Economics of trust_webinar

INSIGHT EXPERIENCEwww.insight-experience.com

152 Commonwealth Avenue | Concord, MA 01742 | 978-369-0639 | [email protected]

The Economics of Trust: Connecting Leadership to Business Results

A webinar from Insight Experience

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• Insight Experience helps leading companies develop leaders and execute strategy•We create dynamic business simulation and

leadership development experiences that connect leadership to business results•We work globally across industries, at all levels of

management, with a focus on Fortune 1,000 clients

About Insight Experience

Today’s Conversation

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Review the data

Answer questions

Give you a tool

Share our thinking

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»Worked on a service excellence initiative for mid-level managers and executives

»Modeled the business and “uncovered” the dynamic of the Service Profit Chain

Connecting Leadership to Business ResultsOur experience and a little history

» Engaged to help solve an employee retention challenge

»Based on detailed company metrics, added “people” drivers with operations and economic drivers to truly mirror their business system

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Leadership creates shareholder value:

Leadership and Business ResultsWhat’s the data now?

SOURCE: Bersin by Deloitte: Global Human Capital Trends 2015

+15.7%Equity premium on

organizations perceived to have effective leadership

–19.8%Equity discount on

organizations perceived to have ineffective leadership

+15.7%

-19.8%

Leadership, culture and engagement are now real

business issues:

Culture and En-gagement

Leadership Gaps

87%

86%

PERCENT RATING TREND IMPORTANT

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Question: Why does engagement matter in your business?

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28 research studies show a correlation between employee engagement and:

Employee Engagement

Service

Sales

Quality

Safety

Retention

Sales, Profit and

Total Shareholder

Returns

Why is engagement important?

SOURCE: Cited by Kevin Kruse, Forbes

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• A study of 64 organizations revealed that organizations with highly engaged employees achieve twice the annual net income of organizations whose employees lag behind on engagement.

The Data is In…

• Study of 23,910 business units compared top quartile and bottom quartile engagement scores and found that those in the top quartile averaged 12% higher profitability.

SOURCE: The Impact of Employee Engagement. Kenexa

SOURCE: Gallup Q12 Meta-Analysis, Gallup

http://www.kenexa.com/getattachment/8c36e336-3935-4406-8b7b-777f1afaa57d/The-Impact-of-Employee-Engagement.aspx

http://www.kenexa.com/getattachment/8c36e336-3935-4406-8b7b-777f1afaa57d/The-Impact-of-Employee-Engagement.aspx

http://strengths.gallup.com/private/Resources/Q12Meta-Analysis_Flyer_GEN_08%2008_BP.pdf





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Question: What do you believe are the key drivers of engagement in your organization?

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The Flow of Employee Engagement

SOURCE: Beyond Engagement; IBM Software technical white paper, 2014

Organizational Policies and

Practices

Leadership and Managerial Behaviors

Engagement

Discretionary Effort

Higher Team, Individual and Organizational Performance

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The Flow of Employee Engagement

SOURCE: Beyond Engagement; IBM Software technical white paper, 2014

Organizational Policies and

Practices

Leadership and Managerial Behaviors

Engagement

Discretionary Effort

Higher Team, Individual and Organizational Performance

Behaviors Reinforcing:• Confidence and Trust• Recognition and Respect• Growth and Development• Work and Balance

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In the most engaged organizations, the areas that scored highest were:**

Drivers of Employee Engagement

SOURCES: *Dale Carnegie/MSW Research**Quantum Workplace; 2013 Employee Engagement Trends Report

Relationship with immediate supervisor

Belief in senior leadership

Pride in working for the company

Employee Engagement*

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Trust in Senior Leaders

Feeling Valued Retention

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There is zero correlation between the prominence of corporations’ values (as touted online) and the firms’ performance.

Trust and Integrity: the power is with your people

SOURCE: The Value of Corporate Culture, Guiso, Spienza, Gonzales, 2013

What matters instead is employees’ assessments of companies’ integrity.

High levels of perceived integrity are associated withPE

RCEI

VED

IN

TEG

RITY higher

productivity and profitability.*

PRO

DU

CTIV

ITY

&

PRO

FITA

BILI

TY

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The economics of Trust and Leadership

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a. 10-30%

b. 30-50%

c. 50-70%

d. 70 90%

e. 90-100%

What percentage of their true potential do employees utilize each day?

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The Business Cycle of Leadership

Business ResultsCa

pita

l & O

pera

ting

Bud

get D

ecis

ions

Org

aniza

tion

Dec

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How we learned...

Employees

© Insight Experience

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Communication

TimeAllocation

Priorities & Focus

EmployeePerformance

How you lead ... … impacts the effectiveness of the operating decisions

implemented by your team …


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Business Results

Communication

TimeAllocation

Priorities & Focus

EmployeePerformance



… to drive business outcomes

Capi

tal &

Ope

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udge

t Dec

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Org

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Leaders translate strategy into results

Strategy

Business Priorities & Focus

Organizational Capabilities: Resources, Talent, Process

Action

Results

Defining D

irection

Aligning the Team


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How Leaders Spend their Time is Critical

The bulk of manager time is spent on essential but low impact

management tasks…… leaving little time for

high-value leadership activities

SOURCE: Workboard.com

• Monitor middle management initiatives• Deal with administrative matters and emails• Conduct meetings for operational improvements

SENIOR

• Assign multiple people to the same initiative• Request frequent progress reports on initiatives• Review justifications for decisions from below

MIDDLE

• Produce data for reporting• Seek approval for decisions• Complete forms and reports

FRONTLINE

• Coach and motivate direct reports• Communicate the company’s vision and strategy• Analyze future trends

SENIOR

• Empower frontline managers to stretch themselves• Set performance goals• Share best practices across teams

MIDDLE

• Deal with under-performance, reward positive results• Know each individual personally• Create and share clear and tangible business targets

FRONTLINE

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Executive Time Allocation (Current Period)

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Time Managing Operations

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Communication: what do your employees listen for from leaders?

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What Do Employees Listen For?

Spirit

Accountability

Strategic Alignment

ConsistencyStakeholders


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Spirit

Accountability

Strategic Alignment


WHAT IS OUR STRATEGY? Where are we headed? How does our work connect

to the bigger picture? How does our work support

the strategy?


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Spirit

Accountability

Strategic Alignment


WHAT IS EXPECTED OF US? What are our goals? What do you want us to do? Am I being held accountable

to results?




the strategy?

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Spirit

Accountability

Strategic Alignment


ARE WE MOTIVATED BY WHAT WE HEAR? What is the tone of the

message? Have we been recognized

for our efforts? Is the message exciting

and engaging?


to results?




the strategy?

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Spirit

Accountability

Strategic Alignment


IS WHAT I’M HEARING…? Consistent with our business

objectives? Consistent over time? Consistent with what others

are being told?

ARE WE MOTIVATED BY WHAT WE HEAR? What is the tone of the

message? Have we been recognized

for our efforts? Is the message exciting

and engaging?


to results?




the strategy?

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The data shows that the vast majority of leaders are not engaging in crucial moments that could help employees see them as trustworthy, despite companies’ vast expenditures on reorganizations and change initiatives.

The Key Leadership Levers at work

SOURCE: The Top Complaints from Employees About Their Leaders

https://hbr.org/2015/06/the-top-complaints-from-employees-about-their-leaders

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Communication

TimeAllocation

Priorities & Focus

Performance




SkillMorale Trust

EmployeeEngagement

The Unique Dynamics of Trust

• Trust’s power lies with the giver

• Trust has no value until given away

• It takes a long time to build, but an instant to destroy

When trust isHIGH

it multiplies the

GOOD

BADand filters the

When trust isLOW

it multiplies the

BAD

GOODand filters the

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Dynamics of Trust: How Employees React

HIGH TRUST LOW TRUSTMake Good Decisions/Do the Right Thing

Make a Mistake/ Do the Wrong Thing

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• Reinforces Positive Cycle• Builds trust• Positive feedback• Get Feedback• Action


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• Get the benefit of the doubt• Assume good intent• Get feedback

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• Suspicious•Wait for “the truth”

to emerge• No Feedback• Inaction



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• Suspicious•Wait for “the truth”

to emerge• No Feedback• Inaction



•What I expected…• Confirms my belief• Status Quo• No Feedback• Inaction

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Business Results

Communication

TimeAllocation

Priorities & Focus

EmployeePerformance




Capi

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Ope

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Perspectives&

Information

Culture

Business Results

Communication

TimeAllocation

Priorities & Focus

EmployeePerformance




Capi

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Org

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The Good

Leadership, Trust and Results

The UglyThe Bad

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So, What was your Number?

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www.insight-experience.com152 Commonwealth Avenue

Concord, MA 01742 978-369-0639

INSIGHT EXPERIENCE

[email protected]

@InsightXP

mailto:[email protected]

https://twitter.com/InsightXp

https://twitter.com/InsightXp

Economics of trust_webinar

Leadership & Management

Transcript of Economics of trust_webinar