T+D June 09 // Intelligence //

The Boss’s Pet

By Ann Pace

Managers continue the habit of over-reliance on stars.

Remember that annoyingly perfect girl who sat in the front row of your ninth-grade English class, had a panic attack when she got less than an A+ on an assignment, and always received special attention from the teacher?

Just like your classroom’s prized pupils, the office has its own share of boss’s pets.

Most managers devote the majority of their development efforts to only 20 percent of their employees—the high performers. The remaining 80 percent of workers persist with their potential capabilities untapped.

According to a study by Novations, 30 percent of managers believe 20 percent of their employees operate at “go-to” levels on a consistent basis, while only 6 percent of managers believe more than half of their staff operate at such levels. In addition, a near majority of managers believe some employees have more potential than others, and that it is their job to identify and invest in this promising population.

Even as many companies have experienced a reduction in their workforces, managers focus too much on the all-star team, to the detriment of overall staff development.

“Managers continue to set low expectations for fewer people remaining after layoffs when they should be setting higher standards,” says Gerard Lupacchino, senior vice president at Novations. “They need to increase discovery around what real potential is rather than what is predictable performance.”

Lupacchino explains that managers are often willing to lower performance standards for a variety of reasons that are not data-based, such as the rough economy or a recent layoff.

“There is no strategy about how to get more of the team to perform at higher levels,” he says.

The study’s findings show that the 20-70-10 model—a management philosophy popularized years ago—is still widely implemented today. According to former Chairman and CEO of General Electric, Jack Welch, this method “ranks employees into performance categories of the top 20 percent, middle 70 percent, and bottom 10 percent, and then manages them ‘up or out’ accordingly.” However, this old school approach may be holding companies back from realizing their full potential.

“Many companies adopt a point of view about talent development at a point in their corporate evolution, but don’t change this strategy [as the organization changes],” says Lupacchino.

According to the study, leaders in successful organizations moved away from traditional methods by increasing performance levels and raising expectations for every employee remaining on the team. They accomplished this by parceling out assignments strategically and providing more people with opportunities, managerial support, and coaching, thereby encouraging everyone to take more risks. In addition, the leaders rewarded exemplary efforts to demonstrate what individual success looks like.

Successful organizations are taking advantage of expectations for higher performance by developing their employees in ways they never have before.

“Leaders who manage during a slow economy with the intent to protect the company often miss broadening talent,” says Lupacchino. “If you’re going to get what you want in the moment, you must invest in your people.”

It is the workplace learning professional’s responsibility to connect the dots for his senior leaders.

“Raise performance standards, increase expectations for ROI, and connect employee development directly to strategy achievement. These are all things that speak the language of the financial leaders of the company,” Lupacchino says.

“It makes that investment in training and development less discretionary for most companies because to not invest in it would be illogical.”

T+D June 09 // Leadership //

Communication in Tough Financial Times

Aparna Nancherla

With heightened fears about job losses, supervisors are attempting to be more forthcoming about pertinent information with their employees, but oftentimes, their efforts can backfire and actually increase mistrust.

Leading in the current economy is not an enviable position, and many executives and managers are trying to improve their own methods of communication with employees. Silence from management can scare workers, so leaders are trying to counter that fear by giving regular updates.

According to an AchieveGlobal study “Leading in Tough Times,” 52 percent of leaders said the frequency of communication to employees about the economy had increased. Another 66 percent believed that “leadership is open with employees about how the company is affected and its plans for the near future.”

“The struggle for senior leaders is how much do you tell the rank-and-file about what’s going on?” says Craig Perrin, director of product design at AchieveGlobal. “You want to keep them in the loop, but if you tell them everything, people get panicky, and it has a very negative impact on morale, engagement, and productivity.”

The study included 250 leaders from a variety of industries. Respondents all held leadership positions at different levels within their companies (all of which made $50 million or more in annual revenue): 46 percent were managers, 30 percent were directors, 11 percent were vice president level, and 13 percent were senior executives.

More communication does not automatically instill greater confidence among the staff. Only 20 percent of leaders thought that their communication was successful in answering questions and easing fears about job security and company stability.

In fact, 54 percent of leaders rated their employees’ levels of stress as a problem or a severe problem, and 38 percent rated poor employee morale as a problem or a severe problem.

Executives aren’t the only ones who have to worry about what they’re saying, or not saying to their employees.

“Senior leaders need to share information with middle managers and frontline managers,” Perrin says. “There’s some tension there because the leaders who face these employees every day can’t say everything.”

It’s not all bad news though. In fact, 35 percent of leaders noticed an increase in employee productivity within the last six to 12 months. In addition, 70 percent reported that they motivate their employees through ongoing, positive communication, and 49 percent offered special recognition for employees who perform well.

According to Perrin, some cost-free strategies for leaders to keep in mind are two-way communication and recognition of successes, even small ones, across the workplace.


T+D June 09 // Development //

Unkind Training Cuts

By Michael Laff

Spending cuts to training are a first, not a last resort in mature economies, but the consequences of hasty budget decisions could hinder a country’s ability to compete globally in the near future.

That’s the reality facing U.S. and European organizations today, according to a recent report by Cognisco, "Knowledge: the New Commodity." American and European companies are slashing training staff and budgets, and while that might provide some relief to the balance sheet in the short term, it will reduce those organizations’ ability to compete with global competitors when the recession wanes.

A poorly trained workforce is already inhibiting business development in the U.S. According to a survey conducted at the 2009 World Economic Forum, 12 percent of respondents said an inadequately trained workforce was a barrier to doing business in the U.S. The same figure was 9.9 in Britain, 6.2 in China, and 4.8 in India.

Amid such gloomy prospects, even the status quo sounds promising. In Germany, 12 percent of manufacturing companies planned to reduce investment in staff development compared with 63 percent that planned to maintain the same level. Only 11 percent planned to increase their investment in training.

Large organizations in the U.S. reduced their training staff from 5.1 employees per 1,000 staff members to 3.4 from 2007 to 2008. Medium-sized organizations reduced their training staff from 7.0 to 4.9 employees during the same period. Investment in training declined 11 percent from 2007 to 2008 according to the Cognisco report and could drop again in 2009.

Organizations in developing countries are taking an entirely opposite track. Among 300 companies in various sectors in Asia, only 40 percent reported plans to cut investment in training, instead focusing reductions on travel or inventory.

Training is the bridge to entering new markets because ideas and intangible assets are and will become the bedrock of the new economy, not products or services. The old division between manufacturing and services is being blurred. By building the skills of the staff, an organization can develop new products. Rolls Royce is a prime example.

Paul Mizen, an economics professor at the University of Nottingham and author of the report, cited the example of Hong Kong Airlines purchasing engines from Rolls Royce. The two companies inked a $1.2 billion contract this year, which included 700 engines made by the luxury carmaker, in addition to a long-term services contract.

Such a lucrative deal would not be possible without the investment in training, which Rolls Royce estimates at £30 million ($43.5 million) annually.

“It’s the market of the future,” Mizen says. “You can offer additional services that the customer has not seen in the past. It’s a way to exploit knowledge-based opportunities.”

Britain’s JCB Construction is another example. The company’s executives acknowledged that because business is slow, rather than lay off workers, its leaders should invest in training to renew skills.

T+D June 09 // Work Life //

Visibly Shaken

By Michael Laff

As the shadow of layoffs hovers in the office, just thinking about the future is consuming employees’ time.

Workers now spend three hours per day worrying about their job fate, according to a recent survey conducted by Lynn Taylor, a California-based workplace consultant and author.

A closed door, an ignored email, or an unfriendly gesture are all subtle hints that one’s job may be vulnerable, whether it’s true or not. Seventy-six percent of respondents say they fear a pending layoff when noticing that their manager’s door is closed, according
to Taylor.

“It’s like watching the flight attendants during a turbulent flight,” she says. “You look at their faces and want to ask, ‘Are we okay?’”

Managers need to send strong signals that they are listening and are aware of the cloud that hangs over
the office.

Officewide morale boosters that carry costs are being eliminated, so leaders need to be creative about how they reward employees. Taylor advises managers to keep their doors open unless privacy is absolutely necessary. Other basic principles should be adhered to, none of them altogether new: be respectful of employees’ time, keep appointments, and try to overcome the impersonal nature of email by using signs of appreciation.

Not only are employees casting a watchful eye toward their supervisors, but owing to recent events, it’s a more critical one as well.

Frustration with the recent corporate bailouts and the lack of accountability of high-level executives to pay for mistakes reminds many workers of executive-level failings in their own companies. According to Taylor’s research, 86 percent of respondents said the headlines about bailouts or poor performance remind them of bosses whose misdeeds are not punished until it’s too late.

Mistrust of the boss grows deeper depending on the pay scale. Ninety-one percent of individuals earning between $35,000 and $50,000 agreed with the statement. There is a sharp gender divergence, as 91 percent of women agreed with the statement compared with 80 percent of men. Taylor believes women are more attuned to general morale issues than men.

“Nobody knows about a bad boss’s behavior until it’s too late,” she says. “When a manager leaves, then the floodgates open.”

Low morale is tied directly with levels of communication, Taylor believes, and senior managers should keep the lines of communication with staff open; otherwise, they will cringe when they hear what staff thinks of the commanding middle manager.

T+D June 09 // Fast Fact //

Green Returns

U.S. businesses saved a total of $6.7 billion over the last 10 years by paying employees via direct deposit—an average annual savings of $605 million, according to the PayItGreen Alliance.

The annual environmental savings realized per U.S. employee paid bi-monthly using direct deposit instead of hard-copy checks includes

  • one pound of paper
  • elimination of four gallons of wastewater
  • elimination of one pound of greenhouse gases (equivalent to not driving 4 miles, and half a square foot of forest preserved for 10 years).
  • saving a business $176.55.

The PayItGreen Alliance educates consumers about the environmental effects of choosing electronic bills, statements, and payments instead of paper alternatives. It is a coalition of financial services companies.

If every U.S. employee (122.5 million people) had access to direct deposit and used it, the savings would include

  • 11,082,971 pounds of paper
  • avoiding the release of 105,709,380 gallons
    of wastewater
  • 4,105,889 gallons of gas
  • avoiding the release of 31,581,675 pounds of greenhouse gases into the atmosphere (equivalent to 112,329,703 miles not driven and 1,345,379 trees planted).

T+D June 09 // Info Graph //

Cost-Conscious, High Tech

When looking for efficiencies, to what extent does your organization’s learning function plan to increase or decrease the use of these practices to adapt to a down economy?