This issue of Sagacious is from April 26, 2019

Predict Who Will Leave in 9 Months: The Power of Engagement

This insight is Part 1 in a two-part series on employee engagement and the power of employee surveys.

Sudden departures are disruptive. Being able to predict when an employee will leave can make the difference between a smooth transition or a sudden, potentially unsettling change of plans. What indicators do employees give us before they leave? Peakon, a people analytics company, has released a new study that reveals that it is possible to determine if an employee will leave up to nine months in advance. The study examined over 32 million survey responses in 125 countries, finding that nine months before an employee leaves, their engagement and loyalty starts to fail.

An employee’s engagement is typically measured through the Employee Net Promoter score, which is calculated based on a strategic question: “How likely is it you would recommend [company name] as a place to work?” This one question reflects the employee’s entire spectrum of experience at the company across organizational culture, work environment, and career prospects. As this engagement dips, the intent to stay with the company starts to drop as well.

What leads to sudden dips in engagement? Managers could be a deciding factor. A Gallup poll of more than one million US workers found that 75% of employees who left jobs did so because of their managers and not the job itself. In particular, poor leaders and overbearing managers reduce the morale of their teams, eventually leading to dips in employee loyalty. This is echoed in the Peakon study, as the researchers found that “[w]hile peer relationships are a crucial part of a positive and engaging work experience, when compared to management support, they don’t seem to have as much of an impact on an employee’s likelihood of quitting.”

The Peakon study also indicated some other major drivers behind the dips in engagement, including when people felt:

  1. Unchallenged and unaccomplished in their work – “it’s not the amount of work that’s the problem. At-risk employees find their workload manageable, virtually up until the day they leave.”
  2. Under-appreciated and unable to discuss rewards openly with their manager“employees need to feel their managers care about them as people, and are willing to support them emotionally, in addition to financially.”
  3. Stagnant and unable to see a path for personal development – “When we feel our role is helping us develop into our best self, it can have an incredibly powerful impact on employee engagement.”

Think one of your employees is pondering a change? While you can’t quite use employee survey information to pinpoint a specific employee, according to a Harvard Business Review study, there are 13 behavioural signs that you can look for, including decreases in work productivity, exhibiting less team spirit, having a negative attitude about work, expressing dissatisfaction with colleagues and managers, and poor timeliness.

Stay tuned for next week’s issue, where we explore three common pitfalls to conducting employee surveys.


How Do Board Members Really Feel About ESG?

With more organizations focusing on developing sustainable businesses, there has been a renewed focus on boards using Environmental, Social, and Governance (ESG) criteria to discuss performance. How do board members feel about ESG? A recent article in Harvard Business Review finds that there are gaps in attitude toward sustainability within and between corporate boards. The authors interviewed 25 experienced European non-executive directors from 50 well-known, large companies. They found that there were five different types of board members:

  1. the Deniers, “who see sustainability as nothing more than a buzzword or a fad”;
  2. the Hardheaded, who think that “sustainability is a factor affecting their business, but it tends to be reduced to strategic reasoning”;
  3. the Superficial, who may “be more concerned with being seen doing the right thing than actually doing it”;
  4. the Complacent, who have “not kept up-to-date with the latest developments in sustainability”; and,
  5. the True Believers, who believe that “the long-term economic viability of their organization is closely linked and dependent on social and environmental responsibility.”

The authors also provide suggestions of how to approach each type of board member to help shift attitudes toward sustainability. “Either way, as sustainability takes on more weight globally, and as investors continue to reward companies for improvements to material ESG issues…it is only a matter of time before board directors find that bridging the gap between aspirations and action is a requirement of fiduciary duty...”

Investment Management

How Biases Can Impact Your Investment Decisions

While behavioural biases and their effect on investment decision making may not be easy to capture in real-time, it is nevertheless important to understand the sources of how and why our brains can trick us into making sub-optimal investment decisions. This article from the Collaborative Fund explores some of the lesser-known behavioural biases and how they can impact decision making. One of our favourites is the act of remembering events better than they actually were, which is referred to as “rosy retrospection.” You may often hear the phrase on business news networks “the easy money has already been made”; however, the “easy money” being referred to is always ex-post, and the person making the comment has likely forgotten the inherent uncertainty that is always embedded in the present. At the end of the day, “the long run is just a collection of short runs, each of which has uncertainty, volatility, and decisions that have to be dealt with.”

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Interesting Ideas

Using Machine Learning to Predict Performance and Tenure

What if you could predict which new hires would likely perform better and stay longer at your organization? A new study published in the Journal of Applied Psychology used machine learning to do just that – predict the performance and turnover of school teachers, while also increasing diversity. “Using a combination of machine learning and economic and psychological theory, they developed a predictive model of the effectiveness and retention probabilities of the applicants.” The researchers analyzed the text of 16,000 applications, of which 2,200 were hired, and isolated several predictors such as work history, length of tenure in previous jobs, and reason for leaving previous job. Interestingly, the researchers found that although “[o]verall, teachers with relatively short tenure in previous jobs tended to be less effective and leave more quickly,” those who left their previous jobs for a positive reason (e.g., a better job) tended to be better performers than those who left due to negative reasons (e.g., bad management). Moreover, they found that relevant experiences could also come from a variety of occupations, not just teaching positions. “For example, an applicant who previously worked as a bartender may have acquired some of the same skills or knowledge that teachers use.” Given this finding, it is not surprising that while previous relevant experience was a good predictor of performance, previous job titles were not. 
While this application of machine learning shows promise, there are other issues that must be considered, such as unintentionally perpetuating hiring biases that already exist in the organization. In this case, the researchers took this into consideration and calculated “adverse impact ratios,” or the difference in selection rates for applicants of different groups. “
These are very high stakes for hiring organizations and for the applicants…[W]henever you’re making changes to standard operation procedure, it deserves some scrutiny.”


People Are Less Emotionally Aware Than You Think
In terms of expressing emotions, we often believe we wear our hearts on our sleeves. For example, if you’re feeling tired or angry, it is easy to assume that everyone else can tell just from looking at your face. However, this isn’t always the case“The gap between our subjective experience and what other people pick up on is known as the illusion of transparency. It’s a fallacy that leads us to overestimate how easily we convey our emotions and thoughts.” In reality, people pay far less attention to your tone of voice, facial expressions, or body language than you may think. In fact, according to the results of a recent study on lying, “unless you’re being very obvious, the chances of someone else picking up on it are smaller than you think…[P]eople only guessed they were lying about a quarter of the time—a rate low enough for random chance to account for it.” 
Becoming aware of the illusion of transparency can help liberate us from social anxieties, such as public speaking. In a previous study, “[w]hen participants were asked to give a speech, their self-reported levels of nervousness were well above what audience members guessed they were experiencing. Inside, they felt like a nervous wreck. On the outside, they looked calm and collected.” Accepting the fact that most people will not pick up on our body language can help us feel less anxious about giving public speeches or presentations at work. 
“It’s a lot easier to focus on what you’re saying if you’re not so worried about what everyone else is thinking.”

Cross-Disciplinary Learnings

Get Moving to Improve Concentration

Want to increase your focus and concentration on tasks? An article by Physiologist Greg Wells suggests that “for your mind to be engaged, your body needs to be energized.” We’ve discussed past research in previous issues that has found physical activity improves brain functionality, leading to increased creativity and problem-solving ability. “Even simple movements such as walking get you physically energized and open up the possibility of creating beta-wave activity in the brain, which is reflective of the brain state you need to be in if you have to work at a task or perform an action that requires your concentration.” This is opposed to our traditional approach to work, in which the average person sits from 9-5. While it may be difficult to get to the gym mid-day, the author suggests that you can obtain similar benefits from short spurts of micromovements throughout the day. “As little as 15 minutes of exercise improves mental performance, so add this to your day before important tasks that you have to do.”

Switching From Coal to Gas is Better For the Environment, Science Suggests

A recent science report suggests that shifting from coal to gas is not only central to meeting emission targets and halting the global temperature rise, but that “the benefits of this cleaner-burning gas outweighs its possible risks.” A study published in Nature Climate Change finds that while natural gas is not an end goal, it can act as a bridge while we move toward more sustainable forms of energy. Despite debates about potential methane leakage, “natural gas power plants have both smaller short- and long-term impacts than coal power plants, even when high potential methane leakage rates, a full array of greenhouse gases and air pollutants, or uncertainty issues are considered.” The researchers even controlled for regional differences and carefully selected multiple metrics to evaluate environmental impact. “Our study uses a set of metrics jointly, unlike many studies using just one, to consider climate impacts on different time scales – one metric for a few decades, and another one for approximately a century.”

For the Weekend

World’s 50 Greatest Leaders

Fortune Magazine has released their 6th annual World’s 50 Greatest Leaders list. “In business, government, philanthropy, and the arts, and all over the globe, these men and women are transforming the world and inspiring others to do the same.” Bill and Melinda Gates, Jacinda Ardern, Robert Mueller, Pony Ma, and Satya Nadella round out the top five. Interestingly, the authors suggest that many of the leaders in the list share one emotional quality – hardiness. “Hardy individuals don’t see the world as threatening or see themselves as powerless against large events; on the contrary, they think change is normal, the world is fascinating, they can influence events, and it’s all an opportunity for personal growth.”

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