December 3, 2018 No Comments

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Achieving a breakthrough organization is achievable for any leadership team willing to invest in designing for the future of work. Creating work that is both customer-centric and that is employee-centric is possible.

Today’s post is by Jessica Higgins, Chief Operating Officer at Gapingvoid Culture Design Group.

“Although there’s an assumption that stress and pressure push employees to perform more, better, and faster, what cutthroat organizations fail to recognize is the hidden costs incurred.” – Proof that Positive Cultures are More Productive, Harvard Business Review

The timeworn industry standard is to focus on purely bottom-line results. Productivity obsessed leaders, however, experience a massive, and often invisible, cost of doing business this way. News outlets are reporting that employee burnout is costing US business alone over $300 billion in labor costs annually. Voluntary separations and employee churn are well documented in companies, but what is less well documented are healthcare costs, which are increasing rapidly, according the US Bureau of Labor Statistics.

Simply put, your machines are breaking down on you, and most leaders are failing to see it. In any average company, human capital is the primary expense. This means that your people have the highest replacement cost, and the highest value. I am arguing that you should start treating them this way.

It’s well proven that employees cost around 4 months of time to train. In companies that haven’t resorted to 1099s primarily, there are healthcare costs associated throughout the year. Let alone your churn rates, unemployment, recruiters and all of the other expenses attached should any employee choose to leave.

The cost of implementing more holistic management systems that take care of your human capital quickly become cheap, once all of your invisible costs of old management are brought to the surface.

I first noticed this trend at the beginning of 2017, and increasingly this year. In my work in culture design, historically leaders have desired to employ culture-based management systems that improve engagement and productivity. But then the opposite started happening. CEOs started coming to us with the opposite issue. How do I make my teams work less?

I dug through the research and found the following statistics, and solutions, for rethinking your people-side of your business.

There is an unseen cost to workforce management systems that drive productivity alone. Research shows that company cultures with high stress workforces are shown to have 50% more healthcare costs associated, 40% more absenteeism, 70% more accidents and are far less likely to be recommended as great places to work.

The reverse is also true in noteworthy and surprising ways. Low stress, high productivity cultures are found to have 4x more productivity with less “hand holding” from management and 2x the revenues of their competitors, as reported by Harvard Business School researchers.

When employees are aligned and engaged to a bright future, on a mission that they want to be a part of, performance improves with far greater innovative outcomes and less friction.

In an environment of low complexity (for example, manufacturing workers on basic machines), mindfulness at work is shown to have an incremental gain. In a medium complexity organizations, the productivity gains from mindfulness becomes exponential. In high-complexity organizations, the productivity gains become what Harvard Researchers call a “breakthrough organization.” Achieving breakthrough organizations are what the few culture-centric businesses have done that have achieved name brand recognition for culture: Zappos, Four Seasons, Nordstrom, Quicken Loans, Southwest Airlines. According to Heskett, Sasser and Schlesinger in What Great Service Leaders Know and Do, a breakthrough organization is one that provides extraordinary value to both customers and to employees, not necessarily at low cost, but with extraordinary returns to shareholders.

Achieving a breakthrough organization is achievable for any leadership team willing to invest in designing for the future of work. Creating work that is both customer-centric and that is employee-centric is possible. Designing for the future of organizational culture with new mindsets and innovative systems is how great organizations achieve long-term returns that cannot be replicated by their competitors.

Jessica Higgins, JD MBA BB, is the Chief Operating Officer at Gapingvoid Culture Design Group. She built and manages an end-to-end culture design solutions firm based in Miami, FL with clients worldwide including Zappos, Microsoft, LinkedIn and many others. She is a data scientist, researcher, author, speaker and expert on scaling influence-based management systems to align your people to creative work outcomes. To learn more, contact her at jessicaH@gapingvoid.com or on LinkedIn. To read more of her work, visit her blog.

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Photo: Saltspring Coffee Roasting Facility by Kris Krug

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