Thursday, November 29, 2012

How Committed Are Your Employees?

Companies make hiring decisions based primarily on qualifications and experience, but the biggest difference among employees is likely what they feel about their job and their employer. These differences can be measured in the varying levels of what's known as employee engagement.

According to studies on employee engagement, there are three types of employees:
  • Committed (or engaged). These are employees who feel an emotional connection to their job and employer. They believe in the company's goals and are committed to helping them succeed. They give discretionary effort beyond what is required. Only 25-30% of American workers meet this definition of committed.
  • Compliant. These are employees who don't have much enthusiasm for their job or who don't feel much commitment to their employer. They may be dependable in the sense that they do what they are told and may do it well, but they're unlikely to give any extra effort or take initiative beyond what is required. Compliant employees comprise 50-60% of the workforce.
  • Noncompliant. These employees are unhappy with their job or their employer and act out their dissatisfaction in ways that are detrimental to the company. Their noncompliance may be subtle, or even tolerated if the employee is talented, but it exacts a cost to the company's performance and workplace environment. Studies indicate that 10-15% of employees fall into this category.
So what proportions do you think are present in your firm? I would expect a higher percentage of committed employees in the typical A/E firm. But if you're a manager, it's likely that there are fewer of them than you think. In my years of conducting employee surveys and interviews, I've found that managers usually overestimate the degree of employee satisfaction in their firm.

There's more at stake than simply how satisfied your employees feel. The level of employee engagement directly impacts business performance. For example, companies with a larger proportion of committed employees are more profitable, grow faster, have higher quality, are more innovative, have more customer loyalty, and deliver better returns to their shareholders. Committed employees are 87% less likely to leave their firm, 62% less likely to get injured on the job, and even take 66% fewer sick days.

Considering its impact on business, employee engagement certainly merits your attention. Let me focus for a moment on one ramification—employee retention. I don't have data, but it's evident that employee movement between A/E firms has picked up in recent months. During the worst of the recession, there was little voluntary movement as firms weren't hiring. Layoffs touched the most sensitive aspect of employee satisfaction—job security. Management actions in response to the downturn further contributed to a 10% decline in employee satisfaction in this country.

As business improves, expect to see more employee movement. The harder the recession has hit your firm, the more likely you are to see voluntary departures. This may be the compelling reason to finally take actions to increase employee engagement.

So what factors drive greater employee engagement? The following are tops among the several studies I looked at:

Being part of a winning organization. Obviously, employees are more likely to be enthusiastic about a firm that's successful, or at least one they believe is doing the right things to become more successful. The more opportunity they have to contribute to efforts to help the firm succeed, the more likely they are to feel that connection. If your firm has multiple offices, keep in mind that employee perceptions of the firm are defined at the local level.

Feeling appreciated for one's contribution. In a Gallup survey, 65% of workers said they had received no recognition for doing their job well in the last year. In ZweigWhite's employee surveys for the A/E industry, 67% of employees said they received recognition for their performance—better, but hardly encouraging. This is clearly an area where improvement is needed. I've written previously in this space about the power of positive reinforcement.

Doing meaningful work. Employees like to feel their work has purpose and value. The research suggests that this is particularly important to Gen X and Gen Y workers. But I've had many conversations with fellow Boomers who, reflecting back over their careers, are looking for lasting takeaways from all the years they've invested in their careers. No doubt the work we do in this business is valuable, but we often fail to make a strong connection between our work and the human and societal benefits it delivers. If you want more committed employees, make that connection clear.

Working for competent, caring leaders. Gallup observes that people join good companies and leave bad bosses. In fact, their research indicates that the number one reason employees voluntarily leave their employers is a strained relationship with their boss. But there's more to this factor than that singular relationship. Employees want leaders they trust. They want leaders they can believe have the ability to guide the firm to a successful future. Competence alone won't do, however. Employees want leaders who also care about them as people, in part expressed by showing appreciation (see point above).

Having positive working relationships. Our work is inherently relational. Beyond the relationships employees have with bosses and leaders, their attitude about work is clearly shaped by how they get along with other colleagues—and with clients and other outside parties if their job involves working closely with them. There are many reasons why your firm should take steps to build effective working relationships at all levels; employee engagement is one of them. And don't forget to have some fun. It goes a long way in strengthening those key relationships.

Seeing a path for career growth. Employees, especially the younger ones, naturally want to know how to grow and advance in their job. Many A/E firms still haven't defined clear pathways for advancing up the ranks. What experience, what skills, and what training is needed for each job category? If you haven't clarified the answers, doing so is a valuable step toward increasing employee engagement.

It's also important to give special attention to those positions that seem to have less opportunity for advancement. I was once involved in an initiative to look into high turnover among administrative staff at the firm where I worked. We conducted a survey that revealed that many were concerned that there was no path for advancement. After taking several steps to expand career paths for our administrative staff, including promoting two to the position of branch manager, turnover decreased markedly and subsequent surveys indicated much greater job satisfaction.

Tuesday, November 20, 2012

Does Quality Really Distinguish Your Firm?

What differentiates your firm from your competitors? I've posed that question many times and the number one response is "our quality." Ask clients what traits distinguish the standout firms (as my former employer did in a survey years ago) and quality is undoubtedly at or near the top of the list. But when I've asked clients to rate individual firms in hundreds of client interviews over the years, quality has rarely been mentioned as a point of differentiation.

How can this be so? I suspect it relates to how A/E firms go about the process of "assuring" quality. The fact is that I've not encountered a firm that specifically sought to create differential quality. Despite common claims that "our quality sets us apart," quality management processes in our industry are predominantly designed to simply meet the norm.

Let me suggest four stages of quality improvement (borrowing in part from the Alexandria Marketing Research Group) as illustrated in the diagram below: 

Conformance quality involves meeting an internal standard of care, which typically means minimizing mistakes rather than delivering superior quality. The vast majority of A/E firms fall in this category (the percentages in the diagram are simply my guesses). Plus most firms rely on an outdated mode of quality control that centers on reviews at the end of the production process. That is both inefficient and expensive because the focus is on catching errors rather than preventing them.

At the next stage, firms seek feedback from clients on how their quality meets expectations. Since my informal polling suggests that less than one fourth of A/E firms formally solicit regular performance feedback, I would conclude that no more than a similar proportion reach this stage. Of course, firms get periodic client feedback on their quality. Unfortunately, that usually occurs when the client is dissatisfied—hardly a formula for creating differential quality.

At the third stage, companies benchmark their quality against their competitors. A/E firms do this intuitively; that's what defines the internal standard of care. But I've not heard of anyone doing this formally, and frankly I'm not sure how it would be done. Unlike other industries, we generally don't measure quality, so marketplace benchmarking would be very difficult to accomplish.

Which leads to my conclusion that differential quality—providing a competitive advantage—is exceedingly rare in our business. I'm sure there are a few exceptions out there, such as some of the nameplate architectural firms. But for the most part, quality as a differentiator is a popular myth, with one primary exception—if your quality is substandard, it will set you apart!

So does this mean there's little value in striving to deliver exceptional quality? Not at all. But you should recognize that delivering a quality difference that clients will notice is not as easy as most firms seem to think. If you want to be among those rare firms who truly are distinguished by their quality, here are some things to consider:

Simply minimizing mistakes does not lead to differential quality. If that's the extent of your firm's quality management process, you might reconsider those claims about delivering better quality than your competitors. "We make fewer errors than they do" is hardly the stuff of a compelling differentiation strategy.

Promote a culture of continuous improvement. I've worked with many firms trying to improve, but none that I'd say had embraced a full-blown commitment to continuous improvement. What's involved? An ongoing, relentless pursuit of finding better ways of doing the things that contribute to your firm's success.

Conduct root cause analysis for persistent problems. Clients will generally forgive occasional quality breakdowns, but they are understandably less tolerant of recurring mistakes. These deserve a formal root cause analysis as I described in a couple of previous posts (Part 1 and Part 2).

Focus on reinforcing quality behaviors. About two-thirds of corporate quality initiatives fail to significantly improve quality. A study by the Boston Consulting Group found that one of the primary causes is a failure to "inspire quality-creating behaviors." A/E firms routinely rely too much on quality management procedures rather than addressing the behaviors that lead to superior quality. By the way, most root causes of quality problems are behavioral in nature.

Regularly seek feedback from clients. Benchmarking against the industry might be a stretch, but you can certainly be talking to your clients about how you're doing in meeting their expectations of quality.

Create a more collaborative work process. Coordination errors between disciplines is reportedly the most common cause of quality problems in the A/E industry. In many multidisciplinary firms, the working relationship between different departments borders on dysfunctional. But the real opportunity here is not just fixing the problem; it's leveraging the advantages of different disciplinary perspectives in a truly collaborative process

Remember that quality doesn't differentiate; customer experiences do. It's hard to stand out on the basis of superior quality, but your work product quality is critically important to the best differentiation strategy—delivering distinctive customer experiences. You can have great quality and still have unhappy clients, but you can't have substandard quality and deliver an experience that sets you apart. Make satisfying the client the centerpiece of your quality management approach.

Monday, November 5, 2012

Still More Helpful White Papers

Consultants are expected to be founts of information and insight, a role I relish as a compulsive researcher. I use this blog to share some of what I learn along the way and hope that it helps others. In terms of sources, I particularly enjoy discovering free white papers and ebooks that delve a little deeper into the latest research or best practices in areas of interest to me and my clients. And periodically I point you to some of my favorites.

This time, in addition to a brief summary and link to each white paper or ebook, I'm passing along a favorite quote from each document:

"If salespeople aren't succeeding in a recession, it's because they're doing the wrong things. Increasing their activity levels so that they do even more of the wrong things isn't going to help."

Strategies for Hard Times. So true, and yet that's precisely what I'm seeing most A/E firms doing. Rather than rethinking their BD approach, they're stepping up activity in tactics that never were all that effective but delivered passable results in the midst of record industry growth. Perhaps this white paper will challenge you to consider what changes are necessary for the current times. Download  

"Excellence has never been achieved by benchmarking against a median. In order to rise to the top, firms benefit from examining leaders. How did they become top performers?"

— Clarity: Architecture and Engineering Industry Report. There is certainly value in benchmarking against the norm in your industry. But firms often merely settle for the median, which defines mediocrity. This annual industry survey from the folks at Deltek is a valuable read for anyone in the A/E profession. Download 

"Why are firms that generate a higher percentage of online leads more profitable? Our data does not provide a definitive answer, but one explanation is that over the long term, online marketing simply costs less than traditional marketing."

— Online Marketing for Professional Service Firms. As this excellent ebook from Hinge  demonstrates, firms that market online are generally more successful overall. Hinge's research also indicates that A/E firms trail other professional service sectors in the use of online marketing. What about your firm? This ebook is a must-have resource. Download

"The key to successful email marketing content is providing your readers with knowledge and insight and then teaching them how to apply whatever information you have to share."

— 7 Steps to Jump-Start Your Email Marketing Strategy. Marketing studies show that printed material is quickly losing favor to electronic delivery. I prefer email newsletters for two main reasons: (1) you can use other people's content via links, vastly expanding your available content, and (2) what you send is easily forwarded to others, expanding your reach. This ebook is one of many helpful ones by inbound marketing experts HubSpot. Download 

"In a recent study, Bain and Company asked 362 companies if they believed they offered superior value and a superior experience to their clients. While 80% of them believed they did, only 8% of these companies' customers agreed with them."

— Five Drivers of Revenue Growth for Professional Service Firms. Firms embroiled in just trying to return revenue growth to pre-recession levels may find it impossible to aspire for even better results. But the key to success still lies within the organization, not in the marketplace (for proof, check out Jim Collins' latest book Great by Choice). This ebook is another collaboration of consultants Schultz and Doerr, and can help you refine your strategy for financial growth. Download