It’s Time to CARE: Why You Are Losing Your Best Talent to The Competition
Predictable markets, stable business dynamics, and proven success formulas are a thing of the past. How can leaders create a fertile environment for businesses and employees to thrive in an era of constant change??
Today’s CEOs are faced with the near inevitability that some disruptive development will come along tomorrow and make their business model obsolete overnight. Niche competitors are popping up out of nowhere and gaining market share, wreaking havoc on tried-and-true ROI strategies. Supply-chain disruptions, rising costs, and sudden regulatory changes combined with multiple internal and external crises drive leaders towards reactivity vs. proactivity.
Chuck Robbins, CEO of Cisco, recently articulated this existential threat succinctly: “Just when you think you’ve got it figured out, you get another curveball thrown at you.” [1]
Internally, employees are more disengaged than ever and keeping up morale is challenging. Departments have become increasingly siloed and employees, fearful of holding onto their positions, often tell leadership what they think they want to hear.
As a CEO, you are often the last to hear bad news. You may even stumble upon it by accident. As a result, your ability to make mission-critical decisions is often curtailed or non-existent. That’s especially true in times of volatility, uncertainty, complexity, and ambiguity, otherwise known as “VUCA.” Think of it not just as another acronym but as a constant existential threat to your business that may stick around indefinitely.
The big question for any modern-day corporate leader is this: How do you lead effectively in a VUCA world where the only certainty is uncertainty?
As a global executive working across multiple industries and countries over the last few decades, I have seen what works and what doesn’t. How companies adapt and how they fall behind.
I’ve come to believe that your primary job as a CEO or high-level leader is not issuing top-down edicts and setting stretch targets for your team to over-deliver for shareholders. It is fostering an environment for an innovative and high-performance culture to flourish. Companies that harness their talent and foster organizational spontaneity can open themselves up to unprecedented market opportunities.
What has emerged for me is a holistic model of leadership that can serve as a strategic tool for CEOs and senior management to understand and track their company’s ability to survive and thrive in the VUCA world. Used wisely, I believe it’s an essential tool for building a winning and resilient corporate culture – one with engaged employees, and a level of execution excellence that makes breakthrough ideas real. I call it the CARE Leadership Model.
Modeling High Performance
I believe leaders should focus on setting cultural norms and best practices in four vital areas: Creativity, Autonomy, Recognition, and Execution. Specific leadership objectives will vary, but here are the primary values:
Nurturing each part of the CARE Leadership Model is vital. But leaders also need to consider sequencing: how and when to take the necessary steps. Each element lays the foundation for the next, and influences its success.
It all starts with autonomy, from senior management to the most junior employee.?
Building Autonomy?
In an autonomous company culture, team members experience the trust, freedom, and independence to think out-of-the-box and function expeditiously. Everyone, regardless of seniority, contributes to ideas and strategies that will both course-correct and increase performance. Employees throughout the company enjoy a greater say in decision-making and ways of working.
One of my own experiences with autonomy at a managerial level occurred at Henkel, a large multinational consumer goods company based in Germany, just as e-commerce took hold in China. At the time, this new sales channel was in its nascency, and no one back in Europe was anticipating what it might become. Being close to the consumer on a day-to-day basis enabled my team to see its business potential, and we had the leeway to act decisively. As a result, over a short period of time, our business shifted revenue from entirely brick-and-mortar to 60% online commerce, with increased profitability, while our peers at the time were only reaching around 25%.
For global companies, greater autonomy translates into a more competitive edge in localized markets. In my experience: When decentralized businesses give strategic flexibility for regional teams to operate independently, they are better able to deliver products and services tailored to local consumer tastes and fast-changing market needs.
Zappos practices what I might call “extreme autonomy.” In 2017, the retailer introduced Market Based Dynamics (MBD), “another stepping-stone towards our goal of making Zappos a fully self-organized company.” [2] MBD is in essence an operating system that enables every team to operate as a microenterprise with far-reaching decision-making rights and responsibilities, including managing their own P&L and deciding what services they will provide to others. [3]
As a leader, fostering a culture of autonomy increases employee retention – vital in today’s fluid job market. Employees with a greater degree of self-determination demonstrate higher job performance, job satisfaction, and deeper organizational commitment, no matter their industry or location. According to a recent PwC survey, 45% of global companies offer a high degree of autonomy in the workplace, led by Asia at 48%, North America at 47%, and followed by the Middle East at 36% and Africa at 35%.
At best 45% is still very low. There is still a great deal of room for improvement. That said, the data indicates CEOs are beginning to recognize the power of autonomy as a cultural strength, vital to company competitiveness.
In an autonomous culture, motivation increases because employees are trusted to come up with new and unique solutions, to take the initiative and experiment – even to fail, as long as solid learnings stem from it.
“Failure is a manifestation of learning and exploration,” said Ed Catmull, President of Pixar and Disney Animation. “If you aren’t experiencing failure, then you are making a far worse mistake: You are being driven by the desire to avoid it. And, for leaders especially, this strategy — trying to avoid failure by out-thinking it — dooms you to fail.” [4]
Autonomy fosters curiosity and learning, both of which are essential to seizing opportunities and staying ahead of the pack.
Fostering Creativity
The fact that creativity drives innovation is obvious. What is less understood is how to create an environment where talent and originality can be expressed. As a leader, your ability to discern and balance the subtleties of this strategy is imperative.
Every team member, regardless of their position, brings to the table a unique set of experiences, mental processes, personality traits, internalized values, and competencies.
When they think from who they are, rather than from what they think they are expected to be, they tap into a larger field of intelligence based on direct experience.
In combination and well-orchestrated, these diverse points of view provide real-time insights about the state of the operations and its shifts, which the best crafted plans can’t bring to the surface. Team members on the ground detect risks and opportunities, often before leaders do. They also have views on the adjustments that can be implemented to tackle them.
Companies generally don’t hire for creativity unless they are in the creative space, and I challenge that. Focus is often on industry-relevant experience, rather than attitude – specifically curiosity, confidence to voice one’s opinion, and openness to receive feedback.
What does fostering creativity look like? The following are a few strategies I used as a senior leader at Henkel.
I paid specific attention to creating a safe environment for team members to show up and speak from what they were thinking, feeling, and sensing rather than from a compliant, and standardized position.
One of the ways we targeted pressing business challenges was by leveraging compact teams of 3-4 cross-functional, high-potential talents teamed up with a coach. ?The coach’s role was to assist pods in articulating the opportunity or the risk they had detected and develop an action plan. Working in smaller groups allows for more freedom in creative ideation and the ability to focus on more targeted solutions:
Ming Zeng, Chairman of the Academic Council of the Alibaba Group, has this to say about cultivating creativity in today’s fast-paced, smart business model culture: “…leaders’ most important job is to cultivate creativity. Their mandate is to increase the success rate of innovation rather than improve the efficiency of the operation. In the smart business model, machine-learning algorithms take on much of the burden of incremental improvement by automatically making adjustments that increase system wide efficiency.”
As you foster a culture of creativity in your company, watch for what is commonly known as the 5/95 rule. Only 5% of creative ideas typically ever make it into the execution phase. And execution excellence is where that small percentage of viable new ideas become breakthrough innovations. (The ubiquitous WD-40 lubricant got its name because the first 39 experiments failed. The name literally stands for “Water Displacement – 40th attempt.” [5]
Driving Execution Excellence ?
I don’t think execution excellence is talked about enough in the context of the entire organization and its culture. Most companies tend to recognize and reward business results above everything else. What they are missing: Execution excellence is a people-centered endeavor, and as such requires attention to the way ideas are implemented.
Beyond measurable accomplishments, high-performance teams aspire to learning. There is a direct correlation between engagement at work and the opportunity to become increasingly better at what they do. High levels of satisfaction derive from a job well done, optimizing resource utilization, and matching or exceeding stakeholders’ expectations.
Execution and creativity are naturally symbiotic in the CARE Leadership Model. No matter how clever, an ingenious idea can never produce a breakthrough without impeccable execution. Creative ideas, well executed, lead to business success. Increased efficiencies from execution excellence, in turn, free up bandwidth and resources needed for ongoing ideation.
Execution excellence requires first and foremost the practice of candidly inquiring into the impact of the proposed action plan on all stakeholders involved. What do our clients / distributors / sales force need? What matters most right now? Whose pain points are we addressing? Other practices include:
Good leaders invest more attention in encouraging executional excellence attitudes than controlling process compliance. They think about how to enable the team to be more capable of managing execution across all aspects of the system.
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This is especially true in the era of globalization, where managing decentralized initiatives is key. In my experience developing successful products for the local consumers of a multinational business, I paid specific attention to developing individual competencies by providing relevant and targeted training based on localized consumer insights. This in turn led to more effective feedback and assessment strategies to evaluate consumer needs and create new products.
Overall, we facilitated project reviews that detailed solutions not only to the task itself but the habits and behaviors that lead to successful outcomes, thereby outlining decision details so others could learn.
Leveraging Recognition
Recognition is rocket fuel for high-performance organizations, motivating employees and leading to higher engagement and loyalty.
Few mottos are more disheartening for teams who used their unique creativity and grit to reach top-down targets in a VUCA environment than the infamous, “We don’t celebrate trains that arrive on time.”
Recognition itself is not a new idea. In the CARE Leadership Model, the differentiator is who you recognize in your company, and what you recognize them for. Operating autonomously and creatively to achieve execution excellence is a departure from functioning in an automatic, standard, and predictable mode. This attitude and the behavioral shift it entails calls for and deserves particular appreciation.
A culture of recognition occurs when senior management – including the CEO – recognizes employees at all levels of the company frequently, in formal and informal ways. Beyond a simple reward system, it is important that management sees recognition as a key leadership tool.
Recognition is a vehicle to support and reinforce cultural values at all levels of the model. Employees are recognized for coming up with creative ideas – not just those ideas that get executed. Teams are recognized for execution excellence, not just business results.
Joie de Vivre, part of the Hyatt Group, is a leading boutique hotel chain renowned for its originality and ingenuity. Early in the company’s evolution, management held a “Mistake of the Month Club.” Anybody at the front-line level who made an error in an attempt to do something different or to improve a product or a service was honored. The “winners” of these monthly reviews often helped the company define how they could improve or innovate the diverse and ever-changing aspects of the organization.
In a typical organization, recognition focuses on financially rewarding accomplishments at an individual level. This approach tends to perpetuate the pitfalls of a standard top-down corporate hierarchy with rewards of even more cash, perks, and power. What this fails to do is take into account that hitting yearly targets increasingly depends on circumstances beyond the control of the most competent and diligent team.
One way to counter this trend is to reward both individuals and teams in their endeavors not only to hit strategic business targets but also the behaviors they leveraged to gain that success.
The Virtuous Loop: A Self-Perpetuating Cultural Ecosystem
The CARE Leadership Model is active, cyclical, and continuous. As it becomes self-perpetuating, the organization gains momentum. Tending to each element of your company culture ensures that each factor influences the next. Advancing the four values of the model puts your company culture on a positive cycle. I call this cycle the “Virtuous Loop.”
Given the synergy between company culture and business success, a leadership model built around creativity, autonomy, recognition, and execution excellence becomes a road map for growing the business and creating an environment that fosters employee engagement as well as profitability and growth.
In a Virtuous Loop, autonomy is an environmental state – a fertile ground that enables creativity and innovation. Execution excellence reaps the benefits from creativity and turns it into tangible business results, leading to sustainable competitive advantage. Recognition for execution excellence is rewarded with increased autonomy – and the Virtuous Loop continues. Smart leaders can use this system to proactively increase their team’s ability to perform at a high level, even during times of crisis and uncertainty.
Tending to your company’s cultural “loop” requires constant vigilance. In the same way individual leaders have a shadow side, so does company culture. Disrupt the cycle at any point, and the?Virtuous Loop can easily begin to trend more towards the negative – what I call a Vicious Loop.
Just as the Virtuous Loop starts with autonomy: In a Vicious Loop, centralized and hierarchical organizations is the catalyzing factor. In many organizational cultures, decisions come mostly from upper management or from high-level individuals. Leaders pay lip service to values pinned on the office wall while actually pushing down targets, sanctioning failed experiments, and exerting control through excessive reporting.
This form of leadership tends to breed conformity and apprehension. Employees second-guess their superiors and stick to tried-and-tested solutions because maintaining the status quo matters most of all. Creativity becomes throttled or even discouraged. Conventional ideas, even when well-executed, will most likely produce average results. Execution averageness leads to apathy because no one is motivated by or rewarded for mediocre outcomes.
While many firms claim to be people-centric: Under pressure, many organizations become more rigid and issue stricter controls about work and organizational hierarchies, leading to ever more inflexible approaches to problem-solving.
L’Oréal’s Culture Shift
L’Oréal, the $36 billion cosmetics giant, is a great example of a large consumer-focused multinational that has recently shifted towards CARE-style values in their company culture. “L’Oréal is known for having a tough workplace culture,” the Financial Times wrote in late 2020. “In the company’s internal jargon, managers should cultivate saine inquietude, or ‘healthy disquiet,’ among their teams so as to see who rises to the occasion — and who sinks.”
This strikes me as an old paradigm: Only the best will survive, competition vs. collaboration, and fear vs. trust. This kind of culture may have worked 20 years ago, and can work in a more stable market, but it doesn’t produce sufficient results in today’s environment – especially when employee satisfaction and retention is a key factor.
I believe L’Oréal’s leadership has inherently understood this because in recent years, the company has begun to shift its internal culture towards a more egalitarian model. The L’Oréal group now espouses six values, including an “entrepreneurial spirit,” which it describes as a “synonym for autonomy,” built “on a belief of the importance of each individual and their talents.” This change has resulted in a definitive market improvement as well as an uptick in employee retention.
Maintaining a Culture of Trust and High Performance
While centralized or hierarchical firms grapple with ways to retain disengaged employees or to recruit world-class talent, they’re often just plugging gaps rather than addressing substantive cultural or management issues. Until they drop the autocratic behaviors that hinder their organizational success, these firms will ultimately underperform against more autonomous firms.
Not every company falls neatly into one category or another. But company leaders must remain vigilant and deliberate about creating an environment that fosters a healthy culture, applying aspects of the CARE Leadership Model purposefully at every point.
Take a quick check of your firm’s organizational culture. Do you recognize these symptoms of autocratic company cultures?
Sometimes, when there’s a significant earnings miss, leaders and boards begin to realize that their corporate culture is hampering financial results. They recognize that their reputational KPIs have tumbled precipitously. Individuals may be held accountable – but replacing them won’t solve the problem. In the modern VUCA world, companies cannot afford to wait for disaster to strike before realigning their mission, values, and approach to leadership.
Take stock of your organization’s approach to autonomy, creativity, execution excellence, and recognition. How does your leadership model foster these values – and might it need to evolve?
Consider the following questions:
With my experience working in both autocratic and autonomous organizations, I’m convinced that a leader’s chief role is fostering a culture that fully embodies the four key values of the CARE Leadership Model. In fact: The higher you get in an organization, the more your job is to coach and mentor. The most effective leaders create a fertile environment that enables employees and the company as a whole to reach their full potential.
In an environment driven by CARE values, organizations will see new and more autonomous behaviors take root at all levels. Individuals will be more empowered to problem-solve and suggest improvements. Traditional hierarchies will be redefined and everyone will become deeply invested in how their execution and creative ideas are recognized and rewarded.
Companies that have been vulnerable to disruption in the past will now have the potential to become disruptors themselves, not only in their areas of influence but in their company culture as well. Top talent will not only be drawn to your company; they will become trusted and loyal members of your team, through periods of stability and volatility alike.
Your ultimate success will influence other companies to innovate and transform in similar ways. But beyond pure business results, satisfaction will come from seeing your employees highly engaged, happy and satisfied, working together towards the future you collectively envision.
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Mark Chan is a seasoned international executive and leadership expert with over 20 years of experience leading global teams for well-known brands in the consumer goods space. As a sought-after advisor to CEOs and senior executives, Mark is the creator of the CARE Leadership Model, a holistic system for modern-day leadership. His specialty is high-growth, high-potential companies operating in competitive spaces, who want to up-level performance while strengthening their company culture. He is currently the Managing Partner of an e-commerce startup based in Shanghai, helping consumer goods clients to thrive in the China market.
Experienced Leader / Non Executive Board Member / Strategy / digital Transformation / Sustainability / DEI
2 年Interesting and insightful reading - thank you Mark Chan
Wonderful advice. Thank you!