Noted author and management guru Don Peppers discusses the role of engagement – both internally and externally
“In a world where the lowliest employees can leap corporate hierarchies with a single click,” says Don Peppers of Peppers & Rogers Group, “not only are organizational charts flattened, but corporate culture is transformed into your most reliable competitive advantage.”
Peppers and Martha Rogers, his business partner and co-author of Rules to Break and Laws to Follow: How Your Business Can Beat the Crisis of Short-Termism, argue that a “customer centric” strategy starts with networked culture and engaged employees – employees who enjoy their work and take pride in it, and who have the right tools, the right information and the right training, support and reinforcement.
Companies need “innovation, creativity, resilience and leadership to produce not just quarterly numbers but shareholder value,” Peppers notes. And they’re not going to fulfill those needs if they dismiss employee engagement as just another management fad or buzzword.
Motivation Strategies recently sat down with Peppers to discuss employee engagement – and encouraging a networked culture and an attitude of “positivity” – is critically important to companies that want to succeed in today’s fast-paced and highly competitive marketplace.
MS: Why have corporate culture and employee engagement become such important issues for companies today?
Peppers: Technology has streamlined business immensely. The IT revolution has automated a host of processes. But what has also happened is that companies have trimmed their staffs and now use fewer customer service people. And that’s one place where people really do make a difference – in handling those tasks and issues that can’t be automated.
Any customer service problem today that gets through the interactive voice response system is almost guaranteed to be some kind of a problem or crisis that all the processes and process reengineering didn’t anticipate – otherwise it would already have been automated. So employees are increasingly being called on to make decisions that require judgment and creativity rather than dealing with routine problems and issues as in the past. And that type of judgment and creativity has to be supported by the corporate culture.
MS: That would make culture and engagement important parts of fulfilling the brand promise for many companies. Why is it that so many companies miss that connection?
Peppers: Brands can be defined in a lot of different ways, but I think we would all agree that almost every interaction that a customer has with a product or its message is an element of the brand. And it either fulfills what the customer expects is the brand promise or elucidates the brand promise in some way.
I think it’s human nature to fall back on process and numbers because those are things that you can manipulate and control – they’re within your purview. You can put them on the screen or print them out on paper, and a lot of times folks forget that, to the customer, the person who’s interacting with them is your brand.
That means you have to have employees who are both engaged with their work – that is, they enjoy their work and take pride in it – and they’re enthusiastic about it. In addition, you need those employees to be enabled to do their jobs. They have to have the right training and access to knowledge; they have to have the right tools and information. And they have to have authority to take action. Employees who can sympathize with the customer and want to make the right decision, but aren’t able to, will just become very frustrated – not to mention that customers will also become frustrated.
MS: How do you create “engaged” and “customer-centric” employees?
Peppers: If you want your employees to treat customers the way the customers would like to be treated, then you have to treat employees the way you want them to treat customers. You have to trust them. And you can’t trust an unarmed mob. You’ve got to equip them with the right tools, give them the right training and drill into them the importance of customer centricity.
All of the truly successful companies in the long term are classic examples of strong cultures like this. Look at Wal-Mart, Hewlett-Packard, Johnson & Johnson, Disney, or GE – you can’t name a successful, long-lasting company that doesn’t have a very strong, almost palpable, employee culture.
MS: What can a company do to create that kind of culture?
Peppers: Well, first of all you have to realize that you have a culture whether you go about creating it or not. And the culture is what your employees do when no one is looking. It’s “how things get done around here.” It’s how the secretary or the new marketing assistant learns how this report is filed and who does what. Usually they ask somebody. Cultures are passed on by imitation.
The really good companies that nourish their cultures pay close attention to what they ask their employees to do, and they make sure that the incentives and metrics are aligned with what they say their culture is. I’ve been in many companies where you ask what the mission statement is and they point to a plaque on the wall that says, “Our mission is to be the best company in the XYZ industry and always be fair to customers.”
But then you talk to employees about what they spend their jobs doing, and you realize right away that their primary goal is to make their quarterly numbers, and their mission is to do what it takes to make those numbers. And so the mission isn’t what you put on the wall, it’s what you pay your employees to do.
MS: And who leads the way in creating that culture? Is it marketing or sales? Or is it something that has to come from the top?
Peppers: Well, ironically, and I’m known as a marketing guru, but I think the place where this really needs to happen first is in HR. Unfortunately, too many HR departments are overburdened with just compliance issues and benefits and hiring. But a true HR professional needs to think carefully about the intellectual capital in the company and how to increase that – to increase the power of the people.
MS: And how do you do that?
Peppers: Great companies are finding that you can do a good job of harnessing employees who are now networked together technologically. The lowliest employee can leap the hierarchy in a single click. So the hierarchies, which used to serve as channels up and down through which information flowed, are less relevant now – at least when it comes to information flow. It’s a much more chaotic environment.
On the other hand, one of the benefits of networked employees is that you can create a network effect – that is, you can actually make 100 employees more than twice as effective as 50 employees if you’ve networked them correctly. And the largest companies out there are now growing a rate that is actually in excess of some of the second-tier companies. ExxonMobil, for instance, is an incredibly fast-growing company, yet its management is very lean. There are only about 400 people in the entire headquarters building at ExxonMobil.
MS: So by networking engaged employees, companies can do more with less?
Peppers: Research shows that the actual profit per employee at large companies is skyrocketing, to the extent that those companies are able to harness the networked power of those employees working together. Now, to do that you have to have the technology, and you also have to have a cohesive culture where people work together – where employees come together in ad hoc groups and self organize to accomplish the mission.
A critical step here is that employees have to feel the authority to do it and the capability to do it – but you also have to have a very well defined and more or less universally agreed upon mission. If management and employees for Department A and Department B don’t agree on what the real mission is, then it doesn’t do any good to network your employees together. You’re just going to automate the problem.
MS: How are sales and marketing affected by this emerging networked employee culture?
Peppers: A lot more teams are involved in selling now. It used to be the lone rangers could go out there, and you had some cowboys and some cow herds, and you had the finders and the minders and the grinders. Now, teams are made up of finders, minders and grinders together – and they’re much more effective than ever before. Part of this is because of the technology, and part of it is because of globalization and the fierce pace of competition.
MS: Can traditional incentive programs be helpful in creating a networked and engaged corporate culture?
Peppers: Current thinking is that everyone needs a minimum amount of extrinsic awards. You need to be able to make money and be financially successful, and you need to see your way to further advancement economically in order to be happy in your job. But given that, what really motivates people is having a sense of belonging, having a supportive group, feeling that they have authority over their own destiny, feeling that their career is in good hands, that their leaders are capable and competent. All of those factors go into the whole idea of how employees become engaged.
And there’s another factor that has become very important in the way that many of the smartest companies are now screening candidates, and that’s something you could call “positivity” or inherent optimism. Not optimism in a Pollyannaish sense, but do you see the glass as half empty or half full? Is the sales quarter two-thirds over, or do you still have one-third to go?
People who have a generally positive attitude and outlook on life are not only happier personally, they make the employees around them happier too. And so they have a very important effect on the firm.
MS: How do you find people with that type of positivity?
Peppers: Well, I think people want to be like that on the whole, and if you don’t beat them down into conformity, people will rise to that kind of performance.
Part of it is personality traits, so part of it is screening. But a firm that is tuned into this can go to great lengths to try to inculcate this attitude among all employees. And certainly it would be valuable to have this attitude in the executive ranks to show that it’s safe to have this attitude. We’re not talking about glossing over problems. We’re talking about being honest, but also persevering and being open and optimistic and confident.
MS: Can peer-to-peer or other types of flexible reward programs help support and reinforce a networked culture?
Peppers: Peer-to-peer recognition, 360-degree evaluations, team incentives – all those are tools that a smart company can use. Those tools aren’t appropriate in every situation, but they are appropriate in a lot more situations than they’re used in right now.
MS: Can you mandate employee engagement and a culture of positivity?
Peppers: Well, you’re not going to get anything done without extremely high-level support, because you’ve got to cross all the departmental boundaries. At the same time, top-down change isn’t really going to be the way to get buy-in and employee engagement. Basically, the leader’s role in the process is to paint an irresistible picture of the vision of our new company’s operating manner and culture, and then let employees organize themselves and figure out how to do it.
We have a great case study in the new book. A company called Baptist Health Care, which is a collection of five or six hospitals in Pensacola Florida, was rated in the bottom quintile in both customer and employee satisfaction. And management decided, “OK, we’ve got to fix this,” and so they set it in their agenda to try to get things done differently and to change the culture. What they said was, “This is our goal.” And then they created employee teams to try to figure out how to achieve that goal. And the employees themselves actually did it. So the employees owned the process.