People or Profit? The Evolution of Performance Management

People or Profit? The Evolution of Performance Management

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People or Profit?  The Evolution of Performance Management

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Performance Management

In the latter decades of last century, performance management was all about aiming high, setting “stretch” goals, applying continuous pressure, regular reviews, and eliminating dead wood.

Jack Welch made massive changes at GE during the 1980’s using this process to slash workforce numbers and eliminate non-performing assets. Along with introducing six sigma in ‘95, he not only saved the company, but turned it into a powerhouse. He had a reputation as a tough task-master with a ruthless drive to slash workforce numbers and eliminate costs.

In many ways, this approach was necessary for GE, and its contemporaries, to shake up bureaucracies to eliminate complacency, and inefficient practices in the face of globalisation and rapid technological change. There has, of course, been criticism that the relentless pressure to achieve goals led to short-cuts, employee health issues, and unsustainable profit expectations.

More recently, Jack has said “On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy…your main constituencies are your employees, your customers and your products.” This does seem inconsistent with his earlier reputation, but maybe he had to slash the workforce in order to look after the survivors? Or, perhaps this is a reflection of how times have changed?

We have certainly moved on.

  • The nature of work has changed. Trading our time for a wage has given way to applying our knowledge for a career.
  • Employee expectations have also changed. Meaning, fulfilment, and work-life balance are now the hallmarks of a desirable career.

Employee Engagement

Performance management is adapting by embracing the concepts of employee engagement as the precursors to performance. This is moving away from a result-focused model to a strategic approach that will deliver better results in a sustainable, self-perpetuating system.

Employee engagement has been consistently linked to higher productivity and therefore greater profits and success. It would seem that if we look after the people, the profits will follow. However, some academics argue that the empirical evidence is so sketchy that it is possible that greater engagement is observed because the firm is successful, not the other way around.

We must also consider engagement as a very individual activity occurring in the very unique environment of your workplace. As such, some engagement strategies that work well for one employee may not work as well for others. Equally, engagement success in one department may not be transferable to other departments where different management, processes and/or resources change the dynamics.

Survey Results

Earlier this year we ran an Employee Engagement survey to hear people’s opinions on what actions are producing results, what’s not, and what they would recommend. Here are some of the responses that you may find interesting. Please do add your feedback in the comments below.

What have you found to be successful in engaging employees in the workplace?

Not surprisingly, communication activities featured heavily in the responses, including

  • Managers being seen & available to the staff
  • Honest feedback and involvement
  • Involving all staff in strategic plan development
  • Clear job roles, expectations & KPI’s
  • Feedback to and from others they work with
  • Forums for groups of staff
  • External review processes
  • Newsletters
  • Team Planning Days

Other key success activities were

  • Development opportunities
  • Leading by example
  • Hiring people with passion for the role, given they are qualified
  • Social activities and senior executive visibility
  • Surveys and opinion polls
  • Training and encouragement – interactions with management supporting it
  • Values based activities

What do you see as the main hindrances to employee engagement?

  • Distraction from core business, Time & cost, Unable to quantify the ROI, Workload
  • Perceived pay disparity between those at the top & “the workers”
  • Lack of commitment by managers & leadership effectiveness
  • Lack of interest/understanding by employees, attitudes towards work
  • Location, remoteness, dispersed workforce, working in isolation
  • Low pay, job insecurity, casual workforce
  • No commitment to the mission and values
  • Program scope not defined, No clear goals
  • The connection that people have with our customers can be stronger than the one with the organisation

If you were advising a new company, what initiatives would you prioritise for maximum benefit?

Here are the best suggestions grouped by category…

Survey

  • Survey of current status
  • Annual surveys to check effectiveness of activities
  • Run a survey every two years

Mission Vision and Values

  • Mission consistency throughout the organisation in respect to the values and goals
  • Review and check acceptance of values
  • Clear and concise policies that support positive performance.
  • Ensure mission, vision and values are realistic and not too aspirational

Position Descriptions

  • Review the recruitment/induction process for engagement activities
  • Role clarity
  • Staff know the purpose of the business
  • Employees know what their role is and what difference it makes

Recruitment and Induction

  • Employ the right people
  • Employ people with the right attitudes first, then train them for skills
  • Induction sets the tone for the rest of their employment
  • Spend time up front with the new employees to describe the culture that you would like within your business and the behaviours that you expect from them
  • Review the career and development plan process
  • Training and engagement with staff

Reviews & Feedback

  • Focus group to discuss issues with workforce
  • Annual review cycle for engagement with values/mission KPI’s
  • Clearly articulating values and goals of the organisation and support for staff to embrace them
  • Equitable remuneration programs that go beyond dollars

Consultation

  • Engagement from senior staff to the front-line staff
  • Active listening
  • A high level of employee participation
  • Don’t keep putting on more people at the top
  • Let those doing the hard work see that you are giving them some consideration
  • Small focussed discussion forums and direct action on key recommendations from this group

Employee Engagement Free eBook
This has been an excerpt from an Employee Engagement eBook available free here.
Regards,
David WIlson

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