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Conversation failures are killing employee engagement and bottom lines

Cnversation failures in the workplace are both rampant and costly. How costly? Forty-three percent of respondents estimate they waste two weeks or more ruminating about an unresolved problem at work. And an astounding one in three employees estimate their inability to speak up in a crucial moment has cost their organization at least $25,000. 

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A new survey by Crucial Learning, a learning company with courses in communication, performance, and leadership, shows that conversation failures in the workplace are both rampant and costly. How costly? Forty-three percent of respondents estimate they waste two weeks or more ruminating about an unresolved problem at work. And an astounding one in three employees estimate their inability to speak up in a crucial moment has cost their organization at least $25,000. 

In addition to astronomical price tags on conversation failures, the December 2021 study of 1,100 people by Crucial Learning found that we are resorting to silence in alarming moments. Participants said the costliest conversation they avoid is when someone shows disrespect for another in the workplace—a conversation that didn’t even rank among the costliest conversations in a similar survey conducted in 2016. While this shift may indicate more awareness of workplace inequality, it also shows awareness doesn’t lead to action. Even when people observe harmful disrespect, they fail to speak up.

According to the study, 29 percent more participants said their workplace cultures were more supportive of people speaking up now than they were in 2016. And yet instead of speaking up, we resort to a host of harmful, resource-sapping behaviors including:

–  Complaining to others (77 percent)
–  Doing extra or unnecessary work (63 percent)
–  Ruminating about the problem (57 percent)
–  Getting angry (49 percent)

As a result, 43 percent of respondents say their silence has cost the organization more than $10,000, while 30 percent tabbed the amount at more than $25,000 and a troubling 19 percent admitted their reluctance cost at least $50,000.

The top five Crucial Conversations people avoid include:

  • When someone is not pulling his or her weight (68 percent)
  • When someone performs below expectations (66 percent)
  • When someone shows disrespect towards another in the workplace (57 percent – also identified as the number one most costly conversation)
  • When someone doesn’t follow proper processes or protocol (53 percent)
  • When there is confusion on who owns a decision (53 percent)

Beyond the draw-dropping dollar figures, the secondary costs are also alarming. Respondents report that these conversation failures had damaging effects to employee morale, relationships, corporate culture and project timelines and budgets.

Joseph Grenny, coauthor of the new third edition of the national bestseller Crucial Conversations, says the pandemic and its revolutionary effects have amplified the importance of effective communication. Less than half (45 percent) of respondents say they or others are moderately skilled at holding these work-related Crucial Conversations and an abysmal 9 percent say they are very or extremely skilled at holding them.

As employee anxieties have grown and led to the Great Resignation and extreme burnout, organizations must invest in their employees’ interpersonal skills to build strong relationships and secure bottom line results.

“One of the costliest barriers to organizational performance is unresolved Crucial Conversations,” Grenny said. “If you can’t communicate with your leaders and colleagues, you can’t develop the relationships that are necessary to combat the hard times we’re seeing today. The ability to engage in dialogue is key to successfully leading through and beyond the pandemic.”

Grenny advises organizations interested in curbing the costs of failed conversations to train their employees how to voice their concerns quickly and effectively, including these four tips:

  • Reverse your thinking. Most of us decide whether or not to speak up by considering the risks of doing so. Those who are best at Crucial Conversations don’t think first about the risks of speaking up, they think first about the risks of not speaking up.
  • Change your emotions. The reason our Crucial Conversations go poorly is because we are irritated, angry, or disgusted. Others react to these emotions more than our words. So, before opening your mouth, open your mind. Try to see others as reasonable, rational, and decent human beings—a practice that softens strong emotions and ensures you come across more agreeably.
  • Make others feel safe. The unskilled conversationalists believe certain topics are destined to make others defensive. Skilled realize people don’t become defensive until they feel unsafe. Start a high-stakes conversation by assuring the other person of your positive intentions and your respect for them. When others feel respected and trust your motives, they feel safe, let their guard down and begin to listen – even if the topic is unpleasant.
  • Invite dialogue. After you create an environment of safety, express your concerns, and then invite dialogue. Encourage the other person to disagree with you. Those who are best at Crucial Conversations don’t just come to make their point; they come to learn.

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E-commerce retailers can save money by considering pick failures at stores

While warehouses are built for efficiency in picking, packing, and shipping items, pick failures are much higher in physical stores that are not designed for these purposes for several reasons (e.g., customers moving inventory without tracking, delivery receiving and recording errors, issues with labeling, theft).

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The share of e-commerce retail sales has grown steadily over the last decade. This trend has been driven by retailers with traditional brick-and-mortar stores adopting online channels to connect to customers. In a new study, researchers explored the world of omnichannel retailing — the merging of in-store and online channels in which customers can select from a combination of online and physical channels to place and receive orders.

The study examined top U.S. retailers’ use of omnichannel ship-from-store programs in which retailers use store inventory to deliver orders to homes instead of using a dedicated warehouse or fulfillment center. For the first time, the study incorporated the possibility of fulfillment attempts at stores to fail and identified how such retailers can adopt a policy that leads to significant savings when these effects are considered.

Conducted by researchers at Carnegie Mellon University (CMU) and Onera, Inc., the study is published in Manufacturing & Service Operations Management.

“The rising trend in e-commerce has been accelerated by the COVID-19 pandemic, with online sales jumping from 11.8 percent in the first quarter of 2020 to 16.1 percent in the second quarter,” says Sagnik Das, a former Ph.D. Candidate in Operations Research at CMU’s Tepper School of Business, who led the study. “In omnichannel fulfillment, retailers attempt to minimize costs while fulfilling orders within acceptable time periods.”

Das and his colleagues focused on single-item orders. Typically, online orders are sent to a favorable sequence of locations to be filled in order. Failed trials (i.e., when orders are not filled) are sent to stores later in the order for further attempts until the process reaches a time limit.

“The problem of multistage order fulfillment is an interplay of pick failure — that is, the likelihood that orders will not be filled due to unavailability — at the stores where they may be shipped from, walk-in demand at the stores, and associated shipping costs,” explains R. Ravi, Andris A. Zoltners Professor of Business, and of Operations Research and Computer Science, at CMU’s Tepper School of Business, who co-authored the study.

As stores become an integral part of retailers’ fulfillment strategy in omnichannel ship-from-store programs, the high rate of pick failures at stores becomes a considerable factor in fulfillment costs. While warehouses are built for efficiency in picking, packing, and shipping items, pick failures are much higher in physical stores that are not designed for these purposes for several reasons (e.g., customers moving inventory without tracking, delivery receiving and recording errors, issues with labeling, theft).

Researchers modeled the problem as one of sequencing the stores from which an attempt is made to pick based on anticipated pick failure and ship an order in the most cost-effective way over several stages. To identify the best solution to the fulfillment problem, they modeled pick-failure probabilities as a function of current inventory positions and the result of other online order fulfillment trials.

The study used data on actual orders from several top U.S. retailers that worked with an e-commerce solutions provider to optimize their fulfillment strategies. Researchers proposed three order fulfillment models: one in which physical and online demand were both sparse, another in which physical demand was dense, and another in which both demands were dense. They extended the third model to also incorporate order acceptance decisions along with sequencing the stores from where they are filled once accepted.

By enabling retailers to incorporate the probability of pick failure in their order management systems for ship-from-store programs, the study’s proposed online order-acceptance policies saved omnichannel retailers as much as 22 percent. Specifically, they identified the optimal sequence of stores to try the accepted orders to minimize costs; one of the policies also uses these downstream costs to determine when to shut off the online channel for selling certain items based on current inventory availability levels.

“Our study demonstrates that modeling pick failures along with their interaction with selecting and shipping costs is an important component in optimizing ship-from-store fulfillment costs for large retailers,” says Srinath Sridhar, Chief Technology Officer at Onera, Inc., who co-authored the study.

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Choosing a lucky CEO means bad luck for the hiring company

Sometimes CEOs happen to attain outstanding performance thanks to events beyond their control. Firms that subsequently hire them pay them more and experience declining results, according to a study.

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Seneca, the Roman stoic philosopher, wrote that “luck does not exist.” Modern managerial studies take the liberty of disagreeing. Luck exists in the form of events that are beyond the control of CEOs and firms alike. Movements in oil prices and the business cycle (e.g., variations in GDP growth, and employment rate) that boost the market value of firms are a couple of examples.

A recent study by Mario Daniele Amore (Bocconi University, Milan) and Sebastian Schwenen (Technical University of Munich) found that choosing a lucky CEO means bad luck for the hiring company.

Good luck allows CEOs to “shine” in the labor market, making them more likely to leave their firm. “The hiring companies, though, are not perfectly able to separate out luck from task performance in their candidate pool,” Prof. Amore explained. “Therefore, lucky CEOs are likely to possess greater bargaining power vis-a-vis new firms’ shareholders, and thus gain benefits in the form of higher compensation and more attractive job assignments.”

Using a sample of S&P 1,500 US firms from 1992 to 2018, the authors found a positive association between a CEO’s luck at the departing firm and the level of pay at the new firm. Specifically, this larger pay is mostly made of non-cash compensation items like stocks awards and options, rather than salary and bonus. More interestingly, lucky CEOs were observed to move more swiftly to new firms and to have a shorter time-spell between CEO jobs.

Authors also observed that the increase in lucky CEOs’ bargaining power especially occurs in less competitive industries.

Unfortunately, incoming CEOs’ luck is also associated with a subsequent decline in the performance of the hiring firms. In particular, the performance of firms that hired low-luck CEOs gradually improves, whereas the performance of firms that hired high-luck CEOs experiences a moderate decline.

What is worse, luck may induce an attribution bias: high-luck CEOs, or the boards that hire them, misattribute luck-driven performance to observed individual actions, with the consequence that lucky CEOs will likely implement at the hiring firm the same corporate investment policies they implemented in their former companies, irrespective of their real effectiveness.

“Luck increases the attractiveness of CEOs in the managerial labor market of less competitive industries, bringing about higher bargaining power of lucky CEOs to transit swiftly and earn more. Nevertheless, appointing a lucky CEO is associated with poorer company performance and slower growth,” Professor Amore concluded.

Mario Daniele Amore and Sebastian Schwenen wrote “Hiring Lucky CEOs”, which was published in The Journal of Law, Economics, and Organization.

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Purpose beyond profit: How brands can benefit consumer well-being

I a brand adequately addresses moderating factors, the potential benefits to consumers and marketers are considerable. These factors include consumer trust, brand authenticity, brand credibility, commitment to purpose, consumer-value congruence, and brand-purpose proximity.

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Researchers from The Wharton School of the University of Pennsylvania and the Owen Graduate School of Management at Vanderbilt University published a new paper in the Journal of Consumer Psychology that offers fresh insights into “brand purpose” and its potential benefits to consumers.

The article, “Conceptualizing brand purpose and considering its implications for consumer eudaimonic well-being,” is authored by Patti Williams, Jennifer Edson Escalas, and Andrew Morningstar.

In response to industry reports, apparent consumer demand, and high-profile calls from top executives including BlackRock Chairman and CEO Larry Fink, brands have publicly begun pursuing purpose beyond profit. Brands in a wide variety of categories have sought to define, articulate, communicate, and act according to their “brand purpose.” 

The authors define brand purpose as a brand’s long-term aim central to “identity, meaning structure and strategy” that leads to productive engagement with some aspect of the world beyond profit.  

This research team explores the different types of well-being consumers may experience by engaging with brands they believe reflect their own values. Specifically, they focus on eudaimonia, a feeling of fulfillment resulting from living a meaningful life, contributing meaningfully to society, and acting in alignment with moral virtues.

Their framework cites five mediating factors that affect the relationship between brand purpose and consumer well-being: consumer purpose, meaning and significance, self-acceptance/achievement of true self, positive relationships, and other-praising emotions.  

The article suggests that, if a brand adequately addresses moderating factors, the potential benefits to consumers and marketers are considerable. These factors include consumer trust, brand authenticity, brand credibility, commitment to purpose, consumer-value congruence, and brand-purpose proximity.

While consumers may gain a vital sense of well-being; marketers, may secure positive brand judgements, brand loyalty, and brand evangelism.

“The ultimate goal of our review,” the authors write, “is to guide future consumer psychology research into brand purpose, a concept that we believe may have a transformative impact on business, consumers, and society.

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