Archive for the ‘Performance Management’ Category

This week I watched as a friend was crushed by his supervisor.  He has worked for the company for the past four years, and is the perfect example of an individual who “owns” his job.  His relationship with the company goes beyond employee / employer but might be better described as he is a “FAN” of the brand and company.  I am not sure how many people I know really operate at this level of engagement or ownership – it seems like this level is above “Active Engagement” and generally reserved for the actual owners of the business.

Over the years the company has grown and created new infrastructure and levels of reporting – bringing a new manager between my friend and the company owner who he used to report to.  Of course this brings change, which can always be tough to deal with as a human. But this case is different.  Mike’s role is being reduced to a smaller set of tasks and responsibilities, not due to issues of performance but because of other growth needs of the company.  While Mike understands the strategic shift, it doesn’t make it easier for him personally.  The interesting question and opportunity to watch and learn will be to see how this affects his view of the company, his “ownership” in the brand and his performance as the biggest fan the company has.


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Daniel Pink (author of A Whole New Mind) gives a compelling case for why extrinsic rewards, namely pay for performance, are not successful in helping a 21st century business tackle the complex problems in the current market place. This Ted Talk has created a buzz around our office. Set aside 18 minutes to view the clip.

What culture are you building at your workplace? Are you building a workforce that has the autonomy, mastery, and sense of purpose to guide your company into the future?

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My formal training is in creativity. Every day, I studied and practiced to be more creative, you know, the whole ‘think outside of the box’ thing. If my degrees and grades are any indication, I got pretty good at solving problems using the creative process.

Since then, it seems that I have spent more time just solving problems ’cause they need to be solved and less time using my established system of creativity to kick the problem where it counts. Either way, the problem gets fixed, but could the problem have been fixed better using more creativity?

This then is my conundrum. Do I take the time… time is money, right?… So, do I take the ‘money’ to work through a problem to solve it creatively or do I do the best I can to solve the problem as quickly as possible?

Are we looking for the best, but possibly more expensive and getting less done?


Are we looking to get more things done well but not best?

I don’t know. What do you think?

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A friend of mine who works for NetFlix forwarded me a great article from Fortune Magazine that provides a small amount of insight to the culture driving the success and innovation of Netflix.  At the heart of the article is a 128 page PowerPoint presentation prepared by Netflix CEO Reed Hastings which is embedded below or linked HERE.

While i will let you read the article, and hopefully you take some time to look at the 128 slides below (highly worthwhile) i found several concepts here that I consider vital to creating a successful workplace culture.  Among them are:

  1. Empowerment
  2. Open Communication
  3. Mutual Respect
  4. Shared vision
  5. Goal Alignment
  6. Strategic involvement
  7. Open feedback
  8. Access to management
  9. Peer accountability
  10. Self accountability
  11. “up-level” accountability
  12. Individual Management:  managing the person, not the role
  13. Ownership at all levels
  14. Pay-for-performance
  15. Development
  16. Internal growth and promotion

Culture within an organization happens.  Hopefully by design and on purpose, but the culture is clearly defined by how people act, react and interact.  The Corporate Values that drive Netflix were not created by the executive team in a boardroom, but rather by the team through daily operations.  Netflix sounds like the type of high-performing culture and concepts we teach at PeopleSmarts.  To be successful in this culture the individual either naturally or has developed EQ skills – exactly what we teach.   I know one thing:  if I were ever looking for employment, Netflix would be among the companies at the top of my list.

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When you ask most new managers what motivates people to work hard, they all say money, although research and several management books say otherwise. Typically you find that the things that actually motivate employees to perform at a high level are things like being involved, being respected by both their boss and peer group, having someone at work who cares about them etc. Read any management or leadership book and you will find similar such things that actually motivate. Money is, of course, the reason that we all go to work, but usually not the driver behind how well we perform.

This week I have been speaking with a friend who, although not motivated by money, is certainly being de-motivated and becoming disengaged because of money. Working in the same medical office for the past four years she has become accustomed to making a certain amount of money each month. Her total monthly compensation comprised of hourly wage, performance bonus, car allowance and 100% employer paid health benefits. Recently the practice was sold, and as in any change in ownership the new owner decided to make some changes to office structure. Among these changes were discontinuing paying any performance bonus, car allowance and requiring 50% employee paid health benefits. In total, it is a decrease in the amount of cash she takes home each week. I don’t know the economics of his practice, nor do I know the effect the economy is having on revenue, but I see a change in employee engagement as a result.

The effect:

My friend is now looking for a part-time job for evenings to help offset the real change in monthly income. She may have to start leaving early  from the day job to be on time to her night job. Now that she isn’t free at night, certainly there are social costs to her. Failing to balance her life between work, love and play will have a lasting effect on who she is and how she performs at both jobs.

In the past, when an emergent situation or a patient needed to be seen after hours, or at the end of a business day the team wanted to help – what was good for the office was good for them. The new attitude – “I am off…”  “if he doesn’t care about me, why should I care….”

Additionally, she is looking for alternate employment. Basically saying “if he doesn’t care about me, why should I stay…”

So, while money certainly doesn’t motivate me to work any harder than I do now, it can be a de-motivator and when your employees perceive that you are taking money out of their pockets, or that you don’t care about them, they make decisions and the decisions they make may not be in your best interest.

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Performance management is one topic on which we provide training at PeopleSmarts.  Over the course of the past several weeks we have been internally discussing this topic and the launch of a software application to support and provide additional resources in conjunction with our trainings.  While performance management is a comprehensive process, one piece of that process is the performance review.  This week I ran into a former colleague from the retail industry who was telling me horror stories of his schedule right now because his company is currently in the midst of their bi-annual performance review process.   I suppose as this topic we have been working on it seemed fitting to write about it today.

Talking with my former colleague reminded me of some of the stories and inefficiencies of some organizations performance review process.  The first mistake they make is confusing the annual performance review with being the entire performance management process.  It seems like managers and employees don’t take the time to talk throughout the year, so often the employee is surprised by the feedback received during the review (and therefore dread the annual review because it is negative).  The second problem is lack of preparation.  Maybe the manager is too busy, maybe it is a time-management issue, but either way the result is that the manager waits until the very last second to “Rush” a review by the deadline – and therefore fails to give the employee any constructive feedback on their performance.  As a result the employee dreads the annual review because there is no value in the feedback.

A few years ago I took over a new division during the annual review cycle – according to my new boss the former division manager had written reviews for each of my 23 direct reports and it would be “easy” for me to simply deliver the review.   So I started reading and found each review to be nearly identical.  The only change was perhaps the addition or deletion of a word like “not”  or “does not” instead of “does”.  Example:  “  Mike lives our company values”  vs “Michelle does not live our company values”.   What!  And this is supposed to be feedback as to how this person performed during the year?  There were no examples to back up the sentence or to corroborate how or why Mike or Michelle did or did not live the company values.  Simply said, I could not “easily” just deliver such a review.

There are two major cost components associated with delivering a review like that in the example.  One is the opportunity cost of the time the former manager spent writing those reviews – while not nearly the amount of time it would have taken to create a comprehensive review, but several wasted hours of that manager’s labor in the writing and delivery.  Maybe one hour total x 23 direct reports or 23 total hours.  To deliver a review with no value and waste half of a work week doing so creates no economic value for the company.

The other cost I see is the lack of impact of the review.  The employee eventually becomes disenfranchised and disengaged as a result of no clear feedback or knowledge of how they fit into the organization.  They simply stop to care, and now you bare the cost of disengagement.

 While we continue to develop our trainings on the basis of EQnomics, or the economic effect on a company of poor management practices or disengaged employees expect to see more on this topic as well.    There are two ways a company can spend their performance management budget:

A company can throw labor dollars and the cost of missed productivity at a poorly developed or poorly executed performance management and performance review process is wasting money on achieving nothing.  


A company can have great processes executed well where employees are valued, employee skillsets are developed and where clear, consistent and measurable feedback are delivered throughout the year.

Each company will spend money, each can say they have a process in place but one company is simply burning dollars that yield no or little return (like simply renting your employees)  while the other is increasing the value of their employees or their “people assets”. The company who invests in their human resources and creates an appreciating asset stands to yield greater returns in the long run than the company who simply rents their employees time.

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This week I was talking to a friend who reported hearing a story where two figures were quoted:  one was that 95% of people thought they were “better than average” drivers , and that 95% of people thought they performed at work at an “exceeds expectations” level or higher. 

Of course, an hour of Google searching and I cannot find those same stats or any reference to the story or article he heard or read, but I can find studies showing that 88% of people think they are better than average drivers (Svenson 1981), 80% of students say they are better looking than average.   According to a Wikipedia article when 829k high-school students were asked to rate how well they “Get along with others” less than one percent rated themselves as below average and  sixty percent rated themselves in the top 10%.

As an employer I want these people.  I want 90% of my workforce to be performing at top 10% level,  I want to work with and live my life with the people who “Get along well with others”  but where are they?  Is it really possible statistically to have 60% of people fit into a 10% bucket?   I think the bucket would run over!   Along those same lines if 80% of people think they are performing at an above-average level at work, yet the average performance review score in a company is 3.2 on a 5.0 scale there clearly exists a gap between employee perception and employer perception of the same performance.  It has been a while since I studied statistics, but I do think It is certainly possible to have a greater number of above average employees than below – the distribution does not have to be perfect, as one below average employee can certainly drag down the company productivity levels even when balanced 2:1 with productive people  .

I took over a failing business operation a few years ago where the division had been losing money for 3 consecutive years, measures of customer satisfaction were ranked among the lowest in company and industry, production quality rankings were too at dismal rates.  After first taking this position I met with all my direct reports, and about half of the hourly employees.  I asked each to rate how they fit in to the team.  I saw this same pattern:  80% thought they were better than the rest.   I looked at the previous year’s performance evaluations for the same group.  They all had the same basic “Meets standards”  3.0 on a 5.0 scale score.    My analysis:  We had a group of people who all think they are performing well, the company has told them they are performing at an average and meets standards level while the operation is failing in every way possible;  customers are unhappy, quality is suffering and we are losing money.  These people are not being honest with themselves, nor is the company being honest with them!

As we continue to look at the costs and effect of employee engagement it is critical to also ensure that both the employer and employee have a realistic and common measure of the same performance.  A group of people who’s standards of performance are not aligned with company standards or actual expectations will never perform at a level that can yield long-term and healthy results.

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