SCCE Compliance & Ethics Institute

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1 SCCE Compliance & Ethics Institute Jim Harter, Ph.D. William Kruse, J.D. Chicago 2016 A Tale of Two Offices Market: Overall Chicago Brazil n Size: 3, GrandMean: Opportunities to learn and grow Progress in last six months Best friend Coworkers committed to quality Mission/Purpose of organization My opinions count Encourages development Supervisor/Someone at work cares Recognition last seven days Do what I do best every day Materials and equipment I know what is expected of me at work Team-Level Performance: (Percentile Ranking): Poor (1 st 24 th ) Fair (25 th 49 th ) Good (50 th 74 th ) Excellent (75 th 99 th ) 3 Copyright , 2016 Gallup, Inc. All rights reserved. 1

2 Employee Engagement Throughout the World % Engaged 4.1% 39.1% 4 Workplace Science Science-based focus on the study of excellence Studies of innate talents Gallup studies in Western Europe, Latin America, Africa, Far East Employee engagement organizational practices begin Job satisfaction research begins Unstructured, free-flowing, open-ended interviews Structured interviews Job satisfaction and climate surveys Gallup studies in Western Europe, Latin America, Africa, Far East Ongoing feedback techniques Varsity management Long employee surveys Talent formula Focus groups Validation studies factor analysis of long surveys ( items) 1997 First metaanalysis of 1,135 BUs Q 12 tested throughout the world 2002 Meta-analysis published in Journal of Applied Psychology First, Break All the Rules Manager courses Org. database Causal impact 31M RESPONDENTS 198 COUNTRIES 72 LANGUAGES 2016 Ninth iteration of meta-analysis of 82,248 BUs 5 Basic Needs of Employees to Be Productive Clear expectations Materials and equipment Do what I do best Recognition Cared about as a person Development Opinions count A mission or purpose Committed coworkers Strong social bonds Progress discussions Learning and growth 6 Copyright , 2016 Gallup, Inc. All rights reserved. 2

3 Copy right 2009, 2013 Gallup, Inc. All rights reserved. 12 Elements for Engaging a Workforce 31 million respondents Opportunities to learn and grow Progress in last six months Best friend Coworkers committed to quality Mission/Purpose of company My opinions count How can we grow? Do I belong? Growth Teamwork Encourages development Supervisor/Someone cares Recognition last seven days Do what I do best every day What do I give? Individual Contribution Materials and equipment I know what is expected What do I get? Basic Needs 7 Copyright , 2016 Gallup, Inc. All rights reserved. Employee Engagement Historical Trend 100% Engaged Employees 90% 80% 70% 60% 50% 40% 30% 26% 30% 30% 28% 29% 26% 38% 30% 30% 29% 28% 28% 29% 30% 30% 31% 32% Best Practice 70% U.S. 20% 10% 10% 13% Global 0% Gallup Daily tracking 8 Organizational Engagement Varies EPS +147% 28% 35% ENGAGED 53% 49% 64% 72% NOT ENGAGED 19% 16% Bottom Bottom Quartile Half 30% 23% 6% 6% Top Top Quartile Decile ACTIVELY DISENGAGED 9 3

4 Copy right 2012, 2013 Gallup, Inc. All rights reserved. Culture Change Strategy/Leadership Communication Accountability Development Engagement Q 12 Meta-Analysis Components 2016 Study 1,882,131 Employees 82,248 Business/Work units 339 Research studies 230 Organizations 73 Countries 49 Industries Correlations of Q 12 to Key Client Performance Metrics Customer loyalty/engagement Profitability Productivity Sales Turnover Safety incidents Patient safety incidents Shrinkage Absenteeism Quality (defects) 11 The Business Impact of Q 12 : Highly Engaged Teams Perform Better Top-quartile-engagement work units have substantially better outcomes than their bottom-quartile counterparts. 30% 20% 10% 0% -10% Absenteeism Turnover High- Low- Turnover Turnover Orgs. Orgs. Shrinkage Safety Incidents Patient Safety Incidents Quality (Defects) 10% Customer Metrics 17% Productivity 20% 21% Sales Profitability -20% -30% -40% -50% -41% -24% -28% -40% -60% -70% -59% -70% -58% Business units in the top engagement quartile have 28% less shrinkage and 21% higher profitability than their bottom-quartile counterparts. 12 4

5 Higher Engagement Predicts Better Overall Performance Probability of above-average performance* 100% 80% 68% 72% 80% Success Rate 60% 40% 28% 32% 38% 42% 46% 50% 54% 58% 62% 20% 20% 0% 1st 5th 10th 20th 30th 40th 50th 60th 70th 80th 90th 95th 99th Engagement Percentile Analysis of business units across organizations in Gallup s database *Composite of absenteeism, turnover, shrinkage, sales, safety, quality, customer metrics, productivity and profitability 13 A Year in the Life of an American % With a lot of happiness/enjoyment, without a lot of stress/worry % With a lot of stress/worry, without a lot of happiness/enjoyment Based on data from the Gallup-Healthways Well-Being Index 14 The Workplace and Physiological Outcomes ESP Before Prompt. Did you feel you could not control important things? 1 Not at all 2 Slightly 3 Somewhat 4 Fairly 5 Very much Done Physiological Devices Actiheart monitor Saliva collection Harter, J. K., & Stone, A. S. (2011). Engaging and disengaging work conditions, momentary experiences, and cortisol response. Motivation and Emotion. 15 5

6 Progression of Interest Throughout the Day Varies for Engaged and Disengaged Employees Low Engagement* High Engagement* Level 4.0 Level Time of Day (24-hour clock) Time of Day (24-hour clock) *Working moments only Harter, J. K., & Stone, A. S. (2011). Engaging and disengaging work conditions, momentary experiences, and cortisol response. Motivation and Emotion. 16 Momentary Interest and Cortisol Cortisol (nm/ml) Interest *Controlling for time of day Harter, J. K., & Stone, A. S. (2011). Engaging and disengaging work conditions, momentary experiences, and cortisol response. Motivation and Emotion. 17 Diurnal Cycle of Cortisol by Engagement Median-Split Groups Engagement Low Engagement High 10 Cortisol (nm/ml) Cortisol (nm/ml) Time of Day (24-hour clock) Time of Day (24-hour clock) Harter, J. K., & Stone, A. S. (2011). Engaging and disengaging work conditions, momentary experiences, and cortisol response. Motivation and Emotion. 18 6

7 Daily Engagement Workday Reconstruction Doing productive work Communicating with manager Working with coworkers Working with customers In meetings Doing Working alone Sitting Socializing about nonwork-related issues Using strengths Feeling absorbed in work Doing what you don t do well 19 Engagement and Who You Are Within the Moment Low Engagement* High Engagement* Like people that I am working with right now Like people that I am working with right now Time of Day (24-hour clock) Time of Day (24-hour clock) *Working moments only Harter, J. K., & Stone, A. S. (2011). Engaging and disengaging work conditions, momentary experiences, and cortisol response. Motivation and Emotion. 20 Clear Expectations Guide Conversations Unclear expectations also guide conversations. Knowing What s Expected 2.70 %1-4 % Negative Mood Hours 2+ Hours Hours Yesterday Socializing or Talking About Nonwork-Related Topics 21 Copyright , 2016 Gallup, Inc. All rights reserved. 7

8 Internal Theft % Quarterly 0.50% 0.49% 0.47% 0.43% 0.40% 0.25% 0.00% Bottom 25% Middle Quartiles Top 25% Opinions Count 22 Copyright , 2016 Gallup, Inc. All rights reserved. Actual Internal Theft GrandMean $0.00 Bottom 25% Middle Quartiles Top 25% -$50, $100, $150, $154,020 -$132,528 -$146,869 -$200, $198,090 -$250, Internal Theft Delta From Budget GrandMean $0.00 Bottom 25% Middle Quartiles Top 25% -$25, $50, $75, $100, $125, $150, $175, $145,739 -$150,317 -$157,658 -$166,

9 Days Missed From Work Last Year, Excluding Vacation Middle Management Engaged Not Engaged Actively Disengaged 25 AA(26 KB3 Total Incidents Reported by Quartile Safety Top Quartile Middle Half Bottom Quartile GrandMean 3.71 GrandMean 3.42 GrandMean Percent Specification Compliance % Change 1.5% 1.0% 1.16% 0.5% 0.0% -0.05% -0.5% Top Half GrandMean Bottom Half 27 9

10 Slide 26 AA(26 are this slide and 27 the same? Anderson, Ashley (Furne), 9/20/2016 KB3 Keep 26. Delete 27\ Kruse, Bill, 9/22/2016

11 Number of OSHA Incidents by GrandMean Grouping Safety % Difference Top 50% Bottom 50% GrandMean 28 Number of OSHA Incidents by Quartile Safety Top Quartile GrandMean Bottom Quartile 29 Workers Comp Number of Claims Safety Annual Average Bottom 25% Middle Quartiles Top 25% Expectations 30 Copyright , 2016 Gallup, Inc. All rights reserved. 10

12 Strengths Team Composition Meta-Analysis Study of 11,441 teams across six organizations Executing Influencing Relationship Building Strategic Thinking Achiever Activator Adaptability Analytical Arranger Command Connectedness Context Belief Communication Developer Futuristic Consistency Competition Empathy Ideation Deliberative Maximizer Harmony Input Discipline Self-Assurance Includer Intellection Focus Significance Individualization Learner Responsibility Woo Positivity Strategic Restorative Relator 31 Copyright 2000, 2016 Gallup, Inc. All rights reserved. Highly Engaged Teams Know Their Strengths Q 12 GrandMean by Percentage Strengths Known Across Companies 90%+ Strengths Known <= % Strengths Known 33 Gallup 2016 Strengths Meta-Analysis 1.2M EMPLOYEES 49,495 WORKGROUPS 45 COUNTRIES WORKGROUPS THAT RECEIVED STRENGTHS-BASED DEVELOPMENT WERE FOUND TO HAVE: 23%-59% DECREASED ACCIDENTS 14%-29% INCREASED PROFIT 33 11

13 Optimizing Company Culture Organizational identity 34 Leadership Human Capital Work Teams & Structures Values & Rituals Performance Vision and aspirations Team interaction Communication Attraction and selection Training and development Engagement Business units Geography Team formation Level of matrix Social networks Values Social expectations Social interactions Goal setting Benchmarking Accountability Rewards and recognition Well-being Knowledge management These drivers together and independently shape the behavior of employees. 35 Auditing Culture Following an evidence-based approach specifically when it comes to assessing the impact of values Driving openness and transparency in culture surveys Comprehensiveness of feedback from quantitative surveys Skills and training ensuring auditors are able to work with fairly subjective data, qualitative and quantitative Positioning the audit specifically anonymity Despite being independent and objective dealing with your own bias as you are part of the same culture 36 12

14 Leadership Human Capital Work Teams & Structures Values & Rituals Performance Vision and Attraction and Business units Values Goal setting aspirations selection Geography Social Benchmarking Team interaction Training and Team formation expectations Accountability Communication development Level of matrix Social Rewards and Engagement Social networks interactions recognition Well-being Knowledge management 37 Why Culture Is Important Provides a sense of identity for employees and increases their engagement, connection to the organization Is a sense-making device Reinforces the values of the organization Serves as a control mechanism for shaping behavior 38 A Million Ways to Define Culture AA(29 KB4 Artefacts Organization culture is different from organizational climate Stories Descriptive Shared values and practices Mission Perceived meaning Values Cultural products It s the way we do things around here 39 13

15 Slide 39 AA(29 Is this supposed to be Artifacts? Anderson, Ashley (Furne), 9/22/2016 KB4 Ask Nate D or Jim. Kruse, Bill, 9/22/2016

16 Defining a Culture Gallup s experience has shown culture should be defined, measured, and managed simultaneously with the organization s purpose and brand. Defining Your Purpose Defining Your Brand Defining a Culture Why does your organization exist? How does your organization want to be known to others? How you do things in your organization that supports your purpose and brand. 40 Gallup s Expertise ASSESSMENTS CONDUCTED IN MORE THAN 60 COUNTRIES AND IN MORE THAN 30 LANGUAGES 32 OFFICES IN 18 COUNTRIES OVER 10 MILLION EMPLOYEES ASSESSED FOR MYRIAD ROLES INCLUDING 50,000 LEADERS CLIENTS IN OVER 2,000 ORGANIZATIONS AND OVER 20 INDUSTRIES 80+ YEARS OF EXPERIENCE 41 Advantages of Talent-Based Hiring Using Gallup s talent-based hiring solutions, your organization will experience the following benefits: SPEED Employees operating from talents suited to a role learn the role faster and adapt to more variance in the role quicker. PRODUCTIVITY AND PRECISION Employees operating from talents are more productive, produce at a higher quality and exceed expectations more often. LONGEVITY AND ATTENDANCE Employees operating from talents stay longer, miss less work and build stronger customer relationships

17 What Is Talent? 43 Find the Best of the Best NATURAL TALENT VS. ACQUIRED CHARACTERISTICS Thoughts Feelings Behaviors Knowledge Skills Experience 44 What Is Talent? Think about the best manager you ve ever had. How would you describe him or her? 46 15

18 What Is Talent? Think about the best manager you ve ever had. How would you describe him or her? Excellent performers think, feel and behave differently. 47 Talent is the natural capacity for excellence, which Gallup measures using scientific assessments that evaluate naturally recurring patterns of thought, feeling or behavior that can be productively applied. 48 Examples of Natural Talents That Predict Fewer Accidents Vigilance Discipline Responsibility Communication Teamwork 48 16

19 Outcomes Associated With Low Talent Fit to the Role Transportation Industry Hospitality Industry Manufacturing Industry 24x 4x 5x MORE LIKELY TO HAVE MORE LIKELY TO HAVE MORE HOURS OF MISSED WORK SERIOUS REPORTABLE REPORTABLE ACCIDENTS AND 78:1 RATIO OF WORKERS ACCIDENTS COMPENSATION CLAIMS 49 Workplace Deviance Is Impacted by Both Personality and Environment 50 Trace Risk Map We ve all used it to assign resources and assess risk

20 Volkswagen Did they pay too much attention to external risk factors at the expense of talent, engagement and culture data? PERCENTAGE OF U.S. CONSUMERS FAMILIAR WITH VW SCANDAL 75% Gallup Panel 52 Copyright Standards This document contains proprietary research, copyrighted materials and literary property of Gallup, Inc. It is for the guidance of your organization only and is not to be copied, quoted, published or divulged to others outside your organization. All of Gallup, Inc. s content is protected by copyright. Neither the client nor the participants shall copy, modify, resell, reuse or distribute the program materials beyond the scope of what is agreed upon in writing by Gallup, Inc. Any violation of this Agreement shall be considered a breach of contract and misuse of Gallup, Inc. s intellectual property. This document is of great value to Gallup, Inc. Accordingly, international and domestic laws and penalties guaranteeing patent, copyright, trademark and trade secret protection safeguard the ideas, concepts and recommendations related within this document. No changes may be made to this document without the express written permission of Gallup, Inc. Gallup, Gallup Panel, Q 12, CliftonStrengths and each of the 34 CliftonStrengths theme names are trademarks of Gallup, Inc. All rights reserved. All other trademarks and copyrights are property of their respective owners