A Satisfied Employee Will Switch

A Quick Analysis of a Labour Market Survey Through a Deming Lens

IT’S THE END OF MARCH BREAK here in Toronto and I have some time to write about a recently released labour market study by recruiting firm Hays Canada that garnered a quick one-day hit in the news cycle here for a sensational claim that 71% of surveyed Canadian employees were ready to quit in the next twelve months. And of course, true-to-form for a study that is communicating to employers in the world of The Old Economics, this and many other survey results are presented in the language of two data point comparison theatre.

However, it was in reading the study’s results more closely that some aspects of the precarious instability of Canadian business and management was revealed, ie. the shot-through damage to organizations and people that Dr. Deming wrote about as the side-effects of the dominant theory of management we practise in North America.

So, let’s take a walk through the results and I’ll show you what I mean…

Pump Up the Volume

Our first stop in the survey is the Quiet Quitting Room. It is the source of the sensationalized figure which Hays is interpreting as the next evolution of the “quiet quitting” phenomena where employees begin to put in minimum efforts in response to lacklustre management—the epitome of a “meets specifications, I did my job” mindset. Now, however, it threatens to turn into action. Interestingly, Hays (correctly, in my opinion) connects this to a national decline in productivity for six consecutive quarters.

Dr. Deming would nod in agreement: none of this occurs in a vacuum. It would also show up in our balance of trade figures.

Two points of interest follow: First, Hays contextualizes the 71% figure against a prior high-water mark in 2022: classic two data point comparison theatre that I’ll re-contextualize below; second, note the connection Hays makes to knock-on effects with job vacancies. It’s almost as if they realize this is all a system…

To satisfy my own curiosity, I did some digging (and I mean digging) to find peers for the quiet quitting figure going back to 2017 shown in the PBC below. Analysis shows that Canadian employees have been quietly and consistently simmering about quitting for a while:

Deming Analysis: Prison Working as Designed

There is a reason Dr. Deming starts The New Economics off with a sharp bang in the Preface when he writes:

This book is for people who are living under the tyranny of the prevailing style of management. The huge long-range losses caused by this style of management have led us into decline. Most people imagine that the present style of management has always existed, and is a fixture. Actually, it is a modern invention—a prison created by the way in which people interact. This interaction afflicts all aspects of our lives—government, industry, education, healthcare.

— Preface. 3rd Ed. (p ix), 2nd Ed. (p. xv)

His intent was to rouse the reader from their slumber to realize there is a reason for why things seem off and that reason is found in all of us playing a game by faulty rules that in concert lead to decline and difficulty. What we see encapsulated in the quiet-quitting-turned-loud figures is the rules of the game working as designed, with the consequences accruing to a point where employees can no longer ignore them and want to escape the game for another.

Sadly, however, the joke is on them: this game is played by nearly the same rules everywhere. Deming outlined them as the Faulty Practices of Management, the Seven Deadly Diseases, and the Fourteen Points. Hence: Tyranny.

Employee Satisfaction

Our next stop on this tour is in the Employee Satisfaction department - this one may be disorienting at first, so be prepared for some cognitive dissonance. We’ll take this in stages, starting with the first four questions.

Tell me what you see:

Weird, right? 71% to 78% of Canadian employees surveyed are on a high simmer to leave their jobs, yet about half are satisfied with their job, their employer, their manager, and work/life balance? In other words, the predominant aspects of the system they work within. If we take the neutrals into account, this figure goes even higher. While it could be in the design of the survey, I think there's some nuance here that ties back to Deming.

Deming Analysis: A Satisfied Employee Will Switch

In the first chapter of The New Economics, Deming introduces us to his theory for transforming management by asking how we are doing at present (answer: not well). He goes on to challenge all the ways we think that we're doing well. One is in believing that customer satisfaction and loyalty is a useful way of measuring success. Not so:

Is it sufficient to have happy customers? loyal customers? The customer expects only what the producer has led him to expect. He is a rapid learner; compares one product with another, one source with another. We certainly do not wish to have an unhappy customer, but it will not suffice to have customers that are merely satisfied. A satisfied customer may switch. Why not? He might come out better for the switch.

It is good to have loyal customers, the customer that comes back, waits in line, and brings a friend with him. This could all be true, but it will not suffice to have loyal customers.

3rd Ed. (p. 6), 2nd Ed. (p. 8)

We can similarly ask: is it sufficient to have happy and loyal employees? The figures above, as relieving as they may seem to managers in a "hey, we're not doing so bad!" kind of way, are really ticking time bombs that cast the 71%-78% quit figure in a different light: "Conditions are satisfactory for biding our time." While the pastures the employee leaves for may be no better, there's a bigger cost for the employer in finding and training a replacement.

Hence: your job as a manager and leader, your aim, is to prevent employees from switching.

NB: Those who use CUSAT metrics to run their business by will want to ruminate on the implications of this.

It's in the next questions that we begin to see things break in some strange directions with employees largely dissatisfied with their salary, yet largely satisfied with their wellbeing and neutral on the question of benefits.

It's not surprising to see dissatisfaction with salary this high under current economic conditions-- if anything, this is an indication of employers trying to keep pace. However, it is really surprising to see overall wellbeing at 40% -- it's incongruent with what we've seen so far.

Employee Compensation

At this point in the tour, it makes sense to move on to the Compensation and Benefits department where it seems that employees and employers are in alignment that there is an amount for which the former will put up with the deficiencies in the latter, the question is just what that will be:

Deming Analysis: How Are The Raises Awarded?

From a Deming perspective, pay is an acknowledged motivator - to a point. As we learn in The Red Bead Experiment, people can only achieve as much as their system will permit, and once that threshold has been met, merit increases, bonuses, and the like awarded through annual appraisals begin to demotivate, especially among the losers who can't reconcile the disconnect between their performance and loss.

As we've covered in previous newsletters, this is because despite protests to the contrary, appraised increases are almost always subjective and never take into account the effect of the system on apparent performance.

Rx? Pay people fair market value for their work, get them what they need to do their jobs well, award everyone a share of profits scaled on tenure with the company. Make an open and transparent effort to improve the systems people work within.

See: my Oct. 23/23 newsletter, What Can We Do Instead of Appraising People? for more on this topic.

Employee Benefits

Final stop on our Hays Canada labour market survey tour is in Employee Benefits where we learn that employees (and some employers) are more Deming-aligned than they may realize. Where they diverge is in thinking these are what’s offered to make working in an unimproved system more palatable. The missing ingredient here is attention to joy in work and pride in workmanship.

Deming Analysis: Intrinsic Motivation, Joy in Work

In The New Economics, Deming makes several observations about the differences in what motivates people extrinsically (like money) and intrinsically (like personal drives and interests), and the need for managers and leaders to shift their thinking and behaviours toward the latter over the former. In the passage below Deming notes how he understood what was important to people beyond the paycheque - it’s almost as if he knew what the survey would turn up:

The most important act that a manager can take is to understand what is important to an individual. Everyone is different from everyone else. All motivated to a different degree extrinsically and intrinsically. This is why it is so vital that managers spend time to listen to an employee to understand whether he is looking for recognition by the company, or by his peers, time at work to publish, flexible working hours, time to take a university course. In this way, a manager can provide positive outcomes for his people. and may even move some people toward replacement of extrinsic motivation with intrinsic motivation.

Deming, The New Economics. 3rd Ed (p. 76), 2nd Ed (p. 112)

In Out of the Crisis, he provides fourteen ways to go about bringing this about, with the following being relevant standouts that correlate back to the six survey responses:

Point #6: Institute training on the job.

Point #7: Institute Leadership - the aim of supervision should be to help people to do a better job.

Point #12: Restore right to pride of workmanship for employees and management; this means, inter alia, abolishment of the annual merit rating and management by objective.

Point #13: Institute a vigorous program of education and self-improvement.

Out of the Crisis (pp. 22-23)

Joy in Work

A concept you will repeatedly come across in Deming’s later writing and lectures is that of “Joy in Work”, by which he meant the intrinsic rewards people derive from being part of something meaningful that respects their talents and abilities and is enjoyable to do. It travels closely with the right to pride in workmanship, and is often under threat from the prevailing methods of management:

Some extrinsic motivation helps to build self-esteem. But total submission to extrinsic motivation leads to destruction of the individual, as Figure 10 in Chapter 6 exhibits. Joy in learning is submerged in order to capture top grades. On the job, under the present system, joy in work, and innovation, become secondary to a good rating. Extrinsic motivation in the extreme crushes intrinsic motivation.

The New Economics. 3rd Ed. (p. 74), 2nd Ed. (p. 109)

In other words, when the work itself is rewarding to the individual and helps them serve a greater purpose that is recognized by peers, leadership, and customers, a virtuous cycle is created that is like lightning in a bottle. The challenge for leadership is to capture it by learning new theory to improve their systems for the benefit of employees, not just to throw money at ill-conceived HR programs. This has to be a whole-team effort.

Rx? Answers Won’t Be Found by Doubling-Down

Unsurprisingly, the Hays survey is short on advice to leadership on how to address the problems raised by the results. The best they can muster is for the organizations to reevaluate why employees are threatening to walk out the door due to “stagnant wages, job role dissatisfaction, and perceived benefits inadequacies”. Left out of their analysis is what is meant by “reevaluate", and maybe that’s because they don’t know, themselves.

What is certain is that more of the same theory of management won’t suffice, and I found ample evidence of this in the past surveys I was able to find: the same themes keep recurring.

What’s required is for management and leadership to learn some new theory, and I can’t think of a better example than Deming. Personally, I think this an imperative for restoring Canada’s competitive position in the world and reversing the decline in our productivity. It won’t come from government edicts, but from decisions individual leaders make to do something entirely different.

Reflection Questions

What do you think? Do the survey results we’ve reviewed line up with your current or prior roles? What about the disconnect between the percentage of respondents who indicate they want to quit, but are otherwise content and satisfied in their roles? Do you agree they are “satisfied for now”, or is there something else at play? What about the demand the survey respondents had for acknowledging intrinsic rewards? Do these sync with what you’ve observed in your organization? Are they currently implemented? Are they used sincerely or as a distraction from otherwise poor management? What efforts are being made to prevent people from quitting?

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