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Doing Business In A Brave New World
By: Paul Kiewiet, MAS
Issue: 2010feb
A Shift From Competition to Collaboration Involves People—
And People Can Be Messy
What does economic life look like after the Great Recession? Most people agree, the recent economic collapse is the worst the world has seen since the Great Depression of the 1930s. Double digit unemployment, bankruptcies, foreclosures—what in the world is going on? When is it going to stop? What will it look like when we get to the other side?
In my presentation, “How to Thrive In Any Economy,” I point out that recessions have been a pretty normal pattern in the U.S. economy, coming around about every six years and usually lasting 12 to 18 months. We’ve had nine of them since World War II and usually have been able to make Darwinian comments such as “it’s a good thing because it shakes out the weaker players.” Somehow, the Great Recession of 2009 is different. It’s different because this is not a correction. This is a Structural Shift. There will not be a return to normal.
There are plenty of explanations and most make sense. And there is plenty of blame to go around, but that does us no good. The housing collapse, the banking collapse, entire industries having their very existence threatened—that’s what happened. We’re not out of the woods yet.
In Michigan, where I live and where the recession has been in full flower for several years, unemployment is 15.3 percent. That’s one out of every 6.5 people are out of work (and still on the unemployment roles, it doesn’t include those who no longer qualify for benefits).
The projected budget deficit for the U.S. approaches close to $2 trillion dollars this year, a number that is beyond comprehension. It is expected to be more than $800 billion in seven out of the next 10 years. More than forty percent of tax revenue already goes to pay interest on our national debt. This is money that is not building roads, not creating American jobs, not providing necessary human services, not even buying bombs or a stronger military. At the same time, the Federal Reserve has started printing money at an unheard of pace to subsidize the bailouts of the multitude of critical industries. Increased money supply requires a period of inflation to create true measures of value and worth. During this time, leaders (and I use the term dripping with sarcasm) in business have had a short-term focus on quarter to quarter “results,” and politicians have become partisan and totally self-serving focused only on election cycles and personal or party power.
Welcome to a Brave New World! Remember all the talk that we’ve had about America no longer being an Industrial Economy, but being a Service Economy? How we’ve even extended that to (thanks Joe Pines and James Gilmore) an Experience Economy? Well, how have we changed how we lead? How we manage? How we educate and train workers? For the most part, we’ve used the educational schooling systems created for the Industrial Age. We’ve used the military- based management, business structuring and leadership models that built an industrial giant. Frank Muhern, Ph.D, academic director of the Forum For People Performance Management and Measurement says we are in the midst of a structural shift that:
• Destroys traditional ways of doing business
• Reassigns wealth and opportunity to different people and organizations, and
• Establishes a foundation for a new era
What does this mean to us as business people? At the recent Forum Think Tank in Chicago, Illinois, Muhern and participants discussed the implications. It means that we need to get used to slow or even flat and maybe even more frequently declining growth. We can expect the limited availability of credit, increased regulatory burdens, increased taxes and inflation or fear of inflation to become a part of our routine rather than a cyclical bother.
Entire new mental frameworks are going to be required to exist in this new world. It’s going to require patience with ourselves to rethink, reinvent and respond to the needs of a changing marketplace. As managers, we have always relied on the past to make plans for the future. How can we do that when the past may no longer serve as a reliable guide? Management practice has always been about trying to eliminate ambiguity and now we must get comfortable with discomfort. The days of management omnipotence, of employees as inputs or raw materials, of customers as ATM machines are over.
The economy had a drastic effect on consumer behavior. With 72 percent of our Gross Domestic Product driven by consumer spending, pessimism and fear affect everyone. In general, there is a mood of pessimism about future economic conditions and a marked decline in conspicuous consumption. There is a marked shift toward value, green, sustainability, practicality and meaning in consumer behavior. These tend to be organic and lasting changes, not trend or fad driven.
We have seen the emergence of Corporate Social Responsibility which at first appeared to be trendy and special interest group driven. The structural shift has now made organizations and people more service and more community oriented with real concern about the impact of actions and reactions to the planet and people. Many major companies now measure a triple bottom line: people, planet and profit. While profit will continue to be a lifeblood component to any business, the other two will be the oxygen and sustenance required to thrive in the brave new world.
Driving the change and driving the coming economic revival is the amazing and dramatic digital revolution that we are in the midst of. While it is destroying old business models, it has introduced levels of scaling to an extraordinary level and provides opportunity for innovation and entrepreneurship that the world has never seen.
The Industrial Management model was based on a very militaristic and competitive model. The language of business reflects this—strategy, tactics, tactical plans, mission and beating the competition. Our educational system was built on creating workers to fill in the needs of an industrial economy. There are tracts for generating workers, managers and generals. Specialization for specific tasks is rewarded.
What happens when a digital revolution, meets a globalized work force, multiple cultural influences and a shift from a consumption mindset to a sustainability mindset combine? Change is what happens.
We need to change our zero sum game mindset. We need to move from competition to collaboration. We need to move not just from employee management to engagement, but to enrichment. In a digital world, we are all connected. We need to change our thinking to flourish in a brave new business world.
The employee is where this revolution happens. Yes, employees today are happy to have jobs. But they are also frustrated, uncertain and have a sense of limited opportunity for advancement, change or challenge. Slow economic growth means slow growth in salaries and often times shrinking or more expensive benefits. But in the post-industrial world, treating people as people and not “inputs” or “production units” means a corresponding acceleration in management changes. The service and social responsibility ethic means treating people better.
The new workplace is full of diversity and the young people entering the workplace are digital natives, rather than digital immigrants, having been raised with a screen and a digital device in their hands. They have also grown up with a sense of empowerment and entitlement that isn’t suited to being “controlled” or “managed” in the traditional sense. The business leaders of tomorrow must facilitate environments where dealing with employees means building and maintaining relationships, like that with a friend, child or even spouse. Employees are capable of finding new solutions and tapping their own networks for advice and specialized talent. Motivation and engagement are more personalized.
The shift to a people-oriented or employee-led economy is not without its challenges. On the surface this sounds wonderful but unlike machines that are predictable and standardized, people can be messy. They have feelings, they get sick, they quit, they complain, they shirk and criticize. Becoming a people-first organization means committing to values. What are the values needed in an employee-led economy?
Authenticity. People-to-people interaction requires transparency and being real. People have built-in BS detectors and a very low tolerance for anything less that honesty. Trust is built on authenticity. Employee service is a value that mirrors and facilitates great customer service. Community building based on shared experiences, aspirations, social media and common good is a value required in the new workplace. In this new workplace, managing is about serving, facilitating and supporting each other.
Yes, that all sounds pretty soft. But employee engagement has evolved to a combination of work and non-work quality of life that includes the meaning of work, personal growth and interpersonal connectivity. As people view their work as an extension of who they are, as they invest more and more time and mental effort in their jobs, they expect the workplace to be a place for personal enrichment. This becomes a virtuous circle of benefits to both employer and employee.
When work has meaning and a business has a vision that motivates them, employee commitment and retention increases. When the employee experiences personal growth with increased knowledge and development of new skills, their ability to solve business problems and innovate also grows to the benefit of the enterprise. And when there is an interpersonal connectivity, strong relationships enhance the quality of work and ability to handle stress and job pressures.
This new paradigm of personalism becomes the norm in the workplace, where self-actualization, best self and personal identity expression become competitive advantages. This requires new leadership—people-first leadership.
This approach takes the emphasis away from vision and strategy, and places it on people— employees, customers, partners and suppliers. It means understanding them from their perspective rather than that of the organization. This is a radical change—it changes everything. Marketing is no longer “The 4 P’s” but now has a fifth one: Product, Place, Price, Promotion, and People. Marketing now should be viewed as first serving the interests of customers. A service-dominant approach to management sees the organization as servicing employee needs.
Research by the Gallup Organization, by Marcus Buckingham and trends identified by Jim Collins (author of Good to Great), have been identifying the people-first power to revolutionize business results. Collins calls it “First-Who.” Gallup has preached the importance of having best friends at work for personalized, honest recognition. Buckingham has called for leaders to recognize and encourage people to work from their strengths. A people-first approach to leadership emphasizes the value of human relationships at work. The workplace is a community and leaders are facilitators and builders of the interpersonal relationships with organizations. The Forum For People Performance Management and Measurement calls this the Human Value Connection—the connectivity across people that drives operations and performance.
Making this happen requires employee insight—gaining a deep understanding of employee needs, concerns, motivations and personal life values. It means serving the whole person beyond just work and life balance, but creating life-enriching experiences and opportunities. This changes how the organization will serve based on what employees need rather than by organizational units. New leadership talents will foster the development of strong interpersonal relationships and community among employees. It means organizing for people, not functions. In the future, look for reviews to include measuring “well-being” and recognizing that performance is not just what’s good for the organization. The evolution in business is from performance to people as the primary concern.
There are six primary needs that every person is looking for in their workplace: respect, recognition, belonging, autonomy, personal growth and meaning. As professionals in recognition and motivating people, we need to be sure we are becoming leaders in this new economy.
Paul A. Kiewiet, MAS, CIP is director of business development for Mercury Promotions and Fulfillment (UPIC:Mercu517) and is a former PPAI chair and former trustee of the Forum For People Performance Management and Measurement.
This article is based on content gleaned from the 2nd Annual Forum Think Tank titled,“Who’s in Charge Now? Thriving in an Employee Led Economy,” developed by Dr. Frank Muhern, Ph.D, an associate dean of research at the Medill School of Journalism at Northwestern University and the Academic Director of the Forum.
The Forum for People Performance Management and Measurement is a research center within the Medill Integrated Marketing Communications graduate program at Northwestern University. A central objective of the Forum is to develop and disseminate knowledge about communications, motivation and management so that businesses can better design, implement and manage people-based initiatives for inside and outside an organization. PPAI is a member of the Forum and Paul Bellantone CAE, executive vice president serves as a member of the Board of Trustee on the Forum.
PPB Reader Poll
What is your company doing to engage and retain your employees or team members?
“K&B has taken a ‘business as usual’ approach to the economy. We have the advantage of being a pretty large company without any debt. Other distributors, even some a bit larger in claimed industry sales are dealing with debt, borrowed working capital and the like. So we are able to simply keep moving forward. We have never had a single economic layoff since the Kaeser family has owned the company (1923) and we did not discontinue any bonuses or decrease any pay.
“So for K&B, we have maintained a steady course and not needed to resort to drastic measures to stay afloat. We also reinvested heavily during the slow economy. We are very ready for the growing economy we are starting to see signs of.
“So the answer is this is that solid economic stability is the best way to engage and retain employees and sales associates (our dealers).”
Gregg Emmer
Kaeser & Blair
“Since we’re a family-owned company, Maribeth and Chuck [Sandford] really work to make it a family atmosphere.
• Departments celebrate the holidays within their office areas. You should see our place on Halloween! Christmas is no different.
• There’s a company picnic in the summer and a holiday party in December.
• Most Fridays are theme days—funky hats, favorite sports jerseys, pajamas, crazy hair.
• One day a week, departments take turns selecting the music that’s piped throughout the offices.
• Employees have two cafeterias, a kitchenette and an internet lounge.
• There’s a referral bonus program to attract new, talented associates.
• At the end of each year every person completes an open-ended document called “Lessons Learned.” Employees can openly express their thoughts about the year, what went well and what didn’t and make it anonymous if they want. Chuck reads every one of them and tries to incorporate the best ideas into working programs and policies.
• Employees are encouraged to give ‘kudos’ to each other. Once a week, Chuck does a broadcast voicemail to the entire company thanking and outlining each person’s accomplishments.
“We truly recognize that employees perform far better when they have opportunities to also play at work. It builds camaraderie, teamwork and a sense of being part of something important.”
Christopher Duffy, MAS
BAG MAKERS, Inc.
“We’ve realigned some areas [which] maximizes the level of service our company provides and also is hugely beneficial in keeping morale positive and reinforcing that we value both our customers and our employees. Departments work more closely together and individuals now have a better understanding of how their area fits within the team. Relationships are built that are stronger than the occasional interactions employees may have had before.
“On the ‘fun’ side, we choose a charity each year and coordinate fall/winter drives to donate to that charity. We’ve adopted local families for holiday gift-giving and had food drives. We’ve had a pet photo contest, an ugly sweater contest, Halloween and holiday decorating contests, just to name a few. These activities boost morale while providing benefits to the community and to each employee involved. Adding to that are wellness programs/contests and potlucks/treat days. We recognize that employees on all levels spend a significant part of their lives here and we want them to know they’re appreciated and part of the team. We’re a large company, but small enough to have a flexible, family environment.”
Rebecca Kollman, MAS
Adventures In Advertising, Inc.
“One of the keys to [our] successful retention of employees has been to foster a ‘small company’ feel even though we have more than 80 employees. Every Friday Barry Lipsett (our president and owner) brings in freshly made bagels and treats for all employees. We also have monthly themed lunches with birthday cakes.
“We have a very open policy—we don’t consider our management staff an ‘us versus them’ mentality; we use a team-based approach to our work. This helps every employee from our facilities coordinator to our VP of production understand how they impact the success of the company. It really helps people take pride in their jobs when they know that they are helping to shape the company.
“The single most important retention effort we have though is our promotion from within. We have had warehouse workers become some of our best sales reps, customer service reps become great marketing employees—it is all about believing in people and giving them an opportunity to discover their true potential.”
Vanessa W. Keefe
Charles River Apparel
“We… made necessary staff cuts early on. By mid-year, we were right sized for the economy, and made sure all remaining staff knew we were done. We also made certain our service efficiencies were maintained at the highest level [through] cross training. All in all, our cuts weren't as deep as most companies because we only experienced about half of the revenue percentage decline that the rest of the industry reportedly felt.
“During the second half of the year we had more positive and fun things happening like sales contests which rewarded not only our account executives, but also staff that supports them. HALO/Lee Wayne is known for its fun and positive work environment, so even though the economy was tough in 2009, we did everything possible to keep our people engaged, excited and motivated.”
Dale Limes
HALO/Lee Wayne
“We aren’t doing anything different than we did when times were good. Retaining employees isn’t about retaining employees, it’s about treating those around you like you would friends and family. Making these people want to be around you and the energy your office space brings to their life. Make them feel comfortable, a place they know is safe and will always be there when they need something. You should do parties, get-togethers and extra stuff for your employees because you want to, not because you have to.
“They can sense the difference and as soon as the economy turns around they will be moving on or worse—they will stick around and be a mediocre employee just collecting a paycheck [and] sucking the life out of your company.”
“You have to change it up, do something different, crazy and off the wall, keep them guessing. Make it fun to come to work.”
Charley Johnson, CAS
SnugZ/USA
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