It's about dignity, stupid!

Most managers spend their time and effort trying to force the workforce to do what they want. If they found out what the workforce wanted, to be proud of what they do, and spent their time instead creating the environment that allowed them to become proud, then the difference in their performance would be astonishing.

process to empathy ratio

Knowledge@Wharton: Would you explain the concept of the process to empathy ratio?

Bagchi: Yes. This is actually not a scientific explanation. I, like any MBA, would talk about P/E ratios [price-equity ratios]. You talk about one of the indicators of the financial health of an organization through P/E ratios. When I was raising MindTree, one day it occurred to me that we were putting too much of an emphasis on process and building of process and process as an enabler. I found that the Human Resources folks -- we actually call them People Function folks in MindTree -- were becoming more process-centric, and process does not solve all problems. Process works only when it is given life through empathy. I didn't know how to drive home the point, and then it occurred to me that we could have a different take on the P/E ratio concept. I called those folks and said that we need to balance every process with empathy. Think of it as a new way of looking at the P/E ratio. Deal with every situation partly by looking at process and partly by looking at empathy.

Subroto Bagchi
http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4188

Physical infrastructure you can buy. Intellectual infrastructure you can create, borrow, or inter-network. But emotional infrastructure is the most nebulous and most difficult to build. It offers the most sustainable competitive advantage.

Subroto Bagchi
http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4188

Seven consumer trends you need to know about

By Reinier Evers, trendwatching.com

In a traditional consumer society, he or she who consumes the most, the best, the coolest, the most expensive, the scarcest, or the most popular goods, will typically also ‘gain’ the most status. However, expect 2007 to be the year in which many brands realise (if not grudgingly accept) that the ‘old’, mass-era status symbols, from the Audi Q7 to the De Beers Radiance collection, are no longer every consumer’s wet dream. After all, as mature consumer societies are increasingly dominated by (physical) abundance, by saturation, by experiences, by virtual worlds, by individualism, by participation, by feelings of guilt and concern about the side-effects of unbridled consumption, status is to be had in many more ways than leading a somewhat dated lifestyle centred on hoarding as many branded, luxury goods as possible. In light of this and factors such as the proliferation of social networking, expect the following trends in 2007:

1. Transumers – An increasing number of consumers are driven by experiences instead of ‘the fixed’. They are driven by entertainment, by discovery, by fighting boredom; people who increasingly live a transient lifestyle, freeing themselves from the hassles of permanent ownership and possessions. These consumers have been around for some time but there will be many more of them in 2007. The implications? An obsession with the here and now, an ever-shorter satisfaction span, and a lust to collect as many experiences and stories as possible, are undermining the perceived value (and thus status) of fixed goods and services. How can firms react? Fashion brands are leading the way in tapping into ‘transumerism’. From the very transient (and affordable) collections at Zara and H&M, to innovative lease concepts that play to the temporary nature of the business, and to transumers’ desires. Elsewhere, exclusive car sharing clubs are popping up faster than you can trade in your old jalopy. Why spend all your money on a Bentley when you can experience a Ferrari, Lamborghini and Maybach, too? Check out the likes of Classic Car Club, P1 Club, LuxShare Auto Club and Ascari.

2. Participative lifestyles - Especially for younger consumers, participation is the new consumption. For these creatives, status comes from finding an appreciative audience (in much the same way as brands operate). No wonder that it's becoming increasingly important to hone one's creative skills. Status symbols, make way for status skills. In economies that increasingly depend on (and thus value) creative thinking and acting, well-known status symbols tied to owning and consuming goods and services will find worthy competition from status skills: those skills that consumers are mastering to make the most of those same goods and services, bringing them status by being good at something, and the story telling that comes with it. Once you get into spotting status skills, you’ll notice they are spreading everywhere. Travel is a case in point. As reported in the New York Times last year: “While many travellers are still happy to spend their vacations lollygagging on the beach, more and more of them want to learn something on their trips. [...] Adventure travel captured the American imagination years ago, but now more people are seeking skills, not just thrills.” Equitours, for instance, offers instruction-based horse-riding tours in the United States and across continental Europe, while Access Trips takes small groups off the beaten track for sports programs and a maximum instructor-to-client ratio of 1 to 5. In other sectors, Volkswagen AutoStadt Driving Courses provide customers with a personal trainer to teach them everything from reducing fuel consumption to keeping one’s car under control in extreme circumstances.

3. Connecting lifestyles - In a post-material world, all that’s left to covet is… other people? From networking sites to buddy lists to meetup.org to a boom in members-only clubs, social status 2.0 is all about who you connect to and who wants to connect to you, tribal-style. This lifestyle is a subset of a larger trend, ‘online lifestyles’, which encompasses everything from status gained from the number of views for one’s photos on Flickr, the real estate one owns in Second Life, to the good looks (and outfit) of one’s avatar.

4. Eco-lifestyles - With the environment finally on the agenda of most powers that be, and millions of consumers now actively trying to ‘greenify’ their lives, status from leading an eco-responsible lifestyle is both more readily available, and increasing in value. A substantial subset of consumers is already bestowing recognition and praise on Prius drivers while scorning SUV owners, and this will only accelerate as design-minded and branding-savvy eco-firms push to the forefront in 2007. Make it green, make it chic, make it effortless, make it visible, and don't hesitate to point out your competitor's polluting alternatives!

5. Trysumers – Trysumers are transient, experienced consumers who are becoming more daring in how and what they consume, thanks to a wide range of societal and technological changes. As saturated, experienced consumers can draw on plenty of past experiences, and know that many more experiences will follow, it's easier to cope with possible disappointment stemming from trying out the unknown. Freed from the shackles of convention and scarcity, immune to most advertising, and enjoying full access to information, reviews and navigation, experienced consumers are trying out new appliances, new services, new flavours, new authors, new destinations, new artists, new outfits, new relationships, new anything with post mass-market gusto. Companies that are latching on to the trend are enabling such experimentation through ‘rent instead of buy’ deals – from handbag subscriptions to super car sharing.

6. Transparency tyranny - Remember the promises of flawless matching of supply and demand, and limitless consumer power, when the web burst onto the scene a dozen years ago? While the last few years didn’t disappoint(consumers are already enjoying near-full transparency of prices and, in categories like travel and music, near-full transparency of opinions as well), 2007 could be the year in which transparency tyranny really starts scaring the shit out of non-performing brands. Why? For one, 1+ billion consumers are now online, and the majority of them have been online for years. They're skilled bargain seekers and ‘best of the best’ hunters, they're avid online networkers and they're opinionated reviewers and advisors (tripadvisor.com now boasts 5+ million travel reviews). Now, for 2007, add camera and video phones becoming both ubiquitous and more powerful - reviews of anything and everything will go multimedia. The impact? Well, a picture says more than a thousand words, and a video says more than a thousand pictures. Everything brands do or don’t do will end up on YouTube.com, or on an undoubtedly soon to be launched YouTube-clone dedicated to product reviews.

7. Generation C(ASH) – Three and a half years ago, Generation C(ontent) emerged as "an avalanche of consumer generated content that is building on the web, adding tera-peta bytes of new text, images, audio and video on an ongoing basis." Fast forward to 2007, and it's hard to find anyone still in awe about the fact that content-creating consumers are behind some of the biggest Web 2.0 success stories, from the tens of millions of blogs to the Flickrs and YouTubes. However, this trend still has a lots of room to grow, as younger, participation-minded consumers will eventually dominate all of the online space, meaning the stakes will continue to be raised as well. And now Generation C(ontent) is joining Generation C(ash). If consumers produce the content, if they are the content, and that content brings in money for aggregating brands, then revenue and profit-sharing is going to be one of 2007’s main themes in the online space. It’s not like brands will have a choice: talented consumers are going to be too sought after to remain satisfied with thank you notes. Get ready for an avalanche of revenue sharing deals, reward schemes and sumptuous gifts aimed at luring creative consumers.

Six of One

"...in academia there is much talk, little action. In industry, there is much action, little thought."

Donald A. Norman

Novel Book Publishing Initiative
We Are Smarter Than Me
Having read about business books, here is your chance to get involved with writing one. Wharton (along with the MIT Sloan School and Pearson Publishing) is working on a novel initiative in book publishing, and readers of Knowledge@Wharton are welcome to participate. The project -- tentatively called We Are Smarter Than Me -- is an experiment to see whether a large community of business people can jointly author a book of the same name. Pearson will publish the book later this year. The book focuses on ways in which companies are learning to leverage social networks and the power of communities to improve their performance by allowing customers or others to take over functions typically performed by experts. Every contributor will be credited as an author, and will help direct royalties to charity. We encourage you to explore this interesting opportunity by going to the We Are Smarter website.
http://www.wearesmarter.org/

Plateauing: Redefining Success at Work

http://knowledge.wharton.upenn.edu/article.cfm?articleid=1564

As an executive coach who works with corporations, Monica McGrath has her ear to the ground. And what she is hearing is this: A number of men and women in middle management are increasingly reluctant to take the next step in their careers because the corporate ladder is not as appealing as it used to be, and the price to climb it is too high. "These people are still ambitious, and they are still driving. They just aren't driving for the same things they were driving for 15 years ago," she says.

What may be happening, suggest McGrath and others, is that people are setting career paths based on their own values and definitions of success. They are not burned out or dropping out; they are not going back to school and changing careers; they are not having a mid-life crisis. Instead, they are redefining how they can keep contributing to their organizations, but on their own terms. Rather than subscribe to the 'onward and upward' motto, they are more interested in 'plateauing,' unhooking from the pressure to follow an upward path that someone else has set.

A number of oft-cited trends in the workplace contribute to this phenomenon: Technological advancements are breaking down the barriers between work and non-work hours, adding to the pressure to constantly be on the job or on call. Strategic decisions like restructuring, downsizing and outsourcing are adding to job uncertainty at all levels and reducing the number of promotions available to mid- and upper-level managers. The continuing influx of women into the workforce keeps raising the level of stress when it comes to work/life balance issues.

Lois Backon, a vice president at Families and Work Institute (FWI), a New York-based non-profit research organization, points to a report FWI does every five years entitled, "National Study of the Changing Work Force." The latest one was released in 2003. One of their areas of research relates to what the organization calls "reduced aspirations" among various sectors of the workforce. "This is an incredibly important issue, and it offers some of the most troubling data out there for corporate America," she notes.

For example, in one of its latest reports, "Generation & Gender (2004)," which uses data from the national study to determine differences among generations, FWI found that fewer employees aspired to positions of greater responsibility than in the past. Among college-educated men of Gen-Y, Gen-X and boomer ages, 68% wanted to move into jobs with more responsibility in 1992, versus only 52% in 2002. Among college-educated women of Gen-Y, Gen-X and boomer ages, the decrease was even higher: 57% wanted to move into jobs with more responsibility in 1992 versus 36% in 2002. (Generation Y is typically defined as those born between 1980 and 1995, Generation X as those born between 1965 and 1980.)

"We then did a more focused look at leaders in the global economy," Backon says. "We took the top 10 multinational companies -- such as Citicorp and IBM -- and conducted in-depth interviews with the top 100 men and top 100 women. Of those leaders, 34% of the women and 21% of the men said they have reduced their career aspirations."

This plateauing is part of a bigger phenomenon in the workforce -- one that also includes people putting higher priorities on activities outside their jobs, from family to volunteer work to hobbies. For example, in the FWI study, the reason that the majority (67%) of these leaders gave for their response was "not that they couldn't do the work, but that the sacrifices they would have to make in their personal lives were too great," says Backon.

"We call it 'negative spillover from their jobs to their homes,'" Backon adds. "The whole issue of overwork, of needing to multitask, of having to deal with numerous interruptions during their work day" affects employee attitude, not just toward their jobs but also their free time. "Based on our research, we know that 54% of employees are less than fully satisfied with their jobs, 38% are likely to actively look for new employment in the next year and 39% of employees feel they are not engaged in the work they are doing." Most employees "do want to feel engaged by their jobs. The term 'reduced aspirations' does not mean they are not talented or not good at what they do. They are. But in focus groups, they also say things like, 'I need to make these choices because my family is a priority,' or 'I need to make these choices to make my life work.'"

One way to look at this phenomenon, adds Wharton management professor Nancy Rothbard, is that some employees "still derive some sense of identity from their jobs but they have, or are seeking, other ways to get that fulfillment." They are no longer pushing for the bigger raise, the larger staff, the more prestigious title; "they are taking energy that had been focused primarily on goals defined by the corporation and focusing it elsewhere."

Fewer Promotions, Fewer Pensions

Peter Cappelli, director of Wharton's Center for Human Resources, has done extensive research into the changing nature of the workplace. As he and others have noted, companies no longer promise job security, generous benefits packages or even pensions, and employees no longer feel loyal to their employers or obligated to stay for long periods of time. Employees are responsible for managing their own career track and seeking out the mentors and training they need to move on in their current company or, just as likely, in a new company.

Cappelli agrees that organizations "don't have quite as much influence over people as they used to in terms of shaping their goals and aspirations, in part because people come to these jobs at an older age and change jobs more frequently than in the past. Does that necessarily mean people are on their own career path? It depends what you mean by that. I'm not sure it means they are eschewing corporate success. But they are looking outside their current employer's definition of success, more so than in the past."

Cappelli cautions, however, that it's unlikely employees can go on cruise control and still hope to be retained and valued by their employers. "It used to be you could just lie low and wait for the pension. That doesn't happen much any more." And while some employees may not pay as much attention to the goals that their companies want them to pursue, they "continue to work hard because they are afraid of being laid off.... Companies systematically go through and fire people who are not pulling their weight. The ability to punish people into appropriate behavior is one of the great and unpleasant lessons of the 1980s. Employee morale sank and productivity stayed up because people were afraid of being fired," Cappelli notes, adding, however, that this dynamic changes in a tight labor market.

Wharton management professor Sara Kaplan "could imagine a scenario where people have discovered that there is not too much point being loyal to their employers, and then go on to say, 'Okay, I have gotten where I am going to get, and I am going to focus on the other part of my life. I will keep working but won't invest all my energy in my job.'"

But Kaplan also thinks "everyone needs something to be passionate about, so it would be hard for me to imagine that people would simply ramp down on their job without having a crisis or without having found something else" to interest them. Indeed, in today's economy, she adds, "you can't keep your job unless you are engaged, to a certain extent. Corporations don't want people who don't want to go higher. They don't want people who won't strive. You can't plateau; there are always people biting at your heels."

Directly related to the issue of job satisfaction is the question of job design. "Management scholars have been studying this for a long time," says Wharton management professor Sigal Barsade. "Whenever a company designs a job, it must take into account how employees view that job, whether their goal is to get ahead, whether work is central to their lives, and so forth. A company can make a real error trying to redesign a job to be more enriched if the employee doesn't want that," especially if the new job definition requires them to work harder.

What is crucial, Barsade says, "is good job fit. Is the person doing what the company needs done? If the answer is 'yes' and the person also is good at what they do but simply doesn't want to do more, then that could actually be a good situation, especially for jobs that don't include room for promotion." This is applicable in particular to customer service positions where people need to be engaged while they are providing the service, but are not expected to be thinking of ways to redesign the whole customer service system. "So the fit needs to be between what the organization needs and what the employee wants and values. If that fit isn't there, that's when you are going to have a problem."

When should employees who have no interest in advancing or taking on higher challenges worry about losing their job? "I think as long as these employees are working diligently and competently and are willing to change -- whether that means learning a new technology or adapting to a new work process -- they should be safe," says Barsade.

Making Tradeoffs

Kathleen Christensen, who directs The Program on The Workplace, Work Force and Working Families at the Alfred P. Sloan Foundation, suggests that plateauing in one's job "is a completely natural part of a career, but we ignore it because we have this notion of a steep trajectory." Psychologists, she says, "talk about different stages of human development. One stage may be that as people reach middle age, there is the idea of generativity -- a willingness at this point to start giving back, perhaps start cultivating others rather than just" focusing on your own achievements. Plateauing can be desirable, she says, in that employees "are likely to have a great deal of institutional knowledge. They can be the ones who know the processes, can share them and guide others. If everyone is always out for themselves, it goes counter to developing the team culture that every company wants."

No matter how people define their jobs, Christensen adds, "they still must have performance goals, and be evaluated in terms of how well they meet those goals. But we should also recognize that at different points in people's lives, they may define their performance goals in slightly different ways -- they may move at different tempos -- and still be well within what the company needs in order to achieve its business goals."

Plateauing cuts across all boundaries, Christensen suggests, and it could be the result of certain events in people's lives -- like the birth of a child or the need to care for a sick parent -- which lead an employee to decide, "I'm going to hold my own but not try to climb." But it would be "a mistake to assume that all the factors that lead to different tempos are due only to outside forces. It could just be an employees' own decision not to try to climb" in the organization. It doesn't mean they are slacking off. "Someone can be working hard and still be plateauing in a career," Christensen says.

She emphasizes the need for employer and employee to communicate expectations and goals. Any decision to plateau, for whatever length of time, should be a "deal that is structured to meet both sides' needs. It's a danger if employees think they can make these decisions based only on what they want to do. It's also a danger for the company if it doesn't take into account what the employee needs in order to do his or her best. It comes down to principles of good management."

At Deloitte & Touche USA LLP, senior advisor Anne Weisberg is involved with a pilot program called mass career customization, which allows employer and employee together to customize an individual's career "along a defined set of options." It's a realization, she says, that "the 'one size fits all' approach no longer works." In the pilot program, which started in June with a practice group of 400 people and will run for a year, "we have unbundled the career into four dimensions: role, pace, location and schedule, and work load." Under the role dimension, employees can specify, for example, whether they want an external role involving significant client interaction, an internal role without that client service aspect, or a role somewhere between the two. Under pace, the issue is how quickly an employee wants to move up. Under location and schedule, issues such as part-time hours, working at home and willingness to travel are included, while work load looks at variables like the number of projects an employee is wiling to undertake at any one time.

"There are tradeoffs to these choices," Weisberg emphasizes. "A totally internal role has a different compensation structure and advancement route. But the tradeoffs are articulated and an employee can move from one set of options to another. It's a recognition that people need to fit their work into their life and their life into their work over the course of their career, which is 40 years. No one solution will work" for all that time. (Interestingly, she notes, the pilot program so far has found that "rather than dialing down on their careers, most of the practice group is choosing to dial up," reflecting, in part, the fact that 65% of Deloitte's employees are under the age of 35.)

Companies can't redefine the corporate ladder "with a different model that is just as rigid," Weisberg adds. "We need to replace the corporate ladder with a corporate lattice" -- a term implying a more adaptive kind of framework which allows an individual to move in many different directions, not just upward or downward. "I know in many companies, employees are evaluated on the basis of how much time they spend on the job or how many sacrifices they make. That paradigm has to shift so that you look at performance and contribution separate from sacrifice."

Weisberg, senior advisor to Deloitte's Women's Initiative, says that when the initiative was started in 1993, it was concerned primarily with women's career paths, which are very different from men's. (For example, the vast majority of women, about 80%, do not work fulltime continuously throughout their career, whereas the vast majority of men do, she notes.) "But we quickly realized these issues affect many groups other than women, including men, members of Gen X and Gen Y who perhaps want to accelerate early and then decelerate later, and the baby boomers" who are trying to adjust their workloads to accommodate interests or responsibilities outside of work. What's been missing, she says, "is a way to approach all these different people with a consistent set of options." On the micro level, she adds, "it is fundamentally a negotiation between the employer and employee," which is why it is so important to develop "the right kind of negotiation framework."

In scanning the 2006 employment landscape, Weisberg says she sees a "heating up of the war for talent. If you look at the demographics, there is a huge shortage in many of the knowledge-based industries. That is going to be with us for a long time." She cites a recent statistic that women now make up 58% of college graduates, a trend that should affect even more how jobs and careers are structured. "Smart employers don't want to drive their employees so hard that they burn out. That is very expensive. The estimates of the cost of turnover keep going up, in large part because of this issue of the shrinking skilled labor force."

In the past, she says, "we used 150% of salary as the cost of turnover. We are now using 200% of salary." Some experts say that for knowledge-based companies, that figure is 500%. "Turnover is a huge cost. One of the major reasons for doing mass career customization is to improve retention."

Weisberg, too, suggests the need for transparency in any decisions related to the work environment. When both employer and employee are clear about the choices being made, "then both sides are more satisfied with the arrangement. If choices are never discussed, you can end up with mismatched expectations, which can lead to stress on both sides."

Wharton management professor Stewart Friedman, who teaches Wharton Executive MBA students, among others, agrees that "people are struggling with this issue of, 'What do I really care about and how do I measure success?' My sense is that more people, not just middle-aged employees but younger people as well, are raising this question in ways they didn't 20 years ago. If so, is it because more people are hitting the pyramid and accepting the reality of lowered expectations caused by less upward mobility, or is it that they are part of a larger swing in our culture that is more focused on other definitions of success besides economics? I think it is probably both."

What makes leaders in an organization effective, says Friedman, is that they realize employees can have different values than your typical workaholics -- those who enjoy working 80 hours a week -- and still contribute to the organization. "But it's hard to change norms and cultural values that are deeply embedded." What Friedman describes as "the excesses of the overworked generation" have reached a point "where more and more people are starting to question their total dedication to work. We are seeing more people pursuing creative alternatives. The big question 20 years ago was, 'How early did your power breakfast start?' Now the big question is, 'Where and how far did you go on your vacation?'"

Disappearing Flex Time

It's not clear how managers in organizations might react to employees who redefine their positions as jobs rather than as vocations or callings. "They could worry that people simply decide to 'work to rule,' -- i.e., do exactly what is specified and nothing more," says Rothbard. "Companies are terrified of that happening: They know things will break down at that point because you can't specify everything that has to be done in a particular job. But I think if employees' identities are still tied up in their jobs, this won't happen."

Another consideration is how to continue to motivate people if none of the traditional rewards are available -- such as a promotion or a bigger office. "A company may, in fact, want employees to have other sources of fulfillment, and so will try to build in things that matter to them," says Rothbard. That could include flex time, job sharing, job sabbaticals or the sponsorship of charity events that are meaningful to employees.

Some people question the sincerity of programs like flex time or sabbaticals that let people pursue interests outside of work. "I don't think companies are paying a lot of attention to people's passions. There are programs to address this but, frankly, it doesn't happen that much," says Kaplan, who notes that companies will try to institute flex time benefits during times of economic growth, but "the minute the crunch happens, then all those programs go away." And even when companies implement such procedures as flex time or job sharing, adds Barsade, "it doesn't really address the bigger issues of the tremendous amount of work people these days are expected to do on the job."

One of those bigger issues relates to work/life balance and job commitment. McGrath recently taught an executive education course for women in the middle management ranks of a pharmaceutical company to explore "ways to build relationships with, and support each other, as they attempted to take on the next level of responsibility. It's because the companies were finding that women were not willing to step into the high-potential pool of employees" for a number of different reasons, including in some cases, wanting to make sure they had time for their families. "These women were at the vice president level. They weren't lacking in ambition and they wanted to make a difference in their jobs. It was just a question of, 'How much more responsibility can I take on?'"

Rothbard continues to find it ironic that employees who want to "opt out" of their jobs for a short time get less pushback than women who want flex time "so that they can pick up their children from school at 4:30 instead of 5:30 every day." Rothbard cites Arlie Hochschild's book The Time Bind, which notes the exceptions available to high-potential men who want to take a sabbatical and travel around the world. In one chapter, Hochschild relates how two men had asked their supervisor for time off to do underwater photography of coral reefs. The supervisor granted them an educational leave to pursue their project. Why, the author asks, can't the company offer flexible schedules to parents who want to pick up their children early from daycare?

Rothbard also points to research on the phenomenon of "multiple roles, and the fact that there are physical as well as psychological benefits to people" who have more than one area in their lives that engages them and requires their attention. An example would be a woman who has responsibilities both at her job and with her family at home. The research discusses "the buffer hypothesis, which says that if something goes wrong in one area, you then have another area that buffers you," says Rothbard. "In other words, work/family roles enrich, rather than deplete, each other."

Stress in the workplace, many experts have noted, can be intensified by technological advancements that make it harder for people to ever totally disconnect from their jobs at appropriate moments, like vacations. As McGrath notes, "there are no boundaries around employees' time. They are always available." McGrath has worked as a coach in five large corporations over the past year and at all of them, she observed workloads that were, in her opinion, unmanageable. Some employees, she says, react by trying to set strict limits on their accessibility -- for example, not answering their Blackberry from 6 p.m. to 6 a.m. "They have come to some sort of peace with the fact that they will never get everything done and keep everyone happy."