Do You Know Goodwill's Evil Brother?

Goodwill is a wonderful asset to own. In accounting, you put the asset, goodwill, on the balance sheet in conjunction with an M&A purchase; the price you paid less the accounting valuation of the company. Simple.

In my early career days with Ernst & Young, I fancied goodwill as a company’s internal firepower, not easily measurable; quality personnel, organizational dynamics, client loyalty. Long before I (or the world, for that matter) knew anything about "Talent Management" and "Client Facing." There remains, of course, no clear quantifiable asset measurement for the ROI derived from Talent Management. It's intangible.

Financial statements are fully transparent regarding revenues, expenses, profits and all balance sheets accounts, but provide little insight to the inner workings of an organization. Does your company possess clear, organized Talent Management processes for recruitment, onboarding, objective setting, performance evaluation, communication and engagement? Or is the intangible, largely non-measured asset, goodwill, really a liability? "Badwill," where chaos, politics and "job protection" reign, and short-term initiatives prevail at the expense of long-term shareholder value and customer and employee satisfaction and retention.

Talent Management has a critical role in evaluating the causes of Badwill, and creating disciplined approaches to transition to a learning and development centric organization…

1. Embrace Problems and Mistakes- Embrace may be a strong word, but a recent case study of a Fortune 100 Financial Service company talked of the tens of millions of dollars saved annually as the Talent Management leaders encouraged operations functions to discuss human errors amongst peers rather than hiding them under the carpet.
2. Eliminate Mediocrity- We are evolving into a logical business world where we can no longer accept managers who can’t manage, leaders who can’t lead and employees who breed negativity and sensitivity. We provide, of course, every opportunity for them to change, but after repeated attempts, time to move on…
3. Learn from Those You Don’t Know- The concept of Badwill, rose out of a conversation with Talent Management leaders at a recent networking event: people I did not know. Those who stick to their own kind, mired in repeated patterns will not learn, will not grow and will not breed collaboration. Steeped in Badwill are new executives who insist on aligning themselves with past colleagues before truly evaluating existing talent and those managers who point fingers at other functions rather than looking inward at themselves and their own performance.
4. Reward Interdependence, not Independence – Parents breed independence in children to build them into responsible adults. In business (and as adults), we must focused on an interdependent environment, where every function embraces the critical role they play in supporting and driving others performance, both internally and externally. Badwill depletes client satisfaction and exacerbates us vs. them scenarios.
5. Ramp Up Meeting Creativity and Collaboration – Companies suffer "Meeting-itis", a malaise caused by too few or too many meetings. Challenge every meeting plan, purpose, frequency and outcome to ensure ROI is realized from participants’ time. When done right, meetings are a core driver for employee goodwill and development. When done wrong, the symptoms- stagnancy, negativity, inconsistency, turnover, etc. will overwhelm you.

As we continue to discuss the tall task of building metrics around Talent Management, keep in mind the highly intangible nature of goodwill. And be sure to keep the "evil brother", Badwill, at bay to ensure you are maximizing your intangible internal assets, rather than drowning in their liabilities.