Archive for the ‘Company Culture’ Category
Wednesday, November 10th, 2010
CAN BUSINESS BE ENLIGHTENED?
[Originally posted Nov. 8, 2010 on the Huffington Post]
A half-century ago, few would have suggested that the world’s companies might have a bigger impact on the planet than would the various governments of the world. But, today, there’s no doubt that business — for better or often worse — impacts our lives in more and more profound ways, whether it’s how we communicate with each other in the digital age, whether we are surrounded by pollution, or how we look for global solutions to an ever more connected world. Consciousness and commerce need to feel less and less like an oxymoron.
Recently, I had the good fortune of leading a five-day global teleconference with nearly 14,000 registered listeners from more than 100 countries as 40 different worldwide business leaders and academics talked about how an enlightened business community can make a difference in the world. If you’re interested in learning more, all of the audio is free if you register here. This blog is meant to be a guide to the four key themes that arose from the varied speakers: Great companies have great purposes; Be conscious about your culture; Harvest leaders; and Think bigger than your company.
Someone once said, “our purpose in life is a life of purpose,” and this applies to companies also. One of our esteemed speakers said that the best companies think of themselves as “purpose maximizers” rather than “profit maximizers,” as with a noble and magnetic purpose you are more likely to create sustainable profits. Another suggested some great legacy companies like Hewlett-Packard became truly transformative when they moved from a place of thinking of how they can be the best in the world to being the best for the world. All of this brought me back to Peter Drucker‘s profound management question, “What business are you in?” That’s a question that every leader should ask their people. The first time you answer it, your answer will be obvious, but by the fifth time you repeat the question, it is likely that you will have uncovered your purpose or corporate essence and this is far more important than coming up with a catchy marketing slogan (which is how most companies try to prove to themselves and the world that they have a purpose).
Secondly, a common theme that many speakers suggested was that corporate culture is an essential part of company vitality. Zappos CEO Tony Hsieh surmised that a company’s culture is its brand in today’s more transparent world. And Monika Broecker, who founded the School of Personal Growth at Google, suggested that the best companies know that corporate training is just a disguise for personal development. An enlightened business recognizes that their internal eco-system is like a pond. Stagnant ponds smell and it’s hard for anything to live there. Healthy ponds have a flow of new water coming in and they create an environment where things grow. Ponds are also an apt metaphor for the ripples that are created when a stone is thrown. The most prevalent and contagious ripple in most companies today is the emotion of fear, yet a healthy culture dispels fear. So, if you want to inoculate your company against the debilitating effects of fear, invest in your culture.
Thirdly, everyone agreed that the leaders we breed today are different than the command and control generals of the past. We’re looking for conductors today who are more adept at the nuances of bringing out the best in an orchestra. If the most neglected fact in business is that we’re all human, it’s not surprising that emotional intelligence was outlined as the most important quality of leadership today. The ability to empathize and understand the other is progressively more important in this small world we live in. Authenticity, transparency, and humility were also qualities that emerging as more important for leadership in this century than the last. Anne Mulcahy‘s rein as CEO of Xerox, which she took over when it was very troubled, and her succession planning to help make Ursula Burns the new CEO a few years later shows the importance of healthy and effective leadership when a leader realizes their most essential task is to create the next round of leaders in their organization.
Finally, Richard Barrett suggested that companies are starting to realize that “a business is a wholly owned subsidiary of society, and society is a wholly owned subsidiary of the environment.” Social responsibility needs to be intrinsic within the mission of a truly conscious business and reflected in everything it does, rather than just grafted on for marketing purposes (which sometimes can be the case with Corporate Social Responsibility programs). Companies and leaders are role models — not just with the business community — but in the broader world. And, when any of us thinks of ourselves as a role model — whether that’s as a parent being observed by their kids or a leader under the microscope of their followers — it creates a natural stepping up of how we carry ourselves and what we expect from ourselves. If individual business leaders are willing to approach their work with this level of consciousness, we may actually experience a more enlightened business community with great collateral benefits to the world.
PEAK CONTEST WINNER
Tuesday, November 9th, 2010ANNOUNCING PEAK CONTEST WINNER
CONGRATULATIONS BELINDA!!
Belinda Ricketts from Dibert Valve & Fitting Company is the WINNER of the PEAK Contest. As her prize, she chose to consult with PEAK Master Facilitator, Sue Funkhouser, about ways in which to further activate PEAK in their organization.
Below was her submission. After talking with her, the extent to which her company has embraced PEAK inside their small organization is quite impressive.
Being “Peak’d” is all about recognizing someone’s intangible value to company and the people around them. Sam Dibert, the owner of the company was the first person to be “Peak’d” with the banner and personalized gifts. For example, Sam is an avid outdoorsman, received fishing lures, hunting items and several bags of his favorite candy, black licorice.
“Peak’d” is a take-off on Punk’d . According to Wikipedia, Punk’d is an American hidden camera practical joke television series that first aired on MTV in 2003. Being “punk’d” referred to being the victim of such a prank.
The Company’s Journey to the PEAK:
1. The company spent two days (different employees each day) immersing themselves in PEAK principles.
2. The company recently started distributing a newsletter entitled Peak Times . The header showcases both the associate and customer pyramid. Additionally, each newsletter highlights a customer who has moved up the pyramid.
3. Belinda puts a monthly PEAK question on the office staff time sheets. For example, “What is the top level of the employee pyramid?” Correctly answered timesheets go into a drawing. One winner is drawn each month and receives a gift bag which includes goodies from their personal favorites list.
A little bit about Belinda:
Belinda is truly a PEAK Evangelist. She believes that people want to do their best and it’s her job to help them do that while recognizing their efforts. She said, “I love shopping for personal favorites that I can give out as rewards for our monthly PEAK contest or our “PEAK’d”.
A little bit about the company:
Dibert Valve & Fitting Inc. has been an authorized supplier of Swagelok® products to Virginia’s industry since 1956. Their business objectives are to provide consistent unmatched product performance with product readily available to industry. They have 22 employees spread in their Richmond and Norfolk offices.
Living Downwind from the Flower Shop
Wednesday, August 25th, 2010[Originally posted August 24, 2010 on the Huffington Post]
One of the great mysteries in life is why some of us prefer to be swamp-dwellers. Not literally. I’m not dissing those living in the low country of the Gulf States or, frankly, anyone stuck in less than pristine living conditions. No, what I’m talking about is why some of us choose to be prisoners of our own minds. My grandmother used to tell me, “Some days, you need an escort to take you through that dangerous neighborhood that is your mind.”
Ask a thoughtful swamp-dweller why they perennially veer toward the negative and they may tell you that low expectations translate into less disappointment in their lives. In fact, philosopher William James once wrote that self-esteem could be distilled down to an equation: success in life divided by expectations. Recent studies have shown that Asian-American students coming from families with high academic expectations of them tend to have lower self-esteem even when they score very well on their exams, so maybe there’s some truth to this. But, low expectations can also translate into less success when one’s spirit and motivation is poisoned by a lack of hope, meaning, or possibility in one’s life.
In the context of business, we’re all aware that some corporate cultures create a momentum of victory while others create a constant feeling of failure. Given that my company often takes over the management of hotels that are in a downward spiral, I know the signs of a troubled culture: passive aggressive communication, lots of finger pointing, and universally low expectations. Yet, there are many companies that have risen from their swamp whether it’s Continental Airlines with a newcomer CEO Gordon Bethune in the 90′s or Apple with returning CEO Steve Jobs at around that same time. In both cases, these execs first had to help all in the organization believe in themselves again and identify a few initial victories that they could point to in order to start building that momentum of victory.
My son has just been released from prison after a Federal Judge found that his constitutional rights had been violated (due to mistaken jury instructions). While he was initially ecstatic about being out after being wrongly accused for four and a half years, he started to gravitate back to familiar territory: Will the County District Attorney choose to appeal the Judge’s ruling? Of course, this has enormous implications for his life, but it’s also something he has little influence over and, for the time being, there’s so much life to catch up on and to celebrate that obsessing on the D.A.’s actions can become a no-win game. One of the responsibilities of friends and family is to escort each other through the dark alleys of our minds when there are sunny, open spaces just around the corner.
I’ve been fortunate enough to spend the past few days in Montana with Mihaly Csikszentmihalyi (and his wife Isabella), the author of Flow and many other books on how to live an optimal life. One of the basic premises of Flow is that life is at its best when we’re expertly navigating between challenge and skill. Think of a graph with two axes: with challenge on the vertical axis and skill on the horizontal axis. Flow occurs as we move diagonally away from the intersection of these two axes toward the upper right hand corner. But, most of us spend our lives toggling between boredom (low challenge, high skill) and anxiety (high challenge, low skill) living a life that feels too full of inertia or exertion.
Mihaly says someone in Flow
…concentrates their attention on a limited stimulus field, forgets personal problems, loses their sense of time and of themselves, feels competent and in control, and has a sense of harmony with their surroundings…they cease to worry about whether the activity will be productive or whether it will be rewarded…they have entered a state of flow.
This is true of individuals inside and outside of work as well as companies that pursue an organizational predilection toward Flow.
Manifesting a good life by just thinking positive thoughts is not enough. There’s no doubt that healthy psycho-hygiene creates a greater likelihood of living a life in flow with the world. But, I prefer to think of this as more like planting yourself “downwind from the flower shop.” Your willingness to build your skills and to accept challenges — emotionally, professionally, intellectually, athletically, spiritually — is your means of placing your destiny at a fortuitous intersection where good things come wafting your way. To understand how to find that flow in your life, read Mihaly’s book of the same name or Finding Flow or Good Business (to understand the context for work) or The Evolving Self (how Flow can make a difference to society).
Your Culture Is Your Brand
Friday, May 7th, 2010[Originally posted May 5, 2010 on the Huffington Post]
Is it possible that your head of HR may also be your head brand strategist? That’s hard for most companies to imagine. But, in the transparent “word-of-mouse” business world that exists today, your company culture and how it influences employee and customer engagement is the ultimate secret sauce that defines whether you’re a Zappos or a zippo.
I had the great fortune of visiting Zappos’ headquarters in the Las Vegas area a week ago. How many companies have customers who choose to throw their wedding inside their favorite company’s offices? I saw it – complete with an Elvis impersonator and a real live minister – while strolling through Zappos’ lively and colorful cubicles last Monday morning. Zappos’ CEO Tony Hsieh chose to close down the offices that afternoon so that all 800 employees could come together to hear about Zappos big revenue progress and experience me giving a talk about the importance of addressing employees’ and customers’ higher needs as chronicled in my book PEAK. And, the day culminated with 52 different employee groups brainstorming about new ways to “wow” their customers and then a two-hour raging happy hour that was as wild as anything I’ve seen since my fraternity party days.
Frankly, the whole experience felt like a religious revival given the enthusiasm and sheer company faith I saw in the diverse employee pool. For me, it was like traveling to Mecca as I don’t think I’ve ever seen a company so committed to living the “service profit chain” theory that came out of Harvard Business School a quarter century ago (which I document in PEAK): a unique culture creates happy employees which drives customer loyalty which leads to a profitable and sustainable business. There are many service industry companies that do this well – Southwest Airlines, In ‘n Out Burger, Nordstrom’s, Apple retail stores – but none does it better than Zappos. Tony Hsieh believes that in the noisy world of advertising, what cuts through the clutter is creating peak experiences for his employees and customers such that Zappos becomes a magnet for mojo. Zappos is also a money magnet as the company sold to Amazon for nearly $1.2 billion in stock last fall, primarily because Jeff Bezos marveled at the culture of this skyrocketing online shoe and clothing retailer.
What are some of my lasting impressions of Zappos beyond the wacky wedding and the Elvis impersonator?
(1) Zappos hires for attitude and trains for skill. First off, they do a four-week intensive training with all new employees that helps them understand the company’s 10 core values. You may have heard of the contrarian approach Zappos takes to weed out those that aren’t a great fit during training. At the end of the first week of training (during which employees are paid their full salary), they offer all new hires $2,000 to quit right then or at any time during the remaining three weeks of training. Zappos wants to make sure that their new employees aren’t there purely for the paycheck, but that they want to live and breathe the culture. They’ve found that less than 1% of their new hires take them up on this offer.
(2) Culture is a fundamental part of how employees are evaluated and grown within the organization. 50% of an employee’s performance review comes back to how they’re living the culture, so relationships are just as important as results for rising superstars in this company.
(3) Their call center is seen not as a departmental cost that needs to be starved in order to maximize the bottom line, but instead it’s an opportunity to create another brand touch point through a PEC (personal emotional connection). Only 5% of customers actually connect with Zappos’ phone call center, but the company’s well-deserved great reputation certainly has been solidified by the kind of customer service that is delivered by this engaged phone team.
(4) How many companies offer their customers tours of their headquarters? Not many. Even more impressive is the fact that you are picked up at the airport by an engaged Zapponista who transports you to their offices for free answering all kinds of questions along the way, takes you throughout the facility along with dozens of other Zappos evangelists, and then gives you a series of complimentary business books to choose from in their lobby library (including, happy to say, my book PEAK) to take with you.
Tony Hsieh’s new book, Delivering Happiness, comes out in early June. Keep an eye out for it because there’s no better example of how an engaged company culture creates a brand reputation that can lead to a billion dollar business.
The Culture Club
Thursday, May 29th, 2008Sometimes, I think there’s a secret society of companies that just “get it.” From top to bottom, these companies live and breathe their culture and know that it’s their most valuable asset, and, strangely, one that is invisible on a corporate balance sheet. Which companies are part of this secret society? Google, Genentech, Harley Davidson, Continental Airlines, Whole Foods Market, Medtronic. But, the company that sets the standard is Southwest Airlines. Thirty-five of our top JDV execs did a three-day off-site retreat twelve years ago exclusively focused on what makes Southwest Airlines the champion of the flying business. Of course, they have the odds stacked against them in that industry and this company is the low-price, second most unionized airline so who would expect them to be the most profitable, most admired, highest customer loyalty company in the biz. From that off-site sprouted our Joie de Vivre heart which has been a foundational piece of our business strategy ever since as all 3,000 of our employees gets educated in how culture drives employee enthusiasm which fuels customer loyalty which drives profits which can then be invested back into the culture. It’s a virtuous circle.
Last week, the New York Times printed a fabulous story juxtaposing Southwest and American Airlines. Both are based in Dallas. Both have their annual shareholder meetings on the same day every year. If you want to understand the importance of culture, read this article as it demonstrates that a vibrant culture leads to applauding investors at the Southwest shareholders meeting – even during a very difficult time for the airline industry. Quite the opposite at the American meeting.
NY TIMES story
I will sign off by just taking my hat off to two giants of industry. Southwest co-founder and former CEO Herb Kelleher is stepping down as chairman after 37 years. Shareholders at the annual meeting “gave him the kind of standing ovation usually reserved for rock stars.” His “Herbisms” (great quotes like “the customer comes second”) taught me more than any Stanford Business School class I ever took. And, I also want to express deep appreciation to Warren Buffett whose company, Berkshire-Hathaway, had their annual “Woodstock for capitalists” this month. This company’s annual shareholder meeting attracts 30,000 of Berkshire’s faithful and it’s almost like a church revival event. In the era when corporate CEO’s are “over-handled” by their PR departments, I truly admire the fact that Warren gets up on stage in the big arena and answers questions and extols wisdoms for five hours to the tens of thousands of Berkshire shareholders. And, he does so with humanity and a sense of humor. I am the Finance Chair of the venerable, inner city Glide Memorial Church Board and have to tell you that each year the Church auctions off a “Private Lunch with Warren” to the world on eBay. Warren has donated himself for this cause because he’s such a believer in African-American Minister Cecil Williams’ brand of liberation theology and the impact it has on San Francisco’s inner city. What’s truly remarkable is that people will bid as much as a half-million dollars to have a private lunch with friends with Warren sitting at the head of the table. Thanks to both Warren Buffett and Herb Kelleher for reminding us that there’s a culture-driven brand of capitalism that is more powerful and sustainable than the transaction, dog-eat-dog brand of capitalism that we tend to read about in the popular press.
Transformation isn’t Always Pretty
Tuesday, February 26th, 2008For those of you who’ve read PEAK, you’re familiar with the Transformation Pyramid, which slims down Maslow’s five level Hierarchy of Needs into an adaptable form with just three levels: SURVIVAL at the bottom, SUCCESS in the middle, and TRANSFORMATION at the top.
This Transformation Pyramid represents universal themes that are applicable to any organization’s relationships with their employees, customers, and investors. For example, the Sierra Club can attract meaning-seeking employees by focusing on the “transformational” peak of the employee pyramid, but if they don’t compensate these employees enough to pay their rent at home (their “survival” needs), they haven’t created a sustainable relationship.
On the other hand, most for-profit companies mistakenly think that the compensation package at the base of the employee pyramid is what creates loyalty and differentiation as an employer. They are wrong. Peak performing companies have much higher employee engagement and much lower turnover by helping their employees move their focus from money (what defines a “job”) to recognition (what defines a “career”) to meaning (what defines a “calling”).
The Transformation Pyramid is relevant to customers and investors, too, and it can be applicable to everything from how you approach your expectations of your family vacation to how you view the Presidential candidate choices. No doubt, Barack Obama is a transformational candidate (I’m a big fan), but Hillary Clinton has clearly suggested that his intangible, self-actualizing appeal is distracting from his potential lack of “in the trenches getting it done” management capabilities. In many ways, Americans see the choice of Barack as a peak-minded leader versus Hillary as the foundational, base of the pyramid manager. When we have the choice between inspiration versus perspiration, most of us will choose the former (unless we’re living in a time that’s full of fear…a bottom of the pyramid time).
Clearly I’m a transformation nut. But, let me say that transformation doesn’t come easily. I’ve been reminded of that in my own company this past year. Joie de Vivre Hotels is growing faster than it ever has. We will be launching or re-launching (after renovation) something like 14 unique boutique hotels over the next 16 months plus approximately a dozen restaurants. That’s quite an endeavor and about triple the growth path we’ve typically had in past years. During this time, many of us in the company have noticed that we are a little more stressed and, at times, overwhelmed with the variety of choices and decisions we need to make. We’ve all felt it. Our work climate surveys suggest it’s noticeable, especially with our 80 employees in our home office (fortunately, our on-property staff scores continue to be exceptionally high).
It was in preparation for a recent leadership class to our General Managers and Operations Managers that I came to realize we were “in the goo.” We are all familiar with the miraculous transformation of a caterpillar into a butterfly. That’s exactly where we are today. Here’s a passage from an online site that describes this transformation:
“The caterpillar knows something is going on as the transformation begins. ‘Imaginal cells,’ which are initially thought to be a virus or enemy, start to build up in the caterpillar’s body until such time that these imaginal cells overtake the caterpillar’s cells and the caterpillar creates a cocoon.
Some imaginal cells start changing into wing cells, some start changing into antenna cells, some start changing into digestive tract cells. They are no longer imaginal cells, but instead have become butterfly anatomy cells. In essence, the caterpillar disintegrates into a puddle of ooze. If we were to open the cocoon halfway through the process, we wouldn’t find a half-caterpillar, half-butterfly type creature, but a blob of goop.”
It’s hard to describe my company as a blob of goop, but having that evolutionary reference point has helped all of us understand that our situation is temporary (if this caterpillar to butterfly transformation is too revolutionary or graphic for you, consider the tadpole to the frog instead). We are in a cocoon and what will truly determine whether we properly exit as a beautiful, fluttering butterfly is what we do in this cocoon to use the “imaginal cells” of change in culture and processes to help us be strong enough to emerge from this transformation.
So, the next time you and your company are feeling “in the goo,” ask yourself, “Are you in the midst of a transformation? Or are you just spiraling downward in a kind of corporate quicksand?” If you’re lucky enough to be the former rather than the latter, take this opportunity in the cocoon to truly transform your organization into something exceptionally beautiful. It will be a lot of work, but it will be totally worth it!
Want to Create Change? Tell a Story.
Monday, October 22nd, 2007I was a freshly-minted adult when I graduated from Stanford Business School half a lifetime ago (23 years to be exact). Along with my classmate Seth Godin who was also a youngster when he graduated, I found all the theory that filled the biz school classrooms to be rather stale. Seth and I were so bored that we created our own independent studies course where we interviewed interesting businesspeople and asked them to share their rules for success (the result, “Business Rules of Thumb,” was the first book for us both…good luck finding a copy). We found these corporate leadership stories to be much more compelling than any decision tree or manufacturing bottleneck analysis. Two years ago, Seth even wrote a book on storytelling called “All Marketers are Liars,” in which he suggested that successful marketers don’t talk about features or benefits, they just tell great stories.
Since then, I’ve read a lot of great books on storytelling but I’ve yet to read one that so systematically and convincingly explains the steps for creating the drama and landscape for storytelling as the one I’ve just finished. Authors Richard Maxwell and Robert Dickman, who are consultants in the entertainment industry (if there ever was an industry based on spinning a tale, that’s it), have written The Elements of Persuasion which came out a few months ago. They suggest that all successful stories have five basic components: the PASSION with which the story is told, a HERO who leads us through the story and allows us to see it through his or her eyes, an ANTAGONIST or obstacle that the hero must overcome, a moment of AWARENESS that allows the hero to prevail, and the TRANSFORMATION in the hero and in the world that naturally results. Sounds a like a Hollywood hit to me. But, reading this book, I became convinced that great leaders are also able to express their reality and vision using this arc to define their story.
I was reminded of this last week while giving a presentation about my book PEAK: How Great Companies Get Their Mojo From Maslow. I was speaking to this group, not knowing that the wife of one of our employees was in the audience. For those of you who’ve read PEAK, you know this is a tale of how I launched my impractically-named company (Joie de Vivre Hotels) more than 20 years ago because of the passion I felt for the hospitality business’ approach to making customers feel good. I talked about how I was burnt out at the age of 25 having spent my first two years out of biz school getting pummeled in the rough-and-tumble world of commercial real estate development and construction. Starting Joie de Vivre (mindful of the company’s mission statement – defined by our name: “joy of life”) and growing it to be one of largest boutique hotel companies in the world was exhilarating. But, in our fifteenth year, we experienced the worst hotel downturn since World War II and Joie de Vivre was particularly exposed since all of our hotels were in the same region, the San Francisco Bay Area. Having all of our eggs in one geographic basket led me to not take a salary for three and a half years, during which time I became a real Abraham Maslow nut reading all kinds of books by this mid-20th century psychologist. I then applied his self-actualization-driven Hierarchy of Needs theory to how we created deeper relationships with our employees, customers, and investors. In the end, Joie de Vivre flourished during a difficult time and a new psychology of business was sprouted, which I applied to the company and came to realize was being used – in various forms – in other peak-performing companies.
So, I was telling this story on my book tour and the employee’s wife I mentioned came up to me after I spoke. She said she’d told my tale to probably 50 people because it was like describing a Jimmy Stewart film in which the good guy wins in the end. As she was describing my story back to me, I realized she was following that arc of PASSION – HERO – ANTAGONIST – AWARENESS – TRANSFORMATION that “The Elements of Persuasion” speaks of. So, I asked her, “Why do you keep telling this story?” And, she responded, “All of us need the inspiration to believe that if you persevere with your passion, you will one day succeed. Your story gives people strength.” While I don’t recommend going through the fire the way my company did, it is more than gratifying to know that our story is now inspiring others.
So, the next time you’re trying to persuade your colleagues about a particular strategy or idea, consider telling a story. Maybe tell a true story of someone who’s tale might mirror what you’re trying to articulate. If it’s your own story, all the better. Or possibly tell a future story that describes the positive, transformative outcome of what might happen if your team pursued your path. Facts and figures can help rationalize your story, but it’s the raw emotion that will draw people in and help them to remember just what you had in mind. Change happens when people are inspired.
What’s the Divorce Rate in Your Company?
Friday, September 28th, 2007We live in a promiscuous era, don’t we? America is experiencing a divorce epidemic and the future of the American family is at stake. Is this statement a myth or reality? Turns out it’s a myth. The divorce rate in America has dropped for more than a quarter century and is now one-third lower than it was in 1981.
OK, if that’s the case, then maybe all these stories we hear about employees, customers, and investors being short-term oriented and less loyal are also myths. Actually, while marriage may be making a comeback, sorry to say loyalty in the workplace is become a quaint old notion. The average length of tenure of an American employee has dropped by 6% in the past twenty years (it’s dropped by 17% among men and actually has gone up among women as they have stayed in the workforce longer). In the era of the Internet, customer brand loyalty has plummeted, especially amongst products that are seen as commodities in the marketplace. If employees and customers are defecting, it’s not surprising that investors have decreased their loyalty as the average length of holding a public stock has tumbled from more than six years to approximately one year. Promiscuity (or at least divorce) may be on the decline in homes across America, but the workplace seems to have become a “rent-a-relationship” kind of world.
Fred Reichheld has written a number of books on the value of loyalty in the workplace and he’s proven that building lasting relationships with employees, customers, and investors creates a more sustainable business model for any company. One of his most illuminating studies found that a 5 percent increase in customer retention rates led to increased profits between 25 and 95 percent depending upon the industry. So, if “Loyalty Rules” (as one of Fred’s books is named), why do companies put so little attention on the quality of the relationships that are being created in the workplace?
I’m a bit of an Abraham Maslow junkie and have long marveled at how his “Hierarchy of Needs,” introduced more than fifty years ago, seems to have universal relevance. Most of us are familiar with the idea that we all have base, survival needs like food, water, sleep, and safety and, as we satisfy those needs, we can focus on our social/belonging or esteem needs….in essence, the way we connect with others and see ourselves in the world. For a lucky few, self-actualization is that transformative need at the peak of the pyramid that allows certain people to have continuous peak experiences in their lives. Being a Northern Californian, all this kind of inspirational talk is familiar. What’s ironic is that many business leaders are introduced to (or reacquainted with) Maslow in business school or in corporate universities.
My own reconnection with Dr. Abe occurred when my company was on the verge of bankruptcy. In the post-dot-com, post-9/11 world, being a San Francisco Bay Area boutique hotelier was a struggle and, if I didn’t learn a thing or two about loyalty during that time, I knew I was going to be out of business. Each day during the early part of 2002, when there seemed to be no limit to the depths the Bay Area hotel industry could fall, I would come home from work weary and a little battered and crack open another Maslow book. His theory of human motivation has an awful lot to do with actualizing potential or, as the U.S. Army says “be all you can be” (the phrase came from their internal Task Force Delta team which sort of ripped off Maslow’s quote: “what man can be, he must be”).
I’ve always believed a great leader knows how to tap into potential and actualize it into reality. What Abe Maslow helped me realize is that a great business leader deeply understands the motivations of their employees, customers, and investors. And, from that I started to realize that there was a Hierarchy of Needs pyramid for employees, customers, and investors. But, unfortunately, most companies get so caught up with the base survival needs in these relationships that they lose track of the higher needs of each of these three groups. Business has a natural tendency toward the tangible which impedes many companies from moving to the priceless (to use a MasterCard word) intangible elements at the peak of the employee, customer, or investor pyramids.
I’m thrilled to further the discussion of how creating “peak experiences” can create peak performance for any company. At the very least, I might be able to help reduce your company’s divorce rate with these three important constituencies: employees, customers, and investors. Psychologist John Gottman created a landmark study on marriage and found that successful relationships averaged a 5 to 1 ratio of positive to negative interactions. Other studies in the business world have put this ratio at 3 to 1 with respect to what drives productivity in employees. If your workplace is more focused on giving feedback only when something is going wrong, as opposed to celebrating what’s going right, you may end up with a high divorce rate with your employees (I’m proud to say that at Joie de Vivre, our employee turnover rate is one-fourth the hospitality industry average). These same ratios can also apply to your relationships with your customers, and, miraculously to your investors too (although I know many of you don’t believe a human Hierarchy of Needs may have anything to do with the Return on Investment Robots we call investors).
Maslow posited that studying healthy functioning humans told us more about psychology than studying unhealthy dysfunctional humans (Freud). Similarly, most of us believe that studying best practices in business teaches us more than studying worst practices. I believe there’s a qualitative difference between a human not being sick versus actually feeling healthy or truly alive. Similarly, this idea can be applied to companies. Think of a company that’s not sick but not really alive. Then, imagine a company that’s living up to its potential and is full of a spirit of being alive. If humans aspire to self-actualization, why can’t companies – which are really just a collection of people – aspire to this peak, too? The self-actualized company creates deep relationships with its employees, customers, and investors, and, in so doing, develops a workplace that has a remarkably low divorce rate. The health of any organization is simply the accumulated health of the individual relationships that constitute it. This is true for families and it’s true for companies.
To Labor and to Occupy: Is This Your Relationship to Work?
Wednesday, September 5th, 2007For one who aspires to a daily peak experience, I can become awfully cynical when the subject turns to work/life balance. In fact, I love what Barack Obama’s impressive wife Michelle recently said: “I don’t know about you, but as a mother, wife, professional, campaign wife, whatever it is that’s on my plate, I’m drowning. And nobody’s talking about these issues. In my adult lifetime, I feel duped. People told me, ‘You can do it all. Just stay the course, get your education, and you raise a child, stay thin, be in shape, love your man, look good and raise healthy children.’ That was a lie….we can’t do it all.” Michelle tells it like it is.
We had our annual Executive Committee Retreat last week with our top 16 execs. Given how much we have going on right now (in the process of taking over 5 hotels in a three month period), I was looking forward to diving deeper into a variety of meaty management and marketing subjects. But, I got the “whoa Nelly” from a handful of my team suggesting that we needed a little reflection time on just how out of balance we are and how that’s messing with our executive team’s personal “joie de vivre.” We spent half the day on the subject of work/life balance and I learned a few things. Maybe my cynicism comes from the fact that I finally broke down earlier this year and got a Tre, so now my email messages follow me whenever I’m at one with my PDA. (I got nearly 350 emails one day earlier this week. They say that you need on average 5 minutes per email to either discard or respond which means I would need more than 29 continuous hours to just digest and deal with one day of my email. No wonder I feel like I’m getting further behind in my correspondence.)
Actually, what I learned is that there’s a huge psychological boost in sharing our stories together about how this balancing act is making a mess of our lives. Did we come up with some solutions? Yep. We’ve thought of some new email etiquette. One idea is to educate everyone in the organization to segregate who they send an email to: those who truly need to read and respond on the “To” line while all those on the “cc” line can read if they have time and are not expected to respond. And we came up with new ways to streamline some of our other systems. It also gave our senior execs a chance to hear more about my expectations. I’m a chronic early morning emailer, which scares some of our team as they feel as if they need to be up and reviewing email by 5 AM to see what Chip has communicated. They now understand that I don’t expect immediate responses and, if I do, I will use the exclamation point to help amplify the importance of that particular message (which I may use twice a month). The reality is that leadership is role modeling so how I relate to email will have a big influence on our company’s culture. Just talking about this kind of stuff helped people’s shoulders drop a few inches below their ears as email can truly mess with your nervous system.
A few days after our meeting, I read a NY Times article about how IBM – that venerable icon of American business – now no longer keeps track of their 355,000 employees’ vacation time. Instead of having a formal, top-down corporate vacation policy, employees at all levels make informal arrangements with their direct supervisors guided mainly by their ability to get their work done on time. Everyone gets a minimum of three weeks of vacation a year, but all employees can create alternative means of taking much more vacation time as long as they’re productive. Given that more than a quarter of Americans (and probably 75% of white collar workers) check email or voicemail while on vacation, IBM’s new policy makes all the sense in the world. If our work is going to intrude on our play, then our ability to define our play time better expand. So, it’s less about a work/life balance and more about a work/life blend or maybe a work/life frappe. IBM points to employee surveys showing that the self-directed work and vacation policy is one of the top three reasons their employees choose to stay there. This also makes sense since 40% of IBM’s employees have no dedicated office — they’re mobile. A handful of other companies have followed suit like Best Buy and Netflix. Others compete with each other to see which can be the most generous in creating this work/life frappe. Ernst & Young created a four-day weekend policy around traditional three-day weekends so that their 114,000 employees don’t have to catch planes or sit on crowded freeways on the same exact days as the rest of us. Not to be outdone, Pricewaterhouse Coopers has created a firmwide shutdown twice a year (over Christmas and over July 4th) when virtually everyone goes on vacation for a week so you don’t have to worry about coming back to loads of emails from your work associates.
Here at Joie de Vivre, we recognize that time is about the most valuable commodity in our lives and we’ve stuck to our guns with our liberal sabbatical policy (even during the big downturn from 2001-2005 when we were under a lot of pressure to end it) that allows all salaried employees in the company to take a paid month off every three years. We’re in the travel business and people visit us here in California from all over the world. It would be a crime if we didn’t allow our hospitality employees the time to take extended vacations and visit some of those exotic places they hear about from our hotel guests.
So, having just celebrated Labor Day weekend, let’s be conscious of the risks of the workplace. Think of the word “labor.” It’s a painful time for pregnant women and it’s a word we use when we are “laboring” through something difficult. And, what of the word “occupation?” This word, which is meant to describe what we do for a living–or, more specifically, what we do to make money to have a good life–also describes the hostile overthrow of a land by another force. Work can be labor and it can occupy us if we allow it to. What habits do I use to create a little sanity in my life when it comes to my labor and occupation? First off, I’d better love what I’m doing and feel passionately about it. Otherwise, sign me up for the 9 to 5 job and I’ll find my “life” elsewhere. Secondly, know when to say NO. There was a time when I was living across the bay from San Francisco in Mill Valley. I made a pact with myself that I wouldn’t check voice mail or email once I crossed the Golden Gate Bridge and that I wouldn’t do any work at home in the evenings. So, in that Pavlovian dog kind of way, my evening drive home became a true stress reducer, as I knew that I could go for a run or mountain bike with my dogs or maybe just read a great book. The last part of my healthy habit frappe is just knowing what things I can do to get me out of my brain. For me, it’s a combo of exercise, yoga, meditation, massages, acupuncture and certain kinds of herbs, and occasionally a book of fiction or spirit-minded thoughts. And, of course, I’m a vacation junkie so that doesn’t hurt either.
It’s a new world of work we’re living and laboring through, so make sure that you are conscious about how your occupation occupies your precious time here on earth.
Can Your Company be a “BEST PLACE TO WORK” and be Results-Oriented at the Same Time?
Monday, April 30th, 2007This past week, Joie de Vivre was honored as one of the 100 Best Companies to Work for in the Bay Area (including the full East Bay and Silicon Valley). We earned the honor of coming in 7th place for companies with 500-3,000 employees after having come in 6th place two years ago (we didn’t compete in 2006). This award is based upon a very thorough survey of a large sampling of the employees for the nearly 500 companies that compete. So, being a well-liked employer is an essential part of how a company makes the grade.
Yet, I was full of cognitive dissonance this week. Sadly, I had to abruptly terminate the contract of an outside PR company that wasn’t meeting the needs of one of our hotels, and, I also had to tell the landscape designer who was planning an overhaul of my backyard that this relationship wasn’t working either. Can you be a nice guy and get what you want in life? And, how does that principal apply to companies?
For nearly a decade, Joie de Vivre has been measuring our managers’ performance on a grid that shows RESULTS on one axis and RELATIONSHIPS on another axis. We rate our managers on a 1-4 scale (1 being outstanding, 4 being poor) on both Results and Relationships, which leads to four quadrants and sixteen boxes that a manager could find themselves in (for more info, take a look at my book The Rebel Rules , which talks more about this method of performance evaluation). We don’t promote managers who aren’t in quadrant one (being either a 1 or 2 in both Results and Relationships).
But, more recently, I’ve heard people within JdV make comments that might suggest our culture is favoring relationships over results. In other words, we’re a “great place to work” because we create a positive, recognition-driven culture that makes people feel good. There’s nothing wrong with that as long as the company is very focused and entrepreneurial in executing on its business plan. There are lots of “good vibe” companies that faced big challenges because they got a little too distracted with just being nice and friendly. Anita Roddick’s The Body Shop was socially responsible both externally and internally but they had a faulty business plan and poor execution in many ways and their performance suffered a nosedive. While Levi Strauss has more recently made some positive strides, a decade ago they were in a deadly downward spiral due to the complacent culture that had developed from their positive-spirited, yet results-blind environment.
My Executive Committee has heard me recently thumping the bible of results and accountability as we’ve seen a few of our hotels not perform as well as we would expect. Fortunately, the majority of our hotels are still gaining market share, but four years ago, 80% of our hotels were gaining market share during the biggest drop in American hotel revenues since World War II. We executed effectively when our back was up against the wall. Does that mean that fear needs to be the primary motivator in the business world? I don’t think so, but a healthy mix of fear, clarity of roles and responsibilities, and a reconnection with what makes us great will help almost any business start to right some of its performance metrics problems.
What do I mean by a “reconnection with what makes us great”? There are two parts to this. First, there’s just the basic business plan which, if it’s well thought through, can prove to be a trusty roadmap for success. It’s amazing how many companies deviate from their well-tested business plan because they just stopped executing properly (quite often, due to complacency or a new regime that didn’t recognize the importance of the business plan).
But, the other component of “what makes us great” is the part that takes us back to my title for this musing. Great companies have great purposes. Southwest Airlines is about the freedom to travel. Whole Foods Market is about nourishing the body whole. Apple is about creating technologies that serves and delight you in a truly unique way. Joie de Vivre is about creating joy. Companies that execute well engage their employees in a way that makes the employees feel a deep sense of mission and meaning in what they do. The National Opinion Research Center at the University of Chicago just published a study this month which showed that the professions with the highest job satisfaction ratings and general happiness were those where the employees look at their occupation as a calling. The top three professions were the clergy, physical therapists, and firefighters with the common theme being that these folks feel a deep sense of calling in what they do every day and they know their “results” – whether it’s ministering to someone in need, providing physical therapy to someone who is frail or injured, or putting out a fire at a family home – make a big difference to those they are serving.
So, one of the secrets to being a great place to work is to create that sense of mission or calling as employees’ performance skyrockets when they see what they’re doing is more than just a job or career. What happens to those employees who aren’t clearly pursuing their calling or have performance challenges? Even great places to work occasionally have to terminate poor performers, usually after giving the employee sufficient attention and tools to help turn things around. While Joie de Vivre is a very relationship-driven place, it hasn’t stopped us from ending someone’s employment if we see that the results that the business (and their co-workers) needs aren’t forthcoming from the employee or manager. It’s no fun telling someone they must leave (or, in some instances, finding them alternative employment within the company), but a company that doesn’t demand both results and relationships is putting all of its employees at risk in the very competitive business world we live in.
The founders of Hewlett-Packard proved decades ago that a great place to work can also be results-driven. I think it was Dave Packard who said “being a business leader is all about knowing when to be soft-hearted and when to be hard-headed.” That’s the kind of wise advice that’s helping me negotiate my way through the balancing act of creating both harmony and prosperity.