Companies who practice Customer Intimacy as their core strategy are neither the most innovative or the lowest cost producers in their industries. Their approach is to forge and sustain long-term relationships with customers by providing a level of service other suppliers have a hard time matching.
As with Product Leadership and Operational Excellence, there’s more than one way to implement a strategy of customer intimacy.
The two primary forms we see Customer Intimacy taking are:
- Bespoke (Custom) Products
A good illustration is a tailor who makes made-to-measure or bespoke suits. Such suits are usually much more expensive than off-the-rack suits you could buy at a department store. It takes more time to make a bespoke suit than to buy off-the-rack.
If they’re more expensive and take more time to make, then why do some customers purchase a made-to-measure suit?
By going this route, the customer has much more choice in the suit he or she will purchase. They can choose exactly the quality and pattern of fabric used in the suit. They can have it made in any style they want. They have choice in the accessories such as buttons and pockets they can’t find in off-the-rack suits. Lastly, it will fit perfectly, because the suit is designed around their body shape and size. As a result, made-to-measure suits will wear for many more years than a standard suit. In the long term, the bespoke suit offers better value and satisfaction than off-the-rack.
Here’s a profile of the characteristics of a Bespoke Products strategy:
PRODUCT. You offer made-to-order products to give customers exactly what they need or want. It could be from a range of stock components you assemble or it could be a wide range of components you have access to.
OPERATIONS. Your plant is designed for flexibility to produce a wide range of products based on standard components that can be assembled multiple ways to create unique products
INNOVATION. You focus on optimizing the process used for assembly of the product more so than developing new products. You’ll be looking for ways to reduce labor. You’ll keep your eyes open for new components that might fit with what your customers desire.
PROFITABILITY. You may realize higher profit margins than your competitors because you charge a premium price for making custom products they cannot easily match.
SELLING. You focus on offering customers the best fit for their needs. Your sales personnel are consultative, not price sellers, and adept at uncovering customer requirements or preferences.
PEOPLE. Your employees must be adaptable, flexible and multitalented. You hire a mix of seasoned workers and innovative thinkers. The innovators drive transformation within your company to create new products or services that allow you to take on efficient competitors.
QUALITY. The quality of your products is superior to your competitors’. The materials and/or components are chosen by the customer so they get exactly what they need at the quality they demand.
YOUR EDGE. Customization. Your competitors can’t match your product or your service within their cost structures.
The tailor may be a good analogy for this approach to customer intimacy, but here are some others from different industries.
In the fast food industry, McDonald’s historically has tended to offer standardized products. At Burger King, Harvey’s or Wendy’s, however, you can have your burger dressed the way you like.
In the personal computer industry, HP has tended to sell standard model of desktop and laptop computers. Dell, on the other hand, allows its customers to build their own computer from a menu of options such as memory, hard drive capacity, processor etc.
At the turn of the 20th century, housewives spent more time shopping than we do today. They would go to the butcher’s for meat; the greengrocer’s for produce, the baker for bread and a general store for hard goods.
The introduction of the supermarket dramatically changed the shopping experience by enabling shoppers to purchase a wide range of products from a single store. It was a time saver and, in some cases, they were able to purchase products at lower prices than the individual merchants because the supermarkets had buying power.
So, how can this principle be applied in business?
It’s most likely you will have a network of plants – as opposed to a single plant – producing an array of products that complement each other.
PRODUCT. You offer a comprehensive range of complementary products that can be used together.
OPERATIONS. Your plant could be designed for flexibility to produce a wide range of products. More likely, you operate a network of plants that are focused on specific product types that, together, complement each other, enabling you to offer a complete process solution as a single source. These plants may not necessarily be the lowest-cost for their respective products, but they will be competitive with your specialized competitors.
INNOVATION. Innovation is driven by your close relationship with your customers, who confide their needs in you and ask for your advice. You may require a new process for one solution or product development for another.
PROFITABILITY. You may realize higher profit margins than your competitors because your specialized production equipment or plant scale allow you to be the efficient.
SELLING. You focus on offering customers a complete solution for their needs. While most customers prefer to have multiple suppliers, you emphasize accountability for the overall performance of your solution, which can expedite resolution of problems.
PEOPLE. Your employees must be adaptable, flexible and multitalented. You hire a mix of seasoned workers and innovative thinkers. The seasoned workers probably come from the client industry and bring process knowledge and insights gained from such experience. The innovators drive transformation within your company to create new products or services that allow you to take on efficient competitors. In some cases, you may have an employee embedded in your customer’s organization so you are on the leading edge of customer preferences.
QUALITY. The quality of your products is comparable to your competitors’, but rarely lower than your competitors’
YOUR EDGE. Product Scope and Accountability. Ultimately, it’s your people who enable this. Their empathy for the customer and commitment to service are probably unmatched by your competitors.
To go back to our analogy of the tailor, men’s apparel retailers such as Harry Rosen have taken the concept one step further. They offer their customers bespoke tailored suits but they are not just a seller of suits: they are wardrobe consultants. They can help customers accessorize suits with shirts, ties, shoes and belts that complement the suit.
A classic example of a company using the one-stop-shop strategy is Home Depot.
In developing its product assortment, I think Home Depot strategically positions itself as a home improvement retailer – not just as a hardware store. You’ll find the usual home improvement products found at a retail hardware store – plumbing and electrical components as well as tools and lumber – but customer can also purchase a wide variety of lighting products, ceramic tiles, major appliances, and paints. The scale of Home Depot’s stores is such that they can carry a broader selection in every category than a hardware store could.
Another facet of Home Depot’s strength is in service. Home Depot pioneered the concept of having skilled tradespeople working as associates to be able to give customers excellent advice on materials and how to use them to help them in their product selection. Home Depot can help homeowners with renovation projects such as kitchens or bathrooms with professional designers who work directly with the customer. They also offer installation services for appliances, windows, doors – and, yes, kitchens and bathrooms, too – using contractors who are carefully screened to reassure the customer the job will be done right.
And, if you’re the type who likes to do his own renovations, Home Depot can also support you by renting you professional-grade tools (and provide training, too) to do just about any kind of home improvement project.
Great products. Outstanding Selection. Customer service and support. These are the underpinnings of Home Depot’s success.
If you’d like to read more about Customer Intimacy, we recommend reading this article from the Harvard Business Review.
Next week, we’re going to wrap up with some case studies from my own experience to help illustrate the strategies we’ve discussed, but with more emphasis on how and why the companies I worked for chose those strategies.
Operational Excellence, as a strategy, involves supreme efficiency in product or service delivery.
The traditional way this strategic option is taught is called “Low Cost Producer”; however, we find this limits thinking too much and we prefer to talk in the broader context of efficiency.
The diagram to the right represents a trinity of trade-offs. A company may produce a product at the lowest cost among its competitors but it may have to compromise on speed or quality to do so. Similarly, a company may focus on fastest order turnaround, but it may require extra costs or lower quality standards to accomplish this consistently.
Let’s focus in the main axis of efficiency: cost and speed. Along the way, we’ll show how quality is impacted.
This is an especially important strategy to use in commodity markets, where there is little product differentiation. Cost (price) and Turnaround are key differentiators. Similarly, this is a good fit for distributors, who have little control over the products they market (other than the assortment) but much more control over fulfillment and price.
- Low-Cost Producer
We’re starting off with Low-cost producer because it’s the most familiar way Operational Excellence is used in practice.
PRODUCT. You probably have a standardized product with relatively few options so you can source raw materials more cost-effectively.
OPERATIONS. Your plant usually has specialized production equipment or is built to produce high volumes that allow you to realize economies of scale. You probably have a very limited range of raw materials you work with.
INNOVATION. Your focus is on process development more so than product development. You’ll be looking for ways to reduce labor and/or materials.
PROFITABILITY. You may realize higher profit margins than your competitors because your specialized production equipment or plant scale allow you to be the most efficient.
SELLING. You focus on value selling. It may not necessarily be by securing business with the lowest price. It could be that you can demonstrate how your product can be used more cost-effectively overall than your competitors’.
PEOPLE. Your employees are dedicated to identifying improvements to your process to maintain your edge over the competition. Engineers and accountants are your key hires.
QUALITY. The quality of your products is comparable to your competitors’, but rarely lower than your competitors’. You might offer a high quality and a lower quality version to give your customers some degree of choice.
YOUR EDGE. Price. You have the potential to squeeze out competitors with higher cost structures.
In an industry (restaurants) known for low margins, McDonald’s has been extremely successful with this strategy by offering basic fast-food meals at low prices. They offer a relatively limited selection of standardized products (don’t think of asking for no mustard on your Quarter Pounder) for which they can source ingredients efficiently. They are able to keep costs low by hiring and training inexperienced employees rather than trained cooks. They also rely on few managers, who typically earn higher wages. These staff savings allow the company to offer its foods for bargain prices.
2. The Fastest
This sub-strategy focuses on being the company that can fulfill a customer’s needs in the shortest time. It’s premised on time being of greater value to some customers than money.
Without a primary focus on product, this is, in essence, a strategy founded on service. In fact, this is a strategy that lends itself well to services or distributors. For example, the fastest oil change, the quickest insurance quote or the fastest way to get from A to B.
PRODUCT. As with the low cost producer, you may have a standardized product that allows you to fulfill orders from inventory or straight from the line. If you are a service provider, your secret may lie in the technology you use to process information.
INNOVATION. The source of innovation is likely to be technology. It could be more efficient information systems so you respond faster to customer needs than your competitors. It could be your manufacturing process involves fewer steps.
PROFITABILITY. You may be able to charge a premium price to some consumers in return for rapid fulfillment and, though you may not have the lowest product cost, your margins are probably above average for your industry.
SELLING. Case studies can demonstrate to potential customers how you’re your service is, without giving away any secrets to your competitors. Help customers understand how your fast turnaround can be a source of competitive advantage for them in their businesses. Focus on industries and customers where there frequently are deadlines to be met: your fast turnaround could be the difference between winning and losing a piece of business.
PEOPLE. Your employees like winning races. You hire engineers or invest in IT business analysts to simplify processes and eliminate unnecessary steps.
QUALITY. Your primary KPIs are probably OTD (On-Time Delivery %), some form of measurement of fulfillment time, and Perfect Order Rates.
YOUR EDGE: Speed.
FedEx is a company that promises faster delivery of packages than anyone else. The pioneered overnight next-day delivery – something the postal system was never able to do consistently. FedEx charges more for delivery than the postal service, but by appealing to the generation of instant gratification, customers are more than willing to pay those premiums because FedEx also has an enviable record for reliability.
Next week, we’ll cover Customer Intimacy, providing an overview of what Customer Intimacy is and how it looks in practice.
Product Leadership is all about designing and delivering superior products to customers.
In some cases, it could be as simple as continually making incremental improvements to a product so it can sustain a claim as being superior to its competitors. A more extreme approach involves leadership via innovation – developing breakthrough or disruptive products. Note you could just as easily substitute “Service” for product when Service is what you deliver to customers (or clients), not service as in how you deliver the service to the customer.
A company that practices Product Leadership as a strategy is known by its customers as a company whose products are one or more of the following:
- Best-in-Class. They perform better than any competitor’s product.. They may be of the highest quality.
- The Latest. Their products are considered trend-setters. They may have innovative features.
- Most trusted. This probably applies most to Services, which may rely on integrity to be sold.
We’re starting off with Best-in-Class because it’s the easiest and most cost-effective way to get into Product Leadership.
PRODUCT. Your product consistently outperforms your competitors’ products on multiple dimensions
INNOVATION. Instead of R&D, your focus is on product development: working with existing technologies in new ways.
PROFITABILITY. The perceived value of your superior performance by customers is significantly greater than the cost of imparting the features into the product.
SELLING. Demonstrations are the best way to show your customers how much better your product is than your competitors’.
PEOPLE. Your employees are dedicated to identifying improvements to your product to maintain its edge over the competition. Problem-solving is probably one skill common to them all.
YOUR EDGE. Keeping ahead of competitors with a steady stream of product improvements.
An example of a company that is based on product leadership via having products that are consistently best in class would be Procter & Gamble. Whether it’s laundry detergent (TIDE) or hair care products (HEAD & SHOULDERS), P&G has always sold products that outperform competition. For that performance, they also charge a premium price.
Being first with a new product has advantages – especially if your product is a breakthrough and you are, in essence, defining the market. This approach requires more investment and risk than “Best-in-Class”, but can also yield higher profit margins.
PRODUCT. You consistently introduce the newest products in your category. You’re first with new features or breakthrough technologies.
INNOVATION. The Latest approach requires investment in R&D to drive innovation and discover those new features or breakthrough products. You probably support these innovations with patent protection.
PROFITABILITY. Don’t be afraid to charge a very high price at launch. Pricing will only go down as competitors try to imitate you. For trend setters, money is no object; having the latest thing is everything to them. Maintain a premium to competitors’ entries at all times.
SELLING. Show People. Focus on trend setters and early adopters. Demonstrations are a great way to show your customers your new gotta-have product. Social media can also be a powerful driver when your product launch goes viral.
PEOPLE. Your employees have inquiring minds. You hire the best and brightest throughout the organization because scientists don’t have a monopoly on innovation. You probably have a strong marketing team to complement R&D by identify trends and consumer issues your company can address.
YOUR EDGE: Constant innovation.
A good example of a company focused on leadership by being first is Apple. The iPod was a breakthrough in making music portable. Similarly, iTunes was the first (legal) way people could download music. The iPad made computers truly portable.
This is not an approach new companies can take. It takes time to cultivate the trust of your customers.
I think this approach applies well to mature categories where innovation and new products are not seen often.
PRODUCT. Your product is probably known for quality and reliability more than innovation and your leadership is based on the quality of your products.
INNOVATION. As with Best-in-Class, your focus will be more on product development – incremental improvements, but always thoroughly tested before being made available to customers. Innovation could also focus on the operations side to develop improved ways of manufacturing to guarantee better quality.
PROFITABILITY. Don’t be afraid to charge a very high price at launch. Pricing will only go down as competitors try to imitate you. For trend setters, money is no object; having the latest thing is everything to them. Maintain a premium to competitors’ entries at all times.
SELLING. Remind people about your reputation for quality. Position your product as a safe purchase because your product is more reliable than your competitors’. Showing off awards for product quality can help.
PEOPLE. Your employees reflect your trustworthiness in the market. They’re not the best nor the brightest, but they take pride in their work.
YOUR EDGE: Your reputation. Being around longer than your competitors. Very few complaints.
For a variety of reasons, I’m using IBM as an example of a company with product leadership on the basis of being a trusted brand. They weren’t seen as the innovators in computer hardware (that was Apple). They’ve moved on from focusing on products to being a service provider. They certainly are not the lowest-priced provider of software services, but they are one of the most trusted, In the world of information technology it’s said, “No one ever got fired for buying IBM”.
There’s plenty more that could be said about product leadership. If you’d like to learn more, a good book to read is “The Discipline of Market Leaders” by Michael Treacy and Fred Wiersema.
Next week, we’ll introduce you to Operational Excellence., providing an overview of what Operational Excellence is and how it looks in practice.
Strategy is really all about making choices and it’s not as complex as people think. In truth, there are only 3 basic strategies to choose from.
Where most people go wrong is not sticking to a single strategy or not aligning the other elements of their business plan around a single strategic principle. Another trap is focusing on tactics rather than strategy. Your tactics may be sending mixed messages to your customers because they are drawn from multiple types of strategy instead of consistently following a single strategic direction.
A concept I learned from some of the sales people who worked for me – the 3-legged stool – shows how simple it can be to apply strategic principles. They offer the customer a choice of three things: Product, Price and Service. The customer can only have two of those three things, and the third they have to concede to the sales person. For example, if a customer wants great products and excellent service, he will have to accept that he will have to pay a premium for these. If it’s price and service, the customer will have to make some concessions product quality or features.
- Product Leadership – sometimes known as innovation
- Operational Excellence – sometimes referred to as “low-cost producer”
- Customer Intimacy
When a client who doesn’t know us asks us to help them find a sales person, we’ll ask the client what they think they’re looking for.
A typical first response is “I Want to Hire My Competitor’s Top Sales Person.” And it’s often accompanied by, “And I want them to bring me their book of business with them.”
On the surface, this sounds like a perfect formula for creating an outstanding sales team. Find the best available people and bring them on board. Their loyal customers will follow them and revenue will skyrocket. Plus you will have weakened your competitor by taking away a key asset.
However, here is the reality.
If you have really good people working for you, you’ll do anything you can to have them stay with you. Having an employment contract or agreement is one way to document the responsibilities of both employer and employee.
In the case of sales personnel, you want to prevent them from leaving your company and harming your business.
One option is a non-compete clause. This basically says that, when an employee leaves your company, they cannot work for a company that is a competitor of yours. It sounds good in principle but the courts are not upholding these non-compete clauses because they can limit an employee’s ability to find alternate employment.
The preferred option is called a non-solicit clause. This type of clause does not prevent an employee from going to work for one of your competitors but, if he/she does go to a competitor, he/she cannot call on companies that are clients or customers of your company. This type of clause IS enforceable.
To get back to the original response to our question about what a client might be looking for in a sales rep, it IS possible to hire such a person. However, if they have a non-solicit clause in their employment agreement, you cannot have them call on customers they had at their previous employer, let alone bring along a book of business.
Were you to attempt this, one possible outcome is that your competitor could sue your company. Another possibility is that they could sue your new sales rep and restrict his or her ability to approach customers through an injunction. This could render your new hire essentially ineffective while they’re tied up with lawyers.
Another reality is that customers tend to be loyal to reliable vendors, not the vendor’s sales person. Companies have moved from having a single person making buying decisions to having procurement teams to reduce the personal influence a sales person can have on a buyer. Unless a vendor puts a totally inept person in charge of an account, the account will stay with the vendor as long as product quality and service are kept at consistently high levels and pricing is competitive. It actually costs companies money to change vendors – to put the business up for bid, to assess bids, to qualify a new vendor, among other factors – so companies avoid making changes unless it makes economic sense to do so.
Here are three things you should be doing.
1. Protect your sales team. Review your employment agreements with all your sales staff and add in a non-solicit clause to each one. This can make your top performers less attractive to your competitors to hire away.
2. Hire strategically. Hiring a top performer from a competitor can and does make a lot of sense in some instances. But you need to bear in mind that you will have to focus them on markets where they won’t have to call on customers from their previous employer – perhaps in a business development role. Or, if they are senior enough, you might consider assigning them to key accounts who are not customers of the competitor you hired them away from.
3. Consider New Talent Pools. While hiring from within your industry can save on training and capitalize on existing contacts, it may not be your best strategy for improving the overall caliber of your sales team. Industry studies suggest that only about 25% of ALL sales people are rated very good to excellent so, is your industry likely to yield the best quality candidates? Often what happens is that marginal performers make the circuit of employers within an industry, never really contributing much to any given employer.
Excellent sales people are excellent sales people because they have the discipline to consistently follow a process. The process is independent of industry, product or company. Excellent sales people can be taught the technical attributes of a product and the benefits that make each product different from a rival product. Excellent sales people know how to research an industry to find the right companies and contacts. They don’t rely on a Rolodex alone.
Bringing in an excellent sales person from outside the industry has other benefits. They bring fresh thinking, which could lead to new applications for an existing product, better ways of selling the product. They’ll ask insightful questions that could help you become aware of attributes that resonate with customers that perhaps your staff had consistently overlooked or undervalued.
So, hiring from a competitor can be a good move. But don’t expect sales people to have their customers follow them to you.
This is the final post in our series on employee engagement. We hope you’ve found the posts helpful and insightful.
We know Employee Engagement is a hot topic in the business community, and we think it’s more than just a passing fad. There are some fundamental things in the concept of employee engagement that can help you save money and make more of it.
If you’ve been following this series, then you’ll know we posted articles about each of the 12 questions in Gallup’s Q12 employee engagement assessment. That can be overwhelming.
To help make it easier to understand, we created an infographic to help illustrate the relationship between the 12 elements of employee engagement and four key dimensions of business performance.
The vertical axis is composed of the 12 Gallup questions. Gallup organized these into groupings.
Base Camp represented the very basics of employee engagement – providing employees the information and tools to do their jobs.
Camp One was grouped around questions that reflected what employees could give back to their employers.
Camp 2 deals with questions about employees having a sense of belonging.
The Summit is comparable to the peak of Maslov’s hierarchy of needs: self-actualization. In fact, the whole Gallup Q12 has many parallels with Maslov’s model in that it is essentially a spectrum from basic needs (to do the job right) to more emotional or intellectual needs that make the job resonate with the employee.
The horizontal axis is composed of four dimensions that measure success in an organization: Productivity, Profitability, Customer Satisfaction and Employee Turnover.
According to Gallup’s research, Employee turnover is really driven by the first six questions. If you don’t do the basics, you will lose employees. We included question 12 as well, because we feel employees will leave when they no longer see opportunities to grow in an organization. It may be a bit of a gray area, because it may be something beyond the control of the company.
Productivity is influenced by all but 2 of the 12 factors. What seems to be important is having the right tools/technology, recognition, feedback and having a sense of belonging.
Profitability appears to be impacted by management style. When employees have clear direction and feel they have support, perhaps they’re more willing to take calculated risks that positively impact the bottom line. Also, when they have opportunities to grow and develop, they can bring new skills to the organization that can help improve processes and grow profitability. We added in “right tools” because we felt, intuitively, that technology contributes immediately to productivity, but ultimately to productivity.
When employees perceive themselves as treated fairly, Customer Satisfaction is positively affected. Sometimes employees have to go outside procedures to ensure customers are looked after and, when they do so, and feel they will be supported for doing what’s right for the customer, they’ll continue to take those risks. We added “opinions” because we feel it’s an indicator the company is paying more than lip service to employee ideas. This could include input that some company procedures do not support customer satisfaction.
What You Can Do
If you really want to assess the level of engagement among your employees, the Gallup Q12 is a very simple tool to administer. You might want to consider bringing in a consultant to oversee the project and to act as a buffer between employees and management to help ensure employees open up.
What is your management team saying are the main issues in the organization?
Use the dimensions from the Q12 to explore where you might be lacking and where you can implement some changes.
Make a point of regularly getting out of your office to connect with employees and listen to their views. They’ll be more likely to come to you when they see problems and you may find they have some valuable suggestions to offer. Face-to-Face interaction is so much more effective than the traditional suggestion box.
As we said last week, we’ll be compiling all the posts in this series into a White Paper so you can have the entire series in a single document. Watch your email to find out when it will be available. Like all our White Papers, they’re complimentary.
With this post, we’re reaching the end of our series on employee engagement.
As an older job-seeker, I frequently was asked how long I planned to continue working. While I think this was a way to side-step around asking me my age, I usually took it at face value. My answer was that I’d continue to work as long I was learning something.
When I look back at my career, the companies where I stayed the longest were the ones where I was learning new things – and, coincidentally, where I felt I had the most fun.
At one company, it was learning how to compete effectively against a giant like Procter & Gamble. At Lawson Mardon, the corporate culture revolved around the study of management, leadership and strategy. When I worked for Plasmatreat, it was an introduction to nanotechnology and learning about a lot of leading-edge manufacturing processes in dynamic industries such as aerospace and medical devices.
Ironically, when Gallup analyzed the effects of the Q12 on four different dimensions – turnover, productivity, profitability and customer satisfaction – they found that giving employees the opportunity to grow and develop did not correlate with reduced turnover. Instead, they suggest growth opportunities are more strongly correlated with increased company profitability.
In our experience, while it’s true that employees switch companies to escape bad bosses or for higher salaries, it can just as easily be true that the employee has accomplished as much as they can hope to do with that employer and the only way to continue professional development is to move to another company.
One recruiter I know, who works in the CPG sector, moved people routinely from one kind of company to another: from Food to Personal Care products or Household Product; from large companies to smaller ones. To some extent, the moves were induced to help the recruiter earn more fees; from the perspective of the employees, it gave them broader exposure – to different industries, competitors, channels – that would render them more highly marketable. The average tenure in CPG marketing was about 2 years – about the time it takes to go through one complete budget cycle and come away with demonstrable results. I was placed by this recruiter multiple times and I can honestly say I benefitted from the exposure to different industries and corporate cultures.
What You Can Do
One thing you can consider doing is expanding the scope of each employee’s job so they experience new challenges.
Cross-training is one way of doing this, and it helps your organization by enabling employees to be more flexible and versatile so, when someone leaves the company or is on vacation, you have people already trained to fit into the vacant jobs.
This is easier to do in a larger company than a smaller one because there are simply more roles available to move someone into. That’s not to say it’s impossible to do in a smaller company. In small companies, one way to create growth opportunities for employees is to promote them so they can take on more responsibility.
We tend to think of employee development in a managerial context, developing the proverbial mail-room clerk so he/she can become CEO. But not all employees are good at managing people and some simply don’t want to take on that kind of responsibility. For employees who have no desire to enter management ranks, consider developing a “professional” track whereby they can take on increasingly more challenging projects or become subject-matter experts without having any direct reports. It’s a way to recognize their contribution to the company while allowing them to develop their professional skills. We had such a system in place at Esso, where you could find engineers who were experts on highly specialized topics such as fluid dynamics or catalysts.
Encourage your employees to acquire more knowledge. Have a program whereby the company provides some degree of financial support when an employee successfully completes a formal outside course.
Encourage your employees to achieve professional certification in their respective areas. This especially applies to employees on the professional career track.
Next week, we’ll wrap up the series with a summary. We’ll be compiling all the posts in this series into a White Paper so you can have the entire series in a single document.
If you think, from the title of this post, that you’ve already got this topic covered off because you do annual performance appraisals, then think again.
If you’re only meeting with employees once a year to discuss their career progress, you’re not doing enough to truly engage your employees.
That’s not to say you shouldn’t be doing annual performance reviews, but one problem with doing these once a year is that employees don’t have a lot of faith that the process is intended to help them in their careers and that the annual performance review is just “management’s” way of controlling salary increases.
An annual performance review is also very stressful for both employee and manager. Employee’s hate to get them; Managers hate to do them. Sounds like a process gone wrong.
The Gallup Q12 questionnaire has one question that addresses feedback: “In the last six months, has someone at work talked to me about My progress?” Notice it’s not in the past year; it’s in the past 6 months.
Sometimes, it might be as simple as a quick Post-It or note written on a document that said something like, “Great job!” or “You can do better than this”. Note this isn’t used to only deliver positive feedback.
Something I used to do with my sales team was, when they landed a new account, I’d go see them, shake their hand and say something like, “Nicely done!” or “Way to go!” Usually, I’d also ask them how they managed to win over the account and what they expected to see in sales revenue.
With either of these approaches, there’s no monetary reward or punishment, simply some recognition and honest feedback – and it’s done close to the time the action was taken by the employee. I call it Management in the Moment.
The feedback doesn’t have to always be positive. It’s OK to criticize, but do it constructively. You’ll be helping your employees correct behaviours or processes so they get things right sooner. And you’ll see positive results in company performance.
Something else my best bosses did was periodically take me out to lunch. Sometimes, it was to discuss a project I’d been working on or to talk about an issue at work. Other times, it might just be to have a friendly chat about how things are going. What’s special about this approach is that it’s informal and done in a relaxing environment.. But it’s still Management in the Moment.
When I had a sales team, I promised I would take them out to lunch every month that they collectively exceed quota. The business portion of our lunch was simply saying, “Way to go, everyone. Thanks for exceeding quota.” and an unwritten rule was that we wouldn’t talk business over this team lunch. It was really a team building exercise because everyone got to go to lunch, and nobody wanted to be the one who was below quota. I think we only missed a few lunches in my time, and never two in a row. I think this was part of the reason our Division was the top performer in our company.
One of the best people I know who used lunches effectively was a colleague, Misha Sivan. When we were working on a data warehouse project together, if we had a stretch goal, Misha would say to the development team we’d take them out for lunch if they delivered on that goal. That project was completed inside 16 weeks from concept to live and the lunches were not just ways to rewarding goal achievements, they also served as a way to build team cohesion and spirit.
The underlying principle through all of this is the delivery of feedback on a regular basis, not just once a year. I think most people appreciate acknowledgement of their efforts and achievements and sometimes it’s the little things, such as those notes or lunches, that they appreciate the most. And, when the time comes to do the annual performance review that HR wants on file, there should be no surprises because feedback has been delivered. It’s just a matter of collecting and summarizing in the performance review report.
What You Can Do
- Get out of your office on a daily basis to interact with your staff. It also signals you’re approachable if they need help.
- Catch them doing things right, and let them know you’re pleased with the job they’ve done.
- When an employee has done a nice job on a report, send back a copy with a handwritten note or even just some comments written in the margins.
- Even if the report isn’t great, write in some comments to show where they could have done better and maybe suggest other ways they could have done things.
Giving informal feedback on a regular basis has two very positive effects: you reinforce good behaviours so employees keep doing them and you help them change negative behaviours sooner than if you waited a year for their next performance review. By making your employees feel they are valued, you really help them become engaged in their work.
I’m interrupting our series on employee engagement to let you know we’ve formed a new group on LinkedIn called Encore Careers.
We created the group to serve as a community for older workers to provide support and to share their experiences with age-related employment issues. We’ll also be sharing articles that will be of interest to older workers – and invite members to share as well.
We invite you to join our community at https://www.linkedin.com/groups/8483842
If you’d like to post something on the Group Discussions, here are some guidelines to bear in mind:
- When you join, you’ll receive an email suggesting you post an introduction to yourself as a first step in making contacts with the community. It’s a great way to start a conversation.
- Share articles that relate to age-related employment issues. Articles about Retirement Planning are welcome.
- Articles about changing careers are always welcome. They’re helpful to people of all ages.
- If you have a question about employment issues, please feel free to post. Your peers can probably serve as a good sounding board or offer helpful advice.
- Please do not use the discussions to advertise or make sales pitches.
Membership is free, so please do not hesitate to join our community!
My daughter works at the headquarters of Roots, an iconic Canadian fashion retailer. She called a few weeks ago about some questions she was asked during her first few months. For the most part, she understood the reasons behind the questions, but there was one that puzzled her: Do you have a best friend at work?
I explained she was probably being given a questionnaire about employee engagement, and that having a best friend at work is one indicator of engagement.
We make friends in so many ways: school, clubs, and being neighbours to mention just a few. One way of thinking is that schools and clubs take you through common experiences that you share with classmates. Friendships formed through clubs and neighbours are probably driven by common interests. In all cases, the shared interest or experience takes place over an extended period of time, through which people can gradually reveal themselves to others and steadily build bonds.
The same is likely true also for work. There is both the shared experience of working for the same company but also, in the case of engaged employees, a shared commitment to the company’s mission.
- First-Name basis
- Indirect friend
- Direct friend
- Close friend
- Best friend
In an organizational setting, new employees first encounter people as strangers. As they’re introduced to the organization, they get to know some people on a first-name basis. They might find that they share something in common with one or two of these people, which leads to a warmer relationship. I think you get the idea of how this can progress.
The more similarities people have and the more positive validation they get from each other, the more they develop mutual trust and they can move up the relationship scale.
The way I interpret the reason behind this question in the Q12 is that being a best friend means there is considerable mutual trust and information sharing between the two halves of the friendship. Trust is one of the underlying elements in high-performing teams. The trust is gradually built through shared experiences – usually with positive outcomes. However, in an organizational context, being a best friend probably means finding other connections besides work – common interests, such as sports or being a fan of a sports team.
My father was in the armed forces, and we moved around the country. Along the way, my parents formed many friendships with fellow families from the service – enduring relationships that spanned decades. It was a great role model for me to follow.
Playing a sport can be a great equalizer: the organizational hierarchy has nothing to do with skill level in sports. I used to play squash, and found it was a fun way to forge relationships with people in other departments in the organization. For me, it was squash; for others it could be hockey or golf or something else. You (hopefully) have some fun together but also you see others in a way that goes beyond their role in an organization. You’re letting down your guard while you’re doing this outside activity, but it can make it easier to approach a fellow employee when you need a favour or assistance with something. It can also promote cross-functional collaboration.
Personally, I’d like to see this question in the Q12 expressed more like “how many fellow employees fall into the different classifications on the friendship scale above”, or maybe “what is the highest degree of friendship you have with a fellow employee?” I like to see something other than a yes or no answer and something more easily quantified.
For a company like Roots, I think the founders want to be able to attract talented people on the basis of a vibrant corporate culture. Measuring employee engagement is just one way to put some metrics on culture, and engagement has also been demonstrated to have high correlation with customer satisfaction and overall corporate success.
As you can probably imagine, having close friendships at work can build employee loyalty. Working with people you like and respect helps build morale and, when morale is high, employees feel more comfortable taking on new challenges. Those challenges usually also lead a company to greater opportunities.