Several times a year Advantexe’s Research Department conducts focused surveys to gain a pulse of the market and to understand the voices of our customers. The most recent survey ran for 14 days in June and focused on Business Leadership topics to help us prioritize the continued building of our micro- business simulation portfolio. In the survey, we explored current topics of leadership that are challenging organizations and which need further skill development. The topics we asked customers to prioritize includes things such as Executing Strategy, Leading Innovation, and Managing Conflict. All these topics scored high, but one topic scored the highest and clearly is still difficult to most managers; Coaching and Having Difficult Conversations.
In the VUCA world we all live in, coaching to execute global business strategy in an environment of up to 5 generations of employees is extremely difficult and some may say virtually impossible. The fact of the matter is we can’t give up; we need to continue to understand it, work through it, and make it work the best way we can. Why? The tremendous unaccounted business impact of avoiding the difficult conversations.
Not having those hard conversations is the silent business killer. It impacts everything and most of the time we don’t see the damage or impact. Many of our Business Acumen and Business Leadership simulations are designed and built on sophisticated algorithms that help learners understand the systems of business and leadership. For the purpose of this blog, I am going to explore some of the core algorithms of our award-winning simulations to present and quantify the business impacts of not having difficult conversations.
It starts with the execution of business strategy…
In all of our talent development work, we start with a simple saying; “Leadership is the execution of your business strategy.” Leadership is how you understand your markets, develop your value propositions to your selected customers, and align your people to make it happen. But alignment isn’t easy. Different functions understand strategy in a different way and all employees have or don’t have the skills to execute it. Coaching becomes the functions of providing the feedback needed to develop the skills needed to execute but if those coaching conversations aren’t effective, then the alignment jumps the rails.
Algorithmic Impact: Not having the difficult conversations around coaching to skills of execution impacts metrics of performance (Revenue, Profit, Shareholder Value) by up to -12%
It then moves to employee engagement…
In addition to the direct impact of business performance, there is a secondary impact on employee performance and engagement. Employee engagement is comprised of multiple factors including commitment, morale, and satisfaction with the company and job. When difficult conversations aren’t being conducted effectively two audience pools are impacted; those who need the direct coaching and those who are the collateral damage (the employees who do a good job but watch frustratingly how their colleagues who aren’t performing aren’t receiving the necessary feedback).
Algorithmic Impact: Not having the difficult conversations around coaching to skills has a significant impact on engagement which then leads to a loss of productivity and the metrics of success by up to -6.5%
The third and final impact is to the perception of the brand and value proposition…
When execution fails and employees are disengaged, it impacts product quality and the perception of your brand and overall value proposition. However, unlike the immediate business impact of the aforementioned factors, the deterioration of perception of brand and value proposition can be slower and accumulates. It starts in social media with customers complaining and migrates to customers finding alternative solutions. There is a tipping point that takes up to five years of slow and continuous negative impact.
Algorithmic Impact: Not having the difficult conversations around coaching to skills has a significant impact on the ability to execute and employee engagement which then leads to a diminishing of the perception of your brand and value proposition -.85% per year which accumulates exponentially.
In summary, not having difficult conversations has a significant business impact on performance. Over a three to five year time period your business could experience a loss in business results of up to 20%. For company cultures that don’t address this skill gap what inevitably happens is that they raise their prices and cut costs to make up for the differences. That then accelerates the decline and presents more difficult conversations that aren’t happening in the vicious cycle of corporate implosion. I’ve seen it happen over and over again in our business simulations and in the real world.