“Whether you are the boss or an employee, low morale can be a killer,” says Ron Halversen of Clarity-Ventures.

Morale is a state of mind that involves feelings and emotions.  Created within each employee, it is often considered an elusive quality.  It involves the attitude and perception towards the job, work environment, team members, managers and the organization on a whole.  Positive employee morale is usually exhibited by confidence, discipline and willingness to perform.  There are no single factors that explain high or low morale, but rather a combination of related factors.

In today’s economic reality, the root cause of low employee morale can include job security issues, uncertain business conditions, limited upward mobility, a perceived lack of fair compensation and excessive outsourcing practices.  In such an environment, employees focus more on their career choices, a sense of personal well-being and financial future.

While more traditional managers tend to see low morale as intangible, its importance and impact on profits, productivity and financial competitiveness are measurable and affect organizational objectives.  The Gallup Organization estimated that there are 22 million actively disengaged employees costing the economy as much as $350 billion dollars per year in lost productivity including absenteeism, illness and other low morale issues.[1]

High morale in the workplace is essential to success and is mostly influenced by the top-down rather than from the bottom up.  Managers that create low morale in employees do so from a top-down command and control mode, which implies that employees’ do the listening and managers need not reciprocate.[2] By prohibiting open dialogue on workplace issues, managers are denied a firsthand view of problems that exist.  This can result in a gap when addressing the real problems and can further exacerbate them, leading to employee distrust, disrespect towards management and reductions of morale and workforce motivation.[3]

Less engaged teams are less productive, less customer-focused and prone to withdrawing their efforts and adopting counterproductive behavior.[4] This occurs when management is unclear about expectations, employees have not been effectively trained or do not feel a sense of ownership over their work.[5] Low morale causes employees to lose interest in going the extra mile, especially when they do not feel valued by managers or care about the projects assigned.

A costly indicator of low morale is high turnover; when employees leave because they are not happy with their jobs and have few external reasons to stay.  The negative impact of employee turnover is disconcerting because of its tremendous impact both financially and on productivity levels.  More importantly, when employees leave, they take with them the knowledge, skills, and ability that helped contribute to the goals, profit and performance of the organization.[6] The Saratoga Institute suggests that the average internal cost of turnover ranges from a minimum of one year’s pay and benefits to a maximum of two years salary.  Other research indicates that total turnover costs can reach as high as 150% of an employee’s base salary.[7] High turnover also means that significant recruitment and replacement costs will be incurred.

Another cost of low morale is increased absenteeism.  A workforce that is present and healthy accomplishes more.  According to an article in The Leading Edge, dissatisfied workers crave an escape from their offices, even if those escapes are only temporary.[8] Sick days cost the organization money and production, as well as increased health and insurance costs.  When employees feel dissatisfied, are not as invested in the work they produce or discontented with managers, the level of absenteeism increases,[9] leading to less productivity.

Another reason for missing work or lower productivity is chronic pain. “We had issues with lower than average productivity and found the problem was pain related to the neck and shoulder area,” says Julie Swain of Ithaca Sports. “When we introduced them to our own product, China Gel, the pain was not only relieved for them, but their productivity went up too. You can’t solve a problem unless you know what the problem is.”

Unscheduled employee absenteeism costs an average of 9% of payroll.[10] However, absenteeism does not necessarily mean that employees hate their jobs.  It can also stem from not feeling empowered or well-trained to perform.[11]

Low morale can, in fact, be controlled.  Managers possess the vision and understanding of their employees’ potential and their core work processes.[12] They must ensure employees are being effectively utilized through job enrichment.  It includes understanding employees’ abilities and ensuring jobs provide a challenge to utilize their full capacity, recognizing achievement and giving employees an opportunity to grow and learn new things.

Managers also need to create a culture of trust as they can shape and influence, through role modeling, the way resources are allocated, how employees are rewarded, and the criteria used for recruitment, promotions, and terminations.  A climate of trust exists in organizations when managers do what they say they are going to do and are consistent in their actions.  Managers can earn trust and improve employee morale by being accessible, authentic and fostering openness.

Creating positive morale is accomplished through a diversified approach to relationship building, recognition, and compensation.  Management that implements the innovations and ideas of employees reinforces their sense of value.  Mini-meetings or morning huddles will highlight the tasks to be accomplished while recognizing the previous week’s successes.  This can also be accomplished by increasing the frequency of interaction among team members, providing opportunities to discuss group goals, and developing a healthy sense of competition against other teams.

The time, energy and resources exerted to attract the best talent are also required after the hiring process is completed.  If an employee’s behavior is truly understood, then their success on the job will be more accurately predicted.  Research has concluded that out of 10,000 people, 15% of their success was due to technical training, intelligence, and skills while 85% was due to personality factors and the ability to deal with people successfully.[13]

Sometimes the issue with lower morale isn’t something that is expected. According to Sam Muslin, a respected dentist in Southern California, he reports that his patients reported not only more self-confidence, but better morale and increased productivity following their overbite correction procedure. According to Muslin, because the problem made them feel inferior, by fixing the issue, gave them a boost.

To help prevent morale issues, managers need to spend time communicating their vision to ensure it is understood.  Effective managers communicate widely and allow their messages to be discussed in person or at staff meetings.  By providing an open forum or allowing one-on-one time, employees can express concerns and feelings and also give input on business developments; creating collaborating and supportive workforces.  According to the Supervisory and Management Training Institute, managers and employees need to feel a sense of attachment to their work, because both then will care about the quality of the output.[14]

In any organization, people are the most important resource.  They are the engine that drives productivity and results and therefore their sense of morale and motivation will impact the company’s success.  To ensure commitment and increased morale in economic uncertainty, managers need to energize their employees by acting enthusiastically and optimistically about the future.  This heightens levels of motivation and helps employees recognize the importance of their work while encouraging a goal-oriented, ambitious, and determined working style.  Those companies that remain vigilant to the signs of low morale and focus on improving it can avert the inevitable impact.  When an environment of value and acceptance is generated, it creates a win-win situation for the company and its employees.
–By Vikki Ali

[1] Fink, Nicole, The High Cost of Low Morale: How to Address Low Morale in the Workplace through Servant Leadership

[2] Simonton, Ben.  Why Employees Develop Low Morale & Are Managers to Blame?

[3] Simonton, Ben.  Why Employees Develop Low Morale & Are Managers to Blame?

[4] Woollard, Stuart.  The High Cost of Low Morale

[5] Case, Holly.  Signs of Low Morale Among Employees

[6] Nase, Daniel.  The High Cost of Turnover

[7] Bowes, Barbara.  A Competitive Employee Market Compels Companies to Manage High Turnover

[8] Bartolomei,Kyra.  The Effects of Low Employee Morale

[9] Bartolomei,Kyra.  The Effects of Low Employee Morale

[10] Wolfe, Ira.  How Much is Employee Absenteeism Costing Your Business?

[11] Case, Holly.  Signs of Low Morale Among Employees

[12] Winning Workplaces.  Curbing Low Morale.

[13] Morales, Manuel.  High Cost of Low Morale

[14] Case, Holly.  Signs of Low Morale Among Employees

What is it that motivates you at work? Are you able to be creative, productive and happy? Research shows there is a correlation between performance and your passion for what you do. Harvard Business Review dives deeper into Talent, Passion and the Creative Maze, when looking at improving corporate hiring.

Talent, Passion, and the Creativity Maze

By Teresa Amabile and Steve Kramer in Harvard Business Review

We live in a world mad for talent. From Hollywood and sports to executive search firms and HR departments around the globe, everyone seeks that special mix of natural abilities and attitudes that will make performance pop. A few months ago, Douglas Conant wrote a terrific blog post on how to find talented candidates for a job. When evaluating a potential hire, Conant looks for a strong mix of three qualities — competence, character, and skill as a team player. He gives great advice on how to find such a person. But he’s missing a crucial ingredient.

That ingredient, at least as important as the talent package described by Conant, is passion for the work — what psychologists call intrinsic motivation. Without it, no amount of talent will yield great performance. For 35 years, we have been exploring how motivation affects creativity. In studies involving groups as diverse as children, college students, professional artists, and knowledge workers, we have found that people are more creative when they are more strongly intrinsically motivated — driven by interest, enjoyment, satisfaction, and a sense of personal challenge in the work they are doing.

Arthur Schawlow, a Nobel laureate in physics, said it eloquently: “The labor of love aspect is important. The successful scientists often are not the most talented, but the ones who are just impelled by curiosity. They’ve got to know what the answer is.”

Intrinsically motivated people are more creative because they engage more deeply with the work. Imagine a task you have to do — say, an important marketing problem you have to solve at work — as a maze you need to get through. Most business problems have multiple solutions that would work, multiple exits from that maze. Often, there is one clear, straight path out of the maze — the standard solution that everyone uses for this type of problem. If you’re extrinsically motivated, perhaps by a looming deadline or fear of a negative evaluation, you’re likely to take that safe path. The solution works, but it’s boring; it doesn’t move things forward. But if you’re intrinsically motivated, you love the hunt through the maze for a more interesting — and likely more creative — solution.

As a manager, you can leverage the link between passion and creativity by following three guidelines:

First, hire for passion as much as for talent. If you don’t look for passion in the people you hire, you could end up with employees who never engage deeply enough to dazzle you with their creative productivity. As Conant advises, get to know potential hires for important positions as thoroughly as possible, long before you might have an opening for them. When you talk to them, ask why they do what they do, what disappointments they’ve had, what their dream job would be. Look for fire in their eyes as they talk about the work itself, and listen for a deep desire to do something that hasn’t been done before. When you talk to their references, watch for mentions of passion.

Second, nourish that passion. Unfortunately, standard management approaches often (unwittingly) end up dousing passion and killing creativity. But keeping it alive isn’t rocket science. We have found that the single most important thing you can do to fuel intrinsic motivation is to support people’s progress in the work that they are so passionate about. This is the progress principle, and it applies even to the seemingly minor small wins that can lead to great breakthroughs. You can use the progress principle by understanding what progress and setbacks your people are experiencing day by day, getting at the root causes, and doing whatever you can to remove the inhibitors and enhance the catalysts to progress.

For example, be vigilant about whether your creative professionals have sufficient resources to make progress without a constant struggle. Give them autonomy in how to achieve a project’s goals, because there’s no point in hiring people with great talent if you don’t let them use it. And support them in learning from both successes and failures, because talent is not a fixed quantity; it can and should grow over time. Give talented people every opportunity to develop, keeping in mind the “10,000 hour rule” cited by Malcolm Gladwell: You can’t become expert enough to create an innovative breakthrough in a field unless you have put in at least 10,000 hours of practice. That kind of persistence is fueled by passion.

Finally, look to yourself. If you don’t have passion for your own work, you’ll end up disappointing both yourself and those who count on you. And you’re unlikely to develop your own best talents. One of us, Steve, is an avid photographer of landscapes. An important mentor, the photographer Craig Tanner, has taught both of us a great deal about the connection between passion and the development of talent. In a brilliant essay on “The Myth of Talent,” Craig says: “Long-term, focused, practice powered by the energy of passion […] leads to amazing transformations. The bumbling beginner becomes the exalted expert. The trapped and depressed become the liberated and empowered.”

Ask yourself: Am I liberated and empowered by passion in my work? Are the people around me?

Source: Harvard Business Review

The following article by Wallace Immen was published int the Globe and Mail on February 12, 2011.

Ann Rhoades has a simple and firm formula for building a strong corporate culture: “You should only hire A players and if someone isn’t playing an A game, they aren’t worth hiring or keeping.”

As hiring manager for Southwest Airlines and JetBlue Airways Corp., her theory helped build highly admired teams. Now president of consultancy People Ink in Albuquerque, N.M., she advises organizations on how to build similarly strong, co-operative teams. Here, the author of the new book Built on Values discusses the formula:

How do you define an A player?

Quite simply: A players are people whose personal values match those of the organization. Once you determine the underlying values of your company, the key is to hire people who already believe in and demonstrate those values every day.

You can tell within 30 minutes if a candidate is right by asking specific questions about how they handle real work experiences. Past behaviour is predictive of future behaviour more than 90 per cent of the time. So if a person has the values you need and they can give you that examples of how they’ve applied them in the past, you will know they will handle future challenges the same way.

Why should hiring A players become mandatory?

Just because someone is highly skilled and experienced doesn’t mean they are right for your organization, That has become doubly important as organizations are rebuilding staffs after the recession. Many organizations were restructured and are trying to meld teams from different corporate cultures. People are also being asked to do more with less, so it is vital that everyone involved be working from the same motivations.

What questions do you find most useful in identifying A players?

Forget the open-ended questions that typically get asked in job interview, which invite vague answers … Instead, ask questions about their personal values and scenarios they’ve faced and how they reacted to them. [That] will tell you all you need to know.

Your ability to identity A players is as good as your definition of what you are looking for. There is no one-size-fits-all, you have to clearly define the competencies, behaviour and values you want and then ask specific questions to ensure that the candidate has them. One question I find very telling is: Tell me about a time when you put your job on the line by telling the truth.

At JetBlue, integrity was one of our key values, and I interviewed a mechanic who had been fired at another airline because he refused a supervisor’s order to sign off on a repair of an aircraft. He wasn’t able to find a job with other airlines because he had insubordination on the record. But he explained to me that his refusal was because he had questions about whether the repair was done correctly and he didn’t want to do something he didn’t feel was right and might not be safe. That was exactly the attitude we wanted; I hired him and he was a wonderful employee.

Another telling question is: Tell me about a time when you have broken a company rule for a client or customer. If a manager tells me, “I’ll never break a company rule, I always look at the rule book,” I say, go look at it somewhere else. You want people who are thinkers and will go out of their way to make things happen and make the customers happy.

How do you make sure you are getting the whole picture?

One of the things we believe in is that more than one person must do interviews to get the full picture. Group interviews are the wrong approach. I recommend that three different people do similar interviews of about 30 minutes, then get together and get consensus.

If the feedback is different from one to another and the [applicant’s] answers and stories have changed in the telling, you will know they have told you something that probably was embellished. We go through a full run-through of the answers and check them against the values and competencies we have established as our priorities.

Should you be straight with candidates about why they weren’t hired?

Absolutely. We had a policy at Southwest and JetBlue [that] we are not afraid to tell people the reasons they were not hired. It’s important to give people feedback that can help them shape up into A players, even it it’s not for your organization, but for another employer.

What about existing employees who aren’t meeting the standard?

I recommend that when this process is first put into place, you give those who are falling short of expectations a performance review in which you have a long discussion about shortcomings you find. Most people will try to meet expectations if they know what’s expected of them.

You have to teach people and train them … so it takes one or two years. And you have to inspect whether these B players are making progress by having their peers and managers rate them and give them ongoing feedback and advice.

Then there are C players, whose who aren’t willing to change and don’t acknowledge that they need to change their behaviour to fit with the company’s expectations. If you can’t change what was a hiring mistake, then the quicker you get those people out of the organization the better. If you are good about the hiring model and have a good performance review and accountability system, that number should be minimal.

This applies to everyone, from management on down.. If you tolerate C players on your team, you can post all the values you want on the wall, but nobody is going to believe in them.

HIRING TIPS

To scope out A players, consultant Ann Rhoades recommends staying objective:

Minimize your gut feelings: Develop a profile of qualities and behaviour you want in candidates and go in looking specifically for them.

Probe past actions: Ask behavioural questions designed to tell you whether the person exhibits the values that are a good fit with the company culture in their daily work.

Ask for detail: A candidate should be able to go beyond generalities and be able to give numerous examples of specific actions from their past that show they would be effective to the organization in the future.

Do background checks: Confirm that the candidates technical skills meet the criteria and past work experiences jibe with answers given in the interview.

Have multiple interviews: To ensure there is no bias, have three individuals do separate interviews asking variations on the same questions.

Rate in writing: Score how well candidates do in meeting the key expectations of the position and whether there were areas of concern. Compare their answers in different interviews for consistency.

Get a consensus: Average the ratings and debate discrepancies in judgments before making a final hiring decision.

Executives who act as mentors receive a lot in return, a Canadian survey has found.

The poll of 270 chief financial officers found 54 per cent had become a mentor for an employee in their organization, either formally or informally, at some point in their career.

Of those that did, 54 per cent said their greatest reward was a feeling of satisfaction from helping someone succeed. Another 22 per cent said the biggest benefit was improving their leadership skills in the process, 18 per cent said it gave them an incentive to stay current on industry trends and 3 per cent said it expanded their professional network. Just 3 per cent said they received no benefit in return, the survey by staffing service Robert Half Management Resources found.

Mentoring has become more essential in today’s fast-changing business environment and executives who seek out opportunities can receive much more than they give, recommended Robert Half Management Canadian district president David King. His advice:

• Teach your lessons
  Consider things you learned the hard way that can help others avoid mistakes.
• Don’t wait to be asked
  If your organization doesn’t have a mentoring program, take the initiative by identifying someone you think you can help and extend the offer.
• It’s not just for rookies
  At any level, those eager to advance or looking for a new direction will likely welcome your advice and the company will benefit from the result.
• Don’t do all the talking
  Sometimes the most valuable role you can play is that of a sounding board.

By Jeff Bussgang. Published on Business Insider on April 29, 2011.

The unemployment rate in America is hovering around 9%. But if you are a competent engineer, sales executive, online marketer or general manager in Silicon Valley, NYC, Boston, or other startup hotspots, the unemployment rate is 0%.

The talent market has gotten as competitive and aggressive as I have ever seen in the last 20 years. CNN recently reported that 40% of the 130,000 job openings in Silicon Valley are for software engineers. Senior executives have never been harder to secure. That’s why, even though it flies in the face of conventional wisdom, I’m advocating that all my portfolio companies hire recruiters when they are trying to fill senior or key positions. Immediately.

Typically, when a young company gets financing and begins to hire, they seek to leverage the network of the founding team and their investors. This network provides some valuable leads and perhaps a few hires. Leveraging existing networks has greater benefits than simply cost savings and convenience. Teams that have worked together in the past simpy are well-positioned to out-execute those that haven’t due to their common history, language and relationships.

I have read studies that show that one of the factors that correlates highly for success in a start-up is if the team has worked together and made money together in a previous start-up. But tapping those informal networks alone doesn’t scale. And reacting to inbound people flow generates an adverse selection bias – the best people are not looking, so they will never contact you and respond to your job posting.

As an entrepreneur, I was initially very skeptical of fast-talking, expensive recruiters. I thought hiring them represented a personal failure on my part as an entrepreneur. After all, it was my job to secure the best and brightest talent through my own efforts and my own network. But my years of recruiting have taught me that start-up CEOs are at a distinct competitive disadvantage if they don’t get outside help for recruiting.

Here are the top five reasons why:

1. You Never Have Enough Proactive Time. As an entrepreneur, you are always battling dividing your efforts into proactive time (where you direct the activities through your own energy) versus reactive time (where you are reacting to people and forces around you). With the inflow of real-time information and people coming at you from all sides and demanding your attention (employees, investors, customers, etc), it’s hard to find enough proactive time in the day. Recruiting is a proactive exercise. It requires effort and energy from the entrepreneur to generate candidate flow, meet candidates, vet them, check references.  It is therefore important to have an outside force push you to react to candidates and help you prioritize the recruiting effort, just as your VP Sales is pushing you to prioritize sales and your VP Marketing is pushing you to prioritize marketing.
2. Hiring Inexperience. Most entrepreneurs are first time CEOs or even second time CEOs who simply do not have a lot of experience hiring, particularly hiring the particular executives they’re hiring for (Try this exercise – ask your favorite CEO/entrepreneur how many times they’ve hired a CFO. Most never have but even if they’ve done it once or twice in the past, are they really now an expert at it?). Like anything else, hiring is a science. A recruiting friend of mine likes to say, “interviews are inquisitions, not discussions”.  Too many entrepreneurs don’t actually know how to interview well.  Further, they’re not experienced at assessing their current human capital needs, analyzing the gaps of management team members, and then understanding the market and how to fill the gaps.  Good recruiters are invaluable in this regard.
3. Shallow reference checking. Busy entrepreneurs and busy VCs typically do cursory reference checking when making even senior hires. They allow themselves to be swayed by their own conviction, let the candidates spoon feed them their top fans from past jobs and ignore the opportunity to push for a deep understanding of candidates’ histories and claims. When I make an investment in a company, I typically do 8-10 reference checks and get a wide variety of perspectives from people who have worked with the entrepreneur in the past and seen them in a range of different situations.  It’s hard to have the discipline to replicate this thoroughness when making a senior hire, particularly when trying to move quickly in a competitive hiring market (see “You Never Have Enough Proactive Time” above).
4. Quarterbacking the Selling Process. Many hiring managers don’t realize that the due diligence process for a candidate is as thorough, if not more so, than your due diligence on them. The best candidates have choices and are sought after. Even though you are deciding whether to “buy” over the course of a series of interviews, you need to be in a position to sell every step of the way. “Everyone’s trying to be the coolest place to work,” observed one Stanford junior who is being barraged with job opportunities. Recruiters can be very helpful in quarterbacking the selling process – proactively surfacing objections and handling them with data and follow-up conversations, linking candidates to the right people at the right time in the process.
5. Focus on closing. Closing candidates in this competitive a market is very hard.  ounter-offers, compressed timeframes and personal considerations all get in the way of smooth closes.  Again, if you don’t have alot of proactive time available to you (and who does?!), there’s great benefit to having a focused closer.

Further, I have found having an intermediary helps tremendously with the negotiations.  A candidate will be unafraid to tell a recruiter what it takes to get the deal done, and a tough back and forth with the help of an intermediary can avoid bad feelings aftewards between two principals that will need to work together as a team when the dust settles.Too often I hear entrepreneurs say, “I’ll work my network for a few weeks and then we’ll hire a recruiter.”

Many VCs are over-confident about their own recruiting prowress and will tell entrepreneurs to wait until they talk to their partners and surface a few great candidates from their network. The problem, of course, is that everyone gets busy and distracted. A few weeks turns into a few months, a few candidates get turned up and interviewed but then discarded, and finally when the network comes up dry, the group reconvenes and decides to hire a recruiter. Now the recruiters need to be selected, interviewed, reference checked, negotitated with and ramped up – causing more delay.  By the time you get around to getting the recruiter ramped up, the board and CEO feel frustrated that they are already behind.

To be clear, not all recruiters are created equal and some are a waste of time and money. But if you can find a good one, don’t let them go. Paul English, cofounder of Kayak, is a truly gifted recruiter and there has been alot written about his approach to hiring. If you can be that exceptional, perhaps you don’t need a recruiter.  And, believe me, the price you pay for these folks feels exorbitant, particularly if you are in the scrappy, lean start-up phase of development.

My bottom line advice is to just bite the bullet and hire a recruiter now. The difference will cost you an incremental $50-100k, but everyone knows hiring an “A” has a massive positive impact as compared to a “B” – and that impact is compounded if it can be achieved 3-6 months sooner.