By Scott Engler
In a single joint statement this August, 181 CEOs of the world’s largest companies threw a century of corporate thinking under the bus by declaring shareholder value was no longer their main objective. What’s noteworthy isn’t that these powerful CEOs agreed there’s more to a company than shareholder return — it’s that they’re being forced to acknowledge a new corporate reality: Corporations can no longer aim to reward shareholders at the expense of their stakeholders and society.
In fact, focusing solely on shareholders introduces unseen risk into an organization, as shareholder goals are often far removed from the mission and purpose of the company. Companies overly-focused on shareholder return are less likely to see shifts in the supply chain, workforce, customers, and/or community, and they are less likely to make and stick to long-term commitments.
Overemphasis on shareholders creates disconnects that can produce many unintended consequences, ranging from conflicting goals to outright malfeasance.
How do companies adapt to this new corporate reality? They need to rehumanize their workforces around the stakeholder ecosystem and focus on the corporate mission, allowing their employees to align behavior to strategy without losing their humanity.
Gartner has studied four key strategies that enable HR to ensure the organization’s performance remains connected to its employees and stakeholders. Let’s take a closer look at each:
1. Build Innovation Networks of Expertise That Span Silos and Levels
Innovation is often disconnected from the people who deal with stakeholders every day, resulting in top-heavy decisions that aren’t in the best interest of the company or its stakeholders. The first step for HR is to implement network innovation strategies to build a network of expertise made up of employees and leaders that enables the organization to innovate at scale. Gartner research finds that network innovation strategies can improve innovation effectiveness by up to 23 percent, regardless of the digital acumen of the organization’s workforce.
Companies can employ network innovation strategies by focusing on the following:
• Involve employees in filtering innovative ideas rather than solely contributing to idea generation. • Equip leaders for shared risk-taking, thereby helping them reduce their risk aversion and pursue more disruptive ideas. • Show employees how to use organizational networks specifically for innovation to create momentum.
2. Align Performance Management to the Organization’s Mission
Eighty-two percent of HR leaders claim that performance management is not successful in achieving its primary goal, and only 38 percent say it keeps pace with business needs, according to a recent Gartner survey. Performance management systems often disconnect employees from stakeholders by replacing conversations and operational agility with cascaded goals, KPIs, and tasks. What’s worse, employees cannot see how they impact the organization and are unable to adjust to changing business needs.
Our research found three key measures HR can take to reconnect performance management to the organization’s mission and purpose:
• Create a line of sight between the performance management process, employees, and the mission of the organization. This targeted customization allows performance management to stay relevant to changing business conditions. • Employees should not be treated as consumers of the process, but as designers of performance management from ideation through rollout. • Allow employees to own the testing and final determination of practice designs for performance management. Doing this creates new, employee-centric performance management designs and addresses employees’ diverse needs, leading to a 19 percent increase in utility, according to the aforementioned Gartner survey. • Help employees set goals that align their individual roles to the larger mission of the organization, and use calibration sessions to uncover collaboration risks and the opportunities needed to collectively execute on those goals.
3. Align Employees With the Mission and Connect Culture From the Ground Up
In many organizations, culture change is designed by senior executives and then expressed in values, with the hope that these values will drive behavior change across the organization. This approach can disenfranchise line employees, who may feel as if culture is imposed upon them, making it impossible for them to live the new culture. Gartner research uncovered three imperatives HR leaders should consider to reconnect culture :
• Engage employees to gather unfiltered feedback around values and how they are experienced in the organization so that values have authenticity and alignment to the mission. • Help employees identify and navigate culture barriers and tensions that inhibit values-based culture change. • Redesign explicit and implicit process barriers to enable behaviors that support the new culture. It is often outdated processes, not people, that are the problem.
4. Remove Barriers to Connect the Employee Experience to Stakeholders
Despite organizations making significant investments to improve the employee experience, Gartner research shows that 46 percent of employees are mostly dissatisfied with their overall experiences. To drive performance improvement, HR must shift to a consumer-centric approach that is more consistent with how people behave and what they value in the digital world. Employers can start by doing the following:
• Focus HR leaders on what employees value. Create employee personas, and use new technology and tools to collect data on where employees work, whom they work with, and when they work to better understand their day-to-day work and experiences. Organizations that consider what employees value, not just what they need, can boost employee performance by 20, according to Gartner’s research. • Identify critical employee moments. Rather than focusing on improving quality and functionality, identify places where employees spend a lot of time and effort. Then, deconstruct those critical moments to determine how to make it easier for employees at the moments that really count.
Rehumanizing the workforce and concentrating on the corporate mission is a necessary plan of action for today’s organizations. Ensuring that the quality of the company remains connected to its employees and stakeholders allows HR leaders to achieve positive performance outcomes and drive future business success.
Scott Engler is vice president of advisory in the Gartner HR practice.