52: The Value of Engaged Employees (Part 2) with Les Smolin
The second conversation in our four-part series: this time with Les Smolin, a Group Chairman of Vistage International, and host of Executive Leaders Radio. Listen to Thrive by Design on iTunes, Spotify, Stitcher, and Google Play.
Don [00:01:47] Welcome. I’m your host, Don Rheem, CEO of E3 Solutions today. The next conversation in our new series with industry leaders about the challenges of employee engagement. I’m delighted to welcome Les Smolin, a group chairman of Vistage International, the world’s leading organization for CEOs. He is also the founder and CEO of the Executive Leadership Forum, which specializes in leadership development and consulting mostly for middle market companies. He is a prominent broadcaster, the host of Executive Leaders Radio, a business program heard on multiple stations across the country. The show features key interviews with prominent industry leaders. Welcome, Les – Thanks for being here today.
Les Smolin [00:02:32] Thanks, Don. It’s a pleasure to be on the show.
Don [00:02:35] So first, we’ve had you on before and it was a really enjoyable conversation, but some of the folks listening today may not be familiar with Vistage and your role as a chair in the Vistage community. Can you just give us the elevator speech on Vistage in your role?
Les Smolin [00:02:51] Vistage is what I consider to be the most trusted global executive leadership development company for small and mid-sized businesses. It’s got a global learning platform and strategic partnerships kind of position it to prepare our members to successfully compete in what you and I would call an increasingly more complex business environment. You know my role, I run several groups in the D.C. Washington, D.C. metro area and then I also engage nationally and internationally with my colleagues.
Don [00:03:20] So Les, how long have you been working with CEOs in this capacity?
Les Smolin [00:03:25] In my role with Vistage, I’ve been doing this for over 25 years now.
Don [00:03:28] And I wanted folks to hear that. That’s one of the key reasons why I wanted to have you on was because your level of experience working with CEOs is extraordinary. And you’ve seen just about everything. And I have had the pleasure of speaking to your Vistage groups about employee engagement. Tell us, why is employee engagement important to your CEOs?
Les Smolin [00:03:48] That’s a great question. And I don’t think it’s as obvious as as people would think it is if you’re running a business. Everybody knows that it’s fraught with all kinds of landmines. It’s not as easy as it once was, even 20, 30, 40 years ago. The world’s a lot more complex. And the cost is, I think of that, of making a bad decision is expensive. So if you try and go it alone, it’s not the answer, nor can you be expected to know the answers yourself. So for me, when I think about employee engagement, it’s an imperative need to engage them. And it’s not just what they’re capable of, but also what potentially they can do to help you successfully compete in whatever companies they operate. The thing that’s a competitive advantage, it’s unleashing what really is the potential of people. And I don’t think a lot of small and mid-sized businesses. Heck, I don’t I don’t care how big or small the company is, they don’t really engage their employees in a way in which they maximize what is possible in order to be effective in their markets, less in these markets.
Don [00:04:48] Should you talk about the growing complexity of being a leader? No question. With combination of metrics and the application of science and competitive analytics. But also one of the big pressures right now and I don’t want to date the broadcast, but we are recording at the end of 2019 and we just received the numbers from the U.S. Department of Labor yesterday. We added another two hundred sixty six thousand employees to the workforce last month. We’re now at the lowest unemployment rate since the Vietnam War. The unemployment rate is down at three point five percent, which is considered full employment. How much pressure does this put on leaders when there’s no more talent pool? There’s not even a talent puddle in America today. We’re drilling for talent. How does employee engagement fit in and why is it relevant to that pressure?
Les Smolin [00:05:33] You know, it’s a great question. And I’ve thought a lot about it, especially since I’ve been listening to you a lot and every other channel or media that you can listen to these days where the reference to the talent pool is not getting any bigger. And to me, it doesn’t matter whether the talent pool is shrinking or is growing as the fact that we’ve got talent already and we’re really not getting out of them what we need to. And it may be simple or it may be a whole lot more complex, so large or small, growing or shrinking. I think the idea is we’re not engaging employees the way we need to in order to get the most out of that. We’re paying them for it, but we’re not getting what we really can from them.
Don [00:06:16] What is the role of CEOs here? So you’ve said you’ve seen dozens and dozens of CEOs over the over the years in your role as a leader in Vistage. What seems to be some of the key differences from the employees that get this and act and those that just think the world is going to operate like it always has?
Les Smolin [00:06:32] I think among the leaders, you said it a little earlier. I think folks think this is really hard. They’re not really sure how to grab a hold of it. So they’ll listen to someone like you and talk about it. They’ll look at the data that you share with them. And yet they’re not sure what to do with it. So on one hand, you have those people who I think their hearts are in it, but they’re not sure exactly how to get started. On the other hand, I think there are those that are in it, but they’re not sure exactly if it’s the right stuff that they’re working on. And so it’s easy to get distracted from whatever the shiny object is that kind of appears in front of you. And so they kind of put it to the side because they think of it as something soft. But in fact, it’s not. It’s the hard stuff. But it’s also there’s data around it, as you well know. Yes. That is the evidence that if only they could see that what the possibilities were, then they would probably grab it as hard as they grab anything else and make it the top initiative in anything they do.
Don [00:07:29] There’s something about the fact that when I look at organizations and how they use science, they use it just about everything they do. They’re using it in supply chain. They’re using it in finances. They’re doing LEIGH, they’re doing Six Sigma. They’re doing everything they can. But when it comes to the science of what drives human behavior, most organizations seem about two decades behind that science. What is it from your perspective that makes the science of human behavior or focusing on the conditions where people thrive that is so hard for CEOs? Is it because it’s new, it’s mysterious. What’s going on?
Les Smolin [00:08:04] You know, I wish I had the magic Bowl that would answer the question. In my experience, I think maybe there’s a couple of things here. As you mentioned, the science relatively new. So you have a lot of managers that have been around for 20, 30, 40 years. That’s science to them as new and emerging, even though it’s 20 years in the making. So far, we’re beginning to truly understand how science is driving the science behind behavior. So I think that’s one thing. I think the second thing is this. We all get caught up in old habits. So when we get introduced to things, if we’re exposed to things, if we’re in an environment where we’re constantly being exposed to new science, if you will, I think we’re more inclined to want to gravitate towards it. But we still need something to take us the next step. The thing that puts traction around, the thing that gives us the ability to act on it. So I think those two things in particular might actually make it more difficult for people who otherwise would want to work with this and to take the science and put it to work.
Don [00:09:05] You know, and I should say for listeners that this is one of the first podcasts you’re listening to. Ed E3 Solutions, everything we do is based on empirically validated research around what drives human behavior. And when I wrote the book Thrive by Design – the Neuroscience that Drives High Performance Cultures, my goal and objective was to bring this science of what we now know, the conditions where human beings thrive and we know it down literally to the cellular level in the brain. And all we need and want leaders to do is to replicate these conditions that the brain essentially has been searching for since birth and start to create it inside the workplace. And when leaders do that, employees thrive. That is, they operate at their best. And the beautiful part of this is engaged. Employees are not only more productive and innovative and collaborative and happier, but they’re helping the organization be more profitable and they feel better at the same time. It’s a it’s a win win for both.
Don [00:10:04] So Les you’ve seen organizations with great leaders where engagement is high. What do you see as the differences there?
[00:10:10] I think the thing that I see more often is the folks who are able to really grasp the idea of what it means to have an engaged workforce, are able to translate it into specific kinds of work projects, tasks, if you will. It’s not just things you do to enhance the relationship with people. Its how you can translate that into, well, specifically what your workplace is it costing us not to actually do more. If we were to engage more with the workforce, to get them to produce results, if you will, that are going to translate into the bottom line. So I’ve seen that actually in real time, both in working with you and then in the after effects, if you will, when you’ve come and talk to different groups that I’ve been with and other clients that I’ve invited you in to talk to. We’ve seen it. You know, the data is right in front of the CFO sitting in the room and the CFO says, oh, my God, that’s causing us about a million bucks. And it just stayed right there. Nothing would happen. So what I’ve interestingly seen as the follow up from there. So the follow up sounds like this. How do we take this translated into a specific project with the beginning and that if we’re successful in completing this project, will produce those kinds of outcomes. And that’s been the the linchpin. It’s the translation of that into something tangible that they could actually work on as opposed to some amorphous thing that they don’t know where to start, where to grab it and what will come from it.
Don [00:11:41] Yeah. And that’s one of the the reasons, of course, that we measure engagement. At E3, we. We measure clients in their first year as a baseline, and then we measure every subsequent year to show the growth as they use our training and our manager resource center dot com Web site for their managers are average. And I don’t know if I told you this last, but our average improvement in employee engagement across all of our companies in just the first year alone is a 23 percent improvement in the number of employees who are engaged. And that translates into higher productivity, higher profitability, higher levels of retention, fewer accidents. It’s really remarkable when when people start to see what happens at this journey of focusing on engagement, measuring it as you go. But when we do measure engagement, we always find these disengaged employees. We have two categories of them, the actively disengaged, which are just the hardened people that just aren’t doing the bare minimum. And then we have another category we call the somewhat disengaged. From your perspective, what is the impact of these disengaged employees in organizations?
Les Smolin [00:12:46] Well, you kind of touched on it. I don’t know what your experience has been, but my experience has been this. Everyone out there is competing. Nobody’s getting an easy or free ride and what they do. So when we talk about not only the talent pool not growing anymore, we also talk about the world they’re involved in as a whole, lot more competitive. And so they’re looking for an edge, if you will. And it’s not just a specific age, but the things they can do that not only differentiate them, but engage their workforce more to get more out of them. And I think there’s just so far you go with tools and equipment, if you will, that make us more productive. And I think you actually have to get into what is it we’re missing about the human being that’s in front of me that we can engage them in a whole different way. .
Don [00:13:34] Yeah. You are so right. And, you know, I come from a manufacturing and industrial family. My grandfather was the founder of Rheem Manufacturing, the largest manufacturer water heaters in the world. And back in the days when he was building that into a fortune, 200 company employees were viewed as interchangeable parts in a machine. This is the period when economies started referring to people as human capital. If a person wasn’t working out, you’d unplug them and plug in someone new. But in this market where talent is scarce, we have to hold on to the good people we have and work with those that aren’t great to see if we can create the conditions where they can do better. We can’t just toss people out anymore. Retention is a huge issue today. And I just get a sense from you, I mean, I’m telling our clients that their retention strategy is more important than their hiring strategy, because if you lose people, it’s harder and harder to replace them. People of equal talent and the single largest source of turnover is managers. Employees join companies. They quit managers, 85 percent of employees who voluntarily terminate stays. One of the primary reasons they quit was their relationship with their immediate manager supervisor, because they’re people, they’re human beings in a work environment. And when they’re working with someone who’s toxic, it’s very hard to get the best out of them. What are you saying?
Les Smolin [00:14:54] Yeah, it’s interesting you said it that way. And I’m just going to play off a word that you used. I think the way we’ve looked at it in the past has kind of taken a step backwards and it’s not evolved with the current language. So let’s talk about onboarding versus retention and let’s insert something in the middle there. Often in the past and even today, it’s still called developing people and that’s just making sure they have the new skills and certifications and the like that they can not only build a resume up, but the assumption is the employer benefits from that as well. And I think they do in many cases. But I think the word that we’re missing here is the engagement piece. So there is an engagement strategy, right. Just like you said, there’s a retention strategy. And just like we talk about a recruitment strategy. Whereas the engagement strategy and there is the opportunity, I think that that’s being missed because we don’t think of it as a way to engage us. The fact that we have them on board, we think that’s it and we’ll just manage them, if you will, through the rest of their time with our companies. And I think it’s the fact that we need to engage them differently. We need to have a more cohesive strategy around that. And that’s where science and the art of management, if you will, will meet up. And we’ll do things that are far more, at least based on what we know and are learning about what the brain tells us is really affecting people’s behaviors, which I think intuitively a lot of people know. But the science is never put to it. And that’s what I see you doing is reminding us of that, then giving us specifics around how you can do that less.
Don [00:16:23] I really appreciate your your time today as a as a group chairman of Vistage International and the host of Executive Leaders Radio. Thank you so much for sharing these insights with us today.
Les Smolin [00:16:35] My pleasure, Don. Always.
Don [00:16:43] That’s it for today. I’m your host, Don Rheem. Thank you for listening. Next week, I’ll be talking with Kate Donahue, president and CEO of the Hanford Research Group. Kate is committed to creating a work environment which leverages the experiences and expertise of her staff to encourage both personal and professional development. Join us again for the next Thrive by Design.
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