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Culture, Leadership, Engagement: Getting Close to the Action

A revealing Q&A with Curt Coffman, author of First Break All the Rules – What the World’s Greatest Managers Do Differently, on the key role of engagement in corporate culture

By William Keenan Jr.

The concept of enterprise engagement – improving corporate performance by seeking ways to engage customers, channel partners and employees through a comprehensive, holistic approach – may seem new to some, but it actually has a long and well documented history. World-renowned research firm Gallup, for instance, has been analyzing the connection between employee engagement, customer engagement and corporate performance since the late 1990s. And nearly a decade ago, the Harvard Business Review reported that “research has clearly and consistently proved the direct link between employee engagement, customer satisfaction and revenue growth.”

To gain a greater appreciation of that unique and historic research perspective and better understand why engagement has become so pervasive and important to companies around the world, Engagement Strategies Magazine (ESM) recently sat down with Curt W. Coffman, Senior Founding Partner of the Coffman Organization, to discuss the past, present and future of enterprise engagement.

ESM: Perhaps we can start by talking about your work with Gallup and their research in the area of engagement?

Coffman: I was with the Gallup organization for 22 years and specifically headed up both the employee and customer engagement consulting practice. And through those 22 years – and both before and since – I have always been interested in what it is that creates exceptional performance for employees within their jobs and, for customers, what creates that emotional loyalty toward the brands they use. As early as 1999, our research began to tell us that it wasn’t simply about satisfaction with either employees or customers.

ESM: What was the key factor your research uncovered?

Coffman: It was the degree to which employees were emotionally engaged with both their organization and the customer – or with the people they did business with. That drove us to compile the research and write our first book, First Break all the Rules: What the World’s Greatest Managers Do Differently. In that book we tried to answer the question: What is it that makes up a great workplace? And specifically, what we found is that an organization really doesn’t have one culture that’s overriding. It has many of what I call “little C” cultures, which exist at the local level and are probably made up of the five or seven or nine people you work together with every day. In fact, an organization probably has as many “little C” cultures as it has managers and supervisors, because we found that the manager and the supervisor are a critical catalyst for creating that engagement.

Another thing the research told us was that people don’t leave organizations. They leave a relationship with a manager that’s gone bad. And now we get a sense all of a sudden that culture really is determined by how good the manager is and the relationships they have.

ESM: So every new manager is going to mean changes to that local culture in some way or another…

Coffman: Yes. And statistically we know that there are a lot more average to mediocre managers than great ones, and that’s partially due to how we promote people to that role.

ESM: When did you begin to look at customer engagement?

Coffman: The follow-up book to First Break All the Rules was Follow This Path, which really focused on the customer. And probably the most significant thing we learned doing that book is that customers aren’t loyal by nature. Customers are switchers by nature, but they’re naturally predisposed to have emotional ties to the people they do business with. So once again it’s not an attitudinal thing like customer satisfaction. It’s the degree to which customers are emotionally engaged with the people they’re buying from. And that research really changed how Gallup helped organizations approach both their employees and their managers.

ESM: And where has your post-Gallup work taken you?

Coffman: Frankly, the items that we use to measure highly productive cultures today aren’t necessarily what they were 10 years ago, because employees have become more sophisticated. Employees have become more focused on “Who’s my manager?” and “What are some of the other emotional compensation issues that I’m going to get – not just money?”

So from that we focused the microscope a little more closely, and probably the most significant discovery has been around the fact that that, while an organization doesn’t have one overriding culture, it has basically two dimensions to its culture. It has a broader what I call “big C” culture – which is really that mission, vision, values, strategy, broader perspective, largely driven by leadership. And then it still has the “little C” culture, which is the local level. And what’s we’ve found is that one of the strongest predictors of success has to do with the degree to which those two [cultures] are in alignment.

ESM: Why is that alignment so important?

Coffman: This is going to be critical in the next few months because we’re going to have a lot of organizations starting to emerge from this difficult climb with a whole new set of strategies. And if you think about it – if what keeps high-performing people is that relationship with the manager and the alignment of the big C and little C cultures – that’s something CEOs have never had to think about before. Because now, their new strategies are going to be dependent on the culture to get them done – or, conversely, to help them fail.

ESM: Do you have any suggestions for managing those two cultures and keeping them in alignment?

Coffman: Absolutely. Let me start with the big C. The big C is now demanding a whole new leader. We’re just coming out of a period where, for a number of decades, we’ve had “in-or-out leadership.” Let me explain that.

Draw a circle and put a dot in the middle. Let’s say that dot is the CEO, or it’s the head of a department – a leader at that big C level. Then you put dots representing people inside the circle around that CEO, and you also put some dots outside the circle. Now, the greatest fear of the people within the circle would be getting kicked outside the circle. And the greatest fear of the people outside the circle would be never getting in – or losing their jobs altogether.

So leaders have historically been managing from that in-or-out leadership position, and it has caused a fear of being kicked out, so no one will step up and say, “Maybe it’s not a good idea to take the corporate jet to Washington to ask for $29 billion in aid.”

Now we’re beginning to understand that great leadership is about collaboration – about having and knowing when you have enough information to make a good decision. And we know that diversity drives great leadership. That’s the new big C.

ESM: So the new “big C” collects more input from all of the “little Cs” – or all of the employees in an organization – more so than in the past?

Coffman: Yes. But the true test of a leader is when they can still collect all that information without losing their mind. The leader of tomorrow is going to be the leader who knows when they’ve collected enough and they can crack off the decisions. My prediction is the best decisions come as close to the action as possible, and the great leaders of tomorrow are going to be those who involve the people closest to the action to be able to make those decisions and implement that strategy.

ESM: Empowering those on the frontlines to make leadership decisions on behalf of customers?

Coffman: Exactly. Just think of how many out-of-touch decisions upper managers make, and the people close to the customer can’t imagine how or why they were made. We see that every day, and it’s demoralizing for the customer and for the employee.

ESM: What are some of the things that make up the “big C” and the “little C” in organizations?

Coffman: Our research tells us that three things make up the big C and little C. One is growth. Either you’re growing or you’re dying. And when we talk about growth in the high-productive cultures we study, it tend to be people who are striving to build growth, not buy it.

Second is the quality of relationships within that culture. It’s the degree to which we’re all working together. The silos of yesterday are gone. The protectionism of individualism is gone. We have to have a broader purpose.

The third dimension is probably the most controversial, but we find it in the most productive organizations – and that is what I’d call, for lack of a better term, a servant focus. That’s where “It’s not about us – it’s about the people we’re bringing products and services to and how we’re thinking about them, and how we can better serve them.” The customer. The marketplace. And that can apply to internal as well as external customers. If you think about it, that servant focus reengages the person who has it or does it. When we’re bringing something to somebody else, we are, in turn, receiving and becoming more engaged.

ESM: How important is the role of the middle manager in all of this? The managers in all those “little Cs” will have to share the vision and have all the tools and skills they need in order to create an engaging culture at the local level. That sounds like a big job.

Coffman: Well, first of all, let’s get definitional. We’ve been treating managers as a rung on a ladder. And we’ve also been treating them as leaders in waiting. But the role of the leader and the role of the manager, we find, are very different.

I think about it in terms of an orchestra director – as having the focus of all the different pieces coming together. That’s a leader. But I think about the manager as the first chair of woodwinds, and their focus is that group, that woodwinds group performing at exceptional levels and contributing to something broader.

So we may actually have too many leaders and not enough straight managers. And what we need to realize is that leaders are about creating a better tomorrow, while managers are about creating a better today. Leaders need to prepare managers to be able to make the broad message more individual, more specific and more focused.

ESM: Let’s go back for a moment to some of the research on employee engagement and customer engagement. How closely are those two related? Is it a different process to engage a customer than it is to engage an employee?

Coffman: Yes it is. And that’s where we’ve really missed the boat these last 20 years. Our research says the concept that the customer is always right – that customers know exactly what they want and the form in which they want it, for the price they want it – is just simply not true.

This really challenges conventional wisdom, and it’s a pretty big “ah-ha!” You and I as human beings have needs that we can’t meet ourselves. We’re dependent upon somebody outside ourselves to meet them. Think about how you feel when you can’t meet your own needs. You feel frustrated and vulnerable. And would a customer be a customer if they could meet their own needs? Probably not. If they could meet their own needs, why would they need you?

So they’re coming in frustrated and vulnerable, and they don’t necessarily like being in that position. But we’ve been treating them like they’re always right – like they know exactly what they want. And what we’ve done is we’ve ignored the vulnerability.

Now, think about that. When someone ignores your vulnerability, that destroys loyalty. But when somebody connects to your vulnerability, sees you as vulnerable, sees you as a person who is coming in with needs that they can’t meet themselves, and they connect with that, that’s where trust and loyalty are built. It comes down to simply trying to understand where the person is and where they want to be.

ESM: And the dynamic on the part of the employee in terms of needs and vulnerabilities – how does that differ?

Coffman: The employee’s vulnerability isn’t the same as the customer, but there are some basic needs that are tickets to admission. Job security is a ticket to admission. So is being challenged by one’s work. Feeling as though I’m fairly treated with pay and benefits is a ticket to admission.

Engagement is related to some broader issues – like being challenged by one’s work, feeling as if my manager really knows me, walking away every day knowing the value that I bring to the organization. With employees there’s a new need for relationship and collaboration and diversity because that’s the only way they’re going to be productive. We’re not going to be more productive by working harder, we’re going to do it through technology, having the right talents to fit the job and through the relationships by which we multiply our effectiveness.

ESM: Which comes first in your estimation – engaging employees or engaging customers?

Coffman: That is the age-old question that has no right answer, except to say that you have to do both. If you put me up against a wall, I would say let’s start with engaged employees because I’ll be darned if miserable employees don’t produce miserable customers.

ESM: Gallup and others have been talking about engagement for a number of years now. Why has it taken so long for U.S. companies to understand and accept the need for engagement? What are some of the obstacles to that understanding?

Coffman: Well a lot of companies [like Gallup] – their product is a survey. They’re out to sell a survey. And the problem is you don’t fatten the cow by just weighing it every day. There has been a lot of focus on the survey, the data collection, the reporting of the data – and almost nothing on manager development. It’s my mission going forward to use the survey dimension only to create a student of the manager and the employee. You get employees engaged in their own learning, their own growth and the building of a great culture. And with managers, you have to bring the learning to where they’re at to give it relevancy. So you talk to managers about not just doing a job performance evaluation once a year; you talk about daily feedback. Those are the things that will create real transformation in an organization.

ESM: One thing that companies say about the supporting data on engagement is that we have research that correlates engaged workforces, engaged customers and high-performing organizations – but again it’s a question of which came first. Does the engagement create the high performance or does the high performance create the engagement?

Coffman: Well, it’s both. We know that strong culture is definitely tied to high performance. And engaged employees and engaged customers are part of that culture. But working for a company like Google has an engagement component as well. We should be thinking of it as a circle that each one drives. And the point of highly productive cultures is getting and keeping the circle moving in the right direction, so engagement drives performance which drives engagement which drives performance.

ESM: What kinds of initiatives are you working on now with the Coffman Organization?

Coffman: We’re trying to help people understand that engagement is a dimension that’s part of something bigger called a highly productive culture, which is really the goal. Now, within that is a new customer strategy. And in that is a new employee engagement strategy. And in that, most importantly, is the new manager development strategy. And that means clearly defining the difference between leadership development and manager development – all of the things we’ve been talking about.

So let’s get past the survey stuff and manipulating the results and get to really engaging the culture in your organization. It’s pretty simple, isn’t it? And it makes a lot of sense. That’s one good thing about research – when you do good research it brings you back to common sense.

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