The Four Disciplines of Sustainable Growth

In the April 2002 edition of the Journal of Applied Psychology, The Gallup Organization published research that proved that a more engaged employee is also a more productive employee. The research also proved, if proof were needed, that a more engaged employee is also a more profitable employee, a more customer-focused employee, a safer employee, and an employee who is more likely to withstand temptations to jump ship. Many of us have long suspected this connection between an employee's level of engagement and the level and quality of his or her performance. This research laid the matter to rest.

And so now a new challenge presents itself. Because it makes good business sense to engage our employees, what is the most effective way to make this happen? If we can't use our benefits program to differentiate ourselves, because our program looks so similar to everyone else's, and if we can't use our stock options, because ours are languishing under water like everyone else's, then what lever can we pull, what discipline can we institute, what process can we install to beat our competitors at employee engagement?

Gallup research reveals that most organizations are still struggling with this challenge --70% of U.S. employees are not engaged at work, as measured by the Q ¹², Gallup's 12-question survey of employee engagement. And ironically, the solutions currently being installed within many organizations -- such as competency-based selection, competency-based performance appraisal, competency-based manager development, and gap-driven training needs analysis, all feeding into an integrated performance management IT platform -- only seem to be making matters worse. According to the 700,000-plus employees Gallup recently interviewed on the Q ¹², the longer employees stay with an organization, the less engaged they become.

Why are we so ineffective at engaging our people? And why, despite increasingly complex human resource systems, does the problem get worse the longer a person stays? Asked more positively: What can we do to build a working environment that, over the course of an employee's tenure, creates higher levels of per-person productivity, customer service, employee retention, and safety and, underpinning it all, higher levels of employee engagement?

We can start by answering these two basic questions: How much can we change a person after we hire him? And, given a finite amount of time and money, where are we likely to see the most improvement?

Everything we do to engage our people -- how we select them, position them, measure their performance, develop them, channel their careers, pay them, and terminate them -- is affected by how we answer these two questions. Answer them correctly, and everything we do subsequently will lead us closer to a sustainably engaging, and thus to a sustainable, productive organization. Answer them incorrectly, and all our intricate performance management systems, state-of-the-art corporate universities, and sophisticated IT systems will simply lead us further away from our goal.

So what are the correct answers? Up until a few years ago, we could have debated both questions long into the night, but recent advances in neuroscience have effectively ended the debate. Neuroscience tells us that between the ages of roughly 3 and 15, a person's brain organizes itself by strengthening the synaptic connections that are used frequently, while those that are used infrequently wither away. As Dr. Harry Chugani, professor of neurology at Wayne State University School of Medicine, describes it: "Roads with the most traffic get widened. The ones that are rarely used fall into disrepair." Beyond a person's mid-teens, that unique network of synaptic connections, in which some are strong and robust and others non-existent, does not change significantly. This means that a person's recurring patterns of thought, of feeling and of behavior do not change significantly. If he is empathic when he is hired, he will stay empathic. If he is impatient for action when he is hired, he will stay impatient. If he is strategic, always asking "What if?", he will stay strategic. If he is competitive, he will stay competitive. Gallup labels these recurring patterns of thought, feeling, or behavior talents, but whatever word you use -- such as traits, qualities, or characteristics -- science's perspective on them is clear: They don't change much after a person is hired.

The practical implications of this are hard to miss. Because a person's talents do not change much after he is hired, we must be very careful whom we select. We must identify the talent levels common to the best in the role and build our selection instruments to find candidates who possess similar levels of talent. We must begin any developmental work with a person by first identifying his strongest areas of talent. We must teach managers that talents exist and they are enduring in each person, and we must show them the clues that point to where each person's talents lie.

Of course, none of this implies that a person cannot change. Not only can he learn to better channel his talents by stabilizing his values or by developing a measure of self-awareness, but he can also be taught new skills and knowledge. This returns us to the second question: Given our limited time and money, where is he likely to improve the most? Or more bluntly, where are we likely to see the biggest bang for our training and development buck?

The counterintuitive answer is that he will learn the most, change the most, and improve the most in those areas of his brain where he already has the strongest synaptic connections. As Joseph LeDoux, professor of neuroscience at New York University, notes:

New [synaptic] connections formed by activity [by "activity," he means practice, training, and experience] are not created as entirely new entities, but rather are added to … pre-existing connections. Added connections are therefore more like new buds on a branch rather than new branches. Activity thus does not produce wholesale rewiring of the brain.

What neuroscience is telling us is that if we want to develop a person, if we want to net the greatest return on our investment in his growth, the best thing to do is identify where his talents lie and then expose him to skills, knowledge, and experiences that build on those talents to create consistently excellent performances -- what Gallup refers to as strengths. In Professor LeDoux's words, we must help him create new buds on his existing branches, rather than totally new branches.

The practical implications of this second answer are equally hard to miss. Because a person will always improve the most in his areas of greatest talent, and because each person's configuration of talents is unique, we must not try to train everyone in the same role to behave in the same way. We must hold people in the same role accountable for the same performance outcomes but challenge each person to reach these outcomes by capitalizing on his unique talents. We must teach managers how to distinguish between talents -- which cannot be transferred from one person to another -- and skills and knowledge, which can. We must build performance management systems that label a person's talents his "areas for development" and that encourage him to "work on" strengthening his talents with the relevant skills and knowledge. And we must stop promoting people out of their areas of talent, and instead build alternative career paths that encourage them to grow within their areas of greatest talent.

These two answers -- that a person's talents do not change much after he is hired, and that a person will improve the most in his areas of greatest talent -- serve as the blueprint for a new kind of organization. It will be an organization that selects for talent, holds people accountable for performance outcomes, challenges people to reach these outcomes by capitalizing on their greatest talents, and uproots the Peter Principle by offering people a way to build their careers by building on their greatest talents.

You won't be able to create this kind of strengths-based organization overnight. It is a significant undertaking, one that requires leadership from the top, the right metrics, the right tools, systematic education for all managers and employees, and constant vigilance to ensure that you don't slip back into the remedial mindset. To help you organize your efforts, we offer these Four Disciplines.

Discipline One: Hold all employees accountable for their local performance outcomes

The first discipline is to ensure that each employee understands which outcome metrics will be used to measure her success. This discipline appears obvious, but don't look past it too hastily. After all, according to Gallup research, more than 58% of employees cannot strongly agree to the statement, "I know what is expected of me at work."

To increase this number dramatically within your own organization, each employee must be able to look at her performance dashboard and identify each dial, understand why each dial is important, and know how, and how often, each dial will be measured. (Some roles are easier to measure than others, and all roles will have areas that cannot be quantified. However, anyone who says, "My job is so dynamic and complex that it just cannot be measured" has what one might charitably call a "non-job." If no dials of any kind move when she comes to work, why does she bother? Would anyone notice if she didn't?)

The perfect dashboard is one that includes only three kinds of dials. One dial should measure the person's business performance. The exact metrics will vary according to the type of role and organization. For example, a sales role would normally include such metrics as gross margin and revenue growth, an operations role would include measures of quality such as "errors per million," and an information technology role would include measures of efficiency such as "new program cycle time."

When selecting the appropriate metrics for each role, be mindful that, as noted by a sign hanging in Albert Einstein's office, "Not everything that can be counted counts." Pharmaceutical salespeople, for example, are often measured by how many calls they make. Telephone customer service representatives are frequently rewarded for handling each call in as few seconds as possible. Both of these metrics are easy to count, but neither is necessarily a good measure of success. It doesn't matter how many calls a pharmaceutical salesperson makes. What matters is whether these calls result in more of the company's drugs being prescribed. Likewise, it doesn't matter how quickly customer calls are handled if customers wind up feeling rushed.

The bottom line on selecting the right business performance metrics is this: Make sure that, for each role, the metrics align perfectly with the larger business strategy.

The second dial should measure how engaged the employees in each workgroup are. Although short-term results can sometimes be achieved by bullying tactics, sustainable and superior results are impossible without high levels of employee engagement. And because every employee either adds or subtracts from her team's level of engagement, every employee should be held accountable for contributing to it.

Your employee engagement metric should be short, so you can field it and report the results twice a year with a minimum of fuss. It should be simple, so every employee at every level in the organization can understand what it measures and why. It should measure the local work team's level of engagement -- managers with five or more direct reports should receive their local team's scores, and managers with less than five direct reports or employees with no direct reports should receive the scores of the team of which they are a part. And last, the metric should ask employees to rate their own feelings about their workplace. People can be relied upon to rate their own feelings accurately, particularly if the statements are as simple as "I know what is expected of me at work" or "In the last seven days, I have received recognition or praise for doing good work." In contrast, people are notoriously unreliable when it comes to rating the feelings or behavior of other people. So don't ask employees to rate their managers, managers to rate their employees, or peers to rate their peers.

Once this short, simple, and reliable employee engagement metric is in place, you can hold each employee accountable for making her own unique contribution to moving her workgroup's dial.

The third dial should measure customer engagement. As with the employee engagement metric, your customer metric should be short, simple, and local, and it should ask actual customers to rate their own feelings and/or behaviors. Obviously, for teams that interact directly with customers, you should carefully sample the team's external customers and report the results at least twice a year. Less obviously, you should also do the same for teams that don't interact directly with external customers, because these teams have customers, too. Every department within your organization is charged with delivering a product or service that someone else finds valuable. In the case of the accounting department, the human resources department, and to some extent, the marketing department, the "someone else" will be an internal customer in another department within the organization, but this doesn't make the needs of these customers any less important. So interview each team's internal customers as well. Report the team's scores on each team member's dashboard. Challenge each team member to figure out the unique contribution she can make to move the metric.

These three dials will ensure that your organization holds each employee accountable for engaging employees and engaging customers, while never falling into the trap of legislating exactly how she should reach these outcomes.

Discipline Two: Teach all employees to identify, deploy, and develop their strengths

Most people are not fluent in the language of strengths. Ask them to describe their strengths and with few exceptions, they will quickly lapse into the language of cliché. "I am good with people," they will say, or "I am a self-starter," "I am a perfectionist," and so on. Furthermore, ask them which they think will help them improve the most -- building their strengths or improving their weaknesses -- and most of them will come down on the side of weaknesses. Gallup posed this exact question to representative population samples in the United States, the United Kingdom, France, Canada, China, and Japan, and in none of these countries did the majority of respondents believe that their strengths held the key to their success. It seems that we live in a remedial world, one that is fascinated by weakness but takes strengths for granted. To build a fully engaged organization, you must teach your employees a new perspective and a new language.

First, teach them the difference between talents, skills, and knowledge. Teach them that each person possesses unique talents, and that these talents, these recurring patterns of thought, feeling, or behavior, endure throughout adulthood. Teach them that the way to excel is to identify their natural talents and then to seek out skills and knowledge that strengthen these talents.

Second, teach them a way to identify their greatest and weakest talents. Teach them to look for the clues to talent, such as yearnings, areas of rapid learning, satisfactions, and spontaneous reactions.

Third, teach them a language for describing each person's talents. This language must be precise -- it should be able to describe the subtle variations of how one person differs from another. It must be positive -- it should help explain a person's strength, not his frailty. And it must be common -- it must be a language in which every employee is fluent, so that if someone says Mary is strong in "Command" or Brian is strong in "Achiever," everyone knows exactly what is meant.

Finally, teach them the deep meaning of the strengths-based approach to performance. Teach them to spend at least 80% of their time thinking about how to build on their talents to create bona fide strengths by acquiring relevant skills, knowledge, and experience. Teach them that only 20% of their time should be spent managing their weaknesses. Teach them how to use this time wisely by finding a partner to help them, developing a system to support them, using one of their strengths to make their weakness irrelevant, or if the weakness stems from a lack of skills or knowledge, taking responsibility for seeking out the skills or knowledge they need.

If you can teach all of this -- through one-on-one conversations, training classes, and e-learning -- the human side of your enterprise will become virtually self-policing. Employees will start to ask themselves such questions as: "Does this role play to my greatest talents? How can I use my greatest talents to move the dials on my performance dashboard? Who on my team has talents that could complement mine?"

Managers will start to ask similar questions, such as: "What are the talents of each of my team members? Is my team missing any talents that could make it more balanced? What experiences can I provide this employee to help him build upon his talents to create strengths? Are this employee's performance problems caused by a lack of talent, in which case more training and more time aren't going to help? Or are his problems caused by a lack of skills and knowledge, in which case more training and more time will pay dividends?"

These questions, and the actions that follow, will muscle-build your organization. Beginning with one employee discussing his talents and strengths with one manager, and then multiplied a thousand-fold, your organization will gain the power of having employee after employee after employee perfectly cast in his role and challenged to express his best at work.

Discipline Three: Align all performance appraisal and review systems around identifying, deploying, and developing employee strengths

No matter how accurate your metrics, no matter how strengths-based your education, your organization will fail to increase per-person productivity, customer engagement, or employee engagement if your forms and your processes remain steadfastly remedial.

Unfortunately, most performance appraisal forms and processes are precisely that -- and their remedial focus is one reason why employees become more disengaged the longer they stay with your organization. The typical process resembles something like this: Once or perhaps twice a year, a manager looks at an employee's past performance and rates her on various aspects of it. If she is doing well in a particular aspect, it is labeled a "strength"; if she isn't doing very well, it is labeled "needs improvement." The manager then tallies these ratings and creates an overall rating, normally somewhere between "1" and "5," or between "outstanding" and "below expectations" -- these rating scales tend to be defined in agonizing detail in the hope that every manager will apply them consistently. The manager then assigns merit and bonus pay based on the employee's overall rating -- many organizations try to distinguish between merit pay and bonus pay, although the distinctions are often so subtle, they are nearly impossible to apply in the real world. Finally, the manager and the employee discuss the areas marked "needs improvement," and they agree on actions the employee should take to get better in these areas to earn a higher rating, a better merit increase, a better bonus, or a better shot at a promotion.

There are three repercussions to this kind of process, and none of them are productive.

The first repercussion is that the process telegraphs to the employee that her success and her pay hinges on her manager's inherently subjective overall rating. Of necessity, the employee starts asking herself, "What can I do to improve this rating?" This in turn raises other, more confounding questions, such as: "What is my manager like? What does she value? What kind of behavior, what kind of effort, or what kind of style will impress her?" Of course, the question the organization wants her to ask is more straightforward: "What can I do to increase my objectively measured performance?"

The second repercussion is that most of the conversation focuses on the past and specifically on trying to gain consensus about the manager's rating. The manager is forced to defend her rating by dredging up examples of the employee's past behavior, which the employee then counters with her own examples, which the manager then counters, which the employee then counters, ad infinitum. This complex negotiation about the past distracts them from what they should be focused on -- the employee's future performance.

The third repercussion is that when the conversation does eventually turn to the future, the employee is told that the key to future success, and more money, and perhaps a promotion is to improve in the areas marked "needs improvement." Inevitably, each employee starts working on her weaknesses, and as a result, each individual development plan becomes little more than an exercise in remediation. It is hard to see how an organization can win when all of its employees wind up in remedial programs.

To avoid these repercussions, you must redesign your performance appraisal process. Obviously, your process must be tailored to the unique requirements of each role, but to guide your redesign, we suggest following this simple sequence. At the beginning of each year, the manager and the employee should have a one-hour conversation. During this conversation, they will discuss three areas:

1. What are this employee's strengths? Specifically, what are her greatest talents and her relevant skills and knowledge?
2. What is expected of her? Specifically: What are the dials on her performance dashboard? What level is she expected to reach this year on each dial? What at-risk compensation will she receive if she reaches these levels?
3. How can she use her unique talents and strengths to drive each of the dials? Specifically, what strength-based strategies or tactics can she employ to reach the levels expected of her? This last area is where all the really creative work of great coaching needs to occur.

During the course of the year, the manager and the employee will meet at least four more times, for a minimum of 30 minutes each time. Some managers and employees will meet even more often than this. In these meetings, the employee will answer three simple questions: a) What is my main focus going to be for the next three months (or shorter period)? b) Are there any new strategies or tactics I need to employ, or should I stick to the ones we agreed on at the beginning of the year? And c) What two things can you, my manager, do to help me? These brief conversations keep every employee focused on the short-term future and thus are the mechanism that enables an organization to respond in real time to dynamic market conditions and shifting priorities. They are the organization's best antidotes to change.

At the end of the year, the manager and the employee meet for a final time to review the past year's performance. In this meeting, the manager plugs in the employee's objectively measured scores for each of the dials. No complex negotiation is needed to arrive at the employee's overall rating because there is no overall rating. There are only the scores -- objective, dispassionate, and incontrovertible. They are what they are. The employee receives the at-risk pay agreed upon at the beginning of the year, and then the process begins again for another year.

This process meets the demands of both real-world business and real-world neuroscience. It meets the demands of business because it is simple and because it focuses the employee and the manager on driving objective performance dials. Some of those dials measure productivity and some of them measure "values," such as employee engagement and customer engagement. But the important thing is that each dial is measured objectively.

This process meets the demands of neuroscience because the entire process focuses on helping the employee to move the dials by strengthening her natural talents. In the language of neuroscience, the process is designed to identify the employee's branches and then challenge her to create new buds on these branches. It is designed this way not because this is a nicer, more engaging way to manage a person. It is designed this way because this is the most efficient way to use a person's enduring uniqueness to drive performance. Engagement is a welcome by-product.

Discipline Four: Design and build each role to create world-class performers in the role

One simple way to assess how well you are managing your human capital is to ask your employees to react to this statement: "At work, I have the opportunity to do what I do best every day." Gallup research reveals that, on average, only 20% of employees answer that they "strongly agree." Only 20% say they are in a role in which they can use their strengths every day. Why is this figure so low? Why do so many employees feel miscast?

There are as many reasons as there are employees, but one of the main reasons is that employees have been deliberately promoted out of the roles in which they could really use their strengths.

It is a strange irony that organizations profess to want to become world-class, while at the same time, they build a career ladder that rewards an employee's excellence in his current role by moving him out of it as fast as possible. Virtually all prestige systems are set up to encourage a person to move up this ladder -- a ladder that begins with an individual contributor role and extends up through a first-level supervisor, unit manager, multi-unit manager, and regional director, all the way up to the executive ranks. This ladder system is so influential that any employee who lingers too long on one rung sees his reputation slip. His career has stalled.

Despite the prevalence of this typical career ladder, intuitively we all know that it doesn't work for thousands of employees. Excellent salespeople become mediocre sales managers, superb technicians struggle to supervise other technicians, and highly effective unit managers flounder as recently promoted multi-unit executives. If organizations had set out to ensure that they would have amateurs in every role, they couldn't have devised a better career ladder.

Why do organizations persist in promoting people to their level of incompetence, as Dr. Laurence Peter pithily described it in his 1969 book, The Peter Principle? More than likely, it is because the roles in most organizations are defined by their leaders, and these leaders, like most of us, are predisposed to assume that everybody shares their view of the world. They assume that every employee is motivated by the same goals that once motivated them; that every employee must yearn for promotion out of the depths of the organization just as they did; and that each employee, if he's honest, dreams of one day having the top job, just as they did. Guided by these assumptions, they then define most roles, either explicitly or implicitly, as "pass-through" roles -- as in, the only way to grow your career, your compensation, and the respect afforded you is to pass through your current role and move up.

What our leaders have forgotten is that each employee does not in fact share their view of the world. They have forgotten that some employees derive intense satisfaction from being responsible for their own work, and in contrast, find it stressful to be responsible for someone else's. They have forgotten that some employees -- whether they are hotel housekeepers, software designers, or customer service representatives -- actually thrill to the specific demands of their current role, and that, for these employees, the best form of self-expression, and not coincidentally, the best way to serve the organization, is to grow within this role. In short, leaders have forgotten that their employees possess unique and enduring talents and that this uniqueness must be channeled to create world-class professionalism in every role.

To create an organization of world-class performers in every role, you must undertake the following initiatives.

First, define graded levels of achievement for every key role. Specify at least three rungs of a career ladder that leads from good, to great, to world-class. These rungs should be based on reaching certain levels of measurable performance, not just tenure, so be sure to use each role's outcome metrics to define the rungs. No one will take these rungs seriously if they aren't rewarded for climbing them, so be creative with compensation, titles, and other forms of prestige. For example, if a particular store manager has become a world-class professional, the best in your organization, there is no reason (other than convention) why he shouldn't earn more than the novice district manager to whom he reports and be given a more senior title.

By the time this "professionalizing" initiative is complete, every employee in every role should be able to answer these three questions:

1. Who is the very best, the Tiger Woods, at my role?
2. What forms of prestige and respect -- in the form of pay, title, or recognition -- does this person receive within my organization?
3. What are the performance levels I will have to reach to become the next Tiger Woods?

Some of your employees will want to -- and should -- climb the corporate ladder. But many should not. They may be able to learn the relevant skills and knowledge for the role, but they do not possess the relevant talents, and according to neuroscience, they never will. By building alternative ladders within your organization that are defined by clear, performance-based rungs and by linking each rung to meaningful increases in pay, title, and other recognitions. By doing these things, you will provide all employees, whatever their talents, with a way to grow that does not require them to be promoted out, up, and away from their areas of true talent. You will have finally uprooted the Peter Principle from your organization.

Second, you should build an instrument that helps you select employees who possess the same level of talent intensity as your best performers in the role. Many organizations make a commitment to select for talent, but they make this mistake when putting it into practice: They study their top performers in a role, identify the specific talents shared by these top performers, build a selection instrument that scores each applicant on these talents, and then require their managers to hire only those applicants who score well on each of the talents.

On the surface, this seems sensible. So where's the problem? The problem is that a selection instrument built in this way over-promises its precision. It promises a) that it can measure each of these talents reliably; this is true only if the selection instrument is psychometrically sound, which few are. And b) it also suggests that each of these talents is necessary for success, and this is never true. The truth is that although most of your best performers in a particular role possess a similar level of talent intensity, some of them will not -- these are the anomalies who have somehow found their own way to achieve success -- and confusingly, even among those who do share the same level of talent intensity, each person will nonetheless possess a unique configuration of talents.

Given this muddy, exception-filled truth, selecting for talent becomes a numbers game, no more, no less. The most the selection instrument should claim is that it can objectively measure each applicant's level of talent intensity for the role in question, and that across hundreds of candidates, over a number of years, and despite some confounding exceptions, applicants with a higher level of talent intensity for the role will, in general, outperform the rest. This is the limit and the extent of its effectiveness.

As such, a lastingly effective selection system should meet the following criteria:

• It should be built on a study of your best performers in the role or on those who, in your considered opinion, will be the best performers given the way your business is developing.
• It should have at its core a selection instrument that is built on sound psychometric principles. This instrument should be scored, but it should yield only a total measure of talent intensity, not a score for each specific talent. This measure of talent intensity will provide your managers with an objective and reliable answer to the question, "Does this applicant possess an overall level of talent intensity similar to that of our best?"
• Your selection system should provide your managers with a list of open-ended questions that managers can use during the interview process to help them learn more about the applicant. This "discussion guide" should never be scored. It should be designed to support the manager's own intuitions and indeed, to encourage him to use these intuitions. After all, you want your managers, rather than your selection instrument, to make the final selection decision.
• You should position the selection instrument and the discussion guide to managers as follows: "We want you to use your judgment in the hiring process, so we're providing you with a discussion guide. However, we also want to help you increase your success rate, which is why we are using an objective psychometric instrument. The psychometric instrument is not a test that can be passed or failed. We know that a few people, even though they scored poorly, will excel in the role because of their unique combination of talents and experiences. You have the authority to go against the instrument; however, we advise you that if you go against the instrument consistently, you will have less talent to work with, and so, over time, your team's performance will suffer."

Only a system that meets these criteria will strike the balance between scientific objectivity and subjective judgment, between the enforcement of organization-wide talent standards and the empowerment of those managers who ultimately make the selection decision.