Do your people perform at optimum levels? Are their results all that you expect? What can you do to increase your people’s motivation? In workforce surveys, people believe that they could improve their performance by 15 to 20 percent, but that no one would recognize the improvement. Such an improvement could have a tremendous impact on profits, collections, cost savings, and more! Just imagine the impact on profits of a 20 percent increase in sales or a 20 percent reduction in costs! This is worth working for.
You can close this performance gap between what workers actually do and what they can potentially do. The answer lies in measurement, tracking, recognition, involvement and evaluation. These five elements form the basis for any effective performance management program. The author has developed and implemented in many companies a system called “P.R.I.D.E.” that integrates these five cornerstones of performance management. P.R.I.D.E. helps people’s everyday performance approach full capacity. It closes the performance gap.
Guided by the profit and loss statement, this system focuses people on obtaining key results. It is a practical method to get your business focused and your people involved in making the right things happen for improved results. Performance management systems, including P.R.I.D.E., need to be implemented after a clear strategic direction is in place. This article assumes that an effective strategy has been formulated and communicated, and the organization is in need of a performance focusing system to help drive the direction. Let’s review the main components of P.R.I.D.E.
P – Profiling and Pinpointing
Every manager and employee, regardless of his or her position status, needs to be able to focus on the results he or she is to attain. P.R.I.D.E. starts with a performance profile for each individual — a clear statement of what results he or she is to achieve and the key actions it will take to drive those results. Once a profile is written, key results need to be pinpointed into specific performance targets. Information from the profit and loss statement should be a motivating force behind selecting key results on which to focus. Identify the areas within the P&L that the particular worker can most influence. For example, a loading dock crew might have “4,000 pounds per man hour” as their pinpointed target. Specific dock workers would, in turn, contribute to achieving this target. To be effective, pinpointed targets must be measurable, agreed upon, and realistic.
Doug Smith, in his latest book, Make Success Measurable!, provides a detailed treatment of the tools for performance measurement. For a more comprehensive review of pinpointing measures, Mark Brown, in his book Keeping Score, also offers some excellent advice and tools on using performance measures to improve business results. To review an extensive index of specific key results by specific organizational positions, review Richard Sloma’s, How to Measure Managerial Performance.
Ultimately, performance measures need to be cascaded throughout an organization from CEO to each individual employee. The organization, business unit and all individuals will have relevant measures. It is desirable that the overall organizational targets reflect a balance of financial and non-financial metrics, like Kaplan and Norton suggest in their book, Balanced Scorecard.
R – Recording
Can you picture your favorite sports team playing without a scoreboard? How would the players easily track their performance? By the same token, in business, people need to have scoreboards – simple graphs are often the easiest to follow. Information taken from the P&L relating to key results pinpointed for each employee or group is graphed. The performance areas are easily visible to the relevant employee or group. By recording and tracking this information consistently and timely, a performance picture is available for managers and individual contributors to focus their attention. They keep people in the game!
I – Informing and Interacting
Letting people know their progress toward pinpointed performance targets is critical. Equally important, performers need to have the opportunity to express what they are doing, or will do, to drive their scoreboard. Appropriate levels of employee involvement can make good performance outstanding. (Edward Lawler and his colleagues have provided extensive applied research support for the connection between improved business results and employee involvement. This evidence is most recently documented in Strategies for High Performance Organizations – The CEO Report – Employee Involvement, TQM and Reengineering Programs in Fortune 1000 Corporations.)
Informing people of their performance numbers can be done in varying ways and time frames. Showing measurable results is the cornerstone to an effective action plan. Though all key actions are not always immediately measurable, it is always helpful to keep people informed as soon as possible regarding measured performance.
The P.R.I.D.E. program incorporates interrelated systems for informing, interacting and providing performance feedback. Any effective approach to performance management must include performance evaluations based upon the performance profile, performance coaching and performance huddling. Performance will be improved if workers know where they stand, are both supported and confronted around performance issues, and feel that their input counts.
The manager should take information from the performance tracking graphs to use as a basis for action plan development and for discussion in weekly performance huddles. In performance huddling, employees “huddle” to tell what they can do to drive results, working to create the action plan. The huddle should stay focused on key actions that influence the numbers being recorded and tracked. In showing performance numbers, the manager keeps his/her team focused on the key result areas during the action planning.
Huddles should follow a basic agenda: review of action plans and current results with focused discussion regarding the next action plan. The performance huddle is a time for discussing what effects the key actions taken have had on the numbers. Interpersonal influence skills, such as communication, motivation, and conflict management, are helpful in conducting a focused performance huddle. The manager keeps the discussion crisp and has the P&L results in mind during the action planning.
D – Delivering Recognition
Once P&L results are available, it is important to deliver appropriate recognition to those people who have met or exceeded their performance target(s). All key actions, not just the ultimate P&L target, should be recognized. It is these key actions and subsequent results that drive the ultimate P&L targets.
Rewarding and recognizing people for their performance will encourage them to attain goals, and will shape and maintain performance. There are a variety of ways to recognize people, ranging from formal compensation systems to informal non-monetary rewards. Two highly recommended methods are specific verbal praise and “planned unexpected recognition.”
Most people would like to hear from their boss that they are doing a good job, and how their performance is successful. The verbal “good job” message needs to be specific and sincere, not general or phony. Bob Nelson, in 1001 Ways to Reward Employees underscores the research that supports the use of recognition in the workplace and provides managers with a mountain of proven reward strategies and concrete examples on how to use them.
“Planned unexpected recognition” happens when you deliberately recognize someone when they do not expect it — you plan it and surprise them with it! One dramatic example of this recognition happened when a retail store janitor was surprised with a huge chocolate cake (his favorite dessert) from his management team for keeping physical store conditions near perfect, conditions which help drive the P&L statement by increasing customer count which improves store sales and profitability. With tears in his eyes he remarked that he had never received anything like that before.
Another executive that the author worked with to install P.R.I.D.E. in his company used “planned unexpected recognition” to reward his Vice President of Sales. He asked his VP to accompany him to a meeting outside their offices. The president, however, drove the VP to a local haberdashery where the president shocked him with a fitting for five new suits of his choice. The VP was profusely appreciative, remarking that he needed these new additions to his wardrobe, but that they were not in his budget. His hard work over the past eight quarters to significantly improve profitable sales was highlighted by this planned yet unexpected reward. Planned unexpected recognition can be a powerful motivator.
E – Evaluating and Enhancing
Action planning and implementation should always be directed toward driving the numbers. This is a process of continual adjustment and fine tuning. The manager or coach should always be looking for ideas and plans to enhance the process. If, for example, the action plans are not contributing to observable results on the P&L, new ideas should be considered and implemented.
By way of illustration, take a look at a retail store manager and a department head working for her who attained some remarkable results in sales. After reviewing the P&L results and obtaining a history, the store manager and department head set what they believed to be a stretching target. Since sales numbers are available on a weekly basis, the numbers could be reviewed at each weekly performance huddle. By reviewing the action plans during the weekly performance huddle it became evident that the aggressive action plans were resulting in a radical increase in sales over a relatively short period of time. The store manager recognized the department head for the numbers and encouraged her to continue with her aggressive action plans. The department showed consistent increases of more than 100 percent over historical averages. The process was this:
To bring the program together, the P.R.I.D.E. manager must evaluate performance improvements, linking them to key operating indicators and the bottomline. The goal is to improve operating results and increase employee satisfaction and loyalty. For example, improving tonnage per man hour, weight per truckload and loading accuracy on the dock can result in big cost savings for a freight forwarding company. As with any other program, the P.R.I.D.E. program can and should be enhanced with new ideas along the way to reach for maximum results.
P.R.I.D.E. is a management system to help you focus on performance. It is designed to help make everyday performance rise to its highest potential. Clear work expectations, stretching performance targets, feedback, recognition and continuous evaluation of program impacts on the bottomline are cornerstones of this approach to performance management.
During these competitive times, you need to do all you can to create a competitive advantage and maximize business achievement. Get started by putting P.R.I.D.E. into your people’s stride.
You are encouraged to review the status of P.R.I.D.E. in your organization by completing the following checklist. You can use this as an initial benchmark to track how performance management is evolving within your areas of responsibility.
|The following are the most important dimensions related to the P.R.I.D.E. performance management system. These are the specific things you will want to review when evaluating performance management within your organization. You may want to make a check next to those items on which you need improvement or use a rating scale such as 1 to 5 (5 being highest) to evaluate each behavior individually.|
|Dimensions within Organization||Check or Rating|
|1. All individuals have performance-based job descriptions or profiles.||_____________|
|2. All individuals have stretching performance targets.||_____________|
|3. All work areas have stretching performance targets.||_____________|
|4. Performance results are regularly tracked.||_____________|
|5. People are regularly given performance feedback on goal achievement.||_____________|
|6. People are routinely provided the opportunity to actively participate in improving performance.||_____________|
|7. Recognition for performance improvement is given.||_____________|
|8. Specific individual and group performance targets are regularly evaluated against overall operating results.||_____________|