Navigating Pandemic, Employee Engagement Crisis Requires New Approach to Leadership

The pandemic has placed a big spotlight on the quality of leadership in our organizations. According to a CNN poll released last week, 54% of Americans continue to say the US government is doing a poor job preventing the spread of Covid-19. This crisis of confidence isn't limited to government - a Gallup poll in March revealed that less than half of US employees (45%) believe that their organization cares about their overall well-being. This absence of trust should be worrisome - organizations will need strong leadership to navigate this crisis. Those that have effective leaders are likely to emerge from the pandemic in a better competitive position.

 Less than half of US employees (45%) believe that their organization cares about their overall well-being.

McKinsey & Co. describes the pandemic as a "landscape scale" crisis, "an unexpected event or sequence of events of enormous scale and overwhelming speed, resulting in a high degree of uncertainty that gives rise to disorientation, a feeling of lost control, and strong emotional disturbance." Under these circumstances, McKinsey argues, traditional leadership will not suffice because there aren't pre-determined plans to follow. Instead, organizations need leaders that can build trust with employees in order to improvise and adapt to changing market conditions.

 Unfortunately this task is more difficult since employees were already mostly disengaged prior to the pandemic crisis. Gallup's most recent "State of the American Workplace" found that only one-third of employees are actively engaged, meaning they love their work and are actively providing value to the company. The remainder are actively disengaged (16%), meaning they are miserable at work and destroying what engaged employees are building; or they are not engaged (51%), meaning they're just there.

Gallup has dubbed this an "employee engagement crisis." They estimate that actively disengaged employees cost the U.S. up to $600 billion in lost productivity. Perhaps worse, this isn't a new phenomenon. Gallup has been sounding the alarm for almost ten years as employee engagement has barely budged during that time period.

 While there are a number of contributors, the single-most important factor is the quality of leadership which accounts for 70% of the variability in employee engagement scores. Unfortunately, Gallup found that organizations fail to choose effective leaders 82% of the time. They did not choose individuals for leadership with the unique combination of talents necessary to drive excellence from teams that significantly contribute to company performance. 

Quality of leadership... accounts for 70% of the variability in employee engagement scores. Unfortunately... organizations fail to choose effective leaders 82% of the time.

Part of the challenge is that the talent to lead people is rare and innate - only 10% of the population have all of the capabilities to be great leaders. These are the individuals who know how to build trusting relationships, motivate each person on their team, create accountability, overcome adversity and make decisions based on productivity — not politics. Gallup finds that another 20% of the populace have some of these traits which can be further developed with coaching.

 The biggest reason organizations fail to choose the right leaders, however, is they undervalue how important these "soft" leadership qualities are and instead over-index on technical capabilities or tenure. The talent to be a great software developer, salesperson or accountant is not the same talent necessary to build trust and drive performance from others. As Stephen Covey points out, the soft skill to lead "isn't a nice-to-have, it’s a must-have. Without it, every part of your organization can fall, literally, into disrepair."

The talent to be a great software developer, salesperson or accountant is not the same talent necessary to build trust and drive performance from others.

The current pandemic puts the question of whether organizations have the right leaders into sharp relief. Companies that fail to recognize the distinct qualities of leaders are likely to overemphasize technical skills, experience or industry expertise and placing employee engagement at risk at a time when most companies can ill afford it. Leaders who lack the talent to be effective are likely to be disengaged themselves which has a cascade effect on their teams.

 There are good reasons for organizations - and the nation - to improve employee engagement, especially now. Gallup has found that employees who are engaged have greater productivity and lower turnover. They feel more connection to their organization, making them more effective brand ambassadors, build stronger relationships with customers, and help increase sales and profitability. The Great Place to Work Institute, which produces the “100 Best Companies to Work For” in partnership with Fortune found that these companies - which have highly engaged workforces - beat “the average annualized returns of the S&P 500 by a factor of three.”

 A recent article from Boston Consulting Group points out that this moment is one of the biggest opportunities for culture change for large organizations. Organizations that are able to seize this opportunity to infuse new leadership talent, build a more engaged workforce and drive greater innovation will reap outsized rewards. BCG’s list of the 50 most innovative companies for 2007, all of which made significant investments in innovation despite the slowdown, greatly outperformed the market as the economy recovered, delivering total shareholder returns that were 4% higher per year than the market from 2007 to 2012.

 Finally, it bears repeating that only 33% of American workers are engaged. If companies make the leadership investment to double that number, there's opportunity for the American workforce at-large to reverse the decline in productivity - not just from the pandemic, but the broader trend that has been going on for some time. After all, a stronger workforce will result in stronger companies. Those companies in turn can expand hire more workers and increase wages - helping to strengthen the economy.

 It's perhaps an obvious statement that we need strong leaders to help navigate the pandemic crisis and beyond. We can't get there by assuming that the old model of selecting leaders on the basis of performance and tenure will produce results - the evidence suggests that undervaluing leadership as a talent has led instead to years of stagnation and inefficiency. It's effective leaders - ones who can build trust, communicate vision and direction with clarity, adapt and overcome obstacles and coach performance from employees that will lead us through the pandemic and on to greater productivity and innovation.