- Critically important organizational factors and change management issues need to be addressed to effectively transition or shift a culture.
- Transitioning an organization to even the best strategic solution will fail or fall short without a well thought out, well executed implementation plan.
- Individual habit and organization inertia will overcome any great idea that is not very carefully and systematically implemented.
- The rate and success of the transition will be determined by how well the organization addresses the questions listed below.
- By trying to hurry, it takes organizations longer and they are less successful than those taking the time and effort to do an effective and deliberate implementation.
- Longer term, what is/are the ideal vision or the intended objective(s)? What is / are the reason(s) that we are trying to do that?
- How is this consistent with, how do we tie this to our overall mission, vision and goals
- What’s the goal, purpose, rationale from a business perspective?
- Are all leaders seeing the answers to above questions in a similar way and saying the same thing?
- Does the senior leadership team and mid-level management understand the solution, the rationale for the transition and do they support the change? Have they allocated sufficient resources?
- Do they know what they need to do to support the transition? How will management demonstrate their support, “walk the talk”, supporting the transition and promote its success?
- How will we know if we are successful/progressing in this transition? What are our criteria?
- What is the accepted timeline? Is it known by all leaders? Is it realistic?
- Will the transition be communicated repeatedly, consistently and through all channels? How will it continue to be kept “front and center” in corporate communications? Will it be regularly included in meeting agendas? Which, when?
- Do leaders understand and communicate the potential benefits and do they understand and expect objections and provide a similar responses?
- Is senior management willing to review, adjust and align systems, including incentive systems, healthcare premiums, policies, physical features, rewards, training etc., to support the change?
- Do senior leaders understand the predictable reactions to this change and how to address them?
- What specifically are we asking the employees to do, know or act, both short and long term?
- What does an individual have to know or understand in order to be successful?
- How will people be informed, educated? What are the most effective ways to do that?
- How will we keep people informed, updated, notified…?
- Have we identified, do we have and can we develop the skills and competencies required at the individual level to effectively implement this strategy?
- Will there be pilot testing, mentoring or practice opportunities?
- What other training information or education is needed?
- Have we clearly stated the expectations?
- Are we adding the required and expectations to job descriptions?
- Is everyone expected to make the transition? If “no”, who is/isn’t? If “yes”, by when? If “yes”, what do we say/do with those who are resistant or refuse to change?
- Are we evaluating performance, promoting and compensating with these requirements in mind?
- Are we evaluating potential employees and on boarding new hires with these requirements in mind?
- Do mgr/producer discuss it in weekly or bi-weekly review meetings?
- How do our key support systems/infrastructure (e.g. HRIS, compensation, training, etc.) align to support this transition? Where it’s weak or misaligned, can we change it?
- What are the intrinsic and extrinsic factors motivating individuals to adopt the changes? What intrinsic and extrinsic factors could be motivating individuals to resist the proposed changes?
- Moving from the initial steps to project completion, what support systems have to be in place to move seamlessly through the process? What assumptions are being made, and how can we test those assumptions (and prepare the systems) before implementation?
- As an organization, what can we measure to evaluate the success of the transition? How will we know if the transition has been or is being successful? When will we review progress?
- Will there be any pilot testing in areas? A partial rollout before full implementation?
- Will we have an implementation team? Who? Where? Roles? Are there champions that would be supporters? Educators for others? Is any area or group not represented?
- Will there be a central answer center, or contact for questions? Hot line for issues, problems, feedback?
- Do we have our policies aligned to support it? Have we looked for inconsistencies? Remove them? What new ideas, policies, practices, events, etc. can we add to support the initiative?
Implementation and Evaluation
- Do we have the subject matter expertise / experience to do this?
- Do we have a partner / program in place?
- What are the specific implementation goals, the key steps and the goal dates for each? Do we know who does what when
- What special cases, exceptions, problems, etc. can occur?
- What insider info buzz can we create…formal? Informal (ad hoc?)
- Pre-mortem: project into the future, if it went wrong…where did it go wrong
- Central site… for constant feedback and updates; scoreboard…visits and wins
What potential questions are we likely to face?
- Why are we doing this?
- How much are we spending on all this?
- We’ve talked about this forever…can’t we just ignore this again?
- What about family members?
- How do we know it will work?
- But I don’t think it’ll work…I think it a mistake…what will I tell everyone who asks me about this?
- What if it’s a colossal failure?
- This may work in other places…but it won’t work here…
- Isn’t this just the most recent fad?
- This is just the first step…it’s a slippery slope to…
- I’ve seen this tried in other places and it failed.
- What if I don’t have time?
- What if the technology fails? What if I don’t have a phone….can’t use the technology…?
- I’ve been successful for a long time—why would you want to try and change how I do what I do?
- So you’re making everyone do this? What if I choose not to use this method?
- What’s the timeframe on this? Is there an implementation plan?
- At XYZ, they use this to get rid of the people they didn’t want.
Your company may be missing an opportunity to save millions of dollars in healthcare costs by failing to implement innovative, low risk healthcare benefit design solutions.
That’s because there are some very common beliefs that keep HR and C-level leaders from finding solutions to their healthcare benefit problems, and these beliefs are so fundamental to how people think that they are unaware of them.
Many organizations have gotten locked into cycles of increasing costs and disappointed employees, and they respond by doing the same thing –tweaking the same variables — and expecting different results. This approach can be fatal in today’s healthcare reform environment. Payers are adapting strategies, policies and coverage plans, providers are creating new and different partnerships, processes and care services, so businesses have to generate (or borrow) innovative solutions to today’s new challenges or be driven to financial ruin. Rather than just reacting to new regulations, effective companies are finding opportunities and introducing innovative responses.
There are consistent pattens within the groups that fail to generate or consider alternative solutions to healthcare benefits challenges. Working with decision makers has led me to identify 15 common assumptions that block innovative thinking. The first four are mistaken beliefs about healthcare in general.
1. We have to fix this mess.
Health care benefit professionals doom their own thinking by approaching the problem too broadly. Yes, US healthcare probably is too big and complex for you to fix, but you don’t have to fix the whole thing! Think smaller! Ask yourself “Given this company in this context, what are some of the things that we can do to provide great care at affordable prices? How can we manage care and costs?” Turn off the “healthcare is doomed” media and think smaller and locally. Think selfishly of only your organization and forget the rest of society, take care of your own. Fully understand your own company’s situation, define what you want your corporate culture to be, decide how your benefits strategy can impact that and generate as many ideas as you can to get there.
2. There are no good solutions, only least bad options
Highly tenured benefit professionals are especially guilty of this belief. They have worked in the business for so long and settled for the least bad option so often that they have given up believing that there are actually good solutions to be found. After years and years of defensively raising deductibles and co-pays, adjusting coinsurance levels, increasing maximum out-of-pocket limits and other methods of cost shifting to achieve the smallest possible increase in premiums – that they have stopped looking for other ways to fix the problem. In Psychology the term “learned helplessness” refers to the trained belief, after long exposure to only aversive outcomes, that any (all) behavioral choices will lead to unpleasant results. It’s the belief that the action really doesn’t matter because it’ll turn out bad anyway! Unfortunately, this pessimistic view is quite common when dealing with healthcare decision makers.
3. We should wait until this gets clearer or things settles down.
You cannot wait for things to become better defined or settle down. This is the new normal of healthcare benefit design…like it or not, it’s extremely unlikely that things will settle down. You must have or know people who understand PPACA past, present and future and intimately understand what your company is trying to accomplish with its benefits. (See my earlier blog about the importance of establishing clear objectives and success criteria for your benefits). Due to healthcare reform (and other factors) today’s business environment is turbulent and uncertain, yet decisions must be made before any more settling or clarity emerges. Work with experts, get up to date information, and know that some decisions will have to be made despite the uncertainties, unknowns and undefined terms!
4. SSDD: Same Stuff Different Day.
If your company is approaching healthcare benefit design in the same way it always has…if you think you’ve been here before…think again. There are new variables, new players, new rules, new requirements, new options, new everything. This is not the same problem solving decision-making situation you’ve faced before, so the same solutions won’t fix this new challenge. It’s time to think differently.
Next up in my blog I’ll address how benefits decision makers approach the problem solving process. SPOILER ALERT: most companies make the very important, very costly healthcare benefits decision in surprisingly undisciplined, haphazard ways.
Then, after reviewing the 15 common mistakes that badly damage how companies make their healthcare benefit decisions, I’ll offer a few simple, inexpensive methods that can save companies millions of dollars in unnecessary healthcare spending!
I don’t think “Reformophobia” is a real word and as far as I know “Health Care Reformophobia” is not a real affliction. But it may be one soon because there has been a lot of fear and anxiety caused by health care reform especially for business owners, leaders and HR personnel.
Typically a phobia is defined as a persistent irrational excessive anxiety associated with a specific object or situation. But people experiencing reformophobia might argue that the reactions are neither irrational nor excessive. In fact, the combination of factors associated with the Affordable Care Act create a perfect storm for stress and anxiety:
- exceptional complexity buried in more than 2,000 pages of hard to read legislation
- a likely increase in costs for businesses
- seemingly ambiguous terms, many of which have yet to be clearly defined
- unique exceptions, situations, factors and considerations that may not have been foreseen by lawmakers
- shifting deadlines and milestones
- mandates, changes and requirements that will continue until 2018
- potentially high penalties for errors
- rumors of increased auditing by the federal government
A common defense against a true phobia is to reduce or remove the stress by entirely avoiding the anxiety-producing situation or object, or denying its existence. For healthcare reform this might’ve been an understandable strategy last summer when we were all waiting for the Supreme Court to decide on the fate of the bill. It may even have been an acceptable strategy until the November election to see if we’d have a new administration that would repeal the mandates. But it is clearly not what you should be doing now.
Here’s the good news: There are specific steps that you can take to reduce the anxiety enough to move your organization from catatonic paralysis to decision-making and action.
First reduce any vagueness that exists on your side of the equation. You won’t be able to make smart healthcare benefit choices if you have not explicitly defined your values, people strategy, your compensation philosophy and what kind of culture you’re trying to achieve. What specifically are you trying to achieve with your pay and your benefits? Does the talent market require that you aggressively recruit or retain talent – or is there a lot of talent from which to choose? Do your offer other benefits that can reduce the importance of the direct pay component? What is the average age of your workforce and what matters to each group? Do you want to be a leader in benefits or do you differentiate yourself as an employer in some other way? What do you offer: quality work life, a family friendly environment, a fun workplace, great experience? Define how you want to compete for talent, what your beliefs are about your people, what you hope to accomplish and what comp and benefits strategy makes sense for you. Only after answering these questions can you make decisions about what course of action to pursue for your organization.
Rely on trusted advisors. You don’t have to know everything if you have experts working on your behalf. Demand more from advisors (internal and external). This does not mean you need to hire additional consultants. If you have agent / brokers – they should be culling information for you and working side by side, not just dropping in semi-annually or occasionally forwarding ACA emails from others. The once a year meeting to market your plan, raise deductibles, tweek out of pocket maximums and creatively cost shift are over. Find a good partner(s) with current ideas and cutting edge solutions, get constant relevant updates and pursue every possible healthcare solution. Think both short term and long term. Demand that your advisors bring you the best tools, aids, timeframes and current accurate information. If you don’t understand something, ask the experts. Healthcare benefits are now like corporate law, high level banking or other areas where you cannot be expected to know it all, but you need trustworthy professional partners to whom you can turn for help and advice.
Once you have aligned your vision, values, and talent management strategy and you have a healthcare partner who understands what you’re trying to do, you need to focus your attention and that of others on what you know for sure. Yes, some things have not yet been completely defined, there are still rumors swirling around about certain decisions, and some (many) things you may have no power to influence. The uncertainty and anxiety has led many to a paralyzed “wait and see” attitude. But many important decisions are made on the basis of insufficient data. While your competitors are wringing their hands and waiting for certainty, you can be miles ahead. Define what you know and what you control. There is much more known than not known. Act on only those items that are in your control and make sure that you’re not dedicating time or resources to the things that are out of your control. If you can calm the healthcare waters for your organization, and quickly and efficiently make decisions that fit your overall goals – your employees can get back to the work you hired them to do.
Finally, while the perfect storm of anxiety may lead others to either inaction or to making frantic ill-advised choices, you should follow a structured decision making process to make smart strategic decisions for your organization. There are half a dozen good problem solving decision making processes, find one you like and apply it to a small group of informed company leaders. By carefully following a formal group problem solving process, you are more likely to avoid many of the mistakes that can impede effective decision making.
Your prescription for Reformophobia:
- Don’t avoid the issue, address the challenge head on. Leaders are most needed in challenging times and these are challenging times, so step up and lead.
- Review, define or re-define the company’s vision, philosophy and goals. It’s easier to choose a course of action when you determine what you want to achieve and align these solutions to help you achieve that vision. (If you don’t know what you stand for you’ll fall for anything.)
- Rely on trusted experts: Get reliable tools and reliable sources of help and information. Current and accurate information is invaluable during periods of uncertainty and change.
- Help others focus. Define what you currently know for sure as well as what you know about the proposed changes and requirements that are coming in the next few years. Define those things that are in your control and focus your resources on what you know you can impact. Re-assure others that the challenge is under control in your company.
- Use a structured problem solving / decision making process. Frame the problem or challenge you’re trying to resolve, define the parameters, question the assumptions, demand and analyze the right data, research and generate as many options and solutions as possible, test a few, select your best option(s) and implement.
These are good fundamental steps to deal with any major issues in your company. In this context, these basics will help you reduce any healthcare reformophobia that may be paralyzing your organization.
“The doctor of the future will give no medicine, but will interest her or his patients in the care of the human frame, in a proper diet, and in the cause and prevention of disease.”
– Thomas A. Edison (1849-1931)
Appriss, Inc, is a Software as a Service (SaaS) company based in Louisville, Kentucky. It was founded in response to a tragic crime committed in December 1993. A rape victim was planning to testify in court against her former boyfriend and the alleged perpetrator of the crime. She believed she was safe since she thought he was being held in jail until his trial. Unaware that the accused man had posted bond and been released from jail, he ambushed and murdered her as she left work. Her death led the founders of the company to create Victims Information Network Everyday (VINE) a system that notifies crime victims when their offender is released, paroled or moved to another facility. Started first in Kentucky, the system quickly spread to nearly every state and many federal criminal justice jurisdictions. In 2000, VINE became Appriss, Inc., and the types of data gathering and dissemination services provided by the company continued to grow. By 2013 sales were approaching $200 million and more than 400 employees throughout the country were provided a wide variety of products and services, all consistent with the company’s motto of “using technology to keep people and communities safe and informed”.
In its brief history, Appriss was like most companies, trying to keep rising healthcare costs from eating into the company’s profitability. Passing the annual increases along to the employees was never an option, as one of the many unique benefits that differentiated the company from other employers was having employees contribute only $1 per month for their healthcare coverage. This and several other innovative employee-centric ideas created a great culture at Appriss and led to a long run of best employer and other local and national awards.
Innovative ideas and awards extended to its responses to the healthcare challenges it faced. Appriss became the first in their region to implement an extremely innovative and cost effective healthcare benefit design that is still in place today. It continues to achieve astonishing results through the careful integration of these inter-dependent components: (1) self-funding, (2) a very active biometrics / wellness rewards system, (3) an on-site clinic, (4) sophisticated data gathering and analysis, (5) a narrow network and (6) carefully designed steerage mechanisms.
The results achieved with the integrated model from 2006 to then end of 2012 are these:
- spending less per employee per month in 2012 than was spent 2006, with an ongoing downward trend in health care spending
- spending less than half per employee per month than others in the region, others in similar businesses and versus national averages
- prescriptions costs that increased at a rate lower than the average in the workplace
- employee biometric scores (predictors of later chronic diseases) that improved by showing lower risk, at every measurement period
- employee average biometric scores more favorable than new employees’ average scores
- employee surveys that consistently resulted in favorable unsolicited written comments about healthcare and the clinic, and very,very rare unfavorable comments about healthcare benefits
- A healthcare system that contributed to extremely low employee turnover and was cited by many job candidates as a recruitment advantage.
Because the systems that led to these results did not occur in a single step or as a solitary flash of insight, it’s easiest to explain the model chronologically, how it actually evolved.
In 2007, Appriss faced rising healthcare premiums and knew it reached a point where it needed to get more innovative with how it addressed healthcare, so it created an internal “think tank” to address the growing challenge. About a dozen employees from all levels and areas of the company volunteered to research the existing literature and report to the group any ideas about how companies deliver their healthcare benefits. This not only led to a wealth of ideas, it produced employee ownership, as well as an increased understanding of the healthcare landscape and its many challenges.
Starting small that first year (the 2008 calendar year), the input of the committee was used to design and implement a modest health education and wellness program to help the 200 or so employees better understand how best to use their healthcare coverage, how they might stay healthy and possibly reduce their health care costs.
Through a High Deductible Health Plan with a Health Savings Accounts (HSA) and the wellness and education efforts in place at the time, the company saw an eight percent reduction in overall healthcare costs. The insurance company rewarded this 8% decrease in healthcare costs with a proposed 22% increase in premiums for the next year! It was at this point that Appriss decided to entertain even more dramatically different ideas with its Healthcare plan!
In the 2009 plan year, with only about 225 employees, Appriss made the leap that the healthcare group had been discussing the previous year: it dropped its health insurance and became self-insured.
Self funding simply means that company will forego paying insurance premiums and will simply pay the healthcare bills accrued by its employees. This step relieves the company of many state mandated insurance requirements and enables much greater access to the healthcare utilization data of the group. The autonomy provides greater freedom in designing the plan to meet the company’s specific needs
When Appriss went self-funded, it kept the High Deductible Health Plan concept that was in place but switched from the HSA strategy to a Health Reimbursement Account (HRA). This meant that instead of dividing more than $300,000 amongst every employee on the plan and sending it directly to each employee’s health savings account, Appriss reimbursed only a limited portion of the healthcare dollars employees actually spent above their deductibles and after they reached their maximum out of pocket levels — and the company “got back” whatever was reserved but not used.
The idea was that Appriss would pay less in the HRA plan. Although the HRA did require fewer dollars than the HSA plan ($225,000 versus $300,000), it was better, but still not seen as an optimal solution and they continued to search for a way to use those dollars in a more strategic manner.
At this point in the Appriss story, three important pieces of the integrated solution were in place, the basics of a wellness design, a self-funded healthcare strategy that allowed for benefit from the gains and flexibility in strategic plan design, and smart decision making based on unfettered access to healthcare data.
The next key component to the model emerged from studying the data – which being fully self-paid allows you to do with greater detail than if you’re fully insured. When the data from 2008 were analyzed it became evident that about 20% of the costs went to nearly 1800 primary care visits, each costing in the $125-150 range. Because the workforce would soon grow to nearly 300 employees, this was a concern, since as the employee base grew there’d be a corresponding increase in these costs.
One way to control these expenses would be to find a provider willing to offer lower cost primary care or contract the services at a fixed rate rather than paying multiple variable rates.
In 2009 Appriss aggressively researched on-site medical services. Around this same time Appriss’ insurance broker, BB&T Insurance Services, had been meeting with all the healthcare providers in the region with the goal of finding a partner for a slightly different model they’d been working on. BB&T understood that the Appriss goal in researching an on-site clinic was to address three inter-related issues:
1. encourage employees to practice preventive medicine, (wellness + clinic)
2. reduce the costs associated with primary care visits, (lower fixed rates versus variable rates)
3. better manage the costs of prescription medications.
BB&T introduced Appriss to the key people at the Baptist Health System. BHS liked the onsite clinic idea and were very interested in partnering with Appriss to expand their HealthWorx and Immediate Care Center strategy at the Appriss facility.
The immediate reaction by Appriss could not have been more negative! Inviting one of the local competing health care providers into the company to provide primary care (and have them serve as the source of referrals to other specialists and inpatient and outpatient services) seemed a lot like asking the fox to guard the henhouse.
Appriss had many serious concerns, such as:
- Could a healthcare provider understand what Appriss was trying to achieve?
- If so, would they be willing and able to help drive down primary care costs?
- Would every visit to the onsite clinic lead to a referral? Would they ever provide referrals to any caregivers outside of their own network?
- Will they share their expertise to provide proactive preventive care in order to keep employees OUT of the very kinds of healthcare facilities they own and operate?
It took months of communication and planning for Appriss to become convinced that BHS not only understood the Appriss model and goals, they were every bit as committed to making it successful. After much discussion, it became apparent that Appriss’ health care strategy was consistent with the overall BHS business strategy of focusing on enhanced primary care, wellness and preventive medicine. What’s more,by partnering with BHS on the clinic enabled Appriss to negotiate superior rates inside the Baptist network – using their “narrow network”
Opening the Appriss/Baptist 800 square foot onsite clinic in early 2010, provided the next component of the integrated model. Appriss was self-funded, was getting and using healthcare data, was highly focused on wellness and preventive care and it had an on-site clinic.
The clinic was the first of its kind in the Louisville area designed to be a full service primary care, wellness and medical home to employees and their families. The convenient location increases the likelihood of preventive care for employees and their families and the free visits and free generic medications provide great incentives to use it.
The logic behind the clinic lies in the simple fact that there’s a fairly low breakeven point between the fixed costs of the contract versus the employer’s share of outside primary care visits. In other words, because the per visit costs are less at the clinic, a company does not need many patients to substitute clinic appointments for outside appointment before the cost of primary care comes down.
Clearly the success of the clinic depended upon its utilization. The first year at Appriss, the goal was to get more than 35% of the primary care visits redirected from outside doctors to the clinic. This would pay for labor costs and clinic supplies. Assuming only a slight increase in total primary care visits, any percentage above 35% would have actually represented a decrease in the primary care cost portion of the total healthcare spend. A 70-75% transfer of primary care visits to the clinic in the first year, would not only have paid the contract and the supplies but also the reconstruction costs incurred to house the clinic. (Approximately $75,000)
After opening on April 14, 2010, the clinic had enough use to reach the break even point, including construction costs by the end of the calendar year. Ninety (90) percent of the available appointment times were filled. Over 85% of the Appriss employees eligible to use the clinic or a family member used the clinic. Of those who used it 96% reported a favorable experience and would recommend it to others. Because of the immense impact of the clinic,the overall annual healthcare spend decreased almost 10% while the size of the workforce increased. This resulted in a lowering of the reinsurance rates to cover potential specific and aggregate losses – which are typically based on 125% of the previous years per employee healthcare spend!
The primary care center also served as the headquarters for the company’s Health Incentive Program. The goal was to promote higher levels of employee engagement in their health and well-being, to provide incentive to everyone to stay healthy for a longer time. To encourage these behaviors Appriss crafted a plan where part of the money saved on healthcare was shared with people who maintain their biometrics.
Employees were rewarded for either keeping their four biometric scores in a healthy range, or had to not get worse! This concept was based on the research by Dr. Dee Eddington at the University of Michigan, and reported in the groundbreaking book, “Zero Trend”. Providing rewards for not getting worse not only provides an incentive that can appeal to the most anti-wellness couch potato, it is proven to be an effective strategy to avoid increases in healthcare costs.
Twice per year every employee on the plan (and his/her spouse or partner) has the chance to earn cash rewards for maintaining or improving their current level of health as measured by four key predictors of chronic illness (those being blood pressure, bad cholesterol levels, body mass and glucose levels). The goal is to keep people healthy and to avoid the slide into any predictable chronic illnesses caused by simple neglect. An employee can earn $50 for each of the factors that do not get worse between semi-annual assessments, or stay in the healthy range. That’s a potential $400 in “health dividends” each year. If there are two adults on the plan, they can each earn $400 annually.
This plan financially rewards healthy behaviors. These incentives are a much better investment of then the money that had been given away (through HSA or HRA) plans which either reward just being on a high deductible plan, or worse, reward the highest users of sick care.
In one of the first set of assessments Appriss paid out $80,000 (or about 80% of the maximum possible) for maintenance of the key biometrics. This represented a $160,000 annual investment annually to reward healthy behaviors, rather then distributing 250,000 to 300,000 dollars in HRA or HSA plans that do nothing to encourage the desired behaviors.
Recall that allowing the clinic to be run by BHS enabled Appriss to negotiate deep discounts with the Baptist network. When inpatient or outpatient care was needed — the plan provided steerage towards the available narrow network.
A narrow network is a group of medical and healthcare providers who provide employees and companies with deeper discounts for agreeing to use their services. Steerage to a narrow network is a company strategy to provide greater incentives in order to “steer” users to a particular network. So by negotiating a high value (high quality / low cost) option, the plan was designed (remember self-insurance allows greater flexibility in plan design) to pay a larger portion of the preferred option – in this case the Baptist network. Appriss used a tiered system where it paid 90/10 for the preferred network, 70/30 for the next and 50/50 for anything out of the first two networks. Maximum out of pocket levels and deductibles were also stratified in a way that encouraged the use of the preferred providers. Employees still had a choice of any provider the reimbursement rates just made certain choices more financially attractive.
Appriss carefully designed other intrinsic and extrinsic benefits, policies, processes and initiatives to support the culture shift towards overall health, such as on-site fitness programs, reimbursing half of employees’ gym memberships, free smoking cessation, providing healthier food and snack selections at meetings and in vending machines, paying half of the entrance fee for runs and walks, nutrition and wellness classes, contests, convenient onsite delivery of a healthy foods through a Community Supported Agriculture (CSA) program and even sizable random drawings (for trips or major cash prizes) for all the people whose biometric scores did not get worse between measurement periods.
While this comprehensive integrated strategy worked well for Appriss locally and a few others nationally, many (most) companies have fewer than 150 employees and cannot justify their own primary care center or feel they cannot afford to risk the investment in the prevention of illness. To address that need, companies and neighborhood business associations are collaborating to establish near site primary care centers and using the wellness programs that the centers provide. These clinics provide primary care services and the same benefits to employers without requiring the company to provide the up front capital to build their own center, does not require them to research and operate a wellness program, nor does it require them to sign what may feel might be a risky long term contract for care. Like self-funding, improved data gathering and analytics, shared near site clinics or other forms of alternative medical home for enhanced wellness and preventive care are very likely to increase in use over the next few years. It seems that Edison was correct…just way ahead of his time!
The constant changes in health care policy, practices, rules, and regulations makes longer term prognostication in healthcare very difficult. What we can say for sure is that for Appriss the integrated solution has proven to be very effective and is likely to continue to be a cost savings tool as well as an appreciated employee benefit for the foreseeable future.
It’s very likely that “bending the trend” since 2006 has saved Appriss more than two million dollars in healthcare spending – and through financial transparency and sharing some of the gains it continues to create a culture of excitement and collaboration. Companies simply have to find and implement innovative methods and practices like these to change healthcare from an annual “employees versus management” adversarial zero sum contest to a longer term and much more unifying “Us against healthcare costs” survival strategy.
A well thought out and carefully implemented integrated design offers an efficient and constructive healthcare solution…and what other valued benefit can an employer provide to its employees that also saves the company money?
Dr. Rick Cartor holds a Ph.D. in Industrial / Organizational Psychology from The University of Tennessee. Rick has taught graduate and undergraduate classes in psychology and management at UT (Knoxville) Maryville College (Maryville, TN), the University of Louisville and Bellarmine University, where he was the Director of the Bellarmine MBA program from 1992-1995. Dr. Cartor was the VP of Organizational Consulting with Right Management Consultants, then served as the VP of HR at Appriss from 2006 to February 2012. Rick currently operates Custom Healthcare Designs, LLC which contracts exclusively through the Louisville office of BB&T Insurance Services.
I’ve seen teams of very intelligent, highly qualified people under-perform because the group gets dominated by a single person or sub-group.
Peter Senge said this another way. In Fifth Discipline (1990), he asked:
“How can a team of committed managers with individual IQs above 120 have a collective IQ of 63?”
I’m a believer in hiring smart people.
I know that’s like saying “I like to look both ways before crossing, or “I don’t run with scissors”. But, here’s what I mean. To be most effective any selection system must distinguish three things:
- Does the person fit with the culture, mission and aspirational values of the company (including a perceptible level of motivation or desire to contribute)?
- Does the person have the specific technical knowledge or skills required for the position?
- Does the person possess a high degree of general intelligence?
I intend to dedicate multiple blogs to #1, the culture topic. Number 2 and 3 deal with hiring smart people.
“Smart” = “g” + “S”
More than 100 years ago Charles Spearman, a famous early researcher in psychology, found that any child’s grades across a variety of subjects were highly correlated. He proposed the influence of some consistent underlying factor which he termed g for “general” intelligence or ability.
He tried to account for the variations in test scores by two factors. The first was a factor specific to a particular mental task (or subject matter). These were individual abilities that would make a person more skilled at a specific cognitive task (“S”). The second was a general factor “g” that governs performance on all cognitive tasks.
So Spearman suggested “S” or specific intelligence (learning) as well as the existence of what he called “the g factor” (where g stands for general intelligence.)
So when I say smart matters, I’m referring not just to subject matter expertise (specific knowledge) but the g factor (general intelligence). A selection system should be able to determine both – yet the latter often goes unmeasured. That’s an important point because you cannot assume that high S means high g. We all know or have heard of highly educated people (high S) who are unable to deal with problems or challenges that require alternative or creative solutions (g). Unfortunately, while S matters and will get you in the door for many jobs, most important problems at work require g. A basic level of subject matter expertise, plus a good dose of general intelligence (leading to effective decision-making, analytical thinking, enhanced reasoning, on the spot problem solving, lateral thinking) is what’s most required on the job on a day-to-day basis.
Give me a team of adequately qualified employees with high g factor, and we’ll leave your highly educated experts with average or lower g factor in the dust.
So it sounds like an easy solution: hire intelligent (high g) technically prepared (high S) team members and success is guaranteed right?
Pushy Trumps Smart
Ineffective group dynamics can wipe out all your efforts to “hire for smart” and can actually endanger the survival of the entire organization if the team with sub-par group dynamics is a senior leadership team. (See Rick’s Rule #3: “Your Leadership Team is a Fractal”)
Here’s what I mean by “pushy”. I mean an un-self-conscious un-embarassable desire get one’s way. Whether it’s bringing about or preventing a particular action, introducing a change, forcing a decision – whatever the goal– the behavior is clinging to one’s desired outcome with little or no desire to compromise or see another’s viewpoint. Such a “no retreat / no surrender” damn the torpedoes approach can be commendable in cases of major ethical, moral life and death issues, but it’s an inappropriate approach to every decision.
For those interested in the psychological perspective, at its most extreme, this pushy personality type can make you wonder if these people might’ve shown borderline Asperger syndrome as kids. They seem to lack the ability to send or understand nonverbal communication cues and show limited empathy with their peers. As they mature although they may develop great acuity in a particular field (high S?) as well as nearly obsessive side interests, social and communication difficulties may persist. It’s probably not a pathology or disability to be cured, but this “social difference”, can be very challenging to work with and harmful to group outcomes.
While this personality is not extremely common, most people can recall working with at least one or two people like this. They approach team process not with the goal of reaching the best decision for our team (or the company) but simply “winning” to get their way. They subvert usual group dynamics because they seem to have little awareness of team norms, social cues, and are either not interested in the potential reactions to decisions or do not see evaluating social consequences as a key part of a rational decision.
Over time team members learn about persistence: defeat of the pushers idea is never final or complete. An idea is never killed but merely goes dormant and will probably return undead at a later point. Even in those cases where s/he is a minority opinion, pushy wins most of the time because s/he outlasts others who are unwilling to fight for every point (most take a “choose your battles” strategy or understand the give and take of social cues).
These behaviors clearly sub-optimizes the decision-making process, as you’re no longer benefiting from team problem solving and synergy…and it will only get worse as people withhold input and participate only the most important decisions to them. Thus, pushy trumps smart because smart quits participating.
If you have a person or person who fits these descriptors, and meetings are not actively managed to control his/her tendency to dominate – chances are you’re not benefiting from the collective abilities of the group.
So how do you avoid the situations where pushy trumps smart?
For it to be a problem you must have “pushy” on your team, so the first place to look is in the hiring decision. Ideally your selection process is sophisticated enough that in your assessment (or reference checks) you’ll be able to identify candidates’ inability to play well with others – and you’ll hire for smart while avoiding pushy.
But if you suspect that you already may have a pushy team member whose keeping the group from achieving its potential, talk about it candidly and individually with others on the team. If there is consensus that the group is not benefiting from collaborative problem solving, planning or decision-making, introduce a more formal structure into your meetings and have a trained facilitator lead your meetings.
The facilitator will function as a much-needed gatekeeper (or “traffic cop”) who can:
- Introduce and manage a more formal meeting or decision-making process
- Help craft clear problem statements
- Point out assumptions, as well as bad, wrong or absent data
- Push for facts to back up statements or conjecture
- Request diverse views and push for equal participation
- Allow equal attention and credence to subject matter experts.
- Provide regular feedback to the team on their meeting effectiveness.
Seek candidates who meet your technical requirements. Assess and select based on general intelligence. Be more vigilant (less sloppy) in how your meetings are conducted. Otherwise the time and effort you’ve put into building a top-flight team of competent, intelligent subject matter experts will be negated by a single pushy person with narrow expertise. Because…
Smart matters…but pushy trumps smart.
I skipped around.
Below I cover Lesson #8…jumping over Lessons 5, 6, and 7. Those will be next. I just felt like dealing with the “generations at work” topic.
Here are the first ten lessons – based on what I’ve learned at work:
1. Every organization has the same problems.
2 Most people handle change well.
3. Your Leadership team is a fractal.
4. You should get rid of 10% of your people
5. Smart matters, but pushy trumps smart.
6. Playing well with others is over-rated.
7. Most conflict problems aren’t conflict problems
8. Generations don’t matter
9. The right meme can save your job.
10. There is no such thing as corporate culture.
It seems like every time I read a magazine, journal or website there’s an article about how hard it is to manage a workforce composed of multiple generations and the challenges associated with finding, engaging and retaining younger employees. These analyses typically include subtle (or not so subtle) criticisms that younger workers:
- are irresponsible
- can’t be relied upon
- don’t take work seriously
- don’t have the same values as the older workforce
- aren’t willing to commit to a job
- will leave the company for another one that pays a little more or offers better hours.
My view on generational differences in the workplace is a bit different. Here’s Rick’s Truth #8:
Generations don’t really matter that much.
We’re on the eve of destruction.
Every age group has a great variety of dedicated and less dedicated employees and just about every generation has a negative perception of the generations that follows their own. They also tend to believe the younger generations’ values are all screwed up.
One of my favorite quotes on the subject is this one:
“Children today are tyrants. They contradict their parents, gobble their food, and tyrannize their teachers. What will become of them? This world is truly coming to an end.”
I’m not sure about the “gobbling their food” part, but judging by the literature on the subject, many must feel that the “world is truly coming to an end” because of today’s irresponsible kids. But since Socrates made that statement in 430 B.C., maybe this whole generational thing is not such a new phenomenon.
Meet the new boss, same as the old boss
An important part of growing up is differentiating yourself from your parents and their generation. Long before flappers, through bobby soxers, rock and rollers, greasers, hoods, hippies, punkers, rappers, grunge, gang bangers, Gen-Xers, nexters, ravers millenials and gen y, “the youth of today”, have been vilified and recognized as the group that bring about the demise of the world as we know it!
Yet the world has not come crashing to a halt when the values of one generation merge into those of the next. In part that’s because the values and motivations of people evolve to become more like those of preceding generations as they mature through the various stages and responsibilities of life. It makes much more sense to consider the values and behaviors we see in the newer entrants in the workplace as transient states that we all grow through and not enduring traits that signal a forthcoming crisis.
If I leave here tomorrow…
Lets look at retention. In a decent economy, people are on the lookout for better opportunities regardless of age, race or gender. Shorter employment stays are not simply a function of one’s age. Turnover is most dramatically influenced by a robust economy, lots of job opportunities, high expectations by savvy employees who can and do shop their skills around via high and low tech networking. Add an internet that brings a world of opportunities to every desktop and you see heightened churn.
Employees of all ages have learned, either first-hand or through friends and family members that employer loyalty is a thing of the past. Because of experiences with layoffs, workforce reductions and downsizings, most people have developed “a fool me once shame on you, fool me twice shame on me” work attitude. For most workers, it’s extremely difficult to feel loyalty and commit to a company that will not or cannot commit to them. The need to keep your resume current and handy is a workplace reality, regardless of your age. (I’ll elaborate in an upcoming blog about how effective companies build rich cultures to retain and fully engage a diverse workforce.)
Consider, too, that often when a person leaves an organization, s/he is quitting to leave a specific boss. “Management Generated Turnover” is pervasive in the workforce and it affects all ages. If you were told that you had to start working again for the worst boss you’ve ever had, what would you do? Regardless of generation, most people say they’d quit, resign, leave, transfer, or in some way escape the situation. A bad boss is a major contributor to job dissatisfaction and is a mighty contributor to turnover.
Oh won’t you stay, just a little bit longer?
So what do those who see these younger worker as disengaged and transient prescribe to engage and retain them? Here’s a partial list from recent articles:
- Opportunities for professional development
- Fun on the job
- Increased input and participation in decision-making
- Greater appreciation and recognition
- Flexible hours and working from home
- Variety on the job
- Open and timely two-way communication
My question is this: Who wouldn’t want to be treated like that? The management practices and techniques recommended to effectively manage the younger workforce are just good management practices. So of course they would help retain younger workers, these factors are likely to retain everyone!
T-t-talking ’bout my generation.
When today’s more senior entrepreneurs, business leaders, captains of industry, C-level managers generalize about the values of the younger members of the workforce, I like to gently remind them that their generation has not always been as responsible or career oriented as they are today.
Take the group that we call the Baby Boomers – who are now and will continue to cycle out of the workforce for the next ten to fifteen years or so. When I hear these folks criticize younger workers it makes me ask: “Did the 1960’s really happen or was all of that just made up?”
This is a generation that battled their own government about the war in Vietnam and had regular demonstrations against “Pigs”, “the establishment” and “the military/industrial complex”. They “struggled against The Man” and decried “materialism”. How could such a generation forget the huge chasm that existed between their views and values and those of their parents? How can they forget the now quaint “don’t trust anyone over 30” view of life, the less than stellar view of their generation by their elders and the rampant speculation that America would go to pot –literally and figuratively–when they (the long-hairs and hippies) ran things?
Dudes, how on earth could you possibly act as if you were born behind that mahogany desk?
Baby Boomers have not always been the solid silver-haired pillars of the workforce they act like today. Woodstock was not a job fair. It was not promoted as a major networking opportunity. When Jimi Hendrix asked “Are you experienced” he was not conducting a job interview.
Do a review of the music from the 60’s and 70’s and you’ll find that most songs highlight the recreational use of pharmaceuticals, they focus on getting free of responsibility, gaining independence from commitments or authorities and creating and enjoying leisure time. To this day any self-respecting Parrot Head will attest that much of the appeal of Jimmy Buffett’s music is the drunken enjoyment of leisure time and freedom from work. So if the generation(s) that grew up in the 1960s and 1970s are going to claim that they’ve always been responsible hard-working people, there’s some very serious revisionist history going on!
It ain’t me, babe
When I talk to groups about ages in the workplace, at some point during the review of the whacked out 60’s (‘70’s and 80s) someone usually bristles and says “Not everyone was like that”. You’ll hear people say…
- I didn’t demonstrate against the war
- I wasn’t at Woodstock
- I had a job and supported myself, my family, kids, or parents
- I didn’t smoke dope (or “I didn’t inhale”)
- I was never tried acid (or ecstasy or coke or….)
- I never went to a protest (or sit-in or concert or rave or…)
They point out that the gross generalizations just don’t fit them, that not everyone could be stereotyped with the general perceptions of their generation. They’ll usually say they don’t like being grouped in with others who were seen as lazy slackers, dopers, misdirected, or uncommitted because it doesn’t ft them.
…And if life were a cartoon, it’s at this point you‘d see a light bulb go off above many heads.
Because isn’t that what people are doing when they stereotype and generalize a single set of values to all these younger employees? Aren’t we grouping people, lowering expectations, placing blame, making accusations and judging the values of an entire generation?
Aren’t we falling into the same rut that earlier generations have, going at least back to Socrates—predicting the downfall of society because of what they believe is lacking from the next generation(s)? And aren’t many (though not all) of these younger people just acting like so many generations have before them—when they were of comparable age?
I can see clearly now
Here’s the point: youth is a state, not an enduring trait. It’s not a chronic condition, people tend to grow out of it. As people age and mature, their interests and concerns evolve with the stages of their life. (Consider how Boomers’ concerns have evolved from long hair to no hair, cocaine to Rogaine, seeds and stems to roughage, killer weed to weed killer, dropping acid to using antacids, etc.)
What shall we do now?
Treat employees’ age and life stage like any other diversity factor and help people become better at working with others who not are not exactly like themselves.
Remember that not all people under 30 are bad, uncommitted slackers… assuming they are and treating them like they are going leave will be a self-fulfilling prophecy.
Remember that there are reliable and unreliable, responsible and irresponsible people in every age range (and you’ll see that when you believe it!)
Treat the behaviors you see equally across your workforce population
Establish a range of recruitment, compensation, benefits and retention strategies that will appeal to every life stage.
Offer a variety of benefits that fit people at all life stages – a 401k match might appeal to none but the most planful young employee, while a company kickball game or laser tag outing might not engage your close-to-retirement group.
Be strategic in your efforts to build a culture of retention (see the upcoming blog on this)
Pay handsomely for referrals to encourage existing employees to bring in more talent
When an organization is having a tough time keeping good young workers, don’t start by blaming the people who leave. Take a good hard look at the people who are staying to manage the organization, and what the organization has to offer. Make sure that managers know and are demonstrating he simple and effective management behaviors that all employees (not just younger workers) have a right to expect today. If not, turnover will remain high…and those who are most likely to leave will be those who have the least invested in the company (i.e., your younger workers).
I hope, the next time you draw on those tired old stereotypes about your younger employees you hear a line from that old Neil Young song running through your brain: “Old man take a look at my life, I’m a lot like you were”!
But be warned… you may also hear Mick Jagger respond: “What a drag it is getting old!”
Havoc Precision Lugubrious Fury Furious Bombastic Amok Fortuitous Akimbo Ascertain Malevolent Nefarious Defenestration Pith Ostensibly Indignation Tedious Vapid Sinister Clever Fiendish Loiter Goiter Vex Ambivalent Acrimony Incisive Diligent Vague Vulgar Anguish Insidious Typhoon Jejune Soporific Banal Effluvia
Go into any company and ask a group of managers these questions:
How many of you have team members who are simply not pulling their weight?
Do you have someone on your team that you would prefer NOT to have on your team, based on the quality or quantity of their work?
Is there someone on your team who you could do without – or remove– without hurting your team’s output?
After the managers agree to several of the questions, and you calculate that the number of people to which they’d be referring amounts to about 5-10% of your total workforce, ask this question:
Why are we keeping these people?
While it’s impossible to have extremely high performers in every position of a company, it is a very unfortunate reality that within every organization performance varies significantly and you have many low performers who create ill-will because they contribute well below expectations.
Thus Truth #4: You should get rid of about 10% of your workforce.
What makes this truth even more frustrating is that it’s usually common knowledge who the hard workers are and who the slackers are. Co-workers know who produces and who doesn’t – and in a pure meritocracy the low performers would either be gone or would be paid substantially less than the higher performers.
But that’s the heart of the problem: most people in similar jobs are paid about the same – and in most companies it is extremely difficult to provide rewards that significantly differentiate between effective and ineffective performance. The belief that “C” and “D” players are “getting away with” sub-par performance is made worse by the fact that even when the performance is addressed, it is typically done (and should be)in a discreet and confidential manner.
Left unchecked the problem of great variation can lead to resentment and even a reduction in the performance of your top performers. I’ve seen instances where production increases by removing the 5-10% who malinger. This phenomenon can be explained by “Equity Theory”, an idea introduced by behavioral psychologist John S. Adams. Briefly it says we all compare our own workplace efforts and outcomes to that of others. Ill will builds when your ratio is significantly different from mine – especially if I believe you put in less work and get out the same amount of rewards or more. If I believe my inputs are greater than yours and we get the same outcomes, I’ll eventually either get fed up and leave or restrict my input to make our ratio of inputs to outcomes more similar. In other words, I’ll produce less if it looks to me like I’m doing more than you for no additional advantage or payoff.
How’d we get here?
A lot of factors contribute to creating and perpetuating these situations.
1. Hasty Hiring
“Act in haste repent in leisure”, the saying goes. Few decisions that you can make as a manager are more important then the hiring decision. And it’s hard to do….you’re trying to predict the future. Yet under pressure to fill a position, we often see managers select someone, despite concerns or reservations about a candidate, just to get a person in a position. This is especially true to when his or her direct reports are pressuring for a peer to help with the workload.
2. Fear of Firing
With so many horror stories and warnings of unfair dismissals, lawsuits and punitive action…people are afraid to let someone go even when the person is a clear and persistent underperformer. In fact, we are much more likely to see a person moved from position to position within a company, rather than being let go, which is an extremely short-sighted solution.
Not addressing a difficult situation is the easy way out. If there are no differences in the consequences to a manager, s/he will choose to ignore performance issues if doing so is less unpleasant than holding an awkward conversation. If I have not been held accountable for my team’s performance, if I’ve never been instructed on how to do it, if I do not understand the potential problems that can be caused by failing to act, then i have neithe the willingness nor the ability to take any action.
What can we do about it?
You do not need to establish a full force top-grading regimen in your company to see improvement in your lower performers. By addressing the three causes described above you can go a long way towards “raising the bar” and lessening the variation in performance. Here’s a simple checklist that will produce real results for you:
Make sure your managers know the real dangers of allowing extreme variations performance to persist.
Teach your managers that the most important employment decisions they can make are who to hire. This point cannot be over-emphasized. If doubts exist about whether or not to hire someone – don’t hire – most times there are valid reasons to doubt.
Establish clear standardized company-wide processes for hiring and firing and teach your managers how to correctly follow them.
Teach everyone the art / science of effective interviewing.
Teach managers how to do collaborative goal setting and hold regular goal setting and goal review meetings.
Establish a metrics-based culture and set clear performance expectations.
Use collective (group) metrics to better link (evaluate) mangers’ performance to group performance
Conduct candid frequent (quarterly) 10-15 minute standardized goal-based performance management meetings. This provides regular ongoing communications, eliminates surprises, and creates more rapid performance documentation to support management decisions.
Separate pay increases from performance management meetings.
Establish a standardized series of steps in coaching and using your performance improvement plans.
These steps may sound easy, like Management 101, yet many fail to perform these fundamental steps…and until you do this in your company, you’ll just have to live with Truth #4: About 10% of your workforce should be gone.
Regardless of the type of business, its sector, size, age, or profitability, the powerful impact of a leadership team on an organization is unmistakable. While their strategic decisions, analyses, planning and conscious efforts to lead obviously influence the enterprise, it’s the less intentional often inadvertent effects of the senior team’s personalities, foibles, strengths, idiosyncrasies norms and rivalries that can have even more significant consequences for the organization.
Which leads to Truth #3:
A leadership team is a fractal.
What’s a fractal?
In The Fractal Geometry of Nature (1982) Mandelbrot defines a fractal as “a rough or fragmented geometric shape that can be split into parts, each of which is (at least approximately) a reduced-size copy of the whole.”
In God of Resilience (2011, an e-book available through Amazon.com) Max Ryan, a character in the book, describes a fractal as
… an image or an object that when magnified, looks like the original object – it’s called “self-similar” and repeats itself over and over to make a bigger pattern. There are lots of examples of fractals in nature, like a tree, a leaf, or a portion of the sky. If you look at the system of roots at the base of a tree, a large root splits into smaller roots, which split into smaller roots, and so on. At each splitting the size gets smaller but the root divides in roughly the same way into smaller parts. This same sort of self-similar splitting is seen in the veins and arteries in human beings. Or if you take a portion of the sky, you see nearer stars and galaxies, with more distant ones behind. If you zoom into that view, you see nearer stars and galaxies, with more distant ones, and on and on.
It is really more accurate to say that an organization is a fractal pattern, and the leadership team is the self-similar design that defines the rest of the organization. As the leadership team’s image repeats and magnifies, it creates an organization that is a larger, yet an amazingly similar representation of the team.
More specifically, if you look at the strengths and weaknesses of an executive team, it’s very similar to the strengths and weaknesses of the entire organization. Whatever the executive team of an organization focuses on, whatever it does well or does poorly, how it goes about doing what it does whatever values, drives or beliefs the dominant personalities possess, these are replicated and magnified throughout the organization and those become the strengths and weaknesses of the entire company.
Once I started writing this I found that I could go on and on and on with examples. So I opted for a more direct, more readable format. I provide some of the details associated with a few examples in the table below. I’ve tried to sketch a broad picture or both the senior team and the company at a particular point in time. Both columns are greatly simplified and obviously reduced to broad caricatures of people and companies, but I’ve tried to give enough information to support my contention, because each of these examples came to clarify the point that I find fascinating and irrefutable: the personalities, traits, characteristics capabilities, limits, and collective functioning of the leadership team directly translate into the strengths and weaknesses of the organization.
The implication should be clear. Don’t underestimate the impact of the personalities on the senior team or the influence of the group’s dynamics. How they act and interact determine the strengths and weaknesses of your company. You need a highly functioning well-integrated team at that level NOT for a cozy kumbaya feeling – but you must have it to work effectively. How do you do that? Work backwards – reverse engineer your senior team by looking at the strengths and weaknesses of the company. You’ll see the dynamics and personalities of that team in the overall fractal pattern of the company. If you don’t like what you see in the company fix your leadership team. You will not fix the organization until you fix the individuals and functioning of that group.
Why? Because of Rick’s Rules: Truth #3 says: The leadership team is a fractal
|Delivery service: Senior Team||Company’s SWOT|
|Highly tenured male pilots, with military experience, engineering backgrounds or both. Each strong-willed, assertive and confident to the point of narcissistic. More apt to tell than ask or listen. Methodical, persistent able to resolve existing problems but not likely to anticipate problems or find creative solutions. Demanding of self and others, committed, charismatic, and continue to succeed by hard work and force of will.||Strengths: profits in existing services, well-engineered processes, clockwork logistics, self-sufficient operations, tremendous reputation in community. Extremely reliable service.Weaknesses: decreasing growth rate/shrinking market share (in increasingly price competitive market), not coordinated with / benefiting from rest of organization, not addressing the changing competitive environment or seeking to identify / anticipate customers’ needs, no long-term plan other than seeking better engineering solutions. Starting to have adversarial relationship with union.|
|International Beverage: Senior Team||Company’s SWOT|
|Young CEO facing task of re-defining the organization with an older experienced senior team that had rarely met together. Why are we meeting together? Why do we need to coordinate? Why spend time getting to know the team?||Strengths: Separate successful enterprises. Solid supply chains (entirely owned) from raw products to distributors. Overall great reputation with loyal distributors. Growth business in all economiesWeaknesses: Low (and decreasing) margins. Most revenues from established products in existing markets. Separate empires: redundancies – few shared resources. No new products, aging customers. Entrenched processes, no recent improvements.|
|Local Utility: Senior Team||Company’s SWOT|
|Very nice, long-term CEO: akin to a benevolent father who demanded politeness, manners and niceness. Waiting to retire, though not wanting to. Even youngest of senior team members highly tenured with the company. Politeness over candor – disagreements avoided.||Strengths: Long term successful enterprise known for decent service and rates, secure employment. Low turnover. Model of effective relations with unions.Weaknesses: Focused not on growth, investment, replacement or expansion into new areas but on repair, maintenance of existing aging infra-structure. Status quo revered: No turnover in mid to senior level management positions. Loyalty, tenure more important than ideas, change. Extremely high t/o in younger professional ranks: experts frustrated. No open talk about the absence of a succession plan, but competition for Dad’s attention (and position) through quiet maintenance of silos – which came only by controlling/directing existing collective resources towards maintenance (no problems from) “my area”.|
|Kids Magazine||Company’s SWOT|
|At least two generations and multi-sibling family in the child book publishing business. (think Addams family). Unclear (matrix?) family relations, mixed family roles and company authority (e.g, aunt reporting to nephew). Exclusive, untrusting “us/them” feel, all came up through the family business with little/no outside influence or experience.||Strengths:Name recognition. Years of loyal good will. Familiar product.Weaknesses: Company couldn’t decide its future. Closed to change or new ideas. Intense competition from other media and edu-tainment options. By default, survival—if achieved–would come through existing print product since no other media would be entertained. Demanded only information delivery – not facilitation at meetings. They evolved from endless strategy to structure discussions as they could not make progress on strategic issues. Then shunned outside help since structure “was a family matter”.|
It is so common to hear that people hate change, that they can’t handle change or that they resist change…that it’s almost become an accepted fact.
But the truth is: People handle change quite well.
Granted that’s a tremendous over-simplification. The type of change, when it happens, how significant and permanent, brought about by whom, are all very important variables to consider before making such a blanket statement. But if we’re talking about the types of workplace changes to strategy, structure, procedures, people, etc., that change management gurus typically address…then the truth applies. People are pretty open to change and are really quite resilient.
But here’s the rub…and Lesson #2 is based on this bit of wisdom:
There is a nearly universal tendency to under-estimate people’s’ ability to handle change and over-estimate their ability to handle ambiguity or uncertainty.
It’s not the change that freaks people out, it’s the period of not knowing. Most of us can handle anything. By the time we’re adults we’ve already survived humongous amounts of change. We press on and make the most of it when we learn the new reality.
But adjusting to the new reality is the easy part. The challenge, and the part that leaders of organizations tend to botch – is the informational stage, relentlessly and repeatedly communicating details about impending or ongoing changes.
What I’ve seen quite often in organizations is a vicious cycle of mishandling change. A leader or leadership team believes and expects a negative reaction to a new idea or proposed change. Because they believe that people can’t handle change or need time to adjust, they slowly introduce it, or float the idea while delaying its full implementation. But by only sharing a glimpse of a change, or slowly and partly introducing a change without providing more information and details, the leaders all but assure widespread stress and angst. This upset, caused more by the “not knowing” than the “change”– perpetuates the belief that people cannot handle change, and creates the likelihood that changes will be poorly implemented, delayed and poorly handled in the future.
Think about change in your own life. Changes large and small occur all the time, in all facets of your life, and many you have little or no power over. Some you may like some you may not, but you adapt, in some way or other, once you know the new reality. The most difficult times are when you know something is changing or about to change — but you lack the details to plan or you’re uncertain of its impact, so you cannot adjust and get on with your life. Less than the change itself, it is usually the period of “not knowing” that makes change so difficult.
The lesson? As leaders we need to understand that people can handle change, they may not embrace the change with open arms, they may initially react in a negative way, or they may provide contrary ideas, but over relatively brief periods of time people will adjust once they have information about what the change is and in what ways it will affect them. In most cases it is best to treat people as adults and share as much as you can when you can. Holding back accurate details creates an informational vacuum that quickly fills with harmful misinformation, rumor and speculation – often more dangerous and difficult to deal with the facts.
Over-simplified? Maybe. But if you’re going to err…err on the side of respecting people as adults who’ve already faced and effectively dealt with a lot of changes in their lives. Try it – the truth may set you free!
Here’s a nearly fool proof exercise you can do: Walk into a company, any company with more than 10 people. Put your hand to your head and make a face like you’re concentrating very, very hard. After an appropriate time period, maybe 5-10 seconds, say that you have just telepathically experienced the company’s main challenges and can now provide a status update.
Assuming that you’ve not been thrown out of the building for acting so weird, go on to make these points:
- Many people in your organization are unhappy with all the changes – and they grumble that it is not the company it was when they started (regardless of when they started)
- Your people do not handle conflict well – they prefer to avoid it rather than address it directly,
- You feel that your organization-wide communications are too slow and many employees complain that they do not get important information they need in a timely manner
- …yet attempts to hold regular information update meetings are poorly attended
- You’re unhappy with how performance evaluations are done
- You don’t go a good job of dealing with low performers and don’t hold people accountable,
- Senior managers need to be more visible
- Most people do not like your health care coverage
- You have too many meetings
- You have your values posted, but many people feel that key individuals don’t practice them and there are no consequences for failing to do so
If your assessment of the organization is off, it’ll only be by a little bit. Depending on the company, you may be treated like an all knowing Deity, a clairvoyant consultant or an evil shaman….and if you really try this, at this point you’re on your own; I have no more advice about what to do next…but good luck and let me know how it turns out.
Here’s the point of that little thought exercise…
Most organizations today are in a constant and unending–that’s a key point–battle, to get these things right…and if you have human beings working at your company, you’re probably unsatisfied with the current state of these areas.
Despite the fact that I won many consulting jobs by saying how unique your company is…. “When you’ve seen one you’ve seen one” I’d say, I knew that it would not be good business to point out how similar most organizations really tend to be. And that’s not a bad thing, because if a company is doing relatively well, it probably is dealing with many of the same challenges that other healthy companies are facing. If they are doing very poorly they are consumed with survival issues like generating revenues, meeting their commitments and paying their employees…and they don’t have the luxury of working on these “higher level” system or process issues. It’s very similar to Maslow’s hierarchy, but applied to the survival of organizations rather than individual survival…if you’ve got the basic survival issues under control, you’re going to start dealing with “relatedness” issues – and for the most part, that’s really what those are.
Happy families are all alike; every unhappy family is unhappy in its own way.
Leo Tolstoy, in Anna Karenina
I don’t speak Russian, I’ve never read that book, and wouldn’t know Leo Tolstoy from Leo the lion or Leo Scully, but isn’t that a great quote at this point?
Unhealthy organization can do a million different and often bone-headed things to avoid success, but reasonably happy (healthy) companies follow the same basic steps to assure the systematic ongoing delivery of products and services that generate regular revenues streams, and then must deal with those higher order challenges—the ones you the Clairvoyant Consultant listed above.
BUT- Because these are common challenges does not mean that you can accept them – in fact, just the opposite is true – it means you need to recognize them and deal with them constantly. Remember is said “unending” was key – well it is….these are things you never “finish” or completely achieve. Because of that it is critical that if your organization has these problems don’t assume the person, or persons or departments in charge of them are total buffoons. Rather recognize that these are omnipresent ongoing challenges in relatively healthy organizations that will never be completely resolved—and keep them on your radar as things we need to continue to address. Think of it as a permanent rotating to do list. You will never finish these tasks so consistently monitor them and find new ways to address them.
What can you do? Well some of these will be fodder for later Truths….but know that truth #1 is ”All organizations have the same problems”.
I’ve had the opportunity to go into a lot of companies and witness a lot of different people related situations, problems, crises and solutions. In that time I’ve noticed a lot of stuff…things that don’t make it into the books you use in college or graduate school. I’ve not written them down before…although I’ve trotted them out many times when speaking in front of groups (or anyone that will listen, really) Because these have been garnered over about 20-25 years, rather than indicating a blinding flash of wisdom, they’re more like slow motion epiphanies.
I will list the first few…and will then elaborate upon them in future blogs. Some are short, sweet and not so hard to fathom, others are a twist on common beliefs and a few are downright contrarian.
Here are 1 through 10 (in no order really):
1. Every organization has the same problems.
2 Most people handle change well.
3. Your Leadership team is a fractal.
4. You should get rid of 10% of your people
5. Smart matters, but pushy trumps smart.
6. Playing well with others is over-rated.
7. Most conflict problems aren’t conflict problems
8. Generations don’t matter
9. The right meme can save your job.
10. There is no such thing as corporate culture.