Harvard business

Subscribe to Harvard business feed Harvard business
Practical insights, tools and resources from leading business thought leaders.
Updated: 55 min 31 sec ago

Pay Injustices

6 hours 26 min ago

Are you getting paid unfairly? In this episode of HBR’s advice podcast, Dear HBR:, Dan and Alison answer your questions with the help of Shirli Kopelman, a professor at the University of Michigan’s Ross School of Business and the author of Negotiating Genuinely: Being Yourself in Business. They talk through what to do when a poor performer gets paid more than you, when the company salary structure is making people quit, and how to ask for more money when your boss leaves and you do their job.

Download this podcast

Listen to more episodes and find out how to subscribe on the Dear HBR: page. Send in your questions about workplace dilemmas by emailing Dan and Alison at dearhbr@hbr.org.

From Alison and Dan’s reading list for this episode:

HBR: When You Find Out a Coworker Makes More Money than You Do by Rebecca Knight — “Your impulse might be to storm into your boss’s office and demand that he fork over more cash. Or maybe you just feel like scowling across the cubicle at your higher-earning colleague with a sneer: ‘Seriously? You?’ These actions, of course, are not advisable.”

HBR: Most People Have No Idea Whether They’re Paid Fairly by Dave Smith — “Perceptions about pay don’t always reflect reality, even if employers are paying the same — or more — than similar companies. In fact, a whopping two-thirds of people who are being paid the market rate believe they’re actually underpaid, representing a huge discrepancy.”

HBR: Envy at Work by Tanya Menon and Leigh Thompson — “When you’re obsessed with someone else’s success, your self-respect suffers, and you may neglect or even sabotage your own performance and possibly your career. Envy is difficult to manage, in part because it’s hard to admit that we harbor such a socially unacceptable emotion. Our discomfort causes us to conceal and deny our feelings, and that makes things worse.”

HBR: Make Your Emotions Work for You in Negotiations by Shirli Kopelman — “Your emotions matter in negotiations. They fuel your behaviors, energize you, and allow you to strengthen — or distance and damage — relationships with the people you’re negotiating with. But too often, people refuse to acknowledge their full range of feelings because they’re afraid of losing the ability to think rationally and act strategically.”

Categories: Blogs

Apple’s Pact with 13 Health Care Systems Might Actually Disrupt the Industry

7 hours 10 min ago

laura schneider for hbr

An announcement on January 24 didn’t get the large amount of attention it deserved: Apple and 13 prominent health systems, including prestigious centers like Johns Hopkins and the University of Pennsylvania, disclosed an agreement that would allow Apple to download onto its various devices the electronic health data of those systems’ patients — with patients’ permission, of course.

It could herald truly disruptive change in the U.S. health care system.  The reason: It could liberate health care data for game-changing new uses, including empowering patients as never before.

Since electronic health records (EHRs) became widespread over the last decade, there has been growing frustration over the inability to make electronic data liquid — to have it follow the patient throughout the health system and to be available for more sophisticated analysis in support of improved patient care and research. Most efforts to liberate and exchange health data have focused on getting doctors and hospitals to share it with one another. Those efforts continue, but progress has been slow.

Frustration has increased interest in a very different approach to data sharing: Give patients their data, and let them control its destiny. Let them share it with whomever they wish in the course of their own health care journey.

Several technology companies — including Google and Microsoft — tried this in the early 2000s, but their efforts failed. There just wasn’t that much electronic health data available at the time, since only a tiny fraction of doctors and hospitals had electronic records. Health systems were reluctant to share what data existed, seeing it as a valuable proprietary asset. The technology for giving outside entities access to electronic records kept by hospitals and doctors was underdeveloped. And EHR vendors were uninterested in promoting such access because the demand was weak and data sharing could spur competition from other vendors.

Insight Center

Those obstacles have now mostly melted away. Electronic health records and digitized health data are now ubiquitous. Various federal incentives and regulations now require providers to share data with other providers and with patients or face significant financial penalties. The Argonaut Project, a voluntary private sector collaborative, has provided guidelines for an open source, standardized application programming interface (API) that provides ready access to data stored in providers’ electronic records. Think of APIs as gateways into electronic data warehouses that now populate the health care landscape. Of note, the federal government now requires all vendors of electronic records to include these open APIs in their products to be federally certified.

A world in which patients have ready access to their own electronic data with the help of facilitators like Apple creates almost unfathomable opportunities to improve health care and health. First, participating patients would no longer be dependent on the bureaucracies of big health systems or on understaffed physician offices to make their own data available for further care. This could improve the quality of services and reduce cost through avoiding duplicative and unnecessary testing.

Second, the liberation of patients’ data makes it possible for consumer-oriented third parties to use that data (with patients’ permission) to provide new and useful services that help patients manage their own health and make better health care choices. Such consumer-facing applications — if they are designed to be intuitive, useable, and accurate — have the potential to revolutionize patient-provider interactions and empower consumers in ways never before imagined in the history of medicine. Imagine Alexa- or Siri-style digital health advisors that can respond to consumer questions based on users’ unique health care data and informed by artificial intelligence. Health care could start to function much more like traditional economic markets.

Nevertheless, this vision of the future faces obstacles and uncertainties.

First, large numbers of hospitals and doctors have to follow the lead of the 13 systems that have already jumped on board. There are encouraging signs that many more will join, but ultimately, there needs to be a clear business case for both providers and their IT allies to invest in this new partnership. Perhaps the most compelling would be widespread consumer demand for the service. For that demand to materialize, consumers have to receive something they value in return for giving third parties like Apple access to their data. This means that Apple and its future competitors will have to develop nifty consumer-facing apps that solve consumer health-related problems easily and cheaply. Those apps simply don’t exist at the moment.

Second, the opportunities for fraud and abuse in this new world of data access are daunting. Most consumers will want to delegate to third parties the job of accessing, storing, managing, and analyzing their data. Making sure those third parties are trustworthy is critical, and unscrupulous actors will inevitably take advantage of unsophisticated patients. Health data is extremely valuable on illicit markets. And even honest but unsophisticated data stewards can create huge problems if they don’t adequately protect patient information. Federal and private sector organizations are trying to develop a voluntary but enforceable code of conduct to govern the behavior of private data stewards. This would be an important first step toward assuring that consumers are not victimized on the way to a brighter health care future.

Third, once new companies start to develop consumer-facing health applications based on patients’ own health care data, the quality of those applications could become an important issue. If they offer advice, it needs to be reliable. If they promise a service, they need to deliver. Some applications may fall within the existing regulatory authorities of U.S. federal agencies like the Food and Drug Administration or the Federal Trade Commission. If not, the question of whether and how to assure that the advice furnished consumers is valid and reliable will certainly arise as a matter of public policy.

These problems notwithstanding, the announcement of this collaboration between leading American providers of health and information technology services likely signals a new era in health and medicine. The partnership and its results will not solve all our health care problems. But they could really shake things up. And that is what the U.S. health system needs.

Categories: Blogs

Emergency Responders and the Dangers of “Masculinity Contests”

8 hours 10 sec ago

Petr Svarc/Getty Images

During the horrific school shooting last month in Parkland, Florida, one of the sheriff’s deputies on the scene did not enter the building to confront the attacker. The internet, Parkland officials, and politicians reacted swiftly. The deputy was criticized by his boss for his supposed inaction and was called a “coward” by the president of the United States.

The use of this specific word was not accidental. More than just failing to act as a first responder, “coward” implies a much greater transgression: failing to act as a man. As Alex Kingsbury writes in the Boston Globe, it plays into a timeless American narrative: “the idea that real men dispatch bad men with a pull of the trigger.” Because the bonafide requirements of first responders’ jobs closely align with traditional ideals of heroic manhood (“strong,” “brave,” “risk-taking”)—ideals deeply rooted in culture and psychology—men in first responder roles face additional pressure to “act like men” at work. This makes their perceived failure to do so all the more noteworthy and susceptible to critique by the public and their colleagues.

Masculinity, we should note, has many manifestations in organizations. One of us (Olivia) has investigated a side of masculine organizational culture known for what psychologists call “companionate love.” It involves fondness, affection, caring, compassion, and tenderness—or, as first responders would say, “camaraderie” or “brotherly love.” Shaming the deputy for failing to act heroically by calling him a coward, however, perpetuates a darker side of masculine culture associated with avoiding the appearance of vulnerability and gaining and maintaining dominance over others. By making people feel diminished, worthless, and exposed, shaming like this often motivates defensive responses, as psychologist June Tangney and her collaborators have found in their study of criminal recidivism. Shame in the context of this second type of masculine organizational cultures, we are coming to learn, can lead to a variety of negative individual and organizational outcomes.

For the past two and half years, a working group of gender scholars (including us) led by Jennifer Berdahl, Joan Williams, Peter Glick, and Marianne Cooper have been working to understand what happens in organizational cultures that conflate masculinity with performance, or what the working group refers to as “masculinity contest cultures.” To maintain status, such cultures require workers (both men and women) to “prove” their masculinity by engaging in behaviors we categorize into four groups: “dog-eat-dog,” “strength and stamina,” “put work first,” and “show no weakness.” These behaviors tend to be common in organizations characterized by toughness and competitiveness, like first-responder organizations, but even consultants and executives who spend most of their time behind a computer can valorize similar ideals, as sociologists Erin Reid and Mary Blair-Loy find in forthcoming research.

Our initial analysis indicates that masculinity contest cultures are associated with numerous harmful workplace outcomes such as bullying, increased sexual harassment, burnout, and decreased employee well-being. These outcomes are exacerbated when threats to masculinity are made public.

In a series of studies, research by Jennifer Bosson, Joe Vandello, and colleagues shows that when men experience public threats to their masculinity, they have increased anxiety and are particularly likely to lash out with behaviors such as increased aggression and financial risk taking. This suggests that threats to masculinity that are widely publicized via social media or other channels—such as the reaction we observed in the Parkland case—can magnify the feeling of impending threat and scrutiny. In a vicious cycle, these negative behaviors create an environment characterized by fear and hostility, preventing people from doing their best work.

In the case of first responders who frequently need to process traumatic events, this can be particularly detrimental. Masculinity contest cultures may discourage emergency responders from confiding in others or seeking health services, a recommended best practice from employees who frequently experience trauma. A recent study by Ashleigh Rosette, Jennifer Mueller, and David Lebel found that male leaders were penalized and rated as less competent when seeking help. Psychologist James Mahalik and collaborators have also written extensively on the link between masculine norms and reduced help-seeking behaviors, suggesting that environments characterized by masculinity contests make it difficult for employees to seek the social support and health care they need.

All of this said, first responders must make quick decisions in life-or-death situations. Protecting the public is central to their jobs. When something goes terribly wrong, it’s important to investigate what happened and why. Those involved must deal with these situations in a professional manner while simultaneously negotiating the painful emotions that go along with them. None of this is easy. But it can be done.

How? In a now-classic study of offshore oil workers, for example, Robin Ely and Debra Meyerson examined one approach. The company at the center of their research implemented an organizational culture change initiative that decoupled stereotypically masculine traits prominent in the organization (like reckless bravado, emotionlessness, and never admitting failure) in favor of competencies aligned with better performance (like willingness to admit failure, relying on and learning from others, and expressing vulnerability and concern). This move not only drastically improved productivity and safety; it also helped men realize they could “behave in ways that conventional masculine norms would have precluded.”

Another antidote to the pernicious effects of masculinity contest cultures is to prioritize the aforementioned brighter side of masculinity: companionate love. Rather than publicly shaming an emergency responder, as we saw this past month, this kind of masculine culture encourages perspective-taking and caring.

A recent longitudinal, multi-method research study of 40 metropolitan fire stations conducted by one of us (O’Neill) shows just how influential—and positive—emotions can be to an organization. In the study, firefighting crews with a work culture defined by companionate love and what we found to be a prototypical masculine emotion—joviality, or being in good humor—were much less likely to engage in unnecessary risk-taking, both in their own lives and at work. The consequences of joviality for performance were striking: crews higher in joviality showed faster coordination time during emergency calls and were less likely to be in auto accidents or have property damage on the job. We also discovered the importance of a supportive family life, which had its strongest impact on firefighter physical health—particularly in combination with the warmth and supportiveness of the crew culture.

To be clear: traits associated with masculinity—heroism included—in and of themselves, are not the problem. The problem is when masculine traits like heroism and emotional stoicism are taken to the extreme, leaving no room for vulnerability or mistakes. Under these circumstances, situations unfold that can hurt men, the organizations for which they work, and potentially the people they seek to protect. Scolding emergency responders for violating masculine ideals is not helping anybody—and, in fact, may do substantially more harm in the long-run.

Categories: Blogs

Research: Legal Marijuana and Gay Marriage Have Been Good for U.S. Innovation

9 hours 1 min ago

Kenneth andersson for hbr

Many countries and regions declare that they want to develop their own Silicon Valley and be a hub for innovation. The page for Technology Centers on Wikipedia, for example, lists no fewer than 90 places that have billed themselves as “Silicon This” or “That Valley”, hoping to emulate the Valley’s success in generating innovation. It is usually followed by a variety of policy initiatives, such as R&D tax credits, public grants for innovation, public procurement of innovation, grand innovation challenges, and support for intellectual property rights. Yet, few regions have managed to achieve the levels of innovation as seen in Silicon Valley. Why? We argue they have overlooked an important set of policies altogether. Pretty much all policy measures target the economic incentives to innovate. Instead, our research shows that social policies matter just as much — if not more.

Innovation, while an economic activity, is fundamentally a social process. In this process, people combine their ideas with those of others. This kind of interaction has fundamentally social aspects. Companies admit as much when they try to foster innovation by providing employees with ping pong tables and happy hours, and by taking away things like enclosed offices in favor of communal workspaces. Research backs up what we know intuitively — that social interactions often provide the best breeding grounds for innovation.

But do government social policies impact innovation? To answer this question, we examined the impact of two social liberalization policies (legalization of same-sex civil unions and legalization of medical marijuana) and one anti-liberalization policy (passage of abortion restrictions) on innovation in the United States. In our context, social liberalization is defined as the easing of government restrictions. The U.S. provided a good location for this study, since states have considerable leeway in setting their own laws. We also deliberately chose multiple and contrasting policies to ensure our findings were not driven by any specific one. We measured innovation output as the number of patents granted to individuals in each state, a common measure used by both researchers and policy makers. Our sample included every single patented innovation by an inventor in the United States between 1990 and 2007.

We found that states that implemented the social liberalization policies subsequently experienced a significant increase of 5% to 6% in their innovation output. In contrast, the passage of an additional abortion restriction in a state was followed by an average 1% decline in its innovation output. The chart below shows the average effects of the legalization of same-sex civil unions and the legalization of medical marijuana on state-level innovation output over time. Social policies had a very significant impact on the rates of innovation in a state.


Of course, as we all know, correlation is not causation. Therefore, we employed various sophisticated research designs and statistical techniques to ensure that it is the policies that lead to innovation (rather than, for instance, the other way around) – details of which can be found here and in the sidebar. Moreover, the staggered implementation of these policies over time enabled us to compare the change in the innovation output of states that implemented these policies to that of other states that had not yet done so. The conclusion: Social liberalization policies at the state level significantly influence local rates of innovation.

Methodological Note

To disentangle correlation and causation, we relied on a number of methods. Our main empirical strategy is based on comparing the change in the patenting rate of states that have implemented a policy to those that have not yet, while controlling for a wide range of state-level factors such as past innovation rate, state total expenditure, total business R&D expenditure, population, educated population, individual and corporate tax rates, house prices, real per capita personal income, and the political mixture of state senate and house.

A major concern in our study is the direction of causality. We want to make sure that we are capturing the effect of policies on innovation and not the other way around. To address this concern, we show that the pre-legalization patenting rate of states cannot statistically predict the implementation of these policies. Moreover, we show that there is no pre-trends in innovation rate of states that have implemented these policies. The change in patenting rate of states starts approximately three years after the implementation of policies.

We also show that the effects we are capturing are not the result of some underlying trends in the patenting rates of states that implemented these policies. If the results are driven by underlying trends unrelated to these policies, the actual policy dates should not matter. To test this idea, we created a bunch of fake policy dates and show that the results do not hold when we use these fake dates. The effects only show up when we use the actual policy dates. 

Finally, we checked for any other concurrent policies that could potentially drive our results, but couldn’t find any.

What explains the link between these policies and innovation? Our analysis suggests a two-step process. First, social liberalization policies can promote more diverse social interactions among individuals. Recent works in political science have shown that social liberalization policies influence individuals’ attitudes towards openness and diversity, inspiring higher levels of social diversity, increasing general trust, and promoting interactions between individuals with more diverse views, life styles, and racial-ethnic backgrounds. It is a tacit process and observing it is not straightforward.

However, we found supporting evidence in our setting. Individuals were more likely to work with more diverse collaborators after the implementation of social liberalization policies, and vice versa. We also found a faster circulation of knowledge within a state after the implementation of social liberalization policies, pointing to more frequent and diverse interactions among individuals. To conclude: Liberal policies caused people to work with a more diverse set of collaborators.

Subsequently, more diverse interactions, in turn, lead to more and higher quality ideas. New ideas do not come out of thin air. Rather, most innovations are the outcome of combining previously disconnected ideas. Henry Ford developed the idea behind Ford assembly lines from assembly lines of meatpacking plants. The Reebok “pump,” an athletic-shoe with an air bladder, was inspired by inflatable splints and intravenous bags. Almost all new music genres are the result of sampling and mixing previously known genres. Scientists constantly borrow ideas from each other, recombine them in new ways, and build new theories. For ideas to flow and collide, the people who hold those ideas need to meet, mingle, talk, and share. Individuals with more diverse social interactions are exposed to a more diverse set of ideas, and thus have more opportunities to produce innovations from combining previously unconnected ideas.

We found exactly that in our research: More diverse collaborations in states that implemented social liberalization policies were directly tied to higher levels of innovation. Our findings show increases of 22% and 17% in inventors’ number of new collaborators, i.e. other inventors with whom they had never worked before, subsequent to legalization of same-sex unions and medical marijuana, respectively. We also found an increase in the knowledge diversity of inventive teams after social liberalization policies. Further, innovations that were produced after the implementation of social liberalization policies were on average more novel and impactful. For measuring impact, we used an established measure based on the number of citations a patent receives from future patents. For novelty, we used another common measure based on whether a patent is assigned to two technological classes that were never been assigned together to any previous patent. Innovations that were produced after the implementation of social liberalization policies were on average more novel and impactful.

Overall, we found strong evidence that social liberalization policies trigger more diverse collaborations on the ground, which subsequently produce inventions with more novelty and impact.

For policy makers who want to stimulate innovation in their own region, our research implies that they should consider social policy as well as economic stimulus. And for executives thinking about where to locate their businesses, our study suggests that they should consider social regulations as well as business regulations.

The core insight is that the social context in which innovation takes place matters as much as the incentives for individuals and firms to invest in it. Social policies complement economic policies. The latter can create the right incentives and the former can create the right context.  Social policies can become a source of regional competitive advantage. The same applies to managers who wish to promote higher levels of innovation in their companies. Building a workplace in which employees have the chance to routinely meet new people and freely share their ideas can truly unleash their innovation potential.

Categories: Blogs

How to Manage an Employee Who Cries Easily

9 hours 9 min ago

Hayon Thapaliya for HBR

Most managers feel uncomfortable when employees cry during business conversations. Many of us may recall a time we’ve cried at work, but for some people it’s not a rare occurrence. Some individuals seem to react excessively to disappointment or challenge, with repeated bouts of apparent sadness or fear accompanied by tears, shaking, or reddening. If you manage someone who tears up easily, you may find yourself leaving important topics or issues unaddressed to avoid upsetting them.

Some employees are quick to cry because they lack strong self-management skills; they may be embarrassed by their own emotionalism, and grateful for any advice you can offer on keeping a more even keel. Some cry as a form of deflection or manipulation; I’ve worked with a handful of people whose frequent crying served as a first line of defense against criticism. Of course, they may also be handling a tough situation in their personal lives – from illness to difficult family situations. And perhaps the most positive reason for crying occurs when your employee trusts that you have the kind of boss-subordinate relationship where tears are nothing to hide or be ashamed of.

You can’t know what’s going on inside your employee’s head, or whether they cry because they trust you, are trying to manipulate you, or happen to be overwhelmed by personal issues outside of work. If the issue is personal, you may want to refer them to your HR department or your company EAP, so they can get some additional support. Regardless of the cause of their distress, though, you’ll need to find a way to work around – or through – their tears. These six steps will help you and your subordinate keep a humane and professional focus on the work that still needs to get done.

Don’t overreact to the stimulus of crying. Mentally characterize the tears as the equivalent of someone else’s furrowed brow or bit lip. The fact that a crier is crying again doesn’t mean they’re an emotional wreck who’s having a breakdown; it’s just the way their body reacts to pressure. Remind yourself that you’re in charge of the situation. Face the employee and keep your body language open and your language neutral; show that you’re paying close attention but not becoming distressed yourself. This is a time not to be empathetic and try to experience what they’re feeling, but to be compassionate and take action because you see that they’re having a hard time.

Note the trigger. It’s useful to identify the patterns for discussion, and to be aware of what gets the excessive reaction started. Is it an event, a belief about someone else’s intentions, or a build-up of frustrations that should have been vented sooner? Rather than asking why the employee is reacting, which can encourage a deep exploration of aggravations and hurt feelings, try to name the concrete, proximate cause: Say something like, “I can see that something just upset you. Was it….?” You want to start out by naming it without delving into it.

Require a brief recovery period instead of calling off the meeting or pretending nothing’s happening. With someone who cries rarely, you might want to reschedule the meeting. But with someone who cries a lot, that may not be the answer — there’s no inherent reason that your next discussion will go significantly better and no one has time to reschedule meetings anyway. So you might as well help this one along, show that you can protect the employee’s dignity, and take control of the situation simultaneously. Say, “Let’s take a quick break so you can calm yourself and then we’ll figure things out.” The employee may want to take a short walk or get a coffee, or if the meeting is in your office, you can leave for a few minutes, or even do some other work. After a short interval, say, “Okay, let’s resume our conversation.”

Probe for the employee’s immediate purpose or need. It’s important to avoid questions that invite a litany of woes or stories about problems that occurred three years ago. So skip leading questions like “What’s going on?” in favor of “What are the specifics I need to know about this situation?” or “What’s the most important thing you’re trying to accomplish right now?” Keep bringing the employee to the point: the data and considerations to move forward with the business problem.

Don’t commiserate, pity, or try to fix the situation for them. It’s okay to acknowledge, “I’m sorry that upset you,” but minimize any sense of drama. Resist getting upset yourself, even if you’re frustrated; it will only encourage even more emotion. Look away a bit, as if they happened to have a bloody nose and will take a few minutes to clean up but don’t need an ambulance.

Announce a conclusion. This is a two-fold step: The first is to declare what needs to be done to progress through the problem and ensure that you’ve each committed to your follow-up actions; the second is to bring the discussion to a close so there’s no wallowing in emotion. “So here’s what we’re going to do – you’ll handle X, and I’ll arrange a call with Y. Thank you for filling me in. We can check in again on Tuesday.”

It’s natural to want to avoid the discomfort of confronting a crying subordinate. But if you’re calm and focused, you can help the employee move past their emotions and come back to the necessary work at hand. Over time, they’ll become more proficient at curbing their own reactivity. And you’ll be happier to meet with them.

Categories: Blogs

The Economics of Why Companies Don’t Fix Their Toxic Cultures

Thu, 03/22/2018 - 10:20

naqiewei/Getty Images

Over the last decade, industries, academics, and the public sector have turned their focus toward culture and ethics in response to the financial crisis as well as misconduct at a broad range of corporations. But what role does culture play in corporate misconduct, and why do these problematic cultures persist?

My perspective and approach to misconduct risk are influenced by my work as a bank supervisor, and by my background and training as an economist. In my view, bank supervision must include attention to the culture at financial firms, not just to their financial safety and soundness. The justification for this attention comes from relatively simple economics. By thinking of a company’s culture as a form of investment subject to market failures, we can better understand why companies sometimes tolerate misconduct, and why they can’t always fix it on their own. Though my experience is in the financial sector, these lessons apply to other industries as well.

The economics of corporate culture

Analyses of recent cases of misconduct in the financial sector suggest that misconduct is not just the product of a few individuals or bad processes, but rather the result of wider organizational breakdowns, enabled by a firm’s culture. One way to think about the underlying factors involved is as “cultural capital.” The possibility of employee misconduct—the potential for behaviors or business practices that are illegal, unethical, or contrary to a firm’s stated values, policies, and procedures—is a form of risk just like liquidity risk or operational risk. Investments in cultural capital is one way to reduce that risk.

A firm’s cultural capital is a type of asset that impacts what a firm produces and how it operates. Cultural capital is analogous to physical capital, like equipment, buildings, and property, or to human capital, like the accumulated knowledge and skills of workers, or reputational capital, like franchise value or brand recognition. In an organization with a high level of cultural capital, misconduct risk is low, and its organizational structures, processes, formal incentives, and desired business outcomes are consistent with the firm’s stated values. Unspoken patterns of behavior reinforce this alignment and drive corporate outcomes.

By contrast, in an organization with low levels of cultural capital, formal policies and procedures do not reflect “the way things are really done” — that is, the stated values of the organization are not reflected in the behavior of senior leaders or the actions of the organization’s members. Misconduct then results from norms and pressures that drive individuals to make decisions that are not aligned with the values, business strategies, and risk appetite set by the board and senior leaders. Rules may be followed to the letter, but not in spirit. All of this increases misconduct risk and potentially damages the firm and the industry over time.

As with other forms of tangible and intangible capital, a firm must invest in cultural capital or it will deteriorate over time and adversely impact the firm’s productive capacity.

When viewed through this economic lens, the question becomes: If misconduct risk is bad for firms, why don’t they invest in cultural capital and reduce the risk themselves? Why do regulators and supervisors need to get involved?

Market Failures and Misconduct Risk

It’s worth noting that many large financial firms have increased their attention to misconduct risk and cultural drivers in the wake of serious frauds and enforcement actions over the past several years. But the degree of commitment and progress in these efforts has not been even across the industry, and serious and persistent misconduct continues in some businesses.

So, why wouldn’t a firm do more to invest in cultural capital? Traditional economic theory may offer a few explanations. Namely, firms may operate with sub-optimal levels of cultural capital due to different types of market failures. Three well-known phenomena—externalities, principal-agent problems, and adverse selection—may help explain why misconduct risk persists.

Externalities. Externalities are the impact that a transaction between actors has on other unrelated actors. If a company pollutes when making a product, neither the buyer nor the seller bears the cost of that pollution – the cost falls on the rest of society. Externalities can drive a wedge between private- and socially-optimal outcomes and lead firms to underinvest in their own resiliency by ignoring the broader impact of bad outcomes on the financial sector and the real economy.

Does a firm’s toxic culture create an externality? Yes, because the impact of employee misconduct extends beyond the individual and even the firm — in finance it can affect the safety, soundness, and effectiveness of the financial sector and the broader economy.

If a firm commits fraud or another type of misconduct, for instance, much of the cost of that misconduct does fall on people involved – managers, employees, and investors – in the form of fines, diverted management attention, or even bankruptcy.  But this can also impose costs on people not directly connected to the company.  Customers might lose confidence in the firm or the industry as a whole and financial intermediation could decline.  In such a case, misconduct has created an externality.

And there is evidence that financial misconduct can have broader impact, imposing costs beyond the industry. Recent surveys, for example, have found that confidence in the financial sector has fallen by half over the last decade, which can impede the efficient intermediation of credit and the provision of financial services.

In the case of pollution, externalities motivate government intervention. In banking regulation, externalities are the conceptual driver behind the enhanced prudential standards for capital, liquidity, and risk management that are currently applied to the largest, most systemically important financial institutions. The same reasoning suggests a possible role for regulators and supervisors to consider company culture and the potential misconduct. Because the costs of that misconduct are not always paid by the firm, it may substantially underinvest in the cultural capital required to prevent it.

Principal-agent problems. Principal-agent problems occur when the incentives of employees don’t align with the broader interests of management or shareholders. This can lead to excessive risk-taking, underinvestment in risk-reduction and risk-control mechanisms, and a focus on short-term returns at the cost of long-run viability. Think about the trader who is compensated on short-term profits and losses and not long-term value creation.  The misalignment of incentives can tilt the firm toward excess risk-taking unless curbed by the appropriate culture and focus on risk management.

These issues can be amplified by the opacity intrinsic to many financial activities that allows misconduct to persist and erodes the cultural capital of the firm.

Adverse selection. Adverse selection occurs when those particularly ill-suited for something are the most likely to participate. This could occur in the context of culture and misconduct if conduct-related events change the composition of a firm’s workforce. Firms with relatively low cultural capital (and a relatively high tolerance of misconduct risk) may attract and retain employees and clients more inclined to take inappropriate risks and push beyond internal limits and controls. Further, high-quality directors, executives, and employees might leave such firms or decline to join them, depleting the firm’s human capital and contributing to the deterioration of cultural capital.

Role of the Public Sector

These market failures suggest a role for the public sector to encourage resiliency, including investment in cultural capital, beyond what the firm would choose to do on its own. That is, if firms don’t have sufficient incentives to overcome these forces, then the public sector should push toward a better overall outcome.  Given my role as a bank supervisor, my focus is on financial firms, but these types of phenomenon can lead to inefficient outcomes in any industry.

While misconduct risk poses clear threats to both firms and the overall financial system, addressing culture reform across an entire industry is a complex challenge, and there is no one action or approach that will fully address it. The work bank supervisors do in this area is critical because there are limits to the regulatory or deterrence and enforcement approach. To understand how a firm manages misconduct risk—and to improve resiliency and reduce the potential for unwanted disruptions to financial intermediation—we must increase our focus on firms’ decision-making practices and behaviors as a core aspect of good governance.

The views expressed in this paper are those of the author only and do not necessarily represent those of the Federal Reserve Bank of New York or the Federal Reserve System.

Categories: Blogs

How Being a Workaholic Differs from Working Long Hours — and Why That Matters for Your Health

Thu, 03/22/2018 - 09:00

Hayon Thapaliya for HBR

Hanna, a finance director at an international home care retailer, works long hours. She’s usually in the office from 9am to 5pm, but at home, when her three children go to sleep, she’ll work another four hours, not closing her laptop until midnight. She sometimes also works on weekends. But even though she works 60 to 65 hours per week, she told us that she can “switch off” when she needs to, and that she still feels energetic every day. She hasn’t had to worry about her health.

Michael, the director of strategy for an American insurance company, does not work as much as Hanna. His workdays usually start at 8am and finish no later than 6pm, and he often leaves work at 3pm on Fridays. But even though he works an average of 45 hours a week, and is single with no kids, he has a hard time “switching off” and unwinding from his job – he is constantly checking his email and worrying about work. A few months ago, at a routine health check, his doctor noted he had high LDL cholesterol, which raises his risk for cardiovascular disease and diabetes. He was prescribed medication to lower it.

We generally assume that working too much is bad for our health. But what exactly is unhealthy about this is unclear. Is it working long hours that increases our risk of developing health issues? Or is it something else, like Michael’s compulsive work mentality, that is harmful for health?

What our research shows

We sought to unravel the difference between behavior (working long hours) and mentality (a compulsion to work, or what we call workaholism). We conducted a study in 2010 at the Dutch subsidiary of an international financial consulting firm with over 3,500 employees. We asked employees to complete a survey and then sign up for a health screening conducted by medical staff. 763 employees completed both.

What Is Workaholism?

The term “workaholic” was coined in 1971 by the psychologist Wayne E. Oates, who referred to “an uncontrollable need to work incessantly” as an addiction. Workaholics are characterized by having an inner compulsive drive to work hard, thinking about work constantly, and feeling guilty and restless when they are not working. Workaholism often goes hand in hand with working long hours, but the two are distinct: it’s possible to work long hours without being obsessed with work, and it is possible to be obsessed with work but only work 35 hours a week or less.

The survey asked about participants’ workaholic tendencies (e.g., “I feel guilty when I am not working on something,” and “I put myself under pressure with self-imposed deadlines when I work”), their work skills, work motivation, and their work hours in an average week. It also asked if they experienced various psychosomatic health issues such as headaches and stomach problems. The health screenings gave us information about their various biomarkers (such as waist measurement, triglycerides, blood pressure, and cholesterol), which, when aggregated, are a reliable gauge for an employee’s risk of developing cardiovascular diseases and diabetes — what is referred to as Risk for Metabolic Syndrome (RMS). We also controlled for a host of factors such as gender, age, education, and family history of cardiovascular disease.

We found that work hours were not related to any health issues, while workaholism was. Specifically, employees who worked long hours (typically more than 40 hours a week), but who did not obsess about work, did not have increased levels of RMS and reported fewer health complaints than employees who demonstrated workaholism. We found that workaholics, whether or not they worked long hours, reported more health complaints and had increased risk for metabolic syndrome; they also reported a higher need for recovery, more sleep problems, more cynicism, more emotional exhaustion, and more depressive feelings than employees who merely worked long hours but did not have workaholic tendencies.

The experiences of Hanna and Michael, individuals whom we interviewed separately, outside of this study, align with these results. Hanna works long hours, but she is not mentally pre-occupied with work. When she finishes work for the night, she feels fulfilled and falls asleep easily. In the morning, she feels refreshed for a new workday. She told us, “I take my work very seriously while I’m working, but I forget about work the minute I decide I’ve done enough for the day.” Michael, on the other hand, has a compulsion to work hard and feels restless when he is not working. He continues to ruminate about his job and often finds it difficult to fall asleep and recharge before the next morning. When asked about his general stress levels, he mentioned that he “cannot remember the last time not feeling stressed or anxious about work.”

Unlike people who merely work long hours, workaholics struggle to psychologically detach from work. And we know that ongoing rumination often goes together with stress, anxiety, depression, and sleep problems, and it impedes recovery from work. Stress levels in workaholics are therefore often chronic, which leads to ongoing wear and tear on the body.

Here’s a quick explanation of why: To cope with stress, the body activates several systems (e.g., cardiovascular, neuroendocrine). So say you’re facing an important deadline. As you approach it, your stress hormones (e.g., cortisol), pro- and anti-inflammatory cytokines (e.g., interleukin-6), and blood pressure would likely go up. But after the deadline, these would return to their original levels, known as the “set points.” When you’re working an excessive workload and continually pushing your system beyond its range, you may re-set your set points. Elevated blood pressure may become chronic, and cortisol levels stay elevated. When your biological systems keep working around elevated set points, you have a greater risk of cardiovascular disease (CVD), diabetes, and even death.

Does it matter if you love the work?

Most workaholics are aware of their obsessive work habits, and friends and family will often warn them about the possible health risks. But a common defense is that they love their jobs. Linda, a personal injury lawyer whom we also interviewed separately from our study, readily admits to her work addiction but says she simply enjoys her work too much to change. Linda works for a medium-sized law firm in Canada and although her hours are exceptionally low for a lawyer (40 hours per week), she feels guilty when she is not working and often tries to come up with solutions for her clients off the job. As a result, she finds it difficult to fully engage in play with her five-year-old after work. She often experiences headaches and difficulty sleeping, as she ruminates about work and thinks up new ways of tackling work challenges. When talking to her husband and a trusted colleague about the ongoing headaches and sleep problems, they both urged her to visit the doctor — but she initially resisted. She told us, “There is really not much wrong with me, at least not physically. I just need more hours in the day.”

We wanted to see if enjoying the work mitigates the negative health effects of workaholism. Looking at the data from our study, we differentiated between workaholics who reported being highly engaged with their work — meaning they enjoyed their work, felt vigorous at work, and got easily absorbed in their work — and workaholics who reported low work engagement. We found that both types of workaholics reported more psychosomatic health complaints (e.g., headache, stomach problems) and mental health complaints (e.g., sleep problems, depressive feelings) than non-workaholics. However, non-engaged workaholics had higher RMS — a 4.2% higher risk — than engaged workaholics. (This number might seem small, but even a small increase can pose a serious health risk.)

This suggests that being loving your work can mitigate some of the risk associated with obsessing over it. We also found that engaged workaholics reported having more resources at home and at work compared to non-engaged workaholics. Engaged workaholics reported receiving more social support (e.g., advice, information, appreciation), from their supervisor, co-workers, and their spouse, than their non-engaged counterparts. They also scored higher on communication skills, time management skills, and general work skills, and they reported much higher intrinsic motivation for work than non-engaged workaholics.

We think that this arsenal of resources may help engaged workaholics prevent initial health complaints from developing into more severe health risks. In Linda’s case, after listening to her husband’s concerns, she eventually consulted her doctor. The doctor did a general health check, and as Linda suspected, the results did not reveal any concerns in terms of physiological health. But her doctor referred her to a counselor to work on the sleep problems Linda mentioned during the check-up.

If we look at all of our examples, it’s clear that while Hanna, Michael, and Linda all work hard, the way they engage with work differs substantially, and hence, their health risk differs as well. Due to Hanna’s long work hours, her stress levels are high at times, but because they return to baseline levels, her stress is not chronic and she does not have the related mental or physical health risks. Michael has an obsessive work mentality, and he does not enjoy his work, which causes ongoing stress and frustration, frequent anxiety attacks and feelings of depression, and also elevated risk for cardiovascular disease. Linda has a similar compulsive work mentality, but she loves her job and reports having a supportive family. While she experiences some sleep issues and headaches, she does not have an elevated risk for cardiovascular diseases.

Two key messages — and their caveats

These stories and our research findings reveal two key messages: First, when it comes to effects on health, working long hours is not as bad as obsessing over work. But this warrants an important disclaimer: The employees in our sample worked a maximum of 65 hours per week, and therefore we do not know the health outcomes of working longer hours. It may be quite difficult to detach from work, engage in recovery activities, or get enough sleep if one works 70 hours per week or more. Still, it seems that more than hours, our thoughts and feelings about work impact our subjective well-being and health risks.

The second key message from our study is that workaholics who love their jobs are somewhat protected from the most severe health risks, and this may be because they feel that their work is worth all the hard work they put in. But this brings up another caveat: Although we found that engaged workaholics had lower physiological health risks (lower RMS) than non-engaged workaholics, they still reported more depressive feelings, sleep problems, various psycho-somatic health complaints, and a higher need for recovery than non-workaholics. These are all signs that well-being among workaholics, regardless of how much they love their job, can be impaired.

Avoiding the negative effects of workaholism

Our research suggests some potential solutions to help keep stress levels manageable and prevent health risks. The first step is to acknowledge when a relationship to work is unhealthy — when it feels out of control and is undermining outside relationships. The next step is to regain control over your work behavior. One way to do this is by setting clear rules for how many hours you will work each day. This can help you accept that there is a point at which you’ve done enough work for the day. If you have trouble “switching off,” you might want to stop working two or three hours before bed. Taking up enjoyable non-work activities, such as seeing friends, watching a movie, reading a book, or learning a new skill, can also help you psychologically detach from work.

It can also be useful to reflect on the reasons why you work excessively and compulsively. We found a striking difference in work motivation between engaged and non-engaged workaholics. Whereas engaged workaholics worked because they enjoyed their work or found their work meaningful (these are intrinsic motivators), non-engaged workaholics were more likely to work for extrinsic motivators such as money and status. Intrinsic motivation is associated with more optimism, effort, and persistence, whereas extrinsic motivation often instigates anxiety and undermines persistence, making failure more likely.

The proactive mentality that is characteristic of employees with intrinsic motivation may help them take action when they experience initial health complaints, whereas the anxiety and frustration that can accompany extrinsic motivation may make non-engaged workaholics more passive, such that they continue unhealthy work habits and eventually face substantial health risks. Thus, finding ways to promote intrinsic motivation in one’s work, whether through new projects or even a new job, may not only make you happier but also healthier.

Managers too can intervene by helping employees find intrinsic motivation; they can re-engage them in their work and provide more support. This can mean assigning employees challenging but feasible tasks, reducing red tape and other barriers, discussing their personal and professional growth, and providing them with ample resources to do their work, such as autonomy, feedback, and support. Managers can help hard workers develop stronger communication and time management skills, with tactics such as making a to-do-list each week, making a long-term goal list, differentiating between urgent and non-urgent tasks, and scheduling non-interrupted time for important tasks. Friends and family can also play a role by making sure that employees have emotional and tangible support at home.

Ultimately, the challenge for anyone is to identify a compulsive work mentality and prevent its consequences. Focusing on one’s engagement and ability to “switch off” will go a long way in helping employees feel happy at work and outside of it.

Categories: Blogs

How Mayo Clinic Is Combating Information Overload in Critical Care Units

Thu, 03/22/2018 - 07:30

JUAN Diaz-Faes for HBR

Health care teams depend on electronic health records (EHRs) to compile important medical data from innumerable lab tests and medical devices, observations, treatments, and diagnostic codes. We rely on it so much that we consider the EHR to be a team member.

But in fast-paced critical care units, where even small errors can have big consequences, this digital team member can overload physicians with information. The sheer volume of data in EHRs creates a staggering challenge in complex environments such as intensive care units (ICUs) and emergency medicine departments. Individual clinicians may have to sift through more than 50,000 data points to find key information. This proliferation of data (both meaningful and meaningless) and the workload created by EHR systems have been key drivers of clinician burnout and, paradoxically, introduced new threats to patient safety. What is more, relying only on EHR data greatly limits the insights derived from artificial intelligence algorithms or big data analytics.

Mayo Clinic, the nation’s second-largest critical-care provider in the United States, with nearly 350 beds in 15 intensive care units (ICUs) across its campuses in Minnesota, Arizona, and Florida, decided to combat the data deluge with ambient intelligence: a set of decision-making tools powered by data on and insights into clinicians’ goals, work environments, strengths, and performance constraints. When layered on top of existing information infrastructure, ambient-intelligence applications can cut through the clutter and deliver the right information in a digestible form that clinicians can use, quickly and effectively at the patient’s bedside.

Insight Center

We created a multidisciplinary team of clinicians, researchers, and experts in clinical informatics to design and test information-technology tools that can help, rather than hinder, clinical care. The ambient-intelligence approach we adopted prioritized a deep understanding of clinicians, the way they work, and the environmental factors they face. Using a NASA Task Load Index, we identified clinicians with a very high mental, or cognitive, workload who continuously have to filter important information out of the cluttered environment.

Subsequently, over a two-year period, we conducted 1,500 interviews with clinicians from Mayo Clinic ICUs nationwide. With these insights, we identified that out of tens of thousands of pieces of data pouring through EHR, roughly only 60 pieces are crucial patient information that clinicians needed to access quickly and easily for effective care. This information included both expected data points, such as blood pressure and medications, as well as less obvious but critical information such as cough strength or previous difficulty with endotracheal intubation.

Next, we needed to find a better way to deliver the crucial information to clinicians at the point of care. We built an EHR interface for clinicians in the ICU called Ambient Warning and Response Evaluation (AWARE), which we introduced in our ICUs in Rochester, Minnesota, in 2012, and in our campuses in Phoenix/Scottsdale and Jacksonville, Florida, in 2014. A rules-based, ambient-intelligence application, AWARE filters out the meaningless data and delivers context-specific, high-value information to clinicians in real time. It contains over 1,000 rules that run continuously through data and enrich it with insights from clinicians and patients. Data is organized around familiar clinical concepts needed for timely and accurate decision making.

For example, the conventional EMR displays are cluttered with irrelevant data, making it easy to miss changes in hemoglobin, platelets, and coagulation factors — all critical for recognizing and treating acute bleeding. By prioritizing these data elements on the dashboard with color coding that indicates severity and urgency of specific corrective intervention, AWARE displays allow instantaneous recognition of an ICU patient at risk of severe bleeding complications.

AWARE provides a real-time overview of every ICU in the Mayo Clinic system, using visual displays that make it simple to scan and identify patients in need of urgent interventions. Each patient is represented by a square with icons that represent the status of required tests, scans, and procedures. It provides a quick picture of overall acuity, and clinicians can drill down into each patient’s data — down to each organ system.

While conventional alarms and EHR alerts create often create meaningless noise that gets lost in the hustle and bustle, AWARE smart alerts are integrated into the clinician’s workflow. They notify the clinician of potential omissions only if the clinician’s actions do not match the patient condition, minimizing the chance of harmful interruptions.

For example, our “VILI (ventilator-induced lung injury) Sniffer” provides an automated surveillance of mechanically ventilated patients that notifies providers only if the ventilator settings do not match the patient condition based on gender, height, and the presence of acute respiratory distress syndrome. Another application, “Sepsis Dart,” continuously surveys patients in emergency departments and medical intensive care units for the timely and accurate implementation of best practices (cultures, lactate, antibiotics, fluid) for diagnosing and treating sepsis. Yet another example is context-specific smart checklists such as CERTAIN (Checklist for Early Recognition of Acute Illness) that focus on completing common processes of care that are sometimes overlooked or missed in busy environments.

Compared to standard EHR interfaces, AWARE improves the cognitive performance, efficiency, and reliability of human decision makers. It also saves three to five minutes on chart review per patient per day. With an average ICU clinician workload of 15 patients per day, the savings mean that more than one hour of additional clinician time can be devoted to patient bedsides, improving often-inadequate shared decision making. In a subsequent study, AWARE implementation was associated with improved patient outcomes and reduced costs in the ICU. Adjusted for illness severity, the odds for hospital mortality of critically ill patients treated after AWARE implementation were reduced by half (odds ratio 0.45, 95% confidence interval 0.30 to 0.70). In addition, the length of ICU stay decreased by 50%, length of hospital stay by 37%, and total charges for hospital stay by 30% ($43,745 per hospital admission).

As an example of ambient-intelligence applications used in the emergency and ICU settings, AWARE delivers results that clearly suggest the importance of human insights and creativity in developing information technology for clinicians. Advancing ambient-intelligence applications and combined human–computer partnerships has the potential to help solve some of our most meaningful and challenging health care problems.

Disclosure: Mayo Clinic Ventures licensed part of the technology referenced in this article to Ambient Clinical Analytics, which sells clinical decision-support and alerting tools to hospitals and critical care providers. Mayo Clinic and the authors have financial interests in Ambient Analytics. Mayo Clinic uses any revenue it receives to support its not-for-profit mission in patient care, education, and research.

Categories: Blogs

People Don’t Want to Be Compared with Others in Performance Reviews. They Want to Be Compared with Themselves

Thu, 03/22/2018 - 06:05

HBR STAFF/Schreiber Sons/nypl

People hate performance evaluations. They really do. According to a survey of Fortune 1,000 companies done by the Corporate Executive Board (CEB), 66% of the employees were strongly dissatisfied with the performance evaluations they received in their organizations. More strikingly, 65% of the employees believed that performance evaluations were not even relevant to their jobs.

This is unfortunate considering the amount of resources that organizations devote to conducting performance evaluations. CEB research says that when we take into account how much money organizations are investing in their performance appraisal technology and how much time managers are spending to evaluate their employees, on average U.S. organizations spend $3,000 per year, per employee. This implies that billions of dollars are spent across the country because more than 90% of American companies provide performance evaluations at least once a year.

Why are employees so frustrated about the way they are evaluated, despite all the time and money being spent on these evaluations? What are organizations missing? We believe that one clue lies in the fact that 71% of the American employees thought that their evaluations had problems in the domain of fairness.

Fairness is at the heart of enhancing employees’ work experiences. It begets numerous benefits such as employees’ satisfaction with their jobs and commitment to their companies. In the context of performance evaluations, when people believe that the outcomes of their evaluations are commensurate with how well they performed, they are likely to consider the evaluations as fair. But there is so much more that goes into people’s perceptions of fairness. Specifically, employees perceive the fairness of evaluation processes when they feel included and respected. They also consider it fair when their evaluations are accurate and are conducted based on ethical and moral principles. When employees perceive fairness in the evaluation processes, they are more likely to accept their evaluations, in which case they will digest the information contained in the evaluations and motivate themselves accordingly.

Then, the remaining question is this: what are the specific things that organizations can do to increase perceptions of fairness during the process of performance evaluations? Our research, recently accepted for publication in Organizational Behavior and Human Decision Processes, suggests that an important driver of the fairness in performance evaluations is the reference point managers use to appraise their employees’ performance. Specifically, in four studies based on the data collected from 1,024 American and Dutch employees, we compared two types of reference points.

One reference point is the focal employees’ own past performance. When employees’ current performance is compared with their past performance, managers evaluate the temporal trajectory of the employees’ achievement, thereby providing feedback on how much employees have (or have not) made progress over time. We call those temporal comparison evaluations.

Another reference point is other employees’ performance during the same period. When employees’ performance is compared with how others have done, managers evaluate how much employees have (or have not) demonstrated superiority over others. We call those social comparison evaluations.

Our findings demonstrate that employees consider temporal comparison evaluations to be fairer than social comparison evaluations. For example, in one of our studies we had participants work on a task for two rounds. The task consisted of asking participants to make HR-related predictions. After they finished their task, in one condition their manager provided evaluations that compared their performance from round two to their performance from round one; temporal comparison evaluations. In the other condition, their manager provided evaluations that compared their performance from both rounds to another person’s performance; social comparison evaluations. Then, we measured their perceptions of the fairness in the evaluation process. Participants who received temporal comparison evaluations perceived significantly higher levels of fairness than those who received social comparison evaluations. When their current performance was discussed relative to their own past performance, participants believed that the evaluations were more individualized, believing that the manager incorporated specific information about them. Thus, they considered that the evaluations were more discerning and accurate, and that they had been treated in a more respectful way.

The experience of receiving individualized evaluations was significantly weaker in the case of social comparison evaluations. Employees whose performance was compared with another person’s performance believed that while delivering such evaluations, their manager failed to account for specific details of their performance. Thus, they considered the evaluations to be less accurate. They thought that their evaluations were less respectful, perhaps because they felt like they were being treated like another face in the crowd. Importantly, these differences in the perceived fairness between temporal and social comparison evaluations were independent of the favorability of the evaluations: even when the evaluations were positive, employees perceived the process of their performance evaluations to be fairer when they received temporal comparison evaluations (“You did better than before”) rather than social comparison evaluations (“You did better than other people”).

If performance evaluations that compare employees’ performance to those of others sound unfamiliar, let us give you an example. Under the leadership of Jack Welch, General Electric ranked their employees’ performance from top to bottom, giving additional rewards to the top 20% while laying off the bottom 10%. Such evaluations might have increased the employees’ concentration and led them to exert more energy at work. However, there may have been negative repercussions, too. The employees—both at the top and the bottom—might have perceived the evaluation processes as less fair. Past research on fairness suggests that such consequences can be very costly to organizations, especially in the long run.

A counterexample comes from Huawei, the Chinese telecom giant, which is famous for evaluating their employees’ performance in terms of its temporal trajectory. The philosophy of the company is to see employees improve capabilities over time. Even though social comparisons can be used, the main focus of evaluations in Huawei is on building a culture in which each employee manages to grow and develop. Less focus on social comparisons and more on development over time is clearly articulated by their founder, Ren Zhengfei, when he noted, “I will not judge whether each team has done a good job or not, because all of you are moving forward. If you run faster than others and achieve more, you are heroes. But, if you run slowly, I won’t view you as underperformers.”

Our research provides guidance on how organizations can provide performance evaluations that seem fair. Here, managers should remember that employees have individual identities, and they want those identities to be recognized at work. By emphasizing how their performance has changed over time instead of how it fares against other people’s performance, organizations can offer what the employees want—individualized treatment—and thus achieve the goal of offering fair evaluations, which are much more likely to be embraced rather than met with scorn.

Categories: Blogs

Marketers Need to Stop Focusing on Loyalty and Start Thinking About Relevance

Wed, 03/21/2018 - 14:04

Topic Images Inc./Getty Images

If your customer retention strategy relies on “buying” loyalty with rewards, rebates, or discounts, it is coming at a high cost. And these days, it could also mean that you’re giving up something priceless: your relevance.

That’s because the “loyalty era” of marketing, as we’ve known it, is waning. It was built in part on the notion that consumers will keep buying the same things from you if you have the right incentives. Yet, according to recent consumer research from Kantar Retail, 71% of consumers now claim that loyalty incentive-programs don’t make them loyal at all. Instead, in this new era of digital-based competition and customer control, people are increasingly buying because of a brand’s relevance to their needs in the moment.


In fact, consumer research we’ve worked on at Accenture shows that in the U.S. market alone, companies are losing $1 trillion in annual revenues to their competitors because they are not consistently relevant enough. Loyalty remains important, but this finding indicates that the future of marketing — and, in the big picture, many businesses — depends on serving a customer’s most relevant needs in the moment. In this way, companies need to become like more like living businesses, building and sustaining symbiotic ties with their customers as if those relationships are with a concierge, butler, or friend. 

A New Definition of Relevance

To become this kind of living business, with a new understanding of customer needs, we need a new definition of relevance. Abraham Maslow’s oft-quoted “hierarchy of needs” — first published in 1943 — provides a good start. Maslow sought to map the psychological needs of humans and their motivations. But his framework also offers a model for rethinking the traditional four P’s of marketing: product, price, place, and promotion. Most companies today are guided by these four facets of engagement.

The problem, however, is that brands using the four P’s exclusively often target a static customer archetype (e.g., a high-minded customer for an organic supermarket or a value-conscious customer for a discount chain). The reality is that there is no such archetypical customer. Everyone’s needs vary depending on time and context. And with today’s technologies, companies now have the ability to see and act on these fluctuations in the moment. Customers are increasingly expecting all companies to do just that, both in their marketing efforts and in the experiences they offer.

To become a living business, companies should expand their thinking to include the following five P’s as well: purpose, pride, partnership, protection, and personalization. These form a simple and comprehensive test of relevance. The first four extend from the top to the bottom of the psychological hierarchy—from what Maslow called “self-actualization” or fulfilling your full potential, to safety, a more basic need. The fifth, personalization, enables companies to connect with customers around any of these needs.

  1. Purpose: Customers feel the company shares and advances their values.
  1. Pride: Customers feel proud and inspired to use the company’s products and services.
  1. Partnership: Customers feel the company relates to and works well with them.
  1. Protection: Customers feel secure when doing business with the company.
  1. Personalization: Customers feel their experiences with the company are continuously tailored to their needs and priorities.

Soul Cycle provides a good example of what the five P’s look like in practice. By creating a community for indoor cyclers and fitness buffs, SoulCycle’s purpose aligns with customers’ values of health and a positive environment. This experience creates a sense of pride for customers who want to participate in a high-end cycling experience (given the pricing and the tendency for instructors to be young and fit). Customers also feel that SoulCycle is a partnership in the lifestyle they wish to achieve: They feel like they are treating themselves with new, clean facilities, upscale bathroom products, and custom SoulCycle playlists on Spotify.

SoulCycle customers also feel protection in their purchase — which is expensive for a 45-minute fitness class compared to the cost of a traditional gym — because they are confident that the staff will help them with their needs and also will help them to make the most of each class. Finally, the SoulCycle experience becomes totally relevant when a customer has an instructor that personally inspires them, thus creating personalization.

Many companies will be challenged to satisfy all five P’s at once. The following three principles, however, should help them in their efforts to connect with customers on these fronts:

Go outside your comfort zone

Many companies have been using the traditional four P’s for decades, and many of those with great success. Often, this means companies will need to extend outside of their comfort zones to position their brands these new, expanded ways.

Consider Yoplait, the global yogurt brand owned by food giant General Mills. Consumers typically associate big food companies with mass-production methods and plastic packaging. Companies like these are more typically accustomed to using traditional 4 P’s approaches such as pricing and promotions to attract and retain customers. But Yoplait recently found itself contending with an influx of newer brands, including the Greek yogurt brand, Chobani, that emphasize and compete on meaningful connections to authentic food traditions.

In response, Yoplait pivoted toward a focus on customer relevance. Yoplait found that consumers often take pride in using products with a connection to an authentic national tradition – whether Italian olive oil, or Greek and Icelandic yogurt. Recognizing that its long history of making French yogurt could be turned into a market advantage, it embraced a traditional French method in which yogurt is cultured and sold in small individual glass pots. As a yogurt executive at General Mills noted, “The simplicity of this idea, that this is a French method, coming from a French brand, with a French name — that’s authenticity.” It is also something both Yoplait and its customers can take pride in.

The company is, at the same time, enhancing its relevance to customers in other ways. For example, it also recognized customers’ desire to feel protected. Their new “Oui” French yogurt product is all-natural, non-GMO, and promotes its very simple ingredient list.

It’s still too early to tell whether this targeted initiative will translate into increased sales. Nonetheless, it is a noteworthy example of a company purposefully pivoting to an approach that extends beyond its norms to be relevant to customers.

CVS Pharmacy, the retail pharmacy of CVS Health, offers another example. CVS Pharmacy is moving beyond a purely transactional retail model where customers fill prescriptions; instead, the company is focusing on helping their customers on their path to overall better health. In this way, customers share the company’s purpose. It also helps satisfy their desires to feel cared for, and helps build upon the trusted relationship most customers have with their pharmacist – an example of what we’ve termed protection.

Extending far outside the traditional retail paradigm, CVS is embracing technologies including predictive analytics, artificial intelligence, and machine learning to send their customers personalized reminders to refill or take their medications, in the spirit of partnership. And, the company has teamed with AI giant IBM Watson to anticipate patient needs, including when they might require more urgent care. These new avenues and practices will enhance the value for customers in maintaining an active engagement with a pharmacy retailer—and make the CVS brand more relevant in the moment through protecting their health and well-being.

Timing is everything

If the first four P’s are additive, the final one — personalization — is multiplicative. A key component of becoming a living business is conveying exactly the right message, experience, or offer to customers in exactly the right context. It’s a level of personalization that few companies ever attain.

Car-rental giant Hertz has worked to develop a “Just in Time” approach to delivering highly relevant offers at the exact moment when the customer is evaluating deals across the channels they prefer, whether it is through call-center agents, counter terminals, handheld devices, or the Hertz web site.

Using predictive analytics, Hertz suggests deals based a customer’s propensity to accept certain offers over others. For example, a customer who would be qualified for a buy-one-get-one-free deal might still receive a different (perhaps even less profitable) offer if she passed up similar offers in the past. The company understands that a promotion can only be as profitable as a customer’s willingness to take it — and an unwilling customer is a lost opportunity. That’s why offers are calibrated to a customer’s behavior in a way that all marketing channels can simultaneously use.

Don’t be loyal to the status quo

To succeed in this era of relevance, marketers and companies must be continuously willing to abandon the old. As new technologies shift customer journeys and expectations, they can (and should) also enhance companies’ abilities to engage with customers in the most relevant ways. Often, the greatest roadblock is a company’s lack of willingness to transform their processes, organizations, and mindsets as needed.

To overcome that barrier, some companies have shifted from a product-focused mindset to a platform approach.

Under Armour, Inc. offers a good example. Instead of thinking of itself merely as a sports apparel manufacturer, the company has purposefully developed a “connected fitness” ecosystem. In 2015, in fact, it spent more than $500 million to acquire two popular fitness-metrics services in a bid to become the world’s largest tracker of fitness information. The two services — one based in the United States and the other in Europe — had a combined 100 million subscribers when they were acquired.

Under Armour intends to enable these platforms to grow independently, while reaping aggregated data that can inform and expand its apparel designs. Ultimately, the goal is to link customers to new services such as innovative start-ups that are developing embedded sensors and biometric readers for apparel. In the words of CEO Kevin Plank, “Brands that do not evolve and offer the consumer something more than a product will be hard-pressed to compete.”

Similarly, automaker BMW has embraced partnerships across a broader ecosystem to help its customers navigate their urban environment, with or without their car. Customers can now see their engagement with the brand as an ongoing relationship, rather than a one-and-done purchase. To provide its customers a seamless transportation experience, the automaker links them into a broader of ecosystem of car-share and rental companies, parking aids, electronic-vehicle charging stations, and location-based mobile lifestyle apps.

Today’s mobile-enabled consumers are constantly evaluating and re-evaluating their purchasing decisions. They will choose the brands most relevant to them at an increasingly rapid pace. And they’ll pay a premium. Living businesses — those that achieve this profound degree of relevance — will have pricing power and will drive repeat purchases. Those are the ultimate goals of loyalty, now newly attainable, when relevance matters more than ever.

Categories: Blogs

7 Ways to Improve Operations Without Sacrificing Worker Safety

Wed, 03/21/2018 - 09:00

HBR STAFF/CSA Images/BW Archive Collection/Getty Images

When I ask corporate leaders why they are committed to preventing serious injuries and deaths among their workers, most say they care about their employees and don’t want to see anyone hurt. They’ll also note that “safety pays” in reducing costs, or admit they fear reputational damage following a significant incident at their company.

In my experience, these rationales rarely lead to significant changes in workplace safety and the prevention of serious injuries and deaths. Underneath it all, many business leaders have an implicit but unfounded belief that, while it is necessary to reduce workplace injury risk, there is a trade-off between profits and the expenditures necessary to keep workplaces safe. One example of this sticks in my mind.

During my years at OSHA, where I served as the Assistant Secretary of Labor from 2009 through the beginning of 2017, I received several reports of safety system failures at DuPont facilities. I watched with concern as the company, under pressure from activist shareholders to increase profits, cut costs and let its safety program deteriorate. Needed repairs and upgrades were delayed, worker training postponed, and risk assessments overlooked. The culmination was an incident at an insecticide plant in LaPorte, Texas, where, as a result of a basic process safety management failure, an extremely toxic chemical—methyl mercaptan—was released and two workers were overcome. With inadequate equipment, others rushed in to save their colleagues. In all, four workers were killed.

We fined DuPont a few hundred thousand dollars—a high penalty for OSHA but petty cash for DuPont. To get management’s attention, I issued a statement declaring that “these four preventable workplace deaths and the very serious hazards we uncovered at this facility are evidence of a failed safety program.”

It worked. CEO Ellen Kullman came to see me and promised a top to bottom review of the DuPont safety program. I was pleased with our meeting, feeling like she had made a real commitment. And then, less than two weeks later, she stepped down.

Her successor, Ed Breen, was quoted as saying, “as we confront a challenging environment, [Kullman] and the management team already have taken actions to accelerate cost reductions. Looking ahead, we will continue to drive productivity, and we plan to conduct a deep dive into the details of our cost structure and allocation of capital to ensure we deliver appropriate returns for shareholders.”

When I read DuPont CEO Breen’s words “accelerating cost reductions,” my heart sank. I thought immediately of BP and the other industrial giants whose “accelerating cost reductions” had disastrous consequences. These kinds of statements speak to a leader’s choice of values, and a failure to understand the relationships between a safe work environment and operational performance. They convey to workers what’s really important, and they create ample context for inadequate safety focus lower down the organization.

It doesn’t have to be this way. Companies can be successful and safe at the same time. The reality is that virtually all workplace injuries are preventable, and safety management and operational excellence are intimately linked. Injuries and catastrophic events, in addition to being tragic, are evidence that production is not being managed correctly. Improved operational performance will result in fewer injuries.

Here are some steps CEOs, executives, and boards can take to accomplish just that.

Start at the top.

From the CEO down, the message should be, “We care about safety because we care about you — doing it right means no one gets hurt.” Take safety as seriously, if not more seriously, than anything else you do.

One former CEO who exemplifies this message is Jim Gallogly, who was hired to be CEO of LyondellBasell, one of the world’s largest plastics, chemicals and refining companies, in 2009. When Gallogly arrived, the firm was in bankruptcy; his job was to return it to profitability (which he did). At his first meeting with employees, however, he announced that he wasn’t going to begin by talking about the firm’s financial challenges. Instead, the new CEO wanted to focus on something far more important: his absolute commitment to safety. He subsequently included a report of the firm’s safety performance in every earnings call, too.

Aside from prioritizing safety with employees and investors, corporate leaders need to be familiar with the nature, extent, and potential of the major risks — and the risk mitigation plans — associated with their facilities. Many executives require every serious injury to be reported to them immediately. At Cummins, Inc., for example, serious incidents are reported directly to the COO and communicated to business unit vice presidents as well. They are then reviewed by the company’s Manufacturing Leadership Council.

When operational staff knows that the C-suite will be on the receiving end of such reports, and that they will be analyzed in detail, it reminds mid-level management of the importance of risk reduction and injury prevention.

Use the right incentives.

The term “safety culture” is misleading because it suggests organizations have multiple cultures:  one for safety, another for production, and perhaps others for quality and for sales.  In reality, each company has its own organizational culture, and all too often, when production needs suddenly to increase, production takes precedence over safety.

At the safest, most successful companies, safety is what the firm does — and what the firm is at its core — not something that is separate from operations. In fact, a study of 19 manufacturing firms on quality, productivity, and economic performance, along with subjective data on how workers and managers felt about their safety program, found that:

“As safety deteriorates, product quality and plant performance, based on internal and external measures, suffers. There is more scrap, more rework, and employees are less involved. Such outcomes are in line with the core concepts of total quality management which would suggest that employees who do not feel safe in their jobs are not likely to do their jobs well…. Safety and operating performance measures should be viewed as in concert with each rather than as competing entities.”

Operations managers must get the message, though direct comments, performance reviews, and bonuses, that safety is a central part of their jobs. I have seen far too many employers who fail to penalize managers when their safety management systems are failing but their production numbers are good. LyondellBasell, for example, has a policy that makes it clear that safety is no less important than profits. According to Jim Gallogly, no matter how low the OSHA recordable injury rate, if there is a serious incident — a fire, a chemical release, a worker is seriously hurt — no manager gets a bonus.

Don’t blame workers for injuries.

Workers are humans and humans make mistakes. No matter the job, at some point a person will get tired, bored, or distracted. Because of this, errors are inevitable. Well-functioning safety programs understand this and have multiple backup systems to ensure that mistakes do not result in injuries or deaths.

It’s also worth remembering that serious events are almost always caused by multiple factors — not the actions of one person — and that the prevention of these events is most effective when many indicators are considered together.

The most effective path to preventing injuries is to consider human errors as the consequences, rather than as causes, of operational failure. As James Reason, the organizational psychologist who authored the seminal book Managing the Risks of Organizational Accidents, wrote, “(w)hen an adverse event occurs, the important issue is not who blundered, but how and why the defenses failed.”

Rethink how you think about injury rates.

Injury rates, often called “OSHA recordables” are important metrics, in that they reflect the very real experience of your workforce. At the same time, injury rates and reports of specific incidents are what are known as lagging indicators. While they identify problems that often need immediate attention, they do not adequately evaluate a firm’s safety and health management system.

This may be the opposite of what many CEOs hear from their safety professionals. For many years, it was a common belief that preventing minor injuries will also prevent the most serious ones. In fact, the causal chains that lead to most serious and fatal injuries are quite different than those leading to the majority of “OSHA recordable” injuries (#4 talks more about these). This is especially true in the high-risk sectors where a single event can be catastrophic. Famously, BP executives were on the Deepwater Horizon drilling rig the night before that horrific explosion, giving its workers an award for their low injury rate.

That said, you should set concrete goals for injury rates at your company. But instead of focusing on a lower rate, I would recommend setting an aspirational goal of zero injuries (while making it clear that reporting injuries is an absolute requirement). The undesirable premise underlying the goal of a lower injury rate — versus aspiring to no injuries — is that it is OK for some workers to get hurt, as long as fewer get hurt than before.

Focus on leading indicators.

To make substantial progress in injury prevention, companies must select a set of indicators that measure progress toward that firm’s chosen goals. These are called “leading indicators” because, unlike lagging indicators like recordable injuries, they are predictive of fatalities, serious injuries, or events that may have catastrophic consequences.

The measures could involve hazard identification or abatement, incident investigations, or the time it takes to close out of recommendations, among others. Each firm needs to select or develop its own, appropriate to its functions and products. Start with a small number and then add more as your program matures.

The pharmaceutical manufacturer Allergan, for example, tracks “good observations,” reports that include near misses, unsafe conditions, or suggestions for reducing risk. Beyond providing a mechanism for workers to alert management to problems, this metric encourages a continual focus on risk reduction. Good observations are a take-off point for another measure the company tracks: speed in which serious or high gravity hazards are addressed.  Simply receiving the observations is not enough, of course; eliminating the serious hazards are what is important.

Whatever the metrics, top managers should use them to measure the evolution of their safety management system (see #5 below), and they should be an integral component of managerial performance payments.  The performance of senior executives at Dow Chemical, for example, is evaluated using leading safety indicators, not injury rates.

Embrace a safety and health management system.

Managing for safety requires managers to implement a systemic process to find and fix workplace hazards before workers are hurt. Generically these programs are called Safety and Health Management Systems (SHMSs) or Injury and Illness Prevention Programs. They all involve an iterative, continual improvement process that have as their operating principle the Plan Do Check Act cycle (or the Plan Do Study Act cycle, sometimes called the “Deming Wheel”) widely in use today.

In order to be successful, an SHMS must involve support from leadership; worker participation (including the acting involvement of a union if one present in an organization); hazard identification, assessment, prevention and control; opportunities for education and training; and regular program evaluation and improvement.

SHMSs should also include protocols for investigating incidents that are sometimes called near misses or close calls. These incident investigations, conducted with the participation of managers, workers, and safety experts, examine the chain or root causes that led to the incident and then develop recommendations for preventing them in the future.

Welcome a regulator as a “cheap consultant.”

A visit from an OSHA inspector often triggers fear, if not panic, especially among inexperienced managers. But many OSHA inspections lead to substantial improvements in a firm’s operations. I was amused to hear an executive at one of the nation’s largest chemical manufacturers tell me that he looked at OSHA inspections as an inexpensive consultant, since our fines were always less than he would have to pay an industrial hygienist to do that same inspection for him.

In fact, most firms actually benefit from OSHA inspections, and I’m not just saying this because I worked there. According to researchers David I. Levine and Michael W. Toffel, OSHA’s random inspections of high hazard establishments result in a 9% reduction in injuries that triggered workers’ compensation claims in the four years following the inspection. On average, each inspection reduced employer expenditures for wage replacement and medical costs by $350,000.  Further, not only do the OSHA inspections prevent injuries, “they cause no discernible damage to employers’ ability to stay in business and no reductions in sales or credit ratings… Nor did we identify any effects of workplace inspections on wages, total payroll, or employment.”

Today and every day in the future, corporate leaders need to reassess what safety means and how their company can achieve it. They need to recognize that safety is a value proposition, that safety management and operational excellence are inextricably linked. If you ask the CEOs of companies who take this seriously, my bet is you won’t hear the same old tired line that “safety is a priority.” They understand that safety is not a priority — it is an essential precondition of their work. It is a fundamental component of their operating culture. Safety, ultimately, is at the core of what they do.

Categories: Blogs

AI Will Change Health Care Jobs for the Better

Wed, 03/21/2018 - 08:37

shuoshu/Getty Images

Smart machines tend to elicit both awe and deep anxiety. This is especially true in health care, where people’s hopes and fears tend to get magnified quickly. Consider three issues that get a lot of attention: the use of medical records, the “human touch” in medical care, and the future of jobs in the industry. On balance, are people more glass half-full or half-empty? Our research points to an optimism that may surprise expert observers.

Consumers Want What Works

When it comes to privacy of medical data, of course people don’t want their records hacked by criminals. But consumers are ready to share their information when it’s in their clear interests to do so, and when it’s shared with the right people. More and more people are turning to wearable health devices, for example. According to a recent Accenture survey, 88% of consumers are willing to share the data from their “wearables” with either their doctor, a nurse, or other health care professionals. And 72% are fine with their health insurers having that information. (On the other hand, only 38% are willing to share that data with their employers.)

Insight Center

We see similar results when it comes to the human touch. Of course, in many situations, nothing can substitute for the human touch. But in many cases, convenience and efficiency trump personalized care. In our survey, two-thirds of respondents said they would use AI-based after-hours services, and 63% said they would use AI agents to help them navigate the health care system. In addition, more than half of those surveyed said they would be likely to use AI-based systems to diagnose their symptoms and to receive emergency advice. Overall, 75% of U.S. consumers surveyed said that AI technological advances (including mobile apps, wearable monitoring devices, and smart scales) were important to them to help them manage their health.

What About Jobs?

When it comes to the impact of smart machines on jobs, we see ample evidence to put hopes over fears. Take the question of potential worker displacement through automation. Accenture Research recently concluded a study of future workforce trends, including in health care, and the data point to significant growth for the industry, both in terms of jobs and revenues, as AI moves beyond rudimentary automation and enables greater collaboration between humans and machines. The data predict that, from 2018 to 2022, employment in health care will increase by 15% while revenues will surge by 49%.

Much of that growth will come from three new ways in which smart machines will enable humans to improve performance.

The first is by amplifying people’s natural abilities, enhancing their insight and intuition through the use of powerful analytics and copious historical data. A Harvard-based team of pathologists, for example, recently developed an AI-based technique to identify breast cancer cells with greater precision. Using the new method, they were able to increase their accuracy from 96% to 99.5%. That might not sound like much of change, but with nearly 1.7 million new cases of breast cancer diagnosed globally each year, the improvement translates to 68,000 to 130,000 more women receiving accurate diagnoses.

The second way is by interacting with people through novel types of interfaces such as voice, emotion, or gesture recognition. In elder care, robots can help overburdened caregivers by reminding patients to take medication, lead them through physical and cognitive exercises, and provide them with companionship. Chatbots can help mental health professionals serve many more patients a day. Machine learning tools can help with the screening and treatment for autism. Philips has developed an AI-based tool, Illumeo, for radiologists. One of the tool’s features is that it displays contextual information about a patient alongside the images, so a radiologist doesn’t have to hunt for that information. It can also anticipate the radiologist’s needs. It might, for example, recognize the anatomy of the radiological images and automatically suggest the correct tool set such as one that can measure and analyze blood vessels. The software is also able to learn how a particular user prefers to look at the images — what’s known as a radiologist’s “hanging protocol.”

The third way that smart machines are helping humans is by embodying physical attributes that work to extend people’s capabilities beyond their natural limits. A good example of embodiment in the health care field is robot-assisted surgery: Instead of using a scalpel, the surgeon sits at a console and nudges a joystick that controls robotic arms. This AI-assisted technology has been a huge asset for certain types of surgeries that require incredible precision — for instance, when a doctor has to remove an overgrown retina membrane that’s only a hundredth of a millimeter thick. By eliminating human jitters and involuntary tremors, robot-assisted surgery can help significantly improve the success rate of such operations.

The above examples are just a few of the many that illustrate the power of human-machine collaborations in which each party does what it does best: people’s intuition, creativity, teamwork, and social skills combined with a machine’s precision, speed, scalability, and quantitative capabilities. Such collaborations are the future, enabling companies to reimagine their work processes, and this transformation is happening in one industry after another. That’s cause for considerable optimism.

Categories: Blogs

Leading with Less Ego

Wed, 03/21/2018 - 08:20

Rasmus Hougaard and Jacqueline Carter, of the global consulting firm Potential Project, make their case for mindfulness, selflessness, and compassion in leadership. Their survey of 30,000 leaders showed those characteristics are foundational — and often missing from leadership development programs. Practicing self-awareness, they say, leads to more focused and more people-focused organizations. They’re the authors of the new book, The Mind of the Leader: How to Lead Yourself, Your People, and Your Organization for Extraordinary Results.

Download this podcast

Categories: Blogs

How Military Veterans Can Turn Their Skills into a Corporate Career

Wed, 03/21/2018 - 06:05

Hayon Thapaliya/Peter Dazeley/Getty Images

When Toby Johnson was 24 years old, the Army pilot was in charge of eight $30 million Apache helicopters, plus the 30 people who managed them — more responsibility than any of her friends in the private sector. But when she decided to leave the Army and get a civilian job, she realized she had a challenge: most hiring managers weren’t veterans, and they struggled to understand how her military experience might translate to the corporate realm.

Transitioning from a military career to the corporate world can be a fraught process for the nearly 360,000 U.S. veterans who leave the service each year. In addition to networking their way into new professional circles and learning new cultural mores, veterans have to face down the even more fundamental questions: what career will best suit them? And once they know what they want, how can they convince hiring managers that their skills will translate — especially if they’re not quite sure they will?

Since 2013, I’ve keynoted talks to groups of transitioning military veterans nearly 20 times as part of Deloitte’s CORE Leadership program, which helps vets reinvent themselves into civilian careers. In the process, I’ve gotten to know hundreds of veterans and heard their stories of entering the corporate world – including what they wish they had known when they began their transitions.

The first lesson they’ve shared with me: control your narrative. Toby Johnson, who I interviewed for my book Reinventing You, taught me this one. She ultimately realized she had to take control of how she told her story, and make those hiring managers understand she wasn’t marketing her flying abilities — it was about the leadership skills she’d developed. Those leadership abilities, she knew, could be applied inside a corporation — and she was ultimately able to make that case successfully. Today, she’s a VP and General Manager for a prominent Fortune 500 corporation.

To make that kind of case, though, you first have to recognize the value of your experience. For some veterans, that can be tough. Chris Robinette served in the Army for 11 years, first as an armor officer, then in Army Special Forces (also called the Green Berets). But despite his prodigious experience — which included a stint in Eastern Europe working with NATO partners— when it came time to transition to a civilian career, he doubted himself. “I felt very intimidated” by undergraduate classmates who had gone into more traditional corporate careers, he told me. “I felt like they had this decade of totally unique, impressive experience that I couldn’t match.”

Over time, though, he came to realize that direct corporate experience wasn’t really necessary. “It’s very much, ‘Can you learn? Do you have a strong work ethic?’” Today, Chris is leveraging his military and leadership experience running a startup operation within a larger company that specializes in security consulting for major sports arenas and convention centers.

Veterans often place an inordinate amount of pressure on themselves to identify the “perfect job” after they leave the service. But recognize that your first job may not be a fit. Of course, we all want to make good decisions, and it makes for an appealing can-do story to identify the job you want and land it. But the truth is, even with planning and preparation, there are some things we just can’t know in advance about whether we’ll thrive in a given job or industry or workplace. Indeed, close to half of veterans leave their first civilian job within a year.

John Lee Dumas ( I profiled him in another book) went through a string of jobs after leaving the Army. He tried tech, finance, and real estate — all to no avail. But instead of beating himself up about his failure to succeed in those industries, he did something important: he noticed what he actually cared about. Through his work in real estate, where he’d spend hours each day driving, he started listening to podcasts, and eventually decided to start his own.

It’s important to recognize that your first hypothesis about “the right job” may not pan out. That isn’t failure – it’s data. Learning to listen to it, as Dumas did, enables you to find the avenue where you can ultimately succeed. Today, he’s one of the most successful business podcasters, earning seven figures a year.

His experience highlights another piece of retrospective wisdom I’ve heard from many of the veterans I teach: you don’t have to take the straight path. When I met TJ Wagner at the CORE program, he had a plan — he just wasn’t sure it was a good one. He intended to enter business school in the fall, but he had nine months between his separation from the Army and the start of school. His plan for that time was to take sailing lessons and qualify to become a skipper for Yacht Week along the Croatian coast over the summer.

On the surface, it might seem like a frivolous pursuit — what did sailing have to do with business school or a future corporate career? But he was excited by the prospect and decided to do it. Over the ensuing months, TJ took sailing theory classes in the Philippines and attended sailing school in Malaysia. To pass one of his final skipper exams, he told me, “one night the instructors untied the five yachts from the raft, and woke us up screaming and yelling, ‘The raft is collapsing!’ I felt like I was back in the Army.” TJ took control of the situation and passed his exam with a perfect score, and spent Yacht Week as skipper serving “Lebanese, Australians, Europeans, members of the American military, South Americans, and many more. It was the best job in the world.”

He originally worried that recruiters would look askance at the gap on his resume, and his nontraditional choice of how to fill the time. But he’s no longer concerned. He’s leveraged his maritime skills as a networking asset, becoming president of the sailing club at his business school. Indeed, doing something out of the ordinary can often increase your professional status, making you an object of interest and giving you an entry point to connect to others on a human level. TJ is still considering his plans once he graduates. He may take a corporate job, he says — or he may open a sailing company.

It’s comforting to assume that our career transitions will be linear and orderly. But that’s rarely the case, whether you’re shifting between corporate roles or from the military to civilian life. By recognizing that there’s no one “perfect transition,” it becomes easier to do the deep work necessary to find the right job and career for you over the long term.

Categories: Blogs

Having Your Smartphone Nearby Takes a Toll on Your Thinking

Tue, 03/20/2018 - 09:00

Oliver Hibert/Getty Images

“Put your phone away” has become a commonplace phrase that is just as often dismissed. Despite wanting to be in the moment, we often do everything within our power to the contrary. We take out our phones to take pictures in the middle of festive family meals, and send text messages or update our social media profiles in the middle of a date or while watching a movie. At the same time, we are often interrupted passively by notifications of emails or phone calls. Clearly, interacting with our smartphones affects our experiences. But can our smartphones affect us even when we aren’t interacting with them—when they are simply nearby?

In recent research, we investigated whether merely having one’s own smartphone nearby could influence cognitive abilities. In two lab experiments, nearly 800 people completed tasks designed to measure their cognitive capacity. In one task, participants simultaneously completed math problems and memorized random letters. This tests how well they can keep track of task-relevant information while engaging in a complex cognitive task. In the second task, participants saw a set of images that formed an incomplete pattern, and chose the image that best completed the pattern. This task measures “fluid intelligence,” or people’s ability to reason and solve novel problems. Performance on both of these tasks is affected by individuals’ available mental resources.

Our intervention was simple: before completing these tasks, we asked participants to either place their phones in front of them (face-down on their desks), keep them in their pockets or bags, or leave them in another room. Importantly, all phones had sound alerts and vibration turned off, so the participants couldn’t be interrupted by notifications.

The results were striking: individuals who completed these tasks while their phones were in another room performed the best, followed by those who left their phones in their pockets. In last place were those whose phones were on their desks. We saw similar results when participants’ phones were turned off: people performed worst when their phones were nearby, and best when they were away in a separate room. Thus, merely having their smartphones out on the desk led to a small but statistically significant impairment of individuals’ cognitive capacity—on par with effects of lacking sleep.

This cognitive capacity is critical for helping us learn, reason, and develop creative ideas. In this way, even a small effect on cognitive capacity can have a big impact, considering the billions of smartphone owners who have their devices present at countless moments of their lives. This means that in these moments, the mere presence of our smartphones can adversely affect our ability to think and problem-solve — even when we aren’t using them. Even when we aren’t looking at them. Even when they are face-down. And even when they are powered off altogether.

Why are smart phones so distracting, even when they’re not buzzing or chirping at us? The costs of smartphones are inextricably linked to their benefits. The immense value smartphones provide, as personal hubs connecting us to each other and to virtually all of the world’s collective knowledge, necessarily positions them as important and relevant to myriad aspects of our everyday lives. Research in cognitive psychology shows that humans learn to automatically pay attention to things that are habitually relevant to them, even when they are focused on a different task. For example, even if we are actively engaged in a conversation, we will turn our heads when someone says our name across the room. Similarly, parents automatically attend to the sight or sound of a baby’s cry.

Our research suggests that, in a way, the mere presence of our smartphones is like the sound of our names – they are constantly calling to us, exerting a gravitational pull on our attention. If you have ever felt a “phantom buzz” you inherently know this. Attempts to block or resist this pull takes a toll by impairing our cognitive abilities. In a poignant twist, then, this means that when we are successful at resisting the urge to attend to our smartphones, we may actually be undermining our own cognitive performance.

Are you affected? Most likely. Consider the most recent meeting or lecture you attended: did anyone have their smartphone out on the table? Think about the last time you went to the movies, or went out with friends, read a book, or played a game: was your smartphone close by? In all of these cases, merely having your smartphone present may have impaired your cognitive functioning.

Our data also show that the negative impact of smartphone presence is most pronounced for individuals who rank high on a measure capturing the strength of their connection to their phones—that is, those who strongly agree with statements such as “I would have trouble getting through a normal day without my cell phone” and “It would be painful for me to give up my cell phone for a day.” In a world where people continue to increasingly rely on their phones, it is only logical to expect this effect to become stronger and more universal.

We are clearly not the first to take note of the potential costs of smartphones. Think about the number of fatalities associated with driving while talking on the phone or texting, or of texting while walking. Even hearing your phone ring while you’re busy doing something else can boost your anxiety. Knowing we have missed a text message or call leads our minds to wander, which can impair performance on tasks that require sustained attention and undermine our enjoyment. Beyond these cognitive and health-related consequences, smartphones may impair our social functioning: having your smartphone out can distract you during social experiences and make them less enjoyable.

With all these costs in mind, however, we must consider the immense value that smartphones provide. In the course of a day, you may use your smartphone to get in touch with friends, family, and coworkers; order products online; check the weather; trade stocks; read HBR; navigate your way to a new address, and more. Evidently, smartphones increase our efficiency, allowing us to save time and money, connect with others, become more productive, and remain entertained.

So how do we resolve this tension between the costs and benefits of our smartphones?

Smartphones have distinct uses. There are situations in which our smartphones provide a key value, such as when they help us get in touch with someone we’re trying to meet, or when we use them to search for information that can help us make better decisions. Those are great moments to have our phones nearby. But, rather than smartphones taking over our lives, we should take back the reigns: when our smartphones aren’t directly necessarily, and when being fully cognitively available is important, setting aside a period of time to put them away—in another room—can be quite valuable.

With these findings in mind, students, employees, and CEOs alike may wish to maximize their productivity by defining windows of time during which they plan to be separated from their phones, allowing them to accomplish tasks requiring deeper thought. Moreover, asking employees not to use their phones during meetings may not be enough. Our work suggests that having meetings without phones present can be more effective, boosting focus, function, and the ability to come up with creative solutions. More broadly, we can all become more engaged and cognitively adept in our everyday lives simply by putting our smartphones (far) away.

Categories: Blogs

How Augmented Reality Will Make Surgery Safer

Tue, 03/20/2018 - 08:00

mathisworks/Hayon Thapaliya/Getty Images

Some of the biggest medical advances of the last few decades have been in diagnostic imaging—ultrasonogaphy, mammography, computerized tomography (CT), magnetic resonance imaging (MRI) and so on. The same forces that have propelled technology developments elsewhere—tiny cameras, smaller and faster processors, and real-time data streaming—have revolutionized how doctors use imaging in performing procedures. Almost every surgery involves some sort of a scan prior to incision. Even in emergencies, surgeons have ultrasound or CT to help guide the procedure. Imaging can now be performed in real time at the point-of-care during procedures, both big and small.

Yet, while imaging has radically evolved, how images are displayed is basically the same as it was in 1950. Visual data are always shown on a 2D flat screen, on displays that force health care providers to look away from the patient, and even away from their own hands while operating. Further, the images are not displayed from the perspective of the viewer, but rather from that of the imaging device: doctors have to use skill and imagination to understand and mentally project the images into the patient while they are doing procedures. Finally, different types of visual data are displayed separately, so doctors have to direct additional attention to mentally fusing multiple image types, such as angiography and CT, into a coherent representation of the patient. Acquiring this skill takes years of training.

Augmented reality (AR), a set of technologies that superimpose digital information on the physical world, has the potential to change all of this. In our research at the Maryland Blended Reality Center’s “Augmentarium,” we are prototyping AR applications in medicine, as are teams at Stanford, Duke and Johns Hopkins. In envisioned application, a surgeon using an AR headset such as Microsoft’s HoloLens would be able to see digital images and other data directly overlaid on her field of view. In such a scenario, the headset might display a hovering echocardiogram with vital signs and data on the characteristics of the patient’s aneurysm directly above the surgical field. The surgeon needn’t look away from the patient to multiple different displays to gather and interpret this information.

AR in the OR: Augmented reality could superimpose critical clinical data directly on the surgeon’s view of the patient. Source: The Augmentarium at the University of Maryland (illustration by Brian G. Payne)

AR’s potential ability to concurrently display imaging data and other patient information could save lives and decrease medical errors. This is especially true for procedures done outside an operating room. The OR may be the safest place in the hospital, where one patient has an entire team of 4 to 8 dedicated doctors and nurses. Because everyone has pre-operative imaging, the procedures are generally well-planned. Anesthesiologists monitor the patient’s physiology and administer pain-controlling and life-saving medications. Surgical nurses make sure all of the necessary equipment is immediately available. Surgeons can be completely immersed in the operative task. But time in the room is extremely costly, and ORs are solidly booked with elective cases. Elective operations are an essential source of revenue for all hospitals, so there is incredible pressure to keep ORs full and flowing. Small, emergent procedures do not easily fit into this reality. As a result, many of these procedures are done outside the OR in intensive care units and emergency departments. It’s during these “bedside procedures” that patients may be most at risk and where AR could provide some of the greatest benefit.

Insight Center

Unlike operations in the OR, bedside procedures have minimal support. There is usually one doctor and one nurse, both of whom have other responsibilities. Often the patients are physiologically unstable. If it is late at night, the physician performing the operation may be a junior trainee, who has both the anesthesiologist’s and surgeon’s roles. The rooms are not specifically designed for procedures, especially those that involve cumbersome carts for imaging. The situation is made worse by a tangle of patient monitors. In tracking multiple image and data displays, it is easy to miss vital cues regarding the patient’s status. A single AR display that integrates all imaging and patient data and allows doctors to keep their eyes on the patient has the potential to improve quality, safety and reduce cost by decreasing procedure-related complications.

In addition to cost reduction from safer procedures, there is also the potential to reduce costs by eliminating the need for redundant screens. Currently ultrasound, endoscopy, and bronchoscopy all require hospitals to buy entire systems, each with its own display. The systems can cost upwards of hundreds of thousands of dollars each. It is not that different modes of imaging require special displays, but that the current economic model is to sell whole systems with incompatible imaging devices. The electronic medical record has its own display. Hemodynamic monitors and ventilators each have their own separate screens, and that data is not merged. AR can provide a shared display, eventually reducing the need for a dedicated monitor for each aspect of a patient’s data, while providing a place where physiological data from multiple sources can merge in real time.

AR technology still needs to evolve for this all to be realized, and doctors need to buy in to the concept. Hardware needs to fit comfortably and securely on the practitioner’s head. For some applications the images will need to be as opaque as possible, while for others they will need to be more translucent. If the projected images are being used for operative guidance, they need to be positioned with extreme accuracy. There are a variety of technical challenges, but none of them are insurmountable.

At our Maryland Blended Reality Center, we are committed to investing in the future of AR as a primary tool to help health care providers save lives while also reducing medical costs. Teams at Stanford, Duke and Johns Hopkins are also working to merge and project visual data, while simultaneously creating AR displays ideal for patient care.

It will take gifted computer scientists and visionary physicians to make augmented reality an actual reality in medicine. But we are excited for the future, where the use of AR in health care will be just as commonplace as use of a stethoscope.

Categories: Blogs

Disney Defines Its Corporate Culture by the Actions of Its Leaders - SPONSOR CONTENT FROM DISNEY INSTITUTE

Tue, 03/20/2018 - 07:55

Photo Credit: Disney Institute  

Everyone has heard the phrase “Actions speak louder than words.” But did you know that this idea can be your key to establishing the thriving organizational culture you desire?

While corporate culture is often defined as the shared values and beliefs of the people who make up an organization, leaders sometimes overlook how that culture is effectively communicated through behavior and actions.  

Read More from Disney Institute:

Leaders must be intentional, proactive, and authentic when it comes to fostering an environment that supports the culture they want to cultivate in their workplace. Why? Because if leaders are not purposeful, the organization’s culture can become a “culture by default,” often dictated by the current workplace environment.

At Disney Institute, we teach business professionals in our training courses that an organization’s values often are formed intentionally by proactive leaders or organically in the presence of all types of leaders. One can have an innovative culture, a creative culture, or even a toxic culture, and it likely stems from the behavior and actions demonstrated by the leaders of the organization.

When leaders consistently behave in a way that clearly aligns with their stated values, the outcome is usually a workplace culture that reflects these same values.

At Disney Parks and Resorts, one of the areas where we’ve been very intentional over many years is creating a culture of safety. We have been able to do this by ensuring leaders continuously promote and prioritize safety through their words and deeds. When Cast Members see their leaders consistently demonstrating safe behaviors, the entire team can more easily act and behave in ways that also support safety as an organizational value and a critical component of our culture.

Want to learn more? Consider our Disney’s Approach to Employee Engagement professional development training course, which exposes participants to some of our best Disney business insights, imparting new strategies and key takeaways for building a thriving workplace culture in their own organization. Or bring our team to yours for a full cultural transformation through a private initiative for your organization.

Think about it; what kind of organizational culture are you promoting through your actions?

About Disney Institute
As the trusted, authoritative voice of the Disney approach to customer experience, Disney Institute uses business insights and time-tested examples from Disney parks and resorts worldwide to train business leaders and professionals to help them improve their own organizations. For nearly three decades, Disney Institute has helped professionals positively impact their organizations and the customers they serve by focusing on key topics such as customer experience, leadership excellence, quality service, and employee engagement. Unique to Disney Institute learning experiences is the opportunity for participants to go behind the scenes in a “living laboratory” (a Disney park, resort, or operational area) to observe firsthand how Disney methodologies are operationalized and how they can be adapted and applied to other industries and business environments. To learn more, visit DisneyInstitute.com.


Categories: Blogs

Many Employees Have a Mid-Career Crisis. Here’s How Employers Can Help

Tue, 03/20/2018 - 07:00

HBR Staff

Plenty of media coverage — and companies’ attention — is devoted to employees at the beginning and end of their careers, at least in my experience. Entry-level employees learning the ropes garner more than their share of managers’ time, and those transitioning toward retirement pull executives’ focus by necessity as they work to develop succession plans.

What about the wide swath of employees who are in the middle of their careers?

The “midcareer crisis” is a real phenomenon for many workers; research has shown that career satisfaction bottoms out when people are in the middle of their careers. For many managers, the problem is seeing those employees through to the other side.

Many companies and leaders have failed to develop plans for the employee who has progressed in his career but may not see many opportunities left at his existing company. Feeling overlooked or forgotten can be the nail in the coffin for someone who feels he’s given his best efforts to a company and is now grappling with a deep desire to change roles, locations, or missions.

As Josh Bersin, Deloitte’s principal, human capital, has noted, employees are assets that offer more value to their companies over time. The downside of losing these employees can be devastating to managers and their organizations: Losing the institutional knowledge, honed skill sets, and employee trust and cooperation that have been accrued by mid-career employees is costly — to the tune of 213% of an employee’s salary in one year, in some cases.

Here’s what managers interested in keeping their valuable mid-career employees can do:

Create lateral opportunities for those needing intellectual stimulation. Mid-career professionals who are comfortable with their level of responsibility or are disinterested in taking on managerial work — but who also find themselves bored or in need of stimulation — may need a lateral challenge. Doing something different can often shake the cobwebs off of a career that’s grown stale through repetition.

To make a lateral shift more palatable, companies should offer additional training or skill development, both internal and external, as well as shadowing opportunities and mid-career internships. Most compelling, perhaps, will be first crack at developing new divisions or roles within the company that would benefit from mid-career employees’ existing knowledge, pulling that know-how in fresh directions.

One mid-sized automation company I worked with had been spreading its social media efforts out among employees, adding posting duties to their existing tasks. When I asked executives if they’d noticed variations in the performance of different employees’ posts, they admitted, “We haven’t been tracking performance — we need to use social media, but we don’t really have time to focus on it.” We discussed the importance of tracking any efforts they were investing time in, and I asked whether they had any employees who were ready for a challenge.

A quick brainstorm led them to pinpoint a mid-career manager who had been with the company for nearly a dozen years and had always done high-quality work. Recently, however, she seemed less enthused. They approached her about shifting to social media, emphasizing the need to determine benchmarks for the company’s performance and develop a social media strategy for the brand. A year later, the employee was visibly re-engaged, the company’s Facebook engagement had improved by 1,100%, and the business benefited by having someone familiar with the brand’s voice running its accounts.

Develop an internal mission for those needing a deeper sense of purpose. Launching a partnership with a charity, founding a philanthropic arm of your company, or seeking pro bono work can engage the mid-career professional who’s grappling with a “What’s it all for, anyway?” view. Seeing that daily work is supporting a deeper mission can spur an employee to stick with it, and nearly 90% of companies that offer volunteer opportunities see a correlation between employee participation and increased engagement.

To make this more appealing to those in the middle of their careers, companies should accommodate workers’ schedules to include the work, give them a sense of agency in pinpointing causes or organizations to work with, and leading the work (particularly for those who are not executives or typically in the limelight and may not feel the authority to do so).

Salesforce originated the 1-1-1 model of giving, and it offers an example of a program with options for any interest an employee might have. The company’s volunteer opportunities include an “employee-inspired” donation program, pro bono volunteering, and volunteer time off (VTO) to provide help in other areas. More than 27,000 Salesforce employees have participated in its volunteer opportunities, putting 1.4 million hours of work toward missions near and dear to their hearts.

Encourage mentorship roles. If you’re surrounded by mid-career professionals who have the skills, attitudes, and critical thinking you’d like less seasoned employees to emulate, encourage your experienced employees to take on mentorship or managerial development roles.

To do this, companies should determine which employees fit this description and seem to crave more interaction with others in the organization; establish a structured program for mentoring/succession planning so employees can self-select or be nominated by their bosses; and offer continual training or touchpoints with mentors so they feel supported while they support others.

Remember that many mid-career employees would benefit from mentee roles of their own, too. Mid-career faculty, for example, mentor both students and peer faculty members, resulting in associate professors devoting 10 hours per week to mentoring. Full professors spend only a little less, however, as they mentor associate professors; schools like Johns Hopkins University directly encourage departments to include mid-career faculty in their mentoring programs. Mentoring opportunities — both mentoring and being mentored — are valuable for mid-career employees who have knowledge to impart and knowledge yet to gain.

These endeavors to support tenure-track academics can be replicated by companies. KPMG offers a very structured CPA mentorship program to ensure its newer employees succeed in detail- and compliance-oriented areas. With milestones built into the program — which includes both a regimented four-day boot camp and a more flexible mentoring community — mid-career professionals can see exactly where they need to guide newer employees. The program has a twofold benefit of keeping long-term employees immersed in changes in the industry while instilling successful work habits in entry-level employees taking over work mid-career employees are leaving behind.

Offer physical moves or enable remote work for those needing a change of scenery. Some midlife employees are grappling with a “grass is greener” feeling, seeking warmer weather, more skiing, or closer proximity to family. They are perfectly happy to keep doing the same work, simply in a different location; for these employees, remote work structures can scratch their itch to change their personal life while retaining their professional progress.

A relocation could also involve a new or expanded role for employees. If a a position at another branch or in a burgeoning locale makes sense for a company’s future goals, approaching an experienced employee who still has years left in her career may flame her enthusiasm while solving a problem for the organization.

Because the latter can be trickier, especially for employees with families or community ties, companies should make these moves more palatable to employees by offering moving and other ancillary services to set up cable or internet or help employees find local doctors, vets, and dentists. Making the personal aspects of moving simpler can push employees to take professional leaps, particularly when taking into account the hidden costs of moving; because most businesses don’t have these resources in-house, a cost-effective way to provide these options is through outsourcing.

A midlevel manager I consulted with told me he’d been on the brink of resigning from his company when his boss asked him if he’d be interested in helping the company launch a branch in Atlanta. He was intrigued by the challenge, but the thought of uprooting his family — including two kids in elementary school — was less appealing. When he told his boss he wasn’t sure he could move his family 1,500 miles away, his boss connected him with the company’s partner organizations that help with logistics. The organizations pledged to find a rental in a good school district and find the lowest rates on services the family would need. Within a week, the manager had answers for his family and agreed to make the move. He said the new role was fulfilling enough that he could now see himself staying for several more years.

Workers at the beginning and end of their career are important, but overlooking those in the middle sets companies up to lose valuable knowledge and experience. To get these employees to stick with their employers until they get back to the happy second half of their careers, managers have to make plans for their mid-career employees so both the company and the employees benefit.

Categories: Blogs

How We Made Our Sales Training More Effective by Making It Harder

Tue, 03/20/2018 - 06:05

PM Images/Getty Images

Not long ago, my company was the king of ineffective sales training. We’d hire and onboard reps and then train them in a hurried few weeks dedicated to shadowing sales calls, reading call scripts, and learning how to handle objections. As the company grew, however, I found that individual sales approaches were wildly different. Our reps answered questions inconsistently, and prospects underwent entirely divergent experiences. It became increasingly obvious that our haphazard training model would lead to inconsistent rep ramp-up time, continued customer expectation problems, customer churn, and employee turnover.

But last year, we adopted the following four training methods, and since then, we’ve vastly improved our performance: after two months of my team’s updated practice-based model, we increased our new sales by nearly 70%.

1. Include leaders in practice sessions. Salespeople need their leaders to model success for them. Research published in the journal Frontiers in Psychology shows that when employees view their leaders as empowering and capable, they work more proactively.

Our team adopted a strict practice regimen. Each sales rep began role-playing calls individually, using an AI tool that simulated a potential customer, and role-playing in a face-to-face group weekly. Newer and lower-performing sales reps began practicing daily.

When we implemented these practices, I jumped into the hot seat first. I acted as the salesperson while my sales team threw curveball objections my way for 45 minutes. If I’m not too good to practice, my salespeople aren’t, either. I still regularly jump into sales call practices to demonstrate this and to bond with the team.

2. Make practice harder than the sale itself. Softball scenarios in which the “prospect” asks only a handful of easy questions are a waste of time. Make practice harder than a real sales call so salespeople are prepared for any conversation. Have reps practice in front of their peers. Don’t help them when they get stuck; wait for them to recover. Don’t let them break out of their roles by feeding them answers. Ask follow-up questions until they find solutions themselves.

With this strategy, practice is essentially a type of exposure therapy. A study by NYU researchers gave participants small shocks while showing them an image of a blue square to create an unconscious fear response to the image. Then, they removed the fear by repeatedly and consistently showing participants the image without giving any shocks.

Similarly, when sales reps practice hard sales calls without the pressure of having a client on the line, they’re working to fight off an automatic negative response to tough questions. When that real sales call comes, they’ll be prepared to handle it without panicking.

3. Practice the entire sales cycle, not just the first call. All sales training programs include practicing initial sales calls, but practicing the calls that follow is less common. Spend time going over the follow-up message, the second sales call, and every call after. Great sales teams excel in all interactions, so practice even seemingly obvious encounters.

The principle at work is “overlearning.” Alaa Ahmed, an assistant professor at the University of Colorado-Boulder, worked with a team to study how overlearning a task affects task performance. By asking participants to repeatedly use a robotic arm to move a cursor on a screen, they found that subjects exerted less effort to successfully complete the task as they practiced. Even if it seems unnecessary to practice daily tasks like sending follow-up emails, the reinforcement makes task completion faster and more successful with less effort.

Uniform practicing across our sales team enabled our calls to become more consistent. Our reps shifted from spending 60-65% of their time talking to spending that proportion of their time listening to prospects instead. This practicing and perspective shift helped reduce customer churn by 70% in just two months.

4. Have the highest performers practice, too. Include even the best reps in practice and coaching efforts. While the most skilled salespeople’s calls are undoubtedly good, a true practice culture means no one should be exempt.

The data agrees: A study published in Performance Improvement Quarterly revealed that, controlling for sales experience and tenure, a coached salesperson displays superior performance, with coaching accounting for 2.9% to 6.2% of the performance difference between employees. We saw the effects of coaching in our work, too, as we’ve seen from our vastly improved sales rate.

Growing a great company means merely good sales calls and simple training won’t cut it. Implement a thorough practice program to help your salespeople hone their skills until they’re sharper than ever.

Author’s note: Thanks to Emily Muhoberac, COO, and TJ Macke, VP of Client Services at Sapper Consulting, for their contributions to this article. 

Categories: Blogs

What to Do If Your Boss Doesn’t Like Someone You Manage

Mon, 03/19/2018 - 14:01

cintascotch/Getty Images

At a meeting, a low-level leader thought he was being helpful by pointing out why the CEO’s ideas couldn’t be implemented. The CEO did not find this endearing, and she conveyed that message to the employee’s boss. The manager trapped in the middle turned to me for help: how could he protect his employee – who was good at his job – from a CEO who now saw him as a naysayer?

If you have an employee who consistently delivers what your team needs, but your boss doesn’t like him, it can be tough to figure out what to do. You might consider doing nothing, hoping the conflict blows over. You could feel pressured to get your team member to change, or in the worst case scenario, you might even feel pressured to nudge your employee out of the organization.

It might be tempting, or even seem more fair, to try to protect your employee from negative feedback that you don’t agree with, but if your boss has complained to you about your subordinate’s behavior and hasn’t seen immediate change, the ongoing tension could affect your own relationship with the boss. In a case like this, a mid-level manager I coach found that every weekly meeting with his boss included negative feedback about one particular subordinate’s weaknesses and inadequate performance – not a pleasant experience or a productive use of limited face-to-face time.

So how can you balance the requirements of managing both your subordinate’s performance and your boss’s expectations? You might have the impulse to make a “business case” for your subordinate’s value – but that’s not likely to win the day if you can’t also satisfy your boss’s underlying preferences for style, tone, and demeanor. Instead, here are some approaches I’ve used successfully with clients.

From the outset, it’s important to uncover the source of the friction. Typically, in this situation, you may have been willing to overlook the behaviors or styles that your boss doesn’t like, either because you see the benefit of the trait or because you know it’s not standing in the way of performance or collaboration. One common example is a personality difference. At one of my clients, the senior leader had a strong personal preference for extraverts, and tended to discount the effectiveness of quieter, less grandstanding employees.

To make sure you understand precisely what triggers your boss’s dissatisfaction, ask focused questions to identify concrete behaviors and actions. For example, does “more assertive” mean to speak more definitively or more loudly in meetings, or to be willing to interrupt others? Or is it more physical, like looking more confident and decisive based on posture, gestures, taking up more space? Once you learn what your boss’s turn-offs are, you’ll be able to coach your subordinate in a more explicit and understandable way.

Next, plan to give your subordinate minute and detailed feedback about things you never thought necessary before. Explain the risks of not taking the senior executive’s displeasure seriously. You might need to give personal or stylistic recommendations including details like how early to arrive for a meeting, a particular format for writing email, or even grooming or wardrobing. For example, I suggested to one client that her subordinate wear his “louder” shirts on presentation days. He was overlooked among his peers and was perceived as having less authority. He needed to speak and appear more colorfully to keep the attention of my client’s boss. As petty as some of these things may sound, they’re completely non-trivial if the change gets a positive response.

You might also try to delay the inevitable by reducing the level of interaction between your subordinate and your boss. One of my clients calls this “Don’t Poke the Bear.” This approach can work in the short-term, but it’s usually stressful and draining because you have to do much more work running interference. On the other hand, if it preserves a much-needed skillset or other important relationships it may be worthwhile as an interim tactic. Just keep in mind that the problem is likely to crop up again, and put more work on your shoulders.

It can feel unwarranted and even demeaning to oversee your employee in this way, when you don’t perceive the need yourself. But keep the bigger picture in mind: Perhaps your boss has heard negative feedback about your subordinate from colleagues who haven’t been candid with you. Or your boss could have seen evidence of culturally inappropriate behavior, skill gaps, or attitudinal problems that you haven’t noticed because your subordinate is careful to keep you happy.

If your employee resists making the required changes, consider your alternatives. Their career and peace of mind may benefit more if you to recommend them for another role elsewhere in the firm, or even negotiate a generous exit arrangement. You’re not necessarily doing them any favors by keeping them on a team where the senior leader just can’t stand them.

It’s possible that your boss and your subordinate may never take well to each other. Rather than shrugging off the problem as personal preference, it makes sense to explore the situation more deeply. If you can help your subordinate to improve performance, you’re more likely to preserve a valuable person while maintaining your own productive relationship with your boss.

Categories: Blogs