February 2005

Beware of Management Consultants bearing Measurements

Despite the bag of employee performance measurements that some management would recommend, there's no replacement for good old fashioned personal empathy. Research conducted by McNair Ingenuity Research has shown that while the numbers on some graphs may appear to go up, employee engagement may well be going down. As one respondent to the research put it, 'riding their arse like zorro' doesn't do any good. It is the old adage - there is good and bad research.

The Perils of Over-Measurement

In recent years there has been a move by some management consultancies to introduce employee productivity measurements to every corner of the business. Some would even argue that if it can't be measured, it 'ain't worth doing'. However, a programme of qualitative and quantitative research has unveiled more complex implications of employee research, and subtle forces in action. The research included nearly 1,000 unionised employees at two leading banks in Australia, and used a rigorous ten-call design to achieve a high 88% response rate amongst the selected sample of union members.

Employee Engagement Research

One of the apparent benefits of instituting consistent employee engagement research is that the results almost always trend upwards over time. It is argued that this proves the benefit of such research. Conversely, the reality in the context of how employees respond to this kind of measurement is that three effects may actually be driving up the scores:

1. Employees quickly learn that low scores are not beneficial for them, their team or their manager;
2. Employees understand how their manager expects them to respond to the survey, irrespective of whether this is overtly or covertly communicated; and
3. Employees come to feel that the measurements are about 'looking good' rather than feeling good.

In fact, managers' and employees' 'gut feel' about team engagement and changes in attitudes can be the best measure there is. This is despite the fact that in some cases even very empathetic managers can fail to read the signs amongst their employees that indicate changes in engagement or attitude, particularly when these changes are not communicated in the way that the manager expects them to be.

The Cautionary Tale of Employee Research

Inevitably, work places are competitive and collaborative. The manager who believes that there is no office politics or office gossip is detached from the intricacies of what is really happening at their workplace - of course this may not be a bad thing for a manager. The chart on the right shows that nearly half of the bank employees surveyed said that when they responded to an employee engagement survey, they felt that it was in their best interest (or their manager's) to answer the questions more positively. In the qualitative research, employees explained that at first they thought such a survey was an opportunity to express dissatisfaction or needs. They soon learnt that for each item surveyed for which their team scored poorly, they would be invited to participate in a workshop to discuss how to improve their scores on that item. The more poor scores, the more workshops they were expected to attend. Employees participating in employee engagement surveys learn that it is in their best interest to score positively. Workteams that have good scores to employee engagement surveys are recognised and sometimes even rewarded. Managers expect their scores to improve from survey to survey, and employees know that their managers are dependent on that. Hence, it is no surprise that such surveys always achieve better and better scores.

In one case, a leading management and research consulting firm also happens to have the highest employee engagement scores of all the organisations that they surveyed. While this may reflect a superlative management achievement, it may also, and more likely, reflect that their own employees have learnt to play the game better than those of their clients.

In the qualitative research we heard from employees that they would simply click on or tick the highest possible scores to every question. While it is possible that an employee genuinely may wish to score their workplace with the highest possible score on every question, it is more likely that results with such a pattern should be discarded, which would give rise to a very different overall finding from such research. One of the banks (Bank A in the chart on the left) amongst whose employees the research was conducted, promoted the fact that they were re-positioning their bank in the Australian marketplace, substantially by having highly engaged employees. By comparing the results with another bank (B) whose employees we also surveyed, we can see that the employees of Bank A were essentially duping the bank into this perception through Bank A's own employee engagement surveys. In fact, Bank A's frontline staff were substantially less engaged than at least one competitor.

When focus groups were conducted with the staff of Bank A in order to get down to the issues, it became apparent that the cultural change was disenfranchising many staff. The plethora of measurement of every aspect of the employees' work and behaviour was a disincentive to perform well, because it became a 'numbers game'. Employees felt less trusted, valued and respected, and this sentiment was reciprocated back to their employer, despite the fact that the bank's own employee engagement surveys pointed to exactly the opposite.

Many organisations use performance-linked pay schemes to reward staff. The research conducted amongst bank employees indicates that what employees most appreciate is being treated as a valued member of staff and being treated with respect. When analysing the results of the attitude questions, three attributes had a positive correlation, coefficient with the key indicator phrase 'I would recommend the bank as a place to work', the first (a given) that they were satisfied working there, secondly that they felt 'valued' by their employer, and thirdly, that they were 'treated with respect' by their employer.

Trust

Trust is a key issue. Trust in the organisation and trust in managers. Perhaps organisations are too scared to ask this question. As part of the research, employees of one bank were asked to say which of a list of emotions they associated with their workplace. Younger people were more likely to rate competition as the dominant workplace emotion (77%), followed by commitment, while 82% of older employees associated stress with their workplace, and four-in-ten said their workplace was back-stabbing.

Older employees tend to have more emotional needs in the workplace, particularly from managers, while younger employees expect a more structured and formal relationship with their manager or supervisor. For instance, in the qualitative research we found that older employees assumed that they could go to their manager to discuss problems, such as that they were not reaching their sales targets. If their manager was of their own generation, they may be able to get support, either in the form of encouragement, or work procedures, in order to improve their performance. However, when taking such a problem to a young manager, such as a manager recruited through a graduate program straight into management, they were most commonly humiliated by a rebuff - the manager did not expect to deal with such problems. Young employees were much less likely to expect to be able to take those kinds of problems to their manager.

When employees are asked what really makes a difference in their day-to-day engagement in the workplace, one of the most common responses is `their manager'. Having a supportive and positive relationship with a manager they trust is a key issue.

Unwelcome employees

No doubt every organisation has employees that they don't want. They may be poor achievers, or their managers simply don't like them, but there are insufficient grounds to dismiss them. These employees are squeezed out, perhaps by intimidation, deprivation of positive feedback, or by continual performance demands (more and more measurement). When these employees don't budge, managers often wonder why the employee 'don't they get it?' and realise they are not wanted. The reality is that these employees know when they are not wanted. At one bank that we surveyed, an astounding 28% agreed that `the bank would prefer if I left'. The problem is that as managers work to dissolve the employees' confidence, the employee also loses confidence in their prospects of re-employment. The more they fear losing their job, the less willing they are to leave. In our research amongst employees at one bank we found that:

• Those who were in fear of losing their jobs were no more likely than any other staff to be actively seeking alternative employment. While they were significantly less likely to expect to stay with the organisation (24% compared to 38% amongst employees not in fear of losing their jobs), they were not taking any action with respect to their careers.
• In fact, while 4% of employees overall were actively seeking alternative employment, amongst the 39 employees who said that they were strongly in fear of losing their jobs, not a single one was actively seeking alternative employment.

The research indicates that making employees feel unwelcome in the belief that they will resign is not an effective way of removing unwanted staff.

Meanwhile, many highly praised and valued 'best performers' may feel most confident about their potential employment prospects (although generally they are also more likely to want to stay with their employer).

When only the best will do

In the 1980s we had Total Quality Management. In the 1990s, we had 'Best Practice' which became misconstrued such that organisations wanted to only have the very best employees (and who doesn't?). The danger comes when the reality fails to sink in that not all employees will perform to such high standards all the time. While rewarding the best with great accolades may seem noble, many good employees will be de-motivated by their relative lack of recognition. While it is true that some highly competitive employees may be inspired by such an approach to perform better, many will not, and many will be demotivated.

One theory why employee profiling can fail abysmally is that employees tend to answer in a pattern that they think will put them in the best light. Employees good at guessing their employers' expectations will be able to present themselves well through this device. Typically older employees (or potential employees) can miss the mark on this because they are unable to 'play the game' as well, even though on more impartial measurements (such as customer satisfaction) they may perform much better than their sycophant younger counterparts.

Older employees feel that experience counts for a lot, but in this kind of research it is hard to measure the value of experience. The research found that older employees were far more likely than younger employees to feel that they 'understand my customers better than the bank does'. In fact an astounding 80% of employees at least partially agreed with this statement. Tacit 'know-how' of employees makes up a big slice of the overall value of an organisation. One would like to think that clients and customers sense this, and gravitate to organisations that have experienced employees who have seen the same problems before, and know the solutions.

Competition and Ethics

Managers should be aware that as they wind-up the competitive culture of the organisation, the competitive behaviour, and hence the politics, will also increase.

When employees step over the mark, act with too much zeal, or do unethical things, it is often tempting to look to the manager's instructions, and hunt down the evidence of diabolical instructions issued downwards within the organisation. In reality, many employee misdemeanors are not in response to instructions, but driven be a sense of expectation or a desire to please management. There is no paper trail, because the employee has acted 'on spec'. They are acting on what they believe is, correctly or incorrectly, the unspoken expectations of their superiors.

It's business and it's personal

One often hears 'its nothing personal - it's business'. But when it comes to employees, business is personal. Our research unveiled many stories of managers behaving in a way with employees that they would not behave with friends or family. Managers criticise and abuse employees in a way that they would not speak to a stranger on the street. Managers hide behind the organisation, resulting in organisations being less friendly, charitable or helpful than the sum of the individuals that they employ. Managers will lie and cheat in the workplace, in a way that they would not at home. Unless an organisation drives a culture of good ethics, their employees will tend to allow their worst ethics to emerge in the workplace, because they feel protected by their team.

The CEO sets the tone

Organisations tend to reflect the personality of the CEO. Not just because the CEO may communicate his or her expectations of corporate culture, but more so because employees tend to emulate the person that they think is the role model that will help them progress through the organisation.

A recent newspaper article reported the chief executive of a leading telecommunications firm as describing the market for mobile phones amongst young children as 'white hot' - and he specifically mentioned children from the age of four up. Such an organisation will slowly attract employees who are in agreement with this view, while over time employees that are not in agreement with this perspective will either leave by natural attrition, or be silent on their views, because their views are out-of-line with the corporate culture.

Conclusion

Don't over-measure! Measuring every aspect of an employee's performance communicates distrust, and turns loyal employees into laggards. Managers who look too closely at the time that their employees arrive at work will find that their employees learn to walk out the door at 5 o'clock on the dot.

Behave in business as one would behave in private life. Treat employees fairly and reasonably. That doesn't mean not rewarding good performance, but it does mean being sensitive to how all employees perceive the manager.

Fear doesn't work. Employees living in fear of losing their jobs tend to batton down the hatches. They are no more likely to look for a job - in fact, they often wait to be pushed! Respectful but frank conversations between managers and employees work better.

Managers can't rely on only having the best employees. They need to learn to work with their whole team, and while they might spend more time with some than others, they need to have a relationship with their employees based on the age-old notions of mutual respect and trust. There are no simple answers and rule books for managers. Management is difficult and hard work. Applying measurement systems and processes is no replacement for the fact that a manager needs to rely on their character and energy to motivate and get the best from a team. While management books can help, management cannot be learnt from books alone, nor in the classroom.

There is no escape from the fact that successful management hinges on treating employees with respect and trust, and behaving with integrity to earn the same from their team.

The above information is copyright to McNair Ingenuity Research and may not be reproduced or published without McNair Ingenuity Research's express permission. Contact Matt Balogh ph 02 9966 9133.

McNair Ingenuity Research Pty Ltd ACN. 096 437 991 Level 4, 270 Pacific Highway, Crows Nest, NSW, 2065 Phone: +61 2 9966 9133 Fax: +61 2 9966 9277 www.mcnairingenuity.com