No More Performance Evaluation!

The Great Performance Evaluation Debate

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Like a lot of others I was intrigued to read about Accenture’s decision to radically modify their approach to performance evaluation and eliminate such practices as forced ranking and the annual or semi- annual trip to the woodshed that both employee and manager dread.

That being said I think what I liked is that Accenture, and other progressive companies recognize, is that it is largely the execution of the process that fails IF you recognize that the primary purposes of performance evaluation should be to give employees feedback on things they are doing well and can improve on, and to provide some measure of objective information in making compensation decisions.

Employees need and require feedback. In fact a Saratoga Institute survey of 20,000 employees from multiple industries indicated that lack of meaningful feedback is the number 3 reason employees leave employers. Number 1 is a lousy boss (see a correlation), and number 2 being poor job fit.

There a literally hundreds of reasons we don’t give meaningful feedback, and as a human resources executive and management consultant I have heard most of them.

Giving feedback constructively is not a natural skill for most of us. Some of the biggest reasons include:

  • Fear of hurting the recipient’s feelings
  • Dislike potential confrontation and conflict
  • Fear of losing control over our feelings and emotions
  • No data (haven’t observed performance)
  • Never got it yourself
  • Haven’t been trained
  • Not timely; it loses impact
  • Culture doesn’t demand or reward it

It seems that many of us are still caught up in Frederick W. Taylor’s model that Leaders lead and employees do, so all that soft stuff like constructive feedback, corrective action, and coaching are for wimps.

I am still stunned by the number of organizations that don’t assess for emotional and social intelligence skills in addition to technical capabilities when hiring or promoting management or leadership talent. Remember my top three reasons employees leave!

Then in many cases we compound it with lack of training.

My former colleagues in Human Resources have unfortunately contributed over the years by designing systems that are easy to administer and are more about documenting process than modifying or reinforcing performance.

Constructive feedback isn’t code. It means the feedback is specific, measurable, job related, and timely. Semi -annual isn’t timely even if it meets the other criteria. Annual is an epic fail.

Corrective action isn’t a politically correct way to describe “discipline” or punitive action, or “building a case”. It means identifying behavior or performance that isn’t meeting expectations and figuring out why and fixing it. It could be unclear expectations, lack of training, conflicting priorities, or a host of others causes. It is first always diagnostic.

Coaching isn’t training. It is helping an employee increase capabilities or learn new areas by reinforcing strengths and aptitudes we see demonstrated.

Then there is the mess we call compensation delivery.

In my over thirty plus years as an HR and C level executive and consultant I see this crash so many times. Employees often take issue with their compensation and the way it is delivered because we provide no context or framework for how those decisions are made.

I have always embraced a pretty open model.

  • These are the labor markets we compete in for talent.
  • This is the position we choose to tale relative to that market; i.e. at market, leading, or behind.
  • We use a salary benchmark. We track performance and pay to that benchmark and our goal is that people performing at that benchmark will be paid at that benchmark. Pay above that benchmark is reserved for outstanding performance in most cases.
  • We don’t do “cost of living”, we pay to our market.
  • Your pay and your performance relative to our benchmarks determine how big a raise you get or don’t get.
  • Although we don’t “force rank” unless we are blowing our goals away everybody in the organization is not exceeding expectations. Our expectations are high; meeting expectations means solid performance not a “C” like school.
  • While I hire and manage whole people your personal circumstances are not a factor in my decisions about compensation.
  • Your compensation doesn’t reflect your value as a person; it reflects the market value of the rent I pay to have you provide your talents and abilities in my organization.
  • I do compare people who do the same or similar jobs to each other considering their experience, capabilities, and performance in pay decisions.

There was an excellent post on Linked In today, https://www.linkedin.com/pulse/performance-evaluations-dont-help-your-workers-best-jacob-jaber, which does an excellent job of describing what good performance evaluation is intended to accomplish.

Accenture, Deloitte, and others who have “blown up” their performance evaluation systems haven’t lost track of that. They are experimenting with other models to address the flaws in our current systems.

They have not stopped giving feedback or tying compensation to performance so like them if you are looking to throw out your old system make sure you have a replacement……

Our Tipping Point

I will freely admit to being a Malcolm Gladwell fan. I have enjoyed all of his books. Unlike his critics I don’t see him as a scientist as much as a social commentator. He makes observations about things that he sees and comments on them.

Perhaps some of the reason I enjoy Gladwell as well as Seth Godin and Dan Pink is that I find their observations interesting and the fact that I am a social commentator as well.

Over the last three and a half decades I have continued to be at my core human resources professional although my path has taken me from human resources generalist to executive to c level executive to management consultant and coach.

The reason I say I have remained true to my calling is because what drew me as a young undergraduate continues to draw me- exploring how to build better relationships between individuals and organizations. I remain firmly convinced that the organization that acquires, retains, and aligns their talent best prevails in every industry. Unlike 35 years ago now there is evidence to support my belief!

It does wryly amuse me that as an industrial society we still shy away from this. We still want to honor the memory of Frederick W. Taylor, the “father” of scientific management, and manage people like we manage other inanimate assets.

We still call things like communications, giving and receiving feedback, setting appropriate expectations and coaching soft skills.

Even after a millennium we still do a poor job of ensuring that candidates for leadership and management are not at least competent if not proficient in those skills.

There remains a significant cohort that embraces the idea that leaders are born not made. I do accept that some individuals have a natural proclivity towards leadership; just as other have natural athleticism. Similar to athletics, every leader doesn’t have to play at the professional level…

The latest tempest in a tea pot is the arrival of the Millennial generation as the largest cohort in the workplace and the proliferation of their characteristics and how to and not to manage them.

I find that wisdom pretty lame. They are no more one size fits all than any other generation. They are influenced by their environment just like we all were.

The Tipping Point I am hoping for is that employers recognize that employee engagement, giving employees an opportunity to “join up” rather than comply is a far superior strategy and more importantly it is a culture not a program.

There has been a lot of information about how engagement strategy is a waste of time and energy and merely a fad. Most of that has been written by organizations that looked at engagement as a program and delegated to the HR department with minimal real change in any of the underlying culture or processes.

Unfortunately in the majority of organizations the human resources department’s primary function is compliance. They are score keepers not consultants so delegating responsibility for engagement to them is an epic fail.

My experience has taught me that there are a couple of key ways to create and sustain engagement:

  • Hire the right people. I talk and write a lot about things like building a foundation based on trust, respect, and congruency. The reason I do that is because those characteristics of a culture have been proven over and over again to generate outcomes we want.
  • Invest in front line leadership. The criticality of front line management shouldn’t be a surprise to anybody. Heskett talked extensively about the impact of even one bad manager in his book The Service Profit Chain, and it has been discussed extensively by others as well. Employees have different expectations of their manager/supervisor than previously. The concept of manager as boss is severely outdated. Employees expect their manager to partner with and coach them in their career.
  • Engagement is a culture, not a program and it doesn’t belong to or live in HR. If you ask most human resource professionals what their critical contribution to their organization is the vast majority will answer compliance. Compliance isn’t engaging, it represents the bottom rung of the trust ladder being based on authority and rules.
  • Engagement is not a survey. If you have no intention of making meaningful changes don’t annoy your employees by asking them to respond to a survey. Pre-survey they might give you the benefit of ignorance. Post survey they know you are either incompetent or apathetic.
  • Although leadership and management are a continuum and every manager doesn’t have to be an enlightened leader every manager must be competent at some core skill sets among which I include; setting clear expectations, giving and receiving feedback constructively, diagnosing performance issues and taking appropriate corrective action, coaching to optimize performance, and creating line of sight between organizational and individual goals. These skill sets are critical to every management role. The bad news is they don’t teach these in business school or most university curriculums of any discipline.
  • The best organizations have a clearly defined employment brand. An employment brand clearly identifies for current and prospective employees what you are about. It is reinforced in hiring, training, performance management, and the reward system. Every organization has an employment brand; superior organizations are managing theirs proactively.

The reasons for executing an engagement strategy should be pretty clear:

  • The economy is improving. Finding and keeping talent is becoming critical again, employees have choices and they will act on them.
  • The “new” generations see themselves as much more of an equal partner in the employment relationship. They will not settle for the old model.
  • Engaged organizations outperform their competitors in every key performance metric from per capita productivity to shareholder return and profitability.

So maybe, just maybe we can get to a place where managing people and talent rather than human capital becomes more than a fad….

 

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Note to Self

Employers Be Advised!

I have been seeing a few posts of late that reinforce some things that I have known and talked about for some time:

  • We don’t just acquire talent or human capital; we hire and hopefully retain whole people.
  • Contrary to everything you read Millennials are not slackers, uninterested in making a contribution, and generally the most awful generation ever…
  • All Millennials are not motivated by the same things (imagine that)
  • EVERY employer has an employment brand; some have an intentional one…

As a former human resources professional, c level executive, and management consultant I have watched the evolution of how we approach the attraction, retention, and occasionally engagement of staff for over three decades now.

I chose interesting timing (2008) to publish my first book, Managing Whole People, on my personal approach to managing talent. I say interesting because during the recession the concept of treating people respectfully, building engagement into your culture, and appreciating the return on investment of engaged versus unengaged or marginally engaged employees didn’t get a lot of traction.

I think we lost ground we had been gaining in that area for the ten years proceeding. With the unemployment numbers increasing I watched employer after employer fall back into their old habits.

The nice thing about the intervening years is that employee engagement is hardly conceptual. The studies are out, have been vetted, and clearly demonstrate the value of an engaged workforce.

There are still detractors who believe that engagement is voodoo or another fad, but the people who believe that also believe that Human Resources highest and best value is compliance and administration. Many of those detractors live and work in human resources departments. Changing your paradigm is hard…

We aren’t a whole lot better at managing talent than we were thirty five years ago when I entered the corporate world.

The problem is as employers we are facing an emerging workforce that sees themselves as equal stakeholders in the employment relationship.

They have expectations-

  • They expect meaningful work
  • They expect their employer to partner with them in developing their portfolio of skills
  • They interpret loyalty the same way employers do, talk is cheap action is clear

I have to say I continue to be amused when I hear employers who used the recession as leverage to defer pay increases and hiring, reduce workforces, and off shore and outsource whine about how employees just aren’t loyal. Some of them even manage it with a straight face…

Todays’ employees, especially Millennials seem to have embraced some pretty interesting ideas promoted by several of my favorite pundits-

From Malcolm Gladwell they have embraced legitimacy-

Those whom are governed have a voice in the process; their input is sought and heard.

  • There is a dimension of predictability and consistency in the application of the law or standards.
  • The application of the law or standard has to be administered fairly and objectively, you can’t   have disparate treatment without a clear and compelling reason.

From Stephen MR Covey they operate from an advanced interpretation and expectations around trust-

In his hierarchy the first level of trust is deterrence, trust that comes from authority or position. This was a broadly accepted concept for hundreds of years provided first to rulers or religious leaders and embedded in Calvinism that God only allowed “good” people to create wealth and prosper so they were endowed with that trust.

The next level of trust Covey calls competency based. In many cases there is an assumption that anyone who achieves a management role has that competence, but we all know better. In most cases their competency is limited to technical proficiency; their emotional intelligence capacity and social intelligence are rarely considered.

The highest level of trust in Covey’s hierarchy is identity based trust which incorporates both your competency and you character as demonstrated by your applied values and behavior to create credibility.

I personally believe (and Millennials seem to agree) that to a large extent leadership as opposed to management is founded in legitimacy. Leadership is entirely relational versus hierarchical, it was be earned rather than bestowed with a title or position.

This is a new paradigm for us old timers…

The other issue we must face is that the new workforce doesn’t rely on us to validate our employment brand, our work environment and how we treat our employee stakeholders.

Social media has provided them with a platform to research and validate or invalidate everything we say about ourselves.

Here’s a tip, if you think your website and recruiting brochures are your employment brand you are in deep shit.

If you think you don’t need to proactively manage your employment brand you are deluding yourself.

The competition for talent, especially experienced talent is increasing not decreasing. The Department of Labor estimates that employee turnover costs the U.S. economy over $200 billion annually.

Having a great employment brand is not going to guarantee that people stay forever, but it will help you attract the right people and have former employees promote you as a great place to work.

So two things to remember-

  • Millennials represent the largest emerging sector of the workforce
  • They see things differently…

Let’s Play To Win!

Getting The Performance You Want!

At the end of the day I believe this is the objective that every manager in every organization is most interested in meeting and exceeding. It is also one that even a couple hundred years in the process of employer and employed we do badly.

You can’t pick up a business journal without encountering something on this topic. The latest thinking is that traditional performance assessment is useless and should be thrown out.

I don’t disagree, but it leaves us with a gap-

  • How do we continue to improve the capacity of our talent
  • How do we appropriately distribute compensation since most of our talent won’t work for free

I have a strong personal bias that says that effective managers and leaders have to at least minimally competent at several key skill sets. They are in priority order-

  • Setting clear performance expectations
  • Giving and receiving feedback constructively
  • Taking appropriate corrective action
  • Delegating appropriately and effectively
  • Utilizing positive reinforcement to motivate future performance
  • Coaching to optimize performance

The bad news is that these skills sets are neither inherent, nor are they taught in most business schools or degree programs. The good news is that they are eminently teachable and most manager/leader candidates can master them to at least a degree of competency.

I believe that the first step in building a great organization is selecting your talent pool, but that is a topic for another day so I want to focus on managing the performance of the talent you have.

The literature is replete these days with the benefits of engaged employees as opposed to marginally or unengaged employees. Much of that engagement is accomplished in your hiring and selection, but continuing to see engagement is best accomplished when employees feel that they are playing to their strengths and their highest skills.

The interesting about that as it relates to how we evaluate performance is how poorly we do it. In most cases we try to evaluate skills. It turns out our personal biases effect those ratings significantly.

A study quoted in the latest HBR showed that in a study of ratings on almost 4500 managers including their direct reports, peers, and subordinates varied substantially and that over 60% of the variance could be attributed to the raters bias- only 20% was actual performance variance.

The point is that information is horribly valuable because it is so potentially biased.

Deloitte decided to tackle this issue with what I think is a fascinating experimental approach to managing performance.

They found as the Gallup organizations research has demonstrated previously that teams and individuals that are allowed to play to their strengths consistently outperform others. In their own internal research they found that the variance between high performing teams and lower performing teams could be accounted for by team members responded to three items-

  • My coworkers are committed to do quality work
  • The mission of the company inspires me
  • I have the chance to use my strengths every day

The first two items speak clearly to the concept of an employment brand. The third is the critical link of clear expectations and focusing employee efforts on playing to their strengths is support of the organizational mission.

I like to think the ties to the critical skill sets I outlined above become pretty clear at this point!

Deloitte decided that their objectives for performance management are in three key areas:

  • Recognizing performance and appropriately rewarding it
  • Capturing meaningful and accurate performance data efficiently
  • To fuel appropriate future performance

To accomplish their objectives they created a snap shot approach that asks team leaders to communicate their future actions about each employee and the end of every project or at minimum each quarter for long term projects. Their research found that four items provided the basis of that snapshot:

  • Given what I know of this person’s performance, and if it were my money I would award this person the highest possible pay increase and bonus. This measures overall performance and unique contribution to the organization.
  • Given what I know of this person’s performance, I would always want him or her on my team. This measures the employee’s ability to “play well with others”
  • This person is at risk for low performance. This identifies areas for intervention ranging from coaching to other more drastic action and minimizes risk long term.
  • This person is ready for promotion today. This measures perceived potential.

Each of these items is rated on a five point scale ranging from strongly agree to strongly disagree.

By focusing on these snapshots you have a roadmap for both discussion and managerial action

In addition to these quarterly snapshots each team leader is expected to check in with each team member weekly. The purpose of these “check ins” is to clarify expectations, monitor short term progress, and provide course correction, coaching, or other valuable input.

The interesting thing at Deloitte is they don’t consider these “check ins” ancillary or in addition to the team leader’s role, they consider them to be inherent to it. The other interesting dynamic is that responsibility for scheduling the check ins is with the individual team member!

As you might suspect, I am a fan of this new approach.

When you couple it with appropriate selection and placement you have taken huge steps towards building and reinforcing a strong employment brand.

Employees are indicating that they want more not less performance feedback and this model speaks to that.

To go full circle I think you can see the critical correlation between the skills I mentioned previously and the ability to execute on this kind of a model.

If managers are not skilled at setting expectations, giving constructive feedback, coaching and developing employee’s strengths then you only have a two dimensional model that doesn’t address the three objectives that Deloitte identified of recognizing performance and appropriately rewarding it, capturing meaningful and accurate performance data efficiently , and most importantly to fuel appropriate future performance.

In the final assessment the team with the best players who play together is going to win the most consistently. This model won’t make up for poor hiring and selection or managers/team leaders who don’t have the skills to diagnose and coach performance issues, but it is far superior to what most of us are using today taking a huge step towards “managing whole people”. Any rating of less than 5 on questions 1, 2, and 4 are a platform for discussion and mutual investment by the employee and the organization….

 

The Arch Dilemma

Are You Willing To Stand Under the Arch?

The ancient Romans had a tradition: Whenever one of their engineers constructed an arch, as the capstone was hoisted into place, the engineer assumed accountability for his work in the most profound way possible: He stood under the arch.” – Michael Armstrong

As all of you know I write a great deal about management and leadership, especially from the perspective of leadership as a gift rather than entitlement.

I saw an excellent blog post this morning that mentioned the fact that although US companies have spent literally billions on engagement programs we have made very little progress on creating environments where employees are truly engaged. The most recent Gallup studies indicate nearly 74% of American workers are either minimally engaged or actively disengaged.

I am not going to rant again about the literally billions of productivity and human losses that number represents, but suffice it to say it is there.

I think in many cases we have an accountability vacuum in our society in corporate and especially in government.

The reason I emphasized that the majority of spending was on engagement programs is because I passionately believe that is a big part of the problem- it is addressed as a program and assigned to some department, typically human resources to manage. So they go through the motions.

The vast majority of human resources departments are skilled at and managed for compliance, they keep the lid on.

We call basic skills like clear expectations, giving feedback, taking corrective action, and coaching soft skills. Oh yeah, we also don’t teach them in our B schools.

I am surprised engagement is at 36%…

Engagement is a culture and the accountability for it belongs in the C suite.

I remember many years ago when our CEO couldn’t figure out what key metrics to assign me as the Human Resources manager for my management incentive plan, (That’s a topic for a whole separate post).

He proposed that my entire incentive be based on executing a meaningful improvement, (ten percent or more), on our employee climate survey. I would be the only manager who had this goal.

I countered with the idea that I would put the same percentage of my incentive on the line for that single metric as he was…As you might suspect he wasn’t amused. He also declined to accept my challenge. He wouldn’t stand under the arch.

I think one of the fundamental differences between management and leadership is that commitment to personal accountability and being willing and able to create alignment with the vision.

When I teach leadership classes one of the challenges I make to “graduates” is to go to work every day being prepared to be fired for doing the right thing. I especially challenge C level leaders and HR people to make that commitment.

I don’t think everyone at every level should be expected to stand under the arch, but if you aspire to leadership I think it is a key requirement.

Authority must be balanced with responsibility in a kind of yin and yang relationship.

That is why I like Stephen MR Covey’s hierarchy of trust from compliance through competence to identity.

The old models are horrifically obsolete.

When you hear all the ranting and raving about how Millennials and Gen Y are lazy your bullshit meter should be shrieking. They aren’t lazy; they just refuse to follow leaders who aren’t willing to build their credibility on a platform of identity and stand under the arch.

Can we really say that they are wrong….?

Would You Join My Tribe?

Building A Company Tribe

In organizations, real power and energy is generated

through relationships. The patterns of relationships and

the capacity to form them are more important than tasks,

functions, roles, and positions.”

Margaret Wheatley

When people ask me what I do I have been known to facetiously say – I build cults, but I think that that particular description can be perceived pretty negatively so I have been thinking on a more appropriate way to describe it and I like the idea of building company tribes.

A tribe in the most common context is a group of people who have shared ancestry, but can also be a group who shares values, beliefs and customs.

I rather like this definition of a tribe; a group of people who share values, customs and beliefs and work together to optimize the collective good. The neat thing is this definition can be expanded to include your stakeholders including customers, shareholders, and even the community in addition to employees.

Anyone who is familiar with my body of work knows that I have a deep and abiding investment in two core beliefs-

  • Building an organization based on commitment and shared values will always be more successful than building an organization using compliance as a base.
  • We hire, manage, coach, and interact with whole people; not just their knowledge, skills and abilities.

As a human resources practitioner and C level executive I learned through experience that people join cultures and leave managers. I also learned that no organization will see greater success from their product brand than their employment brand over the long term.

We are seeing the results of poor employments brands every day.

Employee engagement continues to hover in the high 20s to low 30s where it has been for the last five years or so.

The economy is starting to improve and the repressed demand for more equitable wages and treatment is starting to surface in major ways. Almost fifty percent of workers in recent surveys reported that they were likely or very likely to pursue new employment in the next 12 to 18 months.

The Department of Labor estimates that employee turnover; both voluntary and involuntary, costs the U.S. economy $5 trillion annually in hard and soft costs.

The American Mental Health Association says we lose another $200 billion annually to the phenomenon of presenteeism, where people show up to work, but perform substantially below their capabilities because of job related stress, dissatisfaction, poor management and other related factors.

Our recent recession gave employers a bit of an edge by lowering employment opportunities and I believe moved back progress in the employment relationship, but now it is time for payback.

I don’t just want to dwell on the negative, there are substantial motivators for creating an engaged tribe!

  • Hay Group studies show that high engagement can improve revenue growth by 250 % and reduce turnover by as much as 40%.
  • 70% of organizations with high engagement exited the downtown with higher levels of employee motivation than pre-recession.
  • 90% of the Fortune Magazine Worlds’ Most Admired Companies have developed and maintained an explicit employment brand. An employment brand is systemic. It permeates the entire organizational culture at every touch point from recruitment and selection to interactions with customers, community and other shareholders. It lives at the C-level, not in HR.

Your frontline employees are the organization to your customers. If they don’t feel the passion and the commitment they will not reflect it. Global research organization ISR’s Research Director, Patrick Kulesa, states it clearly:

Our research continues to show that a well substantiated relationship exists between employee engagement – the extent to which employees are committed, believe in the value of the company, feel pride in working for their employer, and are motivated to go the extra mile- and business results.

So how did we go wrong? I will give you my short answer-

  • We have not captured the energy and commitment of the American worker. We have used technology and systems in many cases against rather than on behalf of people. In short we have disengaged them.
  • Our management and leadership models do not appropriately value and reinforce the importance of relationships and people.

I remember entering the workforce and being surprised that we didn’t think that employees were very smart. We relied heavily on compliance based models rather than explaining our goals to them and enlisting their support.

We rarely involved them in decisions about how to do something. We didn’t explain systems like health care or materials management or in some cases even the legal environment. Managers managed and people did. I was pretty naïve and wondered why if we thought all these people were stupid, why did we hire them?

Let’s look at the curriculum of the average MBA program-

The amount of the curriculum that deals with communications, setting expectations, and skills like giving and receiving feedback constructively or coaching are dwarfed by financial modeling, economic models and related studies.

In a HBR (Harvard Business Review) article a well- known management consultant was recommending to business and organizational leaders that they distance themselves from engagement initiatives. His premise was that engagement as it is being marketed is largely about morale and employee fulfillment rather than performance.

While I don’t disagree that much of the language and programming around engagement fits his description discarding engagement is overly simplistic. Engagement is about alignment and should be tied to individual and organizational performance.

Although engagement will look different in different organizational cultures; there are several factors that will transcend organizational and culture boundaries- you will find them present in any engaged organization. Those elements include the following at minimum:

  • A foundation of trust and mutual respect
  • Clear expectations and feedback mechanisms at all levels of the organization
  • A clear and compelling value proposition.
  • An equitable and transparent system for delivering compensation.
  • A competent leadership and management team who have the total skills portfolio to attract, retain, and reinforce the values of the organization
  • Recognition and reinforcement of every employee’s responsibility to participate in the process actively rather than passively.

 

Over 30 years ago a gentleman named Roger Deprey created a model he called the Human Resources Pyramid®. It is composed of an employee’s ability to answer six questions in a particular order-

  • What is my job?
  • How am I doing?
  • Does anyone really care?
  • What is our function/mission/goal?
  • How are we doing?
  • How can I help?

Corporations and organizations spend an enormous amount of time and money talking to employees, shareholders and other stakeholders about mission, vision, culture, and values as abstract principles. Before employees can embrace your vision or mission, they need to understand where they personally fit in the organization and how you, as an executive, see them and their contributions.

You see, when you answer those six questions you have invited employees to join your tribe and they have accepted your invitation.

My template for creating your tribe is not complex, but it is not easy…

  • Treat your employees with respect by providing clear expectations, meaningful feedback, and an opportunity to collaborate with you in achieving your goals and theirs.
  • Treat them as intelligent adults by holding them accountable for performing their tasks independently and competently, given clear direction and guidance. Provide clear boundaries of acceptable and unacceptable behaviors and performance, and enforce them consistently.
  • Provide them with the big picture and context of how their jobs, skills, and activities fit into the larger purpose of the organization- answer their question “What is my job?”
  • Provide a clear “line of sight” between their performance and their compensation and rewards. If it takes you longer than 20 minutes to explain the basic structure of how you make decisions about employee compensation, it is too complicated. If you are afraid to explain the targets you use and how you make decisions, your model is flawed. Remember that human nature is to distrust what we do not understand.
  • Do not expect more “loyalty” than you are willing to provide. I define loyalty as a mutual agreement that, while someone is my employee, they commit themselves to being engaged 100% and fulfill their responsibilities with our mutual respect. If they need additional clarity or information, they make me aware of that, and if they have an issue, they allow me to address it. Envision loyalty as an agreement between adults: we will continue in our relationship as long as it is mutually beneficial to both parties.

I won’t mislead you. Making the commitment to build a tribe is hard work and a journey rather than an event. It has to be approached systemically, you can’t pick and choose the elements you want to work on and expect success.

On the other hand when you look at the impact on every key performance indicator from shareholder returns to reduced turnover and increased per capita productivity I think the ROI is there.

So in summary I leave you with this parting thought…

Companies have a hard time distinguishing between the costs of paying people and the value of investing in them. Thomas A Stewart

I rather think the numbers speak for themselves….

 

 

Get it Right!

A colleague posted something on LI today that I have known for a very long time- employees want and need more performance feedback, not less.

It is almost impossible to pick up a business publication these days that doesn’t castigate the performance evaluation process used in most organizations and justifiably so. They are usually pretty lousy processes conducted once a year where we tell people that their performance is not at the level they think and they are not going to get the raise they believe they deserve.

We do performance evaluation almost as well as we do hiring and selection- which for the most part is poorly.

I hear frequently how the culprit for these poor processes is the human resources department. As I was a human resources manager and executive before I moved to the C level, I can tell you in most cases that is absolute bullshit.

The role of Human Resources in my opinion is to facilitate and provide guidance. Hiring and performance management belong to the manager.

The problem with managing is that we are dealing with people, not human capital.

People are pesky. They want things like clear expectations and meaningful feedback. They expect their supervisor to connect the dots for them on how their efforts and contributions connect to the larger picture.

They expect us to connect their performance and the decisions we make about their compensation and career growth. How arrogant of them!

A recent Gallup poll concluded that 82% of the time organizations fail to make the right choice in selecting candidates for leadership and management positions.

James Harter, Gallup’s chief scientist for workplace management was quoted as indicating that only 18% of the population of current managers possesses a high level of talent for managing others.

The critical talents identified by Harter include:

  • The ability to motivate others
  • The capability of being assertive balanced with making people comfortable
  • The ability and commitment to making tough decisions
  • The ability to build and maintain strong relationships

The big culprit is our selection process, in the U.S. the majority of managers are promoted based on one of two criteria-

  • Their competency at previous non-managerial roles
  • Their tenure in the organization

Is it just me or do you notice that skills like setting clear expectations, giving meaningful feedback, taking appropriate corrective action, and coaching are missing from the selection criteria?

Contrary to popular opinion I don’t believe an MBA prepares people for leadership. It exposes candidates to systems and integrative thinking and how the disciplines interact together, but there is little emphasis on the management of talent, so the answer isn’t to populate your management ranks with people with no managerial/leadership experience or training, but MBA’s from “name” schools…

Similarly I see tomes written on the application of technology to hire, manage, deploy and optimize performance. I am not technology phobic by any means; I do adhere firmly to the belief that technology is a tactic, not a strategy.

So you might be asking, what do I suggest to “fix” this issue?

I suggest we begin with being able to answer the following questions for each of our employees-

  • What is my job?
  • How am I doing?
  • Does anyone care?
  • What is our mission/function?
  • How are we doing?
  • How can I help?

My experience is that many organizations spend an enormous amount of time and energy answering questions 4 and 5, but we don’t lay a foundation.

Once we can answer those questions for every employee, I set a goal to answer yet another set of questions-

  • How Do We Generate Revenue?
  • Who Pays Us Our Revenue?
  • What Is Our Unique “Value Proposition”?
  • How Does My Job Meet Our Mission And The Big Picture?
  • What Unique Factors Do I / Can I Bring To Directly Or Indirectly Support Our Mission?

Some people may read this and say, but I am a not for profit so some of these questions don’t apply.

I would respond au contraire-

If you are not generating revenue and you have no unique value proposition you are in big trouble…

My experience, validated by my colleagues post indicate that every employee is interested in four (4) key things from their employer-

  • Respect
  • Clear Expectations
  • Meaningful , Balanced Feedback
  • Equitable, Clear Reward System

These themes really double back on one another. A relationship with trust and respect incorporates the other elements.

The old employment model based on loyalty (spelled obedience and compliance) is dead, let’s bury it.

The Gallup study indicated that less than 20% of the current management population has the right skill mix to manage talent well. They describe that skill mix as-

  • The ability to motivate others
  • The capability of being assertive balanced with making people comfortable
  • The ability and commitment to making tough decisions
  • The ability to build and maintain strong relationships

At the risk of stating the obvious continuing the model of promoting leaders based on technical competence in non- managerial roles and tenure isn’t going to address that skill mix proactively.

We are bleeding billions annually in lost opportunity from employee engagement that continues to hover in the low 30’s.

What are we waiting for…?SAM_1552

What’s Your Value Proposition?

I have occasion to come into contact with a number of not for profit organizations on a regular basis ranging from very large organizations like education and health care providers to local service providers with a much narrower focus.

I use the term not for profit as opposed to non- profit very deliberately. The point that I try to make with these organizations is that profit at its most basic is the amount of revenue that exceeds expenses and there is nothing fundamentally immoral or amoral about how that excess is distributed.

I find that the idea that an organization should goal for and achieve solvency on a regular basis doesn’t always make me very popular. The idea that the organization should be held accountable to have a clear and compelling reason that it exists and perform its services in an efficient manner is seen by many as an elitist or purely capitalistic viewpoint. I disagree.

I find Seth Godin to be one of my favorite business authors. I don’t put him up on a pedestal or see everything that he writes as either brilliant or that I agree with, but he provided some simple points for would be entrepreneurs that I think have application for every organization-

  • If you have never been paid for your product or service it is a hobby, not a business.
  • If the only people who have ever utilized your product or service are friends and family it is a hobby, not a business.

I have encountered as number of not for profits who believe that their first and most compelling objective is to raise funds and invite donations to their cause.

The idea that they should be able to articulate what it is they are trying to accomplish, how they differentiate themselves from others who provide the same or similar services, and how they seek to become and remain sustainable and viable often seem to be secondary at best.

On the other hand I see organizations that do provide meaningful services and a clear and compelling value proposition who are severely criticized because they do things like a successful business-

  • Create and execute a business strategy
  • Create a strategy to attract and retain the talent necessary to drive the organization and pay that talent competitively.

The most common criticism I hear is that non-profits do not pay any taxes so their spending money on marketing and human resource infrastructure is inappropriate.

The reality is that in most cases the only tax an NPO doesn’t pay is income tax. The other reality is that running a complicated NPO is not significantly different than running any other kind of enterprise and requires the same kinds of talents.

I worked as an executive in the Credit Union industry for several years and then and now heard the criticisms from banking and other financial institutions about the “unfair” advantages that credit unions enjoy.

Rarely do you hear about the restrictions that apply including a significantly higher rate of reserves, limitations on the structure of their loan and product portfolio, and depending upon whether they are State or Federally chartered restrictions on the process of expanding geographically or even within a given geography.

I happen to believe that our society and in fact our world economy has become complicated enough that no one sector is able to address all of the issues facing us and a new model has to continue to emerge. I think we have seen evidence that I am not alone in my thinking.

I am intrigued by Warren Buffet and other billionaires who have signed a pledge to invest in philanthropic endeavors with a minimum of 50% of their net worth. That means the minimum buy in is a half a billion dollars – each.

The reasoning behind it was classic Buffet, who said that once you reach a certain point in wealth the incremental benefit to you personally is minimal if it exists at all. When asked about whether it isn’t more appropriate to leave it your heirs he said no- that creating multiple generations who are further and further from the actual activity that generated the wealth is an unhealthy process.

I agree. I didn’t have the benefit of growing up in a family that endowed me with a large bequest upon my parents passing and neither do I plan to provide my children with such in the event I become rich and famous.

The discussion about why or why not a billionaire should turn to philanthropy and whether or not this allows the ultra-wealthy too much control was interesting as well.

The biggest reason they stated was ability. They have the financial means to make a difference. Several also talked about with humility about learning to play in a different world with a different set of metrics.

I like the discipline that some of these business leaders have brought to the philanthropic process. I think it is okay to expect a philanthropic organization to have clearly articulated goals and for progress to be measured as to their achievement of those goals. That to me is the most important metric- is you creating measurable results?

So I would ask that we evaluate whether to create and fund not for profits under those terms-

  • Can they articulate a meaningful value proposition and means to address the issue they identify?
  • Can they provide these services in a manner which is efficient and represents a good societal investment for individuals and organizations?

At the end of the day all organization should be judged on how well it articulates and achieves its mission. It is that simple and that complex….

 

SAM_1552

Meeting People Where They Live

Read an interesting post today from Bruce Kasanoff recommending we step away from the old adage of “teaching people to fish” when they are truly hungry.

He points out that when people are truly hungry they need nourishment, not wisdom.

That really shouldn’t be news to any of us since Maslow created his hierarchy of needs decades ago, but it seems like we still struggle with it on both sides of the employment equation.

I am a really big fan of employee engagement. I believe, and the statistics bear me out, that organizations with high employee engagement outperform their lesser engaged counterparts in every key performance category.

So you might ask- Why wouldn’t every organization be investing in employee engagement strategies?

The answer is that creating and more important sustaining an engaged environment is hard work. You don’t accomplish it by administering a survey or creating a project team, or making the human resources department accountable for it.

You also never arrive; sustained employee engagement is a moving target. People’s needs and expectations evolve.

The other thing is that employee engagement is not a management initiative, but rather a partnership. Employees have as much responsibility for engagement as management does. It is something we do with people not to them.

A few years ago I published my first book, Managing Whole People, with some of this in mind. We don’t just manage two dimensional people so if we are going to create and sustain the relationships that lead to true engagement we have to manage the whole person, not just the employee.

We also need to take into consideration where the organization is and where people are and make our matches pretty carefully.

Two dimensional hiring is based on all the stuff that compliance has taught us about being very careful to describe the skills and knowledge and tasks we want performed. Many HR practitioners get very nervous when we talk about things like attitudes and attributes because they are less precise to quantify, but the reality is these characteristics play a huge role in how successful an employee is in any given environment.

Bruce’s comment caused we to think about two of the most common and often unsuccessful initiatives I see organizations embark on a regular basis-

  • Training
  • Change Management

As a consultant it is not uncommon that I receive a request to develop and implement a training program or initiative for an organization.

When I ask why they want training they usually respond – we aren’t getting the behavior or performance we are seeking.

When I respond – Why training? – They often get annoyed. My point to them is that training provides a skills base or model. If what is preventing the performance is attitudinal or other factors training won’t fix it…

Similar with change management, we usually try to do change to people rather than with them. In short we don’t meet them where they are.

That doesn’t mean that we have no right to expect people to modify their performance or behavior it just means understanding what the real impediments are is critically important.

Employee Engagement is a higher level state of performance. It requires some fundamental infrastructure to succeed. Things like trust, respect, clear expectations, constructive feedback, line of sight, and a host of others.

You can’t achieve engagement without mastering these and we still refer to many of these skills as soft in our management theories and discussions.

Worse yet there are many who have adapted the organizational brilliance that emotional intelligence and empathy are gender based and that women are inherently better equipped to succeed in those skills.

Please, for me that rates right up there with the stereotypes we used to attribute to racial or cultural groups.

We have the opportunity to return to the old social contract that the Founding Fathers conceived of when they included personal competency to balance personal property.

Over the years of industrialization and embracing the theory of scientific management, which created the concept of white collar versus blue collar, we lost a lot of the personal competency.

I believe as I covered in my book Plan B- An Alternative to Obamacare, this is a big part of the issue with our health care delivery system. We abdicated personal responsibility for managing our personal health and a very complex system grew up to manage it for us.

Now we have the responsibility back, but little education or information about how to navigate it.

As those of you who are familiar with me and my work know I am deeply committed to a few key concepts. Among them I include building your organization on a foundation of commitment rather than compliance and the concept of personal competency.

There are a lot of other things that inherently embedded in those ideas, but they really represent the foundational pieces.

In the first is the idea that when people come together with a shared set of values and clarity about our purpose proactively and willingly the amount of energy they will bring to that effort increases exponentially.

The second is the idea that people are whole. They perform best when we give them both an opportunity and an expectation of being present. My colleague Reut Hebron Schwartz describes it in part as Kind Excellence. She would tell you there is not true kindness in letting someone meander through their life or career working at 70 or 80 percent of their capacity. Neither can you achieve excellence by simply providing someone with a template and punishing them if they do it wrong.

Social gravity is the emerging concept of describing your value proposition in such a clear way and operating with such consistency that your stakeholders including customers, employees, shareholders, suppliers, and communities are drawn to you. There is a community of interests that is clear and compelling.

Social gravity doesn’t look the same in every organization. Since the dawn of the Industrial Revolution we have really developed an infatuation with best practices to the point we want to use them almost like recipes.

When I see surveys that conclude that most leadership failures occur because of organizational fit, interpersonal dynamics and relayed human factors I have to say I find the perplexity of failure of technology to guarantee sustained success ironically amusing. The answer is right there. It isn’t about processes it is about relationships. Processes can facilitate communications and tasks, but they can’t create relationships. That is a uniquely human dimension.

So I would suggest once again let’s endeavor to manage whole people and to do that we have to meet them where they are….SAM_1552

A New Leadership Model

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The topic of leadership is one that consistently takes up space on every social media forum and management development curriculum, but the interesting thing is are we learning and changing anything?

If we look at the opportunity costs offered by things like employee engagement and reduced expenditures in health care from partnering with employees and health care providers to manage health not health care they are enormous, yet over the last few years we have seen minimal progress.

Employee engagement, where employees feel aligned and are contributing at their highest and best levels has pegged at around 30% even though there is an abundance of information tying higher engagement to increased productivity, higher profitability, and reductions in health care expenditures, absenteeism, and related costs.

In many cases the responsibility for increasing employee engagement is placed with the human resources department so I see a lot of criticism of that function including why it should be eliminated or minimally split into two distinct functions; administrative- which would manage payroll, compliance, benefits administration and other procedural activities and organizational development, which would lead talent development, succession planning, and other “higher end” activities.

As a former human resources and C level executives I see a simplified solution like that as an “epic” fail.

The dirty little secret that most of us don’t like to discuss is that engagement doesn’t fail in the HR department; it fails where employees and managers collide.

The problem is that society has evolved beyond our leadership models.

Ted Santos covers many of the issues very nicely in his recent blog post,

For decades, many CEOs rose from sales and marketing. They were great at knowing the product, customers, driving innovation and selling the organization on a vision. In the recent past, they rose from finance and law. They bought back their own shares, orchestrated financial reengineering, changed accounting practices and down sized the company. They have been the masters at making the organization profitable”.

For over 100 years the prevailing model was that people were at best human capital, their sole purpose was to perform a set of routine tasks. As a result they were usually marginally paid and treated as expendable.

This was the leadership model I “grew up” with. As an emerging leader the skill sets were planning, directing, budgeting, and controlling. Last time I checked these were things you do to rather than with people.

We then evolved into the technology age where technical specialists were exalted and paid very well with the key leadership skill being how to leverage their ingenuity and expertise into marketable products.

Over the last few decades the financial analyst has reigned supreme. This is where we saw aggressive downsizing, offshoring, and other techniques to maximize short term financial return.

I mentioned in a previous blog that the vast majority of the benefits of the financial recovery where “reinvested” in things like stock buybacks and dividend distributions which exacerbates that mentality.

Santos quotes several former CEOs as recognizing this model is untenable for the long term-

“…When I was younger, I worried about managing the money, metrics and processes of the company. As I became older, I realized the business was about people. Therefore, I learned to take care of the people first. When I did that, they did a great job of taking care of the money, metrics and processes. It made my job a lot easier. If only I would have figured that out when I was younger.”

He goes on to say (and I hope he is correct) that the most important skill set for emerging leaders will be that of social reengineering.

This shouldn’t be rocket science. If you look at top performing companies like Zappo’s, Starbucks, Amazon, Google, etc. they have made significant efforts to reengineer their human resources processes not only internally, but externally as well.

Jack Ma, the CEO of Alibaba, spoke directly to this when he mentioned that in his stakeholder model the interests of customers and employees come before shareholders. When he was told that isn’t the U.S. model he simply replied, “I know, they are doing it wrong.

Another very good post on LinkedIn today reemphasizes this concept with Three Ways to Frustrate Your Frontline Employees-

  • Unrealistic Expectations
  • Dictate From On High
  • Sub- Par Supervision

 

Now hear is the bad news.

Technology isn’t going to fix any of these issues, nor is lean or six-sigma, or other new age solutions. The other bad news is that none of these three elements live in Human Resources so splitting or getting rid of your HR department won’t fix them either.

It is going to have to get messy. We have to do a better job of hiring, selection, and deployment. We also have to rewire our Leadership paradigm.

I am not going to make any apologies for being a huge advocate for developing and implementing employee engagement strategies in every organization. The key word is strategy. Simply announcing an initiative or doing a survey annually is not going to cause engagement to spread like the Ebola virus in Africa! You have to do some real work.

The first thing you do is to identify the core value proposition of your organization and develop a strategy to clearly communicate it to all of your stakeholders; this includes employees, suppliers, customers, shareholders, and communities where you do business.

The second thing that you do is that you develop hiring and selection processes that ensure that the people you invite to join your organization share the value set of the organization and that the connection between their personal values and your organizational values is transparent.</p>

The third thing that you do is ensure that anyone in a management or leadership role has the competencies and skills to create and reinforce that line of sight.

The fourth thing that you do is make sure all your other systems reinforce the values as well. By that I mean your hiring and selection, training, compensation, performance management, and your succession planning, and promotional decisions.

The fifth thing you do is to benchmark your progress and recalibrate as needed. Perception is reality, if your employees don’t feel aligned with your core mission and objectives they will not perform at peak.

This requires a different model for both developing and defining leadership.

I like the way Jack Welch describes it-

“…leaders are generally not judged on their personal output. What would be the point of evaluating them like individual contributors? Rather, most leaders are judged on how well they’ve hired, coached, and motivated their people, individually and collectively—all of which shows up in the results.”

I guess it isn’t essential that organizations accept the need to evolve and embrace the new management model, but when you weigh the consequences-

  • The latest Gallup poll provided some pretty eye opening statistics, including the fact organizations with high employee engagement saw a 147% advantage in earnings per share over non- highly engaged organizations in 2011 and 2012.
  • The fact that the Department of Labor estimates that disengagement costs the U.S. economy between $450 and $550 billion dollars annually and for me at least that garners some attention.
  • Recent studies indicating that voluntary turnover was up 45% year to year from and cost per hire is up 15% for the same period and you might think that more organizations would be examining their strategies and taking action.

Why in the world would we want to continue with a model that is obviously outdated and not generating the kinds of financial and social outcomes we deserve?

What do you think….?