The Big 3 of Leadership: How to Develop Engaged Employees and Better Business Results

Aydin Mirzaee (Fellow.app)  00:37

Russ, welcome back to the show.

Russ Laraway (Author)  03:02

Yeah, thank you so much for having me back gate. And I’m pretty stoked to be here.

Aydin Mirzaee (Fellow.app)  03:06

Because I always just say, Russ, welcome to the show is what I would but then I remembered, of course, you are actually the first guest that we’ve had. That has been here like a second time. So you’re the first returning guest, which I would say is awesome. We’re very excited to have you back on.

Russ Laraway (Author)  03:23

Yeah, I’m a pioneer. I’m a pioneer. What can we say? Yeah.

Aydin Mirzaee (Fellow.app)  03:26

So you know, for everybody out there who hasn’t listened to our first episode. You were on episode 45. You know, prior to this. And you know, one of the things that I really remember very well as like you told us this great story of how you were interviewing. And you know, Kim Scott was kind of like interviewing you. And you told us about, like how the interview went and how you really like I think like the biggest takeaway I had from our last conversation was just like, welcoming dissent. Like that was like a core tenet of like what we talked about last time. And also just like, you know, the power of feedback and all the things surrounding that. And now you’re back today, and I’m very excited. You kind of hinted at it the last time we were chatting, but you’ve written a new book, it’s called when they win, you win. So very excited about this. Tell us why did you write this book in the first place?

Russ Laraway (Author)  04:21

Yeah, it’s when they when you win. And then the subtitle is being a great manager is simpler than you think. And I wrote the book, actually, because I believe deeply that people deserve to be led well, and there’s a very large amount of evidence that strongly suggests that managers are actually failing. And it’s unclear to me anyone’s helping. And so like, sort of make that point. I have this fantasy. It’s called My lunch line fantasy where I get to go and ask industry luminaries, people who write about management stuff or people who talk about it, maybe even I’d grab you and I say You all each down individually, right? And I got to ask you, so there’s this mountain of content aimed at helping managers be better at their jobs? How does your stuff you know, Kim or your stuff, Simon or your stuff, Aiden, how does your stuff fit in, right? And my fantasy goes like this, you would each describe something like a manager’s going through a buffet style lunch line, you know, ala carte, they get to one section, they pull something off the Simon section, put it on their tray, pull some off Kim section, put on their tray, Liz section, and off they go. And they’ve got this nutritious, you know, set of things to use, that they can then go and solve all their leadership problems, right. And they just pick the right food item and and they’re good to go. I think that’s what the folks who put out the content believe people like me, I’ve been a part of this system for decades. And the reality is, I think for the average manager, it doesn’t feel at all like a leisurely trip through the lunch line. Instead, it feels like you’re hogtied in the center of a middle school cafeteria while there’s a multi 1000 person FOOD FIGHT transpiring. Right. So broccoli bounces off your head or mashed potato sliding down your cheek. You know, because there’s so much out there, it doesn’t hang together, it’s pretty hard to identify what should I really pay attention to? And what shouldn’t I. And so to that end date, and like what I discovered and writing the book, and the book ultimately is not about my opinion, we don’t need another person’s opinion about what it takes to be a great manager. In the end, you think about it good leadership should only really it produces two things, it should produce happier employees and excellent results. There’s no other thing that leadership or management, I don’t care about the distinction between the two, by the way, there’s no other thing it should do. That’s it. And so ultimately, I think what’s different about the book is really three things. One is the leadership standard put forth works. And what I mean by works is that it measurably and predictably, delivers more engaged employees are happier people, and better results. It’s simple. So people, I think when we get through a little bit of the content here, I think folks might be surprised at how simple it is simple but not easy. And that’s a feature, not a bug. And then it’s coherent and complete, I think if you were to sort of practice this set of behaviors, it was ultimately what it boils down to, I don’t think you need a ton more gets 85 90% of the way there. And you’ll be a pretty darn good effective manager just by doing the things I laid out there. So that’s why I wrote I wrote a simple book, that where the standard is held to measurable account for both happier employees, and better results, because people just want to do great work, and be totally psyched while doing it. That’s all anybody wants at work. And so the person most likely to create or destroy those circumstances is the manager. And it’s the manager by a mile.

Aydin Mirzaee (Fellow.app)  07:47

It is super interesting, right? Because there is I mean, the buffet analogy that you were saying was very interesting to me, because it’s so true. There’s so much content out there. And like every year, there’s more and more and like not just books, audio books, podcasts like what we’re doing here. But I guess one of the questions that comes to mind is like, Why do you think there is so much content to begin with? Like, why do people feel that, in general, like there’s more of a need for them to like, contribute more content? And I think like, what you’re trying to do is you’re trying to say like, Hey, there’s a bunch of stuff. But like these are the core tenets. And if you follow this simplistic approach, it’s going to get you 85% of the way there. Yeah, but

Russ Laraway (Author)  08:29

the reason people put out content is because there’s demand for content, you know, and so this is the paradox managers are not all of us. But many of us are looking for tips and hints and tricks to become good at this job. You know, many of us are self aware that we don’t have all the answers. And we want some of them. Many of us are not self aware, and aren’t looking. But I think the simplest answer your questions, there’s demand, there’s demand for this content, and therefore people will supply it. Here’s the paradox, though, despite some amount of demand for content on how to be a better manager, and despite the near limitless supply of content, managers are actually getting measurably worse. It’s almost like the more content that comes out. The worst managers become on average, maybe the top 5% are getting great. They’re just getting great. But broadly acRuss the world, the more content that comes out, the worst managers get. It’s almost incomprehensible paradox, but it’s what’s happening.

Aydin Mirzaee (Fellow.app)  09:25

That’s an interesting one. And I don’t know few references in the book, but this concept of managers actually getting worse over the course of time. How is that measured? And like, who did the studies behind that? Yeah,

Russ Laraway (Author)  09:37

well, it boils down to there’s sort of a, we get it that measurement a little bit like maybe diagonally, you know, orthogonally, I guess. So. Everything in the book runs through an idea called employee engagement, which I did before I wrote the book, people badly misunderstand what this is. Employee engagement is not what Aiden thinks about engagement or what is In fact, if you and I just laid out our two intuitive ideas of what engagement are, we’d actually be very close. But it turns out actually engagement is a measurement that comes out of IO, psychology, industrial organizational psychology. It’s like a 30 year old field, studying the way people behave at work. And I can define it for you if you want. You know, it’s usually a couple simple concepts like how employee satisfaction overall, how satisfied are you employee Net Promoter Score, like how likely are you to recommend this as a place to work? How fulfilled Are you by your work? How likely are you to go above and beyond? A few questions like that? How likely are you to stay at this company? And any way you can measure that you asked employees these questions, get the responses on a five point scale. And engagement is the frequency with which the top two selections are picked, disengagement frequency with which the bottom two expressed in a percentage? Anyway, so that’s what engagement is. The reason we care about engagement, is because engagement strongly correlates with results. And so actually brought a couple stats. So for example, third party research Bain and Company, right? So big baller consulting agency found that highly engaged employees grow revenue two and a half times faster than less, you’re engaged. The Royal Bank of Canada was a customer of mine, I helped them in their digital business, which is like a 10,000 person, business. So they’re cutting edge, you know, technology oriented group. And they found that a highly engaged employee drove three times more revenue than a lesser engaged and even gallop, who’s you know, the 800 pound gorilla in this kind of space, found that companies in the top quartile and employee engagement are 17% more productive, and 21% more profitable. So anyway, I lay that out, because I think like the core model in the book is called three E R. and the E is engagement in the RS results, and they’re all related. So if we believe for a moment, Aiden, the engagement delivers better results. The question is what drives engagement? And buddy, it is the manager and nothing else is close. In fact, to sticking with Gallup, they found the manager explained 70% of engagement, which means in large datasets, if you observe a positive variance from average and engagement 70% of that variance is statistically explained, you regress back, they’ve discovered that 70% of variance is explained uniquely by stronger than average manager. And same for negative variance and engagement. 70% of variance is explained uniquely by a negative variance, negative variance in engagement explained by negative variance in manager quality. Anyway, would you care to guess what global engagement is right now? Guess? It’s a hard question. But it’s zero between zero and 100%? Yeah, so

Aydin Mirzaee (Fellow.app)  12:39

if I had to guess I would say between, I didn’t know, is it like 40 35%?

Russ Laraway (Author)  12:45

So Greg, guess if we were talking about the United States, you would have been spot on us is about 33 35%. Globally, it’s 15%.

Aydin Mirzaee (Fellow.app)  12:56

Right? Oh, my God, really? 15%? Yeah, it’s

Russ Laraway (Author)  12:59

abysmal. And you know, and it’s hilarious that it’s two times better in the US than the globe. And it’s still, like, when I went to school, 33% wasn’t just an F, like it was an A F, you know what I mean? Like it was. And so, engagement is bad and not and not getting better, right. And if you by the manager affects engagement more than any other factor, by the way, the manager explains 70%. And that literally means everything else you do at a company to try to change, employee engagement is worth less than half, everything you do is worth less than half of the investments you would make in your managers. And so with engagement down and declining, that’s my evidence that managers are not succeeding managers are actually getting measurably worse. And then you can actually measure manager effectiveness. I think our interview today, I’ll get to that spot. But that’s the sort of way that I sort of back into the fact that managers are at least not getting better as a result of all the content.

Aydin Mirzaee (Fellow.app)  14:00

Yeah, that’s pretty crazy. So I think like one of the things that you talk about is like, there’s just so many, I mean, there’s this buffet of advice. There’s so much advice out there. How does one differentiate like if you’re going to this buffet, how do you differentiate between what is good and bad advice? Because it is very, very confusing. Like what does someone who wants to get better? Obviously, going to read your book like this is going to be a very important part of this, but like, how do you distinguish between good and bad advice?

Russ Laraway (Author)  14:30

When you’re going to get advice? I would ask myself two questions. This is a great question. Before getting excited about some management prescription ask yourself first. Am I excited about this because it fits my existing worldview? Like so I think we frequently opt in to some management prescription simply because it happens to mirror what we already value or no. Okay? And that’s dangerous to have biases to be human. But if we’re Paying attention to it just because it’s something we value or no. Is that the highest leverage thing we should be paying attention to in that moment? Or is there something better? Or is that thing even right? Does that thing we’re paying attention to even have a relationship with engagement and results? Right? So it’s the first question, why am I excited about or why do I think I should pay attention to this and try to get underneath? It’s a function of your own bias? The second is, how is this particular leadership standard that’s being prescribed? How is it being held to account? Right, like, has the prescriber done any work at all, to prove that the prescription works now I say that for prescription to be able to claim to work, it must measurably and predictably deliver more engaged employees and better results. If you can’t make that claim? I don’t know what other claim that would be. But honestly, I’d take almost anything else. There’s never been a leadership prescription or a leadership standard that’s been held to that simple standard, like literally a I mean, take the leadership standard, make it the independent variable in like a big statistical package, take engagement, take results that you want, make them dependent variables, and evaluate if there’s a relationship, because again, like every context, it doesn’t matter if it’s government, if it’s a church, if it’s an educational system, or private enterprise or nonprofit, I could go on, you are leading people to a results. And I think they deserve to be engaged along the way. And by the way, you’re going to get results sustainably, only if you’re engaging people. And so that’s the second thing like this prescriber has a bunch of great, cool sounding ideas. Do they do any work to hold that leadership prescription to measurable account? If not, you know, then you got a decision to make I’d put that filter on second first control for my own bias that I like this because it resonates with me already. And second is does the prescriber do anything to hold their standard immeasurable account? Almost nobody does, by the

Aydin Mirzaee (Fellow.app)  16:56

way? That is super interesting. So one thing that you did mention is this concept of at the end of the day, you’re driving people towards an outcome and towards, you know, a common goal. You talk about this concept of like common ground that everybody has, you know, what is that between managers, teams, employees? Like, how do you think about that commonality

Russ Laraway (Author)  17:19

a couple of ways. First, I just the only thing everybody has in common at work, I believe there’s only one thing that we all have in common and work is that we all want to be successful. We don’t really show that we want to be successful, we don’t always have the capabilities or tools, we need to be successful, right. But we all want to be nobody goes to work wanting to fail, not one person. And so that’s the essence of all of it. Like not everybody’s at work to make friends. Not everybody’s at work to dates, but some some people are but not everybody is not in prison at work. So their boss asks about their weekends and the big medical thing going on in their lives or their children. And by the way, not every manager cares to ask about those things. But the one thing we all have in common at work is that we want to be successful. And so I’d love to put people through a little exercise. I won’t make you go through it, but I’ll describe it, which is the exercises, I’d like you to write for a job description for me, that’s for every manager in the world, like the job description has to fit not only the CEO of IBM or whatever, but also the person managing the front line sandwich makers at Jersey Mike’s right same job description. And the constraint is you only have two bullets, you only have two bullets, right? I did this because like, if you’re going to be the guy who comes out with this lunch line metaphor, and it’s so complex, then you also need to be the guy who tries to simplify, right? And that’s the goal of this. I’ll give you if you want to take a shot at the two bullet job description. I’ll let you do it. But you can also plan I can just tell you the answer you’re calling your call.

Aydin Mirzaee (Fellow.app)  18:47

Well, I mean, you know, if I were to cheat a little bit, I mean, I haven’t had it. Like I’m super excited. Thank you, you sent me like a first version of the book. So I haven’t gotten it yet. But I’m going to read it obviously from cover to cover. But in this conversation, you mentioned, happier employees and better results. So I’m gonna say maybe it has maybe those are two good bullet points to start.

Russ Laraway (Author)  19:09

It’s great. So yeah, by the way, the original title of the book that my working title was happy results. It’s way harder to write a title than a book. So we ended up changing that, but so that JavaScripts there are no wrong answers. I mean, some answers a little longer than others, you know, but some are brighter. But here’s what I came up with, right? I’ve been five years to think about this. One is delivered aligned results. And the word aligned is doing a ton of work, then they’re like that’s way easy to say actually a little harder to do. And then second is enable the success of the people on your teams and I take success and I sort of branch it into two. One is short term success, like being good at your job right now. You know, we’re in the next year. So and the second is long term success. So participating in the long term trajectory of your employee when they’re even off your team, you know, 10 years, 15 years 20 years from now. You can participate in that trajectory, you can enable their long term success actually, right now, what’s interesting is I did that exercise sort of independently because I thought I owed it to readers, audience whoever, to if I’m going to be the guy that says everything’s too complicated not working, I need to be able to simplify, that also overlays perfectly onto the core leadership standards set out in the book, which they came from two different directions. The core leadership standards set out in the book was a trial and error theory, where we studied the frequency with which managers exhibit specific behaviors and how that changed engagement, how that changed results, over like a four year period with, you know, like 500 or 600. Managers, they ended up coming from like, sort of see almost like when top down and bottoms up, sort of meet and perfectly interlace. That’s kind of what happened. So anyway, that’s, I like that job description. And I think it puts the manager’s job, like, once everybody understands their portion of the aligned result, everything you do every thing at your disposal needs to be aimed at helping the people on your team then be successful, relative to that aligned result. Yeah, I

Aydin Mirzaee (Fellow.app)  21:05

think that’s a really good description. And as I think about it, if I do the test of does this apply to the CEO of IBM, and, you know, the frontline manager, I think that makes a lot of sense. You then go on to further break it down, right? You talk about the big three, as a way? And do I have a crack that the big three, and I’ll let you explain what that is, but those are like the core components of what a manager does. And then what their day to day is, like we talked about, like, the objective of the role, but then like, the how you do it is the big three? Yeah,

Russ Laraway (Author)  21:38

no, you have it exactly. Right. So the big three represents three broad sets of behaviors, really, I’ll mention them here in just a second. But those big three, which are direction, coaching, and career, those break down into actually probably infinite, but what we measured were 12 behaviors underneath the underneath, though, so maybe it’s not quite for each, but it’s, you know, roughly that’s the math, so a handful of behaviors around direction and for behaviors around coaching handful behaviors around career. So to clear them forea direction is there’s a four part framework was like to long term elements purpose and vision, and then to short term elements like quarterly goals or OKRs. And then, you know, ruthless prioritization, it’s really about helping to make certain that the people on your team, not kind of certain, but certain the people in your team know exactly what is expected of them, and when it’s expected, right, so that’s kind of the idea of direction, but all kinds of practical how to devise those things. For long term elements. They’re not just things that you know, Elon or Zuckerberg or whoever does, right. The lungs of vision and purpose are things every manager should work out for their team coaching, you know, if we go back to that manager, job description, so deliver an aligned result, well, the direction framework is that I mentioned four part framework is really about making sure we’re working on an aligned result, then enabling success, the people on your team? Well, coaching is the way is your best and most available way to help people be successful in their current job, the short term success, so and if you think about it, you’re only ever coaching people to continue something or improve something. And those some things, it’s only their work products and their behaviors. And so that’s actually ends up being a little two by two. And it’s helpful little framing for whenever I’m getting ready to go coach, somebody, I’m either going to coach them to continue some sort of work product or behavior, I’m going to coach them to improve some work product or behavior. And so we get into that along with things like coaching the boss, some other coaching mechanics of like how to do it. Well, no silver bullets for the hard conversations, but how to do it. Well, things like that. And then last is career career, which is like my career conversations methodology, which you’ve seen a space movie before, right?

Aydin Mirzaee (Fellow.app)  23:48

The space movies, so any space give? Yeah. Oh, yeah, of course. Yeah. Many.

Russ Laraway (Author)  23:54

Yeah. And have you ever seen that slingshot maneuver? Do you know what the Slingshot is the gravity assist? Have you ever

Aydin Mirzaee (Fellow.app)  23:59

is that when like, you go around the moon, and then it you use the energy of that to propel you back to the earth?

Russ Laraway (Author)  24:06

Yeah. And so the way it sets up in every space movie ever made, is they’re almost out of fuel, something goes wrong, the mission has to be extended, you know, they gotta go get the guy on Mars, like from the Martian. And so what they have to do is use some planet’s gravity, the gravity assist to slingshot themselves off. And, you know, now they’ll have enough fuel to make it all the way out because they use the gravity to launch them into the far reaches of space. I think a lot of managers get the wrong idea about the relationship with their employee, and that they constrain it to just that little bit of time there together, which, by the way, it’s like what, two, three years usually right, like a manager and an employee together. If a company is lucky, they get an employee for four or five years, you know, for a single manager to keep a single employee for three years is getting less and less common. And so the problem is the employee has been on a much longer trajectory before they got to your team, and they will be on a much longer one when they or outside of the four walls of this company, I’ll submit that your job is actually helped enable that entire trajectory to understand what brought them to this place, why they’ve made the decisions they’ve made. Because there’s something important that can then be applied to their future, and understand their long term vision or their dream job. And then helping them take small tangible steps right now in order to get there, right. And so, the career conversations that I lay out in part four of the book are about helping enable people’s long term success. So you see the big three overlays perfectly with that job description, delivered aligned result direction, enable the success of the people on your team, short term success coaching, long term success career, boom, knock it out, they break down into 12 behaviors, I gotta tell you a couple stats that are going to knock your socks off, if you’re cool.

25:44

Let’s do it. Okay, so

Russ Laraway (Author)  25:45

there’s 12 behaviors, we call that manager effectiveness index, right? It’s how we measure the effectiveness of managers at a company. And you basically ask employees every quarter if the manager showing behavior one, behavior, two, all the way through behavior 12. And that’s the three in three er, right. So better managers, better engagement, better results. What we found is that manager effectiveness are the big three has a relationship with engagement, that’s a little elasticity. So plus or minus two points. In manager effectiveness is worth a plus or minus one point of engagement. So let’s say at scale, you go into a sales organization, you select their managers better, you teach their managers better, you assess them, and you coach them stack, we’re gonna stack up great managers select teach, assess, coach, let’s say you do that, and you improve manager effectiveness by 10 points, right? On average, you’re going to see that organizations engagement improved by five points. Now, here’s the killer. We also found the relationship between engagement and results. So we found that in the sales organization, for example, when you increase engagement by five points, you increase quota attainment by 30, points, 30 points, we also found that our customer success group, when we increase engagement by five points, the contract renewal rate, which is in a SaaS company, man, it’s new business, and it’s growing your existing business, right? That’s it. That’s the whole case. And contract renewal is really important. And for five points of engagement, we found five points of contract renewal improvement. And by the way, that may not sound like a lot accepts, you know, at Qualtrics, their contract renewal rate is already beyond world class, great products, good teams servicing them. And so to find, you know, when you’re near 100%, finding five points is tough. So, stringing together, you improve your managers by 10 points, you improve engagement by five points, 30 points of quota attainment, and that linkage was very strong and very pronounced throughout the system. And so that’s kind of what the big three represents. It’s a practice, it’s a set of behaviors, that if you do them, your employees will become more engaged. And ultimately, they are the ones who deliver all the results, not you. They do and they’ll deliver better results, we think.

Aydin Mirzaee (Fellow.app)  27:52

Okay, they’re just a quick note, before we move on to the next part, if you’re listening to this podcast, you’re probably already doing one on one meetings. But here’s the thing, we all know that one on one meetings are the most powerful, but at the same time, the most misunderstood concept in practice and management. That’s why we’ve spent over a year compiling the best information, the best expert advice into this beautifully designed 90 Plus page ebook. Now, don’t worry, it’s not single spaced font, you know, lots of tax, there’s a lot of pictures, it’s nice, easily consumable information, we spent so much time building it. And the great news is that it’s completely free. So head on over to Fellow.app slash blog to download the Definitive Guide on one on ones. It’s there for you. We hope you enjoy it. And let us know what you think. And with that said, let’s go back to the interview. Yeah, I mean, I think, wow, like 30 points or quota attainment, it’s kind of counterintuitive. And I will say that, like, you know, I might imagine if I was a sales leader, I would say like, Oh, get us better leads, you know, or a better marketing campaign. But I don’t think that I would have necessarily, you know, jumped at like, oh, manager, effectiveness is where we need to emphasize, but that’s incredible.

Russ Laraway (Author)  29:13

I think you’re right, a chief revenue officer might start pointing fingers at marketing before they point fingers, throw managers, but let’s follow that through. Those are people delivering the leads, those are people driving the campaigns, those people are going to do a better job at that if they’re more engaged. And it’s their managers in the marketing work, who will create or destroy the circumstances under which those people do their best work. And so that I don’t think the CRO is wrong. To ask for that. I just think the CRO should understand that the highest likelihood that the leads will improve or the campaigns will improve is if the marketers are engaged because they have better managers. And so if everybody’s on the same page, you know, we can just sort of you know, the rising you know, rising tide lifts all boats kind of thing. So, I would argue with the CRO if they thought the leads were bad, but you know, if you improve your managers, you will improve engagement and that will improve results. I mean, like, if you have a product that nobody wants, you know, we’re obviously talking about insurmountable, but somebody who’s engaged with maybe will develop a better product, right? Or maybe somebody is engaged will develop better pitch around the product, etc.

Aydin Mirzaee (Fellow.app)  30:16

So this is very interesting. And I guess like, one of the questions that I had was, we started out the conversation, and we talked about how a lot of the management books and advice out there like they haven’t necessarily taken that management approach and almost like, tested it with data, right saying, like, if we adopt this management system, this way of behavior, this is what it means in terms of results. It sounds like you’ve definitely done that. I’m curious, was a lot of this data based on your work at Qualtrics? Was it acRuss a bunch of different companies? Like where does the data come from

Russ Laraway (Author)  30:51

some of the third party data that I cited here comes from lots of third parties. The reason I had the theory that this set of relationships existed is because third party data predicts both relationships, the relationship between the manager and engagement, the relationship between engagement results, I just haven’t seen anybody put all three together and say, let’s see how these go. And so yeah, Qualtrics, one of Qualtrics key products is employee experience, product suite, right. There’s customer experience, product suite, employee experience product suite. And so it’s really important for us to be cutting edge. So my main contact, there is one of the founders named Jared Smith, he’s the older brother of the guy who’s the executive chairman, now Ryan Smith, the guy owns Utah Jazz. And Jared has no time for like regular HR. Right. And so he asked me to come in a go to market person who he theorized would never lose touch with the business. He said, Can you to sort of sort this out for me, you know, and starting with, he had this sense that his managers that has managed to do a good job, there’s about 100 250, but that the way they were operating wouldn’t scale well, right. And so in my tenure, we went from about 100 150 managers to 500. Managers, by the way, right? And Jared is a smart guy, he said, what got us here won’t get us there. It’s been a non scalable approach to getting our managers squared away. And on top of that, you know, we still I think, need a lot of work, right? So I was brought in kind of to help with that. And so if you think about, and I was just given the sandbox, and yeah, Jared himself is a systems thinker. I only do things if I think there could be impact, and I won’t allow myself to be convinced there’s impact unless we do some version of measuring. And so this was the core strategy that I put together there. Qualtrics, I have this awesome team of like, people, analysts, you know, like leader for my people analytics team. Her name is Alexis Lopez. She’s amazing. And then, since she’s amazing, she had amazing people on her team. And they figured out all these relationships, you know, so yeah, we’re measuring manager effectiveness, we’re measuring engagement. By the way, you can measure checked in code, you can measure error rates and code, you can measure this in the product or two, I just tend to feature quota because it’s adjudicated by the finance organizations. It’s not adjudicated by like the fox in the henhouse. You know, sales. Leadership Finance says whether that same with contract renewal, but all these every single function has measurements, anyway, you just mix this stuff into a big giant that, you know, with software, software, like statistical package, Qualtrics product did a lot of the work for us. And yeah, we were able to measure all this stuff. So you know, and it was longitudinal, right? It was from 150 to 500. Managers, we measurably improved our managers over those four years engagement followed. And, you know, the company just completed I think it’s fifth or sixth straight beat and raise after an IPO. You know, and it’s the employees who deliver those results, right? Always. And it’s the managers who create or destroy the circumstances under which the employees can deliver those kinds of results. And so at scale, it’s obviously a really well functioning system, you know, so yeah,

Aydin Mirzaee (Fellow.app)  33:45

yeah, I’ve been a big admirer of Yeah, the work that Qualtrics is on, obviously, very successful company. One of the things that I suppose I also wanted to ask you about this. So you’ve hinted at these 12 behaviors, obviously, we’re not going to go through all 12. But just to get a sense of, you know, what one of those behaviors is that you helped your managers over the course of time get better at like, what’s one behavior, and obviously, you go through all 12 In the book,

Russ Laraway (Author)  34:11

probably the behavior that had the second strongest relationship with engagement. How’s that? And guess what it harkens back to our previous episode, and chapter 10, I have a chapter called coaching the boss, which is both I offer a little four step prescription, every manager that would read this book also has a manager, right. And then also the book is also for aspiring managers, so even individual contributors will get some value. Either way, there’s a chapter dedicated to coaching the boss, I used to go teach the radical candor stuff. And I always got asked, like, how to give feedback to my boss, he got asked every single workshop that I did, and so I devised the four step process for doing that. Right. So that’s coaching the bus, but then the transition in the chapter is, hey, bosses. Look at how hard this is. I had to make a four step process For people to teach them how to give feedback to the boss, that’s messed up. What good bosses do is actively farm for input farm for dissents? More specifically, right? And so, and the question the behavior, the way we measure it is something like my manager regularly solicits feedback from me, it’s something like that I’ve got all the precise questions in the book. But it’s something like that. And this behavior managers who do this more often, their employees are way more engaged, and their teams actually get better results. And if you just think about intuitively why it’s a wisdom of the crowd idea, firstly, the engagement side, nobody shows up to work, and they don’t want to be heard. Like, it’s my team to boss, you know, it’s not just your team, it’s my team too. And I’ve got some ideas on how we can be more effective how you boss can be more effective. And the managers that created a little system, where they hear that and they respond to that positively, end up with much higher engagement because their employees feel heard, and their perspectives, they feel valued. They’re more proud, that’s an engagement idea, they’re more satisfied. That’s an engagement idea, they’re more likely to recommend this team in this company. That’s an engagement idea. They’re more likely to go above and beyond because their managers listening to them. That’s an engagement idea. That’s the insight on engagement on results. Our teammates have the answers, we just have to find the ways to listen, it’s always been my experience, the people that report to me and people that report to them. That’s where the answers are, I can promise you, they’re never in my brain, like not the good ones. Anyway, the bad answers are often there, but the team has them and you just have to figure out a way to get that, to pull that out of folks, your jobs, mash it together, figure out the right things more, you know what arrows, we want to put more wood behind all that stuff. But the bottom line is the managers who regularly solicit feedback and then behave well, meaning they actually hear it, and then they absorb it, then they do something with it. Those managers teams deliver and the teams are happier. So there you go. How’s that Aiden? So we were looking for,

Aydin Mirzaee (Fellow.app)  36:59

to definitely bring us back full circle to the first conversation. And I think it’s really awesome. And it’s so funny, like, just last night, I was rereading parts of amongst the many management books out there, but just rereading Drucker’s the effective executive. And there was like this little tidbit in there, where he talks about Alfred P. Sloan. And I think there’s like this one scenario where he walks into a meeting, and everybody’s kind of agreeing. And he says, Ladies and Gentlemen, it seems like there’s a lot of agreement. And so why don’t we adjourn this meeting. So we have some time so that some disagreement can form and then we can we can come back to this meeting. So it’s very interesting, this concept of like, yeah, encouraging the descent, encouraging feedback, like farming that information, it seems like the world’s best leaders do this stuff. No question.

Russ Laraway (Author)  37:49

By the way, Drucker also said, very close cousin to what you just described, that people are more likely to enthusiastically see a course of action through if they’ve had a say in creating it. So whether it’s farming for dissent, or just bringing your team into the fold to help chart your course, to help devise what is the aligned result you should be pursuing, what is the best way for us to achieve this? In either case, we’re Drucker’s got us cover. This is really the essence of it, not only does descent lead us to think harder and better about what we should be doing. But the fact that the team had a say, in creating our course of action means they are more likely to follow it enthusiastically.

Aydin Mirzaee (Fellow.app)  38:30

That makes a lot of sense. You know, Russ, I did have a curiosity just because you’ve had a chance to see this stuff acRuss so many different companies, and you’ve worked with a lot of companies like you’ve looked at the data, has there been any updates to just like the view on how many direct reports a manager can have, should have? And I know some of this is like situational, and it depends on types of the teams. But I always go back to this concept of like, in education, we talked about, well, you know, like all else being equal, you know, smaller class size better than larger class size. So I’m just wondering, like, where things are like, what is the recommended number of direct reports? Where does all of that land today? Would you say?

Russ Laraway (Author)  39:13

Yeah, so this one straight out of a Lexus, Lopez’s people analytics team, you’re gonna love this. I can’t believe you asked this question. It’s a good one. So I’ll give you the prescription, then I’ll explain it. The prescription is between five and seven direct reports with all the caveats, you know, there are moments where a team is too small. Let me explain both ends. First, I will explain the seven. So some people have talked about the rule of seven. Usually the rule of seven is don’t have fewer than seven. And the idea is that when you start having fewer than seven, then your organization becomes less flat more quickly. And so if you’d prefer to have a flat organization, obviously, the larger the span of control for a manager, the flatter the organization will be right. But we have the rule seven that is wrong in that direction. What we saw in Qualtrics? was the second you add a marginal employee to a manager that becomes the eighth employee, manager effectiveness score tanked. Oh, really? Yeah. And think so you got to remember that management, like people forget being a manager is actually real work, there’s a real unique set of activities. And it doesn’t scale well, like, you have to usually do those activities for every single employee. Right. And so with only so much time in a week, the by the way, the employees have to do their jobs, you have to guide you know, the second, you add the eighth, it seems like that’s the tipping point where the manager now no longer has time to be a good manager to all eight, they were a good manager at all seven yesterday, today, they had an eighth, now they’re a bad manager to ollie. So that’s where we say seven appears to be a good top end. Five, on the downside, a couple of reasons for this one is, you know, here’s what happens. Preston is on the team, they’re a good performer, they start rattling, you know, rattle in the chains that they want career growth. And the manager says, Well, what do you want? What do you want for growth, they say I want to be a manager. And so they make them a manager, they give them two direct reports, right? This is a terrible practice, it’s, we can be a lot more clever about taking care of people’s career growth, or go ahead and make them the manager but you better make sure there is a like, verified growth plan to get to five directs, there is a major sports league in the United States that I got asked to consult for, I’m not going to say which one, their headquarters is now a mess. Because they did exactly this over and over. And they have a bunch of I formation, one manager one direct. So now it’s this unbelievably hierarchical place. The people who’s a single direct underneath a manager like they’re demoralized, like, it’s ridiculous on a team. You know, it’s like when you’re doing outlines, you know, in Microsoft Word, or Google Docs, like, you don’t make an A, if there’s not a B, right, I’d say in this case, don’t make an A if there’s not A, B, C, D, or E. And so anyway, but practically, you just see how all of a sudden, the organization goes anti flat, right, it becomes like a ladder. And that’s demoralizing. Because now you have to climb this, it feels like you have to climb this ladder, and more and more layers from whoever’s the head of the league and all that stuff. That’s in the headquarters. And so they asked me, Hey, how would you unwind this? And I was like, Man, I don’t even know like, how do you get here, and they sort of described it for me. The other reason to be aware of five is if you want to measure your people system, which I recommend strongly to people ops groups, anybody who cares about the employee experience, like you got to stop with like, the anecdotes, First, use the anecdotes to understand the data of your people system. It turns out that fives really important number for this to go well below five, you start to lose confidentiality thresholds. So suddenly, if you have a bad acting manager whose instinct is who said, Why, which is the wrong instinct? Well, when you have fewer than five, you can figure out pretty quickly who’s the lone, sort of disk malcontent on the team, right. And also, the the data becomes bumpy, it’s much more variable was like one or two directs than it is with five and not that fives the right number, but it’s a little better signal, not the fives a great like statistically sound number, but it’s way better than two or three, right? And so for a couple reasons there, I recommend not going below five. And like I already know what people are thinking. They’re thinking, Well, how am I going to help this person have career growth, if I can’t make them a manager, so you got to be more clever than that, look, go to part four in the book, I’ll teach you how to do that, where they’re saying, I’ll just do it, and we’ll see what happens. But you just make sure there’s a growth plan to five, you’re gonna have to now it’s fine. Make sure there’s a validated like through finance, headcount plan that gets you to five, and then I think it’s okay, then otherwise, hold the line, hold the line, it’s easier to sell short term pain to give that person one direct report that creates long term pain for you in the company. And then over seven, as soon as you hit eight, you just don’t have the time anymore. So is that kind of what you’re looking for? Does that help?

Aydin Mirzaee (Fellow.app)  43:51

Yeah, that definitely answers the question. And I really liked your explanation, because I think, you know, before you put it, so like, in so much detail there, it was always like, Oh, it’s just there’s this rule of seven. And that’s what it is. And it’s really nice to see the insights and the book ends of that. We’ve definitely talked about a lot of different topics. It’s such an exciting conversation, I was going to ask you the last question that we asked everybody. But before I do, we wanted to do something really special with the book. And you know, for all the listeners that are kind of listening in, we wanted to say that, like there’s so many things we talked about. But if you take one of the things that you have learned, and you tweet at Russ, and you tweet at me, we’re going to choose 10 people who do this, and we’re going to send them a copy of the book. Well, it’s to help get the message out there. Yeah. So that that would be a fun thing to do.

Russ Laraway (Author)  44:48

Yeah, look at that. That’s what it looks like. Right?

Aydin Mirzaee (Fellow.app)  44:50

It looks awesome and 10 Lucky listeners will get a copy. So yeah, so I mean with that said, very excited to do that. And the you know, the question that we We ask everyone, and we asked you this last time, but for all the managers and leaders constantly looking to get better at their craft, what are the parting words of wisdom that you would leave them with today?

Russ Laraway (Author)  45:10

Yeah. So I mentioned a little bit ago that the second most correlated leadership behavior with engagement is asking for feedback. I’m going to tell listeners, the first most correlated, which is continue coaching. So everybody focuses on the hard conversations, the improved conversations, right? hard, tough feedback, whatever you want, right? There’s a reason for that. There’s brain chemistry, which by the way, I cover in the book, in a little bit of detail to help people understand why it’s so hard to have these conversations. But continue coaching is really leveraged the Positive Coaching Alliance, by the way, which is not this is a really important organization works from professional level down through youth levels of sports, they recommend five to one continue to improve or some would say praise to criticism, I use continue and improve. And to be really clear, it’s not five to zero, like not everybody gets a trophy. It’s not infinity to one, it’s five to one, and nobody does this, I would bet dollars to doughnuts, like almost less than 1% of your listeners have a good like cadence of five to one continue to improve. Now, it turns out that continued coaching, first order bid is it’s leveraged. What you are doing, when you offer continued coaching, you are forced to do a couple things as a leader because the standard is to be specific, insincere. So a good job is not good coaching. You don’t say the same thing to your employees, you’d say to your doc, right? Like you just just don’t do that. But specific, insincere? Do you know what I love about the way you ran that meeting? What this forces you to do, if you’re gonna say that you, you have to get very much in touch with the actual standards that exist on your team? Right? In Little League, which I coached, I would literally we praise the kids for being on time to practice, we wouldn’t criticize them for not being on time, because let’s be honest, the 10 year olds not late because of the 10 year old 10 year olds late because their parents, right, like what are we gonna do so but we did always, you know, what I love about the way you feel to that ground ball, I love that you moved your feet, you got the Boston, you got your glove center in your stance, you covered up the ball, and then you quickly got the path up to your throwing hand up to your shoulder. That’s I have to be very specific with it, and then the kids are more likely to repeat it. So if you do this, gone are the days when a player goes home and says my boss doesn’t even know what I do. They’re gone. And by the way, way more your players are saying that about you than you think. And so now people know explicitly what you value, what is valued on the team and what to repeat. So that’s a massively leveraged idea that people think it’s ego stroke. The second thing Aiden is you are distance. Second, is you are actually now recognizing people regularly. And that is a common complaint people have at work is that they don’t get recognized for the things they do. If you suddenly start a five to one, continue to improve ratio, people will start to feel more recognized. And by the way, feel proud of the work they do. They’re more likely to go above and beyond, they’re going to be more satisfied. These are all the engagement ideas again. And so that’s why this one is the most correlated with engagement. And also why teams that do this get better results, because the manager keeps reinforcing the stuff that works. Do you know what I love about Greg, everyone put that phrase, write it down right now, unless you’re driving, but everybody put that phrase, you know what I love about and just start using that you know what I love about the way you ran our team meeting today, the way you made sure every single person had a voice. By the way, if you tell me if that matters, or not that everybody like, tell me if you’re from an underrepresented group, if you don’t frequently go to a team meeting and feel like you have no voice. And now I’m going to tell the person who ran the meeting, continue to do that. And guess what they’re gonna do, they’re gonna do that again. And now we’re gonna get more diverse perspectives, we’re gonna get more disseminated more ideas, and we’re gonna end up with a better path forward together, simply because of that. And just keep doing that. You know what I love about it. You know what I love about it, you know what I love about and you have a more engaged team, I promise to ultimately deliver better

Aydin Mirzaee (Fellow.app)  49:12

rest. That’s great advice. I certainly have my homework cut out for me, I’m gonna adopt that phrase, try and get to the five to one ratio. And this has been great. Thanks so much for coming again on the show. And thanks for sharing all your wisdom and advice with everyone.

Russ Laraway (Author)  49:26

Oh, man. Absolutely. My pleasure. What you all do is really important. I mean, I know I kind of start out with a little bit, you know, there’s too much stuff out there. But you know, the way the way you all go about this is really special. And I And it’s no wonder you have so many listeners, right? They’re just getting a ton of value from it. So thanks for having me.