All posts by David Gillespie

Talent And Motivation Are Critical To The Success Of Your Business

Individuals of great talent can have a significant and disproportionate bottom line impact in jobs that are highly complex…

talent
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According to McKinsey’s global talent survey.  Talent will increase productivity by 800 per cent in jobs that are very highly complex, but by just 125 per cent in high complexity jobs and just 50 per cent in low complexity jobs.

Very high complexity jobs include software developers and high level managers. Low complexity jobs are unskilled or semi-skilled labour such as assembly line workers.

This doesn’t mean the entire team needs to be highly talented.  A highly talented engineer can produce the work of nine average engineers in the same amount of time. 

Even ensuring one in five are highly talented will lift the average productivity of the team in high complexity jobs. It will also significantly reduce the time it takes to complete a project. 

As the late Steve Jobs once famously said after noting that his best engineers were 50 to 100 time more effective than his worst, “Go after the cream of the cream. A small team of A+ players can run circles around a giant team of B and C players.”

Disproportionate Impact

Talented individuals can have a significant and disproportionate bottom line impact in jobs that are highly complex, so, rather unsurprisingly, the competition for talent in those industries is fierce. Almost one third of senior leaders surveyed by McKinsey cited ‘finding talent’ as their most significant managerial challenge. 

And with a predicted shortfall of up to 18 million high skill workers in the United States and Europe by 2020 (and 23 million in China), that is to be expected. 

Based on the labour market sizes, this means 1 in 10 high complexity jobs in Europe and the US, and 1 in 6 in China will go unfilled.  Companies in complex industries will not be able to fill a significant percentage of the high skill jobs at all, let alone fill them with the most talented individuals.

Against this backdrop of significant talent shortage, you might assume businesses were highly skilled at seeking out and retaining talent. And you’d be dead wrong.  According to the McKinsey survey 82 per cent of Fortune 500 executives don’t think their companies recruit highly talented people and just 7 per cent agree with the proposition that their companies retain high performers.

No Engagement, No Talent

Big companies, by and large, are just not good at attracting and keeping talent. This is likely due to a lack of engagement.  A talented individual can work anywhere and usually knows it. If they are not motivated by the job, or engaged with it, they will probably leave.

Gallup conducts an annual survey of employee engagement for US employees.  While the numbers are improving, according to the latest results, more than half (53 per cent) of US workers are disengaged with their work or workplace and an additional 13 per cent were actively disengaged.

A disengaged worker is turning up and doing the minimum required but will leave the company for a slightly better offer.  An actively disengaged worker has a miserable work experience and would quit tomorrow if they had any other choice. These statistics match up to other surveys which suggest about three in four workers are actively looking for another job at any given time.

According to Gallup data, businesses that are in the top quartile for engagement achieve earnings per share growth that is four times that of their competitors in the bottom quartile.  They also experience better retention, fewer accidents and 21 per cent higher profitability.  Attracting and retaining talent by keeping them engaged is a license to print money.  But doing that is far from easy.

According to McKinsey, the key is to correctly identify the roles adding the most value.  Sometimes this is easy. Maybe it’s the engineer who checks in the most code or the salesperson who sells the most but usually its not that obvious.  Companies need to look below the surface for long term value.  Is the code bug-free?  Are the sales repeat business?  Is it actually a brilliant code tester adding the value or an incredible sales engineer?

Honesty Over Money – Honestly!

Once those roles are accurately identified the organisation needs to focus 95 per cent of its retention efforts on engaging and retaining those key individuals.  But it isn’t just about money, according to the McKinsey and Gallup surveys, money is the least important of the four primary motivators for retaining high value talent. 

The other three in order of importance are having inspirational and empowering leaders, working for a company with a reputation for honesty and integrity and having a job that makes a difference (has impact).

In short, don’t employee psychopathic leaders, develop an industry-wide reputation for honesty and integrity, doing something that makes a difference and treat your employees the way you would like to be treated and you will be a long way down the path to attracting and retaining the kind of people who can attach booster rockets the size of a SpaceX Falcon Heavy to your bottom line.

The Leadership Styles That Work Best

Leadership is as much a skill as sales, accounting, engineering or programming, but is rarely treated that way by companies making hiring decisions.

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There is a lot of complicated management theory about management and leadership.  There are detailed guides to choosing the correct management style.  Should your leaders be Authoritative or Visionary or Transactional or a Pacesetter or a Servant or Democratic?  You could spend your life studying the mountains of research and still be none the wiser.  But the reality is likely to boil down to just one rule.

Don’t hire psychopathic leaders.

Leadership is as much a skill as sales, accounting, engineering or programming, but is rarely treated that way by companies making hiring decisions. A recent study has found that a staggering 82 per cent of hiring decisions concerning leadership roles select an inappropriate person. Companies are choosing the wrong person for the leadership role an alarming rate of only once in every five hires.

Leadership Talents = Engaged Employees

Gallup has spent two decades studying the performance of 27 million employees across hundreds of organisations. They have calculated that the innate leadership talents of managers account for 70 per cent of the variance in employee engagement from company to company. 

In an average company in 2018, around 50 per cent of the employees were disengaged and a further 13 percent were actively disengaged. An actively disengaged worker has a miserable work experience and would quit tomorrow if they had any other choice.

The research shows that employee engagement is strongly linked to customer ratings, profitability, productivity, staff turnover, safety incidents, staff theft, absenteeism and product quality. There is however an easy solution at hand. 

The research also shows that increasing the number of hires of talented leaders can significantly increase the engagement of employees.  If the percentage of actively disengaged employees can be reduced below 10 per cent, then earnings can be increased dramatically. 

Lowering Active Disengagement

In 2012 Gallup examined the performance of 49 publicly traded companies and compared their results with engagement results from their survey data.  They found that companies that did manage to lower active disengagement experienced on average 147 per cent higher earnings per share than companies with more typical levels of active disengagement.

Hiring more talented managers can therefore have a massive and direct impact on the bottom line and a significant array of critical business measures. Gallup’s research has left it convinced that all good leaders share just five critical talents:

  1. They motivate every employee with a compelling mission and vision
  2. They are assertive, drive outcomes and persist in overcoming adversity and resistance
  3. They insist on clear accountability
  4. They enforce a culture of integrity and honesty and build relationships that create trust
  5. They make decisions based on productivity, not politics.

In short they must be honest, empathetic and have a clear vision. Or in even shorter, they must not be a psychopath. 

The critical difference between a psychopath and the rest of us is their complete inability to feel empathy.  There care for nobody but themselves and are quite happy to use any means possible to remove anything which gets between them and their goal.  That goal is accumulating more power and money for themselves.

Power over People

As a general rule, a psychopath will be drawn to jobs which give them power over other people. Psychopaths believe they are superior to everybody and that the role of all other people is to deliver rewards to the psychopath.

Add this to their prodigious ability to charm interviewers, and their propensity to make up whatever achievements they need to get the job, and it’s easy to see how they may be fast-tracked. As a result, we can expect them to be towards the top of any corporate structure.

To the psychopath, the team that works for them need to be tightly controlled and completely compliant.  Psychopaths achieve that using classic manipulation tactics, singling out members for public punishment, rotating those with favoured status, implementing ever more detailed micromanagement and the ramping up of secrecy.  

The workplace under a psychopath is in constant turmoil.  Factions are rife, sick leave sky-rockets, staff turnover becomes endemic and productivity drops like a stone.

Power of the People

Luckily the cure is easy.  Well, easy to say.  It’s honesty and transparency.  The best place to hide a murder is in a massacre and the best place to hide a lie is in a company full of liars. It is much harder for a psychopath to use deceit to their advantage if everybody else is honest. 

Companies that ban secret communication channels, reward honesty, punish dishonesty, encourage whistle-blowing and who have strong, honest and independent human resources divisions (and boards that listen to them) are much more likely to control psychopaths and massively limit the harm they can inflict.

This will not stop you employing psychopaths but it will ensure they are working for the greater good of your company rather than destroying its culture and its future.

Is It Time To Get Rid Of The Open-Plan Office?

Well conducted research is beginning to appear and it does not look good for the open plan office…

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The open plan office is the badge of the thoroughly modern work space. It’s as much a part of the office of the future as unlimited free snacks and Fussball tables in the common room.  But research is starting to pile up that it is doing more harm than good.  A lot more harm than good.

By 2014, seven out of every ten offices were open plan according to reporting in the New Yorker.  Gone were the sea of cubicles that inspired Dilbert’s creator.  Instead the typical office looked more like an aircraft hangar full of desks.  The theory was the removing physical barriers removed barriers to collaboration and communication. 

Oh, and there was the no insignificant bonus that they cost a lot less to build and fit out and employees and their work were easier to monitor.  While that theory has logical appeal there was surprisingly little empirical evidence to back it up. The research that did exist was based largely on self-reported questionnaire responses and attempted to measure largely intangible outcomes like employee satisfaction.

Open Plan – does it actually work?

Now however, well conducted research is beginning to appear and it does not look good for the open plan office.  In July last year, the Harvard Business School conducted a large study with a first of its kind methodology.  The researchers decided to use wearable technology such as movement sensors, cameras and microphones embedded in badges to accurately measure whether open plan offices actually did increase collaboration and communication.  The devices were deployed in two different company headquarters before and after a shift to an open plan design.

To ensure robust data, the researchers ensured the devices were deployed over a long time frame and measurements were taken at the same points in the business cycle.  There was no point comparing an end of quarter rush to a start of quarter quiet period.

The results were extraordinary.  Rather than increase face to face collaboration and communication, the shift to open plan massively decreased it.  People talked face to face 70 per cent less in an open plan office than in the normal office space that had preceded it.  The researchers speculated that the open plan triggered a natural human withdrawal response to large groups.  People have a fundamental desire for privacy and the open plan violated that.  Workers stopped talking in person and IM and email traffic surged by 50 per cent.

Perhaps more importantly, from a bottom-line perspective, the change also decreased productivity and work quality in both of the studied companies.  Other studies have estimated the value of this impact to be in the region of a 20 per cent decrease in productivity.

This new research adds quantitative weight to something more traditional studies have been highlighting for the last couple of decades.  Such studies have found that open plan offices had a negative impact on job satisfaction, attention spans and creative thinking, have dramatically increased levels of stress, conflict and staff turnover and significantly increased sick leave.   

And all of that is before we consider the cost of distraction.

Lack of Privacy

A 2013 study of open plan offices revealed that nearly half of the surveyed workers said the lack of sound privacy was a significant problem for them and more than 30 per cent said the same thing about visual privacy.  The same researchers in a previous study concluded that the loss of productivity “due to noise distraction” was doubled in open plan offices. 

It’s not surprising then that the Information Overload Research Group a non-profit consortium of business professionals, researchers, and consultants, estimates that distraction wastes 25 per cent of knowledge workers’ time and is costing the United States economy almost one trillion dollars a year.

Clearly the answer is to put the walls back in.  It might not create any net gains but at least it would reclaim the ground lost by the disastrous detour into communal office space. However,  if you really want to increase productivity, keep the talent happy and retain your best staff then the evidence is now suggesting that you should delete the office altogether and let employees work from home. 

The Worst of Ideas

A recent very large randomised controlled study on a Chinese call-centre operators, for example, found that working from home increased productivity by 13 per cent.  Nine of those percentage points were from working more minutes per shift and four per cent from more calls per minute.  

Home based workers also reported feeling more satisfied and the attrition rate halved. Working from home is not for every employee or every type of job but at least there are upsides and the good news for the CFO is that it saves even more on floorspace costs than the open plan office. 

The open plan office was a bad idea implemented for spurious reasons with an inadequate evidence base.  And it turns out to be a terrible idea.  All we need now is management teams brave enough to admit that and move towards work structures the evidence says significantly improve rather than degrade productivity.

Do Fringe Benefits Increase Productivity?

Does employee happiness improve productivity and which types of workplace benefits produced the greatest productivity gains?

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Until we are all replaced by robots, there are very few businesses where employee productivity is irrelevant.  It is self-evident that fringe benefits which increase employee happiness and reduce stress are likely to increase productivity.  But until now there has been very little hard data around this concept.

A recent series of studies by the University of Warwick, Department of Economics, looked at whether employee happiness improved productivity and, more specifically, if they do, which types of workplace improvement produced the greatest productivity gains. 

The series of experiments was based on creating ‘happiness shocks’ in one group and not doing it in a matched group.  Both groups were then asked to perform a series of easy mathematical additions under time pressure.  They were paid about 50c for every correct answer, so there was incentive to take the test seriously.

Everyone was also asked to provide their most recent school level results in mathematics and do a separate mathematical reasoning test so that adjustments could be made for individual mathematical ability. The time-pressured mathematical test was designed to simulate the type of work done in typical white-collar job in a precise and measurable way. 

The happiness shocks in the first two experiments were created by showing the group a 10-minute movie clip of a well-known comedian performing comedy sketches.  Based on their own assessment, on average people shown the clip were 1 point (on a 7 point scale) happier than people not shown the clip.  In an attempt to make the happiness shock more closely reflect real-world examples, in the third experiment the participants were given chocolate, fruit and drinks instead of being shown a clip. They were given 10 minutes to consume whatever they wanted.  This was equally effective in raising the mood of the participants.

All three experiments showed that the happy people were more productive than the people who weren’t shown the clip or given treats.  Both groups were paid for their answers, but the happy group shown the comedy clips attempted 10 per cent more problems and got 10 percent more correct answers after adjusting for mathematical ability. 

The researchers analysed those results in detail and found that the improved outcome was entirely due to attempting more problems. The happy workers were more motivated to put in more effort. The improved mood did not make them smarter or better at maths. If they were bad at maths before the experiment, they still were when they were happy, they just attempted more problems and so had a greater chance of getting correct answers.  And the same was equally true of those that were good at maths before they started. The improvement was uniform across all ability levels.

The improvement was approximately doubled in the experiment were the ‘happiness shock’ was snacks. Interestingly one of the experiments involved not telling the participants that they would be paid for correct answers.  It made no difference to the outcome.

The researchers also tried a variation where they attempted to see if recent ‘bad life events’ in the participants real life showed up as having any effect on their happiness and their performance. In this experiment, no ‘happiness shocks’ were given, and they were asked to perform the timed task after they reported their self-assessed level of happiness.  After the test, they were individually asked if they had, at any time, experienced one of more of: close family bereavement, extended family bereavement, serious life-threatening illness in the close family or parental divorce.

People who had reported one of the ‘bad life events’ within the last three years were measurably less happy and less productive.  They were at least half a point lower on the 7 point happiness scale, they made 10 percent fewer attempts at the maths problems and got around 15 percent less correct answers.  The more recent the ‘bad life event’ the lower their initial level of happiness and the worse they did on the test. If it happened more than 3 years ago, it made no difference to either happiness or performance.  When they looked at how people who had suffered bad life events had gone in the other experiments they found that the ‘happiness shocks’ were just as effective at improving their performance.

When the researchers separated out the results by the type of event experienced, they found that ‘parental divorce’ probably didn’t qualify as a ‘bad life event.” It had no effect on happiness or productivity and in some instances actually improved both. 

These are obviously not real-world experiments, but they do a reasonable job of simulating the effect of delivering happiness to a workforce.  Happy workers try harder and do more immediately after receiving a ‘happiness shock.’ And their cash reward for the work, their pay, had little effect.

Translating those findings into the workplace suggests that if an employer provides “extras” which the majority of their workforce regard as a treat, the workers are likely to be at least 10 per cent more productive.  As long as the cost of that benefit is less than the measured productivity increase, then employers would be mad not to do it.


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Is The Gig Economy Changing The Way We View Work?

The ‘gig economy’ is just a hipster way of describing people who contract their labour rather than being full time employees. But is it changing the workplace?

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We are constantly told that the ‘gig economy’ is about to destroy the workplace as we know it. We apparently have entered a brave new future where workers are no longer tethered to a business and lack the protections of employment laws written in a bygone and largely irrelevant era.  But the evidence tells a very different story.

The ‘gig economy’ is just a hipster way of describing people who contract their labour rather than being full time employees.  In that sense, gig workers have always been part of our economy.  Most tradespeople, for example, run their own businesses and contract their labour to multiple employers, often simultaneously. 

Recently however, contracting or ‘gig working’ has bled more and more into jobs previously occupied by full-time employees.  Taxi drivers are the most obvious modern example.  Formerly a driver worked for a company who owned and serviced the car.  The driver worked for a wage or for a percentage of the fares collected.  With the advent of Uber, the car is owned and serviced by the gig worker and they get to keep a much bigger (in theory) proportion of the fares earned. And it doesn’t stop there.  Gig workers are doing a similar thing when they turn their home into a hotel and themselves into hoteliers using AirBnB.

But for all the headline-grabbing hoo-ha about Uber, AirBnB and Lyft etc., gig workers using electronic platforms still only account for about 1 percent of the workforce. If we include contractors, temps and on-call workers of any description in the definition, about 10 per cent of the US workforce is part of the ‘gig economy’.  And that percentage has not moved at all since 2005.  The overwhelming majority (90 per cent) of workers had full-time jobs in 2005 and they still do.

The introduction of electronic platforms like Uber, Lyft and AirBnB may not have changed the overall numbers but it has changed one very important aspect of contracted labour, the age of the person doing the work.  Between 2005 and 2017 the percentage of ‘gig workers’ aged 35-44 dropped from a quarter to a fifth.  Meanwhile the percentage aged 55-64 increased by 25% and the numbers aged over 65 almost doubled.  Today’s ‘gig workers’ are increasingly older workers who in earlier times might have been receiving a government pension or living out their golden years on their savings. The reality couldn’t be further from the youth culture branding of the digital platforms.

Gig platforms may be growing but they are largely not replacing more standard work patterns. The JP Morgan Chase Institute (JPMCI) tracks payments to the bank accounts of workers in the ‘gig economy’ (via the platforms that arrange the work).  Their data shows that, for most of those workers, gigs are sporadic and are usually a second job done in a household where another member has a fulltime job.

And far from suffering lesser conditions, data from the US Labour survey shows that the group of gig workers growing fastest (those over 50) had the highest weekly earnings and greatest level of health insurance and retirement coverage of any age group.  All of those measure increased significantly between 2005 and 2017. 

The same survey did however identify a different and more concerning trend for younger workers when compared to its 1995 results.  There is an undeniable decline in work conditions for workers in general.  There is less job security, fewer opportunities for promotion and the increasing probability that their job will be outsourced to a company paying lower wages and offering less benefits.  This is increasingly being driven by the deliberate creation of ‘contracting’ roles which in reality are being performed by people who on any reasonable measure are full-time employees.  The contractor status gives the employer much more flexibility but destroys job security for the employee.

There is a lot of spin associated with the story of the gig economy and it is probably driven by tech companies which have a lot to gain by us believing they are much more important than they are.  The reality is that gig work is not increasing.  All that is changing is the method of arranging it and the age of the people doing it. 

But all the noise about the gig economy hides a more important story.  Full-time job security is declining and with it, people’s overall earning capacity and sense of worth and well-being.  We need to care less about the marketing spin emanating from the ‘gig economy’ and more about the very real declines in job security. 


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Is Artificial Intelligence Destroying Your Job?

Just because a machine can learn from mistakes doesn’t mean it is self-aware and about to deploy robots to destroy humanity throughout time and space.  But it does mean that increasingly, machines can take on more and more human work.

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On 11 February this year, President Trump signed an executive order directing US government agencies to prioritise investments in Artificial Intelligence (AI) research and development. There isn’t any detail on how the AI Leadership executive order will be paid for, but as a statement of intent right from the top, it’s pretty powerful.  So, is this something you need to worry about?  Will robots be taking your job next Tuesday?  Probably not, but the answer is not as reassuring as it sounds.

When we think of AI, we probably think of Skynet (the evil computer that hunts humans in the Terminator films) or the similar tricked-up calculator that is the meanie in the Matrix films.  But real AI is a little more mundane.  It is more likely to be making sure your car headlights are on when you need them (and not on when you don’t), sending a nuisance spam call to your voice-mail or suggesting the next thing to watch on Netflix.  AI is the catchall term for software that can solve problems based on rules rather than a linear set of fixed instructions.  Really advanced AI can modify the rules based on how things turned out the last time or patterns that it detects in the environment.

Just because a machine can learn from mistakes doesn’t mean it is self-aware and about to deploy robots to destroy humanity throughout time and space.  But it does mean that increasingly, machines can take on more and more human work.  In recent decades we have seen this kind of automation steadily eat away at assembly line jobs as increasingly AI driven robots replace workers performing limited and repetitive functions.  A robot can sort big apples from small oranges more efficiently than a human and it never needs to take a break (or be paid). 

As the technology advances, it’s starting to creep into areas we might have thought of as immune from automation.  Medical diagnosis is increasingly the target for deep learning AI, the kind that recognises patterns and makes predictions based on those patterns.  During their career a doctor might see a few thousand x-rays or MRI images and get better at noticing patterns.  But AI software can review every x-ray ever made before the doctor has finished her morning coffee. 

A recent study, for example, compared the diagnostic precision of AI software with that of teams of specialist doctors from all over China.  The AI software was 87 per cent accurate in diagnosing brain tumours in 15 minutes.  The doctors could only diagnose 67 per cent and needed twice as much time to do it.  The AI increased precision and saved time because it was able to learn from a much larger base of experience than any individual doctor or team of doctors ever could. It uses like this that are why AI is predicted to add $15 trillion to the global economy by 2030.

President Trump joined the 18 other countries that have announced AI strategies since March 2017, because he wants the US to be a leader in AI rather than a follower.  And it is why investment in AI based startups jumped 72 per cent to almost $10 billion in 2018 alone.  

And even though some analysts are predicting 1.8 million jobs will be lost to AI in 2019 alone, those same analysts are predicting that the AI industry will create 2.3 million jobs in the same timeframe.  You can’t buy buggy whips now because the industry that created them was destroyed by Henry Ford, but there are many more jobs in the automobile industry he created than there ever were in the one he killed.

When analysts from McKinsey looked at the employment impact of AI in five sectors last year, they concluded that jobs which use basic cognitive skills, such as data input, manipulation and processing will likely decline, while demand for higher cognitive, social and emotional, and advanced technological skills should grow, as will the number of jobs that require customer and staff interaction and management.

If your job could be classified as administrative support then the future does not look bright.  And even if it requires you to do years of training so you can manipulate or recognise patterns in data, like those Chinese doctors, a financial analyst or a military strategist then AI will be coming to a workstation near you within the foreseeable future.  Humans are still a little too messy and unpredictable for the average AI bot.  So, if your job needs you to interact with humans and please them, such as in direct sales, management or counselling, then you are probably safe, for now.  And of course, if you are writing the programs that drive the AI then your career is assured.

AI is rapidly changing the face of the modern workplace.  And while nothing much will change by the end of the year, by the end of the decade, most jobs will be unrecognisable.  You’ve been warned. It’s time to transform yourself from a data geek to a people-person, before your computer takes your job.

How To Cope When You’re Working For Someone Half Your Age

Increasingly employers are looking to fill their ranks with ‘digital natives’, which usually translates to people younger than you. But how do you work for someone half your age?

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Millennials (Gen Y) and Post-Millennials (Gen Z) now make up 40 per cent of the workforce.  So, if you are over 36 years of age you should probably get used to the idea you will one day be working for someone young enough to be your son or daughter.  How you deal with that reality can make a big difference to how happy you are at work and your chances of career progression.

Increasingly employers are looking to fill their ranks with ‘digital natives’ which usually translates to people younger than you. At the same time older workers are staying in their jobs for longer or rejoining the workforce after ‘retirement.’  And while every workforce has always been a mix of the old and the young and everyone in between, for many workplaces how that mix is distributed throughout the organisation has been changing.

In a traditional organisational hierarchy a significant part of the reason you were promoted was because of your length of service. This meant that older people tended to be more senior and young people tended to be lower in the chain of command.  Today this structure still very much persists in government organisations such as the Public Service, Law Enforcement,  the military, Health and Education.  But sheer weight of numbers (of younger workers) and a trend towards less structured workplaces has meant that May-December working relationships between a Boss and their direrct reports is more and more likely particularly in industries where social media capability is a requirement.

Naturally psychologists have a term for this. It’s called ‘status incongruence’ and it means a situation where a person’s status is not what you would expect, in this case, because of their age. 

While the phenomena has been discussed by sociologists since the 1950s, it’s only recently that studies on the impacts for organisations have started to appear. One such study was recently performed by researchers from Naveen Jindal School of Management at the University of Texas in Dallas.  One of the lead researchers, associate professor Orlando Richard told The New York Times the research showed “older workers are not as responsive to [a] younger boss, because they feel he or she shouldn’t be in that position,” and, “[they] are less committed to the company. They’re not as engaged in the job. If they’re close to retirement, they may not leave, but they may not work as hard.”

The study also found that organisations with older workers reporting to younger workers needed to adapt their leadership style to take account of that.  Transformational Leadership is popular among the types of firms likely to experience status incongruence.  But the research suggests this style of leadership in particular is likely to be less successful. 

Transformational leadership requires a leader to work with teams to identify needed change, create a vision to guide the change through inspiration, and execute the change in tandem with committed members of a group.  In order for this to work, the members of the team have to believe in the credentials and ability of the leader.  While that is not impossible where the leader is significantly younger than a team member, it is something that needs to be taken into account in how a leader works with the team.  They will have to work harder to establish their credentials, so that workers can see past their relative youth and develop faith in the leader’s abilities.

It is also something that the organization has to bear in mind when selecting a younger person to lead a team. If that person is not capable of convincing the team that they have the credentials to be there then status incongruence is likely to result in a team which significantly underperforms its ability.

For their part, older workers should focus on not being guilty of reverse ageism.  They need to recognise that age, like gender and race does not define a person’s ability.  They should especially resist the urge to give the leader tips on how they would do the job.  They should strongly resist the urge to say “having done this for years …” and leading with ‘in my day’ is not a good plan no matter who your boss is, but it is definitely a land-mine with a younger leader. 

Instead they should use their experience to help their younger boss in a non-threatening way.  Making yourself and your experience valuable is likely to be a pathway to doing better in any company but this is likely to be especially the case in an organisation that values skills over age.

Is Employee Turnover Killing Your Profits?

It’s a good idea to get the bottom of why employee turnover happens and how to limit it.

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Employee turnover costs US businesses more than one Trillion (1,000 Billion) US dollars a year.  That represents about 10 per cent of all US corporate profits, so it is nothing to be sneezed at.  It is therefore probably a good idea to get the bottom of why it happens and how to limit it.

According to the latest statistics from the US Bureau of Labor Statistics, the average US business turned over 44 per cent of its employees in 2018 and in some industries it was significantly higher.  It was 87 per cent in the Arts and entertainment and 75 per cent in accommodation and food services. At just under 15 per cent, Federal government agencies experience the lowest turnover.

Gallup research suggests each employee loss costs the business 150 per cent of their salary.  Deloitte Consulting partner Josh Bersin says his research shows that, depending on the position,  it could be as high as 200 per cent by the time you account for hiring, on boarding, training, ramp time to peak productivity, the loss of engagement from others due to high turnover, higher business error rates, and general culture impacts.

Besides those obvious cost cascades there are some less obvious, but no less important costs.  The significant direct costs put real time pressure on an organisation to hire a replacement and get them trained, settled and productive quickly.  The pressured hiring process can often lead to the new hire not being a good fit for the job and leaving (or being let go) within a year, thus compounding the costs.

The Harvard Business Review says that as much as 80 per cent of employee turnover is due to bad hiring decisions.  Similarly Leadership IQ’s Global Management Survey reported that 46 per cent of new employees turn out to be a bad hire within 18 months and only 19 per cent will turn out to be an unequivocal success.  When it came to teasing out the factors behind the failure they found  a lack of technical skills explains only 11 per cent of new hire failures, whereas coach-ability (the ability to accept feedback from bosses) accounted for 26 per cent of failures. 

Employee turnover is very real and very costly, so doing anything at all about it, no matter how small the impact, is likely to be a good investment.  The research suggests that there are some especially important factors that are key to retaining employees (that you want to retain).

Obviously the first rule is don’t rush.  It is important to ease a potential new hire into a job.  Ensure they have a good sense of who they will be working with and what the expectations are well before they are signed on.  This means going beyond the standard probation period clause and pro-actively ensuring compatibility with your culture and team preferably before they start.  Throwing a new hire in the deep end and hoping for the best is likely to be a bad idea.

Pay is also obviously a factor but the research shows that if the only thing you do is throw money at them, you are unlikely to be able to stop a valued employee leaving. While being paid too little for the role will definitely motivate churn, overpaying will not make up for an unhappy workplace.  A workplace survey by Equifax for example found that 44 per cent of workers who leave within a year take a pay cut. They want to get out so bad, the pay is not enough to keep them there. 

Pay does have an effect but it is relatively small. According to Glassdoor surveys, every 10 per cent increase in pay only reduces the likelihood of an employee leaving by 1.5 per cent.  So if you double their pay they are still 85 percent likely to leave. 

On the other hand opportunities for advancement and training are significant factors in employee retention.  Humans like to feel they are getting somewhere. Research repeated shows that role stagnation leads to turnover.  Glassdoor have even put a number on this, saying that every 10 months at an unchanged role increases the likelihood of an employee leaving by 1 per cent. 

According to exit surveys conducted by Gallup, more than half of all exiting managers say that in the 3 months before they left, no one in the organisation spoke to them about how they were feeling about their job or their future with the organisation.  If no-one is talking about your future with the company, it’s easy to come to the conclusion you don’t have one.

Gallup recommend proactive engagement about an employee’s opportunities for growth are key to retaining valuable employees.  They suggest you know the employee’s long term personal goals, allow them opportunities in roles bigger than their past experience and help them to acquire new skills to advance their careers.  In short, treat them as you yourself would like to be treated.  Let’s call that the Golden Rule for Employee Retention.  You could so a lot worse than applying it in your business.


Why Sexual Harassment Training Doesn’t Work (And What We Can Do About It)

There is no evidence that most anti-sexual harassment training actually prevents sexual harassment so how can workplaces stop it?

By Tero Vesalainen/ Shutterstock

About half of all working women report being sexual harassed at work at some point during their working lives.  This is true whether the statistics come from the UK, the US or Europe. Figures like this are underlined by the continuous flow of allegations brought to light as a result of the #metoo movement. 

The question for many workplaces is how to stop it.  For many, the answer is sexual harassment training.  In 2017, for example when two female lawmakers testified about sexual misconduct involving unnamed sitting members of Congress, the House implemented a requirement that all members of staff undergo anti-sexual harassment training.  Even more recently, the US State of California enacted a law to expand employers’ sexual harassment training requirements. Previously, employers with 50 or more employees had to provide their supervisory personnel with two hours of sexual harassment prevention training every two years. The new law dropped the number to any firm having five or more employees and requiring even non-supervisors to receive training.  And it is now common for government agencies, universities and other employers to implement similar policies, with over 90 per cent of US employers having some form of training in place.

Many organisations are now taking a pre-emptive approach to sexual harassment.  When, and not if, the inevitable claim happens they want to be able to point to actions they have taken to prevent it.  The only problem is that no evidence that most anti-sexual harassment training actually prevents sexual harassment or that it makes an employer any less liable for harassment claims by employees.

Comprehensive reviews of typical training programs suggest that under test conditions, men with a propensity to harass may be less likely to inappropriately touch a colleague, but the training does not affect their long term attitudes at all.  According to the researchers there is “absolutely no scientific basis for concluding that harassment training fosters employee tolerance and greatly alters workplace culture.” They also caution that there is a risk that the existence of training sends the erroneous message that the workplace is a harassment-free environment, when it is likely to be nothing of the sort.

The problem lies in the nature of the training according to a recent study conducted by Assistant Professor Elizabeth Tippett from the University of Oregon School of Law.  She analyzed 74 current and historical training programs spanning a period for 1980 to 2016. Her research suggested that harassment training solidified into a genre in the 1980s and 1990s.  It became a box ticking exercise (usually) consisting of a video based on an authority figure summarizing the law and then acting out a set of scenarios focusing largely on contrived situations rather than using real data applicable to the employer delivering the training.  Tippett notes, “a substantial portion of examples trainers use, involving sexual comments, jokes, and emails, represent borderline conduct that may not constitute harassment. Trainers do not always provide an explanation of whether the conduct would qualify as harassment, which may lead participants to infer that such conduct would be strictly prohibited.”  

The result is training which is either ignored because it portrays behavior which isn’t harassment or, results in workplaces which become hypersensitive to the point that productivity is impaired because people are scared of interacting with women at all.

Researchers have suggested a number of ways of improving the effectiveness of anti-harassment training borrowed from research into school-based anti-bullying programs.  One of the most effective of those programs is the one designed by 87-year-old Swedish professor of psychology, Dan Olweus, one of the clear leaders in bullying research. His program is designed to curtail any behavior that results from the power imbalance rather than focusing on any given expression of it. In short his program says set rules, stick to them, monitor compliance vigilantly and punish any violation consistently. Importantly, the entire community must cooperate in reducing the behaviour. A common feature of effective anti-bullying programs is ensuring that the community reacts against bullying. If the bully thinks bullying will make them an outcast, they’ll be much less likely to bully. If the bully’s peers react by reporting the behaviour or intervening on behalf of the victim, the bullying will decrease.

Like other bullies, harassers thrive in environments where supervision is minimal and rules are loosely enforced or non-existent. And just as with bullies, cooperation and community values are the most powerful weapons of containment. None of this will stop a harasser from wanting to harass, but it will severely curtail their opportunities to do so, and likely make it a career ending choice.

All of this depends on top-down buy in from the leaders of an organization.  They have to walk the walk, set the tone and make sure it is enforced without fear or favour. They need to do much more than tick the box and press play on the 1980’s sexual harassment training video.

All too often, group think and anxiety about imaginary consequences shuts down complaints before they are even made. If we want to stop abusive behavior in in the workplace, then we need to ensure our HR departments and all our other whistleblowers are protected and emboldened. When abuse is occurring we need to protect those who speak out, not shame them into staying with the herd.

Is The Ageing Workforce Blocking Career Progression?

Younger workers are worried that an ageing workforce makes it more difficult for them to get a job – but just how much truth is there behind their concerns? 

By Kaspars Grinvalds / Shutterstock

The speaker of the United States House of Representatives, Nancy Pelosi, now aged 78, was once asked by an NBC reporter whether her decision to stay in the job blocks a new generation of Democratic leaders. Offensive though it is, the question makes sense to a lot of younger workers.  If Pelosi keeps working, a younger person doesn’t get a go at the job. And there are many workplaces where that question is playing on the minds of workers.  But intuitive as it sounds, the evidence says it’s a load of bollocks.

More of us are working to an older age than ever before.  In Australia for example the chance that a 55 to 59 year old is still working has jumped from 60 to 75 per cent since the turn of the century.  The likelihood that a person aged 60 to 64 is still working has similarly leapt from 34 to 57 per cent.  And the story is repeated across the globe.  Eighty three per cent of 60 to 64 year olds in Iceland still work, as do 76% in New Zealand, 68 per cent in Sweden and 66 per cent in Japan. 

This is trend that is likely to continue to accelerate with the United Nations projecting that by 2050 the number of people aged over 60 will more than double, to approximately 2 billion, representing around a fifth of the world’s population.  Better healthcare have contributed to longer average lifespans. This combined with declining real spending power for employees has resulted in strong economic and social imperatives for people to stay at work longer.

Perhaps unsurprisingly, younger workers are worried that the presence of older workers makes it more difficult for them to get a job and to progress if they do get one.  Surveys like the one carried out by Canada Life Insurance group reveal that two in five employees believe the ageing workforce will make it harder for younger employees to get a start. 

Employees under thirty are the most concerned with almost of half in agreement with the proposition that older members of staff should retire so that younger workers could have a genuine chance of promotion.  Just 29 per cent of workers aged over 50, agree.  There’s only so many jobs at any given level, young workers reason, and if people are staying in work longer then their chances of progressing are significantly decreased. Only one in five workers felt that older workers should be retained so that they could benefit from their experience.

And while that logic sounds intuitively correct, there isn’t a shred of evidence to support it.  The “lump of labour” theory, as it is known by economists has been around since 1851, when a British economist argued that cutting the number of hours employees worked would eliminate unemployment.  It has been used in policy debates to justify all manner of sexist, anti-immigrant or ageist employment or retirement legislation.  In essence it maintains that any big ‘lump of labour’ suddenly hitting the workforce, such as from immigrants, women, returning veterans or, in this case, older people, reduces the employment prospects of new entrants.

But when economists went looking for proof that this actually happens, they have consistently come up dry.  One recent example is a major review of US labor statistics covering the period 1977 to 2011.  It found that the increased number of older workers in that period had not reduced employment of younger workers, reduced the wages paid to younger workers or reduced the number of hours of work available for younger workers.  Indeed the data suggested that the greater employment of older people had lead to better outcomes for younger workers in that period.

Global analysis by the US National Bureau of Economic Research says that the macroeconomic reality is very different from what intuition tells us.  From an economy-wide perspective, the presence of older workers means more people working rather than collecting pensions and being otherwise dependent on the productivity of younger workers.  This in turn drives greater and faster economic growth which in turn spurs the creation of more jobs.  The pool of available jobs is not static say economists.  It is a rapidly expanding pool that is driven by economic activity and technological innovation. 

If your plan for career progression begins and ends with waiting for your boss to retire or die in harness, then yes, the ageing workforce is going to be a bit of a problem for you.  But if you are open to lateral movement, reskilling in new technologies and embracing the new opportunities that an expanding economy presents then older workers are no threat to you.  And more than that by the time you get to be part of that cohort, you will probably be very grateful for the healthcare and lifestyle benefits they have forced employers to adopt to support an older workforce.