Stephan Meier is a behavioral economist, the James Gorman Professor of Business Strategy, and the Chair of the Management Division at Columbia Business School.
What’s the big idea?
Once upon a time, the best product determined the best businesses. Then, a shift happened, and companies that changed their approach toward the best customer experience rose to the top. Now, businesses face another consequential turning point: the most successful businesses will be those with the best employee experience. Here’s how leaders can pivot to employee-centricity.
Below, Stephan shares five key insights from his new book, The Employee Advantage: How Putting Workers First Helps Business Thrive. Listen to the audio version—read by Stephan himself—in the Next Big Idea App.
1. Employees are the new customers.
Customers got a seat at the table with the shift from product to customer-centricity. At Amazon, Jeff Bezos would literally have an empty chair at important meetings that was reserved for “the customer.” Important trends led to the increased focus on customer needs and made the companies that shifted successful.
Now, the same trends that led to customer-centricity are leading to employee-centricity. Empowering employees in an agile environment is becoming more important. Transparency is increasing in terms of employee experience and corporate culture. More data allows for a more personalized employee experience; a one-size-fits-all approach does not work anymore. Lastly, shifting attitudes about brand or company values affect a more employee-centric approach.
Employees are the new customers because focusing on employees can create win-win situations, as with customer-centricity. Employees win by having a better experience and companies win by getting higher productivity, more innovation, lower turnover, and improved customer experience. This ends with more profits and a competitive advantage: the employee advantage.
“The same trends that led to customer-centricity are leading to employee-centricity.”
Employee-centricity is, therefore, the new customer-centricity. Tools for customer-centricity can be productively used to put workers first. For example, the key to customer-centricity is getting customer insights. The same tools that get customer insights can be used to get employee insights. Or customer-centricity is not about lowering prices but rather is about improving customer experience. In fact, we can increase prices because of a better customer experience. Similarly, employee-centricity does not necessarily mean increasing wages but improving the employee experience. To do that, organizations must understand what motivates people to work beyond their paycheck.
2. More than money motivates work.
While fair compensation is important, behavioral science shows that much more than a paycheck makes people show up to work, be engaged, and stay at an organization. In fact, there is a very weak correlation between wages and job satisfaction. Very few people jump out of bed in the morning eager to increase the profits of the company they work for by another percentage point. To create a motivational work culture, we need to understand what motivates people beyond financial compensation.
Behavioral economics highlights four fundamental motivators for fully engaging and motivating workers:
- Meaning and purpose. The feeling of making an impact on an important problem engages and motivates people.
- Autonomy and trust. It is critically important for engagement to feel trusted and empowered by managers.
- Competency and skills. Nobody wants to be under- or overwhelmed performing a job. Most people leave a job because they are stuck and not learning anything anymore.
- Social interactions. Positive interactions can be extremely powerful. On the other hand, a toxic work culture is the top motivation killer.
3. Personalize the workplace.
In the workplace, we still mostly take a one-size-fits-all approach. But employees are as different and individual as customers, so the lack of personalization no longer works when it comes to managing a team.
Data about employees and their personal feedback should be used to tailor the work experience according to their preferences. For example, when it comes to skill development, a top-down approach is not working when the half-life of skills is drastically decreasing. One innovative alternative is an internal talent marketplace that allows employees to engage in projects that fit their ambition level and interest. Employees can then be matched with opportunities within the firm. Companies like Mastercard or MetLife have had great experiences with AI-powered tools that empower employees to choose their learning journeys.
Eli Lilly, the pharmaceutical company, used its customer-centric tools to understand its employees’ different needs and wants. To promote more women and people of color, the company created an “employee journey” tool, similar to its “customer journey” tool, to understand pain points for underrepresented minorities. Results were staggering, as Eli Lilly saw a six percent jump in the percentage of women of color at the executive level from 2016 to 2019. Focusing on every individual’s unique experience helped Eli Lilly get closer to its diversity goal, providing further evidence of the value of a personal company-employee relationship.
4. Tech is easy; humans are hard.
The future will rely on human-machine interactions. However, we focus more on the technology side than the human side. But as Jeff McMillan, the Head of Firmwide AI at Morgan Stanley, said, “Tech is easy; humans are hard.”
We need to focus more on humans to make technology additions work. It is vital that technology enhances the four human motivations and not destroy them. Consider one of the critical motivators: autonomy and trust. If technology is deployed to control workers (like surveillance programs for remote work), trust is significantly destroyed, with large effects on motivation and engagement.
However, technology can be deployed to augment and allow autonomy. For example, technology should enable productive remote work. More importantly, for autonomy to be effective, employees need constant feedback and information. Technology allows us to provide that engagement at scale.
“Technology is a critical part of setting autonomy up for success.”
Buurtzorg, a Dutch homecare provider, achieves higher-than-average patient satisfaction at a lower-than-average cost. They do so by providing full autonomy and empowerment to their teams and an IT system that supplies the necessary feedback for informed decisions. Technology is a critical part of setting autonomy up for success.
In general, we over-indexed on technology and underemphasized the human aspect of work. The most successful organizations understand how humans tick and implement technology for a human-centric future of work.
5. An intentional workplace makes a business thrive.
Superficial fixes like adding perks—free snacks, ping pong tables, free yoga classes—are not cutting it. The employee advantage calls for deep, hard-to-imitate initiatives that may be difficult to implement in the short term but deliver significant long-term benefits for the organization. Companies like Costco, DHL Express, Unilever, and Best Buy do just that.
Being intentional about strategic choices requires leaders at all levels to focus on employee experience. The successful customer-centric organizations do that with their customers. But we are lagging when it comes to employees. My research found that leaders talk about customers ten times more often than they talk about employees. They see customers as opportunities and growth and employees as risk and cost. We require a mindset shift that focuses more on employees. Companies that are intentional about employee motivation will thrive.
For an intentional strategy, listen to employees. Their insights contain transformative feedback. Hubert Joly, former CEO of Best Buy, used a human-centric approach in his amazing turnaround of the electronics retailer. Listening to the Blue Shirts, aka its employees wearing the iconic blue shirt, was key. By fostering open communication and valuing employee expertise, companies can create a thriving culture where employees feel empowered.
To listen to the audio version read by author Stephan Meier, download the Next Big Idea App today:
