Secrets of Human Capital Management: Oddly, Good Isn't Good Enough

Secrets of Human Capital Management: Oddly, Good Isn't Good Enough*

By David Creelman who can be contacted at dcreelman@hr.com

1. Introduction

While we'd all like to be "excellent" being scored as "good" doesn’t feel bad at all. Oddly, there is a range of evidence suggesting that scoring "good" isn't good enough—not by a long shot.

The most famous measure of employee engagement is Gallup's Q12, twelve questions they have found predict engagement. The strangest question of the lot is, "Do you have a best friend at work?" Most people balk at this question. Surely, it would be more reasonable to ask "Do you have a good friend at work?" However, Gallup stuck with "a best friend" instead of a mere "good friend" because having a best friend is predictive of engagement and less zealous questions are not. It is not enough for your employees to have good friends, they must have a best friend.

You see similar results from other studies. In Practice What You Preach David Maister describes his study of professional service firms. In describing what kinds of questions predict high performance Maister writes, "These are not statements about achieving competence. Notice the language: Management gets the bets work out of everybody. We tolerate nothing less than high client service. People do whatever it takes. There is a powerful and meaningful gap between competence and excellence."

Rob Lebow, a consultant, researched what corporate values lead to success. He identified values such as "Treat others with uncompromising truth" and "Lavish trust on your associates" [emphasis added]. Again it's not enough to be "trust", you must "lavish trust."

When you are assessing your culture being good is not enough. You need to achieve the excellence implied in the extravagant statements used by Gallup, Maister and Lebow. The same principle applies when you are surveying customers. Enterprise Rent-a-Car, which has shot ahead of entrenched rivals like Avis and Hertz, on the basis of customer and employee loyalty (see Loyalty Rules! by Fred Reichheld) asks its customers to rate service on a scale of 1-5. Enterprise discards all lower scores and just counts the "top box"—the "completely satisfied" customers. In other words, a "satisfied customer" doesn't count, Enterprise feels if customers are not completely satisfied then something is wrong.

2. Compliments Every Time

I noticed something similar when I worked for the Hay Group in Canada. The receptionist, Shirley Berry, would pass a call to me and the caller would say, "Wow, you've got a great receptionist." This would happen again and again. It's natural to think that "nobody says thanks"—particularly for a receptionist—but I observed that this wasn’t true. People did lavish compliments when they recognized excellent performance. Shirley was generating praise on close to 100 percent of the calls.

3. Are High Goals Unrealistic?

There is something unrealistic in hoping to have a workforce where employees have a best friend, where managers get the best out of everyone, people lavish trust, customers are completely satisfied and 100 percent of callers pass on a complement.

We've been trained to make trade-offs, to find "optimal" levels. Surely, you could drive yourself to bankruptcy doing whatever it takes to ensure all your customers (and employees) were completely satisfied.

However, the impeccable logic that optimal levels of service must exist demonstrates a weakness of logical arguments, not a failing in the message of Gallup, Maister and Lebow nor the methods of Enterprise Rent-a-Car. People, in a good business environment, act reasonably. An Enterprise employee is not going to go to a clients house and wash their windows just to ensure they tick the "top box." However, people also operate best when there is clear direction. Shooting to be the best, to get complements on 100 percent of calls, or to act with uncompromising truth gives a powerful direction to people.

Dr. Gary Latham, who has done groundbreaking work on goal setting says, "Reaching for a dream inspires hope. Progress toward high goals sustains that hope and gives people a tremendous sense of energy to forge ahead vigorously." Setting high goals, even goals you can't quite hit, usually motivates people more effectively than aiming at something your accounting department has determined is optimal.

4. Taking Action

In setting your own goals you should aim for the extravagant rather than the reasonable. Unless you are getting scores in the "top box" your performance won't be any better than average. Good is not good enough.

*Reprinted by permission of the author