CHAPTER 2

CORPORATE CULTURE AND EMPLOYEE ENGAGEMENT

Passengers on a delayed Air Canada flight were frustrated. Air Canada Flight 608 left Toronto on March 5, 2019, on its way to Halifax, Nova Scotia. But poor weather in Halifax closed the airport, so Flight 608 was diverted to a small airport in Fredericton, where its passengers ended up sitting on the tarmac for more than four hours. There was a snowstorm, it was late, and other planes occupied all the gates. The passengers were cold and hungry. As the plane languished on the runway, unable to get to a gate, the passengers became restless. There was no food on the plane, little water, less information. The flight attendants apologized that there was simply “nothing we can do.”

Then the Air Canada pilot made a phone call. He knew that Minglers Restaurant and Pub in Oromocto might be open. It was. The pilot ordered 23 large pizzas. Despite the late hour and the fact that there were only three staff members on duty, the staff quickly prepared the cheese and pepperoni pizzas and delivered them right to the door of the stranded airplane. By that point the passengers on the Airbus 320 had been on the plane for eight hours.

You can call that good customer service. We call it an example of decency at work and exquisitely fine-tuned employee engagement. The pilot is a poster child for corporate decency. In the face of institutional inertia—“We’re sorry, there’s simply nothing we can do”—the pilot made a phone call. He didn’t ask for permission or make a big deal of it. He looked at the situation and acted.

For the Sake of Decency

This book is all about extending ourselves for the sake of decency. Decency nourishes what is best in our organizations. It’s not just good on an individual or team level, it promotes a culture that reinforces core values and helps inoculate the organization from misbehavior.

A theme of this book is that organizational success is not a permanent condition. It must be cultivated at every level. Success is a fluid and ever-changing state that requires continuous care and nourishment. Our organizations often generate high-minded statements of principles and values. That’s not the hard part. It’s easy to hold out principles when conditions are ideal. The hard part is sustaining those principles and values on a day-to-day basis, frequently against a backdrop of business threats and scarce resources. The practice of decency as described in this book is part of any organization’s commitment to reflexively modeling those principles and values when the going gets tough.

Decency is all about caring.

Caring, like decency, is a fragile thing. Loss of caring happens incrementally. The pattern unfolds through a series of small choices. Seemingly inoffensive compromises to ethical business practices, treating employees fairly, customer service, or product quality lead to a gradual disintegration of decency, leading to mediocrity or worse by a thousand cuts. In the airline industry, for example, baggage was transported free for the first 75 years. Following airline deregulation in the 1970s, airlines began finding ways to recover the revenue lost through competition. Charging for baggage delivered $9 billion in cost-free revenue.

The trend in this industry is negative. Mindless, careless, and insensitive decisions like redesigning planes with smaller aisles and smaller seats, when clearly the data shows body size is increasing is just one example. This simply sends the wrong signals.

When intentional misbehavior moves beyond simple negative irritations and discomforts and moves into operations, catastrophe can be the result. Case in point is the current grounding of all Boeing 737 MAX aircraft following two crashes in the first few months of this new aircraft’s operation, killing hundreds of people. The planes remain grounded because investigations indicate reduction in safety procedures—software problems that were ignored. As this book goes to press the evidence of intentional malfeasance, cutting corners, and ignoring warnings from employees, including their chief pilot, requires that the 737 MAX aircraft remain grounded until every problem is found and fixed and this is confirmed by independent, outside aircraft experts.

The incremental abandonment of organizational ideals, principles, and values delivers toxic blows, and companies practicing these behaviors find themselves in ethical, legal, or reputational jeopardy. We’ve seen the degradation of organizational ideals in businesses and institutions of all kinds. When people and organizations veer away from the core principles that enabled their success, they enter treacherous waters that can lead to their undoing.

Employee Engagement Starts When Management Supports Employees’ Daily Goals

Among culture-conscious employers, employee engagement is a hot topic. Hot? A better word is scorching, and for good reason. Employee engagement is a critical component of attracting and retaining talent. Turnover is usually bad news for an organization. It’s bad for teamwork and productivity. It destroys morale, degrades innovation, and weakens organizational trust. Most of all, turnover represents an unnecessary expense as the organization commits precious resources to replacing employees.

There are a variety of engagement strategies organizations can take. Some of these can be elaborate and require significant training and a budget. But employee engagement requires neither a large budget nor a magic formula or gimmicks. What’s required first and foremost is management’s recognition that employees determine their engagement based on personal values and concerns, rather than what’s best from the company’s or organization’s point of view. This stems from the failure of management to recognize that the more tenured leaders become, the more their life is defined by their work and work goals. Employees, on the other hand, even those most senior, tend to determine how engaged they’ll become based on the positive impact of their experiences at work and the way their work contributes to their self-esteem, personal goals, and family life.

Decency-driven engagement practices are usually available at low or no cost. Engagement practices that flow out of an organizational culture committed to decency can be powerful tools to counter the problems of employee turnover and tune-out. They also serve as a viable strategy for greatly improving workplace experiences with employees who stay.

The dichotomy between employee needs and management’s erroneous assumptions about those needs, put starkly, is that many employees’ primary goal for their workday is to get home on time. Management’s primary goal for their workday is getting the work done, no matter how long they have to stay to do it. This is the conundrum of employee engagement.

It’s All About Engagement

Leaders have an amplified role in the employee engagement process because of their position as “chief culture officers.” Done right, an engaged, values-driven culture can signal a relentless commitment to quality of working life and a connection between work and home.

Integral to ensuring an enabling culture is institutionalized decency, a tightly woven, leadership-driven, relentless pursuit of civility, transparency, trust, integrity, and unified purpose. Codes of conduct are helpful if they’re brought to life. Values statements are helpful if they’re brought to life. Ethics and compliance manuals are essential if they’re brought to life. Simply, understandably, repeatedly, constructively.

Cynicism in the workplace is as widespread today as in the past. Employees—including executives—are checking out too often, phoning it in, or in some cases undermining the organization. This cynicism is often related to excessive profits, needless losses, or macroeconomic conditions that could have been anticipated.

A stunning symptom of this reality is the stagnant state of employee engagement. The Gallup Organization has researched millions of employees in hundreds of US organizations. According to the most recent “State of the American Workforce” report, 85 percent of employees are not engaged or are actively disengaged at work.¹ Look at it another way: If a department has 20 employees, only 3 people on the payroll are giving it their all. The rest are phoning it in.

The impacts and economic consequences of this global engagement pattern represent $7 trillion in lost productivity according to Gallup’s “State of the Global Workplace” report. Eighteen percent of workers are actively disengaged in their work and workplace, while 67 percent are “not engaged.” These are not a company’s laggards or worst performers, the report insists. They are simply—or not so simply—indifferent to the goals of the organization. They grudgingly exchange their time for a paycheck, but they withhold their best ideas and creativity. It’s a global engagement pattern that may underscore how poorly performance is managed.

Many well-intentioned programs designed to address the problem of engagement are misfiring. The new workforce is looking for access to information, advance warning of adverse developments, more of a voice in decision making, and ways to connect their home life to their working life. They see work and life as interconnected, and they want their job to be a part of their identity.

Employee engagement is essential to organizational success, yet many companies struggle with inspiring and positively challenging their workforces to go above and beyond. When we get performance management right, engagement will naturally rise. And the potential impact on the bottom line is significant. The best organizations achieve earnings per share growth that is more than four times that of their competitors, according to a 2017 report from Gallup.²

There can be little doubt of the critical role employee engagement plays in the success of work teams, departments, enterprises, and even entire economies. In the United States alone, disengaged employees cost organizations an estimated $450 to $550 billion each year, according to Gallup.³

More Engaged Leaders

The key to more engaged workers is more engaged and trustworthy leaders. Employees see right through initiatives that are basically little more than manipulation. No one wants to feel manipulated, especially by leaders who are seen as uncaring and aloof. In his book The Meaning Revolution, Fred Kofman asks, “If engagement is so crucial to an organization’s performance, and if the strategies to produce it are so simple, why aren’t there more engaging leaders, and why aren’t more companies dramatically increasing employee engagement?”

McKinsey and Company routinely asks executives what they found most often missing in creating a peak performance environment. The response: a strong sense of meaning, without which employees quickly disengage and see their work not as a career but as just a job.

Employee engagement doesn’t necessarily respond to promotions that can seem designed to increase sales, reduce costs, build market share, or grow shareholder value. All these goals are important, but even if an organization achieves them, it can still suffer if employee engagement does not keep pace. Personal engagement is required for organizational success. Engagement produces group cohesion, solidarity, trust, mutual respect, and an environment in which people can work together to accomplish audacious goals.

Bolt-On Engagement

It’s futile for companies to simply throw money at conventional employee engagement initiatives and think that will solve the problem. These bolt-on functions typically let companies check the right boxes while they continue to engage in practices inconsistent with the values and initiatives they evangelize. Similarly, establishing a stand-alone employee engagement function, without integrating it into every corner of the organization, does little to create a culture that infuses processes with values, catalyzes ethical behavior, and holds all stakeholders—including leaders—accountable.

We recently visited a Fortune 500 company that had a celebrated ethics statement prominently displayed on the walls. The ethics statement was also printed on the back of the security badges every employee wore on lanyards around their necks. At a private lunch with some employees, we asked about whether the ethics statement actually catalyzed the company to act more ethically. One of the employees looked sad and reported the following:

Just a month ago, the company promoted a manager to a senior executive position. He received a corner office, more money, a big bonus, stock options, company car, the whole package. He got the promotion because he tripled his quota. He achieved that feat while violating every single one of the values we say we stand for. So, you tell me. Should we pay attention to these values, or should we pay attention to what actually gets rewarded around here?

As we left that luncheon, the employee was sadly reading the words on the back of the lanyard around his neck. We couldn’t help thinking that the violated values of that posted statement were more of a weight around his neck than an inspiration. The takeaway is that employee engagement is a matter of alignment. If a bank (think Wells Fargo) proclaims, “We value what’s right for our customers in everything we do,” but then tolerates and even encourages workers to open unwanted accounts for customers without their knowledge, the values become a source of derision, not a set of guiding principles.

Values on the Wall

Sadly, this episode is more often the rule than the exception. Too many leaders focus more on articulating their organization’s mission and values than on living up to those values. More than 70 percent of all S&P 500 companies promote integrity as a core value, according to an analysis by finance professors Luigi Guiso, Paola Sapienza, and Luigi Zingales.⁴ The researchers wanted to determine how advertised values correlated with financial performance. In a follow-up study of 679 US companies and more than 400,000 employees, the same researchers concluded that “companies that lived their values in practice achieved higher productivity, higher profitability, and an increased ability to attract talent compared with those that did not.”⁵ Integration moves the “values on the wall” to “values in action.”

Corporate culture consists of the sacred values, attitudes, behaviors, standards, beliefs, traditions, and ritual moments that define an organization as it is lived. Culture is embedded in the stories we tell one another about ourselves in an attempt to make ongoing sense of why we do what we do. What matters most is how leaders behave. It’s all about authenticity and alignment.

What we propose in The Decency Code is that in a workplace that is diverse, competitive, global, and virtual, the ultimate measure of effectiveness is whether the words match the music, and if not, what leadership proposes to do about it. Our main point is that what leaders can do to make a difference in employee engagement is inject their cultures with everyday acts of decency that may represent only 2 percent of what they do, but 98 percent of who they are.

Institutionalized Decencies

Our book is about the potentially powerful cultural impact of institutionalized decencies. Recent frequent conversations around the impact of greater decency, civility, and ethics are significant but too conceptual to drive the point home in the workplace. However, think of the nightly news stories reporting real-life examples of decency: storm- or fire-related selfless acts of sacrifice and bravery—the vivid, indelible, three-dimensional images that can set examples for future behavior. These are much more compelling than statistics around burnt forest acreage. They have the enduring effect of engaging the audience. Helicopter rescues, rooftop survival, pet rescues, nursing home evacuations all make memories and leave us with role models and, in some cases, even heroes.

In corporate cultures, it’s vivid, actual examples of leadership selflessness, courage, generosity, collaboration, and even tough love that provide the elusive “glue” that’s the essence of real, enduring employee engagement. An organization’s culture becomes lasting, palpable, believable, and productive if it is bonded relentlessly to engagement activities: in recruitment, onboarding, orientation, leadership development, career development, operations reviews, performance reviews, talent management, conferences, training, and yes, even terminations. David Noer, noted consultant and author of Healing the Wounds: Overcoming the Trauma of Layoffs and Revitalizing Downsized Organizations, created the following recipe for “cultural glue”:

•   Fill glue pot with the fresh, pure, clear water of undiluted human spirit.

•   Take special care not to contaminate with preconceived ideas or to pollute with excess control.

•   Fill slowly; notice that the pot only fills from the bottom up. It’s impossible to fill it from the top down.

•   Stir in equal parts of customer focus and pride in good work.

•   Bring to a boil and blend in a liberal portion of diversity; one-part self-esteem and one-part tolerance.

•   Fold in accountability.

•   Simmer until smooth and thick, stirring with shared leadership and clear goals.

•   Season with a dash of humor and a pinch of adventure.

•   Let cool, then garnish with a topping of core values.

•   Serve by coating all boxes in the organization chart with particular attention to the white spaces. With proper application, the boxes disappear and all that can be seen is productivity, creativity, and customer service.⁶

Sculpting Fog

Central to today’s discourse around corporate cultures is the issue of virtuality. How do you lead people you don’t see and who don’t see you? How do you operationalize Tom Peters’s compelling advocacy of MBWA (management by walking around) in an operationally diffuse, increasingly remote workplace? Isn’t the real leadership challenge about “sculpting fog” in a work world characterized not only by virtuality, but by job-sharing, contingent employment, portfolio careering, and in-betweening? In other words, where empowerment and career self-sufficiency rule?

Current and future leaders will be increasingly challenged by the trend toward telecommuting. Global Workplace Analytics claimed that 40 percent more US employers were offering flexible workplace options than five years ago.⁷ Surveys show that upward of 80 percent of the US workforce would prefer to telework at least part of the time, according to Gallup’s State of the American Workforce Report.⁸

Employee engagement strategies are now challenged by this new, mobile, virtual, and amorphous world of work. Cultivating engaged employees when they are in the same physical location is difficult enough. Building engagement with employees who work remotely adds extra layers of complexity and requires innovative ways to increase communication, collaboration, and community. Fortunately, the same technology that makes remote work possible provides opportunities to create a sense of shared purpose. Those technologies include robust videoconferencing, chat programs, and gamification.

The Birth of Employee Engagement

The engagement movement likely had its origin in the studies decades ago around morale, especially among returning World War II veterans and then factory production lines. The term “employee engagement” was coined in 1990 by Professor William Kahn of Boston University in a paper titled “Psychological Conditions of Personal Engagement and Disengagement at Work.” While now universally accepted as an essential component of a sound corporate culture, it’s still hard to pin down exactly what the term means. The Conference Board is helpful here. It defines employee engagement as “a heightened emotional connection that an employee feels for his or her organization that influences him or her to exert greater discretionary effort in his or her work.”⁹

In other words, it’s about the working environmental attributes that motivate employees to enthusiastically go above and beyond what’s expected. “The emotional commitment the employee has to the organization and its goals,” is a definition offered by Forbes.¹⁰ Regardless of the definition, employee engagement turns out to be perhaps the most challenging success factor for any organization.

Early commentators on the subject were convinced that “keeping people” is in no small way a function of employer-sponsored benefits and perks. These are just a partial list of institutional perks intended to promote retention:

•   Education assistance

•   Casual dress policy

•   Bring children to work days

•   Flexible work schedules

•   Free food

•   Health/fitness facilities

•   Relaxation zones

•   Laundry/dry-cleaning services

•   Mentoring programs

•   Stock ownership

•   Family outings

•   Formal awards/recognition programs

•   Community service days

•   Telecommuting flexibility

•   Leadership development

These perks are institutional in that, unlike small decencies, most need a budget and policy. Some of these programs have proved more effective than others. Engagement advocates argue, however, that it’s the total working environmental attributes that motivate employees to go above and beyond what’s expected. We would add it’s the corporate cultural characteristics and leadership essentials that can make fraud and gross misconduct a remote consideration. So, employee engagement theory is less about happiness and more about quality of work life, ethical work life, values-driven work life.

Means to the End

Our book argues that employee engagement is a means to the end. A company must function excellently in other dimensions, too. If the other business tools are not in place, a team of supercharged, engaged employees who think they’re working for a great company could one day arrive at work and find the gates chained. You could have low-performing businesses with highly engaged employees.

A recent IBM study of more than a million employees concluded that, ultimately, engagement happens one employee at a time, one interaction at a time.¹¹ It is this reality that, in aggregate, makes the case for a genuine commitment to decency in corporate culture. It’s about one spontaneous gesture at a time. Sewn together, these gestures can form a tapestry of cultural richness, worthwhile traditions, priceless stories, and, ultimately, engaged colleagues.

Employee engagement has joined the litany of business fads—think MBO (management by objectives) or ZBB (zero-based budgeting)—that make their way around the corporate ecosystem and are often then jettisoned in favor of the NBT (next big thing). We are warned to be cautious of the “fashionality” of employee engagement. Employee engagement can drive a more disciplined business strategy.

The Gallup organization has captured what workers say they want from an organization. Engaged employees want to know that their leaders:

•   Think about me

•   Know me

•   Care about me

•   Hear me

•   Help me feel proud

•   Help me review my contributions

•   Help me grow

•   Help me build mutual trust

•   Challenge me¹²

The PwC authors of Closing the Engagement Gap put it even more succinctly in advising employers to:

•   Know them

•   Grow them

•   Inspire them

•   Involve them

•   Reward them¹³

“U.S. workers have a trust problem,” suggests a recent Wall Street Journal article by Lauren Weber. “Only about half of U.S. workers feel their employers are up front with them according to a survey about work and well-being by the American Psychological Association” she writes. “And one quarter of Americans say they simply don’t trust the companies they work for.”¹⁴

Empathic Leaders Inspire Engagement

At one time, perhaps, employees were satisfied simply working for an organization with quality products or services that created satisfied customers. Somehow, we doubt it. We believe that in all periods, employees have sought a sense of engagement with their fellow workers and employers. Today, the bar has been raised. Employees demand to be partners in the goodwill that comes from serving customers well. In addition, they want the companies for which they work to do some social good along the way and stand for values beyond profit.

This is the essence of the challenge of employee engagement. Of course, employees want everything they have always wanted. They want a decent salary, decent working conditions, effective supervision, and a path toward development. And without sacrificing any of these, employees insist on jobs that give them a sense of purpose in a company they feel is making the world just a little better. As well, engagement extends to customers and other stakeholders.

Customers, for example, want to engage with products that not only satisfy them but respond to a real need and are offered at a fair price. But customers and investors also want to associate with organizations that stand for decent values and leverage those values with actionable practices in such areas as gender equity, diversity, and environmental sustainability. Stakeholders want to associate with companies that are viewed as force multipliers for the social issues that the stakeholders see as most important. In short, stakeholders increasingly value social impact.

Supporter or Cynic

Whether you’re a supporter or cynic about employee engagement, the issue will not disappear. One reason is the justifiable concern among hiring authorities about talent shortages. Over the years, creative initiatives aimed at strengthening employee engagement have been well intended, but their sustainability has been challenged. Most important is the degree to which employee engagement is a factor in creating or at least reinforcing an ethical culture. The Ethics Resource Center in 2010 asked two key questions:

1.   Does ethical culture play a part in employee engagement?

2.   Does management’s commitment to ethics impact employees’ engagement with the company as a whole?¹⁵

The findings:

•   Management’s commitment to ethics is particularly important for employee engagement.

•   Employees who already felt engaged were less likely to feel pressure to commit misconduct.

•   Engaged employees are more likely to report misconduct when they witness it, thus reducing the company’s ethics risk.

•   A positive impression of the company’s ethical culture promotes employee engagement, while misconduct erases it.

Philosophy of Doing Business

There is a philosophy of doing business that goes beyond the transfer of goods and services. It calls for an infusion of values in the form of small decencies—business gestures that are cost-free or nearly so and can make a firm a more effective and supportive place to work. They can be implemented without a lot of planning or training. And they are invariably focused on customers or employees.

Everyone in your organization can model decency. You have permission. You have the resources. What you need to do is act. A company’s culture can be molded—for the better—by the cumulative power of small decencies. It’s about the way leaders choose to behave—the actions leaders embrace—every day, especially during the quiet moments when we think no one is watching.

Employee engagement is the critical success factor that often distinguishes the most successful organization from the runners-up. Employee engagement is less about what’s missing and much, much more about the resources that are available. The most effective way to build employee engagement is through a coordinated set of decencies: individual gestures that help define the larger environment, build the foundation of an ethical culture, and help inoculate the culture against gross misconduct that violates ethical norms. Corporate leaders can post ethics statements, but buy-in is a decision that each individual employee makes every day. The government can require compliance with regulations, but it cannot legislate ethics, values, and civility.

Integrity needs to be cultivated and supported through shared values and enforced norms. Integrity needs to be perfected through day-to-day practice. Integrity is a constant, whatever the situation. What we have is the opportunity to uphold promises and fulfill duties in every situation that faces us, large and small. Integrity is also about a practice and a habit of keeping promises, the ones we make explicitly and the ones that are implied in all our relationships.

We confront a time when the theme of indecency and incivility is increasing in our workplaces, our institutions, and our personal relationships. But by recognizing and resisting the ways we tend to squander trust in our lives at work and at home, we can repair the disconnects that create vulnerabilities in our institutions. The Decency Code exposes how too often our culture sanctions breaches of integrity large and small through an array of rationalizations and euphemisms.

Leaders will never realize their full potential until they help people contribute to their full potential. Employees today deserve to contribute in an environment that allows them to liberate their full potential. Leaders today can help the people they serve experience an entirely different level of engagement at work. It begins when we create the conditions in which they willingly bring more of themselves to work.

The return on engagement can be significant. Evidence shows that sales, profits, innovation, customer satisfaction, and every other key metric is positively impacted by how much employees care. When you raise employee levels of engagement, you’ve overcome a significant barrier to superior performance.