In a recent article in the Business Insider, Editor Henry Blodget says that business obsession with short-term profits has led to the view that employees are costs, rather than value creators. http://www.businessinsider.com/business-and-the-economy-2013-7 Many of us who have participated in the annual school district budget reduction discussions are surely guilty of the same sin. Aren’t the short-term profits in education the annual test results? Don’t we at least consider applying more of our resources to those “costs” that provide higher short-term profits (better results) in lieu of those that might provide better long-term value (student success)?
If your district vision and mission statements call for long-term success for your students (career and college readiness), shouldn’t your resources be applied to value creation and not short-term profits? How are you measuring long-term student success?
In a recent article in Talent Management magazine concerning changing company culture, Reut Schwartz-Hebron suggests that using what we know about how the brain learns will be a way to deliberately develop more positive outcomes as part of organizational change.
Cultural change is not easy. Using the latest findings in brain science about how the brain unlearns and that it does not see everything as experience will help change managers to design a program that anticipates these issues and will be more successful as a result.
In his recent guest post on Clarity, Jamie Notter talks about a company’s culture and his belief that it is the organizational culture that drives success. http://blog.clarity.fm/culture-that-drives-success/
“People leave the culture, not the company.” is one of the culture clichés he uses. It is clear that without effective cultural change why many districts are unable to address their consistently high turnover. One large district told me that one-third of their instructional workforce will leave within five years. I understand from superintendents all over the country that those statistics are not unusual. Could it be time to focus on cultural change within educational organizations? After all, it is one aspect of the education business that will be cost-effective. Every time an employee leaves, it costs the district roughly 20% of that employee’s salary to hire a replacement.
I know some of you have begun change management, but once the rest of you get Common Core and PowerSchool up and running, it is time to for us to talk about real cultural change. Measure your annual losses and calculate the cost.
Educational organizations are in the middle of the hiring season. Anthony Tjan offers some good advice about what to look for in a candidate. Not your typical HR questions, but you may not be looking for the typical HR results!
A five-minute research-based video that deals with the community influences we all know hurt student outcomes.Clearly, the next step is for someone to take responsibility for addressing this, although no one has the authority to do so.
This is why when we start a design session we ask each participant to generate at least ten solutions. Number one is never perfect. Number ten is better. Zolli in Resilience talks about hybrids as being the way to avoid catastrophic system failure (unless they change, all systems fail). Taking the best of solution number one and solution number ten and combining them gets us closer to amazing.
Even if you are suspicious of using high-stakes tests as a benchmark of national progress, this dataset showing high school and college graduation rates, college readiness and investment per student should be a wake-up call for us.
One of the finest conferences I have ever attended was last year’s Great Place To work conference in Atlanta. I tried unsuccessfully to interest CMS in a campaign to be the first school district to be on the list, but apparently that goal was too much of a stretch. One of these days I hope to convince a school district that being listed is not a pipe dream. It simply is a matter of changing a Theory Y organization into a Theory Z. Worth it? You bet!
The Proof Is In The Profits: America’s Happiest Companies Make More Money
BY MARK C. CROWLEY
FEBRUARY 22, 2013
Workplace happiness may seem like a fuzzy concept when it comes to financial value. But as the Parnassus Workplace Fund has proven, dignity has–and creates–value.
“Goodness is the only investment that never fails.” –Henry David Thoreau
What’s perplexing about all this fanfare, of course, is that we know most workplaces in the U.S. aren’t at all that good in sustaining employee morale. Gallup’s announcement a few months ago that only 19% of American workers are fully engaged in their jobs sufficiently validates this. It also suggests that few organizations have made it a priority to learn and model the leadership practices known to produce high employee contentment.
The question needing to be asked is whether or not we fully believe there’s a direct connection between having happy workers and improved profitability.
At this point, the evidence suggests many of us remain suspicious of any firm that, say, allows its employees to play foosball or shoot hoops during work hours. But our enduring cynicism may also have its roots in traditional beliefs about leadership effectiveness. Many of us have been taught that it’s actually desirable to have some worker unhappiness. The idea is that keeping people under some constant tension actually is a more powerful driver of productivity. There’s also the concern that when employees are cared for to any extent they’re likely to get soft in the middle–so sufficiently sated that motivation to work hard and produce is spoiled.
One person who may have the answer is Jerome Dodson, the founder in 1984 of ParnassusMutual Funds. Since April 2005, Dodson has held the additional role of portfolio manager for the Parnassus Workplace Fund, a mutual fund that invests exclusively in large American firms proven to have outstanding workplaces.
“The idea of creating a fund that only invested in organizations where employees were really happy,” Dodson told me recently, “was brought to me a decade or so ago by a journalist named Milton Moskowitz.” In 1998, Moskowitz and his associate Robert Levering (cofounder of the ) oversaw the production of the first “Best Companies To Work For” list ever published in Fortune magazine.
“He told me that the Russell Investments, publishers of the Russell 2000 Index, had performed an investment return analysis of all the “100 Best Companies To Work For” and proved it was phenomenal and much better than the S&P Index, one of the most commonly used benchmarks for the overall U.S. stock market. So, Moskowitz said, ‘Why don’t you start a fund like this?'”
Initially, Dodson, a Harvard Business School graduate, was resistant and told Moskowitz directly, “It’s a little different using real money compared to doing an analysis on a hypothetical basis.” But soon after their conversation, Dodson said, “the idea struck a chord in me because I’d always felt that having a happy workforce really meant a much better business as an investment. But until then I had no way of proving it.”
To get the fund going, Dodson and his firm invested $600,000 and solicited investors in other Parnassus funds to contribute more. In the first few years, with no track record of performance to draw on, along with an unproven premise, the fund grew very slowly.
Dodson spent his time scouring the country for companies that had built solid reputations for treating employees with profound respect and which supported them through ongoing training and personal development. To quote Moskowitz, they were the kinds of firms that “genuinely cared about their employees as people, not just hired hands.”Other important characteristics of the firms Dodson inevitably selected: they provided some meaningful form of profit sharing, health care, and retirement benefitswhile also being especially supportive of working mothers. He found many of these firms amongst the “100 Best Companies To Work For” list and discovered others that had never submitted the documentation to be officially considered an outstanding workplace. Ultimately, he chose companies like Intel, Google, Charles Schwab, Microsoft, and Gilead Sciences and then waited to see how they would all perform.
To Dodson–and Moskowitz’s–delight, the Parnassus Workplace Fund proved immediately, enormously, and enduringly successful. Since the fund’s inception (April 2005-January 2013) it’s had a 9.63% annualized return. This compares to the S&P Index which has earned just 5.58% during the same period. “Our fund has had returns over 4% better than the S&P Index every year,” Dodson noted. “Eight years later, the performance of the fund confirms what I’ve always believed. Treating people well and authentically respecting them does lead to far better business performance. We proved it works.”
Another compelling statistic buried in the Parnassus prospectus: Over the past five years–the height of the Great Recession–the average annual return on the Workplace Fund was an incredible 10.81%. The S&P Index for the same period was just 3.97%, a 6.84% difference. Dodson believes the wide gap in performance is easily explained: “I think what happens when you have a contented workplace, people are willing to put out more effort to improve operations during really difficult times. While I think every organization has their ups and downs, the downs are not as pronounced because everybody pulls together to try to get through the crisis. And, of course, this consistently more engaged performance inevitably reveals itself in the firm’s bottom line.”
After five years, investments in the Workplace Fund had grown to $80 million. Today, less than 3 years later, balances have ballooned to over $300 million. As reported by rating agency Morningstar, the fund also ranks highest in shareholder return compared to 1,303 other peer funds.
According to a 1997 article in the San Francisco Chronicle, many business leaders dismissed Moskowitz’s earliest list of “Best Places To Work” and derided it as being “a ’beauty contest’ that didn’t matter to anyone outside of corporate personnel departments.” But Moskowitz, and soon after, Dodson, have gone on to prove that the leaders at organizations which ensure employees feel valued, supported, developed, and rewarded are the most enlightened. They inspire a greatly expanded bottom line and set an example for all to follow in this 21st century.
There was an article in December’s HBR by Charles Galunic and Immanual Hermreck that described how to help employees get strategy. It seems “trickle down” doesn’t work for strategy. “Only top leaders can give strategic communications the appropriate weight. Strategy involves trade-offs, which are more easily accepted when put in a broad perspective, without parochial filters. As in the game of Telephone, messages passed from person to person seldom arrive intact.” How many of you strategic planners were surprised at that research? That’s what I thought. How many of you will use it in your next pitch to get the executive staff involved? Me too!
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