Tuesday, February 19, 2013

Increasing the 'meaning quotient' of work - McKinsey Quarterly - Organization - Change Management

McKinsey Quarterly:

Through a few simple techniques, executives can boost workplace “MQ” and inspire employees to perform at their peak.

Musicians talk about being “in the groove,” sportsmen about being “in the zone.” Can employees in the workplace experience similar performance peaks and, if so, what can top management do to encourage the mental state that brings them about?
... When we ask leaders about the ingredient they think is most often missing for them and for their colleagues ... they almost invariably signal the same thing: a strong sense of meaning. By “meaning,” we and they imply a feeling that what’s happening really matters, that what’s being done has not been done before or that it will make a difference to others.
... Indeed, two contributions to McKinsey Quarterly1 over the past year have highlighted this theme. ...
Meaning and performance
Flow [psychology]
Flow [psychology] (Photo credit: Jordanhill School D&T Dept)
The mental state that gives rise to great performance ... has been described in different ways. The psychologist Mihàly Csìkszentmihàlyi ... observed that people fully employing their core capabilities to meet a goal or challenge created what he called “flow.” ... [He] found that individuals who frequently experienced it were more productive and derived greater satisfaction from their work than those who didn’t. They set goals for themselves to increase their capabilities, thereby tapping into a seemingly limitless well of energy. And they expressed a willingness to repeat those activities in which they achieved flow even if they were not being paid to do so.
alternate logo 1998–present
alternate logo 1998–present (Photo credit: Wikipedia)
Athletes describe the same feeling as being in the zone. Bill Russell, a key player for the Boston Celtics ... put it thus: “When it happened, I could feel my play rise to a new level. . . . It would surround not only me and the other Celtics, but also the players on the other team. . . . At that special level, all sorts of odd things happened.  . . . I’d be putting out the maximum effort . . . and yet I never felt the pain.”2
Flow sounds great in theory, but few business leaders have mastered the skill of generating it reliably in the workplace. An easy first step is to consider what creates flow in your own work situation... . In this exercise, individuals initially think about their own personal peak performance with a team, ... Then they pinpoint the conditions that made this level of performance possible: ...
The ... answers ... fall into three categories. The first set ... are what one might term rational elements of a flow experience or, ... its intellectual quotient (IQ). When the IQ of a work environment is low, the energy employees bring to the workplace is misdirected and often conflicting.
Another set of answers includes ... a baseline of trust and respect, constructive conflict, a sense of humor, a general feeling that “we’re in this together,” and the corresponding ability to collaborate effectively. These create ... to borrow from the writings of Daniel Goleman and others, an environment with a high emotional quotient (EQ). When the EQ of a workplace is lacking, employee energy dissipates in the form of office politics, ego management, and passive-aggressive avoidance of tough issues.
While IQ and EQ are absolutely necessary to create the conditions for peak performance, they are far from sufficient. ... This third one describes the peak-performance experience as involving high stakes; excitement; a challenge; and something that the individual feels matters, will make a difference, and hasn’t been done before. We describe this third category as the meaning quotient (MQ) of work. When a business environment’s MQ is low, employees put less energy into their work and see it as “just a job” that gives them little more than a paycheck.
The opportunity cost of the missing meaning is enormous. When we ask executives ... how much more productive they were at their peak than they were on average, ... the most common ... is an increase of five times. Most report that they and their employees are in the zone at work less than 10 percent of the time, ... If employees working in a high-IQ, high-EQ, and high-MQ environment are five times more productive ..., consider what even a ... 20-percentage-point increase in peak time would yield in overall workplace productivity—it would almost double....
What to do differently
Business leaders, ... are striving hard to find the missing MQ ingredients so they can improve motivation and workforce productivity. ...[A] survey (conducted by The Conference Board and McKinsey) of more than 500 US-based HR executives identified employee engagement as one of the top five critical human-capital priorities facing organizations.3
... Gary Hamel urges modern managers to see themselves as “entrepreneurs of meaning.” In The Progress Principle, Harvard Business School professor Teresa Amabile and her coauthor Steve Kramer present rigorous field research highlighting the enormous benefits that a sense of forward momentum can have for employees’ “inner work life.”4Csìkszentmihàlyi writes extensively about “the making of meaning” in his book Good Business.5 ...
In McKinsey’s research, we’ve uncovered a set of specific, actionable techniques underpinned both by experience and a significant body of social-science work. The full tool kit can be found in Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage.6 The three examples described here are not only among the most counterintuitive ... but also the most powerful.
Strategy #1: Tell five stories at once
We typically see organizational leaders tell two types of stories to inspire their teams. The first, the turnaround story, runs along the lines of “We’re performing below industry standard and must change dramatically to survive—incremental change is not sufficient to attract investors to our underperforming company.” The second, the good-to-great story, goes something like this: “We are capable of far more, given our assets, market position, skills, and loyal staff, and can become the undisputed leader in our industry for the foreseeable future.”
The problem with both approaches is that the story centers on the company, ... Our research shows that four other sources give individuals a sense of meaning, including their ability to have an impact on
  • society—for example, making a better society, building the community, or stewarding resources
  • the customer—for instance, making life easier and providing a superior service or product
  • the working team—for instance, a sense of belonging, a caring environment, or working together efficiently and effectively
  • themselves—examples include personal development, a higher paycheck or bonus, and a sense of empowerment
Surveys of hundreds of thousands of employees show that the split in most companies ... is roughly equal. It appears that these five sources are a universal human phenomenon.
The implication for leaders seeking to create high-MQ environments is that ... [the] way to unleash MQ-related organizational energy is to tell all five stories at once.
A recent cost-reduction program at a large US financial-services company began with a rational-change story focused on the facts: expenses were growing faster than revenues. Three months into the program, it was clear that employee resistance was stymieing progress. The management team therefore worked together to recast the story to include elements related to society (more affordable housing), customers (increased simplicity and flexibility, fewer errors, more competitive prices), working teams (less duplication, more delegation, increased accountability, a faster pace), and individuals (bigger and more attractive jobs, a once-in-a-career opportunity to build turnaround skills, a great opportunity to “make your own” institution). The program was still what it was—a cost-reduction program—but the reasons it mattered were cast in far more meaningful terms.
Within a month, the share of employees reporting that they were motivated to drive the change program forward jumped to 57 percent, from 35 percent, according to the company’s employee-morale pulse surveys. The program went on to exceed initial expectations, raising efficiency by 10 percent in the first year.
Strategy #2: Let employees ‘write their own lottery ticket’
...[The] best meaning makers spend more time asking than telling.
In one of Daniel Kahneman’s famous experiments, researchers ran a lottery with a twist. Half of the participants were randomly assigned a lottery ticket. The remaining half were given a blank piece of paper and asked to write down any number they pleased. Just before drawing the winning number, the researchers offered to buy back the tickets from their holders. The question they wanted to answer was how much more would you have to pay people who “wrote their own number” than people who received a number randomly. The rational answer should be no difference at all, ... The actual answer? ... [Researchers] found they had to pay at least five times more to those who chose their own number.
This result reveals a truth about human nature: when we choose for ourselves, we are far more committed to the outcome—by a factor of at least five to one. ...
... David Farr, chairman and CEO of Emerson Electric, for example, is known for asking virtually everyone he encounters in the organization four questions: (1) how do you make a difference? (testing for alignment with the company’s direction); (2) what improvement idea are you working on? (emphasizing continuous improvement); (3) when did you last get coaching from your boss? (emphasizing the importance of people development); and (4) who is the enemy? (emphasizing the importance of “One Emerson” and no silos, as well as directing the staff’s energy toward the external threat). The motivational effect of this approach has been widely noted by Emerson employees.
Strategy #3: Use small, unexpected rewards to motivate
US author Upton Sinclair once wrote, “It is difficult to get a man to understand something when his salary depends upon his not understanding it.” The flip side, however, isn’t true. When business objectives are linked to compensation, the motivation to drive for results is rarely enhanced meaningfully.
... Most annual-compensation plans of executives are so full of key performance indicators that the weighting of any one objective becomes largely meaningless in the grand scheme of things. Furthermore, most compensation plans typically emphasize financial metrics ... beyond individual control. On top of that, most companies don’t have deep enough pockets to make compensation a significant driver of MQ in the workplace.
... Terry Burnham and Jay Phelan’s book, Mean Genes,7 describes an experiment in which 50 percent of a group of people using a photocopier found a dime in the coin-return slot. When all were asked to rate their satisfaction level, those who got the dime scored an average of 6.5 on a scale of 1 to 7, while those who didn’t scored just 5.6. The lesson here is that when we aren’t expecting a reward, even a small one can have a disproportionate effect on our state of mind. ...
At ANZ Bank, John McFarlane gave all employees a bottle of champagne for Christmas, with a card thanking them for their work on a major change program. The CEO of Wells Fargo, John Stumpf, ...[sends] out personal thank-you notes to all the employees ..., with specific messages related to the impact of their individual work. Indra Nooyi, CEO of PepsiCo, sends the spouses of her top team handwritten thank-you letters. ...
Some managers might dismiss these as token gestures—but employees often tell us that the resulting boost in motivation and in connection to the leader and the company can last for months if not years. As Sam Walton, founder of Wal-Mart Stores, put it, “Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They’re absolutely free—and worth a fortune.”
Of the three Qs that characterize a workplace likely to generate flow and inspire peak performance, we frequently hear from business leaders that MQ is the hardest to get right. Given the size of the prize for injecting meaning into people’s work lives, taking the time to implement strategies of the kind described here is surely among the most important investments a leader can make.

About the Authors
Susie Cranston is a senior expert in McKinsey’s San Francisco office, and Scott Keller is a director in the Southern California office.
1 See Teresa Amabile and Steven Kramer, “How leaders kill meaning at work,”, January 2012; and Cynthia A. Montgomery, “How strategists lead,”, July 2012.
2 William F. Russell, Second Wind: The Memoirs of an Opinionated Man, first edition, New York, NY: Random House, 1979.
3 See False Summit: The State of Human Capital 2012, October 2012, a joint report from The Conference Board and McKinsey.
4 See Teresa Amabile and Steven Kramer, The Progress Principle: Using Small Wins to Ignite Joy, Engagement, and Creativity at Work, first edition, Boston, MA: Harvard Business School Publishing, 2011.
5 See Mihàly Csìkszentmihàlyi, Good Business: Leadership, Flow, and the Making of Meaning, first edition, New York, NY: Viking, 2003.
6 Scott Keller and Colin Price, Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage, first edition, Hoboken, NJ: John Wiley & Sons, 2011.
7 Terry Burnham and Jay Phelan, Mean Genes: From Sex to Money to Food: Taming Our Primal Instincts, first edition, New York, NY: Perseus Publishing, 2000.

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