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READERSHIP INSTITUTE

Media Management Center, Northwestern University

PEOPLE MANAGEMENT PRACTICES:


Displays to Accompany Survey Findings

July, 2000

Todays Objectives
Understand the business case for people management Examine newspaper survey results 3

- Inform (findings and patterns) - Insight - Implications


Build your confidence, conviction and capability to inform others Ensure that you know how to read the various reports Address some of your most important questions Provide a near-term path for moving forward
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2001 Readership Institute

The Mega-Study

Premise
Our employees are our most valuable resource and therefore, the management of people makes a significant difference to company performance.

Challenge

Prove it, or else stop talking about it!

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Overall Business Impact

Economic Factors
Relative market share Company size Industry profitability

People Factors
Core drivers High-impact practices Specific actions Constructive culture

33%

67%
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Business Case Was Built in Two Ways

Correlational Studies

Real World Applications


Describe what world-class companies do and how they do it

Determine what organizations should do

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Empirical Validity

Very Strong

Customer Satisfaction & Retention Leadership Change Management

Selection Compensation Creativity & Innovation Development Performance Management

Strength of PracticePerformance Relationship*

Culture
Employee Satisfaction & Retention

Strong 500 1,000

Total number of organizational units: 21,304


1,500 2,000 2,500 3,000

Number of Organizational Units Included in Research


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People Management Model


Returns to Shareholders Profitability Growth Productivity

READERSHIP?
Customer Satisfaction and Retention 3 Employee Satisfaction and Retention

CULTURE
Change Management Creativity & Innovation

Selection

CULTURE

2
Compensation Performance Management Development

CULTURE

1
Knowledge Management

Leadership

CULTURE
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Five Strata Examined


Strata I II III Circulation Ranges 0 25,000 25,001 50,000 50,001 100,000

IV
V

100,001 200,000
200,001+

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Three Levels of Analysis


Level 1

DRIVERS
(4 + 1 sections of the survey) Level 2

What to focus on

HIGH IMPACT PRACTICES


(17 Best Practices Derived from Mega-Study) Level 3

What you should strive to achieve

SPECIFIC ACTIONS
(90 Survey Questions)

What you can do

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Overview Level 1 and Level 2


Drivers (Level 1) Selection High-Impact Practices (Level 2)
Selection criteria and processes have consistent structure Selection skills are a key leadership attribute Seek to fill positions internally Promote integration and corporate glue Significant leadership responsibility Commitment is balanced between organization and individual Effective succession planning and talent pool processes

Pre-Reading Pages 18-20

Development

22-25

Performance Management Compensation

Clear mutual expectations Stretch objectives with meaningful measures Ongoing coaching and feedback Market-based compensation Performance-driven rewards and recognition Alignment of employee and shareholder interests Latitude and authority for determining how best to execute job accountabilities, particularly to meet customer needs Quality and sustainability of highly effective leadership, particularly employees immediate supervisor Extent to which employees possess the knowledge and skills to contribute plus the opportunity to grow and advance Customer satisfaction is a high priority and is balanced with making the numbersplusrewards are provided for contributions

26-27

28-30

Employee Retention*

33

* Note: Employee Retention is an Intermediate Outcome.

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Newspaper ResultsEmerging Themes


Very low scores! Performance management highest

Development lowest
Amazingly flat!

More effective at and inclined to manage vertically versus horizontally

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Emerging Theme #1: Very Low Scores!


All Newspaper RespondentsBest Practices Are in Effect LEVEL 1 ANALYSIS
100%

Strongly Agree plus Agree

80% 60% 40% 20% 0%

Strongly Agree Agree Disagree Strongly Disagree 29% 18% 13% 9% 31%

Disagree plus Strongly Disagree

-20% 20%

40% -40%
-60% 60% -80% 80%

71% 82% 87% 91%

69%

-100% 100%

Selection

Development

Performance Management
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Compensation

Employee Retention

2001 2001Readership ReadershipInstitute Institute

Emerging Theme #1: Very Low Scores!


All Newspaper RespondentsBest Practices Are in Effect LEVEL 2 ANALYSIS
100% 80% 60% 40% 20% 0%

Strongly Agree plus Agree

Strongly Agree Agree


61 59

X1 denotes the Drivers High-Impact Practice Disagree in the order it appears in your reports Strongly Disagree
64 44 31 27 10 14 18 18 45 23 49 55

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12

17

Disagree plus Strongly Disagree

-20% 20% -40% 40% -60% 60% -80% 80%

39

41 56 55 65 51

35
45

69
88 83

73 90 85
P1 P2 P3

81
C1

82
C2

76

-100% 100% S1 S2 S3 D1 D2 D3

D4

C3

R1

R2

R3

R4

Selection
Relevant Page in Consolidated Report

Development
17

Performance Management
28

Compensation
37

Employee Retention
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Emerging Theme #1: Very Low Scores Why?


May reflect the newspaper industrys historical oligopolistic structure and behavior of the industry Newspaper industry might be inwardly not externally focused Newspaper industry, on average, is likely stuck in the Ingredients Era of people management practices

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Eras of People Management Practices


Cogs
People were thought of as part of the machinery

Ingredients

Enablers

Differentiators

People management activities are:


Discrete Inconsistent Contradictory Not aligned

People management activities are:


Systematic Consistent Aligned Integrated

People management activities are:


Core to business strategy Key to differentiation Source of competitive advantage

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Newspaper Results

Findings

Insights & Implications Typically the most advanced Driver in stable or static industries that have undergone little change

Performance Management is highest!

Other Drivers are characteristically brought into play more strongly as companies and industries are confronted by major change

Development is lowest!*

Typically viewed to be the softest Driver


Is the most complex Driver of all

*Assuming we ignore Compensation

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Emerging Theme #4: Amazingly Flat Results


LEVEL 1 ANALYSIS
3.0

2.9

2.8

2.7

2.6

Disagree plus Strongly Disagree

2.5

2.4

2.3

2.2

Selection

Development

Performance Management
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Compensation

Employee Retention

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Emerging Theme #4: Amazingly Flat Results


LEVEL 2 ANALYSISBy Department

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Emerging Theme #4: Amazingly Flat Results


LEVEL 2 ANALYSISBy Circulation Strata

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Emerging Theme #4: Amazingly Flat Results


LEVEL 2 ANALYSISBy Strata by Department

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Emerging Theme #4: Amazingly Flat Results


LEVEL 3 ANALYSISSelection

Relative Strength Relative Weakness


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Emerging Theme #4: Amazingly Flat Results! Why?


Industry has very homogeneous practices May be implied or accepted standards External changes may not have yet stimulated aggressive adoption Newspaper industry may be currently trapped in transformational no mans land

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Industry Transformation
High

Successful Change

Today
Performance
Newspapers? Triggers: Competitors Changing needs Technology Economics Demographics

Change unrecognized or not acted upon

Low Time
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Emerging Theme #5: Newspapers are more effective at and inclined to manage vertically versus horizontally
Driver Top Strengths
The standards we use for selecting internal candidates for open positions are set at relatively high levels The selection standards we use for outside hires are set at relatively high levels Selection of qualified people for position vacancies is a top priority of our newspaper's leaders We encourage self-nomination to open positions

Greatest Weaknesses
Our selection process is efficient (i.e. provides us with qualified people quickly) When we consider candidates from outside the newspaper to fill job openings, the size and quality of our external applicant pool is strong (i.e., we consistently choose among many qualified candidates) Our leaders are held accountable for attracting and selecting high-caliber candidates from outside the industry Our newspaper possesses and continuously updates a newspaper-wide database that keeps track of competencies and skills individuals need to succeed in their positions Attending training programs for at least 35 hours a year is strongly encouraged by our newspaper

Selection

Development

Our newspaper's leaders place a high priority on developing people Managers generally help their subordinates meet their career aspirations Qualified employees generally demonstrate sufficient initiative in developing their own skills

Our organization systematically and regularly reviews its talent pools frequently (i.e. at least twice a year)

Performance Management

We believe that one of the primary purposes of performance management in our newspaper is to support the execution of our business strategy Performance evaluations entail a discussion of an employee's performance, including the manager's own perspective on the employee's performance Performance evaluation discussions focus both on recent performance and identifying development needs

Our strategies and strategic plans are regularly communicated so that all employees understand how their performance expectations are linked to them Each person's performance evaluation incorporates input from people within the company who are impacted by their work Performance evaluations incorporate input from the employee's peers/ team

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Emerging Theme #5: Newspapers are more effective at and inclined to manage vertically versus horizontally
Driver Top Strengths
Performance is the key determinant in establishing variable compensation (i.e., incentive) levels Our newspaper effectively recognizes (formally and informally) performance that supports our goal Change in overall job accountabilities is a key determinant in reviewing fixed (i.e., base salary) levels

Greatest Weaknesses
Our newspaper's compensation programs enable us to attract and retain required talent Change in external market pay levels is a key determinant in reviewing fixed ( base salary) levels Our compensation programs support the philosophy of providing superior rewards for superior performance Share-based compensation (e.g., employee share ownership plans, profit-sharing) for employees is a means of providing a single shared objective that binds together the various entities across our newspaper Employee share ownership is encouraged in our newspaper through our compensation plans

Compensation

Employee Retention

On average, our employees exhibit a high level of attendance on the job

Employees are energized by the newspaper's culture and work environment

Employees possess a clear understanding of the limits within which they are permitted to act
Achieving high levels of customer satisfaction is a high priority with my superior Employees possess a clear sense of how they personally contribute to meeting customer needs

Our managers spend unusually large amounts of time coaching and developing their subordinates
Employees receive appropriate recognition and rewards for their contributions

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Why Should I Really Care About This People Stuff?


High Levels of Employee Satisfaction & Retention Are Associated with Greater Customer Satisfaction & Retention... which create a powerful way to move the needle

The Zone of Affection The Royalty of Loyalty


100%

Customer Retention

High

Customer Satisfaction & Retention

Low

3.0 Low

80%

48% defected! Satisfied Loyal

60%

40%

20%

4.0 Employee Satisfaction & Retention High 1 Extremely Dissatisfied 2 Somewhat Dissatisfied 3 Slightly Dissatisfied 4 Satisfied 5 Very Satisfied

Customer Satisfaction Measure

Source: RNW Research

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Source: Harvard Business School; Heskett, et. al.

2001 2001Readership ReadershipInstitute Institute

Four Key Factors of Employee Retention


100% 90 80

98.0% 84.4% 70.4% 55.8%

13.6%

14.0%

70

Explanatory Power*

60 50 40 30 20 10 0

14.6%

36.6%

Authority 19.2%

Latitude 36.6%

Leadership and Culture

Capability and Development

Recognition, Rewards and Focus on Customer Satisfaction

*Represents the proportion of the total R2 explained by each determinant.

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Real Effect of Employee Retention


Company Employee Satisfaction & Retention Customer Satisfaction & Retention

State Farm

Agent tenure 200% longer than industry average Agent productivity 150% higher than industry average

93% customer retention

USAA

7% employee turnover rate Two-thirds lower than industry average

98% customer retention in auto

Northwestern Mutual Life

Most productive organization reflected by home office cost per $1,000 of face value premiums sold

95% customer retention

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So, what can/should you...


Do Not do

when you return home?


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Between Now and Our Next Meeting


Ready, aim, fire! Dont jump in and fix itgo slow to go fast For now, ask more questions than give answers Guiding Principles Take the time to really create understanding and insight Thencreate strong alignment in terms of your desired end state

Set expectations carefully


This is a technical and a political challenge; i.e., a formidable change management challenge

Objectives

Get under the survey to gain clarity and commitment to the real issue(s) and their root causes Come back in October with the issues and their root causes the data that is ready then will help you set priorities and begin to act
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Between Now and Our Next Meeting


High-powered committed team and create a charter Set expectations for objectives and time commitment Provide clear directional guidance for what you really want to discover.

Describe specific outcomes and deliverables that you want them to produce

What specific factors have resulted in our current situation? Why? Build understanding through focus groups and one-on-one interviews.

Strive for insight and understanding

What has been (is still) the impact on our organization? How do we know? What is our desired future state? Why? If we are successful, what specific differences/impacts would we expect to see become visible? What decisions must we make and what actions must we take, to close gaps? Who needs to be involved in making the above happenbased on expertise, political considerations and the need for the change?
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