Occasionally, my posts are inspired by content I create while replying to the content of others on sharing platforms. This will be one more such case.

Last week, I was reading a post from a guy on performance management. The post was a 12 minute read and was much more involved than what I’m reducing it to, so I realize I’m not doing it a lot of justice. One of his main points was that measurement was incredibly difficult for the profession he spoke of. Employees commonly worked in teams, and since collaboration was such a huge determining factor of performance — along with technical skill — then the ‘team’ should be rated, suggesting that all on the team be given an equal rating.

I get the thinking, but I challenged it, because somehow, you have to be able to determine individual contribution. I mean, if a promotion comes up, who from the team gets it? And if you’re hiring for this skill set, the candidate has to be able to dimensionalize his/her contribution to be able to explain the impact they can have if they joined the company. Most companies in the west are meritocracies, so we need to push ourselves a little more on this challenge.

To help, I continued on to lay out my suggestions of how to go about measuring performance in a general sense, showing relevance to his situation. I drew from the best systems I’ve worked with along with my own creations. The result is my list of key principles to embrace and follow when managing performance. The more of these than can be followed, the better:

Acknowledge that it’s a lot of work. (that provides a lot of benefit)

So get over it. No, actually, embrace it. No, really actually, obsess over the amount and importance of this work.

You know it’s funny. We might spend ridiculous amounts of time debating a monetary spend in the context of projected ROI. We choose to completely ignore that we can generate far greater returns of consequence through two more important and finite resources – people and time. What’s worse, when it comes to people, we complain to a greater extent than we can demonstrate our efforts to foster better performance. Somehow we both consciously and subconsciously believe great performance should just happen and be innate in everyone we hire. Sigh.

In my mind, the role of an exec team is broader than what it tends to focus on — to deliver the number this financial cycle. I see that as about a third of the focus, at least once the company is off the ground. The other two thirds should be equally (roughly) divided between incubating future revenue streams / business models, and perfecting infrastructure. In this post on my projected Org Chart of the Future I go into detail on what I mean, while recommending it be brought front and center into management practice.

Org structure, culture, process, decision support systems are all vital performance tools for a company and can be a source of competitive advantage. About time companies start seeing it that way. Oh, and as a by-product of working your infrastructure diligently, you are likely to have happier, loyal and more productive employees. Just a thought.

For now I’ll stop there. Just need to wire your brain to make this a big thing that is baked into your (daily!) routine practices.

It’s both art and science.

But guess what, so is marketing and most of business, so…what’s the problem?

You have to both measure and reconcile qual and quant information and layer in some gut and common sense. It’s no different when you’re measuring performance, so once again, just accept it, and don’t let these things tie you in a knot or force you to bail on trying to make your system great.

We’re not ready yet to rely on AI or big data to measure performance, so be careful about to what extent you try to modernize. There are behaviors that ladder up to results that need to be captured in quite human ways, so at least for now, we all need to be involved.

Overthink the metrics and behaviors of success.

Metrics such as growth in sales, share or profitability come easy.  It’s the fuzzy stuff that gets complicated because there are probably a few hundred leadership skills from which to isolate the select few that cause results in any given company.

What also goes with this process is auditing what damaging behaviors you are cultivating when you lay out the conduct and metrics you reward. I remember the CEO of Johnson & Johnson in a town hall admitting he didn’t think things through when he told the head of Ops the company had too much money tied up in excess inventory and so going forward he would be bonused on keeping inventory under X days of supply. What happened? Out of stocks, everywhere. Customers were incensed.

I tell people that in things like economics as well as other things in life, when you fix one thing you risk breaking another. Be conscious of this in every business move that you make.

Same with leadership and team behaviors. I have seen managers pressure people to speak up in meetings. The result? Epic meetings with people blabbing about nothing to everyone’s frustration. (OK, OK that’s just about every meeting, yeah. If you want to read up on that, check out The Root Cause of Meeting Misery for a dissection of that dynamic)

Set expectations at the beginning of the performance cycle.

(Why do I even have to point this out??!?!?).

Note to readers: never complain about the performance failings of any of your team if you haven’t told them what you expect of them and how you are measuring them. Nope, they don’t come pre-packaged with a God-given sense of how to please you. But they will make an effort to behave in the ways you want if you explain it to them on the front end. Contrary to popular belief on Millennials especially, most employees do want to perform well; if you don’t show them what that looks like there’s a good chance you won’t get it.

I’m going to pat myself on the back for creating one tool that I have never seen put to use anywhere else. I created an Excel grid with every technical and soft skill set I’m looking for in my direct reports, and I show them what meeting and exceeding expectations looks like as two distinct behaviors. A simple example: influencing skills. In my grid I consider exceptional behavior to be presenting information that changes the mind of a senior person who had an ingoing bias against your point of view. Meeting expectations would be presenting a plan in front of an audience of any size with an open mind and getting the plan approved. It’s often times the environment or circumstances that gives power to your performance, so I’m able to motivate my team by explaining where they can really step up to the plate and earn their money. I have had consistent success with this model throughout the more recent stages of my career.

Factor performance for the things your employee can control.

Most good systems will construct tiers or components of a performance rating, especially as it relates to bonuses.

Employees don’t operate in a vacuum. While they can influence many things, they are still part of a team and a company at large. This is in part why you can’t just reward on business results – unless you’re CEO.

As a result, plan to factor performance measurement to recognize goal attainment at the team and/or company level as well. Alter the proportionate factors based on your level (for example, the performance rating of an entry level associate would be factored comparatively little for overall company performance).

In fairness, you should also test that company/team/individual goals do not work against each other as they sometimes do, sadly. This check is needed because, as mentioned, the C-level suite is often not seated at the head of the goal setting and performance development process. Things somehow always get a bit decentralized, resulting in incongruence between departments.  That would be another epic post. See this almost every day, I feel.

Track performance constantly, and in real time.

You need systems and discipline to track even micro-contributions that can ladder up to bigger impact. Most managers are too lazy and wait until year end, so they have little fodder to evaluate and they capture the wrong things…and not enough data points in general. What’s left is some subjective feeling about a person’s performance with little substantiation based on how the employee actually approaches their work.

I charge both myself and my direct reports to keep track of all of their contributions, qual and quant based on the system of measurement I devised. So they know minute by minute by their own evaluation if they did something great. No, I don’t expect them to write their own review, but because I empower them (ie I’m not sitting in their lap all day), I need them to provide me data points and evidence of their impact in those times when I’m not able to see it for myself.

Say they are in a meeting and the team is trying to solve a problem and there’s an impasse. And one team member comes up with a way to break the impasse and that leads to forward progress. That needs to be captured. Probably in real time. How are you doing that? If you don’t have such a system, you are not capturing and archiving evidence of valuable contribution. This is as big of an issue as the failure to set expectations. Missed opportunity on top of missed opportunity.

Calibrate to ensure objectivity, consistency and fairness.

You’re probably thinking “well it’s hard to measure the impact of causing a breakthrough in a meeting”. Yup, this is why it’s not a perfect science as I mentioned earlier. Sometimes it’s easy, such as an expression of creativity that leads to a new product idea generating $XXX in sales in the first year. The qual stuff is harder.

This is how you can best deal with it. Calibration.

I worked for a large company that did this. Each manager (director, VP, etc.; done at every level) compiled the entire book of work for the year for each person doing the same job at each level with same performance expectations. That info was laid out side by side and the managers of those individuals got together in a meeting to discuss each person at length to ‘calibrate’. The process took a few days, which is entirely worth it because we believed we needed to invest in our people as an essential resource.

Once you look at each person side by side you can get a good sense of the impact of each person relative to each other. So you can sort of bell curve the employees and rate them accordingly. Don’t get caught up on the negative connotations of my ‘bell’ terminology; we didn’t force a percentage into lower tiers if we felt all made substantial contributions. We were allowed to rate everyone exceptional if we could justify it. Great system that kept things fair, while also teaching leaders how to consistently attach a value performance.

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All of this sounds like a giant pain in the butt, doesn’t it? Yup, it’s a ton of work. But think of it as an investment with a long tail of returns. Put the time in to install or revamp your system with something well thought out and you’ll only need to tweak as time goes on. That’s what we do as company leaders – develop and invest in assets that we can monetize over time. We should take the same approach to systems and people.

Taking short cuts will only leave you with stagnating business results and frustrated if not uninspired employees. The next time you complain about poor performance, take a step back and audit how much time and energy you spend on interviewing (including preparing to interview), setting expectations, collecting insights, giving feedback….all of it. And consider my point of view. Your time and energy is a resource just like money that needs to be invested to earn a return. If you see it that way, you should expect to ‘get what you ‘pay for’ when it comes to your team and its performance.

 

ADDITIONAL READING

A valuable though tangential post from a while back with some guidance to ensure employees have the right skill sets before you promote them. Superior performance at their current level isn’t always enough justification.

 

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