Description
Within this detailed outline concerning increasing the meaning quotient of work.
McKinsey r t e r l y
Increasing the 'meaning quotient' of
work
Through a few simple techniques, executives can boost workplace "MQ"
and inspire employees to perform at their peak.
Musicians talk about being "in the groove," sportsmen about being "in
the zone." Can employees in the workplace experience similar performance
peaks and, if so, what can top management do to encourage the mental
state that brings them about?
We've long been interested in work environments that inspire exceptional
levels of energy, increase self-confidence, and boost individual productivity.
When we ask leaders about the ingredient they think is most often missing
for them and for their colleagues-and by implication is most difficult to
provide-they almost invariably signal the same thing: a strong sense of
meaning. By "meaning," we and they imply a feeling that what's
happening really matters, that what's being done has not been done before
or that it will make a difference to others.
The idea of meaning at work is not new. Indeed, two contributions to
McKinsey Quarterly
1
over the past year have highlighted this theme. In
one, the authors demonstrate how misguided leaders often kill meaning in
avoidable ways. The author of the other suggests that "meaning maker" is
a critical role for corporate strategists. In this article, we will show from
our research how meaning drives higher workplace productivity and
explain what business leaders can do to create meaning.
Meaning and performance
The mental state that gives rise to great performance-in sports, business,
or the arts-has been described in different ways. The psychologist Mihaly
Csikszentmihalyi studied thousands of subjects, from sculptors to factory
workers, and asked them to record their feelings at intervals throughout
the working day. Csikszentmihalyi came up with a concept we consider
helpful. He observed that people fully employing their core capabilities to
meet a goal or challenge created what he called "flow." More important, he
found that individuals who frequently experienced it were more productive
close
and derived greater satisfaction from their work than those who didn't.
They set goals for themselves to increase their capabilities, Lhereby Lapping
into a seemingly limitless well of energy. And they expressed a willingness
to repeat those activities in which they achieved flow even if they were not
being paid to do so.
Athletes describe the same feeling as being in the zone. Bill Russell, a key
player for the Boston Celtics during the period when they won 11
professional-basketball championships in 13 years, put it thus: "When it
happened, I could feel my play rise to a new level .... It would surround
not only me and the other Celtics, but also the players on the other team . . .
. At that special level, all sorts of odd things happened. The game would be
in the white heat of competition, and yet somehow I wouldn't feel
competitive .... I'd be putting out the maximum effort ... and yet I never
felt the pain."
2
Flow sounds great in theory, but few business leaders have mastered the
skill of generating it reliably in the workplace. An easy first step is to
consider what creates flow in your own work situation-a question we
have put directly to more than 5,000 executives during workshops we've
conducted over the last decade. In this exercise, individuals initially think
about their own personal peak performance with a learn, when, in other
words, they have come closest to the feelings Csikszentmihalyi and Russell
describe. Then they pinpoint the conditions that made this level of
performance possible: what in the team environment was there more or
less of than usual?
The remarkably consistent answers we've received fall into three categories.
lbe first set includes elements such as role clarity, a clear understanding of
objectives, and access to the knowledge and resources needed to get the job
done. These are what one might term rational elements of a flow
experience or, to use a convenient sho1thand, its intellectual quotient (IQ).
When the IQ of a work environment.is low, the energy employees bring to
the workplace is misdirected and often conflicting.
Another set of answers includes factors related to the quality of the
interactions among those involved. Here, respondents often mention a
baseline of trust and respect, constructive conflict, a sense of humor, a
general feeling that "we're in this together," and the corresponding ability
to collaborate effectively. These create an emotionally safe environment to
pursue challenging goals or, to borrow from the writings of Daniel
Goleman and others, an environment with a high emotional quotient
(EQ). When the EQ of a workplace is lacking, employee energy dissipates
in the form of office politics, ego management, and passive-aggressive
avoidance of tough issues.
While IQ and EQ are absolutely necessary to create the conditions for peak
performance, they are far from sufficient. The longest list of words we have
compiled from executives' answers to our peak-performance question over
the last ten years has little to do with either of these categories. This third
one describes the peak-performance experience as involving high stakes;
excitement; a challenge; and something that the individual feels matters,
will make a difference, and hasn't been done before. We describe this third
category as the meaning quotient (MQ) of work. When a business
environment's MQ is low, employees put less energy into their work and
see it as "just a job" that gives them little more than a paycheck.
The opportunity cost of the missing meaning is enormous. When we ask
executives during the peak-performance exercise how much more
productive they were at their peak than they were on average, for example,
we get a range of answers, but the most common at senior levels is an
increase of five times. Most report that they and their employees are in the
zone at work less than 10 percent of the time, though some claim to
experience these feelings as much as 50 percent of it. If employees working
in a high-IQ, high-EQ, and high-MQ environment are five times more
productive at their peak than they are on average, consider what even a
relatively modest 20-percentage-point increase in peak time would yield in
overall workplace productivity-it would almost double.
What's more, when we ask executives to locate the bottlenecks to peak
performance in their organizations, more than 90 percent choose MQ-
related issues. They point out that much of the IQ tool kit is readily
observable and central to what's taught in business schools. The EQ tool
kit, while "softer," is now relatively well understood following Goleman's
popularization of the concept in the mid-199os. The MQ tool kit is different.
What to do differently
Business leaders, we know from other sources, are striving hard to .find the
missing MQ ingredients so they can improve motivation and workforce
productivity. Late last year, for example, a survey (conducted by The
Conference Board and Mc.Kinsey) of more than 500 US-based HR
executives identified employee engagement as one of the top five critical
human-capital priorities facing organizations. 3
Management thinkers are also on the case. Gary Hamel urges modern
managers to see themselves as "entrepreneurs of meaning." In The
Progress Principle, Harvard Business School professor Teresa Amabile and
her coauthor Steve Kramer present rigorous field research highlighting the
enormous benefits that a sense of forward momentum can have for
employees' "inner work life."4 Csikszentmihalyi writes extensively about
"the making of meaning" in his book Good Business.s
In our experience, though, there's often a disconnect between the desire of
practitioners to create meaning in the workplace, the good ideas emerging
from cutting-edge research, and the number of specific, practical, and
reliable tools that leaders know how to use. Often, platitudes about
communication, quality feedback, job flexibility, and empowerment are
used as substitutes for such tools. Much of this amounts to little more than
advice about how to be a good manager. Inspirational visions, along the
lines of Walt Disney's "make people happy" or Google's "organize the
world's information," have little relevance if you produce ball bearings or
garage doors.
In McKinsey's research, we've uncovered a set of specific, actionable
techniques underpinned both by experience and a significant body of
social-science work. The full tool kit can be found in Beyond Performance:
How Great Organizations Build Ultimate Competitive Advantage.
6
The
three examples described here are not only among the most
counterintuitive (and therefore the most often overlooked) but also the
most powerful.
Strategy#1: Tell five stories at once
We typically see organizational leaders tell two types of stories to inspire
their teams. The first, the turnaround story, runs along the lines of "We're
performing below industry standard and must change dramatically to
survive-incremental change is not sufficient to attract investors to our
underperforming company." The second, the good-to-great story, goes
something like this: "We are capable of far more, given our assets, market
position, skills, and loyal staff, and can become the undisputed leader in our
industry for the foreseeable future."
The problem with both approaches is that the story centers on the
company, and that will inspire some but by no means all employees. Our
research shows that four other sources give individuals a sense of meaning,
including their ability to have an impact on
• society-for example, making a better society, building the community, or
stewarding resources
• the customer-for instance, making life easier and providing a superior
service or product
• the working team-for instance, a sense of belonging, a caring
environment, or working together efficiently and effectively
• themselves-examples include personal development, a higher paycheck
or bonus, and a sense of empowerment
Surveys of hundreds of thousands of employees show that the split in most
companies-regardless of management level, industry sector, or geography
(developed or developing economies)-is roughly equal. It appears that
these five sources are a universal human phenomenon.
The implication for leaders seeking to create high-MQ environments is that
a turnaround or a good-to-great story will strike a motivational chord with
only 20 percent of the workforce. The same goes for a "change the world"
vision like those of Disney and Google or appeals to individuals on a
personal level. The way to unleash MQ-related organizational energy is to
tell all five stories at once.
A recent cost-reduction program at a large US financial-services company
began with a rational-change story focused on the facts: expenses were
growing faster than revenues. Three months into the program, it was clear
that employee resistance was stymieing progress. The management team
therefore worked together to recast the story to include elements related to
society (more affordable housing), customers (increased simplicity and
flexibility, fewer errors, more competitive prices), working teams (less
duplication, more delegation, increased accountability, a faster pace), and
individuals (bigger and more attractive jobs, a once-in-a-career
opportunity to build turnaround skills, a great opportunity to "make your
own" institution). The program was still what it was-a cost-reduction
program-but the reasons it mattered were cast in far more meaningful
terms.
Within a month, the share of employees reporting that they were
motivated to drive the change program forward jumped to 57 percent,
from 35 percent, according to the company's employee-morale pulse
surveys. The program went on to exceed initial expectations, raising
efficiency by 10 percent in the first year.
Strategy#2: Let employees 'write their own lottery ticket'
The first strategy gives specific and practical guidance about how to tell the
story. Yet the best meaning makers spend more time asking than telling.
In one of Daniel Kahneman's famous experiments, researchers ran a
lottery with a twist. Half of the participants were randomly assigned a
lottery ticket. The remaining half were given a blank piece of paper and
asked to write down any number they pleased. Just before drawing the
winning number, the researchers offered to buy back the tickets from their
holders. The question they wanted to answer was how much more would
you have to pay people who "wrote their own number" than people who
received a number randomly. The rational answer should be no difference
at all, since a lottery is pure chance, and therefore every ticket number,
chosen or assigned, has the same odds of winning. A completely rational
actor might even want to pay less for a freely chosen number, given the
possibility of duplicate ones. The actual answer? Regardless of geography
or demographics, researchers found they had to pay at least five times
more to those who chose their own number.
This result reveals a truth about human nature: when we choose for
ourselves, we are far more committed to the outcome-by a factor of at
least five to one.
In business, of course, leaders can't just let everyone decide their own
direction. But they can still apply the lessons of the lottery-ticket
experiment. The head of financial services at one global bank we know first
wrote down his change story, shared it with his team for feedback, and
then in effect asked all individual team members to write their own lottery
ticket: what change story, in each of the businesses, supported the wider
message? His team members in turn wrote change stories, shared them
with their teams, and the process continued all the way to the front line.
Although this method took far longer than the traditional road-show
approach, the return on commitment to the program was considered well
worth the investment and an important reason the bank achieved roughly
two times its revenue-per-banker-improvement targets.
Likewise, when Neville Isdell took charge at Coca-Cola, in 2004, he
cocreated a turnaround strategy by bringing together his top 150
employees for three multiday "real work" sessions. The process was then
cascaded further down into the organization, at small working meetings
where participants could in effect write their own lottery ticket about the
inlplications for their particular parts of the business. With hindsight, this
process of creating and interactively cascading what became known as The
Manifesto for Growth is seen as a pivotal intervention in a two-year
turnaround in which the group stopped destroying shareholder value and
generated returns of 20 percent, driven by volume increases equivalent to
selling an extra 105 million bottles of Coke a day. In this period, staff
turnover fell by 25 percent, and the company reported what external
researchers called unprecedented increases in employee engagement for an
organization of this size.
Leaders who need to give their employees more of a sense of direction can
still leverage the lottery-ticket insight by augmenting their telling of the
story with asking about the story. David Farr, chairman and CEO of
Emerson Electric, for example, is known for asking virtually everyone he
encounters in the organization four questions: (1) how do you make a
difference? (testing for alignment with the company's direction); (2) what
improvement idea are you working on? (emphasizing continuous
improvement); (3) when did you last get coaching from your boss?
(emphasizing the importance of people development); and (4) who is the
enemy? (emphasizing the importance of "One Emerson" and no silos, as
well as directing the staffs energy toward the external threat). The
motivational effect of this approach has been widely noted by Emerson
employees.
Strategy#3: Use small, unexpected rewards to motivate
US author Upton Sinclair once wrote, "It is difficult to get a man to
understand something when his salary depends upon his not
understanding it." The flip side, however, isn't true. When business
objectives are linked to compensation, the motivation to drive for results is
rarely enhanced meaningfully.
The reason is as practical as psychological. Most annual-compensation
plans of executives are so full of key performance indicators that the
weighting of any one objective becomes largely meaningless in the grand
scheme of things. Furthermore, most compensation plans typically
emphasize financial metrics whose results depend on myriad variables,
many beyond individual control. On top of that, most companies don't
have deep enough pockets to make compensation a significant driver of
MQ in the workplace.
Leaders of organizations that successfully instill meaning understand the
power of other methods. Terry Burnham and Jay Phelan's book, Mean
Genes,7 describes an experiment in which 50 percent of a group of people
using a photocopier found a dime in the coin-return slot. When all were
asked lo rate their satisfaction level, those who got the dime scored an
average of 6.5 on a scale of 1 to 7, while those who didn't scored just 5.6.
The lesson here is that when we aren't expecting a reward, even a small
one can have a disproportionate effect on our state of mind. And that's also
true of employees in the workplace.
At ANZ Bank, John McFarlane gave all employees a bottle of champagne
for Christmas, with a card thanking them for their work on a major
change program. The CEO of Wells Fargo, John Stumpf, marked the first
anniversary of its change program by sending out personal thank-you
notes to all the employees who had been involved, with specific messages
related to the impact of their individual work. Indra Nooyi, CEO of
PepsiCo, sends the spouses of her top learn handwritten thank-you letters.
After seeing the impact of her own success on her mother during a visit to
India, she began sending letters to the parents of her top team, too.
Some managers might dismiss these as token gestures-but employees
often tell us that the resulting boost in motivation and in connection to the
leader and the company can last for months if not years. As Sam Walton,
founder of Wal-Mart Stores, put it, "Nothing else can quite substitute for a
few well-chosen, well-timed, sincere words of praise. They're absolutely
free-and worth a fortune."
Of the three Qs that characterize a workplace likely to generate flow and
inspire peak perfonnance, we frequently hear from business leaders that MQ
is the hardest to get right. Given the size of the prize for injecting meaning
into people's work lives, taking the time to implement strategies of the kind
described here is surely among the most important investments a leader can
make.
About the Authors
Susie Cranston is a senior expert in McKi nsey's San Francioco office, and Scott Keller is a director in the
Southern California office.
Back to top
Notes
1
See Teresa Amabile and Steven Kramer, "How leaders kill meaning at work, " mckinseyquarter1y.com,
January 2012; and Cynthia A. Montgomery, "How strategists lead ," mckinseyquarter1y.com, July 201?.
2 William F. Russell , Second Wfnd: The Merroirs of an Opinionated Man, first edition , New York, NY: Random
House, 1979.
3 See False Surmit: The State of 1-/uman Capital 2012, October 2012, a joint report from The Conference
Board and McKinsey.
4
See Teresa Amabile and Steven Kramer, The Progress Principle: Using Srrell Wfns to Ignite Joy,
Engagerrent, and Creativity at Work, first edition, Boston , MA: Harvard Business School Publig,ing, 2011 .
5 See Mihaly Csikszentmihalyi, Good Business: Leadership, Flow. and the Making of Meaning, first edition,
New York, NY: Viking, 2003.
6 Scott Keller and Colin Price, Beyond Perforrrence: How Great Organizations Build Ul timate Corrpetitive
Advantage, first edition, Hoboken, NJ: John Wiley & Sons, 2011 .
7
Terry Burnham and Jay Phelan, Mean Genes: From Sex to Money to Food: Tarring Our Primal Insti ncts. first
edition, New York, NY: Perseus Pubfig,ing, 2000.
© Copyright 1992-2013 McKinsey & Company
doc_314329078.pdf
Within this detailed outline concerning increasing the meaning quotient of work.
McKinsey r t e r l y
Increasing the 'meaning quotient' of
work
Through a few simple techniques, executives can boost workplace "MQ"
and inspire employees to perform at their peak.
Musicians talk about being "in the groove," sportsmen about being "in
the zone." Can employees in the workplace experience similar performance
peaks and, if so, what can top management do to encourage the mental
state that brings them about?
We've long been interested in work environments that inspire exceptional
levels of energy, increase self-confidence, and boost individual productivity.
When we ask leaders about the ingredient they think is most often missing
for them and for their colleagues-and by implication is most difficult to
provide-they almost invariably signal the same thing: a strong sense of
meaning. By "meaning," we and they imply a feeling that what's
happening really matters, that what's being done has not been done before
or that it will make a difference to others.
The idea of meaning at work is not new. Indeed, two contributions to
McKinsey Quarterly
1
over the past year have highlighted this theme. In
one, the authors demonstrate how misguided leaders often kill meaning in
avoidable ways. The author of the other suggests that "meaning maker" is
a critical role for corporate strategists. In this article, we will show from
our research how meaning drives higher workplace productivity and
explain what business leaders can do to create meaning.
Meaning and performance
The mental state that gives rise to great performance-in sports, business,
or the arts-has been described in different ways. The psychologist Mihaly
Csikszentmihalyi studied thousands of subjects, from sculptors to factory
workers, and asked them to record their feelings at intervals throughout
the working day. Csikszentmihalyi came up with a concept we consider
helpful. He observed that people fully employing their core capabilities to
meet a goal or challenge created what he called "flow." More important, he
found that individuals who frequently experienced it were more productive
close
and derived greater satisfaction from their work than those who didn't.
They set goals for themselves to increase their capabilities, Lhereby Lapping
into a seemingly limitless well of energy. And they expressed a willingness
to repeat those activities in which they achieved flow even if they were not
being paid to do so.
Athletes describe the same feeling as being in the zone. Bill Russell, a key
player for the Boston Celtics during the period when they won 11
professional-basketball championships in 13 years, put it thus: "When it
happened, I could feel my play rise to a new level .... It would surround
not only me and the other Celtics, but also the players on the other team . . .
. At that special level, all sorts of odd things happened. The game would be
in the white heat of competition, and yet somehow I wouldn't feel
competitive .... I'd be putting out the maximum effort ... and yet I never
felt the pain."
2
Flow sounds great in theory, but few business leaders have mastered the
skill of generating it reliably in the workplace. An easy first step is to
consider what creates flow in your own work situation-a question we
have put directly to more than 5,000 executives during workshops we've
conducted over the last decade. In this exercise, individuals initially think
about their own personal peak performance with a learn, when, in other
words, they have come closest to the feelings Csikszentmihalyi and Russell
describe. Then they pinpoint the conditions that made this level of
performance possible: what in the team environment was there more or
less of than usual?
The remarkably consistent answers we've received fall into three categories.
lbe first set includes elements such as role clarity, a clear understanding of
objectives, and access to the knowledge and resources needed to get the job
done. These are what one might term rational elements of a flow
experience or, to use a convenient sho1thand, its intellectual quotient (IQ).
When the IQ of a work environment.is low, the energy employees bring to
the workplace is misdirected and often conflicting.
Another set of answers includes factors related to the quality of the
interactions among those involved. Here, respondents often mention a
baseline of trust and respect, constructive conflict, a sense of humor, a
general feeling that "we're in this together," and the corresponding ability
to collaborate effectively. These create an emotionally safe environment to
pursue challenging goals or, to borrow from the writings of Daniel
Goleman and others, an environment with a high emotional quotient
(EQ). When the EQ of a workplace is lacking, employee energy dissipates
in the form of office politics, ego management, and passive-aggressive
avoidance of tough issues.
While IQ and EQ are absolutely necessary to create the conditions for peak
performance, they are far from sufficient. The longest list of words we have
compiled from executives' answers to our peak-performance question over
the last ten years has little to do with either of these categories. This third
one describes the peak-performance experience as involving high stakes;
excitement; a challenge; and something that the individual feels matters,
will make a difference, and hasn't been done before. We describe this third
category as the meaning quotient (MQ) of work. When a business
environment's MQ is low, employees put less energy into their work and
see it as "just a job" that gives them little more than a paycheck.
The opportunity cost of the missing meaning is enormous. When we ask
executives during the peak-performance exercise how much more
productive they were at their peak than they were on average, for example,
we get a range of answers, but the most common at senior levels is an
increase of five times. Most report that they and their employees are in the
zone at work less than 10 percent of the time, though some claim to
experience these feelings as much as 50 percent of it. If employees working
in a high-IQ, high-EQ, and high-MQ environment are five times more
productive at their peak than they are on average, consider what even a
relatively modest 20-percentage-point increase in peak time would yield in
overall workplace productivity-it would almost double.
What's more, when we ask executives to locate the bottlenecks to peak
performance in their organizations, more than 90 percent choose MQ-
related issues. They point out that much of the IQ tool kit is readily
observable and central to what's taught in business schools. The EQ tool
kit, while "softer," is now relatively well understood following Goleman's
popularization of the concept in the mid-199os. The MQ tool kit is different.
What to do differently
Business leaders, we know from other sources, are striving hard to .find the
missing MQ ingredients so they can improve motivation and workforce
productivity. Late last year, for example, a survey (conducted by The
Conference Board and Mc.Kinsey) of more than 500 US-based HR
executives identified employee engagement as one of the top five critical
human-capital priorities facing organizations. 3
Management thinkers are also on the case. Gary Hamel urges modern
managers to see themselves as "entrepreneurs of meaning." In The
Progress Principle, Harvard Business School professor Teresa Amabile and
her coauthor Steve Kramer present rigorous field research highlighting the
enormous benefits that a sense of forward momentum can have for
employees' "inner work life."4 Csikszentmihalyi writes extensively about
"the making of meaning" in his book Good Business.s
In our experience, though, there's often a disconnect between the desire of
practitioners to create meaning in the workplace, the good ideas emerging
from cutting-edge research, and the number of specific, practical, and
reliable tools that leaders know how to use. Often, platitudes about
communication, quality feedback, job flexibility, and empowerment are
used as substitutes for such tools. Much of this amounts to little more than
advice about how to be a good manager. Inspirational visions, along the
lines of Walt Disney's "make people happy" or Google's "organize the
world's information," have little relevance if you produce ball bearings or
garage doors.
In McKinsey's research, we've uncovered a set of specific, actionable
techniques underpinned both by experience and a significant body of
social-science work. The full tool kit can be found in Beyond Performance:
How Great Organizations Build Ultimate Competitive Advantage.
6
The
three examples described here are not only among the most
counterintuitive (and therefore the most often overlooked) but also the
most powerful.
Strategy#1: Tell five stories at once
We typically see organizational leaders tell two types of stories to inspire
their teams. The first, the turnaround story, runs along the lines of "We're
performing below industry standard and must change dramatically to
survive-incremental change is not sufficient to attract investors to our
underperforming company." The second, the good-to-great story, goes
something like this: "We are capable of far more, given our assets, market
position, skills, and loyal staff, and can become the undisputed leader in our
industry for the foreseeable future."
The problem with both approaches is that the story centers on the
company, and that will inspire some but by no means all employees. Our
research shows that four other sources give individuals a sense of meaning,
including their ability to have an impact on
• society-for example, making a better society, building the community, or
stewarding resources
• the customer-for instance, making life easier and providing a superior
service or product
• the working team-for instance, a sense of belonging, a caring
environment, or working together efficiently and effectively
• themselves-examples include personal development, a higher paycheck
or bonus, and a sense of empowerment
Surveys of hundreds of thousands of employees show that the split in most
companies-regardless of management level, industry sector, or geography
(developed or developing economies)-is roughly equal. It appears that
these five sources are a universal human phenomenon.
The implication for leaders seeking to create high-MQ environments is that
a turnaround or a good-to-great story will strike a motivational chord with
only 20 percent of the workforce. The same goes for a "change the world"
vision like those of Disney and Google or appeals to individuals on a
personal level. The way to unleash MQ-related organizational energy is to
tell all five stories at once.
A recent cost-reduction program at a large US financial-services company
began with a rational-change story focused on the facts: expenses were
growing faster than revenues. Three months into the program, it was clear
that employee resistance was stymieing progress. The management team
therefore worked together to recast the story to include elements related to
society (more affordable housing), customers (increased simplicity and
flexibility, fewer errors, more competitive prices), working teams (less
duplication, more delegation, increased accountability, a faster pace), and
individuals (bigger and more attractive jobs, a once-in-a-career
opportunity to build turnaround skills, a great opportunity to "make your
own" institution). The program was still what it was-a cost-reduction
program-but the reasons it mattered were cast in far more meaningful
terms.
Within a month, the share of employees reporting that they were
motivated to drive the change program forward jumped to 57 percent,
from 35 percent, according to the company's employee-morale pulse
surveys. The program went on to exceed initial expectations, raising
efficiency by 10 percent in the first year.
Strategy#2: Let employees 'write their own lottery ticket'
The first strategy gives specific and practical guidance about how to tell the
story. Yet the best meaning makers spend more time asking than telling.
In one of Daniel Kahneman's famous experiments, researchers ran a
lottery with a twist. Half of the participants were randomly assigned a
lottery ticket. The remaining half were given a blank piece of paper and
asked to write down any number they pleased. Just before drawing the
winning number, the researchers offered to buy back the tickets from their
holders. The question they wanted to answer was how much more would
you have to pay people who "wrote their own number" than people who
received a number randomly. The rational answer should be no difference
at all, since a lottery is pure chance, and therefore every ticket number,
chosen or assigned, has the same odds of winning. A completely rational
actor might even want to pay less for a freely chosen number, given the
possibility of duplicate ones. The actual answer? Regardless of geography
or demographics, researchers found they had to pay at least five times
more to those who chose their own number.
This result reveals a truth about human nature: when we choose for
ourselves, we are far more committed to the outcome-by a factor of at
least five to one.
In business, of course, leaders can't just let everyone decide their own
direction. But they can still apply the lessons of the lottery-ticket
experiment. The head of financial services at one global bank we know first
wrote down his change story, shared it with his team for feedback, and
then in effect asked all individual team members to write their own lottery
ticket: what change story, in each of the businesses, supported the wider
message? His team members in turn wrote change stories, shared them
with their teams, and the process continued all the way to the front line.
Although this method took far longer than the traditional road-show
approach, the return on commitment to the program was considered well
worth the investment and an important reason the bank achieved roughly
two times its revenue-per-banker-improvement targets.
Likewise, when Neville Isdell took charge at Coca-Cola, in 2004, he
cocreated a turnaround strategy by bringing together his top 150
employees for three multiday "real work" sessions. The process was then
cascaded further down into the organization, at small working meetings
where participants could in effect write their own lottery ticket about the
inlplications for their particular parts of the business. With hindsight, this
process of creating and interactively cascading what became known as The
Manifesto for Growth is seen as a pivotal intervention in a two-year
turnaround in which the group stopped destroying shareholder value and
generated returns of 20 percent, driven by volume increases equivalent to
selling an extra 105 million bottles of Coke a day. In this period, staff
turnover fell by 25 percent, and the company reported what external
researchers called unprecedented increases in employee engagement for an
organization of this size.
Leaders who need to give their employees more of a sense of direction can
still leverage the lottery-ticket insight by augmenting their telling of the
story with asking about the story. David Farr, chairman and CEO of
Emerson Electric, for example, is known for asking virtually everyone he
encounters in the organization four questions: (1) how do you make a
difference? (testing for alignment with the company's direction); (2) what
improvement idea are you working on? (emphasizing continuous
improvement); (3) when did you last get coaching from your boss?
(emphasizing the importance of people development); and (4) who is the
enemy? (emphasizing the importance of "One Emerson" and no silos, as
well as directing the staffs energy toward the external threat). The
motivational effect of this approach has been widely noted by Emerson
employees.
Strategy#3: Use small, unexpected rewards to motivate
US author Upton Sinclair once wrote, "It is difficult to get a man to
understand something when his salary depends upon his not
understanding it." The flip side, however, isn't true. When business
objectives are linked to compensation, the motivation to drive for results is
rarely enhanced meaningfully.
The reason is as practical as psychological. Most annual-compensation
plans of executives are so full of key performance indicators that the
weighting of any one objective becomes largely meaningless in the grand
scheme of things. Furthermore, most compensation plans typically
emphasize financial metrics whose results depend on myriad variables,
many beyond individual control. On top of that, most companies don't
have deep enough pockets to make compensation a significant driver of
MQ in the workplace.
Leaders of organizations that successfully instill meaning understand the
power of other methods. Terry Burnham and Jay Phelan's book, Mean
Genes,7 describes an experiment in which 50 percent of a group of people
using a photocopier found a dime in the coin-return slot. When all were
asked lo rate their satisfaction level, those who got the dime scored an
average of 6.5 on a scale of 1 to 7, while those who didn't scored just 5.6.
The lesson here is that when we aren't expecting a reward, even a small
one can have a disproportionate effect on our state of mind. And that's also
true of employees in the workplace.
At ANZ Bank, John McFarlane gave all employees a bottle of champagne
for Christmas, with a card thanking them for their work on a major
change program. The CEO of Wells Fargo, John Stumpf, marked the first
anniversary of its change program by sending out personal thank-you
notes to all the employees who had been involved, with specific messages
related to the impact of their individual work. Indra Nooyi, CEO of
PepsiCo, sends the spouses of her top learn handwritten thank-you letters.
After seeing the impact of her own success on her mother during a visit to
India, she began sending letters to the parents of her top team, too.
Some managers might dismiss these as token gestures-but employees
often tell us that the resulting boost in motivation and in connection to the
leader and the company can last for months if not years. As Sam Walton,
founder of Wal-Mart Stores, put it, "Nothing else can quite substitute for a
few well-chosen, well-timed, sincere words of praise. They're absolutely
free-and worth a fortune."
Of the three Qs that characterize a workplace likely to generate flow and
inspire peak perfonnance, we frequently hear from business leaders that MQ
is the hardest to get right. Given the size of the prize for injecting meaning
into people's work lives, taking the time to implement strategies of the kind
described here is surely among the most important investments a leader can
make.
About the Authors
Susie Cranston is a senior expert in McKi nsey's San Francioco office, and Scott Keller is a director in the
Southern California office.
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Notes
1
See Teresa Amabile and Steven Kramer, "How leaders kill meaning at work, " mckinseyquarter1y.com,
January 2012; and Cynthia A. Montgomery, "How strategists lead ," mckinseyquarter1y.com, July 201?.
2 William F. Russell , Second Wfnd: The Merroirs of an Opinionated Man, first edition , New York, NY: Random
House, 1979.
3 See False Surmit: The State of 1-/uman Capital 2012, October 2012, a joint report from The Conference
Board and McKinsey.
4
See Teresa Amabile and Steven Kramer, The Progress Principle: Using Srrell Wfns to Ignite Joy,
Engagerrent, and Creativity at Work, first edition, Boston , MA: Harvard Business School Publig,ing, 2011 .
5 See Mihaly Csikszentmihalyi, Good Business: Leadership, Flow. and the Making of Meaning, first edition,
New York, NY: Viking, 2003.
6 Scott Keller and Colin Price, Beyond Perforrrence: How Great Organizations Build Ul timate Corrpetitive
Advantage, first edition, Hoboken, NJ: John Wiley & Sons, 2011 .
7
Terry Burnham and Jay Phelan, Mean Genes: From Sex to Money to Food: Tarring Our Primal Insti ncts. first
edition, New York, NY: Perseus Pubfig,ing, 2000.
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