Why Caring Companies Win

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Some of the most forward-thinking companies in the country are putting people first by improving their employees’ experiences at work and their work/life balance. And they are prospering. The approach may be the most effective strategy for improving company performance in an economy battered by change, according to a recent study by the Forum for People Performance Management and Measurement, a Naperville, Ill.-based research center affiliated with Northwestern University.

Post-recession economics are paving the way for new approaches to employee engagement and business productivity. The emergence of social media, an increasing need for transparency, and labor market trends are transforming the global marketplace into a people-centered economy, giving rise to a new concept called “employee enrichment.” Employee enrichment is a strategic approach that genuinely emphasizes the quality of people’s lives with a “people-first” orientation.

For the past two years, most business leaders have been preoccupied with finding ways to keep their core business operating — to simply keep the organization alive. Employees have been exposed to a variety of strategies designed not only to attract the best talent, but to also make them as productive as possible. Engagement techniques such as special training, career development and employee incentives have worked, often yielding measurable results. Nevertheless, the past two years have seen far too many employees preoccupied with the impact of a shrinking economy and company downsizing. This has left them grateful for just being able to keep the jobs they have and their leaders at a loss as to how to improve employee engagement and productivity.

But the good news from all the upheaval is that there has never been a better time to try new methods for improving the work environment, keeping employees engaged and generating better business results.

One promising approach is detailed in a new study by the Forum for People Performance Management and Measurement entitled, “Leadership and the Performance of People in Organizations: Enriching Employees and Connecting People” (Won-joo Yun and Frank Mulhern, Nov. 2009).

The study reframes the concept of business leadership from a people-first perspective, examining the importance of identifying and meeting the needs of multiple constituents — employees, consumers, shareholders and the community at large. The central focus is a concept called “employee enrichment.”

Employee enrichment extends beyond the concept of work/life balance to encompass real concern for helping employees to really have better lives. It addresses work and non-work factors and attempts to enhance people’s lives based on the expectation that the better a person’s well-being, the better that person performs.

The concept of employee enrichment is very different from employee engagement, which more or less says, “Management wants employees to be engaged so they perform better for the company.” The study abandons the idea of using people to make an organization perform better and replaces it with a “people-first” orientation. Implicit, but not dominant, is the expected positive outcome that enriched employees have on the organization’s performance. The enrichment approach encourages an organization to make people the priority and then figure out how to make money in a people-first environment. The fundamental shifts require organizations to place less emphasis on control and a more sincere emphasis on people.

In recent years, interest in how employees feel about their work environments and leaders has grown as increasing numbers of business organizations survey, study and reward successful companies for exemplary human resource practices. In just one example, Fortune magazine partners annually with the Great Places to Work Institute® to conduct one of the most extensive employee surveys and cultural audits in the United States in order to select the 100 “Best Companies to Work For.”

The Great Places to Work Institute website includes examples of what employees at some of the best workplaces say about their work environments:

Management truly encourages and expects individuals to care for themselves before work. They understand personal lives are more important than jobs.

We are obviously in business to make money, but the people come before profits. The company takes care of the people first, and the people in turn take care of the profits.

The company is always striving to improve itself and at the same time giving individuals the motivation and encouragement to achieve their desires.

Every morning I wake up I am more than excited to get to work and do the best I can for a company that really appreciates it.

Central to the concept of enrichment is a focus on the well-being of individuals. The emphasis shifts to what is good for the employee and how employee interests are aligned to organizational objectives. The reality is that people are the lifeblood of any organization. People provide resources to the firm, shareholders provide capital, customers provide revenue and profits, and employees provide labor, innovation, service and a host of other components that make success possible.

Using an enrichment focus means that care for the welfare of people must be central to the organization’s culture. Places of employment are real communities for the people who work there. Employees place tremendous value on the relationships they have with their co-workers. Yet leadership and management practices provide limited guidance on how organizations should build healthy communities and foster a culture of caring.

At the heart of the relationship between the employer and the employee is the idea of a value exchange whereby each party sacrifices something to achieve something else. Employees provide time and effort in exchange for compensation and benefits. Employers provide compensation and benefits in exchange for labor that helps the organization achieve its objective. In the context of a people-centered approach, enriching the lives of employees gets added to the overall value exchange. The value exchange ultimately encompasses all aspects of what people get from organizations and what organizations get from people.

In the most recent selection of Fortune magazine’s Best Companies to Work For (CNN Money.com, downloaded 1/21/10), extraordinary employee perks include such things as: a fully staffed on-site medical center, a free fitness center and natatorium, corporate artists in residence, an on-site farmers’ market, healthy living incentives, concierge services, and paid sabbaticals along with the more common techniques like generous retirement investment matches, etc. Value also comes in the form of “intangibles,” the invisible qualities offered in the work relationship that go beyond compensation. Ben Behrouzi, founder of DotNext, had this to say when he was asked by Forbes magazine to comment on actions that companies can take during tough economic times to shore up employee happiness and well-being:

We all know that without a happy and thriving team, there’s no growth, especially in a recession. At DotNext, we employ a two pronged approach…: First, we immediately roll out substantial, structured and predictable performance-based compensation in the form of bonuses…. Second, we aggressively enhance the quality, frequency and quantity of spirited culture activities that play directly into happiness and well being.

Organizations can provide value to employees by moving beyond the basics of regular compensation and benefits to encompass personal growth. The idea of promoting personal growth among employees shifts the focus of leadership away from strictly marketplace outcomes and moves it toward the enrichment of people’s lives. Implicit in such thinking is the expectation that the collective personal growth of individuals actually contributes to organizational growth and performance. Personal growth can take a variety of forms including education support, training programs, physical and mental wellness efforts, rewards, and incentive programs.

This human value connection also represents a “flow of performance.” Organizations succeed because information and actions flow from person to person. While such a flow seems to be identical to the idea of organizational processes, Yun and Mulhern emphasize personal relationships more than the rigidity of formal processes. A top-down approach fails to acknowledge the connectivity that happens on an ongoing basis both within and, sometimes, across an organization. They explain that a necessary first step is to put mechanisms into place for tracking and measuring the flow of performance, because organizations perform better when they simultaneously manage multiple flows of performance among many people. Surveys can provide satisfaction and engagement scores while other metrics such as absenteeism rates, hours spent at work and employee retention can be added to the evaluation mix.

Implications
The people-first framework outlined in the Forum study probably fits best into the emerging information and service economy, nevertheless, the concepts it advances can be applied to many situations. While it draws on a constituent-based approach to leadership that balances the needs of multiple constituents — employees, consumers, shareholders and community — it relies on the more traditional leadership approach of an organizational vision and alignment of interests.

A fundamental gap exists between emphasizing profit maximization in the short-term and treating employees and customers as people who have a variety of needs and concerns. Adding the customer to the picture opens up the possibility of creating “customer enrichment,” that is, designing a company’s products and services to truly enrich the lives of customers. Further research is needed to determine how specific management initiatives in product design or service delivery systems can manifest themselves in high-quality customer experiences.

There are many implications as a result of this research. Among them are:

  • The idea of developing “employee insights” much like consumer insights, as a way to deeply understand how to enrich employees’ lives
  • The concept of serving the whole person and recognizing that “work” and “life” are no longer separated, and therefore can’t be balanced
  • The importance of human connections — human social networks at work lead to an emphasis on the workplace community and how that culture impacts society as a whole

As the ability to attract, retain and motivate high performers becomes increasingly important in an emerging, postrecession economy, further work is needed to develop a more people-centered approach to leadership and overall business strategy. One thing is clear: employers need to value their workers as people and reward them in ways that truly enrich their lives.

The Forum for People Performance Management and Measurement is a research center within the Medill Integrated Marketing Communications (IMC) graduate program at Northwestern University. A central objective of the Forum is to develop and disseminate knowledge about communications, motivation and management so that businesses can better design, implement and manage employee engagement both inside and outside an organization. Contact the Forum at 630-369-7780 or sue@performanceforum.org. Look for the full study, “Leadership and the Performance of People in Organizations: Enriching Employees and Connecting People,” available at www.performanceforum.org.

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