The good news is that more and more CEOs understand the impact of culture on business performance as a new Heidrick & Struggles study reveals.
That's good news at a time were many are fastening their seatbelts as softening economies suggest a lot of restructuring efforts to happen as we get into the second half of the year. One company though is a lighthouse example for a business that over 70 years has not ever used layoffs. A fascinating story. Enjoy the read.
Time For Restructuring? Now It′s Time for Compassionate Leadership!
Around the world, many markets are characterized by concerns about a recession being around the corner. Often, those concerns result in cost-cutting strategies. Down-sizing becomes the word of the day. When that happens, all eyes of the organization are on the leadership. Now it′s time to consistently adhere to a combination of transformational and compassionate behaviors to help people navigate through difficult times.
Brian Bacon , Executive Chairman of the Oxford Leadership Group, recently shared some of the crucial behaviors
Long-term Vision:?It is important for the leaders to maintain a long-term vision and communicate it clearly & consistently to employees. This helps create a sense of purpose and direction, enabling employees to see beyond the immediate challenges and work towards a brighter future.?
Steady-State Communication:?It is crucial for the leaders to communicate calmly, openly and honestly about the challenges the organization is facing and the reasons behind the downsizing and cost-cutting measures. Cool headed transparency helps maintain trust and reduces uncertainty among employees.
Empathy and Compassion:?Leaders need to display empathy and compassion towards employees who are directly affected by downsizing or cost-cutting measures. This can be done by providing support, listening to concerns, and offering resources for career transition or retraining.
Strategic Consistency:?The leadership team must make consistent, well-informed decisions based on data and insights, aligning them with the long-term vision and goals of the organization. It is important to strike a balance between reducing costs and maintaining core capabilities necessary for future growth.
Inclusive Decision-Making:?Engage key stakeholders, including middle managers and employees, in the decision-making process as much as possible. Their input and ideas can lead to more effective solutions and also help in mitigating resistance to change.?
Fostering Employee Engagement:?Leader should focus on maintaining employee morale and motivation during challenging times. This can be done by recognizing and rewarding employee contributions, offering reassurance, and emphasizing the importance of their roles in the organization's success.
Leading by Example:?The leaders must lead by example, demonstrating a commitment to cost-cutting measures and modeling the desired behaviors. This includes making personal sacrifices when necessary and encouraging managers in the organization to do the same.?
As Brian suggests, “during turbulent times the leaders must always strike a balance between maintaining the financial health of the organization and supporting the well-being of employees, while keeping a future-oriented perspective. These leadership behaviors lay the foundation for effective steering during a period of austerity, downsizing and cost-cutting.”
I′d like to add: how leaders act during those times does not only have an impact on those that have to leave, but also on those that stay. A lot can be learnt from how Airbnb managed a mass layoff of 25% of their workforce during the Covid pandemic. What they did? Communicate in an open and clear way, explaining the impact on the company and treating those that had to leave publicly with the utmost respect, staying true to their key theme of “belonging” which guided them through these difficult times.
No Layoffs During 70 Years Of Being in Business!
Here′s one to celebrate: Lincoln Electric , a company that most of us have never heard about, has managed to avoid layoffs for over 70 years despite the “towering inflation of the early 1980s, the stock market plunge of 2000-2001, the Great Financial Crisis of 2008-2009,” writes Fortune ’s Geoff Colvin . His article is well worth reading – it shows how a company can manage bad times through agreeing with its workforce how to manage the good times too.
Lincoln Electric CEO Chris Mapes says that the company’s ability to dodge layoffs is the most visible element of an overarching philosophy of management that guides the business through financial booms and busts: “The Lincoln Electric system, known internally as ‘the program,’ is radical and deceptively simple. Production employees agree to let Lincoln increase or decrease their standard 40-hour workweek within limits based on customer demand. They get paid by piecework instead of the hour and receive a year-end bonus reflecting each worker’s performance. The company, in turn, pledges not to lay them off for lack of business.
When CEOs visit Mapes to learn more, he first asks them why they want to install the Lincoln system. If it’s just to increase productivity, he says, ‘That may not be enough, foundationally, for it to survive.’”?Definitely worth a read.
Back-To-Back Meetings Promote Stress –?
but Breaks Promote Performance
Sometimes it′s just great to see research confirm what you thought all along. For instance, when it comes to how your body reacts to the meeting-mania in many firms. 微软 's Human Factors Lab studied 14 participants (wore EEG caps to monitor electrical activity in their brains) across two days of video meetings.
On the first day, participants took part in four back-to-back 30-min meetings. On the second day, there were another four 30-min meetings, but with 10-minute breaks in between. The results should have an impact on we organize our daily schedules:
Back-to-Back Meetings Promote Stress - Those situation leads to an accumulation of stress being built-up. Especially during the last minutes of a meeting, when your brain anticipates the next meeting already is stressful.?
Breaks Promote Performance - The good news though: short breaks in between meetings allowed the brain to reset. The result: stress does not build up. But even more importantly: those breaks had a positive impact, participants performed better.
As meeting culture is one aspect of corporate culture, there′s an easy implementable solution to reduce stress levels inside the firm: schedule breaks pro-actively.
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New Payscale Research Reveals Top Drivers Behind Employee Turnover and the Impact of Pay Transparency?
Payscale , a US based compensation software firm, recently published a survey what topics have an impact on the likelihood of employees to consider leaving their current employer. More than half a million sets of data were reviewed and the data are quite telling. By large, a “bright future” outlook is the best recipe to keep employees with their firm. The next big thing is fair pay perception followed by company culture and a good relationship to the direct manager.
Those data confirm the 麦肯锡 study from last autumn that looked at the key themes for employees to leave. Being treated fairly and in a just way is critical for people to feel appreciated and build that sense of belonging which is such a critical lever for employee loyalty. But since Payscale is about payments, they also identify fair pay and transparency about it as a key theme. "Posting salary bands publicly and having open conversations about pay with your teams signal to current and future employees that you're forward-thinking, have your ducks in a row and, most importantly, care about compensating people fairly," said Lexi Clarke , chief people officer at Payscale. "Employees want to stick with employers who they feel truly have their back, and pay transparency is a great way to build that trust."
But it is not just retention, it is also about attracting new talent. Payscale's research is the latest to find positive effects of the practice for organizations: A pair of studies suggests that if employees are aware of how their salary compares to their colleagues', it may compel them to work harder to prove their worth. Another report from ResumeLab indicates that pay transparency attracts job candidates, with 4 out of 5 workers saying they are unlikely to apply to a job that doesn't provide a pay range.?Click this link to learn about all the details.
More and More CEOs Believe That Company Culture Drives Business Performance And Retention Rates
Heidrick & Struggles recently published a survey of 500 CEOs from nine markets around the world. One-third of CEOs rank culture as the number one most important influence on financial performance, up from 7% two years ago and as a driver of success in their business and talent management strategies.
These data are encouraging. There are three main reasons for CEOs to take a people-centered approach:
Culture is the top influencing factor on employee retention rates, surpassing even compensation and benefits and workplace flexibility.
Strategy Science Special On Corporate Purpose Is Now Available
The long-awaited Strategy Science Special Issue on corporate purpose is finally in print. Matthew Kraatz, William Ocasio , and David Chandler have curated a remarkable set of papers from an outstanding set of scholars. Their contributions address the topic from a wide range of theoretical and disciplinary perspectives and do so with varying forms of enthusiasm and occasional pessimism. You will enjoy reading the issue and in doing so garner a deeper understanding of this concept so central to the field of strategy. The Illinois Strategic Organization Initiative at the University of Illinois Chicago supported this important effort.?Get access to the documentation here.
Effective Leadership Teams Outperform Even The Most Effective Individual Leaders
Top teams that prioritize learning and practice these collective behaviors are the most effective, but a surprising percentage of top teams struggle to work together well, according to new interesting research published by 贝恩公司 using data from hundreds of top teams across 11 industries and three global regions.
High-performing top teams have top team’s ability to act, to behave as a collective. These teams certainly have a great individual leader to lead and coach, but that's not the most important trait.
Researchers found the most effective leadership teams demonstrate 5 observable behaviors:
To build an effective team, researchers recommend companies to create developmental periods during which they can build specific behaviors and skills, setting times and locations (virtual and physical) when all members convene to learn. They also suggest that teams that get good results faster prioritize specific behaviors they want to develop and concentrate on incrementally changing them over an extended period of time.
Good to know.
The next edition of the Building Corporate Soul newsletter will be in your mailbox on September 3. In the meantime let's make soulless companies a thing of the past...
Owner, The Cassie Partnership
1 年Ralf always brings fresh perspective to the core truth that Vision & Purpose enable aligned, productive behaviours & foster a healthy, dynamic culture. The other truth is that this drives performance. So what is it that leaders (and the people who hire them) are not getting? This, in principle, is the ABC of how to run a company. I believe that another indicator should be created. I would call it the *sshole indicator or *I for short. Very simply, you are committed and capable of building a company with Soul, or you are an *sshole. Soul or *sshole. Very short interview. Saving millions by not letting *ssholes anywhere near the building and the people inside. Enough. It's Soul time.