Ian: Welcome to the Business Coach Podcast, an advice-oriented series for Canadian entrepreneurs. I’m Ian Portsmouth, Editor of Profit Magazine and I’ll be your host as we tackle the hot issues and opportunities facing Canada’s small businesses. We’ve developed this podcast in cooperation with BMO Bank of Montreal. Over the course of the series I’ll be drawing on experts in a number of fields including some BMO experts in order to provide the credible information and prescription you need to run your small business better.
The labour shortage isn’t coming, it’s already here. A recent study by the Canadian Federation of Independent Business found that in 2006, 251,000 positions among small and medium size enterprises remained unfilled for at least four months. A national survey by Profit Magazine found that half of companies are being negatively impacted by an inability to find talented people, and of course we’ve all heard about the acute labour crisis being experienced in Canada’s booming western provinces.
So what’s the solution to this growing problem? Well it’s up to every entrepreneurial business to retain its people and to keep them at peak levels of performance. Of course you don’t need to feel the talent crunch before making HR a strategic priority. That’s because in the age of intellectual capital employee retention and motivation are also primary drivers of competitive advantage.
So today more than ever it pays to offer people a great place to work. Here to offer his view on the subject is Graham Lowe, a partner in The Great Place to Work Institute Canada, based in Kelowna, British Columbia the Institute produces the annual ranking of the best workplaces in Canada and offers consulting and education services aimed at improving corporate performance and employee quality of life. Graham, welcome to the Business Coach.
Graham: Pleasure to be here Ian.
Ian: Graham many years ago people kind of had the expectation of a job for life and corporations basically were as loyal to their employees as employees were to them, but that’s changed a lot over the past couple of decades. In the past decade or so how has the employer-employee relationship or, or the social contract between them changed?
Graham: That contract has transformed. If we think back ten years remember the hand wringing and the concerns about the end of work, about double-digit unemployment, about downsizing, about ah people basically not being able to start their careers and the nineties, especially the mid the late nineties was a period when a lot of employees were saying I basically have to go out on my own, ah that ah connection that I wanted to have with an employer has been weakened. Loyalty is a thing of the past and basically that was the big shift that happened in the nineties. So if we fast forward to 2007, the pendulum has basically swung 180 degrees.
Ian: And what’s driving these trends? It is a seller’s market among employees, are employers becoming more enlightened about the way they need to treat and retain people or is it something entirely different?
Graham: There’s no question that having the lowest unemployment in thirty years and in some parts of Canada, Alberta and British Columbia in particular having the lowest unemployment ever is a key factor but it’s more than that. I think what we’re seeing is a convergence of trends in the early twenty-first century so in addition to the very tight labour market we have a whole demographic shift that’s happening with the baby boomers moving into their sixties and thinking about or planning or taking retirement, we’re also seeing heightened concern among employers about rising health benefit costs, this is definitely something that’s popped onto the radar screen in the last five or seven years. We’re seeing growing concerns about work-life balance that people are bringing into the workforce. We’re also in a knowledge-based economy globally where making better use of people’s ideas in the workplace, any kind of workplace has really become a premium, something that all employers have to think about doing. So it’s all of these things coming together in the last couple of years that really has I think put the focus on how do we create a work environment that is going to be both inspiring for employees and really productive?
Ian: Now briefly could you describe the work that you do at The Great Place to Work Institute Canada, and also how your ranking, which will appear in an upcoming issue of Canadian Business Magazine differs from many of the other employer rankings that are very popular at this time of year.
Graham: Sure, so to start with Great Place to Work Institute, our consulting company the Graham Lowe Group brought Great Place to Work Institute into Canada through an affiliate agreement with Great Place to Work Institute in the U.S. two years ago and we’ve been operating here and we offer what is a unique model that Great Place to Work developed in the States and is now being used in thirty countries around the world and this unique model really focuses on trust, and trust is embedded in workplace cultures, that’s really the approach that the institute takes, and we look at relationships in order to really understand how trust plays out in a workplace. So it’s different than the other lists that are available because what we tried to do is really get down to the deep fundamentals of a high performing workplace and an engaging workplace whereas the other lists, well let’s take the list that Report of Business publishes that’s done by Hewitt and Associates, I mean they have a great model but it looks at engagement and engagement is an outcome. So what we do is actually go up the (causal) chain and look at what we feel are the underlying drivers, not only of performance and engagement but also quality of work life. The third list that’s available in Canada is the Top Hundred Employers and basically there’s no employee perspective, there’s no data that’s captured from employees that’s used to create that list, in fact there’s not even a ranking, it’s more an exercise is documenting benefits and perks in organizations which of course is helpful if you’re a job seeker, that’s valuable information. So three quite distinct approaches, really there’s only two that are comparable, the one that we do and the one that Hewitt does, and they basically look at different things. So it’s the focus on culture that I think is really what brands us as being quite distinctive.
Ian: No you mentioned trust and when you mention trust in the workplace are we talking about trust between employees or are we talking about an employee’s trust of his or her employer, or what?
Graham: It’s infused in all relationships, but you’re right, the key set of relationships is between employees and their supervisor or manager, but also senior managements. If you look at the kinds of organizations that are truly high-trust organizations, somebody who’s a frontline employee will have a very high level of trust, be willing to take risks with their immediate supervisor, can feel that you know they can go forward to that supervisor and say you know what I’ve just made a mistake here and here’s what I need to do and not feel that there’s going to be any reprisal. That’s an example of high trust. But that same employee’s also going to trust the executive team in the organization to take employees’ interests into account when making decisions. So it also goes right up to the top of the organization. At the same time it’s important that people trust each other so let’s imagine a team where you’ve got employees all at the same level, if they don’t trust each other they’re not going to share information. That’s basically a very dysfunctional team.
Ian: So there is a strong positive correlation between trust and corporate performance?
Graham: There is and in fact The Great Place to Work Institute has been doing these best workplaces lists using a very rigorous survey called the Trust Index, plus what we call a Culture Audit which is a more qualitative assessment and the Fortune List of course is well known and independent analysts, both financial analysts and academics have taken data from the Fortune List for Publicly Traded Companies and run the numbers backwards forwards and sideways and concluded that indeed those organizations that are on the list that have high trust cultures outperform their peers using a whole range of financial metrics. So that’s pretty compelling evidence.
Ian: You’ve also mentioned that this methodology is used in more than thirty countries. Do we see any interesting differences between the role that trust plays in Canada or what engenders trust among Canadian employees versus other countries around the world?
Graham: Local cultures definitely play a role and certainly when we look at the workplace practices of high trust cultures as identified through this Trust Index survey in different countries, they’ll take different forms. So let’s take in Greece I mean you know a manager to show a lot of respect for an employee will give a sizeable wedding gift to their employee in Greece. Now that’s simply not something that would happen in Canada. Whereas if you look at the actual scores on the employee surveys we do, they’re remarkably close to each other going across all of these countries. So for example people feeling that they are treated with respect by their immediate supervisor and by their co-workers, that’s a universal, that transcends any particular local culture, because if it’s not there you aren’t going to have that high level of trust.
Ian: Now we don’t have enough time to run through all of the companies on this year’s Best Workplaces in Canada ranking but can you tell us a bit about who’s number one this year and what this particular company is doing right?
Graham: Sure and I’ll start by saying that the list this year is bigger, there’s more organizations participating, it’s a very diverse group of organizations which I think is positive news for Canada and the Canadian economy. But the company that really came out with the top ranking and this is based on the employee survey is based on a culture audit that we actually put numbers to, it’s also based on the employee comments. There’s two open-ended questions in the survey that we capture information on, so there’s a lot of information that we’ve processed and the company that scored the best, although it doesn’t mean that they’re head and shoulders above the others, it just means that they you know in this sort of finely calibrated ranking where, where number one is a Vancouver-based company called Back In Motion and they’re a full-service rehab and disability management company that employs a lot of health professionals, physicians, occupational therapists, psychologists, physiotherapists and so on, and they’re fairly new, they’ve only been around since the earlier or mid nineties, they’re rapidly growing and they have a very, very strong philosophy of people first, both their customers but also their employees. They have for example an open book management approach where everybody in the company knows how the company’s doing and they share all financial information, so people feel really part of what’s going on. There’s a whole long list of other things they do but I think what really is distinguishing is the, the philosophy of being totally open and of running the company in a very open manner.
Ian: And that is something that a lot of enlightened companies are beginning to do more and more.
Graham: Yeah and people basically in terms of trusting management there’s no surprises cause people can see what’s coming down the road. In the late nineties they went through a very difficult period in terms of their business, it dropped off. They shared the financials with everyone and decided well you know we can find ways of not laying people off as long as we’re willing to all cut back in terms of compensation we’re taking and so there’s ways that they were able to, to manage a very difficult time by sticking with that philosophy.
Ian: Graham thanks for giving us a sneak peak at the list and for joining The Business Coach.
Graham: Thanks for the invitation Ian.
Ian: You’ll find the 2007 list of the Best Workplaces in Canada in the April 23rd issue of Canadian Business Magazine. To participate in the 2008 ranking or learn more about The Great Place to Work Institute Canada, visit greatplacetowork.ca.
Ian: If it’s the age of intellectual capital then it’s also the age of emotional capital. Now that may sound paradoxical but there is a critical link between intelligence or IQ on the one hand and what’s called emotional intelligence or EQ on the other. Joining us to speak about EQ in the workplace is Dr. Stephen Stein, CEO of Multi Health Systems, a Toronto based publisher of psychological assessments. Steve is also the author of the international best selling book The EQ Edge: Emotional Intelligence and your success. His new book Make Your Workplace Great: The Seven Keys to an Emotionally Intelligent Organization, was published in March 2007 by John Wiley and Sons Canada. Steve, thanks for joining The Business Coach..
Steve: Nice to be here.
Ian: Steve if I could point to the one key lesson that I learned from your new book it’s that our roles in the workplace are blurring, our relationships between our colleagues are blurring and I guess even the lines between work and home are blurring and all of this fuzziness in our work life demands that we all become more aware of and I suppose sensitive to the needs of the people around us in the workplace. And also more aware of the impacts of our own behaviour on those other people. Now I think that’s part of being emotionally intelligent according to my understanding of the term but please why don’t you give us some more expert definition of emotional intelligence?
Steve: Well I think you’re doing really well, that’s a great learning point that you got from the book actually. What we mean by emotional intelligence is the ability to both be aware of and manage our own emotions and those of the people who are around us. So that’s right on it terms of what you’ve picked up.
Ian: Now how does the emotional intelligence of a business owner impact their ability to retain and motivate their staff?
Steve: Well as you know in the first book we spent a lot of time looking at the emotional intelligence of individuals and the effect that has on your life and so on. In terms of the business owner, just think about the people that report to you, the people that you work with, how engaged are they? Basically what we’ve been finding is that those leaders who really care about the people, who report to them and work for them have a much greater impact, people are much more motivated, they’re more successful in terms of the leadership and the results produced.
Ian: Now when we think about emotional intelligence among a leader’s core competencies or characteristics, where would EQ rank in terms of its impact on corporate performance or individual performance.
Steve: Well certainly you know in the top five of characteristics. It’s really hard to tease out exactly how much it was but to be really good as a leader, obviously you’ve got to be strategic, you’ve got to be able to plan and see the future, you’ve got to be smart in terms of high IQ, you know put a lot of information together and know what it means. But what we’ve found I guess the new contribution is that this emotional intelligence is right up there with those other two because if you’re smart and you’ve got good strategy what good is it if nobody listens to you or you can’t carry it out. So the emotional component is that part that lets you connect with the people around you and let’s you motivate them and get the plan carried out.
Ian: Now your book talks about the emotionally intelligence workplace, and of course we’ve all heard about the theory that corporations are very much like living organisms. But given that EQ is widely considered to be a human trait how can an organization have emotional intelligence or organic capacity for greater emotional intelligence?
Steve: Well it’s interesting, you know when, when people feel a certain way, especially leadership, what we found is that those emotions are contagious, they run throughout the organization. So if you have a really optimistic kind of a leader that spreads in terms of how people see not only the leadership but the organization as a whole, and that’s what lead me to the whole concept of an organizational emotional intelligence, and we spent our time really investigating how that plays out. It’s one thing to have a lot of smart people in one place or even a lot of emotionally intelligent people in one organization, but to really leverage that there has to be an organizational emotional intelligence and a lot of that, the drive for that comes right from the top of the organization.
Ian: Now how do I know a company with high emotional intelligence when I see one? What are the traits that exhibit or what are the practices that it embodies?
Steve: Well you’re probably going to feel it shortly after you walk into that place, I mean there’s, there’s certain things you’ll see like ah probably have a pretty low turnover rate, it’ll probably be a pretty productive organization. The number of sick days people have will probably be lower on average than most places. The other thing that you notice is what we call sort of a corporate citizenship that people in that organization aren’t just coming to work every day to put in their time. What we find in emotionally intelligent organizations is that people go out of their way to do things for others and for the organization. So when you walk into an emotionally intelligent company you’re going to see that people are attentive to you when you come in, they’re going to be really thrilled to tell you about their job and what they do, they’ll be excited and tell you about how they contribute to the big picture. I mean you know it may sound magical to you and you may not believe them but you know I’ve been walking around in quite a number of companies since I started working on this book and doing the research, and you can really tell the difference in the companies that we saw it really stood out versus the rest.
Ian: Now one challenge that CEO’s and entrepreneurs have is that they’re constantly surrounded by their own organizations and their own people so they often think that everything is hunky dory within their company when it might not be. So what can a CEO or an entrepreneur look for specifically within their own organization as a reliable gauge of how emotionally intelligent their company might be?
Steve: Well some of these things are very measurable. You know what your turnover rate is, you know, you do exit interviews so you know why people are leaving. You know in our organization people who leave, I mean we have people crying when they leave just you know for whatever reason they have to go, if they move away or whatever, they really feel like part of a family, and what you should look at is the way people treat the organization. Do people recommend friends and relatives every time that you have an opening? These are the kinds of things to look for and when you walk around the organization and talk to people and ask them a question, how excited are they to tell you the answer or they tell you about what they do. These are signs you can pick up when you walk around the floor of the place.
Ian: That’s great Steve, thanks very much for joining The Business Coach.
Steve: Thank you.
Ian: Dr. Stephen Stein is the CEO of Multi Health Systems and author of the new book, “Make Your Workplace Great: The Seven Keys to an Emotionally Intelligent Organization”. Thanks for listening to this episode of the Business Coach Podcast. I hope you discovered a few insights that will help you grow your business. Your feedback is always welcome. Drop me a line at Business Coach at firstname.lastname@example.org. Meanwhile be sure to visit us online at profitguide.com or bmo.com. Until next time I’m Ian Portsmouth Editor of Profit Magazine wishing you continued success.