Global capability centers (GCCs)¹These large facilities concentrate workers and infrastructure that handle operations (for example, back-office functions, corporate business-support functions, contact centers, and middle office) and IT support (such as app development and maintenance, remote IT infrastructure, help desks, and research and analytics) to sustain productivity growth. face an enduring and worrisome challenge: how to keep good talent from walking out the door. In our conversations with GCCs, executives report that attrition rates are high. The combination of departures and the current volatility in the talent market have disrupted and destabilized company culture; increased recruitment costs; and resulted in lost institutional knowledge, additional time spent on training new employees, and lower productivity and work quality.

While some of the worker retention pressures are abating in the current economic climate, the underlying issues persist. Forward-thinking businesses now have a golden opportunity to address them.

Most leaders understand the importance of solving the retention issue. The problem is that they tend to have a limited understanding of what their employees actually value. And they too often opt for quick fixes rather than addressing the underlying issues. This approach leads to reliance on a set of blunt tools, such as increasing compensation and benefits or providing basic work-from-home flexibility, with predictably little change in retention rates.

There is a better way. Our research has been clear that the best way to resolve the issue is by improving employee experience (EX),²Employee experience is the full set of interactions and cultural touchpoints in an organization that have an impact on a worker’s satisfaction levels. Metrics to gauge EX include how strongly workers would recommend their company to friends and family. which strengthens employee loyalty and, as a result, resilience and continuity.³Jonathan Emmett, Asmus Komm, Stefan Moritz, and Friederike Schultz, “This time it’s personal: Shaping the ‘new possible’ through employee experience,” McKinsey, September 30, 2021. Executives should treat EX as seriously as CX (customer experience) by being more scientific and more tailored in their approach.

Our research and analysis reveal that while compensation and benefits are important, they have essentially become table stakes. Top talent are looking for additional benefits, such as a positive and supportive culture and the flexibility to stay in the current organization or look for a new job. By taking five focused actions, companies can not only keep their people but also help them to be more productive.

Five actions to improve EX

To understand what employees want from their organizations, we researched the EX practices of organizations around the world.⁴We conducted a survey of more than 7,000 respondents from 72 global capability centers that collectively employ more than 300,000 people. We augmented this research with interviews of about 25 GCC leaders and findings from more than 20 focus groups with GCC employees. These insights highlighted five actions that executives could take to create a work environment that better supports employees.

1. Use personas and journeys to customize EX

Our analysis defined nine primary employee journeys and found that six have an outsize influence on whether employees join or stay in an organization. Four of these journeys—role change, feedback and coaching, performance review, and training and skill building—can have a particularly detrimental effect when poorly executed. For instance, our survey found that employee satisfaction with these four “broken journeys” drops with increased tenure, with women experiencing the sharpest decrease.

A one-size-fits-all approach to EX won’t be effective. Instead, companies should create employee personas and then tailor solutions along selected dimensions to ensure offerings are hitting the mark. For example, because a global bank’s GCC identified “support on major life events” as a journey that mattered to most employees, it redesigned its employee-benefit policies and programs to include reimbursement for home office setup and well-being support.

2. Reimagine the role of manager to emphasize coaching and mentorship

When the workforce was going into the office on a regular basis, managers typically spent most of their time monitoring employee performance and handling administrative tasks. At a global insurance GCC, for example, one manager spent 20 percent of their time managing transport and attendance-related issues. In an era of hybrid work, managers need to be prepared to provide one-on-one coaching and feedback to employees—both in person and virtually.

This insight was reflected in our analysis, which found that when a manager shows care for workers, EX improves. While this result might not be surprising, companies tend to undervalue its impact and fail to adjust what they want their managers to do. Companies instead need to fundamentally reshape the role.⁵“Stop wasting your most precious resource: Middle managers,” McKinsey, March 10, 2023.

To address the evolving needs of the workforce, managers must be prepared to play four primary roles:

Problem solver. Provide support on high-complexity operational and administrative activities (such as aiding internal processes and escalating customer issues).

Coach. Offer direction to help employees build capabilities and functional expertise.

Counselor. Understand employee career aspirations, care for physical and mental well-being, and act as a trusted adviser.

Cultural ambassador. Promote employee connectivity in a hybrid work environment and model desired behavior and values, such as being accessible to employees and engaging in proactive communication.

This shift will require companies to invest in additional training and design new incentives. Training programs can help managers focus on developing new essential skills (such as remote coaching, mentoring, fostering interpersonal relationships, building trust, helping manage stress, and promoting well-being) and using new technologies. Providing mentors from different departments and giving managers dedicated time for building these skills can help them master their new roles.

3. Find new ways to embed culture and values for a hybrid work environment

A positive, supportive culture, characterized by inclusion and respect, is strongly connected to the overall well-being and experience of employees. Often, these attributes can have a significant influence on an employee’s connection to the organization’s purpose and brand. This pattern is especially true for female employees: as women move up the corporate ladder, their well-being unfortunately tends to fall significantly.

4. Redesign the office for collaboration and connection

Employees are looking for flexibility in where they work. Our survey found that more than 90 percent favor a hybrid model, with an average of one and a half days a week in the office. Three-quarters of employees report that working from home is a very important factor in staying with their current organization. More than 70 percent of employees want their work commute to be less than 30 minutes (Exhibit 4). Therefore, it’s crucial for companies to design and implement an effective hybrid working model.⁷The State of Organizations 2023: Ten shifts transforming organizations, McKinsey, April 26, 2023.

Workers increasingly see the office as a space for collaboration and connection. This sentiment hints at the office of the future: smaller offices with flexible workspaces and at least 50 percent of the area designated for multiple uses. To encourage people to come into the office, companies should also explore having satellite offices in select locations near employees to enable smaller gatherings, with the main office used for development, collaboration, and hosting social activities.

At one global bank’s GCC, leaders have undertaken a radical redesign of its office. So far, the new approach has reduced the amount of space allocated to doing traditional work by more than half while adding communal areas for activities such as training, coaching, games, and events. This fit-for-purpose office not only addressed new employee needs more effectively but is also expected to reduce the overall footprint by 40 percent.

5. Rethink the traditional workday

A global bank’s shared-service center responded to this need by enabling increased flexibility around scheduling (such as giving employees the option to swap shifts with coworkers and split shifts) to align with persona-based preferences and life events. One employee remarked on the changes as follows: “I love being able to spend more time with my kids at home, and I don’t need to sacrifice my performance at work.” These adjustments have decreased monthly attrition by 80 percent.

Companies have several options at their disposal, including allowing tech workers to adopt flexible day shifts (such as split days or flexible work hours). For example, half of employees would be open to working longer hours over fewer days (Exhibit 5). One survey respondent remarked, “I hope the four [days a week] for ten [hours a day] schedule is open so I can spend more time with family.” This approach requires companies to adapt their approach to hiring and staffing to ensure sufficient levels of coverage.

Because EX is fundamentally personal, organizations need to become more adept at listening to ensure they are addressing employee priorities. By gaining a better understanding of what employees value and reimagining every element of work—from roles, to the office, to scheduling—GCCs can position themselves as an employer of choice for years to come.

This content was originally published here.

The post Employee experience still matters: Talent retention at Global Capability Centres appeared first on Matt Dallisson Global Executive Search | Leadership Consulting.

Diversity, equity, and inclusion (DEI) is at an inflection point: companies and institutions have demonstrated positive intent and increased discussion and activity, but data shows that progress is slow. In 2020, the global market for DEI—that is, dollars spent by companies on DEI-related efforts such as employee resource groups (ERGs)—was estimated at $7.5 billion and is projected to more than double to $15.4 billion by 2026.¹“With global spending projected to reach $15.4 billion by 2026, diversity, equity & inclusion takes the lead role in the creation of stronger businesses,” PR Newswire, November 3, 2021. Yet, as just one example, at the current rate it will take another 151 years to close the global economic gender gap at all levels.²Global gender gap report 2022, World Economic Forum, July 2022.

Greater clarity on what works—and what does not—can help leaders effectively create sustainable change.

The Global Parity Alliance—a cross-industry group committed to advancing DEI—launched the DEI Lighthouse Program to identify initiatives that have resulted in significant, quantifiable, scalable, and sustainable impact and surface what those initiatives have in common. The ambition is that equipping leaders with these best practices will help focus DEI efforts on what works best, ultimately contributing to faster, scalable progress across the global business community and surrounding ecosystems.

For the full results of this work—including key success factors common across initiatives that yielded significant impact, real case examples of effective DEI initiatives in practice, and actions that employees can take at each level of the organization to support progress on DEI—read the full report written in partnership with the World Economic Forum.

Five success factors are common among DEI initiatives that had significant impact

While the state of DEI efforts varies by company, industry, and geography, a growing number of management teams have recognized the importance of, and urgency behind, joining the conversation and taking action to make progress on DEI.

The Diversity, Equity and Inclusion Lighthouses 2023 Report identified five success factors common across the DEI initiatives that yielded the most significant, scalable, quantifiable, and sustained impact for underrepresented groups. The success factors are: a nuanced understanding of the root causes; a meaningful definition of success; accountable and invested business leaders; a solution designed for its specific context; and rigorous tracking and course correction.

The descriptions below include real examples from a selection of the lighthouse case studies featured in the report. The lighthouse initiatives were selected—by an independent panel of DEI experts—for exceeding a predetermined threshold for significant, quantifiable, scalable, and sustained impact for underrepresented groups.

1. Nuanced understanding of root causes

Identifying your company-specific DEI opportunity areas can help to inform prioritization of efforts and investment, goal setting, and solution design. This process begins by analyzing relevant data and sources of insight to deeply understand the challenges and root causes from the perspective of those most affected. This fact base likely includes employee feedback surveys and input from the target population obtained through focus groups and interviews.

Lighthouse case snapshot: US retailer Walmart created an initiative to improve social mobility for employees through free education and upskilling. While conducting a routine equity and accessibility assessment of their processes, Walmart found that its frontline workers, 39 percent of whom identify as Black or Hispanic/Latino, were not securing higher-paying roles at the company. Through a deeper retention diagnostic, Walmart learned that this was because of the skill sets or degrees required to move up internally, and the prohibitive time commitment and cost needed to obtain those skill sets. Initiative impact included 20 percent higher rate of retention among program participants and 87.5 percent higher likelihood of promotion for Black program participants versus nonparticipants.

2. Meaningful definition of success

After prioritizing an opportunity area, defining success by setting clear, measurable, near- and long-term goals can help guide the effort and assess effectiveness. Then, articulating a case for change—the rationale for why the organization is focusing on the effort and how it connects to the company’s values, mission, and business outcomes—can help move employees to action.

Lighthouse case snapshot: Professional-services company PricewaterhouseCoopers (PwC) created a five-year, five-point social-mobility action plan with quantified aspirations for supporting social mobility, including to: help 25,000 young people develop workplace skills; provide 200 young people from lower socioeconomic backgrounds with paid work experience per year; provide 100 young people with technology degree apprenticeships; become a cornerstone employer³A cornerstone employer works with local communities to provide young people in an area with the opportunities they need to be prepared and inspired for the world of work. in a social mobility cold-spot area; and upskill 250 social enterprises across the country and commit to spending at least £10 million through their supply chain with social enterprises. Initiative impact included: upskilling more than 18,000 students through their workplace skills programs in socioeconomically disadvantaged areas, upskilling more than 600 social enterprises to become more effective at driving progress on social mobility and creating more than 200 jobs through the new PwC office in the Bradford Opportunity Area—a social mobility “cold spot.”

3. Accountable and invested business leaders

Deep commitment from executive management can help set initiatives up for success by signaling the importance of DEI and making sure initiatives have the right resources. The CEO and senior business leaders can support by: setting the effort as a core business priority, being held accountable for outcomes and not just inputs or activities, role modeling and leading desired change, and allocating sufficient resources to the initiative—budget, expertise, and timeline.

Lighthouse case snapshot: Professional-services company EY launched Neuro-Diverse Centers of Excellence (NCoEs) to improve the inclusion of neurodivergent candidates and employees. Leaders prioritized the initiative for organization-wide adoption and resourced and treated the NCoEs with the same rigor as all other business initiatives. The program was overseen by the global vice chair of transformation, a member of the organization’s most senior leadership body, who was held accountable for outcomes. NCoEs were scaled across 19 cities in eight countries and resulted in a 92 percent retention rate for employees hired through the NCoEs.

4. Solutions designed for context

Designing solutions to address the root causes of the problem, including by making any needed changes to key processes and ways of working, can support effectiveness and sustainability. Setting the solution up for success also includes equipping employees with the knowledge and skills to support the desired change and encouraging their contributions.

Lighthouse case snapshot: Steel manufacturer Tata Steel launched an initiative to improve intersectional gender diversity for employees by addressing key root causes, including: stereotypes and lack of support structures, legal and geographic constraints, enduring consequences of historic marginalization, noninclusive policies, and unsafe work practices. The multipronged solution included a variety of efforts such as upskilling, career support, job opportunity creation, and inclusive redesign of policies and work infrastructure. Impact included launching the first-ever transgender hiring program in India.

5. Rigorous tracking and course correction

Measuring progress against the aspiration can help leaders monitor the solution’s effectiveness, adjust the approach to increase impact, as needed, and more accurately direct the use of company resources.

Lighthouse case snapshot: HR consulting firm Randstad launched an initiative to support economic empowerment for at-risk women in the United States through upskilling and opportunity creation. The company tracked key performance indicators and participant feedback—including through one-on-one check-ins with participants at key stages of the program—to track participant completion rate and monitor program effectiveness. After the first year, Randstad added childcare and professional clothing to the program’s offerings after learning that participants needed these services to successfully complete the program and secure long-term employment. Impact included supporting 1,000 at-risk women, with 95 percent of apprenticeship graduates advancing into long-term job opportunities through the program.

Applying the key success factors to your DEI initiatives

Engagement at each level of the organization—from individual contributors on the front lines to the CEO and board of directors—can help make meaningful progress on DEI.

This content was originally published here.

The post Diversity, Equity and Inclusion Lighthouses 2023 appeared first on Matt Dallisson Global Executive Search | Leadership Consulting.

Global businesses have reached a sustainability inflection point. Stakeholder expectations and heightened investor scrutiny are putting organizations under pressure to articulate their societal roles more clearly, prioritize environmental and social objectives within their business strategies, and demonstrate progress to stakeholders. We also know that employees are prioritizing their employment decisions based on an organization’s purpose, culture, ESG goals, and diversity, equity and inclusion (DEI) priorities. Yet for the most part, corporations have been neglecting a powerful lever for advancing their sustainability agendas: executive compensation.

A gap has opened up between pay and purpose in most executive suites. Most top teams are incentivized against short-term financial performance, which differs from organizational purpose statements that typically reflect aspirational long-term financial and non-financial goals. This creates a disconnect between the purpose of an organization (its contribution to society) and executive pay (what type of “performance” gets rewarded). By realigning these two things, corporations have the opportunity to transform executive compensation from a reputational risk factor to a catalyst for change.

Research shows that organizations that adopt a long-term incentive scheme for their executives display more “long-termist” behavior, such as investing in innovation and stakeholder relationships. But while the efficacy of tying incentives to long-term outcomes is well established, many organizations are still dragging their feet and failing to incorporate such incentives into their executive’s pay packets.

There are several reasons for this. Foremost is that in the current global economic and geopolitical climate, business leaders are having to deal with pressing disruptive forces while focusing on short-term financial metric performance. In some cases, just “keeping the ship afloat” is the primary focus. But there are other challenges, too, including:

Yet while it’s certainly complex, the transition to a sustainable economy is an inevitable process. With the volume of pending legislation and increased reporting demands, organizations will have no choice but to comply. They can either elect to be reactive to these changes or to be a front runner. Inertia has its own risks too.

Combining research from Reward Value Foundation with EY’s Total Reward advisory experience, we have identified five questions that can serve as a helpful starting point for companies to develop sustainable compensation programs.

What is the goal?

What does the organizations aim to achieve with its compensation plan? How do these objectives link to the corporation’s purpose and strategy?

The scheme needs to go beyond the usual “attract and retain the right people” objective. It must be a catalyst for positive change in the organization and for its stakeholders.

It’s critical that this goal is clearly defined as it will inform all subsequent compensation plan design choices, against which the variable pay plan will be evaluated — particularly around which ESG metrics could have a material impact over a relevant time horizon.

Which metrics matter?

Next, organizations should determine which ESG metrics matter — and which don’t. On which topics does the organization invite its stakeholders to measure its progress? What financial, social, and environmental impact does it expect to make by prioritizing these topics?

For example, reduction of greenhouse gas (GHG) emissions is positive and is possibly on everyone’s agenda. But if you’re in the financial services industry, reduction of GHG emissions of your own premises will have a limited impact, whereas reduction of emissions related to your investment and/or loan portfolios would be more impactful. Such materiality is a key issue for the relation between ESG and business performance.

Santander has included this approach in its single incentive (short and long-term) approach. It measures the role it has as a financial institution towards society through the levels of green finance raised and facilitated through the bank’s loan portfolio, and the decarbonization in its investment portfolio. The deferred component of the bank’s executive director and senior management incentive scheme is dependent on the achievement of these sustainable finance criteria.

British supermarket giant Tesco introduced a new compensation plan in 2022 that illustrates another way that materiality can be included. As part of its performance share plan, the supermarket chain included food waste reduction into its long-term incentive scheme for its executives. This approach is supplemented with other ESG measures, such as carbon reduction and leadership team diversity.

How do you weight the incentives and over what timeframe?

Once materiality is assessed, it’s important to determine priorities — or the weighting — of incentive scheme metrics to drive the right behaviors.

While organizations are paying more attention to ESG topics in compensation, the weight allocated to these metrics is often insufficient to make a difference. If an executive’s compensation is linked to a broad basket of financial and non-financial measures (including ESG), the likelihood that they will have an impact on executive behavior will be small. Either the attention will be diluted and spread out over too many factors, or attention isn’t given at all as the impact on compensation is minimal. In most incentive schemes, non-financial metrics are often a basket of topics and the aggregate weighting allocated is often less than 5% of total compensation, and as such has little impact on decision-making.

To make an impact, compensation plans need to be tied to clear KPIs and be financially meaningful to participants. Mars’ long-term incentive plan highlights this approach by linking pay to clear objectives covering four “quadrants of performance” (financial results, quality growth, positive societal impact and being a trusted partner). The two non traditional metrics are each weighted 20% and are comprised of GHG emission targets for 2025 (and beyond) on all scopes and an externally monitored societal reputation metric measuring Mars’ corporate ratings as a trusted partner that addresses stakeholder interests (employees, supply chain, customers, and society at large.). Because of it’s long-term-minded investors, Mars sees these non-traditional measures as clear shareholder objectives.

“It’s crucial that leaders are clear on what is important and understand the role they have to play in achieving both traditional financial metrics and non-traditional metrics,” said Andy Pharoah, Mars’ global vice-president of corporate affairs and sustainability. “At Mars, growth at the expense of GHG emissions is not seen as a success which is why the shareholder objectives include specific sustainability ones which are integrated in the business strategy and the three yearly, board-approved, integrated value-creation plans. These objectives drive a significant component of remuneration and gives our leaders a clear definition of success.”

What are the targets?

For incentivization purposes, sustainability KPIs must be measurable and typically set with reference to external standards or international treaties (like the Paris Agreement). As regulations and standards continue to evolve, so too will the ESG metrics that are selected. Boards therefore need to make sure that they measure what matters and allow for discretionary adjustments where needed.

Having decided the metrics to be used, it’s critical to quantify and calibrate target performance levels for each KPI selected – for instance, reduction of GHGs by “X” percent over “Y” years. Consider using relative targets to allow for sector comparison. Alternatively to assess the internal efficiency of for instance your GHG emissions, it is sound to make the measure dependent on the level of sales or production. Lower emissions due to lower production does not measure progress on energy efficiency for instance.

Incentives are credible and effective when they’re given for achieving results beyond those that would have been achieved without executive intervention. To realize change, it is important that targets are sufficiently “stretched” and not trivial. Linking remuneration to targets set in accordance with the Science Based Targets initiative (SBTi) are already establishing a strong level of credibility and stretch.

How will you show progress?

With ESG metrics in place to incentivize executive focus, disciplined disclosure practices play a vital role in providing visibility on the progress being made. The goal should be to offer investors, customers, employees, and a range of other stakeholders a transparent and accessible articulation of the coordinated efforts an organization has made to improve sustainability.

Remuneration linked targets should be auditable and be disclosed following, where possible, the existing disclosure standards. Audited targets increase the credibility of the measures and therewith the trustworthiness of the remuneration scheme. Furthermore, in using existing disclosure standards, the remuneration disclosure will become transparent and comparable. In using, for example, the Global Reporting Initiative standards on emissions, volume-based performance over subsequent years can be effectively monitored and clearly linked to pay-outs of executive remuneration. Alternatively, monetized impacts analyzed in accordance with the ISO certified VBA impact assessments are also auditable and can effectively be linked to remuneration.

There is a compelling business case for boards and executives to accelerate the transition to a sustainable and regenerative economy by aligning their organization’s sustainability priorities with their executive compensation KPIs and governance frameworks. Considering the five questions posed above can be a starting point on a path to creating a sustainable compensation framework for organizations that serves as a catalyst for positive change.

This content was originally published here.

The post Linking Executive Pay to Sustainability Goals appeared first on Matt Dallisson Global Executive Search | Leadership Consulting.

And crisis isn’t too strong a word. In surveys conducted by AchieveNEXT in August and again in September, middle-market CFOs and CHROs said that attracting and retaining talent is their number-one challenge — cited as such three times more often than supply-chain disruptions and nearly four times more often than costs. Worse, nearly half (47%) told us that their enterprise lacks the tools to address their talent-retention problems.

Midsize companies have weaknesses when it comes to addressing the talent issues they face — but they also have critical strengths. There are steps they can take to leverage those strengths and prevail in the toughest talent market in memory.

The Middle Market’s Talent Challenge

The talent pinch is more painful for the middle market for a couple of reasons. Compared to big companies, their appetite for talent is greater and their talent-planning capabilities are weaker. The middle market has a voracious appetite for talent because it grows faster, on average, than the rest of the economy. For example, over the last five years, midsize companies have turned in an average annual revenue growth rate of 5.64%, while the S&P 500 has grown 4.92%. Payrolls show the same pattern. Earlier this year, middle-market companies told the National Center for the Middle Market that they hoped to increase headcount by 8.9%.

Broadly speaking, middle-market companies also lack three crucial talent assets and capabilities. First, they don’t attract resumes simply by virtue of being famous — they might be great places to work, but their employer brands tend to be local and not top of mind.

Second, midsize companies don’t have deep pockets and are therefore unable to compete for talent by throwing money at the problem, at least not on a sustained basis. As one energy-industry CFO said at an AchieveNEXT roundtable in Denver, “If we’re caught in bidding wars, we’re going to be outbid sooner rather than later.” Middle-market companies’ vulnerability to poaching has risen since the pandemic as wealthy companies have become more willing to hire people regardless of where they live. For example, according to data from The Conference Board, coastal tech companies are increasingly advertising job openings outside their home metros. Furthermore, the vast majority of middle-market companies are privately held and unable to use stock or stock options to incentivize talent to come or stay.

Third, midsize company HR teams are usually small — only 18% of the companies in the AchieveNEXT survey have dedicated benefits managers, for example — and necessarily focused on day-to-day people issues. This leaves them with too little ability to address talent strategically, which might help them avoid bidding for new hires.

In general, middle-market companies shouldn’t overburden themselves with process, but in these times, HR teams feel its absence. For example, in middle-market companies, onboarding is generally informal to the point of being nonexistent (“Hey, kid, sit here and we’ll get you set up”), a weakness exacerbated by flexible and remote work arrangements. And companies that rely on outside recruiters are even encountering a shortage of them.

How to Attract and Retain Talent

Middle-market companies can’t afford to take on all of these problems at once, in either the short or long term. Ours and our clients’ experience tells us they need to roll out the following three simultaneous initiatives:

Pinpoint the problem.

It’s important for leaders to identify and prioritize exactly which talent they’re lacking — the solution for a shortage of managers is different than one for a shortage of developers.

Finding specialist and technical workers is the greatest pain point for middle-market companies. According to AchieveNEXT data, only 3% of midsize companies say it’s easy to find these workers, while 79% say they’re somewhat difficult or extremely difficult to attract. Retaining these employees is nearly as hard: About 7% — just one company in 14 — finds it easy to hold on to technical and specialist employees, and nearly 60% find it at least somewhat difficult.

For one of Jeff’s clients at PROXUS, a manufacturer with plants in four Midwestern states, the most significant talent gap is specialty machinists. The required skills are specialized enough that few schools teach them and critical enough that the company’s ability to take on new business depends on them. The positions are even harder to fill because each of the company’s plants have traditionally done their own training and recruited locally, which requires looking for rare talent in small talent pools. By identifying the company-wide nature of the problem, leaders have been able to adjust both training and recruiting and execute a recruiting strategy that’s helping alleviate the talent shortage across all plants.

Revamp the recruiting and onboarding process.

A few relatively simple changes can make a big difference in recruiting. First, rewrite ads and job descriptions to emphasize the benefits of working for you, instead of your specs and requirements. Security Risk Advisors, a Pennsylvania-based cybersecurity firm, operates in an industry that has always had a severe talent shortage. “We focus on aptitude and passion,” says Katie Calabrese, the company’s head of HR. And while specs are important, “If you don’t quite meet them, we want you to apply anyway.”

Second, expand your talent pools. Proxus finds that many clients have inadequate or antiquated talent-acquisition processes that miss opportunities to seek diverse talent or to use techniques and technology to find passive candidates and career switchers. Many recruiting technologies, such as those created by Hiretual, Entelo, and Talent Bin (part of Monster.com), are well within most middle-market budgets.

Third, work your networks harder, starting with the networks of your current employees. AchieveNEXT’s data shows that employee referrals are the most effective source of new people, cited as very or extremely effective by two-thirds of middle-market leaders, followed by LinkedIn. Retained and contingency search firms continue to work well for senior leadership positions, but other traditional talent sources such as staffing and temp agencies and schools and universities scored much lower.

Craft a retention strategy.

People who leave a company almost invariably get more pay at their new company, but that doesn’t necessarily mean money motivated their departure. Many studies show that non-financial issues like engagement, close relationships with peers, and opportunities to learn and advance are important elements of an employer’s value proposition. These are too often taken for granted in the middle market.

Asked by AchieveNEXT about the intangible benefits they offer, many executives cited mentoring and access to top management. In most small and midsize companies, those are a given — in a company with 100 employees, most employees are on a first-name basis with the boss. Instead, middle-market companies should institute a four-pronged retention strategy, designed to produce long-term benefits as well as short-term relief:

While middle-market companies come to the talent competition with evident weaknesses, they bring significant strengths as well. Their talent-management processes are scanty, but the companies also tend not to be weighed down by rigid, bureaucratic processes. This should give the middle market a nimbleness when it comes to hiring and promoting — a very real advantage when you need to move fast when you spot someone you want to hire or need to keep. Because top management is closer to the rank-and-file, middle-market companies should be better able to seek and act on employee referrals. And when it comes to job flexibility, they can see what big companies offer and raise them (for example, by offering job-sharing arrangements). Midsize companies also have an inherent work-life balance advantage, something smart middle-market hiring managers have emphasized for years.

By combining these advantages with focused initiatives to pinpoint the problem, revamp recruiting and onboarding, and become planful and strategic about retention, middle-market companies can get through the current crisis and find themselves with stronger long-term talent capabilities as well.

The post How Midsize Firms Can Attract — and Retain — Talent Right Now appeared first on Matt Dallisson Global Executive Search | Leadership Consulting.

Imagine that you have a new supply-chain leader starting next week. You hired her to do supply-chain transformation before the crisis took hold. But now she is joining remotely and inheriting a remote team, and her short-term, urgent priorities are very different from what they appeared to be before the pandemic. As her manager, how can you make her onboarding experience a productive one? What can you do to support her so that she’ll hit the ground running?

Earlier this month we polled leaders about their companies’ current onboarding practices. Of the 125 who responded, 75% said that their organizations were still onboarding leaders, albeit many (45%) at a lower rate than before the crisis. However, only 17% indicated that their organizations had developed systems for onboarding new leaders into remote-work environments. That’s a big gap, given that most onboarding is happening virtually now and that the stakes in quickly getting new talent up to speed have rarely been higher.

The good news is that it’s quite possible to onboard new leaders effectively into a remote-working environment. The biggest barrier is probably mindset. We are all being tested to adapt to new ways of working, and it’s no different with virtual onboarding. Here are some principles to guide you.

1. Be crystal clear about short-term objectives.

Like every leader in transition, your new hire needs to quickly figure out how to create value, and that’s even more important during a crisis. If you hired someone specifically to help with crisis management — for example, with workforce downsizing — their role and goals should be clear from the outset. But if you hired someone before the crisis, as in the case of the new supply-chain leader, they need to understand their role at a greatly accelerated pace. Continuing the example, you should clearly outline what aspects of the original supply-chain transformation role still are a priority and what has changed because of the need to deal with immediate disruptions — ideally before the new leader starts.

2. Provide a structured learning process.

To accelerate learning in a virtual context, you need to provide information in a more structured manner. Doing so requires paying much more attention to what you include in the upfront “document dump”: organizational charts, financial reports, strategy and project documentation, and the current crisis response plan. In a recent Savannah Group study of 200 senior interim executives, 95% said access to that information made them more effective in their first few weeks, especially if the organization asked them ahead of time what would be most valuable. Beyond that, you need to help your new hires get a broader and deeper view of the organization and their role in it. For the new supply-chain leader, you could schedule virtual briefings on critical issues related to the existing system and associated challenges along with ones on culture, planning, and decision-making processes.

3. Build a (more) robust stakeholder engagement plan.

Your next priority is to help your new hires identify, understand, and build relationships with key stakeholders. When onboarding is virtual, it’s essential to be even more detailed and structured here, too. Start by building a consensus internally about who the new leader’s key stakeholders are and, critically, the order in which the new leader should meet them; these things are often not apparent to new hires themselves. For the new supply-chain leader, there may be people one level down in finance and operations whose support will be crucial. Once you have identified the key stakeholders, reach out and align them on the objectives you have set for your new leader; that will maximize the value of their meetings.

4. Assign a virtual-onboarding buddy.

Quite a few companies built buddy systems into their pre-crisis onboarding processes (Microsoft is one example). And for new managers coming into remote-working organizations, a buddy is essential. Good buddies play four key roles: (1) They help orient new hires to the business and its context (2) They facilitate connections to people whose support is necessary or helpful (3) They assist with navigation of processes and systems, and (4) They accelerate acculturation by providing insight into “how things get done here.” Of course, you must take care to choose buddies who have the time, ability, and inclination to help, and you need to brief them on how they can be of most assistance. Typically, they should not be in the new leader’s chain of command; they should be peers or others with the “big picture” understanding necessary to be of real help. For the new supply-chain leader, a peer in operations could be a good choice.

5. Facilitate virtual team-building.

Helpful in face-to-face situations, a new-leader assimilation process is essential when onboarding happens remotely. This is a structured process for creating alignment and connection between a leader and their inherited team. A facilitator asks the leader and team members questions to uncover what they would most like to share with and learn about one another. The facilitator summarizes the resulting insights and uses them to guide a conversation between the leader and the team. The good news is that this process can be done effectively through video conferencing.

6. Consider hiring a coach.

Well before the crisis, research had established that transition-acceleration coaching halves the time required for new executives to become fully effective in their roles. Given that you, your team, and your new leader’s team are all dealing with the stresses of responding to the crisis, transition coaches can be especially impactful now. They are particularly helpful when they understand the organization, the company culture, and the stakeholder environment. Buddies and coaches play complementary roles in advising new leaders on the challenges they are facing and providing a safe space within which to discuss them.

As you apply these guidelines, keep in mind that effective virtual onboarding doesn’t just mean helping external hires. Employees making internal moves at a remote-working organization can face challenges that are as tough as — if not tougher than —  those confronted by new leaders coming from the outside. And in the midst of a crisis, it’s just as important to get them up to speed fast. So you should use the same approach to accelerate every new leader joining your team.

The post Onboarding a New Leader — Remotely appeared first on Matt Dallisson Global Executive Search | Leadership Consulting.

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As the rainbow flags came down in New York City after the WorldPride and Stonewall 50 celebrations, and as flags go up for pride events in other parts of the world, it’s worth asking: where do we stand on global LGBT rights?

This year has offered a mixed bag. More jurisdictions, including Ecuador and Taiwan, have achieved marriage equality while others have stalled or regressed. Kenya’s High Court upheld a law punishing same-sex intercourse with up to 14 years in prison, and Chechnya renewed a wave of persecution and human rights abuses against LGBT people.

Across this inconsistent global landscape, multinational companies with pro-LGBT values face a challenge: How to advance LGBT inclusion when it conflicts with local law or culture. The NYU School of Law’s Center for Diversity, Inclusion, and Belonging team conducted interviews with 30 individuals from Dow, EY, and Microsoft to understand how three major global organizations approached this issue in a variety of countries, from Brazil to Japan to Saudi Arabia.

We learned how leaders in these companies move between different models for upholding pro-LGBT values — from simply following local norms to creating an inclusive environment for their own employees to advocating for change in the wider society. The interviewees showed that by cultivating internal pro-LGBT champions and acting with subtlety and creativity, businesses can promote LGBT inclusion — not just in locations where legal protections are robust and social acceptance is high but also, and perhaps especially, in the many countries where they are not.

Three Models

Previous research by the Center for Diversity, Inclusion, and Belonging’s faculty director Kenji Yoshino, along with the Center for Talent Innovation, reveals that in anti-LGBT countries, global organizations tend to choose from, and move between, three models of engagement.

In the “When in Rome” model, companies adhere to local norms by creating exceptions to their pro-LGBT policies. They might, for example, avoid LGBT issues in diversity and inclusion programs and refrain from establishing an LGBT employee resource group (ERG) chapter. This approach is common in locations where LGBT people face significant legal or safety risks. The model allows companies to avoid potential backlash from local governments or entities but by definition does nothing to foster a sense of inclusion for LGBT employees.

In the “Embassy” model, companies create an inclusive workplace internally for their LGBT employees without seeking to change laws or social attitudes. For instance, they might adopt a non-discrimination policy, offer training on LGBT topics, and sponsor social activities for LGBT employees. This approach is common in more moderate locations where the legal or cultural climate is unwelcoming to LGBT people but not overtly hostile. The model enables companies to support LGBT talent, but it doesn’t address the conditions that lead to LGBT exclusion in the first place. When employees step outside the walls of the embassy, they continue to face discrimination.

In the “Advocate” model, businesses go beyond internal LGBT inclusion and strive to influence the local climate. This means engaging in activities such as lobbying the government, participating in Pride events, and supporting activists. The Advocate approach is common in moderate-to-friendly places — like when hundreds of companies lobbied for marriage equality in the United States — but it’s also possible in more challenging locations, like when businesses successfully lobbied for marriage equality in Taiwan or when Deutsche Bank boycotted Brunei-owned hotels after the country introduced anti-gay laws.

The Advocate model is not without risk: It can provoke governments and communities and upset current or potential customers. However, if a company wants to be a market leader on LGBT inclusion — to recruit and retain LGBT talent, to appeal to LGBT consumers and allies, and to help create vibrant inclusive economies — it should strive to become an Advocate globally.

The interviewees in our study represented businesses using all three models. Yet most of them had witnessed encouraging progression toward Advocacy over time. When we asked how they each moved the needle in their respective locations, they shared both the successes and the challenges. Based on that interview data, we suggest three actions to help companies move from When in Rome to Embassy and three additional actions to help them move from Embassy to Advocate.

Three Actions to Move from When in Rome to Embassy

Focus on the concept of allyship: By framing LGBT initiatives as “LGBT ally initiatives” organizations can leverage the straight and cisgender majority and build a coalition of pro-LGBT champions at all levels of the organization: the grassroots, local leadership, and global leadership. This can be wildly successful: In the first month that the EY Global Delivery Services business launched its LGBT ally network in India, it saw 4,000 of its 21,000 people sign up as allies. Allyship also benefits LGBT employees directly. It allows individuals in hostile locations who might want to stay closeted to be involved as “allies” and then come out only if and when they feel comfortable.

Raise awareness: In trying to implement pro-LGBT programs, our interviewees sometimes encountered pushback from colleagues who wanted a “don’t ask don’t tell” approach or did not understand why LGBT inclusion was important. Raising awareness helps overcome that opposition. Start with the basics: Dow Brazil offered “Diversity 101” education to introduce employees to foundational LGBT concepts and, in China, the company gave explanations of every word, such as “How do you define bisexual? How do you define queer?” Similarly, EY provides access to a “Trans and Gender Diversity Toolkit,” which includes education and resources on leading trans-inclusive practices.

In raising awareness, companies need to customize approaches to the local culture. One interviewee got minimal turnout in Singapore for a “lunch-and-learn sharing session” on LGBT rights; the format had worked well in other office locations but did not fit with Singaporean culture. To ensure that such initiatives are culturally relevant, involve local leaders in the planning process.

Use technology: Where permitted, send e-newsletters or intranet articles about LGBT initiatives to employees in tougher LGBT locations. Amplify LGBT content through social media. One interviewee noted that when EY launched a rainbow version of its logo, its dissemination through social media “has probably given us more visibility in many of those tough countries that we never thought we would have visibility in.”

Companies can also use technology for LGBT events to build comfort levels among participants. At Microsoft in India, employees attended an initial LGBT inclusion event primarily via an anonymous Skype call. Soon after, the company held another fireside chat, which one of our interviewees proudly noted had “more people in person in the room than on Skype, willing to ask questions fearlessly.”

Three Actions to Move from Embassy to Advocate

Strengthen the Employee Resource Group. In most large organizations, the ERG is the primary vehicle for internal champions to advocate for LGBT inclusion. Boost its power by providing leadership development support to its leaders and connecting the group to the company’s broader diversity and inclusion strategy — including recruiting, community engagement, supplier diversity, and marketing. A Microsoft manager in the United Kingdom observed that one of his biggest challenges was finding people to maintain the ERG, which makes leadership succession planning critical.

Forge external coalitions. Join other companies and non-governmental organizations to create task forces, host LGBT inclusion events, and sign onto global LGBT frameworks, such as the UN Standards of Conduct for Business. One interviewee took it upon himself to bring 14 companies together at Dow’s offices in Turkey to hold a conference on LGBT inclusion and share best practices. Once forged, such coalitions can then engage in advocacy at the country level. Dow, EY, and Microsoft recently joined more than 200 businesses by signing onto a U.S. Supreme Court amicus brief to show support for protecting LGBT people from discrimination under existing federal civil rights law.

Engage in “Embassy-Advocacy.” Identify internal actions that drive toward the Advocate model without fully embracing it. For example, after Singapore prohibited foreign companies from funding the local LGBT “Pink Dot” festival, Dow hosted its own internal “Pink Dot Day.” Find small, symbolic ways to indicate support for LGBT rights, such as providing employees with Pride flags or pins or offering options to add inclusive language or even preferred pronouns to email signatures — an effort EY began rolling out in the U.S. last month. Such efforts allow people to “come out of the closet” as more proactive allies, while also making the company’s support for LGBT rights visible externally. In Hong Kong, some recent hires reported that they decided to join EY because the partner interviewing them was wearing a rainbow pin.

It’s not easy for multinational corporations to move the needle on global LGBT rights. Yet we need to move beyond the When in Rome and Embassy models to achieve the goal of true global inclusion and acceptance. Businesses have a tremendous opportunity to make positive change for their employees, communities, and economies.

The post How Multinationals Can Help Advance LGBT Inclusion Around the World appeared first on Matt Dallisson Global Executive Search | Leadership Consulting.

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When he was attending his grandfather’s funeral, Robert Pasin, the CEO of Radio Flyer, was overwhelmed by the outpouring of affection and respect for the family patriarch, who had originally founded the third generation family business, which manufactures toys. “All these people who worked in the factory, all these suppliers, they told me stories about my grandfather. His word was his bond. One supplier told me that they’d never even had a signed contract, just a handshake agreement. I remember feeling proud and grateful that that kind of person had established this company.” It was a lesson that Robert had absorbed over the years watching both his grandfather and father run the business, one that became part of his DNA. “When you start out with really good values, it’s much easier to maintain them,” Pasin says.

With recent headlines about dubious ethical choices that businesses have made in pursuit of profits, it’s not hard to imagine the pressures that influence business choices. Temptations to cut corners are very real for every business, especially companies trying to live up to Wall Street analysts’ expectations.

In theory, family businesses are well-positioned to resist those temptations. Because most family businesses are privately-held, their owners are often shielded from the pressure of quarterly reports. Instead, they can make business decisions that might look irrational to the outside world — forgoing opportunities, investing in a strategy that might not make economic sense on paper — but that are consistent with their values and long-term goals. “There are fewer pulls on you in a family business to do things that are shortcuts,” Pasin says. “There’s just not the pressure for crazy growth.” That means that family businesses built on a history of integrity, like Radio Flyer, should be more immune to those temptations. For them, it’s not just business, it’s personal.

The results bear out in the real world, too. In 2017, the Edelman “Trust Barometer” survey of 15,000 respondents across the globe found that family businesses were far more trusted than those that were not family-owned. With all those advantages going for your family business, how do you make sure that you don’t unintentionally let your values drift and damage the business your family has spent generations building?

As he discusses in his book How Will You Measure Your Life?, Harvard Business School professor Clayton Christensen argues that the road to ruin happens one incremental step at a time. Each individual choice that moves further from the moral high ground makes it easier to take the next one. This is the theory of marginal thinking: making what seem to be completely rational choices about the immediate decision in hand, without ever considering the full costs of that decision over time. For example, in 2005 General Motors made the decision not to redesign a faulty ignition switch that was linked to car crashes because it would have added $1 cost per car. The decision to keep the defective switches would eventually cost far, far more, leading to $4.1 billion in repair costs, victim compensation, and other costs, not to mention the toll of congressional hearings and the ensuing public relations debacle.

The same marginal thinking happens in our personal integrity as well. Just this once, I can make an ethically questionable choice or ignore the rules. Just this once. Except for most of us, Christensen argues, “just this once” repeats itself over and over again.

In our experience working closely with multi-generational family businesses, it’s clear that the risk of marginal thinking can play a significant role in leading a family business away from the values it once stood for. Many family businesses find themselves in situations they never intended to pursue as a result of many logical, small, incremental decisions. Staying true to those values requires work and vigilance from each generation.

Here are the five warning signs that your family business is in jeopardy of heading down the wrong path:

You lose the full family narrative. Family values are passed down from generation to generation through stories. But not just the triumphant ones. It’s important to share both the successes and failures in family business history, what Emory University professor Marshall Duke calls “the oscillating narrative” — an acknowledgement not only of the good times, but also the difficult times. Understanding why the family came to face difficult challenges and what sacrifices were made or not made to overcome them can provide guideposts to help future generations avoid temptations to compromise on their values for short-term gains.

You think “professionalizing” the business means taking the heart out of it. Steve Shifman, CEO of Michelman, a developer of environmentally-friendly materials for industry, struggled to balance maintaining qualities that made his third-generation family business special and the need to remain competitive when he first took over the business in 2003. “I was hell-bent on professionalizing the whole business,” Shifman recalls. “But then I slowly realized that I had created a false binary between ‘family business’ and ‘professional business.’ Part of what made us able to recruit and retain our amazing talent was also what made us special as a family business. We are driven by purpose and values, not just by markets. This isn’t just a wealth-generation machine to us, it’s something more. I realized there was something magical about that.”

You only allow “credentialed” people in the room for key decisions. Often as family businesses grow, they build boards with outside professionals. Those who don’t “measure up” (often family members) are ignored or excluded. Usually those external professionals assume that total shareholder return is the ultimate goal — and advocate choices consistent with that goal. But those choices may also be inconsistent with family values. Protecting those values requires a family member with an outsider’s perspective in a position to ask important “why” questions. In fact, some of the best family business board members we’ve seen have no “traditional” experience but always ask the hardest questions. In one striking instance, a family member who had been relatively uninvolved in the business during the past decade challenged the board to justify why they had agreed that the company’s industrial tooling business could make parts for semi-automatic rifles. The marginal economic rationale was clear, but the underlying family values didn’t support the investment. Without a fresh perspective to pause the conversation and make sure that such a step was consistent with the family’s values, the company might have gone head-long into the weapons business.

You start defining yourself and your family through money. People who know the Pasin family know they stand by their word. The inherent trust, built up over generations, doesn’t exist because of their wealth. It is defined by the many handshake agreements honored throughout their history. Sometimes, however, family business owners start defining themselves through their money and fame, lending their name to buildings, parks, and other public areas. There can be lots of good civic reasons to support local causes, but if the underlying motivation is about showing off your money, the family has started down a slippery slope. When the need for outsider adulation dominates decisions, those outsiders start defining your values, rather than your own family. And once you’ve given others a right to define your own family values, you may feel the pressure to cut corners to make ever-grander gestures that maintain your public image.

Profit becomes your primary motive. Academics and thought-leaders have been telling us for years that the purpose of a corporation is to maximize shareholder value. That may be true for public companies, but family businesses are free to be different. They have an advantage in that the owners can choose what to prioritize — be it profit, family harmony, social responsibility, or some other dimension. When family businesses choose to over-emphasize profit to the detriment of their customers or the communities within which they live, they can find themselves heading down the wrong path. But those that can clearly articulate their motives beyond profit can help reinforce values and strengthen family harmony. At one family with whom we worked, the owners chose to run one of its businesses at a loss because it provided careers for family members and a much-needed public service to the community.

Because family companies face so little scrutiny from the outside world, it might be all too easy to take “just this once” baby steps down a path that can eventually destroy the values they hold dear. Radio Flyer’s Pasin recalls one such moment with his father, years ago, when he questioned his father’s decision not to use cheaper materials for one of the company’s trademark red wagons. “I remember my Dad making the decision whether to use a cheaper steel and a cheaper tire on one of our wagons years ago,” Pasin recalls. “And I said to my Dad ‘Does it really matter? Will consumers know?’ And my Dad said ‘I’m not sure. But when in doubt, I like to overbuild stuff because I can sleep at night. There will be a lot of things you will lose sleep over running this business, but this won’t be one of them.’ I think about that every day. It’s one of the most important lessons my Dad ever taught me.”

The post 5 Signs That Your Family Business Might Have an Ethics Problem appeared first on Matt Dallisson Global Executive Search | Leadership Consulting.

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A lot of companies struggle with two apparently unrelated problems: disengaged younger workers and a weak response to changing market conditions. A few companies have tackled both problems at the same time by creating a “shadow board” — a group of non-executive employees that works with senior executives on strategic initiatives. The purpose? To leverage the younger groups’ insights and to diversify the perspectives that executives are exposed to.

They seem to work. Consider Prada and Gucci, two fashion companies with a good track record of keeping up with — or shaping — consumer tastes. Until recently, Prada enjoyed high margins, a legendary creative director, and good growth opportunities. But since 2014, it has witnessed declining sales. In 2017, the company finally admitted that it had been “slow in realizing the importance of digital channels and the blogging online ‘influencers’ which are disrupting the industry.” Co-CEO Patrizio Bertelli said, “We made a mistake.”

Over the same period, under the direction of CEO Mario Bizzarri, Gucci underwent a comprehensive transformation that made the company more relevant to today’s marketplace. Gucci created a shadow board composed of Millennials who, since 2015, have met regularly with the senior team. According to Bizzarri, the shadow board includes people drawn from different functions; they’re “the most talented people in the organization — many of them very young.” They talk through the issues that the executive committee is focused on and their insights have “served as a wakeup call for the executives.” Gucci’s sales have since grown 136% — from 3,497 million Euro (FY2014) to 8,285 million Euro (FY2018) — a growth driven largely by the success of both its internet and digital strategies. In the same period, Prada’s sales have dropped by 11.5%, from 3,551 million Euro (FY2014) to 3,142 million Euro (FY2018).

We researched companies that use shadow boards, trying to understand what they really contribute to the organization and what best practices look like. We focus here on three companies’ experiences.

Business model reinvention. Facing increasing pressure from Airbnb, French AccorHotels needed a new business model. Top management asked marketing to develop a brand for Millennials. However, after two years marketing came up empty. Arantxa Balson, chief talent and culture officer, decided to turn the project over to a shadow board. In 2018, the Jo&Joe brand was born. Considered “an urban shelter for Millennials,” the brand communicates creativity, flexibility, and a strong sense of community. According to Balson, the shadow board succeeded in part because they focused on their vision and developed their point of view “regardless of all internal and cost constraints.” The shadow board then gave birth to another innovation, the Accor Pass, a hotel subscription that provided people under 25 with a place to stay while they hunted for a permanent residence.

Process redesign. Stora Enso, a Finnish paper and packaging company, used their shadow board (which they call Pathfinders and Pathbuilders) to revise how the executive committee assigned work. Until this shift, work was assigned to groups that the executives considered experts and therefore best suited to the assignment. The shadow board convinced them to assign certain tasks to non-experts, arguing that an unbiased view would increase the chance of breakthroughs. One project, aimed at reducing supply-chain lead time, had stumped a supposedly expert team. The new team came up with a workable plan within six months. No team members came from the business unit in question, nor had they any prior supply chain experience.

Organizational transformation. CVL Srinivas, the CEO of GroupM India, needed to implement a three-year digital and cultural transformation. With that end in mind, he created the YCO (Youth Committee). Since its inception in 2013, the YCO has led GroupM’s Vision 3.0, making digital the centerpiece for driving future growth. Working across departments, the shadow board also led a scoping initiative focused on the digitalization of contracts. It strengthened GroupM’s ecosystem by increasing the number and improving the nature of partnerships with media owners, data providers, consultants, auditors, and start-ups. Additionally, the group noticed that there wasn’t much cross-agency interaction. To promote meaningful conversations, the YCO developed a social media platform (Yammer) that facilitated conversations between management and lower-level employees across agencies.

Increased visibility for Millennials. Research suggests that Millennials crave more visibility and access, which shadow boards deliver. This visibility often results in significant career progression for shadow board members. At Stora Enso, a female shadow board member was a group-level financial controller when she began the program. As a result of her impressive work on a project involving one of their legacy businesses (paper), she was promoted to be the sales director of the largest paper segment a few months after the program’s end. As HR director Lars Haggstrom stated, “This [promotion] would never have happened had it not been for the shadow board program.”

What are the best practices for implementing a shadow board?

Look beyond the “high-potential” group. Many companies staff shadow boards exclusively through executive-committee nominations or with already identified high potentials. Millennial participants tend to prefer a more open process. Stora Enso’s Haggstrom pushed for an open-application process — allowing anyone who fit certain criteria to apply. Doing so not only created a more diverse cohort; it also allowed the company to discover some hidden gems who would not otherwise have been on the radar. Interestingly, they tested the performance of the company’s top forty high potentials (who were clear shoe-ins for the program) against the employees chosen via open enrollment. On abilities such as data analytic skills, sense-making, and teamwork, the open-enrollment members outperformed the high-potentials.

Make it a CEO-sponsored program. In order for the program to have maximum impact, support needs to come from the top of the organization (though most are coordinated on a procedural level by HR). For example, AccorHotels’ shadow board program succeeds because CEO Sebastian Bazin plays an active role by interviewing potential members and regularly interacting with existing members. At Stora Enso, members reported directly to the CEO on issues related to the Pathfinders and Pathbuilders work.

Keep evaluating and iterating. All of the companies we profiled adjusted the programs as they learned what worked (and what didn’t). For example, Stora Enso’s leaders reviewed the program annually and as a result added resources to better capitalize on diversity within the shadow board and interactions between the shadow board and executive committee. And while GroupM’s YCO program originated as a 12-month program, the organization extended it by one year in order for the YCO to maximize potential contributions.

The post Why You Should Create a “Shadow Board” of Younger Employees appeared first on Matt Dallisson Global Executive Search | Leadership Consulting.

Keeping employees engaged is a concern for companies around the world. We tend to think only about engagement in our own organizations. But new findings from ADP Research Institute, which makes and shares data-based discoveries about all aspects of the world of work, reveal stark differences in engagement between countries, industries, and job types.

The Big Idea

A few countries, such as the United Arab Emirates and India, demonstrate high engagement relative to others in the survey. Most hover around the 15% mark, while China and the Netherlands fall behind.

There’s some good news, however, depending on where you live and work: Of the 13 countries surveyed in both 2018 and 2015 (when a similar study was conducted), eight have seen increased engagement.

But except in India and Spain, those improvements have been small — a percentage point or two. And in China the drop in engagement is significant. (The researchers repeated the survey with a different sample to ensure that the findings were stable.) In 2015 China was tied worldwide for the highest share of fully engaged workers — nearly 1 in 5. Three years later that ratio had tumbled to about 1 in 16, the lowest among the countries surveyed. In an economy the size of China’s, pinpointing the exact cause of this drop is hard, and worthy of further study. However, the researchers note that 2016 was China’s slowest growth year since 1990, and its burgeoning middle class is starting to expect more from work than the 9-to-6, six-days-a-week regimen advocated by Jack Ma of Alibaba. These factors, they believe, have something to do with the steep drop in engagement.

Again, being part of a team makes a huge difference. In the UAE, 29% of workers who are on a team are fully engaged. But for workers there who aren’t on a team, that figure plummets to 7%. In the Netherlands the comparable numbers are 11% and 2%.

The team effect is also apparent in industries. For example, engagement in transportation drops to nearly zero for those who aren’t on a team, and information workers who are part of a team are more than four times as likely to be fully engaged as those who are not.

What drives higher engagement in particular industries? For construction jobs, researchers hypothesize, it’s the team-oriented nature of the work and the strong sense of purpose and pride in creating permanent, tangible structures.

This teamwork data raises an interesting question: Is engagement dependent on a worker’s physical proximity to other team members? The data says no; in fact, largely the opposite is true. People who work remotely at least four out of five days in a typical week are almost twice as engaged as those who do so less than one day a week.

Regular communication with colleagues is important, of course. But as anyone who has worked in an open office can attest, the ability to minimize distractions is crucial to engagement. The critical factor is whether virtual workers feel that they’re part of a team. If they do, they’re twice as engaged as their office-bound colleagues.

Working from home isn’t the only way employment arrangements deviate from the stereotypical 9-to-5. Today about 45% of workers have just one full-time job, and 15% have just one part-time job. But nearly a quarter of all workers are considered gig-only: They work as contract, or contingent, employees on a full-time (14%) or part-time (10%) basis.

How do these different types of work affect engagement? For part-timers, it’s a wash. Among people working a single full-time job, however, gig workers are 1.4 times as likely to be fully engaged as those in a more traditional role.

Drilling down, the researchers looked at engagement in seven additional scenarios, in which people work two or more jobs. These combinations are less common, each of them affecting 1% to 3% of all workers.

Perhaps surprisingly, people who work two traditional jobs, one full-time and one part-time, have the highest level of engagement.

Regardless of the type of job, the number of jobs a person works seems to drive engagement. One theory is that certain job combinations offer “the best of both worlds” — a full-time role provides stability and benefits, while a second job allows workers to do something they’re passionate about.

Why should organizations care about all this data? With so many variables outside an employer’s control, it makes sense for companies to focus on factors within their sphere of influence. One is the financial cost in terms of productivity and hiring. A recent study from Cisco showed that when a team member’s level of engagement falls from the top half of the company to the bottom half, their likelihood of actually leaving the company in the following six months increases by 45%.

For a large company, this can add up quickly. Researchers estimate the cost to replace a frontline worker at roughly half that worker’s salary; for knowledge workers, their estimate increases to 2.5 times the salary. Thus a workforce that isn’t fully engaged can translate into millions of dollars wasted on a per-company basis and billions worldwide.

Luckily, leaders can take steps to improve engagement, and they can start at the team level. Even small changes within groups at the office can have a huge impact — not only for your employees but for your company, your industry, and your country as well.The Big Idea

About the author: Matt Perry is the senior graphics editor at Harvard Business Review.

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Within five months, she had her senior management team in place: four external hires and six internal executives who had worked with Beth for many years. Beth asked me to interview the team members to discover what each person thought about the opportunities and challenges within the business and how they felt about other members of the leadership team.

When Beth and I reviewed the interview findings, we found that trouble was brewing. The external hires already felt muted and isolated.

A schism had developed in the executive team between the newcomers and the people who had an existing relationship with Beth. Veteran team members already knew each other and had worked together frequently; they rarely took the time to meet with the newcomers. Consequently, the new hires were hesitant to speak up.

Beth was overwhelmed with her newly expanded responsibilities, and because she was confident in her new hires’ abilities, she had prioritized external meetings instead of spending more time connecting with them.

Everyone on the team was excited about the business and the market opportunity. They were highly skilled and well-intentioned professionals. However, they weren’t yet operating as an integrated team. Given the team dynamics, the new hires were starting to question whether they had made the right choice and whether Beth was even interested in hearing from them.

Beth’s team was on the precipice; they could easily plummet into dysfunction. Studies show that a staggering 50-70% of newly hired managers and executives fail at their new jobs and leave within 18 months. Losing a newly hired executive can cost up to three times that executive’s salary. More importantly, a loss of trust and confidence in leadership teams can affect employee morale, turnover, service, quality, processes, and much more.

Beth and I crafted a strategy to create a foundation for a new group culture that would better integrate newcomers and current executives. The goals were to keep both parties engaged with their mission and to retain the new hires. The strategy we developed can be used by any executive to engage new hires, create healthy team dynamics, and seamlessly transition to a new group culture.

Even star hires need individual attention. Beth had mistakenly assumed that talented hires at the executive level would figure things out on their own. Her neglect left the new hires feeling undervalued, unclear about key decisions they had to make, and unsure about how to best work with Beth.

To make time for her new direct reports without requiring meetings before sunrise, Beth committed to talking to each of them at least once a week, even if it meant multitasking. When she couldn’t have dedicated one-on-ones, she invited them to walk with her to or from a meeting, join her on a customer visit, or take the stairs with her instead of the elevator. This increased face time with Beth, helped to build rapport and exposed the new hires to how the company worked. Beth also learned each new hire’s career goals, which informed her decisions about how to allocate business priorities to her direct reports.

A new team member means a new team. When new team members join a team, it’s easy for veteran members to assume that business will proceed as usual and not to give much thought to team dynamics. New hires are expected to get oriented and then simply slot into the existing team. But, by definition, a new member means a refresh of the team. The job of team integration doesn’t just fall on the new hire and manager but also on existing team members. How a manager creates space for a new hire and asks the group to interact determines how engaged everyone will be in the process.

Beth decided to officially mark the change in the team by asking members to create a new set of team norms. Co-creating a plan for expected behaviors allowed everyone to feel part of the group.

Meeting participation boosts a team’s performance. Research shows that a key characteristic of high-performing teams is that each team member has an equal chance to participate rather than allowing one or two word-hogs to hijack the meeting. Conversations in Beth’s leadership team meetings were dominated by those who had the longest tenure in the group. They spent lots of time discussing work metrics in detail, referring to past events, and joking with each other.

The team decided that equal participation would be one of its new norms. For key topics, each person had to voice an opinion, even if they just said “pass” when they had nothing new to add. The more talkative team members were encouraged to say “plus one” instead of elaborating on a point that someone else had already shared. This process ensured equal participation from the newcomers and it kept the veterans from checking out because they knew everyone was expected to contribute.

Newcomers need support and amplification. There’s a small window of time when newcomers can share valuable insights as “outsiders.” Even though companies hire externally to benefit from an executive’s experience, newcomers are often considered too new to add value. On Beth’s team, people were already rolling their eyes whenever a particular new member spoke. He tended to start most of his thoughts with the phrase, “At my previous company…” This led others to think he felt superior and didn’t understand the nuances of the company’s culture.

With some coaching, the team member learned to share his insights by relating his remarks to the current discussion. For example, instead of saying, “At my previous company we used to have daily meetings to triage new issues,” he said, “It seems like we’re either waiting for the weekly meeting to discuss time-sensitive issues or responding to unexpected fire drills when an issue pops up after the meeting. It might be helpful for us to set up a short daily meeting to triage emerging problems.”

In addition, Beth and one of her long-standing direct reports decided they wouldn’t allow the conversation to move on until a new member was fully heard. Beth and her confederate would follow up, ask for details, and highlight possible actions the team could take to benefit from the new wisdom in the room. As a result, in one meeting, Beth’s team was able to improve on a business process that hadn’t changed in three years.

Beth’s dual strategy of engaging the newcomers while also encouraging existing executives to develop a new culture worked. She successfully created a cohesive team in which differences between new and old melted away. New team members were engaged and contributed at the same rate as the veterans. Soon, the team had a new set of in-jokes that didn’t leave anyone feeling left out.

Beth’s experience with new hires is not unique. The success rate of executives hired from outside a company is low because efforts to set them up for success are anemic. New executives need to watch out for common traps, but it also takes a village — including bosses and peers — to support them in jumping the initial hurdles.

To stop the hemorrhage of new hires, we need to transfuse a new mindset into executive teams — one that allows all team members to reimagine the group as a new entity that they have collectively shaped.

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