Employee Engagement is Not About Nice, It’s About Performance

In a recent presentation to a potential client who is interested in my new performance appraisal process, a senior manager expressed his concerns, “Programs like yours that eliminate the grading of employees and replace it with a search for root causes of poor performance (in the process) give employees excuses not to perform. They are too ‘airy-fairy’ or ‘touchy feely’ for me. We need something that will increase performance.”

This statement proves there is often a clear dis-connect in the minds of many executives about employee engagement and performance. There is a strongly held belief that employees really can’t be trusted to perform (or to be engaged) without some kind of extrinsic incentives and or threats of punishments. In the past fifty years research has shown to support the belief that employees can be trusted. Furthermore, when they are, performance increases significantly. Furthermore, removal of the typical threats and bribes (in the form of pay-for-performance and performance appraisals) also increases engagement and performance. Many leaders still ignore this research remaining in denial.

Let me put the research aside for now and just focus on three principles and ask you to think about these and their impact.

This is the Knowledge Economy:

First, we are moving into a knowledge economy which rewards organizations that can learn the fastest.

Respect Creates Innovation:

Second, having an environment of complete respect for employees creates innovation. Respect is not about being “touchy feely.”

Systems Thinking Accelerates Learning:

Third, creating a culture of systems thinking is about accelerating learning. It’s not about providing excuses for poor behavior or poor performance. It’s sophisticated and not at all touchy feely.

The Knowledge Economy

Our new knowledge economy is in full acceleration yet our policies are stuck in the “middle ages.” Talk to anyone with a 2 or 3 year old and ask what it is like to be around the toddler for any length of time. It’s exhausting. Why? Because 2 year olds can’t stop moving and exploring. One doesn’t need to incentivize a 2 year old to explore the world. Instead, you have to watch out he doesn’t hurt himself exploring how it works and how he/she can dismantle it while he/she plays. Yet speak to that same toddler twelve years later when a freshman in high school. When their teacher presents a ne concept in class their first question is, “Will that be on the midterm?” We are creating environments that destroy the natural tendency for knowledge accumulation while at the same time we need that natural curiosity more than ever before to remain globally competitive as a society.

According to research by the major HR consulting firms, the number one reason given by employees in exit interviews for leaving a company is the poor relationship with the supervisor. This tells me there is a lack of respect which is most often demonstrated by a lack of listening. Estimates of turnover costs range from 1-1/2 to 2 times annual salary. This cost is impossible to calculate because there are so many factors that contribute to this cost including recruitment, training, and knowledge. Knowledge walks out the door when people leave. There is no line item on the P&L statement for “Loss of Knowledge.”

Respect = Innovation

In every major religion there is a statement similar to the “Golden Rule” i.e. “Do unto others as you would have them do unto you.” Just teaching and supporting this statement at the manager level can save many thousands or more. Respect is about performance not about being “airy-fairy and touchy feely.”

Systems Thinking

Finally, systems-thinking is about prevention of problems and root cause analysis to prevent waste. It’s not about providing excuses. Providing employees with opportunities to collect their own performance data, analyze it, and make small experimental changes using a learning model of Plan-Do-Study-Act is admitting the system within which employees work is complex and requires problem solving skills to avoid waste. Trying to hold people accountable for specific mistakes only encourages the hiding of the truth and a perpetual continuation of the problems.

Acknowledging the complexity of the workplace is not providing excuses for employees who make mistakes. Instead it enrolls those employees to be managers of their own destiny and explore, like they did when they were 2 years old, how to solve their own problems.

It’s time we started trusting employees. It’s time now to start treating them with the utmost respect and allowing them autonomy to explore solutions to their complex performance issues. Threats and bribes have not worked and they never will over the long-term. If we continue to use them we will fall further behind in the race to accumulate knowledge and to therefore perform in the global competitive marketplace.