HBR: How Smart Managers Build Bridges

How do you manage conflict?  Are you improving your relationships with your directs? Below is a blog from the Harvard Business Review by Charalambos Vlachoutsicos

How Smart Managers Build Bridges

What do you do when the other person simply won’t budge from an entrenched position in which they have a great deal of personal and professional commitment? How do you bridge the gap between your position and his?

Most people try to win the other person over to their point of view by argument. The trouble is, in many cases they don’t have all the facts to fully understand why the other person doesn’t agree. What’s more, the gap may be down to differences in values or cultures that are not particularly amenable to reasoned arguments. Whatever the source of the differences or gaps, when you can’t win by reason, you start to get angry at what you see is the other person’s lack of it, which gets mirrored, and so the gap only gets wider.

The key to avoiding this dynamic is to stop trying to get the person to change and instead get them to open up. The information you get may well encourage you to moderate your own position and thus open the way for a mutually advantageous cooperation. Make them understand your constraints and get them to see what they have to gain by what you propose.

Of course, sometimes, no amount of understanding is going to get the other person to budge and you’re going to have to force progress. At this point, you have to work to bridge the gap in such a way that their main concerns are accommodated so that you can communicate and cooperate productively in spite of and within the limits of your differences. Typically, this involves talking responsibility for the action you wish to make while being prepared to share the payoff and the credit.

Once the gap is actually bridged and you move forward you will pretty soon see that your interactions generate change. Through the give and take of communication, all sides come to feel that at least some of the differences between them are actually smaller and easier to live with than they appeared to begin with.

I built perhaps my first managerial bridge when, fresh out of HBS, I joined our family’s business. Immediately on joining I realized that our warehouse constantly remained out-of-stock of at least five of the thirty-odd products our company carried. This not only caused a loss of sales of the items missing but also had negative repercussions on the sales of all of our products because it drove many customers into our competitors’ arms.

I went to our warehouse and met with the manager who was a very loyal, trustworthy person who had worked with us for many years. He was about 60 years old, knew all our clients personally and had a wide network of potential clients in the market. I asked him why he believed we faced this problem.

He answered that it was because our suppliers took a long time to deliver our orders and, given the global nature of our supply chain, there was nothing we could do about it. I talked to him a little about the notion of forecasting what amount of each product we would need to carry as minimum stock, in order to cover our sales during the time required between the date of placing our order and the date it would reach us.

His reaction was fierce: “If you want predictions go to the Oracle of Delphi,” he told me. “In Greece we do not know what will happen from one day to the next, so we cannot make predictions of how much of each product we will sell.” He would not budge.

Faced with this attitude, I stopped trying to get him to change. Instead, I asked for a worker, some red paint, a brush, and a wooden ladder. I obtained from the accountant the average monthly sales of each product, added a security margin of 20%, converted this quantity to the volume of space required for each product, and drew on the wall a thick red line at the point where the pile would probably be enough to cover sales of the product until our next order arrived.

I assured the manager that I respected his view that predictions in Greece were risky and — this was critical — assured him that the head office would take responsibility for whatever risks were entailed by my attempts to forecast “All you have to do is, whenever you see a red line appearing on the wall behind the stack of any product, is inform me”. Finally, I promised him a bonus for each day our warehouse carried stocks of all our products.

The immediate impact, of course, was fewer stock-outs. But the longer-term and more important benefit from the improvement was that the warehouse manager and I started talking more. He took to visiting me at my Athens office and to ask my opinion on other problems our Piraeus shop faced and to make useful suggestions on how best to address them. Thanks to my action in bridging I had been able to move from talking to the manager to talking with the manager.

JoA: 5 Things Leaders Should Never Say

How’s is your communication with your directs? Are you pushing them away? Below is an article form Journal of Accountancy magazine By Jennifer Wilson.

5 Things Leaders Should Never Say

To avoid alienating your employees, especially your best young talent, try these alternative approaches for better communication.

Today’s –coming leaders have many career options, and their phones, email inboxes, and LinkedIn accounts are being “hit up” every day by recruiters and others interested in potentially employing them. That’s why established leaders committed to retaining their best and brightest need to pay more attention to the things they say that frustrate and disappoint future leaders.

This article explores five phrases established leaders should never say again and suggests an alternative approach that their young or new talent might better appreciate. And while the advice in this article is geared toward conversations with young CPAs, leaders would be -advised to apply it when communicating with all team members.

Never say this again Be patient …

Why? Because … Up-and-coming leaders have many options. When you tell them to be patient about something they want changed, they hear, “This isn’t going to happen for a long time (if ever),” and they don’t want to—or have to—wait.

Try this instead: When your people want something to change, ask them to develop a plan to make it happen. Then, help them refine their ideas and do your best to support them in implementing the change unless the change is a monumental deal breaker. Be willing to pilot new ideas, take small steps, and implement things imperfectly to ensure that your team feels perpetual forward progress.

Never say this again: You’re not ready …

Why? Because … Emerging leaders want experiences. Most have confidence in their abilities, and they want to progress faster than traditional timelines. Your best and brightest don’t want to be held to “old” timing standards of what a “- person” or a “new manager” does. Instead, they want to do what they believe they are ready and able to do. When you say they’re not ready, they hear you saying, “I don’t believe in you yet,” which contradicts their own beliefs. This leaves them thinking, “You don’t get it” or “You don’t get me.”

Try this instead: Figure out how to get them a portion of the experience they’re requesting or allow them to take on the whole effort. For instance, if they feel they are ready to meet with tax clients, allow them to do so. Ensure that a member of your team acts as a silent shadow for the first few meetings. In my experience, today’s emerging leaders are often more ready than we expect—which is great news! When they try and don’t succeed, most are quick to admit they need to step back and invest to round out their skills. While they’re regrouping, they’ll appreciate that you took the risk and believed in them.

Never say this again: When I was coming up … That’s not how it was when I came up …

Why? Because …They hear you saying, “Four score and seven years ago …” or “I am old.” I realize that’s harsh, but if you hark back to your days as an emerging leader, you rolled your eyes when your boss said this, too! Back in the day, people churned butter and used outhouses. But they don’t have to anymore. Today’s emerging leaders don’t want to talk about yesterday’s hardships—they want to talk about tomorrow’s possibilities!

Try this instead: Ask yourself what you’re trying to convey in a story about the past or your career progression. Instead of using the offending phrases, try something like, “What I have learned that works well is …” or “A best practice we employ is …”

Never say this again: He must not be working because he isn’t here … or She isn’t putting in the same effort as others because she leaves at 4:30 p.m. or isn’t here on Saturdays …

Why? Because … It is a fallacy that people are productive contributors just because they’re in the office. It is possible that your people are working from home, clients’ offices, or other locations at odd hours and producing a lot of great work when they are not in the office. In fact, according to Gallup’sState of the American Workplace report, remote workers logged more hours than their office counterparts and were slightly more engaged. Emerging leaders value flexibility in where and when they work. The offending phrases make them think, “You really don’t get it.”

Try this instead: Look for ways to further your workplace flex programs. Ask your emerging leaders to devise strategies to maximize both production and flexibility. Encourage all employees to stop equating presence at the office with productivity because the correlation is false. And, if you want to learn more about the argument emerging leaders have for virtual work, read my blog post at convergencecoaching.com.

Never say this again: You can change this when I’m gone (sometimes said jokingly, but not heard that way!)

Why? Because … This is similar to “be patient” but has the extra kick of reminding your emerging leaders that you are on your way out, biding your time, bailing, or any other number of “short timer” ideas. And this can cross their minds, “So, we won’t change this important thing because you don’t want to, and the firm will suffer until you leave. Then, we’ll have to scramble to be competitive.” This leads them to want you gone sooner—and you wonder why you feel pushed? When your resistance persists, it can lead to this thought you never want to enter your future leader’s mind, “Why don’t I leave before you and save us both the trouble?”

Try this instead: Our profession is facing immense change in almost every area. For firms, those changes include shifting work styles such as dress and flexibility, the fight for relevance in compliance services, changes in billing practices, the emergence of advisory services, and leaps in technology. Evolution isn’t optional. Your emerging leaders want to capitalize on these changes and position your business for success. Step outside of your discomfort, reignite your passion, and put your immense experience to work to support your team in making the big changes needed—now.

SPEAKING TO THE FUTURE

As a Baby Boomer, I understand the feelings that established leaders might have as they read this article. You want to enjoy the fruits of your labor as you appreciate the view from your career pinnacle. You want things to be familiar and perhaps the way they’ve always been. But that’s like wishing you could do business in a market that doesn’t exist instead of actually doing business in the market you’re in. If you’re committed to having succession in place to ensure that your business succeeds well into the future, give up the notions—and phrases—that send signals of resistance to your emerging leaders. Reignite your inner revolutionary. Embrace their ideas. Engage with them in change.

This article is adapted from “5 Phrases Established Leaders Should Never Say Again,” CPA Insider, Aug. 1, 2016.

About the author

Jennifer Wilson (jen@convergencecoaching.com) is a partner and co-founder of Convergence-Coaching LLC in Bellevue, Neb.

 

HBR: Developing Employees’ Strengths Boosts Sales, Profit, and Engagement

As a manager or owner, are you focusing on your employee strengths? What are you doing to strengthen your employees’ performance? Below is a blog from the Harvard Business Review by Jim Asplund and Brandon Rigoni, Ph.D.

Developing Employees’ Strengths Boosts Sales, Profit, and Engagement

Should companies primarily focus on playing to the strengths of their employees or help them improve on their weaknesses? This question is particularly important today, given low workplace engagement and higher expectations from workers about what a great job entails.

Gallup has studied thousands of work teams and millions of leaders, managers, and employees for more than five decades. We’ve found that there’s significant potential in developing what is innately right with people versus trying to fix what’s wrong with them.

We know, for example, that the more hours a day adults believe they use their strengths, the more likely they are to report having ample energy, feeling well-rested, being happy, smiling or laughing a lot, learning something interesting, and being treated with respect. In addition, people who use their strengths every day are more than three times more likely to report having an excellent quality of life and six times more likely to be engaged at work.

Focusing on employees’ strengths does more than engage workers and enrich their lives, however: It also makes good business sense. Gallup recently completed a large study of companies that have implemented strengths-based management practices. The companies we studied develop what comes most naturally to people — e.g., having employees complete the CliftonStrengths assessment, incorporating strengths-based developmental coaching, positioning employees to do more of what they do best every day, and the like.

The study examined the effects those interventions had on workgroup performance. It included 49,495 business units with 1.2 million employees across 22 organizations in seven industries and 45 countries. Gallup focused on six outcomes: sales, profit, customer engagement, turnover, employee engagement, and safety.

On average, workgroups that received a strengths intervention improved on all of these measures by a significant amount compared with control groups that received less-intensive interventions or none at all. Ninety percent of the workgroups that implemented a strengths intervention of any magnitude saw performance increases at or above the ranges shown below. Even at the low end, these are impressive gains.

  • 10%-19% increase in sales
  • 14%-29% increase in profit
  • 3%-7% increase in customer engagement
  • 9%-15% increase in engaged employees
  • 6- to 16-point decrease in turnover (in low-turnover organizations)
  • 26- to 72-point decrease in turnover (in high-turnover organizations)
  • 22%-59% decrease in safety incidents

So how can your organization approach these impressive numbers? This research, combined with our work with hundreds of organizations, also identified seven best practices for optimizing strengths initiatives. Companies that practiced more of them saw results at the top of the ranges shown above.

Start with leadership. Sometimes a few isolated departments will implement strengths interventions independently, creating a limited impact. But when leaders make these interventions a fundamental strategic priority, that’s when change really happens. Take profitability, for example: We found that the potential for increased profits multiplies when top-level leaders push strengths throughout the entire company.

After a four-way merger, senior leaders at a North American company implemented a “Lead With Your Strengths” program to help employees at all levels understand how to use their strengths to navigate the change, and to foster a unified culture with a shared operating strategy and mutual goals. In the first year alone, the company’s employee engagement levels improved by 26 percentile points in Gallup’s overall organization-level database.

Get managers on board. The best way for employers to maximize workers’ strengths is through their managers. Almost seven in 10 employees who strongly agree that their manager focuses on their strengths or positive characteristics are engaged. When employees strongly disagree with this statement, the percentage of engaged employees plummets to 1%. Manager alignment on a strengths initiative is crucial because managers are ultimately responsible for developing workers based on strengths. This best practice has a profound impact on performance.

Generate awareness and enthusiasm company-wide. When strengths concepts are consistently communicated, employees use their strengths more. A mid-sized financial services company prominently displayed each employee’s top five strengths in their office or cubicle — helping all employees keep one another’s natural talents top of mind. Leaders should also communicate their business strategy in terms of their organization’s competitive strong points – their company’s strengths. Additionally, they need to deliver praise throughout the organization in ways that convey how individuals and teams within have relied on their strengths to be successful. These messages encourage everyone to buy in.

Be mindful of strengths when creating project teams. Not only do leaders need to create ways for all employees to increase their self-awareness, but they should also employ tactics to ensure teams are assembled with each individual’s innate talents in mind. Responsibilities need to be assigned based on what comes most naturally for each team member. For example, strategically partnering two people — whereby both contribute in their area of greatest strength — can make the difference between whether or not teams accomplish overall goals, or even simple objectives.

Focus performance reviews on the recognition and development of employees’ strengths. Even leaders and managers who are motivated to capitalize on their employees’ strengths will find this difficult to do if the company’s performance management philosophy focuses on fixing employees’ weaknesses. A strengths-based approach to performance management is straightforward, appealing and decisive. Managers should conduct performance reviews that encourage and make use of employees’ talents and offer recognition and development aligned with their strengths. Managers should also provide clear performance expectations and help workers set demanding achievable goals. One result of strengths-based performance management is that employees feel their manager knows and respects them, which in turn boosts their performance.

Build a network of strengths experts and advocates. A company’s internal strengths advocates and champions are personnel who play a crucial role in supporting all employees in using what they’re good at to the best of their advantage. These champions help drive the strengths movement at every stage, from initial launch efforts to sustaining momentum down the road. Ultimately, their consistent encouragement can propel the company to world-class performance. One investment management company in the U.K. grew quickly with a network of internal experts who helped employees understand how they could use their strengths more effectively. The result? Despite a competitive and changing market conditions, these individuals were able to adapt to constantly changing environments and develop their skills at the same time.

Tie the organization’s strengths-based culture to its larger brand. A brand that reflects an organization’s strengths-based culture goes a long way for the company. A strengths-based brand attracts the right kind of job seekers – those who are driven to apply and develop their strengths and would be a good fit with the organization’s culture. A strengths-centric brand is also compelling to customers, which can differentiate a company from the competition.

Struggling to live up to its brand promise of exceptional customer service, a large retail company trained its employees to offer shoppers personalized knowledge and advice about purchases, installations, and repairs. When employees were also encouraged to understand and use their strengths, they did an even better job of connecting with customers and providing individualized service. Stores that implemented the new customer strategy and the strengths-based focus grew 66% faster than stores that didn’t use strengths in the initiative.

Now, let’s be honest: employees can’t completely avoid their weaknesses. That just isn’t possible in the real world. But instead of having people waste too much time trying to improve in areas where they’re unlikely to succeed, managers can form strategic partnerships and thoughtful processes that help them work around their weaknesses. Our data suggest that focusing energy on improving in areas that come most naturally to people reaps high returns, as employees and organizations that incorporate strengths as a strategy tend to realize significantly positive business results.

 

HBR: How Your Morning Mood Affects Your Whole Workday

How can you help your employees cope with stress and boost performance?  Below is a blog from the Harvard Business Review by Nancy Rothbard.

How Your Morning Mood Affects Your Whole Workday

Have you ever thought about what happens to your employees right before they get to work? Sometimes we all wake up on the wrong side of the bed and just find it hard to get our bearings. At other times, we might start out fine, but have a horrible commute or a screaming match with a teenager just before going to work. Paying attention to the morning moods of your employees can pay dividends. In my research with Steffanie Wilk, an associate professor at the Fisher College of Business at the Ohio State University, we found that this start-of-the-day mood can last longer than you might think—and have an important effect on job performance.

In our study, “Waking Up On The Right Or Wrong Side Of The Bed: Start-Of-Workday Mood, Work Events, Employee Affect, And Performance,” we examined customer service representatives (CSRs) in an insurance company’s call center over several weeks. We sent CSRs periodic short surveys throughout the day. We studied their mood as they started the day, how they viewed work events such as customer interactions throughout the day, and their mood during the day after these customer interactions. We used the company’s detailed performance metrics to investigate how their mood at work related to their performance.

We found that CSRs varied from day to day in their start-of-day mood, but that those who started out each day happy or calm usually stayed that way throughout the day, and interacting with customers tended to further enhance their mood. By contrast, for the most part, people who started the day in a terrible mood didn’t really climb out of it, and felt even worse by the end of the day — even after interacting with positive customers.

One interesting (and counterintuitive) finding was something we called “misery loves company.” Some CSRs who felt badly as they started the day actually felt less badly after interacting with customers who were themselves in a bad mood. Perhaps this was because, by taking their customers’ perspectives, these CSRs realized their own lives were not so terrible.

Most importantly, we discovered strong performance effects when it came to quality of work and productivity. Employees who were in a positive mood provided higher-quality service: they were more articulate on the phone with fewer “ums” and verbal tics, and used more proper grammar. Employees who were in a negative mood tended to take more frequent breaks from their duties to cope with the stress and get themselves through the day. These small breaks piled up, leading to a greater than 10% loss of productivity.

How can managers use these findings to help employees cope with stress and boost performance? While it can be difficult, it is not impossible to hit the reset button and try to help employees shake a negative morning mood. For example, managers might send out morale-boosting messages in the morning, or hold a regular team huddle to help people transition and experience positive mood as they start their workday. Feeding people and celebrating accomplishments is always a morale booster as well. Alternatively, managers can allow employees a little space first thing in the morning, for example to chat with colleagues before an early meeting. People also need time to “recover” from the night before so managers may want to think twice before launching a late-night barrage of emails as this might set employees up for a bad start to the next day. And if an employee arrives a few minutes late, confronting him or her about it later on instead of immediately may yield a more productive conversation and a more productive workday.

Employees, for their part, may want to take steps to lose their own negativity before arriving at work, creating their own “intentional transition”. This might involve taking a different route to work, giving themselves a pep talk, stopping for coffee, or listening to inspiring music. Finally, the best thing they can do is take a deep breath before walking in the door, to focus on making the most of the new day.

 

HBR: 4 Ways to Be More Effective at Execution

Do you have an execution problem? Below is a blog from the Harvard Business Review by Jack Zenger and Joseph Folkman.

4 Ways to Be More Effective at Execution

Most people recognize that execution is a critical skill and strive to perform it well, but they may a) underestimate how important it is to their career advancement or b) not realize that you can improve on execution without working longer hours.

On the first point, bosses place a premium on execution, which we define as the ability to achieve individual goals and objectives. In fact, when we asked senior managers to indicate the importance of this ability, they ranked it first on a list of 16 skills. Other raters in the organization ranked it fourth, behind inspiring and motivating, having integrity and honesty, and problem solving. We recognize that there are many parts of your job that are important, but if you want to move ahead in your career, it might be time to double down on simply getting more stuff done – it’s what your boss wants to see.

Which brings us to the second point. Many managers react with defensiveness or despair to this news; after all, most of the managers we know already feel like they’ve got too much to do. People who are lethargic, slow, or unfocused are rarely (at least in our experience) promoted to upper management positions. The leaders we know already work hard and long – and working harder and longer is not a viable option. In the short term this typically yields improved results, but in the long term leaders burn out. And if they’ve pushed their teams to do the same, team members quit.

But our data – gleaned from tens of thousands of 360-degree performance reviews — tells us that there are more sustainable methods of improving execution. We looked at thousands of leaders who were rated as being highly effective at execution and looked for the coinciding behaviors that enabled this skill. We found a set of behaviors that improve execution. Four behaviors in particular stood out:

Be clear and methodical

Many people who are energetic about execution tend to jump into activities and take action before they get organized, create a plan, or connect what they’re doing to the strategy of the organization. Having the discipline to organize people, assemble resources, and then generate a plan that others can commit to will collectively improve execution. So will making clear who is doing what; we have learned that when everyone is collectively responsible, that no one is responsible. Providing others with clear direction and a sense of connection to the strategy of the organization helps people understand how the work they are doing dovetails with the organization’s mission.

If you are quick to jump into action and tend to start project without a well-organized plan of attack, or if you get feedback on your lack of planning and organization, this suggestion might be one to focus on. An individual contributor might be able to get away with being disorganized, but it rarely works out well at the senior management level.

Set stretch goals and deadlines

Setting stretch goals helps the group achieve their objectives and generates greater engagement and satisfaction in team members. To push the group to achieve those goals, pair them with deadlines. While we may not like it, when someone gives us a deadline, our behavior changes. Simply setting deadlines for goals and objectives goes a long way toward achieving those goals and objectives! If you resist setting stretch goals for your team, start by asking your team questions like, “What would it take to accomplished this goal two weeks earlier?” We find that by challenging your team and supporting them in accomplishing a difficult goal, team members actually feel more engaged and satisfied with their jobs.

But don’t go overboard; we’ve also found that too much pushing can erode trust, which will hurt execution in the long run. When an untrusted leader asks for additional effort, people question their motives and resist their requests. Moreover, involving your team in the process of setting goals deadlines will increase their sense of commitment and autonomy.

Give more feedback, especially more positive feedback

This is all about improving execution through intrinsic motivation, rather than through goals and deadlines. Leaders who are great executors are skilled at giving feedback. Specifically, the leaders who rate most highly are those who deliver critical feedback by taking the time to listen to and understand their employees’ perspectives, rather than simply dropping a difficult message on someone and ending the conversation as quickly as possible.

But where we really saw a major difference was with positive feedback. Specifically, we found that leaders who are great at execution give a lot more positive recognition. Our research indicates that while giving a little more recognition did not affect execution, being above the 65th percentile on this skill had a major impact.

Resolve conflict and build team unity

Have you ever been part of a team so great that you love coming to work? Teams like this probably do all or most of the above – work assignments are clear and processes make sense, deadlines are ambitious but fair, and feedback is plentiful – but they also do something more. On these teams, it’s not just the boss motivating team members — the expectations of peer team members are powerful motivators, too. Creating this kind of team culture is an important element of good execution. While there’s a lot that goes into building high-performance teams, in our experience, perhaps the biggest single thing for leaders to focus on is resolving conflict. That’s because many of the problems within a team come from differences and conflict between team members; on high-performing teams, team members trust each other and conflict is constructive, not destructive or personal.

As you think about your ability to execute we feel that all three of these dimensions are critical. You may focus on one or two and find that one is lacking. But our research shows that balancing all four of these factors is the strategy that will improve execution most of all.

Finally, if you’ve made it this far and you really feel like you’re already doing all of these things, and yet somehow you’re still perceived as having an “execution problem,” consider this: in our research, we also found that there’s almost a one-to-one relationship between leaders who are seen as fast, and those who are seen as great executors. Previous work we’ve done has shown that some of the above things – setting stretch goals, having clear processes in place, and building trust, for example – will help you move faster. But you may also need to give your peers and bosses more evidence of your speed by, for example, being more transparent about how many projects you’re working on and where they are in your pipeline.

 

HBR: Treat Employees Like Business Owners

Are you teaching your employees what it means to run a lumberyard? And are your employees committed to reducing your cost of goods sold (COGS). Below is a blog from the Harvard Business Review by John Case.

Treat Employees Like Business Owners

Employee loyalty and engagement are hot topics, and for good reason. Companies want to attract and retain talented people who really dig into their work. But most employers ignore two of the most powerful tools for making that happen.

Tool #1 is enabling employees to build real ownership in the business.

Of course, many public corporations offer stock-purchase plans or the like as part of their retirement benefit. And everyone knows about the options collected by a select few in Silicon Valley and other tech centers. But meaningful ownership — sizable grants of stock to rank-and-file employees year after year, to help them acquire a significant stake in the company — is all too rare.

It doesn’t have to be. Many large corporations manage to find big bundles of shares (and huge amounts of cash) for executive compensation, even though there’s little relationship between senior-management pay and financial results. A portion of those assets can be redirected to regular stock grants for employees. And companies — except for the very smallest — can implement an employee stock ownership plan (ESOP), often funded through borrowing. So long as it’s sufficiently generous, either approach gives employees the kind of stake that makes them feel like true owners.

Just look at the supermarket industry to see such ownership in action. H-E-B, the big Texas-based chain, recently announced that it would give up to 15% of company shares over time to 55,000 of its employees, distributed according to a formula based on salary and seniority. That’s a chunk of stock estimated at more than $1 billion. Publix, a large chain headquartered in Florida, is majority owned by its employees and regularly makes the annual “best companies to work for” lists. And there’s WinCo, a grocery retailer based in Boise, Idaho, with 14,000 employees and 86 stores spread across eight western states. Every WinCo employee is an owner. Cathy Burch, who has worked there for 20-some years as an hourly employee, now has close to $1 million in her retirement account.

You don’t think that kind of generosity builds commitment and passion? “We work our tails off,” an employee with 28 years at WinCo told Forbes. “We’re more of a team than just working for a typical company. There’s a carrot out there you’re working for, for the rest of your life.”

Tool #2 goes by different names: open-book management, economic transparency, ownership culture. Whatever you call it, it means encouraging employees to think and act like businesspeople rather than like hired hands.

If you work for a conventional organization, your job is to show up at the appointed time and perform certain tasks. At open-book companies, it’s part of everyone’s job to contribute to the success of the business. Managers help employees understand, track, and forecast key numbers. They welcome ideas for improvement. They reinforce the ownership mindset by sharing profit increases with everyone, usually through bonuses funded by the increase itself. Many of these businesses also have a stock plan in place.

The approach is easiest to understand in a small company. The Paris Creperie, a Boston-area restaurant that’s about the size of a McDonald’s outlet, recently adopted open-book management. Creperie employees learned the basics of the restaurant business, including determinants of profit such as cost of goods sold (COGS). Then, last summer, they launched an initiative to reduce COGS, cutting food waste, reconfiguring some dishes, and coming up with ways to operate more efficiently. COGS dropped from roughly 30% of revenue to 26.5% over a four-week period, and continued to hold in the mid-20s. Operating profit rose by more than 10 percentage points in just four months and has stayed in the 18% to 20% range, compared with a restaurant-industry average of less than 4%.

This year, employees there are on track to get bonuses averaging $6,000. “Any other restaurant, I would just be scraping by,” shift supervisor Amanda Norton told the Boston Globe. “Seeing those bonuses really helps me breathe easier, knowing that it’s not the end of the world when I have to pay bills.”

You can imagine what all this does for employee loyalty and commitment. “Actually,” says Harvard Business School professor Leonard A. Schlesinger, “when employees know more about the business and have an economic stake in the outcome, there’s a high probability that turnover rates would go down exponentially.”

These tools also address two fundamental challenges of today’s free-enterprise system. An ownership nest egg helps mitigate inequality by putting more money in the hands of rank-and-file employees. And open-book management teaches people the basics of business, so they can thrive when they have to change jobs, as most inevitably will in our fast-changing economy. “People are learning what it means to run a business,” says Joe Grafton, a consultant who works with the Creperie. “That’s something they can take with them as they move forward with their careers.”

Both measures give people a stake in the system and the wherewithal to live a more secure life. A company that puts these tools to work helps its community while helping itself.

 

HBR: Let Your Frontline Workers Be Creative

“The researchers found that the creativity of front-line service employees directly affected customer services ratings.” Are you facilitating creativity in your employees? Below is a blog from the Harvard Business Review by David Burkus,

Let Your Frontline Workers Be Creative

We know that creativity and innovation fuel new products, services, even strategies. But too many executives make the mistake of assuming creativity is just reserved for a certain department or just the white-collar knowledge-workers in their firms. New research shows how important it is for all employees to be creative, even if they’re not high up on the org chart.

One new research paper looked at how creativity, or the lack thereof, affected customers’ perception of customer service. The researchers found that the creativity of front-line service employees (which they called “service creativity”) directly affected customer services ratings. “Service creativity allows employees to delight customers in unusual ways or solve problems that existing protocol falls short of addressing,” said Jing Zhou, a co-author on the study and professor of management at Rice University. “The findings suggest that service creativity is a powerful avenue through which customer satisfaction can be achieved.”

The collaborators collected data from 3,550 customers and 380 hairstylists across 118 hair salons as part of a large chain in Taiwan. While that may sound like an odd source for customer research, it is actually a perfect setting for studying service creativity. The researchers chose it because generating novel yet practical hairstyles for a diverse set of customers is a fundamental skill needed by stylists. In addition, the interaction between stylists and customers lasts long enough to study the interaction between employee and customer and observe the employee’s creative performance. The data were collected through observations by the researchers and surveys completed by both the employee and the customer. (The researchers limited themselves to two interactions per stylist per day in order to avoid response fatigue.)

They found that the service employees were rated both more positively and more creatively when they showed customers they were responsive to feedback. But it wasn’t just about making the customer feel good by being approachable – it was about gaining actual insights and ideas from customers, which in turn allowed the employee to promote new options and solutions tailored to the customer. “Because front-line employees engage in contact with customers on a daily basis they may have a better sense of the issues that customers are concerned about and how to solve these problems in a novel and practical way,” said Zhou.

Managers can play a key role in facilitating the creativity of front-line staff by expressing confidence in their service employees and seeking out employees’ opinions on resolving customer issues or providing service.

This stands in contrast to how many customer service departments operate, especially call centers where employees follow standardized flow charts and are encouraged to close customer support tickets and end phone calls as quickly as possible. “Empowering employees — rather than closely monitoring and controlling them – may be a more effective way to enable employees to provide satisfying service,” said Zhou.

The exemplar here is Zappos. Unlike most online retailers, Zappos actively drives customers to contact them via phone, displaying their customer service number prominently throughout their website. Employees receive seven weeks of customer service training. Instead of giving employees scripts, managers encourage call center employees to go to whatever lengths are reasonable and necessary to please customers, including browsing competitor websites if a customer is looking for a specific item that Zappos doesn’t have. One time, when Zappos was out of stock, a customer service representative even visited a brick and mortar retailer to buy the specific shoes and hand-deliver them to a customer.

Especially notable from a service creativity standpoint, Zappos is one of the few call centers that measures average call time but doesn’t reward employees with the lowest averages. Instead, they praise the employees who set length records. That’s important given that creative ideas often take time to develop and that productivity and creativity are often at odds with one another.

While stories about Zappos and extreme tales of customer service aren’t new, this new research helps strengthen the case that it’s not just about doing it differently … service creativity helps companies do it better. Today, creativity is everyone’s job.