Cheloha Consulting Group C O N F I D E N T I A L | Managing the Younger, Changing Workforce Randall S. Cheloha, Ph.D. September 23, 2011 Plumbing-Heating-Cooling Contractors Association (PHCC) Minneapolis, MN

1 © 2011 Cheloha Consulting Group. All rights reserved, Introduction Presentation Goals Introduction/Background I. Understanding and Managing the Younger Generation II. Technology Transformation III. Functions of the Brain and their Influence on Emotion & Attention IV. Emotionally Engaging your Employees (EE)

2 © 2011 Cheloha Consulting Group. All rights reserved, I. Understanding & Managing the Younger Generation

3 © 2011 Cheloha Consulting Group. All rights reserved, Definitions Baby-Boomers: Post WWII –Oldest-- 65 y/o –Youngest--45 y/o Gen X: After Baby-Boomers –Oldest y/o –Youngest--29 y/o Gen Y: (Echo-Boomers; the Millennials) –Oldest28 y/o –Youngest-our children –This is the group most affected by and comfortable with the huge technological transformation of the last 15 years. -1 st Desk top Computer (Gateway) -1994, 250 meg storage -Apple Nano (demonstrate) -2011, 16 gig storage (x160,000 more)

4 © 2011 Cheloha Consulting Group. All rights reserved, Understanding Human Nature However, Human nature remains the same over time, a long time –We evolve very slowly. 1 million years on planet vs. earths age- 4.5 billion years (carbon-dating of rocks) Evolutionary Psychology –In Group/Out Group (groups =12-20) –Gossip (the water cooler)scarcity of resources –Need for a Leader-if not appointed, emerges (leaderless group) –Leader Characteristics (Projection of our needs) Simple Models for Understanding & Assessing Human Nature/Personality –Values, Attitudes, Behaviors –Mathematical Equation

5 ©Cheloha Consulting Group, 2011 Relationship of Behavior, Attitudes, Values The Iceberg (90% hidden) VALUES Attitudes Behavior: Whats Visible

6 ©Cheloha Consulting Group, 2011 The Iceberg (Closer to Scale); 90% hidden VALUES Attitudes Behavior: Whats Visible Behavior

7 © 2011 Cheloha Consulting Group. All rights reserved, Mathematical Equation for Assessing Human Capability ((V + S – (DN)) * WE = CAPABILITY Key: V-VALUES S-Strengths DN-Development Needs/Weaknesses/Blind spots WE-Work Ethic

8 © 2011 Cheloha Consulting Group. All rights reserved, Values: What do you want from work? 1) Aesthetics 2) Affiliation 3) Altruistic 4) Commerce 5) Hedonism 6) Power 7) Recognition 8) Science 9) Security 10) Tradition

9 © 2011 Cheloha Consulting Group. All rights reserved, Strengths: What you bring to the party. Adjustment/Emotional Stability (the governor) Ambition/Drive Sociability Interpersonal Sensitivity –Read people? Avoid confrontation? Prudence/Judgment Inquisitive/Learning Approach

10 © 2011 Cheloha Consulting Group. All rights reserved, Development Needs/Weaknesses/Blind-Spots (lo scores are STRENGTHS) 1)Excitableups and down in moods; emotional; expressive (lo=EQ) 2)Cautious--risk averse, avoid making decisions (lo=Decisive) 3)Skepticalmistrustful, vindictive (lo=builds trust with others) 4)Reservedintroverted; poor communicator; insensitive to morale (lo=communicator) 5)Leisurely--passive/aggressive, mean (lo=responsive) 6)Bold-narcissistic feelings of entitlement (lo=modesty) 7)Mischievous-careless about commitment, loose honesty (lo=integrity) 8)Colorful–reactive, manage by crises, center of attention (lo=good judgment) 9)Diligentover controlling micro-manager (lo=delegate, empower) 10)Dutiful-eager to please boss, brown nose (lo=provide support, independent)

11 © 2011 Cheloha Consulting Group. All rights reserved, Some Examples of Types (Weaknesses/BlindSpots) Reserved: –Get out of office –Host social event Bold/Narcissistic; sense of entitlement –Surround with strong others (why succession fails) –Listen/trust at least one other person Dramatic; Always center of attention; bold clothing colors; sweep into a room (Greta Garbo, Lady GaGa) Dutiful: Need permission slip to do anything –Apple/Steve Jobs –My old firm (MDC)

12 © 2011 Cheloha Consulting Group. All rights reserved, Performance Reviews: Providing Feedback and Coaching Principles of Providing Good Feedback –The closer to event, the better; immediate –Direct, focused, and tactful –But, supervisors focus most on recent events during Annual Review –Discuss again during Annual Review; no surprises –Ratio of 10:1 positive to negative –Negative feedback engenders Defensiveness and emotional shutdown -People dont hear what you say after 1 st negative comment, so… -Keep it briefmake your point -Check for understanding thenand check again 5 days later

13 ©Cheloha Consulting Group, 2011 Formula for Leadership Development & Coaching Awareness and Acceptance 50% Skill Building 25% Energy 25% Page 5

14 ©Cheloha Consulting Group, 2011 Realities of Coaching Needs to be positive/trusting alignment between coach and coachee for coaching to work (interests aligned); thats why boss/subordinate coaching is rarely effective Most emotional memories are laid down by age 5 (Doyles) so people naturally react emotionally to any threat Coaching needs to be a combination of Challenge & Support People can only change a little; but that little has a big impact on behavior (willow tree and guide wire) Build off strengths; acknowledge and fence off weaknesses –Counter-intuitively: people will change most in their area of their strengths

15 ©Cheloha Consulting Group, 2011 Fast (1) & Slow (2) Brain Circuits: Reaction to Stimuli (50 vs. 500 milliseconds) AMGYDALA Hippocampus Thalamus Cerebral Cortex STIMULI S2 S1 Reaction

16 ©Cheloha Consulting Group, 2011 Lack of Change/Improvement leads to Termination: Sooner or Later Most frequently acknowledged mistake by senior leaders didnt cut the cord on X soon enough gave him/her too many second chances Firing people one of the most unpleasant if not the most unpleasant tasks of being a boss; dont assume the situation will get better if you ignore it –Step back and assess the overall situation -Does he KNOW what to do? (K)nowledge -Does he KNOW how to do it? (S)kill -Does he WANT to do it? (A)ttitude Then lay track; individual should see it coming, not be surprised

17 © 2011 Cheloha Consulting Group. All rights reserved, II. The Technology Transformation: Do we Manage Technology or does Technology Manage us?

18 © 2011 Cheloha Consulting Group. All rights reserved, Contacting Someone in the Era of New Technology Old Days (before 1995) Letter, telephone, go see them; fax? New Days (after 1995) –Telephone (office, mobile, home) –Texting; l –Facebook: -shape what we share and who we are -investigated by University recruiters -Nowwhat we buy -Linked-In for Professionals Dantes Inferno: Trying to Reach a Real Person in Customer Service –Listen to carefully to our menu as our prompts have recently changed –Enter your account # and a great deal more of information several times; and then well ask you again on the telephone –Be advised that it would be faster/better/easier if you used the internet –Begrudgingly (you loser, you) say Operator or Agent and someone will come on the line (within the next minutes)

19 © 2011 Cheloha Consulting Group. All rights reserved, Technology Transformation is NOT New War: Horse, gunpowder, cannon, rifle, machine gun, bombs Printing Press/Broad Sheet/ Newspaper/Broad sheet (1600s- Railroad (1830s- Telegraph/Telephone (approx Automobile/Airplane ( Radio/Television ( Now: PC; Internet; ; mobile phone; Blackberry; Smart Phone; I Pad

20 © 2011 Cheloha Consulting Group. All rights reserved, Characteristics of the Younger Generations Hop from job to job (have a new job every year or 2) Expect immediate satisfaction (no paying your dues) Spotty work ethic Used to instant access/instant gratification due to technological nursing –Music (Ipod/nano) --Facebook (friends) –YouTube --Google (information/maps/everything) –Kindle (revamped publishing industry) Splintered attention span; Multi-tasking (may lack listening skills, discipline, persistence) Use technology to keep relationships/intimacy at a bay –Defense mechanism, control needs –Who do you call? What channels?

21 © 2011 Cheloha Consulting Group. All rights reserved, How do you Reach Them? Build a Relationship. Getting to know them (interview) 1 st day Working together Lunch: interests, family, hobbies, whats important Social gatherings Team building

22 © 2011 Cheloha Consulting Group. All rights reserved, Implications of Multi-Tasking (brain is not sufficiently evolved to handle it) Women are better at multi-tasking than men As we age, its harder and harder to change gears (brain flexibility) As we age, brain processing speed slows When feeling overwhelmed, we can not focus and more emotional: –And when we dont focus -Quality of work suffers -Easily distracted; react dont think things thru -Receive less satisfaction from work -Prone to depression, lower affect -It becomes a vicious circle

23 © 2011 Cheloha Consulting Group. All rights reserved, III. Brain Functioning and How It Influences Emotion and Attention

24 © 2011 Cheloha Consulting Group. All rights reserved, The Ghost in the Machine (67): Brain Evolution AUTOMATIC PILOT BRAIN Emotional Brain EXECUTIVE BRAIN

25 © 2011 Cheloha Consulting Group. All rights reserved, Functions of the Brain Automatic Pilot Brain (Brain Stem) –Autonomic Nervous System –Breathing --Sleep cycles/wakefulness –Circulation --Circadian rhythms –Consciousness (drugs) Emotional Brain (Amygdala, Hippocampus, Thalamus) –Emotion –Integration of Range of Brain Functions –Senses –Attention

26 © 2011 Cheloha Consulting Group. All rights reserved, Functions of the Brain (Continued) Executive Brain (Frontal Cortex); The Seat of Reason –Self-Control; Control –Inhibition of Impulses & Reactivity (car accident that shears frontal lobs) –Thinking; Complex Cognition –Judgment & Decision Making (grows until 30s) –Sifting through Context/Subtleties

27 © 2011 Cheloha Consulting Group. All rights reserved, Fast (1) & Slow (2) Brain Circuits: Reaction to Stimuli AMGYDALA Hippocampus Thalamus Cerebral Cortex STIMULI S2 S1 Reaction

28 © 2011 Cheloha Consulting Group. All rights reserved, The Ghost in the Machine: The Evolution AUTOMATIC PILOT BRAIN Emotional Brain Senses: Light, Sound, Balance Disrupts: Computer Screen; texts; Facebook; Multi-Tasking Attention/FOCUS EXECUTIVE BRAIN Evolves until 50s Exhibits Control/Inhibition

29 © 2011 Cheloha Consulting Group. All rights reserved, Fast & Slow Brain Circuits (Reaction to Stimuli) STIMULI S2 S1 Reaction 2 =Think, Consider, Context, Address Subtlety AMGYDALA Hippocampus Thalamus Cerebral Cortex S2 Reaction 1= Anger, Lose Temper, or Meltdown

30 © 2011 Cheloha Consulting Group. All rights reserved, Bobby Knight (Former Indiana University & Texas Tech Basketball Coach)

31 ©Cheloha Consulting Group, 2011 The Effect of Negative Feedback on Employee Performance Self-view GapHow I think Im doing vs. How others think Im doing Negative Feedback/Criticism produces Emotional Arousal Defensiveness Inability to hear and frequently mis-interpret

32 © 2011 Cheloha Consulting Group. All rights reserved, WHY Owners/Entrepreneurs arent Optimally Wired to Manage Others Independent Stubborn, determined, focused Assume other people are the same (theyre not) Over the top drive/determination Risk tolerance (many people dont have it!!; hard-wiring) Assume others can self manage (a few can, some cant) Overly hands-on; detailed; perfectionist CONTROLLING (micro-manager); hard to let go

33 © 2011 Cheloha Consulting Group. All rights reserved, IV. Emotionally Engaging Your Employees

34 © 2011 Cheloha Consulting Group. All rights reserved, Our New Employees Gen Y: (Echo-Boomers; the Millennials) –Oldest28 y/o –Youngest-our children –This is the group most affected by and comfortable with the huge technological transformation of the last 15 years. -1 st Desk top Computer -1994, 250 meg storage -Apple Nano (demo) -2011, 16 gig storage (x160,000)

35 © 2011 Cheloha Consulting Group. All rights reserved, Why is Emotional Engagement Important? More engaged are more productive (300%) More engaged produce higher quality More engaged have less absenteeism More engaged have lower healthcare premiums More engaged turnover less More engaged build your brand More engaged improve customer service Examples: –Philadelphia PIC (Deloitte) from Baltimore strategy for turning around PHL office –window time in construction work moving from job to job vs. GPS

36 © 2011 Cheloha Consulting Group. All rights reserved, Motivation: Maslows Hierarchy of Needs (ca. 1943) Self-Esteem Acceptance/Recognition SAFETY SECURITY MEANING AUTONOMY SURVIVAL/PHYSIOLOGICAL

37 © 2011 Cheloha Consulting Group. All rights reserved, Motivation: Herzbergs Two-Factor Theory (ca. 1950s) Motivating Factors=Growth Hygiene Factors=Maintenance Pay, Security, Co-Workers, Work Environment, Policies (Job Satisfaction) Challenge, Stimulation, Autonomy

38 © 2011 Cheloha Consulting Group. All rights reserved, Definition of Job Involvement (Lodahl & Kejner 65) Job Involvement: An emotional attachment; engaged in work; a decision about this place (longer term) Observation of Karen, the admin., during Summer Internship, State of PA –Inspiration for 77 study –Remembered by Civil Service Director, Beth Hartmann, 30 years later While job satisfaction (hygiene factors) are related to absenteeism and sick leave… Job involvement is a better predictor of absenteeism than job satisfaction Job involvement is deeper than job satisfaction: –Job satisfaction=short term; day to day; whats fair/balance; days work for a days pay –Job involvement=longer term; Ive decided that I like my work and where I work; an emotional commitment

39 © 2011 Cheloha Consulting Group. All rights reserved, Old Wine in a New Bottle: Employee Engagement (>2004) Four (4) Key Components –Pride: Tell you what they do vs. who they work for; back car in at parking lot –Advocacy (Customer service) –Motivation (Motivation comes from within) –Commitment (Endure obstacles, work thru negatives=persevere) Gallup Study of Employee Attitudes (BBY, Richfield, 1999) –More engaged employees/stores; yielded higher profits –Best predictor of $$/Success: -I have a best friend at work

40 © 2011 Cheloha Consulting Group. All rights reserved, Example: Gallup Employee Engagement Items (Strength-based management) I feel inspired to do my best every day I am proud to work for this company I am motivated to contribute more than what is expected of me People in my work group frequently go above and beyond the requirements of the job My company provides supportive policies that allow me to attain my work and personal goals My company has created a positive work environment My relationships with co-workers inspire me to stay committed to the company

41 © 2011 Cheloha Consulting Group. All rights reserved, Do Happier Employees Work Harder? (NY Times, ) US Cost of Employee Disengagement=$300 billion Study: Diary entries from 238 industrial workers –Over 12,000 entries –In 33% of entries, person was unhappy, unmotivated, or both US Cost of Sick Days and Depression=$44 billion –Study -39,000 employees -23% were mildly to severely depressed (1 in 4)

42 © 2011 Cheloha Consulting Group. All rights reserved, Why Entrepreneur/Owner/Bosses are not the Optimal Manager Introverted-dont reach out to others Focused (laser-like) Determined & persistent (assume others are same waytheyre not); can be insensitive (thick-skinned, not thin) Autonomy; like to be independent Risk-tolerant (less security conscious) Work ethic (not 9 to 5) Sacrifice immediate for the future (build a business)

43 © 2011 Cheloha Consulting Group. All rights reserved, What is the Boss/Supervisor/Owners Job regarding Employee Engagement? Kaiser Permanente study (West Coast Health Insurance): –Employees with better work climates -1) Have freedom to manage their own time -2) Receive support from their supervisor -3) And, are less likely to visit primary care provider (<< depression, sickness) Role of the Boss: –Remove obstacles –Provide help –Acknowledge strong effort Goal: Make Progress in Meaningful Work

44 © 2011 Cheloha Consulting Group. All rights reserved, Summary: The High Points Human nature changes very little You can coach people; but they wont change very much; build on strengths –However, the change they make is very important Communication technology has a negative effect on our work and we need to be manage it Brain function and physiology are more important than we thought or understand –On the one hand we are more adaptive –On the other hand, we are not as adaptive Engaged employees are more productive, do better work and make your business more profitable YOUR JOB: job: create a Place where Employees can make Meaningful Progress on Work

45 ©Cheloha Consulting Group, 2011 Cheloha Consulting Group Wynnewood, PA Randall S. Cheloha, Ph.D