All of us are creatures of habit. We often do something because, well, it's just something we do. Routines go unquestioned because that's the benefit of routines--they come easily and don't require much thought. We know which ones are good for us, like regular exercise and good sleep. We know which aren't so good for us, like unmanaged stress or smoking. But the nature of habits, good or bad, is that they're hard to break.
Just like people, companies have habits. You can probably think of a couple right now that are keeping your company afloat, and a couple others that might be holding you back. Companies with profitable habits tend to do well and survive to continue developing new habits. Those that don't? Like famed NFL coach Vince Lombardi said, "Winning is a habit. Unfortunately, so is losing."
Companies, like people, can learn new routines, but not without effort. What seems important to say here is that, to stick with something long enough for it to develop into a habit, we must be highly motivated.
What if you knew that certain habits were empirically linked to better profits? Cue motivation.
Two years ago, we began researching whether that might be true. Alongside the Harvard Business School, we measured the good, the bad, and the ugly, with an eye toward habits that economically engage everybody, from the entry-level employee to the customer to the investor. What we've learned after 10-plus waves of research is that some habits are consistently linked to performance that is heads above the rest.
The Economic Engagement research starts with customer engagement, since customers define value and, thus, the economics of any business. This section of the survey focuses on habits around customer input--does your company seek it, systematically and regularly? Is it any wonder that companies with strong customer-engagement habits have significantly higher growth?
Sure, good customer habits will drive growth, but not necessarily profitable growth. To do that, you need economic understanding, the second habit of Economic Engagement. In three questions, we seek to gauge the clarity of the company's economic goals and the shared understanding of those goals. No surprise that companies with a widespread working knowledge of the economics are consistently more profitable.
So, what does economic transparency have to do with Economic Engagement? To develop any good habit, you must know where you're starting and where you're headed. When every employee can see where the company stands, they can track progress or decline. They can see the impact of incorporating new habits or shedding old ones. It also enables group learning, so habits are not only reinforced, but refined as well.
Economic compensation gives all employees a shared stake in the results, making them economic partners in the company. This underlines and rewards good habits that drive profit growth. It also aligns the motivation for all--owners, managers, and employees--creating a true team environment. Teams that share the same goals help other team members stay on track with profitable habits, again driving profitable growth.
The fifth driver of Economic Engagement, employee participation, tracks turnover and regular continuous improvement activities. Some companies rely on feel-good perks to drive employee engagement. But a superficial incentive doesn't transform a hired hand into a trusted partner--and employees who are treated like trusted partners tend to think and act like owners do. They understand, drive, and participate in the profitable growth.
We capture the research results in a benchmark report, measuring each company's habits and enabling them to see where they can improve. While the report is helpful for identifying good habits and improvement opportunities, everyone knows how hard it is to modify our routines. We're all resistant to change, even if we know it's good for us. And any AA member will tell you how important it is to have support.
This is how we came to appreciate the power of the Precision Machine Products Association, led by Miles Free and Renee Merker. Not only did their association share our Economic Engagement benchmark tool with all their members (with a strong turnout of 25 percent participation); they also asked me to share the research results as the keynote speaker at their annual conference.
Now we are working with them to provide PMPA Economic Engagement Support Groups--six to 10 companies of the same industry meet virtually for an hour each month to exchange best practices on improving Economic Engagement habits, all to further drive profitable growth. At inaugural meetings, company leaders discussed attracting and retaining skilled labor, sharing ideas to mitigate these challenges. At our January meetings, the groups want to discuss incentive programs and customer engagement. All agreed that the longstanding PMPA motto, "Better together," is an ideal that is fortified by groups like these.
What habits can your company improve on in the new year? You might consider taking the Economic Engagement Benchmark Survey to see where you stand. (It will take you about 10 minutes.) And you might consider starting your own support group. If that is of interest, contact us and we'll offer a hand. Changing habits is hard, but there are some things that motivate us better than others. As Coach Lombardi would have suggested, you might as well develop winning habits.