One of the keys to greater employee engagement is improved line of sight. This concept has to do with the ability of a person working within a business to see the relationship between certain interdependent elements that drive the company’s success and how they relate to his or her role and rewards. When individuals come to work every day with a clear view of how those components are connected—and can relate them to their personal vision and motivation—they find meaning in their work. Engagement follows.
CEOs are responsible for creating line of sight. They certainly need the assistance of executive and managerial surrogates to help communicate and reinforce each of its components, but the overarching messaging has to come from the chief executive. That requires the primary business leader to have clarity in his own mind about how certain engagement factors are nurtured and a commitment to a communication effort that consistently and relentlessly reinforces the connection between those elements.
So, what are the components of line of sight and how do you improve each in your business? There are six. Let’s define each and talk about what you can do to magnify their impact.
1. Articulate a Clear Vision. Too many enterprise leaders take for granted what their employees understand about the future of their company and why it matters. Articulating a vision of the prospective business is not simply a matter of communicating next year’s sales and profit goals—or even those of the next three, five or 10 years. A vision can only be considered clear once all employees can explain why the company is in business, what value it creates in peoples’ lives, the standards and principles that guide the cultural norms the organization is committed to and what it will mean to customers, employees, communities and even the world if the business succeeds in fulfilling its purpose—and there is consistency in how employees explain that vision.
This idea is what Simon Sinek described as “Start with Why.” When employees have embraced a clear vision of the future company as just described, revenue and profit goals have context and are drenched in meaning and purpose. “If we meet these targets, here’s the impact we’ll be able to have and what it will mean to you. Your role is critical because it impacts our ability to (fill in the blank).” The significance of every other engagement element depends upon a clear and compelling company vision.
2. Define and Reinforce the Business Model. The company’s business model describes how the company produces, sustains and grows revenue. There are virtuous cycles that perpetuate the revenue cycle of the model. A key area of focus for the CEO should be to identify the leverage points in those cycles—the performance areas that provide potential for growth—and what roles and outcomes need to be fulfilled to obtain that leverage. The business leader needs to then be able to communicate those roles and results to the employees and teams responsible for them in a way that makes those people want to assume stewardship over their achievement. This can only happen when a chief executive can reinforce the connection between the business model and the company vision.
Few employees can explain what the business model of their company is—no less what their role in it is. If that’s the case, it’s the failure of company leadership not the workforce. Getting people to understand the revenue engine of the company and how they impact it requires consistent, clear communication in a variety of contexts and settings.
3. Define and Reinforce the Business Strategy. Whereas a company’s business model describes how the enterprise drives revenue, its business strategy expresses how it will compete in the marketplace with that model. The success of a business strategy relies upon the development of a performance culture which is the product of a performance framework a CEO defines. The business strategy answers certain key questions that define how the company will succeed with its product or service. “What is our core value proposition?” “What is our competitive advantage?” “What differentiates our offering from any other product, service or experience in the marketplace?” “What kind of talent do we have to bring into our business if we’re going win?” “What is our strategy for recruiting that talent?” And so on.
The culture of an organization determines whether that business will have a competitive advantage or disadvantage. When chief executives are able to grow and sustain a culture of confidence—one that “wins” consistently and is a magnet for premier talent—they are able to perpetuate success. That kind of repetitive high performance forges its own engagement virtuous cycle. The factors driving success become so deeply embedded in the culture that a kind of “flywheel effect” kicks in, as Jim Collins described in his book, Good to Great. The CEOs role is to make sure everyone is clear on the business strategy that makes that kind of sustained winning possible.
4. Recruit to a Role—not to a Position—and then Define Success. All workforce data indicate that we are entering a period of significant scarcity when it comes to recruiting highly skilled talent. And the kind of skilled talent organizations need is catalysts; people who can come in and positively impact the growth trajectory of the business. Catalysts are entrepreneurial-oriented individuals who either want to use the resources of a winning organization to create something meaningful and rewarding or start their own business. These people aren’t looking to fill a position on your organizational chart. Instead they want to fulfill a role that will positively impact the future of your business. They are strategic leaders with unique abilities who want (and you need) to spend all of their time focused on issues that have strategic impact—and ferret off to others tasks that are necessary but not strategy- related. Because of the increasing scarcity of this kind of employee, companies will find themselves in heavy competition for their services—making the success and reinforcement of all the elements discussed here all the more important.
The responsibility of the chief executive is to clearly define these kind of high impact roles in the organization and effectively communicate their relationship to the vision, business model and business strategy of the company. This needs to cascade down through the ranks so everyone in the organization knows what his or her role is and how success is defined for that role. You can have a great vision and a stellar business model and strategy, but if your people just think they’re being paid to carry out a position instead of a role, there will be a shortage of performance. This is because line of sight has been short-circuited at the most rudimentary level.
5. Preach Productivity Profit. For full ownership of results to take root in an organization, employees must come to understand how value creation is defined for the business that employs them. Defining and then teaching employees about productivity profit is a way of doing that. Productivity profit is the net operating income that remains after assessing a capital “charge” to account for the return shareholder’s expect on their capital investment. It’s a way of isolating the profits attributable to people at work in the business as opposed to owner capital at work.
CEOs need to preach value creation and productivity profit at every turn. They need to effectively communicate how these two factors are keys to the company becoming a wealth multiplier, where all stakeholders benefit from the growth multiple the business is able to sustain. When productivity profit increases, it tells the company that everyone is winning—customers, shareholders and employees. Once a company is able to clearly define and communicate what value creation means, it makes the formation and reinforcement of an effective pay philosophy natural and easy. The company shares value with those who help create it. The greater the value creation, the greater the wealth sharing that can occur—and faster the company’s vision can be realized.
6. Build a Financial Partnership with Employees. The natural culmination of forging an effective link between the elements just described is defining how people will be rewarded for having success in their roles. Value creation should lead to value sharing. And all employee earnings potential should be tied to the productivity profit of the company and defined in the organization’s compensation philosophy statement. This allows CEOs to codify a financial partnership with key recruits and others in a way that seems fair and compelling. When employees are able to embrace the company vision, know how the business produces revenue and competes in the marketplace, understand their role and how success is defined for that role, see what it means to create value and why productivity profit matters, and are given a rewards package that reflects a wealth multiplier philosophy regarding pay, then they feel free to engage to a fuller extent.
By framing compensation as a financial partnership, a chief executive is building and communicating continuity. The rewards approach conveys organizational and operational integrity. Employees sense there is a consistency to every element of their experience in the company as opposed to dissonance in one aspect or another. That consistency breeds trust which accelerates performance and lubricates the engines of success the company needs to fulfill its vision.
If you lead a business and want to improve engagement, focus on these six elements. As you pay the price to do so, you will unlock the shackles that have been forestalling your growth and the performance culture to which you aspire will reveal itself.