Culture: A Driving Force in Talent Management was the topic of a panel at the Corporate Directors Forums I attended in San Diego in January. Yes, I’m still digesting all the great conversations. Like all Corporate Directors Forums, this one operated under the Chatham House Rule, so you will not find any direct quotes below. These are my notes. As such, they include my opinions as well observations made by speakers, panelists and others in attendance at the Forum. This is certainly not a transcript. However, I hope even those who attended the Forum will find the post useful, especially my attempt to provide additional context through links and commentary.
Culture: A Driving Force in Talent Management – The Panel
- Garry Ridge, moderator and President & CEO, WD-40 Company
- Lori Keith, Co-Portfolio Manager, Parnassus Mid Cap Fund (PARMX)
- Jim Kouzes, Author; Dean’s Executive Fellow of Leadership, Leavey School of Business, Santa Clara University
- Kristen Lipton, Regional Director of Business Development, Gallup
Culture: A Driving Force in Talent Management – My Notes
I supplemented my conference notes with a quick review of Gallup’s report, State of the American Workplace. I consider it a “must read” for anyone interested in talent management. Only one-third of U.S. employees are “engaged” in their work and workplace. The majority of employees (51%) are not engaged and have not been for quite some time. In fact, many are actively working against their company. In an age where social media has increasing influence, talent management becomes even more important.
- 22% of employees strongly agree the leadership of their organization has a clear direction for the organization.
- 15% of employees strongly agree the leadership of their organization makes them enthusiastic about the future.
- 13% of employees strongly agree the leadership of their organization communicates effectively with the rest of the organization.
Business or work units that score in the top quartile of their organization in employee engagement have nearly double the odds of success (based on a composite of financial, customer, retention, safety, quality, shrinkage and absenteeism metrics) when compared with those in the bottom quartile. Those at the 99th percentile have four times the success rate of those at the first percentile. Leaders in talent management must determine how they can:
- design and deliver a compelling and authentic employer brand
- take employee engagement from a survey to a cultural pillar that improves performance
- approach performance management in ways that motivate employees
- offer benefits and perks that influence attraction and retention
- enable people to work successfully from locations besides the office
- construct office environments that honor privacy while encouraging collaboration
- improve clarity and communication for employees who work on multiple teams
51% are actively looking for other job opportunities. 68% believe they are overqualified for their current job. 63% believes it is “very likely” or “somewhat likely” that they would find a job as good as the one they have.
The lack of engagement among front-line managers could be wreaking havoc on engagement among front-line employees. Managerial’ engagement directly influences their employees’ engagement, creating what Gallup calls a “cascade effect,” and the link between the two is powerful. Employees who are supervised by highly engaged managers are 59% more likely to be engaged than those supervised by actively disengaged managers.
Female employees are more engaged than male employees and have been throughout Gallup’s history of tracking the metric. The generation with the lowest percentage of engaged employees in the workplace is millennials. This group also has the lowest percentage of actively disengaged employees. The opposite is true of baby boomers — this generation has the highest percentage of engaged employees, as well as the highest percentage of actively disengaged employees.
EPS is 4.3 times higher among employees with higher engagement. Model consistently, inspire with clarity of common vision, challenge the process and practices, enable others to act and be challenged through cooperative relationships, encourage learning (what can we learn when things don’t go as expected?). Team, expectation, pride… 96% direct reports are more highly engaged if leaders very frequently use the practices recommended by Gallup. The best talent management stories are about challenges and difficulties.
Culture is getting more scrutiny by investors. While there is disagreement about trickle-down economics, there is widespread agreement, the culture of the board filters down. The right tone at the top and the right balance of power can make all the difference. Diversity and incentives are critical to talent management. The majority of companies are not leveraging their employee surveys. Women and millennials are driving the movement to put capital to work around ESG components.
Create an atmosphere were employees feel like they belong. Remove fear of failure. Replace it with the gift of learning. Disclosure of activity in this area to shareholders and the public is inconsistent and spotty. Investors and prospective employees want to see how information is trending. WD-40 includes employee survey in its annual report and/or proxy. A culture of asking for feedback is still not normative. Too frequently we punish people who ask for help or how to improve.