Performance Reviews

Most organizations waste the performance evaluation process, even though it is a great tool to improve performance. The best way to fix that is to evaluate continually rather than annually.

• Annual reviews should be the icing on the developmental cake: You review performance all year as a core managerial responsibility.
• Your goal must be retention, not elimination. Fix the skill sets and mindsets that inhibit productivity.

Read more in this month’s newsletter. Also in this issue:

• Do you hire the “best” person, or the right person?
• Leaders must drain fear from their organization to enable the pursuit of truth and maximize productivity.

 

Please share this newsletter with friends and co-workers who may find our insights productive in their own professional and personal lives.

We have a bulging file of articles and research about employee engagement and it is always refreshing and energizing to check in with some of that data and thinking to keep us focused on what employee engagement is truly all about.

Here is a three-pager on Employee Engagement research done way back in 2004 in the UK that we think might be useful as a quick reminder of all the aspects of HR that underpin a good engagement strategy. Its conclusions support our own Foundations of Excellence philosophy, which focuses on adopting a three-pronged mindset within each employee that drives up engagement, which Bovo-Tighe clients will know well:

• Unshakable Trust
• The Pursuit of Truth
• Commuication that Counts 

In the research summary, the authors presented a graphic that we recreate here:

These facets of employee life capture key areas to work on in creating an environment that encourages engagement. The report ranks these in order of importance based on their own research (based on the UK’s National Health Service) but does note that these factors will shift in importance from organization to organization (safety rises towards the top, for instance, in the energy business). We agree, and left out any reference to relative importance.

Note that “immediate management” can encapsulate how superiors lead and relate to subordinates, which gets a lot of emphasis from us. We also would comment that “job satisfaction” derives from a number of other facets on the list, but could also encompass details about particular job tasks and roles not captured elsewhere on the list. 

What do you think of this? Can it serve as a handy reminder that employee engagement is driven by a mix of factors that all need attention? What gaps do you see that need filling? Let us know in the comment section! We value your feedback on what we post here. It is only our informed opinion, after all! 

For more on our Foundations of Excellence philosophy, click here.

Are you prepared to forestall an employee exodus when the economy warms? Companies who have adopted a mindset of employee engagement probably are, as a side benefit of the productivity gains they have already reaped from this commitment.

A recent news item from Bloomberg brought this looming corporate retention issue to mind:

One in Three Workers Wants to Leave Their Job.

The article cites recent research done by Mercer, an HR outsourcing firm, not a more objective source like Harris or Gallup, but I think it truly reflects where employees are after the economic grind of the last three years.

“They feel less attached to the organization emotionally and psychologically, and they don’t necessarily believe that the organization they work for has their best interests in mind,” said Jason Jeffay, a senior partner at Mercer.

At Bovo-Tighe, we fight this trend for you, and we see the difference in commitment and retention when our clients step up and truly adopt the inclusive corporate mindset of engagement. Note I wrote “truly adopt.” Lip service or one-off training modules that don’t reflect a sustained commitment will only alienate employees, as most of us in the business have seen happen too many times.

For those firms that do “get it” and walk their talk about employee engagement, great jumps in productivity will be had. Genuine efforts to engage and enable employees, that validate their intelligence and trust in their motivation to do the best for their employer, usually works out well.

You need a strategic plan that focuses on this coming problem, because you want to be among those fortunate companies that stays out of the expensive game of musical chairs that organizations and their disgruntled employees will start playing once the economy gets going again.

Forgive the pitch in this blogging space, but if you haven’t spoken to us about our most recent experiences in fostering great employee productivity, you are missing one of the great benefits of working with Bovo-Tighe: Ongoing partnership and brainstorming to keep you progressing rather than treading water.

At the very least, let us bring you up to date on the current state of accelerative learning. That’s something every line manager needs to know about!

For the most part, Performance Management fails in its attempts to raise productivity, retain talent and rewards results. It becomes a burden on an organization and seems to demoralize or at least demotivate employees.

I read a quote recently in an article by David Wentworth on i4cp.com that hit the nail on the head:

“How did we get to a point where the term performance management instills fear and dread at its mere utterance? Employees tend to loathe the process…that does nothing to recognize their work, yet determines their pay for the next year. Managers see it as a huge time suck that culminates in a series of uncomfortable conversations and confrontations they would rather not endure.”

This is sad, because performance reviews and recognition programs should be a vehicle of employee engagement and generate a boost to productivity. Why does it instead induce fear and uncertainty?

Here are a few reasons why: continue

The old phrase “easy to say, hard to do” seems to be the prevailing sentiment about talent management in business. I came back across research I collected in 2008 from the Economist Intelligence Unit that surveyed about 500 senior executives internationally, and its conclusions ring true today: Close to 80% of the senior executives surveyed agreed that a lack of talent was “likely” to impact their operations negatively in the future. So they recognize the need to groom talent, but that same survey measured only about 25 % of them as committed to talent development:

Platitudes vs. commitment to talent management

The sad truth is, stated commitments are not leading to action, even when consultants like us have proof that investments in talent development pay off in spades:

• Only 3% of those surveyed said they were doing “an excellent job” in talent management.
• Another 24% said they were doing a “very good job”, which leaves about three in four executives who felt they had to improve.
• Meanwhile, merely about one in nine respondents said they often championed strategic management of leadership talent.
• Only one in five said they often spent time on managing leadership talent or involved their human resources (HR) department as a strategic partner.
• Furthermore, just one in ten said they often reviewed leadership talent with their board.

This is an area where HR can step up and insist on investing in employee development. Those corporations that do will reap great rewards:

• Better trained executives
• Who stick around
• Who continue to contribute enthusiastically
• Who foster leadership and innovation within their teams
• And groom their own successors in turn

What’s not to like about that? Ask us about furnishing the support you need to get talent development to the top of your CEO’s priority list.

Social comparison, one of the psychological factors that limit the effectiveness of compensation schemes as a performance reward,* apparently also has a salutary effect in improving employee productivity if it is revealed how individuals rank vis-à-vis their peers.

One of the professors we reviewed on the compensation topic, Prof. Francesca Gino, has taken an interesting tangent out of that research to explore how public delivery of performance feedback (as opposed to pay) can affect productivity. The conclusions are:

• Frequent feedback raises productivity regardless of where an employee ranks relative to peers.
• Fear of being the worst is a much stronger motivator to improve than a desire to be the best.

Let’s examine the second conclusion first, as that was more unpredictably interesting. The research measured productivity improvements among people who were given a clear understanding where their performance ranked compared to their fellow workers. This information generated a stronger response when the person found out he or she was near the bottom than if they ranked highly. Such people measurably improved their productivity. Clearly, a desire not to be the worst is a powerful motivator to improve performance! On the other hand, people who found they were not near the bottom did not change their behavior much or at all. This held whether they were middle of the pack or near the top rating. Apparently “being the best” is less motivation than “not being the worst” in a corporate setting!

Taking such a public approach (outside of sales) would have to be handled delicately, as you don’t want to have it drift into public humiliation, but some form of comparative ranking could prove useful.

Public or private, feedback is best when constant

Most critically for people managers, however, was the first conclusion: Frequency of feedback raised productivity across the board regardless of ranking. This is more support for throwing out the annual performance review as the BIG MOMENT when feedback is given. Make the annual review a short, sweet formality by giving feedback constantly, even every day if appropriate or possible. Indeed, one could argue giving steady constructive criticism should be the manager’s top responsibility, because increased employee productivity would naturally make it easier for the manager to hit his or her corporate goals.

For more detail, read the summary on HBS Working Knowledge.

*Our principal David Tighe reviewed that research on this topic a few months ago, describing why human frailties made it nearly impossible for corporations to reward effort using pay-for-performance schemes.

Click on the link below to open Bovo-Tighe’s latest client newsletter. In it you will find useful articles on talent management and development, and how that can prepare you for whatever crisis or opportunity the future brings.

• Retaining Top Talent
• Are You And Your Company Prepared To Handle A Crisis?
• Exceptional Leaders Don’t Hunker Down
• One Minute Ideas – Help Employees Succeed
• Developing Your Leadership Bench

 The March 2011 Newsletter from Bovo-Tighe.

As always, we welcome your comments.

Words matter. How you phrase verbal and written staff communications about corporate do’s and don’t’s can affect employee behavior, even if the underlying corporate goals and/or policies are the same.

Initial research into this aspect of corporate communications brings some light to this. A working paper by Francesca Gino and Joshua Margolis at the Harvard Business School called “The Importance of ‘Don’t’ in Inducing Ethical Employee Behavior” outlined their preliminary findings. (I recommend reading the comments to the article, too, as they have some well-thought-out disagreements with the article’s conclusions.)

“In general, there are two ways a company can encourage ethical conduct among its employees,” write the authors. “Either the promotion of good actions and outcomes or the prevention of bad ones.” 

Through several experiments, the professors found that inducing a “prevention focus” will lead to ethical behavior more than inducing a “promotion focus,” where increased corner-cutting was observed among study participants to make their goals.

“In encouraging ethical behavior among employees, it behooves firms to consider focusing on preventing negative outcomes, not only in creating a code of ethics but also in setting goals and framing task directives,” state the authors.

In short, whatever you choose to emphasize in your employee communications is what your employees will respond to.

One of the comments to the article pointed out that the use of the word ‘but’ in place of ‘and’ will direct employee attention to everything after ‘but,’ neglecting what preceded it. As an example:

“Stick to these new compliance guidelines, but be sure to hit your numbers!”
Or:
“Stick to these new compliance guidelines, and use them to focus your energy on the right sort of deals when working to hit your numbers!”

Retaining ethical, compliant behavior while striving to meet corporate goals is a hard balancing act. Achieving goals is a core motivation among engaged employees that many companies encourage. It is hard to consistently add “but only the right way” in an equally energetic and engaging way. It has to be done consistently, though, or the balanced message critical to a company’s long-term success will be compromised by well-meaning but corner-cutting individuals.

Look no farther than the mortgage industry in the first decade of this century for a classic example where the ‘be  productive’ message got through, but the ‘stay compliant’ message did not. The very message of what staying compliant meant became a moving target as Wall Street clamored for fresh loans to feed their securities pipeline, and competitive pressures pushed brokers and lenders to bend qualifying standards to meet their sales goals. No individual entity led the charge into the sub-prime marketplace, but the disconnection between responsible lending and production goals attracted more and more people to the profitable subprime loans that could be done. The gap between “find loans that make long-term sense” and “find any and all loans you can” grew ever wider until the bridge between them collapsed.

I look forward to seeing what else this research initiative brings to light. If interesting, I will report back in this space!

I recently found on strategy+business.com a long article on how the brain is wired to perpetuate those rote tasks and roles that make up a corporate culture, and how changing the wiring of those established mindsets is the critical foundation to improving employee engagement and productivity.

Eureka! Science is finally uncovering the reasons why our “changing mindsets” and Foundation of Excellence approaches have been so successful.

When you dig through the 5,000 word article and wade through the biological and psychiatric terminology, you will find these basic conclusions:

• Habits, good and bad, get wired into the part of the brain that retains learning.
• To break the bad habits, you have to motivate employees to recognize and challenge their own individual “wiring” or mindsets before they can see the need to change.
• After gaining their agreement that a new set of mindsets would be more productive, you have to install a learning regime that teaches the new behavior repetitively enough to permanently rewire the new mindset into the brain. 

This brings to mind what the wife of one of our Bovo-Tighe associates says about her private-lesson piano students: It is easier to imprint her system on students new to piano than on those who come from other teachers. Transfer students need extensive “rewiring” before she can make any progress.

Naturally, we see our Foundation of Excellence approach more focused than the framework recommended in the article, and we completely disagree with the authors concluding remark that “the concept of organizational reframing (their phrase) is still relatively young.”

Unrecognized, perhaps, but not that young. We have been using this approach for over 20 years!

But these are quibbles: It is nice to be right, and to have such esteemed people agree with us!

CEOs often say “People are our greatest asset!”

Do they really mean it? Or do they just say it because people expect them to say it?

John Gibbons, a columnist for the Institute for Corporate Productivity just wrote a diatribe about it. The first part of his piece described my own suspicious reaction to a CEO spouting on about people are “critical to his company’s success.” Their actions before and after such a statement too often belie their commitment to its principle.

People, in the eyes of too many senior managers, are replaceable. The costs of recruitment and the disruption of turnover are soft costs that are hard to capture, unlike the replacement cost of computers or other harder assets. 

As Mr. Gibbons notes, when you can quantify the costs of staff turnover, or of increased productivity through human development, you get a senior manager’s attention. How, though, do you go about gathering the hard data to prove the value of employee productivity enhancement training?

Here is where I take exception to one aspect of Mr. Gibbon’s rant: You don’t need lay in expensive analytic structures (often software solutions) to start properly measuring the impact of better human capital development investments. You simply need to engage the participants in measuring their own success. It is a win-win-win. Through rigorous tracking and reporting of behavior changes and the results generated:

• The employee sees the results of his or her empowerment, and is encouraged to further excel. (We have lots of case studies that back this up.)
• Their bosses burnish their reputations as good leaders, and are encouraged in their commitment to employee development
• The company gains documentable financial advantage through the innovations that the participants generated by being more engaged and productive.

For over twenty years, Bovo-Tighe has made tracking of productivity improvements a mandatory part of every engagement it runs with clients because we want senior executives to understand the power of investment in human “assets.” Perhaps software tracking and analytics might make that task a little easier, but it is still people who must be motivated to interact with the software to make the reports it generates meaningful.

Before he got into his sales pitch for “Evidence-Based Human Resources,” that is what Mr. Gibbon was getting at!