First e-commerce revised the need for brick and mortar, then Web 2.0 redefined the voice of the customer. Now the rise of mobile technology and online collaboration has killed the dream of work-life balance, which has a direct impact on employee engagement.
A study of 80 global companies, conducted by Paul DeYoung and Tracy Shamas and several colleagues from Towers Watson, reveals that employees need new competencies and behaviors to manage their personal obligations with the demands of today’s 24/7 work environment. Instead of striving for balance, employees must learn to harmonize work and play so companies can reap the benefits of our connected world without sacrificing employees’ discretionary effort.
“Compartmentalizing our activities doesn’t fit today’s digital world,” says Paul DeYoung, Southern California director of Talent Management and Organizational Alignment for Towers Watson. “Employees need to harmonize their work and personal pursuits, because doing so exponentially increases engagement and the bottom line.”
Smart Business spoke with DeYoung about the demise of work-life balance and how replacing it with harmonious integration can exponentially increase and sustain employee engagement.
What is exponential engagement (EE) and why is it important?
Thanks to a growing body of evidence, executives have embraced the notion that employee engagement has a significant impact on an organization’s financial results. But after combing through the data, we’ve identified two factors that influence an employee’s desire and willingness to contribute discretionary effort toward their job. The first is enablement, which exists when employees have the necessary support and tools to work efficiently and effectively over time; the second is energy, which comes from a healthful work environment that supports employees’ physical, social and emotional well-being. When these elements converge, the result is EE, which is capable of lifting a company to even greater financial heights.
How is EE impacted by harmonious integration?
Harmonious integration describes an employee’s ability to manage the demands of the modern work environment with his or her personal commitments, which is integral to emotional well-being. When companies are too focused on the bottom line and continue to raise the bar, the ensuing stress can sap employees’ energy, and, in our surveys, a better work environment and culture has supplanted compensation as the top reason for changing jobs among stressed employees. And when employees don’t have the financial resources or tools to sustain high levels of performance, frustration sets in and they ultimately burn out and check out.
How does EE influence business results?
Towers Watson studied the impact of engagement, enablement and energy across 50 global companies and found that those firms with EE had operating margins three times greater than companies optimizing only one of the contributing elements. To perform at their best, employees need positive and healthy working environments that help sustain high energy levels. For example, clear priorities, effective teams, respectful colleagues, and a balance between performance expectations and job pressures all contribute to employees’ sense of well-being on the job. In turn, positive well-being generates energy and supports sustained effort. On the other hand, motivation driven by the fear of losing your job or recessionary-induced pressures is unsustainable.
How can companies help employees learn the art of harmonious integration?
Employers can solicit feedback through employee opinion surveys and then initiate changes and offer courses to help employees increase their ability to deal with the pressure. But the best way to teach the behaviors that lead to harmonious integration is through mentoring and modeling. For example, our research shows that individuals who achieve harmony are good time managers, they know when it’s time to turn off the infiltration of e-mail and text messages and they have the ability to transition between work and personal commitments without getting frazzled. The best way to become effective at this new skill is to study others who are good at it and get feedback either through a coach or mentor. It’s also critical that executives recognize the problem and support change, before engagement erodes.
How can executives support, encourage and model harmonious integration?
Executives need to be cognizant of their own behaviors, because they impact everyone around them. In fact, based on our research, we’ve revised our executive Competency Atlas (Towers Watson’s competency dictionary) by adding ‘work and personal harmony’ to the list of must-have leadership characteristics and values. Let’s see how you stack up. First, do you send e-mails in the middle of the night? Do you require employees to be accessible on weekends or during vacations? Be conscious of the message you’re sending through your actions and respect others’ need for harmony when scheduling meetings and conference calls. Second, make sure your expectations are proportional and appropriate. It’s OK to have high expectations for your fellow executives, but don’t expect them to answer off-hour calls just because you happen to be available. Third, be a catalyst for change by endorsing training and mentoring programs and making cultural modifications based upon the feedback from employee surveys. Finally, if you’ve had the pedal to the metal during the recession, the early recovery period may be the perfect time to make additional hires and reduce organizational stress so employees can cope with the loss of work-life balance. And while doing that, don’t forget to take care of yourself.
Paul DeYoung is the Southern California director of Talent Management and Organizational Alignment for Towers Watson. Reach him at (949) 253-5215 or firstname.lastname@example.org.
Even the owner of a successful business can encounter an occasional financial setback and cash-flow problems, which prevent them from making the scheduled payments on their commercial property loan. But unless they take immediate action at the first sign of distress, they could end up jeopardizing the future of their business and forgoing the equity in their property.
Fortunately, committed owners with a viable business model may qualify for a loan modification, which gives them a chance to regroup or wait out an economic downturn by temporarily lowering their loan payments. However, owners need to do their homework and research their options before reaching a decision.
“Modifications are a great tool, but they’re designed to relieve a temporary situation,” says Seung Hoon Kang, senior vice president and chief credit officer for Wilshire State Bank. “If things don’t improve and owners fail to make the modified payments, then banks have the right to foreclose on the property or force a short sale.”
Smart Business spoke with Kang about the options for commercial borrowers who undergo a financial setback and the best way to approach a lender about a loan modification.
When should borrowers consider a loan modification?
Borrowers who run short of cash because of the poor economy or a prolonged seasonal downturn may qualify for a temporary reduction in their mortgage payments by requesting a modification. Businesses and individuals who own commercial properties such as strip malls, gas stations, car washes, hotels, motels, apartments or office buildings will be considered. But remember that borrowers are required to pass along any reductions to tenants, so everyone has the opportunity to recover. If a loan officer grants your request, your payments may be reduced for up to six months so you can continue operations. However, you’ll be required to repay the concessions once the economy improves, which is why a modification is only an interim solution.
How does a loan modification differ from a short sale or foreclosure?
A loan modification is appropriate when an owner wants to continue the business and preserve any equity in the property. If the borrower owes more than the property is worth, or doesn’t want to revive the business, then a short sale or foreclosure may be the best option. A short sale requires the lender’s approval, and allows the owner to sell the property for an agreed upon amount that is usually less than what is owed. If the bank forecloses, it assumes the property and the borrower will be forced to vacate and concede any equity. In some cases, banks may be willing to permanently modify a commercial loan by extending the length of the note or reducing the interest rate, which is the best solution for situations that are expected to exceed six months.
What should property owners know about the modification process?
Be sure to contact your lender at the first sign of trouble, because the approval process takes about four weeks. Realistically assess your situation and your options, since you’ll have to substantiate your inability to make your payments and the reasons why your business will thrive once the economy improves. Remember that lenders will consider your ambition and sincerity as well as your business plan, because it’s hard to revive a struggling business and long-term survival requires a committed and enthusiastic owner.
What’s the best way to approach a lender about a loan modification?
Make an appointment to meet with your lender and be ready to present your case by bringing a copy of your business plan, P&L and your latest rent roll, if the property is tenant-occupied. You’ll also need to provide a hardship letter that explains your situation and the reasons you can’t make your payments. In many respects, requesting a modification is like applying for a loan, because lenders will be evaluating your business strategy and the competition and assessing your ability to run the business as well as the feasibility of your model.
Why do so many modifications fail and how can business owners avoid a similar fate?
Borrowers frequently overestimate their ability to bounce back from a downturn and what will happen if they fail to make the modified payments. At that point, they lose the ability to control their own destiny, because the bank has the right to immediately foreclose on the property or force a short sale. Sometimes the situation requires more than a short-term fix, in which case the owner should consider other options and attempt to refinance the loan or negotiate a permanent modification.
Do you have any other advice for commercial property owners?
Do your homework and beware of advertisements from firms offering loan modification assistance, because they may paint an unrealistic picture of your chances or provide misinformation just to earn a fee. Listen to your loan officer, because he or she will know the best course of action after assessing your situation. Ask how each option will affect your credit and consider the long-term implications when making your decision. Finally, don’t ignore a financial setback or letters from your lender, because the situation will not go away and ignoring communications gives your lender the false impression that you simply don’t care.
Seung Hoon Kang is a senior vice president and chief credit officer for Wilshire State Bank. Reach him at email@example.com.
When there’s a lot on the line, companies expect executives to be expert negotiators and finesse a delicate compromise with board members or close a vital but tenuous deal with a strategic business partner. But sometimes things go awry even for veteran participants, as evidenced by the infamous botched merger talks between Yahoo! and Microsoft a few years ago, when Microsoft walked away from the deal after the Yahoo! CEO set the price too high.
Negotiators can be afflicted by a winner’s curse, overestimate their abilities, or fall prey to the common misconceptions and mistakes that can derail an entire session. Executives must constantly refresh and refine their negotiation skills to prevail, because when the stakes are this high, the opponents are formidable.
“We live in a society where everything’s negotiable,” says Dr. Asha Rao, professor of management for the College of Business and Economics at California State University, East Bay. “So if you don’t play the game well, you’ll lose.”
Smart Business spoke with Rao about the techniques that lead to successful negotiations and the common misconceptions and mistakes that may derail executives.
What are common misconceptions about the negotiation process?
We believe in fairness. In negotiations, professionals sometimes equate this with equality and assume that a good deal offers similar benefits to the participants, but it’s rare that both parties are equal coming into the session, and insisting on equality can shut down the talks without producing an agreement. One party may get a lot more out of it than another, but as long as each side achieves its primary goal, the gains don’t have to be equal.
Another common misconception centers on the notion that he who speaks first loses. If you’re prepared, why not make the opening offer? Doing so gives you the power to anchor the session and set the direction for the talks. And it provides a strategic advantage because it forces the other party to counter your proposal.
How can negotiators avoid typical mistakes?
These frequent errors will work against you, so avoid them at all costs.
- Failing to do your homework. You need to take a position that’s supported by facts, and failing to understand the issues before you enter a session can lead to misplaced confidence. Fastidiously research the issues before you begin, because great negotiators never wing it.
- Failing to identify interests behind positions. It’s easier to reconcile your differences if both parties realize why the other party wants something, and then focus on their common needs and interests. Rallying the participants around a common goal is a great way to break a stalemate and it keeps complex talks on track when the going gets tough. With common interests, negotiations can reopen as in the new successful deal between Yahoo! and Microsoft, where they integrate their businesses and build on common interests to challenge the market leader Google Inc.
- Succumbing to the winner’s curse. You may get what you ask for! Setting your aspirations too low may get you what you ask for but you end up overpaying or leaving money on the table.
What are the fatal flaws that derail experienced negotiators?
Don’t stand on false principle or let your ego get in the way, because negotiations aren’t about validating your self worth or advocating your beliefs. Your purpose is to get a good deal. Another grave error is adopting a take-it-or-leave-it position. Because it’s not an effective use of power, it sets the stage for confrontation, ends the discussions and forces the other party to walk away.
So what are the best practices and most effective techniques?
First, explain the reasons behind your position. Some experts maintain that this isn’t an appropriate technique, but the other party benefits when they understand your logic, and the information you provide may encourage collaborative problem-solving and fuel a compromise. Second, focus on multiple issues, not just one, because it allows the participants to set aside difficult problems, consummate small wins and build on their success. Third, always contemplate multiple scenarios in advance and prepare a series of fall-back positions. Develop your BATNA — best alternative to a negotiated agreement. A BATNA helps you build power, negotiate with confidence and recognize a good deal when you’re in the midst of an intense session.
Are there special techniques that help executives negotiate with a large group or board?
Identify your allies and the opposition. You definitely want to map the power and interests of each member, develop a strategy for approaching key players and focus your efforts appropriately. Plant your ideas and negotiate with individual members before the agenda is submitted to the forum, otherwise a group session can quickly deteriorate into an auction.
Dr. Asha Rao is a professor of management for the College of Business and Economics at California State University, East Bay. Reach her at (510) 885-4517 or Asha.Rao@csueastbay.edu.
Executives frequently face gut-wrenching decisions while seeking alternatives to cash-guzzling call centers. Off-shoring the work is a popular choice, but it eliminates jobs for U.S. workers and alienates customers who have to overcome language and cultural barriers while conducting phone transactions with overseas agents. Some companies have even relocated centers to lower-cost states or counties, but they are dismayed to find that the move produces only a temporary reprieve from exorbitant turnover and growing labor expenses, as competitors often follow and ignite a recruiting war.
While most executives continue to grapple with the problem, a few innovative companies have solved it by quietly tapping underutilized pools of talent and allowing the employees to work from home.
“The benefits of this model far exceeded the expectations of most firms who participated in our recent study,” says Gloria Gowens, director of Towers Watson’s Rewards, Talent Management and Communications initiatives for call centers. “Retention was so much better that brick-and-mortar cost savings were just the icing on the cake.”
Smart Business spoke with Gowens about the unexpected benefits of deploying virtual contact centers.
What can we learn from studying the success of early adopters?
We surveyed 16 companies, most of which utilized the model for a period of one to six years and deployed 18 to 1,500 home-based workers each. They expected to reap savings from closing or repurposing facilities, but, surprisingly, 75 percent discovered that home-based workers outperformed their on-site counterparts as measured by key performance indicators such as productivity, work quality and customer satisfaction. And, 40 percent found the engagement scores for home-based workers were higher than the scores for their counterparts in brick-and-mortar operations. Turnover of home-based workers averaged just 5 percent to 28 percent, which was an improvement when compared to the attrition rate for on-site agents.
Why is the virtual model so advantageous for talent management?
Essentially there are no boundaries when recruiting home-based workers, so employers can tap less-competitive or even rural areas to source the best talent. In fact, employees only need reliable high-speed Internet service, a quiet space to work and a landline phone, so the talent pool is practically endless. Working from home also attracts non-traditional part-time employees who need flexible hours, like students, teachers and stay-at-home parents, and who often have a hard time finding suitable supplemental employment. Benefit cost for some at-home workers tends to be lower, because they average about 20 hours per week. A key satisfier for home-based workers is that they don’t incur the ancillary costs of working outside the home like commuting, parking and business attire.
Is it difficult to manage a remote work force?
Contrary to popular belief, the data shows that remote workers don’t need constant supervision and in-person bonding opportunities to thrive and, though it sounds like a cliché, these employees have lower absenteeism and are more productive because working from home suits their lifestyle and preferences. New workers can be trained in the brick-and-mortar site, or in a virtual classroom. Thin client technology and automatic call distribution makes it easy to monitor agent activity, add or delete users, and route calls to home-based workers; in fact agents can even bump difficult calls to supervisors. Managers enjoy greater span of control since they communicate with employees via chat rooms, instant messaging and traditional conference calls; in fact, one innovative manager engages his group by holding virtual donut-eating contests. Best of all, some firms found it’s easier to staff difficult split shifts and they no longer worry about phone coverage on snow days.
How can executives assess the viability of transitioning to a virtual model?
Employers should conduct a feasibility study that considers the critical success factors and lessons learned by those with successful deployment experience; include these factors:
- Structural considerations. Develop the work force configuration model, deployment strategy and the projected costs.
- People considerations. Establish the desired candidate profile, recruiting and selection strategy, compensation and benefits structure and the performance expectations for remote workers.
- Process considerations. Consider employee training, scheduling, agent career paths and the communication process.
- Technology considerations. Assess the equipment requirements, tech support needs and the protocol for system downtime.
- Management considerations. How will team leaders coach the agents and keep them motivated and engaged?
What are the next steps once the feasibility study is completed?
Employers could launch a pilot program, assess the outcomes and refine the model before scheduling full deployment. Early adopters found that hiring new employees wasn’t the best way to test the model, because it compared the performance of rookies with veterans. Instead, allow experienced agents to work from home during the pilot and slowly integrate new hires, because it simulates a realistic scenario. They also resoundingly endorse the need for structured deployment, as it allows companies to optimize savings by strategically shuttering one call center at a time.
Gloria Gowens is director of Rewards, Talent Management and Communications at Towers Watson. Reach her at (949) 735-2933 or firstname.lastname@example.org.
After taking a turn for the worse during the recession, it appears that L.A.’s commercial real estate market is finally poised for a rebound. Banks are cautiously considering new loans, life insurance companies and institutional investors are wading back into the market and the FDIC plans to close its Irvine office in early 2012, which points to the improving health of the region’s banking industry.
But high unemployment, rent concessions and shifting consumer preferences could sabotage uninformed investors who inadvertently venture into unstable submarkets. It seems that while investors were napping, the rules changed, and big returns in commercial real estate are no longer guaranteed.
“Overall, commercial real estate is heading in the right direction, but it’s not the heyday of 2005 to 2006 when virtually every investment paid off,” says Rocco Pirrotta, senior vice president and manager of the Commercial Real Estate Group for Wilshire State Bank. “Investors need to do their homework and partner with a creative banker because, this time, your mistakes will definitely come back to haunt you.”
Smart Business spoke with Pirrotta about the opportunities and pitfalls awaiting local investors in today’s commercial real estate market.
Which submarkets offer the best deals?
After falling precipitously during the recession, several submarkets are starting to gain traction. First, the recession virtually halted the construction of new apartment buildings and condos, so apartment vacancies are starting to decline and rents are inching up, which will ultimately increase owner cash flow and may even boost property values.
Second, retail sales were up in the fourth quarter and landlords are granting fewer rent concessions, but consumers now prefer the convenience of one-stop retail centers and success hinges on local demographics as well as tenant mix and longevity. Industrial properties have been steady performers and container volume continues to rise at our local ports, but investors should be cautious about purchasing office buildings, as companies are still reluctant to hire, vacancy rates are high and experts say it will take two to three years to absorb the existing excess space.
Finally, avoid the hospitality sector, car washes and gas stations, because many of these businesses are still struggling.
What’s the key to evaluating prospective deals?
Investors can’t rely on superficial analysis; they must review data and confirm anecdotal market intelligence supplied by owners and brokers to accurately estimate their ROI.
- Rent rolls. Review a six-month collection history to see if tenants are making their scheduled payments and to expose disparities between scheduled and collected rents, which may indicate concessions. On the one hand, investors may be able to boost cash flow as rent concessions expire, but on the other hand, financially strapped tenants may be unable to pay the higher rents and they might request additional concessions if economic conditions don’t improve.
- Tenants. Are apartment dwellers working? Are suitable jobs available in the local area? Do retail centers have financially sound anchor tenants like banks and grocery stores that draw traffic and provide critical services? Centers could be in trouble if tenants rely on discretionary consumer spending, especially in economically depressed areas. Consider the local demographics along with each tenant’s business model and customer base as these underlying factors influence a property’s return.
- Lease terms. Banks have historically preferred long-term leases when evaluating commercial deals, because tenant longevity favors the buyer. Now most commercial leases average one to two years, which could be advantageous if tenants renew at higher rates, but short-term leases also allow viable tenants to negotiate a better deal or shop the competition and defect to other properties.
What else should investors consider before making a commitment?
Investors should ignore the national trends and focus on local economic conditions that directly impact commercial real estate submarkets, since our recovery is lagging behind other parts of the country. They should also spend an entire day at the property to assess the neighborhood, traffic flow, vacancies and competing projects to see if the property attracts an ample number of customers and prospective tenants. Finally, examine the owner’s recent marketing expenditures, because abundant giveaways and free rent could be a sign of a troubled property.
How can investors partner with bankers to secure a loan?
In this age of cautious underwriting, investors need a creative financial partner who understands the need for liquidity and is willing to consider options that satisfy the needs of both parties. For example, bankers used to consider future cash flow when determining funding limits, because they assumed the owner could raise rents to cover the increased debt. Now, bankers may need to offer a smaller loan, such as an earn-out loan, where future time-sensitive benchmarks allow them to increase the loan as occupancy rates or rents rise. The lender usually agrees to fund future loan increases at today’s rates, which protects investors in a rising rate environment. Collaborative evaluations and creative financing protect both investors and lenders in this new world of commercial real estate, where not every deal is a guaranteed winner.
Rocco Pirrotta is senior vice president and manager of the Commercial Real Estate Group for Wilshire State Bank. Reach him at (213) 427-6592 or email@example.com.
Executives were so busy slashing costs and meticulously revising the business plan to survive the debilitating recession, many of them overlooked the need to create a complementary talent management strategy.
Now their efforts to capitalize on the long-awaited economic rebound could be thwarted by employee defections and talent shortfalls, unless executives take immediate steps to align the disparate strategies.
“When employers institute furloughs and pay freezes and shift benefits costs onto employees it empties their emotional buckets,” says Rob Rogers, a Principal with Findley Davies, Inc. “The impact of reductions in rewards and talent management often goes undetected, until the damage is done.”
Smart Business spoke with Rogers about the process of realigning talent management with the business plan, before the window of economic opportunity closes.
Why should executives revise the current talent management strategy?
Now that the labor market is improving, top performers and workers with critical skills will be reviewing their recessionary experience and making stay or go decisions. They’ll consider whether they were treated fairly or if the company’s revised rewards continue to justify their energy, loyalty and trust. If the emotional damage is too great or the total rewards are too small, employees who possess critical skills or key institutional knowledge may be vulnerable to overtures from competitors. And since talent management refers to the holistic process of selecting, developing and rewarding human capital, it’s highly possible that many retained employees lack the necessary skills or knowledge to achieve the revised business plan or thrive in an increasingly demanding environment. To solve these challenges, employers must revitalize training and development programs and recalibrate total rewards to make sure the company’s talent management strategy complements the current business plan.
How can employers achieve emotional and intellectual realignment?
Assess the ability, willingness and motivation of your work force to thrive in the new economy by taking a series of pulse surveys to assess these critical areas:
- Intellectual readiness. Do employees possess the appropriate skills and competencies to help the company compete and meet evolving customer demands for new products and services? Can they help the company do more with less?
- Emotional readiness. Do employees understand the new business model and revised expectations? Have they embraced the need to sustain recessionary cost reductions and lower operating expenses? Are they engaged and ready to meet new challenges?
- Employee value proposition (EVP) effectiveness. Does the current EVP match employee preferences? Does the compensation program reward and motivate employees to achieve the revised business goals? Will the company maximize the ROI for rewards expenditures under the current structure?
How can employers close the gaps?
While it’s traditional to address proficiency shortfalls through employee training, mentoring and other educational programs, increased accountability is the only way to incite and sustain permanent change. Reformat the existing performance management system and employee goal-setting process to include the attainment of new skills and competencies. There is a tremendous opportunity for technology solutions to assist in this process. Don’t overlook the role of line managers in facilitating the change management process. Require supervisors to model new behaviors and actively support the evolutionary process. Although executives often hesitate to increase investments in training and development in an uncertain economy, the challenging environment provides an ideal opportunity to retool your work force. Research shows that employees consider opportunities for professional development to be an important component of EVP.
How can employers motivate employees by aligning rewards with business outcomes?
Since employees consider monetary and non-monetary rewards when assessing the return for their contributions, create a complete inventory of rewards and gauge their effectiveness by mapping each component to the goals in the business plan. This will not only expose gaps and troublesome misalignment but also allow employers to ascertain whether the rewards are capable of inciting goal-oriented behaviors and activities. For example, employers may want to offer bonuses for improving customer service or reducing R&D costs if these goals are critical to achieving vital business outcomes. Be sure to involve employees in the rewards discussion, because our research shows that employees are capable of making prudent choices when they are armed with the facts and employers are often surprised to find that low-cost benefits like flexible schedules or telecommuting do a better job of motivating and retaining employees than higher-cost perks.
How can executives support realignment?
Closing gaps and bolstering engagement requires an inclusive and holistic communications program that starts at the top of the organization. Executives must provide a road map so employees can align their efforts with the company’s goals. The leadership must clearly articulate the new expectations and the need for fresh behaviors, so employees don’t revert to old habits as the economy improves. Finally, be on the lookout for change, so you can recognize new habits and refill employees’ emotional buckets. Remember, a misaligned talent management strategy can be temporarily camouflaged by a rebounding economy and, by the time it surfaces, it’s often too late to prevent the departure of valuable resources.
Rob Rogers is a Principal with Findley Davies, Inc. Reach him at firstname.lastname@example.org or (216) 875-1900.
Given the right environment and abundant executive support, cross-functional teams can lift organizations to new heights by pooling their knowledge, penetrating internal silos and devising innovative, holistic solutions. But without the proper leadership and guidance, teams often languish and become dysfunctional, while failing to achieve their all-important mission.
“Cross-functional teams are responsible for knitting the pieces of the organization together and solving today’s big, wicked problems,” says Dr. Sharon Green, associate professor of management for the College of Business and Economics at California State University, East Bay. “It’s critical that executives re-image their roles and embrace the collaborative process, so teams can flourish and surmount these difficult challenges.”
Smart Business spoke with Green about the role of executives in fostering a collaborative environment and nurturing cross-functional teams.
What is the role of cross-functional teams?
Today’s problems are multi-dimensional, so it takes a group of employees with diverse functional expertise and different perspectives to work across disciplines and devise holistic solutions. In many cases, these teams are being asked to develop new products or implement vast changes that impact the entire company. They often encounter resistance, because many companies are a collection of fiefdoms, so team members have to bridge the divide between departments, or even collaborate with other teams, in the quest for comprehensive solutions. Another reason the teamwork concept is gaining momentum is that it suits the work-style preferences of Generation Y, who are very social, even tribal by nature, and crave a collaborative process and a variety of projects.
How is the team structure evolving to meet new challenges?
To meet the growing need for global solutions and lower operating costs, companies like Hewlett Packard are implementing virtual teams, which connect home-based, high-level professionals from around the world. We’re also seeing the emergence of multicultural teams, especially here in California, because they focus on products and services that satisfy our diverse population. Finally, companies have so many teams in play, there’s a growing need for intra-team collaboration and extreme consensus-building as teams channel their energies toward a common goal.
How can business leaders assess team effectiveness and head off problems?
Traditionally, executives have evaluated teams by monitoring outcomes, cost versus budget and the time required to develop solutions. But these types of high-level assessments don’t expose the underlying issues that point to future problems. Executives need to get down in the weeds and talk to team members, because stress, low energy, absenteeism and poor morale are symptoms of dysfunction and, if left unabated, often lead to turnover and the loss of critical institutional knowledge, particularly in high-tech companies. Also, be sure to evaluate the effectiveness of team leaders, because underperforming teams are often led by veteran, mid-level managers, who rely on command and control techniques and tend to over-manage the process. These managers need training to mentor and coach cross-functional teams, which thrive on empowerment and equality.
How can executives support effective teamwork?
Executives should embrace these techniques to build, nurture and support teams.
• Conduct a personal audit. Leaders must audit their own behaviors and expectations to see if they are enabling or hindering the teamwork process. Do you embrace collaboration? Do you truly trust the team to develop great solutions? Do you see yourself as a team member? Executives must set the tone by embracing the teamwork philosophy and modeling appropriate behaviors.
• Be a great storyteller. To be successful, teams need to understand their mission and role. Why is the project critical and how will their solutions impact the company? Leaders must provide the framework for success through effective storytelling, and then define and communicate the expectations, before backing away and refraining from controlling the process.
• Provide training and development. Teamwork skills are not innate. To groom team players with the ability to work across multiple disciplines, executives must task human resources with creating a training curriculum that covers communication and collaboration skills, as well as conflict resolution, and teaching team members how to play various roles and draft team agreements.
How can executives embrace and support the teamwork process?
First, teams need coaching, encouragement, mediation and impartial feedback to deliver quality outcomes. It’s up to executives to fulfill these needs and provide emotional support. Many executives were star individual performers before moving up the corporate ladder, but they should refrain from doing the work or supplying the answers, and instead offer guidance and counsel so the team members can struggle, persevere and overcome obstacles on their own. Second, team members need to raise their hands and ask for help when they hit an impasse, without worrying that their actions will be viewed as a show of weakness. Finally, executives need to be active participants and provide mentorship, so teams don’t feel like they’ve been assigned a difficult task and set adrift without adequate support.
Dr. Sharon Green is an associate professor of management for the College of Business and Economics at California State University, East Bay. Reach her at email@example.com.
After two years of layoffs, salary freezes and shifting benefit costs, employers are worried about attracting, retaining and engaging top talent now that the economy is improving. In fact, 52 percent of U.S. employers say it’s already difficult to attract employees with critical skills and 25 percent say it’s hard to retain top performers according to the 2010 Towers Watson Global Talent Management and Rewards Survey.
Given these emerging challenges and the ongoing need to contain costs, it’s imperative that employers invest precious dollars in rewards that resonate with employees and prospects. Unfortunately, many organizations are using insufficient data or old intelligence to determine employee preferences, so they’re spending money on programs that have little impact on retention or engagement.
“There’s a gap between the rewards many employers are offering and what employees want,” says Darryl Roberts Ph.D., senior consultant for Organizational Surveys and Insights at Towers Watson. “By listening to their employees and giving them a say in determining their rewards, employers can boost engagement, retention and productivity without increasing expenditures.”
Smart Business spoke with Roberts about the current state of employee rewards and how employers can optimize expenditures by delivering programs that meet employee preferences in a cost-effective way.
What are the challenges facing employers now that the economy is improving?
Our research shows significant gaps between what employers believe is most important to employees and what employees actually want. And given the recent economic obstacles, many HR and business executives are out of touch with employee preferences. For example, 86 percent of the U.S. employees surveyed in the 2010 Towers Watson Global Workforce Study cited improved work-life balance as a retention factor, yet relatively few employers offer flexible schedules despite the often-modest cost of instituting a program. And 62 percent of employees said rapid skill development contributes to a preferred work situation yet only 33 percent of employers said it is available in their organizations.
The good news is employers don’t have to increase rewards spending if they just listen to their employees and recalibrate their current expenditures.
How can employers determine employee preferences and optimize rewards expenditures?
The goal of Total Rewards Optimization (TRO) is to help organizations generate the highest possible perceived value for rewards at the most economical cost. We start by conducting a conjoint survey that determines employee preferences by testing a number of specific reward options. Throughout the process, employees are forced to make trade-offs and prioritize rewards, not look at each reward separately. For example, employees may be asked if they prefer a higher employer 401(k) contribution and less training, or a lower employer 401(k) contribution and more training. Our experience shows that employees understand the challenges employers face and are capable of making prudent choices if they’re brought into the conversation. Next, we analyze the data to identify rewards portfolios that have the highest impact on desirable employee behaviors while delivering the greatest ROI. The process also highlights the best rewards mix at different expenditure levels because there’s not necessarily a one-to-one relationship between cost and employee perception. Some rewards may be less costly but highly valued by employees, while others may be expensive but not deliver enough value to justify their expense.
What else will employers discover through the TRO process?
TRO provides employers with valuable information to calibrate rewards by answering these critical questions.
• What is the right level of total investment in employees? Is the organization spending the right amount? Are there opportunities to do more with less? Conversely, is there an economic case to increase rewards spending?
• Which rewards enable the business plan by driving desirable employee behavior? Organizations may be spending too much on some rewards but not enough on others, and may also have opportunities to modify some rewards programs in ways that improve ROI.
• How should rewards be tailored by employee segment? Employees value different things at different points in their careers or employment situation. For example, early-career employees may place a higher value on learning and development while more experienced workers may value larger 401(k) matches. And employers may need to tailor programs to attract and retain employees with scarce skills such as engineers or IT professionals.
How has TRO helped companies optimize reward expenditures?
When a manufacturing company faced unsustainable pension and benefits costs, it was able to launch pension program changes for new hires, redesign retiree medical and change the distribution of stock options to lower expenses with minimal impact on active employees. A health care provider found that an improved work environment, paid time off for training and more predictable work schedules were more valuable than higher pay and subsequently reduced the annual turnover of clinical staff by 25 percent. And when a large grocery chain faced intense competition and margin pressures, they instituted a program that reduced reward expenditures by $50 million while reinforcing employee behaviors that increased customer loyalty, without increasing employee turnover.
TRO helps employers better invest valuable dollars in rewards that support their business plan.
Darryl Roberts, Ph.D., is a senior consultant for Organizational Surveys and Insights at Towers Watson. Reach him at (949) 253-5229 or firstname.lastname@example.org.
Cash flow is the lifeblood of any successful business. So when credit markets tighten and the economy slows to a crawl, executives often spend valuable time monitoring payables and receivables instead of pursuing lucrative business deals. To solve the problem, leaders frequently turn to traditional, yet costly, remedies like upgrading accounting software or prodding customers to hasten the collection process.
Fortunately, it’s possible to improve cash flow by processing rudimentary financial transactions online or outsourcing them to banks. Modernizing the banking process offers executives myriad benefits such as reduced paperwork, improved efficiencies and a real-time opportunity to manage finances.
“Business leaders don’t have to invest in software or rely on the postal service to speed up collections,” says Elaine Jeon, senior vice president and chief operations administrator for Wilshire State Bank. “By leveraging the robust technology of banks, executives will enjoy better cash flow and reduced risk without making additional investments in technology or hiring additional staff.”
Smart Business spoke with Jeon about the advantages of using treasury management services to improve cash flow and manage company finances.
Which treasury management services improve cash flow?
These services enhance a company’s ability to control the flow of cash, and because employees access the system online, they don’t have to visit the branch to make deposits or initiate transactions.
• SpeeDeposit: Deposit checks as soon as they’re received by scanning the items and submitting them electronically. You’ll also get faster access to funds because deposits are accepted and credited until 7 p.m., and there’s no need to safeguard unprocessed deposits or fill out deposit slips.
• Automated Clearing House (ACH) Origination: The check’s never in the mail when you collect receivables and pay vendors electronically. ACH affords companies precise control over the timing of payments and reduces bad debt exposure, allows business owners to forecast cash flow, negotiate and enforce explicit payment terms and even compete for new deals or larger contracts.
• Lockbox Services: Businesses receiving a high volume of checks can leverage the bank’s staff and technology to process payments and, best of all, deposits are credited the same day they’re received.
• Wire Transfer: Initiate wire transfers to domestic and overseas locations without leaving your office. You’ll also enjoy lower fees and a later cut-off time by processing transfers online, and the added convenience may inspire you to enter new markets.
How does online processing lower risk and improve security?
Treasury management allows companies to leverage the bank’s technical infrastructure, IT expertise and network security without purchasing additional software or hardware, because employees access the program through a secure website. The system also accommodates an unlimited number of users, while reducing the risk of embezzlement or fraud, because administrators can establish access and permission levels and segment transactions by size. Creating different access levels allows the accounting staff to enter transactions so managers and executives can review and approve them online. Each user’s identity is verified when they log in and companies can instantly add or delete employees when the need arises. Finally, businesses that issue large numbers of checks, like real estate or escrow companies, often use positive pay services to prevent fraud. With positive pay, the bank verifies each check number and amount against a list supplied by the company to make sure checks haven’t been altered.
Why is the bank’s software superior to in-house programs?
Companies often collect data in several software programs, so executives have to transfer the information onto spreadsheets to obtain a holistic view of the company’s banking transactions and financial information. The bank’s treasury management system consolidates financial data and transactions from multiple accounts and business entities, giving executives and officers a single, real-time view of the entire organization’s finances along with the analytical capabilities of a Fortune 500 company. And because the program is Web-accessible, executives can monitor cash flow, analyze the company’s daily cash position, identify funds available for investment and improve yields by initiating transfers from anywhere in the world.
How can executives assess the costs and benefits of purchasing these services?
Certainly executives need to consider the cost of treasury management before deciding to purchase the services. But it’s important to note that online processing or outsourcing banking transactions allows companies to reduce or eliminate many direct and indirect costs along with these additional benefits.
• Online transactions are paperless so they increase efficiencies by reducing the need for faxes and e-mails.
• Multi-level security reduces risk without creating costly, redundant processes.
• Banks provide technical support and employee training at no additional charge.
• Transactions are processed by trained, specialized bank personnel who are more efficient than external employees.
• Fewer trips to the branch and streamlined processing lets employees focus on customers and revenue-generating activities.
Above all, treasury management allows executives to prioritize growth and innovation rather than administrative tasks, and that’s important in today’s environment.
Elaine Jeon is senior vice president and chief operations administrator for Wilshire State Bank. Reach her at (213) 427-6580 or email@example.com.
The global economy is undergoing a sea change. While American markets languish and deficits snowball, the global market has continued to grow in size and importance. Whether it is for technology or consumer products, the global market is now the best place to grow sales and profits. To fully realize the potential of these opportunities, executives must undergo a paradigm shift, strategically analyze data and build alliances before the first dollar changes hands.
“The $500 billion current account deficit and the trillion-dollar-plus U.S. budget gap are not sustainable and can’t be financed much longer,” says Dr. Glen Taylor, director of MBA Programs for Global Innovation at California State University, East Bay. “If we keep printing money to cover our debts, it will lead to inflation, devaluation of the dollar and diminished purchasing power, so our future depends on global expansion.”
“To sustain growth and allow the next generation of Americans to have a better life, we have to rethink globalization, identify opportunities and be contributors to the global economy, rather than consumers,” says Dr. Yi Jiang, associate director of MBA Programs for Global Innovation at California State University, East Bay.
Smart Business spoke with Jiang and Taylor about the process of identifying and making the most of ripe opportunities in the global marketplace.
What prevents U.S. executives from capitalizing on the best global opportunities?
Taylor: U.S. executives need a changed mindset and a different approach to analyze and select global opportunities, because our country is no longer the dominant market in the world. Our loss of supremacy means that we need to learn how to do business in other countries that don’t always comply with our culture and business practices. We must put ourselves in their shoes and see things from their perspective in order to identify and capitalize on the best opportunities.
Jiang: We’ve had a tendency to view globalization in simplified terms and think of other countries as a resource for outsourced services and cheap labor. But when executives apply a different perspective to the analysis process and develop innovative products and solutions, they stand the best chance of succeeding outside the U.S. For example, PepsiCo recognized an unmet need in India, and capitalized by identifying itself as a provider of well-being services, rather than a supplier of food and beverages. The CEO’s paradigm shift and innovative marketing approach has led to greater success than simply transferring the U.S. strategy to another culture.
What’s the first step in the identification process?
Taylor: The first step is demographic analysis, but unless executives take a deep dive into the data, they may overlook emerging trends and actually target the wrong customers. For example, a superficial analysis of Chinese demographics reveals no net population growth, but an in-depth study shows that social change is underway and people are urbanizing at the fastest rate in the world, adding tens of millions of new global consumers each year. This creates unprecedented demand growth for all kinds of products and services. The country’s rising affluence has made the Chinese auto market the largest in the world, the largest market for mobile communications technology, and the largest market for consumer products and services of all kinds.
Jiang: Don’t take a cookie-cutter approach to the analysis process, because each country has regional and generational differences that create unique opportunities. While cultural and generational differences often drive demand on the consumer side, U.S. executives must consider dynamic industry cycles and a county’s openness and resources before attempting to position each country in the holistic picture of global strategy.
What’s the next step?
Jiang: After analyzing the data, travel to the country to experience the culture, validate your hypothesis and establish strategic business partnerships and networks. You’ll need seamless collaboration to understand the cultural nuances and build a supply chain. Infusing yourself in the culture will help you identify additional opportunities, since the best ideas often come from prospective partners, suppliers and customers.
Taylor: Meeting people is an important part of the evaluation process, and business relationships are like a marriage, so prospective partners must get to know each other before making a commitment. And your travels may yield additional opportunities, especially if you view things with an eye for the innovations being developed in other markets. Even though the U.S. may not be able to compete in labor-intensive manufacturing, we have endless opportunities to develop and export intellectual property, and there’s an unmet need for clean tech infrastructure in many parts of the world.
What else must executives do to succeed in the global marketplace?
Jiang: Remember that global opportunities and situations are fluid, so what seems like a great idea today may not work tomorrow. Conduct extensive scenario analyses so you are prepared to perform under a variety of circumstances, and keep your finger on the pulse of prospective customers by garnering feedback through open source social networking.
Taylor: There’s every reason to be extremely optimistic about our future, if we make changes in the way we conduct business and get our deficits under control. The key is to search out opportunities in global markets to develop innovative products and services that build on our strengths while embracing new ideas from other countries
Dr. Glen Taylor is the director of MBA Programs for Global Innovation at California State University, East Bay. Reach him at firstname.lastname@example.org.
Dr. Yi Jiang is the associate director of MBA Programs for Global Innovation at California State University, East Bay. Reach her at email@example.com.