Breakthrough Performance in the New Work Environment

EXECUTIVE GUIDANCE FOR 2013 Breakthrough Performance in the New Work Environment Identifying and Enabling the New High Performer 1

Driving corporate growth in a low-growth environment is a consistent theme in boardrooms today. As CEB research shows, many companies are (or should be) pursuing Intelligent Growth simultaneous growth in top-line revenue and bottom-line profitability. Companies that successfully manage the cost growth trade-off significantly outperform their peers and reward shareholders. Unfortunately, achieving Intelligent Growth is hard and getting harder only 3 out of 10 companies in the S&P 500 have been able to grow and keep costs at bay since the global financial crisis. For many firms, managing the cost growth trade-off comes down to increasing workforce productivity. To date, business performance gains have come from better labor efficiency, and companies have been getting more and more from their investment in employees. Since 1993, revenue per full-time equivalent (FTE) has grown at a 3.23% compound annual growth rate (CAGR) compared to no growth in revenue per cost of goods sold (COGS; CAGR = 0.16%) and a 0.61% in revenue per invested capital. 1 Companies Get More from Employees Trends in Key Productivity Measures, 1993 to Present 2 Indexed to 1993 Revenue per FTE Revenue per COGS Revenue per Invested Cap 2.0 1.8 CAGR = 3.23% 1.6 1.4 1.2 1.0 0.8 0.6 CAGR = 0.16% CAGR = (0.61%) 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Source: Compustat; CEB, CEB Finance Leadership Council. 1 Based on median figures. 2 Data includes 8,625 companies from 93 countries with annual revenue greater than US$500 million. 1

Needing Even More from Employees Simply put, the corporate bottom line depends on getting more efficiency out of the workforce and signs suggest companies will continue to need more from employees going forward. Companies are clearly striving for profitable growth. The majority of executives surveyed by CEB believe their revenues will increase in the coming year (59%), but they also anticipate continued pressure to lower costs (67%). Profitable growth will continue to put pressure on employees to be more efficient only 32% of executives plan to increase head count despite optimism around revenue growth. The Challenge: Growth Without Staff Investments Percentage of Executive Expectations Q3 2012 Increase Stay the Same Decrease 32% 59% 67% 33% 15% 26% 17% 16% 35% Expected Revenue Cost Pressures Head Count Source: CEB, Business Barometer Quarterly Report ; CEB, CEB Finance Leadership Council. 2

Moreover, ambitious profitable growth goals at many firms have executives demanding a discontinuous jump in workforce performance and productivity. On average, global executives believe they will need a 20% improvement in performance over and above current levels in order to meet their business objectives. Executives Need More from Employees to Meet Current Goals Percentage of Improvement Needed to Achieve Business Goals n = 2,046. 39% On average, global executives believe they will need a 20% improvement in performance over and above current levels. 27% 15% 14% 5% 0% 1 10% 11 20% 21 30% More Than 30% Source: CEB, CLC Human Resources High Performance Survey. 3

Are Productivity Expectations Unrealistic? Achieving a dramatic jump in workforce productivity may be harder than business leaders anticipate. CEB has been tracking employee effort and performance levels since 1998, and the labor productivity gains realized over the past two decades may well be reaching their limit. The discretionary effort employees put into their work rebounded after the global financial crisis but has remained relatively flat over the past year and a half. 3 Employees surveyed by CEB report that their jobs are getting harder, with more than two-thirds reporting more complexity and 80% seeing their workloads increase. Rapid shifts in the global economy and availability of technology and information have resulted in dramatic changes to corporate organizational structures and the way work is done. Most observers agree that work has become much more global and more dependent on information and technology and requires more collaboration across a geographically dispersed workforce. Increasingly complex work is taking its toll: more than one-half of surveyed employees indicate the stress of their jobs is on the rise. Employees Are Working Harder and Longer Percentage of Employees Who Have Experienced an Increase in Workload in the Past Three Years n = 23,339. 80% 78% 56% Your Workload Your Team s Workload Hours Worked per Week Source: CEB, CLC Human Resources High Performance Survey. 3 CEB, CLC Human Resources, Quarterly Global Workforce Insight Report, Q3 2012. 4

Employees Struggle to Handle the Stress of Their Jobs Percentage of Employees Agreeing with the Statement, I Cannot Handle the Stress of My Job for Much Longer n = 23,339. 55% Agree 45% Neutral or Disagree Source: CEB, CLC Human Resources High Performance Survey. 5

Herein lies the problem: employee trends suggest employees are reaching a limit to their workload, but executives need a 20% lift in workforce productivity. Many business leaders believe employees can be more productive. On average, executives think that only about 29% of their employees are operating at peak productivity. Moreover, for every executive that believes his or her staff is fully productive, seven believe their staff could substantially improve. Most Executives Think Employees Could Substantially Improve Percentage of Executives n = 641. 68% 20% 12% Substantial Room to Improve Moderate Room to Improve Little to No Room to Improve Substantial Room to Improve = 1 to 33% of workforce performing at highest possible level Moderate Room to Improve = 34 to 66% of workforce performing at highest possible level Little to No Room to Improve = 67 to 100% of workforce performing at highest possible level Note: HR executives answered for the entire workforce, while other executives answered for their function or department. Source: CEB, 2012 CEB Senior Executive Survey. 6

With employees stretched in their jobs, how will organizations achieve performance and productivity advantages especially in light of the changes taking place in the work environment? Higher workloads and increased employee stress are symptomatic of fundamental shifts in the work environment. To be even more productive in this environment, employees will need to build new skills and competencies and work in different ways. As a result, executives will need to organize and manage differently to enable their teams to be productive. To achieve profitable growth, companies must: Understand the most important changes taking place in the new work environment and the implications for employee performance and productivity, Identify the necessary new skills and competencies for employees to be productive and determine how best to quickly build them across the workforce, and Adjust management approaches and target technology investments to better enable high performance. 7

Understand the New Work Environment and Its Implications It is a well-known fact that the economy and underlying work environment are changing. The press and business literature are replete with mega trends and micro trends all believed to be driving more fluidity and complexity in the business environment. The global economy is less stable, technology is evolving at breakneck pace, and information and communication channels have become ubiquitous. But which of these trends really matter, and what are the important subsequent changes within corporations? Through a survey of more than 1,500 senior executives, CEB identified 10 important trends that fall into three broad, but distinct, categories: Frequent organizational change More interdependent work An increase in knowledge work These trends meaningfully impact how work is structured, managed, and conducted, and they reveal new realities in the workplace that fundamentally change how work gets done and what drives employee performance. 8

Frequent Change, More Interdependence, and Knowledge Work Define the New Work Environment Percentage of Executives Indicating Trend in Their Top Three 4 n = 1,630. CHANGE (ECONOMIC AND ORGANIZATIONAL) More Frequent Organizational Change 31% Greater Financial Uncertainty 16% Organizational Downsizing 14% INTERDEPENDENT WORK Cross-Function or Departmental Work Groups 27% Matrixed Reporting Relationships 21% Geographically Dispersed Workforce 18% Team-Based Work 15% KNOWLEDGE WORK New Information Technology 27% More Nonroutine Work 17% Greater Information Availability 15% Source: CEB, 2012 CEB Senior Executive Survey. 4 HR executives answered for the entire workforce, while other executives answered for their function or department. 9

Frequent Organizational Change Is the New Normal A persistent and common aspect of the new work environment is frequent, significant organizational change, both broadly defined (e.g., strategic objectives, markets) and narrowly defined (e.g., work teams, reporting relationships). Shifting economic power, regulatory uncertainty, and rapid technological changes cause frequent adjustment in business objectives and strategies and lead to real changes in organizational structures, reporting relationships, and work teams and processes. Over the past three years, 63% of employees report experiencing frequent changes in organizational objectives. Structural changes in the work environment are just as common and persistent. In 2009, 81% of employees experienced a significant organizational change, and every year since, more than 50% of employees have reported significant changes. In a high-change environment, established work processes become less relevant and valuable as objectives and organizations change. Moreover, process and structure changes disrupt, or even disband, long-standing employee networks. CEB analysis estimates that a high-change environment can reduce overall employee performance by as much as 10%. 5 Implication: Change and ambiguity will derail productivity unless managers help employees better anticipate, contextualize, prioritize, and respond to frequent change at all levels ultimately making them more agile and accepting of change. 5 CEB, Communications Executive Council Agility Survey 2011. 10

High-Level Objectives Are Changing Frequently Amount of Change in Organizational Objectives in the Past Three Years, by Percentage of Employees n = 23,339. 3% Decreased 34% Stayed the Same 63% Increased Source: CEB, CLC Human Resources High Performance Survey. Most Employees Experience Persistent Change Percentage of Organizations That Experienced Significant Changes in the Previous 12 Months 81% 56% 53% 56% 2009 2010 2011 2012 Source: CEB, CLC Human Resources Quarterly Global Labor Market Survey. 11

Work Is More Interdependent As organizations have become more matrixed, employees across the organization share formal responsibilities, authority, and accountability for more work outcomes. While informal working relationships and networks have always been important, getting work done today requires more collaboration among a broader and more diverse set of people who are performing new tasks and working across more geographic locations. Collaborating today is harder than it was yesterday: Sixty-seven percent of employees report an increase in work requiring active collaboration. One-half of all employees indicate a significant increase in stakeholders needed to make a decision. Fifty-seven percent report an increase in the number of coworkers they work with in other geographic locations. Sixty percent of employees report working with 10 or more people on a day-to-day basis (and one-half of these employees report needing to work with more than 20). 6 Sixty-five percent of employees indicate they must manage external stakeholders (i.e., outside their company) to perform their work. 7 The new work environment requires collaboration, yet the pace of workplace change complicates working with and through others. As previously noted, organizational changes disrupt employee networks and work processes, making connections hard to build and even harder to maintain. Employees must navigate across different structures, cultures, and processes to perform, but they struggle to understand whom to work with and how to work with them. Implication: Collaboration will not occur unless organizations enable and encourage broader employee networks connecting employees as needed and providing clear direction, aligned incentives, integrated workflow, and better technology. 6, 7 CEB, CLC Human Resources High Performance Survey. 12

Work Requires Collaboration with a Broader, More Diverse Network Change Experienced in the Past Three Years, by Percentage of Employees n = 23,339. Amount of Work That Requires Collaboration with Others 3% Decreased 30% Stayed the Same 67% Increased Number of Individuals Involved in Decisions 7% Decreased 43% Stayed the Same 50% Increased Amount of Work with Coworkers in Another Location 5% Decreased 38% Stayed the Same 57% Increased Source: CEB, CLC Human Resources High Performance Survey. 13

Almost Everyone Is a Knowledge Worker The introduction of big data to the workplace has coincided with exponential growth in computing power, proliferation of business applications, more process automation, and increased outsourcing of routine work. As a result, most work processes are highly automated, and work in general has become more data and information intensive, less routine, and more exceptions based. Working with data and information has become core to most employees jobs, with 76% of employees reporting a significant increase in time spent working with data and information. While definitions vary, more and more employees are knowledge workers anyone who collects, manages, uses, analyzes, and makes decisions using information as a primary part of his or her day-to-day job. Almost three out of four executives report that more than one-half of their staff are now knowledge workers. 8 Unfortunately, not all employees have achieved proficiency in being able to find information, analyze it, and use sound business judgment to make decisions. CEB s Insight IQ index measures an employee s decisionmaking maturity. Employees with the highest Insight IQ those with the ability to effectively analyze information to make sound decisions are called Informed Skeptics. On average, less than 40% of employees are Informed Skeptics. 9 The best decision makers are found at the executive level, and the number of employees with the right balance of skills declines rapidly at lower levels in the organization. Implication: Since knowledge work requires both ready access to the right information and effective decision making with that information, organizations need to ensure that employees have the right skills and abilities to use advanced information technology effectively in their jobs. 8 CEB, CLC Human Resources High Performance Survey. 9 CEB, Information Technology Insight IQ Diagnostic. 14

Employees Are Doing More Knowledge Work Change in Time Spent Finding and Reviewing Data and Information in the Past Three Years, by Percentage of Employees n = 23,339. 6% Decreased 18% Stayed the Same 76% Increased Source: CEB, CLC Human Resources High Performance Survey. Good Decision Makers Are Rare Lower in the Organization Percentage of Informed Skeptics (Mature Decision Makers), by Level n = 4,941 knowledge workers. Executive Leadership 69% Senior Managers 50% Mid-Level Managers 41% Individual Contributors 32% Source: CEB, Information Technology Insight IQ Diagnostic. 15

The work environment has changed dramatically, and work is now done through a web of collaborating knowledge workers. Employees in this environment have more ambiguous objectives, and their work is interconnected with a growing, more dispersed network. Employees are making more business decisions much lower in the organization. They need more high-quality information and tools to make those decisions. But most of all, they need the experience and skills to apply sound judgment in decision making. Bottom line organizations will need a different kind of employee, one that is immune to the paralyzing complexities of change, willing to collaborate with a broad range of individuals, and able to apply judgment in an increasingly knowledge-based role. 16

Identify and Build New Skills Who are the high-performing employees in this new work environment? What skills and behaviors will differentiate the most productive employees? Most managers and performance management models assume that strong business acumen, task and process mastery, and technical know-how explain the majority of an employee s job performance. Unfortunately, the prevalence of outdated assumptions about the most valuable skills and abilities leads to the misidentification (or under-identification) of the organization s next generation of high performers. Using existing methods, organizations will likely fail to identify 65% of their new high performers. 10 Building the next generation of employees requires focusing on a new set of skills. CEB analyzed the drivers of performance for more than 23,000 managers and employees across more than 40 organizations globally and found the 10 employee competencies that differentiate those best able to perform in the new work environment: 1. Prioritization 2. Teamwork 3. Organizational awareness 4. Problem solving 5. Self-awareness 6. Proactivity 7. Influence 8. Decision making 9. Learning agility 10. Technical expertise 10 CEB, CLC Human Resources High Performance Survey. 17

Based on these differentiating competencies, the new high performer is someone who can: Adapt to Change High performers use their knowledge of the organization and their role to quickly adjust to work environment changes. Adaptive employees are also proactive; they are not paralyzed by change, and they are willing to take action and move projects and priorities forward. Work Collaboratively High performers are good collaborators, working well with and through others. They have the teamwork skills necessary to work with a wide range of people across the organization. They use their technical expertise to influence stakeholders and contribute to collaborative projects. Apply Judgment High performers use strong analytic skills to prioritize their work, assess problems, and make decisions. They rely on their expertise, experience, and knowledge of the organization to apply judgment to their decisions and in their work. 18

The New High Performer Adapts to Change, Works Collaboratively, and Applies Judgment Top 10 Out of 32 Competencies Driving Employee Performance n = 23,339. Organizational Awareness 11% Adapt to Change Self-Awareness Proactivity 9% 9% Learning Agility 7% Teamwork 12% Work Collaboratively Influence 9% Technical Expertise 7% Prioritization 13% Apply Judgment Problem Solving 11% Decision Making 9% Source: CEB, CLC Human Resources High Performance Survey. 19

Unfortunately, employees with the right combination of skills those who adapt to change, work collaboratively, and apply judgment are relatively rare. SHL, a global leader in talent measurement and a CEB subsidiary, tracks a global benchmark constructed from competencies core to the new high-performer profile. On average, about 5% of assessed employees have a strong combination of the core skills and competencies essential to high performance in the new work environment; in addition, some industries have more new high performers than others. While technology (6.4%) and professional services (6.2%) sectors have relatively more capable employees than the travel and leisure (4.1%), oil and gas (4.2%), engineering (4.2%), and utilities (4.3%) sectors, the new high performer is in a clear minority. New High-Performer Skill Sets Are Rare Presence of Key Competencies, by Industry Sector Globally Percentage of Population 1 Technology 6.4% 2 Professional Services 6.2% 9 Consumer Goods (Personal and Leisure) 5.3% 8 Public Sector 5.4% 10 Business Services 4.9% 6 Mining 5.6% 17 Travel and Leisure 4.1% 15 Oil and Gas 4.2% 11 Health Care 4.8% 15 Engineering 4.2% 6 Insurance and Financial Services 5.6% 12 Banking 4.6% 12 Telecoms 4.6% 14 Utilities 4.3% 5 Consumer Goods (Heavy Goods) 5.8% 3 Food, Beverage, and Tobacco 5.9% 3 Retail 5.9% Source: SHL, The SHL Talent Report: Big Data Insight and Analysis of the Global Workforce. 20

How can organizations quickly develop the new skills required for high performance? It is too easy (and incorrect) to assume that current employees are incapable of developing the new competencies required. While hiring new staff with stronger aptitude in the new core skills will help over time, there is no substitute for experience. The competencies essential to strong performance in the new work environment are best developed through on-the-job experience with a single company over time. As an employee gains organizational experience, his or her ability to adapt to change, work collaboratively, and apply judgment in his or her job rises steadily. Performance Improves with Experience Maximum Impact on Performance of Tenure at Organization n = 23,339. 8% 4% As employees gain experience even early in their career they are: More likely to serve as a critical resource to others and More likely to contribute to new ideas for products or services. 0% 0 5 10 15 20 25 Source: CEB, CLC Human Resources High Performance Survey. Tenure in Years 21

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Adjust Management Approaches and Target Technology Investments Leadership teams can no longer rely on old management assumptions and paradigms. Generating the next level of breakthrough performance and productivity will require building essential skills, better managing new work processes, and finding ways to enable higher productivity. To do this, executives should do the following: 1. Accelerate Skill Development Through Guided Stretch Roles 2. Adjust Employee Roles to the Demand and Supply Sides of Collaboration 3. Reorient Managers to Guide and Empower Knowledge Workers 4. Target Technology Investments to the Evolving Needs of Knowledge Work and Collaborative Teams 23

1 Accelerate Skill Development Through Guided Stretch Roles The new high performer adapts quickly to change, works collaboratively, and makes sound business decisions. Unfortunately, while most knowledge workers know how to manage work processes and use technology and tools in their work, CEB finds that less than 40% have the analytical skills and business judgment needed to use the tools effectively in decision making. 11 Analytic ability and judgment cannot be acquired readily in the job market, but they can be learned. Judgment, and the ability to apply it in the right situations, is best developed over time through experience, maturity, and business perspective. Likewise, the ability to work on teams and influence others is a skill best developed through interactions working with others in the business environment. Organizations need to create opportunities for employees to learn essential collaboration and analytic skills by reengineering the work environment to better promote learning on the job. This is far easier said than done and achieved through specific steps to increase on-the-job development: Design stretch roles to achieve development goals as well as business results. Employees learn best in real work situations that require direct skill application. Managers should define a set of projects where analytic and collaboration skills are essential to success and designate them as on-the-job learning opportunities. Select projects with high levels of stretch, accountability, and visibility for the employee as the more important and riskier the role, the stronger the incentive will be to learn. 11 CEB, Information Technology Insight IQ Diagnostic. 24

Use connectors to transfer network building and collaboration skills. Identify your best collaborators and use them to teach others how to network, build relationships, influence decisions, and manage collaborative projects. Your best connectors should also document key relationships and help transfer network knowledge from project to project. Use Informed Skeptics to teach how to apply judgment in work. Identify employees with the strongest decision-making skills those who bring a critical eye to analytic tasks, analyze data, use their intuition, and apply judgment. Use these Informed Skeptics to model the correct approaches to decision making on the job. Task them specifically with coaching less capable team members and rotate them across key projects. Manage both learning and work activities on key projects. Learning needs to be intentional and built into projects. Managers, mentors, and coaches must emphasize learning alongside the project s core activities. Hold managers accountable for ensuring that the following steps are taken: 1) identify learning opportunities and goals before a project begins, 2) assess learning during a project, and 3) reflect on skill development and next steps at the project s completion. 25

2 Adjust Employee Roles to the Demand and Supply Sides of Collaboration The new work environment requires organizations to take a much broader, enterprise-wide view on performance redefining employee roles to emphasize collaboration and broader organizational impact. Ultimately, managers and employees need to shift from focusing on individual contribution (meeting individual work tasks and objectives) to enterprise contribution. This shift recognizes the added importance of building an employee s network performance or his or her contribution to the performance of others broadly across the organization (i.e., beyond individual and team performance). Performance Requires Working and Helping Others CEB s Model for High Performance in the New Work Environment Individual Task Performance An employee s effectiveness at achieving individual tasks and assignments + Network Performance An employee s effectiveness at improving the performance of others broadly across the organization Business Unit Outcomes Increased Profit and Revenue = Enterprise Contribution An employee s effectiveness at meeting his or her own performance goals and contributing to the performance of others Source: CEB, CLC Human Resources, Driving Breakthrough Performance in the New Work Environment. 26

Redefining employee roles and managing them toward greater enterprise contribution leads to stronger business performance. CEB s analysis shows that those organizations able to move beyond maximizing individual performance to achieve higher levels of enterprise contribution significantly outperform their peers. Firms that were able to move more employees to high levels of enterprise performance realized a 10% improvement in profitability, compared to a 5% improvement for those who emphasized and achieved high levels of individual performance alone. Managing to Enterprise Contribution Increases Performance Percentile Change in Profit, by Percentage of Enterprise Contributors in Business Unit n = 23,339. 15th High Enterprise Contribution (High Individual Task and Network Performance) 10th 5th High Individual Task Performance Alone 0 0% 25% 50% 75% 100% Percentage of Employees Note: CEB used a two-stage least squares regression to estimate the causal relationship between business unit profit change and percentage of employees achieving individual task and network outcomes. The effects are modeled using a variety of multivariate regressions with appropriate control variables. Source: CEB, CLC Human Resources High Performance Survey. 27

Unfortunately, 64% of employees do not feel their current role truly reflects how they do, or should, work with others to get their jobs done. 12 To improve their employees enterprise contribution, managers need to embrace collaboration as a key element of the new work environment and take specific steps to help employees be more productive in new, expanded roles: Add the Three Cs of strong enterprise contribution to employee roles. Focus employees on the importance of sub-roles that are key to driving network performance by setting expectations that each employee must act as a: Connector Effectively enfranchising essential coworkers, peers, and others in formal and informal collaboration projects, specifically including others who are jointly responsible and accountable for work outcomes and those who should be consulted and informed. Contributor Willingly providing input and support to the work of others, both formally and informally, as required. Consumer Actively seeking out ideas and input from others in the organization and incorporating them into formal and informal collaboration projects as required to get work done. Manage collaboration over discrete work tasks. Unfortunately, only 40% (two in five) of employees report their manager is able to connect them effectively with their coworkers. 13 As a result, many employees are uncertain about whom to work with and how to do it effectively. Managers must actively encourage their employees to collaborate more effectively providing support from connectors, coaches, and peers. 12, 13 CEB, CLC Human Resources High Performance Survey. 28

Invest time in building complementary teams, and keep the ones that work. On a limited number of high-impact or critical projects, take the added step of formally creating the initial working teams. Evaluate the core staff available for key projects on extended teams, and create connections that complement strengths and weaknesses. Avoid disrupting effective teams, ensure team stability, and keep key elements of collaborative teams intact from project to project. Emphasize network management alongside knowledge management. In addition to documenting key work processes and activities, executives should map and document key relationships within and between working teams. Actively reflecting on and documenting connections essential to collaborative projects will help in transferring network knowledge over time. Encourage and enable collaboration with external partners. With more outsourcing, critical supplier relationships, and strategic partnerships, it is more important than ever to establish strong working relationships with staff in external organizations. Create opportunities for joint work, and encourage informal communication between staff and vendors, partners, professional associations, and alumni networks. Use simple rules to guide these interactions and to protect strategic projects and proprietary information. 29

3 Reorient Managers to Guide and Empower Knowledge Workers While leaders can take specific steps to shift roles and expectations to improve collaboration, they must also help employees perform better at fundamentally different work. The challenge of managing in the new work environment is compounded by the fact that work is less supervised and, by extension, more autonomous; there are fewer managers to do the managing since the average span of control has grown from 6 to 12 direct reports between 2002 and 2012. 14 How can senior leaders and managers at all levels modify their traditional approaches to management to overcome this challenge? Even in a more collaborative work environment, hierarchical, manager-led control serves as a valuable check and, more importantly, a focused means of directing work to the best organizational outcomes. Work is fundamentally more complex and will remain so going forward. A manager s role is not to fight the trend by trying to simplify complex work or jobs but rather to remove the complications arising in a less routine, more ambiguous, and collaborative work environment. Help Employees Do Complex Jobs Don t Simplify Them Maximum Impact on Employee Performance, by Type of Manager Strategy n = 23,339. 11% < 1% Managers Help Employees Simplify Their Roles Managers Help Employees Navigate Complex Roles Source: CEB, CLC Human Resources High Performance Survey. 14 CEB, CLC Learning and Development High Performance Survey, 2012; CEB, CLC 2002 Performance Management Survey; CEB, CLC 2008 Organizational Redesign Survey. 30

Organizations effective at achieving higher performance and more enterprise contribution from their employees expect their management teams to do the following: Focus and communicate on big-picture objectives over process. A consistent understanding of organizational objectives is essential to employee focus and performance in a high-change environment. Regularly restate and confirm organizational objectives to provide a strategic context for employees work and decision making. Empower and embrace decisions deeper in the organization. Employees need greater autonomy to make decisions and manage their work activities. Embrace this shift in decision making and enable it by setting clearer objectives, providing access to more information, and supporting more agile resourcing for key projects. Connect employees to information sources rather than provide the information. Managers should provide direction to and establish context for critical information rather than mediate its flow to employees. Resetting connections can be as simple as creating links between employees and key stakeholders or as complex as changing reporting and permission rights on key sources. Pursue managed collaboration over broad idea generation. Too often, collaboration is an unfettered exercise in idea exchange fueled by online crowdsourcing and social media platforms. While the easy flow of information and ideas is important, focus on limiting the number of approved projects and attaching them to enterprise-level goals with clear objectives, timelines, and expectations. 31

4 Target Technology Investments to the Evolving Needs of Knowledge Work and Collaborative Teams Maintaining and improving productivity levels will require organizations to retool the work environment to better support collaborative, knowledgeintensive work. While corporate IT organizations have done a very good job providing foundational, enterprise-level solutions to support standard work processes and needs, senior leaders should reevaluate their technology needs to ensure current platforms are accelerating performance, not hindering it. While 99% of employees use some form of technology on the job, 15 less than 40% feel they have the technology needed to be productive. As work has become less routine and more exceptions based, standard enterprise solutions are simply not as effective. End-user surveys show that employees want easy-to-use technology that will help them collaborate, make decisions, and get their work done. Unless organizations can better link technology to the work needs of employees, inadequate or misapplied technology will likely be a major barrier to knowledge worker productivity, not to mention bottom-line profitability. Employees Lack Sufficient Technology to Work Effectively Percentage of Respondents, by Level of Enablement on CEB s Technology-Enabled Productivity Barometer n = 983. 61% Not Technology Enabled 39% Technology Enabled Source: CEB, CEB Technology-Enabled Productivity Survey. 15 CEB, Help Desk Benchmark Database, IT Performance Benchmarking. 32

Employees Want Easy-to-Use Technology to Get Work Done Preference Ranking of Technology Attributes at Work n = 9,900 global employees. Least Important Most Important Device and Applications Should Be as Easy to Use and Intuitive as Possible (7%) 38% Information Should Be Seamless, Meaning I Can Access and Use It Across Applications and Devices (9%) 16% Technical Support and Training Should Be Available by Request with Minimal Delay (9%) 16% I Need to Be Able to Customize Devices and Applications to My Individual Needs (20%) 5% I Need to Be Able to Accomplish Both Personal and Work-Related Tasks with the Same Devices and Applications (33%) 7% Source: CEB, Infrastructure Executive Council Employee Technology Value Survey 2011. 33

How can executives ensure employees have easy-to-use technology that will help them make decisions, collaborate, and complete their work? Firms that get more enterprise contribution from their employees invest in improving mobility, data usability, collaboration platforms, and customized applications by doing the following: Build back from employee needs, not just broad business needs. Do not over-standardize technology and tools at the enterprise or divisional level. Encourage corporate IT to move beyond legacy needs assessment methods to processes that are more customer friendly, that is, focused on observing end users in specific workflows (e.g., work groups and major collaboration projects) rather than broad business or functional groups. Identify and use prosumers to redefine technology needs. Every group has its prosumers, the early adopters who discover, test, and adopt the most appropriate (if not always approved and supported) technologies to do their work. Use your prosumers to help establish team needs, identify promising technologies, and drive utilization. Encourage and embrace mobile technology trial and error. Employees will use and adopt the technology they need to get their work done. More than 60% of employees use their own mobile devices at work not for convenience, but because they are useful in getting work done. 16 A simple, but big, step in many organizations is to embrace the use of personal devices by employees. Leaders should avoid zero tolerance, overly restrictive, or one-device-fits-all policies for mobile devices and customized applications. 16 CEB, Infrastructure Executive Council Employee Technology Value Survey 2011. 34

Fix data accessibility and usability. While employees can access data readily, too much data is unusable or too hard to find; more than 50% of employees say information is in formats they cannot use. 17 As a result, two-thirds of employees report spending time on unproductive analyses. 18 Business leaders and their IT organization need to conduct regular assessments of the company s core data needs and assets identifying causes of less usable data and creating a defined structure for collecting, defining, prioritizing, storing, and disseminating better information. Create collaboration platforms to make immediate, in-the-moment interactions easy. Unfortunately, most collaboration platforms are centered on document sharing and project management when they should be supporting knowledge work allowing employees to work together quickly, seamlessly, and on demand. Organizations need to develop improved capabilities for broad idea sharing; concurrent, joint, and iterative work; and on-demand communication (including easy-touse, low-cost messaging, web conferencing, and video/voice systems). Provide a wider array of analytic applications. New technologies and devices (tablets, smartphones, etc.) allow employees to readily access data in and outside the office. The bigger challenge is providing employees access to the analytical applications necessary to be productive with enterprise information outside the office; one in three employees are using applications they have found themselves. 19 Managers should work with their IT group to identify and innovate the applications employees find most useful for work outside the office. Avoid overly restrictive policies that limit the use of cloud-based apps or over-prioritizing scalable applications that are less customized to specific employee needs. 17 19 CEB, Information Technology Insight IQ Diagnostic. 35

Corporations today are focused on growth not at any cost but at less cost. Achieving simultaneous growth in top-line revenue and bottom-line profitability has come, and likely will continue to come, through greater workforce productivity. While organizations have achieved impressive levels of workforce efficiency in recent years, they require more to stay competitive and grow, CEOs and leadership teams look for breakthrough performance and productivity gains from their employees. To achieve these gains, organizations need to understand the dramatic shifts underway in the work environment and refocus on enabling higher levels of workforce performance. 36

Today s work environment is in constant flux. Change is the new normal for employees changes in target markets, products, business objectives, organization structure, work location, work teams, job role, or manager alignments have become common. In part as a response to a more fluid business environment and a result of ubiquitous information and rapid technological advances, the predominant work of employees has become much more collaborative and knowledge based. While firms may be tempted to hire an all-new employee better able to perform in a collaborative, knowledge-based work environment their needs are much more immediate, and the new skills required are best developed through on-the-job experience. Improving or simply maintaining workforce productivity requires firms to accept the work environment has changed, and their underlying approaches to employee development, work roles, management, and technology must also change. Improving workforce performance and staff productivity is a central focus of CEB and SHL. In 2013, we will continue to refine our understanding of the changing work environment, evolving skills requirements, and talent management challenges essential to improving employee performance and productivity. To learn more about how other organizations are improving employee productivity, to participate in our work, or to network with your peers, please visit us at www.executiveboard.com/executive-guidance. Members can reach their Executive Advisor at 1-866-913-2632 or contact CEB at EXBD_support@executiveboard.com. 37

ABOUT CEB CEB is the leading member-based advisory company. By combining the best practices of thousands of member companies with our advanced research methodologies and human capital analytics, we equip senior leaders and their teams with insight and actionable solutions to transform operations. This distinctive approach, pioneered by CEB, enables executives to harness peer perspectives and tap into breakthrough innovation without costly consulting or reinvention. The CEB member network includes more than 16,000 executives and the majority of top companies globally. For more information visit www.executiveboard.com. COPIES AND COPYRIGHT STATEMENT The pages herein are the property of The Corporate Executive Board Company. No copyrighted materials of The Corporate Executive Board Company may be reproduced or resold without prior approval. For additional copies of this publication, please contact The Corporate Executive Board Company at +1-866-913-2632, or visit www.executiveboard.com. 2012 The Corporate Executive Board Company. All Rights Reserved. CEB3113312SYQ4 38

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