Box of Crayons Blog


Kevin Nakao on Taking the Pulse of Employee Happiness

kevin-nakaoToday, I’m speaking with Kevin Nakao. He is the head of employee engagement and marketing at TINYPulse, a company that helps give leaders a pulse on how happy, burnt out, or frustrated their employees are. Kevin has a BA in philosophy from Whitman College and an MBA from Harvard Business School. In this interview, we dig into:

  • Just what makes employees happy
  • Strategies you can use to understand what employees are feeling and thinking
  • Some surprising statistics around company values
  • Ways to better recognize employee contributions in a way that is aligned to company values


In many organizations, “employee engagement” can be a bit of a slippery eel. How do you measure it? How do you monitor it? How do you actively change it for the better? Definitions of “employee engagement” can vary from department to department, and the waters can be muddied. Kevin outlines solid ways that organizations can improve employee happiness, create stronger, more transparent companies and give a voice to its employees.

If you are strapped for time, download it as a free podcast on iTunes and listen later or scroll below for extended notes.

Listen to my interview with Kevin Nakao.

Full Transcript:

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You’re listening to a Great Work Interview with Michael Bungay Stanier, founder of Box of Crayons and author of Do More Great Work.

Michael Bungay Stanier: So I’ve just finished reading a pretty interesting book. It’s called Work Rules by Laszlo Block. Laszlo Block is the CHRO, the chief people operations person at Google. He says here are the ten essential work rules that work; this is the subtitle, That Will Transform How You Live and Lead. It is actually a pretty compelling read. I was sceptical going into it but I actually enjoyed the book. One of the early chapters is actually called “Culture Eat Strategy for Breakfast.” Now it’s in quote marks. He’s an ex-McKinsey person so you can kind of imagine him going kind of having a bias towards strategy rather than culture.

But what’s interesting in this chapter is he kind of went okay, rather than having opinion, let’s do some data stuff around this because that’s what Google does. He actually found out that there’s some real truth to culture eating strategy for breakfast. Actually, he went another level down here. He went I think I’ve identified the three essential cornerstones for what makes Google such a unique and powerful culture. It’s not actually they can throw in unlimited amount of money at things so that obviously has a little bit of an effect.

Here are the three cornerstones. The first is what he calls mission. So that’s that sense of connected to a bigger picture. If any of you have read the Dank Pink book Drive which I love and quote endlessly, you know, Dan Pink says that one of the three key drivers of motivation is purpose, autonomy and mastery so that kind of connection between purpose and mission. So that’s there.

The second cornerstone for the Google culture is transparency. In other words we try and be as clear and as open as possible in all that we do. You can see that exactly connects to the way Google tries to show up in the world.

Then the third one and this is really important to what we’re going to talk about today is he calls it voice, which is the importance to continually listening to your employees, to figure out what’s really going. Because it’s so easy if you’re a senior leader or if you’re an HR to end up in your own little side of it and just start making stuff up about what you think matters or doesn’t matter to employees.

So having read the book and I recommend to folks who are listening, I thought well, you know what, I’m going to get curious about this whole idea of employee voice because in my experience working with organizations, actually most organizations don’t do a particularly good job at listening to their employees. I mean you know, for some it’s just a here’s our biannual employee engagement survey which honestly are often kind of fact and debacles, you know, you get some data, people kind of fill them out, kind of don’t and then nobody uses the results anyway.

But I thought there’s got to be a better way of doing that, particularly in this world of being hyper connected and that leads me to today’s guest. So I’m speaking with Kevin Nakao. He is the head of employee engagement and marketing at TINYPulse and we’re going to hear a bit about what TINYPulse is about. Now Kevin has a BA in philosophy from Whitman College and MBA from Harvard Business School and we’re going to dig into just what makes employees happy and what are some of the strategies you can use to actually understand more clearly, what employees are feeling and thinking and why would you even care. So Kevin welcome to the call today.

Kevin Nakao: Thank you very much.

Michael Bungay Stanier: Perfect and Kevin tell us a little bit more about who you are and how you ended up here talking to me today.

Kevin Nakao: Sure. I spent the last 20 years working in entertainment, technology, start-ups, big companies. I’ve had the big fortune of working with some really great leaders and some good cultures. I’ve really spent the last five or six years in my career focused on companies that are helping other companies with employee engagement and recognition and that’s why I’m at TINYPulse. Our mission is to create happier employees through really simple and easy feedback loops and peer recognition programs.

Michael Bungay Stanier: Okay. So the language “happy employees” is interesting because you could be talking about productive employees or engaged employees or focused employees. I can just already feel there’s some people going oh happy, okay so it’s another west coast touchy, feely moment here. What’s actually important about happiness? Why is it actually a useful metric to track?

Kevin Nakao: One of the reasons why it’s a good metric is because when you ask people are you happy; they pretty much know how to answer the question. Yes, I’m happy or I’m not.  If you ask somebody if they’re engaged, they’re like what do you mean?

And not only that, all the kind of experts on the topic, they all have their own definition of employee engagement. Some people define it as your willingness to go the extra mile. Another person may measure it by how much discretionary effort you’ve put into your job. So the problem with engagement although the intent of it is good, there’s not a shared definition so when you go out and you ask you know, employees in the general public this question there’s going to be a lot of different answers because there’s no a common understanding of the question. Happiness everybody gets and…

Michael Bungay Stanier: Okay so that’s actually a pretty compelling case. I love the way you put it which is and I agree with you which is like employee engagement is one of those slightly lofty words that everybody bandies about without ever quite having a shared definition around.  But even if I have a happy employee, why would I care? I mean does it make a real difference to make the business that I’m leading?

Kevin Nakao: it does and you know we correlate this question to a number of different factors. In fact, we just looked at companies that scored very high at happiness and then we looked at what their kind of net promoter score was with the customers they served.

Michael Bungay Stanier:  And to interrupt, for some people who are not sure what a net promoter score is, can you just explain that?

Kevin Nakao: Sure. It’s a calculation of really how likely you are to refer a service to somebody else and there are detractors and there are promoters. The higher the number, the better the score and so what we basically found is the companies with happier employees had happier clients.

Michael Bungay Stanier:  Does that work for just frontline employees so people who are kind of serving customers directly? What if you’re kind of buried in the bowels of a bigger company and you’re like I never even talk to customers, why would I even care about my happiness?

Kevin Nakao: You know, if you walk into a room, and whether or not somebody’s customer facing or not and you have some people that are disgruntled, grumpy, it’s just going to ruin your day. So I think the more positive people you have, the more constructive they’ll be. And then you know every business is going to face challenges. We’re going to have some tough times and long nights. If you have people with great attitudes and feel valued, your likelihood of success is going to be better. It’s not assured, but I believe it improves the probability of success.

Michael Bungay Stanier: Got it. Okay. So that’s interesting about the correlation between happiness and net promoter score. Are there any other correlations between happiness and someone’s sort of core business outcomes that people care about?

Kevin Nakao: Yeah. So it’s really interesting. I have not read Laszlo’s book. I have read a lot of articles about him but we’re seeing the same kind of thing, right, especially with millennials. They really believe in the importance of mission. They’re not going to a company just because it pays well or because the office looks great. They’re going there because they believe in that company’s mission. The other thing that’s really important is just transparency. And I think you know, we live in a world now where there’s no such thing as lifelong employment with a single employer. So we kind of want to know what’s going on. Things are moving fast and we just all want to do a better job quicker so we want to know what’s going on. And of course employees want to give a voice and get feedback.

But the really surprising thing I’m seeing that I don’t see a lot of research on is and I’ve seen this trend kind of grow over years is how important who you work with is to your overall work satisfaction and engagement. So more and more I’m seeing people kind of rate and see a strong relationship between how they value and how they rate their co-workers with how much they like their work.

Michael Bungay Stanier: So does this mean that, I mean that it’s been said for a long time that people join a company but they leave a manager. Is this one of the kind of key drivers for employee happiness? If you’re saying that happiness creates better business outcomes, what are the factors that influence people’s happiness? It’s just kind of the people around you?

Kevin Nakao: That’s definitely one of them. I mean clearly your manager can play a role but it’s not the only thing. And the way companies are working today is we’re working on cross functional teams. I’ve been in organizations where maybe 10% of your time is spent with your manager and what’s more impactful on what you do to day to day is the person working in the other department that’s helping you build something or ship something or design something. So I think with a lot of companies, we’re all working on cross functional teams and those colleagues that you’re working with have a greater impact on what you’re doing.

Michael Bungay Stanier: So I’m curious to know, I may be putting you on the spot here but what is the impact of having somebody who is just kind of making you miserable? I mean is it – does the person who creates unhappiness I don’t know counteract the impact of four people who make you happy or six people who make you happy or what sort of – how bad is a bad apple?

Kevin Nakao: You know I have never asked that question so I can’t tell you from any statistical basis. But I can tell you from my own experience I have been in a couple of different scenarios where I’ve had to let some bad apples go. Not a lot of people said anything to me before that but afterwards I have been amazed by the number of who comes up and thank you, thank you for doing that. I think look most people are good people and we hate to see somebody lose their job. It’s their livelihood and nobody wants to really wish that on anybody. So it’s a tough decision to make but I know when I’ve made those in the past, it’s always had a really warm reception.

Michael Bungay Stanier: So tell me a little bit about what Tiny Pulse does and how you work in this idea of trying to increase transparency and increase that sense of voice that Laszlo and other people have talked about in terms of driving a successful culture.

Kevin Nakao: Sure. We’re doing a couple of things. I think you mentioned being in the show employee engagement historically was measured by these big annual surveys or 50 questions. Again the intent is good but the problem is that there was too much and they were too late. So you know, we move so quickly. If you have a problem with the company, you’re not going to wait a year. Particularly in this marketplace with the job rate really healthy and employment going down. You’re not going to stick around if your feedback isn’t listened to.

Secondly, there’s just tons of scholarly research shows that if you ask more than like five questions your response rates go down and even if you get people to answer those questions, the quality of the answer is it’s pretty bad. I have been through this. I know other people are just- you want to get it down. You just power through it. You’re not really paying attention to the questions.

Big surveys can be problematic. So what we’ve done is we’ve taken that and we’ve flipped it on its head and we said you know what, rather than asking 50 questions once a year, why not ask a question a week, why not ask that and that way you can get quicker feedback. So once a month we’ll ask how happy are you at work and we can actually do trend analysis but this really allows you to identify trends and issues much, much quicker so you can deal with them before small issues become big problems.

Michael Bungay Stanier: So let’s say that you’re noticing, you’re asking this weekly question how happy are you and I’m guessing people rate themselves on a scale, right, on a 1 to 10 or 1 to 7s or something like that. And let’s say you see the trend is heading south, not a good trend at all, how do you know where to look in terms of trying to cauterize the wound to make people become happy again?

Kevin Nakao: Yeah. Well the first thing is that you know you have a problem and actually we asked that question on a monthly basis. I think weekly might be a little bit too noisy.  So once a month is pretty good. But at least you know you have a problem. What we do then is many companies that we work with create segments around the questions so they’ll organize it by department or they might organize it by function. The one thing we do is it is all anonymous so we never allow a segment with less than five people because we don’t ever want somebody to be able to identify the individual. It’s really not the individual that matters. It’s kind of what the bigger picture data is showing.

So what we see happening is somebody organizes it regionally and they say oh we may have a problem with our London office or it could be a place in New Orleans. So it helps you isolate things a little bit better. But the real value of is it’s really the starting point of the discussion. So I’ve seen many companies, their score has gone down and what they’ll do either in smaller group meetings or in larger ones, they’ll sit down say hey look at our score. There’s also qualitative feedback that people will provide and they’ll have a discussion about it. So that’s another thing that’s pretty important is we don’t consider ourselves a survey tool. We’re really part of this service that helps create feedback loops and to really start the conversations that you need to you know, get a more productive dialogue going and kind of the solution so that that’s what the scores starts to go up again.

Michael Bungay Stanier:  So that’s making sense to me. How happy are you? Is that kind of basically the only question you ask or are other questions that you found are useful to ask on this kind of monthly pulse like way?

Kevin Nakao: Oh yes. One of the first questions that we ask is do you know your company’s mission and values and that’s critical. Again, with the mention of the book, you know, values are so important to what we do. You know, I think we all know that it’s good to empower your employees to make decisions. So in order to provide the right framework for them to make great decisions, you’ve got to have a sense of values so they can optimize. You know, not all answers are easy and I think values help guide us through the murky waters. So that one is really important.

Michael Bungay Stanier: So let me ask you about that because I’ve got an opinion about a lot of organizational values which is emotionally a load of posh. You know, there’s something that somebody came up in a boardroom. Somebody went okay, we need them to spell the word courageous or we need them to spell the word leadership. So we’ve now got eight values. The first one is I don’t know, loveliness and the second one is equality and the third one is apple pie for all or stuff like that. And then they get laminated and they get slapped over the wall somewhere or given to you in a key card. I’m never quite sure if there’s a correlation between seeing and perhaps knowing the values and what level they show up in the way organizations truly work.

So I’m just curious to know about what you’ve learned if anything about how values are not only known but kind of show up in the behaviours and the kind of DNA of organizations.

Kevin Nakao: Yeah. I mean there’s been a lot of great historical research. The book Good to Great showed the importance of values and focus on companies that were more successful than others. But I do agree with you that it’s really easy to fake our way through values and proclaim a whole bunch of noble attributes that you have but not follow them. So the effectiveness of your values is only going to be as good as your willingness to live by those and to make sure that everybody else in the company lives by those. So yeah, some companies are much better at it than others.

But it’s a really hard thing to do and I’ll share something with you. So you know, a lot of companies that use us, we have more than 500, they’re really focused on creating great company cultures. They all have values. They do everything they can to promote those. Our baseline on that is just roughly 50%. Only 50% of employees actually say anything they know their value . So it’s a really hard thing to get employees aware of, so it’s almost like an ongoing process and I’ve seen great examples of companies who one of the things they do is they have the peer recognition program and when they give people kudos for doing something, they’ll do it within the context of the values.

So that’s really important because it’s then teaching the person giving that kudos what the value means and when they saw an example of it. It’s getting other people to talk about it, people beyond just the CEO or the head of HR. You kind of want to get everybody involved with that.

Michael Bungay Stanier: Cool. Okays so that’s interesting and you’re saying it’s about 50% of your baseline for doing your others. Do you have a baseline for happiness? I mean does that show up?

Kevin Nakao: It does. I don’t remember this off the top of my head right now. It’s a little bit you know, higher than the 50%. It’s on a 1 to 10 scale. But we do have a baseline for that that the companies can compare against.

Michael Bungay Stanier: Okay. So two good questions. Is there a third question that’s kind of a staple of the survey you put out?

Kevin Nakao: Yeah. I’m going to share one with you that might summarize a lot of different things that we’ve been talking about and the question is how transparent do you think management is. I want to tell a little bit of story about that. We worked with a company based in the UK. They’re one of the top consultancies out there that hire people from all over the world who are experts in kind of internet and digital marketing.

And the question came out how transparent do you think managers are and this company received kind of a lower score than benchmark and they were used to just killing it on their score, just crushing it and have really good scores. Their CEO took great pride in their culture and he was just devastated by the results. So he started thinking about it. He goes you know what, I’m going to ask this customer question. I’m basically going to say ask me anything.

So he used that in Tiny Pulse and they said you can ask me anything and we’re going to have a town hall meeting kind of WebEx so we could have a lot of these remote teams on it and I’m going to go through every single question. So we had a huge, huge response. People asked everything from compensation to company strategy to mission and they had that town hall meeting and spent a couple of hours addressing every single question. And then I looked at kind of the Tiny Pulse results after that and all the scores shot through the roof. I remember some of the scores were on like would you recommend somebody else to work here. They had a super high score on that and a super high score on happiness and a really high score on management rating. So that’s a great example of where you know, they didn’t necessarily do any changes like put in the ping pong table or adjust their maternal leave policy. They just answered questions and were completely transparent and it had an amazing effect on the company culture that we’re able to measure.

Michael Bungay Stanier: And that’s a great anecdote but I’m also curious to know whether that commitment to transparency has a kind of I guess a kind of broader evidence that it drives positive business outcomes and the like. Is there research behind that or is it just something that you’ve gone and are pretty sure that this just matters to people.

Kevin Nakao: I don’t know if there’s research done. Intuitively it makes sense to me because in order to be more successful in business today, you have to be able to move quicker with all the information available. When you have information asymmetry which is the opposite of transparency, and you don’t know what’s going on in other parts of the company or with senior leaders who are thinking or on the cost structure of things that you’re working on, you’re going to make less than optimal decisions. So logically it seems to me it would have a greater impact on business. I’m just not able to you know, I don’t have any data off the top of my head to prove that.

Michael Bungay Stanier: Got it. So you know as a way of kind of wrapping this up, I’m a busy manager, I’m a busy leader. I’m working away all this stuff quite interesting to me.  But if I’m like okay, so Kevin what would you say to me, what would you recommend for me to change my behaviour or do things differently, so that I can actually if there was a pulse question asked to me I would be rated higher rather than lower. Have you picked up any kind of trends or guidance or just sort of general advice that might be useful for people?

Kevin Nakao: Yeah. I would say be more transparent where possible. I know if you were a publicly traded company, there are SEC rules that govern what you can say and what you can’t say and make about forward looking statements so be transparent. The second thing that I haven’t touched on at all is just give recognition more. Think about your values and your mission. Think about some great examples for the people that you work with exhibit those values. Just thank them in the meeting, in the email. You can never thank people enough and that has a huge impact on you know, your workplace. When you do that, you’re essentially giving permission to other employees to thank each other to give kudos and that’s one of the most constructive things I’ve seen people do is really take these top down recognition programs and kind of replace them with more peer to peer recognition programs.

Michael Bungay Stanier: Very cool. Kevin, for people who are curious about what you’ve been talking about and curious about Tiny Pulse where can they find out more about the company?

Kevin Nakao: Yeah. You can go to we have a free two-week trial but one thing we always say to people is please don’t sign up for a service unless you’re prepared to make change. If you’re not, you’re actually going to be worse of if you ask for employees’ questions and you don’t do anything about it. So if you go to our site, and for whatever reason you’re not ready to read some of our articles and our blog about how to be a better leader, how to reward and recognize employees, only sign up for Tiny Pulse if you’re committed to creating a better workplace.

Michael Bungay Stanier: Kevin it’s been really interesting to talk to you. I mean there’s a great connection to go from reading the Laszlo book on Work Rules and then kind of making the connection going so here are some of the ways people can think about solutions to being able to drive happiness and transparency and that share of employee voice. So thanks for your time today.

Kevin Nakao:  Yeah. Thank you for letting me be a part of this and for spreading the word about all the great things that

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