January 2011

If you read the Wall Street Journal article, “Air France Panel Cites Wide Safety Deficiencies,” you probably won’t rush to fly on an Air France plane. As the article states:

An independent study of Air France-​​KLM SA’s operations found a lack of “strong safety leadership at all levels of management” that has resulted in lax cockpit discipline, ineffective pilot training and “an unhealthy relationship” with unions.

The article says that management gives the message that safety is a priority. But the value of safety is obviously not woven into the fabric of their culture. For that matter, if you go to their website, it’s hard to find  any reference to safety. Buried in the massive content under sustainable development, you can finally see the word “safety.”

So what airlines do you fly? And what do they value? Take the time to see what they say matters to the company and its employees and of course, see if the experience matches their claims.

For example, Southwest Airlines is very clear about their values. It’s easy to find that service and value are their focus. Start by looking on their website: there’s a link on each page for “The Southwest Difference.” Just listen to a video and you’ll hear a customer service story that will make you cry. You can also read about their Mission and customer service commitment as well as their safety commitment. It’s so easy to find the values that matter to this company and its employees.

Next time you plan on flying or buying any products or services, take a moment to check out the values important to the company you are planning to use. If it’s not obvious what is valued, then there’s a good chance employees will not have a shared set of principles to guide what they do. Maybe it’s time to rethink where you take your business. Maybe it’s time to do business with companies that share your values.

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Another recall for Toyota. Now over 1.7 million vehicles world-​​wide including some Lexus models are being recalled for defective fuel devices or other faulty parts. What is happening to quality at Toyota?

It all goes back to knowing what’s core to your culture and never compromising on it. Every organization must define what values must be shared by everyone in the organization. These are the values that are never compromised. These are the values that each employee takes pride in and wants to live more effectively each and every day. You don’t want a lot of values–that important– so that there’s no excuses. These few values must be clearly understood. So, for example with Toyota, the focus should always be about quality. Quality should be the blood that runs through the veins of all who work for the company. Nothing moves quality second to anything.

So why do companies mess this up? It’s often a problem of not integrating the value throughout every aspect of the company. It’s about aligning all practices with the core principle. In the case of Toyota, as reported in the Wall Street Journal,

“Toyota has been using more common parts in its vehicles” in order to cut costs, said Koji Endo, an auto analyst at Tokyo-​​based independent auto industry boutique Advanced Research Japan.

Toyota should know better. The suppliers they use and the materials they buy must meet their high standards for quality. Anything less should not be qualified to be in a Toyota product–from the car to the key chain.

The article says Toyota has been taking actions to prevent recalls, such better reporting of safety issues, assigning engineers to focus on quality issues, and spot-​​checking vehicles for potential problems before launch. But maybe that’s just not comprehensive enough.

Every aspect of the company’s internal practices from how the organization is structured, how work is designed, systems for doing one’s work, hiring practices, orientation, training, performance management, internal communications and technology must reinforce the focus on quality.

And every aspect of the company’s external practices including its suppliers, vendors and partners must be screened to set quality as the number one requirement.

Also, the image the company projects should always be about quality. When I look at the Toyota website, I don’t see a dominant focus on quality. There seems to be a greater focus on selling more cars. Maybe the focus on growth has become more important.

If quality is the core value that captures the core essence of what Toyota is all about, then they must make it core to all they do. Costs or any other value cannot be a higher value than quality.

Successful organizations understand that they must define their core culture–the principles that are central to who they are that are never compromised. And employees must practice those few principles in everything that they do.  That consistency is what makes organizations great.

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How effective is communications in your company?

by Sheila Margolis on January 24, 2011

Conduct a Communications Audit

Is communications a problem in your company? Does information flow top/​down, bottom/​up and laterally? Do employees get the information they need to be effective in their jobs? Are employees informed on the culture and strategy of the company? Are employees clear on their job and goals? Are decisions communicated? Is progress shared? Are employees up-​​to-​​date on what’s happening with others in their organization?

Periodically, you should conduct an internal Communications Audit to evaluate the practices that are in place to share information within the organization. The process involves first compiling a picture of the current communications practices that are being used, their effectiveness, and recommendations to improve the flow of information.

Gather Information on Current Practices

To begin the audit, first ask a few people on varying levels of the organization, through interviews and focus groups, general questions like:

  • How would you describe the effectiveness of communications in this organization? Please explain.
  • What do employees need to know? What additional things do employees want to know?
  • What practices exist (vehicles) for sharing information? For each ask, how effective it is and what changes would improve communications.

Create a Complete Picture of the Communications System

To build a comprehensive picture, gather information on the following:

  • CHANNEL and MEDIA: What written forms of communication are used such as memos, letters, email, webpages, blogs wikis, text messaging and instant messaging? What spoken forms of communications are used such as phone, conference calls, voicemail, and podcasts? What blended forms of communication are used such as face-​​to-​​face discussions, meetings, presentations, webconferences, and webchats? Be sure to compile all traditional and electronic forms of communication. Are the best media being used to share that information or would a different channel choice be more effective?
  • AUDIENCE and MESSENGER: For each channel and medium, determine what audiences receive that communication and who is the messenger? Code each as being top/​down, bottom/​up, or lateral communications.
  • CONTENT: Then indicate the content of the message. Categorize content. Is the focus of the communications things like company goals, culture, job duties, decisions, employee updates, customer updates, progress and metrics, etc.?
  • TIME/​FREQUENCY: For each, indicate the frequency that information is shared. Have a clear picture of what information is shared, daily, weekly, monthly, quarterly and annually.

More specifically, when talking about the flow of information, ask questions such as:

  • Does information flow effectively down throughout the organization–from leaders to managers and from managers to employees (or whatever levels exist)? What changes would improve communications? Is there sufficient sharing of information or is information lacking?
  • Does information flow effectively upward from employees to managers and from managers to leaders? What changes would improve communications? Is there sufficient sharing of information or is information lacking?
  • Does information flow effectively laterally–with others in your group or department and on a similar level in other departments? What changes would improve communications? Is there sufficient sharing of information or is information lacking?

With a clear picture of all the ways information is shared, be sure to uncover:

  • How effective is it?
  • What can be done to improve it? Is information lacking? Is there information overload?

Before you can improve communication, you must get this baseline data of what communications are in place and compile recommendations for making communications more effective. In addition to gathering the data through interviews and focus groups, observe communications activities like meetings, and review samples of communications like emails, memos, and letters. From your data gathering compile a chart of the communications system used by the organization and list recommendations to improve communications.

Survey All Employees to Get Their Views

Then, using a survey, have all employees evaluate current communications and give their opinions on a list of recommendations that might improve communications.

Develop a Communications Plan and Share It

Analyze the input from everyone and develop a plan for improving communications. Present the plan to the leadership team and finalize the recommendations. Then, communicate the communications plan to everyone in the organization and start implementing it.

Make Communications an Ongoing Focus

Periodically, evaluate communications in your organization. When possible, use outside consulting support in this process to ensure that employees feel free to share their views. Communication drives employee satisfaction. And you cannot have an engaged employee if that employee is not satisfied.

If you have conducted an internal Communications Audit, please comment on the practices that worked for you and anything to avoid. Thanks!

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What is the optimal group size for decision-​​making?

by Sheila Margolis on January 24, 2011

Much of work today is done in teams. Even in MBA programs, the team is the structure used to meet class goals. So what is the optimal size for effective decision-​​making? It appears that a recent Harvard Business Review stat published that research by Marcia W. Blenko, Michael C. Mankins, and Paul Rogers indicates that seven (7) is the optimal size. Yet much of the research I’ve found says that number is a bit too high.

First, many studies target an “odd” number as the first criteria for group size. According to one resource:

This (an odd number) prevents ties and improves the odds of making a correct decision when using majority rules.

Even-​​numbered groups can make decisions, but the decision-​​making can take more time.

Getting back to the actual number, think about the benefits of a large group. The more people you have, theoretically, the better chance you have of getting the best information to make the best decision. Research has shown that collective intelligence does exist. But, according to research reported in Science, the October 2010 issue  by authors Anita Williams Woolley, Christopher F. Chabris, Alex Pentland, Nada Hashmi and Thomas W. Malone:

This “c factor” (the group’s collective intelligence) is not strongly correlated with the average or maximum individual intelligence of group members but is correlated with the average social sensitivity of group members, the equality in distribution of conversational turn-​​taking, and the proportion of females in the group.

So it looks like social sensitivity–possibly a more common attribute to females–facilitates group decision-​​making. Emotional intelligence and what some consider the soft stuff is important to the functioning of teams. So getting back to the optimal group size–what’s the best number? In what size, can you have the equality in distribution of conversation turn-​​taking as the research indicates is an important feature of an effective group?

If you measure the number of possible social interactions with varying group sizes, the optimal group size appears to be five (5). According to a resource on applications of probability and statistics:

As can be seen by the figure below, the number of possible social interactions begins to explode in groups with more than 5 people.

Research by Hackman and Vidmar (1970) on optimum group size for member satisfaction showed a similar outcome. They composed groups that ranged in size from 2–7 members to assess the impact of size on group process and performance for various kinds of tasks. After the groups had finished their work, they asked participants independently to indicate the extent of their agreement with the following two questions: Question #1– This group was too small for best results on the task it was trying to do. Question #2– This group was too large for best results on the task it was trying to do. The chart below indicates the average answers to these two questions on the same graph. Not surprisingly, few people in the dyad thought it was too large and few in the 7-​​person group thought it was too small. What is noteworthy is where the two lines crossed. They dropped a perpendicular line from that point to the horizontal axis and discovered that the optimum group size was 4.6 members.

So if you’re looking for the best size for a team, consider an odd number close to five. But remember the number is just one factor. Social sensitivity and being able to read emotions are attributes of successful team decision making. Consider the number and consider the members. Maybe they’ll need a little training in empathy and being sensitive to others as well as having a culture that allows all to fully participate. Sounds like the right-​​sized team that practices many of the principles of employee engagement can be the most effective.

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Does your company use Groupon or other online promotions to pull customers to your business? And does it work?

An interesting article in the Jan.-Feb. 2011 issue of Harvard Business Review by Utpal M. Dholakia of Rice University’s Jones Graduate School of Business, suggests that when companies offer customers deep discounts to drive traffic, unhappy employees can damage the customer experience–and the promotion becomes a losing proposition for the company. Although in theory, the promotion is expected to be an opportunity to increase business and bring in new customers, in practice, deal-​​seekers often only purchase the deal, are not willing to buy extras, and when they are faced with overworked employees–exhausted from the increased traffic–they don’t want to come back.

Employees may feel overworked and may also disagree with the company even using the coupon program. And when the employees are unhappy, the customer experience will be affected. As the article states:

Your employees stand between your product and your customers, and ultimately they’re the ones who will make a promotion succeed or fail.

So before you use a coupon program to bring in more customers, take the time to include the employees in the decision making and planning process. Get employee input on how to make the experience a success. Through employee participation, you can achieve greater employee ownership and a better experience for the customer.

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According to a Forbes article published December 28, 2010, merger activity will increase in 2011:

A recent study from Thomson Reuters and Freeman Consulting Services concludes that the global market for M&A will surge 36% in 2011 to over $3 trillion.

Sadly, most mergers do not achieve their objectives. Failed mergers that otherwise have a sound strategic and financial fit are typically the result of the loss of intangible, hard-​​to-​​measure, human factors on which the company’s tangible assets ultimately rest. M&As have the power to shake up an organization and ignite feelings of loss and uncertainty that can be devastating to a company and the people in it. Employees with years of knowledge and a depth of commitment to a company don’t just turn off the switch and feel dedication to something new. These transactions are fraught with challenges:

  • People who previously may have been competitors are thrown together.
  • Employees fear being earmarked redundant.
  • Competitors capitalize on the uncertainty.
  • Existing cultures change.

So what is the remedy? How can you manage in this climate of continuous change? How can you learn how to not only survive but also thrive in a constantly changing work environment? The solution begins with understanding culture.

  • Analyze the culture of both organizations prior to the deal and decide the culture of the organization that emerges after the deal.
  • Share with everyone the Purpose of the new organization, its distinctive Philosophy that directs employee actions, and the strategic Priorities that must guide workers so they are strategic in their work activities.
  • Access the fit of employees with this new culture and give employees the opportunity to evaluate their fit or lack of fit with the new culture. A merger or acquisition represents a new opportunity to create a compelling, ambitious vision to capture value not present prior to the transaction. Individuals must determine if they buy in and want to be a part of that vision and strategy. Is the future of the company a future you want to share?
  • Communicate–actually over-​​communicate. There is a lot of uncertainty and any and all communication will be appreciated by employees. Know that individuals want to know how the change will affect them so be sure to address the organization-​​wide changes and the changes that will impact each individual. Questions employees will have include: Do I have a job? Who will be my boss? What type of company will I be working for?

And a few months after things have settled, give employees an opportunity to voice their feelings and perspectives through a survey that is anonymous. Take the time to share survey results and any changes that will be made.

As companies choose to use mergers and acquisitions to grow and expand their reach and their offerings, they should take the time to clarify the cultural issues and focus on the people issues so that the deal is a financial, strategic and human success.

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