Archive for the ‘Management’ Category

Four Core Things I Believe About Life in Organizations

04/04/2012

I learned something important about myself on the weekend. I am less patient with myself now and much less accepting of some of the things others in my society believe about life in organizations. I don’t expect to be seen as being any more “right” in my views now than in my earlier years. I don’t expect folks in general to agree with me any more than they did in the past – that is up to them. But I do find that I am not prepared to engage in as much dialogue about these beliefs with those who see things differently, unless that dialogue leads to real constructive action that benefits both of us.

I have worked for a long time. Over the course of my career, I have kept up a constant involvement in academic life – as a night student, graduate student, part time lecturer and distance education participant. I have and still read widely in management and workplace psychology. I have thought hard about what I was doing at work and how I was leading the folks who worked for me.

I have come to these four conclusions by reflecting on both the reading and the experience. I have quietly held them for years. They underlie all my consulting work and business related writing.

1. Performance appraisal is a waste of time if you are looking for business results.

Our evolved instinctive approaches to living in tribes makes power based interpersonal relationships vey much part of the way that we work together. We like tribally defined hierarchies. We need leaders and followers. We need to know where we stand in these tribal power structures. Performance appraisal does a fine job of addressing these needs. But it does nothing at all to increase an organization’s ability to generate results.

I have personally appraised dozens of direct reports. I have directed the building of innovative computer based performance appraisal systems. I have led the implementation of such performance appraisal systems in large large IT organizations (> 1500 professionals).

But I now accept very little of my work around performance appraisal contributed to improving the results we delivered in the organizations for which I worked. I now know that backward looking performance appraisal simply does not justify the energy it takes to do and the anxiety and mistrust that it creates in the people who were appraised.

Forward looking performance contracting is different. Performance contracting means looking ahead, not looking back. It consists of:

  1. negotiating what an individual will do in the coming months and year,
  2. clarifying how this relates to what others, including the person whom the individual is dependent on, are doing,
  3. agreeing on how the to be delivered by the individual are going to be measured  by both the person and the boss (i.e. they each need independent access to the data that makes up the measures);
  4. and then getting together regularly to review delivered personal results against the agreed upon performance objectives.

Managers who do performance contract in this way lead at work. They inspire. They shape the future through the actions of the people who work for them.

It worked for me. I have twice created IT organizations that outside auditors independently judged to be “world class excellent”. In both organizations, I did performance contracting with my direct reports, and encouraged them to do so with the people who worked for them. Together, we supported the cascade of this approach down our organization.

Performance contracting is not easy. The boss must make a personal commitment to simultaneously treating the people who work for the boss as problem solving peers and as results-responsible direct reports. Doing so involves accepting and working with the dynamic contradictions between these two roles. As power solving peers, the two people share power and a kind of equality. As direct report and boss, they are in a clearly defined power hierarchy. Recognizing and respecting these differences, and dealing with the conflict they create, takes self awareness and self containment on the part of the boss.

Bosses must discipline themselves to continuously clarify when they are behaving as a problem solving peer and when they are behaving as a results evaluating superior.

At times, bosses must negate the “power surge” that comes from being a results evaluating superior so they can effectively coach as a problem solving peer They must resist the temptation to use the power component of the relationship to simply dictate the solutions to problems when the two of them engage as problem solving peers. They must accept that simply telling does not always lead to understanding on the part of the direct report. They must act as if this is the boss’s failure, not the direct report’s, when this occurs.

At other times, particularly at the end of the performance period, bosses must take on the tough challenge of carrying though on negative consequences when the direct report’s performance has been lacking. This is not easy if the boss has developed a “liking” for the person through working with the individual as a problem solving peer. It will be even harder if the boss has failed to coach effectively in the regular review meetings between the two.

Human beings’ instinctive approach to managing performance in organizations – power based performance appraisal – is much easier, especially on bosses. It just does not motivate the folks who are appraised to produce “above every day” or excellent results.

2. Organizations waste the dollars they spend on interpersonal skill training (e.g. programs on leading others, resolving conflict …).

If behavior on the job does not change as a result of training, the money spent on it is wasted.

Very little interpersonal behavior training leads changes on the job, despite the millions of dollars spent on managerial, supervisory and interpersonal skills training. Every one “kind of” knows this. That is why there is so few systematic follow up programs to measure actual “on the job” behavior after such training programs. As long as we don’t have to face the facts, we can continue to believe.

There are two reasons why behavior change back on the job after participating in interpersonal skill type of training program is so hard.

1. Unless individuals are personally motivated, they are not going to change their behavior back at work (or in their personal lives), even it they learn the underlying ideas and concepts.

Self selection and self initiation of participation in such training is a good indicator of the needed motivation. Personally enrolling oneself in this type of course is a good predictor that the individual might have the needed motivation needed to actually change behavior back on the job. Expending personal resources to pay for the training is an even better one.

Being “sent” on such program by your organization has very little to do with having the level of personal motivation needed to actually change behavior on the job. Yet many organizations ask people to attend such training programs because the “boss” thinks it is a good thing, or because it is the norm for all people who first enter a certain job level, or because some executive has come to believe that this type of training has pay back.

2. Individuals behave in interlocked patterns at work. If one person changes his or her interpersonal behavior, the others the person interacts with have to change theirs as well. These other people are often not motivated to do so. Instead, they put group peer pressure on the person who changes his or her behavior after attending a training program to revert back to the old behaviors the person had before they went on the training program – the social extinction effect. Most individuals who try to implement new behaviors do revert back to the old behaviors in the face of this implicit social pressure. The training investment is lost.

The individuals who persist in wanting to change their behavior after such training often respond to the peer pressure by finding new people to work with. Usually, this means moving to a new job. Often, that new job is with another employer. The training investment is lost.

Organizations who want to really change interpersonal behavior patterns need to engage in systematic culture change programs. As well as training, such programs involve visible recognition and compensation programs that reward the “new behavior”. These programs also involve specific activities that counter “resistance” to change on the part of current members of the culture.

Such programs are difficult to plan and to execute. They must work from the top down and the bottom up in a coordinated way. They are intensely resource demanding. They require persistence over extended periods of time. Few organizations succeed at such culture change programs at the level of “walk”.  Most organizations though engage in “talk” as if they are doing such things, even if they don’t really do them.

There are a couple of simple things to consider as a result of these dynamics.

If you invest in an individual’s interpersonal behavior change, you need to move them into a new job to have a reasonable chance of recouping on your investment.

When individuals are motivated to spend personal resources on changing their interpersonal behavior at work, they are also at high risk for leaving your organization in order to find another job where they can practice those new skills.

3. Interview based recruiting is all about “good enough” hiring, not future performance excellence on the job.

The academic research is clear – talk during recruiting interviews is not correlated with eventual final candidate performance on the job. But everybody continues to do to use talk based interviewing as their primary recruiting tool. Why?

Talk based interviewing finds “good enough” candidates – both on the technical skill level and culture fit level. Talk based interviewing does not systematically succeed in finding the “best candidates”. It does not need to. Good enough is good enough for most organizations. Few organizations are really excellent. Most organizations talk ‘excellence”, even when they don’t “walk” it.

It is possible to recruit for excellence. It takes “show us how you will perform with the people that you will be working with” recruiting techniques. This means crafting work based role plays and work based simulations. They are more difficult to set up and to facilitate than interviews. Creating them, and then facilitating them, is far beyond the skill of most recruiting professionals.

The best way to see how a person will behave in the future – on the job, is to get them to behave currently.  Get candidates to do, not talk about what they have done. Even “behavior based interviewing” does not do that.

Job based role plays and work simulations go some way to allowing the assessment of performance fit. Involving future peers in interacting with candidates and then systematically collecting their impression of fit allows some level of assessment of cultural fit.

The best hires – excellent performance fit to a particular job and superb emotional fit to a specific organization’s culture – are often temporary folks who have already “demonstrated” how they will perform on the job. You see what they can do and how they will interact with their fellow co-workers during their temporary assignment. The best predictor of future behavior is always past behavior.

Bringing the person in on a temporary basis is the best way to assess both performance fit and culture fit. It remains the best hiring tactic if you are hiring for excellence. If you are not, and most organizations do hire for good enough, then the talk that happens in recruiting interviews will do.

4. Many human abilities are as much instinctive as thoughtful. Excellence at work requires thought rather than just responding instinctively.

More and more, modern research is showing how much of our human capability to do and to interact with others utilizes ability systems that located in the pre-conscious parts of our brains. These evolved ability systems let us become the dominant species on the planet hundreds of thousands of years ago.

Somewhere in the past 40,000 years or so, we began to move from being tribal creatures to being societal ones. We started to live in conglomerations of individuals which were bigger than one tribe. Previously, as simple tribal members, we might have had occasional interactions with members of a number of other geographically local tribes. But as societal creatures, we developed (i.e. added) the ability to be concurrent members of a number of tribe-like social collections that exist within our societies.

As societal creatures, we developed organizations that specialized in achieving at least some of the objectives of each of their members. We shaped these organizations in which that reflected our evolution as tribal beings. Our organizations have hierarchies and insider/outsider dynamics that we developed as tribal creatures. At the same time, as societal creatures, we developed shared mechanisms and processes for collaborating within and across these organizations.

Organizations traded with other organizations for the resources needed to achieve those objectives of each organization’s members. Thoughtful, structured, planned ways of interacting with individuals in these other organizations became as important a part of our human abilities as our instinctive ways of interacting with other individuals in families and in tribes.

Today, we have all these types of ability. Our gene based evolutionary history adds new abilities to our competency repertoires. It does replace the ones we already have with new ones. Neither does evolution act to integrate new abilities with old ones in balanced way. As a species, we have simply added the new more thought based organizational abilities to our older instinctive interpersonal familial and tribal ones.

Stress is a large of our organizational and societal life. Under stress, we tend to fall back on our instinctive abilities, even when they might not be as effective for dealing with a given situation as our thoughtful abilities. Our instinctive abilities often define our business and societal interactions. Much confusion and turbulence occurs in organizations and in societies as a result.

Understanding and mitigating the results of these dynamics requires that managers in organizations consciously override their instinctive first responses with careful, thoughtful, analytically-based responses. The next generation of organizational behavior writing and business professional development curriculum needs to be much more clearly explicit about the evolutionary nature of human abilities. We need to move from theories of “emotional intelligence” to ones that more clearly reflect the additive evolution of our abilities. We need to make sure that managers understand that they concurrently have instinctive interpersonal and thoughtful organizational abilities. We need to help them recognize that our instinctive abilities, the ones we all move to under most levels of stress, are not the best ones to use to respond to the demands of organizational and societal life.

Conclusion

There is tremendous hope for us as human beings. Our evolution has given us the ability to shape our collection future through collaborative, thoughtful organizational action. But we often do not. Our evolution has also given us the capacity to interact in ways that are firmly embedded in the pre-conscious instinctive abilities that evolved when we were members of families living in tribes. We need to move beyond the familial and tribal in organizational and societal life in order to have a future of hope, not one of self defeating strife.

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Shape The Future, Don’t Appraise the Past: Performance Contracting is the Key to Employee Engagement and Organizational Excellence

01/12/2012

Performance ContractsThe HR and business press is full of articles about how Generation X, Generation Y and the next Generation now entering the work force are different from the Baby Boomers ware about to retire. But in one way they are not so different. Employee satisfaction surveys still tell us, like they have for the past forty years, that employees do not believe that performance appraisal helps them improve their performance.

So why are we as managers not listening? There are a variety of reasons. Some have to do with organizational inertia. Some have to do with the fact that managers appreciate the re-enforcement of the relative power positions inherent in performance appraisal. But most importantly, we, as managers, really haven’t had the business support systems that we need to move from performance appraisal performance to performance contracting.

Contracting for performance with our direct reports requires that we commit to the regular independent delivery of feedback to them. That feedback has to be based on agreed upon metrics. Those metrics, in the majority of cases, need to be tied to the automated business applications that we now use to run our business.

So the business tools that we need are finally there. Now all we need to do is change our attitudes. We need to stop appraising people. We need to stop telling them what they did and did not do in the past. We need to stop rating them on a scale that invariably involves subjective judgment.

We need to move to contracting about the future with these individuals. We need to help them get crystal clear on what it is they are expected to do. We tell them exactly how we will evaluate whether or not they accomplish the things they contract to do. And finally, we need to make sure that they get the data on these metrics directly from the automated business applications that we both use to do our work.

For the organizations that do this, magic happens. Most people want to do well. Most people want to contribute to the organization for which they work. Most people, when they get regular independent feedback on how they’re doing, will take steps to correct their performance when they go off track. The best of them will strive to exceed their contracted delivery levels

That’s the essence of performance contracting for excellence. It is also the basis of effective boss – direct report coaching. Together, these two are the key to engaging people in the workplace. That engagement is, and will be ever more crucial, in the current and coming competition for skills and talent.

Let us as managers demonstrate to the people who work for us that we can do what we expect them to do: listen to feedback. Let us take what we’ve been hearing on employee satisfaction survey after employee satisfaction survey seriously. Let’s start shaping the future, and stop appraising the past. Commit yourself to performance contracting with your direct reports.

Here are some links that will help you accomplish this.

Why Performance Contracting?

C-Level Performance Contracting: Getting It Done (A How To Guide)

Both are short voice over presentations that run in a browser over the Internet.

“Shape the Future, don’t appraise the past”. ™

How do you performance contract for organization turnaround?

01/11/2012
organization turnaround

Organization Turnaround

Over the last two years, at executive networking sessions, I have heard hundreds of executives describe themselves as being excellent at turnaround. As I listened, I realized that they were describing their process improvement skills, not their corporate turnaround abilities. They were talking about fixing up part of the whole, not turning around the whole organization when it was under threat.

One morning, as I was driving, I hear a professional house renovator – a “re-newer”  – describe he what did. He took care to distinguish what he did from folks who called themselves “renovators” but were really “part of a house” fixer-uppers.

“When I renovate a place, the only things that will stay the same about the house are its external structure and its internal supporting walls. I pretty well gut everything else. When I am through, it’s a very different place to live in. It is a much more effective and efficient house. It operates better as a home, and costs much less to run. It usually looks better from the outside as well, although everyone can still see that it is the same house.”

What an insight!  I immediately understood the difference between all those executives I have been listening to and corporate turnaround experts.

Process Improvers

Organization Renovators

Make improvements to 1 or more existing processes through improving automation or re-organizing work flow. Address what needs to happen to ensure this organization survives and dramatically improves its results. Figure out how to do it without destroying the organization (i.e. without tearing down “external and internal supporting walls” = destroying customer relationships or financial viability) while change is occurring.
Fit improvement into the “day to day” normal way of doing the other work in organization. Tackle all processes in the organization and re-do them to achieve dramatic success.Do so a way that ensures that organization survives while whole scale internal change is on-going (i.e. the organization continues to serve customers, to provide services or make products, to pay its bills etc).
Help existing staff learn new improved processes Challenge existing staff to come up to the new performance bench marks. Train them to do so if they are willing and if they can.  If they don’t, bring in people who do and fully integrate them into the team.
Fit the new ways of doing things into the existing culture of the organization. Re-shape the culture, energizing the people. Get them to believe in their own personal future with the organization. More them from “react and get along” to “pro-act, create, provide services at extraordinary levels, achieve extraordinary results.

The metrics that are used in contracting with an executive for the improvement of existing process are straight forward. Processes do something. They produce output of some kind (e.g. service transactions, produces, units of information ….). They take energy to do (e.g. people hours, head count, …).

To develop a process improvement metric, all you have to do is count the output and the input reliably. Put units of output over units of input and you have a useful “point in time” metric for that process.  Add a relevant time period (e.g. days, or weeks, or months). Then watch the trend over time. When you do so, you have a clean, clear performance metric. Here are some classic examples:

  • bank customers served per month / teller hours per month,
  • airline passenger miles per month / air crew hours per month,
  • Widgets produced per day / manufacturing staff hours per day.

Trend metrics such as these will tell you if the executive is “improving” the process.

You cannot take this approach when you contract with an organization renovation leader, and his or her team. Every process inside the organization will be different by the time they through, just like the entire interior a house will be different by the time house renovators are through.

Renovating an organization involves great urgency to make wide-ranging change under continuous conditions of organizational stress. Sometimes, part of the change goes backward for a time, in order for the whole change to go forward. (See The Reality of Enterprise Turnaround for more insight into these dynamics.)

So how do you “measure” the performance success of an organization renovation leader and team?  You need to take a much broader approach to metrics than when you are contracting for process improvement.

  1. Use metrics that look at the whole organization from the outside in.

An example is “$revenue produced / $dollar of operating expense” per month. Watch the trend. A downward slip for a month or two is expected. But a clear downward pattern that shows no sign of turnaround is not.

All kinds of process change will be happening in an organization during renovation. However, the overall pattern of positive change will be reflected in the trends in such “from outside the organization looking in” metrics. Using a number of them is better than using just one. When you do so, you can see if the general pattern is positive, enough one or two may be on a short term downward trend as change moves forward.

Add these whole organization metric trends to a “menu” of trend metrics that focus on specific internal process. An experienced organization renovation team uses both to monitor the impact of what they are doing both on specific processes, and on the whole organization.

2. Expect the organization renovation leader and team to show how they are making both short term immediate changes and long term changes at the same time.

Listen to them as they talk about this with you on a regular basis. If they cannot show how they are doing this, then this absence is in itself a “negative metric”.

Ask for regular “review” sessions with the team. Expect the leader and the team to “insist” on having them. Expect them to initiate on the development of process specific metrics that show what is happening as a result of their changes.

An experienced organization team is profoundly metrics based. They do not believe in the “power” of their personalities as the key to change. They do expect turbulence during the change. They have an integrated approach to change that both makes sense in the longer term and adapts to short term events as they move the organization renovation forward. Just like a house renovator, they take what they uncover into account as they make change.

3. Expect negative trends in some of the process specific improvement metrics while you are seeing positive trends in others.

The turbulence experienced during an organization renovation can means that things can look worse before they look better. Just imagine what the inside of a “renovated” house looks like before house renovators start building the new walls.

4. Work with renovation team to identify the “supporting walls” for this organization – the key things that must continue to be in place while the change is happening.

Develop metrics for each one. “Revenue per customer” and “customer satisfaction / engagement “ are two examples for a customer service organization.

Watch the reaction of renovation leader and the team to any negative sustained trends in these metrics. They are about the organization’s survival. Expect them to understand the importance of these metrics, and take negative trends in these key “survival” metrics extremely seriously. They need urgent corrective action.

Turning around an entire organization is very different from turning around a specific process within an organization. But you can still develop effective performance contracts for such total change. You just need to make use that the performance metrics that you use reflect the totality of the change. You will know that you have the right turnaround leader and team when they are just as concerned about developing, monitoring and adjusting their work to a set of such metrics as you are.

“Shape The Future, don’t appraise the past.”™

Roelf Woldring (416.427.1567)

How do you use performance contracting to pick “good”, rather than “bad” organizational leaders?

01/10/2012

“Why Are We Bad At Picking Good Leaders” is 5th on Harvey Schachter’s Toronto Globe and Mail Ten Best Business books of 2011. In it, Jeffrey Cohn and Jay Moran present the 7 characteristics that they correlate with good leaders.

1. Integrity
2. Empathy
3. Emotional Intelligence
4. Vision
5. Judgment
6. Courage
7. Passion

These qualities have been praised by many other “leadership” writers over the years. Cohen and Moran tell organizations to select for organizational leaders who demonstrate these qualities. They provide “stories” which illustrate how they believe that organizations can do so.

But all of this advice may be missing an essential point. Finding a person who is exceptional on these 7 qualities may be a next to impossible task for most organizations.

Suppose that a “good” leader needs to demonstrate possession of all 7 qualities at a level that is at least 2 standard deviations above average. Simple math will shows that the likelihood of finding, i.e. selecting, such a person is very slight.

The Normal Distribution

The normal distribution graph shows that only 2.4% (=2.2% + .2%) of the population will be 2 standard deviations above average when you consider 1 characteristic. If you expect an individual to be 2 standard deviations above average on 7 qualities, you have to multiply 2.4% by itself 7 times. If you do this on your calculator or in Excel, you will get a very small number indeed. The following table shows the probability of finding a person who is 2 standard deviations above average on a progressively greater number of qualities. As you can see as you want people to have such outstanding levels on more and more qualities, the less likely you are to find them.

Let’s make it easier. Say that a good leader only needs to demonstrate these 7 qualities at a level that is 1 standard deviation above average. Even in this case, the chances of finding individuals who demonstrate most or all 7 of these qualities at this above average level are still pretty slim (2.7 people in each 1,000,000).

But we need to move beyond statistics. Cohn and Moran’s 7 qualities are not “simple” human behaviors. They are human characteristics that depend on a complex interactive mix of genetics, up-bringing, experience and education. This is the reason why years of time and millions of dollars of organizational investment in “leadership” training and development have not really produced an abundance of “effective leaders” who posses these 7 qualities at these levels.

Does this mean that most organizations might as well forget the process of “finding” or “developing” good leaders? I don’t believe so. What can an organization do find and to develop better leaders?

Organizations certainly need the succession planning processes that Cohn and Moran advocate. But organizations need to be base their decisions about individuals in such succession planning processes on an underlying performance management process that is strongly based on forward-looking, metric-based performance contracting.

An individual who consistently achieves or betters metric based performance targets over a number of years, in a variety of executive positions, is a potential future organizational leader. That person is demonstrating that she or he can apply the “right” personal characteristics to stand out from the average performer in “this” organization. Useful leadership is always demonstrated in the context of an organization’s shifting specific economic, technological, social and cultural conditions over a number of years.

The abstract “leadership characteristic” labels used by Cohn and Moran, and many other writers on leadership, tend to ignore this. Executive search consultants and academic writers turn “leadership” into an abstraction precisely because they are removed from the day-to-day performance of people in their client organizations. They do not have to deal with leadership as a concrete set of behaviours demonstrated by a specific individual that lead to valued results in a specific organization as over a significant period of time.

Executive search consultants perpetuate this tendency to relate “leading” to these kinds of highly abstract personal characteristics. It is a core assumption necessary to the continuation of their business. Unless clients believe that leadership is “transferable” from one organization to another, retained executive search for leaders from outside an organization makes no business sense.

If we approach “leading” in a less abstract way, and focus more on demonstrated “in context” performance, organizations are more likely to succeed at picking “good” leaders. Organizations that seriously want to “pick and develop” the leaders they need for the future will do the following.

1. Organizations will take care to develop their internal performance contracting competencies. They will use forward-looking performance contracts. These contracts will include a process by which boss and subordinate contract to use metrics to track subordinate progress. These metrics will derive from the automated business applications the organization uses to track and to manage the work done on a day-to-day basis.

Once such a forward looking contract is “signed” by both boss and subordinate, these metrics will be delivered independently to both boss and subordinator over the course of the performance period. As a result, the power relationship between them will shift. Bosses are more likely to become coaches when subordinate performance goes off-track. Subordinates are more likely to “ask” for help when they see that they are under achieving.

This performance contracting and progress monitoring process will be in place for at least the “manager of others” levels and above in the organization.

2. The senior most executives in such organizations will systematically review actual performance on such performance contracts to identify top performers: – individuals who consistently achieve and deliver at or beyond their contracted performance metrics.

3. These organizations will promote such top performing individuals so that over the years their job scope becomes more complex and wide ranging. As a result, maintaining “top performance” status will become harder and harder over time. This will refine the identification of potential leaders based on actual performance, not personal loyalty or personality fit between boss and subordinate.

4. These organizations will “move” such top performing individuals to a variety of assignments over the course of their career. This will allow the organization to see if their ability to deliver at or beyond contracted performance levels remains consistent in a variety of organization environments (functional, operational and geographic).

”Picking good leaders” in this way will take commitment over a number of years. The performance contracts for the CEO and the CEO’s immediate reports will consistently require the presence of metrics that “show” that this is being well done.

Organizations that do this will not be “bad” at picking good leaders. Instead, they will be shaping their futures in way that increase their probability of long lasting competitive success over a number of executive generations.

“Shape The Future, don’t appraise the past.”™

Ho, Ho, Ho – It’s the Season for Performance Appraisals

11/28/2011

I asked Susan, my horse sharing friend, what was going on with her as we drove over the stable to free lounge Hamish. She groaned, and said “It’s performance appraisal time. I just don’t’ like doing them. They always kinda spoil the year end at work for me.”

Susan is not aware that I work on executive performance contracts. Her comments reflected unhappiness with the performance appraisal process that I have heard from countless managers. I responded to her with “what’s happening”, knowing that there was a good chance I would hear things that reflected the reality experienced by millions of subordinates and mangers.

“Well, I’m working on my own appraisal. At the same, I doing the ones I need to do for the folks who work for me. It always feels like a game to me. I haven’t had a single conversation this year with my boss about what I’m supposed to do and how she is going to measure my performance. And now she asks me to write up my own performance appraisal and rate myself. I know it’s tied to her concerns about how year end bonuses will be allocated. She’s done this to me every year that I have worked for her. It’s all a big set up game.”

By now, Susan was obviously discouraged. You could tell from her voice tone that she really didn’t enjoy talking about this. I decided to leave it alone when she continued on.

“They tell us that the performance appraisal at our company is objective and based on performance dialogue that we should be having all year. I try to do that with my subordinates. Because I hate not being clear on how I’m going to be measured myself, I try to be as clear about this with them as I can. Also, I know that they know that their annual bonuses are tied to their performance appraisal ratings. That makes all of us anxious. Money is money – we all can use more, especially at Christmas.”

Seeing that she was willing to go on, I asked, “Do your subordinates feel differently about this based on what you do?”

“It’s the power tripping and game playing that really gets to me. We all know it’s about money. The performance appraisal rating we get directly determines the size of our annual bonus.”

She looked out the car window and went on.
“I get along reasonably well with my boss during the year, but it always seems to fall apart at year end. She asks me to complete my appraisal rate myself. I already know that she’s already decided what rating she is going to give me. I also know it has more to do with how she wants to spread out the bonus money she has overall folk she has working for her. She clearly enjoys the power position that this puts her in. My final rating is going to be based on a bunch of things, many of which have nothing to do with me or my performance. So puts me in a real bind. I struggle with it for days before I finally stop thinking about what I did during the year and just try to guess at what I think she wants me to rate me.”

Making sure my non-verbal cues were sympathetic, I asked “what about the performance appraisals you have to do for the people who work for?”

“That’s just it”, she responded, “I know my boss’s real concern is about how she’s going to distribute the pool of bonus dollars that have been allocated to her. Part of that relates to who gets what among my subordinates. So she’s not going to engage in real dialogue with me about what they did during the year. Sure, she will go through the words, but she finalizes my ratings of them based on how she wants to spread out the money. I sense that she’s doing calculations in her head about this the whole time we are reviewing my ratings. And she always does this, before she tells me what my own rating is going to me. So even if I disagree with her about one of my folks, I don’t really push on it, because I don’t want to pull down my own rating.”

“What does that do to your relationships with the folks who work for you?” I asked.

“Poisons them, quite frankly, at least until everybody knows what they’re bonuses they are going to get”, she responded. “They know perfectly well how my boss handles this. It is kinda of an open secret no one talks about. They play up to her, especially to her, more than they pay attention to me. The final ratings that my people get have more to do with how effectively they manage my boss’s feelings about them than the work they do for me. And I suspect the fact that some of my folks, who are good-looking members of the opposite gender, really know how to subtly, without being obvious or foolish, influence her feeling bout them. Again, it is almost an open family secret. Everyone knows it. No body ever talks about it. But everyone knows. And it is all o.k., because nobody ever takes it over the line whether it is obvious abuse or inappropriate behaviour. Quite frankly, I hate performance appraisal time.”

Susan was clearly not very happy. Since I didn’t want spoil our working time together with Hamish, I change the topic to how we will work with the horse today. Susan responded with relief.

Susan’s feelings about performance appraisal are not unusual. Survey after survey, both by outside HR experts and internal HR departments, have shown that most managers and subordinates dislike and do not trust their company’s performance appraisal process. They deal with it, particularly in light of the fact that so many companies tie annual or other bonuses to performance appraisal ratings. But very few survey respondents believe that performance appraisal has very much to do with people’s actual performance on the jobs.

There are several things that companies can do to avoid this annual feeling of malaise.

First, if you insist on using a performance appraisal process, try to schedule it so it’s not tied to the calendar year end. Scheduling performance appraisals on the anniversary of employment dates for instance avoids this concentration of unhappiness at year end.

Second, make sure that your company uses a performance contracting rather than performance appraisal approach. Since performance contracting looks ahead, it clarifies what bosses expect subordinates to do. Review “Performance Appraisal is Dead, Long Live Performance Contracting” (a voice over browser based presentation) – if you like to know more about how this works.

Third, structure your bonus scheme so that it has two or more components. One organization has the following bonus compensation scheme .Although each portion of the bonus is smaller than the one time annual bonus paid by their competitors, their employee satisfaction surveys indicate that their employees are very happy with this structure.

◦ A company performance bonus paid out to everyone in early February. The amount is related to their annual salary. It is based on the total company’s performance on financial and operational measures. These targets are communicated to everyone as part of the annual planning process.

◦ A team bonus which is paid out all of the members of each team in December, based on their achievement of a set of predetermined targets. Every member of the team receives a portion of this bonus based on the ratio of their annual salary to the total annual salary for the team. These performance targets are also developed and communicated as part of the annual planning process.

◦ An individual bonus directly related to the person’s performance appraisal ranking is paid out (or not) based on the person’s personal performance appraisal rating. Performance appraisals are scheduled based on the anniversary of each individual’s original employment date.

As we arrived at the stable, Susan sighed and said “You know, I would just like to know what I am supposed to do, and how I can going to be measured on it. It would get rid of the games.” Susan and millions of other employees agree. Yet somehow, organizations are stuck in a performance appraisal rut. As a result, “Ho, Ho, Ho” means anything but employee satisfaction during each year end’s performance appraisal season.

You Can’t Manage What You Can’t Measure – More From the C-Level Consultants Discussion on Linked In

04/27/2011

Incorporating Management Measurements into Managed Work Flow

Let’s take the point of view of an innovative manager. I have a bunch of software in place in my organization that manages workflow. That is, for transaction-based events that must be handled inside the organization, we developed piece of software which routes activities from person-to-person based on the contents of the previous event. Data or documents flow along this this workflow as appropriate. Scheduling events allow individuals to assign pieces of work to either the next available person in a role, or to specific individuals. Decision events route the work down one sub path or another. Essentially this is a managed workflow. With some thought and care it can be implemented in a variety of ERP or other packages.

Now let’s add a measurement component.First, let’s lay out some some basic principles or values on which we want to base our measurements.

1. Not every occurrence of an event in the workflow will take the same time. Some will take longer than others on both the actual time put in any calendar elapsed basis. This will be a function of both the content of each actual occurrence of the event, and on outside events (e.g. vacations).

2. Individuals who do a particular event in the workflow are the best judge of how long a particular occurrence should take based on the knowledge they bring to the doing of the event.

3. The point is to provide feedback which helps them complete the task, as well as aggregated measures which help management decide if intervention of some kind is necessary either with an individual(e.g. coaching) or with the structure of the work flow itself.

So how would you do that? Remember you can’t manage what you can’t measure. What do you can measure here? And how would you do that in a way that is not obnoxious and over rigid, but still respects the capability of the individuals doing the work during the particular events in the workflow.

Here is how I would do it.

1. Add a component to the software which measures the elapsed calendar time between the initiation of an event in the completion of that event. That’s reasonably easy to do.

2. Store this information in a database.3. Provide periodic reports to the individuals who complete events in the workflow which show:

a. Their distribution of completion times,

b. as compared to the average distribution of completion times for all of the people who do this event,

c. as compared to the normal curve.

Why provide these three levels of feedback in this way?

1. It respects the fact that many things can affect the completion of a particular instance of the event – some of which may be beyond the control of the person completing it.

2. It provides individual with feedback that compares their distribution of completion times against the average distribution of completion times. It provides them with direct information about their level of performance, not subjective judgments by others.

3. It provides a norm, a normal distribution, which says that management expects variation in completion times. We are not just providing you with this feedback to try to drive you into completing events in the shortest time possible.

So, if we implement this we have a very sophisticated measure and manage system which is really not beyond the capacity of much of the software we have today.

The point I’m making here is that it’s not just about what we can measure and not measure, but also about the values we bring into the process of implementing measures in a management context.

I built primitive versions of feedback mechanisms like this and have been deeply impressed by the willingness of the people handling the events in the workflow to take this feedback and find ways to improve the quality of what they do.