Welcome to this first edition of our Business Performance newsletter for 2012. We extend an especially warm welcome to our new subscribers. We expect this year to be as turbulent as the last. The new year starts with no clear end in sight to the European debt crisis and the United States continuing to stress under the weight of its mounting deficit.
We trust your business has in place clear-headed strategies for either expanding your market share, holding fort or contracting in a controlled way. The trick is to know your market, your external regulatory environment and your internal capabilities. How prepared are you and your business for the uncertainties ahead?
The Question and Answers (Q & A) in this month's newsletter deal with issues that you may be facing personally as a result of the current unpredictability in our environment. Our first question is relevant to organizations wanting to improve employee performance as a way of staying ahead of the competition. The second question is from a manager deciding whether to stick with their current dysfunctional organization or move on in search of greener pastures.
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Should we kill our performance management system?
We keep tinkering with our company's performance management system. Each year, we try to make it simpler, but we never seem to get anywhere. Managers and employees using the system never tire of telling us how much they hate it. Are there any companies that have ditched it altogether?
Performance management systems have come in for a lot of flak in the last few years. And it's no wonder. However, the reasons for failure of the traditional performance appraisal process have been voiced for decades. William Edwards Deming, a well-known leader of the quality movement, was one such longstanding critic.
Deming's main concern with the traditional approach was that by focusing on the performance of individuals, the traditional performance management system avoids dealing with system deficiencies. These deficiencies account for some 80% of service and product errors.
In a nutshell, here is why many traditional appraisal systems do more harm than good:
- usual rater errors (halo, recency effects, etc)
- no meaningful feedback in between the annual/bi-annual appraisal
- managers build it up emotionally to a once a year "give 'em everything you've got"
- individual appraisals ignore systemic deficiencies impeding performance
- individual appraisals ignore the interdependence of team members
- tying appraisals to individual financial incentives generates high emotions
- this year's financial incentive becomes next year's entitlement
- manager's ill-equipped to give constructive feedback and defuse tension
How many of these problems can you recognize in your organization? Some companies have ditched the traditional performance management system for more effective alternatives. In her article on How to Give Good Feedback, the author shares some examples of just such organizations. If you are considering jettisoning your current system, here are some practices to consider including in your new system that we have been found to be effective:
- manager and employee mutually agree goals for the next period
- manager regularly meets with the team and each employee (weekly/fortnightly) to discuss goals, progress and roadblocks
- numerical measures are only applied to goal attainment and not to rating individuals
- performance feedback is gathered from multiple sources (customers, peers, suppliers, etc)
- avoid individual financial incentives except perhaps for the most routine of roles
- managers are trained and coached in giving effective performance feedback
- performance feedback is two-way (i.e., direct reports also give feedback to managers)
So, don't jettison your performance management system altogether. Replace your current dysfunctional "tick the box" appraisal process with a system that is truly worthy of being called a performance management system.
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Should I leave my new employer or try to change the people?
I recently took up a management position with a new employer. Unlike my previous company that excelled in many areas, employees at all levels of the new business thrive on mediocrity. Product quality and customer service are wanting and the long-standing employees just don't seem to care. They also resist any suggestions for change. Should I look for another job? Or are there strategies I can use to try to lift motivation?
There is no straightforward answer to your question. What is right for you in your case will depend on your specific situation. To begin with, there are two sets of questions that you will need to ask yourself. The first set revolves around your new employer. How difficult will it be to turn around the attitudes and behaviors of your peers and direct reports? Will you have the support of the next level of management above you?
The second set of questions revolves around you. Do you have the innate desire and stamina to pursue the required change? Do you have the right complement of skills needed to bring about the change? What will it mean for your career? What is the risk to you if you fail?
Step outside of your situation and get an independent view. Seek out a sounding board to help you work through these questions. This could be a trusted colleague or a previous mentor. In terms of strategies to use, here are some general guidelines:
- Gather data on the cost to the organization of poor product quality, project blowouts, customer complaints, and so on. Use this data in your conversations with individuals.
- Find people within your new organization that command some resources and respect and think the same as you. These people will serve as important political alliances as you initiate change and come upon roadblocks.
- Focus on small achievements first. After you have made some quick wins, market these successes to the rest of the organization.
- Complete courses in managing change and interpersonal skills and put your new skills into practice immediately. Get others to monitor your progress in applying your new skills.
If you decide to try to bring about change in your new organization, your first step should be adopting a person you trust as a coach. This person will act as your touchstone who will see you through this challenging period in your life. A skilled coach will allow you to uncover your deepest values, confront your biggest challenges, explore alternatives and set meaningful goals.
If you have a question that you would like answered, send it to us at firstname.lastname@example.org
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Visit our web site at www.businessperform.com for lots of expert guidance and practical tools designed to help you get ahead of your competition. Also, be sure to pass this newsletter on to friends and colleagues who want to stay up with what's on. From all of us here on the Business Performance team, we wish you a productive month and look forward to communicating with you again soon.