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REA
DER
SH
IP
INS
TIT
UTE
Media
Manag
em
ent
Cente
r, N
ort
hw
est
ern
Univ
ers
ity
PEOPLE PEOPLE MANAGEMENT MANAGEMENT
PRACTICES:PRACTICES:
Displays to AccompanyDisplays to AccompanySurvey FindingsSurvey Findings
July, 2000July, 2000
2© 2001 Readership Institute
Today’s ObjectivesToday’s Objectives
• Understand the business case for people managementUnderstand the business case for people management
• Examine newspaper survey results—Examine newspaper survey results—II33
- IInform (findings and patterns)nform (findings and patterns)
- IInsightnsight
- IImplicationsmplications
• Build your confidence, conviction and capability to inform othersBuild your confidence, conviction and capability to inform others
• Ensure that you know how to “read” the various reportsEnsure that you know how to “read” the various reports
• Address some of your most important questionsAddress some of your most important questions
• Provide a near-term path for moving forwardProvide a near-term path for moving forward
3© 2001 Readership Institute
PremisePremise
“Our employees are our“Our employees are ourmost valuable resource…most valuable resource…and therefore, the managementand therefore, the managementof people makes a significantof people makes a significantdifference to companydifference to companyperformance.”performance.”
ChallengeChallenge
“Prove it,“Prove it,or else stopor else stop
talking about it!”talking about it!”
The Mega-StudyThe Mega-Study
4© 2001 Readership Institute
Overall Business ImpactOverall Business Impact
People Factors
• Core drivers
• High-impact practices
• Specific actions
• Constructive culture
People Factors
• Core drivers
• High-impact practices
• Specific actions
• Constructive culture
Economic Factors
• Relative market share
• Company size
• Industry profitability
Economic Factors
• Relative market share
• Company size
• Industry profitability
67%67%
33%33%
5© 2001 Readership Institute
Business Case Was Built in Two WaysBusiness Case Was Built in Two Ways
Correlational Correlational StudiesStudies
Correlational Correlational StudiesStudies
Determine Determine “what”“what” organizations organizations
should doshould do
Determine Determine “what”“what” organizations organizations
should doshould do
Real World Real World ApplicationsApplicationsReal World Real World
ApplicationsApplications
Describe “what” Describe “what” world-class world-class
companies do and companies do and “how”“how” they do it they do it
Describe “what” Describe “what” world-class world-class
companies do and companies do and “how”“how” they do it they do it
6© 2001 Readership Institute
Empirical Validity
Strength of Practice-
Performance Relationship*
SelectionSelectionSelectionSelection
CompensationCompensationCompensationCompensation
PerformancePerformanceManagementManagementPerformancePerformanceManagementManagement
500 1,000 1,500 2,000 2,500 3,000
Number of Organizational Units Included in Research
Total number of organizational units: 21,304
VeryStrong
Strong
Creativity &Creativity &InnovationInnovation
Creativity &Creativity &InnovationInnovation
LeadershipLeadershipLeadershipLeadershipChangeChange
ManagementManagementChangeChange
ManagementManagement
CultureCultureCultureCulture
EmployeeEmployeeSatisfactionSatisfaction& Retention& Retention
EmployeeEmployeeSatisfactionSatisfaction& Retention& Retention
CustomerCustomerSatisfactionSatisfaction& Retention& Retention
CustomerCustomerSatisfactionSatisfaction& Retention& Retention
DevelopmentDevelopmentDevelopmentDevelopment
© 2001 Readership Institute
7© 2001 Readership Institute
People Management Model
Returns to Shareholders • Profitability • Growth • Productivity
READERSHIP?
SelectionSelection
DevelopmentDevelopment
PerformancePerformanceManagementManagementCompensationCompensation
1
2
Creativity &Creativity &InnovationInnovation
KnowledgeKnowledgeManagementManagement
ChangeChangeManagementManagement
LeadershipLeadership
Customer Satisfactionand Retention
Employee Satisfactionand Retention
3
CULTURECULTURE
CU
LTU
RE
CU
LTU
RE C
ULTU
RE
CU
LTUR
E
CULTURECULTURE
© 2001 Readership Institute
8© 2001 Readership Institute
Five Strata Examined
Strata
I
II
III
IV
V
Circulation Ranges
0 – 25,000
25,001 – 50,000
50,001 – 100,000
100,001 – 200,000
200,001+
© 2001 Readership Institute
9© 2001 Readership Institute
Three Levels of Analysis
Level 1
DRIVERS(4 + 1 sections of the survey)
Level 1
DRIVERS(4 + 1 sections of the survey)
“What to focus on”“What to focus on”
Level 2
HIGH IMPACT PRACTICES (17 Best Practices Derived from Mega-Study)
Level 2
HIGH IMPACT PRACTICES (17 Best Practices Derived from Mega-Study)
“What you should strive to achieve”“What you should strive to achieve”
Level 3
SPECIFIC ACTIONS(90 Survey Questions)
Level 3
SPECIFIC ACTIONS(90 Survey Questions)
“What you can do”“What you can do”
© 2001 Readership Institute
10© 2001 Readership Institute
Overview Level 1 and Level 2
* Note: Employee Retention is an Intermediate Outcome.
Drivers (Level 1) High-Impact Practices (Level 2)
Selection Selection criteria and processes have consistent structure Selection skills are a key leadership attribute Seek to fill positions internally
18-20
Pre-Reading Pages
Development Promote integration and corporate glue Significant leadership responsibility Commitment is balanced between organization and individual Effective succession planning and talent pool processes
22-25
Performance Management
Clear mutual expectations Stretch objectives with meaningful measures Ongoing coaching and feedback
26-27
Compensation Market-based compensation Performance-driven rewards and recognition Alignment of employee and shareholder interests
28-30
Employee Retention*
Latitude and authority for determining how best to execute job accountabilities, particularly to meet customer needs
Quality and sustainability of highly effective leadership, particularly employee’s immediate supervisor
Extent to which employees possess the knowledge and skills to contribute – plus – the opportunity to grow and advance
• Customer satisfaction is a high priority and is balanced with “making the numbers”—plus—rewards are provided for contributions
33
© 2001 Readership Institute
11© 2001 Readership Institute
Newspaper Results—Emerging ThemesNewspaper Results—Emerging Themes
• VeryVery low scores! low scores!
• Performance management “highest”Performance management “highest”
• Development “lowest”Development “lowest”
• Amazingly flat!Amazingly flat!
• More effective at and inclined to manage More effective at and inclined to manage “vertically” versus “ horizontally”“vertically” versus “ horizontally”
12© 2001 Readership Institute
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
Selection Development PerformanceManagement
Compensation EmployeeRetention
Emerging Theme #1: Very Low Scores!S
tron
gly
Agr
ee
plus
Agr
eeD
isag
ree
plus
S
tron
gly
Dis
agre
e
82% 87%
71%
91%
69%
18%13%
29%
9%
31%
Strongly Agree
Agree
Disagree
Strongly Disagree
All Newspaper Respondents—“Best Practices Are in Effect”LEVEL 1 ANALYSIS
100%
80%
60%
40%
20%
© 2001 Readership Institute
13© 2001 Readership Institute
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
S1 S2 S3 D1 D2 D3 D4 P1 P2 P3 C1 C2 C3 R1 R2 R3 R4
Emerging Theme #1: Very Low Scores!All Newspaper Respondents—“Best Practices Are in Effect”
Str
ong
ly A
gree
pl
us A
gree
Dis
agr
ee p
lus
Str
ong
ly D
isa
gree
Selection
Strongly AgreeAgree
88
39 41
83
6973
90
56
85
55
81 8265
5145
76
35
64
1824
5549
2318
45
14
44
10
2731
17
5961
12
Development Performance Management
Compensation Employee Retention
Relevant Page in “Consolidated” Report
8 17 28 37 46
LEVEL 2 ANALYSIS
DisagreeStrongly Disagree
“X1” denotes the Driver’s High-Impact Practice in the order it appears in your reports
100%
80%
60%
40%
20%
© 2001 Readership Institute
14© 2001 Readership Institute
Emerging Theme #1: Very Low ScoresEmerging Theme #1: Very Low Scores
• May reflect the newspaper industry’s May reflect the newspaper industry’s historical “oligopolistic” structure and historical “oligopolistic” structure and behavior of the industrybehavior of the industry
• Newspaper industry might be inwardly Newspaper industry might be inwardly not externally focusednot externally focused
• Newspaper industry, on average, is likely Newspaper industry, on average, is likely stuck in the “Ingredients Era” of people stuck in the “Ingredients Era” of people management practicesmanagement practices
Why?Why?
15© 2001 Readership Institute
Eras of People Management Practices
People werethought of
as part of themachinery
“Cogs”
People management activities are:
• Discrete
• Inconsistent
• Contradictory
• Not aligned
“Ingredients” “Enablers”
People management activities are:
• Systematic
• Consistent
• Aligned
• Integrated
“Differentiators”
People management activities are:
• Core to business strategy
• Key to differentiation
• Source of competitive advantage
© 2001 Readership Institute
16© 2001 Readership Institute
Performance Performance Management Management
is highest!is highest!
Performance Performance Management Management
is highest!is highest!
• Typically the most advanced Driver in “stable” or “static” industries that have undergone little change
• Other Drivers are characteristically brought into play more strongly as companies and industries are confronted by major change
• Typically the most advanced Driver in “stable” or “static” industries that have undergone little change
• Other Drivers are characteristically brought into play more strongly as companies and industries are confronted by major change
Newspaper ResultsNewspaper Results
FindingsFindings Insights & ImplicationsInsights & Implications
Development Development is lowest!*is lowest!*
Development Development is lowest!*is lowest!*
• Typically viewed to be the “softest” Driver
• Is the most complex Driver of all
• Typically viewed to be the “softest” Driver
• Is the most complex Driver of all
*Assuming we ignore Compensation*Assuming we ignore Compensation
17© 2001 Readership Institute
Emerging Theme #4: Amazingly Flat ResultsLEVEL 1 ANALYSIS
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
3.0
Dis
agr
ee p
lus
Str
ong
ly D
isa
gree
Performance Management
Employee Retention
Selection Development Compensation
© 2001 Readership Institute
18© 2001 Readership Institute
LEVEL 2 ANALYSIS—By Department
Emerging Theme #4: Amazingly Flat Results
© 2001 Readership Institute
19© 2001 Readership Institute
Emerging Theme #4: Amazingly Flat ResultsLEVEL 2 ANALYSIS—By Circulation Strata
© 2001 Readership Institute
20© 2001 Readership Institute
Emerging Theme #4: Amazingly Flat ResultsLEVEL 2 ANALYSIS—By Strata by Department
© 2001 Readership Institute
21© 2001 Readership Institute
Emerging Theme #4: Amazingly Flat ResultsLEVEL 3 ANALYSIS—Selection
Relative Strength
Relative Weakness
© 2001 Readership Institute
22© 2001 Readership Institute
Emerging Theme #4: Amazingly Flat Results!Emerging Theme #4: Amazingly Flat Results!
• Industry has very homogeneous practicesIndustry has very homogeneous practices
• May be “implied or accepted standards” May be “implied or accepted standards”
• External changes may not have yet External changes may not have yet stimulated aggressive adoptionstimulated aggressive adoption
• Newspaper industry may be currently trapped Newspaper industry may be currently trapped in “transformational no man’s land”in “transformational no man’s land”
Why?Why?
23© 2001 Readership Institute
Industry TransformationPe
rfor
man
ce
Time
Low
High
“Today”
Change unrecognized or not acted upon
Successful Change
Newspapers?Newspapers?
“Triggers”:• Competitors• Changing needs• Technology• Economics• Demographics
© 2001 Readership Institute
24© 2001 Readership Institute
Emerging Theme #5: Newspapers are more effective at and inclined to manage “vertically” versus “horizontally”
• The standards we use for selecting internal candidates for open positions are set at relatively high levels
• The selection standards we use for outside hires are set at relatively high levels
• Selection of qualified people for position vacancies is a top priority of our newspaper's leaders
• We encourage self-nomination to open positions
• Our selection process is efficient (i.e. provides us with qualified people quickly)
• When we consider candidates from outside the newspaper to fill job openings, the size and quality of our external applicant pool is strong (i.e., we consistently choose among many qualified candidates)
• Our leaders are held accountable for attracting and selecting high-caliber candidates from outside the industry
DriverDriver ““Top Strengths”Top Strengths” ““Greatest Weaknesses”Greatest Weaknesses”
Selection
• Our newspaper's leaders place a high priority on developing people
• Managers generally help their subordinates meet their career aspirations
• Qualified employees generally demonstrate sufficient initiative in developing their own skills
• Our newspaper possesses and continuously updates a newspaper-wide database that keeps track of competencies and skills individuals need to succeed in their positions
• Attending training programs for at least 35 hours a year is strongly encouraged by our newspaper
• Our organization systematically and regularly reviews its talent pools frequently (i.e. at least twice a year)
• We believe that one of the primary purposes of performance management in our newspaper is to support the execution of our business strategy
• Performance evaluations entail a discussion of an employee's performance, including the manager's own perspective on the employee's performance
• Performance evaluation discussions focus both on recent performance and identifying development needs
• Our strategies and strategic plans are regularly communicated so that all employees understand how their performance expectations are linked to them
• Each person's performance evaluation incorporates input from people within the company who are impacted by their work
• Performance evaluations incorporate input from the employee's peers/ team
Development
Performance Management
© 2001 Readership Institute
25© 2001 Readership Institute
Emerging Theme #5: Newspapers are more effective at and inclined to manage “vertically” versus “horizontally”
• On average, our employees exhibit a high level of attendance on the job
• Employees possess a clear understanding of the limits within which they are permitted to act
• Achieving high levels of customer satisfaction is a high priority with my superior
• Employees possess a clear sense of how they personally contribute to meeting customer needs
• Employees are energized by the newspaper's culture and work environment
• Our managers spend unusually large amounts of time coaching and developing their subordinates
• Employees receive appropriate recognition and rewards for their contributions
DriverDriver ““Top Strengths”Top Strengths” ““Greatest Weaknesses”Greatest Weaknesses”
Compensation
Employee Retention
• Performance is the key determinant in establishing variable compensation (i.e., incentive) levels
• Our newspaper effectively recognizes (formally and informally) performance that supports our goal
• Change in overall job accountabilities is a key determinant in reviewing fixed (i.e., base salary) levels
• Our newspaper's compensation programs enable us to attract and retain required talent
• Change in external market pay levels is a key determinant in reviewing fixed ( base salary) levels
• Our compensation programs support the philosophy of providing superior rewards for superior performance
• Share-based compensation (e.g., employee share ownership plans, profit-sharing) for employees is a means of providing a single shared objective that binds together the various entities across our newspaper
• Employee share ownership is encouraged in our newspaper through our compensation plans
© 2001 Readership Institute
26© 2001 Readership Institute
Why Should I Really Care About This People Stuff?
High Levels of Employee Satisfaction & Retention Are Associated with Greater Customer Satisfaction & Retention...
…which create a powerful way to move the needle
•
•
• •• • •
• • •• •
••
•••••
1Extremely
Dissatisfied
2Somewhat
Dissatisfied
3Slightly
Dissatisfied
4Satisfied
5Very
Satisfied
Customer Satisfaction Measure
100%
80%
60%
40%
20%
Cu
sto
mer
Ret
enti
on
Source: Harvard Business School; Heskett, et. al.Source: RNW Research
•• •
••
••••
••
•
•
• 48% defected!
• Satisfied ≠ Loyal
Cu
sto
mer
S
atis
fact
ion
&
Ret
enti
on
High
Low
Low HighEmployee Satisfaction & Retention
3.0 4.0
“The Zone of Affection”“The Royalty of Loyalty”
© 2001 Readership Institute
27© 2001 Readership Institute
LatitudeLatitude36.6%36.6%
LatitudeLatitude36.6%36.6%
Authority Authority 19.2%19.2%
Authority Authority 19.2%19.2%
14.6%14.6%14.6%14.6%
14.0%14.0%14.0%14.0%
13.6%13.6%13.6%13.6%
0
10
20
30
40
50
60
70
80
90
100%
Expl
anat
ory
Pow
er*
Leadershipand Culture
Capability and Development
Recognition, Rewards and Focus on
Customer Satisfaction*Represents the proportion of the total R2 explained by each determinant.
55.8%
70.4%
84.4%
98.0%
36.6%
Four Key Factors of Employee Retention
© 2001 Readership Institute
28© 2001 Readership Institute
Real Effect of Employee Retention
Employee Satisfaction & Retention
• Agent tenure 200% longer than industry average
• Agent productivity 150% higher than industry average
• 7% employee turnover rate
• Two-thirds lower than industry average
• Most productive organization reflected by home office cost per $1,000 of face value premiums sold
Customer Satisfaction & Retention
93% customer retention
98% customer retention in auto
95% customer retention
Company
State Farm
USAA
Northwestern Mutual Life
© 2001 Readership Institute
29© 2001 Readership Institute
So, what can/should you...
•Do
•Not do
…when you return home?
© 2001 Readership Institute
30© 2001 Readership Institute
Between Now and Our Next Meeting
Guiding Guiding PrinciplesPrinciples
Ready, aim, fire!
Don’t jump in and fix it—go slow to go fast
For now, ask more questions than give answers
Take the time to really create understanding and insight
Then…create strong alignment in terms of your desired end state
Set expectations carefully
This is a technical and a political challenge; i.e., a formidable change management challenge
ObjectivesObjectives
Get under the survey to gain clarity and commitment to the real issue(s) and their root causes
Come back in October with the issues and their root causes—the data that is ready then will help you set priorities and begin to act
© 2001 Readership Institute
31© 2001 Readership Institute
Between Now and Our Next Meeting
High-powered High-powered committed team committed team
and create a and create a “charter”“charter”
Set expectations for objectives and time commitment Provide clear directional guidance for what you really want
to discover. Describe specific outcomes and deliverables that you want
them to produce
Strive forStrive forinsight and insight and
understandingunderstanding
What specific factors have resulted in our current situation? Why? Build understanding through focus groups and one-on-one
interviews. What has been (is still) the impact on our organization?
How do we know? What is our desired future state? Why? If we are successful, what specific differences/impacts would we
expect to see become visible? What decisions must we make and what actions must we take,
to close gaps? Who needs to be involved in making the above happen—based on
expertise, political considerations and the need for the change?
© 2001 Readership Institute