In the fifth episode of the Engaged Organization Podcast Series, Stefan and Dan Sullivan talk about the cost of disengagement and how engagement is the basis of making really smart hiring and firing decisions. You will learn how to turn the high cost of disengagement into an investment in engagement, how to use engagement as a fundamental hiring tool to avoid employing the wrong people, and how Engagement Multiplier can help you avoid many of the challenges of firing disengaged employees.

Want to see the impact of Engagement Multiplier from an employee’s perspective? Watch these short videos from the Strategic Coach team.




Stefan: Hi, this is Stefan, founder of Engagement Multiplier. I’m here in the studio again with Dan Sullivan of Strategic Coach to talk about the Engaged Organization and what it means to have an engaged team. Today we are going to talk about two topics. One, the cost of disengagement and secondly, engagement as a basis for making really smart hiring/firing decisions.Dan, thank you again. It’s great for us to be together and talking about this never-ending topic of engagement. If we pick up on the theme of disengagement and the cost of disengagement first, I know recently that you were talking about this in one of your workshops. I wasn’t there, but I got some fabulous feedback from the team that were. I’d love to hear, in your words, what you mean by the fact that you’re paying for it anyway.

Dan: Well, I’m very committed because right now we have three thousand entrepreneurial business owners in the program that because the Engagement Multiplier is working so well for us, and our clients are really interested in what we do back stage. They come, they like the program, but they always have part of their attention based on how does Strategic Coach run itself. Also, they’re checking out the validity about what I’m preaching and whether I’m actually practicing it. I’m very, very conscious that this goes on all the time. Does the person walk their talk?

I’d got on the subject of engagement because I’m trying to promote this throughout the Strategic Coach universe, our three thousand. I don’t care if you only have two employees. I think that, if you want to grow, I would get yourself and your two team members on the Engagement Multiplier just to have a way of bringing out all the most important topics that you’re going to need to grow. It’s a marvelous universe of really, really important considerations and ideas that you probably won’t get anywhere else.

I do a lot of work on Smart Boards so I go up and I put word ‘engagement’. Then I put two columns, disengaged, engaged and I said, “How many of you can tell when one of your team members is disengaged with what the company is, or not engaged with you?” If those two are true, they’re probably not really engaged with their work. I said, “Give me one of the telltale signs.” Boy, I’ll tell you, the whole room, there was no problem getting that. “They’re late.” “They leave early.” One of the things that I said, “If they have sick days that they’re granted,” and everybody does because of the political jurisdiction that you’re in, everybody gets sick leave, sick days, and everything else. One of the things that I said, “They max out all their sick days.” Their experience is that being sick is, say, a more enjoyable way of being disengaged than actually being at the company.

They max out their sick days, in meetings they don’t contribute anything, we know it. Every entrepreneur, if I gave them a sheet of paper, and I said tell me ten ways that you can tell that someone working with you or working for you isn’t engaged. They could write down ten things. I wasn’t looking for anything in particular, but we got seven in the column, disengaged column, and I says, “Okay, that’s the disengaged column. Let’s go to the engaged column. How would you know?” What was interesting, they just didn’t flip it and made it the opposite, the seven that they put down for engagement were not just the opposite of the disengaged. They were very, very real things.

I said, “Right now, how many of you have the experience of someone in the left hand column? How many of you have the experience of someone in the right hand column?” They could see the difference between these two columns. I said, “How many of you are already paying quite a large check for the left hand column?” Every hand in the room went up. I said, “Well, what if we could take all the money you’re presently paying on the left hand column and take a portion of it and pay it for the right hand column so that all the dollars that you were investing were going to the proper column?”

Everybody went, “Oh.” If it’s normal, you don’t think of it as a cost, but it is a cost. There’s turnover, and turnover is one and a half times the first year salary that you’re paying anyone. We know that. If somebody quits, then you have to go through the hiring process, and you have to go through the training process, and everything else. You’re paying 1.5 whatever the person who left, or what the job position is, you have to pay 1.5 times the first year’s salary to get the new person in. I said, “That’s a big cost.” Then there’s low productivity, lots of other things. I said, “Why don’t we use all of our money to pay for engagement? Let’s stop paying for disengagement?”

Stefan: I love it. It’s a very simple way and a very clear way of bringing it to life for an entrepreneur.

I think it leads us nicely into the subject of who’s on the team because, as we discussed in an earlier podcast, when the organization is measuring and scoring engagement every ninety days, it’s very easy for individual team members to see how their personal level of engagement, and only they get to see that because of the confidentiality, but how their personal level of engagement compares to the rest of the organization. An interesting consequence of that has been that, over the last twelve months, we’ve seen, with many clients, that people that are simply not in the game, not engaged, unlikely to become so, make the decision to take their disengagement elsewhere.

Or, those that actually have a bit of a wake up call say, “Well, now it’s time to start getting serious.” That can be what drives them to becoming more engaged. There’s an element of, I write about in my book, Darwinian selection here. Those that aren’t engaged tend to fall by the wayside. That’s not your loss, in fact, best to know that now. Then, you’ve used engagement as well as experiencing disengagement of employees that are not engaged effectively selecting themselves out. You’ve also used engagement now as a theme for hiring, I understand. Can you tell us a bit about that?

Dan: First of all, everything that we’re talking about here, we can talk about it in a new way simply because you’ve created a marvelous technology. I’m not saying anything so far in the podcast that every entrepreneur doesn’t know a hundred percent. It’s one of the reasons why they have a hard time taking free days is because, when they’re on free days, they spend their time really, really angsting over the disengagement that’s going on inside their company. They can’t really plan for a bigger and better future because they don’t have the confidence in the engagement level of their organization to jump to a higher level of performance and results. I can understand that. If I’m going to be thinking about this anyway, I may as well be busy at work rather than on the beach or at a resort because I can’t do anything about it there.

The big thing is that, this has been an enormous revelation for me, I think that I was committed to everything that is articulated in the Engagement Multiplier program. I think it was why it was such an easy adaptation for our company is because we were totally predisposed to this, but we didn’t have any way of coming to grips with anything because we had no measurements. Our measurements are not the important thing, it’s actually the measurement of the entire organization. I talked to the two individuals who are most responsible for the LEO team, the Leaders of Engaged Organizations, inside of Coach.

One of them happens to be the person who is primarily involved in the hiring process for Strategic Coach and also the firing process at Strategic Coach. I was talking to her, I didn’t coach her on this, and I said, “Karen, we’ve gone through two quarters now,” this was after the second survey that we did on the Engagement, “Any change in how you’re identifying whether someone’s a new good fit for us when you’re going through the hiring process? Is there anything that you’re noticing about now coming to grips with people who really shouldn’t be here?” She said, “Oh, yeah. There’s no question about it. First of all, let’s start with the last first. Let’s start about the people leaving coach.”

She said, “Someone really, really has to be bad before you can fire them, just by the legal requirements.” I have to tell you, of the three countries, the UK, Canada, and the United States, the United States is the toughest in hiring because it’s a very litigious society. Everybody’s got their own lawyer here. Depending on the state that you live in, you can live in a labor friendly state where their notion of management is that they’re evil so they side. The actual easiest place to get rid of people is the UK. It surprised me because you’re closer to Europe. There are parts of Europe where you might as well wait for them to die because you’re going to have a hard time getting rid of them before that.

First of all, we have a very, very high participation rate now after our fourth survey. We’re at ninety-seven percent. Everybody who participates knows that we are getting a very high participation rate so everybody’s excited about the quarterly survey and everybody’s excited about the information that’s coming back to them. This is common knowledge throughout the Coach culture. You may be one of the people who aren’t voting so you’re faced with the fact that ninety-seven percent of the other members in the company voted and you didn’t so that’s one piece of information that you have.

The neatest piece of information here is starting with the fourth survey, you now give them a comparison between their voting results and what everybody except them did. I think that’s got to be a tremendous wake up call because it’s saying, “Am I the only one? I thought everybody felt this way. It looks like I’m the only one who feels this way.” A person really has to take responsibility for what their attitude is, what their performance is and I think that one of two things can come out of it. They say, “Well, I better really, really up my game here and really figure out how to be more engaged with what’s going on and I can talk to somebody about this,” or, “This is just not a place for me and maybe I should start looking elsewhere.”

I don’t know about the first because I wouldn’t necessarily know because they’d be talking to their team leader and I wouldn’t necessarily know about it. That would be a private conversation anyways so I wouldn’t really know about it. I’ve talked to the team leader who’s responsible for people leaving and she’s says there’s no question now that people are being encouraged by the Engagement Multiplier’s scoring to make up their decision where we don’t have to be the pressure that’s being brought to bear, their scoring is the pressure. The difference between their score and everybody else’s score is the pressure that says, “Okay, this isn’t going to get any better. I’m not going to vote differently in the next survey. The company keeps voting higher on the next survey.”

Stefan: You said earlier, it isolates negative people faster than anything you’ve ever seen. I think it does.

Dan: Firing people is a tremendous emotional, psychological challenge for most people. It’s usually done based on ignorance on both sides. This supplies all the information that’s really necessary. Having said that, was that useful? Do you know what I was talking about?

Stefan: Absolutely. It’s very useful in terms of understanding when it becomes almost self-managing in terms of people that are not engaged. The program does provide that structure and framework where the individuals themselves get to see that they’re not actually part of the rest of the group. Everyone else seems to be doing one thing, they’re doing something else. People like to be part of something. That helps them make their decision, I think. I’m interested to see or understand a bit more about how you were talking about Karen and the hiring process. Interested to understand, and I think the entrepreneurs who are listening, will be interested to understand how you’re using, or referring, or referencing engagement as a way of deciding who joins the organization.

Dan: Now that we know that the electricity of the organization, your eyes and your ears are looking for that electricity coming in. You look at their work experience, but that doesn’t really tell you anything about the engagement level and besides people’s, what they put together, they might as well have gone to a PR agency to get their resume put together so it doesn’t really tell you anything. You can do all sorts of tests, we do IQ tests, we the Kolbe test. Actually we hire through agencies, the only exception to that is where it’s an affiliation hire where the person is connected to someone who’s already at Strategic Coach. Any time we’re hiring someone new, not known to one of our team members, we go through agencies and we require the agencies to do a number of tests.

One of them is the Kolbe. The reason is because we use the Kolbe to define the job position. There’s a whole Kolbe program that actually allows you to determine what the Kolbe profile of the person should be so that there’s a good fit. We do the StrengthsFinder, we do the IQ tests which is Wonderlic, and then we do the DISC. Having all those scores doesn’t tell you anything about the engagement level of the individual. I often heard, they said, “The biggest problem of hiring is that you have no insight into character. You have no insight into character. Is the person a giver or a taker, you can’t tell that by any of their other scores.”

Anyway, what Karen told me, and this Karen is one of the founders of the LEO Organization, but she’s got this key responsibility of people coming and going at Strategic Coach. She said, “I’m giving them audios about the program to listen to. They have to go through and look at videos of various people and coaches talking and they have to read certain things.” She said that, “When they come in the door, my first conversation is The Gap. What did you think about the Gap Concept?” There’s always two people, Karen always has another person in the room with her. She has a sign that she gives if the interview is over. The person says, “Boy, I was really busy and I didn’t get to that.” She’d gives the sign and they’ll talk a few more minutes and she said, “You know, that was actually your first assignment on the job and you didn’t engage with it. We feel because you didn’t engage with that, you won’t engage with anything else and that you’re just looking for a job, you’re not looking for something to engage in.” End of the game.

Doesn’t matter what their qualification is, doesn’t matter anything like that. They had a first opportunity to engage and they didn’t engage. Then we have a three month trial. In most jurisdictions, you’ve got three months where it’s just a trial and you can fire without cause. You can leave people to go. More and more, we’re up front loading engagement tests in the first three months. Do they engage? This would never have happened if the consciousness of engagement wasn’t in the company. Karen is really great at this, she’s always been great at this. She’ll tell you, if she was doing it intuitively, she didn’t have any basis for making a lot of the decisions that she was making. She says her participation in the survey, the company’s participation in the survey, and the difference that they know now between someone who’s engaged and not engaged has now given her enormous amount of tools to work with, to be watching for certain things that might have passed by previously.

Stefan: Absolutely. One of the things we’ve noticed about Engagement Multiplier is that companies that are on the program are very quickly realizing that where they are in the hiring process and they’ve got someone they really want to hire. We have that happen, don’t we, where we get the opportunity to complete some interviews and you suddenly think, “We really want this person on board.” One of the things that is proving to be very helpful in the recruitment process, which helps you identify and recruit people that are engaged, is to actually tell them that you are an engaged organization. You systemically measure engagement every ninety days, that everyone in the organization gets a vote, that they get the opportunity to have their say, and that there’s a process that connects the team around the engaged purpose that the organization has, and that you care about engagement for all the reasons that engagement is important and here’s the system that backs it up. By the way, “Here’s our scores.”

In Coach, right now, someone’s thinking of joining the business and you actually want them to join and you’re going to reflect back on how, you’re about to do a fifth survey, here’s how our score, because it’s public information, here’s how our score has moved over time. This is probably a great point to mention. That wonderful video that you showed me this morning which there’s a link for listeners with this podcast, there’s a link for this particular video.

Dan, talk a little bit about the video because I think whilst it’s incredibly rewarding for me as a founder of Engagement Multiplier to watch your team members talking, I think you’ve got something there which will prove to be an incredible tool for you to use when recruiting new engaged team members.

Dan: The big thing that prompted or triggered the video that we did with our team members where we had them talk about what their experience has been for the first year, was that every workshop during the last quarter, I brought the Engagement Multiplier up as a new capability for our clients in the workshops. One of your top people is in our workshops here in Chicago and then we’ve made provisions for our own staff to be able to do it. I said, “Well, we’ve got the wrong person selling here. I shouldn’t be selling it, about what the Engagement Multiplier is doing for our organization, my team members should sell what the Engagement Multiplier is doing inside Coach.”

We have a really good video team. I said, “We have the thirty-five people who have volunteered to be part of the LEO team. Why don’t we just start interviewing them.” I gave them some questions. “What’s the biggest difference that you noticed? Do you see comparisons between Coach and other organizations? What do you think is personally possible for you now that you have this new capability inside?” Then the team went at it. I was no part of the actual interviews. I knew that I was going to be seeing you and I says, “Let’s have it ready for Stefan when he comes. I think he’d be really interested in this.” When you walked in this morning to get our thoughts together about the podcast, I said, “I want to show you something.” You and Jane, she who makes things happen, came in together and I showed it to you. I think everything that was talked about on that video confirms reports that you’re getting from other organizations.

Stefan: Yeah, it’s wonderfully authentic. If you’re listening to this podcast, then the link’s there and I’d recommend you watch it. It’s a great insight into what the impact of running with Engagement Multiplier and what the team members truly think.

Dan: There’s just one thing I want to go back to on the hiring and firing thing that I talked about. My experience as a coach of entrepreneurs going back forty-one years, is that the best entrepreneurs are great salespeople. The last person in the world that you want to have hiring anybody is a salesperson. The reason is because the owner sees it as a sales opportunity. They don’t want to hear any negatives about the person. I’m a terrible person at hiring people because, as a good sales person, I can get them totally excited about the opportunity, but they’re not excited about the job, they’re excited about the sales job.

The people we have are really dispassionate, they don’t smile, they’re very polite, and everything else. They’re not trying to make the sale. If anything, they’re trying to not make the sale because they know the trouble it’ll cause if the hire the wrong person. It’s not one problem, you hire the wrong person, and it’s ten problems. If you do not fire someone, those ten problems stay with you so you’re paying for the disengagement. Every month or quarter you go on with someone who shouldn’t be, the cost of disengagement goes up because it’s impacting everybody else in the organization. We have this concept which is called multiplication by subtraction, that there’s a situation where it’s not improving and there’s one person who is really, really keeping the lid on things. When that person leaves, all of a sudden there’s this explosion. You say, “Well, what happened?” I said, “Well, you were the last one to know that that person was a problem. Everyone else did.” That’s the other reason. Owners are the last people to know that someone in their organization is a problem.

Stefan: Absolutely. It comes back to the point that I make that the answers to how to improve your organization are there amongst the team members that are doing their jobs day in and day out. You’ve just got to provide them with the structure and framework to be able to freely, without fear of reprisal, sharing honest feedback. Honest feedback.

Thank you, Dan. That’s some great insight again. If anyone is listening, I do recommend you watch the video. It’s a fabulous video. If you’re interested in understanding more about Engagement Multiplier, please visit We’d love to have you as part of a community of businesses all over the world measuring and improving engagement every ninety days.

Dan: I’m saying because we have a growing worldwide community of entrepreneurial business owners who are listening to these podcasts, I just want to say, I don’t say this about many things, but I will absolutely one hundred percent say this about the Engagement Multiplier that, I believe that you will, if you’re listening to these and you’re looking at the website, the link for Engagement Multiplier, at some point, you’re going to sign up for this program. If it’s right away, you’re going to be very happy if you did and if it’s a year from now when you sign up, you’ll say, “Gee, I wish I’d done this a year ago when I first heard about it.” I’d like to save you that kicking yourself a year from now by doing it right now. It doesn’t cost anything. The reason is because the bills are already coming in for disengagement. Why don’t you just eliminate all the money you’re investing in disengagement right now and put all the money in the proper place?

Stefan: Thank you, Dan. Absolutely wonderful.