The Wrong Focus

Over the last several years, I’ve seen more and more references - through basically every media channel I pay any 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 manager 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 all the way back to a 1918 study by Charles Riborg Mann (published by the Carnegie Foundation at the time) stating that “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 you’ll find concurring with that century-old study, but 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 completely in the dark about what’s killing their profitability! Before we can effectively address our highest risk areas, we need to change our focus…

Think back to the SIS International Research study I referenced before stating 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.” I don’t believe for one minute that this falls solely on the shoulders of the folks in roles with leadership responsibility. I believe this downtime, and the communication issues contributing to it, is an issue that touches every team member at every level of our organizations!

This incorrect perception, the one 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 that we do indeed need. With that in mind, let’s look at 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 strong grasp on all the details of the department, we certainly can’t tell them that what they’re doing to their team members is unacceptable?

Just in case 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 ever sticking around long enough to get close to mastering the technical part of their respective jobs! And their behavior didn’t just push the up-n-comers away, it kept more than a few highly talented people from ever 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 but 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. Make no mistake, I’m not about to suggest that the technical skills in any given industry aren’t extremely important. We all know they are! I am, however, making a case for how that century old Carnegie Foundation study is as true now as it’s ever been and those skills responsible for 85% of an individual’s success also make a tremendous impact on the organizational culture as a whole.

The challenge almost always lies in which we develop. Having the wrong focus can keep us from addressing the profitability killers head-on but it can also keep us from truly capturing the profit we’re losing even when we do address it if we’re not able to measure it.

If a Tree Falls…?

I’ve often heard the deep 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 closes…

OK 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 having a tough conversation 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 because I’ve been there to see the tree falling and hear it hitting the ground. Truth be told, I think that’s often the reason business owners and executives are so willing to provide technical training for the people on their teams; they know exactly how they were able to apply the technical training they received as they grew in their own careers. 

In many cases though, these same folks struggle to invest in providing their team members with any training that’s perceived as soft because they’ve never been given a format for measuring whether or not it’s applied or how it yields results. Think about it… If 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) by using it, we’d know right away if they continue performing the task the same way they had prior to having that new equipment… We’d see their behavior had not changed!

The challenge I’ve seen with the majority of training that’s been labeled as leadership, communication, or any other “soft” skill is that it’s focused on ideas, which almost always make sense, but never tied back to specific behaviors that need to be applied in order to get visible results. And because results matter so much, this kind of team member development tends to be the very first thing cut from a budget when times are tight.

Be honest with me (and yourself) here… If I could hand you ten dollars for every one dollar you gave me, how often would you hand me a dollar? Would you even consider not handing me that dollar just because you were too busy or because something changed in the economy? If you made that same offer to me, I’d be handing you as many dollars as I could get my hands on and as often as you’d take them! When we’re considering a capital expense like a new piece of equipment or an investment into technical training that we can see our team members apply, we can picture the return so there’s rarely any discussion as to whether or not we have money budgeted for it. But since nearly any type of development for those perceived “soft” skills is hardly ever measured, we take a completely different approach - and that cycle continues to kill profitability!

With that in mind, it’s really 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, FL 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 actually the last person that 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, but they apply at least as much to the issues that are killing profitability in so many organizations today! All too often, having the wrong focus and struggling with the idea of investing in developing our team members’ skills that are less technical really boils down to not having that “realistic, clear-eyed, complete assessment” of our current state.

Ask nearly any executive what their annual turnover ratio is and I’d 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 is able to 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' 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, just using the most conservation of those numbers, for how that study applies to their organization.

As I discuss all the things that contribute 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 so many scenarios, organizations throw money at whatever appears to be causing the most pain in 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 absolutely 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 so we’ll pick up there soon!