Business Before Politics: How Office Politics Raid a Company – Case Study

 

Business Before Politics: How Office Politics Raid a Company

A Case Study Hybrid

JD Thornton

Bellevue University

August 2016

 

 

 

Abstract

 

“Office politics” is a term many of us cringe upon hearing.

But what does it mean? How does it affect our business operations? And how can we overcome its adverse impact?

Office politics is a term that represents the strategies, decisions, and behaviors that individuals employ to gain advantage in business for themselves or for a cause that has little or nothing to do with the success of the business itself. The phrase itself doesn’t necessarily have a negative meaning, semantically, but it has come to represent the darker sides of businesses and their leaders, especially those in decision-making capacities.

In many companies, it affects both strategy and day-to-day decisions such as resource allocation, process improvement, and especially human resource decisions. This case study explores the short and long term effects of this negative side of office politics and how it affects business decisions, especially in regards to retention and turnover, productivity, employee satisfaction and engagement, and innovation. It will also explore various ways to handle these issues and reduce their negative impact on the business.

By focusing on this topic, I hope to present a perspective that can lead to better, more informed and well-thought-out corporate decisions that keep the long-term success and sustainability of the company front-of-mind.

 

Background

 

Contrary to most case studies, this paper does not focus on one single company. Rather, it compiles the data from a myriad of companies to provide a clearer, stronger picture of how office politics affects a company, as well as making the conclusions drawn more relevant to various industries and businesses.

This case study is a compilation of data from numerous sources, as well as my own personal experience as a consultant in various companies and diverse industries. Through the last several years, I have worked closely with a number of different companies in distinct industries, primarily on accounting processes, business ethics guidelines, and employee engagement.

 

Vision and Mission

As a consultant, my goal is to guide a company’s decisions in a manner that bears in mind the long-term mission and vision of that company, as well as sustainability over time.

Often, the reason customers stay loyal to brands is because of their set of values. The best brands strive to combine physical, emotional, and logical elements into one exceptional customer and employee experience (Kolowich, 2015). When a business successfully creates a connection with their customers and employees, they are more likely to remain loyal for life, giving the company the chance to increase overall profitability while building a solid foundation of brand promoters.

However, achieving that connection is no easy task. The companies that succeed are ones that stay true to their core values over the years and create a company that employees and customers are proud to associate with. To do this requires strong company mission and vision statements. A mission statement is intended to clarify the ‘what’ and ‘who’ of a company, while a vision statement adds the ‘why’ and ‘how’ as well.

One defense against the ill effects of office politics is the adherence to a strong mission and vision statement, as well as values statements. To be truly effective, these must be ingrained into the culture, adhered to with integrity and consistency, and referenced when making business decisions (Lencioni, 2002). This creates a foundation for decision-making that discourages the kind of decisions that might harm the company.

 

Strategic Objectives

Strategic business objectives are goals deemed most important to the current and future health of a business (Burris, n.d.). By using the mission and vision, as mentioned above, and by prioritizing strategic objectives, a business can minimize the influence of office politics.

For example, process improvement and employee engagement are vital pieces to the puzzle that create a stronger foundation for a business to flourish upon. They are truly required for a company to find and maintain a competitive advantage in a fast-paced, constantly changing business environment. These become elements of a company’s strategic objective plan.

 

 

Problem

 

For this case study, office politics will be defined as those behaviors and decisions made by both leaders and employees that go against the overall success of the business in favour of some personal agenda.

Let’s get real here: every business, every company, every industry experiences some form of office politics. Every individual in the workforce has been exposed to the nasty side effects of ego and personal agendas that trump logic and business success. As long as businesses are run by humans, there will be the likelihood of these things happening.

Ironically, our human nature is also the thing that can save us, as we are the creatures most capable of learning and adaptation (the true ‘survival of the fittest’).

 

The View

So what does office politics look like?

A manager may promote an employee based on out-of-office relationships (i.e., because the employee is a nephew or a neighbor), or because of how well that employee caters to the manager’s ego, rather than based on their actual performance in the position. An executive may push funding to one department over another, based on the relationship they have with the department heads, rather than on the true need and value of each department. And an employee may decide to cover up a problem with a process out of fear of looking ‘bad’ to their supervisor, rather than helping to find a solution.

Each of these situations involves decisions being made that directly affect the success of the business, but which were made without the business’ success in mind. The manager’s decision to promote an employee on personal grounds, rather than on performance, results in long term damage to the success of the business, as the newly promoted employee is neither suited for the position nor well equipped to handle its demands. An executive improperly funding departments based on personal relationships rather than need and potential value, creates imbalances in the process that could be catastrophic to the productivity of the business. And any time an employee feels they need to “look out for themselves” rather than making decisions that benefit the company as a whole, day-to-day operations suffer, processes continue to cause problems, mistakes multiply, and errors cost the company hundreds, thousands, even millions of dollars.

In each of these examples, we see that productivity, process improvement, successful budgeting, and human resources are all directly affected by office politics. This case study will focus on the quantitative measurements of productivity and production loss, as well as employee retention and turnover rates.

 

The Importance

The terms employee engagement and employee satisfaction are often used interchangeably, but in fact they are quite different (McKee, 2015), the difference being level of commitment. While satisfied employees are committed to showing up every day so that they get paid, they are not necessarily committed to the success of the organization. Satisfied employees are more concerned with their own personal and career growth than the organization’s. Engaged employees on the other hand, are more concerned about successful business outcomes.

Despite what people say, work is personal. Engagement occurs when an employee feels an emotional connection to an organization and its goals. As a result, they:

  • Collaborate on ideas to improve business processes and outcomes
  • Feel empowered to come up with innovative solutions
  • Are charged with positive energy, which makes them more productive

Aimee McKee at the Teleos Leadership Institute says, “happy people are better workers. Those who are engaged with their jobs and colleagues work harder and smarter.”

Their research found that employees want three things:

  • A meaningful vision of the future
  • A sense of purpose
  • Great relationships

This coincides with Daniel Pink’s (2009) concepts of motivation as being more intrinsic than in the past, and involving the need for purpose, autonomy, and mastery.

Achievement of these components creates employees who are more than simple clock-punchers who perform a mediocre job. Engaged employees become a company’s greatest asset in a quickly growing business world, driving innovation, improvement, and smart business decisions, both strategically and in day-to-day operations. Employee engagement translates to increased customer satisfaction, increased productivity, decreased costs, and reduced risk of ethical or legal problems.

 

The Discovery

Office politics is something employees have been familiar with for decades. This is not a new concept. Now it’s time to look at the problem from a perspective of resolution. It’s time to address it in much the same way one would address any other organizational problem: with analysis, understanding, objectivity, and a focus on solution.

 

Proposed Steps

Our measurements and specifics revolve around:

  • Productivity
  • Employee Engagement
  • Retention and Turnover
  • Innovation

The plays of ego and lack of foresight related to office politics causes a great deal of damage to employee morale and engagement, drives good employees away from the company, and creates a weak organization where innovation cannot live or thrive, and productivity struggles to be even remotely effectual.

To combat the effects of this issue on business success, proposed steps include:

  • Genuine focus on employee engagement
  • Embracing creativity and innovation
  • Designing a strong foundation in the mission, vision, and strategy of the company
  • Investment in a business ethics program, with support of senior leadership
  • Decision making processes that involve the overall strategy, as well as accountability
  • Checks in the process to reduce the likelihood of inappropriate use of authority
  • Continued measurement of the proposed metrics

As mentioned before, human nature is well designed for adaptation, and continuous measurement and analysis can provide an organization’s leaders with perspective and understanding with which to combat any number of organizational problems, including office politics and its effects.

 

The Bottom Line

There is one more element I propose as being completely necessary for a good defense against the dangers of office politics. I hinted at it in several of the above proposed measures: consider words such as genuine, accountability and ethics. To illustrate this element, let me describe a leader I once knew.

Todd came in as a new leader to a company where I worked. This company has been the supreme example of poor business decisions, completely disengaged employees, and questionable ethics, providing a great deal of material for me during my studies of organizational performance. But this man’s character was the perfect illustration to me of what a business like that needs to transform. He refused to accept ‘that’s just the way things are’. He questioned practices, people, and especially politics. He treated everyone with respect, from the President of the company to the guys loading boxes in the warehouse. He listened actively. He was never afraid to stand up to someone who was making poor decisions for the company, regardless of their position. His goal was the success of the business, and he was committed to that end. I had an enormous amount of respect for him, as did everyone else who worked there, even those he had disagreements with.

In a culture of selfishness, pride, ego, and poor ethics, the required character for transformation is one like Todd’s: genuine, strong, committed, and pragmatic. Honesty is as necessary as productivity, and an active listener as important as a strong leader. As Mary Kay Ash has said, “Honesty is the cornerstone of all success, without which confidence and ability to perform shall cease to exist”.

 

 

Expected Results

 

Future Performance

How can a business expect to perform in a culture where office politics is minimal?

Of course, elimination may be impossible, but reduction of office politics and its influence on business decisions can be a breath of life for a business. When an organization operates from a culture where important business decisions are driven by ego, personal agendas, and reactive behaviors, it becomes highly unstable and vulnerable. The success and long-term sustainability of the business take second place to the objectives of individuals. Lack of consistency and objectivity destroy trust and push employees to fend for themselves, causing them to also make decisions that are poor for the company and negatively affect customer satisfaction, productivity, and, ultimately, the financial stability of the company.

Genuine Focus on Employee Engagement

One of the proposed steps I mentioned was a genuine focus on employee engagement, the key word here being genuine. Engaged employees, even beyond satisfied employees, make the right decisions on a day-to-day basis for the benefit of the company. They serve customers with a good attitude, a strong focus on problem solving, and a creative mindset. They innovate and create powerful solutions. They choose to support the company in difficult situations, and are far more likely to operate with positive business ethics. They are more focused, more productive, and more energetic and positive. The entire atmosphere of the organization changes, and the culture becomes one of engagement, so that even new employees are more likely to be engaged early on.

 Embrace Creativity and Innovation

Engaged employees, as stated, are more likely to innovate and come up with creative solutions to problems. Some managers are concerned with the concept of employees as innovators, because they fear the disregard for authority, but this is not necessarily a probable outcome. First of all, a healthy questioning of authority is good for the growth and improvement of a business and its processes. Secondly, laying down clear ground rules for innovation and problem solving can give both a strong foundation for employees to use, as well as reduce the risk of an employee going ‘rogue’. Innovation and creative problem solving is no longer the realm of senior leadership, and some of the most valuable insights can come from the critical thinking of front line employees.

 Design a Strong Foundation

Utilizing well-designed mission and vision statements, as well as a solid, well communicated strategy can provide the foundation necessary for a company to stick to strong decisions and appropriate use of authority. These items provide a long-term focus and a strategic guideline for decision-making that can help weed out decisions made for the wrong reasons. They also give employees a roadmap for innovation and decision making.

 Invest in a Business Ethics Program

Another proposed action step is to invest in a robust ethics program. When many people consider business ethics, they first think of obviously ethical problems such as stealing, misappropriating funds, and fraud. However, most ethical dilemmas are less obvious and much more difficult to make decisions on. They could involve obscure, unknown state or local laws, the debate between two seemingly negative choices, or simply a question of consistency in practice and policy. An ethics program also consists of options for anonymous reporting of ethical situations, which can provide a good notification for when office politics are taking hold of a business unit.

Decision Making Processes

Related to the strong foundation mentioned above involving mission and vision statements, this includes designing a process or flow for important business decisions. This means creating standards for who makes certain types of decisions, who they should consult, how large business decisions should be communicated to the rest of the company and when, as well as suggestions for accountability, such as requiring two or more individuals to sign off on certain impactful decisions, as in the hiring or promotion of a C-level executive. This keeps the process honest and reduces the influence of office politics.

Checks Within Processes

Whenever a problem area for office politics is identified, checks should be put in place to reduce or prevent the influence. For example, hiring and promotion processes should include input from more than one individual, as well as proper documentation for future review, if necessary. This helps reduce the likelihood of an individual being promoted or hired for the wrong reasons.

Continued Measurement

The metrics presented in this paper are helpful for identifying problems related to office politics, as is the aforementioned ethics program and reporting options. Continuing to measure these items on a consistent basis, as well as analyzing and adjusting as necessary, provides a picture of how the culture looks, how it’s improving, and where focus can move to continue the development of a healthy, authentic business environment.

 

Future Operations

Obviously, all this means a business is going to operate very differently. It may require greater cost and manpower to develop and maintain this culture, especially for a company whose current culture is deeply embedded in office politics. The value of taking those extra steps to reduce and potentially eliminate the power and influence of this issue can greatly impact a company’s bottom line and long-term success and sustainability. In short, this is due to increased productivity, reduced turnover, improved employee engagement, better decision-making, more effective and efficient processes, and the stability that comes from consistency and integrity in business operations.

 

 

Quantitative Measurements

 

Office Politics and Quantitative Measures – Overview

At first blush, office politics may not seem like something one could adequately measure the impact of, but there are actually a large number of business elements that are impacted, directly or indirectly, by the tendency for business leaders to make decisions based on something other than the success of the business as a whole. Determining these aspects only requires some big-picture, analytical thinking and an understanding of processes and how they interconnect.

 

The Numbers

Productivity

After the 1986 Challenger explosion, NASA launched an investigation to determine its cause. The resulting testimony of the scientists and engineers who worked on the space shuttle is, in a word, chilling. The testimony showed some people who worked closely on the project had been worried about the craft’s worthiness. Others just felt that it shouldn’t be launched. However, those interviewed never spoke up because they feared the political ramifications of doing so. They felt that the program needed to look successful and a delay would ruin that image (AMA, 2010).

Thankfully, most office politics don’t result in the loss of human life. However, they can have a substantial impact on a company’s bottom line, and even on its solvency. The estimated productivity loss because of stress-related factors is more than $100 billion in the United States alone (AMA, 2010).

According to a 2002 study in the UK, office politics resulted in more than an hour of lost productivity per day (HRZone), which could be close to 250 lost productivity hours in a year for a typical workplace, which is about a month of lost working hours. The publishers of the Myer-Briggs Assessment published a study on workplace conflict, which found that employees in the United States spent 2.8 hours per week dealing with conflict among their peers and managers in 2008. This adds up to approximately 385 million working days lost and more than $250 billion in paid hours wasted on unnecessary conflict and its ensuing chaos (Miller, 2015; CPP, 2008).

In the same study, it was found that 85% of employees deal with workplace conflict. While office politics specifically may only be a portion of this, it is probably safe to say that, as we have defined it, office politics does make up a significant portion of workplace conflict.

A

Those are some pretty large numbers, since we’re looking at a general measurement over an entire country. Let’s break it down into something more digestible:

For a company of 100 employees, 2.8 hours per week of lost productivity results in 280 lost hours per week, or just under 15,000 lost productivity hours per year. Let’s say average revenue is about $2 billion annually, and employees are paid an average of $40,000 annually. Losses would be about $582 million, or a staggering 30% of total revenue. And that’s just from pay. Other costs involving lowered productivity can come from lost revenue, wasted materials from higher error rates, dissatisfied customers, increased sick days and vacation days, increased healthcare costs, and other direct and indirect factors. Effects could be astronomical, especially if other factors come into play, like economic downturns, rising costs, poor sales, and high turnover rates.

 Employee Retention and Turnover

When office politics plays too large a role in a company, the morale of employees suffers substantially. They begin to feel that their performance no longer matters, and their position is only secure if they make self-serving choices, which can lead to the destruction of the company’s reputation with its vendors and customers, as well as with its own employees.

The result of this then becomes a very high turnover rate, as employees leave to find more meaningful work at companies they at least hope will have better cultures. Word begins to spread about the negative culture of the company and how things are done there. Fewer good employees want to work for the company, creating even higher turnover as poor employees are hired and quickly let go, which also affects the morale of the remaining employees, who also start looking for new jobs. It becomes a vicious cycle that can cost a company an enormous amount of money, time, and human resources to train and recruit for the constantly dwindling pool of staff.

I have seen this occur in a few companies, and the effects are broad. Not only does the company spend far more money, time, and manpower attempting to recruit and train employees, the consistency of work done, as well as quality and productivity are strongly affected. During training, productivity declines, and when a company is constantly training new people for the same positions, the productivity is never able to improve. Customer satisfaction is also negatively affected. At one company I worked with, the constant sea of new faces and the trend of ‘musical desks’ became the regular topic of many bitter jokes from customers about their experience with that company. For many businesses, seeing a familiar face or hearing a familiar voice over the phone creates a sense of loyalty and trust for customers that can be of great benefit to a company’s reputation and success.

Turnover and retention rates are very telling for any company, although some may need to adjust their expectations due to the nature of an industry. A good benchmark for a company should come from the average or mean of multiple other companies within the same or a similar industry, as well as taking into account the geographical area.

For example, in 2014, the average voluntary turnover rate for all industries was 11%. For utility companies it was as low as 6.9%, while hospitality was as high as 20.2% (Compensation Force, n.d.). This is just voluntary turnover, when an employee leaves of their own volition, which is the primary turnover rate we would be concerned about for the purpose of this study. Overall turnover rates were 15.7%. Gallup determined that the ‘golden’ number was roughly 10%, though they urge leaders to consider ‘who’ rather than ‘how many’ (Smith, 2002).

To do this, Dr. John Sullivan suggests a two-fold metric for turnover: high performance turnover rates and poor/marginal performance turnover rates (n.d.). Essentially, this requires knowing where your employees rank in performance, and what your turnover rates are for both high performing employees and moderate to low performing employees. This agrees with Gallup’s findings that having a turnover (or replacement, as Dr. Sullivan prefers to call it) for low performing employees is actually a good and healthy thing for your company. It’s the good ones you want a minimum turnover rate for.

Two more considerations need to be made in relation to turnover and retention.

Firstly, there are a few other things that affect turnover, such as compensation, working conditions unrelated to office politics, poor business practices or management unrelated to office politics, and poor training and organization. Economic and social factors can also contribute to turnover as well (Mushrush, n.d.). These other factors need to also be taken into account to paint an accurate picture of how office politics may be affecting turnover and retention.

And secondly, we need the more qualitative measurement of why. Conducting exit interviews for employees who are leaving voluntarily, as well as employee surveys for those who stay, can help tell a clearer story about why people are leaving and what keeps them with the company. When we can combine the qualitative and quantitative measurements, we see a much stronger, clearer picture of how office politics may be affecting the company.

 

Quantitative Measurements Summary

To summarize, the practice of making business decisions based on personal motivations rather than true business long-term success can have a severe and lasting impact on the daily operations, success, and solvency of a business. Allowing office politics and personal agendas to govern the business decisions made for a company is one sure way to destroy that company’s future.

To understand the impact of office politics on a business, we reviewed quantitative measurements such as productivity and employee turnover and retention rates. We looked at several examples and numbers that show the real impact of such behaviors on these factors. However, measuring productivity levels and turnover rates does not tell the full story, as these can be affected by a number of other factors. This is why we also need qualitative measures, to tell the why behind the numbers. For this reason, I recommended exit interviews and employee surveys with specific questions geared towards determining why employees are leaving the company or choosing to stay.

Analysis would also need to be conducted of productivity numbers to determine what specific situations are causing loss of productivity. We saw through the above examples and numbers that productivity can certainly be affected by office politics, but simply measuring the productivity of a business or unit will not tell us if this is the specific problem.

And this is really the bottom line with quantitative measurements. They tell us only that there is a problem, not what caused it. They are essential to raise awareness of when problems are occurring in a business, but we need qualitative measurements and root cause analyses to help us determine exactly what is creating those problems.

 

 

Qualitative Measurements

 

Office Politics and Qualitative Measures – Overview

Qualitative measurements tend to be less numerical and more fluid. They are needed in combination with quantitative measurements to help tell the story of the numbers. Qualitative measures are the descriptors for the problems that the quantitative measures help highlight. As discussed in the quantitative section of this case study, a large number of business elements are impacted, directly or indirectly, by the tendency for business leaders to make decisions based on something other than the success of the business as a whole. Determining these aspects requires some big-picture, analytical thinking and an understanding of processes and how they interconnect, and analyzing the impact requires both quantitative and qualitative measurements.

The quantitative measurements that this case study focused on were those of employee turnover and retention rates, as well as productivity measures. Along with those, qualitative measures are needed to explain their connections to office politics, so we added exit surveys and analysis of the root cause of productivity loss.

In addition, this study focuses on the qualitative measurements of company and employee innovation, as well as employee engagement. Surveys are the primary mode of measurement for qualitative metrics of this type, and innovation would be tracked by type and source, as well as by whether or not the innovative idea was implemented and successful. As a note, however, innovation should always be encouraged, even if not all ideas are implemented or successful, as adaptation and growth are vitally necessary for the long term success of a company, and innovation is a very fluid process.

 

The Data

Employee Engagement

This case study will begin with employee engagement because engaged employees are necessary for genuine, effective innovation to occur.

Morale is a state of mind which involves feelings and emotions, hence the difficulty of measuring such an element. Employee morale involves the attitude and perception towards the job, work environment, team members, managers, as well as the organization on a whole. Positive employee morale is usually exhibited by confidence, discipline and the willingness to perform (Ali, n.d.).

In relation to office politics, there is a somewhat circular effect with employee morale and engagement. When a company culture becomes rife with the behaviors and attitudes that make up our definition of office politics, and when business decisions are made based on personal agendas rather than corporate success and objectivity, employee morale suffers. Employees begin to feel that their contributions to the company are meaningless, and their work is no longer valued. They believe they must protect themselves from the unfairness and subjectivity of the leadership that works from this frame of mind, and therefore begin to make daily decisions based on what will protect them and their paycheck, rather than on what will help the business succeed. Because they are no longer considering the health of the company, many of their decisions and daily activities can harm the company, due to ethical misconduct, misappropriation, theft, poor customer service, neglected processes, and many other issues. This becomes yet another facet of the culture, and office politics continues to run rampant, bringing the company down.

By the same token, a company that embraces objectivity, long term business success, and strategic thinking, sees the value of employee engagement and morale. This company makes business decisions based on the needs of the company as a whole, and ensures that employees understand why the decisions were made, as well as making sure employees have a voice and understand their role in the success of the company. In return, the employees feel valued and they feel that their work matters. They become more engaged with the success of the business and with its long term vision and mission. Their daily decision making process reflects this as they serve customers, perform their duties, and do what they can to improve the business and help it grow. As their efforts are recognized and valued by the company, the cycle of ethical decision making and objective, strategic thinking continues, leading to stronger innovations and a healthier bottom line.

 Motivation

There are no single factors that explain high or low morale, but rather a combination of related factors (Ali, n.d.). We can talk about things like job security issues, uncertain business conditions, limited upward mobility, or a perceived lack of fair compensation until we’re blue in the face, but I think the strongest foundation for understanding real employee engagement is Daniel Pink’s concept of motivation. In his book, Drive, Pink pushes the antiquated concept of reward versus punishment aside, pointing out several studies that illustrate the fact that these concepts just don’t work anymore, and rarely result in any positive employee engagement or morale. In fact, it can often have the opposite effect (Pink, 2009).

Instead, Pink outlines three much stronger sources of deeper motivation: autonomy, or the desire to be self-directed; mastery, or the itch to keep improving at something that’s important to us; and purpose, the sense that what we do produces something transcendent or serves something meaningful beyond ourselves (Popova, 2013). When considered in the light of Abraham Maslow’s work on the hierarchy of human needs, as well as where we are as a society, I think these concepts are completely accurate and necessary for future business success.

B

This also is shown well in Penna’s Hierarchy of Engagement (Morgan, n.d.):

C

They could also help explain why office politics can have such a negative impact on employee morale, as it tends to occur in companies that restrict and discourage employee self-direction, because this level of autonomy is considered a threat to the success of the business leader. Mastery can also be seen as a threat to a leader’s position, and therefore cannot be tolerated, since behavior tends to support individual agendas and egos, rather than the success of the company. And purpose of course is relegated to what an employee can do to serve their superior, rather than the business itself or the customers. Since all of these motivations are limited or completely cut off in this sort of culture, an employee finds it difficult or impossible to be motivated to perform at any sort of positive level for the company, hence the resulting losses of productivity and the increased turnover we discussed before with our quantitative measures.

Method of Measurement

To help analyze the effect and level of occurrence of office politics on employee morale, employee surveys can be used to get a broader picture of the satisfaction, company loyalty and pride that employees feel for the business, as well as why they feel the way they do. Even if they are not willing to point the finger at a specific leader who is playing heavy handed with his or her authority, their answers can be very revealing about the general culture of the company, and if office politics is common or is even perceived to be encouraged.

 

Numbers

The Gallup Organization estimated that there are 22 million actively disengaged employees costing the economy as much as $350 billion dollars per year in lost productivity including absenteeism, illness and other low morale issues (Ali, n.d.).

Good & Co report that 7 out of 10 employees are disengaged at work (2013). They also report that 46% of new hires fail within the first 18 months, and that 89% of these failures are due to poor culture fit.

The power of engaged employees is tremendous. Good & Co’s information also highlights that companies with engaged employees out perform companies without engaged employees by 202%. Employees with high levels of commitment to their work and companies perform 20% better than their counterparts. And happy employees tend to have 31% higher productivity levels, 37% higher sales numbers, and three times the creativity levels of disengaged employees.

To illustrate this, let’s assume a company’s typical employee productivity level results in an output of 30 units per day. If each of the 10 employees becomes more engaged and increases their productivity by 31%, they will now be producing roughly 40 units per day. If each unit sells at $500, this will result in an increase of $5,000 per employee, per day.

Now, if the sales department of five employees also becomes more engaged and reaches the higher sales numbers of 37%, this can improve the revenue even more. If we assume a typical employee sells 10 units per day at $500, their increased sales would result in an additional $2,000 in sales per employee per day.

With this example then, we are seeing a collective growth of $50,000 per day for the manufacturing team, and $10,000 more per day for the sales team. If we assume an annual working day total of 245 days, we would see a net growth of $12.2 million for the manufacturing team, and $2.45 million for the sales team.

Innovation

6 out of 10 CEOs stated in a survey from Pricewaterhouse Coopers (PwC) that innovation was either one of their top priorities, or their number one focus (Wulfen, 2014). However, studies in both the US and the UK revealed that most company strategies tend to be very risk-averse, and typically only support innovation in very small increments with low risk of failure.

Also, while nearly half the employees (49%) said management support is very important to the generation of entrepreneurial ideas, only one in five believed their company delivers it. And although 42% consider tolerance of failure from management very important, only one in every eight employees thinks their company is good at it.

What these numbers tell us is that most CEOs understand the importance of innovation as a concept, but not as a practice.

It is difficult to find good benchmark data on how innovation supports a company’s success. Largely, the consensus in the business world seems to be that a company that refuses to innovate is doomed to failure (MacFarland, 2014; Trisk, 2016), as they become obsolete and surpassed by gutsier competitors.

However, there are a few things that a company should track if they decide innovation is important to their strategy (Kaplan, 2014):

  1. Number and scope of innovative ideas offered up (i.e., large or small)
  2. Percent of those innovative ideas based on source (i.e., department, leadership vs employee, external source such as consultant or customer, etc.)
  3. Percent of implemented and successfully implemented innovations
  4. Percent of senior executive time focused on future vs daily operations
  5. Percent of employee time spent on future innovations
  6. Innovation training

 

Qualitative Measurements Summary

Office politics very obviously affects employee morale, both short term and long term. In turn, employee morale affects the longevity and success of the company, as well as its ability to remain competitive. When employees feel valued and are motivated through autonomy, mastery and purpose, they are more able and willing to contribute to the company’s growth and bottom line, especially in regards to innovation and improvement within the company.

By using employee surveys to gauge the culture of the company, as well as tracking engagement and innovation statistics within the company, an organization can get a very good grasp on the impact of office politics within their own organization, when also combined with the quantitative measurements of productivity and retention.

 

 

Case Study Summary

 

Let’s revisit the first lines of this study:

Office politics is a term many of us cringe upon hearing.

But what does it mean? How does it affect our business operations? And how can we overcome it?

First, we defined office politics as behaviors and decisions made by both leaders and employees that go against the overall success of the business in favour of some personal agenda.

We reviewed effects on business such as:

  • Loss of productivity
  • Instability
  • Mistrust
  • Disengaged employees
  • Inefficient business processes
  • Poor business decisions
  • Unsustainability for the long-term
  • Unethical practices
  • Lost revenue and higher costs

These effects can be caused by multiple factors, so we discussed using qualitative measures and analysis such as employee surveys and anonymous reporting lines to determine the level of influence from office politics.

As we reviewed the concepts behind this issue, how it affects a business’ decision making, and measurements we can use to track and address it, there is one thought I hope stood out to you: that there needs to be an honest, up-front confrontation of office politics in business. A company is simply not going to be profitable for a sustainable period in today’s world when important business decisions are made from a place of ego, rather than from a perspective of business success. I hope the metrics provided in this paper showed that as clearly as possible, and inspire business leaders to address this common and too often unspoken element that pervades the culture of far too many of our companies today.

Finally, we looked at a few steps a company can take to address the issue of office politics, such as:

  • Genuine focus on employee engagement
  • Embracing creativity and innovation
  • Designing a strong foundation in the mission, vision, and strategy of the company
  • Investment in a business ethics program, with support of senior leadership
  • Decision making processes that involve the overall strategy, as well as accountability
  • Checks in the process to reduce the likelihood of inappropriate use of authority
  • Continued measurement of the proposed metrics

The bottom line is, for a company to truly be successful, both leaders and employees must make daily and long-term decisions with the success of the company in mind, rather than from a place of ego and personal agendas. In order to accomplish this, they need the right tools and culture, which will support them in their decision-making, so they don’t feel the need to fend for themselves. When a company invests in its people, its people can invest in the company, and this will lead to a mutually beneficial relationship and a stronger foundation for the organization as a whole.

 

 

References

 

Ali, V. (n.d.). The High Cost of Low Morale — and What to Do About It. Retrieved from: http://www.barrettrose.com/the-high-cost-of-low-morale-and-what-to-do-about-it/

AMA (American Management Association). (2010, August 5). The Organizational Cost of Office Politics. Retrieved from: http://www.amanet.org/training/articles/The-Organizational-Cost-of-Office-Politics.aspx

Burris, T. (n.d.). Six Strategic Business Objectives. Retrieved from: http://smallbusiness.chron.com/six-strategic-business-objectives-14492.html

Compensation Force. (n.d.). 2014 Turnover Rates by Industry. Retrieved from: http://www.compensationforce.com/2015/03/2014-turnover-rates-by-industry.html

CPP, Inc. (2008). Study: Workplace Conflict. Retrieved from: http://img.en25.com/Web/CPP/Conflict_report.pdf

Good & Co. (2013, November 13). Workplace Happiness: The High Cost of Unhappy Employees (INFOGRAPHIC). Retrieved from: http://good.co/blog/2013/11/13/workplace-happiness/

Heathfield, S. (2016, May 12). Mary Kay Ash Quote. Retrieved from: http://humanresources.about.com/od/inspirationalquotations/a/integrity.htm

HRZone. (2002, July 2). High cost of office politics. Retrieved from: http://www.hrzone.com/perform/people/high-cost-of-office-politics

Kaplan, S. (2014, June 16). How to Measure Innovation (To Get Real Results). Retrieved from: http://www.fastcodesign.com/3031788/how-to-measure-innovation-to-get-real-results

Kolowich, L. (2015, August 4). 12 Truly Inspiring Company Vision and Mission Statement Examples. Retrieved from: http://blog.hubspot.com/marketing/inspiring-company-mission-statements#sm.00001divetlchufh5r3y1j4m726ji

Learning Theories. (2014, July 18). Maslow’s Hierarchy of Needs. Retrieved from: http://www.learning-theories.com/maslows-hierarchy-of-needs.html

Lencioni, P. (2002, July). Make Your Values Mean Something. Retrieved from: https://hbr.org/2002/07/make-your-values-mean-something

MacFarland, S. (2014, February 3). Refusing to Innovate: What’s the Cost? Retrieved from: http://www.huffingtonpost.com/scott-macfarland/refusing-to-innovate-what_b_4706492.html

McKee, S. (2015, July 14).  Why Employee Engagement Matters and How to Measure It. Retrieved from: https://www.surveygizmo.com/survey-blog/why-employee-engagement-matters-and-how-to-measure-it/

Miller, B. (2015, March 31). How Office Politics Can Tank Your Small Company. Retrieved from: https://www.entrepreneur.com/article/243983

Morgan, C. (n.d.). Employee Satisfaction Surveys: Measuring Staff Engagement. Retrieved from: https://www.b2binternational.com/publications/employee-satisfaction/

Mushrush, W. (n.d.). Reducing employee turnover. Retrieved from: https://missouribusiness.net/article/reducing-employee-turnover/

Pink, D. H. (2009). Drive: The surprising truth about what motivates us. New York, NY: Riverhead Books.

Popova, M. (2013, May 9). Autonomy, Mastery, Purpose: The Science of What Motivates Us. Retrieved from: https://www.brainpickings.org/2013/05/09/daniel-pink-drive-rsa-motivation/

Smith, B., and Rutigliano, T. (2002, February 4). The Truth About Turnover. Retrieved from: http://www.gallup.com/businessjournal/316/truth-about-turnover.aspx

Sullivan, Dr. J. (n.d.). The Ideal Turnover Rate. Retrieved from: http://hiring.monster.ca/hr/hr-best-practices/recruiting-hiring-advice/strategic-workforce-planning/employee-turnover-rate-canada.aspx

Trisk, A. (2016, February 9). 3 Huge Industries Facing Death Because They Won’t Embrace Radical Ideas. Retrieved from: http://www.inc.com/adam-trisk/3-huge-industries-facing-death-because-of-a-lack-of-innovation.html

Wulfen, G.v. (2014, January 13). Companies Frustrate Innovative Employees. Retrieved from: https://www.linkedin.com/pulse/20140113094448-206580-companies-frustrate-innovative-employees

Print Friendly, PDF & Email

Leave a Reply

Your email address will not be published. Required fields are marked *