The Perfect Program to Turn-Off Employees

Most performance appraisal programs are perfectly designed to de-motivate managers and subordinates alike.  Managers detest them and employees dread them.  If you don’t believe me, ask your people.  It doesn’t have to be this way.  In fact the performance review can be a highly motivational tool, and a key part of executing strategy. 

They’re deeply flawed because they have lost their purpose and are primarily used to allocate ‘merit’ increases.  This causes perverse influence, dysfunction and mistrust everywhere:  managers rating everyone the same so that all would get the same increase, managers obviously playing favorites to give certain people more money, etc.  It’s gaming the system to dole out meager increases, rather than increasing the value of your talent.

The primary purpose of a performance review should be to tell people where they stand, how they fit in the organization, what they can do to improve, and what they can do to get ahead.  It should be a level-set and development-oriented.  It needs to be a tool to increase the value of your talent.  Performance reviews should drive merit increases, not the other way around.  This requires a culture of trust and honesty, managers who are trained to grow talent rather than control it and employees who are energized about the company, its direction and its leadership.

Poison in the Well

During a college summer I worked for a manufacturing company as a machine operator.  It was boring work.  During the first night, I figured out a more efficient way to configure the work space.  The second night, after some rearranging, I more than doubled the output.  When entering the plant on the third night, the supervisor clapped me on the back and congratulated me.  Barely two minutes later, the union steward told me that if I did it again, I risked bodily harm in the parking lot.

I was designing a sales incentive plan working closely with the vice president of sales for a well-known consumer manufacturer.  During a plan review meeting, a financial person persisted in questioning a provision in the plan.  After a short while the sales VP suggested that maybe the finance person didn’t want his job.

As a senior vice president of a national broadband company, I heard of a small group of cable installers in rural Massachusetts who wanted a union.  I traveled most of a day to get there and sat with the group.  It took a while for them to open up, but when they did, I heard their ideas to better schedule time off.  Unfortunately, their manager didn’t want to listen to them.  It wasn’t about pay, or benefits, or safety – it was about flexibility.

There are many reasons why organizations don’t get the best thinking from their people – it almost never has to do with the ability or motivation of the front line crew.

Fear of Communication

There is fear deep in the heart of many organizations.  It has become worse over recent years due to the economy, but it’s not new.  I’m not referring to the fear of layoff, but rather the fear in middle management that speaking up or bringing bad news will lead to punishment in one form or another. 

It’s difficult for those at the top to see this, but it exists, and it damages the organization’s ability to innovate, improve, perform, and have strategic discussions. 

Effective strategy implementation and execution requires an organization culture where discussions can be honest and candid – sometimes even brutally candid.  I once worked for a Frenchman whose passion for excellent work could offend consultants and cause staff to cry, whereupon he would suddenly become consoling and say, “It’s only business, don’t take it personally.”  On the flipside, one could tell him anything and he’d actually listen and give you credit. 

But blunt honesty is much different than punishing someone for expressing an idea or providing feedback.  Just one incident of such punishment will damage important communication for years.  And there are still managers, and even presidents, motivated by their own insecurity and need for control who will punish people who have thoughts, opinions and ideas that differ from their own.  In doing so, they prevent entire organizations from being their best.

Senior leaders need to work hard to establish a productive culture, one where the walls are taken down between those with power and those with knowledge.

Pink Slime in Your Organization

“Pink slime,” was in the news last week.  Whether you call it “lean finely textured beef” or “salvage” as one scientist called it, you won’t want to eat it, especially if you read about it in Wikipedia.  What everyone agrees on is that it’s added to ground beef as filler.  Organizations have their own pink slime – filler that’s of questionable value.  I’m thinking of the many reports, meetings, policies, procedures, rules, and processes that add no value, but sap resources and attention away from a focus on serving customers better, encouraging employees to be their best, and generating improved cash flow.

There’s tremendous value in putting all those forms of waste on trial for their lives, as Peter Drucker noted, and get rid of the ‘pink slime’ in your organization.  It’s healthier.

Why Not Use a Horoscope?

Assessment tools (Myers Briggs, DISC, etc.) are being touted as useful ways to improve teamwork and productivity.  But they’re really nothing more than a way to label people in ways that aren’t even accurate (since they are self-reported.)  You might as well use a horoscope.  These tools actually provide an excuse not to be honest with each other because it’s easier to label people and put them into categories than to really understand each other.

(If you want genuine personality assessments or selection tools, use a qualified professional and valid, reliable instruments, otherwise you’re on thin ice.  And if you need a referral, let me know.)

The real question is:  What is your objective?

• If your purpose is to start a conversation, why not use a Drucker essay, a Maureen Dowd column, or a Harvard case study?
• If you want to identify work styles, why not just discuss who works best in a group work and who prefers solitude?
• And if you want your people to work better as a team and improve business execution, an approach I often use is to help participants give each other relevant business feedback and actually listen to each other.

The real key is to change behavior, not just insights.

Why You Cannot Build Teamwork in a Committee

The World Series reminds me that teams can take many forms. Baseball teams operate differently from football, basketball and hockey teams, but in every case, the team members are all focused on the same outcome and either they all succeed, or no one succeeds.

Most senior management ‘teams’ are not teams at all, but rather committees. Each member has his/her own agendas and goals. And they succeed or fail separately — sales may achieve their objectives, manufacturing may not.

When organizations ask me to help them build teamwork at the top, the first step is to understand whether we’re working with a committee or a team. You can improve cooperation and collaboration within a committee, but there is no overriding necessity for one group to give up resources for another.

If you want a team, here are some of the issues you need to address:

• Are the incentives and rewards aligned so that everyone wins (or loses) together?
• Are measures in place so that the team can determine its progress and self-correct?
• Can the team make quick decisions about key issues?
• Does the team represent all important operating and customer perspectives?
• Can the team handle problems candidly and openly?

Do you have a team or a committee? Which do you really need?

Managing By Opinion

In some leadership groups, opinions appear to be more important than facts.  I’ve seen senior management groups where an executive’s in-depth knowledge and experience is over-ruled by opinions from other executives — opinions that aren’t based on fact, evidence or experience — just pure opinion.

Yes, there is always a need for new, fresh and different input, but that doesn’t mean that opinion and conjecture should take precedence over knowledge.  In some ways, it reminds me of dysfunction in today’s press — to much opinion, too much slant, much less professional journalism.  The result is that you reaslly don’t know what to believe.

When secretary of state Colin Powell took office, he gathered a large group of state department staffers together.  He said that he wanted to hear what they think, and what they know.  And he asked them to make sure he knew the difference.

Strategy execution requires consistently good decision making.  If you don’t know the difference between what people think and what they know, it can lead to very poor decisions.

How clear is your strategy – Is your management team on the same page?

Most organizations set aside time each year for the senior team to discuss strategy and develop a strategic plan. Yet, in my experience, few companies end up with a strategic plan that drives the business.  Instead, everyone goes back to doing what they were already doing.  After a couple weeks, a binder containing the strategic plan is delivered to each senior manager.  Over time, the binder migrates from the desktop to the top of the credenza, to the inside of the credenza, and eventually to a file somewhere.

Seldom is the strategy referred to.  Once I worked with a CEO who told all the senior team to lock away the binder and not communicate the strategy internally least the competition learn about it. It wasn’t close to being a stellar strategy in the first place. (You can’t make this up.)

Having a strategy is good, but if your organization doesn’t know what it is, and if you don’t implement it, there’s absolutely no value.  It’s like having a high level of intelligence, but never putting it to good use.

How clear is your strategy to your organization — the people who need to implement it?  During your next management meeting, ask each of your senior managers to state in less than 20 seconds what your business strategy is.  If you don’t hear the same message from each, then they’re not on the same page.

Get a list of my key questions to ask yourself and your team to determine how clear your strategy is to the organization, and how well it is implemented.  It’s free – just click here.

The biggest downsizing mistake.

The biggest mistake is to focus solely on cost reduction without regard to value.  It’s a lot like focusing on expense instead of return on investment.

If you don’t come out of this recession with a much more valuable workforce, you’ve missed an exceptional opportunity. 

If you must downsize, you can improve the overall value of your workforce by letting go the weakest performers.  That’s weakest performers, not those with the highest pay rates, or those with the least seniority. 

The Wall Street Journal ran an article a month or so ago about how companies in this recession are letting go less capable and less experienced performers – not the more experienced (and expensive) people the way companies have done in previous recessions.

Common problems:

1. HR or legal want to go by seniority because it’s “only fair” or it will prevent employment complaints.  You know who the best and worst performers are right?  You’ve got a good performance management system, right?  One that differentiates based on performance outcomes, right?  If not, you’ve got remedial work to do because that is affecting your ability to manage your key asset. 
2. Finance is telling you to chop the most expensive heads to reach cost-cutting objectives faster.  The assumption is either that all people are of equal value, but come with different price tags, or the only thing that matters is cutting costs.  You want to focus on value, not short-sighted and one-sided views of generating business value.
3. Managers are saying they want a cookie-cutter approach.   They don’t want to make the difficult choices necessary.  A financial services firm wanted to use the same seniority-based approach across the board.  The reason given was that it would be more fair.  For whom?  For the high performers with loads of experience who happened to be hired recently?  To the long-service employees who are in the in-office retirement program?  What it came down to was the managers wanted someone else to make difficult decisions for them by using an “objective” criterion that does not serve the business, but makes their jobs easier.
4. Managers want complete freedom to pick favorites.  This is the flipside of #3.  They’re either managers who truly want to select the weakest people, or they’re the insecure and autocratic type who want to surround themselves with rotomontades.  You can tell the difference – the latter type get defensive about their picks.

What to do:

1. Make sure you have a good performance management process – one that produces documentation that differentiates based on performance.  It does not have to be sophisticated, complex, or comprehensive.  It just needs to evaluate how well someone is doing, and provide guidance on how to improve.
2. Stay focused on value.  Seniority and pay level don’t matter as much as overall value.  What value is years of seniority if the performance isn’t there?  What value is a high pay rate if the value received is high?

Alternatives to Layoffs — Part III

Strategy #3:  Reducing HR Costs

Many companies still haven’t transformed their HR area to reduce costs and improve support to the business.  Cost reductions of 25% are possible and the change in HR from administrative transaction processor to business partner significantly helps line managers.

• Examine the possibility of self-insuring benefits such as dental or optical coverage.
• Consolidate human resource or training functions in the field where appropriate.
• Streamline HR processes and procedures such as the approval process for hiring, transfers, and performance appraisals.
• Employee performance appraisals are generally more effective and less time-consuming if held on a quarterly or semi-annual basis, rather than annually.
• Reduce duplicate paperwork, data input, and manuals.
• Automate HR functions via internet applications, for example benefit enrollments.
• Push more responsibility onto vendors.
• Renegotiate vendor contracts.
• Outsource selected HR functions such a payroll, benefits administration, training, or recruitment.
• Restructure HR to provide new challenges and improve efficiencies through new HR staff performance goals and accountabilities.

For a copy of the full report click here.