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Performance Management Must Begin With the Manager

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The concept of performance management allows managers to align the actions and activities of their employees with the goals and objectives of senior management in order to achieve the stated outcomes of the company.

It is this linkage that allows each individual employee to work toward the accomplishment of mutual goals and objectives.

Many managers make the common mistake of assuming that because they understand the goals and objectives assigned to them, everyone else does as well. This is often where many performance problems occur, as in terms of thinking and action there is a gap between what was planned as an overall company goal and what the unit or department is actually doing. The company might have established a specific goal while employees are working in a fashion wholly unrelated to that goal, which will assure that it is not met.

Managers are the liaison between senior leadership and their people. Often there is no sense of connection between a company’s goals and the actions of individual employees. They continue to perform in their usual fashion without achieving the desired outcomes stated by upper management. The role of the manager is to align the actions of his or her employees with the goals and objectives of the company.

Effective performance management must begin with the manager. Before they can communicate the goals and objectives of management, he or she must clearly understand both what is desired and the means to achieve it. Unless this information is clearly communicated to the manager and he or she comprehends and understands what is desired, there will be a gap in the system that will result in deficient results.

The problem is that in many organizations there is too great a disparity between plans and results. Many employees and managers develop annual plans and then ignore them during the course of the year; there is no actual implementation. They are instead an exercise that management requires, without any real utility or connection to day-to-day work.

Before managers can manage the performance of their people, they must personally commit to it and the results they wish to achieve. Once they have done so, they can then focus their efforts in the following areas:

Clarifying Goals

Managers must take the time to create a two-way dialogue with their people and clearly communicate the company’s goals to them. Employees should be encouraged to question, challenge, interpret and clarify these goals in their minds. This process gives them ownership of the goals, which makes them more concrete and meaningful and increases the likelihood they will be accomplished.

Discussing Ways to Meet Goals

Once employees understand the individual company goals and objectives, managers should discuss the specific ways they can meet them.

These discussions should be detailed and explicit in order to align employees’ strategies and plans with the company goals. Managers should specify the precise changes employees have to make to align their individual behaviors and activities with the company goals.

Employees should be informed of what is now expected of them and how they are expected to meet those expectations. As goals were clarified through encouraging questioning, challenging and interpreting, similar brainstorming should be encouraged to determine the best ways to achieve company goals and objectives.

Following Through to Align Behaviors with Outcomes

The critical link in performance management is the manager’s commitment to follow through with each individual employee to ensure that their work is aligned with the stated outcomes outlined in the company’s goals and objectives. This is where many performance management programs fall short: goals and methodologies are discussed with the unit or department, but individual employees are allowed to backslide into old habits that hinder achieving the company’s goals.

Managers follow through by first observing each individual employee’s professional behavior, discussing the results he or she is achieving, and supporting their efforts with additional training and coaching to keep them on focus.

Excerpt: Performance Management: The Pinpoint Management Skill Development Training Series (Majorium Business Press, Stevens Point, WI 2011) $ 18.95 USD

Related:

Five Critical Steps to Maximize Performance

Focusing Employees on Common Goals

Plans Must Be Rooted in Past Performance

Focusing Your Employees on Future Performance

For Additional Information the Author Recommends the Following Books:

Strengthening Performance: Pinpoint Management Skill Development Training Series

Planning to Maximize Performance: Pinpoint Management Skill Development Training Series

Maximizing Financial Performance: Pinpoint Leadership Skill Development Training Series

Timothy F. Bednarz, Ph.D. | Author | Publisher | Majorium Business Press
Author of Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It (Finalist – 2011 Foreword Reviews‘ Book of the Year)
Linkedin | Facebook | Twitter | Web| Blog | Catalog |800.654.4935 | 715.342.1018

Copyright © 2013 Timothy F. Bednarz, All Rights Reserved

Leaders focus on enhancing the customer’s ‘experience’

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Across the broad spectrum of products, services and industries, and the span of over 200 years, the great leaders shared a mutual focus to greatly enhance their customer’s “experience.” This incorporated the concept of “ruthless efficiency” to drive down costs, improve quality and increase efficiencies through innovation and continuous improvement. This resulted in better products at lower costs. This generated their record of growth and success through the practice of overwhelming and eliminating their competition, who couldn’t match their performance.

Edward Harriman (Union Pacific) illustrated this attitude.

“Walking some Southern Pacific track one day with one of his finest officers, Julius Kruttschnitt, Harriman’s restless eye seized on one of the bolts holding a rail in place. ‘Why does so much of that bolt protrude beyond the nut?’ he asked abruptly.

‘It is the size that is generally used,’ replied Kruttschnitt.

‘Why should we use a bolt of such a length that a part of it is useless?’ persisted Harriman.

‘Well,’ admitted Kruttschnitt, ‘When you come right down to it, there is no reason.’

After walking a bit farther, Harriman stopped suddenly and asked, ‘How many track bolts are there in a mile of track?’

Kruttschnitt did a quick calculation and ventured a figure. ‘Well,’ snapped Harriman, ‘in the Union Pacific and Southern Pacific we have about eighteen thousand miles of track and there must be some fifty million bolts in our system. If you can cut an ounce off from every bolt, you will save fifty million ounces of iron, and that is something worthwhile.

Change your bolt standard.’” [1]

Contrary to today’s focus on shareholder value, the great leaders attributed their success to the maintenance of a fanatical focus on the well being of their customers. The customer is the key constituency and is placed first, even at the expense of the stockholders.

Common sense told them that before profits there needed to be sales. And happy customers generated sales. Any actions that diminished the customer experience would be detrimental to the health of their businesses. Jeff Bezos (Amazon) stated,

“Customers want three things; the best selection, the lowest prices, and the cheapest and most-convenient delivery. At Amazon, all decisions flow from those fundamentals.”

When leaders lose their focus on building their business, and maintain a balance with their constituencies, their professional credibility suffers. Many who attain prominent positions are faced with numerous temptations, which come with the trappings of power. These can become the impetus that destroys their credibility and in certain instances, their careers.

Focusing on the attainment of their personal agenda, including prominence, personal notoriety, and popularity often tops the list of problematic behaviors. Some leaders are enamored with politics and the possibility of political office, while others are consumed with personal interests and activities.

Carly Fiorina (Hewlett-Packard) fell into this trap as she was accused of acting like a rock star during her tenure as CEO. “Some critics said she became caught up in high-level strategy and high-profile marketing events to create buzz (such as appearing on stage at a trade show with pop singer Gwen Stefani a month before her firing), rather than homing in on the nitty-gritty operational issues…” [2]

James Cayne (Bear Stearns) was participating at a championship bridge tournament as his company faced imminent financial collapse in 2007. He was later accused of being more focused on his bridge activities than his company in the critical period leading up to the financial disaster.

“On July 12, chatting with visitors over lunch, Mr. Cayne seemed less interested in discussing the markets than in talking about a breakfast-cereal allergy and his stash of unlabeled Cuban cigars. On another occasion, he told a visitor he pays $140 apiece for the cigars, keeping them in a humidor under his desk. Five days later managers of both funds informed investors their holdings were virtually worthless.” [3]

Undoubtedly, many problematic leaders feel if their companies are performing well, they are free to pursue their own interests. In the case of Carly Fiorina, her personal focus was transparent and she was severely criticized in the press and in the company. This undermined her credibility, which ultimately led to the loss of her validity, and authority to lead. Her actions alienated her constituencies, who ultimately abandoned her when she needed them. She lost her professional credibility.

“CEOs can grow arrogant. They stop listening to trusted advisors and begin to breed negative energy, reflecting that back on the company. ‘Roger Smith became shorthand for a generation of managerial puppetry,’ says Jeffrey Sonnenfeld, president of the Chief Executive Leadership Institute and an associate dean at the Yale School of Management.

To be sure, when highly visible CEOs make bad decisions or fail entirely, their companies suffer as well. ‘Personal actions, such as political decisions, take on more weight,’ says Peter H. Coors (Coors) ‘What we might do personally would have an impact on the company.’” [4]

P.T. Barnum (Barnum & Bailey Circus) offered sound advice, which is just as applicable today as it was then, when he said,

“Engage in one kind of business only, and stick to it faithfully until you succeed… When a man’s undivided attention is centered on one object, his mind will constantly be suggesting improvements of value… There is good sense in the old caution against having too many irons in the fire at once.”

References:

  1. Klein, Maury, The Change Makers (Henry Holt and Company, New York, 2003) p 128-129
  2. Zapler Mike, Analysts: Carly Fiorina Long on Vision, Fell Short on Execution at HP (Oakland Tribune) April 21, 2010
  3. Kelly, Kate, Bear CEO’s Handling of Crisis Raises Issues (The Wall Street Journal) November 1, 2007
  4. Benezra, Karen and Gilbert, Jennifer, The CEO as Brand — Their Names Are Synonymous With Their Companies’ Products — And That Presents A Slew of Unique Challenges (Chief Executive) January 1. 2002

For more information on this topic, refer to Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It by Timothy F. Bednarz (Majorium Business Press, Stevens Point, WI 2011).

Timothy F. Bednarz, Ph.D. | Author | Publisher | Majorium Business Press
Author of Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It (Finalist – 2011 Foreword Reviews‘ Book of the Year)
Linkedin | Facebook | Twitter | Web| Blog | Catalog |800.654.4935 | 715.342.1018

Copyright © 2012 Timothy F. Bednarz, All Rights Reserved

Focusing Employees on Common Goals

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The overarching principle behind organizational development is that all employees have a wealth of knowledge and experience that can be harnessed and tapped into to enable the organization to grow. Managers are the organization’s primary facilitators of knowledge and experience at their specific level. Growth can only be successfully accomplished when employees are focused upon a shared vision and common goals.

With the increasing intensity of global competition, organizations must move forward or be bypassed. With this in mind, organizations wishing to experience growth must ensure that their employees change. Individuals must continue to grow, develop and improve themselves as employees. Organizations are comprised of people; therefore if they are to progress, so must their people.

It is important for managers to understand that they play an important role in the development of the employees they direct. They must create an environment that fosters a learning atmosphere. When they do this, they satisfy the basic human need to continue learning. Most people don’t want to stagnate, but seek opportunities to continue their personal development, whether on the job or with hobbies and other areas of interest. Research has shown that most individuals will seek new ways to learn whenever they have the opportunity.

As managers begin to focus their employees on common goals, there are a number of basic assumptions behind this task. Before managers begin to establish common objectives, they should take the time to review these assumptions with their employees. By doing so, they lay the groundwork of specific expectations that employees can use as a foundation for their goals. These assumptions include:

Related: You Keep Innovating if You Want to Keep Leading

There Is a Better Way

Many organizations echo the sentiment, “We’ve been doing it this way for years—why change if it isn’t broken?” If this feeling permeates the organization, it signals a level of stagnation in the face of constant change.

There is always a better way of doing things. Research has shown that every time employees review their goals and functions in a group setting they do a superior job of stating them, measuring them and achieving them. This synergy is a clear sign that the organizational unit is growing in terms of its individual members and as a working unit.

Related: Why New Ideas Trigger a Competitive Advantage?

Working Capacity

A common complaint is that employees are overworked and have too many demands placed upon them. The truth is that no one is ever working at 100% capacity. Research indicates that even the best performers are only working at a fraction of their true capacity.

There are a number of factors at work here. Some individuals make a conscious choice not to provide the organization with the best of their abilities, for whatever reason. Additionally, many managers are placed in a position where they are applying new leadership principles to old bureaucratic methods with internal resistance present. This resistance often stands in the way of desired levels of effectiveness. In other cases, the speed of change and pace of demands are so overwhelming that managers find it difficult to stop and reorganize effectively.

Motivation

Employees are not strongly motivated to accomplish the goals and objectives established for them by others within the organization. Resistance to authority goes back to childhood, when many resisted their parents and teachers. Most employees feel that the goals established by others underutilize their skills. This resistance is very common in most, if not all, organizations.

However, employees will work hard to achieve goals they set for themselves. They feel empowered and assume ownership of their ideas and concepts. When employees assume ownership, they are motivated to succeed, if only because they have been given an opportunity and do not want to fail. They feel bureaucratic constraints are lifted and they are enthusiastic and challenged by the opportunities presented to them.

Related: When Motivating Employees, Expectations Are Everything

Sense of Accomplishment

Employees are happier when they are given the opportunity to accomplish more. Many bridle under older, more bureaucratic rules and procedures that limit their personal ability to perform, grow and develop. Once these constraints are removed, employees have the opportunity to do more than they were allowed in the past. They develop a sense of accomplishment that brings most people pleasure and a feeling of importance.

Most individuals have a need to accomplish something worthwhile in their lives, and managers can use this psychological need to their advantage. If managers are successful in this goal, they will see their employees more interested and enthusiastic than before. The challenge lies in increasing the frequency of these opportunities.

Related: Motivation Is More Than Money

Excerpt: Strengthening Performance: Pinpoint Management Skill Development Training Series (Majorium Business Press, Stevens Point, WI 2011)

Timothy F. Bednarz, Ph.D. | Author | Publisher | Majorium Business Press
Author of Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It (Finalist – 2011 Foreword Reviews‘ Book of the Year)
Linkedin | Facebook | Twitter | Web| Blog | Catalog |800.654.4935 | 715.342.1018

Copyright © 2012 Timothy F. Bednarz, All Rights Reserved

Written by Timothy F. Bednarz, Ph.D.

September 25, 2012 at 11:29 am

Plans Must Be Rooted in Past Performance

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Performance planning is not developed in a void, nor is it based upon unsubstantiated estimates of budgets, performance and plans. Effective leadership demands plans be based upon past performance and results. By successfully implementing such plans, leaders can stimulate their subordinates to exceed normal performance expectations.

It is surprising how many managers develop annual plans and budgets without accounting for previous years’ performance and the realistic capabilities of their operational unit. Plans that lack these important elements are typically ineffective as roadmaps for achieving high output from an organizational unit.

Related: Six Key Benefits of Performance Management

Effective leaders understand that in order to move their unit forward, they must look at what has worked in the past and then build upon those successes. They also take proactive measures to eliminate any apparent failures and weaknesses.

This process is important for leaders to understand if they wish to motivate their subordinates to reach higher levels of achievement. Plans are not a worthless set of documents to be viewed only once or twice a year: they outline significant milestones and detail what the unit needs to do to effectively operate throughout the year. Leaders understand that performance plans lay out the path for attaining their goals and objectives.

The importance of proper planning cannot be emphasized enough: if it is to be effective and realistic, it must be focused upon prior performance of the leader’s organizational unit. Therefore, a formal review must be conducted in the following three critical areas:

Operational Performance

A formal review in this area is normally conducted on two levels simultaneously: operational and leadership. The operational review compares the organizational unit’s performance with the stated goals and objectives passed down by senior management. The leadership review compares the organizational unit’s performance with the leader’s expectations. While both levels review the same information, the leadership review is conducted from the leader’s perspective of how he or she can motivate the unit to exceed expectations.

The process of a formal review begins with a superficial selection of areas that need further examination. Particular attention needs to be paid to what did and did not work during the past year. This is where leaders can begin to develop strategies to build upon their unit’s successes and eliminate or correct any failures/weaknesses.

Leaders next need to rate the actual performance of all aspects of their organizational unit, including personnel, tasks, assignments, roles, resources and so forth. At this point, any required changes and adjustments should be noted for inclusion in future performance plans.

A final review of operational performance needs to explore the impact and affect of new trends, changes in economic conditions, and uncontrollable events on the operational unit. A thorough examination should note exactly what occurred, how it impacted the leader’s unit and how the unit responded. Any lessons learned from these experiences should also be included in future plans.

Related: Measure What Needs to Be Measured

Resource Utilization

A formal resource utilization review should be conducted to determine if the leader and the organizational unit maximized their use of available resources. Typically, this review determines if the unit effectually used personnel, machinery, equipment, time, schedules and financial resources.

Leaders need to analyze the operational or production capacity of their organizational unit. This can be conducted from several perspectives, such as production, operations or administration, depending upon the responsibilities of the unit. A resource utilization review pinpoints any bottlenecks or problems that occurred in these areas.

Next, leaders must determine the causes of bottlenecks and problems, which can include inadequate scheduling or insufficient human or financial resources. The findings should be detailed and included in future planning activities.

Related: Five Critical Steps to Maximize Performance

Financial Performance

The last step in this review analyzes the unit’s financial performance. First, leaders determine how well their organizational unit worked within its budget. They will often discover problem areas that can be more deeply examined during the performance planning process.

An additional review should be conducted to look at the profitability of the organizational unit, including potential ways for it to cut costs and improve productivity. These findings should also be detailed and noted for further examination as well as inclusion in future performance plans.

If you are seeking proven expertise and best practices in performance planning to train or educate your employees to solve problems and improve their performance in this area, refer to Planning to Maximize Performance: Pinpoint Leadership Skill Development Training Series. Click here to learn more.

Timothy F. Bednarz, Ph.D. | Author | Publisher | Majorium Business Press
Author of Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It (Finalist – 2011 Foreward Reviews‘ Book of the Year)
Linkedin | Facebook | Twitter | Web | Blog | Catalog | 800.654.4935 | 715.342.1018

Copyright © 2012 Timothy F. Bednarz, All Rights Reserved

Measure What Needs to Be Measured

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Performance plans are action plans, not static documents. Effective performance plans must detail the specific actions leaders and employees must follow to accomplish the goals and objectives set within it. Leaders understand that without meaningful performance standards, measuring and evaluating individual performance becomes difficult if not impossible. Once the plan is implemented, meaningful performance standards allow leaders to modify and adapt their plans to actual conditions.

Leaders must use solid standards to monitor and evaluate all aspects of performance. Any measurement used should determine and create an action both on the part of the employee being evaluated and on the part of the leader performing the evaluation.

There is a natural tendency for a leader to focus his or her activities on more prominent areas that will be highlighted and spotlighted, yet every element of the performance plan must be fully addressed.

It should be noted that any standard a leader creates will direct, limit and change the behavior and performance of their employees. This is important for leaders to understand because what and how they choose to evaluate can have either a positive or negative effect on the performance of their organizational unit.

A common pitfall in establishing performance standards is overdoing them. It burdens all involved with excessive factors and controls. Leaders know that to be effective, they need to set performance standards that are relevant and meaningful. It is far better to have fewer meaningful standards than to establish many useless ones. When applied, these standards will present a true picture of the performance of their organizational unit at any given point in time. Four areas to focus on in creating meaningful performance standards are:

What to Measure

The specific elements that need to be measured will vary by organizational unit. Typically, performance standards are set around productivity and profitability. Most leaders establish performance standards by setting specific performance expectations. Examples include:

  • Progress is evaluated by the reaching of specific milestones linked to individual goals and objectives.
  • Profitability is evaluated against the budgets established for each activity.
  • Efficiency is evaluated by the resource utilization within the organizational unit.

Each organizational unit has key factors that determine their success. Leaders identify these factors as indicators of performance and look for trigger points that are early indicators of the success or failure of these factors. For instance, if a leader is managing a manufacturing unit, he or she may focus on projected orders as a key indicator of their unit’s future activities. While a production supervisor may not be interested in these future indicators, a leader looks beyond the immediate horizon to maximize the efficiency of their unit.

How to Benchmark

Once leaders know what they want to evaluate, they need to benchmark each critical measurement. This establishes degrees of confidence and reliability in their numbers. They review these statistics over a meaningful period of time to establish a benchmark of past performance in each area. The longer a leader reviews the past performance of a specific area, the higher the degree of confidence and reliability he or she establishes.

Once key performance standards are benchmarked, leaders establish “triggering events” that result in taking immediate action. Since the benchmarked statistic is the standard, a triggering event can be predetermined. This event or “flag” occurs when performance rises above or falls below a specific percentage of the benchmarked standard. This provides leaders an early warning system to proactively deal with performance problems before they get out of hand.

How Frequently to Measure

Leaders are careful not to overburden themselves with needless information. They use performance standards as a means to keep their finger on the pulse of their unit’s performance. They can easily determine the frequency for receiving reports of their unit’s performance. Some statistics are meaningful on a daily basis, some hourly, and still others only when reported over prolonged periods of time.

What Measurements Indicate

Key performance standards need to inform leaders of the overall performance of their organizational unit. Specific measurements can trigger corrective actions, while others indicate the progress of the unit against performance plan goals and objectives. Effectively utilized, solid performance standards lead and direct the leader’s actions to fine-tune his or her unit’s performance. The right balance of key standards points the way to improved overall performance and productivity.

Excerpt: Planning to Maximize Performance: Pinpoint Leadership Skill Development Training Series (Majorium Business Press, Stevens Point, WI, 2011) $ 16.95 USD

If you would like to learn more about performance planning techniques, refer to Planning to Maximize Performance: Pinpoint Leadership Skill Development Training Series. This training skill-pack features eight key interrelated concepts, each with their own discussion points and training activity. It is ideal as an informal training tool for coaching or personal development. It can also be used as a handbook and guide for group training discussions. Click here to learn more.

Use promo code XC9OTF47 to receive 10% discount on this book.
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Timothy F. Bednarz, Ph.D. | Author | Publisher | Majorium Business Press
Author of Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It (Finalist – 2011 Foreward Reviews‘ Book of the Year)
Linkedin | Facebook | Twitter | Web | Blog | Catalog |800.654.4935 | 715.342.1018

Copyright © 2012 Timothy F. Bednarz, All Rights Reserved

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