5 Risky Imbalances That Keep Businesses From The Results They Expect

Often the simplest principles create conditions for success. Balance is one those principles. One of my earliest teenage jobs was as a server. Servers learn right away that you cannot carry a tray of drinks if all the drinks are on one side of the tray. Unbalanced, they will fall every time. Basic and perhaps obvious, right?

This basic principle of balance is also applied in big business every day. A cargo ship can’t have all of its cargo on one side, or it will sink. An aircraft cannot have all the passengers and luggage on one side, or it will be unsafe to fly. Professional sports teams cannot have only offense or only defense, or they won’t be able to advance the ball and score. Yet so many organizations lack balance.

• They lack balance in having enough of the right people in the right seats to execute on their business goals.

• They lack balance in diversity, equity, inclusion and belonging. Beyond that though, they lack diversity of thought. In many organizations, group think ruins the culture and prevents growth.

• They lack balance in where they work. Hybrid work is the norm. But that environment is so much more challenging to manage and lead than a completely virtual or a completely on-premises entity.

• Since the pandemic, companies have had to constantly react to relentless disruptions: safety protocols, remote to hybrid work, supply chain, energy, inflation, talent shortages, rising wages, global economy, the war in Ukraine and geopolitical uncertainty. Any combination of these external headwinds can throw companies off balance.

• They have also been thrown off balance by internal misalignment between leaders and boards regarding policies, processes, people, or by pulling the wrong levers to correct for the “dumpster fire” of the day.

Why does it matter?

The result: off-balance employees, leaders and organizations cannot move forward in a proactive way toward business goals. Constantly having to react and regain ground is not healthy for growth nor transformation. Instead, it disrupts and impedes progress.

What can be done?

Diagnosing what specifically is keeping your company off balance is often difficult when you are too close to it, and there are so many factors. Here are five key imbalances and action steps leaders can take to regain stability and mitigate risk for the future.

Five Risky Imbalances

1. Not having enough of the right people to execute on business goals

You may have to do more with less for the long term. Unemployment is down, but not enough people are returning to the workforce. Retirements, job changes and “non-negotiable” expectations from employees have put employers at a disadvantage.

To address, business leaders should consider conducting a critical role analysis. Whether for intentional right-fit decisions or voluntary turnover, assess roles in advance. Don’t overlook the irreplaceable value of key employees with nondescript titles. Ask yourself, whose knowledge can you not afford to lose (veterans to younger SMEs)? Whose external connections and key working relationships are critical to their team or operational success? For those retiring, what is your plan for knowledge transfer? Which employees are culture and brand ambassadors to help with recruitment and retention?

And when it comes to turnover, don’t assume you know the cause. McKinsey found a great disconnect between what employers and employees value in their jobs today. Employee expectations are a moving target, and employers must be responsive. It is not simply compensation. Flexible menu-style benefits should be considered, catering to the various generations in your workforce. Don’t dismiss the value employees put on mission and purpose. Investments once viewed as nice-to-have are now mission critical to attracting and retaining talent.

The right data can help to hire right-fit candidates, tailor onboarding, improve employee engagement, manage people to greatness, create more high-performing teams and help with career pathing within the organization. The impact of investing in advanced people analytics is clear according to Bersin:

• 3x more likely to create a sense of belonging

• 8x more likely to be seen as a great place to work

• 3x more likely to retain employees

• 6x more likely to exceed financial targets

• 7x more likely to adapt well to change

• 7x more likely to innovate effectively

And yet, 83% of companies do not use advanced people analytics

Have an open and agile mindset for how to attract and retain your talent. Rethinking job experience and requirements opens up additional pools of talent. Re-skilling and up-skilling workers and facilitating internal mobility within the company improves retention. 79% of employees who have access to free training like their jobs more than those who do not.

2. Diversity

I had predicted DEI accountability would be a top blind spot for leaders and boards in 2021, and this persists today. Organizations are being rated on ESG efforts by investors, prospective and current employees, customers and other entities. Yet, outside metrics are not universal, and therefore results are mixed.

Methods of increasing accountability, such as tying them to executive performance reviews, have also had mixed results. Consider asking: In an effort to become more inclusive, has your workplace become more exclusive? How do we know if our policies are having a positive impact on our culture, or have they had an adverse effect? What are your internal benchmarks? Be agile in your responses. Josh Bersin found that 8 in 10 employees feel “more empowered” to hold leaders accountable for workplace changes in 2022.

Diversity of thought is also key today. Societal unrest has unfortunately created an intolerance of differing opinions, which can spill into the workplace. Has this divisiveness created discord within your organization which negatively impacts business outcomes or decisions?

Bestselling author and restauranteur Jon Taffer’s new book, The Power of Conflict, is an interesting look at how to have civil discussions, communicate productively and resolve conflict. Consider conflict-resolution trainings. Refocus efforts on company culture. When groups are hyper-focused, aligned and committed to company mission, there is less room for disagreement.

Separately, has the tight labor market hampered your ability to hire more innovative thinkers and creative problem-solvers? When building high performing teams, actionable people data can help strategically align team members with the work to be done.

3. Hybrid team leadership

There are so many inherent imbalances to hybrid work. Retaining managers is critical to success. Have your middle managers struggled with managing hybrid teams?

More than half of managers feel leadership is out of touch with employees according to Microsoft’s 2022 Work Trend Index. Companies should be investing in mid-level manager training and tools that can be quickly deployed and align with the demands of leading hybrid teams. Updated policies are necessary mitigate risks of bias and ensure that valuable “quiet” voices on teams are not lost in hybrid schedules.

4. Board and leader misalignment

PwC and The Conference Board found that 55% of executives rate their board performance as only fair, and 89% feel that at least one board member needs to be replaced. Reasons include diversity and lack of business acumen needed for current business conditions.

In five key areas, leaders found that directors lacked expertise in ESG, cybersecurity, crisis management, human resources and technology. The report shows the disconnect is deep: leaders felt with ESG matters, only 47% of directors understand the impact, while 80% of the directors felt they did.

Efforts must be made on both sides to align and create policies that serve the fiduciary interests of the company.

Why this matters: As of May, Netflix has lost $170B of streaming value share YTD. Perhaps this is why the company updated its culture policy, which tells employees that they “must spend their members’ money more wisely” and that “they may have to work on projects that they personally do not like.” There has been a pattern of employee groups pressuring leaders and companies to take public positions and actions on social, political and other issues. The outcomes have often negatively affected revenue, created crisis communication situations, and created discord with employees and customers.

• Boards and leaders can mitigate risk of such instances by creating strong policies that can set expectations for employees and shareholders.

• Refresh boards when needed to include perspectives that can connect the important dots across management functions.

• Leaders should provide directors with ample information and education especially for quickly evolving events.

• Transparency and communication between directors and executives are as essential for trust as it is between leaders and employees.

Further, there should be more consideration for the unexpected. Create policies regarding the public positions that leaders and the company should or should not take. In a highly volatile climate, wading into hot topics of the day, or being pressured by the loudest voices sets poor expectations and is not financially sound. Leaders and boards should be in agreement beforehand.

5. Customer listening and loyalty

Make no assumptions about customers without current data and active listening and engagement tools. You must continue to earn consumer loyalty. According to a recent McKinsey Consumer Pulse, 90% of consumers switched brands in 2021 and will continue to do so. Customers have no patience for the inability to communicate with brands, and there is no reason for companies not to have technology and personnel in place to serve customers throughout the life cycle. When supply chains or any other obstacles block customer outcomes, transparency and easy communication can preserve those relationships.

One final lesson from my days as a server: imbalance can also come from looking at the wrong targets. The best servers know that the only way to quickly carry a loaded tray across the room is to keep your eyes up and watch where you are going. When you look down, that’s when you’ll spill the drinks.

In a similar way leaders today are often putting out fires that are tossed on their desks, or sometimes creating fires of their own. But when they only focus on what’s placed in front of them, they take their eyes off where they are going. Leaders are usually hired for their vision, but it’s difficult to lead when your eyes are down.

If balance is basic, then why is it so hard to regain once it has been lost? Because when you’re in the midst of it, it’s difficult to see the way out. When we work with leaders with organizational imbalance, we objectively assess the negative impact they are experiencing, identify the likely causes, prioritize what should be addressed and create an action plan. Are there areas where you feel more reactive than proactive, preventing you from gaining new ground?

The best way to keep your balance is to mitigate the risks.

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