Leadership IQ » Research

Are SMART Goals Dumb?

Mark Murphy, CEO of Leadership IQ — Mon, 05 Apr 2010 02:46:50 +0000

A new study from Leadership IQ reveals that SMART Goals can be pretty dumb.

We studied 4,182 workers from 397 organizations to see what kind of goal-setting processes actually help employees achieve great things. (After all, isn’t that the whole point of having goals?)

Click here to download the complete research study called “Are SMART Goals Dumb?”

Managers Are Ignoring Their Employees

Mark Murphy, CEO of Leadership IQ — Mon, 26 Oct 2009 13:16:51 +0000

News Release (WASHINGTON, D.C.) December 2, 2009 –- Note to managers: Employees want a lot more attention and feedback from you, even if it’s sometimes negative. According to a new study by Leadership IQ, 66% of employees say that they have too little interaction with their boss. And in an indication that this could be driven by the recession, this number is up from 53% in May, 2008, the last time this study was conducted.

But employees don’t just want warm-and-fuzzy interactions. While 67% of employees say they get too little positive feedback, 51% also say they get too little constructive criticism from their boss. Perhaps most troubling is that employees who said they didn’t get enough feedback were 43% less likely to recommend their company to others as a great organization to work for.

Leadership IQ, a leadership training and research company, compiled these results after surveying 3,611 workers from 291 business and healthcare organizations, predominantly in the United States and Canada. Employees were asked 21 questions about their relationship with their direct boss, their personal effectiveness, workforce issues and overall management effectiveness.

This study discovered that it’s not just the quantity of the feedback that is lacking. 53% of employees say that when their boss does praise excellent performance, the feedback does not provide enough useful information to help them repeat it. And 65% of employees say that when their boss criticizes poor performance, they don’t provide enough useful information to help employees correct the issue.

Mark Murphy, Chairman of Leadership IQ, says “Managers are neglecting one of the most fundamental aspects of their job; providing feedback. Especially in these stressful times, employees are desperate for feedback and interaction with their boss. And when they don’t get it, their job performance suffers. But perhaps worse than the lack of interaction, is the finding that when managers actually do give feedback, more than half of employees say that the feedback is useless. The whole point of feedback is to improve poor performance or reinforce great performance. And this study shows that’s just not happening.”

“We know that this has worsened, at least in part, because of the recession,” says Murphy. “When times get tough, managers become avoidant. Focusing on spreadsheets seems a lot easier than talking to employees. Not only might you get hit with questions you can’t answer, but when your own stress levels are through the roof, the last thing many managers want is to meet the emotional needs of their employees. But this is precisely the time that employees really need lots of feedback, and they need it to be very high quality.”

What can managers do to fix this? “First, focus on giving a lot more feedback,” recommends Murphy. “Managers should double their efforts to interact with, and provide feedback to, their employees. And second, managers really need to ensure that when they give feedback, it’s actually useful. If the feedback doesn’t help employees improve poor performance or repeat great performance, then it’s not worth the breath it took to utter it.”

About the Study
Leadership IQ surveyed 3,611 workers from 291 business and healthcare organizations, predominantly in the United States and Canada. Employees were asked 21 questions about their relationship with their direct boss, their personal effectiveness, workforce issues and overall management effectiveness. The surveys were delivered to Leadership IQ subscribers, with 93% of respondents submitting their responses electronically, 5% via paper and 2% over the phone. Leadership IQ statisticians reviewed the data for accuracy and consistency and analyzed the valid submissions.

About Leadership IQ
Leadership IQ, a research and training company, directs one of the largest leadership studies ever conducted. Our work has appeared in Fortune, Forbes, Business Week, CBS News, ABC’s 20/20, Fox Business News and many more. Our clients include Harvard Business School, Microsoft, IBM, MasterCard, AstraZeneca, MD Anderson Cancer Center, and thousands more. Leadership IQ is headquartered in Washington, DC with offices in Atlanta and Cincinnati.

Why CEOs Get Fired

Mark Murphy, CEO of Leadership IQ — Sat, 15 Aug 2009 02:33:00 +0000

News Release (WASHINGTON, D.C.) — It’s a commonly-held belief that CEOs get fired (or forced to resign or retire under pressure) because of “current financial performance.” But that’s wrong, according to a new study by LeadershipIQ.com. It found that 31% of CEOs get fired for mismanaging change, 28% for ignoring customers, 27% for tolerating low performers, 23% for denying reality and 22% for too much talk and not enough action.

The four-year study by LeadershipIQ.com, the world leader in online leadership seminars, compiled these results after interviewing 1,087 board members from 286 public, private, business and healthcare organizations that fired, or otherwise forced out, their chief executive.

“We get fixated on current financial performance,” explains Mark Murphy, CEO of Leadership IQ. “But if that was really the whole story, every CEO who ever missed a quarterly target or lost money would be immediately dismissed. And we know that plenty of world-class CEOs have seen their stock price dip, missed earnings forecasts, or even lost money for periods of time. So financial performance seems to be an inadequate explanation.

“A more accurate explanation for why CEO’s get fired,” he added, “is that the Board of Directors or shareholders have lost confidence in the CEO’s ability to generate sufficient financial returns in the future. And this study explains why Boards lose confidence in their CEOs.”

To elicit honest responses free from public relations spin or internal repercussions, Leadership IQ employed investigative journalism techniques and promised confidentiality for all respondents. The result is one of the most comprehensive “behind closed doors” study on CEO terminations ever conducted.

Upon completing the 1,087 interviews, Leadership IQ compiled the responses and distilled the most common answers to the open-ended question: “So why did the CEO REALLY get fired or forced out?” The following are the top five responses with the percentage of respondents who gave this response (percentages exceed 100% because some respondents gave more than one answer).

Mismanaging change (31%): Virtually every organization we interviewed indicated they were undergoing, or had recently undergone, a change initiative. However, half of board members said that their change initiative did not go well. Most pointed to a failure on the CEO’s part to properly motivate employees and managers, and more specifically, to adequately sell the need to change course. Another group identified the CEO’s inability to follow-through and solidify the gains as the cause of failure.

Ignoring customers (28%): Even with Sarbanes-Oxley, many board members have close ties with, or are themselves, customers of the organization. And they overwhelmingly said that if a CEO ignores or alienates customers, it not only undermines the business and revenue, but it significantly undermines board support. Board members said their test for whether the CEO was sufficiently engaged in the business was the extent to which they evidenced intimate knowledge of customers, customer needs and developing trends.

Tolerating low performers (27%): Board members shared that when CEOs allowed an obvious low performer to linger (without any improvement or discipline), it destroyed the CEO’s credibility and made it politically difficult for them to hold others accountable. Board members also complained of CEOs becoming too emotionally attached to a low performer(s) whether from loyalty, fear of being seen as too harsh, or unrealistic optimism. Significantly, Board members also suspected that, in numerous cases, CEOs covered for poor performers out of fear that they might divulge embarrassing or indicting information.

Denying reality (23%): Board members overwhelming said they could handle bad news and significant course corrections. What they couldn’t handle was a CEO who was in denial and wouldn’t recognize the bad news. Many board members felt that they were closer to the market and customers than the ousted CEO, and a significant percentage said the CEO was far too insulated from frontline realities. Board members also said they would rather have bad news and a plan to fix it, than they would no news or sugarcoated news.

Too much talk, not enough action (22%): We heard many comments about CEOs talking the talk, but being unable to walk the walk. Numerous board members complained that CEOs could talk endlessly about grand visions and new strategies, but would both neglect a tactical plan for the “who, what, when and where,” as well as evidence of its implementation. One board member commented that their former CEO “gives good meetings,” but little else.

“Here’s the message to CEOs,” explains Murphy. “If the board has confidence that you understand customers and the market, can manage change and take action, even if that means some tough choices, you will keep your job. The board members in our study understand that stock price, revenue, and profit are not going to grow exponentially every quarter. However, they do need confidence that they CEO is going to take the actions necessary to achieve growth over time. The top five issues identified in this study identify why CEO’s fail and the actions necessary to inspire Board confidence.”

Why New Hires Fail

Mark Murphy, CEO of Leadership IQ — Sat, 15 Aug 2009 02:31:49 +0000

News Release (WASHINGTON, D.C.) — According to a new study by Leadership IQ, 46% of newly-hired employees will fail within 18 months, while only 19% will achieve unequivocal success. But contrary to popular belief, technical skills are not the primary reason why new hires fail; instead, poor interpersonal skills dominate the list, flaws which many of their managers admit were overlooked during the interview process.

The study found that 26% of new hires fail because they can’t accept feedback, 23% because they’re unable to understand and manage emotions, 17% because they lack the necessary motivation to excel, 15% because they have the wrong temperament for the job, and only 11% because they lack the necessary technical skills.

The three-year study by Leadership IQ, a global leadership training and research company, compiled these results after studying 5,247 hiring managers from 312 public, private, business and healthcare organizations. Collectively these managers hired more than 20,000 employees during the study period.

While the failure rate for new hires is distressing, it should not be surprising: 82% of managers reported that in hindsight, their interview process with these employees elicited subtle clues that they would be headed for trouble. But during the interviews, managers were too focused on other issues, too pressed for time, or lacked confidence in their interviewing abilities to heed the warning signs.

“The typical interview process fixates on ensuring that new hires are technically competent,” explains Mark Murphy, CEO of Leadership IQ. “But coachability, emotional intelligence, motivation and temperament are much more predictive of a new hires’ success or failure. Do technical skills really matter if the employee isn’t open to improving, alienates their coworkers, lacks drive and has the wrong personality for the job?”

The study tracked the success and failure of new hires and interviewed managers about their hiring tactics and new hires’ performance, personality and potential. Upon completing the 5,247 interviews, Leadership IQ compiled, categorized and distilled the top five reasons why new hires failed (i.e., were terminated, left under pressure, received disciplinary action or significantly negative performance reviews). The following are the top areas of failure, matched with the percentage of respondents.

•   Coachability (26%): The ability to accept and implement feedback from bosses, colleagues, customers and others.
•   Emotional Intelligence (23%): The ability to understand and manage one’s own emotions, and accurately assess others’ emotions.
•   Motivation (17%): Sufficient drive to achieve one’s full potential and excel in the job.
•   Temperament (15%): Attitude and personality suited to the particular job and work environment.
•   Technical Competence (11%): Functional or technical skills required to do the job.

In addition, the study found no significant difference in failure rates across different interviewing approaches (e.g., behavioral, chronological, case study, etc.). However, 812 managers experienced significantly more hiring success than their peers. What differentiated their interviewing approach was their emphasis on interpersonal and motivational issues.

“Highly perceptive and psychologically-savvy interviewers can assess employees’ likely performance on all of these issues,” explains Murphy. “But the majority of managers lack both the training to accurately read and assess candidates, and the confidence to act even when their assessments are correct.”

“Hiring failures can be prevented,” he notes. “If managers focus more of their interviewing energy on candidates’ coachability, emotional intelligence, motivation and temperament, they will see vast improvements in their hiring success. Technical competence remains the most popular subject of interviews because it’s easy to assess. But while technical competence is easy to assess, it’s a lousy predictor of whether a newly-hired employee will succeed or fail.”

“The financial cost of hiring failures, coupled with the opportunity cost of not hiring high performers, can be millions of dollars, even for small companies,” adds Murphy. “And the human cost can be even worse. If a hospital hires a nurse that won’t accept feedback and alienates pharmacists and physicians, the result could be a medical error. This one bad hiring decision could cost a patient their life.”

Nobody Likes Low Performers

Mark Murphy, CEO of Leadership IQ — Sat, 15 Aug 2009 02:30:51 +0000

News Release (WASHINGTON, D.C.) — According to a new study by Leadership IQ, 87% of employees say that working with a low performer has made them want to change jobs. 93% of employees say that working with a low performer has decreased their productivity. But only 14% of senior executives say their company effectively manages low performers. And only 17% of middle managers say they feel comfortable improving or removing low performers.

Leadership IQ, a leadership training and research company, compiled these results after conducting employee surveys with 70,305 employees, managers and executives from 116 public, private, business and healthcare organizations. Leadership IQ’s employee survey asks 45 questions about such workforce issues as employee loyalty, corporate strategy, and leadership effectiveness.

What makes someone a low performer? In follow-up questionnaires, 6,241 employees were asked to list five characteristics that defined a low performer. The top five responses were as follows, in order of importance:

•   Negative attitude
•   Stirs-up trouble
•   Blames others
•   Lacks initiative
•   Incompetence

“Low performers can feel like emotional vampires, sucking the energy out of everyone around them,” explains Mark Murphy, CEO of Leadership IQ. “It’s one of the great management misnomers that low performers’ major problem is technical incompetence. While some lack skills, most low performers are so identified because of a difficult attitude.”

“While it may strike some leaders as paradoxical, leaders may have to remove their worst employees in order to keep their best employees,” he notes. “When the overwhelming majority of employees say that working with low performers makes them want to quit their jobs, leaders should accept this as a ‘wake-up call’ and tackle this issue immediately. Because if low performers start dictating the company’s culture, productivity, quality and service will all decline precipitously, and high performers will avoid your company like the plague.”

“Given that only 14% of senior executives think their company addresses this issue effectively, there’s tremendous competitive advantage for companies that can turn this around” adds Murphy. “But companies need to begin by investing much more time and energy training their managers how to solve this problem if they hope to be successful.”

“Trying to run an organization without tackling the low performer problem is akin to building a house with shoddy materials. No matter how skilled the labor, the structure is going to collapse.”

High Performers Ready to Quit

Mark Murphy, CEO of Leadership IQ — Sat, 15 Aug 2009 02:29:42 +0000

News Release (WASHINGTON, D.C.) — According to a new study by Leadership IQ, 47% of high performers are actively looking for other jobs (they’re posting and submitting resumes, and even going on interviews).

While it’s terrible that almost half of high performers are thinking about quitting, what’s perhaps even worse is that low performers want to stay. Only 18% of low performing employees are actively seeking other jobs, and 25% of middle performers are actively looking around.

Leadership IQ surveyed 16,237 employees on a range of workforce and retention issues, and then divided them into high, middle and low performer categories based on their annual performance appraisal scores. There were 3,896 employees identified as high performers, 8,607 identified as middle performers, and 3,734 low performers.

“High performers keep companies in business,” says Mark Murphy, CEO of Leadership IQ, “so every company is at risk if these people leave. If you lose some low performers, you might actually be better off. But when your best people quit, revenue drops, quality suffers, and snafus increase. Even large companies can take a big hit with the departure of just a few key employees.”

Murphy continues “The worst part of this is that we typically cause our high performers to quit by how we treat them. Frankly, we treat our high performers worse than any other employee. When a manager has a tough project upon which the whole company depends, to whom do they turn? Who gets the late hours and the stress? It’s not the low performers, because managers want the project done right. Instead managers turn to their handful of high performers. Over and over we ask our high performers to go above and beyond, making their jobs tough and burning them out at a terrible pace. Meanwhile, low performers often get easier jobs because their bosses dread dealing with them and may avoid them altogether.”

Recession Rumination Kills Productivity

Mark Murphy, CEO of Leadership IQ — Mon, 06 Jul 2009 16:53:13 +0000

News Release (WASHINGTON, D.C.) — According to a new study by Leadership IQ, workers waste 25% of their workday, and that number is up 44% over last year. The study also discovered that the biggest reason for this increase in wasted time can be traced to “Recession Rumination.”

Leadership IQ conducts an annual survey of workplace slacking, and 6,447 workers completed both the February 2007 and February 2008 surveys. In February 2007 these workers reported wasting 1.6 hours per an average 9.1 hour workday. But in February 2008, these same workers reported wasting 2.3 hours per an average 9.2 hour workday, an increase of 44%.

The biggest time wasters for respondents? In February 2007, the Top 5 timewasters were the typical culprits…

Surfing the Internet for Shopping (17% of respondents)
Surfing the Internet for Entertainment (15%)
Surfing the Internet for Personal E-Mail (10%)
Chatting with Co-Workers (9%)
Daydreaming about Positive Topics (9%)

But in February 2008, the Top 5 timewasters were quite different and clearly influenced by fears about a potential recession…

Surfing the Internet for Career Improvement (21% of respondents)
Surfing the Internet for Personal Finance (17%)
Daydreaming about Negative Topics (12%)
Chatting with Co-Workers (9%)
Surfing the Internet for Entertainment (7%)

Mark Murphy, Chairman of Leadership IQ, has a name for this phenomenon. “We call this Recession Rumination,” he says. “In times of great anxiety, like an impending recession, people can get stuck in a self-reinforcing cycle where they ruminate about their anxiety which, ironically, only increases their anxiety. And of course, this vicious cycle absolutely destroys their productivity.”

Fortunately, there is a cure for Recession Rumination. Survey respondents answered questions about their workplace, including their manager’s effectiveness, workload, and job satisfaction. Workers that rated their managers as highly effective reported significantly lower amounts of wasted time than others. The survey questions that most significantly predicted managerial effectiveness included…

If I shared my work problems with my direct boss, I know that he/she would respond constructively.
I know exactly what actions I should undertake to fulfill the organization’s strategy & vision.
My direct boss recognizes my accomplishments.
My direct boss pushes me to expand my skills and knowledge.

“Effective managers can cure Recession Rumination,” notes Murphy. “Managers that set clear expectations, respond constructively to problems, recognize accomplishments and stimulate their people to grow, will stave off wasted time. These effective managers keep people at the optimal levels of engagement and challenge. They push hard enough to keep people’s minds occupied, but not so hard that people become demoralized and burned out.”

Finally, Recession Rumination is not affecting all groups equally. Workers between the ages of 41-50 experienced the most significant time wasting increase (62%) over the past year, even though their overall wasted time was lower than some other groups (2.1 hours per day).

About the survey
Leadership IQ surveyed over 9,000 employees across all job levels during February of 2007. Then in February of 2008, Leadership IQ approached these same employees and again asked for their participation in the survey. In total, 6,447 employees completed both the 2007 and 2008 surveys. The surveys were delivered to Leadership IQ subscribers and their responses were submitted electronically. Leadership IQ statisticians reviewed the data for accuracy and consistency and analyzed the valid submissions.

About Leadership IQ
Leadership IQ trains companies how to motivate their workforce. Leadership IQ directs one of the largest leadership studies ever conducted, and our work has appeared in Fortune, Forbes, Business Week, the Harvard Management Update, CBS News, ABC’s 20/20, and many more. We’ve trained tens of thousands of leaders from across the Fortune 500, healthcare, midsize-large companies, and government organizations. Leadership IQ is headquartered in Washington, DC.