Have We Been Getting Employee Engagement All Wrong?
A business consultant says employees are no more engaged than they were 30 years ago when the employee-engagement industry first took off.
Here are today’s highlights:
More than half of your employees are planning to ask for a raise before the end of the year.
Companies are finding that giving up an office lease can be expensive.
No, you’re not getting Taylor Swift tickets. It’s a phishing test.
Israeli startups are seeing as many as half of their employees mobilized.
THE 21 HATS PODCAST
Bonus Episode: The Employee Engagement Industry Has Failed: In this week’s bonus episode, Bill Fotsch, a business consultant, explains why he thinks much of the effort that he and many others have put into creating employee engagement over the past three decades has been wasted effort—well intentioned, but wasted. The fact is, Fotsch says, employees today are no more engaged than they were some 30 years ago when the concept of employee engagement first gained currency. So what’s the answer? Fotsch has come to the conclusion that it’s something he calls “economic engagement,” which happens to be the name of his consulting business. What exactly is economic engagement? He says it’s getting employees to focus on serving customers, and doing so profitably. He says it’s not so much about sharing financials with employees but about getting employees to understand the strategies and actions that really drive a business’s profitability.
Fotsch is so convinced that he’s cracked the code that he’s gone beyond mere consulting and has been buying stakes in businesses so he can implement his ideas and prove his concept. So far, he says, it’s working.
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Are you giving out raises? “According to the 2024 Salary Guide from Robert Half, about 63 percent of workers said they plan to ask for a raise before the end of the year. Why are they asking? About 39 percent point to higher inflation, while 26 percent said they took on more responsibility, and 16 percent said they felt underpaid. More than 30 percent of workers said they would look for a new job if they did not get a raise. ‘Many employees are feeling overworked and underpaid,’ said Emily Neill, a senior managing director for Robert Half’s executive search division. ‘Individuals are at a point where they are ready to ask for raises.’”
“Worker expectations remain high. The annual expected salary of a job offer jumped to $67,416 in July 2023, up from $60,310 in July 2022, according to the Federal Reserve Bank of New York’s SCE Labor Market Survey, the highest the survey had recorded.”
“The demand for raises comes at a time when many companies are seeking to dial back the raises and bonuses that defined the height of the Covid-19 pandemic, when companies were scrambling to hire anyone at all to fill vacant positions. Those increases led not only to overinflated salaries, but also to higher expectations among workers, Neill said.”
“More than 60 percent of workers in Robert Half’s new report said they would rather stay in a job with flexible work options than accept a position with higher pay but more rigid in-office requirements — giving companies that can offer that flexibility a leg up.” READ MORE
Done right, hybrid work can work: “The benefits of hybrid work can be significant, Gallup reported. Hybrid workers consistently report less burnout at work, a better work-life balance, and more autonomy. Over half of those surveyed reported increased productivity, despite risks of weakened communication and workplace collaboration. Gallup also found hybrid workers have much higher employee engagement, lower turnover intentions, and better well-being compared with fully in-person workers.”
“While the perks of including employees in hybrid work policies are notable, only 12 percent of hybrid employees surveyed say their team's hybrid work policies came about from a collaborative decision-making process, Gallup reported.”
“Gallup noted that just going into the office may not be the determining factor in hybrid work's success, especially since 60 percent of hybrid employees don't get to set their office schedule. Managers should give teams time to adapt to hybrid work and employees should have the space to advocate for more flexible schedules, Gallup said.”
“When bosses push too hard to get staff in the office, or when they become too fixated on tracking employee performance when working from home, this could lead to increased tension in the workplace, according to Gallup.” READ MORE
When companies clear out, someone has to clean up: “Leases typically delineate a tenant’s obligations when moving out. Traditionally, contract provisions are fairly basic. Before keys — whether electronic or physical — are returned to the landlord, furniture, fixtures and equipment must be cleared out, the space left ‘broom swept’ or ‘broom clean,’ and ultimately returned to the same state as first occupied. But straightforward lease provisions do not tell the whole story. Large heating, ventilation and air-conditioning systems for old computer rooms must be dismantled. Abandoned vaults must be removed. And staircases, and even fully equipped kitchens, sometimes must go if commercial tenants hope to recover their security deposit.”
“The cost of removal can be substantial. Tenants can recoup at least some value, often by selling some fixtures in the secondary market, but the expense is often unanticipated.”
“As with fashion, office design changes over time. Few people want the large mahogany tables that were once a fixture in boardrooms. Landlines are relics. Jewelers and banks may need to contend with the removal of large vaults.”
“Even kitchens have waned in popularity. Landlords now often require tenants to remove them, especially if the building owner plans to divide the footprint into smaller spaces. Bigger companies may retain them, but Mr. Horne predicts that ‘they’re a thing of the past.’”
“Tenants in bankruptcy often leave without fulfilling their obligations, resorting instead to ‘jingle mail,’ a practice that, in the days before electronic entry, involved sending keys back to the landlord in an envelope, said Steven A. Carvell, a professor at the Cornell SC Johnson College of Business.” READ MORE
Israeli startups are seeing as many as half of their employees mobilized: “Companies and investors with operations in Israel are assessing how to proceed as staff members, including executives, have been drafted or voluntarily enlist. Firms are checking on their staff’s safety, and attempting to provide support for those who are affected. Entrepreneurs are also coordinating volunteer efforts to support the war and those affected by it, as well as setting up contingencies for how their businesses will operate should they join the fight. Some Israeli founders who are running startups in the U.S. are also heeding mobilization orders, or are preparing to be called up.”
“Itamar Friedman, co-founder and chief executive of Israeli artificial intelligence startup CodiumAI, said he has reported to reserve duty. ‘I want to be part of the people who are protecting our country,’ he said.”
“Some companies are seeing half of the staff being mobilized, said Eric Reiner, founder and managing partner at New York-based venture firm Vine Ventures. ‘Those folks who are from combat units are being called and saying, hopefully see you soon, to their wives and kids,’ Reiner said.” READ MORE
Small businesses have become a lifeline for Cuba: “Newly licensed private businesses are becoming a lifeline for Cuba, bringing in about half of the country’s total food imports as the cash-strapped Communist government struggles to keep power plants running and provide public transport because of acute fuel shortages. Havana passed laws allowing Cubans to form small businesses that can employ up to 100 people in the wake of countrywide protests that shook the impoverished island two years ago. Since then, more than 8,000 small and midsize businesses have registered with the government. They are involved in activities that range from tourism and construction to computer programming.”
“These businesses are now leading importers in a country that relies on imports of everything from fuel to most of its food. Cuba’s economy minister, Alejandro Gil Fernández, said in a report to Cuba’s Congress on the state of the economy that imports by private companies could top $1 billion this year.”
“‘In the last two years, the private sector has been dominating commerce in Cuba to an unprecedented level,’ Aldo Álvarez, a Cuban lawyer turned importer based in Havana, said in a telephone interview. ‘We not only have businesses, but we have the capacity to import.’”
“Last week, more than 70 Cuban entrepreneurs met in Miami with U.S. officials, leading Cuban-American businessmen and potential suppliers in a bid to boost the island’s private sector and understand how to navigate rules to trade with the U.S.” READ MORE
Companies are getting creative with their phishing tests: “What once began with Nigerian princes asking for help in exchange for riches has become far more sophisticated social engineering, and companies are rising to the threat by getting creative in their training. These simulated phishing emails promise bonuses, gift cards and yes, once-in-a-lifetime concert tickets. The practice has left some employees chuckling, and others wary about the lines companies might cross to test someone’s cybersecurity competence.”
“JuSong Baek remembers the email all too well. In early September, he opened his work inbox to amazing news: He was officially off the waitlist for Taylor Swift’s Eras Tour—he could buy tickets for her Toronto show.”
“But just before the 26-year-old product designer clicked on the link, he remembered something: He didn’t use his work email to register with Ticketmaster. It was a phishing test from his employer.”
“The Taylor Swift phishing test was a template created by KnowBe4, a security-awareness company. In the past 30 days, it was sent 17,600 times, with 533 people clicking on it, the company says. It’s in line with KnowBe4’s usual range for its phishing tests.”
According to a report from KnowBe4, after a year of phishing training and simulations, a company’s likelihood of employees clicking on an email or suspicious link drops to 5.4 percent from 33.2 percent.” READ MORE
Backyard cottages are now the hottest thing in housing: “These add-ons are known as accessory dwelling units. They can be free-standing miniature homes as small as a studio apartment and tucked away in a backyard. They can reside above a garage or in a basement and extend to more than 2,000 square feet. ADUs are growing in popularity as states encourage their construction through zoning changes and homeowners seek ways to lower their housing costs by renting out these units. The typical cost to construct one is around $100,000, according to building-permit data company Builty.”
“Adding housing units on existing lots is seen by policy makers as a quick way to increase housing supply. California, Oregon, Maine, and other states passed laws in recent years to encourage ADU construction.”
“‘It’s gone from a small niche in the market to really a much more impactful part of new housing,’ said Scott Wild, senior vice president of consulting at John Burns Research and Consulting. ‘Municipalities love it, existing homeowners love it, developers love it.’”
“ADUs are often built by local contractors, but some companies are trying to use factories and modular construction techniques to lower costs and make ADU construction more standardized. San Francisco-based company Villa offers factory-built backyard ADUs in California with base prices from $95,000 to $180,000.” READ MORE
FOOD & BEVERAGE
The food industry is preparing for the Ozempic era: “Big food companies and investors are watching as Ozempic and other similar weight-loss drugs flow to millions of people, upending America’s diet industry and raising new questions about how consumers will eat. Executives at food manufacturers from Campbell Soup to Conagra Brands said they are fielding questions from investors about the drugs’ potential impact, as internal teams start to assess consumer behavior and brainstorm ways to respond. The drugs, which suppress patients’ appetites, have exploded in popularity in the U.S., straining manufacturing capacity. Morgan Stanley has projected that 24 million people, or nearly 7 percent of the U.S. population, will be taking such medications in 2035.”
“Those people could cut their daily calorie consumption by as much as 30 percent, according to the firm, which surveyed over 300 patients. For a person on a 2,000-calorie diet, that could mean eliminating a one-ounce bag of salted potato chips, a bottle of soda and more each day.”
“Mark Clouse, chief executive of Campbell, which along with its namesake soups makes Goldfish crackers and Cape Cod potato chips, said he has been struck by the rapid rise of pharmaceutical companies behind the drugs. ‘That’s a little bit of an, OK, wait a minute, something is going on here,’ Clouse said.”
“Now, concerns about companies’ growth prospects in the age of Ozempic are adding to worries over declining sales volumes, increasing pressure on food companies’ stock prices. The S&P 500 Packaged Food & Meat subindex has dropped 14 percent so far this year, while the S&P 500 has climbed 11 percent.” READ MORE
Charles Feeney, co-founder of international retailer Duty Free Shoppers: Feeney made billions of dollars by operating a global network of shops selling liquor, perfume, jewelry and other items at tourist hubs. Much of his success, he said, was ‘dumb luck,’ and he didn’t need a vast fortune to support his modest tastes. So he created a group of foundations that gave away about $8 billion. He kept around $2 million to cover his retirement.”
“Unsure where he wanted to work after graduating from Cornell in 1956, he sailed on a Cunard liner to France and took courses at the Sorbonne in Paris and at a university in Grenoble. Noticing that it was hard to hitch rides in southern Europe, he began holding up a sign reading ‘English conversations offered.’ Cars started stopping for him.”
“He set up a summer camp for children of Navy officers and later—working with a Cornell acquaintance, Robert Warren Miller—began selling duty-free liquor, perfume, cameras and other items to sailors. He met Danielle Morali-Daninos in France. They married in Paris in October 1959.”
“The duty-free business expanded as more American tourists flooded Europe. Feeney and Miller began working with and later acquired a rival firm, Duty Free Shoppers. They opened a shop in Paris and expanded into Asia, where a large part of the business initially was selling duty-free cars to be shipped to the U.S. for American military personnel.”
“He advised fellow tycoons to start their philanthropy early. ‘It’s a lot of work when you are over 65 to start a giving program,’ he said.” READ MORE
Thanks for reading, everyone. — Loren