1. Develop and implement a humane philosophy

A good starting point is to ask yourself a question. What kind of environment would you like to work in? You would probably want to know your group’s mission, and your own. You would want to know how those missions were connected to the company’s purpose. You would want to eliminate all of the organizational drag that makes it hard for people to get their jobs done every day.

Most of the leaders we talk to have other ambitions as well for their organization. They want to build teams of high-performing individuals, and they want to give those teams considerable autonomy to complete their missions. They want to create a place where employees can grow to whatever level their ambition and abilities take them. They understand that some of these employees will seek mastery, while others will just want to be good at their job and get better every day. But they want everyone to feel a part of the organization and to identify with its goals.

This kind of environment isn’t a myth; you can see it in operation at many of the “millennial” companies that have come into being in the last few decades—companies such as Google, Netflix, Spotify, Airbnb, Tesla, SpaceX, and many others. Most of these companies have business models that are supercharged by digital technologies. Many are led by their founders and exhibit the traits of what our colleagues Chris Zook and James Allen have termed the “founder’s mentality.” They often seem successful in engaging their people in pursuit of a bold mission. How do they do it?

• They set out to make a difference. They are results oriented, and they often have a David-versus-Goliath attitude that makes them fiercely competitive. They express their goals not just in terms of business success, but also in terms of the impact they have on the lives of their customers and on the larger society. At Dell, for example, leaders emphasize “the next billion people that will have access to education; the next billion who will receive better medical care based on the information Dell makes available to doctors.” It’s big goals like these that motivate employees to go the extra mile.
• They presume trust. They give their employees the freedom to pursue their passions within the company and beyond the company.
• They are unafraid to take risks. They encourage calculated risk taking, relying heavily on facts and data to make choices. They test hypotheses and adjust course, when necessary, with relative ease.
• They empower the team more than the individual manager. Organizations that imbue managers with too much power tend to undermine the autonomy of individuals and the power of teams. These companies don’t make that mistake. Granted, some may take autonomy too far—we’re not yet believers in Zappos’s “Holacracy” concept, which attempts to reshape managerial hierarchies completely. But it’s possible for hierarchies and autonomous teams to coexist. Google, for instance, creates spans of control that are so broad that managers can’t possibly micromanage the teams for which they are responsible.
• Their cultures and business practices are guided by principles, not by rules. Rules-driven cultures are only as good as the business logic built into the rules. In dynamic markets like those in which these companies must operate, it’s virtually impossible to update and enact the rules with sufficient frequency. Principles-driven cultures, by contrast, are dynamic and are capable of adapting to new conditions in real time. These companies try to establish behavioral frameworks to guide ways of working, rather than creating a scorecard enforced by culture vigilantes.

Many will argue that it’s easy for these high-flying companies, filled with young, ambitious employees, to build a people-centric, empowering, working environment. But any company can treat its workforce as an asset rather than as an expense. Think about the difference between the income statement and the balance sheet. When a company views “labor” as an item on the income statement—a cost—its focus will always be on minimizing the expense. When it views employees as a balance-sheet item—human capital, an asset—its goal will be to maximize the productive value of the asset. Plenty of companies give lip service to this distinction, but few have built a working environment that makes the most of the human capital on its balance sheet. Zeynep Ton, of MIT’s Sloan School of Management, has written extensively about the power of the balance-sheet approach in her book The Good Jobs Strategy.¹ Examining the retail grocery industry, which includes many poorly paid service-sector jobs, she persuasively demonstrates how companies such as QuikTrip, Trader Joe’s, Costco, and the Spanish grocer Mercadona have created superior business models founded on the twin ideas of operational excellence and treating employees as assets rather than as expenses.

The millennial high flyers and the more earthbound grocery retailers have all put into practice one critical belief: involve your people by treating them like adults, like people who seek meaning in their work, who are worthy of trust, and who are able to operate on their own without much oversight. This is the kind of philosophy that lays the groundwork for inspiration and engagement.

Implementation: Follow the hierarchy of engagement practices. A company’s philosophy on human motivation takes practical shape through many different elements. It’s reflected in the value proposition a company offers its employees. It affects the operating model, the working environment, and modes of collaboration. Companies that take their philosophy seriously ensure that it addresses all the factors that determine employees’ level of engagement and inspiration.

Before we examine these factors, there’s one prerequisite, which is that an employee who feels he or she is in the wrong job will never be engaged or inspired, no matter how hard you try. So we assume before anything else that your company has an effective recruiting and placement system that matches people to jobs that suit them—simply put, one that enables your difference makers to make the biggest difference.

In our work, we find it useful to think about engagement as a spectrum ranging from satisfied to inspired and driven by a hierarchical model, which we call the pyramid of employee needs (see figure 6-2). At the lowest level are the qualifiers, which are necessary for a basic degree of satisfaction. Since you can’t expect people to be engaged in their work unless their fundamental needs are met, these are the essentials. They include providing employees with a workplace that is safe, both physically and emotionally; providing the tools, training, and resources necessary to do a job well; ensuring that no one is obstructed by the organizational drag that comes with excess bureaucracy; and offering both fair monetary rewards and the feeling that the employee is valued. A company that meets these needs will find that its employees are relatively content with their jobs and their work. They may not be fully engaged—and they may be open to leaving if a better opportunity crops up—but at least they are not backing their cars into parking spaces.

FIGURE 6-2

The pyramid of employee needs

Source: Bain & Company

The next level in the pyramid includes the factors that begin to create deeper engagement. At this level, companies begin to unlock some of their employees’ discretionary energy; they empower individuals and teams to take on extraordinary missions. The factors on this level are highly correlated with people’s intrinsic motivations. In Drive: The Surprising Truth About What Motivates Us, Daniel Pink describes three key motivational elements: autonomy, mastery, and purpose.² A company that provides employees with appropriate levels of autonomy and the opportunity to achieve mastery of their work, both individually and as part of high-performing teams, will find that their productivity soars. Employees who achieve this level of engagement like the content of their jobs, enthusiastically show up for work every day, and will willingly take on new tasks and challenges.

The top layer of the pyramid adds the final dimension: inspiration. This is where engagement goes viral. Employees are not only individually inspired but also inspire others through their passion and their actions. People at this level become vocal advocates for the company. They believe in it, and they do extraordinary things to contribute to its success.

It’s important to understand that these layers are sequential. The psychologist Abraham Maslow famously taught that human beings can’t concern themselves with higher goals until their basic needs are met. The pyramid is a corporate analogue to Maslow’s hierarchy. It reminds leaders that they can’t expect employees to be engaged, let alone inspired, unless they have taken the steps necessary to ensure a safe, effective work environment with fair rewards. If they haven’t, the very initiatives that are meant to foster engagement will feel like just one more energy-draining commitment—or like a cynical attempt to extract more hours out of an already stretched workforce. Attempts to inspire employees are particularly vulnerable to this sort of backfiring. Grandiose mission statements that are not anchored in the day-to-day reality of what the company does will ring false.

One consistent key to engagement, we have found, is to help individuals link their roles and individual missions to the company’s purpose. This is especially compelling in service-intensive businesses; creating a connection between employees and the customers they serve turns the customer from a faceless abstraction into a real human being, and employees begin to see the link between their work and the company’s mission. Nordstrom is one company that has done just this. In her article “The Path That Builds Trust,” Jennifer Robin of the Great Place to Work Institute notes that Nordstrom has a single rule for employees: “Use good judgment in all situations.” But it also establishes a single objective that is both clear and simple: “Our number one goal is to provide outstanding customer service.” Setting this goal provides clarity to employees, as it “provides a guide for decision making, a standard for measurement, and also a philosophy about customer service that makes Nordstrom the industry leader they are.” The company also provides employees with specific guidance as to the kind of behavior that is expected. In the words of one former employee, they include:

• A Nordstrom salesperson rarely points. If you have a question about where something is located, someone will walk you there.
• Salespeople are taught to walk your bagged purchase around the counter to you, versus just handing it across the counter.
• Salespeople can offer to ring up your purchase without you ever having to stand in line.
• Departments are generally trained to answer the phone on no more than the second ring.³

While each individual expectation is modest enough, they collectively shape a customer experience that few retailers can match.

To empower employees to act autonomously and in the best interest of customers, the company has designed an operating model and recognition system that are mutually reinforcing. For example, Nordstrom recognizes employees through an elite million-dollar club of top-performing employees. It empowers employees to act like small business owners, allowing them to “make use of their client list … to build and cultivate personal relationships with customers and take care of them as they see fit, or in other words operate their ‘own’ business within the larger company.”⁴ As a result, the company has become famous for nearly incredible stories of customer service. Jacksonville Business Journal, for instance, reported that a member of the housekeeping staff at a Nordstrom store in Connecticut discovered a customer’s bags, along with her receipt and a flight itinerary, in the parking lot. Noticing that the customer had likely left directly from the store to catch her flight at Kennedy International Airport in New York, he looked up the customer’s phone number in the company’s system and tried to call her several times—all while driving to the airport with her bags. When she didn’t answer her phone, the employee had the airport page her to let her know he had her bags.⁵

2. Balance employee autonomy with organizational needs

Central to any model of engagement and inspiration in modern, dynamic companies is the concept of employee autonomy; indeed, autonomy may be the single most important element in creating engagement or inspiration in any company. How can anyone feel engaged, let alone inspired, if she feels that some supervisor is always looking over her shoulder? But autonomy is a double-edged sword. On the one hand, it spurs creativity and involvement. On the other, unchecked autonomy can lead to ambiguity and inefficiencies, even organizational chaos. To find the right balance, you have to wrestle with three distinct challenges:

Balancing autonomy and accountability. An essential counterweight to autonomy is strict accountability for results, and for the actions and behaviors that deliver those results. In the words of a popular folk song from the 1960s, “freedom isn’t free.”

A company thus has to establish a strategy and purpose that provide context for employees’ actions. It has to put the strategy into practice through measurable objectives, consistent measurement of progress toward those goals, feedback systems to monitor activities along the way, and appropriate consequences for reaching or failing to reach the goals. At their best, companies like those we mentioned realize that not everything is easily measurable or should be measured, and that constant temperature taking and micromanagement are both inefficient and demoralizing. But they also establish transparent boundary conditions and clear expectations. Employees and teams know they will be held accountable, and they know where the guardrails are. They understand the objectives, and they have a great deal of freedom in determining how to reach them within those guardrails. Clarity of purpose and what we call high-resolution strategies, which give people a clear view of where they’re headed, provide the compass that can guide the choices teams and individuals make when working autonomously.

Balancing freedom to innovate versus following proven routines. All companies begin their lives as entrepreneurial ventures. As they grow, and as the industries they compete in mature, their leaders want to ensure that the organization gets the benefits of learning, and of the economies of scale that come from doing the same thing over and over. When this transition is managed well, companies create organizational mechanisms ensuring that best practices and proven routines are followed with rigor; they do this without creating too many rules and without draining the organization of its entrepreneurial energy. When it’s managed poorly, companies create employees who follow the rulebooks to the point where they stop innovating.

The art and science here is determining how to get both outcomes—consistency and innovation—in the right proportion and in the appropriate parts of your organization. In many areas, freedom to innovate is the critical need. Think of new product development, or the parts of the company’s value chain and business model that are undergoing significant reinvention because of digital transformations. In these activities, speed of innovation is critical, and the rallying cry should be autonomy, small teams, and organizational agility. Other areas, however, may benefit from standardized approaches. These are areas where consistent outcomes are essential and where speed of execution comes from deploying common methods, best practices, and enforced routines. The rallying cry here should be repeatability and efficiency. Each requires speed in different areas, innovation versus execution, and achieves these results in different ways. The challenge in striking the right balance is to know which method should predominate where, and how to design appropriate ways of working for each area. The wrong approach leads to confusion over goals and to ineffectiveness.

Balancing alignment with control. This task is closely related to the other two. In traditional hierarchical organizations, managers direct the work of subordinates and thereby ensure alignment with broader organizational goals. Spans of control are limited to a reasonable number—typically eight people or fewer—so that managers can effectively oversee their subordinates’ efforts. This organizational model can work well in relatively stable business environments, where the pace of change is modest and where annual planning cycles suffice for managing strategic changes and course corrections. In more dynamic business environments, where innovation cycles happen in days or weeks rather than months and years, and where much of the work is cross-functional in nature and undertaken by small, agile teams, this type of organizational model can be slow to respond and innovate. Companies that take the approach of empowering autonomous teams must find ways to ensure coordination and connectivity among those teams without relying on controlling managers. Again, it’s a matter of managerial art as well as science to achieve alignment without excessive control.

3. Develop leaders who deliver results and inspire

Strong leadership is one of the most critical elements required to move from engagement to inspiration. In the Bain–Economist Intelligence Unit study, we asked respondents to rate their leadership team on their ability to inspire and motivate. The results are displayed in figure 6-4, and they are hardly encouraging. Barely half of the time did respondents “agree” or “strongly agree” that leaders were inspiring their people, or doing the things necessary to inspire.

FIGURE 6-4

Does your organization have leaders who inspire?

Please indicate the degree to which you agree with the following statements about leaders in your organization

Source: Bain/EIU research (N = 308).

One condition is clear: inspiration and performance must be inseparable. This is true both for strong leaders and for winning cultures. Who will be inspired by working for a company that turns in mediocre results? In observing hundreds of high-impact leaders across scores of companies worldwide, we consistently find that the strongest among them successfully drive both performance and inspiration. Leaders who deliver only performance may do so at a cost that the organization is unwilling to bear. Those who focus only on inspiration may find that they motivate the troops only to be undermined by mediocre outcomes. Given the outsized impact leaders have on shaping cultures, it should not be surprising that we believe both should be evaluated by the strength of their performance orientation and their ability to inspire.

Effective leadership isn’t generic. To achieve great performance, companies need a common leadership profile that reflects their unique strategy, business model, and culture—in other words, a common behavioral signature, as described in chapter 4. Just as a company must “spike” in certain capability areas to create competitive advantage, leaders must have behavioral spikes that are relevant to their company’s model of value creation. The winning behavioral signature is unique to a company but should be common across the leaders within the company. Achieving inspiration, however, requires a different approach. Our experience has shown us time and again that every leader has the potential to be inspirational by drawing on his or her unique strengths. The combination of attributes that lead to inspirational leadership are thus unique to the individual.

Developing inspirational leaders. There are few rigorous methods to measure someone’s ability to inspire, to systematically develop that intangible quality, or to embed those skills throughout an organization. “Leadership as an area of intellectual inquiry remains thin, and little original thought has been given to what leader learning in the second decade of the twenty-first century should look like,” observes Barbara Kellerman of Harvard Kennedy School.

To understand what enables a leader to be inspirational, we and our colleagues conducted extensive primary research. Starting with an initial survey of two thousand employees, we asked respondents to rate how inspired they were by their colleagues. We also asked them to rate what was important in contributing to that sense of inspiration. While inspiration may seem difficult to decipher, we identified thirty-three distinct and tangible attributes, depicted in figure 6-5, that are statistically significant in creating inspiration in others. We built this list from multiple disciplines, including psychology, neurology, sociology, organizational behavior, and management science, as well as from extensive interviews.

We then grouped the characteristics that inspire in four quadrants that highlight the setting in which they tend to work their magic. One quadrant, for example, contains the qualities related to leading a team, such as focus, harmony, and direction. Another quadrant, including stress tolerance, optimism, and emotional self-awareness, comprises behaviors that develop one’s inner resources. While these quadrants provide a structure that makes the model easier to digest, they do not emphasize any particular distribution of abilities. Our research demonstrates that each of the elements is important to the collective inspirational health of an organization, and that no particular combination is more powerful than others in contributing to an individual’s capacity to inspire.

FIGURE 6-5

Bain inspirational leadership model

Source: Bain & Company

Next we assessed people’s ability to inspire. We defined an individual’s distinguishing strengths as those ranking within the top 10 percent of one’s peer group. We labeled the characteristics ranked between the seventieth and ninetieth percentiles “potential distinguishing strengths,” and those in the bottom 10 percent “weaknesses.” The remaining 60 percent of the ranking are neutral characteristics, because one’s level of skill neither detracts from nor contributes to a differential effect on others. The results of our research revealed four critical insights into building effective coaching programs to help your leaders raise their inspiration quotient:

• Having even one distinguishing strength—that is, ranking in the top 10 percent of your peer group on one of those characteristics—nearly doubles your chances of being a leader who inspires others.
• The more distinguishing strengths you have, the more inspirational you can be. Having just four of those attributes as distinguishing strengths is sufficient to make someone highly inspiring. More than 90 percent of those demonstrating distinguishing strengths on four or more of the thirty-three elements are inspirational to their colleagues.
• People who inspire are incredibly diverse. Any combination of distinguishing strengths works; there is no fixed archetype of an inspirational leader. This finding underscores the power of authenticity. Inspirational leaders come in many varieties.
• Everyone has the ability to become inspiring by focusing on his or her strengths as opposed to fixing weaknesses. This is consistent with a growing body of research. According to Gallup, for example, the odds of employees being engaged are 73 percent when an organization’s leadership focuses on the strengths of its employees, compared to 9 percent when they do not.

A surprising result of the research was that centeredness turned out to be the single most important attribute among the thirty-three. It was the most statistically significant in creating inspiration, and it was the trait that employees most want to develop. Centeredness is a state of greater mindfulness, achieved by engaging every part of the mind. While a growing number of companies offer optional mindfulness programs to promote health and workplace satisfaction, our research shows that centeredness is fundamental to the ability to lead. It improves one’s ability to stay level-headed, cope with stress, empathize with others, and listen more deeply.

Right now, leading companies are beginning to develop programs based on these principles. They understand that their competitive edge depends on their ability to deliver a great customer experience. They know that the nature of work has changed, and that today’s employees are looking for more from their jobs than a paycheck and a pat on the back. They also know that talented people have lots of opportunities and must be re-recruited all the time. So these companies seek out and value the leaders who truly inspire people, and they proactively develop those inspirational skills throughout their organization. Conventional leadership development programs might have been sufficient in a twentieth-century enterprise. But today’s world is different—faster moving, more demanding, and more open. Inspirational skills, properly supported and developed, are one key to a more productive future—and to a workplace where people don’t back their cars into the parking lot.

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The more employees a company can effectively engage and inspire, the higher the organization’s productive power. People who devote more of their individual discretionary energy to the company’s success are more productive and make those around them more productive. But employee engagement requires more than colorful posters in the headquarters lobby, free gourmet coffee in the cafeteria, or volleyball over lunch. It requires careful management—from the top—and dedication to creating an environment where people will bring more of their whole selves to work. Also, as we’ve argued throughout this chapter, pursuing engagement alone is aiming too low. The best-performing companies manage to inspire a large percentage of their workforce. They expect their leaders to deliver both performance and inspiration. All this enables these companies to make the utmost of their human capital.

FOUR WAYS TO BUILD INSPIRATION AND ENGAGEMENT

1. Help employees build greater connection between their daily work and the company’s customer or social mission. Ask whether you are running a company where employees want to “back in or head in” in the morning.
2. Develop a humane philosophy and implement it. Translate it into an employee value proposition, operating model, working environment, and ways of working that address the entire set of engagement drivers. Determine the right degree of emphasis for each element based on your strategy, business model, and culture.
3. Create a high-autonomy organization without losing the benefits of scalability and repeatability. Strike the optimal balance between autonomy and organizational needs. Ask whether you have actively eliminated needless bureaucracy, micromanaging, and overly prescriptive rule books.
4. Invest in inspirational leadership development. That’s how you create leaders who are skilled both at delivering exceptional results and inspiring employees.