Seven Best Practices of Successful Organizations

Transparency Helps Orgs that Pay Employees Fairly

By Daniel Butcher

Organizations with merit-based raises and bonuses deemed equitable by employees benefit from pay transparency by incentivizing top-tier performers to put in maximum effort and stay at the organization, while encouraging many bottom-tier performers to look for new jobs.

“The bottom line, what we found is that people’s perceptions of the fairness of pay in their organization had a big impact on the degree to which transparency was associated with higher or lower rates of turnover,” Academy of Management Scholar Peter Bamberger of Tel Aviv University said. “And a lot of that can be explained by people’s perceptions of trust.

“Where employees have a sense that pay is distributed fairly, you get a lot of benefits from pay transparency with regard to reduced turnover, because essentially, in most cases, where people believe that pay is fair, pay transparency is showing that the pay is, in fact, fair,” he said.

“And it’s driving higher levels of trust, which encourage people to stay in the organization, and in those situations where people are feeling that the pay is unfair, it’s typically people who are performing less well and are rewarded less well, transparency can be problematic, because then you’re actually making it obvious to them that they’re not doing as well and they’re likely to leave to look for greener pastures.”

In this way, Bamberger and colleagues were able to explain inconsistent findings regarding pay transparency and turnover in prior studies. They explained these mixed effects by showing that pay transparency can both increase and reduce turnover.

“For people who are performing well in an organization and getting those higher rewards and feel that their pay is fair, transparency drives higher retention, but for those who are feeling that their pay is unfair, perhaps because they’re getting lower rewards, typically transparency can actually drive higher rates of turnover,” he said.

Bamberger and his fellow researchers looked at employees’ overall perceptions of pay fairness, regardless of what their frame of reference was in terms of level of seniority or job title.

“What we found is when the two are aligned, high transparency with high perceptions of justice, they’re getting higher retention,” he said. “When there’s high transparency with lower perceptions of justice, we were seeing higher levels of turnover.”

Two Factors that Determine Young Professionals’ Drinking Levels

By Daniel Butcher

Early-career professionals often drink as much alcohol as they did in college or even more after graduation, especially if they’re working in a sales role with a boss or mentor who drinks a lot, research shows. But young workers in roles that make them feel empowered and who are surrounded by supportive coworkers who tend to drink alcohol in moderation are more likely to deal with socialization and stress in healthy ways and avoid problem drinking.

That’s according to Academy of Management Scholar Peter Bamberger of Tel Aviv University, who said supportive peer relationships with abstainers or moderate drinkers can be influential, as can jobs that provide a higher level of psychological empowerment.

“A combination of the two—peer support and empowerment—make it so that people aren’t as stressed out by being given roles and tasks that they may not be able to handle, because underlying a lot of what’s involved with this drinking are two main motivations,” Bamberger said. “One is a normative social motivation to go out and drink to become socially integrated in their workplace.

“The second is a stress motivation: ‘This is how I coped with stress in college; I went out to drink, and now I do the same thing at work,’” he said. “One of the critical things that we show in our research studies is that if managers can find alternative ways of coping with stress, actually being proactive in terms of trying to address some of the stressors that newcomers face at work, like uncertainty, they may be able to speed up that maturing out process that can lead to reduced levels of alcohol consumption among early-career professionals.

“Support from peers and psychological empowerment were keys to success in that.”

Sharing Info, Workloads, Positive Feeback Boosts Productivity

By Daniel Butcher

Leaders who can install processes for effective, timely information-sharing, fair workload distribution, and civil communication—including positive feedback—foster the best collaboration and productivity among team members.

Academy of Management Scholar Peter Bamberger of Tel Aviv University said that lackluster productivity is often a result of poor information-sharing and workload-sharing behaviors.

“Team processes are hard; people can’t always pick up the signals that they need to,” Bamberger said. “For example, if they have a piece of information that someone else needs, when should they pass it on to this other person? A nurse has a test result; when should she pass it on to the to the team leader or attending physician?

“If she passes it on too early, she’s going to disrupt what they’re doing, which clearly affects their performance, but if she passes it on too late, it could be deadly, so timing and synchrony of such tasks are crucial,” he said.

Incivility and rudeness also undermine productivity, while civility and kindness tend to boost it.

“In research on medical teams, we demonstrated that when people experience gratitude at work it can often, but not always, have beneficial implications,” Bamberger said. “A lot depends on the source of the gratitude and the nature of the task at hand.

“In one experiment, we had the three teams: a control condition, one that viewed a video before they started the day from a senior neonatologist talking about how grateful he is to everybody in the field for doing the wonderful work they do to save these babies, which had nothing in terms of a productivity boost, but then we had a third group where we had a mother of a preemie talk about how grateful she was to the medical team that saved her child, and that had massive positive effects,” he said.

“We demonstrate what that does to the team interaction through the implications based on a theory in cognitive science called [Fredrickson’s]broaden-and-build, which explains how positive emotions have beneficial effects on people’s ability to be flexible in their thinking, to absorb more information, and things like that.”

Bamberger and colleagues also demonstrate that the effects were much stronger when a mother expressed gratitude than when a senior colleague did.

Sharing positive customer feedback

Business leaders and managers can leverage these insights to improve their effectiveness.

“They can demonstrate gratitude themselves; it does make intuitive sense that if managers and leaders behave with civility and politeness, then that may set an example for the rank-and-file employees to do the same, but they can encourage customers and clients or patients to say ‘thank you’ directly,” Bamberger said. “If you like the way a flight attendant treated you on a flight, you’re supposed to write the company, but what if you were actually put in direct contact with the flight attendant and were able to express the gratitude directly?

“Our evidence suggests that that’s going to have a much stronger effect than a manager saying, ‘You got three positive letters this week,’” he said. “Setting up systems for customers to directly express positive feedback has the potential to significantly boost employee morale and performance.”

Rudeness Doesn’t Motivate Workers—Quite the Opposite

By Daniel Butcher

Some business leaders and managers resort to barbs or even shouting to motivate staff members, but research shows that a coercive leadership style is counterproductive. In fact, civility leads to improved team cohesion and performance, while rudeness hurts workers’ performance.

Academy of Management Scholar Peter Bamberger of Tel Aviv University said that several research papers on the subject explore the implications that emotion-laden events in organizations have on interpersonal relations and team dynamics. In a nutshell, rudeness creates a huge distraction that undermines productivity.

“For example, why can’t you text and drive at the same time? When you’re driving, the reason you don’t text is because—aside from it being against the law—you’re distracted,” Bamberger said. “It’s a complex process to text—it takes your attention, so you have limited cognitive resources, and driving is also complex.

“Whatever goes to the texting is not available for driving, and the result could be death,” he said.

What’s the connection between texting while driving and leadership style, as well as interactions between coworkers? Rudeness and even mild incivility are actually highly emotional events that occur frequently in the workplace.

“Many, many employees experience rudeness at work, and it’s rather ambiguous,” Bamberger said. “It’s not like being bullied or attacked physically, but in response to rudeness, you’ve got to try to figure out what is threatening to some degree, but you don’t know how threatening it is.

“And precisely because of that, and largely unconsciously, your brain is engaging and trying to determine the degree of threat,” he said. “That’s not a mindset that’s conducive to analysis, attention to detail, or any type of thought-demanding work.”

If You Do Employee Surveys, Listen to Respondents

By Daniel Butcher

Conducting regular employee surveys is a best practice that leads to better engagement, morale, retention, and productivity. But it isn’t enough to simply collect responses, according to Academy of Management Scholar Quinetta Roberson of Michigan State University. It’s important for leaders to actually listen to respondents’ thoughts and feelings and take action to correct problems.

Roberson said that she was working with a large organization as a diversity consultant to develop a strategic plan and objectives. A key step was to collect feedback from its employees, some of whom were ringing alarm bells.

“In their employee survey, they had people who were talking about interpersonal incidents with their coworkers, and they felt bullied and harassed,” Roberson said. “Particularly members of certain groups didn’t feel a sense of belonging and would project that they only had a year left in the organization.

“And so I said, ‘That is really bad; we’ve got to address this … let’s talk about how to address this problem that people say they felt bullied and harassed,’” she said. “I didn’t say this as my own personal opinion; I was literally looking at the responses to their employee survey.

“And they said, ‘We don’t want to say that because it might make other people feel like they are harassed or bullied, and so their whole communication approach was to say, ‘We’ve got some good stuff going on, but we don’t want to talk about the bad stuff.”

While focusing on the positive is an understandable impulse, by not prioritizing the negatives, leaders and managers miss opportunities to make improvements that boost employee engagement, morale, retention, and productivity.

“It isn’t easy work to do, but if you put in the time and the investment, it also isn’t rocket science, so people have to be willing to do the work and get into the stickiness of it,” Roberson said.

“That’s the kind of conversations that I have, because if they’re not willing to do that hard work of thinking about ‘What do we do to fix our problems? What should our goals be? How do we want to be better? How could we be better? And how could we measure that?’ then I’m not the person to work with them, because that’s where I do my work at that strategic level,” she said.

“And that’s just a personal thing from my research and my background where I say, ‘If we don’t have those conversations about formulating strategy, developing dashboards, and creating processes to drive change, then we’re not going to get anywhere; we’re just putting a band-aid on stuff.’”

The Evolution of Corporate Social Responsibility

By Daniel Butcher

Academy of Management Scholar Herman Aguinis of the George Washington University School of Business, one of the most influential management professors and researchers, said corporate social responsibility (CSR) is about three Ps—profit, the planet, and people—the “triple bottom line.” The following is an overview of how CSR has evolved, reflecting changing societal expectations and business practices:

1. Robber barons whitewash their image with philanthropy:

In the 1800s and early 1900s, ultra-wealthy industrialists such as Andrew Carnegie and John D. Rockefeller engaged in charitable activities. The idea of businesses having responsibilities beyond profit maximization was out of favor among the politicians and business leaders of the day, but began to spread among academics and social critics.

2. Businesspeople have social responsibilities:

In 1953, economist Howard R. Bowen wrote Social Responsibilities of the Businessman, recommending that companies should focus on business ethics, contribute positively to their community, and do good things for society, not just make money. Urging business leaders to consider stakeholders other than shareholders and look at outcomes beyond profits was out of step with the post-World War II era, but that concept gained influence in the following decades.

3. Strategic CSR and stakeholder theory:

In the wake of the publication ofR. Edward Freeman’s 1984 book,Strategic Management: A Stakeholder Approach, thathighlights the interconnected relationships among a business and its customers, suppliers, employees, investors, communities, and other stakeholders, and the U.N.’s 1987 report,Our Common Future, CSR started to become integrated into more companies’ strategic-planning processes in the 1990s. As the turn of the millennium approached, more businesses recognized that socially responsible practices could enhance reputation and boost profitability.

4. Globalization and standards:

As globalization accelerated in the 2000s and 2010s, businesses faced increasing pressure to adopt CSR practices to improve their environmental effects, pay and treatment of workers, and ethical governance. Frameworks such as the U.N. Global Compact (introduced in 2000) and the International Organization for Standardization’s ISO 26000 standard (released in 2010) provided guidelines for sustainable and socially responsible policies. In addition, corporate transparency and reporting gained traction as more companies began publishing annual sustainability and CSR reports.

5. Integration of CSR and ESG:

CSR has increasingly become intertwined with sustainable business management, emphasizing the importance of environmental, social, and governance (ESG) criteria. More investors, consumers, and regulators are demanding greater accountability in charting progress toward achieving CSR objectives and quantifying the effects of organizations’ operations on climate change, social justice, and sustainable development.

Effective Performance Management Helps with Retention

By Daniel Butcher

The first step for leaders to improve their organization’s performance management is to define it. The next step is to measure it. Further, leaders must ensure that performance-management processes and procedures, including employee reviews and evaluations, are aligned with organizational goals. If done well, performance management can save the organization money by retaining star performers.

That’s according to Academy of Management Scholar Herman Aguinis of at the George Washington University School of Business and author of Performance Management for Dummies, who said that a strong focus on increasing the effectiveness of the organizations’ performance management can not only help them to optimize their talent through targeted skills development and training, but also retain excellent workers.

“If you have a good performance-management system in place, then you talk to employees and make an effort to understand them, you know who your top players and star performers are, and you can anticipate that someone might leave and do something about it before they give notice,” Aguinis said.

Employee turnover is expensive for businesses, with costs ramping up for more senior and high-performing staff members. Costs from employee turnover include recruiting—including advertising, applications, interviews, and onboarding—and training. Administrative costs and lost productivity due to turnover are difficult to calculate exactly, but certainly significant. There are also hidden costs of turnover, for example, culture change, decreased morale and engagement, lost institutional knowledge, potential customer or member dissatisfaction, and even workplace safety problems.

A possible solution? Improve your performance management, align it with the organization’s strategic objectives, identify your top performers, and adjust your discretionary compensation accordingly, then you’ll reduce employee turnover, Aguinis said.

Social-Class Bias Undermines Meritocracy in Promotions

By Daniel Butcher

The role of social class in the workplace is not as discussed as it should be, as it plays a big role in who earns promotions and raises—and who decision-makers include and listen to in meetings. The consequence is that many deserving professionals from lower social classes get unfairly passed over, while those who do get their due in moving up the ladder often outshine their more privileged peers.

Academy of Management Scholar Sean Martin of the University of Virginia explained that social-class backgrounds shape us almost like different cultures. A person who has been upwardly mobile through different social-class positions and professional ranks is akin to being multicultural.

“People who have been upwardly mobile have been shaped in very different ways than people who might have always been in fairly privileged positions, in ways that make them have to learn new cultural norms and reach across cultural divides, as they’ve had to do as they move into new and higher social-class settings,” Martin said. “They come equipped with a skill set, including communication skills, and experiences that are very useful.

“My own research finds that people who come from lower social-class backgrounds who’ve been upwardly mobile are actually quite likely to speak up and offer a fresh perspective,” he said. “The real challenge is that bosses often don’t ask them for their input as often as they would ask it from people who come from more privileged backgrounds.”

People who come from a more elite background typically have many indicators of being from an upper social class, for example, having gone to prestigious schools, saying urbane things that are very culturally savvy in a particular accent that makes them sound smart, and an expensive mode of dressing that is taken for granted in that echelon. And all of those qualities make an impression on supervisors.

“Upper-class people may have that ‘it’ factor—they went to name-brand schools, have name-brand clothes, and say these things that sounds so smart, so bosses say, ‘I’m going to go to them for their input,’ as opposed to a person who might speak more plainly, making the same point but in a very different way, or might have gone to an extremely good school, but maybe not a brand that jumps off the page at you,” Martin said.

“There have been really interesting studies that showed there’s actually a class ceiling and a class pay gap, just like there’s a gender ceiling and a gender pay gap, such that people working the same position who are from a lower social-class background essentially get paid less than a person who’s doing the same job but comes from an upper-class background, so coming from a lower-class background is inhibiting in those ways as well,” he said.

“A lot of my research tries to flip the script and say, ‘Let’s focus on all those multicultural abilities and all the ways that people have been shaped on that upwardly mobile journey that are incredibly useful and valuable, especially pertaining to leadership.”

Tips for Managers to Avoid Team Burnout

By Daniel Butcher

Managers should be on the lookout for signs of burnout in their team members, and a sudden decline in work performance, missed deadlines, or increased errors could be an indication that an employee needs help. Burnout leads to reduced productivity and increased turnover, which is expensive for organizations and causes headaches for managers.

Academy of Management Scholar Sean Martin of the University of Virginia said there’s evidence that many people’s views of the workplace are pretty bleak right now.

“I saw some statistics indicating a lot of folks are feeling a high level of burnout—two-thirds of people would rather get a new boss than a pay raise; they’re just tired of dealing with their boss,” Martin said. “I recently saw another poll that said more than half of people would trust a stranger more than their boss.”

Worker stress has remained at record high levels since the pandemic, with 52% of employees in the U.S. and Canada reporting that they experienced a significant amount of stress on the previous day, according to Gallup. Managers who want to help avoid or mitigate burnout on their team need to realize that people are dealing with stressors both in and out of work and, in response, demonstrate flexibility and empathy.

“There’s a lot of things that are going on in someone’s life like managing family dynamics, extracurriculars, maybe they have care duties for young kids or older parents, so burnout is likely to be present in some form on your team,” Martin said. “If that’s the case, recognize that it’s not always just because of what’s going on at work, although it certainly could be.

“We could either be the kinds of leaders who say, ‘I don’t care—this is work—check all of that stuff at the door and do your job, ’or we could say, ‘I want to deal with a whole person and be the kind of leader that, when people are finished working with me, they view their time with me as time well spent and believe that I had a positive impact on their life and their career,’” he said.

“If you want to be that, then you have to recognize that burnout is an ever-present threat, and when you see people starting to experience it and start seeing the telltale signs of stress, such as retreating into oneself and performance issues in terms of objective measurables, be willing to ask, ‘What can I do? How can I help? ’to start mitigating the burnout that people can feel.”

Can Performance Be Managed Upward?

By Daniel Butcher

Employees evaluating managers’ performance, not just vice versa, also can benefit organizations.

That’s according to Academy of Management Scholar Herman Aguinis of at the George Washington University School of Business and author of Performance Management for Dummies, who cited Dell Inc., where everyone—from entry-level employees to the top management team—completes an annual employee engagement survey called “Tell Dell” with questions about performance and diversity, equity, and inclusion (DEI). Dell leaders use the survey data to hold personnel—including leaders—accountable.

“Before they get promoted upward, every Dell manager needs to have really good ratings from their subordinates or direct reports, so it’s not just the supervisor evaluating the performance of their employees, but also the employees evaluating the performance of leadership and their supervisors—it goes both ways, upward and downward,” Aguinis said.

An even more extreme experiment in a new way to do performance management is “radical transparency,” which Ray Dalio, founder of hedge fund giant Bridgewater Associates, initiated more than three decades ago. He’d been looking for ways to improve the company’s performance and establish a culture of openness and independent thought. The organization has encouraged employees to review their direct manager or supervisor and even senior executives honestly, even harshly—real-time performance evaluations often deliver “radical truth.”

While Dalio found success with this approach, it’s not for everyone, as it can ruffle feathers and make people uncomfortable. Radical transparency means that leaders—and everyone else at the company—open themselves up to oversight and critiques. They must have thick skin and open minds to listen with humility to the feedback that lower-ranking employees give them and respond to it in ways that are productive, without getting defensive or seeking retribution. They also have to deliver brutally honest feedback to their direct reports in ways that improve their performance and morale rather than discouraging them.