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How to Create More Value From Employee Surveys

CEOs often proclaim that "people are our most important asset." Yet many HR departments find themselves unable to play a significant part in translating these words into reality for several reasons:

a) Some HR departments rely so heavily on benchmarking that they fail to customize their strategies to their organization's unique circumstances, thereby almost guaranteeing they will, at best, stay average.

b) Others get too caught up in the flavor-of-the-month programs.

c) Many are so busy putting out fires they have no time to address what's truly important - drivers of business results.

d) Despite its potential, too often the only thing that comes out of the annual employee engagement survey is a big data dump with no real impact.

Analytics can ensure HR is not pigeonholed as non-strategic and out-of-touch. "It's no longer possible for HR departments or functions to ignore analytics," said Larry Costello, executive vice president, Tyco Fire and Security. "The forces bringing analytics to the forefront are simply too powerful to disregard."

Talent leaders can use a four-step process to create an HR analytics strategy that will transform the traditional engagement survey into a source of actionable business intelligence.

Step 1 - Create a smarter employee survey.
Traditional employee engagement or satisfaction surveys are not up to the task of producing actionable business intelligence. Engagement is necessary to produce great results, but it's not sufficient. For example, in the Harvard Business Review article "Manage Your Human Sigma," while describing an analysis of customer engagement at a multi-site retailer, Gallup researchers state, "Our working assumption was that at least a few of the top employee engagement stores would also be top customer engagement stores. We were wrong.

Just one store appeared on both lists."

There are two major deficiencies in most employee engagement surveys:

1. They pay too little attention to critical organization-level factors such as work processes, hiring processes and informal learning. These factors are big drivers of business results, but are typically not among the top employee engagement/satisfaction drivers. For this reason, they are under-measured in most surveys.

2. They miss the opportunity to tap into workforce wisdom about the drivers and impediments of what it takes for an organization to be a good seller and a good community and environmental steward - both of which are increasingly necessary to an organization's ability to outperform its competition.

Employee survey content should be expanded to include a broader set of questions that go beyond HR's current concept of employee engagement.

Step 2 - "Linkage analysis" to business outcomes.
Next, statistically link the data from the smarter employee survey to data on desired outcomes.

Linkage analysis can be done with soft outcomes data collected within a smarter employee survey, which includes engagement - including employees' intent to stay and willingness to recommend the organization to friends as a good place to work - as well as elements such as employees' reported ability to help the organization achieve its cost containment goals; and the extent to which employees report that the work environment supports excellent customer service.

Data on hard outcomes comes from outside the survey, such as sales, safety, turnover and customer satisfaction, and is then mapped to the survey. This involves aligning these outcomes to the survey responses of the employees who provided them. It is important to note that this mapping requires the survey be non-anonymous. Hence, creating business intelligence from a smarter employee engagement survey requires contracting with an independent third-party analytics firm, since failing to do so is likely to result in less-than-frank responses to a non-anonymous survey.

The specific statistical methodologies that should be used for the linkage analysis will depend on the outcome being analyzed. The techniques can range from complex multivariate analysis, such as logit regression or panel estimation techniques, for most individual-level data, to more straightforward univariate analysis - correlations and statistical testing of differences of means - for group data with small sample sizes.

However, it's important not to get hung up on the statistical nuances since there are plenty of experts who can help with this. The critical point is that linkage analysis is the missing connection that allows organizations to move beyond guesswork, hope and intuition on the people side of their business.

"Leveraging analysis that connects areas like employee engagement to important business results is the missing link," said Mary Humiston, senior vice president, global human resources, Applied Materials. "It is helping us to develop a strong fact-based HR strategy for driving improved business results. Identifying the unique human drivers of our business outcomes with precision and rigor is helping us to elevate our game."

Step 3 - Create a rigorous, fact-based process to identify the best areas of opportunity.
It's important to understand that benchmarking is not analytics. For example, knowing that an organization benchmarks at the 90th percentile on a specific survey item should not be cause for celebration - unless linkage analysis reveals that the specific item drives an important business outcome. And a low score on a specific survey item should only create significant concern if it drives a key outcome. Benchmarking provides little, if any, basis for creating a fact-based HR strategy.

Following a survey, many organizations spend lots of time working on their lowest-scoring items. They would therefore focus heavily on seeking to improve survey item A - the item with the lowest overall score.

However, if a second piece of information is added to the mix, a different conclusion emerges.

Remember survey item A with the lowest score? Turns out it's a negative predictor of sales and therefore is actually a poor target for improvement. The best area of focus turns out to be survey item B, which has the fourth-lowest score, but is both an important positive predictor of sales and still an area of relative weakness. While it might be tempting to wonder what the specific survey questions are that correspond to A and B, that would miss the point, which is that each organization must do its analytics homework to determine the survey items that are most important for it rather than accept a one-size-fits-all answer.

The content of the actual survey items in this example doesn't matter; the results will be different for every organization. That's the point of doing this analysis - to help organizations move beyond benchmarking and target survey items that are the most important predictors of their organization's business outcomes.

Step 4 - Make insightful and easy-to-understand recommendations.
Getting to step 3 can be challenging, since it helps move organizations beyond potentially misleading one-size-fits-all benchmarking measures. But to enjoy the full advantage of this breakthrough, effectively communicating the findings from the analysis is essential. Three points to keep in mind:

1. Avoid data dumps and the temptation to share everything learned in the course of the analysis.

2. Home in on the most important findings and implications, and focus on those.

3. Communicate simply and compellingly. This is as much art as science, but it's critical skill to create actionable business intelligence on the people side of the business.

The top areas of opportunity emerging from Step 3 provide a compelling business case to create a fact-based HR strategy to drive business results.

"At Applied Materials we are using analytics to convert both HR data and business data from information into actionable insights," said Angela Sheffield, head of global workforce planning at Applied Materials. "The executive team is very engaged - they are asking for more. It really helps them to understand the link between what goes on in HR and our business results and guides them to where the biggest levers are for improvement."

One of the real beauties of this approach is that it is possible to provide insightful, customized reports to each manager and offer specific recommendations for actions the manager should take - based on his or her specific pattern of results - to help that manager achieve his or her objectives.

Once this has been achieved, it is typically no longer necessary for HR to push the findings of the employee engagement survey onto the organization - the organization starts to pull for the analysis and insights. The move from push to pull is a significant breakthrough in HR's ability to help the organization be truly strategic.

There are powerful forces - in terms of both supply and demand - that are bringing HR analytics to the forefront. First, technology advances have made HR data available on a scale that was heretofore unimaginable. More importantly, the growing economic premium associated with superior human capital management means that HR strategy is simply too important to be left to gut and intuition. If HR doesn't step up to the plate, another part of the organization is sure to fill the void.
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Eight Principles of Inspirational Leadership

Companies from all over the world are thinking differently about values, culture, trust, transparency, meaningful connections and collaboration. These characteristics are different from command and control organizations where power is the province of the few and information is tightly controlled. This traditional ethic has led to uneven performance, escalating self-interest, growing dissatisfaction with companies, missed opportunities and even scandal, but talent leaders can help companies to envision a different future by enabling a new brand of leadership.

Living examples of this new future are led by people who have a different view of what leadership means and can do. They view it as a behavior, not a title. It is more about relationships and connections than power and authority. They don't coerce or threaten to achieve results, they inspire others to act. They pursue significance beyond the immediate and short-term. They demonstrate "humbition" - a humble personal perspective accompanied by a fierce ambition for the organization's success. They help to create a culture bigger than themselves so the organization endures.

Researchers John Zenger and Joseph Folkman uncovered similar findings in their multi-year research detailed in their book The Extraordinary Leader. They examined more than 200,000 surveys for 20,000 leaders with correlated company performance data. The most important factors that distinguish the best from the worst leaders are: inspire others to high levels of effort and performance and energizes people to achieve exceptional success.

The Inspirational Leadership Model

While there is widespread agreement that new approaches are needed, and that "inspiration" is a vital ingredient, according to the 2011 HOW Report from advisory services firm LRN Corp., only 4 percent of organizations inspire their employees. It is valuable to define inspirational leadership not in terms of traditional leadership competencies, but principles that provide a broad framework to guide future behavior for the leader and the organization.

There are eight principles on inspirational leadership that a leader demonstrates that become infused into the culture. They can be divided into business and relationship clusters to reflect the fact that inspirational leadership is about both relationships and positive organizational and business results.

1. Rethink and reframe.
Decades ago the priority was to keep the assembly line working and not make changes. Today, in the innovation economy businesses have to stay competitive, out-think the competition and fight complacency. Leaders need the courage to reframe, rethink and outmaneuver others who attempt similar actions.

Vineet Nayar, CEO of HCL Technologies, used the phrase "mirror mirror" to enable employees to see the company's actual position in the marketplace. While HCL was doing fine according to some measures, it was mired in a comfortable mediocrity. Through many meetings, Nayar listened, led with questions - not his own answers - and recognized that not everyone would be accepting. By challenging convention and living the values he was espousing, Nayar established a new level of trust. The results have been significant. From a mid-level, regional player in IT services, HCL is now a global leader in the industry and considered to be among the best managed companies in Asia.

2. Pursue significance.
People want to believe in what they do. It is no longer enough to go to work just for a paycheck. People want a higher calling. Younger generations, in particular, are demanding more from work and life.

The pursuit of significance, meaning and purpose is a serious focus for organizations. It is not a "nice to do" or the corporate social responsibility program of the day; it is a central mission, and one that many top leaders and companies support. Jeffrey Immelt of GE once said that "To be a great corporation today, first you have to be a good one." Professional services firm PricewaterhouseCoopers espouses the four P's: profit, people, principles and planet. Harvard professor Rosabeth Moss Kanter gave a name to organizations that prize purpose: vanguard companies.

"In vanguard companies, belief in the purpose and embrace of the values generate self-guidance, self-policing and peer responsibility for keeping one another aligned with the core set of principles," Kanter said. "This type of human control system does not work perfectly by itself, but it certainly reduces the need for rules, and this helps people feel autonomous. Rather than feeling forced into conformity, employees feel that they are willful actors making their own choices based on principles they can support."

3. Live, share and scale the right values.
Leadership is about shaping, living and spreading the right values that drive the organization to achieve exceptional results. These values provide the spirit, soul and continuity of the enterprise. Organizations need to stand for something, not just exist for their own ends, and leaders need to help shape these values.

One of the first things that former IBM CEO Sam Palmisano did when he took the job was to enlist the company's employees in rethinking what IBM stands for today. A collaborative tool was used to reach all employees globally, and the three values that emerged were dedication to every client's success, innovation that matters for our company and the world, and trust and personal responsibility in all relationships. More than 140,000 employees participated in this discussion.

"It wouldn't do to create values from the top, like [former IBM Chairman and CEO Thomas] Watson did; today people are too sophisticated, global and cynical. We want people to connect to the entity in a way that's relevant to them. Then they have pride in the entity's success and will do what is important to IBM," Palmisano said.

4. Lead through culture.
Culture is a core part of the business infrastructure that has been ignored or underestimated for decades because it was thought to be too big or amorphous to change.

Inspirational leaders understand that culture is the organization's operating system, and it should be intentionally shaped, developed and enhanced. An organization's culture is its enduring asset, significant beyond a single leader's impact; and values-based cultures lead to stronger business results.

5. Earn and extend trust.
A trusted person is open, honest and delivers results.

The conventional wisdom is that trust, like culture, just occurs and it is too soft to measure or change. However, trust can be measured, monitored, developed and improved. And it needs to be improved - according to the 2011 HOW Report, only 9 percent of employees work in high-trust organizations.

6. Embrace transparency.
Transparency means "to shine light through," and in business the term means decisions are accessible to all people; information is not needlessly withheld; people are honest, direct and clear about their motives; apologies are offered when mistakes are made; and information is shared with relevant stakeholders.

Transparency is a condition of modern life that cannot be denied. Google is now a verb. The sooner leaders and organizations accept the almost universal availability of information, the better. Especially as younger workers enter the workplace, transparency is an established ethic, and anything else is distrusted.

7. Connect with others.
The inspirational leader connects with others in meaningful and unique ways. Establishing the tie between the inspirational leader and employees is important. This connection must be tangible, whether it is virtual or in person. It could be seeing former McDonald's CEO Jim Skinner get his hamburger every day or having a meeting with Nayar while he explains HCL's value zones. Communities form when people are connected.

8. Collaborate across boundaries.
The next level of connectedness is collaboration. Inspirational leaders do not just connect, they work together to accomplish ends across geographic and organizational boundaries. Collaboration can take many forms, including working together on joint projects, sharing knowledge and experience, and enabling the flow of information and talent across the enterprise.

One of the toughest issues leaders face is when organizations retreat into turf wars, silos and protective behavior. Traditional rewards, governance and rules reinforce this type of dysfunctional behavior. Inspirational leaders need to pierce these mindsets and demonstrate how collaboration can lead to greater, not less success when rooted in purpose and values.

Manufacturer W.L. Gore & Associates has structured its entire company around the premise that communities always outperform bureaucracies. It has eschewed economies of scale for an economy of ideas, and work units are rarely larger than 150 to 200 people. Connection and collaboration occur almost organically when these people are linked by common purpose and principles.

These eight principles of inspirational leadership interact and build on each other. A leader who is trusted and collaborates across the enterprise is more impactful than a leader doing just one or the other. When leaders are capable and experienced in all eight principles, they become inspirational leaders who can leverage, propel and inspire the organization to greater heights in a world that is demanding new approaches to leadership and more responsible and ethical organizations.
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