Recently, I blogged about, How Many HR Staff you should have. Today there is a related article in a United Kingdom publication about efficiency in government workers versus private workers.  I should preface these findings by saying that just as is the case in the U.S., the U.K. is facing major cut backs in government budgets. This research essentially says that the public sector lacks the management skills to improve efficiency. Not a popular message, but if you are a proponent of professional management in local government, you will appreciate the emphasis on the importance of involving employees in order to make them more accountable.

Some key findings.

*        In the U.K., private businesses generate more personal accountability than the public sector for performance, allowing them to achieve better staff efficiency. Staff utilization rates for private and public differed by 14%.  To illustrate the difference, the study offered an example of a 30,000-person county council. If utilization rates were improved from 32% to 44%, the same work could be done by approximately 22,000 staff (8,000 fewer), a staff reduction of 27%.

*        Managers and supervisors in local government were found to be spending fewer than 15 minutes per day (only 3% of their time on average) engaged in ‘active’ management such as following up on work assigned to their team.  But at 25 minutes per day (5% of the time) the average private sector manager was not much better.  

 The consultants in the study point out that simply cutting back budgets will only result in reduced services and “chaos”. Far more significant changes are needed, including a change in mindsets, improved management skills and a shift in culture to include more involvement by employees.

 The following quote from the researchers illustrates this point:

“For instance, during our observations most managers were found to be uncomfortable confronting the poor performance of staff or even establishing with staff what good performance meant. Many seemed more comfortable spending time doing hands-on work in the mistaken belief that they were ‘helping’, rather than managing people and performance levels. Often they were observed busily carrying out administrative tasks, while outside their office their staff were clearly under-utilized; it is crazy to have well-paid managers spending so much time on administration or doing the work of their people when their greatest value would be to spend more time ensuring their staff’s performance is being optimized.” 

Amen.

The Harvard Business Review published a blog article this week entitled Keep Your Eye on Process Improvement which explores the fate of so many process improvement programs, such as Total Quality Management, Business Reengineering, Lean, and Six Sigma.  Anyone who has worked hard on implementing one of these programs can appreciate the difficulty in keeping the organization invested and focused on the effort.  The energy which fuels the inception of the program can be quite exhilarating because it usually comes in response to a major event in the organization, such as new leadership or a threat to cut back. But eventually, the program has difficulty “sticking” and the question is, why?

For his part, the author states that in his research, he has identified five factors that have gotten in the way of sustained attention to process improvement:

1. Competing demands for attention (as with Honeywell’s potential deal with GE)
2. Competing mindsets and behaviors (such as work harder vs. work smarter)
3. Strategic irrelevance (other more important levers for competitive success)
4. Traditional management processes (e.g., Legrand’s cost accounting)
5. The pain of disruption

While the answer is different for every situation, my own experience has shown me that the learning curve advanced during a concentrated period in an organization will in fact likely have long term positive impact on the organization, even if the program eventually slides from view.  I know this to be true because I have seen programs come back to life, and the difference is a much shorter learning curve (experience, knowledge and skills were retained but simply not being used) and I have also seen a re-generation of process improvement concepts and learning come alive in new programs developed with clients I have met again in later stages of their profession.

The key point here is that process improvement is itself, a process, not a program, and so long as employees are engaged in the activities associated with it, improvements are going to take place, whether management measures these improvements , or not. Critics may quarrel with this assumption that employees could be self-motivated, but I remain faithful to the principle that employee development, through experiential training and education brings about the ability to analyze what works and doesn’t work critically, and process improvement, through its focus on employee involvement, is a way to change the way people think and act in their jobs, permanently.

We are still a long way from understanding how to create effective links between pay and performance.  Part of the problem may be that we still over estimate the role money plays in achieving work satisfaction.

I recently listened to a fascinating interview on WITF Radio Smart Talk with Behavior Economist  Dan Ariely, author of “The Upside of Irrationality”.  He provides interesting insights about research on money and motivation.  He makes the point that when we operate solely from rational models, such as those employed by economists or business schools, we assume people act according to left-brain thinking and decision making at all times.

In fact, we are irrational beings and our human tendencies will often lead us to behave very differently when stressors are introduced. For example, his research reveals money is not the best motivator when linked to creative tasks, and in his famous Bart Simpson experiment, he finds that we are more concerned about distributive justice, or how fairly awards are distributed, than whether we received something. So, for instance, if we receive a small bonus, but our co-worker, who we perceive to be less productive than ourselves, receives a larger bonus, our rational mind tells us we should be pleased because something is better than nothing, but in fact, we feel offended and de-motivated by the reward we have received, because we compare it to what others have received.

One of the most memorable lessons from this interview concerned an interview he did with a group of technology professions in a highly visible west coast firm. They shared with him about how they had worked very hard for two years on a new product. As they prepared to roll it out, the CEO called everyone together and announced, that they had decided, based on business reasons, to not roll it out after all. Although this was a rational business decision, this group of employees was naturally devastated. When they were asked, what could have been done differently, they came up with ways their ideas and experiences might have been shared with other employees, and somehow valued for the efforts invested by the group. Clearly, the motivation for performance was rooted in the meaning of the work.

In a similar case, Ariely talked about an employee whom actually received a bonus for work performed on a project that was never launched, but still continued to feel a loss of job satisfaction subsequent to this experience.

On the other hand, and here is an important distinction, research shows very strong links between performance and pay where the person has control over the outcomes.  At the basic level, this means the proverbial widget maker, or even the athlete who is paid for performance.  And somewhere in between the purely physical types of performance and the purely creative mental types of work, there is a breakdown of the strong link between performance and pay.  You could say, our human factors take over, and we are motivated by a more complex array of factors.  No wonder we continue to search for the elusive elixir for performance.  Perhaps it is time to consider that it does not really exist, except in isolated pockets of work experiences where we, for a certain period of time, train ourselves to focus on money, e.g., the waiter job, the lawn mower job, the newspaper route, and to a certain extent, some of the higher end sales jobs.  But ultimately, we want to feel good about ourselves, and find meaning and a larger sense of self. After a minimum threshold, money does not do that for us.

Performance Reviews and Workplace Stress

The NY Times Health section recently reported on workplace studies that show the negative health effects of stress at work and in particular, cited performance reviews as a cause. Although performance reviews are necessary to separate the high performers from the low performers and provide adequate documentation, most of us also acknowledge the difficulty in delivering effective feedback and even those of us who agree they are necessary, cringe at the thought of giving reviews.

So is anyone surprised at the link between performance reviews and workplace stress? In fact, this finding relates to a much broader area of research which links high stress levels, low productivity, low engagement and low morale, to one major factor: the relationship with and/or perceived competence of the front line supervisor.  The Conference Board research cited in this article is only one among many studies showing that employee satisfaction is greatly impacted by the quality of managers.

Two important lessons can be taken from these findings: In brief, there is no one-size-fits-all and a performance review system does not need to be overwrought.  Oftentimes I consult with organizations that do not have the will or the means to develop a system that integrates performance with competencies, pay or organization-wide goals.  In such cases, I stress the following:

• Start a performance review program by sitting down with each employee once a year and reviewing the job description to discuss changes, perceptions of the job and expectations, all the while keeping the discussion focused on the job.
• Then establish goals for the coming year that reflect priorities for the organization. Set timelines, and target dates to report on progress.
• Finally, keep a record of summary comments by supervisor and employee about the outcome of the interview.

This type of review process steers away from judging attributes or personal characteristics which often give rise to the perceptions of unfairness, especially where trust is in question.  Rely on a well drafted personnel policy with a discipline policy to address problems that disrupt business and relationships at the workplace.

The second important lesson is that while after years of research, we now know that leaders with emotional competence (“people persons”) create less toxic, less stressful workplaces. What is becoming more evident in the research is the stronger link between first line supervisors and stress.  So we need to think more about assessing people skills in lower level supervisory positions as well as assessing and coaching in this area.  Some specific suggestions include:

• Develop internal mentoring relationships to promote informal coaching and feedback.
• If possible, provide formal coaching by an external person to help supervisors follow a more structured development plan.
• Provide an outlet for employees to report problems with supervisors (this is where a good HR person is vital). 

 Good relationships lend themselves to productive feedback. So leaders who hire can, and should, place a premium on people skills.  Also, use performance reviews sparingly and consider all the various ways to deliver feedback. The main idea is to communicate what is important in the job, both short term and long term. So, conduct mini-reviews everyday on yourself and your staff and then ask yourself, “what important conversations do I need to have today?”

OTHER NEWS AND UPDATES OF INTEREST

Save the Workplace and Fire Bad Supervisors and Managers  This blog post continues the discussion on supervisors and performance evaluation.

Another piece that compliments today’s topic: How to spot a liar and why it might be harder if he’s the boss.

Be aware! One of the proposed amendments by the DOL for the Fair Labor Standards Act is that all employees will be considered non-exempt unless proven exempt.  In order to “prove” exemption, the employer will need to show that a position has been analyzed, that the job incumbent has reviewed the analysis and that the analysis is kept as a record for review by wage and hour in the event of an investigation.

Did you know? Employees harassed by Third-Parties: Male Prisoners Harassing Female Correctional Employees  In this case, the employer was responsible under Title VII for harassment.

Inability to get along with co-workers can be sufficient basis for adverse employment action – from Employment Law Matters – note that this case highlights the importance of good documentation.

What is critical for success?

Does anyone wonder if my friend Dylan is going to forget this time in his life when he mastered what was critical for success? Performance management involves coaching, discipline and also inspiration.  When we take the first step out, others will follow. We set the tone, show the way, model courage in the face of change. Many of you today are thinking about what lies ahead with ever tightening budgets.  My clients are talking about strategies to re-structure jobs and reward performance, in essence, to work smarter and maximize potential and capabilities in the work force.  Performance management provides a framework for accomplishing change, but it cannot work unless a leader is willing to talk the helm.

Leaders change the way we think and act. Performance management is part of the skill set of a leader. When we talk about a system, as in performance management system, we are talking about a perspective that takes in the whole of the organization. It is not just something you do once in a year, it is a way to thinking about how to build success into the organization.

The first step in building a performance management system is identifying critical job competencies. When I worked with the County of Lancaster on this, the management team came up with what they thought was a comprehensive list of critical core competencies. Timi Kirchner, then the County Administrator, recently recalled to me how she remembers that a focus group took a look and came back with something much more complete, descriptive and even more challenging then the management team. I have seen this in many other organizations too, which is why I recommend engaging your employees in this question:

What is critical for success?

Great questions

Next, profile your high performers using the list of critical competencies. Gather stories and examples of behaviors that demonstrate these competencies.  You can also use these questions to gather information from employees during an annual performance review, or ask these questions during an employment interview to see if the candidate fits in with your organization.

¨  Tell me about three challenges you faced in this past year. How did you deal with these challenges?

¨  What competencies do you think were critical to the outcomes?

¨  What did you learn about your strengths and what competency are you most interested in developing in the future?

Develop a dictionary

You can also develop a dictionary of critical competencies for your organization. You may want to start with an existing dictionary (one is available at www. njhessassociates.com on the resource page) and then customize it using data from your own organization.

Job Descriptions

You also want to develop job descriptions to document actual work duties and a list of competencies, including knowledge skills and abilities required for the job. Use a methodology that is structured and systematic so you can defend your job descriptions if need be. For instance, be sure to

¨  Use structured questionnaires

¨  Interview to confirm and gather additional data

¨  Allow for comments from supervisor and employee.

Create Clear Performance Goals

Two types of goals are common and important in the performance evaluation process:

¨  Job goals relate to organization mission, goals and strategies.

¨  Development goals relate to competencies.

 Lucca is my neighbor’s dog, and she also reminds me of what it means to be a natural performer. But she does not perform without clear direction. The minute I change my focus away from her, she begins to lose interest as well. So, focused and intentional direction, and communication of clear expectations is imperative!

Do’s and Don’ts

Finally, a few do’s and don’ts

¨  DO create a policy and procedure that outlines the process for an annual review. It can be…

¨  Short and sweet with a focus on review of job and development goals(an example can be found at www.njhessassociates.com)

¨  Or , it can be more extensive with a focus on competency development where employee and supervisor review job performance from the context of a  competency profile created for their job.

¨  DON’T confuse your performance program with your disciplinary policy.

¨  DO include an appeals policy.

¨  DO practice documentation of reviews.

¨  DO have someone review all evaluations for consistency and integrity.

PERFORMANCE MEASURING TOOLS YOU MIGHT HAVE MISSED

So you think your management group has developed some realistic, inspiring goals. And they have followed through with some strategies that will move the organization forward. Now, you come to the part where performance measures are needed, and the end is in sight.

Temptation sets in to rush through this step. Somewhat ironic is the fact that most of us start out with the idea that what is really needed are performance measures and then months and months later, after painstaking work on mission, vision, goals, strategies, FINALLY we are ready to establish performance measures, and resistance sets in. We may have grown weary, but worse, we may feel we have run out of ideas.

Certainly, one way to combat this is to keep performance measures in focus throughout the process of setting goals and developing strategies. But another way is to set aside time to brainstorm about creative ways to approach performance measure. Remember, performance measures are best if they tap into qualitative and quantitative approaches. Either way, in order to measure, you must first develop feedback.

So, here are a few approaches I recommend you play with:

1. Survey feedback one of the most obvious ways to collect qualitative data but can be time intensive on an ongoing basis. There are a number of user friendly on-line survey packages that will collect and analyze your data for you. My favorite is www.surveymonkey.com. They offer a basic free version, but if you are going to do some serious surveying, you will want to upgrade.
2. Think about ways to make survey feedback more accessible to your customers.  Can they call and opt for a phone survey to report a service problem? Can they log onto your web-site and complete a survey?
3. Yes, yes, it is true, social media have already had a huge impact on customer service. Why not be the first in your niche to launch a twitter site and encourage your customers to find you there? What is nice is that complaints must be written in 140 characters or less! Customers like interaction and fast response. No one is better at this then Twitter. Think about it.
4. Digital Cameras! Capture expectations on camera. Take pictures of what things should look like when they are at their best (parks, facilities, nicely done brochures and mailings, service with a smile). Use the camera on periodic basis to capture problem areas. Or take pictures of certain areas on a quarterly basis on compare against the benchmark. Use them for discussion in team meetings and keep them in a log so you can refer back to previous quarters and assess trends over time.
5. When examining financials, keep asking, “What do these numbers mean? What definitions guide us? What is it we most want to know?”  Invite others who work less with the numbers to ask questions and help you see the less obvious gaps in information, or assumptions that may be a hindrance to your effectiveness in reporting.
6. Get in the habit of asking questions that encourage measurement. At the end of a team meeting, ask: Where are we at currently? What is our total expected achievement within six months?

ACHIEVEMENT SCALE

0% >>>>>>>>>>>>>>>>>>> 100%

What other creative performance measures have driven your organization to move in a new direction?

Strategies – What’s the Big Deal?

Strategies convey the way we get things done in organizations. Everybody has them, but the question is: can we explain them? Are they transparent, intentional, and based on shared understanding? Whether we refer to ourselves, our team, or our organization, without attention to strategy, default patterns hold sway and no real change is possible.

Only when we can detect default strategies can we begin the process of change from old patterns to new ones. If we blank out the order we have imposed on our surroundings, and attempt to see the chaos of ever merging, diverging, converging patterns of interactions, communications and activities, we might begin to appreciate the value of adapting and reacting to the environment in new ways. Only when we take the time to consider “old ways” versus “new ways” can we detect the difference and measure results.

Without supporting strategies, goals fall flat and are immune to measurement.  Strategies relate to how we define and establish costing systems, or configure and apply management information systems to our business model. Strategies are also the way we tap wisdom at the workplace, and the “rules of thumb” that implicitly inform our decision-making.

When strategies are identified, defined, and understood in the context of the highest goals, they lend themselves to the process of feedback and measurement.  So, strategies are the link between goals and outcomes that keep us engaged, talking to one another, debating, evolving ideas, and moving forward.

Next Time:         Performance measure opportunities you might have missed.

Goals and Strategies – Do You Know the Difference?

If you have worked on development of goal and strategy statements you know the challenge of distinguishing between the two.  The definitions are deceptively simple (and I rely on the classic work of Eden and Ackermann, Making Strategy to guide me).  A goal is what you intend to do, and a strategy is how you intend to do it. If you are working toward a performance-based culture, you know that goals and strategies (or similar constructs) inform what measurements you will establish. Often organizations blur the two or completely disregard the second [I will address that issue in an upcoming post about performance measurements].

By way of example, in meeting with a client recently, the team arrived at a draft goal of building institutional knowledge for long term sustainability.  Although this was not something emphasized in their mission and values, it certainly was tangential to their aspirations expressed in part by, “enhance livability and economic vitality. “  Eventually, as the team becomes clear about what they mean by their goal statement, they will go back and re-visit their mission and vision statement to see if it needs refinement to better express the goal aspiration. This leads to another important point about the process; work on mission and vision statements feeds into work goals and strategies, and vice versa. The process is iterative, not linear.

Once the team began looking at strategies to achieve the goal of building institutional knowledge, the team came up with “break down department silos through open information” and here they met the conundrum. Although we were working on strategies, this felt and sounded to the team like a goal. Certainly this statement supports the goal, but it also feels and sounds pretty potent by itself.

And here is the key point: In fact, when groups generate goals and strategies, it is not always possible to distinguish between the two until the group constructs a hierarchy of goals. Some statements will be core, or central to the mission and vision. Other statements will be subordinate, or supporting, but may still be goals in their own right. Only by distinguishing how goal and strategy statements relate to the mission and to each other does it become possible to develop a system of goals and strategy that reach both horizontally and vertically within the organization.

So, here are some tips for differentiating between goals and strategies that may be helpful in your quest:

GOALS

• Think of goals in terms of hierarchy; some are super-ordinate to others and each goal sustains higher order goals.
• Goals have outcomes in their own right, and are not seen as a means to other ends.
• The team may begin with as many as 50-70 goals but the task of the group is to arrive at fewer, maybe 15-20 goals. Some of these goals become strategies and others will merge into an inclusive goal statement.
• Goals are inter-related; goals support other goals; goals relate to different parts of the organization and work together as a system to support each other.
• The meaning of a goal arises from context, for instance, the issues and emergent themes that might have been surfaced in a SWOT analysis.
• Organizations typically have 5 -12 goals as a primary focus .

STRATEGIES

• Strategies are the means of achieving the goals. Some are usually related to resolving key strategic issues; others address future concerns and new aspirations, or the development of new distinctive competencies.
• Strategies are considered in light of the goals they are trying to achieve.
• Potential (initial) strategies may number 30-60, but eventually are reduced to somewhere around 10 – 20.

Happy May Day

In the most recent Economic Research Institute (ERI) Quarterly newsletter, we hear something we have not heard much about in the news media, but which remains a critical point for employers to keep in mind.

Economic conditions are drastically affecting 2009 compensation administration. At the same time, the US is greatly increasing its money supply (restoring bank, auto, and insurance company losses, with these funds mainly hoarded). As soon as the economy turns around (and it will), this money will chase a finite amount of goods and services, the foremost being talented individuals’ skill sets. Stimulus conditions are creating “perfect storm conditions” for salary/wage inflation affecting those managing the pay of skilled individuals.

In fact, labor economists have warned of the impending shortage of educated, skilled workers to meet future demands. Long before this economic downturn, HR professionals in the U.S. were conferencing on how to attract and keep the best workers, and when we emerge from this period where there appears to be a flood of candidates to supply our needs, the backlash will likely shock our compensation systems. Organizations who hire a professional at a lower market rate today, because they can, should be prepared to accelerate pay in the future, or lose the high performer. 

What strategy do we employ now? 

1. Take steps to distinguish high performance and take care of your high performers. Know who they are and know what they are worth.

2. Be prepared to articulate why you will go to the wall for some, and not for others.

3. Gather quantitative and qualitative data on critical aspects of performance.

4. Set up feedback systems so people know how the organization is doing, and how they are contributing to the picture. 

Final thought: When you watch a highly successful sports team, you may be drawn into the way in which the whole operation works, from the big picture strategy, down to the individual contributors.  While you may be focused on outcomes, the big wins, the longer you follow the team and study the dynamics of the operation, the more you learn about how people are engaged with one another, the culture of the organization and most importantly the leaders at various levels of the operation. Every organization has roadblocks and problems, but from our armchairs we see something of the forces at play behind the success of our team.  We need to apply the same interest and willingness to examine our own milieu.