The luxury goods and services industry has historically invested most heavily in product development. Major luxury brands have also poured billions into data, analytics, A.I. and other technological innovations in an effort to remain relevant. Unfortunately, over the last several years, most luxury and premium brands have been borrowing from the playbook of mass companies and using these technological enhancements primarily to determine how fast they can automate, and how quickly they can eliminate people. Meanwhile, investment in human development has lagged, and/or has been misallocated, to the deep detriment of the brand’s luxury culture and optimal client experience.

That trend seems to be changing dramatically in 2019. Recently, the Luxury Institute has received an unusually large number of inquiries from luxury goods and services brands, especially retailers, asking for its neuroscience-based executive and employee training and development programs. After years of investing in product development, data, technology and analytics, many luxury goods and services brands finally recognise the secret formula for success relies on the highly skilled human element that builds lasting employee and client relationships. Even brands choosing to automate with A.I. find that while it liberates employees from low-value, repetitive, mechanical tasks, and creates task efficiency, there is a far more critical need to invest in human development to achieve that elusive effectiveness factor truly driving top-tier human performance. Given the rapid disruption occurring across the luxury industry, speed is of the essence.

LinkedIn recently conducted its 2018 Workplace Learning Report. It is one of the most reliable and valid pieces of research on talent development. However, Luxury Institute, having successfully trained and coached tens of thousands of executives and front-line associates over 16 years, believes there are more effective methods to achieve high-performance and happy employees than some of the conclusions and recommendations outlined in the LinkedIn report. The LinkedIn survey results indicate ‘soft skills’ such as leadership, communication, and collaboration are the top three most important skills in human development programs. As is typical, LinkedIn refers to these emotional intelligence-driven skills as ‘soft skills’ and to technical skills as ‘hard skills’. This obsolete and flawed terminology used throughout the corporate world, and in the media, implies that skills such as coding and web development are difficult and tangible, and the most important. Emotional intelligence-driven skills are seen as easy to learn, less definable, and, of course, less important.

In fact, it is the technical skills, such as coding, that can be learned more easily because they are far more predictable, rote and mechanical than building and maintaining multiple, highly dynamic and complex, long-term human relationships. Paradoxically, technology experts predict most coders will be replaced by machine learning methods and algorithms by 2030. Fortunately, algorithms will never replace human relationships, regardless of what Silicon Valley’s software engineers say. Witness the fact that coding schools today are a commodity and can get almost anyone to basic coder levels in 3-6 months. That’s the easy part. Getting a coder to be creative, innovative, adaptable, agile, to collaborate as an emotionally intelligent team member effectively, and to stay for more than 18 months, are the really hard skills.

There are five key areas of employee skill development related to emotional intelligence and high-performance identified through 16 years of research and practice by Luxury Institute. After working with over a thousand luxury goods and services brands that employ hundreds of thousands of people in executive, back-office and front-line positions, the Institute has defined the hard-core skills that matter most in the human-relationship-driven, multi-trillion-dollar luxury goods and services industry. Luxury Institute research finds when the company objective is to teach employees critical life and career skills, and when the company becomes their self-mastery university, then trust, happiness and performance improve dramatically. Employee retention is a by-product. The five critical skills are defined briefly below:

1. Identifying Individual Employee Life Purpose and Values

Most companies communicate their purpose and values and expect employees to adopt and follow these religiously. And yet, the employee engagement surveys indicate that most employees are highly disengaged. Companies need to reverse the process. Dare to get personal and teach employees how to get in touch with their own individual life purpose and values as a gateway to self-mastery and living a missionary vs. a mercenary life. Most employees who go through this exercise tell Luxury Institute the thought of writing their life purpose has never even crossed their minds, and love and appreciate the company for providing them with this process of self-discovery. They learn to have integrity within themselves, and with others. Then, brands should conduct an honest dialogue as to whether the employee’s purpose and values are a fit with those of the company. Watch employee engagement, performance and retention grow with those who find your company to be a great fit. Find a way to be generous and kind with those whose purpose and values are not aligned as they leave with new skills, vitality and gratitude. The company’s reputation for humanity will grow.

2. Conquering Fear

Neuroscience has chronicled how humans are wired to avoid threats first and seek rewards and pleasure second. Humans dramatically overstate threats and undervalue opportunities. That mindset worked well in the early stages of human development because it guaranteed physical survival. Today, deeply insecure employees who continue to operate from a state of fear become predators, or prey, and render themselves, and others, inefficient and ineffective. Create a safe space for employees to learn how the fear of failure, fear of rejection, and fear of change can all do far more harm than good, especially in the relatively safe world of work. Teach your employees to rewire themselves to confidently dominate their irrational fears and use them as a tool to energise themselves for high-performance, similar to how extreme athletes harness fear to get into positive states of mind. A fear-free corporate culture drives high performance at all levels.

3. Building Actionable Emotional Intelligence

High-performance requires employees to continuously develop the skills of connecting emotionally and deeply with others to create positive team and client results. Through empirical research, continuous work with neuroscientists, and successful case studies, Luxury Institute has identified and distilled emotional intelligence into four pillars. The four pillars make up 20 per cent of the traits that account for 90 per cent the effectiveness in each human engagement, whether in business or in an employee’s personal life. The four pillars include expertise, deep empathy, trustworthiness and generosity. The companies that will be successful at human development will teach employees to see themselves as “elite mental athletes”. Just like professional athletes, employees will learn to measure behavioural and emotional KPIs, practice daily, and use assessment and coaching to master the four pillars of emotional intelligence leading to deep, long-term relationship building success in their professional and personal lives.

4. Playing with Creativity and Innovation

Companies often confuse creativity and innovation. Creativity is the playful generation of new, novel ideas by individuals or teams. Creative ideas are original and unique, although they are not always brought to reality, or useful. Innovation is the skill of taking creative ideas and implementing them into concrete solutions that help others, and then scaling them throughout your ecosystem. Human development requires companies to teach employees to be imaginative, open-minded, and connect the dots others do not see. While they can be creative with only their imagination, and enjoy the process of daydreaming and brainstorming, employees must learn to be totally deliberate about bringing their ideas into practical solutions adding value for the entire ecosystem. Teach your employees that creativity and innovation are hard-core skills, not genetic gifts. The results will speak for themselves.

5. Performing with Adaptability and Agility

Adaptability in business is the ability of an individual or team to perceive the facts accurately, and then, respond appropriately, to the new internal, or external, circumstances and environment. Adaptability is required because tumultuous change and disruption occur constantly, and there are so many uncontrollable factors in life and business. The ability to adapt is critical in order to avoid obstacles, course-correct, and take full advantage of opportunities. Agility complements adaptability by enabling individuals and organisations to adjust rapidly and effectively. Individuals and teams lacking adaptability and agility will be road-kill for competitors who can innovate and disrupt the industry faster and better. Learning and recognising that we, as individuals, and teams, are complex adaptive systems living within other complex adaptive systems that are continuously evolving, helps employees develop the mindset to navigate through life and work efficiently and effectively.

A manager at the Chicago store of a mid-tier luxury brand achieving double-digit revenue gains vs. prior year summed up the virtuous paradox of investing in human development and teaching employees real-life relationship skills with emotional intelligence instead of Industrial Age robotic training. “I have never worked at a company that gives us such little direction, and, yet, so much real human development support, in achieving our team objectives,” she said with the joy of an entrepreneur. 

Many luxury goods and services executives believe great people skills are ‘soft’ and those who possess these skills have inherited traits and are ‘naturals’. Genetic and personality factors do play a role, but the biggest success factor is the deliberate focus and effort the company and its employees invest in developing the life skills required for building the expertise and relationships driving high-performance. In 2019, the most enlightened luxury leaders are taking strong and immediate action to invest in human development as an imperative for longevity and success in the most rugged and perilous landscape in the history of the luxury industry.

Image: Samuel Zeller