Business Energetix

12: The Elements of Great Managing

by Rodd Wagner & James K. Harter, Ph.D. (2006)

Reviewed by Marti Benjamin, MBA, PPC

The world's largest database of employee opinion and business performance is held by the Gallup organization and summarized in this book, the successor to Gallup's first book about management titled, First, Break All the Rules. Added to this database of 10 million interviews, the author's insights from brain-imaging studies, genetics, psychology, behavioral game theory and other scientific disciplines to describe the route to employee engagement.

If the company's goal is to optimize their profitability, employee engagement is important. "The evidence is clear that the creation and maintenance of high employee engagement, as one of the few determinants of profitability largely within a company's control, is one of the most crucial imperatives of any successful organization. It introduces a powerful edge impossible to replicate through any other channel." (Page xvi) (Emphasis added) The level of employee engagement is something each business can truly do something about, whereas overall market conditions and the cost of supplies and other resources may be subject to factors beyond the business' control.

Gallup has identified 12 Elements of great managing and tied those findings back to the financial performance of the company. When employees agree that these elements are present in their current position, the company shows financial performance in the upper range for companies of similar size and/or industry. Each element is described briefly below; a complete examination of the correlation between the employee reports of each of the 12 elements and the financial performance of the company is beyond the scope of this review but I hope this summary will whet your appetite to pick up this book and read it carefully. You may be surprised by the findings.

The First Element: Knowing What's Expected

That seems almost too obvious to be necessary, but it turns out that only about half of the employees in the Gallup international database were able to report that they "strongly agree" that they know what is expected of them. This goes well beyond a job description; it is an understanding of how each person's work fits together to form a cohesive whole and how these expectations change when circumstances change. (Page 4) In highly reliable organizations, each individual understands what is expected individually and how that piece of work contributes to the overall outcome for the team.

Even the stellar individual performer may fall short on this element if he doesn't understand that his work impacts everyone else in the operation. The familiarity and predictability that comes from teams performing together increases the outcome for all.

This first element of great managing shifts the focus from executing a process to achieving an outcome. (Page 12)

The Second Element: Materials and Equipment

"When employees lack the means to do their work well, frustration with their inability quickly follows, as does anger with the company for placing the worker in such a difficult spot." (Page 17) When employees believe that the company values them enough to provide the right equipment, it serves as a powerful psychological motivator. When employees feel supported, they demonstrate their engagement by finding ways to increase productivity, which leads directly to a stronger financial performance.

"Of the 12 Elements, whether a person has the materials and equipment needed to do his work well is the strongest indicator of job stress." (Page 23) Employees want to do their jobs well and when they are stressed, they are less productive and they carry that stress from work to home and the community.

Less than one-third of employees in the Gallup database strongly agree that they have the materials and equipment they need to do their work well. (Page 24)

The Third Element: The Opportunity to Do What I Do Best

"Matching a person to the right job, or a job to the right person, is one of the most complicated responsibilities any manager will face. As a consequence, no other element of managing has as much depth as the Third." (Page 34) Successful managers begin by asking, "Who would excel in this assignment?" (Page 34)

Research indicates that each person is a unique set of talents who will succeed to the extent these essential traits are employed. (Page 36) Contrary to the behaviorist approach that says every person can learn to do almost any task, the Gallup research supports the theory that individual brains are just as variable as bodies and that each is suited to some specific tasks and processes more than others. These unique themes of talent are consistent over time and are not phases of growth or maturity but enduring traits that are not molded by events and training.

"At work, these optimal situations are those in which the employee enjoys the work itself rather than enduring the job just to earn the pay or to gain the chance to be promoted at a better, more fulfilling job." (Page 40) This approach allows the employee to focus on the outcome and to apply his own style to accomplishing that outcome.

Managers who produce outstanding results tend to be those who spend a disproportionate amount of time with their high producers, matching their talents to the tasks and emphasizing their individual strengths.

The Fourth Element: Recognition and Praise

"Employees who do not feel adequately recognized are twice as likely to say they will leave their company in the next year...Variation in the Fourth Element is responsible for 10-20 percent differences in productivity and revenue, and thousands of loyal customers to most large organizations." (Page 52) Wagner and Hartner go one to identify this element as, "...one of the greatest lost opportunities in the business world today." (Emphasis added)

In the highest performing teams, problems are discussed and criticism is shared, always in the larger context of reassurance and appreciation. Astute managers, skilled in this element of managing, use techniques such as basing praise on objective examples and giving public praise to the entire team, while private conversations include praise for the individual.

The Fifth Element: Someone At Work Cares About Me as a Person

All organizations—companies, not-for-profits, neighborhood associations—depend on the psychological commitment of their employees or members. This element of management is about developing a tribe, "...a cohesive, cooperative, self-sacrificing, motivated crew..." (Page 65) This affiliation with others and the need to know that we are cared about is at the very core of our human nature and the effective manager understands that as the leader of the tribe, their ability to let others know they are cared about as a person is important for building that crew.

"In high-turnover companies, workgroups in the lowest quarter of the ‘someone at work cares about me' statement average 22 percent higher turnover than their top-quartile counterparts." (Page 67)

The Sixth Element: Someone at Work Encourages My Development

If a manager wants to encourage the use of new practices within the department or company, there is no faster way to do that than to model the practices, frequently and consistently. The authors contend that today's employees expect to have a mentor, someone who will encourage their personal development, model the behaviors that build a strong employee and team, and ensure that the employee successfully navigates their course.

"Invest in the relationship, do the right thing, and the results will ultimately follow." (Page 89)

This element of management was shown in the Gallup research to be the most sensitive of the 12.

The Seventh Element: My Opinions Seem to Count

"Although there is always a need for expertly designed systems that help maximize production, nearly every system depends to a huge degree on the motivation of the people who run it. That motivation, it turns out, requires workers strongly agree that, 'At work, my opinions seem to count.'" (Page 96) Some management theory has suggested in the past that employees were motivated primarily by external rewards, such as incentive pay or merit increases, but the Gallup data suggests otherwise. It seems that we all have a greater sense of responsibility for those things over which we have a say.

When employees feel that their opinions count, the Gallup research showed a positive impact on accident reduction, customer experience, productivity, employee retention and safety, all of which created a 6-percent improvement in profitability. (Page 101)

The Eighth Element: A Connection With the Mission of the Company

While this element seems extraneous to the job itself or to the employee's compensation, the emotional need to see a connection between the work at hand and the larger purpose of the company drives both productivity and profitability. "Mission-driven workgroups suffer 30 to 50 percent fewer accidents, and have 15 to 30 percent lower turnover." (Page 111)

"...quantitative studies are finding that the motivating power of salary, commissions, and even awards is limited...the general population is realizing that above a minimum level necessary for survival, money adds little to their subjective well-being." (Page 114) Rather, the belief that one is contributing to something meaningful provides greater motivation.

The meaningfulness of a job has almost nothing to do with the actual work involved. "There are conditions that make the seemingly most important roles trivial and conditions that make ostensibly awful work rewarding." (Page 117)

The surprise for many managers in this element is that the connection is not so much about the larger mission of the company or the overall culture; the connection is with the immediate manager. The inspiring leader/owner/executive has less direct impact on the employee that the first-line manager. The employee closest to the customer receives inspiration from the manager closest to him/her.

The Ninth Element: Coworkers Committed to Doing Quality Work

"Few factors are more corrosive to teamwork than the employee who skates through life taking advantage of the much harder work of others...one of the most discouraging situations for any team: allowing some people to shoulder less of the burden while requiring the others to carry the bulk of the load." (Page 128)

People will generally be cooperative when they are met with cooperation. When accountability is lacking, some will begin to coast and resentment builds among those who originally were committed to the workgroups goals. If there are consequences for slacking, the whole team performs better because the fairness of the system is valued and appreciated. The group will most likely require the manager's involvement; self-policing this dynamic seldom works.

"...people who feel part of a solidly committed team are routinely safer, better with customers, less likely to quit, and more productive." (Page 130)

The Tenth Element: A Best Friend at Work

This is the most controversial of the 12 elements of managing. The authors describe how some clients have pressed the Gallup organization to drop this question from their employee surveys because it is confusing to the top management. "Gallup itself would have dropped the statement if not for one stubborn fact: It predicts performance. Something about a deep sense of affiliation with the people in an employee's team drives him to do positive things for the business he otherwise would not do." (Page 140) This is a "scientifically salient ingredient" in obtaining profitability, safety, inventory control and the emotional connection and loyalty of customers (Emphasis added).

This element is evidence of human nature winning over the existence of policy. People will fulfill their social needs, regardless of the company policy and smart companies will harness the social capital rather than fight it.

The reality of our fast-paced and busy lives today is that work has become a major source of fulfillment of social needs, while we have less time for clubs, organizations and informal socializing. People generally still have their closest friends outside of work, while the workplace provides a place for building a cohesive social network. The key component is to ensure that it is a network with an expectation of high performance. "The best managers encourage friendships in the workplace by creating the conditions under which such relationships thrive." (Page 147)

The Eleventh Element: Talking About Progress

When managers provide regular and individualized feedback for their employees, the impact is more powerful and productive than saving it all up for an annual performance review process. The ongoing feedback process, tailored to the individual employee's performance, serves as a mirror to see where they are doing well and where they are failing to meet the standard. Once educated about the difference, most employees will improve performance to meet the standard.

"Supervisors need to consider the type of information that motivates a given employee, and realize that it may be different from the types that motivate others on the team or the way the manager herself prefers to learn about how she is doing." (Page 159)

"Most important to the employee and to the business is that he understands how he is doing, how it is being perceived, and where his work is leading." (Page 160)

The Twelfth Element: Opportunities to Learn and Grow

The opportunity to grow and develop is what changes a job into a career and an employee from a worker to a contributor. The employee and manager must chart this course together so they are both aware of the goals and the opportunities that present themselves for further learning. When the manager is well informed about the employee's goals and aspirations, he/she can match the right opportunities to the employee, for the benefit of both the individual employee and the company at large.

This element of managing links very strongly to the company's customer engagement and profitability. Employees who feel their employer is committed to encouraging their growth and development create superior customer relationships, leading to higher profits.

"While people differ dramatically in their drive to advance in a career, the need for progress seems to be nearly universal." (Page 177)

An Element Unto Itself: The Problem of Pay

Gallup found that pay, as an element of managing, did not behave as the other 12. "...an employee's response to each of the 12 Elements predicts how he will perform in the future, his answer to a pay question is so bundled up in psychological complexities that asking it usually causes more problems than it solves." (Page 186)

The first step in getting this element right is understanding that it is an emotional element, layered with status, envy and organizational politics. The following briefly summarizes Gallup's findings about pay.

"Higher pay does not guarantee greater engagement.
Good and bad employees are equally likely to think they deserve a raise.
Some incentives can backfire, decreasing employee motivation.
Money without meaning is not enough compensation.
Pay is more about status than about paying the bills.
Pay comparisons among employees spark intense emotions.
In most countries and companies, people consider their pay a private mater.
While individual pay usually should not be public, compensation criteria should be.
Compensation works in concert with each of the 12 Elements.
Most employees who feel generously compensated repay the gesture." (Page 187-196)