It’s a grim picture out there in job world as the ANZ bank follows Westpac in announcing that it will shed 1,000 jobs by the end of the year – hardly surprising given the backdrop of global economic stress and a more cautionary approach to debt from business and households.
Should all organisations downsize themselves in sympathy? Is it wise to make investments in this environment? What is the smart thing to do?
Every business wants to increase its margins by growing revenue, cutting costs or reducing the cost of capital. This sounds like a stretch when the economy is crapping out. And we are awash with buzzwords like innovation and productivity that have all the reverence of a Holy Grail.
On a recent fact-finding mission I met with a range of representatives from the government, non-profit and private sectors and found that the meaning of innovation depends on whom you are talking to. For some it is the commercialisation of science and technology; for others it may be about the complexities of social media or as simple as figuring out a better way to lift a box.
Occasionally, and much too rarely, do we include organisational performance in the same breath as innovation. Most of our policy efforts are pointed in different directions. The 2010 House of Reps inquiry into productivity growth focused on health and education measures when discussing human capital.
And yet some of the biggest payoffs on offer reside in improved organisational performance. The Department of Education, Employment and Workplace Relations has been edging in the right direction, funding a recent study on high-performing workplaces.
There is a pot of productivity “gold” waiting at the end of the rainbow. Who can honestly say that they haven’t worked for a dysfunctional firm, a dodgy company or a ticking time bomb at some stage in their life?
There are massive internal costs waiting to be cleaned up. A workplace with mediocre levels of staff engagement will have low job satisfaction rates, excessive turnover, unwanted recruitment costs and be constantly dealing with a rash of temporary placements to fill the potholes left behind.
A survey by the Gallup organisation in the US found that about 70% of employees were categorised as disengaged, and the cost associated with that estimated to be equivalent to 35% of payroll. If there is a productivity God, then he or she would be poised and ready to pounce on such largesse.
An engaged workforce is also more likely to be on the lookout for new opportunities and ways of doing things – as per the example of Accor that I wrote about recently. We can create innovation / productivity feedback loops!
So, how do we tackle the problem? Do we lift everyone’s spirits by holding a mufti day and donating to a charity? That’s not necessarily a bad thing to do, but it is a sideshow to the main game.
One avenue we can follow involves building mutual value between businesses and community organisations through partnerships. If crafted well, business can provide developmental activities for its employees, leading to more job satisfaction and financial gains from productivity outcomes.
I regularly talk to businesses that are struggling to figure out how to do it. I see non-profit organisations struggling to tap into the potential resources that are on offer. These barriers can be overcome with some decent analysis, expertise and the development of strategic options.
It takes an investment in thought processes and guidance rather than a massive capital outlay. As the harsh realities of a flat economy bite, investing in soft skills is the smart thing to do.
Phil Preston
PO Box 163
Helensburgh NSW 2508
Australia
(e) phil@philpreston.co
(m) +61 (0)408 259 633
Comments
Great article, Phil. All the research supports the benefits of investment in soft skills, especially in leaders. Online job board SEEK recently conducted a survey of over 1000 people who had left a job in the past 3 years. When asked to list the top 3 reasons for leaving their most recent job the most common answer was ‘bad management’ (28%). Specifically ‘bad management’ was predominantly identified by survey participantd as ‘lack of direction/disorganised’ and ‘poor communication skills’.
The front line employees may appear to be ‘the problem’ but in almost all cases these employees are just the symptom of poor leadership from their direct report (and naturally that will extend all the way up the line).
Thanks Ross – your point is interesting and certainly true. I know of a couple of blue chip organisations that are leading the market in the way they think about employees and the world around them – they produce brilliant policies and reports – but, as you say, talk to the people on the ground and you get a much different story.
Fantastic article and insight, Phil. It is apparent to me:
poor leadership management = loss in talent retention + drop in organisational profit margin + poor business culture
Lastly, looking forward to reading your next article
Hi Penny, I’d say you’ve got it in one there! The organisational skill base that is missing is the ability to make the link between soft skill development and the bottom line; and the barriers to that are often driven by conflicting timeframes – the performance expectations of companies (and those who analyse it) sit within a tighter timeframe than that of the perceived benefits of soft skills improvements.