If People Don’t Adopt the Strategy, You Won’t See Results

Putting people at the center of your strategy increases understanding, adoption, and fulfillment of your strategy.? A disengaged workforce leads to underwhelming results, frustrated internal stakeholders, and bad results for investors.

Since the industrial revolution, the treatment of people within organizations has markedly changed.? As the employment market shifted from self-employment on family farms for sustainment to businesses creating products in mass production industrial facilities, businesses needed to focus on building and sustaining a stable workforce. ?In the early days, organizations got away with a lot of bad treatment, forcing employees to work long hours in less than desirable conditions, often times putting their lives at risk.? During this early period of employment arrangements, employees did not believe they had a voice in the working arrangements or conditions, because they no longer worked for their own families’ sustainment, but worked for a company owner that paid them money that sustained their families.? As employees increased their understanding of reasonable expectations from the organization with which they worked, they started to look for ways to improve working conditions.? This brought about the onset of unions and other organized groups to help provide a voice to workers, helping to negotiate livable wages, better working conditions, and safer environments for employees to work.? For a long time, this truly helped improve working conditions for employees at all companies.

As the American employment landscape shifted away from manufacturing job and more into knowledge jobs, organizations took steps backwards in their treatment of people, hoping knowledge workers would simply accept less than desirable working conditions, knowing the environments in which they work and the jobs they perform prove much more desirable than manual labor in manufacturing plants.? This approach worked for a period of time, and while knowledge workers did not have the same abilities to organize as a unified labor group as the manual laborers, the capitalistic employment market certainly took over.? In strong economic times, where jobs remained plentiful, demand for workers exceeded supply, enabling workers to drive conditions and wages up and expectations down.? This forced companies to provide the best possible employment agreements possible or risk losing critical employees to other organizations.? In slower economic times, employees still generally made out better, because the option to go to another organization, even at a reduced salary point always loomed largely for the organization and their leaders.

Over time, the employees realized they could negotiate their individual expectations with companies and employers realized that putting standard, well received people-centric programs in place generally placated employees, creating a fairly stable working arrangement for most knowledge workers, even in the absence of a collective bargaining engine to secure specific agreements. This working agreement shifted slightly in fall of 2022, when big Tech realized that they over-indexed on market generation, built too many non-core products that continued to underperform, and laid off large portions of their workforces.? While many of my technologist friends would tell me the stress of working for big tech does not always justify the pay and benefits associated with it, they all seemed to stay and most felt surprised when layoffs took place. Despite the small blip, the current knowledge worker expectations remain largely intact and currently, a reasonably healthy balance exists between employer and employee that forces both to work hard in their efforts to deliver optimal outcomes for the other party.? And if we’ve learned nothing more than one key message from the 2008 financial crisis, organizations that listen to their employees, offer them opportunities to grow their skills, and reward them for their valuable performance create a lasting culture and build loyalty in their employees that can’t be broken by nominal raises offered by competitors.

Let us look at a couple of examples where employee engagement (or a lack thereof) played a part in helping the company achieve exceptional strategic results.

What good looks like…

I know I always laud Walmart for their efforts across many different business success drivers, but in full transparency, they do a lot of really good things and you don’t reach / sustain your organization on top of the Fortune 500 list without doing a lot of really good things to run your business.? Since its inception, Sam Walton maintained a people first mantra across all Walmart entities, and for the most part, it led to tremendous financial results and accelerated results.? Like many high-growth organizations, Walmart grew beyond its capacity to govern every corner of the organization, and in 2002, a series of employees sued Walmart for a myriad of payroll injustices, including telling associates they had to clock out for their Department of Labor mandated 15-minute breaks per 4 hours worked.? The lawsuit exposed a crack at the edges, with many of the suits coming from stores far from the golden triangle near Bentonville and revealed Walmart’s inability to sustainably govern all locations.?

Walmart took a big perception hit for their efforts and immediately took action to change the perception within the talent marketplace.? Immediately, the organization centralized talent and HR efforts, expanded field HR coverage to create more visibility in the field, and trained leaders on expectations.? Realizing that policy and procedure remediations alone will not solve their talent issues, Walmart set out on a perpetual journey to develop sustainable talent strategies, measure the engagement of their people, and ensure that they age old mantra, “happy employees = happy customers” rings true in all Walmart locations.? Since this initial issues, they have increased pay scale to retail industry leading levels, rewarded front-line supervisors with stock in an industry first effort to reward those closest to the customers, made educational advancement a priority with a combination of internal and external degree options for all employees, and most recently, established a belonging organization to ensure that the diverse needs of all employees are represented in the people programs they offer.

All of these people efforts have resulted in long-term success for the company on the financial side, helping the company continue to grow, fend off competitors small and large, and continue to differentiate the organization as the preeminent omni-channel retailer in the world.? Throughout this time, they have certainly faced challenges on the people, product, operational, and financial fronts, but their ability to demonstrate resilience by putting their people at the center of the solutioning efforts continues to serve them well.? And while this sustained effort ties to a long-term strategic investment, not a change in organizational strategy, their ability to remain at the top of the Fortune 500 list is in large part due to the people investments they continue to make.

What not so good looks like…

A large retailer decided to implement major strategic changes to differentiate itself from a major competitor, changing the ways they attracted customers, redesigning store layouts, and redistributing the product mix between physical and digital environments.? The board fully supported the changes and gave an initial funding pool of several hundred million dollars to conduct a series of tests to baseline financial improvements generated by the proposed changes.? The leadership team selected a handful of stores in dispersed markets to understand the impact of the changes on customers, redesigning the stores and leveraging different marketing techniques to draw people into the stores.? Within 30 days of making the changes, the worst performing stores in which changes took place delivered 1.5x the revenue of the same month 1 year prior and outperformed the other stores in their markets by at least 2x.? The leadership team patted themselves on the back, asked the board for funding to continue the in-store changes across a broader suite of stores, and signed contracts with vendors across every discipline imaginable to implement the necessary changes.

At the end of the first quarter following the changes, the CEO proudly announced on the quarterly analyst call that the company completed a highly successful test and planned to continue the changes in at least 25% of the company’s retail network.? Unfortunately, the CEO never discussed the changes with the corporate employees who supported the stores or the store employees in stores that did not participate in the test.? The organization also did not take into account that new ways of working, new layouts, and new customer expectations required changes to people related topics like job descriptions, incentives, and potentially performance expectations.? Quickly after the call, employee engagement began to tank, as corporate and field teams realized that if they did not work on projects related to the store transformation, their ability to do the work they loved would soon come to an end.? In response to the eroding engagement, the company brought in a strategic communications firm to help manage the change and to no one’s surprise, the communications partner proposed a series of cascading communications, all written by their firm.?

Two years later, despite tremendous results in the stores they transformed and the markets in which they adjusted marketing strategies, the overall company earnings remained flat.? Six months after that, they started an annual series of employee cuts that continued to erode employee trust and led to many high performers leaving the organization.? Five years later, the company is ? the size of the competitor and while it remains a strong company, it struggles to attract and retain talent in a relatively small employment market.?

Implementing a new strategy takes effort, commitment, and an understanding that you need to bring your people along on the journey.? Regardless of successes realized by the test stores, the 85% of the company’s employees that did not have a voice in the changes and did not understand what the new strategy meant for them quickly became frustrated.? That lack of engagement led to declining service in the stores, which led to declining store financial performance, and ultimately an untimely end to a potentially successful strategy.? Organizations much engage their people in the development and cascading of the strategy.? Gone are the days where senior leaders could lock themselves in their ivory towers, change the company’s direction, and employees blindly accept the changes as the right next move for the company.? The best companies start with feedback from their customers and customer – facing employees to truly understand pain points on the ground floor and marry those feedback points with the key financial indicators, but at minimum, organizations must do a better job engaging their middle managers who must execute on the strategy with their teams.

So how do you create a compelling PEOPLE strategy?

Here is a dirty little secret that consulting firms never want to say aloud…the process for creating any strategy, regardless of function, incorporates the same pieces.? Whether your organization wants to make major strategic direction changes, enhance technology, or make best use of your most important asset, your people, the strategy development process can follow the same flow.

1.?????? Discover the current-state

2.?????? Determine the destination

3.?????? Define the gap between current and future

4.?????? Design the plan

5.?????? Deliver the areas of focus

Yes, I intentionally forced 5 D’s to help people remember the approach to build a strategy, but let us quickly dissect each of the elements of the approach quickly.?

§? Discover: No company can define the future-state objectives without first acknowledging what they do well and what opportunities they have that may ultimately become disablers for their people.? Taking the time to conduct a landscape analysis of leading people organizations and conduct a competitive analysis of your top talent competitors’ programs points you in a direction to exceed your employees’ expectations.? Notice I say talent competitors as well, because not all companies compete within the same ecosystem for employees as they do for customers.

§? Determine: With the current state in mind and an understanding of what the employees and candidates believe the company does well and set aspirational notions of how the company can best serve the needs of today’s employees, as well as tomorrow’s employees. This often manifests itself in new programs, new roles, and new ways for employees to connect within the organization, all with the intent of dreaming big about future possibilities, without constraining the innovation with the gap between current and future state.? With the onset of AI, companies also need to diversify how they define employees, so they do not find themselves over-automating tasks and losing employees who do not simply want to audit the findings of a machine.

§? Define: Companies now have clarity on the desired destination and the current-state limitations and can use that polarity to assess the gap between current and future state. During this phase of the approach, they conduct a gap analysis, define how they intend to close the gaps, and put new working constructs (e.g. new compensation or engagement models) in place to bring the new people strategy to life. Many companies go straight from assess to do, often finding that without changing the ways of working, they cannot truly achieve the desired outcomes.

§? Design: With recommendations set, operating models defined, new people programs put in place, and second level leaders informed, the company can break the people strategy down into key initiatives, prioritize the work, and build a transformation roadmap. Companies that do this well break the roadmap into business, operations, people, process, experience, and technology to ensure that the all-encompassing plan truly encompasses all elements of the changes.? The best companies use this opportunity to create an empowered leadership team, so the day-to-day engagement activities fall within the purview of the front-line leaders.

§? Deliver: Lastly, companies must openly communicate key changes to their various stakeholder groups, ensuring alignment across internal and external stakeholders. A single bad actor at any point in the chain can derail the long-term strategy attainment, so organizations cannot rush or underwhelm during this phase. If comms and alignment do not go well, the strategic objectives will never realize their fullest potential.

Engagement of your people proves as critical as selecting the right markets, the right products, and the right systems.? Companies that treat their people strategy on the same level as their other strategies engage employees who in turn engage customers in meaningful relationships that result in higher lifetime customer value.? Companies that consider their people an afterthought and treat them as merely another commodity inside the organization frustrate employees who in turn deliver bad customer interactions, and financial results quickly tumble.? Take Walmart’s successes as a model you can use to create long-term employee engagement that breeds trust, long-term service, and exceptional customer interactions.? If you think in a similar way and respond to potential issues in a meaningful way like Walmart has since 2002, your organization will ultimately see much better business outcomes.? You cannot say your people are your most important asset and then protect your technology more vigorously than you protect your people.

Thanks for reading.? I look forward to your thoughts.