By Bruce Bolger
Command and Control Versus Employee Value Add
Big Decisions Are Being Made Without Metrics
Evaluating the Cost of WFH Vs. Office Work
How to Address the WFH From an Employee Value Creation Standpoint
How to cope with the unwillingness of many employees to return to work has become a major challenge, as exemplified by this recent New York Post article. Most companies are trying to coax them with incentives and perquisites, others are trying to force them with direct or indirect threats. How about constructively involving your teams in making the best decision as employeed every day on factory floors around the world employee TQM processes.
The pandemic has created a valuable opportunity to rethink how we make decisions affecting the workplace that challenges the effectiveness of the traditional “command and control” model prevalent at many organizations today. The very same business executives who resist attempts by government to command and control them, and who enjoy significant autonomy in how they do their jobs, often assume their employees don't mind coercion or lack of autonomy. Since most companies have minimal to no serious human capital metrics tied to earnings or other key performance indicators, many CEOs make employee engagement decisions based on hunches or impulse.
This article provides a prescription for a strategic and systematic approach to addressing the work-from-home (WFH) issue that uses the same approach used in TQM (Total Quality Management), which includes an employee involvement process and key metrics to assess the impact of any key decision for the purposes of continuous improvement.
First, it’s helpful to understand the strategic basis for this recommended process.
The command-and-control model appears to be based on the traditional view that most people are a sunk cost; that the contribution of employees or other stakeholders cannot be measured as an asset, and that, as result, people are treated as a production unit. Seen as sunk costs, the traditional people management model evaluates employees on their time in the office; their alignment with corporate culture; scores on skills or other tests; their appearance and comportment; participation in organizational events and meeting deadlines; producing quality work and getting along with their managers, colleagues and/or customers. The traditional “sunk cost” view of employees usually results in a generally ad hoc, reactive approach to training, job design, rewards, and recognition, etc. with little clear measurement. Since these organizations rarely employ effective human capital metrics, no one knows the true impact of decisions on recognition, learning, or other employee engagement investment, let alone work-from-home policies.
The alternative view of employees as value creators, which some call Employee Value Creation, sees people (that also means customers and other stakeholders) as value creators in direct or indirect support of customers. The premise is that people will be more engaged if they have a sense of ownership. In this model, people are measured on how effectively they add value consistent with the organization’s purpose, values, goals, and objectives of each team and job. Think of divisions, groups, and teams as entrepreneurial models with a clear sense of purpose, values, goals, and metrics, and a level of voice and autonomy that creates the sense of ownership needed to achieve superior performance.
Instead of measuring people on obedience, value creation looks at any decision based on the impact on organizational purpose and goals, engagement, efficiencies, financial results, and stakeholder experiences. In the world of employee value creation, the best place to start is by involving the stakeholders affected by any key decision in the process of developing a recommended solution and an objective means of measuring the impact over time.
In the world of value creation, people and teams are measured on how well they add value in support of the organization’s purpose, values, and goals, rather than by how well they comply with organizational policies. If you can't determine how an employee or team adds value, that's a red flag. If you're having trouble, try to calculate the cost to your group or the organization if that task were not done in terms of lost sales, higher costs, lower productivity, or quality, or safety, etc.
The new approach, long known in TQM, is based on the premise that employees are not a sunk cost but a source of value creation that sees people as the key to enhancing productivity and quality and involves them in every step of value creation. Because productivity and quality results are relatively easy to measure in manufacturing, the TQM practices outlined in this article are used in factories around the world but rarely elsewhere in business. In fact, the role of people in TQM was found to be so critical, the same International Organization for Standardization (ISO) working group that created the ISO 9001 Quality Management standard created a separate related standard known as ISO 10018 People Engagement standards in 2015.
So, the first question to ask in addressing the WFH or any issue affecting people: How will the solution align with and support the stated purpose, values, and goals of the organization and how will the results be measured? If your organization lacks clear metrics on human capital, it’s difficult to objectively determine the impact of working from home versus daily commutes except on a subjective basis from a command-and-control point of view.
Unfortunately, most organizations do not track simple-to-calculate metrics directly linked to earnings that would help management make more objective decisions on any human capital issue. Instead of holding their fingers up to the wind, CEOs can benefit from key metrics linked to financial and stakeholder experience outcomes that can help measure the effectiveness of WFH and other decisions. These metrics include Human Capital ROI; Human Capital Value Add; turnover; revenues, costs, willingness to refer of customers, employees, and other key stakeholders; DEI (Diversity, Equity, Inclusion) effectiveness across all stakeholders; wellness and safety of all stakeholders. These metrics can have a direct relation to financial results, because they expose the costs of employee and customer turnover, low productivity and quality, low willingness to refer, high legal and litigation costs due to accidents and illegal conduct, etc. that routinely are built into the numbers of many organizations as a cost of doing business because no one is asking any questions.
Since many companies lack basic metrics, here is a link to two online calculators that can be used almost instantly to calculate your organization’s Human Capital ROI and Cost of Turnover, provided by the human capital analytics firm HCMoneyball. So, when most CEOs say they want people back full-time, the first question is: What metrics are they using to determine if a decision is good for the organization from a profitability, quality, productivity, culture, or other standpoint.
If there is nothing more than a gut response to that question, chances are the organization likely is run under a command-and-control theory and this article is of no little to you. Your organization will continue to wrestle with turnover and disruption and build the costs into its business model and accepted culture. This helps explain why so many are unhappy at work and why so much productivity, quality, and turnover damage goes untracked, despite Gallup estimates that it costs the world of business $7 trillion or more each year.
Before addressing the WFH issue, it’s important to consider costs. Even management who view employees and other stakeholders as sunk costs cannot ignore the very measurable impact of commuting five hours a week (the average American’s average trip time). That cost can be calculated based on the fully loaded estimate of average pay and benefits per hour multiplied by the number of hours of commute each week over the course of 52 weeks minus vacation. This calculation does not to consider the mental and physical wear-and-tear of many commutes and diminished work-life balance, or the cost to the company in office space. Using this basic calculation, the cost of commuting could easily add up to $12,000 or more per employee per year, which essentially is a “tax” imposed by organizations on their employees. So, viewed from an economic standpoint, any objective business leader must weigh the true cost of working full time in the office against the clear cost savings of working from home, not to mention the enhanced work-life balance.
Without the use of clear metrics, such as those recommended above, any decision amounts to shooting from the hip and would rarely be acceptable as a basis for decision-making in manufacturing, science, or finance.
Instead of making a top-down decision about such a crucial issue, the employee-value-creation approach works on the premise that your stakeholders will much more likely engage in the decisions if they a sense of ownership in the decision. There is nothing more revolutionary about this concept than what occurs on the shop floors of tens of thousands of factories around the world that have embraced Total Quality Management. This is not about asking employees about their preferences; it's a disciplined process to involve them in making key decisions that are subject to final management approval, ongoing measurement, and continuous improvement based on outcomes.
This 30- to 60-day process that involves only a few meetings a years is almost guaranteed to result in greater buy-in from employees and to provide concrete metrics to evaluate the results over time in terms of concrete impact on performance and culture.
The process involves a facilitated collaboration of representatives of your various divisions, groups, or teams to recommend the best solution for their group. Of course, management retains the right to make the final decisions, as they will be most directly accountable for the outcome.
The nominal group technique. Applying the approach used in TQM, the process of addressing the WFH question, or any key decisions, starts with creating a “nominal group” representing no more than a dozen employees or other stakeholders who interact with that team to help draft formal recommendations through a facilitated process. Depending on the decision, this can be an ad-hoc or ongoing team to monitor results and recommend improvements. In the case of WFH, this is probably an ongoing committee to monitor results and recommend improvements if necessary. Representatives from other stakeholder groups are included to make sure that recommendations take the interests of other value creators into account. The best results will come if employees feel they have had a say in the decision, either for the entire company, or, for large organizations, specific divisions, or departments. For more details on this process, see ESM: Who Says You Can’t Measure the ROI of Employee Engagement Processes.
Once formed, the group uses a facilitated process, which can be conducted face-to-face or in video calls involving no more than a half day, that starts with a review of organizational purpose, values, goals, and objectives to determine whether there are any fundamental organizational principles to guide decision-making. For instance, if a company’s purpose statement or stated values include the need for people to work physically together to develop fellowship, case closed. However, in most cases, such principles are not in place, so the next practical step for each group is to develop recommendations based on input from all stakeholders who could be affected. These include clear measures to monitor results, such as the measures Human Capital ROI and turnover, Human Capital Value Add, the others outlined above, or metrics recommended by your stakeholders that are appropriate to measuring the effective and sustainable use of your people to create value.
What is your organization’s purpose and values? To what extent is it necessary to have people in your office to ensure that all have a clear sense of what’s important to support the purpose, values, and goals of the organization and their teams. Face-to-face is a necessary component of reinforcing purpose and values, but are five days in the office necessary to understand and act upon these principles?
What are the goals of the organization or the specific team? Any organization with a business operating system knows the goals of the organization; of each department, and how the two relate. Every team should have a clear sense of goals and how they align with organizational purpose if we expect them to function well autonomously. These goals also help determine the amount and frequency of time required together in the office.
What are the impacts on productivity, quality, and customer outcomes. For instance, if a specific process requires a physical review, approval and hand-off of material, and the cycle time for completion is delayed if someone is not in the office, that is a strong argument for in-office work. In other words, to what degree does having people working remotely affect productivity and cycle-times—will internal or external customers experience delays if people work remotely?
What are the impacts on stakeholder daily experiences. How are customers, employees, and supply chain and distribution partners affected by the absence or reduced presence of people in offices.
How will the impact be measured? What specific metrics will be used to measure the impact of the decision and over what time period? Do the metrics have any connection to organizational purpose and culture; productivity, quality, turnover, willingness to recommend, DEI effectiveness, etc.
What are the key tactics used to engage people. How are these tools related to being in the office; i.e., communicating the latest organizational news; training for professional or personal skills; recognizing people for achievements; promoting DEI, and wellness and safety, etc? How much office time is required to accomplish these goals in your organization. Can an Enterprise Engagement Technology address some of these engagement needs so that less time is needed in the office for reinforcement?
What is the importance of community and collaboration? How much does the team’s work and engagement involve spontaneous brainstorming? What delays or decreases in quality are occurring because of remote work? What is the importance of physical presence in establishing that culture of community and collaboration for each team? To what extent is side-by-side physical presence needed for achievement of productivity and quality goals or for evaluating the performance of individual contributors? Can quarterly off-sites replace the need for office time?
What process will be used to ensure that the WFH decision achieves the desired results? What’s the business plan to make sure that the recommendations will have the desired effect? For instance, if the group recommends that everyone should come back full time, what will be done to mitigate the damage and how will those steps be measured? Or, what if the WFH is truly shown to have a negative impact on the selected metrics?
Continuous improvement. As in any TQM managed organization, what is learned from the strategy and tactics is put into action and then measured again to see what happens.