1. Instill a culture of happiness and quality will follow

    April 4, 2015 by BPIR.com Limited

     

    Originally posted on Biztorming by Luciana Paulise

    Google, Zappos and Virgin are convinced that happiness can change the world by improving profitability and employee performance at the same time. Do you want to know how?

    The quality culture of happiness

    In the 80’s Edwards Deming used to say that to achieve continuous improvement: “Management obligations include the following ingredient, I believe: Create a climate in which everyone may take pride and joy in his work”. When he was working for Ford, a cultural model of 14 principles based on three main goals was designed at the company. One of those goals was “Provide Employees an environment that encourages full use of their potential”, which would include 8 of the 14 principles.
    Nowadays, Companies like Google, Zappos or Virgin showcase that whether you are an entrepreneur managing a startup, or a corporate executive with thousands of employees, if you keep your team members happy at work, they are better collaborators, work to common goals, and are more innovative. A Harvard Business Review research shows an average of 31% higher productivity, 37% higher sales, with creativity three times higher, which confirms Google, Zappos, Virgin and Deming are right.

    On the other hand, according to the Forbes insights on Culture of Quality, instilling a culture of quality is “essential to the success of any quality program.”

    The challenge is to find the best way to keep everyone on your team happy, productive and quality oriented.
    Even though each company already have their own culture set up, no matter the size or industry, a new culture can be instilled in the long term if the day to day behaviors are changed accordingly. Tony Hsieh, Zappo’s CEO states that “Culture will happen regardless of whether you want it to or not, you just need to formalize and organize it. You just have to analyze what makes you unique, what you want to be known for, and what your ideal employee looks like.”
    I found there are five basic decisions that can guide company owners in the right direction towards a “happiness culture”. It’s up to the owners to decide which way to go!
    The five decisions are:

    1. Intrinsic vs. extrinsic motivation: Extrinsic motivators are usually money incentives based on performance. They lead an individual to act mainly for an external reward (pay). On the other hand, intrinsic motivation drives an individual to act (such as work or study) because it generates joy, self-satisfaction and happiness. Edwards Deming would say that extrinsic motivators like money rewards and carrot and stick incentives were not enough to motivate employees to work at their best. He insisted that intrinsic motivation was the key, and that people should be given a purpose to satisfy their psychological needs based on Abraham Maslow theory. Richard Branson at Virgin said in his blog What employees wellbeing means to me that “Flexible working encourages our staff to find a better balance between their work and private lives, and through this balance they become happier and more productive. At Pluralsight, a training company that applied Deming philosophies, they used to have only 10 days off on holidays. Now employees can take as many days off a year as they need, as vacation time is not tracked. There are only two rules: “be respectful” and “always act in Pluralsight’s best interest”. They eliminated extrinsic motivators like incentive pay for managers and commissions for salespeople, to focus on creating an environment where everybody wins.
    2. Long term vs. short term profit thinking: Companies that want to transform their culture undoubtedly need to have a long term view because cultural changes are slow. Management commitment is crucial to allocate resources through a sustained period of time even when changes will become evident later on. Thinking long term help employees prioritize quality, when fore example in the case of small business, employees tend to be always thinking in what needs to be done now, no matter how.
    3. Win-win mindset vs. win-lose: A Win – win scheme is perfect for a culture of happiness. Competence and rivalry brings sub optimization and frustration. In an “I win you lose” scheme everybody is losing, like in a divorce. Companies don’t have to focus on keeping happy only a few excellent employees, but making sure all the employees are happy because they can excel in what they do. In a win-win approach you don’t beat out a rival. He is doing his best, you’re doing yours, and you can all work together.
    4. We vs. Me organization: WE organizations promote more cooperation, less individualism and remove barriers to teamwork (like individual incentives). Everybody work as a unit to accomplish objectives rather than everybody off doing the very best they can do at whatever they do and not paying much attention to what the objectives are. Rewards will be greater for everyone, not just in money but in self-esteem and intrinsic motivation.For example, If I cut a piece of wood and it is too short or too long, others have to do more work. I may save a dollar to make it easier for me but it would be costing you 10 dollars. In a ME organization I should work to minimize loss for the system, I should spend 1 hour to make you save three hours. Toyota for example focus on team working and the evaluation is based on the group performance, so people want to share everything they know, they want to make sure everything they do is great to increase the total shared.
    5. Small continuous improvements from bottom up vs. breakthrough changes from top down: Psychologist Ron Friedman in his book “The best place to work” states that “smaller frequent positive feedback and rewards will keep people happy longer than a single large infrequent happy event. The small continuous improvement approach is not also good for employee’s motivation but also for dealing with a changing environment. For a small business, conducting small experiments without making massive investments is much more flexible and allows to deal with uncertainty and lack of resources, minimizing the expenditure of time, money and effort. It also generates an environment of experimentation without fear. At Toyota for example, the responsibility of the daily kaizen is led by those who are responsible for operations, instead of being the responsibility of a “quality department”. This is what I call “improvements from bottom up”, because employees are the ones proposing the changes.

    Believe it or not, it is possible for employees in business, as well as entrepreneurs, to be both happy and productive. It is difficult to change a big organization but you can start small, in small continuous batches. Managers and directors are the first ones to change their minds. If they do, they will change their habits, and the rest of the employees will us follow their examples. Start up and entrepreneurial organizations can pick-up these new ideas naturally.
    Happy employees lead to success, more than success leads to happiness. If you want to emulate Google’s success as a great place to work, and as a successful company, maybe it’s time to adopt a culture of happiness.

    A quick piece of advice to start delivering a culture of happiness? Replace the “Employee of the month” award with a “Thank you” note.


  2. What Executives Value in Their CEOs

    March 20, 2015 by BPIR.com Limited

    Originally posted on HBR by Leslie Gaines-Ross

    A CEO’s reputation is a key part of a company’s success.

    Few would disagree with that. But how about specifics? Weber Shandwick conducted new research with KRC Research, The CEO Reputation Premium: Gaining Advantage in the Engagement Era, among more than 1,750 executives in 19 markets worldwide. We sought out the perspectives of those closest to the CEO, those in the best position to judge.

    We found that nearly one half of a company’s corporate reputation (45%) is attributable to its CEO’s reputation. Similarly, 44% of a company’s market value is attributable to its CEO’s reputation. Tellingly, one-half (50%) of the global executives we surveyed report that they expect CEO reputation to matter even more over the next few years. Global executives also say that a positive CEO reputation attracts new employees (77%) and helps to retain them (70%).

    We found that executives value a few key attributes more than others. Among them:

    1. Humility. Only one out of four CEOs in our study were described by their executives as being humble. Yet we found that highly regarded CEOs are nearly six times as likely as less highly regarded CEOs to be described as humble (34% vs. 6%, respectively). While there are still some well-known celebrity CEOs out there, today’s CEOs have to demonstrate their humility, not their celebrity, and make it clear that the company, not themselves, is their focus.

    Humble CEOs motivate and empower those around them, share employees’ values, and listen well. They use their reputations on behalf of all. They rely on their senior teams to validate strategy. They build cultures that are about the collective whole, not individual rising stars.

    This is a nascent trend that will undoubtedly continue to grow. Global media coverage of humble CEOs has spiked 200% in the past year and mentions have risen 70% in a Google search.

    2. Visibility. While it’s important to be humble, a successful CEO can’t be a wallflower. A hefty 81% of global executives believe that for a company to be highly regarded it is important for CEOs to have a visible public profile. In addition, admired CEOs are four times more likely to be skilled at engaging the public than those with less admired status (50% vs. 13%, respectively). When engaging the public, CEOs are the purveyors of the company’s narrative. It is this narrative that must stand out amidst the informational deluge that besets the public. The CEO therefore must attend to the clarion call, standing up and standing out so as to tell the company’s story. Given the glut of competing information bombarding society, however, standing up and standing out is no easy task. It is immensely difficult to get the story of one’s company not only heard, but also recalled and shared. All of which leads to our next finding.

    3. Persuasiveness. The CEO must convey the company narrative and satisfy the marketplace’s demand for content and transparency through both traditional methods of storytelling (such as media interviews) and newly developed digital channels. Which of the many communications channels are most important? The majority of global executives (82%) believe speaking engagements to be most beneficial when engaging external stakeholders. Industry-specific speaking engagements are more important than non-industry ones. Other important external CEO activities are building relationships with the media, using the company website strategically, and identifying compelling thought leadership platforms. Social media participation is also viewed favorably. A full 43% of respondents deem using social media a worthwhile CEO activity to demonstrate the company’s forward-looking ideas and clear vision for the future and, of course, to elucidate the company story.

    Along with public visibility and engagement, however, comes some risk. When asked whether CEO visibility positively or negatively impacts company reputation overall, an equal number said it improves reputation (41%) as said it can either improve or harm reputation (41%). Just 10% said visibility serves only to harm a company’s reputation. So the smart CEO takes advantage of the positives but is wary of the negatives.

    Global executives today are luckier than ever — a rich ecosystem of channels exists to promote the company’s business strategy, greater purpose, and company story. Customers are ready to engage with the CEO, and conferences with receptive audiences are exploding.

    CEOs now generally accept what has long been apparent: like it or not, they are public figures. By virtue of digital communications we all have in some sense or another gone public. It is just that some of us, CEOs in particular, are more public than others. There is no turning back. It’s time to embrace engagement — but in a most humble way.


  3. What Are You Waiting For?

    March 12, 2015 by BPIR.com Limited

    Originally posted on Linkedin by Diane Kucala

    The future belongs to those who believe in the beauty of their dreams.”, Eleanor Roosevelt

    Imagine having a thought and immediately grabbing whatever is within reach to make that thought a reality. In 1991, Jimmy Ray, founder of Gogo in-flight communications services, sketched a vision for a future aircraft telephone system on a paper napkin. With a goal in mind and the determination to see it through, the company was awarded an exclusive frequency license by the FCC in 2006 and the company designed, patented and deployed an uninterrupted cellular network to the aviation market in the U.S. With its debut in 2008, Gogo brought Internet access to 30,000 feet, giving airline passengers the means to communicate and access the World Wide Web in the sky. Today, the company continues to lead global aero-communications with innovative technology and services for the commercial and business aviation markets.

    Ray envisioned new possibilities and created an innovative market space that enriches our travel experience today and has become a necessity for many business travelers. He created something people wanted and subsequently, people needed. Innovations such as this demonstrate the long-term value of futuristic thinking. Futuristic thinking serves customer needs and in some cases, makes the world a better place.

    In addition to envisioning possibilities, futuristic thinkers inspire others to imagine what lies beyond the current scope of vision. In essence, those that follow this innovative way of thinking paint a picture of the future that the rest of us don’t yet see. Leaders at companies like Apple, Google, Southwest and Gogo dare to push the boundaries in their industries, anticipate what’s to come, and bring innovative products and services to life without hesitation, knowing there are always risks. In order to survive and thrive in our ever-changing technological world, futuristic thinking is imperative. This school of thought should begin immediately, without hesitation, not in the future. Maybe the idea of futuristic thinking should be coined ‘futuristic thinking now.’

    Now that we know what’s at stake, let’s take a look at what it means to be a futuristic thinker.

    Be a visionary. Look to the grander scheme instead of getting intellectually trapped in the short term and existing conditions. Use your imagination to think creatively about the long term with no limits. Predict changes in your current reality and open your mind to the endless possibilities that have not been thought of yet. Understand the interdependency between your customer’s needs and technology, for this will be the new tomorrow.

    Be fearless. Challenge the status quo. Ask probing questions that challenge assumptions and the current state of thinking. With a strong sense of curiosity and a spark of creativity, we all have capacity to envision a new and improved future. However, in order to do this, one must possess the humility to acknowledge that the current parameters may not suffice as technologies and customer needs shift over time. Consider how your decisions today are limiting the expansion of your long-term vision.

    Be an expert. Collect and analyze valuable information that contributes to shaping the future of your business. This may include finance reports, risk assessments and technology options. Also, pay attention to intuition and be willing to take risks. As bestselling author Daniel Pink explains in his book “A Whole New Mind,” our left brains are going to play a bigger role in breakthrough thinking over the coming years and decades.

    Be proactive. Prioritizing your organization’s success requires setting aside sufficient time to think forward and around corners. Many leaders voice major concerns about getting caught in the day to day, not spending enough time contemplating the future. Strategic thinking takes time and must be purposefully addressed. Futuristic thinking has to start now to reflect the future you desire to create.

    How do you begin developing futuristic thinking?

    • Start engaging in conversations with colleagues and mentors who demonstrate futuristic strategic thinking.
    • Allocate time to brainstorm critical shifts impacting your sector of the marketplace.
    • Set aside time to ask tough questions.
    • Think long term, not just the immediate effects an idea may have.
    • Take risks knowing you may not always succeed when attempting to predict the future.
    • When you have an idea, act on it immediately and know if you don’t, your competition will.
    • Explore shifts and trends. Here are a few websites to investigate: www.futureconscience.com/top-10-futurist-websites/
    • Invite people from diverse backgrounds with various education and expertise to share ideas. (Visit www.ideo.com for examples of working well with people across industries and platforms.)

    As every moment passes, the world is evolving. We challenge you to inspire and lead your organization to a future not yet imagined. Grab a napkin and a pen, and get started. What are you waiting for?


  4. How Do You Rank the World’s Best CEOs?

    March 5, 2015 by BPIR.com Limited

    Originally posted on HBR by Charles Fombrun

    How do you measure a CEO’s impact? An HBR team recently addressed that question by ranking CEOs according to the increases their companies have seen in total shareholder return and market capitalization across their whole tenures. HBR’s resulting list of the 100 Global CEOs who have delivered the best financial results, published in its November 2014 issue, placed Amazon.com’s Jeff Bezos squarely at the top.

    There’s no doubt that Mr. Bezos has done well for the company he founded. And clearly CEOs can and should be judged by the financial results they generate. But increasingly, CEOs and their companies are also being called to account for their impacts on employees, communities, governments, and society at large. The changing expectations have magnified the relevance of non-financial metrics and the need to paint a more complete picture of a CEO’s performance.

    Companies now need to understand what value they are creating, not only for their investors, but also for their employees, customers, and society at large – and they need to know how their reputations reflect this net value creation. This is why Reputation Institute regularly surveys people around the world about their perceptions of companies, and produces a ranking on this score. It’s also why, since 2000, individual companies have consulted the Institute to gain a deeper understanding of how well they are regarded on non-financial metrics – and why. To develop consistent and reliable data, we rely on a scientifically developed and standardized survey instrument designed to gauge public perceptions of companies on seven dimensions: finance, leadership, workplace, citizenship, governance, products, and innovation. We call it the RepTrak scorecard.

    When HBR invited Reputation Institute to add a nonfinancial perspective to its top 100 CEOs coverage, our team of researchers, led by Dr. Leonard Ponzi, Brad Hecht, and Viktoria Sadlovska, began with the RepTrak methodology, and created a special “non-financial performance index” using a subset of its categories – specifically, the scores for each company’s workplace, citizenship, and governance. Based on those scores, we reranked HBR’s list. (Note the caveat that our data reflect perceptions of companies, not individual CEOs. The assumption here is that, because most of these value-adding leaders have had substantial tenures, the reputations of the firms, no less than their financial success, reflect these individuals’ leadership. )

    Next, we set out to examine more closely the relationship between HBR’s financial indicators and our non-financial indicators of performance.

    Based on our past research, we thought it likely that companies with higher reputations would tend to financially outperform those with lower reputations. On average, we have found that high-reputation companies have higher returns (both Return on Assets and Return on Equity), deliver higher earnings multiples, have higher market/book ratios, and have a higher Enterprise Value/EBITDA ratio – the key measures on which investors assess corporate performance.

    But the scatterplot presented below demonstrates clearly that, within this set of top CEOs’ companies, there is not a linear relationship between financial and non-financial measures of performance; companies that deliver strong financial results do not always have good reputations with the public, and vice versa.

    Look, for instance at the company names in the lower-right quadrant – the ones who did well financially but not so well on reputation. Monsanto is a case in point, its CEO ranked #8 on HBR’s financially based ranking, despite having the weakest reputation of all the companies. Meanwhile the upper-left quadrant of the chart is also well populated. These are the companies earning the highest public respect, but turning in lower financial results. (Again, let’s keep in mind that all these companies are financial high performers in the greater scheme of things; otherwise they would not be on HBR’s list.) Germany’s car manufacturer Volkswagen stands out in this regard, as does France’s food giant Danone. Both of their CEOs were well down the list of HBR’s top 100, but have managed to win their companies high praise from the public on non-financial criteria. In general, the broad dispersion across quadrants shows that financial and non-financial metrics provide different points of view on a CEO’s performance.

    This nonlinearity of course complicates the question of how one would arrive at a “net” assessment of a CEO’s legacy. How much weight should each ranking get? Should financial and non-financial criteria matter equally, or should they be weighted differently? More weight given to the financial or more to the non-financial?

    We would argue that the truer measure of CEOs’ legacies is the amount of “public support” they helped to create for their companies during their tenures – the changes in people’s willingness to recommend, work for, buy products from, or invest in their companies. In fact, this is a measure that Reputation Institute regularly captures in its public surveys. And we have calculated the relative statistical contribution that financial and non-financial criteria make in predicting this index of public support. Our statistical analysis suggests that some 35% of a CEO’s legacy can be explained by financial performance, with the remaining 65% by non-financial criteria.

    Thus, to assess these CEOs’ full legacies, we developed a combined ranking based on weighting the financial and non-financial performance rankings used in the scatterplot. Take a look at the table below. The second column in it is the original ranking released by HBR based on financial performance. The third column is the re-ranking of the same set based purely on reputations in non-financial (that is, “social”) performance areas. The first column is the ranking of CEOs that Reputation Institute arrives at by applying our weighted combination of the two. (And we’ve added a fourth column to highlight whose ranks change most.)

    Now who rises to the top? CEOs one and two, as you can see in the overall rankings column, are Novo Nordisk’s CEO Lars Sorensen and American Tower’s CEO James Taiclet. Volkswagen’s Martin Winterkorn leaps up 68 slots to 21st thanks to favorable non-financial results. Disney’s Bob Iger also rises dramatically (from 60th to 10th) as do the CEOs of Fastenal, Alfa Laval, and Antofagasta. Starbucks’s Howard Schultz moves up from 54th to 14th place, reflecting a well-balanced commitment to governance, citizenship, workplace, and financial performance. Amazon’s Jeff Bezos drops only slightly from 1st place in HBR’s original ranking to a robust 3rd in the combined ranking.

    Some CEOs see significant drops in ranking when we factor in the weak non-financial performance reputations of their companies. They include Japan’s Fast Retailing, and Taiwan’s MediaTek. Monsanto’s Hugh Grant suffers most heavily when ranked by this more holistic assessment of how his company has fared under his leadership. It drives down the assessment of his legacy from a lofty 8th to a more remote 82nd place in the adjusted ranking. Perhaps he has decided Monsanto must do more to boost its non-financial performance reputation; within the past few years, the company joined the World Business Council for Sustainable Development (WBCSD) and started offering Business Ecosystems Training globally to its employees.

    The fact that financial performance and nonfinancial performance reputation do not correlate among HBR’s top 100 CEOs underscores why it is so important to keep refining our non-financial metrics and ensuring their rigor. And if both kinds of metrics are important to take the measure of a company, they may matter even more to assessments of a CEO’s tenure. The most holistic measure of a CEO’s contribution over his or her tenure would be a reliable answer to one question: How much better or worse is the overall reputation of the company compared to the day this leader stepped into the role? A great CEO’s legacy is never as one-dimensional as the ledger.


  5. Tackling Fat Cat Pay

    October 23, 2014 by