Marina Gorbis's Blog, page 1395

What Momentum on Climate Change Means for Business

Climate change is real — as in actual, factual, and tangible. And it’s really expensive. This is the clear message from “Risky Business,” a new report issued by former U.S. treasury Secretaries such as Robert Rubin and Hank Paulson and other bigwigs like Michael Bloomberg.

Their report is just one of many drumbeats for action on climate — drumbeats that have gotten much louder in recent weeks. Four former EPA chiefs, all Republicans, went to Congress to ask their party peers to take action, for example. And Hank Paulson, George W. Bush’s Treasury Secretary, recently wrote an op-ed called “The Coming Climate Crash” as a prelude to the Risky Business report. He likened the growing climate crisis to the fiscal crisis of 2008, a mess he had to deal with firsthand. This Republican and former Goldman Sachs exec actually called for a tax on carbon. Let that sink in for a moment.

The story coming from these unusual messengers is not subtle about how expensive climate change is and will continue to be. We’re taking out an “interest-only loan,” the report says, with cumulative interest that will burden future generations. In a neat metaphor, “Risky Business” calculates that there’s a 1 in 20 chance — equal to the chances of “an American developing colon cancer” — that more than $730 billion of coastal assets will be at high risk in the coming years. And whole swaths of the country will face extreme heat — months of days above 95 degrees, which could seriously impact agricultural and labor productivity (imagine construction and other outdoor work in dangerous heat).

These long-term numbers are just for scale and to, well, scare us into action. But the real message of the report is that there are serious economic impacts today. Extreme weather from climate change is, they say, “already costing local economies billions of dollars.”

So finally, real bipartisan pressure and consensus are building. What does that mean for business?

First, questioning whether climate change is even happening is moving fast to the far fringe. The discussion is shifting, thankfully, from if we should tackle it to how — as one CEO I work with said recently, “I know this is a problem… I just don’t know what to do about it.” Over the coming months and years, it will become even less acceptable — to employees, customers, and investors — for business people to stick their heads in the increasingly hot sand on this issue. Investors in particular are starting to notice the massive risk to business and acting accordingly — see Barclays’ downgrading the bonds of U.S. utilities because of growing competition from solar and distributed energy generation. Business leaders who want to take action and show their investors and customers that they “get it” should step forward now.

Second, there will be more regulation on carbon around the world. The recent coal rules the Obama administration issued are just the beginning. (The 30% reduction from utilities demanded by 2030 is not even particularly aggressive. Ten states have already hit the goal.) It’s not just the U.S. — the day after Obama’s announcement, China said it would cap CO2 emissions starting in 2016.

Third, and most important, business needs to change how it operates fundamentally. When you dig past all the political wrangling and theater around climate change, you reach a very serious challenge. Asking government to act, as many new voices are doing, is a great start. But we need business to lead in the areas it excels at — driving deep, heretical innovation in products, services, and business models; connecting with and inspiring customers to change their behavior; allocating capital to the best ideas, and much more.

But we’re going to have to redefine “business as usual,” a shift I’ve called the big pivot. Companies will need to think about the longer term — at least more than a quarter at a time — if they want to plan for multi-year and multi-decade risks and opportunities. They’ll need to set goals based on science and make investment decisions with a broader sense of return on investment than they normally use, to include benefits like risk reduction, business resilience, relevance in society, and attracting and retaining the best talent. And we’re going to see new, unusual partnerships across normal party and competitive lines.  All of these pivots are underway, but they need to move much faster.

Luckily, we have most of the solutions we need now. Renewable energy is reaching scale quickly and companies are coming together along value chains to work on big challenges — for example, Coca-Cola, Pepsi, Unilever, and others have been working for years on changing technologies for refrigerating drinks, something that relies on high global warming HFC gases today.

But even if the options for building low-carbon lifestyles and businesses are growing, transformation can be hard. Who knows what gets people over a hump to see the need for real change. Hearing from unlikely sources, like Treasury Secretaries, might do the trick. Certainly the growing economic costs are getting clearer. It’s time for business leaders to make climate action a — if not the — core priority for business.

The Paying-It-Forward Payoff

You scratch my back, and I’ll scratch yours. But if you scratch my back, am I any more likely to scratch someone else’s?

Most of us are familiar with direct reciprocity – the idea that people respond to kind actions directed toward them with other kind actions. But generalized reciprocity — “you help me and I help someone else” can be a bit trickier to measure. New research, however, shows that it might be possible for companies to encourage such generosity among employees.

Researchers Wayne E. Baker, a professor at the Ross School of Business at the University of Michigan, and Innovation Places’ Nathaniel Bulkley focus in on two common types of generalized reciprocity: paying it forward and rewarding reputation. Paying it forward, they write, means that people’s motivations are driven by “positive affect: ‘You help me, and I feel grateful, so I pay it forward by helping a third party.”

Rewarding reputation is a little less full of glitter and rainbows. As the researchers explain, it’s when “helping others is driven by strategic action and intentional reputation building.”

Yet much of the research on rewarding reputation suggests it might be a much stronger and longer-lasting motivating force within organizations compared to paying it forward. For instance, at a firm like IDEO, write Baker and Bulkley (drawing on research by Andrew Hargadon and Robert I. Sutton), where “designers with reputations for helpfulness are more likely to get help themselves compared to those who have not been helpful,” designers “build reputations strategically with future self-benefit in mind.”

So Baker and Bulkley designed an experiment in which MBA students were required to post five questions to a group message board and respond to 15 such requests from others. This was worth 10% of their grade, and those who went above and beyond the quota would not receive extra credit.

The researchers found that the more responses posted to the message board in total, the higher the probability a group member would respond to another’s brand new post. This supports the hypothesis that the more help a person receives from others, the more likely that person is to help someone else. Second, the more responses a person wrote in the week before making a request of his own, the more likely others were to answer his question. This supports the idea that helping others will make it more likely that they themselves will receive help – rewarding reputation did have an impact.

Here’s where things get interesting. There was an even stronger impact for paying it forward.

There are a few reasons for this, the authors say. To start, rewarding reputation only really mattered for recent reputation. In fact, they write, “reputation effects decayed thereafter and actually turned negative for past reputation.” This wasn’t something the researchers were expecting, but they posit that a “good citizen” is often seen as someone who helps others on a regular basis, and that an old reputation for helpfulness doesn’t do anyone any good. It’s what they refer to as the “What have you done for me lately?” problem.

Essentially, paying it forward is cognitively easy, at least compared to remembering who is helpful, and how often. “The sole requirement [of paying it forward] is that a participant be aware of his or her own experience,” they write, “which is simpler and more salient than observing others and keeping track of what they do.” Few people have the mental energy to deal with the constant scorekeeping that rewarding reputation requires.

And yet Baker and Bulkley don’t discount rewarding reputation; rather, they see the two types of generalized reciprocity as working strongly together, albeit with paying it forward coming out slightly on top. In fact, the researchers observed cycles of reputation-building and paying it forward that suggests “over time, rewarding reputation and paying help forward may have created a virtuous cycle of cooperation.” They continue: “The fact that almost 9 of the 10 participants continued to use the system after the quota [had been attained] suggests that a ‘tipping point’ may have been reached. If it had not, then a vicious cycle might have ensued, and cooperation would have plummeted.”

But it didn’t. Interest in one’s reputation did not overcome paying it forward. The two mechanisms managed to interact harmoniously, with paying it forward lasting longer over time.

So how can organizations harness this? The authors suggest IDEO’s regular brainstorming meetings enforce norms of asking for and offering help. Such gatherings need to occur regularly because of the “what have you done for me lately?” dynamic. The researchers also encourage using gratitude as a tool, as Southwest Airlines does with the “agent of the month” award that recognized employees who have helped others do great work. Google, they write, “uses a peer-to-peer bonus system that empowers employees to express gratitude and reward helpful behavior with token payments.” Smartly, this policy has a built-in pay it forward mechanism because “a recipient of a peer-to-peer bonus is given additional funds that may only be paid forward to recognize a third employee.”

And if your company is globally dispersed? Take a cue from ConocoPhillips, which has online knowledge sharing communities where members post business problems and others offer solutions. Since 2004, the researchers write, the company has realized over $100 million in savings using this system, built simply off the idea that, in the right situations and with very little handholding, people really are willing to help others out.

The Hobby Lobby Decision Could Affect a Majority of U.S. Workers

The U.S. Supreme Court today ruled that the government cannot force “closely held” corporations to offer insurance coverage that provides birth control to employees, a stipulation of the Affordable Care Act passed by Congress in 2010.

Closely held corporations — firms in which 50% of stock is owned by five or fewer people — are by definition closely linked to a few core owners, whose rights the Court sought to protect. As the majority wrote:

“The purpose of extending rights to corporations is to protect the rights of people associated with the corporation, including shareholders, officers, and employees. Protecting the free-exercise rights of closely held corporations thus protects the religious liberty of the humans who own and control them.”

But while the ruling may seem limited in that it only speaks to closely held firms, it in fact applies to more than 90% of U.S. companies, and even to a narrow majority of workers.

The effect that the ruling will have is unclear, though the Wall Street Journal has already reported on some businesses that plan to stop providing contraceptives as a result of the ruling.

Such a trend could help reverse the steady increase in contraceptive coverage, which has risen from 68% to 84% since the passage of the ACA.

The backdrop for firms’ benefit decisions are the “two opposing forces” of “strong demand for employee benefits by jobseekers and existing employees alike, and the ongoing rise in the cost of benefits, particularly health insurance” according to a recent survey by the Society for Human Resource Management.

For most closely held firms, religious exemptions will take a back seat to this balancing act, between costs and talent. According to a recent Journal of the American Medical Association poll, 69% of Americans support the Affordable Care Act’s policy of mandated contraception coverage, and only 7.8% supported all benefits except contraception — the Hobby Lobby position.

What Makes People Follow Reluctant Leaders

In today’s knowledge-based and highly-automated enterprises, companies look for the cleverest and most capable people they can find. But having hired such talent, organizations face a challenge. Places full of highly mobile and in-demand workers operate more democratically.  Leaders don’t necessarily gain power by dint of high rank; they need to earn it every day. How do they do that? And, for the would-be leader in an organization like this, what are the secrets to rising to the top?

For the answers, it’s useful to look at how leaders succeed in professional service firms, traditionally structured as partnerships. These have always been places where the leaders are those who most impress their clever peers rather than their superiors. A new study by professors Laura Empson (Cass Business School, London) and Johan Alvehus (University of Lund, Sweden) sheds light on who reaches the position of maximum authority in these firms and why. They went deep into three international firms with reputations for excellence – one a law firm, one a public accounting firm, one a management consultancy – conducting over 100 face-to-face interviews with people working within them.

The leaders in these firms, they discovered, are characterized by three traits. First, they are exemplary professionals, judged by their colleagues to be capable of doing the core work of the firm at the very highest level of quality. In the words of Empson and Alvehus they have gained “legitimacy to lead through market success.” As important as the model of excellence they offer is the very fact that they are seen (and trusted) by the professionals they lead as “one of us.” One senior partner put it this way: “I think that professional service practitioners … will accept almost unlimited decision-making and authority from someone they think understands the things they are going through.”

Second, these leaders enable autonomy while retaining control. Clever people do not want to be told how to do their jobs, but they appreciate the importance of coherence, and the power of colleagues pulling together rather than working at cross purposes. They grant permission to lead to colleagues they believe will allow room for grown-up and capable people to get on with their work, while ensuring that the firm is heading in the right direction and maintaining high standards.

Third, and even tricker to manage, effective leaders are given credit for their political skills, both as they rise through the organization and as they operate at the top. As one senior partner said: “I think the level of politics and personality here is different because you have a sort of cadre of highly paid (partners) … people who own the client relationships. So there is something about needing to keep all 500 partners happy which brings a level of politics, which you wouldn’t get if we were an engineering company or a pharmaceuticals company.”

It would be hard not to note the parallels to the workings of political parties and the delicate process of “seeking high office.” In these firms, elections are held, requiring candidates to issue manifestos, give speeches, and participate in debates. There is much talk of “the electorate,” “constituents,” and “mandates.” Aspiring leaders of professional service firms must build and sustain consensus among their colleagues, make trade-offs between competing interest groups, and offer incentives to individuals to lend their support. The process is subject to the lobbying and bargaining which occurs in any other political arena.

But the respect for political skill is striking, because in these workplaces Empson and Alvehus also frequently encountered abhorrence of political behavior, and a professed belief that effective leaders are “above politics.” The leaders who succeed, the researchers conclude, are capable of interacting politically while appearing apolitical. Without being caught doing anything so grubby as scheming or plotting, they manage relationships and power with aplomb. This requires a combination of social astuteness, interpersonal influence, networking ability, and apparent sincerity.

Put these three traits together, and the sum is a kind of paradox: the people most enthusiastically granted the power to lead by their peers are individuals who seem reluctant to do so. They relish doing the core work of the firm, serving clients with distinction. They are happy to grant autonomy. They don’t exhibit the political behavior associated with raw ambition. They might not go so far as to say (as General Sherman did), “If nominated, I will not run; if elected, I will not serve.” But they display the attitude toward leadership that it is not work one would choose, only a responsibility that should be shouldered by “one of us.”

Perhaps it is only appropriate that such a paradox of an employee, the autonomous follower, can only be directed by another paradox: the reluctant leader. As enterprises of all kinds depend increasingly on clever, capable talent, they will have to embrace the same paradoxical arrangement. In today’s well-regarded professional services firms, they can find the models for enabling knowledge workers to combine their energies and accomplish great things. And they can find the secrets to enjoying a brilliant career in an organization where so many are brilliant.

Everything You Need to Know About Giving Negative Feedback

There’s a lot of conflicting advice out there on giving corrective feedback. If you really need to criticize someone’s work, how should you do it? I dug into our archives for our best, research- and experience-based advice on what to do, and what to avoid.

Never, ever, ever feed someone a “sandwich.” Don’t bookend your critique with compliments. It sounds insincere and risks diluting your message. Instead, separate your negative commentary from your praise, and don’t hedge.

Schedule regular check-ins with your direct reports, so that giving feedback — both negative and positive — becomes a normal part of the weekly routine.

Don’t lump your critical feedback together with discussions of pay and promotion — as in typical year-end evaluation. This creates a toxic cocktail of emotions even the most mellow employee will have trouble managing. Instead, make these separate conversations.

The adage “praise in public, criticize in private” is an old management mantra. But sometimes, you have to be critical in public. Holding people accountable sometimes means discussing performance issues with the group, even if it feels uncomfortable.

Ask permission. This may sound odd — especially if you’re the boss — but you can tip people off that a critique is coming (making them more receptive to hearing it) if you start the conversation with, “Can I give you some feedback?”

Avoid jumping to conclusions or seeming like a bully by sticking to the facts. For instance, if employees are leaving early and showing up late, they could be having a family emergency or a health issue. Simply state the behavior you’ve observed and let them explain what’s going on.

Try framing your critique in terms of the positive result you want to achieve, rather than as what’s wrong with the person. Make it about the impact the employee could achieve by working differently. Ask “What are your goals?”

Be specific about the new behavior you’d like to see.

If you’re delivering some particularly hard-to-hear news, consider giving the person the rest of the afternoon off. Studies have shown that top performers are especially vulnerable to major setbacks. Show compassion not by softening the blow with false praise, but by giving bad news straight and then offering some breathing room.

If the person you’re giving feedback to gets defensive or lashes out, keep your preferred outcome and preferred working relationship in mind. You can’t prepare for every possible thwarting mechanism someone might throw at you, but you can control your reactions.

Recognize that everyone wants corrective feedback — yes, even Millennials and even experienced, expert workers. Consulting firm Zenger Folkman found that while managers dislike giving critical feedback, all employees value hearing it — and often find it even more useful than praise.

There’s one important caveat here, however, and that’s the ideal praise-to-criticism ratio. While we may not be willing to admit it to ourselves, we do need to hear praise. And studies of both the most effective teams and the most happily married couples have shown that the ideal ratio is about five compliments to every criticism. So do shower your team with kudos — just don’t do it at the same time you’re critiquing them.

And when you do offer plaudits, praise effort — not ability. Carol Dweck’s well-known research has shown that’s the best way to keep people motivated and it makes criticism feel less threatening and personal. After all, if you’ve been told your whole life, “You’re so smart!” a rebuke might make you wonder, Am I dumb now? Focusing your praise on behaviors — “You guys really put a lot of attention to detail into this” or “I’m so impressed with how hard you worked to get this done on time and under budget” — means that when you have to deliver some corrective feedback, people are more likely to take it in the same vein rather than as a personal attack.

How We Transformed Marketing at Electrolux

Marketers are racing to create seamless customer experiences that make it easy for consumers to engage at every touchpoint as they navigate the “decision journey” and beyond. Despite this revolution, leading appliance makers have been slow to adapt to the ways people learn about and purchase appliances. Electrolux was no exception – until recently.

Many consumers think of us as a vacuum cleaner company – and indeed our first product, in 1919, was a vacuum. But today we’re a $15 billion global consumer and professional appliance firm that includes Frigidaire, AEG, Molteni, Electrolux, Zanussi, and Eureka among its brands. As we were a product-centric organization, the shopping experience had played a supporting role, with individual elements of the experience managed by different organizational silos. When online emerged it became a new silo, followed by mobile and social. The organization was locked in a structure that made it difficult to connect and integrate all the different ways that a person gathers information, makes a decision and receives support — online and offline. In 2012, Electrolux leadership decided this had to change.

Our transformation centered on the consumer. Research uncovered many underappreciated consumer purchase drivers and barriers. We were surprised by how much the introduction of new store formats, new product types, and new online, social and mobile tools were frustrating consumers because they did not connect to each other. With this growing complexity, the journey was becoming increasingly fragmented and difficult. Recognizing the need for integration, Electrolux’s digital, trade, brand and product marketers worked together to create a cohesive experience from pre-purchase, to the purchase itself, to post-purchase service and beyond.

To this end we eliminated silos between functions including marketing, sales, IT, consumer insight, and innovation and established “consumer experience teams” in each business and region. These teams include consumer insight, brand, product, retail, digital, social, and consumer care specialists who now closely work together to create integrated consumer experiences and launch plans. We also moved responsibility for the post-purchase experience into marketing — all of the services, onboarding, registration, and add-on purchases and support that people receive after they buy.

In addition, we took a fresh look at how our marketers are organized globally. We moved a large group of digital marketers from the corporate center into the consumer experience teams. And we set up new, regular sharing sessions to improve cooperation among regions.

Temporary “pilot” teams in each region are now an important part of the new organization. They pilot innovations in the consumer experience such as launching a new digital recipe planning app or creating an easier way to register products under real market conditions, and they help implement promising innovations at roll out. Team leaders focus on translating the pilots into repeatable programs for other regions.

Governance is clear. Marketing leaders representing each region meet monthly to coordinate activities and share best practices across the globe. Individual regions build and execute integrated customer experiences and launch innovations based on the way consumers shop in their markets.

We’re supporting this organizational transformation through training initiatives, process improvements, new tools, and a focus on building a more consumer-focused culture. Capability building puts an emphasis on developing “transformation champions.” In 2013, the top 50 global marketing leaders engaged in a hands-on three-day training session focused on the vision, strategy and plans to transform the appliance shopping experience. An additional 250 marketing leaders are undergoing similar training right now. Month-long online “adventures” that tackle specific customer-journey challenges began rolling out May 2014. The first adventure challenged participants to learn more about how digital is changing consumer shopping behavior and to identify better ways to use digital technologies in appliance shopping.

An organization-wide crowdsourcing program is just one of the tools we’ve introduced to accelerate product and consumer-experience innovation and build a more consumer-focused culture. A few months ago over 6,000 employees globally crowd-sourced more than 1,500 ideas in 72 hours with record levels of collaboration and engagement. Three finalists entered pilots this spring. Each year we celebrate the best of our consumer experience ideas through a live conference held in our corporate headquarters in Stockholm. Experience innovators are feted by the most senior leaders in the Group and recognized throughout the company.

Our transformation is driving growth. In the first quarter of 2014, The Electrolux Group delivered its ninth consecutive quarter of organic growth. The organizational changes have dramatically increased the number of products and experience innovations that exceed predetermined goals for meeting consumers’ needs. Our pilot teams are really taking hold. In the past six months, we’ve launched a branded food and home decor inspiration site, an online recipe site/app, a mobile augmented reality app to demonstrate the benefits of new products such as steam ovens and an in-store product-selector web site that helps consumers find the best washer and dryer for their needs. Our market research shows that shopper experiences are improving. Speed to market has accelerated.

These organizational changes have been challenging — as is always the case when you knock down silos, shift resources, and push the culture in new directions. But the payoff has been demonstrable and rapid. In just two years, Electrolux has pulled from behind in the omnichannel race to become a leader in its sector.

The New Marketing Organization

An HBR Insight Center




How Sephora Reorganized to Become a More Digital Brand
CMOs and CEOs Can Work Better Together


Marketers Need to Think More Like Publishers
Brands Aren’t Dead, But Traditional Branding Tools Are Dying

Encourage Your Employees to Talk About Other Job Offers

Why can’t employees speak honestly about their career goals with their managers? It’s because of the reasonable belief that doing so is risky and career-limiting if the employee’s aspirations do not perfectly match up with the manager’s existing views and time horizons. It seems safer to wait until another job offer is in hand, so that if one’s manager reacts badly to one’s ideas, there’s no danger of being passed over for on-going professional development, or worse, left unemployed. It’s a self-fulfilling prophecy: once an employee has gone far down the road with another potential employer, it’s hard for her to maintain a positive relationship with her current company.

Neither manager nor employee necessarily wants the current employment relationship to end, but because of the lack of trust and honesty, that’s precisely what becomes likely to happen with talented employees.

If you want to forge a high-trust alliance with your workforce, take a page from a popular clause in founder employment agreements — the “Right Of First Refusal” (ROFR). When a founder wants to sell stock in the company and has an offer to purchase some or all of the shares, the company has the right to exercise its ROFR and buy the stock at the offered price. This compromise reassures the founder (or employee) that the company can’t block the sale of stock while allowing the company to make sure it isn’t saddled with investors it doesn’t want.

We believe that an equivalent compromise can help improve the employer-employee relationship: the “Right of First Conversation” (ROFC). If an employee decides she wants to explore other career options, she commits to talking with her current manager first, so that the company, if it so desires, has the opportunity to define a more appealing job or role.  This doesn’t mean that the employee informs her manager every time she receives a call from a headhunter—this kind of disclosure would be onerous for both employee and manager.  Rather, the employee should initiate a conversation when she is seriously considering alternate job offers or career paths. Similarly, the employee should also approach the manager if she felt strongly that her current tour of duty no longer fits, and that without a change, she would feel obligated to start looking for another employer.

As with other aspects of the employer-employee alliance, the ROFC isn’t a binding legal contract. It’s an understanding between manager and employee that carries moral weight if violated.

Because the employer typically holds the power in the relationship, it’s up to the company to take the first step towards building the necessary trust. Managers need to say, “We don’t fire people for talking honestly about their career goals,” and truly mean it. Once employees believe that the company will live up to those words, managers can point out the benefits to the employee of granting them the Right of First Conversation.

First, an employee can benefit from frank career advice from a manager on specific industry opportunities. In a high trust relationship, a manager will not reactively denigrate competitors or “say anything” to keep an employee.

Second, perhaps the current company can upgrade the quality of the employee’s existing tour of duty. An employee who provides advance notice allows the company the time necessary to explore and develop more possible options and offers. If the company has weeks to match or exceed an offer from a rival, it has a much better chance of pulling together a counter than if it only had twenty-four hours to respond.

Finally, even if the company can’t present a compelling counter or the employee chooses to switch firms, the ROFC helps preserve the long-term relationship. The split can be made amicably, and on a timetable that works for both parties, honoring the mutual obligations and investment they have made in each other.

As a manager, would you rather manage a planned separation from an employee who has completed her final tour of duty? Or would you rather scramble to perform damage control on a sudden departure?

As an employee, would you rather depart amicably and become a valued member of the company’s alumni network? Or would you prefer to depart under a cloud of acrimony?

The Right of First Conversation represents a major departure from business as usual, but that’s precisely the point. The lack of trust between employer and employee is costing both parties. Adopting the ROFC helps both parties build trust and a longer, more fruitful relationship.

Do Men in Traditional Marriages Block Women’s Advancement?

In a study of male managers from U.S. accounting firms, those whose wives weren’t employed tended to evaluate female employees more negatively than did men whose wives held jobs: Responding to an online simulation in which they were asked to rate fictional candidates, men in traditional marriages rated women 2 points lower on a 4-point recommendation scale than did men whose wives were employed, says a team led by Sreedhari D. Desai of the University of North Carolina. There was no such discrepancy for male candidates.

The Power of Meeting Your Employees’ Needs

What stands in the way of our being more satisfied and productive at work? That’s the fundamental question we sought to answer in a survey we conducted with HBR last fall. More than 19,000 people, at all levels in companies, across a broad range of industries, have so far responded to the questions we posed.

What we discovered is that people feel better and perform better and more sustainably when four basic needs are met: renewal (physical); value (emotional), focus (mental) and purpose (spiritual). This isn’t surprising news, of course. Is there any doubt that when we feel more energized, appreciated, focused and purposeful, we perform better? Think about it: The opportunity and encouragement to intermittently rest and renew our energy during the work day serves as an antidote to the increasing overload so many of us feel in a world of relentlessly rising demand. Feeling valued creates a deeper level of trust and security at work, which frees us to spend less energy seeking and defending our value, and more energy creating it. In a world in which our attention is increasingly under siege, better focus makes it possible get more work done, in less time, at a higher level of quality. And finally, a higher purpose – the sense that what we do matters and serves something larger than our immediate self-interest – is a uniquely powerful source of motivation.

What’s surprising about our survey’s results is how dramatically and positively getting these needs met is correlated with every variable that influences performance. It would be statistically significant if meeting a given need correlated with a rise of even one or two percentage points in a performance variable such as engagement, or retention. Instead, we found that meeting even one of the four core needs had a dramatic impact on every performance variable we studied.

For example, when employees at a company perceive that any one of their four needs has been met, they report a 30% higher capacity to focus, a nearly 50% higher level of engagement, and a 63% greater likelihood to stay at the company. Even more interestingly, there is a straight dose effect associated with meeting an employee’s core needs – meaning that the cumulative positive impact rises with each additional need that gets satisfied.  For example, when all four needs are met, the effect on engagement rises from 50% for one need, to 125%. Engagement, in turn, has been positively correlated with profitability. In a meta-analysis of 263 research studies across 192 companies, employers with the most engaged employees were 22% more profitable than those with the least engaged employees.

Interestingly, meeting three needs seems to have nearly as great an impact as meeting all four on most performance variables. The exception is people’s reported stress levels, where meeting a single need prompts only a modest 6% reduction in people’s stress, but meeting three reduces stress by 30%, and meeting all four leads to a 72% drop, The message to employers is blindingly obvious. None of us can live by bread alone. We perform better when the full range of our needs are taken into account. Rather than trying to forever get more out of their people, companies are far better served by systematically investing in meeting as many of their employees’ core needs as possible, so they’re freed and fueled to bring the best of themselves to work.

In practical terms, it’s possible to start making a considerable improvement without a lot of effort or expense, addressing one core need at a time. Consider the most basic performance variable, renewal, and its effect on people’s capacity. Only 20% of respondents said they were encouraged by their supervisors to take renewal breaks during the day. By contrast, those who were encouraged to take intermittent breaks reported they were 50% more engaged, more than twice as likely to stay with the company, and twice as healthy overall. Valuing and encouraging renewal requires no financial investment. What it does require is a willingness among leaders to test their longstanding assumption that that performance is best measured by the number of hours employees puts in – and the more continuous the better — rather than by the value they generate, however they choose to do their work.

Reframe a Moral Dilemma with Just One Word

Coulda Woulda ShouldaDoes “Could” Lead to Good? Toward a Theory of Moral Insight Working Knowledge

When we’re faced with an immediate moral dilemma, most of us are so thrown off that we’re not exactly able to think in complete sentences. Once we’ve pulled ourselves together and we’re thinking more rationally, though, chances are we’ll ask ourselves something like “What should I do?” But there are advantages to making a one-word change to that question, turning it into “What could I do?” That’s because one of the difficulties of moral dilemmas is that they appear to force us to pick one path or another; the simple substitution of “could” allows us to think more expansively about possible solutions.



Harvard Business School doctoral student Ting Zhang, along with faculty members Francesca Gino and Joshua D. Margolis, report on a series of online experiments in which they asked participants to ponder such hypothetical dilemmas as whether to hire the (not very qualified) son of an important personage for an internship. They found that the “could” mental construction led participants to have better moral insight, enabling them to formulate solutions that resolved the tension between competing objectives. They generated solutions that didn’t simply select one path at the expense of the other (though we don’t get to hear how they would have solved the intern problem). —Andy O’Connell

Satisfaction Not GuaranteedWhen Doctors Tell Patients What They Don’t Want to Hear The New Yorker

There’s a lot of talk in American medicine about the value of listening to the “patient voice.” Patient-satisfaction scores now affect hospital reimbursements and even physician salaries in various inpatient and outpatient settings across the country. But as Penn cardiologist Lisa Rosenbaum points out in The New Yorker, there’s a disconnect between satisfaction and quality of care. Patients tend to become upset and extremely dissatisfied when doctors give them bad news or tell them to improve their lifestyles. In one study, the more patients understood about their poor prognoses, the less they liked their doctors.



Rosenbaum tells a great story of her own dissatisfaction with a doctor who informed her that the cure for her hamstring injury was to stop running for a while. She didn’t want to stop running, and pretty soon she started to notice the doctor’s faults: He typed with one finger. He had bad breath. She dumped him and found another who gladly injected her with steroids. Her satisfaction soared, until she realized—much later, when she still couldn’t run—that the bad-breath doctor had been right all along. —Andy O’Connell

Facebook = TebowSocial Media Fail to Live Up to Early Marketing HypeThe Wall Street Journal

The race to gather as many Facebook followers as possible has ended, at least for companies. Last May, for example, the Ritz-Carlton Hotel Company purchased ads that resulted in an avalanche of new fans. A few years ago, this would have been celebrated. But for the hotel's Vice President of Global Public Relations, Allison Sitch, the sudden increase wasn't positive at all. "We were fearful our engagement and connection with our community was dropping," she says.



And she's not alone. With new Gallup data showing that social media ads don't affect the buying purchases of 63% of people, companies are radically rethinking why they're on Facebook and how they can best reach and communicate with their customers. Reaching customers isn’t going to be easy: Facebook algorithm changes have resulted in an almost 10% drop in the number of fans who can see a company's posts, and posts are more likely to reach nonfans because of a premium placed on sharing. So what's a company to do? Monitor the heck out of what people are saying, as opposed to pushing content and ads. The NBA's senior vice president of digital media, for example, says her goal is to "give them more of what they're talking about."

Behind the Viral StoryA Job Seeker's Desperate ChoiceThe New York Times

If you're on Facebook, you've probably seen Shanesha Taylor's face. It's probably in mug shot form, her skin wet with tears. Taylor, of course, is the woman who left her kids in a car while she went on a job interview in Scottsdale, Arizona. She was charged with two counts of felony child abuse and suddenly became "symbol of both economic desperation and shirked responsibility." But she's a person, too, and in her first interview since the widely reported incident, Taylor describes her life: She had a good job as a mortgage loan officer until the economic downturn, and she exited the workforce in 2008 following the death of her grandmother. She was unable to recover, worked a series of low-paying jobs, and had two children. Then came the interview at a Farmers Insurance broker – and a babysitter she says wasn't at home. "Child care," explains the Vice President of the Institute for Women's Policy Research, Barbara Gault, "is often listed as the No. 1 challenge that gets in the way of women's work participation." Taylor describes her day this way: When the babysitter wasn’t available, she wondered, "What do I do now? What do I do now?"



Taylor is out of jail, but the charges are still hanging over her head. She finally has money — over $100,000 has been donated to her cause — and a three-bedroom home. But she doesn't have a job (which may be even tougher to obtain if she’s convicted) or her kids, who were removed from her custody. Nothing, it seems, will line up – even though, back in Scottsdale on that 71-degree day, it almost seemed as though things would finally come together for her.

It Could Happen to YouWhen Outsiders Oust Your Board: The Ramifications of ISS’ Influence on Public CompaniesChief Executive

As a provider of such things as proxy voting services and class-action claims-management services, Institutional Shareholder Services carries a lot of clout. (That’s putting it mildly — “Every public-company CEO is terrified of ISS,” Chief Executive’s Lynn Russo Whylly quotes crisis communications consultant Robert L. Dilenschneider as saying.) So a lot of attention was paid when ISS recommended that seven of Target’s 10 directors be replaced in the wake of the damage done to the retailer’s stock price by last year’s massive data breach. What to do? Whylly suggests Target take three steps: Reach out to ISS and try to work things out privately; remove the two or three directors it feels are most responsible and replace them with people who have some data-security experience; and do a lot more to acknowledge the problem and publicize the steps being taking to rectify it. Despite the obvious hit Target has taken, Whylly reports, infrastructure consultants do not feel that other CEOs are learning from its mistakes. —Andrea Ovans

BONUS BITSLegalese

Thrown Out of Court (The Washington Monthly)
This Site is Building a Business on Making You Less Famous (Quartz)
Aereo and the Strange Case of Broadcasters Who Don’t Want to Be Broadcast (HBR)