The Wrong Focus
Over the last several years, I've seen more and more references-through basically every media channel I pay attention to with ties to the overall workforce-to the importance of soft skills. More often than not, though, these references are generalizations tied to management and executive level roles, with qualifying comments like this from a recent article on Forbes.com, "Soft skills generally refer to categories like leadership, communication and problem-solving. On the other hand, hard skills are the technical capabilities that can be quantified and measured." Much of what I've seen points back to a 1918 study by Charles Riborg Mann (published by the Carnegie Foundation at the time) stating that "85% of job success comes from having well-developed soft and people skills, and only 15% of job success comes from technical skills and knowledge."
I'm one of the loudest voices concurring with that century-old study. Still, I take issue with so much of what I see tying those skills (almost) exclusively to the success of folks in supervisory or management roles. I also take exception to the notion that only hard skills equate to "capabilities that can be quantified and measured." That's crap! That's also why so many companies are in the dark about what's killing their profitability. Before effectively addressing our highest-risk areas, we must change our focus.
The SIS International Research study I referenced before stated that "the cumulative cost per year due to productivity losses resulting from communication barriers is more than $26,000 per employee. Not only that, the study found that a business with 100 employees spends an average downtime of 17 hours a week clarifying communications. Translated into dollars, that's more than $530,000 a year." This cost should not fall solely on the shoulders of the folks in roles with leadership responsibility. This downtime, and the communication issues contributing to it, is an issue that touches every team member at every level of an organization!
This incorrect perception that anything perceived as a soft skill is intangible is killing our profit margins, and it serves as a significant roadblock to building a culture that attracts the best people who have the hard skills we do indeed need. With that in mind, let's consider how this wrong focus can impact our entire culture.
Experts in Their Fields...
So, picture this... One of your most senior employees, the one who's arguably the absolute best in the organization in their specific skill set, constantly grumbles about how poorly they're treated and occasionally goes on a tirade, slamming the owner in front of all of their peers. Because they have so much knowledge and experience, do you dare risk the consequences that could come from addressing such behavior?
Now picture this... One of your supervisors, who's been with you for years and knows all the ins and outs of their department, has a long-standing reputation for chastising and berating direct reports for simply not being mind-readers. Since this supervisor has such a firm grasp on all the department details, we certainly can't tell them that what they're doing to their team members is unacceptable, can we?
If you're not tracking with me here, these are prime examples of having the wrong focus! In both cases, the technical expertise was unmatched, but the impact their behaviors had on the overall culture-in their immediate teams and throughout the entire organizations they were a part of-prevented many team members from sticking around long enough to get close to mastering the technical aspect of their respective jobs. And their behavior didn't just push the up-and-comers away; it kept more than a few highly talented people from joining either team!
I've had the privilege of working with organizations with a completely different focus, a focus so intent on ensuring that their values are upheld that highly skilled candidates are passed over (in even the tightest hiring market) when they have a history of exhibiting behaviors that contradict the organization's established culture. In those cases, I've heard owners and executives stress that technical skills can be trained, but their culture is too important to risk!
Many companies talk about how important their culture is. Still, few go that far to protect it, and that's where those high-risk areas we've touched on briefly turn into real profitability killers. I'm not about to suggest that any industry's technical skills aren't critical. We all know they are! I am making a case for how that century-old Carnegie Foundation study is as accurate now as ever. Those skills responsible for 85 percent of an individual's success also tremendously impact the organizational culture as a whole.
The challenge almost always lies in which of those skills we choose to develop[Editor1]. Having the wrong focus can keep us from addressing the profitability killers head-on. Still, it can also keep us from genuinely capturing the profit we're losing, even when we do handle it, if we cannot measure it.
If a Tree Falls...?
I've often heard the profound philosophical question, "If a tree falls in the forest, but no one is there to hear it, does it still make a sound?" and thought it was stupid. Quite frankly, I'd rank it right up there with the guy who closes himself in the refrigerator to see if the light really does go off when the door is shut...
Okay, Wes, what does that have to do with anything? In all honesty, I believe both of those conundrums tie right in with how having the wrong focus can kill profitability and paralyze us when faced with challenging conversations with experts in their field who just aren't living out our organization's values! But I'm convinced that the impact on our profitability doesn't stop there.
I grew up cutting firewood with my dad, so I know exactly what it sounds like when a tree falls in the forest. (I have not shut myself in a refrigerator, though, nor have I ever cared if the light stayed on.) I know that sound of the tree falling because I've been there to see and hear it hitting the ground. That's often why business owners and executives are so willing to provide technical training for the people on their teams; they know precisely how to apply the specialized training they received as they grew in their careers.
In many cases, though, these same folks struggle to invest in providing their team members with any training that's perceived as soft; they've never been given a format for measuring whether it's applied or how it yields results. Suppose one of your employees makes a case for purchasing a new piece of equipment by detailing how much more efficient they can be (and how much more profit can be generated). In that case, we'd know immediately if they continue performing the task the same way they had before having that new equipment. We'd see their behavior had not changed!
The challenge I've seen with most of the training labeled as leadership, communication, or any other "soft" skill is that it's focused on ideas. This almost always makes sense but is never tied back to specific behaviors that need to be applied to get visible results. And because results matter so much, team member development tends to be the first thing cut from a budget when times are tight.
Be honest with me (and yourself) here. How often would you hand me a dollar if I could hand you ten dollars for every dollar you gave me? Would you even consider not handing me that dollar because you were too busy or something changed in the economy? If you made that same offer to me, I'd be giving you as many dollars as possible and as often as you'd take them! When considering a capital expense like a new piece of equipment or an investment in technical training that we can see our team members apply, we can picture the return, so there's rarely any discussion as to whether we have money budgeted for it. But since nearly any type of development for those perceived "soft" skills is rarely measured, we take a completely different approach-and that cycle continues to kill profitability.
With that in mind, it's just as simple as measuring the right things!
Facing Reality...
Cindy and I first heard Carly Fiorina speak as part of a Live2Lead event we hosted in late 2018; then, we were in a small group with her in Orlando, Florida, the following spring. I contacted her team after that event, which led to quite a bit of interaction with her over the next year. Carly was the last person Cindy and I met face-to-face with before the world began shutting down for Covid in March of 2020. One thing we've heard her emphasize over and over is that leaders must "take the time to understand exactly where they're starting from as well as to understand the possibilities of where they could be!" Each time, she shared the importance of developing a "realistic, clear-eyed, complete assessment of the current state" before we can ever set achievable goals for our future state.
Carly's words were geared at big-picture, strategic planning for organizations. Still, they apply at least as much to the issues killing profitability in many organizations today! All too often, having the wrong focus and struggling with the idea of investing in developing our team members' less technical skills boils down to not having that "realistic, clear-eyed, complete assessment" of our current state.
Ask nearly any executive their annual turnover ratio, and I expect you'll get a response fairly quickly. They may even be able to tell you how that relates to the national average in their respective industry. What I've rarely seen, though, is one of those executives who can go into detail on the total cost of turnover! I frequently cite a Gallup study that shared, "The U.S. Bureau of Labor Statistics has found that the U.S. voluntary turnover rate is 23.4% annually. It's generally estimated that replacing an employee costs a business one-half to five times that employee's annual salary. So, if 25% of a business's workforce leaves and the average pay is $35,000, it could cost a 100-person firm between $438,000 and $4 million a year to replace employees." And each time, I go on to challenge whoever I'm talking with to do the math, using the most conservative of those numbers for how that study applies to their organization.
As I discuss everything contributing to this massive hit on profitability through turnover alone, I see all kinds of reactions. What I have never seen is an executive who has been fully aware of the total profit that's being lost! Unfortunately, I could share similar examples tied to employee engagement, poor communication, and several other profitability killers that far too many organizations have no established baselines for measuring. When there's no clear-eyed assessment of the current state, it's nearly impossible to understand how some simple changes in behavior can impact our future state-and capture so much of that profit that's being lost! In many scenarios, organizations throw money at whatever appears to be causing the most pain at that moment without dialing in on the root cause, just like the example I gave before about a doctor writing a prescription for pain rather than identifying what was causing the pain...
We can change this and keep those profitability killers in check, but it will require that clear-eyed view of our total current costs AND a clear-eyed view of the real root causes that are driving our current issues!
[Editor1]Can you clarify?
