Notes from Presentation by Nancy Hess, N.J. Hess Associates, to 2009 Annual Municipal Health Care Benefits Seminar, sponsored by the The Benecon Group, Inc . 11/13/2009
Carthage existed from about 9th Century BC to the 2nd Century BC. Although highly advanced, (one wonders if anything new has really been invented since that time) it was a stratified society, with relatively few in the ruling class and a large lower class. Perhaps their greatest downfall was that they largely relied upon foreign mercenaries. One of their most famous leaders was Hannibal who fought the Romans and although he beat them in the Punic Wars, he could never successfully lay siege and the Romans eventually sailed to Carthage so that Hannibal had to make a hasty retreat to defend Carthage.
Change is upon us and we may feel at times as if we are in the midst of our own Punic Wars.
Whatever our perspective, we can agree that much is at stake: people care about health benefits and the real challenge is to provide benefits that meet the needs of employees and promote wellness. Research findings conclude that health benefits are very important in attracting and retaining employees, so, the last thing we should be thinking about is cutting back benefits, but the current environment leaves us no choice but to re-think our benefit programs.
In an October 2009 Watson Wyatt Study titled, The Effect of the Economic crisis on HR programs, 72% of the respondents stated that they expect to make permanent increases to the percentage of health care costs paid to employees. We know change is coming, but how do we as leaders shape the outcomes?
This morning I will talk about how to approach change, and in particular, how change can offer opportunities to lead the organization in positive directions.
I recently returned from an overseas trip where I had an opportunity to share dinner conversation with people from many different countries. I learned a little bit about how others perceive our struggles in this country. So one night I asked them to talk about their health care from their various perspectives, and everyone became quite animated and wanted to share their experiences. I would say we were “engaged”. Then, in the flow of conversation, the topic of health care reform came up. Suddenly, you could feel the tension of a charged wire. Some wanted change, others did not want change and the air was filled with misunderstandings with what was good or bad about the health care policies of a particular country. I got the point: health care, within a political context, is not good dinner conversation. You can talk about personal experience, the “I” conversation, but not the political
views, which is the “c” conversation. The “C” stands for CHANGE.
At the heart of the matter, “I” conversations bring about engagement (i.e., what does this mean to you?) “C” conversations set off a whole chain of unpleasant reactions (i.e., what should be different?) As I recently learned in Bari, Italy, “I” and “C” conversations take place in cafes, at the market, and here, on the steps of the church.
Leadership is about changing the way people think and act, and so naturally, it involves “C” conversations, but it can’t be accomplished without “I” conversations.
As a consultant, I often hear managers tell me they do not have 6 months or 1 year to work on a program that will significantly impact how employees perceive their work and rewards. When I suggest that is not possible, and either turn down the work, or they find another consultant who promises them to do it in a short time, I often learn later that the program was never implemented because, the managers grumble, it was a hard sell.
I had dinner with a very successful consultant recently, and when she found out that I help organizations with pay and performance, she shook her head, and said “never! When you go in and have to tell people how much their jobs are worth, they will never ask you back!” Another consultant once said, when I told her what I did, “ugh, I could never do that, you get in there and roll around in the muck with them.”
Change is a difficult process. It simply cannot be railroaded through. We are at a major crossroads today with pay and benefits. What are we going to do about it? How can we think and act in a way that ensures a future we want and moves toward a vision we seek?
We are going to talk about two kinds of strategies for change: Business Case (Directive approach) and Engagement (Collaborative approach). You will need both.
First, let’s frame the question we want to explore:
We are going to make changes to our health care program, but we are not sure which direction to go. So we ask,
With respect to health care, what do employees care most about?
When we dissect this question, we first ask what assumptions undergird this statement. First, the question is framed around employees, and not some other stakeholder, like citizens, or elected officials. Health care exists because of employees. If we focus on any other stakeholder, we will have wasted our time. Our assumption, then, is that health care exists because it is a moral and ethical obligation and because it helps the organization attract and retain competent staff.
Secondly, when we dissect this question, we recognize an “I” conversation. And another way to think of the “I” conversation, is that it is always about values. Healthcare conversations are always personal. They are about something people care deeply about.
So, we begin our look at changing health care programs by acknowledging the fundamental purpose of why they exist, and that we are talking about changing something that is deeply personal.
RECENT FINDINGS
* A Met Life 2009 Open Enrollment Poll found that 1 in 4 employees do not pay attention to benefit changes because it is too overwhelming and too technical.
* Another finding is that 8 in 10 employees say health benefits are important when making an employment decision.
* Perceived dissatisfaction with health benefits leads to lower levels of performance.
* Health care benefits influence loyalty during times of downturn.
PSYCHOLOGICAL UNDERPINNINGS
We know….
Cognitive Dissonance is that uncomfortable feeling we get when we try to hold two contradictory ideas simultaneously. For instance, if we say we are making changes to improve benefits, while simultaneously increasing employee costs, there is going to be an uncomfortable gap between those two ideas. If employees maintain that they love their job, while at the same time they are increasingly concerned out their health care benefits, they experience an uncomfortable feeling arising from the inconsistency. They may resolve this by changing their perception about their job.
Herzberg’s motivation-hygiene theory, or Two Factor Theory, was developed by Frederick Herzberg, a psychologist who found that job satisfaction and job dissatisfaction acted independently of each other. Two Factor Theory states that there are certain factors in the workplace that cause job satisfaction, while a separate set of factors cause dissatisfaction.
The presence of one set of job characteristics or incentives lead to worker satisfaction at work, while another and separate set of job characteristics lead to dissatisfaction at work.
Hence, we might conclude that perceived dissatisfaction with benefits will result in low morale, low performance, even though exceptional levels of benefits are not necessarily motivating. In fact, the factors that lead to satisfaction have more to do with factors like achievement, recognition and meaningful work.
The theory behind Maslow’s Hierarchy is also relevant to our discussion because employees who do not have basic safety and psychological needs met (in other words feel threatened by loss of benefits) will not be able to engage at the higher levels functioning that require confidence and involve achievement, problem solving, and more importantly acceptance of new facts and information.
SO, BACK TO OUR QUESTION…
With respect to health care benefits – what do employees care most about?
They care about being satisfied and feeling comfortable with respect to their basic needs being met. But we also know that when people talk about something they care about, they are charged with energy.
So here is another relevant finding from research:
People do not always make decisions based on rational thinking, particularly when it is about value-related concerns.
For this reason, as leaders, we must appeal to both the head and the heart if we are going to get people to accept change.
STRATEGIES
With all of this in mind, we can now look at strategies that will help us achieve change in the way our employees think and feel about their health benefits.
Failed approaches we may have tried:
Gnashing of Teeth (frustration) [PICTURE]
Conquer or Die (anger and survival of the fittest)[PICTURE]
Woe is Me (Self Pity) [PICTURE]
OOOOMMM…Something will emerge (Denial) [PICTURE]
King Arthur’s Court ..Seek Ye the Holy Grail… (Perfectionism!) [PICTURE]
All of these strategies are part of our arsenal and may work part of the time, but we need a more complete approach to the larger process of change if we want to demonstrate leadership that affects positive change on the organization.
We will need to keep two kinds of approaches in mind to get where we want to go:
First, we need to build a business case for change. Second, we need to engage people. We want to engage people because we want to engage the heart. If we are going to create the energy and will for change, we need momentum.
MORE FINDINGS
Employee Benefit news, in a November lead article talks about research on the effects the recession has had on employee engagement. The finding from a joint survey by WorldatWork and Watson Wyatt was that employee engagement levels within the past year fell nearly 10% overall and 23% for top performers among 1,300 full-time workers at 235 large U.S.
The researchers suggest a need for rethinking benefit and compensation strategies, and where voluntary benefits come into play, the challenge is to broaden choice without making it seem like another takeaway.
Additionally, 41% believe that pay and benefit changes made have had a negative effect on work quality and customer service, while 36% of top performers say their company’s situation has worsened and the number who would recommend others take jobs at their company has declined by nearly 20%.
Still More findings….
Employees will rate the importance of their health benefits higher if they are aware of options and if they have choices.
They also rate the importance of health benefits higher if …
..their income is lower,
..if they are unionized,
..if change is imminent and
..if they are in the public sector.
These findings were cited in the 2009 summer issue of Public Personnel Management. This article explores the relationship between health benefits and employee satisfaction and cites research by Professor Marcia Micelli of Ohio State University who has been working on research that looks at employee satisfaction with the quantity of benefits versus employee satisfaction with the quality of benefits.
One of the major findings of this article is that public sector organization have more favorable opinions than the private sector organizations in regards to health benefits being very important for improving the morale and satisfaction of employees , improving employee health, increasing productivity and performance, and attracting and retaining employees.
If this is true, does this not make a case for taking the time to engage employees in the question of what is most important to them? Organizations are what we shape them to be and our conversations determine what gets noticed and which challenges and opportunities people will pay attention to.
Change is im
minent!
Venice is a city vulnerable to sudden changes due to rain. Rain signals that change is imminent and people don hip boots and set down walking platforms, so that life may go on. We read the signals of change in our environment and must develop the strategies that we can employ, so that for our organizations as well, life may go on.
SO, BACK TO OUR STRATEGIES
First, we consider what we mean by “building a business case”. This approach to change can be described as…
* Programatic
* Linear
* Actionable, a la John Kotter style (author of Leading Change)
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¬Low importance High importance ® |
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Certainty
Uncertainty ¯ |
3 Low importance/High certainty
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1 High importance/High certainty |
| 4 Low importance/Low certainty | 2 High importance/low certainty | |
When we are building a business case, we are essentially building context and developing shared understanding of the reasons for undergoing change.
Some examples of activities that help to build a business case:
1) SWOT analysis (strengths, weaknesses, opportunities and threats)
2) Urgency and Certainty Grid (see below)
3) Why –What- How Conversations;
4) Guiding coalitions with vision;
5) Analysis of programs, protocols, policies.
Second, we consider what we mean by “engagement”. This approach can be described as…
* Emergent
* Organic
* “Ready to ride the lead horse”
| [Sidebar]Personal engagement happens when employees bring their personal self-identity to the performance of tasks in their work role identity.
This is most likely to occur when three things happen:
-William A. Kahn, Ph.D. (Boston University School of Management) in 1990.
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Some examples of activities that help to build engagement:
1) Ask the question, “What do people care most about?”
2) Involve employee groups in a process of learning.
3) Involve the gatekeepers, i.e., whole family.
4) Bring other stakeholders to the table, i.e., key organization leaders, consultants, labor representatives.
5) Appeal to self esteem; appeal to spirit.
6) Look at thoughts, aspirations, needs, desire, fears – all within the context of realities.
7) Create a psychological safe atmosphere to discuss these things.
8) Realize that resistance is a necessary part of the process of change.
Lawrence Miller, Author of American Spirit, Visions of New Corporate Culture said that the mass of people within our society, or our organizations, are not primarily motivated by what is rational. It is the emotion, the appeal to self esteem, the spirit that is the prime mover.
CLOSING
We know, based on research, that we should not be reducing the quantity or quality of health benefits, but the fact is, we have to change the model in which we are operate.
A 2009 Towers Perrin Health Care Cost survey found that high performing companies will pay 12% less for annual health care premiums by making use of account-based plans and consumer based approaches. High performing companies are also more likely to share costs with employees. But the key finding is that high performing companies report a greater emphasis on employee engagement.
High performing companies are defined as those who:
* manage employer and employee costs
* enhance efficient purchasing of health care services
* enhance employee understanding and engagement
* enhance employee satisfaction, attraction and retention.
High-performing companies in the survey focus primarily on supporting and improving employee health. They also commit to rigorous and continuous management of their health plans and delivery processes.
We also know from a 2009 Best Employers in Canada study that “High engagement goes hand-in-hand with better health and well-being”.
One public sector organization that has focused on employee engagement to improve health care programs is the City of Montgomery Ohio. They have received an award from the Center of State and Local Government Excellence for their effective use of employee groups to raise awareness in the organization about wellness and help employees to become better educated about health care options.
The goal of the committee was to
* represent employee health care concerns,
* negotiate with insurance providers,
* maintain comprehensive coverage, and,
* communicate with work units about key health care issues.
The results have been
* A decline in sick leave usage
* Containment of health care premiums
* Drop in average annual medical claims
BACK TO CARTHAGE
If you visit Carthage today, you will see ruins, but a short distance away you find Sidi Bou Said, a beautiful fishing village that reflects the thriving Tunis culture and reminds us that change, after the wars, can bring about positive outcomes.
Edgar Schein, the eminent organization psychologist, said that when organizations attempt change, they must first create mutual understanding, so joint opportunities can be identified and realized. This is the “I” conversation.
Kurt Lewin, another early researcher and practitioner, said that if you want to understand a system, you must seek to change it. This is the “C” conversation.
These two approaches are a duality; one focuses on a rational path of building a business case, or the “C” conversation, and the second focuses on engagement, or the “I” conversation. This duality expresses hints of the old adage that pessimists are usually right, but behind every great change, you will find an optimist. The pessimists get the facts right, but the optimist is willing to consider the possibilities for the future.
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