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An Engaged Culture Improves Performance, Not The Other Way Around

A vice-president approached me one day after I finished delivering a keynote. The talk was focused on organizational culture. He was friendly, but rather cocky. The first line he spoke to me was telling. “It takes too long,” he said. “These engagement things you talked about, it takes too long to implement. I need to drive results, not worry about people’s feelings.”

It was a wee bit strange to say the least. Why he decided to take the time to tell me I was wrong said more about his lack of emotional intelligence than it did his poor judgment. I asked if he thought the way his employees were being treated might have an adverse effect on his company’s performance. “It doesn’t matter,” he responded, “because if they’re not performing, they will be found out.”

That exchange haunts me somewhat. In part I am thankful he came forward. He was being truthful and honest, displaying what may be a pattern of leadership found in many organizations. What he did not pay attention to — or outright ignored — during the keynote was the irrefutable causality between culture and performance.

As always, I showcased reams of data, research and examples that proves an engaged organizational culture results in increased performance levels, not the other way around. I remain haunted because I know he’s still out there (like so many other so-called leaders) causing havoc with the people he is supposedly leading. We do have a ways to go.

I recently stumbled upon another excellent piece of research and feel compelled enough to share it in this space. I suspect the aforementioned vice-president won’t care, but I hope you do.

The paper is called “Which comes first, organizational culture or performance?” and published in the April, 2015 edition of the Journal of Organizational Behavior. The sub-title? “A longitudinal study of causal priority with automobile dealerships.”

The researchers responsible investigated 95 different automobile dealerships over the course of six years, analyzing multiple dimensions of culture and performance data in each of the dealer’s sales and service departments. Longitudinal studies like these are my favorite. They eviscerate statistical doubt while providing credible insights over a longer period of time rather than a short-term snapshot.

In their study the researchers looked at automobile dealerships that carried the same products. Furthermore, the dealers used the same performance metrics but each of them were owned and operated independently. Bottom line? There was an incredible level of consistency across multiple factors and data points.

Their hypothesis was simple. Based on their review of various culture and performance literature (they looked at dozens of published papers) the researchers “expected that department culture would have an effect on both customer satisfaction and sales.” Furthermore, they predicted that the overall culture and engagement of a dealership would be a stronger predictor of subsequent performance rather than vice versa. That is, culture affects performance not the other way around.

Dealerships were spread across the United States. Both culture and performance were operationalized at the department level — sales or service — within each dealership, which is to say each location possessed the autonomy to manage how it operated. Using the Denison Organizational Culture Survey (DOCS), researchers assessed four primary cultural traits: involvement, consistency, adaptability, and mission. They did so quarterly with each of the 95 dealerships. Customer satisfaction scores were the result of a quarterly customer survey. New vehicle sales also were reported quarterly. The researchers instituted various control factors as well, which included their final analysis having separated out sales and services departments.

The results are stunning, and prove yet again that if culture comes first, performance levels will follow.

  • Service departments: the results supported the hypothesis that culture has causal priority over customer satisfaction
  • Sales departments: the results also supported the hypothesis that culture has causal priority over customer satisfaction
  • Overall results supported the hypothesis that culture has causal priority over vehicle sales
  • Overall results supported customer satisfaction as fully mediating the culture-to-vehicle sales relationship

The researchers write, “Overall, department culture was found to consistently predict higher subsequent levels of customer satisfaction ratings and vehicle sales, with no evidence obtained for a reciprocal performance-to-culture feedback loop. In addition, the positive effect of culture on vehicle sales was mediated by customer satisfaction.”

Put simply, an engaged culture marked by high levels of involvement, consistency, adaptability, and a transparent mission improves sales and customer satisfaction. More proof about the causality of culture and performance comes from Queen’s University Centre for Business Venturing. Using data over a ten-year period of employee engagement surveys and company results, it found the following for organizations that possessed an engaged culture:

  • 65% greater share-price increase
  • 26% less employee turnover
  • 100% more unsolicited employment applications
  • 20% less absenteeism
  • 15% greater employee productivity
  • 30% greater customer satisfaction levels.

The counter punch to both sets of research is the current state of employee engagement. It remains anemic, aided and abetted by leaders who act like the vice-president that approached me after my keynote.

“Fewer employees are engaged and we expect this trend to continue,” says Ken Oehler, Global Culture and Engagement Practice leader at Aon Hewitt, a firm that has witnessed global employee engagement levels recently drop. Aon Hewitt discovered that, more than ever, senior leadership holds the cards to improving organizational culture.

They write:

“Contrary to what many believe, the immediate manager may not impact or have control over many of the top engagement opportunities. This may be an indication that the manager is not as important in the engagement equation as they once were. It is likely that employees are looking to senior leaders to point the way and make decisions for the future much more closely than before.”

Another organization that has been analyzing employee engagement for over two decades, Gallup, also sees the relationship between culture and performance. In its most recent engagement report it found that, “Highly engaged business units achieve a 10% increase in customer metrics and a 20% increase in sales.” Gallup provides further evidence that an engaged culture improves performance, not the other way around. They write, “The relationship between engagement and performance at the business/work unit level is substantial.”

In summary, the question is simple.

Do you seek to create an engaged culture first or are you more worried about performance?

I don’t need to tell you where I stand with this question. What frustrates me, however, pertains to the number of leaders who believe a myopic focus on performance can positively impact culture. It’s a very rare scenario. The real answer lies in knowing that it is an engaged culture that positively affects performance.

My thanks to Anthony S. Boyce, Levi Nieminen, Michael A Gillespie, Ann Marie Ryan, and Daniel Denison for publishing “Which comes first, organizational culture or performance?”

Originally posted to Forbes.

________

Dan Pontefract is the author of two best-selling books, THE PURPOSE EFFECT & FLAT ARMY.

He is writing his next book, OPEN to THINK, publishing April 10, 2018.

He is also Chief Envisioner at TELUS where he heads the Transformation Office.

Dan is an adjunct faculty of the Peter B. Gustavson School of Business at the University of Victoria.

One Year Later Is Purpose Winning?

It was a year ago today that my second book, THE PURPOSE EFFECT: Building Meaning in Yourself, Your Role and Your Organization published. I have been reflecting on the past year and wondered aloud recently, is purpose winning?

The short answer is sorta. Maybe. Kinda.

The good news is that the word “purpose” no longer feels as awkward as a Grade 8 dance. During the lead-up to the launch of the book I personally felt as though the concept of purpose was sound, yet many others remained in their corner of the gymnasium fearful of taking that first dance purpose step.

Whether through embarrassment, confusion or an acne breakout, people seemed to have cement in their shoes. As the weeks and months progressed after May 10, 2016, however, there was a palpable advancement. Not everyone was doing the moonwalk, but progress was happening. Purpose became an acceptable word.

My discussions with people over the past year always seemed to come back to one thing. How?

There were an endless number of questions that began with how.

  • How can I find purpose in my life?
  • How is it possible to create purpose in my role at work?
  • How does the organization shift from profit-driven to a balance profit and purpose culture?
  • How can I ever learn to break dance?

There was another ‘how’ question that kept popping up as well.

How important is culture to purpose?

That is perhaps my biggest takeaway over the past year. There is an inextricable link between culture and purpose. I found that as the summer turned into fall, and as winter turned into our spring, my keynotes, coaching, workshops and 1-1 discussions began to encompass both culture and purpose. Put differently, I no longer separate purpose from culture. My work–in whatever capacity it takes shape–is a combination of FLAT ARMY (my first book) and THE PURPOSE EFFECT. Whether working with a small or large organization, not-for-profit, public sector or for-profit, culture and purpose are in fact siblings from the same family.

Of course there is a personal element to both culture and purpose. One cannot rely solely on the organization to enact an engaged culture or a purpose-driven ethos. It really does start with you. I see this often in my conversations. Those that take charge of their own purpose are far more engaged at work.

Each day we must look in the mirror and ask ourselves if we are prepared to continually develop what we are about, define who we want to be, and decide how we want to be known after we leave a room. This is the essence of personal purpose, but it can be reflected in the way we are engaged or disengaged in our roles at work, too.

So yes. Culture and purpose are actually fraternal twins. And whether we are engaged in life and in our roles at work has a significant impact on our dance moves. (or if we choose to dance at all)

The Organization

And what about organizations? Are we shifting toward a purpose-driven ethos, one that includes a highly engaged workforce?

I don’t see a rush to the dance floor–even though the base line is catchy, and twerking mercifully seems to be dead–but there are some glimmers of hope.

Dominic Barton, James Manyika and Sarah Keohane Williamson proved one part of THE PURPOSE EFFECT thesis. “Companies that operate with a true long-term mindset have consistently outperformed their industry peers since 2001 across almost every financial measure that matters.” That is, companies focused on the long term in their study ended up averaging revenue growth 47 percent higher and earnings growth 36 percent higher than those focused on short-term gains. This is part of the Good DEEDS model in the book.

On the downside, Gallup’s daily employee engagement tracking in the US sits at 33.5 percent. At the beginning of 2014 it was 32.9 percent. I would not call that progress. More needs to be done to create cultures of collaboration and purpose.

The World Business Council for Sustainable Development continues to do amazing work in this space. It launched the Social Capital Protocol, a framework for organizations to measure, understand and value their interactions with society. Fortune Magazine initiated the Change the World list, a group of fifty companies who are building intentional efforts to address social problems (by way of organizational purpose) into the core of their business plans.

Michael Porter of Harvard Business School and Mark Kramer of FSG are the pioneers behind the list, and they write:

“Companies are moving beyond often fuzzy notions like sustainability and corporate citizenship to making meaningful social impact central to how they compete.”

There is some actual movement out there, often demonstrated by a new generation of leaders who understand the symbiotic relationship between culture and purpose. These are the ones not afraid to “bust-a-move” on the dance floor. I identified a few in THE PURPOSE EFFECT, including LSTN, Fairphone and Market Basket. Over the past year I have discovered several more.

Take for example, Katlin Smith, CEO of Simple Mills. Katlin recognized that foosball tables and a misaligned purpose does nothing to grow the business, or help society. Engagement and purpose is much more than perks and a fixation on profit.

Katlin writes:

“It starts with purpose.

At Simple Mills, we are here to positively impact the way food is made, enriching lives and bodies through delicious, convenient foods made from clean, nutritious ingredients. This is the first and most important component of our company and culture. Every piece, every person, must be centered on fueling our mission – from hiring criteria, to the way we source ingredients, to the products we make.

We focus on the right priorities, at the right time, with the right resources.”

Data and research continues (albeit slowly) to be produced supporting the argument of an enhanced purpose and culture. Alyson Daichendt, Managing Director, Human Capital Consulting Practice at Deloitte helped write a report at her firm titled “The Impact Project.” In it she discovered that the most important principle is something referred to as “Think Values and Value.” She says:

“Many of the exceptional brands included in the report have a deeply embedded sense of purpose in their organization, giving their employees a sense of meaning and deeply influencing decision making.”

As I often say in my keynotes, employees need to feel valued, they need to create value, and they need to believe their efforts are valuable through a values-based organizational culture and purpose.

I love Alyson’s line, particularly how she ends it. It speaks to the relationship between purpose and culture, but it also touches on something I have also realized. Purpose and an engaged culture are important factors, but they are often aided by a better way of thinking and decision making.

Not surprisingly, my next book, titled OPEN to THINK, will publish on April 10, 2018 and it is devoted to something I call Open Thinking. The concept centers around three types of thinking: Creative, Critical and Completion. When we recognize that Open Thinking can assist purpose and culture, well, that’s a dance party that I want to be invited to.

While THE PURPOSE EFFECT is only a year old, I hope it has the “book legs” to make an impact for the next decade. Purpose isn’t winning, but there is hope. If there is anything that I have learned, the dance floor needs more willing dancers.

Are you a dancer?

PS. If you have read the book or have a story to share, please feel free to write your thoughts or comments below.

 

Fifteen Years After My MBA

Fifteen years ago in 2002 I graduated with my MBA from Royal Roads University.

The university recently caught up with me to conduct an interview. It gave me the chance to reflect and think about how the MBA has shaped my professional life.

MBA experience shapes alumnus’ teaching on leadership

Alumnus Dan Pontefract first decided the dominant form of leadership had to change when he was cut from a provincial soccer team at age 16.

“Three men went to the front of the stage, called out the names of the 16 boys that made the team and left the other ten in the audience weeping, and basically said, ‘Better luck next time,’” Pontefract says. “And I said to myself then and there I’ll never treat anyone that way.”

That early experience of the potentially damaging effects of certain leadership styles eventually compelled Pontefract to explore how people lead and learn to be leaders in business and life.

A Master of Business Administration (2002) alumnus originally from Stony Creek, Ontario, Pontefract is chief envisioner for TELUS, where his Transformation Office helps organizations and leaders to improve employee engagement, leadership development and organizational culture.  He has published two books on leadership and purpose, with his third, Open to Think: A Strategy for Better Thinking, to be released in 2018.

“I am trying to help both employees and leaders shine a light…that management, leadership culture, purpose—it can all be done in a different way,” he says.

In 2000, Pontefract was working for the B.C. Institute of Technology and decided to improve his education in order to be a better academic. Royal Roads’ MBA was exactly what he needed, he says, despite the youth of the university and the program.

“I wanted something that was practical and real and didn’t feel as if it was just coming out of a book,” Pontefract says. “So I looked into faculty. I looked into the way programs were set up. I looked into the fact that I somewhat obviously wanted to continue to work.

“And as I started whittling down my parameters, I kept coming back to RRU, even though, in fairness, it was fledgling (at the time.)”

Pontefract says his experience at Royal Roads, from the way the MBA was delivered in a blended learning format, to its focus on collaboration, was essential both for how he views leadership and how he teaches others to be engaged, collaborative leaders.

“I was so enamoured and enthralled with the program’s structure that effectively I stole it and used it as the basis for the TELUS MBA we started a couple of years ago,” he says with a laugh. The TELUS program teaches MBA-level skills to employees in a blended learning model with six residences. Employees work in pods and teams, similar to the cohort model at Royal Roads.

“I remember RRU really unleashing the behaviour of collaboration,” Pontefract says. “As you progress in your studies, you recognize that the sum is greater than its individual parts. So these teams you were concentrated with really disentangled the notion that you had to do everything on your own in life.”

Those lessons influenced Pontefract’s first book, Flat Army: Creating a Connected and Engaged Organization.

“The connected part is not technology. It’s actually behaviour. It’s that notion of being collaborative and connecting with people to create results,” he says.

Pontefract stresses the top behavior for leaders is openness with their teams.

“I define openness as the act of engaging others to influence and execute a coordinated and harmonious conclusion,” he says.

“Employees aren’t looking for heaps of money. They just want to feel valued. So how you create value is you’re inclusive. You’re coordinating with them, you’re collaborating with them. That’s open.”

Pontefract’s vision for business transformation goes beyond more harmonious, engaged work teams. He says business done with openness and purpose has greater social value than making profit; it can improve the lives of its employees and the community.

“Profit is important but not the sole reason a company is in business in the first place,” he says. “The business of business is to improve society. And if one improves society the organization will be returned a healthy profit.”

~ Interview conducted by Cindy MacDougall and first appeared on the RRU website.

Why I Removed A Recent Post

On March 9, 2017, I wrote and published a post that outlined various missteps, difficulties and issues that had recently taken over a particular American company.

After seven days, I had a change of heart.

I removed the column from the three sites in which it was cross-posted to.

Some of you have asked “why?”

I will reiterate what I discussed with my three goats at the Sunday night dinner table.

I made a mistake.

But… “there is tuition value in mistakes.”

I started out the conversation on Sunday night retelling the story of my second book, The Purpose Effect, to the goats. The book almost never was. Actually, it almost was a much bigger mistake than the post I recently took down.

In its first iteration—days before it was about to go to the printers—The Purpose Effect was titled something entirely different. The tone was very dark and brooding. It was as though I had written an angry book, lashing out at all that was wrong in the world of purpose, people, organizations and the like.

I received some insightful feedback (and coaching) from a very wise man who recommended I push out the publish date by a year in order to clean up the manuscript. It led me to rethink the entire premise of the book, as well as my writing style. It led to (I believe) a much more hopeful, positive and useful book.

It is fair to say I learned far more about myself and my writing tendencies through that experience than ever before.

I am very proud of The Purpose Effect and its end result. It may not have won a book award, but the streams of people reaching out and thanking me for writing it is truly humbling. I hope other readers have found it—and continue to find it—useful.

The post that I recently “unpublished” felt a bit like that first version of The Purpose Effect. It was dark and brooding, and did not serve a true purpose. It attacked a company, its leader and several other individuals. In summary, it was not the type of writing that I want to be known for.

And so, as I discussed this with the three young kids on Sunday night over a delightful smoked sablefish, I share those same sentiments here in this space.

What I could have done is provided helpful recommendations and ideas on how to improve various facets of the company’s culture, leadership practices and organizational purpose instead of attacking it. After all, that is what I have been doing for the better part of my career. Instead of descending into an offensive assault, I simply could have helped.

And that is where I erred.

I may still write a more helpful post in the future that aims to assist the company, but for now, it’s simply another example of “mea culpa” in my personal journey of life.

If you were personally or professionally impacted, I am sorry, too.

 

 

Book Review: The Neo-Generalist

I’ve had several roles in multiple organizations over my career. All of them have been rewarding. When I look back I can distinguish one particular fork in the road of my livelihood. The moment I left the public education sector for the corporate world was the time at which I was introduced to the term HR Generalist.

Being in education, there was no such thing as an HR Generalist. I had never heard of the job title before. It not only sounded foreign, it made me laugh.

“What did an HR Generalist do?” I mused to myself. It sounded so goofy to me I thought the role was about having a very low-level of knowledge of Human Resources to translate to people like me. Maybe it was supposed to be like an interpreter. Given the company assigned me one that first week of employment in my new corporate world gig, I needed to figure out relatively quickly what it was she was actually going to help me with.

That “she” was named Diane. And she was fantastic.

As it turns out, an HR Generalist is a bit like what authors Kenneth Mikkelsen and Richard Martin expertly surface in their new book The Neo-Generalist: Where You Go Is Who You Are. They write that a neo-generalist “dislikes labels and categorization precisely because it has the effect of fragmenting and polarizing, creating artificial boundaries and divisions.” My new colleague, Diane, was not a specific HR payroll person, or a learning professional, or a recruitment agent, or a labor analyst, or an organizational design consultant. Diane was all of that. She could deftly move around the continuum of human resources, “in and out of different specialisms and responsibilities, working with an array of groups and communities,” as Mikkelsen and Martin depict.

Diane was indeed someone with that raw and uncanny ability to go wide and narrow. She was both deep and shallow in her knowledge of human resources. She was working in a state of perpetual beta.

The crux of The Neo-Generalist is that each of us possesses the potential to both specialize and generalize . Diane was a perfect example. She generalized the principles and policies of HR in order to specialize for me and the other executives she worked with. Neo-generalists bring their background, unique and oftentimes gifted knowledge as well as diversity of thought to their places of work.

“While the specialist aspires to membership of the guild, populated by experts in their field, and the generalist heads for the salon, which is polymathic in both membership and outlook, the neo-generalist is drawn to a café culture in the hope of combining the best of both worlds.”

As I read the book, I caught myself not only thinking about Diane, I began to think about my own situation. Maybe I’m a neo-generalist?

The author’s simple yet succinct observation is based on a wide range of interviews with athletes, scientists, professionals, artists, film makers and writers. Littered with historical references and pop culture reflections, I could not help thinking about my career and tendencies while reading.

As I approach problems at work or in life—as I tackle projects or ideate on new concepts—I realized I am tapping into a diverse background of personal and professional experiences, ultimately surfacing an answer, a thought, or a possibility by virtue of looking at things specifically and generally. I am like the capital letter T. Along the top of the T is my breadth and along the stem of the T is my depth. As necessary, I shift along the top of the stem to accommodate a given situation.

The authors describe it differently, and perhaps more astutely, by virtue of what they describe as “The Infinite Loop” found below.

The stories are rich and diverse. One minute you can be swept away to the Rugby World Cup and another to an anecdote about Picasso. But the real gold is mined from the personal neo-generalist narratives the authors surfaced with people from around the world. One of my favorites (and most enlightening) was with Susy Paisley-Day, an Honorary Research Fellow at the University of Kent.  While studying wild bears in concert with her PhD research, Paisley-Day became a detective, using sense-making and pattern recognition as part of her scientific analysis. But, she also blended this with the unknown—the mystery, uncertainty and ambiguity—of being in the wild and figuring out how to track these spectacled bears. It’s this specialization and generalization blend where the magic appears.

“Pattern recognition, therefore, requires a fine balancing act between perception and reality; an awareness that objective can be affected and distorted by the subjective.”

As I look back now at the time I spent with Diane, I know not only what an HR Generalist does, I fully appreciate how important her role was to me and my team’s success. She was not a generalist; she was a neo-generalist—a restless multi-disciplinarian who is forever learning and bringing people together through depth and breadth.

By the end of The Neo-Generalist, I was ready to classify myself as one, too.

On Being Human

“If you want to know what being Canadian is, it’s being part of the human race, allowing yourself to be vulnerable.” ~Gord Downie

Of everything I have learned from Gord over the years, it’s this quote that captures my attention the most. It hits me deep. I interpret it as follows:

When we accept our own impotence we can be that much greater.

When we acquiesce to our own susceptibility we can be that much more giving.

When we assume a position of defencelessness we can be even more helpful.

When we are humble, vulnerable and act with humility, we are a part of the human race.

For what it’s worth, my “money” is on Gord. Let us all be a part of humanity and the human race.

Tic Tac Oh Oh

In the game of Tic-Tac-Toe it has been estimated that if two players with intermediate level experience squared off against one another, the odds of it resulting in a tie (called a Cat’s Game) is 51 percent of the time.

When two experienced players set up shop for a match, the game will result in a tie 86 percent of the time.

And if two Tic-Tac-Toe experts were to get together, a tie would occur 100 percent of the time.

I like to think that each of us is an expert in being human. You, me, your neighbour, citizens alike…we are experts in being humane. I give each of us the benefit of the doubt. I hope you do, too.

We are the experts to uphold our decency, our morality, our values…our humanity.

If we use Tic-Tac-Toe as a metaphor for the current mode of operations in the new Trump administration, it feels as though there is no longer a chance for a tie. Life is no longer a zero sum game. Society has quickly moved to one where the bully has overtaken the board. Trump seems to hold power over our humanity. He is relishing the moment with hidden tones of fascism.

Society’s expert status seems to have eroded. There is no longer a chance for the tie.

We need to fight back. Whatever your nationality and wherever you live, it is time to become an open thinker. The current status quo–of a bully unilaterally in charge of the Tic-Tac-Toe board–must be squashed.

Our humanity depends on it.

It is time we got creative. The bully may be in charge of the board right now, but that doesn’t mean we can’t think openly and creatively to outwit his rhetoric. It’s time to play off the board. It is time to rally.