for its small-business segment and 75% for its consumer segment.

THE BROADER BENEFITS OF SHIFTING PERFORMANCE With the careful construction of a performance equation, the contributors to good performance can be understood and replicated, providing a positive shift in performance that is observable and measurable. When that equation is calculated regularly (typically weekly or monthly, depending on the metric and speed of change), it will show that successful behaviors are spreading, in effect causing the majority of workers to shift their performance upward.

Shifting performance can produce other benefits as well, including longer retention of good employees, better collaboration and sharing of best practices, and higher customer satisfaction scores. A willingness to apply analytics to what has been largely regarded as a softer behavioral discipline not only provides answers to near-term performance, but also can give a company a long-term advantage as it helps employees realize their greatest potential. AQ Micah Alpern is principal, A.T. Kearney, in Chicago. He is a culture evolution expert with a passion for helping organizations evolve their culture to enable change and grow their capabilities. Damon Beyer is partner at A.T. Kearney, and the Americas lead for the Organization and Transformation Practice. He has worked on a range of projects in consumer packaged goods, energy, electronics, telecommunications, transportation, and manufacturing. Kristen Etheredge is a partner at A.T. Kearney and specializes in helping clients implement strategic operations improvements. Rodrigo Herrera is a principal at A.T. Kearney in Houston and is a talent strategy consultant aligning people initiatives to business goals, with more than a decade of demonstrated results in management consulting focusing on corporate strategy development, business transformation, talent management, operations improvement, and cost reduction.

TRUST FUELS COMPANY GREATNESS. NEW BOOK on TRUST from JetBlue Chairman JOEL PETERSON

TRUST turns suspicion into empowerment and conflict into creativity. With it, a tiny company like John Deere grew into a worldwide leader. Without it, a giant corporation like Enron toppled. In The 10 Laws of Trust, JetBlue Chairman Joel Peterson explores how a culture of trust gives companies a powerful advantage. “ Peterson’s simple, lucid book is a blueprint for building a culture of trust, creativity and high morale at a time when all three are desperately needed.” — Arianna Huffington, co-founder of the Huffington Post

Hardcover • $15.95 • 978-0-8144-3745-2

“ Trust is the essential enabler for truly great teams—and no one understands, practices, or explains it like Joel Peterson. Where a great book makes complex ideas seem simple, 10 Laws captures the essence of trust and provides a clear pathway for those willing to nurture it.” — General (Retired) Stanley McChrystal, author of the New York Times bestseller Team of Teams

Available online and at bookstores everywhere • www.amacombooks.org • 800-250-5308.

18 I AMA QUARTERLY I SUMMER 2016

STRATEGIES TO REWARD AND RECOGNIZE

MILLENNIALS BY MELISSA VAN DYKE

The Millennial generation has three aspects that set it apart from previous generations. Knowing what makes Millennials unique, and how they are the same, can help in determining how to reward them at work. AMA QUARTERLY I SUMMER 2016 I 19

It’s February 1911. You stray to the corner store to pick up a copy of the Atlantic Monthly and read Cornelia A.P. Comer’s “A Letter to the Rising Generation,” in which she laments that “veteran teachers are saying that never in their experience were young people so thirstily avid of pleasure as now…so selfish.” Flash forward to the 1920s, when the wayward, rootless habits of youth such as Ernest Hemingway and Gertrude Stein earn their entire peer group the moniker “The Lost Generation.” Race forward to July 16, 1990, when Time magazine’s David M. Gross and Sophfronia Scott, in “Living: Proceeding With Caution,” say that Generation X has “trouble making decisions. They would rather hike in the Himalayas than climb a corporate ladder…. They crave entertainment, but their attention span is as short as one zap of a TV dial.” It seems that not a decade passes without leaders in media and business decrying the strange, misunderstood customs of the burgeoning youthful workforce entering the halls of commerce. For decades, businesses have struggled to learn

tools, tips, principles, and practices—on managing newgeneration workers available to today’s executives. A Google search alone for the word “Millennials” will currently return more than 21 million articles in less than half a second. What is one to make of all this data?

NEW RESEARCH—A PATH FORWARD The Incentive Research Foundation conducted an extensive review of modern literature on the topic of motivating the generations, curating the top content in its July 2015 paper “Generations in the Workforce: Preferences in Rewards, Recognition & Incentives.” Concurrently, the IRF, in partnership with the Incentive Marketing Association, launched the Landmark Participant Award Experience Preferences study, which used scenario-moderated conjoint analysis to explore 26 different high-level variables and more than 110 different preference options in the total award experience for 452 individuals in the United States. On top of award preferences, individuals were asked to describe

“ Interestingly, Millennial workers were more likely than Gen X workers to consider it personally important to be for their professional accomplishments.”

rewarded

how to embrace the new, incoming community of workers, acclimate them quickly, and motivate them sustainably. Today, however, the much-discussed Millennial generation has three aspects that set it apart from previous generations. First, the fruits of modern medicine and health practices, coupled with recession-generated retirement losses, have put more generations in the workforce than ever before. Although exact estimates vary, there are about 66 million Millennials (born after 1980), 55 million Gen Xers (born after 1965), and 76 million Baby Boomers (born after 1945) in the United States. Additionally, 4 million to 5 million Traditionalists—71 years of age or older—are still an active part of the U.S. economy. Second, as the data above clearly displays, for the first time since the Industrial Revolution the population pyramid is no longer a triangle, in which there is an even larger younger population of workers behind each older generation’s ranks to train for jobs. The Gen X generation is so much smaller than the Millennial generation that in 2015 the Millennials overtook the Boomers as the largest generation in the U.S. economy. Employers are therefore incented to keep topperforming Gen Xers longer than ever before and to train up star Millennials at a much faster rate than in the past. Finally, perhaps most tellingly, there is the simple fact that past generations did not have nearly the amount of data—

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themselves relative to professional, attitudinal, and lifestyle characteristics. Respondents also used characteristic ratings to self-describe on 17 professional, 21 attitudinal, and 11 lifestyle characteristics. Juxtaposing these two works reveals an important picture of where Millennials are truly different from other cohorts and where they share some similarities. Most important, it reveals sustainable strategies for motivating them.

WHAT MAKES MILLENNIALS VERY (AND NOT SO VERY) UNIQUE In the Participant Award Experience Preferences study, respondents were asked about 11 lifestyle/behavioral characteristics. While Millennials differed relative to some professional and attitudinal dimensions, they differed in nearly all lifestyle characteristics. According to the study, the following behaviors and activities increased as the age of the respondent decreased: • Socializing frequently inside and outside of the home, including patronizing restaurants and events • Buying on impulse and surprising friend/family with gifts • Using social media The heightened use of social media is not surprising. According to the Council of Economic Advisers to the White House, in its October 2014 message, “…the sheer amount of computational

power and access to information that Millennials have had at their fingertips since grade school is unparalleled.” Respondents were also asked about 17 professionalrelated dimensions as they relate to their own attitudes and preferences in their work. Importantly, most of these dimensions saw all the generations in agreement on their feelings toward work preferences. Millennials did differ on a few of the dimensions, however. Generally, Millennials were less likely than older workers to feel that their work is important to their company, their positions are secure, and their jobs are enjoyable and challenging, and that they enjoy their co-workers. Interestingly, Millennial workers were more likely than Gen X workers to consider it personally important to be rewarded for their professional accomplishments.

WAYS TO REWARD AND RECOGNIZE MILLENNIALS Five strategies can be used to incentivize Millennials: Connect them to the bigger purpose. As previously noted, Millennials are generally less likely than older workers to feel that their work is important to their company and their positions are secure. This is why it is imperative to train managers and colleagues to recognize each other using three simple steps within the following framework: 1. I saw what you did. 2. H ere’s why it is important to what we are trying to do as an organization/team. 3. Thank you. Providing this type of repetitive, positive feedback helps employees connect to the bigger vision. Provide continuous feedback loops. Millennials are accustomed to and expect continuous feedback. A December 2014 global survey by Universum showed that 93% of Millennials expect feedback at least once per month; 25% said they expect it every day, if not instantly. Meeting this need can be as simple as training managers and even colleagues to check in electronically or face to face on a weekly basis (or daily in high-volume seasons) to see how projects are progressing and help course-correct or provide positive feedback where needed. Make it programmatic. One of the largest Millennials studies is Aimia’s Canadian Millennial Loyalty Survey from 2014, which included 1,000 Canadian Millennials. The study revealed that of all the generations, Millennials are the most interested in loyalty and reward programs. Although they sometimes use reward points slightly less during this stage of life, Millennials expect to and acquire reward points at a faster pace than other generations. They’re also more likely to research the actual value of their acquired rewards. Focus on the “how” of recognition, not just the “what.” While tangible rewards such as merchandise or gift cards

are a big part of creating a motivational experience, the Participant Award Experience Preferences study found that, on average, 40% to 50% of an employee’s preferred total award experience has nothing to do with the physical reward. Instead, almost half of an employee’s preferred reward experience was determined heavily by who is recognizing him or her, how it is communicated, and what type of professional development is included. For small awards, the analysis showed that Millennials prioritized the communication and professional development aspects of a reward a bit higher than other generations did. Generally, Millennials wanted to be recognized in front of co-workers and be offered a special assignment as part of their recognition. For large rewards, Millennials put a bit more weight on the award itself and generally wanted recognition for their large efforts to be acknowledged on an internal or external site. And where the reward itself is considered, move beyond cash. The study showed that when provided a robust award experience that aligns with their personal preferences, employees do not automatically choose cash as part of that experience, especially for large awards. The study found that, on average, the most preferred tangible award for large awards was travel. For small awards, 65% of people, especially Millennials, would select a noncash award if all other experiential elements were optimal. Celebrate uniqueness. One of the most important findings of the Landmark Participant Award Experience study was how critical it is for organizations to truly understand, at an individual level, the employees they want to motivate. Out of 452 respondents, 99% had a unique set of motivational preferences—different from that of every other person in the study. Employees’ expectations around individualized shopping and lifestyle habits bleed into their motivational preferences. One easy way to understand an employee’s interests, likes, and dislikes is to simply ask about his or her favorite music, colors, hobbies, heroes, etc. Peppering these personal interests into a recognition experience makes the impact and expense all the more worthwhile. One of the final and most important pointers when rewarding and recognizing Millennials is to avoid “generational myopia.” So much information is available about Millennials that it becomes easy to focus too heavily on this as the only distinctive factor for the cohort. Here’s the good news: While the strategies above are based in data and sure to resonate strongly with the Millennial cohort, they are also solid strategies for fueling performance with individuals regardless of generation. AQ Melissa Van Dyke is president of The Incentive Research Foundation (TheIRF.org), which funds and promotes research to advance the science and enhance the awareness and appropriate application of motivation and incentives in business and industry globally. The goal of the IRF is to increase the understanding, effective use, and resultant benefits of incentives to businesses that currently use these inducements, as well as other organizations interested in improving the performance of their employees.

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FINDING

AUTHENTICITY BY KARISSA THACKER

Developing a truly authentic mindset allows leaders to operate effectively in the digital era of freedom and fear.

It’s been a hell of a start to the 21st century. Major events such as 9/11, the banking crisis, and the housing market crash damaged our collective optimism and sense of boundless freedom and opportunity. If you weren’t laid off during all the downsizing of the past 16 years, someone close to you was. Moreover, the U.S. has shifted from an industrial economy to a knowledge economy, upending expectations of a predictable, dependable job in which you do the same thing every day. Fear—of layoffs, of the unknown, of change itself—can have a paralyzing effect on leaders in their everyday work. However, you can see through this fear fog and seize the day. Warren Bennis, in his classic book On Becoming a Leader (AddisonWesley, 1989), defined leaders as people who master the context as opposed to being mastered by their context. The 21st century also offers freedom. How can managers and leaders work through the fear fog and thrive in the digital era? By adopting an authentic mindset. Once we understand the fears of our unique cultural moment, we can look at ways to combat that fear and flourish.

THE CALL TO AUTHENTICITY We are all leaders and we are all followers in this digital era. Things have changed a lot during the first 16 years of this new century. In 1999, Peter Drucker, the sage of the business world, predicted in the Harvard Business Review that we

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would all need to learn to manage ourselves, as da Vinci, Mozart, and Napoleon did. The truth is that we all need to learn to lead ourselves and answer the call to be authentic. The essence of authenticity is being fully yourself. It requires courage. Being an authentic leader and manager is not just about making the right ethical decision when the heat is on. It is primarily about doing the work every day to bring your best self forward into the world so that you are in shape when the heat is on and the pressure is high. Being authentic is just like being in shape physically. It is a daily decision, and there is no substitute for doing the work. Why does authenticity matter now? How is authentic leadership different from leadership—or the lack thereof that we hear so much about? Again, we live in an era in which fear is a huge force, and we hear about it all the time due to our unprecedented ability to communicate incessantly. The situational press of fear, negativity, and cynicism is deafening. The World Economic Forum, in its “Top 10 Trends for the World in 2015” report, listed deepening income disparities, persistent structural unemployment, diminishing confidence in economic policies, and a lack of leadership. We’re not living in easy times, but when have they ever been easy? The challenges are just different. A hundred years ago, in 1915, World War I was raging. But unlike in 1915, it may not be possible today to blend in below the radar with a predictable job in manufacturing or farming.

ON BECOMING MORE AUTHENTIC Becoming more authentic may be a key to reaching your external dreams and achieving internal well-being. People who have something unique to say and are willing to step up and say it increasingly are finding success. Choosing your own path with an understanding of external forces is at the heart of psychological authenticity. Authenticity is not a new idea. Historically, being authentic has meant being true to yourself—being genuine or real. It has generally been accepted across philosophical traditions and cultures to be a state to which one aspires. It is assumed that being authentic is a good thing. It’s likely that when you describe someone as “authentic,” you admire that person. So why does authenticity really matter now? Perhaps the external environment, for the first time, is demanding that you must be authentic instead of dissembling and conforming. To be sure, the forces toward conformity that are part of the human condition still exist. However, the opportunities for jobs in which you perform the same tasks every day are going away. The industrial era was a time of great opportunity, providing a certain level of financial security if you were willing to consistently work hard at these predictable jobs. Our current world places little value on rote tasks that can be accomplished easily through the use of technology. The drive toward authenticity requires you—like Mozart, da Vinci, and Napoleon—to think for yourself. It requires

you to do the hard work of figuring out what you really want to do. You must dig in and notice your passions, your strengths, and your shortcomings, and relentlessly pursue opportunities. Success will go to the managers who know how to work with other people to get difficult and important things done. The level of psychological sophistication and depth required to connect, relate, and achieve in partnership with others has escalated in the past 16 years. In today’s flatter organizations, we can no longer rely on role authority—in which we assume that people will just do what we say. In this new world, the winning strategies are to have or nurture new ideas, collaborate to win, and figure out how to do what no one else has accomplished. Cultivating authenticity and tuning in to yourself at a deeper level are required to accomplish such lofty goals on a daily basis. People across the world can access your social media posts, and you can access theirs. The notion of privacy seems more of a fantasy than a reality. Anyone anywhere can capture your worst moments of any day in a video or photo. But you can also use those same tools to craft relationships and learn in ways that were unthinkable just a few years ago.

HOW DID WE GET HERE? In October 1999, I was a management consultant at a global, psychologically based consulting firm. I had just settled into AMA QUARTERLY I SUMMER 2016 I 23

network

“ Curate a of people who think differently from you. It’s easy, especially within an organization, for different functions to operate like separate islands and never interact.” seat 10E on my flight to Minneapolis when I read the words about managing ourselves in Drucker’s now classic article, “Managing Oneself.” I was flying to Minneapolis to work with my largest client, Best Buy Corp. It was the era of the big-box retailer. Consumer electronics were hot. New gadgets were flying off the shelf, and Best Buy’s stock was riding high. The very air smelled like opportunity, and dotcoms were promising prosperity without end. What did Drucker mean that people of average ability would have to manage themselves as Mozart or Napoleon did? It appeared to me that plenty of people with modest endowments or average abilities were making plenty of money by following pretty obvious paths. Since I’d been recently promoted to senior consultant in my firm, I considered myself to be among them. I highlighted several paragraphs of Drucker’s eloquent prose (iPads hadn’t hit the scene), thinking how useful the ideas would be in the leadership development work that I was doing at Best Buy. I would sound very cutting edge and smart quoting Peter Drucker. All of my clients would have heard the name and have a vague sense that he was important.

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I read deeper. Drucker said we all should be able to answer the following five questions in really practical terms: • What are my strengths? • How do I work best? • What are my values? • Where do I belong? • What can I contribute? Drucker envisioned a world in which average knowledge workers knew their strengths and weaknesses and the kinds of situations in which they could contribute the most, and deeply understood both their own values and those of their organization. With this insight, workers could determine how to contribute the most. It would essentially be up to the workers to figure all this out, as managers of the future would no longer be spelling it out with their job descriptions and management by objectives. The critical-thinking psychologist within me thought, there is no way that the vast majority of people will be able to chart their own course and manage themselves. Everything we know about human behavior clearly points out the power of

conformity, role, and structure. Most people simply want to blend in, find a good job, and follow a predictable, stable path. A rather dark view, but nonetheless data driven. The view in 1999 was bright, and looking back, it’s clear that we had no clue what was coming in the new millennium. The Industrial Revolution had created opportunities, particularly in the manufacturing sector, in the last half of the 20th century. During that time period, an average person could earn financial security by conforming and doing as he or she was told. You could get a job at General Motors or Ford in manufacturing, afford to send the kids to college, and receive a great pension. It appeared that each generation was going to be more upwardly mobile than the last. The post-World War II boom brought many happy days, and the United States rose to unparalleled economic prosperity and power on the world stage. Fast-forward 16 years from seat 10E on that flight to Minneapolis. I have been an entrepreneur inventing and managing myself and my brand for 12 years. I have been on at least three different paths in the past 16 years, none of which turned into a predictable path with a cozy retirement package. The certain, smooth path that I had imagined on that flight has not been my reality. Within the past 16 years in the broader world, we have been through the tragedy of 9/11, countless corporate ethical debacles, a real estate market collapse, the meltdown of the financial markets in 2008, a stubbornly high unemployment rate in the United States, skyrocketing youth unemployment in parts of Europe, the longest war in American history, globalization that has included the rise of India and China as forces to be reckoned with on the world and economic stages, and unprecedented technological developments. These changes at the macro level have implications for all of us as individuals, and we must think about developing ourselves in new ways.

YOUR PERSONAL AUTHENTIC CALL TO ACTION The digital era is here in full force, and we would all do well to stop looking for a predictable path. Those who want to lead and be authentic must chart their own course. Drucker was right, and I was right. Drucker was right in that we all need to learn to manage ourselves like Mozart and da Vinci did. I was right in that the forces of human nature toward conformity and playing it safe are strong. Many people are struggling to find their way in this ambiguous new world. Managing ourselves is not enough. We must learn to lead ourselves and have the courage to be authentic. The idea of authenticity is in the zeitgeist as people use the word to describe everything from a writer’s “voice” to the experience of buying a car. A Feb. 13, 2016 piece in the New York Times discusses how AT&T is encouraging employees to take courses on their own time to get up to speed with the digital era. Retraining employees is vital to AT&T’s ability to stay abreast of its

competitors. The company offers assistance and benefits to employees willing to learn but makes it clear that staying relevant is now a part of their jobs. AT&T CEO and Chairman Randall Stephenson put it this way in the article: “There is a need to retool yourself, and you should not expect to stop.” This sentiment is key to thriving in our cultural moment. Realworld authenticity is fundamentally a process of self-invention, creation, and ongoing self-shaping based on interactions with all kinds of situations. Cultivating authenticity is the answer to flourishing in our current era of freedom and fear. The authentic are brave enough to be themselves despite all the fear within and the fear in the atmosphere. Here are some tips for managers and leaders seeking to become more authentic in the digital era of freedom and fear: Do the work to determine where and how you best contribute in your personal and professional life. This analysis will better inform your continuing education efforts and your life path. Unsure about where you best add value? Try writing a paragraph about the last great day you had at work. Not a good day, but a great day. Then figure out what was unique about that day as opposed to an ordinary day. You are likely to find clues in your paragraph about your strengths. Embrace the mindset of a learning creature. We’re in a constant state of flux, and regardless of the industry, it’s unlikely that you’ll ever reach a point where you know everything and are set for life. But the nice thing is that you can learn. The digital era offers myriad online courses and other ways to increase your knowledge and develop new skills. You don’t need to be born with a natural learning agility either; you can develop it at any age. Curate a network of people who think differently from you. It’s easy, especially within an organization, for different functions to operate like separate islands and never interact. Moreover, it’s tempting to surround ourselves with people who think like us. But an echo chamber won’t do you any favors. Make the effort to expose yourself to different people and ideas outside your functional area. Seek out people with a broader mindset to challenge your assumptions and see things from a different perspective. Understanding and feeling the pressure of a situation is a fact of life, but allowing the situation to determine who you are and how you will respond is a choice. Strong situational pressures are always present, and authentic managers and leaders find ways to use the strong forces of their particular time and situation. AQ Karissa Thacker is founder and president of Strategic Performance Solutions Inc., a management training and consulting firm dedicated to elevating people to reach their highest potential and career satisfaction. She specializes in executive coaching and development that balances on-the-job performance with the need for sustained personal fulfillment. Thacker is the author of The Art of Authenticity: Tools to Become an Authentic Leader and Your Best Self (Wiley, 2016).

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Reducing Turnover Through

Motivation BY LAURA M. GRAVES, PhD, AND KRISTIN L. CULLEN-LESTER, PhD

As this article is being written, it’s spring, which is considered a time for new beginnings. In many organizations, employees have completed another year of work and deposited their annual bonus checks, and they’re taking stock of their employment situation. They may be considering whether to depart for positions in other organizations. Regardless of when they occur, employee departures are extremely costly to organizations, with consequences such as productivity interruptions, lost intellectual capital and clients, and replacement costs. A compensation package that is competitive and rewards excellent performance is certainly an important factor in reducing unwanted turnover among talented employees. However, organizations that want to limit turnover should pay attention to other forms of motivation as well.

A DEEPER LOOK AT MOTIVATION When it comes to motivation in the workplace, more

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motivation is certainly better than less. But it is not just the amount of motivation that determines how managers and employees act; the type of motivation also is important. Most individuals are aware that there are different types of motivation, such as seeking more money or wanting to make a difference. Yet, many organizations do not pay enough attention to the impact of different kinds of motivation on employees’ job attitudes and reasons for leaving. There are two types of motivation: external and internal. Research shows that both types have benefits and that the combination of external and internal motivation is what matters most in determining employees’ happiness with their organizations. In external motivation, individuals are working for recognition, financial rewards, and promotions (or perhaps even to avoid sanctions or termination). Employees who are externally motivated work hard and remain with the

organization because they want the rewards they’ll receive in return for good performance. A good compensation package, along with opportunities for recognition and advancement, boosts external motivation. Compensation systems for sales positions often rely heavily on external motivation. In some cases, close to 100% of an individual’s pay is based on sales results. Pay packages at many investment firms also are designed to induce a substantial amount of external motivation. Although it is sometimes criticized, external motivation is not necessarily bad. On the contrary, it is a fundamental part of work life. Most employees need money to provide for themselves and their families, and they expect to be paid what they’re worth. Further, recognition, rewards, and promotions may help employees feel appreciated by the organization and increase their sense of competence and self-worth. In internal motivation, employees are pursuing their own values, goals, and interests. They are motivated by the opportunity to do things that are important to them or that are personally interesting or enjoyable. When individuals are internally motivated, they are acting in accordance with who they really are. Thus, what is internally motivating to one individual may be different from what is internally motivating to another individual. It is important to note that external motivation and internal motivation are not opposites; they coexist. Most individuals have both external motivation and internal motivation. However, the exact amount of the two types varies across individuals.

MOTIVES TO MITIGATE TURNOVER Because individuals have varying patterns of internal and external motivation, an important question is, “What combination of motives is best?” To address this question, one must look at job satisfaction, commitment to the organization, and intention to leave for employees who have different combinations of internal and external motivation. Research shows that various combinations of internal and external motivation will affect how employees feel about their work and whether they are likely to stay with an organization: • Employees who have low to moderate external motivation and high internal motivation are highly satisfied with their jobs, committed to their organizations, and unlikely to leave those organizations. • Employees who have above average levels of both external and internal motivation feel fairly good about their jobs and organizations. However, their feelings are less favorable than those of employees with high internal motivation. • Employees who have average external motivation and slightly below average internal motivation are neutral about their jobs and organizations. They appear uncertain about whether they will stay with their organizations.

• Employees who have moderate external motivation and very low internal motivation are dissatisfied with their jobs and uncommitted to their organizations. They report that they are likely to leave their employers. Employees need internal motivation to thrive. When we consider employees’ job satisfaction, organizational commitment, and intention to leave, external motivation is not damaging when it is paired with internal motivation. A company will see more positive outcomes when employees are both internally and externally motivated than when they are externally driven alone. In today’s competitive landscape, external rewards are not enough to prevent turnover and make employees satisfied and committed. Organizations must focus on boosting internal motivation. Keep in mind that an employee’s mix of internal and external motivation is not set in stone. Organizations can take steps to boost employees’ internal motivation and, ultimately, enhance job attitudes and reduce costly turnover. Of course, a good match between the interests of the employee and the demands of the job is an important first step. But the manager and the organization also play critical roles in creating internal motivation. For internal motivation to thrive, employees must feel supported by their managers and organizations. They need to believe that their contributions are valued and that the organization and managers care about them. Without support, employees will feel that their status is precarious. They will focus their energies on doing what it takes to gain and maintain approval from their bosses rather than pursuing their personal values, goals, and interests. In many of today’s organizations, ongoing restructuring creates a constant sense of insecurity that makes it difficult for employees to feel supported.

FIVE TIPS TO BOOST EMPLOYEES’ SELF-DIRECTION Beyond making sure employees feel supported, a manager who wants to boost employees’ internal motivation should increase their sense of self-direction. This sense allows employees to feel that they have a say in what they are doing and helps them align their job activities with their values, goals, and interests. Given the demands on managers to meet organizational goals with fewer resources, some might question whether enhancing self-direction is feasible or even wise. Yet, increasing employees’ self-direction does not mean that important job activities will be ignored. Instead, employees may actually be more engaged in those activities. To prevent turnover and achieve organizational goals, follow these steps: Provide a solid rationale for assignments. Managers must explain why goals and tasks are important. When employees understand the rationale behind assignments, they are AMA QUARTERLY I SUMMER 2016 I 27

“ Organizations that want to reduce the departure of talented employees should go beyond creating competitive compensation systems that reward good performance.”

more likely to buy into those assignments and see them as personally important. Increase employee problem solving. When problems occur, it is tempting for time-starved managers to simply tell employees how to solve them. However, if employees are given a chance to investigate problems and develop solutions, they not only build their own competence but also have a much greater sense of ownership of the problem and the solution. They become internally motivated to solve the problem. Give constructive feedback. Many managers dread giving feedback, and they fail to provide constructive assessments that will help employees to improve. But most employees have a fundamental desire to grow and develop. Welldelivered, constructive feedback not only nourishes this basic desire, it helps employees know what they need to do to improve and increases the chance that they will personally “own” their development goals. Provide a choice of assignments. Where possible, managers should consider providing a choice of assignments. When multiple tasks need to be accomplished, providing choice facilitates employees’ feelings of self-direction and personal ownership. Have conversations with employees. Managers should ask employees about their values, goals, and interests and help them consider how they can bring those into their work roles. For instance, an employee who is passionate about corporate environmental sustainability might be encouraged to become involved in the organization’s sustainability efforts. Managers who take these steps are more likely to boost employees’ internal motivation, and consequently have satisfied employees who are committed to the organization.

BALANCING EXTERNAL MOTIVATION SYSTEMS Although internal motivation seems to be especially important in enhancing employees’ experiences, we do not want to imply that external motivation is unimportant.

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External rewards are an important part of organizational life, and organizations that neglect external rewards and motivation do so at their own peril. Be aware, however, that dysfunctional reward systems can increase employee turnover. For instance, reward systems with an extreme focus on metrics create stress, dissatisfaction, and turnover. Consider the case of one consultant who worked hard to become a partner at a large consulting firm. His promotion provided him with a large raise and financial stability. Once he was a partner, his rewards were based primarily on the number of billable hours he produced. He found himself traveling nonstop to visit clients and spending almost no time at home with his family. Ultimately, the relentless focus on billable hours led him to take a job with another firm. Similarly, unfair reward systems in which pay and promotions are based on internal politics and personal connections, rather than on actual performance, are likely to damage employees’ commitment to the organization and increase turnover. Organizations that want to reduce the departure of talented employees should go beyond creating competitive compensation systems that reward good performance. They must recognize the impact of internal motivation on employee attitudes and turnover and take specific steps to boost internal motivation. AQ Laura M. Graves, PhD, is professor of management at the Graduate School of Management at Clark University in Worcester, MA. Her research focuses on creating organizations that facilitate the performance, development, and well-being of employees. She has published extensively on issues related to leadership, motivation, work/family integration, and diversity. Kristin L. Cullen-Lester, PhD, is senior research scientist in research, innovation, and product development at the Center for Creative Leadership. Her work focuses on improving leaders’ understanding of organizational networks and the ability of organizations to facilitate collective leadership, complex collaboration, and change across organizational boundaries. Her work has been widely published in academic journals.

OFF THE SHELF

Excelling Under Pressure Mental preparedness is the key to performing well in stressful conditions. BY LOUIS S. CSOKA, PhD

egardless of their career stats, NFL kickers are only as good as their last kicks. One mistake, one missed field goal, and their careers could be over. To have any chance of sustained success, they must be able to line up for every kick, without letting the fear of missing or getting cut distract them from the task at hand. That is why when Billy Cundiff was released by the Atlanta Falcons in 2007, he knew he needed help. Billy started his career on a high note; he was signed by the Dallas Cowboys as an undrafted free agent in 2002. After missing two field goals in a critical game in 2005, however, he was released. Then he was signed and released by teams at a surprising pace, playing in four different cities in two years. After being released again in 2007, he asked his coach for advice during his exit interview. The coach told him to work on the mental side of things and referred him to my company, Apex Performance. “It turns out my thought patterns were bringing me down,” Billy said. “I had to get to a place where I was confident, without being arrogant.” I worked with Billy on setting goals, stress management, and mental preparation. “I realized that I was capable of much more than what I had been doing,” Billy told me. To achieve peak performance, he needed to center his own thoughts and mental preparedness, and he learned that it did not matter what 80,000 other people thought, whether they were cheering for him to miss or jeering him because he had. He became mentally strong, able to bear the weight of kicks that could be the difference between victory and defeat. It

changed the trajectory of his career. In 2010, while playing for the Baltimore Ravens, Billy was selected for the Pro Bowl. “For me, going from having to compete for my job to start the season to being voted by my peers as being the top kicker in the AFC was pretty nice.” What I taught Billy comes from both personal and professional experience. As a cadet at the United States Military Academy at West Point and later as a soldier in Vietnam, I learned the importance of mental preparation. Years later, as a professor at West Point, where I conducted research on performance enhancement, I approached our football coach about teaching his players the mental skills he talked about with them: visualization, confidence, poise, and focus. He allowed me to work with

several players on the team, and I used sports psychology and the newest science in biofeedback, making my research an evidence-based program. West Point went on to have one of the most successful seasons in years, and from there the program was expanded to all cadets. Years later, as head of human resources at New Holland, a $6 billion agriculture and construction equipment manufacturing company, I adapted this program for the business world. In my day-to-day dealings with the company’s management team, I gained insight into the pressures and demands placed on these executives. Their stress levels were off the charts. The company, like so many others, provided no resources to help these managers cope, let alone thrive, in an environment that kept them under fire at all times. I witnessed far too many people under these conditions making bad decisions, exhibiting poor problem-solving skills, and experiencing interpersonal confrontations, all of which were a threat not only to the success of the company but to the overall health and wellness of the company’s executives. I realized the skills I had taught athletes and soldiers could be beneficial for businesspeople as well. I expanded my research and found that the concepts I had developed on peak performance and mental training applied no matter what challenge you faced. Even if you are not under actual fire, even if you are not lining up a kick to win the Super Bowl, it can feel that way. After leaving New Holland, I was the executive coach for Fred Rockwood, who was the CEO of Hillenbrand, Inc., AMA QUARTERLY I SUMMER 2016 I 29

OFF THE SHELF at the time. He understood the issues his executives faced and how powerful this type of integrated training could be. In 2002, we implemented the first-ever peak performance center in a Fortune 500 company, putting into practice a center embedded within a business organization where executives could develop and strengthen the mental skills needed to excel under the pressure-filled demands the business world brings. Here, for instance, are five situations you will likely recognize:

You can improve the way you respond to the stress—physiologically, mentally, and emotionally. These responses will determine your level of performance.

To meet shareholder expectations, there is a huge emphasis on cost cutting in today’s post-recession world, as well as downsizing and delivering results on a smaller budget. Fewer people must do more and more and more. No matter how hard you try, at some point there just is not enough time in the day or the resources to get it all done. This can lead to work overload and feelings of being overwhelmed.

texts, and so on. In other words, what was supposed to be anywhere, anytime, has become everywhere, all the time. Given a finite amount of time in the day, you might allow the demands from work to creep into your family time. And if your family life is important to you, you push that demand further into your personal time. Eventually you realize that the time you had for doing the things that make you happy—sports, gardening, exercising, or reading—has all been spent. At best, this can lead to guilt when you do choose family and personal time over work. At worst, you can lose a sense of your own individuality.

Your skill requirements and job assignments are rapidly changing

You are dealing with discontinuous change

You are being pressured to deliver

When companies downsize, the surviving workers are typically asked to engage in some tasks with which they are unfamiliar and for which they have not been trained or prepared. When you are thrust into such situations, your learning curve is steep and your chance of failure high. This can cause you to lose confidence.

You have to work on a team Companies have come to widely adopt the use of teams as a means for increasing efficiency and productivity. However, you might be more comfortable and highly productive working on your own, and not so when placed on a team. You find yourself uneasy with being accountable and responsible for your teammates, and the stress can be counterproductive.

Technology is transforming your work Technology has transformed the ways in which we live, work, and play. With the good, however, comes the bad and the ugly—the emails, voice mails, smartphones, laptops,

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Continuous change is a natural part of life, as linear as time and somewhat easy to predict and accommodate by growing and developing. Discontinuous change, on the other hand, is sudden, unexpected, and unanticipated, and it catches us by surprise: the sale of your company to one whose interests might not align with yours, a reorganization and redistribution of responsibilities, a boss resigning, an opportunity for advancement that goes to someone else, or getting laid off, all for reasons beyond your control but with personal and professional effects. Discontinuous change can create an extended period of loss of direction and purpose, a blurred vision of tomorrow. The cumulative effect of all the above is a lot of pressure and stress. To be able to survive under these conditions, you have only three courses of action: You can opt out of the situation by quitting. You may have friends who have done this, and maybe they found relief in a different career track altogether. However, for most of us, given our debts,

lifestyles, and family responsibilities, this is not a realistic option. You can attempt to eliminate the causes of the stress, but for the most part these are beyond your control and impossible to avoid. You can improve the way you respond to the stress—physiologically, mentally, and emotionally. These responses will determine your level of performance and, eventually, your success both at and away from work while preparing you to counter any future stresses. This is your best course of action. You might think the best way to respond is by focusing on day-to-day processes, which is what most of today’s business books and business consultants advocate. That could mean focusing on something specific, such as your design process, your marketing tactics, or your accounting system. But ask yourself the following question: How has getting the processes right ever made an impact on your business? Of course, an organization has to have the proper processes in place to function efficiently. But efficiency and effectiveness are different from performance. What happens at a critical moment can greatly affect your business, and the reaction to the situation is determined by a human, not by a process. Let’s say that you have to make a key sales presentation to a big client, and you are up against five competitors. If you get that business, your life is going to change. But getting the business entails much more than mastering a few processes, such as getting the presentation assembled, printed, and delivered. It means understanding your client’s needs. Knowing exactly what you want out of the meeting. Seeing what could go wrong. Having faith in your presentation. And

maintaining your cool when your product or ideas are questioned. All this is easier said than done, so how do you do all these things? It takes a deliberate and systematic approach, which I have outlined in my book, When the Pressure’s On: The Secret to Winning When You Can’t Afford to Lose (AMACOM, 2016). First, in my book, you will learn how recent findings in brain science have unveiled a wealth of information about how the brain works and how we can use that information to succeed. Second, I detail the Five-Point Plan. You will learn in-depth about my performance plan and the five areas you need to work on to grow your mental strength. Finally, I apply the Five-Point Plan to extraordinary performance situations to demonstrate its real-world applications. In the end, this book will help you do the following:

• Gain confidence and self-assuredness that stems from a positive, deliberate, and adaptive thought process • Gain greater control and selfregulation when under extreme conditions • Develop a razor-sharp focus and concentration amid distractions • Realize how you can envision success and then make it happen • Understand how to lay out a clear purpose and goals, and set attainable benchmarks for getting there • Build an increased capacity for situational awareness, mental agility, learned instinct, and commander’s calm Throughout the book, you will find stories about people who have used this plan and how it has changed their lives for the better. These stories serve to illustrate how the performance plan works, and they also give you something

to strive for in your own practice. Most important, what you learn in the book helps you be more successful in not only your career but the rest of your life as well. You will be mentally healthier, stronger, and able to deal with the ups and downs of life. AQ Louis S. Csoka, PhD, founded Apex Performance Inc. in 2005 and serves as partner and president. He has designed, developed, and implemented leadership development programs with primary focus on sustained peak performance. Csoka has successfully delivered targeted results as a performance consultant with various organizations across a multitude of disciplines and industries. Adapted, with permission of the publisher, from When the Pressure’s On: The Secret to Winning When You Can’t Afford to Lose, by Louis S. Csoka. Copyright 2016, Louis S. Csoka. Published by AMACOM.

WOMEN’S LEADERSHIP CENTER Connect. Learn. Thrive.

Upcoming Events at the Women’s Leadership Center HALF-DAY WORKSHOP Negotiation for Women

WEBCAST Get Big Things Done

Strategies for Success San Francisco • August 12, 2016 Chicago • October 17, 2016 Arlington, VA • December 12, 2016

Unleash Your Connectional Intelligence September 21, 2016

Overview: Empower yourself with skills to leverage the unique perspectives you bring to the negotiating table. Through hands-on practice, in-person role plays and expert feedback, this half-day seminar will help you overcome any anxiety and show you how to reframe your approach to negotiating. Learn to create a game plan that helps you navigate the issues, optimize interpersonal dynamics and gain buy-in and support in every negotiation.

Overview: We typically associate success and leadership with smarts, passion and luck. But in today’s hypercompetitive world, even those gifts aren’t enough. Strategist Erica Dhawan argues that the game changer is a thoroughly modern skill called Connectional Intelligence (CxQ). Virtually anyone can maximize his or her potential, and achieve breakthrough performance, by developing this crucial ability. Speaker: Erica Dhawan, founder and CEO of Cotential and co-author of the bestselling book Get Big Things Done: The Power of Connectional Intelligence (St. Martin’s Press, 2015).

WEBCAST Training Our Brains

What Neuroscience Can Teach Us About Leadership November 9, 2016 Overview: While most of the brain’s functions are predetermined, our experiences continually shape our brains. In fact, the connections and patterns our brain cells make are more plastic than scientists had guessed. Speaker: Stacie Grossman Bloom, PhD, senior executive director for administration and policy and a member of the neuroscience faculty at NYU Langone Medical Center. Bloom earned a PhD from Georgetown University.

To learn more about seminar offerings, upcoming web events and workshops please visit

www.amanet.org/wlc

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Turn Employees into Investors to

Power Up Performance BY MIKE LACKMAN

Ask the founder or CEO of any growing technology or consumer company whom he or she personally works the hardest to please. Some will admirably answer “the customer,” while many others will—perhaps more honestly—mention their current or prospective investors. The stakeholder who is lost in this equation is the employee. Driven by personal accountability and fiduciary duty, leaders often give the best of themselves to their boards, while the teams that create value more directly for those stakeholders rarely share the same sort of mutual purpose. To be clear, the reality of needing to deliver returns to investors isn’t budging, but think about the effect of expanding the reach of that accountability to a company’s team members. So here is the question: What would it look like if you took the most basic dynamics of the relationship between an investor and an executive and put them at the center of a model for how employees interact with the management team? If successful, you would create a system in which employees are elevated to scrutinize both their own work and the company’s strategic investments, with the same standards that you would expect from any reasonable investor. It would be a team that not only cares about the bigger picture, but also sees each individual’s ability to drive returns on equity by investing time in the company over a horizon of five or more years.

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In practice, a number of companies have built teams with this mindset, and they benefit from employee engagement that goes far beyond what is represented by simple cash compensation. Based on personal experience, as well as learnings from other consumer companies in the startup community, I believe this value is crucial for long-term success.

REACHING A CRITICAL LEVEL OF OWNERSHIP It really does start with ownership. Some teams embrace it, and others don’t. This ownership could come in the direct form of stock options and profit sharing, or in the more indirect form of a collective opportunity for employees to grow with the business and succeed in their careers as the company hits its milestones. In the end, though, the litmus test by which to judge whether a team demonstrates a real feeling of ownership is the ability of frontline employees, those closest to a business’s customers, to clearly articulate the basic elements of its strategies and understand how their roles fit in with those goals. There are large, wellestablished companies that don’t offer employees any legal ownership in the business which pass this test, and startups with massive stock option programs that fail it. The question is how well the company relates the higher-level business

goals to its employees and whether it rewards them personally when those goals are met. When it comes to stock options, there is one very fundamental factor that separates the cultures that do have a broad sense of ownership from those that do not. The stronger cultures explain what stock options are, how they affect employees, and why employees should care about having them. At PetFlow, for example, many of our employees who had been granted incentive stock options at past jobs admittedly did not understand the difference between stock options and equity. For some of those who did, it was still often unclear that options present an opportunity for their holders to profit from the improvement in the value of shares relative to the issue price. When a culture elevates and educates employees about the nuances and true value of these programs, employees elevate themselves to sincerely care about the impact that a damaged shipment or a disappointed customer has on the bottom line. Teams that possess this critical level of ownership understand that driving basic operational improvements can produce results that are good for the company and the employees themselves.

PUTTING PERSONAL GOALS FRONT AND CENTER Every employee has to have goals. Everyone says it, but what does that actually mean? It means no one should come in on Monday morning with the goal of clearing his or her in-box in time for lunch. It sounds simplistic, but the importance of goals in the mentality of employees varies greatly across companies, and it is an indicator of both satisfaction and performance.

In talking to managers across different organizations, I have found a consistent, unresolved challenge to measure the tangible output from the input of employee time, even when a team is visibly dedicated and committed to its work. In my own experience, when we have failed to put personal goals front and center, employees have expressed a feeling of “exhausted mediocrity” —a term coined by Frances Frei and Anne Morriss in their book Uncommon Service: How to Win by Putting Customers at the Core of Your Business (Harvard Business Review Press, 2012). Employees who experienced this feeling knew how hard they were working but couldn’t put their finger on precisely what they had to show for it. And they certainly didn’t feel like they were excelling. Many of the businesses that get this right do so by ascribing to different forms of Agile or Scrum methodology. At their core, these regimented systems assure two basic things: • Employees have a strong grasp of what they are going to accomplish in both the short and long term. We have this structured at PetFlow as 1-week and 12-week horizons, but the exact numbers aren’t important. What is important is that there is a place where daily expectations live, while there is also a clear and deliberate effort made to set biggerpicture priorities that advance an employee’s career. These priorities could be anything from a big project to hitting a simple metric milestone. • Employees have an actively accountable relationship with a manager who is there to praise the occasions where employees accomplish what they set out to do, while offering help and feedback in the places where they get blocked. AMA QUARTERLY I SUMMER 2016 I 33

The structure carries up to the department level, where managers have the same accountability, and on up to the corner office. Whether through biweekly stand-ups or quarterly meetings, a management team must explain what has been accomplished and what still needs to be done. This is the critical piece that allows employees to relate their own personal goals back to the bigger picture of the company’s success.

STAYING TRUE TO SIMPLE VALUES Goals change. Values stay the same. This means goals are fluid and change frequently in reaction to data, market conditions, customer insights, and intuition, while values are a constant, sitting at the foundation of a company. Ask some of the most effective investors in consumer brands what their successes tend to have in common, besides a great product, and you will hear that there is a premium on companies driven by a simple and transparent set of values. Customer centricity and a positive working environment are important values for me, and for my company, and I would suggest that they should be for any business. At the most basic level, everyone in the company should feel empowered to take positions rooted in customer advocacy regardless of any specific goal or recent objective. If there’s a positive balance of humility and capability among their counterparts, these same employees will feel support when it’s warranted and hear reasonable pushback when it isn’t. In tandem with these values, PetFlow has benefited greatly from an emphasis on transparency and a goal-driven working environment. Simply put, employees should know what’s on the horizon, why that is the goal, and how they can play a role in making it happen. If employees don’t understand why the company is doing something, they’re expected to speak up and ask. While I certainly don’t endorse strategizing by committee, I can’t say enough about giving employees straight answers. In the spirit of accountability, this puts the burden on the management team to commit to strategies that will pass muster with employees. We’ve always owned up to this responsibility for our board and investors; we simply try to enable our team to adopt a similar position of scrutiny.

BRINGING IT HOME To offer a practical example of how this works on the ground, my team is building a proprietary system that allows us to track the pet nutritional stories we hear from customers. This data will empower our merchandising team to build rich content about pet nutrition for our website and accessible information for our customer-facing teams that allows us to accurately draw insightful links between a pet’s nutritional needs and the product that is the best fit for a pet parent’s values and budget. In practice, this means the team members who converse with our customers, through chat, phone, and email experiences, need to deliberately tag and catalog the attributes of the conversations they’re having

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even as they provide customers with excellent outcomes in the here and now. At a strategic level, figuring this out will add tremendous value to our enterprise by improving customer outcomes and providing a go-to-market platform for our brand partners that improves on any recommendation experience their consumers can find from competing retailers. There is a major risk here, though. If we are inconsistent in the way we document conversations, or if our team members do not alert the product and merchant teams to any structural weaknesses in our data model that fail to address real customer stories, we will end up giving incomplete data to our brand partners and, ultimately, presenting less-thanrelevant data to shoppers. How do we make sure that a team member near the end of his shift, after just getting off the phone with an angry customer, will take the time to write a thoughtful email to our product team when he encounters a use case that our system could not address effectively? The answer is context-rich ownership. When employees connect the dots, things start to click. There’s an implicit logic here: If A = B, and B = C, then A = C. “If I profit when the company profits, and the company profits when it hits its goals, and it hits its goals when departments hit their goals, and my goals are a part of the departments…” The ownership and engagement in the creation of products like the one in this example motivate our team members to be invested beyond the numbers they see on their paychecks every other week, and we can count on them to do what the company needs in situations like these. More and more in emerging consumer businesses, the models that survive the proof of strategic viability are confronted with a practical differentiation challenge that is rooted not only in a broad and relentless ground game around operational execution but also in the sophistication of their algorithms. What we have seen as we have cultivated this system of employee ownership is a reduction in the degree to which we need to micromanage many aspects of our ground game: Our distribution centers don’t have trash on the floor because our employees take pride in the surroundings. Our web developers push back on missing pieces in feature requests because they have fully bought into the customerfirst mission. Our customer experience team approaches every conversation with a personal sense of ownership. In the place where we would have invested energy into engineering systems to manage those outcomes, we make fewer mistakes and have more resources to expand upon the offering we bring to market for our customers. Most important, we keep ourselves honest. We’ve empowered those who know our customers best, our employees, to shrug at ideas that seem off-base and question the champions putting them forward. AQ Mike Lackman is CEO of PetFlow, a leading retail brand of specialty food and supplies. For more information, visit PetFlow.com

CEO INSIGHTS

Building a Culture of Performance A plastic injection-molding company in Illinois prides itself on innovative thinking in employee performance. BY PEYTON “CHIP” OWEN

D&M

Plastics is a plastic injection-molding manu facturer located in Burlington, IL, a rural community roughly 55 miles northwest of Chicago. This bucolic, agricultural setting is not likely to be the kind of place that people envision when they imagine disruptive thinking in business. But since its founding in 1972, this privately owned manufacturer has consistently looked for new ways to power up both organizational and individual performance, while hoping to create a renaissance in American manufacturing.

I know. I bought the company in 2013 with a goal to make manufacturing cool again. With a degree in engineering, which somehow detoured into a 30-year career in commercial real estate sales, service, and investing, I wanted an opportunity to sink my teeth into something tangible—to finally make things. Having spent the last six years of my career in New York City, I had seen too many of the best minds go to Wall Street, not to the heartland of manufacturing. What if we could produce technology through manufacturing; make things

differently, smarter, and faster in the 21st century? Transitioning to manufacturing, while incorporating the best practices of business, gave me an opportunity to align my work with some of my core beliefs. I believe that for America to be strong, it has to make things. Manufacturing wages pay better than average and can provide an opportunity to build wealth through profit sharing, ownership, and retirement benefits. My first job in sales was at a heavy construction equipment manufacturer. I saw how manufacturing builds families AMA QUARTERLY I SUMMER 2016 I 35

CEO INSIGHTS and communities, which create strong and stable environments. D&M Plastics has provided its customers a comprehensive guarantee of quality, delivery, and price since it was founded. The D&M manufacturing team stands behind its customer goals and outcomes, and its leadership team has more than 300 combined years of injection-molding experience. As a specialist in tight tolerance precision

In addition to our core values, the charter also outlines the relationship that we intend to build with each other and with our customers and suppliers, as well as a lofty revenue goal for 2018 of triple our 2014 annual sales. Accountability is key. As a team and individually, we have a sufficient number of conversations to ensure a quality result, and we accept that in all things for which we are accountable, we have

Before every shift, the entire team comes together to share key information and suggestions on how to improve performance. parts for the medical, automotive, and electronics industries, D&M had a lot of strengths to begin with: a reputation for quality, a phenomenal facility, a stable and talented workforce, and a book of customers who had done business with D&M for decades. There were also numerous opportunities to improve the business through better financial management and improved sales and marketing efforts. In short, it was an opportunity too good to ignore.

Peak performance A key way D&M seeks to modernize the image of manufacturing is by inspiring performance. In fact, it’s built into the company’s team charter, which states our values of responsibility, accountability, trust, and integrity, and explains what is meant by each one. These guiding principles create what D&M calls our “Strategic Way of Being” as partners in innovation and help guide the behaviors we hope to see in the workplace, if we are all living up to the charter. Every employee was able to suggest any changes to the charter that he or she thought were necessary, and the document was then signed into daily practice by the entire team.

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the absolute last say. When the bar is kept high, performance matters— individual performance, leadership team performance, supplier performance, and company performance. It not only trickles down, it also tends to bubble up. The team charter is so important it’s written on a four-by-six-foot banner where our employees have team “huddle meetings.” These meetings are exactly like they sound. Before every shift, the entire team comes together to share key information and suggestions on how to improve performance. This vital component is integral in helping D&M build its lean culture, in which employees are encouraged to use their heads, not just their hands. Based on many of the principles in Paul Akers’s book, 2 Second Lean: How to Grow People and Build a Fun Lean Culture (FastCap, 2011), every day we ask that each employee make a two-second improvement to his work process. Everyone contributes, and no idea is too small. In the past two years, our staff of 50-plus employees has generated more than 2,500 ideas. The company has implemented roughly 80% of them—while saving tens of thousands of dollars through their integration. No

idea is more, or less, important than anyone else’s, and the ideas range from repositioning a table to improve work flow to relighting the entire manufacturing facility, which reduced energy costs by 30% and increased the lumens per square foot by 25%. Sometimes the ideas pertain to an individual’s specific area of work, and other times it’s a suggestion outside of his or her personal/professional role within the company. For instance, one manufacturing operator came up with the idea of putting motion sensors on hallway and cafeteria lights, an idea we’ve implemented that will undoubtedly save on energy costs. There’s also a great sense of personal satisfaction when an individual’s ideas are implemented. This creates even greater engagement and heightened performance for an ongoing cycle of improvement. By encouraging and implementing performance ideas spawned by the men and women actually doing the work, we have created a culture of ownership. This culture empowers the team and ultimately creates a better work environment, a better product, and in the end, a better company overall— a company people want to work with and for. In keeping with a goal to encourage our employees to improve personal performance, I realized that learning Spanish would give me a greater connection to, and ability to communicate with, some of our employees. So I made that a personal goal, which has been challenging and rewarding in equal measure. There’s an old joke that asks, when was the last time anyone washed their rental car? It’s human nature to care more about something when there’s pride of ownership. In fact, ownership breeds success. To that end, D&M has put a profit-sharing plan in place. All employees participate and can earn up to 13% of their annual income in profit sharing. D&M sets operating profit targets based on its budget, and depending on how the company performs each quarter, a portion of the profits is paid to employees. When personal incomes

Our team has adopted more of a manufacturing think tank or incubator mindset—where we ideate solutions in concert with customers. are tied to company-wide performance, which is really just the collective of individual performance, the trend is toward greater accountability and ultimately success.

Transparency and mindful actions D&M also encourages employees’ performance through the sharing of real-time data and outcomes. There are no secrets. Managers share shipping and revenue numbers, missed shipments, and customer feedback daily. On a monthly basis, they share the company’s financial performance, including revenues, expenses, and operating profit, and new business activity. By sharing data and information, we foster a conscientious understanding among team members that their performance directly impacts the company’s bottom line, either positively or negatively. Encouraging individual performance means employees are being mindful in their actions, which ultimately creates a safer workplace. D&M boasts nearly two consecutive years without a lost time accident, and there are numerous safety procedures in place to protect employees and ensure on-time delivery. These two components are of equal importance to the management team. When rigorous attention is paid to production systems and outputs throughout each day, bottomline improvements are easy to measure. An employee survey is conducted at the beginning of every year and the

results are shared with the team. We ask for feedback on how we can improve the survey results. The staff then chooses one item to focus on annually. A plan is developed, and everyone works to deliver on that plan throughout the year. Performance benchmarks inform and encourage employees to work the plan.

Changing the conversation Most molders think about making parts faster and cheaper—the low-hanging fruit. Focusing on performance has fostered innovation, allowing us to develop creative solutions to our customers’ manufacturing problems and tackle difficult projects that other manufacturers don’t want to do. The confidence that comes from having higher expectations for yourself makes the entire process more rewarding, which leads to more job satisfaction and creates an infinite loop of continued performance. This makes the job more interesting and more satisfying. By implementing performance-based solutions, our team has adopted more of a manufacturing think tank or incubator mindset—where we ideate solutions in concert with customers—before the concept or prototype is designed. For our company, encouraging performance has seemed to matter most in the development stage of the manufacturing process. We tend to think less like a manufacturing company and more like a technology company, which

is fitting given the complex geometries and highly engineered parts that D&M produces for the medical technology industry and others. This mindset has allowed us to tackle exotic materials that are challenging to mold, as well as difficult geometries such as ultrathin walls and hard-to-fill parts or tight tolerances of under 0.003 inches. We’re beginning to think of injection molding in nontraditional ways. By instilling a culture of performance and raising expectations, we’ve changed the game completely. A company can accomplish anything by building the right culture; it is a competitive advantage. We believe D&M has ignited performance to create a leadership engine that makes a distinct difference in the lives of others every day. As part of our team charter, we ask ourselves, what does it look like to be the most sought-after company that is integrating injection molding with traditional and novel manufacturing techniques? We hope to find out. AQ Peyton “Chip” Owen is CEO and president of D&M Plastics. As president, Owen embodies corporate vision, engaged leadership, financial acumen, and management expertise acquired through 20 years in plastics, real estate, sales, and investments. His cross-industry knowledge and breadth of experience undergird his talent in building teams, leading business growth, and delivering results. For more information, visit www.dmplastics.com or call 847-683-2054.

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Winning with Well-Being BY TIM STATE

Humana’s transformation from traditional health insurance company to health and well-being leader is being driven through its associates’ personal journeys toward their best health. Building and leading a world-class workforce today involves helping organizations address some fundamental questions. How do we evolve our company culture to best reflect and enable our core purpose and values? How do we create an employment experience that engages and inspires our talent—and strengthens our business results? How do we foster an employee community that is thriving physically and emotionally—in the best condition to create relationships and value with customers and have personal meaning in one’s work? A key answer to these questions at Humana has been this: a vibrant social movement inside the company, deeply rooted in a shared purpose. What does this look like? Thousands of people, namely our associates, on a personal journey toward their best health and well-being, supporting one another as they make progress, struggle at times, and move forward together. Guided by an enterprise well-being strategy, this movement is powered by the energy and ideas of thousands of associates and visibly championed by the company’s leadership. It has become foundational to the work culture and experience of associates. This movement also reflects a broader, basic premise supported by both common sense and a body of study

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and evidence: As people’s health and overall well-being improve, they generally are able to be more productive, engaged, connected, resilient, and effective at fulfilling their ultimate purpose. This is true for an individual person and for an organization full of people—its number one asset. That simple idea, and the stark opportunity the workplace has to enhance personal and population well-being, offers tremendous possibilities. At Humana, the journey toward improved well-being is having a profound impact while measurably improving lives. A few facts: We’ve reversed the trend toward declining health. As a cohort, our associates employed since 2012 have significantly fewer health risks on average than three years ago, with 7 out of 10 people either sustaining or improving their health risk profile. These risks include factors like hypertension, BMI, blood glucose and cholesterol that lead to the onset or progression of chronic conditions, and other challenges. The overall average number of risks per person has been reduced 9% in three years, with 42% of the population eliminating risks and improving their health. For example, 37% of these associates went from elevated blood pressure to normal levels, and 26% moved their

elevated blood glucose levels (associated with diabetes risk) to normal range. Holistic well-being has steadily improved. Since 2012, across the company we’ve seen a 13% improvement in the overall well-being of associates, measured by the four dimensions of well-being: purpose, health, belonging, and security. Workforce engagement has blossomed. We’ve experienced world-class associate engagement levels—in the top tenth percentile globally—for the past four years as measured by the Kenexa engagement survey, which directly translates into higher productivity and many other positive impacts. Each of those years, the number one driver most correlated with engagement has been our commitment to associates’ well-being. Leader commitment has proven vital. In 2015, for instance, 86% of associates agreed when surveyed that their leader really cares about their well-being. And today, 87% of associates say Humana is committed to creating a work environment that contributes to their health and well-being. These results and others have added to our performance and provided a competitive edge. Beyond the impact of

health-related cost savings, we’re more engaged and productive as a team. Perhaps more important, when our members interact with us, they are encountering people who believe in our defining purpose of helping people achieve their best health and lifelong well-being and who experience it firsthand.

HAVE A DREAM AND A WAY TO GET THERE A clear and powerful purpose that unifies and inspires teammates is indispensable. One key to our progress toward deeper engagement and elevated well-being has been Humana’s “Bold Goal.” We’ve pledged that the communities we serve will be 20% healthier by 2020 because we make it easy for people to achieve their best health. We’ve taken that goal further with our own associates, promising ourselves that we will be 20% healthier even earlier, by 2017. We’re leading by example, knowing that embarking on our own health journeys creates more empathy and makes us better partners for our customers. As Tim Huval, our senior VP and chief human resources officer, put it, “We want to invest in what matters most, our teammates—we’re better able to serve other people when we do that. By getting there first, we will lead and learn from the front.” AMA QUARTERLY I SUMMER 2016 I 39

To measure our success toward that goal, we’re using the “Healthy Days” tool developed by the Centers for Disease Control and Prevention for population health management. Participants are asked to rate their recent days of physical health and mental health; they consider things like pain, depression, anxiety, sleeplessness, and anything that might limit their physical activity. What emerges is a simple, overall picture of their health. Among Humana associates, our number of Healthy Days has significantly improved since 2012. Although Humana is well on its way toward achieving its goal, the fact is that no matter who you are, these days health is hard. In this unifying goal, we emphasize making health easy because our convenience culture and lifestyles create daily barriers to good health that must be overcome. The fragmented healthcare system often struggles to reward health outcomes or enable them through affordable access and people-centered technology. Given all that complexity and importance, for Humana it is the significance of the mission that makes this shared purpose so unifying and inspiring. It is also why making the journey easier for our own has been an imperative for HR and leadership across the business. That journey has also enabled new learning into how individuals and communities improve. Through co-creation and iterative trials, our associates’ own experiences have

and as a community. For example, when associates regularly volunteer, they not only experience a stronger sense of purpose but measurably do better in all other dimensions of personal well-being when assessed. Humana has been committed to volunteerism since the company’s founding in 1961. And today—with our core values guiding our work and impacting the health and well-being of the communities we serve—it’s even more important. We have a goal to more than double our volunteer participation over the next three years, and we’ve created ways to make volunteering easier and more vibrant. For example, our Humana Volunteer Network website makes it easy to find local volunteer opportunities that are personally meaningful, and our “volunteer time off” benefit provides the opportunity to take a day of paid time off to participate in volunteer activities that support health and well-being. We believe that meaningful purpose is at the heart of healthier lives. Likewise, the value of a diverse workforce and the importance of an inclusive atmosphere where everyone feels welcome and belongs reflect an important dimension of well-being, and of Humana’s values. For example, we’ve created several Network Resource Groups—associate-led and associate-driven organizations that provide valuable insights and points of view. Among these are groups for lesbian, gay, bisexual and transgender (LGBT) associates;

“ The interconnection between our health (physical and emotional), sense of purpose, feeling of security, and sense of belonging with others is profound.” contributed to new understanding and product development that helps accelerate positive outcomes while better connecting teammates to the needs of customers. As Humana’s multiyear journey to help its internal community achieve its best health and well-being has progressed, several principles have proven critical to achieving results:

EMBRACE WELL-BEING HOLISTICALLY We all sense that feeling well and happy involves multiple dimensions of “health.” At Humana, this is foundational. The interconnection between our health (physical and emotional), sense of purpose, feeling of security, and sense of belonging with others is profound. These dimensions of well-being are assessed at the individual and team level. Measurable organizational progress toward goals is shared through reporting, so teams can work together through action plans on the areas that most deserve their focus. Applying this integrated view has enabled deep learning into how people make positive changes in all areas, individually

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African Americans; Hispanics; caregivers; military veterans; women; and Asian and Pacific Islanders. The groups are open to everyone across the company, and they engage and empower all of our associates in bringing our purpose to life. More important, they foster a sense of belonging that is so instrumental to well-being.

FOCUS ON PEOPLE’S EXPERIENCES OVER PROGRAMS Helping people be their best shouldn’t be experienced merely as a corporate initiative; it is about empathetically meeting them where they are. For example, for someone struggling with severe depression or on the verge of family bankruptcy, near-term success in a new weight-management program may be a long shot. Processes that normalize caring and authentic workplace conversations about the well-being of individuals and teams, supported by effective resources and solutions that can actually meet their needs, help open the door to lasting change. Leaders, in particular, must be encouraged and

“ Since 2012, Humana associates have participated in the 100 Day Dash, a mass social experience designed to get people moving and have fun at the same time.” supported in their ability to nurture and inspire health and well-being as an embedded feature of the leadership model. Motivating and rewarding personal progress is also critical to sustained improvement. For example, HumanaVitality® (to be renamed Go365™), our wellness and rewards program, offers incentives to participants for making healthier choices. Earned Vitality Points can be redeemed for gift cards, fitness trackers, clothing, and so on, ultimately helping people set goals and keep them while encouraging them to get out and get active. A short health assessment produces a personal Vitality Age that indicates whether your body is living younger or older than your actual age based on personal lifestyle and habits. Today, HumanaVitality is well engrained within our culture. While more than 90% of associates participate, about 7 out of 10 associates are actively engaged in improving their status— a group that has experienced 30% fewer unscheduled days of absence since measurement began in 2012.

LEVERAGE SOCIAL INFLUENCE TO MOVE COMMUNITIES Not only are our habits and attitudes fairly contagious, but their outcomes are as well. Humana has observed that, similar to other communities, the health of its own work teams tends to move together, for good or for ill. Moreover, few stories of positive change are solo acts. They invariably involve the support and influence of family and friends, especially at work. Sparking social engagement within frontline teams and virtually across the organization has been vital. Today at Humana, the number one topic people routinely choose to discuss on internal social media is their efforts toward health and well-being. The stories of inspiration and shared experiences are lifeblood to the cultural movement under way. A powerful example is Humana’s 100 Day Dash. Since 2012, Humana associates have participated in the Dash, a mass social experience designed to get people moving and have fun at the same time. Steps are tracked via a pedometer or another wearable device, and teams are spontaneously formed to promote camaraderie and healthy competition. The Dash rallies us as a community and helps everyone take steps toward their best health. In 2015, we took more than 15 billion steps together. The executive team’s average step count was even higher than the associate community’s average, which speaks to the importance we put on leaders’ inspiring the health of our Humana teammates.

The social nature of this shared cultural experience provides inspiration toward healthier lifestyles and the catalyst for lasting positive change. For example, our associates who have lost weight, often spurred on by the Dash, have shed over 100 tons in three years, and the prevalence of prediabetes has been cut by 20%.

MAKE IT SIMPLE Enabling an easier path to health and well-being requires eliminating the barriers that complicate progress. This is especially true in the employer context, where adults spend most waking hours. To understand those barriers, Humana combines deep analytics on multifaceted hard data with critical information gained from a crucial means: intently listening to people. Applying customer research principles, we proactively segment and seek out associates for their insights and experiences. The goal is to use this information, combined with a steady flow of grassroots perspectives from a voluntary network of several hundred well-being champions, to eliminate critical barriers to health while enabling a more integrated experience across all elements. Over time, the discipline of seeking to understand the unmet needs and barriers that create complexity has enabled a wide spectrum of changes that matter. From smaller elements like where healthier items sit in vending machines to broad policy on health plan design and incentives, making progress easier by simplifying the journey for people is a must. Today more than ever, customers, job seekers, and even investors are increasingly choosing to align themselves with organizations that carry a meaningful purpose in the world—having a net positive impact on our communities and society. Likewise, positive workplace cultures that help move people toward their best selves are associated with distinct competitive advantages in both talent and enterprise performance. As Humana is witnessing firsthand, at the intersection between purpose, culture, and great societal need there is the potential for transformational change, especially when we put people—and their well-being—first. AQ Tim State is VP, associate health and well-being at Humana. The company has a goal of improving the health of every community it serves, and that commitment begins with its own 50,000 associates. State and his team develop leading-edge strategies designed to drive a well-being movement within Humana’s workforce. Along the way, he has led the development of several population health and well-being solutions that have ultimately become available to external Humana customers.

AMA QUARTERLY I SUMMER 2016 I 41

TOP SKILLS

of Employees at High-Performing Organizations BY AMERICAN MANAGEMENT ASSOCIATION

What sets the highest-performing executives apart at successful companies? Last fall American Management Association published its findings based on a survey of more than 7,500 employees across the globe. “AMA Research: Business Skills That Set High-Performing Organizations Apart” details the skill sets necessary for every level of employees to raise the bar on company performance. Here are some of the key findings.

ESSENTIAL SKILLS OF FIRST-LEVEL MANAGERS AT HIGH-PERFORMING ORGANIZATIONS Figure 3

Top 5 Differentiating Skills of First-Level Managers at High-Performing Organizations vs. Low-Performing Organizations

11%

Motivation

10%

Objective Setting

Hiring

42 I AMA QUARTERLY I SUMMER 2016

This underscores the need for new-manager training. As reported in the article “New Managers: Alone and Out of Their Depths,” research conducted by the Institute for Corporate Productivity (i4cp) found that “only about a quarter (23.5%) of respondents judged their organizations to be good when it comes to how well workers make the transition once they’ve been promoted from individual contributor status to manager. Another 16% say their companies are actually poor at these transitions, while most (60.5%) rank their firms as fair.”

KEY FINDING: First-level managers in high-

7.80%

Coaching

performing organizations score significantly higher in basic management skills than managers at low-performing organizations. Motivating, setting objectives, and coaching are all basic management skills. First-level managers at highperforming organizations show disproportionately higher scores for these skills. In addition, basic knowledge of HR concerns and the ability to hire well are clearly differentiating factors even for first-level managers.

Focusing and improving upon the competencies mentioned above as employees transition to management will help to better prepare managers for the tasks ahead.

8.3%

KEY FINDING: First-level managers in high-

10%

12%

performing organizations have sophisticated interpersonal skills. One key difference between high-performing and lowperforming organizations at this level is in how well managers are able to influence and persuade others. Firstlevel managers often find themselves in the role of trying to

execute without having full authority over key members of their team. Having political savvy and strong influence skills is important to a manager’s ability to get things done, and it’s clear from the data that low-performing organizations score very low on this skill. As employees start to move up in an organization, more nuanced communication skills are needed that focus on building relationships and influencing others. Employees of all levels at high-performance organizations score 7.3% higher on influence, persuasion, and political savvy. In addition, high-performing organizations are better at building culture, which requires a sophisticated set of relationship-building and interpersonal skills including both political savvy and leadership skills. Managers who are adept at such skills also score high in external-facing relationship skills such as customer service and sales. This indicates that interpersonal skills are a crucial differentiating factor. In addition, first-level managers at high-performing organizations still outrank low-performing ones on teamwork and collaboration by 3.7%, indicating the so-called “soft skills” around collaboration are still an important component of what makes a high-performing team. Firstlevel managers, like individual contributors, are focused on customer service. They have critical thinking skills and a high level of learning agility. High-performing managers at this level have excellent influencing and relationship-building abilities, as well as strong management and leadership skills, such as motivating others and setting objectives.

CRITICAL SKILLS FOR MIDDLE MANAGERS AT HIGH-PERFORMING Figure 5 ORGANIZATIONS Top 5 Skills That Differentiate Managers of Managers at High-Performing Organizations vs. Low-Performing Organizations

18.60%

Written Communication

18%

Information Technology

14.30%

Sales Acumen

13%

Financial Skills

12.90%

Time Management 0%

10% 12% 14% 16% 18% 20%

KEY FINDING: Core business skills rise in importance for middle managers. As one moves up the corporate ladder, the focus may shift from managing direct client relationships toward managing AMA QUARTERLY I SUMMER 2016 I 43

relationships with managers and implementing strategy. This explains the rise in importance of such skills as written communication, information technology, sales, finance, and marketing. These skills are important in monitoring the progress of employees as well as staying on top of marketplace trends to make sure the strategy doesn’t need adjusting. Execution is also a competitive advantage at this level. Low-performing organizations don’t rank in the top six for execution as a strength, and they lag behind high-performing organizations by 10.3% in this skill. “It is essential for all employees to consistently work on building their skill set,” said Mike Wright, chief marketing officer at American Management Association. “As you advance within an organization, you’ll take on added responsibilities that all have to be executed effectively. Often, these new responsibilities are in areas that you have little to no prior experience in, which can be overwhelming. If you take the initiative to build your skill set from the beginning, it makes for a much easier transition when moving up the corporate ladder. The greater your skill set, the more you can contribute to the organization, ultimately making you a more valuable employee.” Teamwork and collaborative skills rank high in the top five skills of managers at this level of high-performing organizations, but it doesn’t break the top six skills for their counterparts at low-performing organizations. In fact, lowperforming organizations rank on average 11.4% lower in this skill. This indicates that organizations that perform well tend to have strong teamwork right up through the manager of managers level.

KEY FINDING: Decision making is a critical skill for higher-level managers. Critical thinking/problem solving claims the top spot for the skill on which managers of managers rate themselves the highest. The article “Eight Habits of Effective Critical Thinkers,” by Stephen L. Guinn, PhD, and Gary A. Williamson, PhD, discusses core traits of critical thinkers, including assessing situations before making decisions, focusing on the big picture as well as minute details, and flexibility. While still important, customer service acumen appears to take a backseat to other competencies as it falls to third. “In today’s workplace, executives are faced with complex, multilayered challenges on an almost daily basis,” said Wright. “Leaders need to possess top-notch critical thinking abilities in order to solve some of these problems. The results of decisions made by executives with poor critical thinking skills could sabotage the entire organization’s reputation. However, with the proper training, executives have the potential to increase productivity by explaining things in a more concise way to employees and be able to read between the lines when problems arise.”

44 I AMA QUARTERLY I SUMMER 2016

The capacities to stay on top of multiple teams and execute strategy are imperative skills for managers of managers. Their client service, affinity for learning, and collaboration skills remain strong, but the increased passion to succeed by this group demonstrates the overwhelming drive to accomplish, lead, and advance to the next level. Areas of opportunity for managers of managers are similar to previous levels in that improvement in sales, marketing, and financial knowledge would give them a competitive edge.

C-SUITE EXECUTIVE SKILLS AT HIGH-PERFORMINGFigureORGANIZATIONS 7 Top 5 Differentiating Skills for C-Level Executives at High-Performing vs. Low-Performing Organizations

32.30%

Sales Acumen

27.10%

Strategic Planning

27%

Negotiating

25.30%

Financial Skills

21.80%

Marketing

10%

15%

20%

25%

30%

35%

KEY FINDING: At the C-suite level, the difference between critical leadership skills widens significantly. C-level executives score the highest in key leadership skills such as strategic planning, decision making, execution, and drive for results. At the same time, they become quite proficient in nuanced persuasion skills like sales, presentation, influence, and political savviness, all of which are crucial to inspiring people to want to follow. Professionals who take more responsibility within an organization will see leadership competencies become more in demand and rate higher compared to other job levels. In the article “Are You Ready for a Promotion?” by Ilona Jerabek, PhD, research revealed that professionals seeking to advance to the next level showed a much stronger desire for growth, greater willingness to take on more responsibility, leadership potential, and stronger desire for change and stimulation. It further revealed that these professionals have more initiative, confidence,

and adaptability and are better at dealing with stress. Interestingly, while leadership skills improve for the C-suitelevel executive, teamwork and collaboration tends to taper off for this group. In the level below C-suite, “managers of managers” tend to have extremely high teamwork and collaboration skills. “Teamwork and collaboration are key skills for executing strategy,” said Sam Davis, vice president at American Management Association. “As you move up in an organization, however, you’re the one creating the strategy, not executing it. At that point collaborative skills are nowhere near as important as the more nuanced and subtle skills of influencing others and political savvy.”

KEY FINDING: Time management skills become strained as responsibility increases. Time management is an interesting competency to examine, as it did not appear in the bottom skills of any level below the executive suite. This indicates that as role and responsibility increase, availability and effective management of time decrease. “Many executives have difficulty prioritizing initiatives in part because at their level they work on so many high-priority items,” said Davis. “Time is finite, though, and executives need to be very careful how they spend theirs. In fact, McKinsey research points out that only 52% of senior executives spend their time according to strategic priorities of their organizations. This means that strong time management skills can be a huge competitive advantage, not only for the individual executive but for organizations as well.” C-level executives possess extensive knowledge and insight regarding many of the highest-rated competencies and have achieved near mastery levels. C-level executives surveyed value critical thinking and problem solving as their strongest attributes. Leadership competencies such as

decision making, execution, and coaching are the highestrated leadership qualities out of any other job level surveyed. This reinforces the notion that C-level executives need to be strong leaders and demonstrate effective leadership acumen. The results also maintain that skills such as learning adaptability, client service, teamwork, analytics, and communication need to be consistently developed and improved throughout a leader’s development, from the entry level to the C-suite. Focusing only on the strongest attributes of C-level executives will not be enough. Even C-level executives need a solid grounding in areas outside their particular scope of expertise, such as finance, marketing, and sales. Staying up to date on the newest technological innovations in business and computing, as well as honing time management skills, will be imperative to being a cut above other C-level executives. These findings are a broad overview of the data. There are slight variations in skill gaps and strengths based on industry, country, and organization size. To compare your organization’s bench strength against comparable organizations, contact 877-566-9441. Or to preview AMA’s Talent Transformation Tool, visit www.amatalenttool.com. Given the compelling benefits and low costs, AMA’s AT3 is a strong self-assessment tool that organizations should be using. This diagnostic tool is especially useful for performance-enhancement opportunities such as the creation of individual development plans. AQ Portions of this article were previously published on TrainingIndustry. com. This article is an adaptation from the white paper AMA Research: Business Skills That Set High-Performing Organizations Apart. To read the entire report, please visit www.amanet.org. Data was compiled from AMA’s Talent Transformation Tool—AT3 (www.amatalenttool.com). This tool was designed to offer organizations the ability to quickly and economically evaluate the skill levels of their employees, identify skills gaps, and benchmark their skills to comparable organizations worldwide.

AMA QUARTERLY I SUMMER 2016 I 45

Establishing the

CONFIDENCE EFFECT BY GRACE KILLELEA

For a person to be truly confident, it’s critical to understand the delicate relationship between competence and confidence as they apply to our workplace brand as well as our leadership potential. Both are equally important, but for too long it seems women have relied on competence rather than confidence to show off their skills. As a result, we find ourselves at a point in time when there are more women in the workforce than ever, yet we remain woefully underrepresented in leadership positions at the top, or even the near top. According to the Center for American Progress, “Women… hold almost 52 percent of all professional-level jobs… and since 2002, have outnumbered men in earning undergraduate business degrees. And yet, women have not moved up to positions of prominence and power in America at anywhere near the rate that they should have based on their representation and early successes in higher education and in the entry-level workforce.” There are so many reasons why this observation is so dreadfully accurate that it would take reams of paper to list them all. That’s not my intention. This book isn’t about men in the workplace. Men are not the enemy. This is about connecting with our own power as leaders and taking ownership of the areas in which we can effect change. My book, The Confidence Effect: Every Woman’s Guide to the Attitude That Attracts Success (AMACOM, 2016), is about what you can do right now, today, to turn the tide in your life. For most of my 30 years in corporate America, I lived

46 I AMA QUARTERLY I SUMMER 2016

the workplace reality described in the Center for American Progress quote. This book is about how I beat the odds by overcoming the obstacles, detours, and roadblocks in my path to success. What I’ve discovered along my own personal journey to authenticity, leadership, and career satisfaction is that competence is absolutely critical to success. You must be good at what you do. You must exceed expectations. But competence is only half the equation. You need to combine it with confidence to truly crack the code.

TAPPING INTO YOUR CORE OF CONFIDENCE Writing for the Atlantic magazine, Katty Kay and Claire Shipman, authors of The Confidence Code: The Science and Art of Self-Assurance—What Women Should Know (Harper Business, 2014), provide a great definition of confidence. “Confidence is not, as we once believed, just feeling good about yourself,” they write. “If women simply needed a few words of reassurance, they’d have commandeered the corner office long ago. Perhaps the clearest, and most useful, definition of confidence we came across was the one supplied by Richard Petty, a psychology professor at Ohio State University, who has spent decades focused on the subject. ‘Confidence,’ he told us, ‘is the stuff that turns thoughts into action.’”

Renowned executive and life coach Gail Blanke defines confidence as “an attitude that starts with the conviction that you’re here for a reason and that you are so much more powerful, so much better, so much more necessary to the world than you have any idea.” So, what does it mean to possess “The Confidence Effect”? It means confidence to the core—the place where we’re the most powerful, the most authentic, the most self-reliant, and the most connected to our skills and abilities. If you hang out in a gym or talk to a personal trainer or just keep up with fitness magazines or websites, you hear a lot about building your core because that’s where you’re flexible and have the most strength. I like the idea of the core as it relates to confidence for women, in particular, because that is where we house our strength and power—where we find our voice. And by strengthening our confidence and connecting it to our competence, we can become more powerful in our organizations and in our lives. It is from our cores that we move forward into the types of leadership positions that now exist mostly in our dreams. Experts in the field such as McKinsey and the Harvard Business Review have compiled a ton of research that I could quote extensively. But instead of dispensing facts, I want to have a conversation about the many women I see who simply are not moving beyond a certain level in their organizations. They are, in a word, stuck. They’ve been working deep in the trenches, outperformed their contemporaries, led teams or maybe even divisions, but the corner office or even senior management seems to elude them. Why? What’s holding them back?

GRAVITAS: GRIT AT THE CENTER OF CONFIDENCE When you talk to women about those questions, their answers are rarely about performance. Instead, they usually talk about confidence—and specifically about women’s hesitancy to take risks, speak up, stand out, or even raise our hands. We question our own competence, feel like we’re under a microscope, and perhaps even feel unable to meet the demands of leadership positions. As a result, we miss out on building the relationships and workplace brand that can put us where we want to go and give us the confidence we need to take risks, believe in ourselves, and perform to our potential.

lends an air of credibility—of gravity—to our actions. It adds weight, depth, and character to our personalities, and it allows us to temper our emotions with data, analysis, and proven, delivered results. I call this grit. It’s the ability to stand your ground and express your strength in an appropriate, professional manner. I often use the wonderful expression “No grit, no pearl” to remind my clients of their need to “stand over their own power”—not to waiver, but to own the moment, to feel the grit, and to stand strong. Gail Blanke agrees. “The importance of grit—or resilience—is that most of us don’t know how good we are until we get to the hard part and the power of persistence and simply keeping going and refusing to cave, which is always very tempting,” she says. So if women are not showing up confidently, proudly, and ready and willing to lead, if we’re not raising our hands or stepping forward with that grit and power behind us, then, typically, the organization overlooks us and promotes men. Why? Because men tend to exhibit those traits even if they’re not as competent. They show up, stand out, raise their hands, take charge—even take command—regardless of whether they possess the skills such leadership positions demand. If we strengthen our cores, if we focus on getting to the heart of the matter and positioning ourselves in a way that is both competent and confident, then we have the power within us to show up, stand out, and lead in a way that’s authentic to our true and inner strengths. We don’t have to wait until we are fully confident to begin to exhibit confident behaviors. We can, in fact, “act as if” and “fake it till we make it.” Success is about striking the right balance between competence and confidence. And let me say right off the bat: Confidence alone won’t cut it. Bravado, bluster, and popularity alone won’t get you where you want to go. We’ve all known supremely confident men and women who, despite their gravitas, simply don’t execute. They don’t deliver, they don’t delegate, and they don’t meet deadlines. They use emotions rather than facts and logic. As a result, they are incompetent. We must be careful not to assume that success is merely a case of “inserting confidence” and solving all of our workplace troubles. Just like at the gym, if you work only on your core and you don’t build up your cardio strength, then you won’t be fit overall. Similarly, if you’re confident but you lack important qualities such as business acumen and the knowledge of how to build relationships, you do not have what it takes to lead. AQ

An extension of our core confidence is the power we bring—or don’t bring—to our workplace roles. Gravitas is the presence we feel deep down inside. Merriam-Webster defines it as “high seriousness (as in a person’s bearing or in the treatment of a subject).” Without this air of gravitas—the sense of weight and “grit” deep in our guts—it’s hard to feel the confidence we need to lead: to lead ourselves, our teams, our divisions and, ultimately, our organizations.

Grace Killelea has been keenly focused on developing, supporting, mentoring, coaching, and connecting women for more than 15 years. She has served as the only national facilitator of a premier executive leadership program for women in the telecommunications industry and is a highly sought after keynote speaker.

Citing gravitas as a key ingredient of executive presence, the Center for Talent Innovation describes it as encompassing confidence, poise under pressure, and decisiveness. Gravitas

Adapted, with permission of the publisher, from The Confidence Effect: Every Woman’s Guide to the Attitude That Attracts Success, by Grace Killelea. Copyright 2016, Grace Killelea. Published by AMACOM.

AMA QUARTERLY I SUMMER 2016 I 47

OUR VIEW

Maintaining Institutional Knowledge T

he ever-shifting economy and retiring Boomers bring organizations more problems than just a talent war. With more open positions than there are job seekers, turnover in companies is high. Organizations are also choosing more and more to invest in flexible labor, which can make a company more agile but has unintended consequences for performance. Key to organizational performance is maintaining institutional memory—both the knowledge base in archives and the knowledge of individuals’ memories. As employees leave, this knowledge often is not passed on adequately. Worse, with 94% of workers reporting they feel overwhelmed by a deluge of data and information, it’s a recipe for corporate amnesia. Compounding knowledge loss, employees often don’t have the requisite mix of skills. Organizational knowledge is only useful if employees can apply it. Performance suffers from the simple problem that the organization can’t learn from hindsight and can’t apply what it does know. Explicit knowledge, or business acumen and technical skills, is not enough. Employees need the tacit knowledge of knowing how to get things done, such as building relationships and inspiring teams to perform better. Balancing hard skills with soft skills is the concept behind AMA’s Total Professional framework. Tacit knowledge is very difficult to pass on from one employee to another. Much of this knowledge needs to be acquired through functional, context-specific experience such as firsthand, on-the-job training. Some skills are better off practiced out of the office, but in team activities that simulate common workplace challenges. Yet it’s the tacit knowledge that often results in productivity gains and a competitive edge. Equally important to having the right skill sets is learning them in a way that allows you to remember and use them in the workplace. This discipline is the basis of all our programs at AMA: Experiential learning. Whether delivered in our classrooms or in a customized onsite training session, all of AMA’s programs provide focused learning that teaches best practices, reflects upon them, and then allows practice with feedback from industry practitioners. Call us to find out how we can help.

Edward T. Reilly President and CEO American Management Association

48 I AMA QUARTERLY I SUMMER 2016

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