You need ‘skin’ in the game to win
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.
Jan van der Hoop, president of HiringSmart Canada, says engagement doesn’t just happen, employers must set the stage.