What should a leader do when she arrives at a company that is struggling?
The founding director of the Center for Neuroeconomics Studies recently wrote a book, Trust Factor: The Science of Creating High-Performance Companies to answer these and other questions. Paul J. Zak, PhD, is also a professor at Claremont Graduate University. He recently answered some of my questions about his extensive research into trust. His book is fascinating and contributes to the body of work on trust and organizational culture.
Survey of 200,000 employees: 71% of companies have mediocre to poor cultures.
In one part of the book, you tell a story of walking into an office full of cobwebs, old furniture, and a struggling culture. What are some of the signs of a low-trust culture?
Distrust drains employees’ energy, so people move slow, think slow, and lack a passion for their jobs. Organizations with low trust also have lower profits, so offices often look out-of-date, even while new employees show up as turnover tends to be high. We have also shown that people take more sick days when they work at low-trust companies, so one sees empty desks. All these factors are signs of a low-trust syndrome and a downward cycle of productivity, innovation, and profits.
“High-trust companies invest in employee health and productivity.” –Paul J. Zak
Why is a healthy culture based on trust so vitally important to its success?
Companies are, first and foremost, people. As social creatures, we naturally form teams to accomplish goals together. Extensive research shows that teams are more effective when they have a clear objective and when team members are trustworthy. Trust reduces the frictions that can arise in teams so getting things done takes less effort and as a result more and better work is done. By measuring brain activity while people work, we’ve shown that people are more relaxed when they trust their colleagues. They innovate more and shed the stress from work faster than those in low-trust companies. Creating a culture of trust provides powerful leverage on performance because it harnesses what our brains are designed to do: cooperate with others in teams. And the neuroscience I’ve done shows how to create a culture of trust in a system so it has the maximum effect on brain and behavior.
Workers in high trust organizations are paid an average of $6,450 more.
But it’s not always so easy to understand each other.
Often I see how a phrase in one language doesn’t translate to another. Try speaking on stage and using a gesture that is common in one country and see how it offends an audience in another. Technology and travel have moved faster than our understanding of cultural differences.
Every time people from different cultures interact, a culture crossing occurs. When you get a culture connection, things go well, and the impact you have on each other matches your intentions. But there can also be a culture crash, a phenomenon that occurs when someone from one culture unintentionally confuses, frustrates, or offends a person from another culture. Typically when these occur, people’s intentions are not in alignment with the impact they may be having on each other.
Would you share a high-profile example or two? Some more recent culture crashes that come to mind include when Microsoft founder Bill Gates insulted the South Korean president by keeping one hand in his pocket while shaking her hand, a sign of disprespect in South Korea, or when LeBron James inadvertently disrespected Princess Kate (and much of the U.K.) by slinging his arm around her for a photo op.
Recognize Your Own Cultural Programming
Can you share a few simple culture crash–minimizing techniques?
There is a three-step method that can apply in many situations that helps people to take some of the “cultural reflex” out of the equation and set themselves up for success. It’s the same method I share with all my clients:
Recognize your own cultural programming.
Open your mind to other ways of perceiving or approaching a situation.
Identify opportunities to adapt your response to optimize results.
The methodology is widely applicable, whether the goal is to increase sales, build strategic partnerships lead people/teams, or maximize the potential of a diverse customer base. The more you search through your cultural baggage and recognize your own cultural programming (Step 1), the easier it will become to put the next two steps into action. Getting to the bottom of your bag won’t happen overnight. I’ve been at it for several decades, and I still regularly discover new aspects of my cultural programming.
How do leaders align and engage a workforce in the midst of uncertainty?
Authors Kay Kendall and Glenn Bodinson are expert Baldrige coaches. They studied more than two dozen organizations that delivered exceptional results following the Baldrige Criteria, key principles derived and championed by Malcolm Baldrige in the mid-1980s to improve productivity and competitiveness. Their research was supplemented by talking with more than fifty CEOs to gain insights on performance excellence. I recently asked them about their work and their new book, Leading the Malcolm Baldrige Way.
What do readers, who may not know Malcolm Baldrige, need to know before picking up your book? How will studying the Malcolm Baldrige Way help business leaders?
Malcolm Baldrige was a very successful businessman before Ronald Reagan tapped him to be Secretary of Commerce. He was deeply concerned about the future of manufacturing in America. At that time, the 80s, Japan was dominating in the automotive and electronics manufacturing industries. Both of those industries – and others in America – were being plagued by poor quality, and consumers were making choices to go with Japanese products. Secretary Baldrige championed an effort to establish a presidential award based on rigorous standards that would recognize manufacturing and service organizations that achieved high levels of performance. After Baldrige’s untimely death, President Reagan decided to honor his friend with what became known as the Malcolm Baldrige National Quality Award. Studying Leading the Malcolm Baldrige Way will help business leaders in any industry, in any situation – flourishing or in peril – learn how to align their employees to deliver exceptional results.
Why Engagement Matters
To those who think culture is soft, what statistics can you share that demonstrate engagement matters?
One study showed that companies with high levels of employee engagement have five times higher shareholder returns over five years. There is also clear evidence that engaged employees create loyal customers. If that isn’t compelling, consider the flip-side of engagement. Statistics from a recent article in Harvard Business Review cited, “Disengaged workers had 37% higher absenteeism, 49% more accidents, and 60% more errors and defects. In organizations with low employee engagement scores, they experienced 18% lower productivity, 16% lower profitability, 37% lower job growth, and 65% lower share price over time.” Those are staggering costs for organizations.
Engagement is the rage these days in leadership circles, yet still many leaders don’t work on engagement. Why is this?
Honestly, we don’t understand it. The evidence that engagement matters and impacts bottom-line results is clear. There is also the notion that treating employees as valued assets is what leaders as decent human beings ought to do. In the latest recession, we saw a lot of leaders with an attitude of “My employees should be grateful just to have a job.” As the economy picked up, we saw many employees jump ship as soon as there were opportunities to work for an organization with a better culture, where they were treated as valuable contributors to the mission and vision.
Research: Companies with engaged workers report 6% higher profits.
There’s one phrase that often goes unheard in the workplace, yet has a huge impact on a company’s success: employee engagement.
Most business leaders have the mentality that they’re responsible for providing work; employees are responsible for getting it done. Under this logic, it’s up to the employees to motivate themselves day in and day out.
However, it’s practically impossible to stay motivated in an unsupportive environment (which is probably why 70% workers are disengaged from their jobs).
Fact: 70% of workers are disengaged from their jobs.
Disengagement is a defense mechanism. Employees distract themselves from what makes them unhappy (work) with other things they deem more fulfilling, like looking for new jobs, talking to friends, or watching funny cat videos.
“When people are emotionally invested, they want to contribute.” –Simon Sinek
This helpful illustration from Company Folders provides an eye-opening look at just how low employee engagement could be affecting you. (In the U.S. alone, companies could save up to $350 billion a year through increased employee engagement.)
Read on to learn what’s causing employees to disengage and how you can help them get back on track.
“To win in the workplace you must first win in the workplace.” –Doug Conant
Don Yaeger is an expert on what it takes to cultivate a champion mindset. He was associate editor of Sports Illustrated for over a decade; he has made guest appearances on every show from Oprah to Good Morning America, and he’s also authored more than two dozen books. Now a public speaker, he shares stories from the greatest winners of our generation.
Don, you’ve seen the inside of great teams in the sports and the business worlds. Your new book focuses on 16 characteristics of great teams. Let’s talk about a few of them.
Your first point is that great teams understand their why. Purpose motivates both individuals and teams. How does the personal “why” interact with the team “why”? Do they ever conflict?
In the business world, a “why” is often misunderstood as a company mission statement or code of ethics—which couldn’t be further from the truth. Author and motivational speaker Simon Sinek has described a company’s corporate “why” as “always disconnected from the product, service, or the act you’re performing.” If an organization desires to become a Great Team in the business world, then it must understand how to utilize the “why” properly in order to galvanize support from its professional ranks. “When an organization lays out its cause, how it does so matters,” explained Sinek. “It’s not an argument to be made, but a context to be provided. An organization’s ‘why’ literally has to come first—before anything else.”
“People don’t buy what you do, they buy why you do it.” -Simon Sinek
Companies that understand the purpose and philosophy behind the “why” are usually astute, high-performing organizations that tap directly into the pulse of those they benefit the most. When utilized correctly, this understanding can create a powerful sense of duty and purpose for business teams because the employees know exactly whom they are working for and to what end.
“Great teams build a deep bench at all levels of the organization.” -Don Yaeger
You talk about letting culture shape recruiting. In a large company, how do you make this a reality so that every single hiring manager is thinking about culture and not just reviewing a resume?
Purpose and leadership are essential to building a team culture. Once an organization determines its “why” and aligns its leadership style with the needs of its members, it is on the right path to becoming a Great Team. But culture building doesn’t stop there. A team must also recruit the right talent. If done well, recruiting will result in a highly competitive team that is consistently motivated to seek and claim success.
Great Teams recruit players who fit—who will thrive within the established team culture and add value to it. The talent of the employee or teammate is important, but fit trumps all. These organizations understand that Great Team culture establishes an environment conducive to success, but that success ultimately depends on the right kind of personnel.
In today’s marketplace, it is very easy to be wowed by decorated resumes. When the “ideal” candidate—the one with the outstanding CV—arrives, many leaders incorrectly believe that including that person will automatically better the team. A Great Team, however, understands that fit is more important than credentials. Someone who might be perfect for one environment—or might have been great while working for a competitor—will not be a guaranteed fit for another. That’s something hiring managers should keep in mind as they build their teams.
“Great teams realize that fit is more important than credentials.” -Don Yaeger
Successful huddles are all about open and consistent communication. Under head coach Bill Walsh, the San Francisco 49ers placed such importance on the art of the meeting that he had specific rules and procedures regarding how each one should run. Walsh analyzed and even recorded meetings to spot potential lulls and weaknesses in their process. He wanted to make sure his assistant coaches—who would sometimes change from year to year—were teaching his team in a consistent fashion.
Quarterback Joe Montana, who came on board right after Walsh did, shared Walsh’s high opinion of meetings. This legendary team leader—who won four Super Bowl championships and is tied for the most titles among all quarterbacks—was known in and around the NFL as “Joe Cool.” He had an uncanny knack for seeing all aspects of the game from his position on the field and was seemingly unflappable in the most pressurized situations. And there was a reason for Montana’s demeanor: like Walsh, he believed in a very diligent, orderly meeting process as a means of keeping players engaged. For Montana, the huddle was a sacred place and the ultimate comfort zone. There were rules to be followed when Montana was giving out information for the next play. If those rules weren’t adhered to, Montana told his teammates to take the issue somewhere else. The huddle was a place where everyone needed to be engaged and headed in the same direction.
Great Teams in businesses can take a page from Walsh’s and Montana’s playbook and conduct orderly, disciplined meetings. Such order makes a bigger difference than many leaders want to admit. A successful meeting revolves around clear communication. It can be pivotal to achieving greatness because it explains precise strategy and opens the door to new ideas. An efficient meeting allows an organization to remain one step ahead of the competition and forces it to remain consistent with any existing strategies. But these ideas must be streamlined by a process and guided by a leader who can filter out the good ideas from the bad.
16 Things High-Performing Organizations Do Differently
Great teams understand their why.
Great teams have and develop great leaders.
Great teams allow culture to shape recruiting.
Great teams create and maintain depth.
Great teams have a road map.
Great teams promote camaraderie and a sense of collective direction.
Great teams manage dysfunction, friction, and strong personalities.
Great teams build a mentoring culture.
Great teams adjust quickly to leadership transitions.
Great teams adapt and embrace change.
Great teams run successful huddles.
Great teams improve through scouting.
Great teams see value others miss.
Great teams win in critical situations.
Great teams speak a different language.
Great teams avoid the pitfalls of success.
Would you share an example of where one team missed “value” and another team spotted it and capitalized on it?