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Episode Overview
In this episode, Luke speaks with Dan Kessler, President of Energage, about their partnership and shared mission to improve workplace culture. Dan outlines Energage’s “pyramid” methodology, which measures employee engagement based on individual experience, manager relationships, and senior leadership’s direction.
They discuss how Energage’s extensive benchmarking data helps organizations understand their standing and drive improvement. Dan clarifies common misconceptions, emphasizing that culture building is a continuous process owned by everyone, not just HR, and that actions can be simple and low-cost. The conversation highlights the crucial role of managers, with Mo’s collaboration aiming to equip them with actionable insights.
Dan shares a concrete customer success story and reveals how Energage’s employee engagement data correlates with future equity value, defining a “human capital factor.” He concludes by advising leaders to extend grace to themselves and approach every interaction with intentionality and an openness to employee feedback.
How to Become a Top Workplace
Read the guide we created based on Dan’s insights.
Episode Transcript
Luke: Hi everybody, I’m here with Dan. Dan, we’ve spent the last 12 months or so fleshing out a wonderful partnership, and I’m very, very excited to have you featuring on the podcast. Will you start us off, tell us a little bit about you and a bit about Energage, please?
Dan Kessler: Thank you, Luke. Likewise, it’s been one of the pleasures of the past year getting to know you and the team at Mo and all the phenomenal work you’re doing. So, I couldn’t be more excited for the conversation ahead and the great work we’re going to be doing together. So, very briefly, a bit about myself and Energage. I’m the President of Energage. Our business has been around almost two decades. I’ve been there for most of that ride, about 15 of those 20 or so years.
First and foremost, we are a purpose-driven business. The reason we exist, Luke, as you know, is to make the world a better place to work together. That drives everything we do. Some folks might be familiar with the B Corporation movement, which is really about connecting purpose and profit. There are thousands of B Corporations around the world, and one of our real badges of honor at Energage is that we were one of the first 20 B Corporations in the world. The way that we do that fundamentally is we build and brand winning workplaces. We do that through the voice of the employee. We gather feedback from employees, and we help them understand what is going on in their organization, help inform a measurement of employee engagement, and help drive improvements they can take to continually build their culture, which we’ll talk about a lot here, I assume. Then fundamentally, we really help tell the world about what makes their culture unique. So that’s just a bit about what we do, and I’m really excited to spend some time here with you talking about that a bit more, and also the unique aspects of what Mo and Energage can do together.
Luke: Perfect. Thank you so much. Should we start with Energage’s pyramid? I know a lot about it and how you think about the workplace experience and how you measure what matters. Do you mind just talking us a little bit around your methodology and how you measure what matters?
Dan Kessler: Yes, of course. I think that is the perfect place to start. As you’re talking about the pyramid, the visual that folks often think about is almost like Maslow’s hierarchy of needs when you’re thinking about assessing a culture. Ultimately, the outcome of a great culture from our perspective is having high levels of employee engagement. There are three ways that we measure that: Am I as an employee motivated to give my best? Am I loyal to the organization, meaning I’m not looking for another job? And am I willing to refer a friend or colleague to work at the organization? So, essentially, that’s an employee Net Promoter Score.
When you think about those three components of motivation, loyalty, and referral, they’re great representations of that mindset of employee engagement and the discretionary effort that we’re all looking for to drive better productivity, better results. In and of themselves, they are not actually very actionable. So we think about that as the output of a winning culture. What we’re also doing is really measuring the drivers of that. So what are the inputs to employee engagement, which are actionable?
If you kind of get back to that visual, the pyramid, if the top of the pyramid is that sense of engagement, the base of the pyramid really starts with the individual employee experience. You, Luke, as an individual employee, are you paid fairly for the work that you do? Are you getting the training? Do you have, however you think about work-life balance, flexibility, do you have what you need to manage your life, your individual employee experience? That’s kind of the foundation, right? If you’re not getting that right for the individual employee, it’s going to be hard to sort of move them up the pyramid towards that engaged state of mind.
From there, we then think about the relationship between that manager and that frontline employee. A lot happens in that relationship, and that’s one of those amazing shared value areas when we think about what you and the team have built at Mo. When you think about that relationship between the manager and the frontline employee, it’s, am I appreciated by my manager for the work that I’m doing? Am I able to share what’s really on my mind? Does my manager frankly just care about me as a human being? Do they care about my growth and reaching my potential? So a lot of those things happen at that manager-employee level.
Then the third and final building block towards that fully engaged culture gets down to things that tend to be more under the control of the senior leadership. The two dimensions there are things like, is there a clear direction that the organization understands and is aligned around? Do we have a sense of shared values as an organization? Is there a sense of meaning in the work that we’re doing? You can imagine how those things really come from if the senior leadership hasn’t figured that out and isn’t aligned on that. It’s very, very difficult to cascade that through an organization and really embed it.
The other piece quite simply gets down to how the work gets done. A lot of that is about communication, right? So we talk about communication up, meaning, do you as a senior leader understand what’s actually going on in the organization? Then do I as a frontline employee feel informed about the things that really impact my role? As organizations scale, how do we get things done across departments? Generally, as we’re doing the work, is there a lot of friction? Is it just difficult to get things done together? Those are essentially the building blocks of that pyramid. Then if you kind of go back to where we started, which is that sense of motivation, loyalty, willingness to refer, those are all the levers here that are at play that are going to drive that engaged state of mind for the individual employee.
Luke: Makes a lot of sense. So I come to you as a customer. I run an assessment, a survey as to where I stand against these drivers in the pyramid. How do you help me drive a pathway to improvement? How do you help me understand how I stack up to the competition?
Dan Kessler: So there are a few pieces to that, and to your point, when an employer comes to us, the last thing you said is probably the first place where these employers are starting, which is, we want to know where we stand. If you take a step back, how do you know where you stand, right? It’s a massive marketplace. So much is unique about an employer when it comes to where they’re located, the industry that they’re in, the size of the organization. We know these things really shape and drive how you build a culture and what type of culture you need. Part of the benefit, frankly, of having been around for a couple decades and having built our business around this measurement instrument that has remained relatively consistent over the years is we just have extraordinary benchmarking data.
So that first step, to your point, in terms of where I stand, is not just a generic benchmark of, here’s how you compare to every employee that we’ve happened to measure over the life of the company. It’s more about, we can compare you to companies in your industry and in your size. So if you’re an accounting firm, right, we can compare you to other CPA firms that have a few hundred employees. Part of the first step when we’re working with an employer, especially at the leadership level, is, do they buy into the data and the way that we’re analyzing it? Having those credible benchmarks is, frankly, step one because ultimately it puts that data in context.
The other thing, and I know we’ll get into this a bit more, is that companies come to us because they want to stand out as an employer of choice. As you know, Luke, we celebrate and recognize top workplaces all over the United States. Because of that, it’s a pretty elite benchmark. The other important level set for the employers that we work with is to say, ultimately, we know that you want to be the best. So we’re going to compare you to the best. That can be a little bit uncomfortable for folks because it is an elite benchmark.
From there, you start to really get into what are the tools and tactics to actually drive impact throughout the organization? There are various mechanisms that we’re able to do that. If you think about just a common organizational structure and being able to understand what are the various moving parts and essentially subcultures that have emerged within the departments in your organization? How are various slices of your employees, from a tenure or a job level, or a salary band, or a performance grade, how are these folks experiencing your culture differently, and how does that shape the highest leverage actions that you can take to continually build the culture?
Then frankly, it’s about, how do you also at the same time find those things that you’re doing well and help celebrate that with the outside world? So those are the types of actions that we’re seeing with employees. More recently, what I think you’re also aware of, Luke, but exciting to share, is we’ve now broadened our suite with a set of talent management tools to get into even more actions that organizations can take when it comes to how to understand the profile of their employees, how to encourage more one-to-one check-ins, how to do quality performance management. So, we’re really building that robust set of actions that you can take with your talent to continue to build and shape a winning culture.
Luke: I think, maybe the million-dollar question if I was sat listening to this rather than asking the questions would be, what does it take to become a top workplace?
Dan Kessler: So, I think that is the right question. To kind of zoom out for a sec on that question, an employer wants to be an employer of choice, Luke, they want to stand out. If you really zoom out, if you’re sitting in the shoes of an employer and you want this recognition that you are a top employer, what are your options? One option is you can go and buy an award.
Luke: Yeah.
Dan Kessler: Another option is you can join what is essentially an essay writing contest, and you can find a really good writer to earn you an award.
Luke: Yeah.
Dan Kessler: You can also enter a popularity contest where you spin up a great marketing campaign, get a lot of votes, and boom, you’ve got an award. As you know, we don’t really buy into any of that. We think the best way to determine whether or not a company is a top workplace is simply by asking the employees what they think of the culture. The only criteria that goes into determining whether or not a company is a top workplace is the quantitative data that we capture and measure based on all of those items that we’re talking about from that pyramid that we started with. That’s it.
You have to earn it, and you have to earn it day in and day out, which we’ll also talk about, and you have to earn it in the moments that matter, as you know. The only other piece I would add to that, which I think is important for different types of employers that might be listening to us yap away here, is that the hurdle that you need to get to is different based on the size of the employer. So that’s what we don’t do: compare a 10,000-person organization to a 100-person organization because that is a very different culture, a very different experience that you’re trying to manage. But fundamentally, to your point, you’ve got to earn it, and you’ve got to earn it through quantitatively measurable feedback from the team.
Luke: Yeah, and I think that completely makes sense, right? Because if you look at a 10,000-person organization versus a 100-person organization, the 10,000-person company probably has a hundred people in their HR team, you know.
Dan Kessler: That’s right.
Luke: It’s good to know that for anyone sitting there thinking, “Wow, how would we ever compete with Microsoft?” There’s your answer.
Dan Kessler: Right.
Luke: Cool. Okay. That makes sense. So let’s say I’m a newly appointed Chief People Officer. I’m in a zone in which I’m like, “Okay, cool. This feels like a big, hairy, scary goal for me: become a top workplace.” Where do I start? What do I really need to think through in the first one, two, three steps to get me going?
Dan Kessler: So, it’s a phenomenal question, and what that conversation tends to sound like in that early stage is, when we’re talking to that chief people officer or that member of the leadership team, what we’ll hear is, “We’ve got a pretty good culture here.” We’ll say, “Cool. Tell us a little bit more about that.” They’ll talk about, frankly, oftentimes it’s talking about company events that they’ve done, all-hands meetings that they do, philanthropic activities that they do, which again, are all awesome in and of themselves.
Then they’ll kind of share some maybe general observations about thinking they’ve got a good culture. We’ll say, “That’s awesome. Well, how do you know?”
The first hurdle is really ensuring that from a leadership perspective, Luke, is the team truly open to feedback? That’s a really important, it sounds simple, but that is really an important question that a new leadership team or a new individual people leader needs to really ask themselves. Of course, you and I would say if you’re not, let’s talk about that, and you’re missing the mark. So there’s an obvious answer to that question. But the reason that you want to truly understand that, and we do still talk to people leaders who say, “Look, our owners, for example, in a smaller company, are actually not ready yet.”
Luke: Yeah.
Dan Kessler: I would challenge that, and I think you and I both know that you want to challenge that because ultimately the feedback, the sentiment is out there.
Luke: Yeah. People are saying it whether you know it or not. Yeah, yeah.
Dan Kessler: Whether you know it or not, people have a point of view on their culture. They’re talking to each other about how they’re experiencing your workplace. So there needs to be an openness to that and an appetite. Once we get over that hurdle, okay, then we can get into the conversation and really start working with, well, what does that mean once we’re open to feedback? But to your point, from a “where do we start,” that’s the starting point. It’s, is there an openness? If there’s not, let’s work on that. Let’s work through that resistance. We dive in.
Luke: I think the elephant in the room for me is that these days people have the ability to share on Glassdoor or Indeed reviews or whatever, right? So whether you want to hear it or not, people will give it. Therefore, it’s just a question of how much control do you want over your reputation and perspective of what people are putting out there.
I think asking most leaders that they know that reputation is a huge amount of the story in business, right? Therefore, thinking about owning your reputation and what people are saying and thinking about you maybe gives you increased levels of control by asking the question and accepting that you might not like the answer.
Dan Kessler: And so, it’s an opportunity to take control of it, be as intentional about it as you can be. I could not agree more.
Luke: Yeah. Then let’s just talk through. So we run a survey, we get all of this insight and intelligence. What do you find normally are like the blind spots or maybe some of the myths that are out there that organizations tend to then face in this journey once they’ve got that leadership commitment?
Dan Kessler: I think one of the, I don’t know if it’s a blind spot per se, or just a misperception, which is that I think sometimes there’s this sense that if we take all this feedback from employees, there’s going to be this expectation of massive change and massive actions.
Luke: Yeah.
Dan Kessler: And expensive actions that we need to take based on what we’ve heard from the team. I think that’s a real miss and really gets in the way of culture building, culture shaping, and celebrating great cultures. Because as you and I both know, from a leadership perspective, it is a day-to-day exercise to build and maintain a winning culture, a top workplace culture. So, what we have seen again and again is that what the best companies are able to do is build a muscle of asking for feedback, taking that in, and then taking what can often be simple and frankly, low-cost to no-cost actions in response to that feedback.
Frankly, Luke, in many cases, these actions align with things that may have already been in motion. There may already be conversations going on from a leadership perspective. Part of it is simply a communication of connecting what you’re hearing from the team to things that you’re working on, because again, in strong cultures, there’s probably already some overlap there.
So, are there cases where, “Wow, we need to really reset the values, the business strategy, all of those things”? Of course, that’s probably not going to come up from an employee. If you’re hearing that in an employee survey, you were probably already aware that there needed to be a bigger transformation. So, there are those edge cases, but that is a big misperception from our experience of doing this literally thousands of times, which also frankly helps dial down the pressure from a leader. So that’s kind of one piece.
The other piece I would say from a perception that can get in the way of building and celebrating winning cultures is that culture is not the responsibility of HR. Culture is not the responsibility of the CEO or the executive team. The culture needs to be owned by every single employee. When we talk about the moments that matter, and we talk about the feedback that we gather from a team, and how we then take action on that, where that really happens is at that team-level conversation about what we heard and what we’re going to do as a team.
What am I going to do as an individual employee to help make the culture at Energage, at Mo, as strong as it can be to achieve our goals? Then, yes, there are pieces that we’re going to say, “Look, you know what, I think this would really help our culture. That’s actually probably not in my control as an individual employee. That’s probably a little bit out of scope for our team.” So I’m going to bubble that up and align that to some overall input to the leadership team. But fundamentally, that sense of shared ownership for our reputation as an employer, for the type of culture that we want to work in, has to be owned by everyone. I think we often miss the opportunity to set that tone when we’re doing this type of work.
Luke: I couldn’t agree with you more. I think, Dan, there’s probably a really useful insight that you can give to people here about you. You’ve done this for 20-plus years. You’ve got a lot of data, you’ve got a lot of customer conversations, like does it simplify and boil down to a set of key levers to drive change in organizational culture? Given what you’ve said, it feels like there are some threads in there.
Dan Kessler: Yes, of course. Ultimately, Luke, a lot of this comes back to what we are thinking about and wanting to do together, which is that, fundamentally, it’s about this openness to actually being open to listening to our employees, which is not necessarily a commitment to taking action on everything we hear. It’s an openness, but then fundamentally it’s about those critical conversations that happen in the one-to-one, in the team meeting, and the problem-solving around the leadership table. How do we inform those types of interactions with a perspective on the type of culture that we want, what we’re hearing from the team, and driving that continuous action? I think those are the pieces that we’ve seen. The companies who kind of build that muscle and get that right are the companies that are able to truly build and maintain that standout reputation, that standout culture.
Luke: Yeah, interesting. We often in our work talk about the manager. I know that represents the middle chunk primarily of your pyramid, and often the manager has the highest impact and the highest frequency of impact on the day-to-day experience of the employee. How do you think about equipping managers with both the right insights and the capabilities to drive change?
Dan Kessler: Yes, let’s talk about that for a sec, because here’s what we know about the manager role. Number one, they’re extraordinarily busy, especially in the current environment, right? Managers are being asked to take on more and more. They are most often well-intentioned. I think you and I both believe that most managers are not waking up every day thinking, “How can I make my team’s life more miserable?” They are trying to accomplish as best they can, right, from their world and the things that they’re balancing personally and professionally. They’re in this unique middle role, to your point on that pyramid, where on the one hand, they’ve got some type of senior leadership influence saying, “Hey, these are the corporate objectives we’re trying to achieve,” or “here are the changes that we need to drive through the organization,” and they’re trying to manage to that. Yet they’ve also got a team that they need to motivate and engage and listen to and understand what their perspective is, and they are this connective tissue between those two.
Our burden is to simply empower that group as quickly and efficiently as possible with the insights into what’s on the minds of their team, and give them the highest leverage opportunities to move the needle, to drive better engagement for their teams, because again, we know what that translates to in the business results. That is where, Luke, and we should talk more about this, where Energage and Mo come together in terms of how we empower those managers to actually move forward. So I don’t know if you want to say more about that, but that’s where we see the connection point.
Luke: Yeah, I completely agree. I think it comes down to managers being exceptionally busy and them not having an enormous amount of time. The environment and conditions that they’re creating for their team are one of many priorities that they have. Therefore, the beauty of the work we’re doing together is utilizing Energage insights and equipping managers with a leadership assistant, with the actions that we believe, based upon that insight, they should look to take. Therefore, it gives you really high degrees of leverage, but in small, bite-sized chunks that can be delivered into the palm of your manager’s hand. So, if anyone wants to talk to us about that, they definitely should.
Just maybe then if we can start to think about rounding out the conversation with a couple of success stories. I have two asks for you: one, in terms of customer transformation stories that spring to mind, and then maybe any standout business successes for any of the cynics that are saying, “What’s the value of being a top workplace for my organization?”
Dan Kessler: Yes, I’ll share a couple of things as we kind of wind down the discussion here, Luke, which is, and this can kind of make it real. As you know, Luke, we’ve got hundreds of these stories, but the one that comes to mind is a building products manufacturer. So they’re a stone manufacturer with a few hundred employees.
Luke: Okay.
Dan Kessler: Think about the work that they’re doing. We got all this data in, and what did they hear? This kind of gets down to the very concrete, simple actions that they take. One that they learned was that one of their teams had simply grown too large. It was not being managed well because of spans of control and the way that team was structured. It simply required some reorganizing, rethinking those management layers to drive more efficiency and connection. Secondly, they learned that the team was really eager for more leadership training opportunities, and what were some programs that could be put into place. Then third was some very concrete, tactical feedback about their benefits that turned into, again, more of a communication than necessarily a cost or an additional investment from a benefits perspective. So when you kind of zoom out and you get back to where we started, which is these bite-sized actions, insights that we can take, that’s a very concrete, literally from a stone manufacturer example of how these things work.
The bigger point is to say that if we zoom way out, the other thing that our data has informed with a company called Irrational Capital is that we have demonstrated that employee engagement data that we capture is a driver of future equity value.
Luke: Okay.
Dan Kessler: This data has been used with other publicly available human capital data to define something called the human capital factor, which JPMorgan, one of the most reputable financial analysts in the world, has published a handful of white papers on this data to define how this human capital factor can drive future equity value. So what we’re talking about here is both applicable at the day-to-day level of building a culture and driving the right organization at the departmental level, all the way up to how we actually use all of this as a lever to build future equity value, future enterprise value that delivers a massive shareholder return.
Luke: Wow, that is very cool. Maybe we should try and get some of those reports from you to add to the footnotes for this, because I’m sure that’s a very, very interesting read. Dan, I’m going to close this out and ask you for one last thing, which is, what’s your one piece of advice? So, any leader that’s listening to this and they go, “I’m inspired, and I really want to build a top workplace, one because I care, and two, because it seems to be the right thing for my business.” What would be the one piece of advice that you give to them?
Dan Kessler: Luke, I’m going to give you a bonus. I’ll give you two. So, the first one, quite simply as a leader, is to have some grace with yourself, because we are all human beings with these things called brains and hearts and emotions. So know that you’re not going to get it right every single day and every single interaction, and nobody will. That’s the first thing. The flip side of that is to bring that intentionality as best you can, and that openness to hearing the voice of your employees to every single interaction, meaning email, meeting, one-to-one. Those are the moments that matter that can help build and sustain a winning culture.
Luke: Amazing. Dan, thank you ever so much. Very much appreciated for your time, your insights, the conversation with you.
Dan Kessler: Thank you.
