Steven P. MacGregor's Blog, page 6

How do you calculate the financial return on wellbeing?

Toby and Daniel were corporate rebels. Meeting at SAP in 2005 their approach to work – challenging the current way of doing things, questioning authority, taking a collaborative approach to solving problems – might not seem out of place today, but it certainly ruffled a few feathers back then. In a massively successful German multinational that sold software, their design thinking led style of working seemed out of place. Design excels in situations that are messy, ambiguous, uncertain. Where is the value for a German giant that runs by the numbers?

Today in 2019 they are forging a new identity for themselves by focusing on the numbers. They have calculated financial savings of over €10M for a commercial sales unit of 400 staff by making small improvements in their wellbeing. And that €10M is based on very conservative estimates.

Their initial identity at SAP was linked to the now renowned AppHaus. What to do with corporate rebels when you’re not quite sure what to do with them? Set them free of course, but keep them inside. As founding members of the AppHaus they were involved in the typical entrepreneurial experience of deciding where to position the doors and power sockets in a new workspace, recruiting talent to drive forward – and also re-designing the payroll experience for thousands of customers worldwide. From humble beginnings as a low-risk experiment in Heidelberg, board members would eventually come to them for advice, and the AppHaus today numbers 82 personnel between its original Heidelberg location and Palo Alto, Korea, Berlin and New York, functioning as a centre of expertise for the messy problems in the company.

SAP played a key role in making design thinking what it is today. The same year that Toby and Daniel met, SAP co-founder Hasso Plattner donated €35M to Stanford University to form the Hasso Plattner Institute of Design, or D-School. I was a visiting researcher at Stanford Design a few years before that donation, interviewing Stanford Professor and IDEO co-founder David Kelley and his colleagues in the Palo Alto studio. The D-School, with Kelley and IDEO, would form a perfect mix to create a global movement, and SAP was one of the early champions to implement design thinking on a corporate level, in turn bringing it to their corporate customers.

So what has design got to do with wellbeing? And further, the measurement of financial benefits? Design is about humans and looks to identify and satisfy human needs. Well-being considers our states of being – physically, mentally, socially and so on – and whether they are positive or negative. In The European Business Review, we have looked at how design may be leveraged to improve health and wellbeing at work, from an ethnographic approach to an executive life to a design for wellbeing framework and how we may re-design the physical and social environment for behaviour change.

In all, the key is the close examination of the experience and particularly how that experience, and related needs, change over time. What Toby and Daniel did was to analyse the experience of commercial sales staff, from recruitment and onboarding to learning the ropes during their first year, until they move on from the role, either changing functions within the company or leaving the company altogether. As Daniel mentions this “keeps the employee in focus, rather than just checking a box.”

Combining with their focus on happiness and wellbeing that we discussed in part 1 of this study last month they looked at how different interventions at each stage could improve the employee experience. Interventions included providing learning at the right time, increased peer support through coaching, and changes in organizational design so that first line managers don’t always get pulled into the sales thrust. In all, they are helping to address the most acute ‘pain points’ to make people happier and improve their wellbeing.

Different scenarios were created, from filling vacant positions to improving performance and simply having trained staff in position for longer. Happy employees don’t tend to leave.

And the benefits are astonishing. Having an experienced employee in post one month longer is equivalent to a saving of €3.5M. This includes the typical ‘overachieving’ profile of a 3rd year employee of 120% of target, and the costs associated with recruiting and training someone new, with 1st year employees generally hitting 40% of target.

Of course, there are assumptions in these calculations, yet design thinkers are experts in challenging assumptions. This is why I believe their assertion that the €10M savings are conservative (and dare I say it, two Germans would not be accustomed to hyperbole!) Much of the focus on calculating the return on wellbeing has stalled on the negative side of wellbeing at work; reducing sickness and absenteeism, yet this takes a very narrow view of health that has no link to performance.

SAP commercial sales in EMEA has provided the perfect platform for this analysis. Sales have an inherent focus on the numbers with plenty of available data. 400 employees is big enough to see the benefits yet not too big to control. And in having a function where the average tenure is 20 months the employee journey is simple enough to examine in its entirety and identify interventions that will make a difference to their wellbeing. We move beyond a narrow wellbeing program to a culture of wellbeing that includes learning, peer support, and empowerment. Local empowerment is key, with Toby stating that “local operations shouldn’t wait for some global magic to happen.” Light touch, high impact interventions depend on addressing the unique needs of a specific location.

Banging the drum of wellbeing at the heart of business may be reserved for the rebels of 2019. In the near future, and supported by significant financial benefit on the positive case, it may well be a more strategic concern – and so be a part of everyone’s job.

The CWO re-boot: SAPs first Chief Happiness Officer Toby Haug

“The term is loaded. It doesn’t mean I’m walking around all day telling jokes and wearing a red nose.”

I’m talking to Toby Haug, head of the new Happiness at Work pilot at SAP. Based in Barcelona and having traversed a long career in design thinking that took him from the US to Germany and now the Catalan capital, he is a little nervous at being called SAPs first Chief Happiness Officer – but that is what he is.

And he is a happy person. With a warm personality and infectious smile, he talks about the challenges ahead and some opening moves for this board-supported initiative that includes 400 commercial sales staff between Barcelona, Cairo, and Dublin.

Are you happy at work? For many, it’s an oxymoron, yet if we’re spending most of our life at work, or at least thinking about it, it’s a worthy pursuit. If you are happy at work think for a moment on why that is. And also if you’re not. What are the reasons for this lack of happiness?

I’m guessing there will be elements of the following in that reflection: of social connection or community that provides safety, using ones’ talents fully and for something bigger than oneself, and feeling empowered and having ownership over many aspects of the work itself.

Empowerment, in particular, has been present in the first months of the SAP pilot, from allowing different groups within each location to personalize their physical space to supporting the process whereby managers are selected by the team themselves.

Space personalization is supported by an allocated budget for each team to take full ownership and therefore responsibility for the space. As Toby comments, “we spend more time in the office than our living rooms, and yet it is often the least personalized space we inhabit.” The democratic form of managerial selection, though yet to be fully implemented, has significant potential in incentivizing all team members to more fully collaborate across the team and gently nudge them to treat everyone with respect.

This empowered work, where there is a focus to bring decision-making power downwards is one of three areas of behaviour focus in these initial stages of the pilot. Creating and strengthening authentic relationships is another which helps to build a fabric of trust in the organization and the third, sustainable success, which closely considers the human factor in any business success that is enjoyed.

Culture is critical for Toby and just as critical is being able to build on an existing positive culture at SAP which supports health and wellbeing, on the physical, mental and organizational levels. The company has long ascribed to such an approach recognizing that well and happy employees lead to happy customers. A focus on culture keeps the simple questions including how we work, and are we acting according to our values? top of mind. It also allows a focus on the collective rather than the individual. The main objective is to align around a set of behaviours that connect the culture to happiness.

It will be interesting to see where this goes. Starting such an initiative within a sales function might not have been the obvious choice for many given the particular profile of sales – targets and associated stress particularly – which challenge notions of happiness. Further, with a target audience comprised of 96% millennials (the company leadership of the future of course) how transferrable will the findings be to the workforce at large? And will any marked differences be observed between the three pilot locations? What difference will climate make for example, between a rainy Dublin and sunny Barcelona? Or city infrastructure or night-life for these, mostly, young driven professionals? There are some interesting tools and experiments in play, and we’ll revisit some of these in the second part of this case when we focus on design thinking and the financial benefits of happiness.

So what can you do to be happier at work, in the (likely) absence of your own happiness at work initiative and Chief Happiness Officer? I think there’s an argument for simply bringing more of yourself, your true self, to the workplace. Try to engage more with others – make a new, or develop an existing friendship. Involve yourself in work and work-related activities that excite you, even if it’s not strictly part of your job description. Listen more, smile more, even if you don’t feel like it just to see the effect it will have on others. And if you’re in a leadership position with decision-making power, do one simple thing: give some of that decision making power away. You’ll be amazed at how increased empowerment and responsibility will lead to a happier workforce.

In all, it’s about being more human at work, which is the overall theme of the SAP initiative: humanizing business.

Part of that humanity at work is realizing the wider human contact – or borrowing terminology from design thinking, touch points – we have in our working day. Reflecting on the happiness experience of himself and colleagues in Barcelona, Toby identified the key role that the cleaning lady, Nubia Gracia, had on a daily basis. An ever-present, cheery personality who welcomes everyone with a radiant smile, she is also the first contact that many people have each day on entering the workplace. It’s certainly not a part of her own job description, but her positivity helps her own happiness, and others’. In a way, she is just as important as the most senior executive, perhaps even more so, regarding the success of the happiness at work initiative, especially in these initial stages.

And the final word from our happy, Chief Happiness Officer: “Many people still think we have work on one hand and life on the other. Yet we have one life, where work is a major part. If we’re not well and happy, that will affect both home and work.”

Sustaining Executive Performance Audiobook now available

From the first content design in 2007 which gave rise to the formation of The LAB, to recording of the online course in 2013, publication of the English language hardback in 2014, and the Spanish language paperback in 2015, we are delighted to now release the audiobook of Sustaining Executive Performance to bring the story of SEP full circle. You can listen to Chapter 3 in its entirety on the Soundcloud link opposite and purchase from the links below.

[Audible UK] [Audible US] [Audible FR] [Audible DE]

Elevating wellbeing as a strategic concern

Originally published in IE Insights

In the fourth industrial revolution, we believe well-being to be a key strategic concern. A key finding for our pursuit of business impact through well-being is the fact that though relatively high levels of happiness and job satisfaction are present, according to the ‘World Happiness Report’, engagement at work is still low.

Creating positive environments that allow people to work together towards a purpose has significant impact. As well as driving engagement, such purpose-driven environments will aid the talent strategy of the enterprise. Roberto di Bernardini, Chief HR Officer at Santander, said, “We are no longer competing against Citi or Lloyds but also Facebook, Google, and the fintech startup in someone’s backyard. We need to convince people that while working with us of course involves making money, there is a responsible and sustainable purpose at the core of everything we do.”

Researchers at the Ross School of Business have looked at the factors that support sustainable high performance. They focus on the term “thriving” to describe employees who are not just satisfied and productive but also engaged in creating the future. They see thriving as present when people believe what they are doing makes a difference and that they are learning. Thriving employees are highly energized and know how to avoid burnout. They found people who fit their description of thriving as having 16% better overall performance (as reported by their managers) and 125% less burnout (self-reported) than their peers. They were 32% more committed to the organization and 46% more satisfied with their jobs. They also missed much less work and reported significantly fewer doctor visits, which meant healthcare savings and less lost time for the company.

Well-being has a formal presence in most large companies today, yet it exists at a relatively junior level of the organization and is focused on the reduction of risks, including absenteeism and sickness. Many programs take a clinical-based approach rooted in the insurance industry. Absence is often reduced, yet the dangers of presenteeism—long hours and low productivity, or people returning to work before they are ready, affecting other members of the workforce negatively through sickness or emotions—are increasingly recognized.

The financial benefits of wellbeing programs are a matter of debate. The Rand Corporation found that although four-fifths of all US employers with more than 1,000 employees are estimated to offer such programs, there are no cost-savings associated with the management of high-risk employees (those who smoke or are overweight). It contrasts its findings with those of Johnson & Johnson, one of the longest-running programs in the US, which finds that return on investment ranges from $1.88 to $3.92 saved for every dollar spent, believing its own methodology to be more accurate. It also found participation in programs to be low, in the range of 20%-40% of the workforce.

Are formal well-being programs required? In most cases, yes. Yet there is another way of perceiving the opportunities of well-being, in the ways that it can improve executive performance—through the increased energy, creativity, resilience, and leadership it undoubtedly generates. If a more progressive definition of health exists beyond merely the absence of sickness, why does health and well-being management in the enterprise still suffer from a similarly negative approach? One answer could be that the narrow, risk-focused view of well-being at work is easier to measure. Some of the business leaders we have engaged with believe this to be part of the company journey—gaining the foothold of demonstrating impact on such measures before affecting the leadership culture.

Our own experience goes beyond the narrow confines of a risk-focused well-being program towards leadership development, which in turn affects organizational culture. The discrete behaviours of leaders influence the behaviors of the people they lead—indirectly through the example they show or directly through their people management—allowing a well-being culture to emerge that mirrors the thriving environment noted by the Ross School of Business. This also aligns with some of the recent work in organizational culture by PricewaterhouseCoopers, which advises that tackling the “critical few behaviors” is a more feasible approach than trying to change culture directly.

Leaders can build a positive culture by adhering to the principles of total intelligence, which considers our whole selves, including physical intelligence, traditionally outside any business concerns. Yet physical activity has been shown to support different business outcomes. Meetings are a major feature of business and changing the dynamic of meetings, from sitting to standing or even walking, can have a variety of positive business impacts. The business case is supported by our human biology. Movement creates energy in the oxygen-rich blood that is transported through the body and brain, activating neurons and releasing hormones conducive to better cognitive performance.

The behaviours we demonstrate as leaders should set the right example for the rest of the organization. Simple things like getting away from your desk for more direct communication and the accidental encounters that drive innovation can help create a thriving organizational culture based on well-being. Though spending time on dedicated physical exercise is often viewed as a luxury, it helps create the energy required for a demanding job, reduces stress, and improves self-efficacy—benefits that can be transferred to other areas of life.

In the age of intelligent machines, thriving workplaces will be defined by their greater humanity, and a more strategic view of wellbeing will help create the positive cultures and environments for this to happen.

Agility and a more human workplace

I recently recorded a video summary for IE Business School on how Agility helps drive a more human workplace. Link to the video coming soon once published. In the meantime, I’m sharing the notes I produced to prepare below…

Agile is a big buzzword these days.

Most people talk about it in the context of digital transformation, and it certainly can help drive that change, yet what is often forgotten is the opportunity to make the workplace more human. In a digital, 24-7 world, our humanity matters more than ever.

Of course, a major benefit of Agile is to make better work – better products and services that more rapidly adjust to customer expectations and improve satisfaction. Yet Agile can also make work better – in terms of the experience of the employee and their resultant engagement with the work.

Learning, finishing, empowerment are all hallmarks of agile. It is a mindset, a way of working, and a way of leading more than tools and methods.

So don’t just think Scrum and Kanban, think empowerment, empathy, experimentation, and finding the answers together.

Agile leadership is an opportunity for more human leadership. An egocentric approach to leadership still holds in certain areas, yet leadership, at its core, is about other people, how we may raise them up. So the hero leaders should be supplanted by the servant leader.

We still need people to be brave and resilient, but that doesn’t rule out humility. Humility is strength, not weakness, and research shows that humble leaders often result in higher team performance. They are more self-aware, recognize their own weaknesses, better recognize the strengths of others, and focus on objectives beyond their own self-interest.

Agile, agility, agile ways of working – is the golden opportunity for creating a more human workplace.

Design Your Life

Design Your Life, a popular keynote of ours the past few years (premiered here) and which led to the current Design Vowels framework that can be found in the Chief Wellbeing Officer book, started off as Chapter 3 in Sustaining Executive Performance. There, I looked at the foundations of design, how it can be taught at MBA level, be used to re-design ones’ day for better health and wellbeing, and ultimately help build a better world. We’re currently producing the audiobook version of SEP and I thought it would be fitting to share this chapter now via the Soundcloud link below. Regardless of interest in health, wellbeing and performance, it might prove useful as an introduction to design, if you’re engaged in teaching design at MBA level, or if you simply want to dive a bit deeper if your own experience has been limited to sticking brightly coloured post-its on a wall ;)

Chief Wellbeing Officer Audiobook now available

We’re delighted to release Chief Wellbeing Officer as an Audiobook. Distributed on Amazon’s Audible platform you can get it for free with a trial subscription. It has a total running time of 6 hours 13 minutes and is narrated by the authors themselves. Check out the free sample on the links below and listen to Chapter 6 in its entirety on the Chief Wellbeing Officer podcast which follows.

Audible UK

Audible US

Audible FR

Audible DE

Harry the Sheepdog

With great sadness and deep gratitude we say goodbye to our Chief Barking Officer, Harry the Sheepdog. Since our foundation in November 2007 Harry has been a source of great inspiration, ensuring we never take ourselves too seriously and remembering the important things in life (in her case not only food, but mostly 

La felicidad en el trabajo

Tuve el placer de asistir el primer evento del Circulo RRHH en Barcelona la semana pasada como invitado especial. En el Circulo Ecuestre de Barcelona hablé sobre la felicidad en el trabajo con una docena de directivos de recursos humanos de las mas grandes empresas de España. Se puede leer la comunicación oficial del evento aquí , y abajo mis pensamientos justo después del evento:

La felicidad es un concepto complejo que tiene potencial para añadir valor en el ámbito laboral. Aunque niveles de felicidad aumentan en empresas en todo el mundo el nivel de compromiso sigue bajo. Mientras apreciamos que las empresas existen sobretodo para funcionar como entidades rentables, y no solamente para que las personas sean mas felices, la felicidad es sin duda una vía (entre otras – la salud, tanto física como mental, es primordial) por la cual el compromiso sube y la empresa sigue generando valor. Los líderes también deben reconocer que su ejemplo, y sus propios comportamientos y hábitos valen mas que cualquier política para que los empleados dan todos sus esfuerzos para crear una cultura positiva – impactando positivamente sobre la sociedad – y así aumentado a la felicidad de todos. Entonces la pregunta para ti, estimado líder: ¿eres feliz en el trabajo?

Esta pregunta puede servir como el punto de partida para un liderazgo mas sostenible que tiene mas en cuenta nuestras necesidades humanas. Prestando atención a temas como la presencia del ocio y recuperación dentro del trabajo para compensar la presencia del trabajo fuera del despacho mejorará la energía y lealtad de la gente. Y la ciencia ya nos enseña la importancia del sueño y los ritmos circadianos para mayor desempeño ejecutivo. En un entorno de trabajo caracterizado por mas y mas horas es importante recordar que no somos maquinas. Esto será la gran diferencia entre el primer revolución industrial y la cuarta que ya vivimos.

CWO podcast: Deeper leadership with Paul Hughes of CCL

Episode 12 of the Chief Wellbeing Officer podcast. As we approach the 1st year anniversary of the podcast we reflect on the 11 episodes to date before talking to Paul Hughes, senior faculty at the Center for Creative Leadership. With a background in Law, MBA and PhD Paul discusses how a deeper view of leadership is required today for effective leadership development, to reflect the changes that are happening in organisations worldwide.