Organizations in all sectors are increasingly required by their investors, customers, employees, and wider stakeholders to articulate a clear statement of corporate purpose. Purpose isn’t about profit maximization; it’s the reason the organization exists.

A purpose statement should clearly explain how the organization will contribute to human, societal, or environmental goals. It needs to be believable, authentic, and inspiring. However, we’ve seen many purpose statements that in our opinion range from vague (e.g., Delta’s “Lift the world”) to grandiose (e.g., Cisco’s “to power an inclusive future for all”) to uninspiring (e.g., Decathlon’s “to be useful for people”).

Having a well-crafted purpose statement really matters. Not only does it represent the organization’s aspirations, it also sends signals to employees about what the company stands for. It is the vital first step on the road to actually embedding and activating an authentic purpose. Yet leaders often struggle to articulate an appropriate and inspiring purpose statement due to a lack of guidance concerning the focus, scope, and form of expression they should aim for.

We’ve undertaken a detailed analysis of 66 purpose statements from leading organizations around the world. We considered whether the statements were clearly formulated and closely linked to the organization’s core activities, as well as the extent to which they were credible. We talked to senior leaders and employees and reviewed best-practice advice. Based on these insights into what does and doesn’t work, we developed a diagnostic framework leaders can use to help craft the best purpose statement for their specific situation.

A Framework for Crafting a Meaningful Purpose Statement

Our framework, SABRE, identifies four dimensions of purpose statement content (i.e., what the purpose means) and one dimension of purpose statement formulation (i.e., how the statement itself is worded). Leaders can evaluate their current or proposed purpose statement against each dimension.

Societal

The foundation of any purpose statement is an explicit reference to the specific, pressing human, societal, or environmental problem(s) the organization seeks to address or alleviate.

All too often, we see purpose statements that simply refer to these in a very general way or worse, fail to mention them at all. In fact, 68% of the statements we analyzed fell into this latter category. We’ve also seen purpose statements formulated around performance or profit aspirations. Statements like these point to a mission or goal, but not a purpose.

A good example of a clear statement of societal benefit comes from Philips:

At Philips, our purpose is to improve people’s health and well-being through meaningful innovation. We aim to improve 2.5 billion lives per year by 2030, including 400 million in underserved communities. As a technology company, we — and our brand licensees — innovate for people with one consistent belief: there’s always a way to make life better.

For those struggling to articulate how their company’s products and services advance a social or common good, it may be more realistic to relate the purpose to how the company operates. For example, food retailer Aldi’s purpose is to “Provide value and quality to our customers by being fair and efficient in all we do.”

Authentic

Both employees and external stakeholders, including customers and investors, will want to know if they can trust that your purpose statement accurately and honestly reflects the organization’s true aims, and they’ll seek cues in and around the organization to guide their evaluation. If the organization’s stated purpose is to improve health yet it continues to sell tobacco products, for example, stakeholders will conclude that the purpose fails the authenticity test.

Employees are likely to be especially well-attuned to inauthentic purpose statements. Where they perceive a mismatch between the stated purpose and the daily realities of organizational life, we’ve found they experience disenchantment, leading to loss of engagement and potentially even the decision to quit. Adding questions about the purpose statement to regular employee surveys will help leaders identify where it’s falling short. Customers and investors are equally unimpressed when a company is revealed to have misrepresented itself in its purpose statement, giving rise to accusations of purpose-washing.

BlackRock’s purpose statement comes across as authentic because it’s grounded in what the company does and how it operates: “As a global investment manager and fiduciary to our clients, our purpose at BlackRock is to help everyone experience financial well-being.”

Of course, authenticity isn’t fixed — purposes that seem authentic one day can become inauthentic the next following negative publicity. For example, Volkswagen, which had previously stated its corporate commitment to delivering sustainable cars for a better future, was accused of “greenwashing” following the revelation in 2015 that the company had tampered with emissions testing, leading to the “Dieselgate” scandal, hefty fines, and reduced trust around the world.

Some purpose statements are so grandiose that they’re impossible to live up to. Unfortunately, many of the statements we analyzed failed the believability test for this very reason. Vague aspirations such as “improving the world” may be laudable, but stakeholders will ask: How?

The best statements make it clear that the organization can realistically deploy their resources and measure their progress toward achieving their purpose. For example, Astra Zeneca’s statement, “We push the boundaries of science to deliver life-changing medicines,” shows strength on the believability dimension, as it’s easy to imagine a pharmaceutical company developing important new drugs.

Relevant to beneficiaries

The most effective purpose statements contain a clear indication of which segments of society and the environment will benefit. Unfortunately, some statements fail to mention any specific beneficiaries at all, and so remain abstract.

For example, Mars’s statement, “The world we want tomorrow starts with how we do business today,” fails to clarify who in particular will benefit from the company’s products. Apple’s purpose statement, on the other hand, makes the intended beneficiaries, its customers, more clear: “Bringing the best user experience to its customers through innovative hardware, software, and services.”

The final component of SABRE addresses how the statement is worded. The best purpose statements are engaging and inspiring, appealing to the heart as much as to the mind. They’re memorable for all the right reasons. When statements are too long, they become unclear and lose their grip on people’s attention. Sure, you may want to have a more detailed explanation of what the purpose means, but the headline statement needs to be punchy. Consider General Mills’ brief and engaging purpose statement: “Making food the world loves.”

Putting It All Together

We believe an organization can develop a statement that meets all of these criteria. Take Novo Nordisk, for example:

Our purpose is to drive change to defeat diabetes and other serious chronic diseases, such as obesity and rare blood and endocrine disorders. We do so by pioneering scientific breakthroughs, expanding access to our medicines, and working to prevent and ultimately cure diabetes.

Novo Nordisk clearly states the societal problem they’re setting out to tackle. The statement aligns with the organization’s core ambitions, and we can see how the firm can deploy its resources to achieve these. The beneficiaries are named, and the statement is concise and aspirational.

By using the SABRE framework to guide purpose statement discussions, leaders can move toward achieving an inspiring, authentic, actionable purpose that will make clear to internal and external stakeholders how they will help address today’s fundamental challenges.

This content was originally published here.

The post What Makes a Great Corporate Purpose Statement appeared first on Matt Dallisson Global Executive Search | Leadership Consulting.

It’s the quitting trend that just won’t quit. People are switching jobs and industries, moving from traditional to nontraditional roles, retiring early, or starting their own businesses. They are taking a time-out to tend to their personal lives or embarking on sabbaticals. The Great Attrition has become the Great Renegotiation.

Competition for talent remains fierce. For certain categories of workers, the barriers to switching employers have dropped dramatically. In the United States alone, there were 11.3 million open jobs at the end of May—up substantially from 9.3 million open jobs in April 2021. ¹ 1. “Table A. Job openings, hires, and total separations by industry, seasonally adjusted,” Job Openings and Labor Turnover Survey, US Bureau of Labor Statistics, July 6, 2022. Even as employers scramble to fill these positions, the voluntary quit rate is 25 percent higher than prepandemic levels. ² 2. US Bureau of Labor Statistics quits levels and rates data, December 2019 through May 2022. At the current and projected pace of hiring, quitting, and job creation, openings likely won’t return to normal levels for some time.

What we are seeing is a fundamental mismatch between companies’ demand for talent and the number of workers willing to supply it. Employers continue to rely on traditional levers to attract and retain people, including compensation, titles, and advancement opportunities. Those factors are important, particularly for a large reservoir of workers we call “traditionalists.” However, the COVID-19 pandemic has led more and more people to reevaluate what they want from a job—and from life—which is creating a large pool of active and potential workers who are shunning the traditionalist path.

As a result, there is now a structural gap in the labor supply because there simply aren’t enough traditional employees to fill all the openings. Even when employers successfully woo these workers from rivals, they are just reshuffling talent and contributing to wage escalation while failing to solve the underlying structural imbalance.

To close the gap, employers should try to win back nontraditional workers. But how?

Our research identified distinct pools of workers with varied workplace priorities. Their differences show that employers have to take a multifaceted approach to attract and retain talent.

To better understand what continues to spur voluntary attrition and other shifts in the labor market, we surveyed 13,382 employees in Australia (n = 593), Canada (n = 1,935), India (n = 766), Singapore (n = 652), the United Kingdom (n = 3,142), and the United States (n = 6,294). The survey data, collected from February 15 to April 2, 2022, included people of working age across 16 industries.

To better understand who might fill all the open jobs, we examined economic and labor statistics; conducted a large global survey to learn more about what is driving people to stay, leave, or return; and applied advanced analytics to define specific segments of the workforce, both active and latent (see sidebar, “About the research”).

Our analysis of workers in six countries focuses on which job attributes are motivating them, both positively and negatively. We asked survey participants in various phases of job churn why they left or would consider leaving and what would make them want to stay or come back. It turns out that many workers want more than the usual compensation and job advancement carrots.

To get at these priorities, we sorted respondents into smaller groups who shared the same set of primary needs that they want an employer to meet. Then we looked at whether these workers also shared demographic similarities. These groups of like-minded respondents became our “personas”—distinct pools of workers that employers can target in their search for talent. While most of these groups valued workplace flexibility highly, they differed in how they rated mental-health support, meaningful work, and career advancement.

These differences show that no single solution is going to attract enough people to fill all the job openings and retain a productive workforce. Instead, employers can take a multipronged approach to reach different talent pools. This doesn’t mean that organizations have to change their mission, values, or purpose. Rather, they can showcase different facets of their employee value proposition to a broader number of workers and get more creative in their offers to current and potential employees.

In this article, we take a closer look at five crucial employee personas that companies must understand to solve the attrition and attraction problem for the longer term.

New trends make the employment picture more complex

Despite significant changes in the economy since the onset of the Great Attrition (or what many call the Great Resignation), the share of workers planning to leave their jobs remains unchanged from 2021, at 40 percent. That’s two out of five employees in our global sample who said that they are thinking about leaving in the next three to six months.

However, the past year has revealed nuances of the larger trend:

Globally, employees are considering their options

While there is ample evidence that this workforce discontent is a global phenomenon, the situation has further deteriorated in certain markets. In India, more than 60 percent of respondents expressed a desire to leave their current posts, well above their counterparts in Australia, Canada, the United Kingdom, and the United States. Workers in Singapore showed the second-highest level of job discontent, at 49 percent.

Respondents across the six countries showed a consistently high desire for work that is better paying, more satisfying, or both, as well as a conviction that they can find better jobs elsewhere. As our research has shown, some workers are leaving their jobs and the workforce, ready for a break and confident in their ability to find another job when they want to. Indeed, almost three-quarters of employed respondents believe that it would not be difficult to find a job that pays the same or better, with the same or better benefits.

Mobility between industries is high

Vitally, companies can no longer assume that they can fill empty slots with workers similar to the ones who just left. Globally, just 35 percent of those who quit in the past two years took a new job in the same industry. In finance and insurance, for instance, 65 percent of workers changed industries or did not return to the workforce. In the public and social sector, the exodus was even greater, at 72 percent.

In some areas, these losses may reverberate for some time. In travel, healthcare, and consumer retail—industries hit hard during the pandemic—at least 18 percent of respondents who quit their jobs are choosing to forgo employment entirely rather than work in the same or any other industry again. ³ 3. According to McKinsey’s Great Attrition, Great Attraction 2.0 global survey, 18 percent of respondents in healthcare and pharmaceuticals did not return to the workforce; 18 percent of respondents in travel, transport, and logistics did not return; and 24 percent of respondents in consumer retail did not return. 

There are bright spots for workers, however. For those with sought-after skills such as data scientists and programmers, the hurdles to changing industries are lower. Companies are more focused on hiring people for their skills rather than their industry experience, and the most talented individuals with the most sought-after skills will be able to continue to explore options to find the best fit. There is less of a stigma attached to job hopping or gaps in a résumé, and joining companies in other geographies without relocating has become easier than ever, making it possible for people to jump from one employer to another.

These factors create a new playing field for hiring, since employers find themselves competing not only within their industry, as in the past, but also across industries.

Five personas: A new way to target the employee value proposition

To navigate this new playing field successfully, hiring managers can look beyond the current imbalance in labor supply and demand and consider what different segments of workers want and how best to engage them.

To do this, employers should understand the common themes that reveal what people most value, or most dislike, about a job. For instance, it cannot be overstated just how influential a bad boss can be in causing people to leave. And while in the past an attractive salary could keep people in a job despite a bad boss, that is much less true now than it was before the pandemic. Our survey shows that uncaring and uninspiring leaders are a big part of why people left their jobs, along with a lack of career development. Flexibility, on the other hand, is a top motivator and reason for staying.

1. The traditionalists: The star of the classic labor pool won’t be enough to fill all the jobs

Traditionalists are career-oriented people who care about work–life balance but are willing to make trade-offs for the sake of their jobs. They are motivated to work full-time for large companies in return for a competitive compensation package and perks, a good job title, status at the company, and career advancement.

Roughly 60 percent of the traditionally employed, full-time workforce have not quit their jobs during the Great Attrition, according to the US Bureau of Labor Statistics. We estimate that the majority of these individuals can be classified as traditionalists. They have been more risk averse, more likely to stick with their current employer, and less likely to quit without another job lined up. If they did leave their jobs, most have likely returned, wooed by a traditional value proposition such as higher pay.

Companies like traditionalists because these career-minded folks are easier to find through common recruitment strategies. Unfortunately, they don’t exist in high enough numbers.

Employers like traditionalists because these employees are easier to find through common recruitment strategies, and what these workers want matches what companies have historically offered to hire and retain people. Unfortunately, this method of securing workers is like playing a game of Whac-A-Mole: when one company hires traditionalist employees, rivals fight back with promotions and higher pay to try to retain and attract the same scarce talent. Companies that use these levers to pursue traditionalist workers end up contributing to wage inflation but fail to solve the problem of employer and job “stickiness”.

Whereas traditionalists are a relatively monolithic bunch, the remainder of the workforce is more varied. Some are self-employed, others are doing gig or freelance work. There are students, temporary workers, on-call workers. There are those who have left their jobs but could be coaxed back under the right conditions, and those who say they won’t ever come back. Together, they make up the majority of the potential talent pool, and they deserve a much closer look.

Of those who have left full-time jobs over the past two years—a status that described 21 percent of the global workers we surveyed—many quit for similar reasons.

Early in the Great Attrition, exiting workers told us that relationships in their workplace were sources of tension and that they didn’t feel that their organizations and managers cared about them. In this latest round, respondents again cited uncaring leaders (35 percent listed it as one of their top three reasons for leaving), but they added a new range of top motivators, including inadequate compensation, a lack of career advancement, and the absence of meaningful work.

In other words, plenty of employees say that they see no room for professional or personal growth, believe that there is better money to be made elsewhere, and think that leaders don’t care enough about them—tried-and-true reasons for disgruntlement, to be sure, but ones that are now being acted upon broadly.

Fortunately, many of those who left traditional employment indicated that they could be coaxed back under the right conditions. These nontraditional workers make up the rest of our five key personas. Here we take a closer look at these groups and what they value.

2. The do-it-yourselfers: Anything for autonomy

This persona, comprising the largest share of respondents, values workplace flexibility, meaningful work, and compensation as the top motivators for potentially returning to the traditional workforce. They tend to be 25 to 45 years old and run the gamut from self-employed to full-time employed in nontraditional roles to gig and part-time workers.

This group wants flexibility above all else. During the pandemic, workload-related stress, toxic managers, a desire for autonomy, and a feeling of not being appreciated led many people to look for something different. Over 2.8 million more people in the United States submitted start-up applications in 2020 and 2021 than in 2019. Others found that part-time or gig opportunities gave them greater autonomy to set their own hours and the freedom to decide what kind of work they would do.

Attracting this cohort may be difficult, because organizations must show that what they offer is better than what these workers have created for themselves. Companies can provide the freedom that these workers crave and a sense of purpose, as well as a compensation package beyond what they have on their own.

During the pandemic, workload-related stress and toxic managers led many people to strike out on their own. To attract this group, companies can offer them freedom and a sense of purpose.

One way to achieve that is through modularized work—defining discreet meaningful tasks that can be accomplished independently. This decouples goal setting and the completion of tasks from the traditional five-day workweek with set hours in an office. Another way is to manage according to outcomes rather than to activities, ratcheting up accountability for impact but allowing workers and their teams to dictate for themselves when and how the task gets done. To make it work, employers should embrace flexibility from the outset—even by asking job candidates how many interviews they would prefer to have and whether they would rather do them remotely or in person.

Many companies are starting to explore various forms of radical flexibility. For example, Airbnb CEO Brian Chesky recently announced that the company’s employees will be able to work from anywhere and abolished the idea of location-based pay. In the days after his announcement, Airbnb’s recruitment page received more than a million visitors. ⁴ 4. Belinda Luscombe, “‘The office as we know it is over,’ says Airbnb CEO Brian Chesky,” Time, May 8, 2022. 

3. The caregivers and others: At home but wanting more

More than two years after the start of the pandemic, this persona needs little introduction. Members of this group are motivated by compensation but have another constellation of priorities for returning to their jobs: workplace flexibility, support for employee health and well-being, and career development.

These are people who have decided to sit it out at home, with some actively looking for work and others who are passive job seekers hoping to find an opportunity that would justify reentering the paid labor force. The predominant age group is between 18 and 44, with more women than men, many who are parents or other caregivers. A lot of the people in this group needed more flexibility and support than traditional employment offered and left to care for children, parents, or themselves.

For many in this cohort, workplaces that are inflexible and that don’t provide a pathway to advancement aren’t worth the sacrifice of going back to work while continuing their caregiving duties.

People in this profile are ready to lend their time and talents to companies that are willing to work with their schedules. For them, workplaces that are inflexible and that don’t provide a pathway to advancement aren’t worth the sacrifice of going back to work while continuing their caregiving duties. These employees are asking for dedicated support that will allow them to fulfill the responsibilities outside their jobs while being recognized for their contributions at work. They could be coaxed back with part-time options, four-day workweeks, flexible hours, or expanded benefits packages.

Many organizations recognize this growing cohort of potential workers and are responding accordingly—for example, by normalizing and widening the use of parental leave and by offering parents more flexibility around school holidays. ⁵ 5. Alina Dizik, “Parents seek more support from employers during school holidays,” Wall Street Journal, June 10, 2022. Companies such as Google, Cisco Systems, and Patagonia offer employees benefits such as on-site childcare, physical therapy, and subsidized housecleaning services.

4. The idealists: Students and younger part-timers

Those in our idealist persona tend to be younger, aged 18 to 24, and many are students or part-time workers. Mostly unencumbered by dependents, mortgages, and other responsibilities, this group emphasizes flexibility, career development and advancement potential, meaningful work, and a community of reliable and supportive people, with compensation far lower on the list.

Companies don’t need to show these employees the money—work is about far more than that. They are more interested in being part of a community of reliable and supportive people.

To woo them, companies have to offer flexibility, of course, but also demonstrate a willingness to invest in this group’s development and create a strong organizational culture that emphasizes meaning and purpose. This persona ranked belonging to an inclusive and welcoming community more highly than the other personas—squaring with our research showing that younger workers value diversity in the workplace.

An appealing value proposition for these workers would include pairing traditional tuition subsidies with flexible work schedules to accommodate classes, along with development programs that offer clear advancement trajectories. Anchoring these measures in purpose and investing heavily in the day-to-day interactions that build a high-quality culture can help create an even more enticing recruitment package.

5. The relaxers: Career doesn’t come first anymore

In contrast to the previous personas, the people in this cohort are a mix of retirees, those not looking for work, and those who might return to traditional work under the right circumstances. We call this latter group the “Gronks,” referring to the American football player Rob Gronkowski, who retired but returned at the urging of his former teammate Tom Brady and the promise of not only pay but also a flexible contract with a great team. Gronkowski recently retired again—but who knows what the future holds?

Like many who retired early during the pandemic, Gronks have completed their traditional careers and might not need more money to live comfortably. So they will want more than the traditional value proposition to be enticed back into the workforce—including the promise of meaningful work. Comprising both early retirees and natural-age retirees who still have many productive years left, they represent the largest segment of the latent workforce.

Organizations have not pursued these seasoned workers as hard as they might. But it’s not too late: companies should consider reaching out to see if they can find the right balance to win people back.

There are interesting dynamics at play here. After a surge in retirement during the early months of the pandemic, the rate of retired workers returning to the job market has slowly been increasing. ⁶ 6. Denitsa Tsekova, “Older workers are ‘unretiring’ after leaving the workforce during the pandemic,” Yahoo, November 16, 2021. Some have been enticed by higher wages or an improved pandemic outlook, while others have felt the effects of inflation and a need to return to work as their nest egg dwindles faster than anticipated. But with estimates of just one in five of these “pandemic retired” ⁷ 7. “Due to inflation, 1 in 5 retirees likely to go back to work this year,” ResumeBuilder.com, May 2, 2022. looking to return to the workforce, there are plenty more out there for companies to attract.

Organizations have not pursued these seasoned workers as hard as they might. Employers who had positive relationships with employees they lost should consider reaching out to them to see if they can find the right balance to win those people back

Organizations have to focus on the right employee pools

The pressure that companies face in attracting and retaining workers stems in large part from the fundamental shift over the past two years in how people have come to view their jobs and their employers. But it is also the result of the unprecedented demands of a hot job market leading to record numbers of job openings.

The US employment picture is a good example. As we noted earlier, there were more than 11 million job openings across the United States at the end of May. While inflation is forcing some people back into the traditional workforce, those numbers are insufficient to fill the open jobs sustainably. And even if the economic picture worsens, many companies are likely to find that job openings will persist in crucial positions, a problem they can’t fix by simply reshuffling their current workforces.

Automation and increased immigration can help with some of the jobs shortfall. But companies need to hire from the existing employee pool, not the one they wish for. That may mean lowering or changing job requirements for some roles—by not requiring a college degree, for example, or by reaching out to workers with a criminal record, part of a recent uptick in “fair chance” hiring. ⁸ 8. Emily Peck, “Workers with criminal records are getting a chance,” Axios, June 14, 2022. While taking these steps, companies can make sure they maintain the right value proposition to meaningfully expand the pool of workers.

Employers should continue to value their traditionalists, but as the personas reveal, they also need to look beyond them to the workers who want flexible, supportive work arrangements. These people are out there, in greater numbers than before, and they can be courted with the right strategies.

To address this attrition–attraction problem for the long term, companies can take four actions.

First, they can sharpen their traditional employee value proposition, which, as we’ve discussed, involves focusing on title, career paths, compensation, benefits, having a good boss, and the overall prestige of the company.

Second, they can build their nontraditional value proposition, which revolves around flexibility, mental- and behavioral-health benefits, a strong company culture, and different forms of career progression. The value proposition itself and the way that companies pursue these prospective employees should be more creative—and more personalized. The sheer volume of churn in the labor market and at organizations means that a massive portion of the workforce is and will remain new. For companies, this means that the culture passed on through traditions and behavioral norms will mean much less unless organizations make the relevance of that culture clear to new joiners from the start.

Third, companies can broaden their talent-sourcing approach, especially since some nontraditionalists are not actively looking but would come back for the right offer. A better understanding of these five personas can help companies tailor their sourcing strategies toward different types of workers.

Finally, organizations can make jobs “sticky” by investing in more meaning, more belonging, and stronger team and other relational ties. Building these organizational attributes will also make it harder for traditionalists to go elsewhere for a bit more pay.

The COVID-19 pandemic has been brutal in so many ways. It has also spurred feelings of liberation for millions of workers who can now envision what they want their jobs to be, not what they have been. Companies don’t have to reinvent their employee value proposition to meet this moment. In fact, they should double down on what that proposition is—a core representation of their culture, purpose, and values—while also expanding their reach into multiple talent pools. This outreach must be creative and authentic. Workers know the difference, and they are voting with their feet.

This content was originally published here.

The post The Great Renegotiation and new talent pools appeared first on Matt Dallisson Global Executive Search | Leadership Consulting.

Despite the gains workers have made through the Covid pandemic in increasing flexibility in where they work, bigger workloads have meant that there is little slack in the system for people to take time out and recover. The effects are obvious. In 2020, 62% of people reported that they had experienced burnout “often” or “extremely often” in the previous three months, and in 2021, 67% of workers reported that stress and burnout had increased since the pandemic. Perhaps it is no surprise then that initiatives such as the four-day workweek, remote and hybrid working, unlimited paid time off, and right-to-disconnect have been gaining in popularity in an attempt to tackle these high-workload, always-on cultures.

But do these solutions really offer change for workers? Can they help employees and managers rebalance demands? Our work at the ESRC-funded research center UK Digital Futures at Work (Digit) Research Centre suggests that the answers to these questions are complicated and not easily answered without addressing the real problem: the issue of excessive workloads and intensification. By focusing so strongly on the where and when of work, policymakers appear to have lost sight of how and how much we are working.

To illustrate, in a recent study about New Zealand’s move to the four-day workweek, researchers Helen Delaney and Catherine Casey found that not only was work intensified following the change, but so too were managerial pressures around performance measurement, monitoring, and productivity. Indeed, several well-regarded studies into the four-day workweek are promoted in the media on the basis that productivity should not fall (or indeed, should increase) if the change is managed well.

It can hardly be sustainable or reasonable to expect already frazzled employees to keep working to existing workloads with one fewer day a week, which is why, while we support four-day workweek initiatives, employers need to be aware of two important factors. First, a reduction in hours must also be accompanied by a revision of or even reduction in workload. Second, time at work could become even more intense and stressful for workers, even if there are productivity benefits to be had. Here’s what leaders need to understand before trying a four-day workweek.

Reducing working hours does not necessarily reduce work

Unfortunately, removing access to work (voluntarily or not) does not mean that the work itself is removed. Existing research suggests that the extent to which people like to remain connected out-of-hours is often based on individual differences and circumstances. We also know that remaining connected to work out-of-hours can be stressful, but that voluntariness, personal preference, and job role can mitigate this.

Contemporary approaches to performance management also call into question the extent to which individuals truly have a choice when it comes to out-of-hours working. Research shows that people with more intensive workloads tend to ruminate about work outside of working hours and are unable to switch off until their work problems have been solved. On the other hand, our own research has shown that some people want to be able to check in on work and keep connected because it worries them more when they do not have oversight of what is going on, which prevents them from feeling in control.

As organizations and governments consider four-day workweeks, it’s important that researchers ask how different types of time off translate into both well-being and performance benefits. For example, in the four-day workweek, is it having a full day off each week or is it working four days’ worth of hours across the week that helps? Can time-use diaries be used to show that people are actually switching off from work when disconnected from it and engaging in activities that promote well-being and meaningfulness? Are diverse groups and those with caring responsibilities equally benefitting when they cannot access their work at certain times of the day or week?

Reducing hours should not increase work’s intensity

The New Zealand four-day workweek pilot found that, to fit in their “real work,” employees took shorter breaks and spent less time lingering to socialize in order to resume their measurable tasks. According to Wired, while “some workers enjoyed the ‘exhilarating’ and ‘full-on pace,’” others felt “the urgency and pressure was causing ‘heightened stress levels,’ leaving them in need of the additional day off to recover from work intensity.” Participants in the research bemoaned that there was no more time for “banter” and that creativity and innovation were being stifled.

The New Zealand four-day workweek trial rings some alarm bells, in that reductions in working days did not necessarily create well-being benefits as workers struggled to meet the demands of their job roles. It is perhaps telling that much of the publicity around the success of Microsoft Japan’s four-day workweek trial rested on how productivity increased substantially during the study period. Employers may need to be careful about promoting outputs over well-being if they want to be seen as investing in their workforce’s work-life balance.

Finding solutions

While the ideas of a right-to-disconnect or a four-day workweek are clearly laudable and well-intentioned, there is a danger in fixating on specific initiatives. A four-day workweek probably sounds great to many employees (and maybe even their managers)! But, as with so many things, success lies in the details.

There is no easy way to address concerns about how (and how much) we work, but our research tells us that no matter what we do, taking a holistic, long-term focus on the well-being of the workforce is the best path to both happiness and prosperity. Maybe the answer is a four-day workweek. Or maybe it’s something else. But we must start with an honest appraisal of how productivity and time trade-offs impact the well-being of workers.

This content was originally published here.

The post What Leaders Need to Know Before Trying a 4-Day Work Week appeared first on Matt Dallisson Global Executive Search | Leadership Consulting.

Despite its sudden elevation in corporate life, “purpose” remains a confusing concept. Finding the right one involves identifying an authentic and motivating basis for alignment among key stakeholder groups.

Why It Exists

Purpose is used in three distinct senses: competence, as in “the function that our product serves”; culture, as in “the intent with which we run our business”; and cause, as in “the social good we aspire to.”

The Solution

Not all companies can save the world. Only a minority should put forward a cause-based purpose. For the rest, a functionally useful business or a strong culture can provide the basis for a meaningful and motivating why.

Today’s business leaders are under pressure to come up with a corporate purpose, much as they were challenged to develop vision and mission statements in the 1980s and 1990s. Although this focus on the role of corporations in the economy and broader society has many positive aspects, a risk is that speed, shortcuts, and spin may take precedence over authentic action. Our goal in this article is to help executive leaders be clear-sighted about what they seek to define: the purpose of their purpose.

Purpose has become something of a fad and a victim of its own success. Companies are aware that their customers and employees are paying more attention to it as part of a wider reassessment of the role of corporations in society. BlackRock’s CEO, Larry Fink, and other major investors are urging executives to articulate a role for their companies beyond profit making, implying that doing so will affect their valuation. But despite its sudden elevation in corporate life, purpose remains a confusing subject of sharply polarized debate. Our research indicates that a primary cause of this confusion is that “purpose” is used in three senses: competence (“the function that our product serves”); culture (“the intent with which we run our business”); and cause (“the social good to which we aspire”).

Cause-based purposes tend to receive the most attention, largely because companies that push for societal change are more visible. But any of the three types can be effective when pursued appropriately. A competence-based purpose (such as Mercedes’s “First Move the World”) expresses a clear value proposition to customers and the employees responsible for delivering on it. A culture-based purpose (such as Zappos’s “To Live and Deliver WOW”) can create internal alignment and collaboration with key partners. A cause-based purpose (such as Patagonia’s “in business to save our home planet” or Tesla’s “to accelerate the world’s transition to sustainable energy”) promotes the idea that it is possible to do well by doing good. All three types can create a meaningful why.

For any individual company, determining the purpose of its purpose is fundamentally a business decision and must be anchored in strategy. Finding the right answer involves identifying the most authentic and motivating basis for alignment among the key stakeholder groups on which the success of the business depends. That is easier said than done, because multiple business functions have a vested interest in and a specific perspective on purpose. It sits at the intersection of four business agendas: (1) For marketing and sales, it can help win customers and enhance their loyalty. (2) For HR, it can attract, engage, and retain employees. (3) For governance and sustainability, it can enhance environmental, social, and governance performance. (4) For strategy and finance, it can guide how resources are allocated and risks are managed.

Making Purpose Real: Series reprint

Any exploration of purpose begins with recognizing that these agendas are valid inputs to the process. We four—a former CMO, a former CHRO, a professor of global business, and a strategy consultant—represent each of the main constituencies, and we believe that although every company needs a purpose, not every purpose must take the form of a social cause. Of course every company should work to become a better corporate citizen, through programs that actively address climate change and pollution, workplace safety, diversity, and employee well-being, and invest in local communities. As other scholars have shown, improving ESG performance (especially in areas that are most material in your industry) is good for business. But it is distinct from the purpose of a business.

In this article we’ll provide three key rules regarding the role of purpose; our observations about what companies typically get wrong about it; and a framework for evaluating which of the three types is likely to be most effective for a company.

Don’t Rally Around a Cause Unless You Actually Have One

Discussions about purpose typically start with the question How would the world be worse off if we did not exist? This spurs people to identify an inspiring social impact that the business should strive to achieve. However, only a limited number of companies operate in industries where the nature of the business lends itself to a compelling answer to that question. Examples include Beyond Meat, whose purpose is to find “a better way to feed the planet,” and Disney, which aims to “create happiness through magical experiences.” Health, science, and clean energy companies fall into this category too. However, focusing on this question too much may lead the majority of companies to misrepresent the actual nature of their business—as WeWork did in its 2019 investor prospectus when it described subletting office space as striving “to elevate the world’s consciousness,” and Knorr (a brand known for stock cubes and gravy) did when it suggested that consumers could “change the world by changing what’s on [their] plate.”

Being able to define a social-cause-based North Star may be of benefit primarily to consumer-facing enterprises. But few others—particularly if they’re in B2B sectors such as basic materials, energy generation, capital goods, commercial transportation, and business services—have any particular higher purpose to which they can authentically lay claim.

A Strong Culture Is Often All You Need

The current fixation on purpose puts pressure on executives to be seen as running a “good” business. Sometimes, however, it’s enough simply to run a business well. Culture-based purpose statements are a great option for companies that provide necessary products and services but don’t present credibly as agents of positive social change. This is especially true when their success depends on high levels of employee engagement and collaboration with both suppliers and distributors. Those stakeholders are primarily interested in what the company is really like to work for or with rather than in its aspirations to have a broader impact on society.

Defining your purpose as embedded in culture—as operating in a thoughtful, disciplined, ethical manner—can be both pragmatic and genuine. Consider Mars, a family-owned consumer packaged goods company, which in 2019 unveiled its first purpose statement in more than 100 years of operation: “The world we want tomorrow starts with how we do business today.” While this expresses aspiration for a better future, its focus is on the “how” of the company’s culture—specifically its Five Principles (such as “We base decisions on Mutuality of benefit to our stakeholders” and “We harness the power of Efficiency to use our resources to maximum effect”) that since they were first published, in 1983, have actively guided the attitudes and behaviors of all Mars associates.

Contrast that with the initial approach to purpose of Mars’s rival Nestlé. In 2014 the company began positioning itself as “the world’s leading nutrition, health and wellness company”—a descriptor it was forced to retract when commentators observed that nearly three-quarters of its earnings were from snacks and confectionary. The company subsequently retreated to the more believable “Good food, good life.”  Craig Cutler/Trunk Archive

Choosing culture as the focus of your purpose statement can be a powerful way to attract talent. An engaged workforce is a key business driver. Conversely, Gallup has estimated that the cost of disengagement—in the form of turnover, low productivity, and low morale—can come to about 18% of salary costs.

A focus on culture may take one of three forms, each of which can establish a powerful sense of community and belonging among employees and business partners. Cultural consistency stresses adherence to a code for the business—such as the J&J credo and Mars’s Five Principles. Cultural fit emphasizes an aspect of the culture that will attract employees and partners who are similarly inclined. Examples include Bridgewater Associates’ culture of “radical transparency” and Zappos’s belief that great customer service depends on “[getting] the culture right.” Cultural diversity focuses on promoting inclusiveness and celebrating employees and partners for their differences as much as for their similarities. This approach is particularly effective at companies such as airlines and financial services, whose business models require that their employee base closely match the diversity of their customer base.

Don’t Delegate Purpose to the Marketing Team Alone

Because CEOs assume that the marketing team is most closely in touch with consumer sentiment, some combination of marketing and corporate communications is often tasked with articulating the corporate purpose. But given that marketing’s objective is to generate demand for the company’s products and services, the purpose initiative may devolve into an exercise in appealing to consumer preferences. Because research shows that most consumers, and especially Millennials, prefer to buy from companies with a cause-driven purpose, the marketing and corporate communications teams will almost inevitably arrive at an elevated statement that puts the company in a highly flattering light.

At the extreme, conflating marketing and purpose can lead to the sort of posturing whereby BAT (British American Tobacco) and Philip Morris International claim—without any apparent irony—that their purposes are, respectively, to “build a Better Tomorrow” and to “unsmoke the world and create a better future,” even if they are simply trying to promote the next generation of their products rather than reduce consumption of an addictive substance. Consider the less egregious but still poorly received attempts by Pepsi and Gillette to position their brands as advocates for important social issues with which they had little previous involvement. The absence of an intuitive connection between Pepsi and the cause of social justice resulted in widespread criticism of its 2017 advertisement featuring Kendall Jenner. A similar reaction greeted Gillette’s 2019 brand repositioning, which replaced “the best a man can get” (in use since 1989) with “the best men can be” in a short film that focused on the problem of toxic masculinity. Although this was and is an important social issue, a history of perpetuating male stereotypes through the sponsorship of macho athletes made Gillette an inauthentic advocate.

That’s not to say that purpose can’t inspire a successful marketing campaign. Contrast those misfires with Dove’s campaign for “real beauty,” which used normal women as models. The campaign was born out of marketing research revealing that in 2004 only 2% of women around the world would describe themselves as beautiful (the figure had reached only 4% when the research was repeated in 2010). Dove’s functional benefits—cleaning and moisturizing—gave rise to an emotional benefit: self-esteem. The campaign aligned nicely with the purpose of Unilever, Dove’s parent company: “making sustainable living commonplace” by investing in and improving the lives of its customers and the communities in which it operates. A marketing campaign is most effective when it is the offspring of a corporate purpose rather than the progenitor of one.

Indeed, some companies with strong cause-based purposes don’t focus on them in advertising because they recognize the risk of trivializing or over-hyping something central and sacred to the organization. Starbucks defines its purpose as “to inspire and nurture the human spirit—one person, one cup, and one neighborhood at a time,” but its advertising highlights the quality and novelty of its products. Likewise, JetBlue’s advertising largely focuses on what drives ticket sales rather than on its mission “to inspire humanity—both in the air and on the ground.” Craig Cutler/Trunk Archive

Companies that can’t credibly claim to produce external benefits or to promote a social cause should accept that satisfying the functional and emotional needs of consumers can be a sufficient foundation for a business. Consider soda and snacks. Consuming them is bad for people from a nutritional point of view. But satisfying “sensorial needs” (to borrow from the doublespeak used by BAT in its purpose video) is a legitimate commercial goal, and companies should be content to acknowledge that they aspire to produce the most delicious ice cream or cookies or potato chips or soda. McDonald’s is right to define its mission as “to be our customers’ favorite place and way to eat and drink.” Nordstrom aims simply “to give customers the most compelling shopping experience possible.” This is not to say that McDonald’s shouldn’t take steps to enhance the nutritional value of its menu or to improve the environmental footprint of its suppliers. Doing so could be good for business in the long term if it reduced the risk of consumer or regulatory blowback. But those goals are manifestly not the purpose of its business, and any marketing campaign that positions them as such risks derision.

To avoid that risk, business leaders need a clear understanding of how their corporate purpose extends beyond the objectives of their brands and their advertising. A purpose is about the essence of the company. Its goal is to achieve buy-in from a broad range of stakeholders—whereas the function of brands is to persuade consumers to buy the company’s products and services.

That distinction was well made by Business Roundtable in 2019 when it described the purpose of a corporation as promoting “an economy that serves all Americans” by meeting the needs of five groups of stakeholders: customers, employees, suppliers, communities, and shareholders. This clearly articulated the need for companies to think beyond the immediate interests of those who provide their funding and to whom they sell.

What Companies Typically Get Wrong About Purpose

The goal of any company is to attract and retain talent, satisfy customers, and conduct business in a manner that secures its license to operate in the eyes of the community and regulators—all while earning an appealing return on capital. Defining your corporate purpose is an opportunity to demonstrate how your company can satisfy those requirements simultaneously. But, as is always the case with strategy, corporate purpose requires clarity about the trade-offs being made and should result in something that is internally coherent.

Many of the challenges that companies encounter with purpose stem from a perceived lack of alignment between how they behave and what they say they stand for. It is tempting to claim being “purpose driven” because of the appeal to employees and consumers—but that works only if you demonstrate authenticity and coherence.

The competence-cause gap.

This lack of alignment occurs when the connection between the nature of your business and your espoused cause is not obvious—a danger for even highly successful companies. For instance, a difficulty currently facing the platforms Facebook and Google is that their advertising-driven business models are perceived to be increasingly at odds with their stated missions: “to build community and bring the world closer together” and “to organize the world’s information and make it universally accessible and useful,” respectively.

The competence-culture gap.

This arises when a company is successful at creating value for customers but is less well regarded as an employer, a business partner, or a corporate citizen. Amazon and Walmart have historically enjoyed high levels of customer approval (reflecting their respective commitments to “be Earth’s most customer-centric company” and “saving people money so they can live better”) while regularly being criticized for their record as employers, their perceived reluctance to recognize workers’ rights, and their lack of transparency in the supply chain.

The culture-cause gap.

If your company has a clearly stated, cause-related purpose yet your employee engagement scores are low, you have a culture-cause disconnect. This suggests a need for greater focus on culture and behaviors or a reevaluation of your purpose’s authenticity as currently defined. That is the challenge the new management at Uber faced in 2018 and the new executive team at Volkswagen is currently facing: how to reinvent a culture that turned a blind eye to toxic behavior (in Uber’s case) and illegal behavior (in VW’s case).

A Guide to Finding Your Purpose

We recommend a five-step process for ensuring that your corporate purpose fulfills its role as a key element of your strategy.

1. Identify the internal constituencies that have a stake in your purpose.

At most companies the leaders of multiple business functions will want to see that their interests are adequately considered. We’ve identified four main kinds of interests and their constituencies: demand generation (sales, marketing, channel management), employee engagement (HR, employee networks), governance and sustainability (legal, operations, corporate communications, investor relations, community relations), and strategy and business valuation (the CEO, the CFO, risk management). The first step in drafting a purpose is to establish a working team with representatives from each of these constituencies.

2. Remember that purpose can be defined in three ways.

The working team’s initial discussion should establish a common language around purpose and explore the various ways in which each of its three domains—competence, culture, and cause—is relevant to each of the constituencies represented. How might a culture-based purpose be articulated with the interests of communities in mind? Or a cause-based purpose with the interests of investors in mind? These discussions should take as expansive a view as possible of the range of options for defining corporate purpose, making authenticity the binding constraint.

It is important to recognize that only executives experience purpose as a top-down phenomenon. Most other stakeholders experience it from the bottom up.

This approach acknowledges that each type of purpose has advantages. A competence-focused purpose presents a clear value proposition for both customers and employees. A culture-focused purpose creates internal alignment and collaboration with key partners. A cause-focused purpose aligns customers, employees, and communities around the societal benefits that the company generates. There will be points of overlap with the ESG agenda, but the purpose effort should go further than simply seeking to address negative external effects.

3. Link purpose to strategy.

The third step is to view all the possible ideas for purpose in light of the factors that will have the greatest impact on the company’s success over the next decade. Is the key business driver talent acquisition and retention—or is it product innovation? The ability to sustain a premium price? International expansion?

Where Purpose Affects Your Organization

Purpose can have an impact on four business agendas. To determine what that is, ask yourself these questions.

Demand Generation

How can purpose increase consumers’ preference for our products and services?

Employee Engagement

How can purpose strengthen the connection that employees feel to the work and to one another?

Governance & Sustainability

How can purpose help reinforce our reputation as a good corporate citizen and a strong ESG performer?

Strategy & Business Valuation

How can purpose enhance our opportunities for profitable growth and reduce business risk?

The point is to develop a clear sense of the business objective that the purpose will support. How can it enhance the relevance and sustainability of your value proposition to customers and other stakeholders and strengthen the company’s relative advantage? This step typically produces a short list of three to five key ideas for defining your purpose in a way that aligns strongly with the strategy of the business.

4. Transcend siloed thinking.

At this point the working team needs to recognize that purpose cannot be authentic if it is motivated only by self-interest and opportunism. The next step is to find an idea that acknowledges but transcends the vested interest of each constituency. The following questions can help in reaching a consensus on the most effective definition of the company’s purpose.

We recommend that during deliberations each member of the working team have discussions with other stakeholders—employees, suppliers, business partners, community leaders—to get their input on the ideas under consideration. That will help ensure that the eventual purpose statement is authentic, relevant, and practical.

5. Embed purpose in behavior.

The final step of the process is without doubt the hardest—as anyone who has been involved in change management will attest. New modes of behavior that bring a purpose to life need to be modeled by senior leaders and reflected in performance reviews and promotions, recruitment, business decisions, and the culture more broadly.

It is important to recognize that only executives experience purpose as a top-down phenomenon. Most other stakeholders experience it from the bottom up—through their interactions with products and services, employees, physical locations, and communications. From a top-down perspective, it seems logical to begin an exploration of corporate purpose by asking, How would the world be worse off if we did not exist? But from a bottom-up perspective, it is more important that purpose increase the sense of authenticity, coherence, and engagement derived from the day-to-day experiences of customers, employees, partners, and the communities in which the company operates. The ultimate test of your purpose is whether it improves the way the business actually operates.

This decade promises to be remembered as the era of stakeholder capitalism, corporate purpose, and the business lexicon’s adoption of the terms “empathy,” “equity,” “diversity,” and “inclusion.” We suggest two further important elements: pragmatism and authenticity.

The full potential of purpose is achieved only when it’s aligned with a company’s value proposition and creates shared aspirations both internally and externally. At its best, it’s the most powerful mechanism for generating buy-in across stakeholders. If enacted poorly or manipulatively, it produces the opposite effect. With so much at stake, getting your purpose right should be one of your most pressing decisions.

This content was originally published here.

The post What Is the Purpose of Your Purpose? appeared first on Matt Dallisson Global Executive Search | Leadership Consulting.

Employer branding is gradually becoming more important in C-suite conversations, but it’s still a relatively new concept. Several years ago business leaders might have pointed to pinball machines in the office game room or catered lunches as examples of employer branding. In 2022 most are aware that such perks hardly constitute a comprehensive employee retention strategy or play any meaningful role in the battle to attract top talent.

This evolution in thinking has undoubtedly been accelerated by the Covid-19 pandemic, which put immense pressure on leaders to not just communicate their values but also to demonstrate them. In the face of difficult decisions, employers suddenly had to decide whether their professed ideals and “north stars” were real and substantive or mere lip service. They gained a heightened awareness of the importance of organizational purpose, team cohesion, and employee experience.

Now more than ever these attributes are critical drivers for candidates contemplating career moves amid the Great Resignation. As a result, they’re top of mind for executives looking for ways to differentiate themselves from competitors fishing in the same shrinking talent pool. Not coincidentally, they’re also elements of employer branding.

Despite the confluence of trends creating a greater awareness of and need for employer branding, many leaders are still unsure what it entails. Misconceptions abound. Some believe that an authentic employer brand is impossible to achieve, because reality rarely reflects the ambitious vision statements on office walls or company websites. Others assume that it applies only to an in-office environment, because remote and hybrid work models are too amorphous to anchor a company identity. Still others argue that employer branding can be encapsulated in a generic mission statement (such as “we want to be the best”) or a single word (“integrity”).

So who’s right? What makes an employer brand?

Here are the three primary components of an employer brand along with strategies to establish each one.

1. Reputation

In the age of social media, word travels fast and perception matters. Modern job seekers weigh a prospective employer’s reputation heavily in their decision to apply for a job or accept an offer, because they’re keenly aware of the impact it will have on their own reputation and the way others perceive them.

In the context of talent acquisition and retention, reputation can be evaluated according to “the three Cs.” The first C, career catalyst, hints at one of the first questions job seekers ask themselves when learning about a company: Will working here move my career forward? Top talent flows to the companies that offer opportunities for ongoing development in and out of the office. The second C, culture, is a direct product of the people you hire and keep; it’s a work environment that appeals to a specific type of person rather than to anyone and everyone. Finally, there’s citizenship, which encompasses the impact on the community and society at large.

In our work with companies such as MassMutual and Entain, we’ve made elements of the three Cs central to their respective employer brands.

MassMutual’s focus on diversity is directly tied to its focus on citizenship. The firm publicly took a stance about the importance of diversity in the organization and the tangible steps it has taken to create a truly equitable workplace, including spending more with a diverse set of suppliers, offering employees antiracism training, and increasing diversity in leadership, LGBTQ+, disability, and veteran communities. Through extensive internal research and conversations, it developed an understanding of where its focus on diversity and inclusion was working and where it fell short, all of which it remains transparent about. It has used what it learned and shared with the outside world what diversity means within its community and what it would mean for those looking to join.

Entain zeroed in on the role of culture in its employer brand. The company’s belief in diversity of background, thought, and experience is embedded in all its values and practices. Entain places great emphasis on ensuring that talent knows and abides by this to foster a strong, consistent culture.

As you consider your company’s reputation, assess each of these areas independently. Not every candidate will value them equally. Identify the types of employees you need to execute your business strategy and study their motivations and incentives as you would a customer’s. You can even develop multiple candidate personas and segment them in terms of fit. Then start building your reputation in the talent marketplace by investing in initiatives that align with the preferences of your ideal candidates.

2. Proposition

Your employer value proposition (EVP) clearly articulates the “give and get” that defines an employer-employee relationship at a particular organization. It establishes your expectations for performance and behavior and the rewards for meeting them, which might include financial compensation, professional development opportunities, work/life balance, a sense of belonging or purpose, or anything else employees stand to gain in your organization.

This give-and-get validates your reputation in the marketplace. The benefits you offer should be commensurate with the expectations you set for employees to ensure that your value proposition is fair, and both should be aligned with the employer brand you desire to build and your strategic objectives. Perhaps most important, you have to be honest about the exchange and uphold your end of the deal. If the demands placed on employees are greater than they were led to believe, or if you fail to deliver the benefits you promised, not only will you lose employees; you might also incur lasting damage to your employer brand.

Consider Tesla. The company has all the ingredients of a great give-and-get proposition, but it doesn’t offer one. While Tesla offers employees work rooted in a phenomenal higher purpose, the draw of Elon Musk’s personal brand, and obvious opportunities to accelerate their careers, it misses the opportunity to position these in a give-and-get context. Its employer brand suffers from a largely negative reputation among Tesla alumni, a well-documented poor work/life balance, and a disregard for what it takes to build and protect a strong culture. While a solid give-and-get proposition wouldn’t remedy those problems, it would allow the company to highlight both its strengths and its vulnerabilities in a transparent way, helping talent make a more informed cost-benefit decision about working there.

When assessing a role or an organization, job seekers and employees inevitably ask themselves, “Is this work worth the effort?” When the answer is yes, that probably means you’ve got an EVP that lends itself to a strong employer brand. Employers can demand hard work, long hours, innovation, and top performance if that’s what it takes to progress toward organizational goals. But they must adequately reward employees who meet those demands in a way that aligns with employees’ personal and professional goals. When that happens, both your organization and your workforce can grow together.

3. Experience

The employee experience is extremely valuable and plays a huge role in building and solidifying your reputation as an employer. If that reputation is strong enough, top talent might be willing to overlook a tedious experience. But if your employer brand is poor, even the best employee experience won’t get you onto the radar of most in-demand job seekers.

The nature of the employee experience is directly dependent on your ability to deliver on your EVP. When employees understand and meet employer expectations and are rewarded accordingly, they’re likely to view the experience of working for your organization as a positive one. And a positive employee experience translates to better performance for the employee and the organization as a whole.

Your employee experience should reflect the reputation evaluation criteria you’ve chosen to prioritize. Take McKinsey & Co., a firm that’s built a reputation as a career catalyst. By consistently equipping its employees with the expertise and experience needed to land coveted positions at companies such as Google and Amazon or to start their own ventures, the firm reinforces that employer brand in a tangible way.

Ultimately, you can’t buy the PR equivalent of a vocal employee alumni network that enthusiastically endorses you as an employer (which is why some companies are now prioritizing alumni experience in their employer branding strategies). Much as satisfied customers often make the best salespeople, satisfied current and former employees can be an invaluable source of candidate referrals, strengthening your ability to attract top talent.

Many of the elements on which people base their career decisions are out of your control. Cultivating employer branding isn’t. It’s the only tangible advantage you have in today’s wildly competitive environment and has to be an integral focus. Taco Tuesdays and office happy hours aren’t enough to attract the best talent. Invest in something that is.

This content was originally published here.

The post Make Your Employer Brand Stand Out in the Talent Marketplace appeared first on Matt Dallisson Global Executive Search | Leadership Consulting.

This may explain why so many workers have been quitting their jobs and why companies are having trouble filling the millions of current openings across the U.S. economy. It also may hint at an immediate, though partial, remedy to the talent squeeze: reduce employee attrition by making your company a more attractive place to stay. In this article, we offer six ways to do so.

How bad is it?

The challenge is severe. Some of our clients have told us they’re seeing upwards of 30% attrition in certain job categories. Some industrial clients have told us that some of their plants have had more than 100% employee turnover since March 2020. In other segments, especially technology and data science, employers describe the turnover and churn as “unrelenting.” At the end of the day, they say, there are always empty chairs. Data from the Federal Reserve Bank of St. Louis, showing steady and significant increases in voluntary “quits” during the pandemic in a wide range of sectors, seems to confirm the anecdotal reports.

The current turmoil in the labor market isn’t likely to subside any time soon. Indeed, 57% of the respondents to our latest survey of more than 10,000 knowledge workers across the globe, conducted in partnership with Future Forum, said they’d consider taking a new job in the coming year.

What’s the solution?

Employers need to recognize that it takes significantly longer to recruit someone than it does for them to give their two-week notice and depart. The solution, then, is to immediately bolster retention while ramping up recruiting. To do so, companies need to get on the same page with employees by reconceptualizing what it means to be part of their organization.

We have some 800,000 data points collected over 20 years telling us what people value at work. The responses, from both white- and blue-collar workers in a wide variety of industries, fall into four broad categories: value, purpose, certainty, and belonging.

All four apply to both the retention of existing employees and the recruitment of new prospects. But recruitment and training costs and the time it typically takes for new hires to reach the same level of expertise as the people they replaced make it imperative that employers focus immediately on retention.

How? Based on our research, we believe taking the following six measures can have the greatest impact:

1. Incentivize loyalty

You have to pay people enough to take the issue of money off the table. So, in addition to updating your overall compensation package, consider offering employees one-time bonuses, helping them pay down their student loans, and providing them with work-from-home stipends. An added benefit of re-leveling compensation is that it gives you an opportunity to detect and correct pay inequities for people of color and women, including mothers of young children. We are also seeing some companies offering “boomerangs,” which are bringing back people who have recently departed by offering to immediately vest them in long-term compensation plans.

2. Provide opportunities to grow

Pretend your best people just handed in their resignation notices. How would you change their minds? Ask them, “If you could shape your dream job here what would it be?” Then look for ways to make it happen. Forward-thinking organizations have been doing retention interviews for the past months — asking each employee what it would take for them to stay.

In forthcoming BCG research based on employee-engagement-survey data we found that a significant predictor of whether employees are engaged is how enthusiastically they answer the question, “Does my job make good use of my skills?” In short, show current employees that you value them even more than potential new hires by providing them with new opportunities to grow and advance. Workers are hungry for this vote of confidence. Our survey data shows that 68% of workers around the world — blue- and white-collar alike — are willing to retrain and learn new skills.

3. Elevate your purpose

Purpose is the timeless reason that your organization exists. It’s the reason people join and choose to stay. Our analysis shows that in turbulent times a belief in what an organization is trying to achieve is even more important than in quieter periods. Prove to employees that there’s more to your organization than the bottom line. And don’t just talk purpose; use it to shape what you do and how you do it.

4. Prioritize culture and connection

Put your work aside and make time to connect and build relationships with — and among — your people. Not only will this solidify their relationship with your organization, but our research during the Covid-19 pandemic indicates that social connection also has a significant positive impact on productivity. Our Covid-era survey data show that both blue- and white-collar workers around the world place a higher priority on having a “good relationship with coworkers” than on many other job attributes.

5. Invest in taking care of your employees and their families

Provide mental health resources, acknowledge the personal sacrifices everyone has made during the pandemic, help parents with small children by providing or subsidizing day care, and give more paid time off. Sure, some employees will need more than others. So? Do whatever is required to take care of them.

6. Embrace flexibility

The future of work is going to be providing flexible work environments in terms of place, time, job description, and career paths. Embrace it. Better yet, have employees form teams to create their future of work. If people help build their dream home, they’ll want to live in it.

And speaking of flexibility: loosen up on “qualifications.” Consider hiring candidates who don’t quite fit your profile; if they have 75% of what you’re looking for, grab them. More than half of technology giant IBM’s U.S. job openings do not require a four-year college degree. With the right mindset and support, people who come up a bit short on paper can learn what’s missing.

We don’t have to resign ourselves to the empty chairs and a continuing tide of resignations. Decisive action is what’s needed, and it’s needed now.

The post 6 Strategies to Boost Retention Through the Great Resignation appeared first on Matt Dallisson Global Executive Search | Leadership Consulting.

Workers are hungry for trust, social cohesion, and purpose. They want to feel that their contributions are recognized and that their team is truly collaborative. They desire clear responsibilities and opportunities to learn and grow. They expect their personal sense of purpose to align with that of their organization. And they want an appropriate physical and digital environment that gives them the flexibility to achieve that elusive work–life balance.

Companies are facing an exodus of employees who are exhausted and overwhelmed, questioning what work means, and thinking through their options. Organizations can offer an excellent employee experience (EX) by taking these needs and feelings seriously at such a crucial time.

Providing top-notch EX is not just lip service; it requires a profound reorientation away from a traditional top-down model to one based on the fundamentals of design thinking. This shift allows a company to put its workers first by exploring and responding to how they view their employee journeys, then delivering tailored interventions that focus on critical moments that matter to maximize satisfaction, performance, and productivity. In doing so, companies can become more inspiring, collaborative, and centered on creating an experience that is meaningful and enjoyable.

Research shows that people who report having a positive employee experience have 16 times the engagement level of employees with a negative experience, and that they are eight times more likely to want to stay at a company. ¹ 1. McKinsey Employee Experience survey, 2020. In this article, we look at how companies can focus on employee experience to help retain and excite the best people, creating value and maintaining a competitive edge as they do so.

How employee experience can shape the ‘new possible’

A recent McKinsey Global Institute report notes that the future of work will bring more remote work, an acceleration of e-commerce and digital payments, and the continuing rollout of automation and artificial intelligence (AI). There will be major workforce transitions for millions across the globe, many of whom face a widening skills gap and other challenges. And because more and more roles are becoming disaggregated and fluid, work will increasingly be defined in terms of skills.

At the same time, the pandemic has opened the door wider to a range of workplace changes we call the “new possible.” ² 2. We spoke with 350 human-resources leaders about the role of uncertainty in their function. They told us that over the next two years they want to prioritize initiatives that strengthen their organizations’ ability to drive change in leadership, culture, and employee experience. Taking the place of a traditional workplace hierarchy is a model that is more flexible and responsive, built on higher levels of connection. In this approach, organizations work together with their people to create personalized, authentic, and motivating experiences that strengthen individual, team, and company performance.

Employee experience takes into account what people value in the broadest sense, acknowledging how life stage, personal circumstances, and even personality type make different propositions attractive for different people (Exhibit 1). Contrary to conventional wisdom, the most motivating answer is rarely just to be paid more. Rather, employees want to feel a powerful sense of agency—being able to influence outcomes that matter to them—allied with a strong sense of identity and belonging. That means agency in work and agency about work.

Our research shows that different experiences in the three core areas of EX—social, work, and organization—explain most of the variation in how positively or negatively employees view their journey with their company. ³ 3. McKinsey Employee Experience survey, 2020; WorkTrends 2016, IBM/Globoforce Employee Experience Index Study (n = 23,070). Before the pandemic began, a majority of employees—particularly Gen Z workers, surveys indicate—already felt disengaged from their jobs and were placing more emphasis on workplace well-being. ⁴ 4. The employee expectations report 2020, Peakon, 2020, peakon.com.

Organizations that design an EX model that is both personalized and supported by digital experiences that augment flexibility create an enduring opportunity to attract, inspire, and keep the best talent. In a world in which so many people are reassessing why and where they work, EX is at the heart of how organizations set themselves apart. Indeed, McKinsey research shows that employees at leading EX companies are more inclined to surpass work expectations, having a 40 percent higher level of discretionary effort.

Taking a systematic approach to EX

Design thinking, which uses both data and empathy to put employees at the center of the problem-solving equation, is a useful model for leaders to use to help them understand what matters most to their employees. It’s the same thinking that has transformed customer experience over the past decade, turning the lens internally to ask the same questions about employees.

There are several factors for success in an EX intervention or transformation, starting with a clear North Star, or measure for success. Also crucial is a commitment to understanding current employee pain points and talent needs, as well as the emotional context of life and work journeys. Finally, these journeys should be enabled by digital tools that free people up to focus on the more creative and engaging aspects of their work.

Three steps can help leaders—and their organization—develop new ways of working, including establishing a cross-functional capability to implement successful EX

Step 1: Establish a baseline and build on it

This first step is a collective exercise that requires the alignment of senior leaders of all functions, as well as the engagement of the wider organization. It starts with a clear, honest appraisal of current employee needs, supported by data as well as by tools and assessments grounded in organizational science.

An honest appraisal of employee needs, supported by data, helps to ensure that a company has a clear-eyed view of the core theme it is driving.

More broadly, it requires leaders to articulate the direction and scale of ambition for EX and define the value at stake. This helps ensure that a company has a clear-eyed view of the core theme it is driving, rather than just a vague idea of how to improve performance with a one-and-done response.

For example, one company wanted to focus on financial performance and customer impact. Looking across all levels of the organization, the company identified leaders in both functions and developed an EX plan to transform how these individuals experienced key moments in their journeys, such as onboarding and their first few months as leaders. This exercise helped the company attract and keep more people who thrived in these roles.

Another organization’s North Star was to become the best place to work in a digital age, so it developed a tailored EX with a focus on digital and AI talent.

Step 2: Identify and transform employee journeys

Design thinking involves a “discover, design, deliver” cycle that involves a deep understanding of a particular employee journey over a relevant stretch of time. For most product- and customer-service journeys, that cycle is shorter than those of employee journeys—and often only applicable to their main components. For instance, the onboarding journey in a role may take as long as a year to play out completely, longer than a typical product journey. But the process is otherwise remarkably similar.

To implement a successful EX model, companies need to get the following two design elements right:

EX designers, like their product and service equivalents, analyze employee journeys by building clearly defined archetypes—what we call personas—to plot out important moments.

Based on data- and empathy-driven descriptions of hypothetical people, personas can be used as tools to redesign the experience in areas that employees find lacking. They reflect who employees are—background, age, level, and tenure—and where they sit in the organization, as well as what their particular needs, behaviors, and attitudes are.

For example, a persona could be based on a role such as a nurse practitioner in a healthcare system. This person exhibits a strong work ethic but has been working nonstop since the pandemic began and is burned out. Despite trying her best, she can’t support her team the way she would like to and needs time to reenergize so she can coach and support the people she works with, who are similarly exhausted.

EX designers, working hand in hand with employees, can build these insights into a persona and, in turn, design “edge cases”—that is, places where redesigning employee journeys has the most value. Support for employees in roles such as nurse practitioner could include flexible paid time off, well-being support, and more opportunities for team engagement.

A global technology leader wanted to emphasize inclusivity, so it developed personas based on observed behaviors and the personality types represented among its workforce. By mapping personas, it found that introverts were often booking meeting rooms just to have lunch in peace and to have a chance to recharge. This exercise set a number of priorities for reimagining the workplace, from the canteen to the conference room, and led to a dramatically different new headquarters design. Performance and satisfaction measures improved in parallel, with some tasks being completed 30 percent more quickly.

‘Moments that matter’

Once EX designers, working closely with employees, create personas, they can then define “moments that matter.” These steps in an employee life cycle are inflection points that, if designed well, can create a disproportionate uplift in experience. They also map pain points that can then be addressed (Exhibit 3). Moments that matter will vary by company, but they also fit within the same relatively consistent set of employee journeys in most organizations.

Journeys, and moments that matter in particular, vary significantly based on personas and company context. It is therefore crucial to work with employees to identify these moments and their related pain points. Having employees help define personas reinforces the “human touch” aspects of the work and helps create meaningful impact.

Colleagues who have experienced these moments can be enlisted to help develop prototype solutions in focused design sprints, along with piloting in a single business area or function for rapid feedback and modification. A key part of designing these prototype solutions is to consider the role that digitization and digital tools play in fundamentally changing what work means for people. Digital portals instead of paper filing, virtual focus groups, rapid prototyping—these measures allow people to focus on more engaging work activities.

Companies can then create a series of key performance indicators to measure and track satisfaction over time, gauging impact and driving continual improvement. Part of this shift includes augmenting the capabilities of HR teams, whose mandate already emphasizes employee-centric policies. In essence, the process of listening to employees and monitoring progress should be a seamless digital experience guided by a human touch.

A commitment to fact-based analysis also distinguishes EX excellence from good intentions. For instance, one global software company used its impressive technology capacity to enhance EX digitally. It identified behavioral employee personas and prioritized a number of critical moments that matter for performance and satisfaction. Using context-specific personalization, employees are guided and supported in real time as they experience annual performance reviews and significant role changes or life events. The company not only leveraged digital tools, such as a virtual avatar, to give personalized, real-time feedback to employees but also used virtual-reality technology to strengthen immersion and empathy during annual performance reviews.

Step 3: Equip the full organization for an EX transformation

After identifying personas and moments that matter, the final step involves implementing systems that let the organization scale EX—through better data, measurement, systems, and capabilities. While HR is a central partner here, tools and resources are put in the hands of employees and managers to transform their experience. The changes to operating models and performance-management systems are linked to business performance so that organizations can assess financial impact.

One major European agrichemicals player accelerated its EX journey in just three weeks with a series of three sprints, engaging employees to help identify and map priority journeys and moments. In addition to a complete redesign of two moments that matter, the team was able to create a full road map for improved EX across the organization, along with resource requirements and measures for financial impact.

In another example, a global heavy-vehicle OEM reimagined its digital dealership through a global employee-experience transformation. The new cocreation approach was adopted across markets by a record 90 percent of dealers. The redesign took ten minutes off the average work order and helped employees to deliver truly proactive customer service.

Success factors: The big picture

Regardless of industry or geography, an organization can create a distinctive EX strategy by first defining what its goals are and how EX supports business impact for the company. It should also avoid a cookie-cutter approach to employee journeys by marrying rigorous analytics with personalization, developing appropriate personas, and focusing on moments that matter that resonate with the workforce.

In addition to these fundamentals, successful EX also creates a balance between top-down guidance and letting employees create their own destinies. Everyone is in on the journey, including a coalition made up of finance, operations, and IT, among other functions; these groups are partners in change management and implementation from the start. Finally, data is at the center of how organizations can continually measure impact and course correct as needed.

Now more than ever, people are thinking hard about where and why they work. The best employee experience is not meant to be yet another organizational process. EX means pinpointing important moments in an employee’s journey and making them more positive, fulfilling, even joyful. Doing so can help companies attract the best people, motivate them to perform, and augment feelings of loyalty. A successful EX culture, in turn, accelerates growth and creates competitive advantages.

Focusing on employees is long overdue. Organizations can seize this moment to do and be more for their people, as well as for their shareholders and customers. How each company manages this opportunity may shape its perception as an employer—both internally and externally—for years to come.

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Given these benefits, firms have been expanding their efforts to make it easier for current employees to learn about and apply for new internal opportunities. Creating more open internal talent markets certainly increases the odds that a hiring manager will find that perfect internal candidate, but it also means that hiring managers more often find themselves in the unenviable position of having to tell other employees that they did not get the job. While good data on internal application patterns is hard to come by, recent estimates suggest that managers can expect to receive an average of 10 internal applications for every open job, a number that was confirmed in our conversations with talent acquisition leaders across more than two dozen large organizations. That means it is often the case that 9 employees — 10 if you hire an external candidate — hear “no” each time a job is posted.

How do those rejected employees respond? They respond poorly, at least in the short term. After all, no one wants to be turned down for a job, and the sting is often greater when you are told “no” by your current employer. Studies have shown that internal rejection leads to reduced job satisfaction and reduced commitment to the organization. Rejection can also engender feelings of envy toward the workers who “beat them out” for the job or lead employees to engage in counterproductive work behaviors, such as stealing from their companies. If employees stick around a few months after rejection, however, these negative attitudinal effects tend to fade away.

But many employees decide not to stick around. In fact, research indicates that rejected internal candidates are nearly two times as likely to leave their organizations compared to those who were either hired for an internal job or had not applied for a new job at all. The lost productivity, combined with the costs of finding replacements for these employees, is often substantial. We wanted to figure out how firms might systematically reduce the likelihood that rejected candidates will exit. Fortunately for firms, our research suggests that while rejection may be inevitable, turnover is not.

We analyzed just over 9,000 rejection experiences of employees at a Fortune 100 company over a five-year period. A key insight from our research is that employees do not apply for jobs solely because they want a new job right now; they also apply to learn what opportunities might be available to them in the future. If an employee is rejected today, they are more likely to stick around if they feel they will have good chance to advance tomorrow. Because flatter hierarchies, rapidly changing job requirements, and increased external hiring have combined to leave employees perplexed as to what career paths look like within their organizations, the easiest and most straightforward way for employees to figure out what opportunities are likely to be available — both today and in the near future — is to apply for a job. While a rejection is a clear indication that the employee is unable to move into a role now, employees also pay close attention to two aspects of the hiring process to determine whether they are likely to be able to move into a similar role in the future.

Did they interview with the hiring manager?

We found that internal candidates who were rejected after interviewing with the hiring manager were half as likely to exit as those rejected earlier in the process. The reason is twofold. First, because hiring managers usually only interview a very small number of candidates (recent estimates suggest about 2% of applicants), getting an interview signals to the candidate that they already possess many of the characteristics needed to move into the job. Second, an interview provides a forum for hiring managers to give feedback to candidates about any knowledge and skills they may currently lack, as well as how to acquire them if they wish to be hired for a similar job in the future.

In contrast, employees who do not advance to the interview stage tend to feel that their application was not given serious consideration and rarely receive concrete feedback about how to improve their chances of success in the future. They are therefore more likely to look externally for subsequent advancement opportunities.

Important to note: Having someone from HR interview a candidate is not a substitute for a hiring manager interview. In fact, we found that rejected candidates who interviewed with HR but not the hiring manager were just as likely to leave as those candidates whose applications were rejected as part of the automated pre-screening process baked into most applicant tracking systems.

Were they rejected in favor of an internal or external candidate?

We also found that a rejected candidate’s likelihood of leaving was cut in half if they were passed over in favor of an internal candidate rather than an external candidate. Why do candidates seem to pay such close attention to whether a colleague or an outsider was hired? Not surprisingly, employees believe that the past predicts the future. When they see their organization favor an external candidate, they assume they will have to face external competition for similar jobs in the future, lowering their own chances of being hired. When employees see a colleague get hired, they assume that internal candidates (like themselves) will be favored in the future. They are therefore less likely to explore external opportunities.

Additionally, seeing a colleague get hired initiates a positive, upward social comparison process, wherein rejected employees feel as though they can emulate those employees’ successful mobility attempts in the future. We ran additional analyses that supported this argument: rejected internal candidates who were more similar to the winning candidate (in terms of functional expertise and tenure in the company, for example) were much more likely to stick around following a rejection.

Given these results, what should companies do? While it is impractical for most companies to guarantee that every internal applicant will be interviewed, firms must be strategic in considering which employees are interviewed.

Consider the case where a star employee in the marketing department applies for a finance job. It is quite possible that the hiring manager has no idea that this employee is a star in marketing, and it would be reasonable for a hiring manager to be hesitant to interview someone that has little related experience. However, not interviewing that candidate doubles the likelihood that he will leave the company. Organizations should therefore ensure that their applicant tracking systems have a capability to flag applicants whom the organization wants to retain and require that they be interviewed. To prevent hiring managers from being overwhelmed with internal applicants, some of whom might not be right for a given job, we suggest that organizations be thoughtful about who they include on a “must interview” list.” They might also redirect workers to other jobs within the firm for which they might be better qualified. Companies such as IBM, for example, have developed technology that explicitly provides individualized information about alternative internal career paths through online career management tools.

While we do not suggest that organizations should only hire internal candidates, our work does suggest that organizations should carefully consider whether to hire an external candidate when there is a viable internal candidate. External hires can bring valuable knowledge and new perspectives into the organization, but doing so also increases the odds that current employees will take their own knowledge elsewhere.

In short, companies that strategically manage their internal talent market are better positioned to keep rejected employees onboard.

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While it is still too soon to know the effects of these policies, we do know from prior research and our own experience that financial incentives can be effective in changing behavior in the short term. But will these policies create sustainable and long-lasting organizational change?

Alongside these formalized change mechanisms, we think it is just as important for leaders to turn their attention toward an informal lever for organizational change: culture. We asked more than 19,000 HBR readers to rate the diversity and inclusivity of their organizations and to rank their organizations’ central cultural attributes.

We found that one particular culture style differentiated the diverse and inclusive organizations from those that were not: a learning-oriented culture.

Developing the right culture can be a slow and difficult process. Although achieving a shift toward a learning culture will take longer than setting diversity targets and paying out bonuses, we believe organizations that are able to pull it off will be the ones to build equitable, diverse, and inclusive organizations for the long-run.

What Is a Learning Culture?

Each organization’s culture is distinct, but can be described by a combination of eight culture styles that fall along two dimensions: how individuals respond to change (stability versus flexibility); and how individuals interact (independence versus interdependence).

Learning­-oriented cultures emphasize flexibility, open-mindedness, and exploration, and can equip organizations with the ability to adapt and innovate. The power of culture lies in its alignment with strategy, and therefore, there is no one-size-fits-all formula. However, the flexibility afforded by learning cultures can be invaluable in navigating today’s exceedingly uncertain business environment.

The Relationship Between Learning, Diversity, and Inclusion

Our survey of HBR readers revealed that 65% of respondents did not think that their organizations are diverse and inclusive. When we separated the organizations that were rated highly for diversity and inclusion from those that received low marks, some cultural differences emerged. Among organizations rated as very or extremely diverse and inclusive, 14% had an organizational culture in which learning was the most salient culture style. In comparison, among organizations rated as not at all or not very diverse and inclusive, only 8% ranked learning as the most salient style.

On the other end of the scale, we found that organizations that were not diverse and inclusive were much more likely than diverse and inclusive organizations to have cultures that emphasized authority (dominance, decisiveness) and safety (stability, preparedness).

It’s important to note that culture styles do not operate in isolation and that examining an organization’s most salient culture style only reveals part of the picture. Organizations are defined by multiple styles, so we next analyzed the relative salience of all eight culture styles. Here, we found that caring ranked as the most salient culture attribute across all organizations, on average, regardless of how the organization was rated on diversity and inclusion.

A culture that emphasizes caring, collaboration, and mutual trust will provide a foundation for diversity and inclusion, but that isn’t sufficient on its own. What’s interesting about learning cultures is that they differentiated the diverse and inclusive organizations from those that were not.

We found that as the level of diversity and inclusion reported by respondents increased, so too did the organizational emphasis on learning. Among organizations that were not at all or not very diverse and inclusive, learning ranked as the sixth most salient culture style (out of eight styles); among organizations that were very or extremely diverse and inclusive, learning ranked as the third most salient culture style.

When we zoomed out further, we found that organizations that are rated as diverse and inclusive had cultures more heavily weighted toward flexibility and independence, while organizations that were not diverse and inclusive had cultures that tended toward greater interdependence. While one might expect interdependence to be a good thing for inclusion, interdependent organizations tend to focus on tradition, rules, and continuity — all of which can get in the way of change and the acceptance of new and different voices. 

How Do Learning Cultures Promote Diversity and Inclusion?

Organizations with learning-oriented cultures will seek out and value individuals who bring unique and varied perspectives and experiences to the table, and will be better positioned to make progress in increasing diversity within the workforce. Creating a more diverse workplace requires a shift away from the status quo — something that learning cultures are uniquely equipped to accomplish.

Learning cultures emphasize openness, creativity, and exploration. As Robin Ely and David Thomas show in their research, these are the same characteristics needed to tap the benefits of a diverse workplace and to ensure that a wide range of perspectives and experiences are heard, valued, and embraced. Once new individuals join the organization, this type of culture can create an inclusive environment and boost retention of a diverse workforce. One study found that 47% of people actively looking for new jobs cited company culture as the main reason. In organizations where differing perspectives and voices are silenced, ignored, or neglected, we expect leaders will struggle with managing, hiring, and retention.

Altogether, the foundation provided by a learning culture can promote the selection of a more diverse workforce while decreasing attrition. Eighty percent of respondents to a Deloitte survey reported that inclusion is an important factor in choosing an employer. Once an organization has established a reputation as a diverse and inclusive work environment, with clear opportunities for advancement and development, it will continue to attract a diverse workforce.

How Can Leaders Build a Learning Culture?

Once leaders have made the decision to orient their organizational culture around learning, they can catalyze the evolution by framing the culture change in terms of current business challenges and tangible outcomes, demonstrating a focus on learning in their own leadership, holding organizational conversations about learning, and reinforcing the change through organizational design.

Our survey shows many leaders have room to grow as a role-models for organizational culture, with 30% of respondents reporting that leaders in their organizations are not at all or not very effective in role-modeling and shaping culture. To foster a learning­-centric culture, leaders should lead by example: being open to new ideas, failure, and feedback; sharing how their own perspectives have changed over time; and recognizing those that think outside the box and take risks. They can take time to develop new skills, and make sure their reports have the flexibility to do the same. Leaders need to hold one another accountable for acting in accordance with this culture style.

Next, the desired changes must be consistently communicated. For example, using language that embraces adaptation for the future, rather than framing today’s challenges in terms of weathering the storm, can help employees feel empowered to think creatively and make changes from how things have been done in the past. Leadership messages and team meetings can be used to highlight new innovations and learning-related accomplishments. When employees routinely hear what is valued within the organization, behavior will start to shift. Our survey showed that in 35% of organizations, people do not talk about culture frequently. This can and should change.

Finally, leaders can design organizational structures, systems, and processes to support the evolution toward a learning-centric culture. This may include adjusting hiring and interview procedures to identify new employees who are curious and open to change. To build a learning culture, onboarding processes should be designed accordingly. For example, because learning opportunities often come from those different from oneself, orientations can be structured to help new employees build cross-functional relationships. Training programs for existing employees can focus on envisioning new opportunities and possibilities outside of long-established routines and provide job rotations that allow exposure to different parts of the organization.

Performance targets and reward systems should be tied to innovative activities and outcomes, and allow for a degree of appropriate risk-taking without fear of reprisal. Performance reviews can explicitly ask employees what they have learned, and can be used to provide feedback and guidance on how employees can become more flexible and exploratory in their work. Coaching and reverse-mentoring programs that match experienced executives with more junior employees can allow for learning to flow in all directions and for ideas to be exchanged throughout the organization. Setting up a resource library can allow employees to both learn from and contribute to a constantly evolving knowledge base.

These efforts will lead to myriad benefits. In addition to providing a foundation for a diverse and inclusive workplace, learning-centered organizations will also be well-positioned to innovate and evolve in a rapidly changing external environment as we emerge from the Covid-19 pandemic. We also found that respondents who reported working in organizations with high organizational performance tended to characterize their organizations as more learning-oriented, while those working in organizations with lower performance levels had cultures that did not heavily emphasize learning. Taken together, what’s good for diversity is also good for organizational performance, and what is bad for diversity is also bad for performance.

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To impose the sweeping change needed to realize those promises, CEOs need all hands on deck: senior leaders, managers, and employees at every level of the company.

But widespread support for any effort can be difficult to garner. And as we’ve seen over the past year, DE&I work can be particularly divisive. At Coqual, a nonprofit global think tank in the DE&I space (formerly the Center for Talent Innovation), we’ve long heard the refrain, “What about me?” A focus on one identity group, such as Black employees, can feel to others as though it comes at the cost of their own group’s career interests and workplace well-being. A crucial way to galvanize support and manage complex change is to create a culture where every employee, regardless of their background, feels that they belong. It’s a lesson companies can teach U.S. society as a whole.

After all, belonging is essential to humans. Psychologists rank our need to belong on par with our need for love. Because the need to belong is universal and fundamental, focusing on it has the power to draw in the whole workforce, even those who might feel excluded from — or threatened by — current DE&I conversations. When companies emphasize a culture of belonging, they call everyone in, creating space in the conversation to address our shared humanity and build a bridge to greater empathy and inclusion for the groups that are the most marginalized in the workplace today.

To build a culture of belonging and reap the many benefits for employers and employees, leaders first require a clear understanding of what it means to belong at work. Informed by existing measures and extensive research by Coqual, we developed a quantifiable definition that states we belong at work when we are:

In February 2020, we fielded a nationally representative survey of thousands of college-educated professionals and held focus groups and interviews with hundreds more. With the onset of the global pandemic, we fielded a second survey in May 2020 to capture of-the-moment employee attitudes. In analyzing the data, we found that belonging yields a competitive edge for employers: Compared to employees who score low on our 10-point belonging scale, those with high belonging scores are far more likely to be engaged and loyal and to promote their organizations as good places to work.

We saw notable variations in belonging scores — demonstrating that there is a lot to do to build work cultures of belonging for all, not just for some. White men and white women have the highest median scores; Asian and Black women have the lowest. Recent hate crimes against the Asian community demonstrate the devastating consequences that can result from humans’ tendency to “other” — to make individuals or groups feel that they are outsiders. (We have yet to see the depth of the workplace toll that the racial and gender inequities exacerbated by the pandemic have taken on employees’ sense of belonging.)

The good news is that while a lack of belonging is the challenge, building it is a crucial strategy for healing — and for galvanizing support for all DE&I work. As organizations map ways to meet their commitments to racial equity and justice, closing these belonging gaps will help them join employees in a common mission — and retain and engage employees of all backgrounds. Indeed, we find that men in the majority group at their companies (generally, white men) who believe in DE&I have far higher belonging scores than their peers who don’t. Getting engaged in the work of including others seems to foster a strong sense of citizenship and connection to one’s employer.

We can all take steps to foster belonging, at every stage in our careers. We examined what employees with high belonging and those with low belonging are likely to get from their workplace cultures. On the basis of those findings, we outline concrete actions leaders, managers, and colleagues can take to drive belonging for those around them:

In polarizing, confusing, and often isolating times, it’s easy to keep our Zoom calls focused solely on getting work done. But our companies have made commitments to change, to make the future of work more fair and equitable for all. Some employees are eagerly awaiting these changes; others are wary. To bring everyone on board, we must tap into each employee’s need to belong — and encourage them to create that same sense of belonging for those around them. Pulling together around belonging can then keep us on track to do the hard work of adjusting processes and attitudes to improve equity as well.

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