Baldrige Model: What are your workforce-focused results?

Item 7.3 in the Baldrige Criteria asks for key results for your workforce environment and engagement.  The following examples from Baldrige Award-winning applications show strong current levels, positive trends, and positive comparisons to key benchmarks. To read the descriptions of these measures and to see a broader range of Item 7.3 measures, go to the Results category responses of Baldrige Award-winner applications here. Chart numbers may not correspond to the Item number because of changes to the Criteria.

A Culture That Values Employees

What is your organization’s turnover rate? Why does it matter?

Software company SAS has an employee turnover rate of 2.6%. The info-tech industry average is 22%. SAS has approximately 11,000 employees. If it lost employees at the industry rate, it would have to replace an additional 2,100 employees each year.

How much does it cost to replace an employee? You can find a method of calculating that cost here, but a good rule of thumb is 150% of an employee’s annual compensation (the cost of recruitment, training, lost productivity, and lost sales, etc.). I don’t know what the average annual compensation is for an SAS employee who leaves the company, but let’s say it’s $60,000. Probably low for knowledge workers and certainly low for executives and managers, but we’ll be conservative here. If it costs SAS $90,000 to replace every employee, the company’s 2.6% turnover rate compared to the industry average 22% rate is saving SAS $189 million annually!

How does SAS achieve such a low turnover rate? According to CEO Jim Goodnight, “Knowledge-based companies need knowledge workers. Looking at services that keep employees motivated, loyal, and doing their best work as merely expenses and not an investment is, I think, a little shortsighted.” So SAS keeps turnover low by investing in its employees.

In 2010, SAS topped Fortune’s Best Places to Work list for the second year in a row. According to Fortune, its perks for employees are “epic”: on-site healthcare, which 75% of employees use as their primary care; high-quality child care…

How Does Your Workplace Measure Up?

When, over a 20-year period, you work with organizations good enough to win a Baldrige Award, you observe several common attributes. Baldrige core values like visionary leadership and management by fact capture some of them, but there are other, less tangible attributes like treating everyone (customers, employees, suppliers, etc.) with respect, never being happy with “good enough,” and a willingness to share—and learn.

Simma Lieberman has made similar observations about excellent workplaces. She helps organizations create inclusive workplaces where employees love to do their best work and customers love to do business. In “Ten Indicators of Morale Level and Employee Involvement” (FastCompany, January 4, 2011), she lists ten “easy to observe behaviors of employees who feel good about their workplace”:

1. “There is visible interaction amongst employees in the office, hallways, and cafeteria. People actually smile and say hello to each other. You may even hear laughter.
2. You hear people speaking well of each other and their customers. Employees greet customers and stop what they are doing to provide customer service.
3. There is resource sharing across work functions, and work groups are not complaining about other departments, or work levels.
4. Employees know what other functions do, on a day-to-day level, and how each function impacts the others.
5. Employee kitchens and washrooms are clean with the right provisions.
6. There are employee initiated social activities with high levels of participation.
7. Employees are comfortable offering suggestions for improvement.
8. Employee grievances are either nonexistent, rare, or resolved quickly.
9. Employees arrive on time, and absenteeism and turnover are low.
10. Employees support each other during personal or family crises,…

Understanding Employee Requirements

When asked to identify their key stakeholders, Baldrige Award winners include employees on the list. In 1997, 2008 Baldrige Award recipient Poudre Valley Health System surveyed its employees and asked:

1. What makes you want to jump out of bed and come to work?
2. How do we build a culture that supports that?

Two years later, PVHS collaborated with Colorado State University to identify key staff requirements, which became the framework for its semiannual Employee Culture Survey. The requirements are:

• Teamwork and cooperation
• Safety in innovating
• Listening to each other
• Respect and fairness
• Enthusiasm
• Feedback and accountability
• Resources and participation

It’s hard to find anything unusual about this list. What is unusual is the systematic approach PVHS used to identify these requirements and how it has continued to refine the list–and what it means–ever since.

As with customer requirements, it’s easy to assume you know what is required to engage and satisfy your employees. Such assumptions are dangerous. PVHS knows what its employees require and it acts on that knowledge to improve both engagement and satisfaction.

Workforce engagement is a PVHS core competency and is measured on its semiannual survey. In 2007, PVHS was as good as or better than the top 10% nationwide in four survey questions on engagement and in the top 10% on 11 of 16 attitude areas.

Based on results, it’s clear PVHS knows what its employees want.

To find out more about Poudre Valley Health System, read its award application summary.

To read more about employee engagement, click on these articles:

• Engaging Employees to Improve Performance
• What Drives You?
• Workforce Well-Being
• Increasing Employee Satisfaction in a Time of…