In this edition of Author Talks, McKinsey Global Publishing’s Raju Narisetti chats with Stephan Meier, the James P. Gorman Professor of Business at Columbia University Business School and chair of the school’s management division, about his new book, The Employee Advantage: How Putting Workers First Helps Business Thrive (PublicAffairs/Hachette Book Group, October 2024). Meier provides a new framework for the future of work in a postpandemic world and details the changes required to create a human-centric workplace. He argues that by adopting both an employee-centered and a customer-centered approach, reexamining the function of human resources, and taking employee perspectives to heart, leaders can help ensure that businesses are well positioned to thrive in the new age. An edited version of the conversation follows, and you can also watch the full video at the end of this page.
This is your first book. Why write it now?
The pandemic was really critical to my motivation to write the book. The pandemic shed a bright light on what wasn’t working in the workplace and what we were assuming should be the way we managed it.
It was a wake-up call for me—and for many employees and leaders as well. It prompted us to determine what we can and should do about the future of work. Remote work is a big example. A lot of leaders and, perhaps, employees thought it was not possible.
Now that we know remote work is possible, we have to figure out, “How should we change it?” At that moment, I thought, why not combine the insights I’ve gotten through my teaching of business strategy and my research on what motivates humans at work with the insights I’ve gained from a new elective that I started on the future of work? I was motivated to bring everything together at the intersection of strategy, human motivation and behavioral economics, and the future of work.
Don’t most companies say they put employees first?
I’ve never heard an executive who hasn’t said that their employees are the most important asset or that their customers are front and center. In the book, I argue that the same trends that lead to customer centricity are also now heading the labor market. Only those firms that really put employees front and center are going to win.
If you look at engagement levels across organizations, it’s simply not true that all organizations put their employees first. According to Gallup, about 67 percent of employees are disengaged at work. This Great Resignation, which continues to a certain degree, shows that we’re not doing what we’re supposed to be doing.
The 100-plus years of scientific management demonstrate that we have thought about workers as cogs in a machine and not really as human beings. Businesses have to treat workers differently and humanize them in order to thrive.
While many organizations say they care about both customers and employees, not many actually do the hard work on both sides. The customer-centric revolution showed that companies can do the hard work of focusing on the customer. I argue that we should do the same for employees and that every organization that does so will thrive as a result.
So employees are the new customer?
There are two mindset shifts that need to happen. The perspective of treating employees as the new customer helps to some degree.
However, the first mindset shift involves moving away from thinking either/or and toward win–win scenarios. It’s not that we either treat the employees nicely or the organization wins. We moved away from that for customers as well. It’s actually OK to do everything we can for customers in order for the organization to win. The same should be true for the employees, because both customers and employees are really important components of creating value.
The second mindset shift involves understanding that employees actually like to work, if the work is done correctly. Many leaders assume that workers are incentivized by money alone. Again, 100-plus years of scientific management have inculcated that concept in our brains. Yet people are motivated by much more than money, and it’s important to realize that.
Customer centricity is not only about lowering the price. It’s about improving the customer experience. Similarly, employee centricity is not only about increasing the wage. It’s much more about increasing the employee experience. As a result, cost per unit actually goes down because productivity increases. Innovation goes up, turnover goes down, and happy employees also make for happy customers.
You say companies should know a lot more about their employees. Aren’t we overwhelmed with pulse and satisfaction surveys?
Data is key. If we think about customer centricity, data is a big part of that. [With data] I can understand what my customers want.
But if the surveys get ignored, then it’s just a waste of time. When you think about data within an organization, first, there are analytics to consider without doing surveys. Who’s talking to whom? What are they doing? There is performance data that we can use in figuring out how to tailor the employee experience.
Once we take the surveys, that awareness has a real impact, as it has with the customer insights that we gather through focus groups and customer journeys. If we do that regularly for our employees as well, it’s not just a waste of time that gets ignored. It really has an impact. People will not be annoyed by having a voice in how the workplace is going to be shaped.
You have a radical idea that ‘moments that matter’ should vary a lot across employees.
The one-size-fits-all approach doesn’t cut it anymore. Employees are used to very different, very personalized experiences when they’re consumers. How can we think about personalizing the employee experience as well—borrowing from the “segment of one” in marketing language? And yet doesn’t that create unequal outcomes? How do people think about those unequal outcomes, and are they upset about them?
Unequal outcomes and treatment are upsetting only if the process that led to them is unfair. People are more OK with unequal outcomes if they understand why one person is treated differently than another. Why do you get more than I do? Why do you get something different than I do? So a really important part of this that I raise often in the book involves transparency. Be very transparent about why people are treated differently and allow employees to have a voice in that.
The same is true when we consider customers. Whatever I click on my screen affects what will be shown to me after. For example, there are internal marketplaces that some organizations, such as Mastercard, implement. If I’m ambitious, if I want to acquire new skills, I can log in to that platform and indicate my availability to work on a different project within Mastercard.
The one-size-fits-all approach doesn’t cut it anymore. Employees are used to very different, very personalized experiences when they’re consumers.
The AI-powered platform then matches me to certain projects where I can gain more experience. Then I have a very different experience than somebody who works on my team but didn’t go to the platform and didn’t pursue the same option.
That’s a different kind of treatment, and my work will look very different than someone else’s work who is not on that platform. Eventually, the skills that I develop will affect the projects I am assigned because my opportunities become very different in the organization. Everyone has the same opportunity to do that, but everyone will select different options. If the process is transparent and fair, then unequal outcomes will be more accepted by the employees.
Can HR inside any organization become a trusted function?
Many employees don’t think about HR as a partner who can help them. Unfortunately, in many organizations, HR has become compliance—rule enforcing and controlling—which nobody likes. That definitely does not foster trust. What needs to happen in employee-centric organizations is that HR executives must start becoming strategic partners rather than just compliance officers. They need a large enough seat at the table to make that change. In organizations that are customer-centric, marketing executives have a more important role.
What needs to happen in employee-centric organizations is that HR executives must start becoming strategic partners rather than just compliance officers.
That needs to happen for the people officers or talent managers as well. Over the years, I’ve met many HR executives who are fully ready to make the transition. They just need the right amount of support in order to have a role that moves away from compliance and control to actual partnership with employees to improve the work environment.
Shouldn’t the CEO and board own this, though?
Metrics are in everything we do. If we don’t reflect what the goal should be—putting workers first—that ownership will not happen.
In the book, I note examples of those who do that. Indra Nooyi, when she was still the CEO of PepsiCo, changed the compensation for her executives from 75 percent business outcomes and 25 percent team outcomes to 50 percent each.
I also note an example of a Chinese firm where it was very important for the employees to rate their managers on different attributes, such as psychological safety and openness to suggestions. Ratings were then tied to compensation. There was a transformational impact on the turnover and the KPIs of the organization.
Obviously, if people you don’t want in the organization leave, that’s fine. If people you do want to stay leave, you should care about this “regrettable attrition.” If we think about employees like customers, customer satisfaction scores for our employees really matter.
Why shouldn’t we introduce a metric that compensates an organization’s managers and leadership based on whether they’re doing the hard work to ensure that employees are productive and staying in the organization?
How do you reconcile the seeming end of ‘work from home’ flexibility with all this?
The remote-work discussion is at the center of how we think about squaring the needs of employees and about what’s good for the organization.
In the book, I mention four motivators for people at work, and two are really relevant for remote work. One is what I call “working together works,” which underscores that social interactions are critical. The other is autonomy and flexibility, which contradicts the question, “Shouldn’t everybody be very flexible and not have to come into the office all the time?” I’m a big proponent of the hybrid approach.
Consider water cooler or kombucha-tap moments. We’re not doing 40 hours of that. We can be very intentional about creating atmospheres where we actually work together. We can have personal interactions without working 40 hours per week and just hoping those interactions happen. We can create an amazing culture with just a couple of days of in-person meetings each week or month.
Humans want flexibility, and flexibility creates significant value. If you empower and trust employees working from home, they can be very, very productive.
It could look very different for different organizations. Humans want flexibility, and flexibility creates significant value. If you empower and trust employees working from home, they can be very, very productive. People can figure out when they’re most productive and when they’re not and determine how they should organize their day.
Then there are days when employees come to the office where we can have that social interaction. But we have to be very intentional about that. That means the remote day can never look like the in-office day. If the days are the same, the effort is wasted. For example, if I will be on Zoom calls only, why do I need to come to the office when I won’t actually have social interactions?
We have to manage the workforce very differently in this hybrid work environment. A lot of employees are appalled to have to come back to the office when nothing really happens there that they couldn’t do at home. However, if you do something very special in the office that is about working together and being very intentional, people might come back.
That something special is not related to free snacks, lunch, or an improved coffee machine. It’s about those human interactions. In every survey, if you ask people what is great about the office, the response involves meeting other people. So office time could focus on that, and time at home could be for doing deep, focused work.
But most physical offices are poorly designed for hybrid in-office days.
In the book, I refer to Lego, which reconfigured its office with hybrid work in mind. It’s not [just] about the job, which we need to do in the office or at home. It’s also about certain tasks. What are the tasks for which I need the team in the same room? What are the tasks for which I don’t need physical togetherness?
There was a study conducted on the amount of time each individual spends on social or alone time. Taking hybrid work into account, the whole office space was reconfigured to strike the right balance between spaces conducive to having teamwork and brainstorming sessions and having private space. A lot of the private work that requires focus can be done at home. So as we consider certain tasks, the physical space must change as well.
