Part of the CHRO Insight Series CEB Corporate Leadership Council™

Cut Through the Communication Permafrost: Aligning Employees with Corporate Strategy

The Value of Employee Engagement Is Cloudy: Learn How to Make It Clear Again

In This Issue

Employee Engagement

CHRO Quarterly

Second Quarter 2015 

Voice of the CHRO

Marlene McGrathSenior Vice President of Human Resources at 3M

Drive Returns on Employee Engagement Investments

A Magazine for Chief Human Resources Officers

© 2015 CEB. All rights reserved. CLC151420GD

The pages herein are the property of The Corporate Executive Board Company. No copyrighted materials of The Corporate Executive Board Company may be reproduced or resold without prior approval. For additional copies of this publication, please contact The Corporate Executive Board Company at +1-866-913-2632, or visit www.executiveboard.com.

Contents

Cut Through the Communication Permafrost: Aligning Employees with Corporate Strategy

4

The Value of Employee Engagement Is Cloudy: Learn How to Make It Clear Again

8

Where Will You Join Your Peers in 2015?

12

Voice of the CHRO: Interview with Marlene McGrath, Senior Vice President of Human Resources at 3M

14

Drive Returns on Employee Engagement Investments

18

CHRO Quarterly

CEB Corporate Leadership Council™Executive DirectorBrian Kropp

Senior DirectorAdam Brinegar

Research DirectorsMatt DudekAmanda Joseph-Little

Research AnalystJohn Roman

Content Publishing Solutions Graphic DesignersMike JurkaCameron Pizarro

EditorMary McMenamin

Infographic of the Quarter

Engagement as a Building Block for Business Outcomes

The Engagement ChallengeToday’s complex, quickly changing work environment makes it harder to achieve business priorities...

AgilityFirms that can sense and respond to change with above-median agility levels are almost three times as profitable as firms with below-median agility levels.

AlignmentConnecting employees’ goals with those of the company (i.e., strategic alignment) leads to extraordinary levels of performance.

EngagementEmployees’ pride, energy, and optimism drive engagement levels by fueling discretionary effort and intent to stay.

...and engagement strategies are not doing enough to help.

of highly engaged employees do not align with company goals.

of line leaders suspect that engagement initiatives do not drive business outcomes.

The survey is customized to your organization’s specific business priorities to ensure you can achieve real business outcomes, such as the following:

■ Business model transformation ■ Continuous improvement ■ Customer centricity ■ Innovation ■ Low-cost leaders ■ Scale (M&A) ■ Solutions strategy ■ Quality

ClearAdvantage Check: Our engagement pulse survey (included in membership) ensures workers are engaged, aligned with strategy, and agile enough to create and sustain a competitive advantage.

Our SolutionThe ClearAdvantage check measures three universal performance drivers to help you achieve your critical business priorities and create and sustain a competitive advantage.

higher employee performance is required over the next 12 months to achieve business goals, according to executives.

20%of employees work with at least 10 people to complete tasks.

60%of employees believe organizational objectives change more frequently than they did three years ago.

63%

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4 CHRO Quarterly | Second Quarter 2015

positioned to help organizations tackle the important challenge of employee alignment. To address this problem, they must work together to ensure strategy is best communicated to employees and reinforced on the job. However, the most important communication approach traditionally used by these executives no longer works.

The Manager-Led Communication Cascade Is FrozenMany executives believe the traditional approach for building employee understanding—the strategy cascade—is frozen. Most communications executives agree the problem lies with the “permafrost” managerial layer. Leaders might satisfactorily cascade strategic messages to their middle managers, but from there, communication stalls. And despite organizations’ efforts to fix the cascade and equip managers with support tools (e.g., strategy presentations, FAQ documents, manager dialogue training), managers do not effectively communicate. As a result, only one in

Why Cascades Aren’t Working and What HR Can Learn from the Communications FunctionNearly two-thirds of corporate executives believe their company struggles to bridge the gap between strategy and its day-to-day application. This discrepancy is a major concern: even the most brilliant strategy will fail if employees do not understand it or feel knowledgeable enough to make work-related decisions that align to it. Employees who are aligned with strategy—those who understand it and know how to follow through on it—can increase performance by 12%–22%. Unfortunately, achieving this alignment is a systemic challenge, as barely one-third of employees understand how corporate objectives relate to their work.

And although this might seem like an unruly problem for other executives, it presents a huge opportunity for CHROs and heads of Communications. These functions are natural allies: they share many common goals regarding the employee experience, and they are ideally

three frontline workers has a strong understanding of corporate strategy.

Although executives may be tempted to invest in additional resources to thaw the existing manager cascade, this is not the only course of action that heads of HR and Communications should pursue. Our research shows that teaching managers how to contextualize company strategy for their employees is effective, but it is not the most important tactic.

Surprisingly, the primary driver of strategy understanding is employees’ self-direction. Highly self-directed employees actively build their own connections to strategy regardless of manager support. They seek out strategic information internally, stay up to date with market news, and use this information to figure out how their work affects others and how they can change their behaviors and processes to improve what they do.

Roughly 40% of employees are naturally self-directed, but 60% are not. The latter require assistance in actively engaging and aligning with strategy, but in more concrete and personal ways.

Cut Through the Communication Permafrost

Aligning Employees with Corporate Strategy

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Maximum Impact of Drivers on Employee Understanding and Connection to Strategy

n = 1,110.Source: CEB 2012 Communications Employee

Performance Survey.

Self-Direction 18.2%

Rewards and Recognition 5.4%

Manager Support for Goal Alignment 5.0%

Leaders’ Expectations 4.2%

Stop Teaching Employees to “Listen to and Forget” StrategyDespite good intentions, even successful strategy cascades have negative side effects. Cascades make it less likely for employees to actively seek out strategic information in the future. Consider how strategic messages are typically shared with employees:

■ Message Timing—Strategic information is typically shared at times determined by the company, not necessarily when it would be useful for the employees’ workflow.

■ Message Source—Employees typically receive strategy information from a hierarchical source (e.g., manager, leader) rather than from peers and colleagues with whom they are more likely to discuss, debate, and more deeply process the information.

■ Message Content—Strategy information is often prescriptive, outlining predetermined conclusions rather than how those conclusions were made.

The timing, source, and content of strategy communications further exacerbate employees’ passivity. Although this approach intends to make it easy for employees to understand strategy, the inadvertent signal that employees receive is that someone else will tell them when to consider strategy and how to apply it. However, our data shows that employees need to personally engage with the individual sharing information to interpret the strategy’s relevance to their work and to build a personal connection to it.

Fortunately, by making better use of existing tools and deploying new ones, companies can increase employees’ alignment with strategy. They must reengineer the manager cascade to encourage proactive—rather than passive—engagement with strategy and also use peer “champions” to help colleagues understand strategy and build their own personal connection to it.

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6 CHRO Quarterly | Second Quarter 2015

Opportunities for HR and Communications to Encourage Active Engagement with Strategy

1. Enable Employees to Build the Firm’s Strategy for ThemselvesLeaders and managers often deliberate and determine the company strategy over several weeks, if not months, but frontline employees are expected to take it all in at once—a nearly impossible task. Rather than dictating strategy messages to employees—hoping they will be absorbed by a portion of the workforce—a better approach is to create simple, informal, and interactive experiences through which employees can actively interpret and apply strategy. For example, CHROs and heads of Communications can work together on initiatives to help managers create exercises that progressively build strategy understanding and that prompt employees to find their personal connection to the big picture. Although employees cannot change the enterprise strategy, they can identify how they can best contribute. This approach empowers employees to determine how to change the way they prioritize and accomplish their personal tasks.

MetLife was able to successfully align its employees with a new strategy for its European operations by holding Strategy Activation Sessions. During a key part of these sessions, facilitators and managers guided employees through an interactive experience that required employees to physically assemble a predesigned symbolic representation of the company strategy. In MetLife’s case, participants assembled a literal puzzle depicting the corporate strategy. This exercise encouraged critical thinking, while facilitators used a strategy answer key to guard against misinterpretation of the symbols. With an increased understanding of overall strategy,

employees could then find new connections between their work and strategy and answer the following questions:

■ Now that you see the full picture, how does your role connect to company strategy?

■ Are there connections that you were previously unaware of or didn’t appreciate before today’s meeting?

As a result of the exercise, over 95% of participants reported a strong understanding of corporate strategy and how it connects to their roles.

2. Cascade Horizontally, Not Just VerticallyPeer-to-peer communication can be a powerful tool for CHROs and heads of Communications. Executives often underappreciate the difficultly of making broad strategy information feel relevant to individuals who typically spend their days focused on their roles. Companies can overcome this challenge by preparing employees to share personal stories that describe how the company strategy relates to their lives and that provide social cues for their peers to follow.

Leaders at one oil and gas company ask certain employees to share their personal connections to corporate challenges instead of using senior leaders to communicate major strategy changes. Employees identify tangible, credible examples that showcase how understanding the strategy informs their decisions and that their peers can apply in their own roles.

The employees who are asked to share their connections must be trusted sources of information. So CHROs should work with HR business partners to identify highly networked individuals who are well respected by their peers—or even employees who are initially skeptical about the strategy. Communications executives can then work with these individuals to help them craft compelling stories.

Questions to Ask Your Head of CommunicationsThe next time you sit down with your head of Communications, consider these three questions:

■ How can we help managers facilitate stronger discussions about corporate strategy with their employees?

■ What would the format and timing look like if we asked certain employees to champion and discuss strategy with their peers?

■ How can we translate our strategy into a few critical behaviors that all employees should adopt?

When strategy communication works well, executives not only set the strategy they believe is essential to company success but also see the workforce make strategy-aligned decisions every day. Together, HR and Communications help an organization realize this vision.

This article is based on CEB Communications Leadership Council™ research on building employee alignment with and connection to corporate strategy.

Traditional Communications Tactics for Solving Manager Permafrost Problem

■ Standard presentation decks

■ Pre-written scripts and talking points

■ FAQs and suggested responses

■ Manager dialogue training

Leaders Set Strategy

Frontline Employees Lack Understanding and Connection to Strategy

Managers Fail to Contextualize

Strategy“Permafrost” =

The Challenge with the Typical Strategy Communication Cascade Illustrative

n = 3,389.Source: CEB 2013 Employee Performance Survey.

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How will you create compelling career paths?Pinpoint strategies to create careers based on growth instead of on promotions.

Who Should Attend■ Reserved for CHROs

What■ Small, interactive peer groups■ High-value discussion and

idea exchange■ Actionable content with

immediate application■ Transformative thinking

When to Attend

12–13 May 2015 Chicago17–18 June 2015 New York24–25 June 2015 Palo Alto, CA6 Aug. 2015 Sydney3 Sept 2015 London17 Sept 2015 Johannesburg

Attend a CEB Corporate Leadership Council™ Event

Learn more. Contact your account manager, or e-mail HR.Support@executiveboard.com.

8 CHRO Quarterly | Second Quarter 2015

rely on employee satisfaction to secure and keep the talent they needed to succeed. In response, to improve employee performance and retention, HR replaced employee satisfaction surveys and initiatives with ones that focused on employee engagement (measured by employees’ discretionary effort and intent to stay at their organization).

The uncertainties plaguing the global economy—beginning in late 2008 and continuing today—have led HR functions to rethink engagement and ask, “How can we improve the return on our engagement initiatives during a time of frequent change?” They realized that existing approaches for measuring engagement could only tell them 1) how engaged their workforce was and 2) what they needed to do to improve engagement levels the day an employee took the survey. They further realized that in a high-change environment, the insight that employee engagement surveys offered could be obsolete in a month, in a week, or even the next day.

Executives are turning to CHROs for guidance on managing organizations undergoing constant change. Are you ready to lead them?

Most CHROs know engagement strategies must evolve, but the most progressive CHROs have discovered that successful strategies must do more than just engage. The best engagement strategies align employees to organizational goals and focus on sustaining engagement over the long term, rather than simply creating hard-working, committed employees.

The Evolution of Employee EngagementEmployee engagement has been a critical HR tool for decades, and its importance to talent and business outcomes has been well established. In the 1990s, organizations experienced an intense “war for talent” during which they could no longer

HR responded to this inconsistency by taking a more holistic, temporal approach to employee engagement, which involved considering employees’ past experiences, present events, and future expectations—and how these three factors could influence their discretionary effort and intent to stay. Today, however, even this approach is not enough.

Growing Uncertainty About Employee EngagementDespite the improvements made to employee engagement strategies, today’s business leaders are uncertain about further investing in employee engagement. Although the majority believes engagement is critical to achieving business results, only 20% of business leaders agree that engagement actually drives business results. These leaders understand that the existing engagement strategies, while much improved, don’t accurately capture the

Today’s leaders increasingly question the business value of employee engagement. Learn how to strategically use engagement to achieve specific business goals your organization’s leaders care about.

The Value of Employee Engagement Is Cloudy

Learn How to Make It Clear Again

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CHROs are asking themselves, “Do we stop investing in employee engagement—and risk decreasing performance and retention? Or do we keep looking for ever-elusive ways to increase engagement levels when the value of improving by only a few percentage points is unclear?”

realities of the work environment in which most employees find themselves. This work environment is characterized, for example, by the following:

■ Complex Decision Making—Half of employees say more people are involved in decisions now than just three years ago.

■ Heavily Matrixed Work—Two-thirds of employees say they work with people from different teams and departments.

■ Frequent Change—Two-thirds of employees report that organizational objectives are changing more often than they were three years ago.

■ Large-Scale Change—Two-thirds of organizations experienced multiple company-wide changes in the past two years. 1

In this new work environment, leaders believe an adaptive, agile, and collaborative workforce will better contribute to high performance than will an engaged workforce. When asked about the attributes that their workforces need to perform at the highest level, only 48% of leaders selected engagement as one of the top three. In contrast, 81% of leaders selected an adaptive and agile workforce, and 63% chose a collaborative workforce.

Striving for More Than EngagementIncreasingly, executives indicate and CHROs realize that although engagement remains important, it alone can no longer meaningfully or significantly improve business outcomes. Instead, HR leaders must bolster their engagement-only initiatives by incorporating alignment and agility into their talent strategies. Our analysis confirms that focusing on alignment and agility can be

beneficial: organizations with the highest levels of alignment and agility in their workforces experience better financial outcomes (e.g., return on assets, profit margins) than do those with the lowest levels of alignment and agility.

To drive engagement and achieve greater business outcomes, organizations need to equally prioritize the three elements that compose CEB’s ClearAdvantage framework:

■ Engagement—Employees’ pride, energy, and optimism that fuels their discretionary effort and intent to stay

■ Alignment—The connection between employees’ work and goals and the organization’s mission and goals

■ Agility—The organization’s ability to sense and respond to change in order to sustain engagement and performance

Alignment is critical for driving the workforce toward the right goals and outcomes, but it’s increasingly hard to achieve when an organization struggles with complex decision making and heavily matrixed work. In fact, 60% of highly engaged employees do not align with company goals. The employees with the highest discretionary effort and the greatest likelihood to stay with the organization—those who can potentially most help the organization achieve important business outcomes—are wasting their hard work on low business priorities.

Agility is critical for sustaining engagement, given the increasing frequency and scale of the changes that the workforce experiences. All change—even when positive—causes uncertainty and can decrease engagement and performance. Without an agile workforce that can absorb, anticipate, and create change, the return on investments in engagement will quickly erode.

The most effective engagement strategies also link explicitly to key business priorities (e.g., innovation,

Top Cultural Attributes of a High-Performance Workforce To Perform at the Highest Level Over the Next Three Years, My Organization/Department Will Need to Be...

n = 1,630 senior leaders.Source: CEB 2012 Senior Leader Survey.Note: HR executives answered for the entire workplace,

whereas other executives answered for their function or department.

global expansion, customer focus). Increasing engagement levels overall impacts business outcomes in a way that’s far too vague; although leaders and CHROs know an engaged workforce does more to contribute to business outcomes, they don’t know how, why, or even which ones.

Next Steps: What CHROs Should Do to Rethink Their Engagement StrategiesProgressive CHROs start by pinpointing the business priorities that leaders and the overall organization care about most, and they then anchor all measurement, action planning, and execution of engagement strategy to those priorities. For example, they customize their engagement surveys based on one or two top business priorities—such as brand excellence or global expansion—to understand how well positioned the workforce is to support those business priorities.

Next, leading CHROs design action plans based on engagement drivers that have the highest impact on employee engagement and that align with their key business priorities. They might eliminate, for example, even high-impact engagement drivers that don’t clearly support the business goal of brand excellence or global expansion. To sustain employee engagement over the long term, CHROs also incorporate into their action plans strategies for building agile workforces (e.g., helping employees build strong networks, helping leaders empower their teams).

Finally, CHROs provide business leaders with data and insight about engagement to better predict the success of specific business goals and to shape plans for achieving those goals. Specifically, they not only communicate engagement survey results but also explain the impact of those results on particular business priorities and outcomes. By doing so, they boost HR’s role in shaping and driving talent and business outcomes.

Clarify your engagement strategy with these CEB resources:

■ Identify critical business priorities with our business priority identification guide.

■ Participate in our new employee engagement pulse survey based on our ClearAdvantage framework.

■ Upgrade your engagement survey with an in-depth, customized survey.

■ Implement action plans that boost engagement, alignment, and agility.

■ Influence business decisions using engagement data.

This article is based on data and insight from measurement experts across CEB. Our ClearAdvantage framework is grounded in decades of workforce performance research on engagement, employee performance, agility, change management, strategy, and measurement and analytics.

1 CEB 2012 High-Performance Survey. (n = 23,339 employees.)

Percentage of Respondents Selecting Attribute as Top Three

Adaptive and Agile 81%

Collaborative 63%

Engaged 48%

Innovative 47%

Globally Minded 22%

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10 CHRO Quarterly | Second Quarter 2015

Source: CEB analysis.

Business Model Transformation

ContinuousImprovement

Customer Centricity

Brand Excellence

Global Expansion

Innovation Low-Cost Leader

Quality

Solutions Strategy

Safety Scale(M&A)

Brand Excellence: Brand excellence aims to create a strong brand that will drive higher consideration, greater likelihood of purchase, and premium pricing.

Business Model Transformation: A firm’s business model is how it creates and captures value. Transformation is the shift from a legacy model to a new, superior model.

Continuous Improvement: Continuous improvement is an ongoing incremental or breakthrough effort to improve products, services, or processes.

Customer Centricity: Customer centricity is a strategy to align a company’s products and services with the wants and needs of its most valuable customers.

Global Expansion: A global expansion strategy establishes a presence in geographies outside the organization’s current markets.

Innovation: Innovation is the implementation of new ideas with sustainable commercial impact.

Low-Cost Leader: Being a low-cost leader in your industry means competing by providing the lowest prices or best-value products or services.

Quality: Quality is the effort to excel against a standard measure.

Safety: A safety strategy focuses on ensuring safe employee behavior and safe products and services for customers.

Scale (M&A): Firms leverage mergers or acquisitions to support strategic goals. (M&A is typically a means for achieving another business priority.)

Solutions Strategy: Solutions target larger, higher-order customer needs by providing a more integrated, bundled, or tailored set of products and services.

Business Priorities

A Clearer Approach to Employee Engagement

Our ClearAdvantage Framework

Business Priorities Definitions

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11 CHRO Quarterly | Second Quarter 2015

Get started. On-demand access to real-time data is available at clc.executiveboard.com.

1 million+ employees surveyed

15+ HR analytical tools

1 focus on what matters most

Change their minds.

4 in 5 leaders think HR data is inaccurate and irrelevant.

12 CHRO Quarterly | Second Quarter 2015

CEB’s HR Practice 2015 Meeting Descriptions

Where Will You Join Your Peers in 2015?

NORTH AMERICAAtlantaCharlotteChicagoMexico CityMonterreyNew YorkPalo Alto, CATorontoWashington, DC

SOUTH AMERICABogotaSão Paulo

AFRICAJohannesburg

ASIAHong KongSingapore

EUROPEDublinFrankfurtLondon

AUSTRALIA & NEW ZEALANDAucklandCanberraMelbournePerthSydney

Creating Enterprise LeadersMay–August 2015

Only 27% of business units have the leaders they need for the future. Although leaders’ average effectiveness at key competencies remains relatively unchanged, the environment in which leaders must perform has shifted significantly. The leaders who are most effective in today’s new leadership environment are Enterprise Leaders; they lead their teams to high performance as well as contribute to and leverage the performance of other units and teams.

Learn how organizations are creating the leaders they need for the future by addressing the three economic costs of being an Enterprise Leader.

The New Path Forward: Creating Compelling Career Paths for Employees and OrganizationsMay–November 2015

The employee–employer contract is broken: only one in five employees is satisfied with his or her organization’s future career opportunities. CHROs are increasingly responsible for solving this problem, as nearly 70% of engagement reports that were provided to the board cite career pathing as a top challenge to solve.

To attract, retain, and build the talent that organizations need to be successful, organizations must redesign careers to build organizational capabilities and improve internal labor market efficiency. Learn how the best organizations do this to meet employees’ career growth expectations.

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How to Attend Contact your account manager, or e-mail meetings@executiveboard.com.

The Future of Corporate HRSeptember–November 2015

Evolutions in technology, the workforce, and performance are fundamentally transforming HR’s value proposition. Many organizations struggle with an increasing gap between the business’s needs and HR’s ability to deliver value. As a result, 81% of CHROs are planning to change their operating model. Learn how leading organizations are changing HR organization design, workflow, and investments.

CEB ReimagineHR Summit 2015September–October 2015

ReimagineHR is our new three-day event that, depending on the summit, brings together over 350 or over 500 executives and their teams, presenting a unique opportunity for members to engage in discussions on critical HR topics with their peers.

Strategically timed to help with the 2016 planning season, ReimagineHR provides members with research and insight from across our multiple talent management businesses.

To bridge the gap between high-level strategic planning and actionable implementation, the event is exclusively for CHROs, global heads of HR, members of their direct leadership team, as well as peers and direct reports.

Note: Dates and locations are subject to change.1 CHROs/heads of HR and their direct reports; limit of

two per meeting.2 CHROs/heads of HR only.3 Two-day meetings run from 1:00 p.m. on day one

to noon on day two. Meeting includes a networking dinner on the evening of day one.

Creating Enterprise LeadersExecutive Briefing1

7 May Frankfurt20 May Dublin (Half Day)20 May Mexico City

(In Spanish; Half Day)4 June Washington, DC

(Public Sector Only; Half Day)

26 August São Paulo (In Portuguese; Half Day)

The New Path Forward: Creating Compelling Career Paths for Employees and OrganizationsExecutive Retreat2

12–13 May Chicago3

17–18 June New York3

24–25 June Palo Alto, CA3

6 August Sydney3 September London17 September Johannesburg5 June Hong KongTBD Singapore

Executive Briefing1

4 August Auckland5 August Chicago6 August Canberra11 August Melbourne18 August New York20 August Atlanta26 August Monterrey

(In Spanish; Half Day)TBD August Perth8 September London16 September Bogota

(In Spanish; Half Day)6 October Palo Alto, CA29 October Toronto4 November Charlotte

Staff Briefing13 August Sydney10 September London6 October Palo Alto, CA21 October New York27 October Atlanta

The Future of Corporate HRExecutive Retreat2

16–17 September New York18–19 November Chicago

CEB ReimagineHR Summit 201530 September– 2 October

Chicago

13–15 October London

CEB’s HR Practice 2015 Meeting Dates

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14 CHRO Quarterly | Second Quarter 2015

Voice of the CHRO

Every quarter we interview a chief HR officer to gain his or

her perspective on issues facing the HR function. This quarter

we spoke with Marlene McGrath about her secrets to successfully

engaging 3M’s nearly 90,000 employees and aligning them with

the company’s innovation goals.

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Thank you for speaking with us. Why do you think so many business leaders still question the value of employee engagement?

MARLENE: Engagement alone is not sufficient to drive results forward. For engagement to flourish in your company, it must be connected to organizational goals and specifically adapted to your culture. You must develop internal capabilities to track this and to demonstrate to yourself and your organization that engagement predicts organizationally relevant outcomes.

The other thing to me is that, fundamentally, engaging your employees must be a leadership mandate. Strong leaders tend to drive strong business results, and strong leaders care about employee engagement. You need to make sure leaders are accountable for employee engagement. Then it becomes a business lever and more than just a stand-alone program that HR tries to link to larger results. It really becomes part of your leadership mosaic. If you miss that piece in the mosaic, then there is a real risk you won’t achieve the right outcomes.

What do you consider the critical element at 3M for achieving the business impact of engagement?

MARLENE: Alignment. How you choose to implement engagement must align with your culture and your organization’s goals. You can’t just bring in a generic program and hope the outcome will be more engaged employees and a better financial return. Unfortunately, I think some companies tend to “drop” engagement into their organization and then expect it to work based on reported successes of other companies.

What is the biggest risk you have taken using engagement data that has paid off?

MARLENE: We introduced employee engagement as a concept in 2007, when I was leading international HR for 3M. We drove it forward in every country with every 3M leader in an aggressive and comprehensive way. We had them understand the power of engagement through research we had done internally, led by Dr. Karen Paul, and research from the market as well.

Driving it was not easy at first—that is, getting leaders to confront reality in their own situations and how best to engage and align

their people—because we were already a successful company. But we started to see some early successes as our leaders began looking at engagement results and following up with employees on what they could do to impact engagement in each country. The concept itself resonated well with leaders in a number of places such as Canada, Germany, and Latin America, and that helped add to the global momentum.

What did those early successes look like? Were you tying engagement to outcomes and influencing business decisions?

MARLENE: Exactly. You could see business results being very positive, and you could map these results back to many of the things they did with the organization around engagement. For example, we found that highly engaged business laboratories, two years later, commercialized more products than those that had lower scores.

This has paved the way for us to do a lot of cool things with engagement. For example, we launched a new brand platform here at 3M (3M Science. Applied to Life.™) and have made our employees brand ambassadors. We feel our efforts are well integrated now, and, in fact, engagement is part of every strategic business plan we see at 3M.

What is the biggest lesson learned that you would share with other heads of HR about getting leaders to truly view employee engagement as a critical management tool and to embed it in their strategies?

MARLENE: One of the things they must be prepared for is a long-term engagement journey. As I sit back and look in the rearview mirror, it looks like it was a very smooth and thoughtful path, but it didn’t feel like it at the time. You need patience to really see this through various business cycles, or I think you won’t have success. This is a commitment that we made many years ago, and you have to stick with it.

To me, engagement is not a program; it is something that forms part of your DNA. You need to have business leadership truly believe in it. If organizations don’t buy into that, then they’re going to be very disappointed. In fact, you might actually go backward because employees don’t want engagement programs for the sake of having a program. Employees want to know their input and work matters before they will be engaged, passionate about being at their workplace, and interested in driving the organization’s goals forward.

Marlene McGrath, Senior Vice President of Human Resources at 3M

Marlene McGrath is responsible for 3M’s HR function, which supports more than 89,000 employees in more than 70 countries. She has been with 3M for more than 20 years.

3M’s Approach to Employee Engagement Surveys

Individual employees are surveyed regularly, and results are reviewed for trends monthly to see how engagement is changing across geographies and businesses.

3M’s Definition of Employee Engagement

Engagement is an individual sense of purpose and focused energy, evident to others in the display of personal initiative, effort, and persistence toward organizational goals.

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16 CHRO Quarterly | Second Quarter 2015

We’ve seen in our research that STEM talent can be harder to engage. Is that true at 3M, too?1

MARLENE: It is interesting that our research also shows a bimodal distribution. We’ve learned that when our technical community is skeptical, they tend to be more skeptical than the rest of the organization. Happily, for us, when you win over the technical community, not only are they more committed and enthusiastic, but they also step up to be real thought leaders for the organization. That is part of the beauty and secret of our success—really focusing on engaging the technical community early and often.

So we make that a priority, and a major achievement in our innovation story is our culture of collaboration. We are extremely collaborative, and we like to work together.

Can you provide some examples of how specifically you’re engaging STEM talent?

MARLENE: One way of many ways is through our Technical Forum (Tech Forum). It began in 1951 with 17 employees. Today, it’s a vibrant community of more than 11,000 employees spanning more than 30 countries. We take a lot of pride in the Tech Forum, and it’s a great way for STEM talent to feel a part of the company from the day they walk through the doors at 3M. It ensures our technical talent have a close-knit community of peers and mentors to draw on.

The Tech Forum creates a very dynamic and engaged community through live and virtual forums. The Tech Forum has a range of events that focus on innovation, from live events to hosted virtual meetings, blogs, and social media through which Forum members engage the whole community. People can post ideas and build on them. Our chief technical officer travels a lot, so he will meet with Tech Forum members when he travels to bring a personal touch to it as well.

What do you think is unique about the Tech Forum that motivates people to keep participating?

MARLENE: The Tech Forum encourages productive interaction at a grassroots level. I think that is a big part of our long-term success. By keeping lines of communication open all around the world, the Tech Forum fosters an environment of creativity and cooperation that we know leads to innovation and

growth. The reality is that by forming that network, you’re more apt to collaborate and innovate together. So, practically, what does this mean? It means you know people around the world who are very open to sharing their technologies and what they’re working on. You’re two or three calls away from any expert, so you’re really enhancing your work through innovations shared by your peers who could be down the hall or at our sites in China or Germany.

Thinking more about leadership, 3M is recognized as a top company for leaders by many different groups. How are you evolving your approach to leadership development to keep top talent?

MARLENE: It all starts with the business. You need to be a part of it—connected and in sync. As a good Canadian, I’d

like to paraphrase hockey star Wayne Gretzky’s quote, “Skate to where the puck is going, not where it has been.” Good leadership development is designed for where the business is going tomorrow. To do that, you have to really know your business.

After our CEO, Inge Thulin, shared a bold new vision and strategies for 3M, he knew it was important that the vision and strategies did not live and die with a single leader. So we designed new leadership behaviors and rolled them out to all employees in 2014. They drive the new organizational vision while staying true to 3M’s strengths and deep history. Most importantly, the behaviors were designed around differentiators within 3M, rather than external standards.

Can you give an example?

MARLENE: Universal concepts such as ethics and innovation are woven into the behaviors, but in ways that are unique to 3M’s talent and culture. For example, Play to Win is defined at a high level as “Exhibits relentless customer-centric, competitive, and strategic mind-set. Accountable for results and externally focused. Plays for 3M and not themselves. Responds to setbacks with learning and a deeper commitment to future success.” Ethics are woven into this one as we want people to “play to win,” which means not winning at all costs, and touch on engagement with the notion of needing to be present and in the game to win.

With the leadership behaviors, Inge brought his agenda to life, defining success throughout all of 3M and owning and executing the new vision and strategies across all levels.

How have leaders and employees reacted to these new behaviors so far?

MARLENE: The results were amazing. As part of our rollout, we created a video of Inge discussing the behaviors and asked each group worldwide to show employees the video coupled with a fun event. We also asked leaders to send back a two-minute video of the group rollouts. (These were really great.) We also held a Global Leadership Behavior Social Media Day. We asked everyone to go online and comment on the leadership behaviors. We not only trended worldwide, but we saw a 15% increase in new participants on LinkedIn and other social media sites. So the rollout succeeded in making people understand and feel they represented the leadership behaviors. We are doing a great deal in this space, but this should give you a little bit of an idea of a few of the things we are doing. It is a very exciting time at 3M.

What are the top questions you are interested in asking your peer CHROs?

MARLENE: How do we as a profession really align what we do with our business strategy? One of the things I’m trying to drive here together with our leadership, in particular our CEO, is treating HR like a business. If HR is going to continue to meet the demands and pace of business, we need to be known as first-rate business people as well as HR people. To keep up with the changes affecting today’s workplace, it is so essential for organizational leaders to deeply understand their talent strategies and how they contribute to an organization’s success. I am always interested to hear more from my peers on what they are doing to really deeply align to the business.

3M’s Leadership Behaviors

1. Play to Win

2. Innovate

3. Foster Collaboration & Teamwork

4. Prioritize & Execute

5. Develop Others & Self

6. Act with Integrity & Transparency

This interview has been edited for brevity and clarity.

1. STEM stands for “Science, Technology, Engineering, and Math.”

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Boost business unit revenue by up to 12%.

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Get started at cebglobal.com/leadership.

Do Leaders Miss the Big Picture?Networked Leaders Drive Results

18 CHRO Quarterly | Second Quarter 2015

Have you been asked how your engagement initiatives drive the business forward?

Only one in five business leaders believes his or her engagement initiatives drive real results. But firms with the highest engagement ratings have more than a 3x higher profit margin than their peers.

You already invest in employee engagement, so how do you achieve the same results?

Merely improving employee engagement is insufficient because highly engaged employees often misdirect their efforts toward projects that don’t advance core priorities.

Your peers in the C-suite are right; engagement is not enough.

Align employees with key business priorities and create agile workforces to sustain engagement and drive performance in an environment of constant change.

Drive Returns on Employee Engagement Investments

What You Need to Know

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19

CEO and the Board Ask...

Why should we invest more in engagement when so many employees report they are already satisfied?

HR Leaders Ask...

How do we create a talent management strategy that helps HRBPs and employees align their efforts with our firm-level strategic objectives?

HR Business Partners Ask...

How do I convince managers to care about engaging their employees and to improve their effectiveness at doing so?

Redefine How You Measure Engagement

Teach the CEO and executive team how engagement should inform their strategic decision making and how it will pay off.

Build and Implement the Engagement Strategy

Help HR leaders and HRBPs increase engagement, agility, and alignment across business units by identifying and prioritizing strategy-impacting talent segments.

Build Engagement Communication Plans to Achieve Key Business Priorities

Clearly communicate the value of engagement to your managers (i.e., what’s in it for them), and equip them to keep employees aligned and agile as your business strategy changes.

Engagement-Based Strategy Risk AssessmentTeach HR leaders and HRBPs this best practice to show business leaders how engagement scores affect business strategy.

Employee Segment Prioritization Tool

Use this tool to identify and prioritize critical workforce segments when making engagement investments.

Business Case for Employee Engagement Customize our business case to show managers how a highly engaged, agile, and aligned workforce specifically helps accomplish their strategic goals.

Manage an Agile Workforce Through CommunicationHelp managers create enterprise agility using these communication strategies.

CEB’s ClearAdvantage FrameworkInformed by years of research from throughout CEB, this approach redefines how organizations must evaluate engagement to make decisions that generate real business results.

Why It Is Important to Measure More Than EngagementShow your board why engagement is necessary, but no longer sufficient, for achieving business outcomes in an increasingly complex and collaborative work environment.

CEB’s ClearAdvantage CheckThis CEB-managed survey helps one of your business units get the most out of its engagement initiatives.

The Steps You Should Take

The Questions Key Stakeholders Will Ask You

CEB Resources

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