What’s in the Way of Executives Engaging Their Human Capital?

The Conference Board CEO Challenge 2014 found that CEOs, presidents, and chairmen from more than 1,000 companies worldwide named “human capital” — developing, engaging, managing, and retaining talent — as their leading challenge.

So, what should these companies be doing to optimize their employees?

To engage employees organizations must create a culture that encourages them to thrive and allows them to realize their full potential.

This starts with leaders bringing the corporate vision to life and aligning environment, communication and emotional drivers to the company’s strategic vision and brand. Doing so means adjusting how the company interacts, trains, coaches, motivates, and incentivizes employees.

There are, however, several issues that impede an organization’s ability to adapt their people practices and create the right culture for engagement and growth. Some key issues to explore include:

1. Fear and risk aversion continue

Both fear and risk aversion continue to be deeply imbedded in businesses and their people.

AMA Enterprises, a division of American Management Association International, recently surveyed executives, managers and employees in more than 500 U.S. companies and found that fear of being held responsible for mistakes or failures was the single biggest obstacle to encouraging people to take greater responsibility.

Because of this fear, companies and their people move pain-stakingly slow, decisions are made by committee and, in many cases, indecision due to risk keeps everyone stuck in the status quo.

Fear of change and the outcome of a decision can paralyze a company. To drive innovation and improve productivity, fear of failure needs to be eliminated by empowering and motivating employees to take thoughtful or well-reasoned risks.

2. Killing workforce creativity

Companies have taken business process rigor too far and they are killing the creativity of their people and stifling their ability to make decisions allowing for personal and professional growth. This is leaving huge gaps in building the company’s leadership bench and earning them trust and loyalty from their people.

3M has become the third most innovative company in the world, after Google and Apple. But this was after the company learned first-hand that lack of freedom, or too strict a process, can be a significant roadblock to innovation.

“The Six Sigma process killed innovation at 3M,” explains Geoff Nicholson, a former 3M executive and the man behind the Post-It note. “Initially what would happen in 3M with Six Sigma people, they would say they need a five-year business plan for [a new idea]. Come on, we don’t know yet because we don’t know how it works, we don’t know how many customers [will take it up], we haven’t taken it out to the customer yet.”

As 3M learned, too much process building can quickly take over a company and kill the innovative spark that made it great.

Organizations have to balance the need to be efficient with the need to stay creative and innovative. They need to define innovation and how it fits into the company’s objectives, and then provide the right support and avoid rigid processes that impede the creative process.

3. You need more than employee satisfaction

Measuring and understanding employee satisfaction is not enough. While you cannot have an engaged employee without first being a satisfied employee, you certainly could have a satisfied employee who isn’t engaged.

And it’s the employees with a high level of engagement and loyalty who represent the brand better, engage customers more effectively, are less likely to be leave for other companies, and are more productive.

It’s troubling, then, that Gallup’s 2013 State of the American Workplace Study found that 70 percent of U.S. workers aren’t reaching their full potential — a problem that has significant implications for the economy and the company performance.

Of the approximately 100 million people in America who hold full-time jobs, only 30 percent are engaged and inspired at work, and roughly 20 percent are actively disengaged costing the U.S. an estimated $450 billion to $550 billion annually in lost productivity. In fact, employee disengagement is the single most important factor in declining productivity, which leads to higher absenteeism, higher costs of doing business, and all around poor performance.

It’s clear that organizations need to learn how to move beyond satisfaction and start learning how to improve employee engagement and loyalty.

Making your employees and your brand thrive

Yes, culture change is hard and it can feel incredibly slow. To start, senior leaders need to empower front-line manages to create “climates” that are centered around guided judgment rather than complete authority or autonomy.

A climate where managers coach and allow team member to test their ideas, that rewards critical thinking and successes, and where people can safely learn from their mistakes.

A climate that encourages open collaboration between all levels of the organization, and where all team members have a common goal – the best experience that can be delivered to the customer.

Do this and I promise your employees will thrive and so will your brand.