UPCOMING WEBINAR (11/17) | A Personal Definition of Success


Understanding Employee Experience from a CEO’s Perspective, with Jim Smith

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Dr. Pelè (00:03): Hello, everyone. This is Dr. Pele with the Work Proud Podcast. And today, I have a very special guest, Mr. Jim Smith. Now, I say Jim is very special for a couple of reasons. I’ve met him on LinkedIn and his profile shocked me. He went straight for the jugular when it came to topics about employee experience. Dr. Pelè (00:25): And Jim, you basically said there are two kinds of employee experience. There is the one that is all theoretical. There is the one that consultants like to use all over the place. Then there’s a different kind of employee experience that is straight from the CEO, that is about numbers, about evidence, about tangible results, and you are a warrior, Jim, for the type of employee engagement and employee experience that is from the CEO’s office. Dr. Pelè (00:51): How are you doing today, Jim? It’s a pleasure to meet you finally. Jim Smith (00:54): I’m doing very well. And your comment about being a warrior, believe me, in what we do, we have to be warriors, because there’s a lot of people at the executive level who don’t want to do what they should do. That’s our life, is figuring out ways to change their minds or indeed, to force them to do what the employees think should be done because it’s such a fundamentally good idea. Dr. Pelè (01:21): Absolutely. And in fact, that’s a great segue into me asking you to help us define the challenge as you see it with your unique perspective. And we’re going to get into that warrior stance about the differences between how some people describe employee experience versus how it really is in the real world. But tell us what the big problem of employee experience really is from your perspective. Jim Smith (01:43): Well, since I only sell our services directly to the CEO, I have a different view. And from giving those presentations and typically, I’m giving a presentation to the CEO and the officers, and typically, they’ve never been told that employee engagement can affect the stock price or the income statement. Jim Smith (02:07): That’s what they’re concerned about. They have a board of directors and they’re there to run the company profitably, so earnings per share is what drives a lot of public companies. And I focus on that only because I’ve never worked with a large private company, but I got to believe the owners care about the same thing as the investors do. Jim Smith (02:28): So when I give these presentations, I try to keep it to 15 minutes for an hour meeting, because they’ve never heard or seen anything like this. And the 45 minutes that’s left is always a machine gun of questions because how can one guy walk in here and have this answer when we’ve never heard of anything like this? Jim Smith (02:51): So it’s like selling something that’s too good to be true. That is the most difficult sale there can never be. What we do in that 15 minutes is explain to them that employee engagement and their earnings are not separate issues. If you can’t tie the two together, then it’s just an exercise in optics. I don’t want this to sound like I’m anti-HR, but let’s just be honest. HR is in no position to force disinterested leadership to make changes. Jim Smith (03:33): They’re not. They can’t. How many CHROs would keep their career if every time they did a study and their peer officers didn’t want to make the changes, that CHRO then say, “Well, I’m going to take you and me to the CEO and we’re going to duke it out?” That is never going to happen. Right? Dr. Pelè (03:53): No, no. Jim Smith (03:54): But in effect, that’s exactly what we do. Dr. Pelè (03:56): Wow. Jim Smith (03:57): So instead of casting some scientific survey, we simply script a five-minute video of the CEO explaining to the employees what he or she is going to do, or what they are doing, and asks them one simple question, which is, “I want you to tell me the 10 dumbest things the company does.” Jim Smith (04:22): And it can be anything. If it’s something that interferes with your happiness, or something dumb that we’re doing that impacts our earnings, anything is okay, but what’s different about what we’re doing is that we’ve hired this third party company. They’re going to collect the data, and they report directly to me. And they’re going to try to get these things executed every single day for the next 10 weeks. Dr. Pelè (04:48): Wow. Jim Smith (04:49): And they run into a blocker. They say, “Well, okay, that’s fine. You and I, we disagree. We think you’re not right on blocking this. So let’s escalate it to the next level of management and have the same discussion.” And I can tell you, in 25 years of doing this, only one person ever took the challenge of blocking something all the way to the CEO. It was a disaster. I mean, the gentleman lost a 27-year career. Dr. Pelè (05:18): Wow. Jim Smith (05:18): So human nature plays a big part in this. Dr. Pelè (05:21): Yeah. Yeah. In fact, I have to say that I’m sure anyone listening can already see that we got to put our boxing gloves on here, because this is going to be a tough conversation. And I love tough conversations because the truth is, you’re right. This is not about a happy dance. We’re not here just to make people happy or to use the buzzwords of engagement. Dr. Pelè (05:44): We’re here to actually help people create results and that’s what the CEO is interested in. I’d love to know though, Jim, how did you get on this path? What made you this get straight to the point guy when it comes to this topic? Was there some defining moment in your career? Tell us your story. How did you get here? Jim Smith (06:05): I got here because I got into IT through pure dumb luck. And I ended up spending the first 10 years of my IT career eventually managing two very, very large IT organizations. By the time I was 28, I was running one of the… Well, the largest privately owned network in the world, which was TRW’s credit reporting business. Jim Smith (06:32): And what I learned in that 10 years and didn’t know I learned it was that I was running two businesses where the computers were the only source of revenue for the company. They weren’t overhead. So later in my career, when I ended up at one of the nation’s largest banks, I was dumbfounded at the difference in management philosophy when you look at IT as an overhead versus as a business generator. And so it was just so easy for me to go into an $85 billion bank, look at IT and say, “Oh my God, let’s fix this. Let’s fix that.” Jim Smith (07:12): And the number of times I got into real serious pushback from leaders who were pushing back for political reasons, not for P&L reasons, and I had to figure out a way, how am I going to fight this? I don’t have the political power, so to speak, to overcome what the CFO wants to do. And so I had to find ways to build a better business case for the change than the blockers could build for not changing. And that did it once the facts were all out on the table. Jim Smith (07:47): A great mentor of mine once told me that it’s easy to defend doing something dumb. It’s really hard to sell it. So put people into position of explaining why it’s such a good idea to do something dumb like block this, and that made all the difference. And so then I moved on. For the next 10 years, I became a consultant where I would go into companies, reporting to the CEO, I would assume responsibility for their IT organization, and I would fix it. And I would leave by helping them find the right CIO to take my place. Dr. Pelè (08:28): I hear words from you that are just so powerful, such as blockers. I hear you say things about even your organization, your consulting firm is paid only by results. I hear you talk about how politics is driving results, or lack of results versus actual technology or employee engagement. Dr. Pelè (08:52): And you’ve come up with a system that is so focused on employee engagement. Now, we know how to measure employee engagement. There are surveys, there are ways to measure that, but how do you inspire it? How do you actually help HR inspire employee engagement, so that the CEO can begin to see the results they’re looking for? Jim Smith (09:10): Well, we should’ve covered this earlier. HR is never involved in one of our projects. Dr. Pelè (09:15): Ah, so you- Jim Smith (09:16): Never. Dr. Pelè (09:16): … basically are bypassing HR 100%? Jim Smith (09:19): Yes. And they have trouble with that, as you might understand. Yeah. Dr. Pelè (09:23): Hence the word blockers that you mentioned earlier. Jim Smith (09:25): Here’s the problem. Let’s look at this from an employee point of view. They’ve been through surveys for years and they never really see anything happen. And it’s because HR can’t force that change on the leadership. Well, when we do the statistics from our work, HR is always a huge part of the problem. And it’s not because they’re bad people or untrained, or inexperienced. Jim Smith (09:50): It’s because the perception from the employee’s point of view is they don’t get anything done. So when we do this, they are treated equally like every other department, they’re going to get their fair share of criticisms that they’re going to have to work on. And our experience is they’re going to be way too busy doing their own stuff to worry about everybody else’s stuff. Dr. Pelè (10:14): So, Jim, when I started this conversation, I promised our listeners and our viewers that this was going to be some tough talk. And boy, you have delivered because as I’m hearing this, as I’m listening to this, if you’re an HR person, basically you might think that you have been singled out as more of the problem than the solution. Dr. Pelè (10:36): And so my question is, how do you do this? How do you help HR feel supportive or comfortable enough to step aside while you help the CEO take employee engagement and connect it to results? How exactly do you do that? Jim Smith (10:53): Well, I hate that this may sound like I’m some kind of a jerk, but HR doesn’t get to vote. I’m working for the CEO. And in one case, I told the CEO, “We’re going to deliver $300 million in expense reduction in 10 weeks.” Now, once he believed that, no one really cared what HR thought. Jim Smith (11:16): And I don’t mean that to sound again, negative on HR, it’s just human nature and the reality. The CHRO is one seat at the table. That’s it, one vote. And that vote almost always goes with the consensus, because CEO… Now remember, I have attended hundreds of CEO staff meetings. The politics at that staff meeting is, “Let’s all hold hands and agree.” It’s just not acceptable for those folks to get into fights. Jim Smith (11:47): So we just cut through all of that. If you want to go with one of my people or me to the CEO staff meeting and argue for in one case, keeping the airplanes, and these are rules that we engage with the CEO right up front. So in one case, and this gives another example why the HR and the survey approaches don’t work. So the reason the HR survey thing doesn’t work so well is because the employees never see anything happen during the time they can comment. Jim Smith (12:20): So in our case, if a good idea pops up today, the owner of that solution only has two days to make the change and then we announce it. So if you imagine employees having 10 weeks to answer the CEO’s question, all during that 10 weeks, they’re seeing stuff happen that they never believed would happen. I was explaining that the employees hated the jets, because they’re going to lay off people and that didn’t seem right that they should lay off 3,000 people and you guys are still flying around on a whole fleet of jets. Jim Smith (12:56): So I took that to the Office of the Chair. The CEO, brilliant man, he said, “That’s right. It’s hardly fair that we’re flying around in jets at the same time we’re complying with the federal WARN Act and announcing 3,000 layoffs.” He announced that day that the jets were going to be for sale. So with 800 employee inputs in our hands, that announcement goes out after the market closes. That was a Tuesday. Seven days later, the 800 grew to 4,700. Now think about that. What happened there? The employees all of a sudden figured out, “Oh my, something different is happening here.” Dr. Pelè (13:37): Well, Jim, and I want to know what that difference is because in all fairness, you’ve made an excellent case for why a lot of HR can maybe just… maybe move aside and don’t stop the progress. However, HR also knows that they have this challenge about being at the seat of the table, and they are working. A lot of people in HR are working to try to be more numbers-driven, be more business-driven and be at the table. Dr. Pelè (14:05): So the question is really, how do you get employees engaged? How do you connect it to the business bottom line that the CEO cares about? And I think you’ve got it, but you haven’t given me a, “Do this first, do that second, do that third.” Do you have something like that? Jim Smith (14:21): Do this first, let HR set this one out. We’re not eliminating HR. We’re just saying you need to be treated just like all the other departments. Dr. Pelè (14:32): Got it. That’s number one. Jim Smith (14:33): That’s number one. Number two is the CEO is asking the survey question, not HR. And it’s only one question. Number three is that a third party is collecting those answers and fighting the gauntlet that is the politics, the culture, and the siloed management. Dr. Pelè (14:53): Got it. Jim Smith (14:54): And if there’s a fourth one, and there’s a very important fourth one, the fourth one is if you’re going to be killing sacred cows, remember these are the perception of employees, not some label I put on something. If you’re going to be killing sacred cows, you need to be announcing it every day, so employees see that something different is happening. Dr. Pelè (15:14): Got it. That is very clear. Now, I get the process. You’re basically saying, “HR, love you, but we want you to sit aside for this one.” Number two, you’re going to be collecting as an outsider with different… who is not part of any politics, as you’ve said. You’re going to be collecting that information. You’re going to be processing it and advising the CEO on things that have to be done to improve employee engagement, and then you’re going to be implementing it. So I get that now. Dr. Pelè (15:43): Let’s talk a little bit about results. How do you know when an our organization is humming the right way? Do you have some indicators that you can see? Beyond the surveys you may conduct, how do you know when success is being achieved using this non-HR approach? Jim Smith (16:04): Well, we get paid based on the impact on the income statement, so when we’re done, the accounting department, now these are public companies. Whatever they say we did is always large enough that they’re going to have to tell the public about it. Jim Smith (16:21): In other words, their next analyst meeting, they’re going to have to disclose what happened. You can’t take $300 million out of somebody’s expense, even though it’s a $13 billion company, you can’t take $300 million out and not explain to the analyst what happened. So we have 75% of our fee based on whatever number accounting comes up with. Jim Smith (16:47): And that’s not something we get to debate. I mean, because they’re going to go public with it. So it’s a very serious number. Dr. Pelè (16:53): Wow. Jim Smith (16:53): So in effect, I guess you could say and we do say, “Our end deliverable is a new business plan.” Dr. Pelè (17:01): I was going to say something like that because sure, asking some people to open up the gate is a good first strategy. But I think what you’re doing is you’re replacing it with really what should be done. And I’m assuming when you leave a company, they should have learned something from your implementation approach. Is that correct? Jim Smith (17:22): Well, in this big example that I use, we ended up with 10,000 inputs from 23,000 employees. After we got rid of the duplicates and the nonconforming ones, and when I say nonconforming, if somebody has an idea that could save money, but it represents a risk, we’re not going to do it. So it was a good idea, except it represented a risk to safety or customer service or a regulatory issue. Jim Smith (17:46): So when we sorted it all out and got rid of the duplicates and the nonconforming ones, the company approved 3,900 actions out of that 10,000. Now, if you think about a company with 23,000 employees, you spread those 3,000 or almost 4,000 things across that many people, no one was really burdened in a great way. In other words, we didn’t have to start a capital project to save money. The vast majority of that 3,900 were things that they just had to stop doing because they didn’t make sense once they were viewed in the light of day. Jim Smith (18:27): Again, when employees see you doing things that they never thought you’d do, like killing dumb policies, killing sacred cow… whole departments, how can you not become engaged when you just saw management actually listen to what you said? Dr. Pelè (18:43): Yeah. Those points you’ve made are just so important. And I want to go a little deeper into the softer aspects of engagement. There’s obviously a lot of science and a lot of research that supports the fact that there are things you can do to help employees feel more engaged. Dr. Pelè (19:03): For example, you could show them action. As you’ve just explained, “Hey, things are changing around here. Let’s get in line.” That’s one way. There’s also recognition, when you recognize them and provide them incentives to be more engaged, or you create a culture where there’s greater happiness and job pride. Pride in your work, pride in the company. Tell us a little bit about those kinds of approaches to creating better engagement with employees. Jim Smith (19:30): Well, I have to confess, that’s not in our program. Dr. Pelè (19:35): Ah. Jim Smith (19:35): In other words, there are people who do that. But if you do those things first, then all the BS things that we’re cutting out, stare them right in the face and offset the recognition. I mean, just like all the studies prove that benefits, salary recognition, those are fleeting benefits because once they’re realized and taken for granted, the culture problems are right there, still staring them in the face. Jim Smith (20:04): So our proof, for example, that this is sustainable is that this company’s stock price was at 19 when we did all this work. And within six months, it was 34. Today, it’s 90. Now, we didn’t cause that, but we got rid of a lot of the roadblocks that prevented them from getting there. That 3,900 items, there was some biggies in there that were sending bullies home and that kind of thing, that have a very sustainable impact on a company’s performance. Jim Smith (20:42): And now, I don’t know, I didn’t stay close enough with them, but it’s possible somebody came in and did the touchy feely stuff because they are constantly being awarded best company for females, best company for minorities. It’s just a truly great company. I don’t think we had a lot to do with that, but we sure did give them $300 million to play with. Dr. Pelè (21:06): Yep. So, let me ask you how you deal with pushback. So for example, at the end of the day, someone may say, “Hey, wait a second. This isn’t just touchy feely stuff. This is at the core of how human beings wake up in the morning and feel motivated to do anything.” Dr. Pelè (21:23): And if we push that aside and just focus on the tougher approach and only results, we may alienate a lot of people and we need those people. So is it and, or is it or? Can we have both of these approaches together, or must it be only one very tough approach? Jim Smith (21:44): I think- Dr. Pelè (21:45): Yeah. Jim Smith (21:45): I think every approach contributes something. It just does. But until you get rid of the stuff that drives employees nuts, that’s different than the stuff that motivates them. This is the stuff that gets in their way of actually wanting to come to work in the morning. Jim Smith (22:05): And that’s what we’re dealing with. We’re trying to create environment where this may sound silly, but people really do tell us when this thing is done, “We didn’t think you could do this.” I’ve had three CEOs say to me, “Jim, this is the craziest thing. When you left the presentation, we agreed to do this, but we also didn’t think you could do it.” And I’m thinking to myself, “Why’d you hire me then?” Well, I think with all this HR, people analytics, new surveys, new approaches, recognition, HR has the responsibility and none of the authority. Jim Smith (22:49): So you can hardly blame them for looking for silver bullets. There aren’t any silver bullets. You got to deal with the tough stuff that nobody wants to confront. Dr. Pelè (22:58): Yeah. I think you’re absolutely right that HR may have responsibility, and maybe not enough authority in most companies and traditionally. However, I think that is changing, and I appreciate the fact that you do agree that there is a rule for both the perspective you bring and also the idea that people are people, and they need motivation and engagement and happiness. I wouldn’t call them touchy feely, but I’m trying to be a devil’s advocate for you here. Dr. Pelè (23:29): So I think in wrapping this up, you’ve given a very important perspective here. Normally, we talk about those feelings, like pride and culture and behavior, and behavior change and things like that. But rarely do we get someone so focused on connecting engagement and experience to the bottom line. If you were talking to a skeptic, someone who completely disagrees with you, how would you make your final case? Jim Smith (24:02): Well, there are no shortage of skeptics in my life. And so I just basically say, “What is the purpose of doing an employee engagement? If it’s to make people happy, we may not be your right choice. But if the purpose of doing employee engagement is to improve the performance of the company, we are absolutely the right choice.” Jim Smith (24:27): You may do other things too. But again, our whole process here is eliminating the stuff that drives employees nuts, and our fees are based on the income statement improvement. I think if you can do that, you ought to do that. And if you can’t do that, then you should probably admit that you’re into the soft areas, but you’re not going to get paid based on improving the business. Dr. Pelè (24:58): Well, I hear you. And that’s why I certainly do not run away from contrary opinions. And I wanted to hear your opinion, because when I saw some of the points you were making online, I found of them very strong and actually very much needed. Dr. Pelè (25:12): We need that voice that says, “Hey, guys, let’s just stop throwing theories around. Let’s start talking about what’s working and what’s not working as it relates to the bottom line and the CEO’s perspective.” So I think that’s very important, and you absolutely deliver on that. Where you and I may have a little bit of a difference or maybe a gap in our perspective is really on the importance of those things that help create engagement that are not necessarily only driven by dollars. Dr. Pelè (25:45): There are motivators that are based on behavior change and leadership and teamwork and what you might call the softer skills, but I might call people skills. So I think we’re both in agreement. And I would say both things need to work together. Would you agree with that? Jim Smith (26:03): Yes. I have, like I’ve said, 25 years of doing this. Every time we complete one of these, we do a lessons learned day. A whole day of all the consultants, we get together, and what happened in the last 10 weeks? And then we score all 3,900 of those items, just using one example. What category does that fall into? Jim Smith (26:26): And things like benefits, salary, and recognition, none of those are in the top 10. Now, this isn’t our scoring. This is the categories of things employees are telling us they’d like the company to do. Some of the stuff is revenue, where somebody had an idea and it’s been rejected five times, but it’s absolutely dead-on. Jim Smith (26:50): But that particular manager or executive just doesn’t want to do it. Well, those people who are supporting that are pretty jazzed up when that gets pushed through, without them risking their political standing within the organization. So, I can’t make this be something it isn’t. I’ve got 25 years of data that shows most of the things the employee engagement industry is talking about, they don’t hit the top 10. Dr. Pelè (27:21): Wow. Wow. You do not pull any punches, my friend Jim. And that’s one of the things that excites me about this conversation. I love to hear different opinions. And you’re one of the few people, few voices that are this strong over here. Dr. Pelè (27:37): I think there’s a middle ground and I think we’ll leave it at that. But before we wrap up, how can people find you? You are obviously on LinkedIn, but do you have any other special ways that people should reach out to you? Jim Smith (27:53): No, really just LinkedIn. And here’s why, I’ve had a website for 25 years. And remember, we sell only to CEOs. I’ve had some real good people redesign and redesign and redesign. I have never received a single call from the website. Not one. Dr. Pelè (28:13): Interesting. Yeah. Jim Smith (28:14): Not one, and I’ve had it for 25 years. Dr. Pelè (28:15): It speaks the power of social media too. LinkedIn has become quite a force, hasn’t it? Jim Smith (28:20): Well, I’m almost completely retired. I’m not selling on LinkedIn. I’m looking for people, and this happens all the time, they don’t want to ask me questions in public. So they connect and then we have private discussions. Dr. Pelè (28:36): Yep. Right. Jim Smith (28:37): And I wish they would ask the questions publicly because they’re damn good questions. And I think the answers are good too. Dr. Pelè (28:46): Yep. Jim Smith (28:46): So I’m way more interested in helping people solve this problem than in actually solving it. I’ve been on the road for 25 years, and I don’t need to do that anymore. But it’s such a powerful tool. I wished I could find another consulting company that just said, “Hey, we’ll take that over from you, because nobody’s doing it right.” Dr. Pelè (29:16): Well, Jim, I have to say that you certainly are going to get this public conversation out. We’re not going to be hiding this inside a messaging chat. This has been our opportunity to hear your point of view and to share in your success. Thank you so much for keeping it real, I might say, and being the warrior that I promised you were going to be. It’s a pleasure to have you on our show, Jim. Thank you so much. Jim Smith (29:44): You’re very welcome.
Jim Smith
Jim Smith has over forty years of management experience. For the past thirty years, Jim has served as the owner of Enterprise Management Group, providing an integrated employee engagement, cost reduction, and culture transformation process to client organizations. 

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