January 13, 2022
TPL Insights: Building Peak-Performance Cultures #102 – The Secret Ingredient of Thriving Companies: Human Magic, Part 1
With paraphrased content from Hubert Joly’s HBR Article The Secret Ingredient of Thriving Companies: Human Magic. 01.10.2022
There is no longer debate that companies must be about more than just maximizing profits. Yet while many companies are trying to articulate their purpose, much remains to be learned about how to create environments that can help turn intentions into reality. Nothing grows in bad soil, no matter how good the seeds and water are. Similarly, no company purpose, regardless of how well it is defined, can materialize unless the company environment is fertile. A fertile environment is one where employees have a spring in their steps in pursuit of a noble purpose, and where everyone can become the best, biggest, most beautiful version of themselves. It is the kind of environment that can unleash what Hubert Joly calls “human magic” and produces inordinately great results, like what Joly experienced at Best Buy as part of the company’s resurgence.
In 2019, for example, Joly received a firsthand testimonial of human magic at work when a senior executive at an event he attended shared with him how shocked he’d been after a recent visit to a Best Buy store. He’d found sales associates genuinely engaged and interested in helping him, he said, whereas a few years earlier, shopping at Best Buy left him frustrated, as no one in the stores seemed to either care or be able to provide a great service and experience. Had Best Buy changed its entire sales force? Or concocted a better system of incentives? No and no. What Joly had done was create an environment where employees were excited to express their untapped individual and collective potential. It’s in that environment that Best Buy’s purpose of improving lives through technology has been able to materialize and blossom.
The traditional corporate approach to motivating people has been a combination of carrots and sticks: a system of financial incentives designed to mobilize everyone around a plan designed by a few smart people at the top. The problem with this approach, as executive coaching pioneer and author Sir John Whitmore once pointed out, is that if you treat people like donkeys, they will perform like donkeys. Multiple studies have confirmed that, for any work involving cognitive or creative skills, financial rewards do not drive motivation and performance.
So, what does? In Joly’s experience, it takes several mutually reinforcing elements to create an environment that unleashes the kind of human magic necessary for a company purpose to take root and flourish. Use the following six ingredients to create your company’s unique recipe for human magic.
One of Joly’s memorable moments at Best Buy was an executive team dinner where participants shared what drove them personally. By reflecting on how this connected with their work, they realized that their individual aspirations to do something good in the world connected and converged, which helped them define the company purpose.
It’s the link to individual drive that gives a company purpose, soul, and legs. Encouraging every employee to reflect on and share what drives them, as well as articulating and constantly feeding the connection between that personal purpose and the company’s, is therefore one of the most crucial roles of any leader, from top executives to store managers.
When Joly was still CEO, he visited one of their stores near Boston, hoping to find out why it performed better than others. He found out that the manager asked every single person on his team, “What is your dream?” He’d then work with each of them to help achieve it, largely by linking their personal dream to the company’s purpose. That link made each employee feel personally invested in the company’s purpose and gave everyone the energy that, combined with their skills, drove much of the store’s superior performance.
Authentic human connections
When thinking about how crucial human connections are to human magic, Joly always remembers a young sales associate who recounted the district manager’s visit to the store where he worked. The manager, who had met him when he was hired, recognized him, and remembered his name. The young sales associate realized that he wasn’t just one of thousands of frontliners. He was an individual, who was known and who mattered. Years later, he still considered this one of his most meaningful experiences at Best Buy. While Joly’s compatriot René Descartes famously said, “I think therefore I am,” I believe that a more relevant formula today is, “I am seen, therefore I am.”
Authentic human connections start with treating and valuing everyone as an individual and making sure everyone feels they belong, which is the very heart of diversity and inclusion. It also means encouraging vulnerability. When Kamy Scarlett, then Best Buy’s head of human resources, shared on the company blog that she had battled with severe depression, her story not only resonated with many other people and unleashed a flood of support, but it also signaled to everyone that it was OK not to be OK.
The Covid-19 pandemic has highlighted how essential it is to see employees as individuals with unique talents, needs, and challenges. Attracting talent is far more about listening and understanding who people truly are and can be than about their qualifications and experience. While many companies are experiencing the impact of the Great Resignation, Corie Barry, Joly’s successor as CEO, recently pointed out that employee turnover at Best Buy is lower than it was pre-pandemic, which she attributes to employees feeling valued.
With so many people working outside the office and far from their colleagues, encouraging authentic human connections has become even more important — and challenging. A Microsoft survey has revealed that the move to remote work during the pandemic shrunk people’s networks within organizations, making companies more siloed. This is an invitation for leaders to learn to genuinely connect remotely. In these challenging times, Joly has seen leaders hold digital coffee breaks with colleagues and organize video meetings with no agenda with direct reports, just to connect. They also apply this to new employees to help onboard them and make them feel they belong.
No one will risk being themselves and being vulnerable unless they trust that they won’t be penalized or ridiculed for showing their true selves, speaking up, or making mistakes — what Amy Edmondson, Joly’s colleague at Harvard Business School, calls psychological safety. It’s a key ingredient to unleashing human magic. In fact, a study at Google revealed that psychological safety was the most important driver of team effectiveness. When Alan Mulally first became Ford’s CEO, no one on the senior operations team dared to admit that there was any problem in their respective area for fear of being fired — even though the car manufacturer was in trouble. When one person finally said during a meeting that he needed help solving a manufacturing issue, Mulally clapped, signaling that asking for help was not only safe but actually encouraged.
Edmondson’s work further highlights what it takes to create psychological safety, including: setting the stage (framing the work, emphasizing purpose), inviting participation (practicing inquiry, setting up structure and processes), and responding productively (expressing appreciation, destigmatizing failure, sanctioning conduct violations).
Based on our research at Allen Austin, each organization needs to define its own recipe for human magic, and there is no quick fix. Creating an environment in which human magic can flourish starts at the very top of the organization and requires a mindset to begin a journey that never ends. Today’s post includes roughly half of Hubert Joly’s article. We’ll finish the post next week with the balance of Joly’s commentary. Please give us a call if you’re looking for a thought partner.
Consultants in Retained Search & Leadership Advisory