Category Archives: Employee Engagement

What Is the Future of HR—Business Partnership or Employee Engagement?


HR signI wrote last September about the relevance of HR in changing times. Recently, I’ve seen several articles on TLNT.com that caused me to again reflect on the future of HR.

Let’s start with a story from DisruptHR entitled “It’s Not Complicated. HR Is About the People,” dated June 20, 2018. That story presents a video by Andrea Butcher which argues that HR professionals should not necessarily become business partners, if doing so takes them away from focusing on the people. Focusing on the people drives business results, because people are what drive business results.

Then I read another DisruptHR story called “HR’s Job Should Be to Encourage Conflict,” dated June 13, 2018. In that piece, Amanda Ono says that the best employees want to learn and grow . . . and they will only do their best work if they disrupt the status quo. So HR should help them by encouraging conflict in the workplace that will change things. She proposes that HR

“Train people on what healthy conflict means. Train people on how to engage in healthy dialogue.”

This sounds like another way of emphasizing people in the organization, albeit emphasizing top talent that can influence change and improve results.

In another TLNT article, “You Can’t Build a Talent-Driven Organization Without HR,” May 3, 2018, Michelle M. Smith writes that HR is under increasing scrutiny for ineffective talent strategies and lack of a strong business perspective. The thrust of her article is that it is the responsibility of corporate leadership—not just of HR—to be focused on finding and developing top talent, but HR must support them. This, of course, is the gist of HR being a business partner.

“The CHRO [Chief Human Resources Officer] of a talent-driven organization must be a great business person, not just a great people person.”

So which is it? Should future HR leaders focus on the business or the people?

The truth is, you can’t do one without the other.

My heart is in employee relations and in developing a great place to work. But if I ignore the business needs of the organization, it will not be a great place to work. If I only focus on employee engagement, without engaging them in what the business requires, I will not be serving anyone well.

And so says Susan Gallagher, in “Fast Growth Means You Need to Pay Extra Attention to Culture,” June 19, 2018.  She writes:

“Culture is the most critical part of your talent strategy when guiding your employees through the stages of rapid company growth. Keeping your people connected to your company’s core values is essential before, after, and – importantly – during the growth period, which itself challenges your company’s beliefs and behavior.”

Although her focus is on growth, the importance of culture and employee engagement is true wherever a company is in the business cycle. Moreover, Ms. Gallagher says:

“Culture cannot be dictated from the top; it must be integrated into all levels of your management team and down through the rank and file.”

The title of this post—business partnership or employee engagement—doesn’t capture the complexity of the workplace. The right answer is . . . HR must focus on BOTH. It is HR’s role to help the organization’s leaders articulate the connection between employee engagement and business results.

As Susan Gallagher says:

“Put yourself in the shoes of different groups of employees and how they will be affected. Get granular and look at different constituencies of your workforce. . . . you want your people to be as invested in the change as you are and happy about making it happen.”

Now that sounds like a focus on employee engagement AND business partnership.

Which focus do you emphasize? Business partnership or employee engagement?

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Remembering September 11: Lessons in Crisis Management


National_Park_Service_9-11_Statue_of_Liberty_and_WTCI’ve written several posts about crisis management, so it surprised me to realize that in over five years of blogging, I’ve never written about my experience on September 11, 2011. I’ve barely mentioned that date at all, even though the heartbreaking day not only shook me personally but provided a huge opportunity for learning as an HR executive.

I lived and worked in the Central Time Zone at the time, an hour behind the East Coast. I was in an early meeting with other members of the Human Resources staff in my company that Tuesday morning. Shortly after we started the meeting, an administrative assistant came into the room to tell us that an airplane had struck the World Trade Center. We acknowledged the tragedy, but continued our meeting. Then a few minutes later, she reported that another plane had struck the other tower. At that point, it was clear that the collisions were intentional—the U.S. had been struck by terrorists. We stopped our meeting, and those of us on the company’s crisis management team, including myself, gathered to determine the impact on our company.

It might seem that a corporation a thousand miles away from the attacks should not have any issues, but our multinational company had locations around the U.S., including on the East Coast. We had employees traveling on business. We had thousands of employees throughout the nation concerned about family and friends near the affected sites. And everyone, of course, was fearful of another strike.

Through the course of that day, we worked on the following issues:

— We immediately began providing the best information we could to employees. For the first time ever, we allowed the intra-company communications monitors at each major location to broadcast national news, rather than static screens of company news. A few departments had televisions going all day long, but we wanted employees working in departments without televisions (i.e., most employees) to have ready access to information as well. Yes, productivity suffered, but it would have anyway, and making the information easily accessible was one way to show employees we cared about their concerns.

— Our Travel Department searched the travel records of all employees away on business and contacted them to determine if they were safe (they were). Because all flights in the U.S. were canceled for the next few days, we also started making alternative arrangements get those employees home. In many cases, we had to authorize one-way rental cars from the coasts to get people home. These were expensive trips, but we knew the most important thing was getting employees back to their families during this national crisis.

— We also assisted vendor and customer representatives on our sites to make arrangements to return to their homes also.

— We prepared a video message for our CEO to deliver to all employees. By midafternoon on September 11, our communications experts had recorded our CEO in a video that we put on our monitors and on the company intranet site. The CEO conveyed his sympathy to those inside and outside the company impacted by the catastrophe and said that he and other corporate officers were as devastated by the day’s events as everyone else. He also provided information on how we were handling the crisis — that the company had located all of our traveling employees and determined none had been on the downed planes and that we were working to bring the others home as quickly as possible.

— We brought in grief counselors to our major locations to conduct group sessions with employees who were emotionally distraught by the day’s news, and provided information on our Employee Assistance Program in case employees wanted more individualized counseling.

Our crisis management team continued these activities for several days, until the nation and its transportation system returned to normal. But, of course, nothing has been the same in the sixteen years since those awful events.

I learned that day the reality of the importance of communications during a crisis. It is one thing to read articles on crisis management, like this one. It is another thing to live it and to know that what you are doing is having an impact, for better or for worse, on the morale of your organization.

I learned it is important to not only communicate facts but empathy as well. Company leaders and managers must seek out and pass on accurate and timely information. But good leaders must also be emotionally congruent with others in their organization. This emotional support is critical, even though at the same time management is providing direction and channeling people’s energy toward productive activities. And leaders must recognize that sometimes the most important thing is to pause and acknowledge feelings before productive behaviors can resume.

A crisis can be an opportunity to bring an organization closer together, but only if it is managed well.

What lessons have you learned while handling a crisis?

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Three Turning Points in a Career


I recently came across something that an old mentor of mine once wrote me as I approached my 30th birthday in the mid-1980s:

“There are three turning points in your career you will go through:

“1. Wondering if you really like what you do, at about age 30.

“2. Mid-life crisis, at about age 40, when you have a strong desire to do something else, and have a sense of losing your youth and vitality, wondering why you haven’t done more and why you’re not at the top.

“3. The end of your career, which might come any time after about age 60, when you’re ready for retirement, want to do more with your life than work, but may have some regret that you haven’t achieved your goals.”

His words weren’t the most artful description of career stages I’ve read, but they had an impact on me, and I’ve had occasion to think about these turning points over the years. He described pivotal times that I did in fact experience in my career.

MP900341467We all go through our individual variations on these career stages. Our chronological age may vary some from what my mentor stated (in particular, retirement in today’s world can come much earlier or much later than age 60). The depth and severity of the emotional conflict each of us feels are likely to be different from person to person, and one turning point might hit one person harder, while someone else is impacted more by another turning point. Finally, how we choose to cope with each of these turning points will be as personal as each of us and our career paths are.

My mentor wrote this to me when I was approaching my 30th birthday and at turning point #1. At that time, he had passed turning point #2, and was beginning to think about #3. Now I’ve passed #3 myself.

In my case, I gutted my way through turning point #1. I stayed in the same career with the same company for another decade after my mentor and I discussed my disillusionment with where I was at that time. But at my #2 turning point, I switched careers, moving from law to Human Resources. And my #3 came when I was only 50—I quit the corporate world to turn to consulting and writing, which I expect to continue for many years into the future.

In my mentor’s case, he moved into management from an individual contributor role at his turning point #1. He changed careers and industries at #2, though remained in a corporate setting. At #3 he also left the corporate world and moved into a teaching position at a small college in a poor, rural community, which he continued to do until he turned 70, when he retired completely.

My mentor said one other thing to me in that letter he wrote long ago,

“Very few think about these things. They just go as far as they go.”

He encouraged me to really ponder what I wanted out of life at each turning point I faced. Perhaps that’s what started me on my journey of self-assessment.

How have you coped with turning points in your own career, and what helped you work your way through them? How have you mentored others facing turning points in their careers?

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Tearing Down the HR Silos


HR signI’ve worked in human resources for twenty years and was associated with professionals in the field for another fifteen. My involvement with HR dates back to the days when the function was called “Personnel.”

For the past quarter century, the profession has talked about the need to become more strategic and less siloed and about its desire to have “a seat at the table.” Yet there are still articles written on how to get HR out of its silo (see here and here).

Of course, the same is said of many other corporate support functions, including IT, Legal, and Public Relations. Every group wants a seat at the table, if only to insure its relevance. Although the plaint is true for all support functions, this post focuses on HR. How can HR become more strategic and less siloed?

Here are four suggestions:

1. Business Acumen — Both Financial and Specific

HR first needs to understand the impact of corporate policies and decisions on the bottom line. Every HR employee must be able to talk the business language of its business. Reading financial statements and budgets is a part of understanding the business, but only part.

Beyond familiarity with financial statements, HR employees also must understand the business drivers of their particular segment of the business. So, for example, if you support a production plant, you should know what drives productivity and quality. If you support a marketing group, you need to know the marketing cycle and critical events within it. If you support a law firm, you must understand both billable hours and alternative fee structures.

In other words, HR professionals need to worry about the same issues that your business partners worry about.

2. Communication and Engagement

Beyond understanding the business drivers, HR has to be prepared to help corporate leadership communicate with employees about the business. HR can offer expertise in employee engagement. But it is important for HR to focus on employee engagement from a business perspective, and not as social director or traffic cop.

The best way to increase employee engagement is to increase employee understanding of the business and of their role in it. HR should involve itself in educating employees about the business’s needs both today and in the future. HR provides the most value when it helps to shape the story that leaders tell in ways that employees can understand and internalize.

3. Collaboration Across the Company

HR can’t be the division that always says “no.” Along with employment lawyers, HR does have particular expertise in employment laws and regulations, which impact workforce management in every respect from hiring to compensation to firing. Sometimes those laws and regulations suggest that managers shouldn’t do what they want to do.

But the best way for HR to be strategic is to ask leadership “what is the outcome you want?” and then figure out how to get there. Risk assessment is a part of any field; HR is no exception. Pointing out the risks of various courses of action is a part of getting to the desired result. But just because risk exists does not mean the desired action should not be undertaken. And many times the same desired outcome can be achieved with slight changes to the plan.

Rather than focusing on what can’t or shouldn’t be done, HR can also help business leaders translate corporate strategies into workforce requirements. What talent will it take to make good on the strategic plans the business has developed? HR must step up to partnering with managers to hire, develop, and retain the best talent for the challenges ahead of the particular business.

4. Integration Within HR and a Customer Service Attitude

In addition to the perception of HR as naysayer, there is also a perception that HR is overly complex and compartmentalized. The great HR guru John Sullivan wrote back in 2006 about the need to knock down silos within HR. In many companies, this is still true today.

Human Resources

While specialization of some functions is important, HR should appear seamless to outsiders. Every HR employee can adopt the military attitude when asked a question—if you don’t know the answer or it’s not in your job description, you can say “I don’t know, sir, but I’ll find out.” No hand-offs from one HR department to the next. No visible arguments between HR business partners and functional specialists—the arguments need to be resolved within HR, not in front of the client.

If HR doesn’t have a cohesive sense of itself, then it cannot present a cohesive picture of people management to the rest of the company. And cohesion is key to any strategy.

Conclusion

HR has been saying throughout my career that employees are the biggest differentiator between companies. If that is true, HR has a critical role as partner in the success of the business—by helping to manage the people who work there.

The first step is getting out of the HR silo and assuming the seat at the table. Don’t wait to be invited. Provide the value, and the seat will be yours.

When have you seen HR professionals work outside their silos as a successful strategic partner?

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Gratitude


2014-11-26-gratitude2This week in the United States we celebrate Thanksgiving—a holiday for most, and the beginning of the end-of-year rush. Shopping. Holidays.

For managers and those they manage, it is typically time for the last push to accomplish goals before the calendar year ends.

Despite the frenzy that these next few weeks entail, it is important to slow down at least for a few days to consider all the things we have to be grateful for. Sometimes it is hard to remember them. There are atrocities around the world. The political campaigns offer everyone someone to despise and perhaps no one to champion. The economy continues to sputter uncertainly.

And yet, each of us has people and places and things in our lives that matter, that we would miss if they weren’t there.

I encourage every reader to make a list of what you’re grateful for. If there are people on that list, reach out to them and tell them you’re grateful for the role they play in your life. You may not be able to contact everyone on your list, but find a way to contact at least a couple of people you haven’t talked to in a while. Or someone you talk to all the time, but not about things that matter.

Happy Thanksgiving to all.

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Don’t Give Up on Performance Reviews


332904-2504-4 perf reviewI’ve been following some of the discussion about annual performance reviews—some companies are stopping them; others are hunkering down. I’m not a particular fan of doing annual reviews, because I think performance management has to happen more frequently than once a year to be of much value.

But annual reviews are better than no reviews. The important thing, in my mind, is to have open conversations with your staff members about their performance.

In two recent articles, Steven Hunt of TLNT has covered this topic. As Mr. Hunt points out in How To Ditch Performance Ratings and Still Evaluate Employees Fairly and Accurately, posted October 20, 2015, no company is actually doing away with rating employees. But some are not doing annual performance reviews. They are finding other ways to evaluate and rank employees.

Ideally, I think conversations about performance should happen about once a quarter—and more frequently with new employees. The usual staff meetings between managers and subordinates can form the setting for these conversations. If followed by a quick email to the employee afterward to confirm expectations, the performance conversation is documented in a simple manner that takes little extra time. Much easier than the multiple pages of many companies’ performance evaluation forms.

As Mr. Hunt says in Haunted By Performance Reviews: How Can You Kill Something That Won’t Die?, October 26, 2015:

“The easiest way to rid an organization of the horrors create by a bad annual evaluation process without releasing the evil spirit of informal evaluation is to actually increase the frequency and number of evaluations you conduct. By constantly evaluating employees through the year, the annual evaluation largely ceases to exist.”

And as Dan Pontefract said in Only 55 Percent Of Employees Feel As Though Performance Management Appraisals Are Effective, Forbes.com, March 31, 2015,

Performance management isn’t a score. It’s a frequent, ongoing coaching conversation.”

About ten years ago, one organization I worked in tried the type of calibration sessions that Mr. Hunt mentions in How To Ditch Performance Ratings and Still Evaluate Employees Fairly and Accurately. Our discussions were painful. They were painful for the managers, and they were painful when the feedback was communicated to the employees. We called the bulk of our employees (the middle 70%) “valued”—which as one person later said, wrecked a perfectly good word forever.

A year ago, Mr. Hunt wrote in Performance Management: We Won’t Fix The Problem By Ignoring It, August 4, 2014:

“We will know we have truly fixed the performance management problem when company leaders are able to accurately identify the most valuable employees in the organization, and can explain this decision to other ‘less valuable’ employees in a manner that inspires them to improve their performance and does not lead them to give up hope, quit, or call their lawyers.”

Now that is a worthy goal. Most likely, we will still be striving to attain it in another ten years.

Here are a few more good articles on performance reviews, in addition to those cited above:

How to Handle Performance Reviews, by Rose Opengart, July 27, 2015

10 Productive Things HR Can Do Instead Of Performance Management, by Heather Nelson, July 31, 2015 (TLNT)

Why Annual Performance Reviews Suck And How Gaming Can Fix Themby Thomas Moradpour, February 19, 2011

What do you think is the best way to motivate average employees in your organization?

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Are the Benefits of the SEC’s Pay Ratio Disclosure Rule Worth the Costs?


SEC emblemI don’t typically comment on Securities and Exchange Commission matters, because I don’t know much about the agency or its areas of regulation. But I do know something about managing compensation. So the August 5, 2015, SEC announcement of its final rule requiring public companies to disclose the ratio of their CEO’s compensation to the median compensation of its employees caught my eye.

Pay ratio disclosure sounds like a really bad idea to me. It is likely to cause consternation within the company, while not addressing the underlying concern over the growing pay disparity between CEOs and rank-and-file employees. The cost of this rule—both financial and in terms of morale—is not likely to be justified by any true benefit.Cost/Benefit Impact and Administrative Burden:

The SEC staff estimates the initial cost of complying with the pay ratio disclosure rule will be about $1.3 billion. Then there are ongoing costs of continuing to update the ratio as required by the regulation. These costs mean that citizens should require the SEC to articulate significant benefits, before the rule seems rational.

1.  Cost/Benefit Impact and Administrative Burden

I am not qualified to discuss the details of the new rule. For detailed descriptions, see SEC Finalizes “Flexible” Pay Ratio Disclosure Rules Under The Dodd-Frank Act: Companies Have Choices To Make, by Elizabeth Razzano, Mark Poerio, Gislar Donnenberg & Amelia Xu (Paul Hastings, Aug. 10, 2015), and SEC Adopts CEO Pay Ratio Disclosure Rule, by Holly J. Gregory, Sidley Austin LLP, (Aug. 14, 2015).

For an article arguing that the the calculation is skewed, see The big flaw in the SEC’s CEO pay-ratio rule, by S. Kumar (Fortune, Aug. 6, 2015).

2.  Employee Morale Concerns

Supposedly, the pay ratio disclosure rule will empower shareholders to challenge executive pay practices. However, shareholders of public companies have already had access to top executives’ pay in other public filings. The new comparison with rank-and-file employee pay is likely to upset the general employee population without providing much new data to shareholders.

As the Sidley Austin article rather blandly points out:

“Companies should be aware that, depending on the magnitude of pay ratios, these new disclosures may exacerbate existing concerns among investors, labor groups and others around executive compensation.”

More directly, in SEC Approval of Pay-Gap Rule Sparks Concerns, by Victoria McGrane & Joann S. Lublin (Aug. 5, 2015), The Wall Street Journal quoted Steven Seelig, a senior regulatory adviser for Towers Watson, as follows:

“This is going to raise all sorts of questions as to whether [an employee] believes they’re paid fairly both internally…and [compared] to competitors.”

From this same article:

“Affected businesses will spend more time explaining ‘to employees at all levels how they set pay,’ said Charlie Tharp, head of the Center on Executive Compensation, a Washington advocacy group for large employers.”

dollar-clip-art-1194985891178996774670a029.svg.medI do think I’m qualified to discuss the impact on morale of a pay disclosure rule. At one point in my career, I managed the Compensation Department of a large U.S. company. The Compensation Analysts who worked for me were competent and professional, yet even they had difficulty dealing with the emotions of pay comparisons. Although salaries within the company were generally kept confidential, these employees had access to all employees’ compensation, including each other’s.

  • The best analyst in the department was paid less than another with less experience. She understood that the new analyst was paid more because he came from a higher paid position within the company. Nevertheless, the conversation I had with my best analyst about why that pay differential was likely to continue for the foreseeable future was one of the more difficult conversations I have ever had as a manager.
  • Another analyst was a solid performer, but not as strong as two others. She knew full well that her salary increase was less than theirs one year. I could explain how I had arrived at my decisions, yet I could not prevent the demoralizing aspect of the policies that led to my decision.

While I do not mean to suggest that employers’ pay practices should be shrouded in secrecy, setting pay is a complicated process. Unless employees are on a strict seniority step system, every employee’s situation is unique. Even HR professionals do not fully understand all the factors, unless they are involved in a particular situation.

Moreover, because pay is seen as a measure of worth in the corporate world, emotion immediately steps in whenever we compare our pay with anyone else’s.

3.  Political Impact

Because the SEC members adopted this regulation along party lines—the three Democrat appointees SEC approved it, while the two Republicans opposed it—Congress and such organizations as the U.S. Chamber of Commerce will continue to attack its implementation. There is no consensus regarding the need for pay ratio disclosures.

The good news is that this regulation does not go into effect until corporate fiscal years starting in 2017, with disclosure first required in 2018. Nevertheless, law firms are recommending that public companies start collecting the information needed for compliance sooner rather than later.

Am I missing some of the benefits of the SEC pay ratio disclosure rule? Am I overstating the morale impact?

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Situational Leadership Theory: It’s Just Common Sense


Situational Leadership Model

Situational Leadership Model

I talked last week to a friend who is about to take a leadership training program sponsored by the government entity where he works part-time. This man had had leadership training in the military, but seemed overwhelmed by the thick manual he’d been given to study before the training program. The manual had a lengthy section on “situational leadership theory.”

Although I was a manager for many years and participated in—and even taught—management training programs, I am not educated in organizational and management theory. I’d never heard of “situational leadership theory.”

So I asked my friend what it was, for two reasons. First, I wanted to know. Second, I figured he would learn the material better if he had to describe it to me than if he muddled through the manual in a vacuum.

He started talking about four quadrants and “high relationship/low relationship” and “high task/low task” situations, and how a manager should behave differently.

But of course, I thought. The best way to manage good people is to get out of their way and let them run with what they want to do. That’s all being a “low task” manager means.

The trick is to know when someone is a strong enough employee to let them run, and when they need more guidance. And the only way to do that is to build a relationship with them (be “high relationship”) and test them on little things while giving them direction (be a “high task” manager).

My friend and I worked through several examples—new employees, trusted employees, good performers, and poor performers. In each case, I asked him whether it was better to spend more time or less time in getting to know the individual, and whether it was better to be more directive or less directive in giving instructions.

He could answer the questions using just common sense. The terminology didn’t matter. He knew what to do. And so did I, despite never having heard of “situational leadership theory.”

situational_leadership3

My preferred style is S3 – Supporting

My own bias is to work on relationships in almost every situation. Most employees want their manager (and also their coworkers, peers, and even subordinate) to know them better. It takes time, but usually bears fruit.

My bias is also to be less directive with all but the newest employees. But that doesn’t always work well. I have been burned on occasion when I’ve found out that an employee took a project in a direction that I didn’t think was going to fly in the organization.

Still, I’d rather err on the side of letting employees make their own mistakes and helping them recover afterward. We’ll both learn more than if I had told them what to do every step of the way.

Management is an art, not a science. It’s judgment, not four quadrants in a grid. It’s knowing your people, not knowing what’s in some manual.

When have you found that management theories or other aspects of interpersonal relationships were really just based on common sense?

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How To Improve Customer Service at Emotional Times


crying-on-the-phone-300x225A close relative of mine recently died, and I have been helping the next-of-kin deal with the aftermath of death. We spent most of a week calling the funeral home, bank, church, insurance companies, and other businesses to inform them of our relative’s passing and to make the necessary arrangements.

Some of the organizations we dealt with were good at customer service, but many were not. I have several suggestions for how all businesses can improve their customer service when they are dealing with people in difficult emotional circumstances.

And don’t most businesses encounter emotional customers at one time or another?

Here are my suggestions:

  1. Minimize the time the customer has to spend on hold, from the first contact to the final call. Grieving individuals will lose focus while you are away from the phone. Moreover, they will get annoyed and believe you don’t care about them.
  2. Don’t play the typical Muzak if you have to put customers on hold. It grates on the nerves of the bereaved to hear vapidly cheerful music. A soft classical selection would be a better fit, but nothing too common that they will remember later on, bringing the moment of their grief back to mind.
  3. If you have a call center that uses scripting, be sure your representatives are prepared to say “I’m sorry for your loss” if they hear of a death without having to look it up in the script. It is disconcerting for the bereaved to hear typing in the background, then for the representative to say he or she is sorry. A human response is more valued if it is genuine, so let your employees sound genuine. If they can’t, they shouldn’t be in a customer service job.
  4. Get back to your customer when you say you will. Even if you don’t have any new information to provide, if you promised an update by 10:00am Wednesday, then call them back to give a status report by 10:00am Wednesday.
  5. Be absolutely accurate in what you tell customers. And if you give them information orally, follow it up with an email or other written correspondence. People don’t think clearly and their short-term memories don’t work well when they are emotional. They will forget what you told them, which is only to be expected.
  6. Recognize that customers who get angry at you are often venting. Try not to take the situation personally. But also take accountability when the problem is your responsibility. If you have been slow to respond, or if you provided inaccurate information, apologize. Profusely. And don’t do it again.

Frankly, these suggestions aren’t rocket science. But it is surprising that so many businesses that deal with people in emotional states aren’t better at customer service.

Don’t let your business be insensitive to your customers’ grief. The goal of any contact with a customer should be to make the customer feel better, not worse, even if only for the moment of your interaction.

When have you encountered excellent customer service in a difficult situation?

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The Future of Unions: Back to Guilds and/or Forward to Work Councils?


Union membership at private employers has declined over the last few decades, standing at less than 7% of the U.S. workforce today. Part of the reason for the decline in membership has been the success of unions over the years. Unions have worked to improve working conditions in individual plants and factories. They have also lobbied for passage of labor laws that affect all employees, unionized or not.

Image from Forbes

Image from Forbes

Consultants helping companies to develop positive employee relations tell their clients’ managers that “employers deserve the unions they get.” They imply that most workplaces are unionized only when management does a poor job of managing—when managers do not follow labor laws and regulations, and when managers do not treat workers with respect.

Not all managers take this advice to heart, but most managers do try to do the right thing, thus reducing the value of union representation to rank-and-file employees.

So, in the absence of evil-hearted managers, what is the future of unions? How can unions develop new programs and goals to address the needs of workers today?

Here are two proposals:

  1. Work on skills and job placement, like the guilds of old

Trade unions grew out of the guilds of skilled workers who practiced particular crafts. The guilds controlled the flow of work to their members, and provided the members with education, tools, and a sense of community. Tradesmen worked together to advance their common interests, but each craftsman was essentially self-employed.

The guilds failed when they hindered innovation and fought among themselves for members and territory. While they provided some efficiencies in the development of the crafts they supported, ultimately their protectionist tendencies increased costs for society as a whole. Does this sound like our unions of today?

Nevertheless, as our economy moves away from life-long careers at a particular employer and more toward self-employed knowledge workers, there may be an emerging need for organizations like the old guilds. Small employers and workers wanting more control and flexibility in their work could benefit from such guilds. The guilds could provide trained workers for short- or long-term projects and positions.

Moreover, as employer-sponsored health and retirement benefit plans change, unions/guilds could substitute their own plans to suit their members’ needs.

Many professions essentially have guilds today. Bar associations for lawyers are one example—they control who is licensed, they provide educational opportunities and discipline their members, they advocate for the interests of lawyers and the judicial system in which lawyers ply their trade.

Unions could take on these responsibilities in a number of occupations, from skilled crafts to freelancers and consultants in many industries.

The downside for unions? They would have to collect their dues directly from members, rather than through payroll deductions from large employers. In other words, they would have to become more accountable to their members. Not a bad result, in my opinion.

  1. Foster the development of work councils

VW logo_newRecently, the United Auto Workers attempted to organize Volkswagen’s plant in Tennessee. Volkswagen took a position of neutrality on the union campaign, but the UAW still lost the vote. One reason Volkswagen did not protest the unionization attempt was that Volkswagen supports works councils in its plants, and wanted to develop a work council in its Tennessee plant, like its German plants.

Works councils are organizations within a particular workplace that govern the work within that location. They help to reduce workplace conflict by providing strong channels of communication between workers and managers. Many times, the councils include union members, nonunion workers, and management.

Works councils are strong in many European nations. They are rare in the U.S., because works councils of nonunionized employees are considered to be prohibited “company unions,” because of the support they receive from management.  See Electromation, Inc. v. NLRB (7th Cir. 1994). In the absence of a union, works councils in the U.S. have very limited topics they can discuss, and they cannot negotiate on working conditions.

conflictNevertheless, if U.S. employers and employees see the benefits of works councils in improving the flow of work through their facilities, there might be a renewed interest in unions. To make this happen, unions will have to recognize that “unions get the management they deserve.” If unions are confrontational, management will continue to resist. If unions facilitate the profitability of the plant, management will be more receptive.

In summary, unions need to change to respond to the disinterest of employees today in joining a union. Perhaps a return to the advantages of guilds or a greater use of cooperative tools like work councils will give more workers a desire to join unions.

What do you think—should unions be receptive to developing either guilds or work councils? If they move in this direction, are employers likely to respond positively?

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