One of the responses to our recent survey that surprised me was how many people mentioned ‘flexibility’ as one of the things they liked about where they work. It was only 12 percent of respondents but when paired with ‘location’ represented a total of 20%.
‘Flexibility’ isn’t normally thought of as a motivator and may be difficult to define. What makes this intriguing is that flexibility came back in two recent company surveys I completed as something that employees wanted to see more of from their employer.
I suspect that the move away from the assembly line towards a knowledge economy has made employees question why they need to be at work exactly at nine and until five, and why they need to wear certain clothes at work. It’s made them question why they can’t work at home now and then, and why they can’t wear more casual attire.
We’re making the shift to a knowledge economy but are slow to lose the rigid trappings of an industrial economy and it is showing in employee attitudes.
If this is the flexibility that employees like and desire then it becomes very simple to implement in order to keep people longer or make them happier at work. After all, there is no assembly line that requires strict attendance or a uniform. Without it, what an employer should really care about is results.
It makes one question what employees are being paid to do. If they are paid just to show up, that’s all they’ll do. If they are paid to produce results and their employer can be a little flexible, then maybe work will produce better results.
For this month’s research, we wanted to find out what things people like and dislike about work so we asked 500 people what they thought about their jobs. And the results are surprising.
Managers and employees like pretty much the same things. This means the two groups have pretty much the same motivators. The list of the three things they like most are as follows:
- Type of work 28%
- Co-workers 22%
- Flexibility/Location 20%
In terms of what they don’t like, there are substantial differences between the two groups though. Managers are much more inclined to dislike the workload than employees are. Employees on the other hand, are much more inclined to dislike management. In total, their top three dislikes are:
- Workload 19%
- Management 17%
- Compensation 16%
You can get more details from the study here.
Leadership is about getting results so it’s nice to be able to see an industry mature and the growing leadership skills begin to bring better results and in particular, better productivity.
Foosball and free food still exist but long gone are the days of mindless spending and large losses in the software industry. The post-bubble era is seeing dramatic increases in productivity for software companies. It looks like the industry is really maturing. Our little baby is growing up.
- Average revenue per employee has increased to $287,000 from $195,000 in 2003.
- Average net income per employee is now $3,700 (which sounds anemic but represents huge improvement over the average net loss of $61,600 per employee back in 2003.)
- 62% of the companies are now profitable versus only 46% back in 2003.
- The average market cap per employee increased from $600,000 to $1,129,000.
You can get a full copy of the report here.
Not surprisingly, trust is often cited as a hallmark of successful relationships. What might not be so apparent is that it also works for teams. When the level of trust in the leader is increased, teams perform better.
One study attempted to look at trust by examining the level of trust in basketball teams. Originally published in the Journal of Applied Psychology, “Trust in Leadership and Team Performance: Evidence from NCAA Basketball” was written by Kurt T. Dirks. His hypothesis was that: “ Trust in leadership will have a positive effect on team performance.”
Dirks examined the level of trust in 31 NCAA basketball teams. What he found was that the two teams reporting the highest levels of trust in their coach at the start of the season excelled. One ended up being ranked as number one for most of the season and other played but lost in the championship game. The team with the lowest level of trust won only 10% of their games and the coach was fired.
I’ve been playing with metrics for the last week, trying to find ways to measure the link between leadership and growth in a company. This article by Bain and Company shows one clear part of the link and demonstrates a powerful metric to be used in measuring client engagement.
The first part of the success formula is good leadership. Good employee leadership at a company creates strong employee engagement. I’ve harped on that before so won’t go into how this works. What is important is what happens as a result of employee engagement.
According to the article: “Frontline employees are central to every high-performing go-to-market system, the linchpin that makes it all work.In our survey, frontline engagement was the No. 1 factor separating leaders from laggards— which means, in effect, that if you don’t get the frontline part right, you are failing to get the system right. As it turns out, nearly every one of the go-to-market leaders we studied engages the front line as the embodiment of its go-to-market system.”
That is the second part of the formula. Engaged frontline employees create customer engagement.
The study points out further that: “Just 9 percent of the 2300 companies in their study companies actually averaged annual revenue and profit growth of at least 5.5 percent over the 11-year period from 2000 to 2010.Nearly all of them have a different relationship with their customers. Far more than other companies, their customers are loyal, passionate advocates—the kind of buyer who loves doing business with a company. Far fewer customers are dissatisfied. The average Net Promoter® score of the growers is 30, compared with just 13 for other companies. (A metric widely used by customer-focused companies, the Net Promoter score, or NPS®, is based on the question, On a zero-to-10 scale, how likely are you to recommend the company to a colleague or friend? A company’s NPS is the percentage of promoters— those responding with scores of 9 or 10—minus the percentage of detractors—those giving scores of zero to 6.)”
So that finally, Engaged customers create growth and profit.
I was preparing for a speech on Monday and looking for examples of great leaders who founded great companies. To do this I looked for the largest technology companies I could find figuring that would be the path to finding great leaders. The thing that jumped out at me was that for the most part, the largest technology companies overall and in their sectors had been led for a long time by their founders, not by so-called experienced managers. (Jobs, Gates, Dell, Bezos, Ellison, Zuckerberg, Page, Moore, Hewlett etc)
When I looked some more I found that in a few cases (Jobs and Dell) the founder had to come back in as CEO to rescue the company. It made me ask the question:
Do companies do better with their founder than with professional managers?
Funny thing is the answer is yes. The private equity industry has a habit of investing in companies doing poorly with bad management. In those cases, replacing the CEO is usually a good idea and the reason the firm invested.
Unfortunately, the venture capital industry has followed this practice. In the name of adult supervision, the CEO is usually gone within 3 rounds of VC investment.
According to this blog: “When I analyzed 212 American start-ups that sprang up in the late 1990s and early 2000s, I discovered that most founders surrendered management control long before their companies went public. By the time the ventures were three years old, 50% of founders were no longer the CEO; in year four, only 40% were still in the corner office; and fewer than 25% led their companies’ initial public offerings.”
However, other research shows that on average “Shares of companies that retain their founders as CEOs, even after they become large corporations, have enjoyed gains that top the market by four times on average, according to a USA TODAY database study.”
You Can’t Buy Passion
The moral of the story is that the founder brings a passion for people or a passion for product that is priceless. The company often loses this passion when the founder is replaced by a professional manager. (Think Sculley) Unfortunately these often MBA trained technocrats have a passion for process and this isn’t what makes great companies. (Although perhaps it makes great banks, insurance companies and conglomerates.)
Companies need these professional managers to complement a founder’s skill set but they should be in roles such as COO or CFO. You can’t buy passion and you can’t create great companies without it.