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Here’s the headline:  Employee engagement drives loyalty and business performance at World’s Most Admired Companies.   According to the Hay Group’s latest research, top companies are particularly focused on making sure employees feel engaged by their work.

Hay also conducted supplemental research on employee engagement practices at these organizations, which found that companies at the top of the list generated stronger employee loyalty to the organization over the last two years and reported greater decreases in employee frustrations over work conditions that were not conducive to their success.

“The World’s Most Admired Companies have been particularly good at focusing on long-term strategies, showing little tolerance for executives that compromise long-term objectives for short-term gains,” said Mel Stark, vice president with the Hay Group. “Equally important, the WMAC communicate their objectives to all employees, connecting the goals and objectives of every employee to the overall business strategy, and as a result, were able to come out of the downturn with motivated and loyal employees.”  Hay Group’s study found that 90 percent of respondents from the WMAC identified their company as very effective or effective at fostering high levels of employee engagement compared to 71 percent of their peers.

These findings are supported by another study conducted by consulting firm Towers Perrin (now Towers Watson).  They conducted a Global Workforce Study, the largest study of its kind, in which they asked 90,000 employees in 18 countries,  “What can a company do to attract, retain, and engage top talent?”  They boiled it down to 5 key things:

1. Get leaders out front to talk with employees about the business environment…how the organization is responding…the long-term vision…what the organization stands for.
2. Involve employees in efforts to manage costs to help them feel like active contributors.
3. Communicate consistently and candidly about both short- and long-term objectives.
4. Listen and gather input from employees.
5. Promote development opportunities so people can see a future for themselves worth working toward.

 If you look at 1,3 and 5, you will see these are all about talking to or telling employees something about the company.  2 & 4 are all about listening and getting employees to tell you ways to manage costs, perhaps front line customer feedback on what needs to change, etc.  The researchers noted: “The challenge for senior management is to recognize the value of employees’ untapped potential and to channel it in ways that yield real improvements in business performance.” 

More engagement comes from being recognized as unique and with value.  The good news is with a more engaged team – the leader doesn’t feel they have to do this alone – it truly becomes a team effort.  And they may even come to care as much about the success of the organization as you do.

What do you need to start doing today to attract, retain and engage your top talent?  There’s no time to waste, because even in this tough job market, your highest performers always have choices.

In a recent Accenture survey, 89% of executives agreed that innovation is as important as cost management for high performance.  This indicates a big shift from 2009.  The emphasis for most companies last year was on how to cut expenses.  This year, there is the realization that you can’t cut your way to business growth.  And this survey bears that out.

Okay, from the Accenture survey we know execs think innovation is important.  Below is the Daily Stat email I receive from Harvard Business Review (a very valuable resource that I strongly encourage you to check out).  From this Ernst and Young survey, we can see that only half of the senior executives see their companies as more innovative than their competition – and 17% even say their less innovative than peers.   

There are several reasons cited for this.  For example, while many companies are investing more in innovation, only a few have a rigorous approach for managing the process.  As a result even innovative companies often fail to realize the benefits that their new ideas could produce.

Interestingly, almost half of them blame the lack of appropriate personnel as a major contributor to their lack of innovation.  You know as well as I do that you can’t just go getting rid of everyone you don’t think is creative – and in fact you don’t have to.  There are ways – which I will share with you in later blog posts – for discovering and tapping into the creativity in each of us. 

And this is where you come in.  Strategic, progressive leaders have an incredible role to play in boosting the innovation occurring within their companies – and it all begins with employee engagement.   Next post – some proven ideas for how to engage your top talent.

Innovation….when you hear this word, what comes to mind?  When I pose this question to a group, I often hear “Apple”, “Something new”, or similar response.

If you look it up in a standard dictionary, like Websters or American Heritage, the definition is simple and straightforward: ”the introduction of something new.”  If, however, you look it up in Business Dictionary.com, you get a very different result: “The process by which an idea or invention is translated into a good or service for which people will pay.  To be called an innovation, an idea must be replicable at an economical cost and must satisfy a specific need.”

The “regular” person’s definition is so much better and more freeing than the business minded one.  I call this the difference between innovation with a little “i” – innovation for everyone – and innovation with a big “I” that stands up to the very tough scrutiny of the business world.   We wonder why we see innovation as a slogan by top execs instead of something that actually gets done.  How do you know if something is going to make money unless you give it a chance?  In many companies we cut new ideas off at the knees because we can’t see right off how it can possibly be profitable.

Let me tell you the story of Alexander Fleming.  It’s 1928 and apparently Dr. Fleming is a pretty messy scientist.  One day he’s cleaning out the petri dishes he had been using to grow bacteria.  Something catches his eye.  Something had contaminated one of the staph cultures – in fact it had killed the bacteria.

Do you know what he had discovered – penicillin — by accident!  “When I woke up just after dawn on September 28, 1928, I certainly didn’t plan to revolutionize all medicine by discovering the world’s first antibiotic, or bacteria killer,” Fleming would later say, “But I guess that was exactly what I did.”

A huge success, right?  Wrong!  There were so many difficulties associated with producing penicillin in mass quantities, it would be another 12 years before the world realized what he had created.  We need the broader definition of innovation…so that we can celebrate the learning…not just the end result.

What “discoveries” - no matter how small and seemingly insignificant – have you made recently?  What can you find to celebrate – not just the end result but what you learned from it – and how you can apply those learnings?

Innovation can be spelled with a capital “I” – culturally imbedded across well-known companies such as Apple, P&G, Google and Starbucks – or with a small “i” – going on everyday in many less-recognized companies and myriad teams across the country. So what can we learn from the big innovation players?

Apple – Be very clear on your innovation philosophy.   Apple has a clear focus on the customer experience; design takes priority.  Whenever I ask audiences to share what comes to mind when they hear the word “innovation”, Apple is always named.  We can also see Apple as a cautionary tale – if innovation is too wrapped up in one person. You saw the stock price dip (not only for Apple, but for the tech sector in general) when the world learned Steve Jobs had cancer – because he is seen as the creative genius behind all their new product development.  In fact, I have it on very good authority that he is the leader of a 10-person creative team that is the sole inspiration behind all their incredible new products.

Google – Make time for employee innovation.  Very different than the perceived “lone creative genius model” of Apple, Google believes in making innovation everyone’s responsibility.  You have likely heard they allow their employees to spend 20% of their time away from their “real jobs” to focus on their pet projects. You might have just marked that up to their being one of those “weird, California, bring-your-dog-to-work and get-a-back-massage” kind of companies.  But you want to know the real reason Google does it?  The founders tracked the progress of of ideas they had backed versus ones executed in the ranks without support from above.  What did they find? There is a higher success rate with ideas that came from lower in the ranks.  Maybe the ideas were better or maybe it’s just because the commitment to execute was higher.

Proctor & Gamble – High-tech companies aren’t the only innovators.  Very different from these other companies, P&G is an old company with (in many cases) “old” brands and products.  This company has to find new ways to make money in mature markets.   They have an incredible success rate for their new product introductions – but it wasn’t always that way.  It went from 1 in every 6 new product introductions having a positive ROI when AG Lafley took over as CEO in 2000 (about standard for the consumer packaged goods industry) to 1 out of every 2 new product introductions today.  How?  Like Jobs, Lafley had a laser-sharp focus on understanding the consumer needs & he established disciplined, repeatable, and scalable innovation processes.  He also moved the responsibility and source for innovation outside the walls of R&D, and even outside the walls of their own company. Innovation is now completely embedded in their organization.  It is the way they do business.

Starbucks – There is room in the innovation tent for both left-brain and right-brain thinking.  CEO  Howard Shultz had always run the business based on intuition.  Now with the tougher marketplace, he’s having to gather more data.   During one such deep dive into the data, he discovered they were wasting millions in milk since they don’t resteam milk for product safety reasons.  Did they go with a high-tech solution?  No – one of the employees suggested they simply etch a line on the inside of measuring pitchers versus having the barista’s wing it.  According to an interview with Shultz, this became an incredible internal succcess story – and led to more small changes with huge impacts.

Summary:

• Be very clear on your innovation philosophy. 
• Make time for employee innovation. 
• High-tech companies aren’t the only innovators.
• There is room in the innovation tent for both left-brain and right-brain thinking.  

Remember Hermey, the misfit elf from the animated Christmas classic, Rudolph, the Red-Nosed Reindeer? An aspiring dentist, Hermey languishes away in Santa’s workshop, trying to make toys. Lacking the talent and desire for toymaking, poor Hermey bogs down the workshop’s finely tuned assembly line. His ineptitude catches the eye of the workshop foreman, who fusses and fumes at the young elf. Tired of being the target of his boss’s verbal barrages, Hermey quits his job and strikes out on his own.

How many Hermeys do we have in the workplace? Would-be dentists struggling to make toys? Square pegs trying in vain to jam themselves into round holes?

As a leader, you have responsibility to identify the strengths and weaknesses of the people on your team. If they are slotted in the wrong place, then getting angry at their underperformance won’t solve anything. It’s up to you to help them find a niche.

As a practical application, have your team complete a strengths inventory and personality profile. Review the results. Who appears to be positioned in the right role? Who might be misplaced?