|Gabriel Gonzalez-Molina is the Gallup
Organization's Global Practice Leader for Gallup Path
Management is co-author of Follow this Path: How the
World's Greatest Organizations Drive Growth by
Unleashing Human Potential. This book was
co-authored by Curt Coffman, who co-authored the
best-selling First Break All the Rules.
David Creelman spoke to Dr. Gonzalez-Molina.
DC- In a nutshell, what do you think is wrong with
GGM- First of all, here is the predicament for
most companies: our growth performance record is not
very good at all. Revenue growth is less than half of
what it should be, and profit growth is less than 25% of
what used to be a decade ago. So, the big challenge for
most companies is how to increase the pace of growth, in
revenue and profits. But if you look at the performance
of stocks in the past decade, you quickly realize that
we seemed to have lived in an illusory world, because
the performance of stocks was driven largely by external
factors, outside of our control, so that stock
performance had very little to do with how companies
So the idea that management practices were driving
success was illusory. The time has come now to build
authentic growth, based on the realization that real
profit increases are the real drivers of real stock
increases and that real profit increases are driven by
real and sustainable revenue growth, authentic growth.
Most companies need a path that can guide them to
achieve authentic and sustainable growth. Follow This
Path tells a very compelling story – how the world’s
greatest organizations drive real and sustainable growth
by creating relationships with employees and customers
that are worth enough to override price, by ensuring
that employees and customers alike are emotionally
DC- Give me an example of a factor people were
following in the past that has little relationship to
the success of a business.GGM- The
question is: Think of any management initiative being
pursued today that actually drives growth. How do we
manage revenue and profit growth? What percentage of a
company’s growth performance can really and objectively
be credited to the manner in which we manage our
companies, in terms of employees and customers? I find
it very difficult to see how any management initiative
pursued today drives revenue and profit growth. In many
cases they simply don’t.
DC- Most HR VPs would say they are pretty sure
there is a connection from their programs to revenue
growth because there ought to be a causal relationship.
However they would admit they have not been able to
prove the connection.
GGM- That is one of the reasons why they don’t
have much influence in how an organization should be
run. The marketing function can show the CEO the impact
of a particular campaign. The operations manager has a
way to link the investments in the production system to
the bottom line. The HR person will never get that
impact unless he or she can demonstrate what drives
revenue, margin and profit growth.
DC- What other mistakes has HR made?
GGM- One is the belief that business
performance outcomes, like turnover, productivity,
profitability, are, in essence, company-wide phenomena.
We have discovered that every business outcome you can
imagine is almost always a local business unit
phenomenon. That was one of our first discoveries.
Take turnover. If you take any given company—and we
have looked at in excess of 300,000 business units in
more than 1,000 companies—you notice that the variation
within (i.e. the internal variation among business
units) is larger than the variation between companies.
There may be 20% of business units accounting for 60% of
the cost of turnovers while 20% of business units have
hardly any turnover.
DC- How big is a business unit?
GGM- On average it is about 10 people. The
range is wide. But what does not change is that the most
important person within a company is the local manager
because almost every business outcome can be predicted
by the relationship between the manager and their
DC- That these very small local units are what
really matter is an interesting research
GGM- I would ask the HR practitioner to take
any important business outcome and break it down in
terms of business units. You will see the range of
outcome performance is incredible. You will find you
have the world's best and the world's worst within your
own company.But what is even more interesting is
what we call, ‘our second discovery’, and that is that
almost every business outcome—efficiency, profitability,
margins or whatever—is driven by employee and customer
engagement. We have been told for a long, long time that
superior individual results were the result of greater
factual knowledge, greater experience, better skills and
so on. We have discovered that two elements are the most
authentic drivers of superior performance: a person’s
individual talent and how well that talent is
emotionally engaged on a day-to-day basis.
DC- Most business professors would say Coca Cola
is successful because they are incredibly smart about
marketing, or that Unisys is successful because they
really understand technology, or that Dell is successful
because they have incredibly effective production.
GGM- You are talking about yesterday. Coca
Cola was highly successful by marketing one brand for
all occasions, and using a mass advertising initiative
as the medium to engage its customers. Today, that brand
is no longer for everyone, nor for all occasions and
what’s more important, that model of engagement has
exhausted itself. Unless you incorporate the human
related issues of engagement in the critical areas of
distribution, merchandising and promotion, how do you
replicate that success story?
The problem again is that unless companies re-define
how they are going to engage customers and employees in
order to somehow override price, their traditional
competitive advantages are gone. As Michael Porter
pointed out, you can either be different or be the
lowest cost producer. The potential for any company to
be significantly different has been eroded so the only
way to compete seems to be to lower your price. We call
cutting your margins the razor blade ride to hell
because once you are on that path you can not leave it.
And while you can momentarily gain share, ultimately you
don’t achieve sustainable growth.
Aside from a few exceptions, the rule is you can’t be
different today unless you maximize the value of people.
That variable has never been maximized because it has
never been considered important. But we are not talking
about ‘people’ in the conventional way. We are talking
about our natural predisposition to want to be
emotionally engaged.We are leaving the era where the
product was key or where the system was key but not the
people doing those things. That is what Follow this
Path is really about.
DC- Tell me a little bit more about customer
engagement and employee engagement.
GGM- Some of your readers will be disappointed
because HR practitioners want to move away from soft
terms and here we are saying, "Hey you should use
emotional engagement." However, our research shows that
that is indeed the key measure. But let me explain:
For more than a century emotions have been considered
to be elusive, difficult to measure, that part in us
that constitutes ‘a baggage of evolution’. Recent
discoveries in neuroscience have changed that forever.
There is nothing elusive or subjective about emotions.
These are chemical reactions inside our brain, which can
be observed, measured and cultivated as any other
biological phenomenon. Secondly, organizations thought
emotions were something you should control so that they
didn’t get in the way of rational thinking (Does this
sound familiar? You probably heard it in Daniel
Goleman’s Working with Emotional
Again, the bulk of recent discoveries in neuroscience
indicates that emotions, first, are mechanisms in the
human brain that you should try to understand. Here is
why: the neural pathways from the amygdala (the
emotional center of our brain) to the frontal lobes (the
house of our intellect, of what we are consciously
aware) are much wider than the other way around. This
simply means that emotions set our highest-level goals,
how much and how well we work and how attached we become
to brands and organizations. And a central theme is that
you cannot control this. In other words, we are
naturally predisposed to be emotionally engaged. The
question, of course, is our organization does or does
not fulfill this natural predisposition to the
Another important implication is that our emotional
wiring is very difficult to change.
DC- So what is your definition of
GGM- Again, I would contend that the basis of
our understanding of talent lies in neuroscience,
particularly how our learning and communication
capabilities (our synapses, the connections between
neurons) are hard wired from an early age. Talent for us
is a consistent pattern of thinking, feeling and
behavior that can be applied productively to achieve
superior results. It contains our intellect, our ability
to process mental images, our ability to reason in a
particular way, but it also includes our feeling of what
happens when we engage in the right activities and makes
us passionate about it. And practically all superior
performers are passionate about what they do. The
question is: Do you seriously think that you can train
someone to be passionate about something?
If there is one lesson that this book should teach HR
practitioners it is that engaged employees create
engaged customers, who in turn create sustainable margin
So there is a vast emotional economy within all
organizations that is bigger than we ever imagined.
There is more value to be created in this economy than
in many, if not all, other management initiatives being
pursued today. Organizations should assume that every
employee is naturally predisposed to be emotionally
engaged. They must use that emotional engagement to
connect with customers. And, they must hold every
manager responsible for the employees’ level of
Oh, one last thing: In the process of managing their
company’s emotional economy, ‘HR’ should be called ‘GR’
instead, because such is the department that should be
in charge of managing the company’s growth rate.
Follow This Path is available from
List of Past HR.com Interviews