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How leaders can build a culture of trust…and why they should

6/16/2015

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 “Google operates on the belief that people are fundamentally good.” –Laszlo Bock

I’ve been blogging recently about the evolution of talent management: where it has come from and where it needs to go. There are a number of important changes that define how talent management is evolving, but probably the most important change we are seeing is that organizations are getting better at trusting and empowering their employees to do the right thing. There’s still a long way for many organizations to go, but it’s extremely heartening to see some shining examples of companies that trust their employees and the monumentally positive impact that this has on employee engagement.

Google is one of these shining examples of a company that trusts and empowers its employees. In his book Work Rules!, Laszlo Bock, Google’s SVP of People of Operations, explains that “Google operates on the belief that people are fundamentally good,” and the leaders at Google trust and empower their employees to do the right thing. This sounds so simple, yet many companies seem to operate on the belief that people cannot be trusted to do the right thing, and all sorts of controls are needed to prevent bad behavior. When companies like Google have shown the clear benefits of trusting and empowering employees, why is it still so hard for most companies to do?

The benefits of trust and empowerment in the workplace

There is substantial research linking trust with improved employee engagement and organizational performance. One such study, Trust that Binds: The Impact of Collective Felt Trust on Organizational Performance, showed that employees who felt that their managers trusted them demonstrated better sales and customer service performance.

Similarly, it has been repeatedly shown that empowering employees – giving them the freedom to make decisions and get things done – has all kinds of benefits. Empowered employees are more productive, because they can quickly make decisions themselves instead of spending lots of time seeking approval from others. Empowered employees are more innovative, because they have the freedom to think outside of the box and come up with better ways to do things. And of course, empowered employees are happier: who doesn’t prefer having freedom in their work vs. being micromanaged?

But if the benefits of trusting and empowering your employees are so clear and obvious, why are there still so many organizations where it’s lacking?

Why is there such a lack of trust?

There are countless examples of organizations not trusting their employees. Company leaders not allowing employees to work from home because they don’t think employees will work hard when they can’t be physically seen (even though research shows the opposite). Company policies requiring manager approval for even the smallest business expenses. Managers asking employees for detailed daily progress updates so they can micromanage how employees spend their time. Small business owners not going on vacation because they don’t trust their employees to mind the store while they’re away. And so on, and so on.

Why does lack of trust seem to be the default for so many company leaders? Unfortunately, it seems to be human nature for many people to be distrustful, even when the facts are telling them it’s to their benefit to trust people. That irrational, emotional part of people makes it difficult to trust. Trusting people requires a certain degree of vulnerability, and this is difficult for a lot of people. After all, if I trust you to do the right thing, and you take advantage of that trust by harming me financially or otherwise, my natural reaction might be to stop trusting anyone, for fear of being hurt again. So, because of a few incidents of employees behaving badly, the result is often that no employees are trusted.

And because trust is a necessary prerequisite for empowerment, leaders who don’t trust their employees will give them as little empowerment as possible. They will resort to lots of rules, required approvals, excessive tracking and monitoring, etc. Employees, in turn, knowing their leaders don’t trust them, will likely feel resentful of that mistrust, unhappy at work, less productive, and more likely to behave in a way that is not in the best interests of the company (e.g. taking extra sick days). And so the lack of trust becomes a self-fulfilling prophecy.

What can companies do to break out of this vicious spiral of distrust?

How leaders can build a culture of trust

Companies with a lack of trust need to focus on changing the culture…from a culture of distrust to a culture of trust. Culture change is hard…it will take time…and it absolutely needs to come from the top. If a company wants to successfully build a culture of trust, company leaders must work on setting aside their predisposition to distrust people and demonstrating that they trust people through their words and actions. No easy task, to be sure. But luckily, companies like Google, Zappos, Southwest and 3M have successfully built a culture of trust, and others can learn from their examples.

Give people the benefit of the doubt. As Laszlo Bock puts it, “If you believe human beings are fundamentally good, act like it.” While many companies seem to operate under a “guilty until proven innocent” premise that trust must be earned, companies with a culture of trust take the opposite approach. They assume people are good and can be trusted, and they act accordingly. A culture of trust has to start with the leaders taking the view that people are fundamentally good, and demonstrating this mindset every day through their words and actions.

Occasionally, even good people do bad things, and when that happens, company leaders must address the bad behavior and let the employee know it won’t be tolerated. If the bad behavior continues or if it’s serious enough, the employee may need to be fired. You can’t maintain a culture of trust if people see that bad behavior is allowed to go unchecked.

Hire great people. It will be much easier for a company’s leaders to trust their employees when they have great employees. Of course, talent acquisition is an extensive and complicated topic of its own, but it bears mentioning because hiring great people is a fundamental part of having a culture of trust. The key is to hire people who not only have outstanding skills and experience, but most importantly, people who fit your culture. If your goal is to have a culture of trust, where leaders and employees act in a trusting manner, then it’s important to hire people who are naturally trusting of others.

Similarly, if you have existing employees who are inherently untrusting, and it’s clear they don’t fit well in a culture of trust, then the best course of action may be to let those people go. Keeping untrusting people employed will undermine even the best efforts to build a culture of trust.

Zappos is a company that is well known for its culture of trust, and that starts with hiring great people. Zappos has a unique hiring process that is very heavily focused on cultural fit. What makes it unique? Instead of responding to a job post (there are no job posts), candidates create an online profile and are encouraged to include a video cover letter to “show your true colors.” Then during the interviews, candidates are not only interviewed about their skills and experience, but they are asked several questions to determine whether they fit with Zappos’ core values. Zappos is known for asking off-the-wall interview questions to assess cultural fit, such as “If you could be a super hero, what would you be and why?”

Be transparent. A key part of trusting employees is sharing information with them. A company can demonstrate trust in its employees by sharing sensitive company information with them and keeping them in the loop on important company decisions. Of course, some information can’t be widely shared for legal, ethical or other reasons, but company leaders should continually challenge themselves to share as much information with employees as possible.

Google, for example, shares the results of their employee surveys with all employees. And they don’t just share a high level summary; they allow employees to filter on any view of the employee survey data they want. Google employees – or Googlers, as they are called – not only get a clear view of the employee survey results, but they clearly see how the company leaders are acting on those results. Contrast this with many other companies, where the norm is to guard employee survey data like Fort Knox, and employees rarely if ever see any post-survey communications telling them how their input is being used to drive change. It’s clear to see that by being as transparent as possible and letting employees know they have a real voice in the company, Google is building a whole lot of trust.

Empower your employees to do the right thing…then get out of the way. One of the clearest and best ways to demonstrate trust in your employees is to empower them…give them the freedom to work how/when/where they want, freedom to make important decisions, freedom to try new ideas, even freedom to make mistakes. As long as employees demonstrate strong performance and deliver outstanding results, it shouldn’t matter if they leave early every Monday for a yoga class. It shouldn’t matter if they choose to allocate some of their time to working on a side project. It shouldn’t matter if they want to work remotely. What’s critically important is that employees understand they are accountable for results. As long as they deliver those results, it’s up to them how they want to manage their work.

Southwest Airlines is a great example of a company that empowers its employees to do the right thing for the customer. It’s not just about flight attendants singing and telling jokes during flights. Pilots, flight attendants, gate agents, telephone service representatives...all employees have the authority to make decisions about how to best serve the customer. Endless examples of empowered employees abound, such as the time a flight attendant gave a passenger a bottle of champagne and let him use the intercom so he could propose to his girlfriend during the flight.

3M empowers its employees through its 15 Percent Time Program, where employees are allowed to spend up to 15% of their working time on their own projects. 3M also encourages its employees to take risks by allowing them to make mistakes. In the words of former 3M President William McKnight, “Management that is destructively critical when mistakes are made kills initiative. And it’s essential that we have many people with initiative if we are to continue to grow.” Empowering employees to take risks by allowing them to fail is one of the fundamental drivers of innovation. It’s no coincidence that risk-averse companies that punish employees for failure are generally some of the least innovative companies.

So many companies expend enormous amounts of effort to control employees and limit their freedoms, supposedly in an effort to suppress bad behavior. Back in the days of the Industrial Revolution, where most people worked on a manufacturing line, control-heavy micromanagement may have served companies well. But those days are gone, and in today’s innovation- and service-driven economy, a culture of distrust is extremely harmful. Not only can controls backfire by incenting employees to behave badly in some cases, but implementing organizational controls is very costly. There are the financial costs of the labor and technology for extensive tracking and monitoring. There are the lost productivity costs of reviews and approvals. And worst of all, there are the decreased employee engagement costs of working in a culture of distrust. If only companies would take steps to replace many of these controls with a culture of trust, work would be simpler, faster, less expensive, more meaningful and more fun!

Photo credit: Pixabay
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Integrating talent management across the organization

6/8/2015

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“Talent is the No. 1 priority for a CEO. You think it's about vision and strategy, but you have to get the right people first.” –Andrea Jung

In my last article, the evolution of talent management: where it has come from and where it needs to go, I talked about several ways in which talent management is changing and evolving. One of the most critical aspects of this evolution is that talent management is becoming more integrated.

What does it mean for an organization to have integrated talent management? There are multiple ways to define integration, but in my point of view, an organization with truly integrated talent management has these three characteristics:
  1. Talent management is not the exclusive domain of HR but involves the CEO and leaders from across the organization.
  2. The CHRO has the business acumen to be a strategic partner and is held accountable for driving results
  3. Talent strategy is well aligned with business strategy, and talent management programs support strategic priorities and deliver business value.

1. Ensure that talent management is the shared responsibility of leaders across the organization

The most important aspect of integrated talent management is that it cannot be the exclusive domain of HR. Yes, HR should be involved in strategic decision-making, and yes, HR leaders should drive and facilitate many of the talent-related conversations with other business leaders. But for talent management to be successful, it needs to be treated as the shared responsibility of leaders across the organization.

Talent is critical to every single part of the organization – for more and more companies, their people are their biggest competitive differentiator – often the delta between success and failure. So it’s baffling that for so long, in so many organizations, talent management was treated as an HR-only responsibility. Most companies these days are getting the message that talent management is a critical issue that affects the entire organization, as evidenced by recent studies showing that talent is now the number one concern of CEOs.

It goes without saying that the CHRO should be accountable for leading the talent management charge: facilitating discussions with other leaders to define the talent strategy, executing talent management processes and programs, and reaching out to involve executives and managers from across the business in talent management activities as appropriate. But a CHRO doesn’t have formal authority over these executives and managers; the CHRO can only influence them. To really ensure active participation in talent management across the organization, the message needs to come loudly and clearly from the CEO. The CEO needs to communicate that successful talent management is everyone’s responsibility, and all departments will be held accountable for the success of their people. According to the McKinsey book The War for Talent, establishing a talent mindset across the organization is the single most important factor in winning the war for talent, and it absolutely must be driven by the CEO.

2. Ensure that the CHRO has the business acumen and accountability to be a strategic partner

One of the primary root causes of siloed, non-strategic talent management is that HR has not acted as a strategic partner with other business leaders. As described in the 2005 Fast Company article, Why We Hate HR, not only does HR not have a seat at the table, but “the table is locked inside a conference room to which they have no key.” Unfortunately, not a lot has changed in the last decade in terms of HR’s lack of C-level strategic participation. Why is HR so rarely included as a strategic business partner?

Well, to be blunt, many HR leaders have not acted very strategically. HR got a reputation for being focused on policy enforcement, administration and risk minimization, because that’s how many HR professionals behaved. Unfortunately, the “human” part of HR often got lost.

HR expertise alone does not make a great HR leader. HR leaders need to be able to think strategically, and they need to have a deep understanding of the business and its strategic priorities. They need to be able to speak the language of the other business leaders in the organization, and they need to be very good at exerting influence. They need to be analytic thinkers, problem solvers, and change leaders. Not surprisingly, some of the best HR leaders have held leadership roles in other parts of the business as well as in HR.

One notable example of a successful CHRO is Tim Huval, CHRO at Humana. Prior to Humana, Huval held a number of leadership roles at Bank of America, both in HR and in other parts of the organization. He was the first C-level hire made by the incoming CEO Bruce Broussard, and in the time he’s been there, Huval has been leading a major people and culture transformation as Humana shifts its business model from a traditional insurance company to a technology company that focuses on improving its members’ well-being. Throughout the transformation, employee turnover has remained low and employee engagement scores have remained high. According to a recent Forbes article ranking Huval #1 on its list of top CHROs, “Huval refuses to take credit for any of the many successes Humana has achieved over the last two years, quickly giving the credit to his colleagues and teammates. But those who know him will quickly point to the critical nature of his role in Humana’s transformation into the enterprise Broussard envisioned.”

Another key issue is that HR leaders have rarely been held accountable for delivering results. Because the business impact of HR programs can be difficult to measure, and because HR has indirect influence rather that direct responsibility for many aspects of talent management, they are rarely held accountable for delivering business value. In other words, many HR leaders have no skin in the game.

This needs to change. HR needs to be held accountable for driving results, and that can only happen if those results are measured (hence, another key attribute of the talent management evolution is that talent management needs to become more data-driven). And this doesn’t mean just process metrics (e.g. “over 80% of our employees have completed the training”), but more importantly, impact metrics and strategic insight (e.g. “over 80% of our employees have completed the training but quality defects have only decreased 1%; let's take another look at the root cause of those defects and see how we can beef up the training...”). Measuring business impact may not be easy, but it’s what matters. HR should be expected to quantitatively demonstrate the business impact that talent management has had on business results.

3. Ensure that talent strategy aligns with business strategy, and talent management programs support strategic priorities and deliver business value

Many organizations have traditionally taken a very transactional approach to talent management. In other words, talent management has often been focused primarily on processes and activities. For example, HR departments would focus on ensuring there is a process for recruiting, another process for performance management, for promotions, etc., and that all of these processes were working efficiently. Not that efficient and effective processes aren’t important, but they shouldn’t be a starting point. Talent management needs to start with understanding the business strategy, which then informs the talent strategy, which then translates into processes and activities to support the strategy.

Start by defining the strategic goals and priorities of the organization, and build the roadmap for how to get there. This will help determine numerous strategic talent decisions, such as:
  • How will the size of our workforce need to change? How quickly?
  • What skills will we need? Can existing employees be retrained? Do we need to hire new employees with these skills?
  • What types of leaders do we need in the next 3, 5, 10+ years? Do we have enough high potential leadership candidates internally? Do we need to look outside for leadership candidates?
  • How will strategic changes affect our employees? What do we need to do to optimize employee engagement as we implement changes?
  • How is our culture helping us get there? Is it helping us more where it’s stronger/less where it’s weaker? How? Why? What can we do about that? Who's going to be best at helping us do it?
  • What are the most important talent-related priorities? How should we prioritize effort and investment in talent management programs?

Once these strategic talent decisions are made, then it’s time to get tactical and work out what talent-related processes, programs and activities are needed to support the talent strategy. By starting with business strategy, it becomes much clearer what talent management actions are needed to support strategic priorities and deliver business value.

An example of integrated talent management

So…what does truly integrated talent management look like in practice? Great examples are still relatively hard to find, but there are a few, and General Electric (GE) is one of them. GE has been recognized as a talent management leader since the 1990s, going back to when Jack Welch put Bill Conaty into the CHRO role because of Conaty’s demonstrated performance across a number of organizational roles and his strong business acumen. Conaty was known as being an influential strategic advisor to Welch, which was even rarer among CHROs in those days.

Jack Welch saw talent as a top priority and was instrumental in driving a talent mindset across the organization. He made it unequivocally clear that talent management was the responsibility of every single leader in the organization, and they would be held accountable. He also saw developing talent as his main job: “I was a gardener providing water and other nourishment to our top 750 people. Of course, I had to pull out some weeds, too.”

Even though Welch and Conaty have both retired from GE, their legacy lives on, and GE continues to be recognized as a talent management leader. Talent management is seen as a key responsibility of all of GE’s leaders, and talent management programs are very closely aligned to business strategy. According to Jeff Immelt, GE’s current CEO, their talent management system is the most powerful tool they have to implement corporate strategy, through attracting, recruiting, developing and deploying the right people.


Here are a few examples of how GE is demonstrating integrated talent management across the organization:
  • Jeff Immelt and most of GE’s leaders spend at least 30% of their time on people-related issues.
  • Every manager at GE is responsible for the leadership development of his or her team, and they are expected to put a significant amount of effort into the leadership development processes.
  • GE identified a strategic goal of increasing the focus on technological and innovation. In response, technology skills were added as a key development requirement as part of Session C, GE’s leadership review process.
  • 21 Millennial employees were selected from across the organization for a special three-month assignment, to make recommendations to Jeff Immelt on how GE can better retain and inspire Millennials. GE implemented several of the recommendations made by the task force.

Photo credit: Pixabay
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    Jackie Bassett is a Director of People Strategy for UChicago Medicine, who is passionate about people...and helping organizations thrive by putting people first.

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