Workers Have Upped Their Game. It’s Your Move!

Posted on by Stuart Murray

039-hard-work, by jdxyw
039-hard-work.  Photo courtesy of jdxyw.
Does business make people productive, or is it people that make business productive?  It’s the latter.  Increasingly, in the modern economy, it’s people who keep the engines running, people who bring in revenue, and people who create profits.  And it’s becoming increasingly obvious that people have been neglected to the point that their full potential is not put to full use.

Eric Garton has written a compelling article for Harvard Business Review entitled The Case for Investing More in People.  Garton, from Bain & Company, has created and/or found strong research that makes the case that high-functioning human resources can be the best driver of corporate performance.  I haven’t read his book, but it looks like the article is an overview of his 2017 book Time, Talent, Energy.

Restoring Fairness in Wage Growth and Labour Productivity

There is a variety of metrics that show that labour market productivity (i.e. how much an individual worker puts out) has been growing at a very slow rate in the US relative to other countries and years past.  While labour market productivity is normally a good predictor of wage growth, the link has been broken such that even that meager growth that has been realized has not been passed along to employees.  This failure to re-invest in labour productivity is a problem.

The article cites a book by Zeynep Ton from MIT entitled The Good Jobs Strategy.  Ton notes a variety of businesses that have chosen to pay above-market wages in order to encourage employee engagement, which is increasingly seen as a driver of customer engagement.  The higher wages lead to “…lower levels of employee and customer churn, and correspondingly lower employee hiring and customer acquisition costs.  The compounding and virtuous effects of increasing customer and employee advocacy more than offset the higher cost of wages.” The decision to spend more on wages is not actually an expense so much as an investment.

We Are So Busy That We Are Unproductive

Garton also frets about employers carelessly wasting employees’ time.  Research shows that the over-abundance of interruptions and time-wasting meetings is causing employee burnout.  Particularly amongst managers “…great ideas that drive breakthroughs in productivity come from human beings with time, talent and energy to innovate.”  In my estimation an accidental or deliberate decision to slam managers with workload is a decision to reduce productivity.  Being cavalier about work volume implies a flippant view of workplace productivity, especially when people are working too hard.

The obligation to see every email, show up at countless meetings, and “look busy” is the hallmark of an organization that has chosen to do everything the same way, every day.  This hamster-wheel organization brings little hope to the future of labour productivity growth.  Yet there are opportunities to remedy this problem through productivity efforts such as Agile and Kaizen… if the workplace decides creative time is a desired business goal.  Remember, this is all about making choices.

Emotions Prevail: Employee Engagement is the Jet Fuel of Productivity

Another missing ingredient is employee energy.  In this case employee engagement is the focus.  “An inspired employee is more than twice as productive as a satisfied employee and more than three times as productive as a dissatisfied employee.  Yet, only one in eight employees is inspired.”

Personally, I’m fascinated by these performance metrics of an engaged employee.  If what the author says is true, and an inspired employee is producing 300 units, a satisfied employee is producing 200 units, and a dissatisfied employee is producing 100 units of output.  Can it be the case that turning an employee from dissatisfied to satisfied is proportional to a doubling their productivity?

That sounds about right to me.  People who are still feeling pretty good (i.e. “satisfied”) can probably get inspired and pour it on, increasing their productivity from 200 to 300 units (a decent 50% increase).  This means that for every 10% of the workforce that experiences a jump in employee engagement level, the return for the employer is in the realm of 5-10%.  And that’s mostly based on intangible items such as job design, power sharing, compassion, and open conversations.

That rate of return significantly out-performs most of what can be produced on the capital investment and cost-containment side of the productivity agenda.  I think that’s why we should conclude that the American investor class has completely screwed up their country’s ability to reach its full potential.  Low investment in labour productivity has been driving lower shareholder returns, flat wages, and generalized discontent.

Amongst society’s greatest woes is that people are working harder but not seeing any results in their paycheques, free time, or government services.  The instinct that we’re making sacrifices for the benefit of nobody but the investor class increasingly rings true.  The article notes that in addition to higher wages, investments in health care, training, and education are among the possible additional improvements needed to achieve a better economy.  If only there was some entity in the American economy that had accumulated extra money in the past few decades which might be available to pay for all of this…

Big World, Small Wages

Posted on by Stuart Murray
the shrinking dollar, by frankieleon
The shrinking dollar.  Photo courtesy of frankieleon.

We are now in an era when unemployment is low, but wages are not increasing.  This is unusual.  Normally when unemployment is low, wages increase.  Even the meanest of bosses would look over their shoulder and increase wages to “stay competitive with market,” when they’re actually just worried about losing key people and unions making inroads.  But the rules of business have changed.

According to the New York Times article Plenty of Work; Not Enough Pay the reasons why wages are staying low are incredibly varied.  Long story short: It’s a dog-eat-dog world and we’re in a big, hot mess.

  • Unions have less power than in the past. Last year only 11% of the American workforce was unionized, down from 20% in 1983.  This decline coincides with American wages largely breaking-even since 1972 on an inflation-adjusted basis.
  • The article interviews Lawrence Mishel from the Economic Policy Institute, who notes that “people have very little leverage to get a good deal from their bosses…” and this reduces expectations to the point where “People who have a decent job are happy to just hold down what they have.”
  • It’s not just workers and unions, businesses are anxious, too. In Japan, companies “mostly sat on their increased profits rather than share with employees.”  Businesses are still spooked from the popping of the real estate bubble in the early 1990s, which was a prequel to the larger subprime mortgage fiasco in the USA around 2008.  In Norway, wages increased as a result of their oil riches in the run-up to 2008.  Their higher cost structure put them at a competitive disadvantage during that same recession and business in Norway don’t want to make the same mistake.
  • Employers who are experiencing good business results are trying to get more work done by hiring temporary employees. After all, if a business can get a large fraction of their work done by contractors, it’s easier to shed the contractors during a downturn.  While temporary work is a negative experience for those forced into it, it is also something business leaders need to do out of fear that they themselves could be in trouble at any time.
  • In Norway and Germany, unions have negotiated special deals to keep wages low, ensure businesses stay cost-competitive, and save local jobs. This arrangement puts pressure on lower-cost jurisdictions, such as Italy and Spain.
  • Globalization is connecting developing-world factories more closely to the individual consumer. After “eliminating the middle-man,” there are fewer bottlenecks in getting goods to market.  With fewer middle players, there is not the same opportunity for employment in these roles.  Factories have fewer hurdles to dropping goods right at your doorstep.  Online leaders, such as Amazon, continue to ravage physical retail.  Meanwhile, warehouse operations and trucking goods across continents are increasingly prone to automation by robots and artificial intelligence.
  • In addition to buyers purchasing goods from developing countries, immigrants are often brought in from those same countries, keeping wages down. It is virtuous to be sympathetic to the plight of immigrants, but there is also truth to the complaint that businesses are using immigrants as pawns. In Norway, the social democratic system that shares wealth with the unionized workforce is being undermined by start-up businesses employing immigrants from Eastern Europe at wages that are below the agreed standard.  The unions are struggling to ensure these immigrants get the same rights as others.  Labour’s biggest struggle is to break even.

The supply-and-demand mantra that the market will correct itself has simply become a falsehood.  This raises the possibility that for our gains, we can’t let the market take care of us.  The possible solutions are varied and the solutions you lean towards probably match the opinions of those around you.

Perhaps families and churches will help us, or maybe it will be unions and the government.  But the emerging consensus is that market forces are nobody’s friend.

Leadership is the Act of Learning

Posted on by Stuart Murray

Portrait Of A Female Student

Are the best leaders currently excellent?  No, they are not.  The best leaders are those who always strive to become a little bit stronger in the near future.  In a recent article in the Harvard Business Review the authors identify that Good Leaders are Good Learners.  Leaders who are in “learning mode” tend to develop stronger leadership skills than their peers.

This learning mode is exhibited through three behaviors:

  • “First, leaders set challenging learning goals in the form of ‘I need to learn how to…’”
  • “Next, they find ways to deliberately experiment with alternative strategies.”
  • “Finally, leaders who are in learning mode conduct fearless after-action reviews, determined to glean useful insights form the results of their experimentation.”

The authors identify several organizational indicators of the fixed-mindset mentality that are contrary to the idea of a “learning mode.”  Consider psychometric testing that selects the most innately qualified leaders; how useful is this information if you can’t see an upward trend?  If the rules in your business keep changing, what use do you have for a leader who was top-performing under last year’s rules?  Surely the best leaders are the one who can move upward and onward from any new starting point, regardless of how excellent their performance is currently.  You get to change the rules more often with these types of leaders.

Also consider the use of forced ranking performance appraisals and winner-take-all reward systems.  Basically, these systems use backward-looking performance indicators and anoint those at a high performance level as those worthy of recognition.  But with a learning mode mindset, those mitigating from a disadvantageous starting point might be your new heroes.  Especially if they were learning and leading along the way.

Leadership Development, Workplace Engagement, and the Learning Organization

My personal interpretation is that the “learning mode” mindset is just the leadership-development element of an engaged workplace with a learning-organization mindset.  That is, if you’re required to lead an engaged learning organization, only those with a growth mindset will excel.  And when they excel, the business will perform better.  So the leader, the culture, and organizational performance will move in synch.

Leaders cannot get fearless feedback unless they have fostered a workplace culture of high trust and two-way communication.  Leaders cannot openly name the things they need to learn unless they have sense of humility and an absence of back-stabbing amongst leaders.  Leaders cannot experiment with alternative strategies unless they have permission to fail; an onus of perfection would oblige leaders to stick to the tried-and-true.

It’s reassuring to know that a variety of broader truths are coming out of the evidence.  Engagement, learning, leadership, and change are all built on a foundation of focus, collaboration, curiosity, and trust.

Now if only we could make sure those types of people are actually put in charge, I think we would be set.  But that doesn’t always happen, does it? It’s a warning-shot to those who think they are already awesome. Excellence is in knowing your next step.

Digging the Gig – Are Temporary Workers Really Happy?

Posted on by Stuart Murray
Skydiving, by Joshua M
Skydiving.  Photo courtesy of Joshua M.  This activity is only fun when voluntary.

Why don’t we all just quit our jobs and go freelance?  Good question.  There’s not a really good reason why we should not.  Gig work improves job satisfaction, opens up work opportunities that might have normally been unavailable, and appears to have few negative impacts.

There is an interesting report on the gig economy available online, entitled “Independent Work: Choice, Necessity, and the Gig Economy.”  It’s a big report, so I’ll summarize the key findings for you.

In this October 2016 report, McKinsey Global Institute finds that about 20 to 30% of the working-age population in Europe and the US engage in some form of independent work.  The report explores whether gig work is truly a voluntary arrangement, and whether the work is lucrative or satisfying.

What is the Gig Economy?

McKinsey defines independent workers as having a high degree of autonomy, payment by assignment (not hours), and a short-term relationship with their employer.  Independent work connects a large pool of workers with a large pool of customers, on a scale that can be global.   The workers and customers link up for efficient matches via the internet and cell phones.  Only 15% of independent workers are using online marketplaces, implying there is potential for significant growth.

In my opinion, if the arrangement is truly independent, gig workers are businesses and not employees. This is a complication because independent business operators tend to be dropped from formal labour market statistics.  This makes the gig economy bewildering to the human resources field.  Also, these businesses are often too small to be measured by those tracking major corporations, such as stock markets or auditing firms. That means that independent workers are also not fully understood by experts in finance and accounting.

All the cool stuff happens at the boundary between categories, and nowhere is this more true than in the gig economy.

Is Temporary Work Truly Voluntary?  Is it Satisfying Work?

In conversations about the gig economy, there is a recurring question: how is this work any different from the contingent workforce of under-paid service employees?  McKinsey overcomes this confusion by placing  independent workers into four segments:

  • Free Agents do independent work by choice and get most of their income from this work.
  • Casual Earners choose this life but their gigs are supplemental income.
  • Reluctants get their primary income from independent work but would prefer a permanent job.
  • The Financially Strapped get supplemental income from gigs and do so out of necessity.

The free agents in the top tier “report greater satisfaction with their work lives than those who do it out of necessity.”  The fact that they could choose independent work had a greater impact on job satisfaction than geography, age, income bracket, or education level.

The higher job satisfaction of free agents reflects several dimensions of their work lives including satisfaction with their choice of their type of work, creativity, opportunity, independence and empowerment, hours of work (amount and flexibility), and atmosphere.  Independent workers like their boss more, that is to say, yes they do like themselves.  Some satisfaction indicators are equal to regular employment, but there were no job dimensions where free agents were less satisfied.

Free agents perceive that they make about as much money as they would in a permanent job.

Amongst the Reluctants and Financially Strapped, temporary work does not drive low job satisfaction.  Those who do any work out of necessity report a similar level of job dissatisfaction, regardless of whether they are independent or have traditional jobs.  It’s an important distinction: people who are forced into temporary work are dissatisfied, but the main driver of dissatisfaction is the phrase “forced into,” not the word “temporary.”  It sounds about right to me, considering how strong the human spirit is in resisting coercion.  And some of the temporary-ness is circumstantial and not attributable to a specific negative entity.

While it is notable that some people are “stuck” in these precarious roles, I personally think it is open to debate whether workers would be better-off with the absence of such arrangements.  That is, the supplemental income might truly make a difference, with no adverse impact on job satisfaction.  And it is not entirely clear whether the gigs can be converted into permanent jobs.  There may be cases where the elimination of gigs would simply result in the elimination of an income stream.

Opportunities and Threats in the Gig Economy

Digital links between workers and customers can be global in reach, and since only 15% of gig workers are connected to a digital platform, things could open up and grow substantially.  For the economy on the whole McKinsey notes that a growing gig economy “…could have tangible economic benefits, such as raising labor-force participation, providing opportunities for the unemployed, or even boosting productivity.”  There is the additional advantage that some services could be provided in a more flexible manner, improving the buyer or consumer experience.

I think there is a trade-off for the common citizen, that sometimes a less secure employment situation can be mitigated by a more beneficial arrangement for that same person acting as a consumer.

McKinsey rightfully identifies that there are challenges posed by the gig economy, including needs for training, credentials, income security, and benefits.  That is, if we are shifting towards a touch-and-go economy it will be harder to ensure everyone can be a winner, or even be able to get by.  There’s an increased demand for social supports coming from all quarters, including consultants at McKinsey.

Who Created Racist Robots? You Did!

Posted on by Stuart Murray

Reinventing Ourselves

If robots just did what we said, would they exhibit racist behavior?  Yes.  Yes they would.

This is an insightful article in the Guardian on the issue of artificial intelligence picking up and advancing society’s pre-existing racism.  It falls on the heels of a report that claimed that a risk-assessment computer program called Compas was biased against black prisoners.  Another crime-forecasting program called PredPol was revealed to have created a racist feedback loop.  Over-policing in black areas in Oakland generated statistics that over-predicted crime in black areas, recommending increased policing, and so on.

“’If you’re not careful, you risk automating the exact same biases these programs are supposed to eliminate,’ says Kristian Lum, the lead statistician at the San-Francisco-based, non-profit Human Rights Data Analysis Group (HRDAG).”

It’s not just the specialized forecasting software that is getting stung by this.  Google and LinkedIn have had problems with this kind of thing as well.  Microsoft had it the worst with a chatbot called Tay, who “learned” how to act like everyone else on twitter and turned into a neo-nazi in one day.  How efficient!

These things are happening so often they cannot be regarded as individual mistakes.  Instead, I think that racist robots must be categorized as a trend.

Workforce Analytics and Automated Racism or Anti-Racism

This racist robot trend affects workforce analytics because those attempting to predict behavior in the workplace will occasionally swap notes with analysts attempting to improve law enforcement.  As we begin to automate elements of employee recruitment, there is also the opportunity to use technology-based tools to reduce racism and sexism.  Now, we are stumbling upon the concern that artificial intelligence is at risk of picking up society’s pre-existing racism.

The issue is that forecasts are built around pre-existing data.  If there is a statistical trend in hiring or policing which is piggy-backing on some type of ground-level prejudice, the formulas inside the statistical model could simply pass-along that underlying sexism or racism.  It’s like children repeating-back what they hear from their parents; the robots are listening – watch your mouth!  Even amongst adults communicating word-of-mouth, our individual opinions are substantially a pass-through of what we picked up from the rest of society.  In this context, it seems naïve to expect robots to be better than us.

So, we must choose to use technology to reduce racism, or technology will embolden racism absent-mindedly.  Pick one.

A major complication in this controversy is that those who create forecast algorithms regard their software and their models as proprietary.  The owner of the Compas software, Northpointe, has refused to explain the inner-workings of the software that they own.  This confidentiality may make business sense and might be legally valid in terms of intellectual property rights.  However if their software is non-compliant on a human rights basis they might lose customers, lose a discrimination lawsuit, or even get legislated out of business.

We are in an era where many people presume that they should know what is really happening when controversial decisions are being made.  When it comes to race and policing, expectations of accountability and transparency can become politically compelling very quickly.  And the use of software to recruit or promote employees, particularly in the public sector, could fall under a similar level of scrutiny just as easily.

I hope that police, human resources professionals, and social justice activists take a greater interest in this topic.  But only if they can stay sufficiently compassionate and context-sensitive to keep ahead of artificial intelligence models of their own critiques.  I’m sure a great big battle of nazi vs. antifacist bots would make for great television.  But what we need now are lessons, insights, tools, and legislation.

Workplace Incivility Drags Workplaces Back to Stone Age

Posted on by Stuart Murray
neanderthal-museum-by-clemens-vasters.jpg
Neanderthal Museum. Photo courtesy of Clemens Vasters.

How important is good manners?  Really, really important.  And it extends much further than knowing what an oyster fork looks like.

Incivility weakens health in areas such as cardiovascular disease, cancer, diabetes, ulcers, and of course mental health.  For reasons of reducing health care claims alone, mistreatment of staff should be curtailed.  However, preventing workplace incivility is actually a bigger deal than originally thought.

In fact, there is significant research that shows being outright rude to colleagues is a major killer of workplace productivity.

In my jurisdiction, there was legislation brought in a few years ago that obliged employers to curtail bullying and harassment.  The legislation goes beyond the long-standing human rights legislation preventing harassment on prohibited grounds, such as sexism or racism.  The new rules say that if we are to compel others to action we must not be aggressive, humiliating, or intimidating.

Uncivil Workplace Culture Adversely Affects Productivity

According to her research, Christine Porath found that for those treated rudely by their colleagues:

  • 47% intentionally decrease the time spent at work
  • 38% deliberately decrease the quality of their work
  • 66% report that their performance declined
  • 78% said their commitment to the organization declined
  • 80% lost time worrying about the uncivil incident
  • 63% lost work time in their effort to avoid the offender

In addition to the reduced productivity of those who stick around, there is also the consideration of those who quit.  Twelve percent of those treated poorly leave the job because of the incident and, by contrast, those who are treated well by their manager are more likely to stick around.  What is interesting from an analytics perspective is that those treated poorly don’t tell their employers why, making it a blind spot in the data.  We know this from other sources; it’s always okay to say that you’re leaving for a better opportunity elsewhere.  But employees usually quit because of their manager and refuse to talk about it in exit interviews.

In addition to those directly treated in an uncivil manner, those who observe someone else being treated in such a manner are also affected.  “You may get pulled off track thinking about the incident, how you should respond, or whether you’re in the line of fire.”  Those who witness incivility see their performance halved and they “weren’t nearly as creative on brainstorming tasks.”  It makes sense that behavior is social and contagious, and that we feel for those around us.  That includes emotional pain.

The impact is not just contagious between employees, but it also spreads to customers.  In research conducted with two colleagues form the University of Southern California, Porath found that “…many customers are less likely to buy from a company they perceive is uncivil, whether the rudeness is directed at them or other employees.”  When customers witness an uncivil episode between employees, that customer makes generalizations about the company.  This has happened with Uber; customers who perceive a toxic environment have turned to competitors.

It’s more evidence of an emerging business model I refer to as double engagement.  That is, that it is engaged employees who attract and retain engaged customers, causing the revenue flow that marketing and finance want so desperately.  The days of investors and marketing teams driving a product or service into the hands of witless customers is long gone.  We live in a world where being human dictates business strength.

But before we put this all in the hands of the worker, we should note that the main source of an organization’s emotional tone comes from its leadership.  Simply put, when leaders treat their team fairly and well, they are more productive.  The team goes above and beyond.  They have more focus, better engagement, more health and well-being, more trust and safety, and greater job satisfaction.

For leaders, the new bottom line must also now include compassion, emotional sensitivity, and engagement.  You must step away from individual heroics and reverse your sense of who is important.  Why? Because way down at the bottom of the pecking order there may be someone who is not treated so well.  Whether you’re a caveman or a gentleman, if you are stronger and more powerful it is your job to carry them.