On November 10, 2010, Cisco's stock price dropped 16%, erasing roughly $20 billion of market value in a matter of hours. Had something catastrophic happened? No. In fact, this stock market bellwether had just beat earnings estimates by 6%. The problem? They reported $0.42 for the quarter, just barely clearing the consensus estimates of $0.40.
Those who follow the market are familiar with the earnings game: deliver an unexpected stellar quarter, and a stock can gain hundreds of millions, if not billions, of market value. But match, or barely beat expectations, and the market yawns, or worse, dumps the stock, as it did with Cisco.
Those of us who are in the market understand and play by these rules. But how many of us are guilty of falling into the same "what have you done for me lately?" mentality with our employees? When what our colleagues and employees do every day becomes no more than a benchmark to beat (e.g. the $0.42 of earnings that Cisco did deliver), it can seem unimpressive. We may start to undervalue what makes our organization really hum. Yet if they stopped doing what they always do, our business would surely unravel.
Early on in my career, I had a boss who discounted my ability to connect with clients. My numbers for meetings and phone calls with clients was 40% higher than the firm average, but he brushed off these efforts because I clearly enjoyed that part of my job and it was easy for me. Later, a different boss recognized and encouraged my talent for reaching out to people, and his praise enabled me to further develop that skill. It had a far-reaching impact on my job performance at that company, and in everything I've done since. As my HBR colleague Peter Bregman wrote, "there is no more powerful way to acknowledge others, than to be thankful for them just as they are."
Maybe some bosses worry that praising people for the stuff they do every day will disincentivize them from going the extra mile. But in fact, gratitude can be a vital tie that binds in a workplace.
Consider the investment advisory group Cambridge Associates. As CEO Sandra Urie explained after a recent 100WHF event, "During the recent global financial crisis, we made the decision not to lay off any of our employees. We knew we had good people, and that the firm — and its clients — would need those people when the market rebounded." Not surprisingly, morale has stayed up -- and the Boston Globe has ranked Cambridge Associates as one of the best places to work in Massachusetts in each of the last three years. Even as firms up and down the Wall Street food chain were shuttering.
Also consider this story recently recounted by Bob Sutton: Ed Catmull and Alvy Ray Smith put their own jobs on the line rather than carry out layoffs at Pixar. That act, and the gratitude and trust it helped foster, has become foundational to the creative company culture of Pixar.
But enough talk.
Here's what I propose. And knowing that our "upside surprise" mentality will not be easily overturned, my proposal is modest. Every day for the next week, will you express appreciation to an employee or colleague for something they routinely do that makes your business run well? It can be via e-mail, over the phone, or even better, in person. Be specific. For example, as I take the challenge myself, I plan to say to one colleague, "I am continually impressed by how you can craft such a compelling investment thesis." And to another: "Every day, I notice how meticulously you attend to operations. Because more investment firms have gone belly-up because of back-office sloppiness than because of poor fund performance, this helps me sleep at night! Thank you."
I'll report back here about my experiences in the comments; I hope you will too. As Tom Peters wrote in a recent tweet, "It takes more time, but one at a time, 15-second praising is 10x more valuable than a group 'way to go, gang'."
For a public company to increase its market value, it needs to beat investor expectations by wide margins. That is fairly immutable, in my opinion. But how companies get there is not. Rather than only thanking your employees for improvements, highlight what they already do like clockwork. In a recent Wall Street Journal article headlined, "Thank You. No, Thank You," by Melinda Beck, she cites research by Dr. Jeffrey Froh who surveyed 1,035 high school students and found that the most grateful students had more friends and higher GPAs, while the most materialistic had lower grades, higher levels of envy and less satisfaction with life. There's an analog here for running a corporation. Those that focus only on more and more end up with less; those that are grateful for what their employees are doing today may actually end up with an upside earnings surprise.
Source: HBR
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