Recently, we had the opportunity to sit down with Andrew Sherman, author of The Crisis of Disengagement and a partner at Seyfarth Shaw in Washington DC, where he spends a lot of his time working with innovation and human capital management (HCM) issues. In his world of corporate transactions, private equity, and venture capital, he found that more questions were being asked not just about human capital compliance but human capital strategy. Investors wanted to know about engagement levels and culture. Culture as a matter of corporate governance, he found, is being embraced from many sides. The human resource function has been elevated, so Andrew has embarked on a journey to help HR professionals stay current, stay educated, and stay competitive.
I think we're at an interesting intersection in history. People want to matter. People want to be relevant. People want to feel like their job is important, and that they're doing some work of meaning. At the same time, with the advent of machine learning (ML), artificial intelligence (AI), automation, and the Internet of Things (IoT), they're feeling―well―threatened. They are asking, “Does my work matter?” There is also frustration with economic declines and cycles that are going on. Many Baby Boomers are not ready to retire, therefore, not ready to delegate. Many in the millennial generation want to be empowered and want to do more, but they can’t. Or they feel like they can’t.
The workers of today want a balance between quantitative reward and qualitative reward. Study after study shows that yes, money is important. We need it to pay our bills, we need it to put our acorns away for retirement, but multiple studies show that it's ranked fifth and sixth and seventh when it comes to workers’ priorities. Workers want to identify with the core values of the company. They want to feel aligned; they want to feel like the company is a good corporate citizen and has a strong set of values. They want genuine respect and recognition.
When you go home at the end of the day, and I call it the “honey, how was your day?” rule, you want to have something exciting to talk about, not just show a paycheck. How people feel about themselves, how they feel about their leaders, how they feel about their peers, their access to the right technologies in the workplace, a sense of empowerment, an ability to innovate, all of those things seem to add up even higher than the paycheck in terms of today's employees’ priorities. I do think as the workplace evolves, this is going to become even more important than it ever was before.
That is a fantastic question. How big and how wide and how deep is the crisis of disengagement? According to Gallup's Study of the American Workplace poll, it's pretty wide; it’s pretty deep; it's cross-generational; it's multi-cultural; it's multi-ethnic. It's not specific to certain industries. People say, “Oh well, it's just the retail worker that's disengaged, not the tech worker.” That is not true. The Gallup results were cross-industry and global.
It turns out that as disengaged as the U.S. workforce is, and I don't know if this is good news, workers in many other countries are even less disengaged. In the U.K., almost 60 percent of government workers describe themselves as disengaged. In Japan, the disengagement rate runs as high as 90 percent. Compare this to the U.S., where we have four percent who describe themselves as highly engaged, 25 percent who describe themselves as just engaged, 51 percent as disengaged―a scary number. But the scariest of the numbers is the 20 percent (one-fifth of our workforce) who describe themselves as highly disengaged.
Those are the saboteurs sitting inside companies, and you know, for small-to-medium businesses (SMBs), the impact of that number is even higher. If you have 10,000 workers, you can get away with 2,000 people who hate their job, but if you've got 20 people working for the company, you really can't. The impact's going to be felt, and it's going to be hard, and it's going to impact profitability and productivity.
Certainly, when compared to a non-charismatic leader, the needle will move a little bit, but it’s much deeper and much wider than that. Coming in and being excited, showing that you're excited, having a set of shared values, and a certain passion about the work will trickle down some to the workers.
However, it is really a bottom-up process. People have to feel a connection to their work; they have to feel a sense of meaning, and all the cheerleading in the world by a charismatic leader won't help if the compensation reward systems, the technology, the flexible workstyle, and the actual workspace isn’t in line as well.
I think that one of the common mistakes in leadership is to think “if I'm very excited and charismatic, that that will be contagious.” It's not necessarily contagious, and it's got to be these days. But more than ever, it has to be authentic. It's got to be from the heart. It's got to be real.
Technology can boost engagement levels, and it certainly has facilitated a more flexible workstyles, telecommuting, virtual work, the gig economy. We couldn't have those things without technology giving people the ability to access their workplace without physically being there. Traffic's getting worse and worse across the country. People want to work in different spaces, and sometimes they're more productive and more creative and more innovative in different venues in different spaces.
But technology is also creating a lot of fear. Fear of replacement. People wonder when the “age of the machine” overtake the “age of man?” Artificial intelligence, robotics, automation. Many people worry about their jobs. The better, more progressive companies are taking affirmative steps. AT&T recently announced that they are investing over a billion dollars in retraining, training, and development. People will remain relevant, but only if their employers invest in them.
But back to the issue of compensation for a second, which would you rather have? A 2,000 dollar Christmas bonus? It sounds nice at first, but it is very short-term. It will probably be spent very quickly. How about 2,000 dollars invested in executive education, that's going to keep you relevant for the next 10 years. That (in a nutshell) is the trade-off that leaders need to focus on. And, yes, it is true that there are not unlimited pools of capital, what is available needs to be invested in keeping people relevant. Otherwise, all you are left with is the fear that is affecting disengagement and irrelevance.
SMBs need to use digital technology to facilitate communication, collaboration, cooperation, not only within the four walls of their companies (in terms of increasing collaboration, coordination, and communication) but also with their partners―companies in their supply chain, companies in their distribution channel, even companies in their sales channels. SMBs need to be more linked and interconnected. Small companies can be at an information disadvantage relative to larger companies, but they can use technology to level the playing field, giving them access to the same kinds of information, customer data, big data, data mining tools. But this can only be done if they deploy the technology and really embrace the technology. I've seen too many companies spend lots and lots of money on software that nobody uses, nobody understands, and by the time somebody figures it out, it's time for the next version of the software and another cost of capital.
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