You need ‘skin’ in the game to win

National Post (Latest Edition) - - FINANCIAL POST - BY DEREK SANKEY

David Loree re­calls an old say­ing from his na­tive Texas about some peo­ple be­ing “fat, dumb and happy.” It’s an ex­pres­sion that refers, in part, to ig­no­rance be­ing bliss so long as ev­ery­thing works out just fine at the end of the day.

The new di­rec­tor of the Ivey Lead­er­ship Pro­gram at the Richard Ivey School of Busi­ness, Uni­ver­sity of West­ern On­tario brings up the phrase be­cause he draws a di­rect com­par­i­son to what’s hap­pen­ing in work­places across North Amer­ica right now.

“For the last five or six years, things have been so rosy that a lot of or­ga­ni­za­tions found they could al­most print money without hav­ing to put much ef­fort into how to do it,” Mr. Loree says.

As soon as the econ­omy did a 180de­gree turn, he no­ticed busi­ness leaders shift­ing their fo­cus to the peo­ple that re­ally gen­er­ate money, why the top per­form­ers seem to gen­er­ate so much of it, com­par­a­tively, and how they can get ev­ery em­ployee to be more pro­duc­tive in tough times.

Re­cruiters say the sin­gle most crit­i­cal means of manag­ing through a down­turn is the en­gage­ment of em­ploy­ees — a term of­ten used and equally elu­sive. In tough times, when morale is low and peo­ple are looking over their shoul­ders, en­gage­ment suf­fers and gets re­flected on the bot­tom line.

“En­gage­ment is the sin­gle most re­li­able in­di­ca­tor of busi­ness per­for­mance,” says Jan van der Hoop, pres­i­dent of em­ploy­ment ser­vices firm Hir­ingS­mart Canada.

“The more en­gaged a group of peo­ple is, the more emo­tional skin they have in the game [and] the more com­mit­ted they are to gen­er­at­ing re­sults.”

The ba­sic con­cept sounds sim­ple, but the im­pli­ca­tions are com­plex. A re­cent sur­vey shows that the top 16% of per­form­ers in a com­pany gen­er­ate about 60% of the or­ga­ni­za­tion’s rev­enues, while the bot­tom 16% cost the com­pany about 20% in rev­enues, ac­cord­ing to Hir­ingS­mart. An es­ti­mated 23% of pay­roll ex­pense is un­pro­duc­tive be­cause of low en­gage­ment, with only 20% of em­ploy­ees con­sid­er­ing them­selves “fully en­gaged” at work.

Get­ting peo­ple fully en­gaged, re­cruiters say, re­quires a con­sid­er­able hu­man cap­i­tal in­vest­ment and a strat­egy that in­cludes fac­tors such as seg­men­ta­tion of the work­force — de­ter­min­ing who makes money for the com­pany and who doesn’t, in­clud­ing the sup­port they need to do it.

But it also in­cludes en­gage­ment best prac­tices, tal­ent spot­ting at an early ca­reer stage and care­fully de­ter­min­ing the “fit” of an em­ployee with any given man­ager, team, job and or­ga­ni­za­tion.

“You can’t just get en­gage­ment by putting a packet of pow­der in the wa­ter and stir­ring it up and think­ing that now we have en­gage­ment,” says Mr. van der Hoop. “You have to set the stage for en­gage­ment.”

Tal­ent spot­ting — de­ter­min­ing high po­ten­tial em­ploy­ees from low per­form­ers — is equally as im­port- ant as en­gag­ing all em­ploy­ees, since keep­ing those top per­form­ers yields ob­vi­ous ben­e­fits.

“Those [top per­form­ers] are the peo­ple that are go­ing to carry you through the tough times and ac­cel­er­ate your per­for­mance rel­a­tive to your com­pe­ti­tion,” says Hen­ryk Kra­jew­ski, na­tional prac­tice leader in tal­ent man­age­ment for Right Man­age­ment.

“If you can keep them, you’re go­ing to have a com­pet­i­tive ad­van­tage when the mar­ket be­gins to turn.”

Tal­ent spot­ting is as much an art form as it is sci­ence, but Mr. Loree says smart busi­ness leaders can re­duce the pos­si­bil­ity of er­ror by tak­ing some sim­ple, con­crete steps that in­volve not only HR leaders, but also mid­dle man­agers who are best able to spot those with high po­ten­tial.

“When it comes to how to de­velop [high po­ten­tial] em­ploy­ees, peo­ple for­get we’re talk­ing about iden­ti­fy­ing tal­ent at low lev­els of the or­ga­ni­za­tion,” he says.

A man­ager’s hunch, or “gut” in­stinct, can help cre­ate a short­list of candidates, but it takes a more strate­gic ap­proach to hone in on those top per­form­ers in wait­ing.

There are very spe­cific ques­tions and con­ver­sa­tions man­agers can have — many are out­lined in a book Mr. Loree rec­om­mends ti­tled Leaders at All Lev­els by Ram Cha­ran — to help those man­agers who lack the skills spot top tal­ent.

When it comes to the link be­tween en­gage­ment, per­for­mance and tal­ent spot­ting, it takes a col­lab­o­ra­tive ef­fort. Re­cruiters ad­mit, how­ever, that in tight eco­nomic times, it’s an up­hill bat­tle get­ting busi­ness leaders to see those links clearly.

“At a time when you need to spend the most at­ten­tion on the key seg­ments of your work­force — your top tal­ent and leaders — is the time when com­pa­nies are most re­luc­tant to do so be­cause it in­volves cost,” Mr. Kra­jew­ski says.

One can’t help but won­der how the Tex­ans might re­vise their ex­pres­sion to fit the times.

JIM ROSS FOR NA­TIONAL POST

Jan van der Hoop, pres­i­dent of Hir­ingS­mart Canada, says en­gage­ment doesn’t just hap­pen, em­ploy­ers must set the stage.

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