The Case For Loyalty

Wednesday, November 04, 2009

A few weeks ago, I ran across the work of a company called Ipsos. Ipsos is a global survey-based market research company out of France. Their slogan as a company is “Nobody is Unpredictable.” They predict human behavior for companies who want to primarily improve their advertising and marketing efforts.

At some point, this company figured out that the topic of loyalty is a major factor in how a company’s customers and employees experience a sense of well-being and satisfaction. The data was so strong that the company set up a subsidiary called Ipsos Loyality that focuses fully on the subject of loyalty and the impact it has on a company’s customers and employees.

Doesn’t this seem odd? In many parts of our society, loyalty is not considered a virtue anymore. Companies that are struggling to stay in business are often forced to undergo a lay-off period…often more than one round. Employees who are affected by a lay-off or see their peers experience this type of misfortune often have a tough time mustering any legitimate feelings of loyalty towards their employer.

How about customers? Does it really make sense for a person to be loyal to a certain company when global competition drives prices down to the point where you can get near identical products and services from multiple companies? At that point, doesn’t it make sense to be “loyal” to the company that can get you what you want at the lowest possible price? Costco has built a multi-billion dollar company on this principle.

And it’s not just business… This lack of loyalty has seeped into nearly every facet of our lives. It has become an anachronism of a value system that has gone by the wayside. It has even got to the point where some would consider loyalty to be a character flaw. For example, when former President Carter wanted to insult the British Prime Minister, Tony Blair’s, support of President Bush, he called him “Abominable. Loyal. Blind. Apparently subservient.”

If loyalty is now such a negative trait, you might wonder why I’d take time to discuss it. The reason for doing so is outlined in "Why Loyalty Matters," a recent book written by Timothy Keiningham and Lerzan Aksoy. In this book, the authors draw upon research conducted by Ipsos Loyalty and demonstrate how loyalty is a necessary ingredient to happiness, meaning, and lasting fulfillment in both your work and your personal life.

In the next few WorkPuzzle blogs, we’ll discuss some of the principles outlined in this book. I think it will challenge your thinking. The basic premise is this:

“Fulfillment only comes when we give of ourselves to others. Loyalty, like love, is not something you get but something you give. But, like love, giving loyalty, over time, through difficulties and trials, leads to mutual loyalty. And it leads to relationships that are a profound source of satisfaction and happiness that cannot be built in any other way.”

I think you’ll see that this principle will impact not only your company’s performance, but your personal relationships as well.

Editor's Note: This article was written by Ben Hess. Ben is the Founding Partner and Managing Director of Tidemark, Inc. and a regular contributor to WorkPuzzle. Comments or questions are welcome. If you're an email subscriber, reply to this WorkPuzzle email. If you read the blog directly from the web, you can click the "comments" link below.

New Recruiting and Retention Essential

Monday, November 02, 2009

It really pays to periodically sit in on real estate meetings and glean the latest strategies around the subjects of recruiting and retention… In a packed house of 50 managers, I witnessed a fascinating presentation regarding the appropriate use of social networking tools. No, I’m not talking about going to the next Rotary meeting… I’m talking about the dreaded, often demeaned, frequently misunderstood tools of Facebook, Linkedin, Twitter and others…

I’ve heard and read a great deal of information about the importance of these tools. On a personal front, I’ve been hearing news from my daughter that her nationally renowned professors focus a great deal on social networking as part of her Journalism/Public Relations education at The University of Oregon. But what caught my attention this time, was a story told by a real estate executive regarding retention.

There happens to be a middle-aged manager from a competing company who has made it his newfound task to learn as much as he can about Facebook. This manager is doing two specific things that have increased both retention and recruiting in his organization. Both of these activities clearly put into practice what I have preached again and again: The importance of building relationship credibility.

Here’s what he does:

He asks all of his agents and every competing agent he meets to become his “Friend” on Facebook. He does this in a gradual, polite, and non sales-like way.
He then dedicates a few hours per week to making sure he comments on what these agents post. He comments on pictures and events, answers questions (not related to real estate), and shows that he is interested in each of these individual’s lives.

In reality, he is substituting these small “touches” for what would amount to several mini chance meetings, where he has the opportunity to express interest in who these people are. From both his existing and competing agents, he is able to obtain greater familiarity with who they are, what they value, who they are responsible for (family), and thus build stronger relationship credibility. It’s important to know, that he never “sells” while he is on Facebook. He merely gets to know the people (notice I didn’t say “agents”), and responds to their postings.

Apparently he networks so well, that he eventually asks the competing agents out for coffee, which is so much more natural given the previously established connection, and finally asks them to consider working for him. Agents have left their companies for this competing manager because they feel he actually knows and values them, and more importantly, he has the desire to know them!

If you are a manager and you haven’t yet learned how to Facebook, you may soon find both your experienced-agent recruiting, and more importantly, your retention, in serious trouble. Younger managers are doing this without being told to. They do it naturally, as part of their day, like brushing their teeth.

If you are older than 32, you finally have a very good reason to get yourself up to speed with regard to social networking. If you don’t, you’re in danger of falling behind in the on-going competition of recruitment and retention.

Editor’s Note: This article was written by Dr. David Mashburn. Dave is a Clinical and Consulting Psychologist, Partner at Tidemark, Inc. and a regular contributor to WorkPuzzle. Comments or questions are welcome. If you’re an email subscriber, reply to this WorkPuzzle email. If you read the blog directly from the web, you can click the “comments” link below.

Resilience Revisited

Monday, October 26, 2009

Six months ago, I described the research around the fascinating topic of resilience. Since then, I have had the opportunity to witness, first hand, examples of people who are living out, daily, the characteristics of what the research tells us. It appears that we are headed out of the current economic crisis, but it won’t be the last time that we need to respond resiliently to stressful times.

The research regarding resilience clearly describes “no middle ground” when it comes to peoples’ response to stressful situations. There are only two possible outcomes: (1) Either you’ll become stronger and more successful, OR (2) You’ll become weaker, less mentally healthy, and less likely to do great things in the future.

Which outcome best describes you and your response to stressful situations? The answer to this question depends on how you’re able to handle job-related stress, and whether you are capable of becoming a resilient person.

Management consultants Salvatore Maddi and Deborah Khoshaba conducted a 12-year study of the Illinois Bell Telephone (IBT) company staff, who were enduring almost constant organizational change during the deregulation changes in the telephone industry.

Every year for 12 years, 450 IBT employees (including supervisors, managers and executives) were interviewed, evaluated, given psychological tests, and given medical examinations. Everyone in the organization was feeling stress, and almost 50% of those sampled lost their jobs at some point during the study. The purpose of the study was to research how people under job-related stress handled these difficult conditions.

The research revealed that employees reacted to the stress in two distinct ways:

65% of the employees suffered additional serious stress-related events in their lives such as divorce, heart attacks, depression, anxiety, and drug/alcohol abuse.
35% of the employees actually thrived under the stress. Those who remained at IBT, rose to the top of the heap. Those who left either started companies of their own, or took strategically important employment in other companies.

When the data started to show a distinct difference between the two groups of employees, the researchers then attempted to quantify what caused a person to be part of the second group.

In their book, Resilience at Work, the researchers outlined their findings. A “resilient person” is someone who possesses and embraces the following: (1) commitment, (2) control, and (3) challenge.

“As times get tough, if you hold these attitudes, you’ll believe that it is best to stay involved with the people and events around you (commitment) rather than to pull out, to keep trying to influence the outcomes in which you are involved (control) rather than to give up, and to try to discover how you can grow through the stress (challenge) rather than to bemoan your fate.”

In short, a steadfast commitment allowed resilient employees to engage more fully in the job at hand (or with a new opportunity for those who lost their jobs). This helped them to understand and interpret the events that were having an impact on them.

Their sense of control empowered the resilient employees to consider ways that they could proactively influence the changes that were affecting them. Their less resilient colleagues tended to passively withdraw effort, believing there was little they could do to impact what they believed was their fate.

Lastly, the resilient employees interpreted the stressors and changes as a challenge, and tended to search out the potential opportunities that change would bring about. They took the outlook that change is an inevitable part of life. It didn’t mean that these people enjoyed the stress, but the positive outlook they embraced positioned them to keep an eye open for new opportunities.

On Wednesday, I’ll reveal the primary coping skills that separated the employees who grew, from those who languished as a result of the immense stress.

Do we have to Manage with the Brain in Mind?

Wednesday, October 21, 2009

One of our clients recently brought to my attention the work of David Rock and Jeffrey Schwartz, authors of an article titled “The Neuroscience of Leadership.” The article can be found on-line at Strategy + Business (summer 2006).

The premise of the article is to propose a way for managers to view their jobs through the filter of how their management practices impact the brains (and therefore the behavior) of all involved. The authors boil down their findings to a catchy acronym, “SCARF,” to represent five social qualities: (1)status, (2)certainty, (3)autonomy, (4)relatedness, and (5)fairness. They explain that all five social qualities must be experienced in any given organization in order for creativity and productivity to increase.

Rock and Schwartz reference several very good research projects in order to build a compelling case of the importance of enabling the sense of reward, and minimizing the threat response in the workplace. All of this is good information, and I did find it interesting to read. However, while I plan to fill you in on the good, I feel compelled to provide you some cautionary thoughts as well.

Here is a summary:

Brain research reveals that the origin of the sensation of physical pain is similar in proportion and location, to the area of the brain that is activated when someone experiences social rejection. The authors use this and other research to build a case toward remembering the social qualities of SCARF. This is very cool stuff to be sure… But, just because something is interesting and intriguing, does not necessarily mean it is important and relevant!

For some reason, everyone is interested in the brain. Marcus Buckingham has called it the “Decade of the Brain.” Some of my most popular blogs have been regarding the brain and related research findings. And don’t get me wrong, as I said, I think the brain and research on the brain is really cool stuff. What I’m uneasy about is when someone uses brain research to shape their own ideas, and then to sell consulting around these theories while inferring that their view of it all is accepted theory.

It’s not that I don’t think Rock and Schwartz are helping companies. I’m sure they are – Because what they are sharing has so much intuitive reality already built in. There is nothing wrong with redundancy – we all need to hear principles of truth again and again. However, I don’t know about you, but I didn’t need to know what happens in the brain to know why certainty, autonomy, relatedness, and fairness are a good thing.

I don’t fault Rock and Schwartz for trying to build a consulting practice around information about the brain. That is not what my caution is about. What I’m wondering is: Have we become callous to applying good old general psychological principles… or better yet common sense? Perhaps what has happened is that we need to hear something about the brain (something tangible and important sounding) to make it important to us. Whatever it is, there are people taking advantage of this mindset – They are using it to sell us services.

In the long run, if the services do us good then there is no apparent harm done. What I fear is that we are resisting good old fashion right and wrong. Certainty, autonomy, relatedness, and fairness are the RIGHT things to develop in your company. And yes, because of this, all research should find all brain data to reinforce these truths.

Don’t wait for the research— Remember what’s right, remember the old-fashioned Golden Rule, and find ways to apply it daily.

Competing With Free

Monday, October 19, 2009

A common complaint we hear from real estate companies across the country is that it has become increasingly difficult to compete with companies who are recruiting their experienced agents on very low-cost fee models (i.e. nearly free).

Here’s an example from an email subject line that came across my desk earlier this week:

“Experienced Real Estate Agents: 100% Commission plus $99/Month Desk Fee”

How does a full-service real estate broker with a significant level of overhead compete with this? The answer…just like everyone else in the world.

Last month, Farhad Manjoo, a columnist for Slate Magazine wrote an article making the point that almost every industry now has to compete with “free” business models:

“In an earlier generation, we might have scoffed at this marketing strategy. What business gives away its products? But not anymore. Free is the new normal. Today, every business that deals in intellectual property — from software to journalism to music — feels the no-cost push. If you’re not giving it away, the thinking goes, you must be doing something wrong.”

Real estate companies are in the intellectual property business. Much of the value that a real estate professional contributes to a business transaction involves collecting information and then customizing that information so that it is usable and valuable to a unique individual and their unique circumstances. If you look around the internet, you’ll find that there are many companies that claim they can do the same thing—for free. And some do a pretty good job of delivering on that promise!

So, how do you compete? Manjoo uses Google’s new free desktop operating system to make his point:

“Though digital prophets champion our pay-nothing future, it’s instructive to consider why free sometimes fails. To return to Google’s Chrome OS, sure, Google will persuade some computer makers to install the OS. But when you consider what free really buys, the answer is not much.

The computers are likely to sell at $20 or so less than the price of comparable Windows machines (Microsoft sells Windows XP to netbook makers for just $15 a copy). In exchange for that slightly lower price, customers will get computers that do much less — they’ll run fewer programs and connect to a smaller range of peripheral devices. And good luck finding tech support.

Most consumers get it. There’s already a free operating system for computers: Linux. Yet netbooks running Windows outsell their Linux counterparts by a margin of nine to one. In other words, free is getting trounced.”

Free (or very low cost) should be getting trounced in your industry as well, but in many cases it is not. Here are some ideas that may help you compete more successfully for the talent that is getting lured away by the promise of free.

1. Play up the “Hassle Factor.” Why do nine times more people choose to pay for an operating system on their computer when they can get one for free? Because using the free one comes with a boatload of hassles. Most people would rather pay than put up with these hassles. The same is true for an agent working in your brokerage, but you may have to do the thinking for them. Quantify what kind of hassles an agent would experience by signing on with a low-cost broker and regularly articulate those pitfalls. Your agents may not be able to envision these hassles before they leave. Then, it’s too late.

2. Play up the “Risk Factor.” One of the big advantages of working with a well-established, well-funded, and respected company is the amount of risk a prominent company can shoulder compared with low-cost employers. Certainly, no one likes to be “scared into” working for a particular company, but make the point that many clients like to do business with not only trustworthy individuals, but also trustworthy, reputable companies.

3. Quantify the Value You’re Providing the Agent. You might want to consider making a list of all the tools, benefits, services and other tangible items that an agent receives by being part of your organization. Then, assign a reasonable cost to each item (the amount the agents would pay if they were to buy the items on their own).

Next, answer the following questions with complete honesty: Does the value equation make sense from the agent’s perspective? Are your agents using the services you’re providing?

For a particular agent, how does the (Total Commissions – Market Value of the Services an Agent Uses) compare to (Total Commissions – Company Dollar)? If you’re not on the right side of this value equation, you’ll have a tough time hanging onto agents.

Take on your competitors who offer ”free” as their primary marketing message. The most successful companies in the world, including Microsoft, Apple, IBM, and HP, all compete against “free,” and win. You can too!

Editor’s Note: This article was written by Ben Hess. Ben is the Founding Partner and Managing Director of Tidemark, Inc. and a regular contributor to WorkPuzzle. Comments or questions are welcome. If you’re an email subscriber, reply to this WorkPuzzle email. If you read the blog directly from the web, you can click the “comments” link below.

Agent Retention: Someone’s About to Pull the Plug on Your Bathtub – Part 2

Wednesday, October 14, 2009

A couple of weeks ago, we highlighted an article written by Dr. John Sullivan regarding how turnover will increase once the economy starts to recover. If your company is going to retain good agents (and employees), more emphasis must be put on retention metrics and strategies. In the previous WorkPuzzle article, I covered retention metrics. Today we’ll discuss Dr. Sullivan’s retention strategies.

Retention strategies can be broken down into three categories:

1. Laissez-faire Approaches: This is the most common approach and involves everything from doing nothing (i.e. turnover is normal and unavoidable) to relying solely on effective recruiting. If your company is going to be successful with this approach alone, you must develop excellent recruiting and talent pool processes that provide talent on demand.

2. Company-wide Approaches: People generally seek out employment to provide income and security to their families and to find personal engagement. Most company-wide approaches involve making compensation opportunities better (addressing income), making benefits better (addressing security), and increasing the workforce’s engagement in their work.

If your company is known for not being competitive with other companies with regard to compensation and benefits, you’ll likely have a retention problem. However, the research suggests that incrementally increasing compensation and benefits with the hope of increasing retention will most likely cost more than it produces in retained revenue.

A better return can be achieved by attempting to increase the workforce’s engagement in their work. Doing this on a company-wide basis is a challenge. Companies have attempted many things with varying levels of success. Here is a short list of ideas that Dr. Sullivan presents:

Employment Branding Strategy: Build the brand of the company up in the mind of the agents. Agents will want to stay with a firm that they perceive as the best place to work.
Blocking Strategy: Erect barriers that keep external recruiters from contacting your company’s agents and employees.
Casino Strategy: Make the physical work environment so attractive that the environment by itself becomes a retention tool. Casinos use the physical environment to keep their customers from thinking about the outside world. Google pioneered this in the employment world by providing free food, a gym, on-site events, etc.
Improve Training, Learning and Development: This is the most popular among real estate companies and probably the most effective. High-performers tend to have a keen interest in continuous learning and will stick with a company where that need is being met. Coupled with increased opportunities to use new skills and techniques, well-trained agents can quickly contribute to revenues.
Remove Ineffective Managers: The number one reason an agent or employee leaves a company is a poor relationship with their first level manager. Replacing individuals who are a poor fit for the management role is the best long-term strategy for reducing turnover.

3. Personalized Approaches: With people, one-size rarely fits all the individuals involved. Targeting retention strategies to the individual needs of an agent takes much more time and effort, but it also produces the greatest results. This is where good metrics and open lines of communication will allow meaningful and productive dialog to take place. Sometimes it’s difficult for agents to quantify what they want. Concrete data regarding performance metrics, opportunities, and a competitor’s performance can keep the conversations from focusing too much on emotion or personal opinion. Dr. Sullivan suggests a personalized plan should address issues such as:

Flexibility: Think of things that can be done to reduce an agent’s stress and the incremental costs of doing business inside the framework of your company. Focus on issues that would strengthen the individual’s family and personal relationships.
Special Perks and Opportunities: Special perks have been used for many years by companies to incentivize performance. Why? They work! Rotate the perks around — People get bored with the same old thing. Also, try to customize the perks to the agent’s interests. It is tough for a competitor to duplicate thoughtfulness. In addition to perks, consider making special business/revenue generating opportunities available to those agents whom you want to retain. This can be tricky because it can discourage others on your team, but a good manager can find the right tension between these competing priorities.
Challenge/Exposure Strategy: This approach increases the opportunities for targeted agents or employees to be challenged with exciting stretch projects and rotations. In addition, agents interested in increasing their exposure to upper management executives are provided with an exposure plan to increase their visibility.
Demonstrating Impact: This education strategy focuses on improving retention rates of key agents and employees who may be unaware of the significant impact of their work. It proactively “walks them downstream” in order to see the impact of their work by meeting and interacting with not only customers, but also others in the company and your organization at large.

There are many more issues and ideas that could be addressed regarding this topic. Hopefully, this article will serve to ignite your creativity regarding how you can retain the agents and employees on your team. Don’t underestimate the disparagement that many people feel toward their employers due to the difficult economic circumstances. If you do, you’ll have to suffer through the potential loss of those agents and employees…a loss that may have been prevented…