Does Money Serve as an Effective Motivator for Certain Types of Work, But Not Others?

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Does money serve as a more effective motivator for certain types of work, but not others? That is the fundamental question explored by scholars in a recent working paper. Pamela Osborn Popp, Ben Newell, Daniel Bartels, and Todd Gureckis have written a paper titled, "Can Cognitive Discovery Be Incentivized With Money?" They conducted six experiments. In the first five experiments, they asked research subjects to examine a set of items. The participants had to determine how the items might be categorized sensibly into groups and then assign them appropriately. The scholars describe this task as "rule discovery" work. In the sixth experiment, the subjects engaged in "rule implementation" work. In that study, the scholars told the subjects what the categorization process should be, and the participants simply had to apply that criteria. 

The scholars found that money proved to be an effective motivator in the sixth experiment, but not in the previous five studies. The scholars conclude that tasks requiring creativity, insight, and discovery are quite cognitively challenging, and they depend on both attention and working memory.   They write  that "the results suggest that performance in tasks which require novel inductive insights are relatively immune to financial incentive, while tasks that require rote perseverance of a fixed strategy are more malleable."  

The researchers note that tasks in the workplace don't fall simply into these two categories though.  There's most likely a spectrum that stretches from the highly rote work to the extremely cognitively challenging tasks require high degrees of creativity.   Moreover, our work often involves some combination of these types of tasks.  Finally, the scholars remind us that this study focused strictly on one form of monetary incentive.  Non-monetary incentives may have different effects. 

Why Do We Miss Key Opportunities?

Why do we miss key opportunities at times in our careers?  Sometimes, it may have to do with the type of opportunity we encounter.  Suppose we have to decide whether to pursue a course of action which could have a positive outcome, but it has a very low probability of a successful result.  Harvard's Emily Prinsloo and her co-authors have published an interesting new paper exploring what they call "opportunity neglect."   Through a series of studies, they show that individuals  systematically fail to take advantage of low-probability opportunities, even when the costs of an unsuccessful outcome are quite low.   In fact, they demonstrate that, "people are even willing to incur costs to opt out of low-probability opportunities."   

Why do people fail to take advantage of these opportunities?   Perhaps, we anticipate the emotions that we will experience if we fail, and we are trying to avoid those negative feelings.  We might not only worry about how we are going to feel, but about how others will perceive us if we don't achieve a successful outcome.  

The question is:  Are we over-estimating the negative repercussions of an unsuccessful outcome?  Do we anticipate the negative emotions lasting much longer than they actually will?  Are we exaggerating the reputational hit we might take if we don't succeed?  

In writing about this research for BPS Digest, Emma Young recalls the famous Wayne Gretzky quote: ”You miss 100% of the shots you don’t take.”   Perhaps we need to remind ourselves that pursuing stretch goals is worthwhile.  In fact, there may be a great deal of fulfillment associated with taking on big challenges.  Moreover, we should recall what Daniel Pink wrote about in his excellent book, The Power of Regret.  Pink notes that people tend to experience more regret in life about paths they did not pursue than actions they undertook.   

Learning on the Job: Do We Learn and Develop Faster with In-Person Collaboration?

Source:  https://www.myworldofwork.co.uk

Do we learn more from in-person collaborators than remote teammates?  That question has been top of mind for many people over the past few years.   Much of the dialogue about this question has not been evidence-based though.  It's been highly anecdotal.   Recently, however, I read about some fascinating research on the topic. 

Frank van der Wouden and Hyejin Youn analyzed more than 17 million academic publications over decades to address the question of whether local collaboration generates more learning than remote collaboration.  The scholars wanted to identify each researcher who collaborated with someone outside their discipline and later published a sole-authored paper in that new domain.  That later publication would indicate that the researcher had learned a great deal from this collaborator outside his or her original field of expertise.  Youn and van der Wouden compared the learning rate for those who collaborated locally vs. at a distance.   They found that the learning rate of local collaborators exceeded that of distant collaborators, with a particularly substantial impact in areas such as chemistry and engineering.  

Moreover, Youn explained why the impact of local collaboration was greater for people early in their careers: “That’s understandable, because early in your career, you still need to acquire knowledge, and you have to be present to do that when knowledge isn’t yet codified. It’s like riding a bicycle. You can’t learn how to ride a bicycle by reading a paper.”

The study covered the period from 1975-2018. Therefore, some will argue that we have much better tools for virtual collaboration today, and we have become more adept at remote interaction.  As a result, they will conclude that we cannot draw far-reaching conclusions from this study.  That may be true, but it still warrants consideration and certainly indicates that we need further study of the topic for the more recent period of time.  The finding about young people is of particular interest to me.  What do these findings mean for how we bring new workers into the fold early in their career? What should onboarding and apprenticeship look like in those early years?  How will they learn and develop most effectively?  We've been thinking a great deal about what type of work can be done best remotely vs. in-person.  We should also be thinking carefully about the stage of each person's career and how that impacts our decisions about in-person vs. remote collaboration.  

Fighting Back Against Becoming Insular & Isolated

Source: www.cleartouch.com

Leaders love to talk about customer obsession.  They often highlight it as a value they cherish.  They encourage others to put the customer first.   Yet, all too often, they don't walk the talk.   Far too many organizations are quite insular in their thinking.  People focus an overwhelming amount of their time and attention on internal processes and procedures.   Executives become buried in staff meetings, and they become isolated from customers, markets, front-line employees, and external partners.    How can we fight back against becoming too insular in our thinking?  It's about more than just building in some scheduled time to visit with customers.  Here are a few tips:

1.  Walk a mile in the customer's shoes from time to time.   Don't just ask customers what they think; actually put yourself into their situation.  What is it like to purchase your product or service?  What are the pain points and frustrations of your customers? 

2.  Open your eyes when you travel and look for the unexpected.  When we drive to work each day, traveling the same route, we are usually on auto pilot.  We don't have to think much, and we often don't notice much along our path.  When we travel, our minds are more alert, and we have to think a bit more about where we are going and how to get there.   Use these travel opportunities to notice the differences between your home city or country and the place you are visiting.  What is different about consumer preferences?  What cultural differences stand out to you?  What local competitors are behaving in interesting new ways?  How might these factors influence your business?

3.  Study organizations outside your industry.   Don't just remain laser focused on the 3-5 major rivals with whom you compete each day.  Find interesting companies, far and wide, from which you can learn.   What interesting practices are they employing?   How have they overcome challenges similar to those you face? 

4.  Go out and recruit new talent on college campuses.  Don't just send your front-line human resources staff members, or your young workers who are alumni from those schools.   Send some more senior leaders to those colleges.  Encourage them to interact with the young people and ask them questions, rather than just providing information about your company. Find out what they care about, how they view your organization, and what they think about your products and services. 

5.  Encourage a few people on your team to role play the competition when you are making a big decision.  Ask them to really study how your rivals think and act, and then encourage them to propose how your rivals will react to your decision.  

6.  Read voraciously, but don't just read the business news and a few books relevant to your industry.  Read more broadly, and keep a journal reflecting on what you have learned.  

The Kyte Baby CEO Apologizes: Could the Apology Do More Harm Than Good?

Source: https://marketoonist.com/2017/04/corporateapologies.html

 
CNN's Ramishah Maruf reported this week about the severe backlash that occurred recently for a children's clothing brand with a cult-like following.   Kyte Baby is one of several popular brands of bamboo fiber clothing for kids.  These brands market their clothing as better for children's skin.  According to Kyte Baby's website, "Bamboo is, simply, the Goldilocks of fabrics—not too hot, not too cold. It’s temperature-regulating, and while we’re pretty confident it’s the softest fabric you’ll ever feel, it’s also super stretchy to grow with baby and fit longer. Perfect for crying babies, busy toddlers, and tired parents alike."

However, consumers revolted recently when news emerged about Kyte Baby's response to an employee's request to work remotely.  The employee had given birth, and their new child was being cared for in a hospital's neonatal intensive care unit.  Kyte Baby denied the employee's request.  Consumers decried the decision on various social media platforms.  Kyte Baby's CEO and founder Ying Liu issued an apology via TikTok.  Apparently, many customers considered the apology insincere and highly scripted.  Liu returned to TikTok to apologize for the poor apology!  The question, of course, is whether the damage has already been done, and whether the brand can now bounce back. 

This episode caused me to turn to the scholarly research on corporate apologies. I found an interesting study by Tessa Basford, Lynn Offermann and Tara Behrend in the Journal of Business Ethics.  In their studies, these scholars found that, "Whereas sincere apologies generated the most favorable follower reactions, insincere apologies often appeared worse than non-apologies... apparently, Chesterton was right - insincere apologies may add insult to injury."  They found that leaders who issue sincere apologies tend to viewed as more humble, and they tend to be perceived as transformational leaders.  

The lesson is clear - take a deep breath and don't rush that apology after making a significant error.  Don't over-script your apology.  Speak from the heart, and empathize with those who have been harmed.  Often, people obsess over the precise wording of an apology.  However, keep in mind that HOW you deliver the words may matter as much, if not more, than WHAT words you use.  

Stanley's Having a Moment: Should They Be Worried?

 

Everyone seems to want a Stanley water bottle these days.  The 40 ounce bottle has become a social media sensation, and it has skyrocketed in popularity with young people.  According to Fortune, the recent introduction of a Target-exclusive Valentine's Day product line created quite a stir: " People are camping outside Target stores, and there have been reports (and social media videos) of physical alterations as people try to get the special edition of the cup that has become something of a multi-generational craze."  

Interestingly, the company has been around for more than 100 years (founded in 1913). The brand enjoyed popularity with construction workers and outdoor enthusiasts for its rugged, utilitarian products. I remember my dad owning an all-steel thermos bottle, as did many other of his fellow factory workers. Trendy it was not.  

In 2016 the company launched the "Quencher" - a very large water bottle (40 ounces) with a handle and a straw whose narrow bottom fit into a car's cupholder. The product did not enjoy market success until a 40-something blogger named Ashlee LeSueur started touting the product online.  She even advised the company to market the product to women, rather than to the men the firm typically targeted.  She encouraged them to create a line of Quenchers in many bright colors.  The company's executives resisted for some time.  Then they shifted gears, and they began to adapt the product and the marketing.  The product has become immensely popular.  Great news, right?  Well, perhaps executives should still be worried.  

When a brand explodes like in this case, executives need to ask themselves:  Is this surge in popularity likely to generate a permanent lift in revenue, or are we experiencing a temporary spurt of growth that may subside?  Could the bubble burst quickly, as other companies introduce copycat products, or as consumes move on to the next big thing?  Given these questions, leaders need to think about how to mitigate the risks associated with scaling up quickly to meet this surge in demand, only to be left facing challenging circumstances if the popularity wanes quickly in the near future.  Think Peloton, who did not mitigate these risks effectively.   Here are a few thoughts about managing the potential downsides at Stanley: 

1.  Don't forget the traditional core customer, and certainly don't neglect their needs.  Sometimes, firms take their eye off the ball in pursuit of new customers, and then capable rivals emerge to attack their core.  What do the construction workers and outdoor enthusiasts need?  How should we continue to innovate for them?  Invest some of the new profits back in the core.  

2.  Scale up with caution.  Don't over-hire in pursuit of the growth.  Cutting workers later will be mighty painful.  

3. Get comfortable with some product scarcity.  That may even enhance the product's popularity.  It may be better to stock out then to be stuck with a ton of excess inventory if the product suddenly loses its "cool" among these new customers.  Moreover, too much product out there in too many places can actually contribute to a sudden turn in popularity, as people begin to complain that "everyone" has what they once considered a more exclusive product.  

4.  Be cautious about extending the brand further into new product categories.  Investing some of the new profits in innovation makes good sense (rather than simply pocketing all the cash), but you have to ask yourself:  Will we have a competitive advantage in this new category or market segment? If so, what precisely is our advantage?  Don't just pursue growth without understanding the nature of the the firm's competitive advantage.  

5.  Watch product quality like a hawk.  As production scales up rapidly, many firms encounter quality problems that quickly become a brand's downfall.  Put in place strong measures to insure that product defects remain very low. 

Stuck in a Rut

Source:  https://hrcsuite.com/pioneers/ 

Alicea Lieberman, On Amir and Ziv Carmon have published an interesting new paper titled, "The entrenchment effect: Why people persist with less-preferred behaviors."   The scholars conducted a series of experiments to examine why people become stuck in "behavioral ruts."  We can all relate, of course. At times, we find ourselves continuing to engage in undesirable activities even though we could rather easily switch to a more enjoyable or beneficial course of action.   The scholars note that many explanations exist for this suboptimal behavior, including the sunk cost trap.  However, they explore another potential explanation for behavioral ruts.  They describe this causal mechanism as entrenchment, defined as "the increased accessibility of a task set which strengthens with repetition and continuity and makes constructing an alternative task set feel difficult, leading people to forgo opportunities to make beneficial changes."  

In their first set of experiments, the scholars show that people can get stuck in behavioral ruts rather easily.  Then, they demonstrate that the more we have engaged in a suboptimal activity, the harder it can be to envision an alternative course of action.   In their language, the alternative becomes less accessible to individuals.   Therefore, people tend not to switch to a more desirable activity.   This entrenchment occurs even when switching is actually not difficult at all, and the other course of action is clearly more desirable.  

However, the scholars find that the continuous repetition of a mundane task leads to more entrenchment than when individuals have the opportunity to intermittently perform other task.  The interruption of the less desirable activity reduces entrenchment and enhances the likelihood of switching to a preferred course of action moving forward.  

The authors argue that the research has important implications for how we structure work for our employees.  Sometimes, requiring employees to take a break, or adding some variety to their work flow, will increase the likelihood that they will seek out and adopt better ways of working rather than staying entrenched in a less productive course of action.  Breaking up the mundane has some really important benefits, as it could stimulate the search for, and adoption of, more efficient ways of working.  

Lesson from the Closing of the Belichick Era in New England

 

Source: ESPN

Simple, but powerful, lesson from the Belichick era's closing chapter in New England: Open up your inner circle as you grow older, invite new voices inside, and keep questioning whether the formula for past success continues to apply in a changing environment. 

Changing Behavior by Making a Process MORE Difficult Rather than Less

https://buffalo7.co.uk/blog/how-to-get-buy-in/

Holly Dykstra, Shibeal O'Flaherty, and Ashley Whillans have written a fascinating new Harvard Business School working paper titled, "The Buy-In Effect: When Increasing Initial Effort Motivates Behavioral Follow-Through."   They begin by noting that many behavioral scientists advocate the removal of friction as a mechanism for stimulating people to adopt a new behavior (or to change their existing behavior).   In other words, make a new course of action easier for people to adopt, and you are more likely to get people to engage in that desired conduct.  However, these scholars posit that sometimes it might make sense to actually ADD friction - in short, make it MORE difficult to pursue a new course of action, and you might actually induce behavioral change.    They argue that adding some friction can increase a sense of ownership and buy-in toward a new course of action.  

To test their hypothesis, they conducted a field experiment with Oregon Department of Transportation.  Several years ago, the department migrated to a new carpool platform for residents of the state.  The scholars noted that there were many inactive users on the old platform (87% of all accounts).  In other words, they had established accounts, but they were not actually using the carpool services.  

The scholars examined whether a slightly different procedure for migrating inactive users to the new platform might have an impact on sign-ups and usage.   Some users were provided information regarding a low-effort method for moving to the new platform.  Others received information regarding a sign-up process that involved more effort.   Here's what the scholars found:

"More Effort group took more trips overall, despite there being fewer participants who signed up to the platform: while 694 signed up from the Less Effort group, only 511 signed up from the More Effort group. During our 122-day study period, we observed 9,147 total trips; out of these, the More Effort group took 5,106 trips, while the Less Effort group took 4,311, meaning that More Effort group took 795 more trips overall than our Less Effort group."

Why did adding friction actually increase usage of the carpool platform?  The scholars don't have a way of actually determining the psychological mechanism underlying individual behavior in this case.  However, they offer some possible explanations.  For example, they suggest that people may "feel a greater sense of psychological ownership over the action and value it to a greater extent, which would increase their likelihood of following through."  They also note that the sunk cost effect may be at play here.  If you are invested some time and effort into a process, you may continue down that path because you don't want to "waste" the initial investment you have made.  

Some Great Reads from 2023

 Here are some of my favorite books that I read in the past year:

• The Devils Will Get No Rest, by James Conroy
• Outsmart Your Brain, by Daniel Willingham
• Hero of Two Worlds, by Mike Duncan
• Unscripted, by James Stewart and Rachel Abrams
• Right Kind of Wrong, by Amy Edmondson
• The Revolutionary Samuel Adams, by Stacy Schiff
• The League, by John Eisenberg
• The Restless Republic, by Anna Keay
• The Power of Regret, by Daniel Pink
• It's Not TV, by Felix Gillette and John Koblin
• Elon Musk, by Walter Isaacson
• Our Man in Tokyo, by Steve Kemper

Getting Comfortable with Discomfort

Physicist Peter Carruthers, once the leader of the theoretical division at Los Alamos Laboratory, had a wonderful viewpoint about the discomfort that comes with taking on an interesting challenge:  

“There’s a special tension to people who are constantly in the position of making new knowledge. You’re always out of equilibrium. When I was young, I was deeply troubled by this. Finally, I realized that if I understood too clearly what I was doing, where I was going, then I probably wasn’t working on anything very interesting.”

As I reflect on the past few semesters of teaching, I'm reminded of the profound insight captured in this quote.  Moreover, I'm mindful that many students are deeply troubled by the discomfort that comes with learning something new and difficult.  Or, they shy away from particular activities that they find uncomfortable, such as making a public presentation or speaking up in class.  In education today, I think we are often allowing students to nestle in their comfort zone.  As a result, they are missing tremendous fairly low-risk opportunities to stretch and grow their skills in the safety of a classroom.  

What happens when they enter the workforce?  Will they seek opportunities that "fit" their skills, or will they look for challenges that will grow their skills?  For those who seek comfort and fit, they may excel early in their career, but will they plateau at some point?  Will they grow bored eventually with repeating tasks at which they have become quite adept?  Meanwhile, what about those who stretch themselves?  We need to prepare them for the failures that will undoubtedly occur.  We need to encourage them to be self-reflective, to learn quickly from their mistakes, and to adapt based on the feedback of others.  If we teach them to be resilient learners, they will thrive in the long run. 

Leaders need to think about how to best develop talented young people in their organization.  They need to insure that these future stars don't limit their potential by simply seeking comfortable opportunities in the early part of their career.  I told my students the other day that they should not shy away from the mess in their future organizations; they should sometimes run to the mess.  In those situations, there's the opportunity to fix broken things, and to learn a ton from that process.  Leaders, of course, need to support those who take on these challenges.  They will need to be encouraged, and they need some help not being frustrated by the failures along the way.  

The Erosion of Brand Loyalty

In my discussions about competitive strategy with many clients, the topic of brand loyalty always arises.  Many companies have experienced a decline in brand loyalty, as this report indicates.  Some of this decline has occurred because of the recent bout of high inflation, as consumers have traded down to lower-priced products including private label goods in many categories.  However, some of this decline in brand loyalty began long before the recent inflationary experience.  The erosion has many causes.

However, I think it is important to think about consumers and brands in terms of both loyalty and desire for variety.  I use this simple 2x2 matrix to illustrate my point.  You may have a brand for which there is a great deal of loyalty or not.  However, you also have to think about the demand for variety in your particular product/service category.  

For some product categories, customers demand a great deal of variety.  They do not want to consume the same good/brand each time they shop.  In some cases, we have low loyalty because customers are constantly trying new things.  They love to explore and discover.  Wine definitely fits in this category. Many people are always trying new wines, and they exhibit very little loyalty.  Craft beer fits here too for many people.  In other categories, there is some loyalty, but the high demand for variety means that the brand sits firmly within the regular repertoire of the consumer.  A product such as M&M's fits in this category.  People love the brand, but they don't always want that type of chocolate.  For Trader Joe's, the brand has a cult-like following, but few people do all their shopping at Trader Joe's. They buy their groceries at several different stores, but Trader Joe's is always in their repertoire.   For companies, they need to think about where their products fit in this matrix.  Do they have a product that is not sufficiently differentiated?  Is it a commodity product, and is that the reason competition always seems to revolve around price?  Or, is the challenge that consumers want variety and love to try and to discover new things?  The response to that competitive challenge can and should be very different than the problem of a lack of differentiation.  

Are You a Perfectionist? Is That Always a Bad Thing?

Source: https://www.verywellmind.com/signs-you-may-be-a-perfectionist-3145233

In Fast Company this week, University of Texas Professor Art Markman describes some of the pitfalls of being a perfectionist. He writes, "It’s wonderful to have high standards. But, at some point, those high standards cross the line from a benefit to a hindrance." Throughout the article, he describes some symptoms that might suggest you have crossed that line. He concludes the article as follows:

"Success in life is less about mistake elimination than about mistake recovery. Do enough work on projects to know that you have covered the major bases. Focus on detecting problems that come up after the work you do. Fix problems as they arise. And if you discover that a problem reflects an error on your part, apologize for the error, take steps to repair the problem, and make a note of it so that you don’t make that mistake again."

London School of Economics Professor Thomas Curran has studied perfectionism for years.  In article for the LSE website, Peter Carrol describes Curran's comments about the downsides of crossing the line from high standards to perfectionism:

"Each form of perfectionism comes with 'negative baggage' Dr Curran says, but this is particularly acute with those that suffer from socially prescribed perfectionism. 'Socially prescribed perfectionists don’t feel valued in social situations and have a chronic need for other people’s approval, while being extremely down on their implicit value,' he says.

While some may view perfectionism as a 'necessary evil' that helps people become become highly successful, Dr Curran argues that this is a myth, and that in fact perfectionism can be detrimental to performance and health. 'There is a lot of evidence to say you are not going to get any real performance benefit from perfectionism, and that it’s actually really damaging for lots of people,' he adds."

I think Markman and Curran offer some important insights about the downsides of perfectionism.  I believe, however, that we have to distinguish between easily preventable errors and other types of mistakes that might occur.  Submitting a memo that has multiple spelling and grammatical errors is inexcusable.  Proofing the memo carefully is essential.    Moreover, the stakes will differ across a variety of situations.  Our level of perfectionism should vary by situation. If the downsides of failure are quite low, then we don't want obsess over every detail to the point of creating undue anxiety or stress of ourselves and our team.  On the other hand, if the stakes are quite high, we might want to change our standards.  Finally, we all have to get better at setting priorities.  What really matters in a piece of work that we are doing?  The substance probably matters much more than the wordsmithing, or the formatting of the slide deck.  I believe that we sometimes obsess over things such as formatting because we are trying to distract ourselves from the tougher issues or choices that need to be confronted in a particular situation.  

Does Merging Two Struggling Firms Create Value?

https://dealroom.net/

Fortune's Chris Morris has reported that Neiman Marcus has rebuffed an acquisition offer from Saks, a competitor in the luxury retail market.  Apparently, merger talks continue, with Neiman Marcus hoping that Saks will increase its $3 billion offer.

This potential merger raises an interesting question for me:  Will merging two struggling firms create value?  Both brick-and-mortar retailers are struggling to compete as e-commerce rivals soar, and specialty retailers such as Zara and Lululemon outperform them.  Morris explains some of the challenges at each firm: 

The potential matchup comes at a time when luxury retail is in a down cycle, as consumers focus on bargain hunting and economic headwinds continue to keep them on edge. Neiman, in 2002, filed for bankruptcy, but has emerged in a better position, with less debt. Saks has reportedly been late with several payments to vendors, some of whom temporarily halted shipments. Hudson Bay Company, which owns Saks, sold real estate holdings recently, raising $340 million to help pay bills.

Saks believes that some synergies will be created as a result of the deal.  According to the article, management believes that combined entity will have more negotiating leverage with powerful luxury brands, particularly those that have become part of very large luxury conglomerates such as LVMH in recent years.  Moreover, management believes that the elimination of certain duplicative functions will reduce costs.  

These synergies may be real, and cost savings may result.  However, a fundamental question is:  Will merging the firms help them turn their revenue problem around?  Can they develop a stronger competitive advantage that enables them to grow in the face of strong headwinds in the brick-and-mortar retail industry?  It seems unlikely that a merger solves the growth problem at these firms.  In addition, one has to wonder about the burden of merger integration hoisted upon two organizations that are already struggling in many ways.  Will the merger integration effort make them more inwardly focused, when they should be paying ever-closer attention to changing consumers?  How much distraction will an integration effort create?  

Two wrongs don't make a right, and two weak firms don't necessarily make one stronger one after a merger.  If this deal does occur, it may lead to value creation, but formidable challenges lie before them if they are to create and sustain value and competitive advantage for the long haul. 

Should We Micromanage Sometimes?

Source: https://day.io/blog/

Adam Bryant recently posted a terrific interview on LinkedIn with David Wilkie, CEO of World50.  Wilkie ended his comments with the following story:

The other thing is that people often struggle with the sheer volume of work they face. I like to ask the CEOs I meet, what is your management hack? One gave me a great piece of advice. “Micromanage,” he said. “I know. Everyone tells you don’t micromanage, but you should micromanage 20 percent. In every business, 80 percent of your business needs to be good, but 20 percent of it needs to be very, very good, and that’s the differentiator for you in the marketplace. Your job as CEO is to know what 20 percent that is and over-index on that.” So I tell leaders, “Figure out what your 20 percent is and focus on that.”

The sentiment here definitely surprised me at first, but then it stimulated my thinking on the subject.  I believe this leader has made a fascinating point.  Leaders sometimes have to take a deep dive on certain matters and get their hands dirty a bit. They need to dig into a project or an issue, and they need to understand it a great deal of depth.  Which areas require this type of extra attention?  It makes a great deal of sense to focus on those key areas of differentiation for the company. What are the make-or-break elements of the firm's value proposition?  Where are the key points where a customer experience can go from good to great, or from good to terrible?  What truly distinguishes the firm from its competition?  In these areas, perhaps a bit of micromanagement from time to time can actually do a great deal of good.   Of course, the key is how the leader behaves when they dive into these matters.  Do they just tell people what to do? Or, do they ask good questions, coach people through the situation, and empower others to help craft a solution collaboratively?

Unhappy and Disengaged: What's Happening with American Workers?

Source: The Human Capital Hub

Vanessa Fuhrmans and Lindsay Ellis have penned a Wall Street Journal article titled, "Why Is Everyone So Unhappy at Work Right Now?"   They report:

Despite wage increases, more paid time off and greater control over where they work, the number of U.S. workers who say they are angry, stressed and disengaged is climbing, according to Gallup’s 2023 workplace report. Meanwhile, a BambooHR analysis of data from more than 57,000 workers shows job-satisfaction scores have fallen to their lowest point since early 2020, after a 10% drop this year alone.

Furhmans and Ellis explain that many companies increased wages amidst the tight labor market that emerged after the initial lockdowns eased.  Moreover, a large number of firms enhanced employee benefits.  For instance, many organizations offered improved mental health benefits and increased support for childcare.  The spending doesn't seem to be paying off.  The battle over remote work vs. returning to the office doesn't seem to fully explain the level of disenchantment either.   While some bemoan having to commute into the office again, others seem to have much less connection to their organizations because of remote work arrangements.

For me, the discussion in the article suggests that leaders need to rethink their approach to engaging and retaining employees. Compensation matters, but it simply isn't enough to drive engagement. Purpose matters, but that alone doesn't create highly committed and engaged employees either. I think leaders need to take a systemic approach. In so doing, they should recognize that pulling one or two levers alone will not have a significant positive impact. They need to think about their entire system. It would be helpful if leaders reconsidered the seminal work by Hackman and Oldham on job design. They described five factors that create a high level of intrinsic motivation, productivity, and commitment.

• Skill variety – People don't enjoy doing the same work day after day.  They want to tap into a variety of their skills and capabilities over time.   Some tasks must be completed each day, but other projects can and should vary.  
• Whole task  – Yes, it may seem that we can be more productive through division of labor.  However, employees find it more satisfying when they can see a job through from start to finish at times.  They don't want to just do a bit part without seeing the finished product.  I would add that these two first points suggest that it is important to provide interesting challenges to your employees. They will find a great deal of satisfaction from accomplishing a difficult task, provided that they have enough support in that effort.  Strive for what educators describe as desirable difficulty.  In other words, it can't be too easy, but if it's ovewhelmingly challenging, they will get frustrated quickly.  
• Task significance  – How important is the work being done?  Do employees recognize and understand the importance?  Here, organizations can do much more to show employees the impact that their work is having on people's lives.  I'm reminded of the CEO of a defense contractor explaining to me that she has her team film videos of soldiers thanking factory workers for making vehicles that keep them safe amidst the threat of roadside bombs and IEDs.   
• Autonomy – Give people some latitude regarding what to do and how to do it.  Sometimes, leaders have to direct people as to what to do.  However, they might still be able to find ways to provide choice regarding how to accomplish those tasks.  Find ways to ask workers often if they have better ideas as to how the work should be done.  
• Feedback – Make sure you recognize hard work and accomplishment in small ways on a day-to-day basis, not just in terms of pay and promotion increases that might come only once per year.  Provide constructive feedback so that people can course correct if they aren't meeting expectations.  Encourage workers to ask for help when they need it.  

It's not enough to pull one of these levers.  You need to work on ALL of them across the board.  Moreover, employees need to be part of the conversation about how to improve on these five fronts.  

How Gratitude Decreases Burnout at Work

 

As Thanksgiving approaches, we should consider the role that gratitude plays not only for our personal well-being, but for the engagement we create among our employees at work.   Amber Kersten and her colleagues have published a new paper in the Journal of Personnel Psychology titled, "Paying Gratitude Forward at Work."  The scholars studied more than 350 employees from companies in the Netherlands, Germany, Finland, Belgium, and Malta.  They found that work-related gratitude is associated with lower levels of exhaustion and disengagement.   In short, those employees who are more thankful and appreciative about elements of their worklife tend to have lower levels of burnout.  Moreover, they found that interpersonal helping behavior (i.e., do people go out of their way to assist others at work?) plays a crucial mediating role in this relationship.  In other words, "gratitude stimulates interpersonal helping behavior, thereby alleviating disengagement."  

Can leaders cultivate a culture of gratitude in their organizations?   Kersten and her co-authors point to a paper by Ryan Fehr and colleagues that recommend certain human resource initiatives that can cultivate employee gratitude.   First, Fehr and his co-authors suggest employee appreciation programs.  Second, they recommend that organizations consider facilitating contact between workers and those customers (internal and external) who benefit from the work that they have done.  In other words, help people see the impact that they are having, even when they don't always see the impact on a day-to-day basis.   Third, offering employees constructive developmental feedback and opportunities to advance their personal development also can enhance gratitude at work.   Together, these three interventions can create a culture of gratitude that goes beyond simply recognizing people for their efforts from time to time on an ad hoc basis.   

Rethinking The Push to Sign Customers Up for Your Loyalty Program

Source: www.technologyinsights.com

Black Friday is almost upon us.  As consumers shop at many retailers, many people will be asked if they are members of the company's loyalty program.  If not, associates will ask customers if they would like to join.  Do loyalty programs add value?  Clearly, most retailers seem to think so.  Yet, I'm always intrigued by the retailers that don't have loyalty programs.  Consider Trader Joe's, one of the most successful grocery retailers in the world.  They have developed a cult-like following without offering customers a rewards program of any kind.  

Recent research suggests that companies might want to rethink the standard approach to loyalty programs.  Scholars Wayne Taylor and Brett Hollenbeck conducted a fascinating study of a major home improvement retailer's loyalty program. Thye examined transaction data for more than 10,000 customers at five store locations over two years.  15% of these customers were members of the retailer's loyalty program, which only offered customers rewards for purchases in a particular product category.  The scholars found that customers do spend more when they join the program, but the cause-effect relationship is unclear.  Did customers spend more because they became members, or did they become members in advance of making some planned major purchases?  Overall, the scholars don't see a substantial positive impact on profits from signing new people up for the program.

Interestingly, however, the scholars do find that a certain subset of customers do deliver additional profits when they become new members of the retailer's loyalty program.  The customers that reside a considerable distance from the retailer's store locations, but in close proximity to a rival's store locations, tend to be quite valuable as new members of the loyalty program.  In other words, loyalty programs work best when they induce customers to switch.   Otherwise, the rewards simply eat into your margins on purchases that would otherwise occur at your stores anyway.  For marketers, the results imply that one could and should focus direct marketing efforts on specific customers in particular locations when trying to increase membership in a loyalty program. 

Customer Experience: Does it End with a Bang?

HBS Working Knowledge reports on interesting new research from Professor Julian De Freitas. He has studied customer journeys, and he finds that a strong memorable moment at the end of a customer journey can help shape a very positive longlasting impression.   As I read about the research, I was reminded about an article I read some years ago regarding Ritz Carlton's legendary customer service.  At the hotel firm, employees are allowed, and even encouraged, to spend up to $2,000 to address a customer's problem.  That holds even when the issue is not the hotel chain's fault, but instead involves  a customer error.   Now, not every firm can empower its employees to spend that much money.  Most firms don't have the margins that Ritz Carlton has, nor do they have the customer lifetime value that the luxury hotel chain generates.  Thus, firms might have a much lower limit.  Still, the concept is fascinating, because it often means that a customer's experience can end with a very memorable positive moment, rather than a frustrating memory.  

Consider a family that enjoyed a terrific stay at the hotel, but then managed to lose their son's favorite toy.   No matter how great the customer service was during the visit, the family will have a negative memory associated with that vacation.  It's not the Ritz Carlton's fault, but it still is a disappointing memory that tarnishes the entire experience.  Interestingly, the $2,000 rule enabled employees to transform that disappointment into a "big bang" positive moment which left a longlasting impression.  Micah Solomon explains in this Forbes article: 

The Rescue Of Thomas The Tank Engine (And Creation Of A Customer For Life)

This summer, a family with a two year old son spent a weekend at the Ritz-Carlton’s Dove Mountain Resort outside of Tucson. As the guests were packing up to leave for the airport the mom realized her son had lost his favorite Thomas The Tank Engine toy.

She found two Ritz employees, Jessy Long and Nathan Cliff, and explained what was at stake: that this Thomas toy was her little boy’s favorite and the loss would be heartbreaking for him. Jessy and Nathan couldn’t locate the lost Thomas train anywhere, but realizing how much this mattered to the guests agreed together that something must be done. After the guests left the property for their flight home, Jessy and Nathan drove to a toy store and purchased an absolute dead ringer of the original train for the little boy.

Then, they composed a note in longhand to the boy–in the voice of Thomas The Tank Engine himself –telling a sweet tale about the extended vacation Thomas had taken after being accidentally left behind. The account included adorable pictures (see above) of Thomas exploring the property, cooking in the Ritz-Carlton kitchen, and more. Four days after the disappearance of Thomas, he arrived by mail to a family that was, understandably, blown away, and that has shared the story at every chance they can find on Facebook and elsewhere, proclaiming that “The Ritz has earned our business for years to come!

Your Brain on Zoom: Not Good?

Fortune's Orianna Rosa Royle reported this week on a new study by Nan Zhao, Xian Zhang, J. Adam Noah, Mark Tiede, and Joy Hirsch, published in Imaging Neuroscience.  The research examined the brain activity of people engaged in Zoom meetings vs. in-person meetings.  The scholars discovered that face-to-face interactions led to enhanced brain activity.    They wrote that,  "the exchange of social cues is greater for the in-person condition."  Specifically, the scholars reported:

Findings from this investigation suggest that differences occur at the visual sensing level (mean and standard variation of eye contact duration); the behavioral level (coherence and diameters of pupils); the electrocortical level (theta oscillations); the neuroimaging level (contrast between in-person and on-line faces); and the dyadic neural coupling level (coherence between neural signals in the dorsal parietal regions).   

Co-author Joy Hirsch told Fortune, “Zoom appears to be an impoverished social communication system relative to in-person conditions. Overall, the dynamic and natural social interactions that occur spontaneously during in-person interactions appear to be less apparent or absent during Zoom encounters.”  She concluded, "“Online representations of faces, at least with current technology, do not have the same ‘privileged access’ to social neural circuitry in the brain that is typical of the real thing."

What does it mean for those of us who do engage in hybrid work?  We have to think carefully about the type of work being done virtually vs. in-person, and we have to focus on the intensity of the collaboration required during meetings.  Some types of collaboration may be more suited to in-person interaction.  Moreover, we must consider how virtual engagement with others may affect our ability to read social cues and ultimately how the ability to read those cues impacts our ability to build effective working relationships.