It’s a question and an opportunity rolled into one for most of us. In working with some clients, I have noted that their industry sectors have challenging business models which include high turnover, increased competition, and increasing price pressure from their customers. Not surprisingly, morale is a problem and creates a negative flywheel: Low profit margins reduce pay increases, increasing turnover and negatively impacting morale. Lower morale decreases productivity, and lower productivity reduces profit margins. Since the turnover is between competitors, the entire sector suffers from this and no one owns the coveted “THE Place to Work” brand label.
Here is the opportunity for the courageous leader: Seize the opportunity to become the market leader in workplace attractiveness. Only one company can be number one in a metric, and this metric has a tremendous bottom line impact. This is truly a Blue Ocean Strategy approach. While executives always agree with the opportunity when I present it, the courage to change course and pursue this new course is usually a struggle. Changing culture is intellectually appealing but emotionally scary.
What I have found is that increased competition leads organizations to focus on process improvement over culture or people improvement. Processes are usually easier to measure and can be rationally presented. This is a natural outgrowth of success. Success requires process improvements to manage increased scale, and success attracts competition. When competition enters, the race is on to “out process” your competitors. Cost increases and the red ocean battle takes place. Read Blue Ocean Strategy by Kim and Mauborgne for more detail.
The solution is to not abandon a process driven culture, just add better processes to your people culture. Brian Brim, a Gallup coach/consultant, calls it “standardizing individualization.” Standardize the way you consistently treat people as individuals on a team. The lack of a coherent game plan to standardize how employees are engaged, empowered, listened to, and encouraged usually results in inconsistent work silos.
When people don’t feel appreciated or listened to, they leave. When they leave, they tell others why they left far more often than why they took the next position. And the cycle begins of replacement workers having less desirable qualities than the workers that left. If a friend told you of her negative work environment, and you have similar abilities, would you apply to take her old position?
The cost of changing culture is high and it’s career risky for an executive. Things usually get worse before they get better. Many good, long-term employees resist change to see if the organization has the courage of their convictions. Yet the cost of continuing on the negative margin/turnover flywheel is even greater. Owning the “GO TO” place to work brand attracts higher quality, more productive, and more loyal employees. Continuous improvement becomes organic and not an additional cost initiative.
My next blog will cover the several options for making your company the “GO TO” place to work.