To what extent does your organization’s culture enable individual staff to be fully present and apply their discretionary energy?
Like the Formula One Ferrari pictured at left, a high performing, values-aligned organization must have every moving part focused on speed, efficiency, agility, and durability . . . or the race will not be won. There are no extraneous pieces or parts on this racing machine, nothing to get in the way of the driver’s desired accomplishment.
As a culture change consultant, I am always on the lookout for research that validates our clients’ experiences. One study has become a foundation for our proven culture change process. It was the first study to inexplicably link employee perceptions of managerial behavior to organizational profits – amazingly powerful, and worth a detailed look here.
In a 2002 Harvard Business Review article, Dr. Tony Simons of Cornell University published the results of a study he and his team conducted for North America-based Holiday Inns, a mid-line hotel chain. The article, titled “The High Cost of Lost Trust,” reports the significant findings from Simons’ study of over 6,500 employees at 76 US and Canadian Holiday Inn properties.
They asked hotel staff to rank, on a five-point scale, how closely their manager’s words, deeds, and actions were aligned to the organization’s stated values. The results generated a manager’s “behavioral integrity” score. Managers’ “BI” scores were then correlated with each hotel’s customer satisfaction surveys, personnel records, and financial results.
The effects were “stunning,” in Simons’ words. Their study found that hotels where employees felt that their managers kept their promises and demonstrated espoused values were substantially more profitable than those hotels where managers scored at the average or lower. In fact, a one-eighth point improvement in a hotel’s score on the five-point scale generated an increase in the hotel’s profitability by 2.5% of revenues. In this study, that translated into a profit increase of more than $250,000 annually for each hotel (!). That’s a huge profit for hotels, which typically operate on razor-thin margins.
Managerial Behavior Impacts Discretionary Energy
This study proved the hard-dollar benefit of managers consistently demonstrate values and keep their promises. Simons’ research helps map out this progression:
- When employees believe that their bosses have behavioral integrity, then
- They apply discretionary energy to their work, which
- Customers notice because of the terrific service they experience, which leads those customers to stay longer, eat on property, bring family & friends, etc., which leads to
- Higher profits.
Two Vital Steps to Enabling Discretionary Energy
If you’d like your organization to benefit from this research, two pieces must be put into place and maintained (daily):
- Values must be defined in behavioral terms, and accountability systems must be in place to ensure all staff members demonstrate desired values.
- All leaders throughout the organization must consistently DWTSTWD (do what they say they will do).
If, across your organization, you see employees proactively solving problems with smiles on their faces . . . creating delighted customers due to their fabulous service attitudes . . . and looking for new opportunities to improve business operations, far beyond the requirements of their job description, then you’ve got a culture that enables discretionary energy. If you don’t see these behaviors, isn’t it time to build a high performing, values-aligned culture?