The Super 8: The Best Corporate Cultures of 2019

Corporate culture is such an important factor in whether a company succeeds, and it’s becoming the key factor that separates the good companies from the great. Yet most companies have no idea what it is and how to improve it. They think putting wellness programs in place to eat better and exercise will make a significant change in employees lives, but the data shows otherwise.  Or maybe you had a speaker or teacher come to teach stress reduction tips or meditation like I did for a Fortune 10 company. The problem is, those things all touch on the symptoms and not the root cause.

A company culture is a living organism that, because you’re dealing with people, it cannot be controlled or contained.  It’s not something you can “fix” easily. You’re dealing with people’s heads and hearts, and THEY decide if what you’re selling them as a company works for them. And the one person responsible for it is the CEO.  And the CEO has a hell of a job to create a culture that adds value to the business, shareholders and the employees.

Some CEO’s think it will happen organically and don’t do anything to create a culture, and some try to control it by creating goals. Their goal might read: “Create an innovative and collaborative culture”. That’s the cool one these days.  Or how about; “Create a culture of open and honest communication that simultaneously drives business results.”  That’s the serious one. Or maybe you have a more emotionally intelligent CEO and it reads; “Inspire a culture of passion and respect for others, allowing for acceptance of others ideas while delivering the utmost in customer satisfaction.”

While all of these are pretty good goals, they don’t really matter unless the behaviors of the CEO and leadership team demonstrate them day in and day out. On top of that, if behaviors don’t align but are allowed to remain, employees will see it as lip service and lose interest in demonstrating the behaviors themselves.

While this may seem difficult, there are plenty of companies that just “get it” and walk the walk.  Below are The Super 8 Top Corporate Cultures based on information and research I’ve conducted over the last few months.  As you’ll see, most of the them have CEOs that were named to the “Top CEO 2018” list, which validates the point that culture starts at the top.

The Super 8: The Best Corporate Cultures of 2019

1.Bain & Company
Glassdoor rating:  4.7 out of 5
CEO: Manny Maceda
CEO Approval: 98%
Recommend to a friend: 96%

Why is Bain’s culture so good in an industry known for extensive travel and burnout? It starts with their leadership who understand their employees, (or “Baineys”) are their greatest asset.

Just ask Keith Bevans, Global Head of Consultant Recruiting for Bain. In a recent interview he brought up humility as a common personal attribute of the leadership and employees. He states there is “a certain level of humility that every person at Bain has.”

Why is humility so valuable for a culture? Humility is the key component to collaboration by creating a safe space to share ideas and help one another. It’s the backbone of values like teamwork and resilience too.

And while pay is not on the top of the list for why employees stay at a firm, Baineys work hard, but their compensation reflects it. From paid paternity leave to incredible health and insurance benefits, it’s clear why Bain is on this list.

 

2. Procore Technologies
Glassdoor rating: 4.6 out of 5
CEO: Craig “Tooey” Courtemanche
CEO Approval: 98%
Recommend to a friend: 89%

At Procore, teamwork is the key to its success. They promote a team culture with one simple value: Openness.

Openness relates to so many things for Procore. Open communication, open to ideas, open door policy…this screams transparency, and their employees love it.

I read a quote from an interview with Sara Borneleit, Director of Business Development, and it really hit on what’s needed to lead in this new era. She said, “I try to embody the philosophy of servant leadership blended with democratic leadership. It’s important for my team to know I care about them when giving critical feedback, and it’s important for me, as a leader, to be vulnerable. By admitting my weaknesses and faults, I allow the team to feel safe in knowing personal areas that need improvement or attention, and that that’s OK.”

When leaders aren’t afraid to share their failures, employees find it easier to relate and find compassion for the leader.  That compassion creates a better relationship, which in turn creates loyalty and trust, the two biggest reasons employees stay or leave a company.

Procore claims their culture is the reason they are growing so fast, and from the looks of it, the sky is the limit.

 

3. Radio Flyer
Glassdoor rating: 5.0 out of 5
CEO: Robert F. Pasin
CEO Approval:  100%
Recommend to a friend: 99%

If you’re like me, some of your childhood memories were with your red Radio Flyer wagon.  I used to use it to cart the family dog around, or to dig up dirt for no apparent reason. And when it showed during my research I was surprised. But it has some seriously loyal employees and a leadership team that figured out how to build an amazing culture.

Their SVP of HR, Amy Bastuga, said in an interview that she wanted every employee to be able to say, “This is the best job I’ve ever had.”  That seems easy to do when 25% of the employees started as interns, but it’s not. The “Flyer” get a chance to test drive their job before deciding if they want to work there.  It’s a great concept that I’ve been promoting for years but doesn’t seem to stick at most companies.

A quote from Glassdoor seems like a warning to prospective candidates who may not have what it takes. The quote below stems from dedicated employees who take pride in their work.

“While this is not a downside, applicants should know that here at Radio Flyer, you are expected to give 100% each and every day. We are a high performing team and everyone pulls their weight! We work hard AND we play hard!”

 

4. 23andMe
Glassdoor rating: 4.8 out of 5
CEO: Anne Wojcicki
Approve of CEO: 100%
Recommend to a friend: 95%
Top CEO 2018

23andMe, Inc. is a female lead consumer genetics and research company based in the San Francisco Bay Area. Named to the Top CEO 2018 list, Anne Wojcicki’s approval rating tops 100%. Wow!

She has created a culture that promotes innovation, conversation (even the uncomfortable ones), and challenge.  Most employees feel they are doing meaningful work and have purpose. If you know anything about “employee engagement”, you know this is one of the key factors in retaining employees.

It also has a flexible work environment with dogs allowed to come to work with their owners, delicious lunches and a beautiful rooftop terrace to work or just relax on.

Because the employees live all over the Bay Area, they offer a free CalTrain GoPass to everyone to use for their daily commute, or during your own free time.

I think a quote from one of the employees sums up why the culture is so good. “It is so inspiring to be in an organization with a female CEO — this means a lot, and Anne’s leadership and energy is awesome!!”.

 

5. Ultimate Software
Glassdoor rating: 4.6 out of 5
CEO: Scott Scherr
Approve of CEO: 95%
Recommend to a friend: 90%
Top CEO 2018

Ultimate Software has a People First mentality and a culture that is unprecedented. There is a phrase that people say about the company and its “once you come to Ultimate you never leave.”

It is ranked #1 on this year’s Best Workplaces for Women list by Fortune and Great Place to Work. With 50% of our workforce being women, this really says something about their commitment to gender diversity.

With benefits like 100% Employer-paid health coverage for employee and family (includes medical PPO plan, choice of dental plan, prescription, and vision), 401(k) Retirement Savings Plan with 45% company match on every dollar of employee contribution (no cap) and Unlimited Personal Time Off (for all exempt employees), they put their money where their mouth is.

And additional perks such as on-site massages; an indoor basketball court; recreational classes and wellness programs; monthly birthday celebrations; periodic breakfast, lunch, and ice cream treats; and departmental reward trips/programs are the icing on the already delicious cake.

What about career advancement, a key driver in employee retention?  They are committed to helping employees “upskill” into higher-paying positions, including helping America’s military veterans find work.

With this kind of culture, it’s clear why Scott Scherr was named to the Top CEO list for 2018.

 

6. Zoom Video Communications
Glassdoor rating: 4.8 out of 5
CEO: Eric S. Yuan
Approve of CEO: 98%
Recommend to a friend: 95%
Top CEO 2018

Eric Yuan came from China 22 years ago barely speaking English. A tough start you might think but today he’s worth $3B and named Glassdoor’s big company CEO of the Year with a 99% approval rating.  Even better is Zoom ranked No. 2 among large companies on the Glassdoor list of best places to work in 2019.

Yuan started Zoom in 2011 after helping build WebEx which was then bought by Cisco for $3.2B.  Now his company is worth $15.9B after an IPO just last week.

His approach to building a great company? The culture. And the employees believe Zoom’s culture is top notch. Just read some of the quotes from an employees on Glassdoor, like this one; “The product is incredible and the mantra of Delivering Happiness is completely legit”

Yes, that’s Zoom’s motto; “Delivering Happiness.”  Some of the benefits Zoom employees enjoy include unlimited PTO, free food, gym and wellness reimbursement.  Reimbursement for any book they purchase, including children’s books promoting his desire for his employees to be self-learners as well.

It’s not just about the employees for Yuan.  “When you do business with customers, you’ve got to make sure your process is very simple but very easy.”  He believes the product is the result of your company culture.  “If you do not have a great culture, occasionally you might develop a good product. However, that’s not sustainable.”

 

7. DocuSign
Glassdoor rating: 4.7 out of 5
CEO: Daniel Springer
Approve of CEO: 98%
Recommend to a friend: 93%
Top CEO 2018

What’s not to like about DocuSign! I use it almost every day and love it. And so do the employees.

Over 102 reviews on Glassdoor talk to the culture, leadership and product.  “People work hard but there is good work/life as well” and  “DocuSign hits the trifecta: great team, great product and great work“.

I was impressed with the values I saw on the website that the leadership lives and breathes.

Trusted. We will always listen, be honest, and try to do what’s right, every day.

Loved. We will give everyone the opportunity to do the work of their life.

Responsible. We will be fair and treat everyone equally. Equal pay, equal opportunity, equal everything

CEO Dan Springer was voted as a Top CEO of 2018 and I see why. He states; “One of our goals is for DocuSign to become the best place any of our employees have ever worked at in their careers.”

What are some of the benefits they offer their employees?  Extended our parental leave globally up to a full six months off. And they have taken steps to expand diversity and inclusion through the growth of their Employee Resources Groups pioneered by our very active [email protected] group and by hiring more female senior executives directly reporting to our CEO to ensure diverse voices are at the table.

 

8. St. Judes Children’s Research Hospital
Glassdoor rating: 4.6 out of 5
CEO: James Downing
Approve of CEO: 99%
Recommend to a friend: 92%
Top CEO 2018

For president and CEO Dr. James Downing, fulfilling the mission of St. Jude Children’s Research Hospital starts with ensuring employees have “a sense of pride” and purpose in their work. He does this through his inclusive and transparent strategic planning process and a leadership team “that’s not afraid to speak up and disagree with me.” Voted a Top CEO for 2018, Downing knows the power of transparency. He keeps employees in the know with transparent decision making and quarterly reviews outlining what’s next.

Downing implement some pretty interesting benefits that most employees would die for. The St. Jude employees enjoy on-site massages, dry-cleaning services, a farmer’s market and car detailing.

How does a non-profit afford that you ask? By being creative. They invite vendors onto its campus for the employees to use without ever having to leave the site. Genius!

But one of the best perks is on Halloween, where St. Jude pretty much shuts down for a couple of hours so the staff can dress up and play with the children.  As a hospital dedicated to children, it’s clear the employees love taking part in the Halloween event, and love working at St. Jude.

I’m sure there are many more companies that aren’t on the list that also have great company cultures, like Salesforce, Intuit, Hubspot and T-Mobile, but they didn’t even come close to these 8 when it came to the factors considered for my assessment.

 

What do all eight have in common?

 Each of these companies have a CEO that believes the employees are their biggest asset, and treat them as such. They provide some of the key elements that make employees feel loyal and want to perform to the highest of their ability.

  • Employees first. Happy employees translates to better interactions with customers
  • Transparency in communication and decision making from leadership
  • Empowerment to challenge and improve no matter what role
  • An environment that enables teamwork and collaboration (physically and mentally)
  • A vision that allows employees to find purpose and passion in their work

 

Want to learn more about how to improve your culture? Contact me for an assessment by clicking here.

 

Top 10 Worst Corporate Cultures

As the war for talent becomes more and more fierce,  job seekers are doing their research before making their decisions.  One the key things they are looking for is a good work environment. With employees flocking to Glassdoor and Indeed to tell the world what’s going on inside the company, it’s becoming more difficult to hide a bad culture.

My experience looking inside 50+ companies ranging from $10M to $150B has given me the ability to notice trends, and even more so, to predict why a company is having problems. And what I’ve found is getting to the root of operational problems usually involves uncovering cultural ones.

A toxic culture can sabotage the best strategy and make it impossible to hire talent. So how do you know if your culture is toxic?  Sites like Glassdoor and Indeed make it easy.  For this article I used Glassdoor’s company review information to make a list of the top 10 worst corporate cultures.

How does Glassdoor get this information?

“Glassdoor calculates company ratings using a proprietary ratings algorithm, with an emphasis on recency of reviews. With this improvement, we’re giving job seekers and employers what they’ve asked of us – the freshest perspective on what it’s really like to work inside any company, according to employees.”

Company ratings are based on a 5-point scale, and the CEO percentage and the “recommend to a friend” are part of the company review process. While I like this format, the variance seemed too big and therefore I’ve added my own rating using A through F, including – or + depending where they fall into the range. 

  • 0.00 – 1.50 Employees are “Very Dissatisfied” (CZ rating is F)

  • 1.51 – 2.50 Employees are “Dissatisfied” (CZ rating is D-, D, D+)

  • 2.51 – 3.50 Employees say it’s “OK” (CZ rating is C-, C, C+)

  • ​3.51 – 4.00 Employees are “Satisfied” (CZ rating is B-, B, B+)

  • ​4.01 – 5.00 Employees are “Very Satisfied” (CZ rating is A-, A, A+)

I’ve listed these in order using the overall rating, with the lowest score last.

 

1. Kraft Heinz

Glassdoor rating: 3.0 out of 5 (up from 2.7 in 2018)
CZ rating: C
CEO: Bernardo Hees
CEO Approval: 57%
Recommend to a friend: 39%

It’s easy to understand why this company culture is in the dumps. After the merger of Kraft and Heinz, major shareholder 3G Capital appointed the cost cutting CEO Bernardo Hees to take the helm in hopes of monetizing their investment.  Hees ruthless strategy of major job and expense cutting worked for a short time, delivering over 20 percent margins, but appears to have fatigued the organization.  Unless you strategically invest in improved technology, processes and people to streamline work, these cuts can bleed an organization to death.

An example of this is captured in these comments;

“A lot is expected from the employees, making work/life balance challenging.”

No work life balance (11 hour days have become the norm)” or “Toxic environment” sums up the culture at Kraft Heinz.

This theme of work life balance showed up in over 400 reviews, which screams red flag for any employee considering going to work there.

I’ve said this many times in my book on restructuring and I’ll say it again, you CAN NOT cut your way to growth.  And you will never create loyal, engaged employees with this mindset. I have my eye on Kraft Heinz and Hees to see their results for the next quarter.

2. Sears

Glassdoor rating: 2.8 out of 5
CZ rating: C-
CEO: Edward S. Lampert
CEO Approval: 18%
Recommend to a friend: 29%

Are you surprised?  Sears has been on a downward spiral for over a decade, with no hopes of ever recovering. As for the culture, I have some inside information from two people who used to work as executives for Sears about the culture and “Eddie”.  Mr. Lampert scored the lowest CEO Approval on the list, for good reason.

If you work in the corporate office and want a life, forget it. This workaholic CEO expects his employees to put in weekday evenings and weekends without any recognition or financial rewards.  If you work in the stores, it’s just as bad based on reviews from Indeed, like this quote from a former employee.

“Unrealistic expectations, unbalanced  work load. upper management do little to no work” and “underpay, got mistreated by the managers”.

Another issue in the stores is the negative remarks from the customers. “When do you think Sears will declare bankruptcy?”  This can’t be a healthy environment, but the salespeople say it’s a pretty normal response from customers.

The future of Sears is pretty dim, it’s only a matter of time before the light goes out for good.

3. CompuCom

Glassdoor rating: 2.7 out of 5
CZ rating: C-
CEO: Greg Hoogerland
CEO Approval: 44%
Recommend to a friend: 36%

Labeled as some of the most dissatisfied workers in the country, CompuCom, a wholly subsidiary of Office Depot, will have its fifth CEO in the last five years, as Dan Stone leaves and Greg Hoogerland steps in. And boy does he have some icky shoes to step into.

With that kind of turnover, there’s no way the employees feel loyal and certainly can’t be engaged. These musical chairs are killing the culture and creating fear in the employees. Not knowing the leadership style, and having to figure it out once a new CEO takes the helm is extremely stressful to employees. So it goes without saying that fewer than half of the company’s employees approved of CEO Dan Stone, and just 37% would recommend a job at the company to a friend.

Given the turnover at the top, it’s not a surprise to read this from a director level employee on Glassdoor;

“Worked for a few companies and this company is one of the most dishonest, unprofessional organizations I have be acquainted with” .

Woah…that hurts!

4. DISH Network

Glassdoor rating: 2.7 out of 5
CZ rating: C-
CEO: W. Erik Carlson
CEO Approval: 47%
Recommend to a friend: 38%

Back in 2012, Glassdoor named Dish the worst place to work for and the then CEO Joe Clayton said “That’s ridiculous.” He didn’t believe the employee complaints and focused instead on the technology DISH was creating.

In 2017 Erik Carlson was named CEO and restructured the organization in hopes of better synergies and communication. While it’s not THE WORST company to work for, it’s still in the top 10.

A former manager stated, “I left DISH because I was over worked, over stressed, and not appreciated for the amount of time I gave the company (12-15 hours a day as a manager). “

A the center of most of the employee complaints was the feeling of stress and under appreciation. When people feel supported, respected and appreciated, they will put the extra work in. I’m interested to see Mr. Carlson’s approach to improving the culture, if at all. The good news is he didn’t call the reviews ridiculous, but then again he probably won’t read them.

5. Xerox

Glassdoor rating: 2.7 out of 5
CZ rating: C-
CEO: John Visentin
CEO Approval: 38%
Recommend to a friend: 34%

John Visentin was named CEO in May 2018 with the hope that Xerox will be transformed back to it’s glory days of being a market leader and an admired company to work for. He’s got quite a challenge after reading through some of the more seasoned and experienced employees.

I reached out to John since I am about 10 minutes from their offices to offer some help. I’ve seen this before and have had success getting quick wins that the board and analysts like to see. Have not heard back but I get the sense he’s up to his ears trying to make an impact to a business that has sharp competition from Ricoh, Konica Minolta and HP.  With that much pressure, where do you the 39,000 employees fit into his schedule?  I can’t imagine CULTURE is top on his list to things improve, but I could be wrong.

Take a read from CURRENT employee reviews on Glassdoor. I was shocked by the candor of some of these employees who still work there!

Executive with 9 yrs
“New leadership with no real vision other than maximizing cash flow.  The company is in shambles….

“Wall Street investors (you know who you are) have forced senior leadership to abandon our core belief system. The customer is no longer #1. In fact, they no longer solicit customer feedback – at all.”

FP&A Manager
“20 yrs employed. They treat people very badly and are constantly sending jobs overseas. Are not running the company as a going concern.”

Manager with 6 yrs at job
“THEFT!!! Robbing employees to improve balance sheet. Hard working employees getting screwed so Xerox’s cash flow is better for earnings.”

6. Alorica

Glassdoor rating: 2.6 out of 5
CZ rating: C-
CEO: Andy Lee
CEO Approval: 46%
Recommend to a friend: 38%


Mr. Andy Lee founded Alorica Inc. in 1999 and still serves as its Chairman and CEO.  While his goal was to improve customer experiences and his entrepreneurial talents, he clearly has no idea how to build a safe work environment.

One thing is for sure, there are major problems with their culture. In an EEOC lawsuit filed in September 2017, the suit alleged widespread sexual harassment by managers at Irvine-based Alorica

As one of the nation’s largest call center firms, they ended up paying $3.5 million to settle charges that its customer service representatives were “openly propositioned for sex, leered at and touched by supervisors and co-workers,” and the company retaliated against them when they complained.

This review by an employee on Glassdoor said it best;

“There are no redeeming qualities to working at Alorica other than the fact that you can get hired on the spot.”

7. Genesis HealthCare

Glassdoor rating: 2.5 out of 5
CZ rating: D+
CEO: George Hager
CEO Approval: 29%
Recommend to a friend: 28%

While Mr. Hager has taken the company from $200M to $5.4B in his tenure, the employees don’t think too highly of good ole George. His low approval rating is less to be desired.

What’s interesting about Genesis HealthCare is the pay.  An average salary is $85,000, well above the national average for the most common position in the industry.

While their tag line is “We change lives”, the employees think otherwise as seen in these reviews;

Upper management not in touch with the needs of staff in the facilities” (in 81 reviews)

“Large corporations can some times be impersonal for patient care” (in 53 reviews)

With this kind of remark the idea of patient care as a business first comes to mind. It makes you wonder what short cuts they may be taking to continue Hager’s growth track record.  Whatever the case, the all too common theme of management not in touch with the people doing the work evident here. The people may stay for the paycheck, but their heart isn’t loyal to the company and that will always flow down to the customer.

8. Conduent

Glassdoor rating: 2.5 out of 5
CZ rating: D+
CEO: Ashok Vemuri
CEO Approval: 39%
Recommend to a friend: 35%

Like many other companies on this list, Conduent is having financial issues that are impacting the culture. The company’s revenue fell from $6.7 billion in 2015 to $6.4 billion in 2016 to $6.0 billion in 2017. Job pressure from a companies’ poor financial performance can be felt all the way down the organization.

As the stress mounts the managers push harder on the employees doing the work as seen in this quote from an employee on Indeed;

“The management does not care about the employees. The hours are horrible. Overtime is expected at the last minute and it is mandatory. “

From the research I’ve conducted it looks appears the senior managers are untouchable. If that’s the case it’s nearly impossible to have a trust, respect and a good culture.  Reading some of the statements made me cringe, including this one by a former mid- level employee.

“It’s constant work and you can’t even take a break without a manager following you to the bathroom to ask what you’re doing. ”  Yikes!

The job is not hard, it’s just not a place to stay unless you have nothing else to do in life.

Run, don’t walk, away from an opportunity here.

9. Frontier Communications

Glassdoor rating: 2.4 out of 5 (declined from 2.5)
CZ rating: D+
CEO: Dan McCarthy
CEO Approval: 17% (declined from 22%)
Recommend to a friend: 25%

The company as a whole is mess.  In the last year, Frontier’s share price took a 50% nosedive, falling from over $19 a share to less than $8.  If that didn’t hurt enough, senior executives have been denied bonuses in each of the last two years — partially a result of the company’s poor performance on Wall Street. With this kind of track record it’s amazing anyone goes to work there.  It is common place for employees to post about its negative culture on Glassdoor and Indeed.

This comment pretty much sums up Frontier’s employee issues;

“Worked their 4 yrs, never received a performance review, never received any formal coaching, was basically on my own from day 1 to figure things out. People were great, however Senior Management lacked a clear direction. Moved the business offshore and back onshore 3 times in less than 2 years.”

With that kind of haphazard changes, it’s no wonder the company is having the issues with employees and management.  Forget about loyalty and retention.

10. The Fresh Market

Glassdoor rating: 2.3 out of 5 (declined from 2.4)
CZ rating: D
CEO: Larry Appel
CEO Approval: 30%
Recommend to a friend: 26%

 

Based on employee reviews on Glassdoor, grocery store chain The Fresh Market is the worst U.S. company to work for. It is the only qualifying company with a Glassdoor rating of 2.3, a decline from 2.4 only a year ago.

The Fresh Market employees regularly complain about the company’s senior leadership. Just 30% of reviewers approve of the job CEO Larry Appel is doing, and his leadership team scored even lower with a shocking paltry 1.9 out of 5.0 rating.

If this isn’t a sign of a major culture problem in the company I don’t know what is.  But what are they doing about it? I called the corporate office to speak to Human Resources to get some insight, but alas, no one returned my calls.

In summary, these companies are just the tip of the iceberg.  Other notables all in the retail arena are Forever 21 and Family Dollar, but there are hundreds of companies, both public and private, whose cultures are hurting the companies financial performance.

With the war on talent, employees have options, and having a great culture ensures attracting the best people.  Culture is a competitive advantage, period, end of story.  As millennials continue to flood the job market, they are looking for a company that provides a mission and values as demonstrated through their actions and not just words.

But, when a company has warning signs like the ones above, it’s usually a too late and a major change management plan must be put into place that will take years to see any benefits. Why do CEOs not understand their biggest asset are their people and by creating the right environment for them to thrive, this helps them achieve their business goals.  It’s easier to manage people who like coming to work and doing their job. Pretty simple, yet hard to understand by these companies and many more who look only at the bottom line as their sign of success.

 

 

 

 

Empathetic Leadership: Why CEOs Need It To Improve Their Culture And Bottom Line

Empathetic Leadership, it’s a skill most CEOs aren’t aware of that could make the difference between meeting numbers versus exceeding them.

Think a companies’ culture doesn’t affect the bottom line? How about a CEO’s empathy?

As competition in the market becomes fierce, the need to differentiate and create a competitive advantage is palpable. We all know having the best “talent” and “innovation” are key components of a company that stands out from the rest, but what if I told you “culture” is an untapped vehicle to increase the bottom line?

If culture is the gold medal, then empathetic leadership is the secret weapon to win it.

According to research by Deloitte, “mission-driven” companies have 30% higher levels of innovation and 40%  higher levels of employee retention. In addition, a 2016 poll by Gallup showed that higher workplace engagement leads to 37% lower absenteeism and 41%  fewer quality defects.  Clearly, having a good culture with engaged employees results in lower costs, but how do you quantify it?

There are lots of survey companies ready to help you measure your employee engagement, a $1Billion marketplace in fact, but the problem is the survey companies simple supply the data, they don’t tell you what actions you need to implement to improve.

In an article by the Conference Board called, “The Engagement Institute: How organizations create and sustain highly engaging cultures,” some surprising data was revealed from a survey including 80 of the most advanced users of engagement surveys; only 50% believe their executives know how to build a culture of engagement.

And why would they know how to create a culture of engagement, their job is to run the business, not be a culture expert, right?

Wrong.

It Starts At The Top

A corporate culture starts at the top.  We all know the saying, “a fish rots from the head down,”  and the same goes for a company culture.  The leadership takes cues from the CEO, the managers take cues from the leadership and eventually it trickles down into every layer of the organization.  Even HR policies are reflective of the CEOs attitude, values and ideals.

In other words, the CEO is the captain of the ship, and whichever way he or she steers, the rest of the organization is going to follow.

With that much power to affect a companies culture, what skill does a CEO need to improve it?

Empathetic Leadership

In a study conducted by Businesssolver, 87% of CEOs agree that a company’s financial performance is tied to empathy, and 43% strongly agree.

More data suggests empathy is the foundation of employee engagement. Empathetic behavior shows people they are being heard and therefore appreciated.

 

  • 8 in 10 CEOs, employees and HR professionals agree that an empathetic workplace has a positive impact on business performance.
  • 9 in 10 employees are more likely to stay with an organization that empathizes with their needs.
  • 8 in 10 would be willing to work longer hours and take slightly less pay for a more empathetic employer and empathetic leadership.
  • Majorities in all demographics of employees responded that empathy motivates workers and increases productivity.

 

In a blog post last month, I outlined the model for “Happiness at Work”( the PERK model ) from my training at UC Berkeley’s Greater Good Science Center.  What is implied in that model is under the K (Kindness) is Empathetic Leadership.

Empathy enables those who possess it to see the world through others’ eyes and understand their unique perspectives. And YES, it can be learned, which is why I call it a skill.  Being more mindful, aware and open to others is something that requires practice and observation.

Best In the Business

A great example of using Empathetic Leadership is by Satya Nadella, CEO of Microsoft. In his new book, “Hit Refresh” he describes how he views empathy in business and in life .

“At the core, Hit Refresh is about us humans and the unique quality we call empathy,
which will become ever more valuable in a world where the torrent of technology will
disrupt the status quo like never before.”

“It’s a quality my wife, Anu, helped me begin to learn when our son was born with severe
disabilities 21 years ago. It’s a quality that shapes our mission of empowerment at Microsoft
and our quest to meet unmet and unarticulated needs of customers.  And it’s the quality that
helps us as a society move forward in creating new opportunity for all.”

 

Satya also discusses how empathy has led to Microsoft’s newest products.

“Empathy makes you a better innovator.
If I look at the most successfulproducts we
[at Microsoft] have created, it comes with that ability tomeet the unmet, unarticulated needs
of customers.”

 

 

Measuring Empathetic Leadership

Still not convinced Empathetic Leadership is a CEO’s Superpower? Take a look at the data that proves the point even further.

The Global Empathy Index, spearheaded by Lady Geek founder, Belinda Parmar, is an initiative that relies on data to validate the importance of empathy in business. Within the yearly index, companies are ranked not by an empty public commitment to empathy, but by measuring tangible indicators — from employee opinions to environmental practices. And the results show a “direct link between empathy and commercial success.”

One of the best examples is KIND Founder and CEO, Daniel Lubetzky. He is a shining beacon for young executives to follow as leadership changes direction and evolves from a top down management style to a more open and empathetic style .

 

“What’s interesting is that as my thinking has evolved – I’m on my fourth business now –
it has become clearer that empathy and kindness offer a distinct competitive advantage.
When I understand people with ease, I can accomplish more in both my business and my
private life. ”


“Being able to access these skills is especially valuable in those moments when you feel
threatened 
and your fight/flight instinct kicks in. If you can ask yourself questions like,
“where is this person coming from?” then you’re able to get to a more productive
place quicker, thereby creating value for business and society.”

 

Proof of Empathetic Leadership creating value in companies can be seen in the top 10 companies in the Global Empathy Index 2015 that increased in value more than twice as much as the bottom 10 and generated 50% more earnings.  Average earnings among the top 10 were up 6% this year, while the average earnings of the bottom 10 dropped 9%.

Empathy also has a positive impact on employee retention.  According to Businessolver’s study;

– 95% of employees are more likely to stay with an organization that empathized with their needs

– 81% of workers would be willing to work longer hours for empathetic employers

– 60% would be willing to take a pay cut to work for an empathetic company and empathetic leadership.

and shockingly,

– 92%of CEOs believe their organizations are empathetic while only 50% of employees report having an empathetic CEO.

Closing the Gap 

Why is there such a big gap between what the CEOs think and what their employees think?  It’s simple really.

Millennials think, act and communicate differently than their baby boomer bosses. They have different expectations from their jobs, the leadership and the company as a whole.

They are looking for a deeper connection to their work, a purposeful position with a company that means something to them, that walks the walk and doesn’t BS them. Salary and benefits are secondary to this generation.  This generation has new ways of seeing and doing things, they are technology savvy and have a voice, and they want to be heard and understood.

As talent becomes more difficult to acquire, companies with CEOs who understand culture and empathy as key pieces to improving the bottom line, will come out on top.  A poor culture and a CEO who doesn’t learn Empathetic Leadership will find their employees jumping ship for less pay but a better environment.

Empathy is a skill to win the hearts of employees and create a culture that is good for the bottom line and a competitive advantage for the company.

Ways To Demonstrate Empathetic Leadership

What are some basic things a CEO’s can do to demonstrate Empathetic Leadership in their organization?

  1. Surround yourself with diversity. Seek out employees from different countries, religions, races, etc and listen to their trials and tribulations with a project or goal or even a personal event that they struggled with. This helps to give you insight into what others have experienced that can make an impact on their thinking.
  2. Cultivate relationships at every level of the organization: Conduct Skip Levels roundtables where the managers are not present. Go to every office and have a discussion about what they like and dislike about the company using metaphors in stories or charades. It’s fun and gives you insight into what’s happening in the organization.
  3. Listen to hear and observe, not respond. Do not speak in a meeting, allow others to manage the conversation and simply observe body moments, tone and tempo of their voice, how they communicate their ideas, the words they use, etc.  This is give you insight into how people are feeling and whether they are living the company values or not.
  4. Do not speak until the other person feels they were heard. In person-to-person meetings, reflect what you heard back to them, and check for understanding.  Do not look at your phone, 100% precent by focusing on what the person is saying. Follow up with an email outlining what you heard and any plan of action required.
  5. Choose your words carefully and deliberately. People can get triggered by words like, “don’t, shouldn’t, wouldn’t.” Using phrases that provide a more neutral feeling like, “Have you considered…?” or “Have you thought about…?” will ease any fight or flight response.  Even if there is an issue, reframing it to focus on the improvement rather than the problem will help people to move forward with right action.

There are many solutions to improving a culture and training leadership on empathy.  If you have questions about Improving Culture or Empathetic Leadership, please feel free to contact me here.

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