Companies With Heart - The Great Attraction

People want and need more than just a pay cheque.  Being part of an organisation that knows what it stands for, and lives it every day is enormously attractive.  In this episode Gerard explores what it takes to be an organisation with heart, how it  contributes to sustainable performance, and why employees are leaving hollow organisations in this post pandemic environment.

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Transcript

COMPANIES WITH HEART – THE GREAT ATTRACTION

 PART 1

I’d like to start this episode of Xtraordinary Leaders with a big thanks to you, the listener.  I started this podcast with humble expectations.  If we could help even just a few leaders grow and learn something new with each episode, then as far as I’m concerned, it was “job done”.  

So, you can imagine my surprise when recently I was advised that our podcast had been streamed or downloaded more than 500 times.  That's over 500 opportunities to help someone grow in their leadership practice.  And then just a few days later our audience grew by another 10% again.  

So thank you, for listening and sharing our passion for leadership, and if you have any issues or hot topics you think we should be exploring, please let me know by contacting me via our website www.xtraordinaryleaders.com.au

Speaking of hot topics, we noticed a terrific response to a recent episode I recorded on the power of purpose, and the role that leaders need to play in connecting others to their “why”. Judging by the feedback from listeners its really struck a chord.

In part that episode was the result of a conversation I had with a friend and client.  He is former Managing Director of a large, listed company here in Australia, and now acts as an advisor and director on several boards.

We had been reflecting on the impact of COVID and he made the comment that from his vantage point as a board member he had noticed that some companies he worked with had been much better at engaging and responding to their employees experience during the COVID crisis.  There was something about the cultures of these organisations that was more human, more responsive, and more resilient.  In his view this would make all the difference in how they recovered from the crisis and their future prospects for growth.  

Now this leader is someone who understands intimately what it means to confront crisis.  He had led his energy company and several thousand employees through a terrible period when they were implicated horrific bushfires had ripped through parts of my home state of Victoria, killing many people and destroying scores of homes and wiping out masses of essential infrastructure.  

Now, I have a strong view on what that special something is that allows some organisations to withstand crisis and existential challenges whilst others topple and fall and when I shared my view with him he agreed enthusiastically.  His comment was “I just wish that more boards and executives got it”.    

So what is that missing ingredient?  It’s what I call “heart”. Its what lives inside the very core of the organisation and is more important than profit and more relevant than strategy. Its what makes an enormous difference to company sustainability and now thanks to COVID it seems, an even bigger difference to employee engagement.  

And what happens when an organisation doesn't have heart?  What dangers and challenges can its absence create for employees, leaders and shareholders?  These are the questions that I’ll explore in this episode.

So hang around, it’s going to be a good one.

 PART 2

You've probably read about The Great Resignation, the predicted tidal wave of employees who will quit their jobs in the coming months to look for something better? 

I spoke about it briefly in Episode 9 – The Power of Purpose.

To recap, it seems that some pundits are predicting Australia will experience a similar phenomenon of higher rates of employee resignations, just like those observed in North American and European countries as they emerged from their pandemic lockdowns over the last several months.

Anecdotally, I know several executive recruiters who tell me that they have never been busier filling vacancies in a market where positions available far outstrip suitable candidates. 

We shouldn’t forget that Australia also has the added challenge of a severely reduced workforce pool created by almost two years of zero immigration and skills inflows, which has been the result of locking down our national borders. So its entirely possible that when this predicted event arises, perhaps after people have had the opportunity to rest, recover and reflect over the coming summer holidays, it may be even more acute than we expect.

Recently McKinsey Consultants published a study that revealed the reasons for the increased rate of resignations in North America, much of which may be instructive for us over here on the other side of the Pacific.  

They found at the heart of the problem was a disconnect between what many employers thought their employees valued, and what the employees actually wanted.  

It seems that employees want more of the human related aspects of their work. More caring and trusting relationships, and more meaning from their work. They want their relationship with their employer to be more than just a transaction of labour for pay.  They are tired and worn out and need to believe in the organisation they work for and the reason for the work they are doing. What does it stand for?  What does it care about? And are these things that employees can feel energised and engaged by, and something that they can commit to? 

Organisations that care about things like purpose and connection have what I call “heart”. And employees are looking to work with companies that have it.  

Now, as far as I can tell, this is something that many employees have always wanted.  It’s just that up until now they may have been more prepared to accept its absence.  The COVID pandemic has in some way shifted their desire from want towards need. And many seem no longer prepared to accept anything less.

This potentially creates a big problem for organisations that lack a more human-oriented caring culture, ones that are what I call “hollow” organisations.  They have no heart.

Mind you, this doesn't have to be all doom and gloom. Whilst I’ve described the Big Resignation as a problem, in truth it’s also a unique opportunity for those organisations that have “heart”. Those organisations who do have what employees are looking for should be able to retain more of their employees whilst also appearing more attractive to the talented job-hunters that have left less-deserving organisations.  This could provide a unique opportunity to engage talented people in a period where many organisations are now dusting off their plans for growth and transformation.     

In fact, with research by Microsoft reporting that 41% of employees are considering leaving their employers this year, it could be a game changer.

PART 3

So what is organisational heart and what role does it play?

I came to find the answer to this question as the result of pursuing some other related but different questions.

You see, I’ve been involved in some incredible business turnarounds and corporate success stories. The truth is I’ve also been involved in some spectacular failures.

 Having worked intimately with both market leaders and market losers I have found myself becoming intensely curious about what makes the difference? What allowed remarkably similar companies to forge quite different stories and futures?

In the earlier episode on the power of purpose I told the story of how I had been mulling over several deep questions about leadership when I stumbled across the answers in a most unexpected place.  This is the same place and experience that helped me understand more about the importance of organisational heart.

For those of you who have not heard the story, let me recount it briefly. 

The place I speak of is hidden in the folds of the Strzelecki Ranges a couple of hours drive east of Melbourne where the headwaters of the Tarwin River start their gentle meandering journey to the coast.   In a picturesque valley on the banks of the river you'll find our holiday cabin, a quiet place where I often go to reflect.

Every time I went there I couldn't help but notice a beautiful tall, silvery grey barked eucalypt tree growing on the banks of the river a few hundred metres from our house. I often stopped and just watched it gracefully waving its branches in the gentle winds of our protected river valley. It was both calming and relaxing. 

Then one day we had terrible winds that roared up from the Southern Ocean and ripped across the countryside creating mayhem and plenty of work for our emergency services. I was pretty confident though that the beautiful trees in our river valley would survive because of their well-protected location.

 I was wrong.

 On my next visit I found that the graceful silver gum had broken in the winds. About ten feet from the ground it had snapped, with the dying branches, leaves and flowers littering the river below. I was confused though. All of the other trees on the property had survived, even though many of them were older and more exposed than the silver eucalypt.

 Why had it succumbed to the wind and the others had not?

 It wasn't until I clambered up the bank and was eye level with the broken and shattered tree trunk that I learned the answer. The trunk was hollow. There were only two or three inches of healthy living wood around the diameter of tree, the rest an empty, dark and hollow space. 

Even though the tree had appeared healthy from the outside, those appearances were deceptive. Clearly it had been diseased and weakened for some time and had been unable to withstand the forces of the storm winds.

It was in that moment that I understood why some of the companies I had worked with had thrived and grown in difficult challenging markets whilst others had broken and toppled. They too were hollow.

So what is this strength that is derived from the core?

Well, a hint lies in fact that the word core is derived from the French word coeur, which means heart.   So perhaps it’s no surprise that the wood at the core of a tree is called heartwood. It's the wood that is prized by builders and carpenters because it is the strongest and most durable.  

It’s the heartwood that when attacked and destroyed leads to the tree becoming hollow and weakened. It's the same dynamic in organisations.

PART 4

So what is a hollow organisation?

It is one that has nothing of substance at its core. As a result, it does not have the strength or resilience to withstand the winds of competition, adversity, and change. Nor can it properly grow, flourish, and thrive. 

I now understand that the core strength of a healthy thriving organisation comes from what’s exists at its very centre.  Those things that are more durable and important than strategy, or competencies, or plans.  

I’m talking about two things.  Purpose and values.  Let me explain why purpose and values form the heart of the sustainable organisation.

An organisation’s purpose is a reason for existing that goes beyond making profit. A shared belief amongst those that work within it, that what they serve is something bigger and more important than themselves, and that the generation of profit simply provides a means through which to pursue that purpose more vigorously. 

A well-formed and healthy purpose is something that will activate people below the neck, in their hearts and their guts.  It gives them reason to get out of bed in the morning when tired, and to persist when the going gets tough.  In its absence an employee is more likely to just give up because there nothing of real importance in the work. 

It’s something that attracts people and holds them together as a cohesive group, committed to the one shared thing that really matters.  In doing so it binds diverse people from across diverse functions into a single unit, all pulling in the same direction. 

Some of my favourite purposes are from The Salvation Army “To save lives, to save souls” and NASA “to reach higher and reveal the unknown so that what we learn can benefit all of humankind”.   

I observed first hand another great example of company purpose when Ian Macleod led over 100,000 employees at the Australian supermarket chain Coles through a extraordinarily successful business turnaround.  They were energised and aligned not by a desire to make profit, but a commitment to restoring the trust of their customers that when they shopped at Coles they would receive quality, value and service.  It was their shared purpose of providing a better experience to their customers that gave them a reason to execute the hard work over 4 years of turning their hundreds of tired stores, often empty shelves, and dubious specials and promotions into something much better 

When I look back at the companies that I’ve worked with that have succeeded and flourished I can without exception find a narrative and story that connected with an important and meaningful purpose. Likewise, without exception those that had become diseased, hollowed out or even fallen had been engaged in the pursuit of something self-serving or had been disconnected from anything that really mattered, instead pursuing the cynical and selfish interests of a fragmented misaligned set of stakeholders. 

When the purpose of the organisation is unclear or lost there’s an inevitable weakening of the organisation. Sure, it may look healthy from the outside but those inside experience hollowness and a sort of emptiness that signals that a rot has set in.

PART 5

Purpose forms part of the heart of the organisation.  So too do values.  Whilst purpose explains its reason for being, values instruct the doing – how people should behave, and what they should use to guide their decisions and actions.  Values are as important as purpose, fulfilling a different function though.

In simple terms, purpose explains “why” we do what we do.  Values inform “how” we go about it.

Here's some examples or company values from some well-known organisations.  As you hear them, ask yourself if it is self-evident, even from your experience as a consumer, that they are alive and well.

Google – focus on the user and all else will follow

Tesla - respect the environment.

Apple - we are creative; we set the pace.

Virgin – Fun

The airline Virgin Australia provides a good case in point of living their values, cultivating them, and protecting them carefully.

Ever since they first started flying here in Australia in 2000, they've sought to differentiate themselves from their more conservative and traditional competitors by being modern, trendy, and fun. They've deliberately cultivated a value of fun to create a more pleasurable experience for the customers – flying is after all generally boring – and to attract and retain bright and engaging customer service staff such as check in staff and cabin crew.  As a result their cabin crew sometimes dress up, and appear quirky and irreverent even during the more serious pre-take off safety briefings in the cabin.

After one such slightly humorous and off script safety briefing, a passenger took offence, and wrote a letter to the companies CEO stating that that she would not fly with virgin again unless things changed.  The CEO wrote back saying that he was sorry that the customer didn't enjoy their experience flying with Virgin.  He then went on to say that Virgin had both safety and fun at the core of their culture, with both being important to him and the staff.  He finished by saying that was sorry that the customer may not fly again with Virgin. 

So, values not only guide employees in how they should interact with the world around them, they also inform how employees should behave towards each other.  Respect, Teamwork, Integrity, Care – these are also quite common values that many organisations try to cultivate.  Although some do it much better than others.  When lived well, they can create healthy cultures and positive constructive workplaces. 

The reality is though that some organisations have stated values but fail to live them consistently. When stated but not lived or upheld, they are viewed cynically or ignored altogether.  The values then atrophy and die. This can contribute to the company becoming the opposite of one that has heart.  It instead becomes the hollow organisation.  It stands for nothing.  It is inevitable weakened.  Eventually it will topple and fall.

This is what happened to Enron, the once successful US energy company that filed for bankruptcy and collapsed in 2001.  The year before its revenues were reported as nearly 101 billion and Fortune Magazine has named Enron “America’s most innovative company” for the sixth time in a row.

But its revenues and profits weren’t real. Its executives been cooking the books in efforts to make more money for themselves. The companies’ auditors Arthur Anderson, one of the world’s top 5 accounting firms, also collapsed because of the scandal after 100 years of practice.  

What were Enron’s values, painted large on the wall of their head office? Respect, integrity, communication, and excellence.  Clearly just words on a wall. 

Ask yourself this important question. If your organisation stands for nothing, how can it remain standing?

PART 6

If you’ve ever walked through the Australian bush, you may have noticed amongst the living trees ones some dead ones with hollows in which some animals live.  Lorikeets, owls, possums, sugar gliders, all sorts of critters can make them their home.

Some of these animals are protected species.  By law they can’t be harmed or removed.  Which is a good thing because they deserve protection. 

However, Hollow Organisations can also provide a comfortable home for a particular type of protected species, and that's not a good thing.

Those I call protected species in hollow organisations are managers and employees who behave in damaging and dysfunctional ways; however, they are never challenged, held accountable, performance managed, or fired, despite the damage that they do in the organisation.

Some examples of the more destructive protected species include bullies, sexual predators, and members of ‘the old boys club”.

The Protected Species seem immune to ethical or social expectations, transgressing reasonable standards of behaviour and conduct without consequence.  Bullying and intimidating others, harassing others, favouring their cronies over more competent and deserving employees, are just some examples of the Protected Species in action. 

 Without a clear sense of what its stands for, the Hollow Organisation is the perfect habitat for the Protected Species.  Without lived values, there are no clear standards to which it holds its employees accountable, so the protected species can live without fear of punishment or consequences to their destructive behaviour.  In the Hollow Organisation they can thrive and even multiply in numbers.

It is also a danger to see them as relatively harmless when in small numbers.  Oh no, the existence of even just a few costs the host organisation dearly.

Slowly they eat away at the living healthy tissue of the organisation, with a cultural disease and values rot setting in.  Other employees become disenchanted and leave, or worse become helpless victims and stay, afraid and protective.

A good example of the harm even a small group can do is well illustrated by the damage that has been done to the standing and reputation of the Special Air Service Regiment and the wider Australian Army through the alleged war crimes committed by a small number of soldiers in Afghanistan. It in part lead to the development and introduction of a new set of values that now apply to all of the Australian Defence Force, with integrity having been added as an especially important value. The hard work of cultivating, nurturing, protecting and consistently living them now lies ahead.

PART 7

It seems to me that the Great Resignation, the tidal wave of looming employee resignations is signalling that there’s a change afoot.  This is the issue that many employees are now struggling with as staying in the hollow organisation becomes an increasingly less palatable option. 

After the pain and sacrifice of months of lockdowns and having had the opportunity to reflect and reset their lives even if temporarily, the return to work may leave them conflicted. They don't want to return to workplaces that feel hollow.  They want to feel connected to purpose and be surrounded by cultures that are healthy.  They want to work in organisations that have heart.

Has your organisation got heart?  What is its purpose and do employees connect to it? How often to you refer to it when engaging and mobilising your people?  What of values?  Are they well cultivated and alive? Do you communicate them, promote them, and nurture them so that they produce a healthy culture and workplace?  

As a leader, these are important questions we should be asking ourselves as we watch with interest over the next few months for the tidal wave of the Great Resignation that may break on our shores…..

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