Archive for March, 2012

Ending the Annual Performance Review * 2 Case Studies

Recognize This! – Yes, getting rid of the annual review can be done successfully.

Do we really need annual performance reviews? I’ve written before that there is a balance between ongoing feedback from multiple sources and annual feedback from one source. I’ve also written about what it would look like if you scrap the performance review.

The latter seems to be the more prevalent – and more pertinent – question in recent conversations. Today, I’m pleased to share with you two recent case studies of organizations that have done just that, both of them relying on more frequent feedback and recognition given in the moment – the hallmark of truly strategic recognition programs.

Kelly Services Case Study

A new case study of Kelly Services by Bersin & Associates shares both how Kelly Services addresses compensation and promotion without annual reviews as well as addressing one of the most common questions: “Don’t I need a formal performance review for legal reasons?”

The answer is no. From the Bersin case study of Kelly Services:

“Today, I am proud to announce that we have published our case study on how Kelly Services abolished performance scores. In the case study, we share the answers to the most frequently asked questions we receive about abandoning performance scores.  These are questions such as:

  1. How do you compensate employees without performance scores?
  2. How do you deal with compliance in countries that require documentation?
  3. How do you identify high-potential employees?

“The answers to these three questions, in a nutshell, are below:

  1. Kelly Services provides annual market adjustments as appropriate, given an employee’s position within the salary range.  Further, the company has developed an evolved definition of “total rewards” that reflects the holistic approach the company takes in providing appropriate recompense to employees.  This approach includes incentives, recognition and other rewards.
  2. Kelly learned that the documentation requirement in most countries only extends to proving that conversations were taking place — not recording what was being said.  Since performance conversations still most definitely take place at Kelly, this arrangement was not a problem.
  3. Kelly created the concept of senior leader talent summits, which are forums for leaders to discuss their talent, the development activities that have occurred and next steps in development.  Talent summits typically cover discussions of the top two to three levels of management below the executive level and a small number of other top talent employees who leaders wish to highlight.”

Adobe Systems Case Study

Adobe Systems also recently announced they are scrapping the annual review, focusing instead on regular, ongoing feedback:

“About 10,000 employees at Adobe Systems, including 2,000 in India, have just completed what could probably be their last performance review. The global product services company plans to scrap the age-old practice of being pitted against colleagues and measured up by the bosses once a year.

“‘Instead of feedback, we will look at feed-forward,’” says Jaleel Abdul, HR head for the Indian arm. Not a borrowed practice, the roots can be traced to management guru Marshall Goldsmith’s theory on how instant and real-time feedback can boost performance. ‘Course correction is also faster and more immediate this way,’ says Abdul. Companies constantly innovate and tweak their appraisal systems.”

Would you tear up the annual performance review if you could?

Recognize Your “Plumbers” as Well as Your “Poets”

Recognize This! – Your star performers can’t shine without the daily efforts of your middle tier.

Who gets recognized in your organization? Just the superstars – the top 10% high performers? Or do you acknowledge those who grind out the work day after day – the middle 80% who make it possible for your stars to shine?

Too often, I hear the argument, “My superstars deserve extra recognition and rewards. The rest? I pay them to do their job. That’s reward enough.”

Is it? I don’t think so. In an excellent post on his Work Matters blog last week, Stanford Professor and author of Good Boss, Bad Boss, Bob Sutton wrote about the great damage inflicted by “visionary leaders” who dream big, but always leave the details to others. He goes on to discuss the impact to the organization of not honoring the contributions of consistently competent employees day after day:

“James March, perhaps the most prestigious living organizational theorist, frames all this in an interesting way, arguing that the effectiveness of organizations depends at least as much on the competent performance of ordinary bureaucrats and technicians who do their jobs well (or badly) day in and day out as on the bold moves and grand rhetoric of people at the top of the pecking order.  To paraphrase March, organizations need both poets and plumbers, and the plumbing is always crucial to organizational performance.  (See this long interview for a nice summary of March’s views).

“To be clear, I am not rejecting the value of leadership, grand visions, and superstars.  But … too many organizations are doing damage by giving excessive credit, stature, and dollars to people with the big ideas and giving insufficient kudos, prestige, and pay to people who put their heads down and make sure that all the little things get done right.”

Don’t your superstars deserve more accolades than “average” contributors? Certainly they do. And in a strategic recognition program, properly implemented, they will receive higher value, more frequent recognition than others in the organization. But in that strategic recognition program, the middle 80% will also receive the recognition they deserve for living your values while contributing to your strategic objectives – and attending to the details that make the vision of your superstars a reality.

Or, as Professor Sutton said:

“I am not saying that we don’t need heroes and visionaries.  Rather, we need leaders who help us link big ideas to the little day to day accomplishments that turn dreams into realities.”

So I ask once again, who gets recognized in your organization?

4 Actions To Take After Your Employee Engagement Survey Is Done

Recognize This! — Strategic recognition is a powerful tool to align employees with your goals and take appropriate action after your engagement survey is done.

Like 80% of the people on our “Your Engagement Survey Is Done, Now What?” webinar yesterday (recording available here), do you conduct an employee engagement survey? Though we didn’t ask who was guilty, do you commit these common mistakes of engagement surveys as shared BlessingWhite Employee Engagement Practice Leader Mary Ann Masarech?

  • Run a survey, but then don’t do anything with the results
  • View the engagement scores as the prize

Mary Ann pointed out, “The goal of surveys should be to improve engagement, not just measure it. Surveys should only be a starting point to inform the actions you can take to create a more engaged workforce and create a culture of engagement.”

She went on to offer these four best practices with suggestions for successful implementation:

  1. Know what you’re trying to achieve (so you can get executive buy-in and support)
  2. Devote more resources to action than measurement (avoid analysis paralysis)
  3. Equip your people (so individuals, managers and executives own engagement appropriately, and you can create a culture of engagement)
  4. Align your practices (to make your desired a culture a reality)

I then discussed the difference between age-old, traditional employee recognition practices and strategic recognition – recognition done right so it works harder for your organization.

I referenced research showing recognition is the number 1 factor in employee engagement, accounting for 56% of the variation in an employee’s level in engagement. I also shared several case studies of the power of strategic recognition to create a culture of appreciation proven to increase employee engagement by double digits in less than a year.

During Q&A, we both answered an important question about what companies with high levels of engagement are doing, even in this time of economic instability and restricted budgets.

I pointed out McKinsey research that showed spreading out $1,000 in small gestures of praise and recognition throughout the year increased engagement by 10% vs. giving that $1,000 as a one-time bonus, which only increased engagement by 1%.

Then Mary Ann added this critically important point:

The powerful thing about recognition is that it reminds people of what matters most. This is a key part of engagement – to redirect employee effort and attention to the top priorities of the organization. That is critical when you have a solid, broad definition of engagement as more than just satisfaction. Regular recognition throughout the year is a subtle reminder of what you need employees to keep doing.”

Indeed, keeping employees aligned with often rapidly changing goals and objectives is a powerful outcome of strategic recognition – frequent, timely, and very specific feedback.

If you missed the webinar, the recording is available here.

Are You Wasting 35% of Payroll Every Year by Ignoring Employee Engagement?

Recognize This! – Lack of employee engagement costs you 35% of your payroll, or up to $17.5 Million annually in a 1,000 person organization.

Like organization culture, employee engagement is a frequent topic of mine. Indeed, creating a culture of recognition is a foundational element to creating an environment in which employees choose to engage. Hallmarks of just such an engaging culture are (in order of importance to employees) trust, recognition and rewards as reported by recent research out of Australia:

The core ingredients for engagement success according to the [Employee Engagement Capability] Report are flexible working arrangements, recognition programs, non-cash rewards/incentives, training and development programs, paid parental leave and time off for study.”

The cost of ignoring the importance of employee engagement is incredibly costly. I’ve cited numbers out of Towers Watson showing a 15% increase in engagement correlates to a 2% increase in operating margin. But let’s get more fundamental then that – how much money are you wasting every year by ignoring engagement?

What’s the cost of getting engagement wrong?

Keith Ayers, CEO of Integro Leadership Institute, ran some numbers based on reported Gallup levels of engagement in the US workforce.

In many companies a lack of employee engagement is costing the organization anywhere from 35% to 50% of payroll. Employees are paid 100% of their pay and benefits, but 35% to 50% of that money, if not more, is wasted because employees are not giving the organization 100% of what they are capable of producing. Companies that have learned the value of employee engagement are reaping the reward – turning 100% of their payroll into an investment. …

“For the sake of this example, let’s be conservative and assume that all Not-Engaged (55%) and Actively Disengaged (16%) employees are giving you 50% of what they are capable of, and we’ll assume that the Engaged (29%) employees are giving you 100%. We’ll also assume an average pay and benefits per employee of $50,000, and that you are paying all employees 100% of their pay and benefits with the expectation that they will give you 100% of what they are capable of.

“Here is the bottom line: In an average company in terms of employee engagement, 70% of employees are giving back only 50% of what they are being paid. That means 35% of payroll is pure cost… there is absolutely no return on investment.

“Using these numbers, that lack of engagement in a 100 person company is costing $1,750,000 (35% of payroll), and for a 1,000 person company the cost is $17,500,000. And remember we are assuming that the Actively Disengaged employees are giving you 50% of their capabilities, and the Engaged employees 100%. Because I have used conservative estimates, the real cost could be substantially more.”

What should you do?

Certainly, assessing your engagement levels is a first step. But don’t fall into the engagement survey trap. Join me and BlessingWhite today, 27th March 2012, at 3:00 pm EDT (7:00 pm GMT) for our webinar on what do with the information you uncover in an engagement survey so you can stop wasting 35% of your payroll.

Register now for “Your Engagement Survey Is Done, Now What?” I look forward to engaging with you on your questions at the end of the webinar.

3 Lessons for Successful Company Culture Change

Lesson_Culture_ChalkboardRecognize This! –Proactive culture change and management is strategy.

Company culture is much in the news these days, a development I am very excited to see as it shows more and more buy-in to the importance of culture as something that can be created and, yes, proactively managed.

A round-up of articles that have appeared during the last few days teach three important lessons on organizational culture:

Lesson 1 – In the Battle of Strategy vs. Culture, Everyone Wins

What’s more important? Strategy or culture? I’ve written my own opinions based on research from Booz & Co. The argument continues on, with this perspective I particularly like from Bob Frisch, managing partner of The Strategic Offsites Group:

“It’s like asking whether you would rather back a great poker player with weak cards or an average player with great cards. You’re more likely to win when you have both: a great player and great cards. The same goes for culture and strategy. You don’t have to choose. Culture doesn’t eat strategy, and the company that lets culture do so is likely to starve.”

That quote comes from a Fast Company article that goes on to share insights from the CEOs of companies with famously strong cultures, including LinkedIn, Facebook, and Jigsaw. Be sure to click through for several videos.

Lesson 2 – A Healthy Culture Has Defined Attributes that Require Effort

John Jantsch, founder of Duct Tape Marketing, pointed out in a recent AmEx Open Forum article that a healthy culture takes work over time to create, manage and maintain. He also defines seven attributes of a healthy culture:

“My belief is that a healthy culture is a shared culture, one created through shared stories, beliefs, purpose, plans, language, outcomes and ownership. These aren’t little things; these aren’t things that you get right during an annual retreat. These are things molded over time with trust and passion and caring. These are things that evolve because you work very hard at finding them, holding them and making them important.”

Yes, company cultures can “just happen” (and, unfortunately, they very often to). But you can also take control of your culture by focusing on these seven attributes.

Lesson 3 – You Can Change Corporate Culture

And that leads us to one of my go-to writers on company culture, Chris Edmonds of The Ken Blanchard Cos., who explained in detail in a recent SmartBrief article the critical role of leaders in changing culture:

“Corporate culture is the most important driver of what happens in organizations, and senior leaders are the most important driver of their organization’s corporate culture. To change an organization’s culture, all leaders must change how they spend their time and what they communicate and reinforce on a daily basis. Their focus shifts from ‘great performance’ to ‘great performance WITH great citizenship.’”

And that’s the heart of the matter – reinforcing desired behaviors through strategic recognition frequently is the foundation of proactive culture change and long-term management. It’s recognizing the how and not just the what. It’s honoring and praising the progress, and not just the results.

Have you tried to change company culture? What methods did you use? How successful was the effort?

The Difference between Incentives and Recognition

Recognize This! – Incentives and recognition play important but distinct roles in Total Rewards. Don’t confuse the two.

As a contributor to the Compensation Café community blog (which was just named No. 4 on Fistful of Talent’s Top 25 Talent Management blogs, by the way), I get to work with and learn from some of the brightest minds in compensation and rewards. A primary reason I sought to contribute to the Café is Founder & Editor Ann Bares.

One thing I greatly appreciate about Ann is her astute assessment of the underlying truth behind murky – if well intended – compensation and rewards practices. Case in point – her recent post on her own Compensation Force blog, “Is the Purpose of Incentives to Motivate People,” in which she says:

“I don’t believe that the purpose of incentive is to motivate people.

“I would suggest that the purpose of incentive pay is – in fact – to influence the efforts and choices of workers who had better already have a baseline level of motivation, by calling out top priorities, by guiding them to areas and activities where they can create the most value, by signaling the importance of collaboration through highlighting shared goals and the opportunity for shared reward, and by defining a form of partnership through which employees have the chance to share in the economic success they help produce.”

I couldn’t agree more. Incentives play a critical role in setting clear goals and giving employees a vision of a shared reward once they achieve the goal.

But that is very different from recognition. Problems arise when people assume that incentives and recognition are the same thing. They are not. I explained this difference in a Compensation Café post last year, using this graphic:

Recognition is powerful for setting that baseline of motivation Ann mentions. Recognition done right clearly communicates to employees not just what you need them to achieve, but how you want them to do it. There is no set goal to achieve, but instead direction to contribute to the organization’s strategic objectives while working in such way that you are demonstrating the core values in your work. In other words, it doesn’t matter just what you do, but how you do it.

Do you only incent employees to do what you need, or do you also recognize them for how they do it?

Your Engagement Survey Is Done. Now What?

Recognize This! – Surveys without action cause more harm than good. Join our webinar to learn how to take appropriate action on survey findings.

I’m pleased to once again be joining Mary Ann Masarech, Employee Engagement Practice Leader at BlessingWhite, in a webinar on Tuesday, 27th March, at 3:00pm EDT (7:00pm GMT).

Mary Ann and I will be presenting Your Engagement Survey Is Done. Now What?” We’ll discuss the frightening reality that, if you ask employees what they think are the two most fruitless activities they are asked to engage in every year and two of the top responses will be:

  1. The annual performance review
  2. The annual employee engagement survey

As I’ve written before, this isn’t surprising as employees rarely ever see action or results taken based on employee surveys or reviews.  More often than not, companies spend endless hours analyzing the data and not nearly enough taking action.

If you survey employees and find out they crave more recognition for their efforts, understand they are telling you they need to know their efforts are noticed and appreciated. They yearn to know that their work has greater meaning and purpose.

Mary Ann will discuss BlessingWhite research showing why you want to increase engagement, not just measure it. She will also explain the negative impact on employee engagement of confusing the two.

I will then share how, when done right, implementing a strategic recognition program fulfills employee needs most commonly uncovered in engagement surveys.

In this webinar, you’ll learn how to overcome “analysis paralysis” and create a strategic plan to act on your engagement survey results. You’ll also learn:

  • How to avoid common engagement survey mistakes
  • Best practices for engagement surveys
  • How leading companies use strategic recognition to drive engagement

Be sure to register today!

How to Appropriately Recognize Employees & Why You Should

Recognize This! – Psychologists, neurologists and management experts all agree: recognition works.

On a daily basis, I track several dozen news and online sources for employee recognition, engagement, motivation and the like. I’ve read more dry and boring reports and stories than I care to admit. But this Entrepreneur article made me laugh out loud. This intro alone tells you the tone of the article as well as giving good insight into “The Power of Praise in Business”:

“Sure, psychologists and managerial experts agree that you should you praise your employees. But how, exactly, are you supposed to do it?

“Here’s what the psychologists think about praise: ‘Positive reinforcement works better than punishment.’

“Here’s what the management experts think: ‘Employee recognition leads to profit.’

“Here’s what the neurologists think: ‘Dopamine, which is released in the brain any time we hear something we like, is a powerful chemical.’

“Here’s what the psychologists, management experts and neurologists think when someone in a position of power tells them they’re doing a great job: ‘Hell, yeah!’ (That, of course, is the dopamine talking.)”

The article goes on to cite experts from each of those fields on the power of recognition, but the bottom line is clear: Employees need to know their work is noticed and appreciated. Giving that recognition leads to direct business benefits.

So, how do you recognize appropriately? The Why Lead Now blog offered advice similar to my own counsel (summarized below):

“When it comes to praising and recognition, you need to remember the following rules:

  1. Don’t under-praise
  2. Don’t over-praise
  3. Recognize the masses
  4. It’s not just for your direct reports:

“It’s easy to forget to praise individuals because we think ‘It’s their job to do what we need them to do.’ We need to remember the recognizing the effort of individuals is a key ingredient to better quality and better work environments.”

Does your organization appropriately recognize employees? Do you?

Need Different Results? Change Beliefs, Actions & Culture First

Recognize This! – You can’t get the new results you need unless you change the underlying behaviors and actions that make up your culture.

I tend to read a good bit on planes. Lately, my pile of books seems to focus on organization culture – what it is, how to create it, how to manage it, etc. Most recently, I read Change the Culture, Change the Game: The Breakthrough Strategy for Energizing Your Organization and Creating Accountability for Results by Roger Connors and Tom Smith.

Overall, I like the approach the authors use to direct readers (and clients) to realize you can’t achieve new results while relying on an old culture and its inherent experiences, beliefs and actions. But it all starts with focusing on the results you want. The authors clearly differentiate between “goals” and “results,” noting that goals are something you hope to attain at some point in the future, but results are something you will deliver and you’ve built the resources necessary to see that happen.

Once you’ve defined the results you need, then you can discuss the needed changes to beliefs and actions to achieve those results. The authors explain it this way:

“Experiences foster beliefs, beliefs foster actions, and actions produce results. The experiences, beliefs, and actions of the people in your organization constitute your culture, and your culture produces results. This bears repeating. Your organizational culture produces the results you are getting.”

These all must work in harmony. Too often, leaders identify areas of underperformance (either in individuals, teams or the company as a whole) and decide: “If I can just change he/she acts, I know we’ll get better results.” But this is doomed to fail because, as the authors state:

“Too often, leaders attempt to change the way people act without changing the way they think (i.e., their beliefs). As a result, they get compliance, but not commitment; involvement, but not investment; and progress, but not lasting performance.”

Rather, leaders must understand that managing culture is not a one-time event, but an ongoing process that requires “fostering the beliefs you need people to hold and the actions you need them to take.”

This is fully in alignment with our recommendations to take your values off the plaque on the wall and turn them into action-oriented belief statements that (1) employees can implement in their daily work and (2) employees are consistently recognized and rewarded for demonstrating – by their managers as well as their peers and colleagues.

Only by reinforcing leader commitment to a new culture (and therefore, new experiences, beliefs, and actions) through consistent, frequent, timely and very specific recognition can you help employees understand and truly internalize those changed beliefs and actions so they can deliver the new results you want and need.

The authors call this focused feedback or recognition noting:

“When people see leaders reinforcing [new] beliefs, everyone gets the message that ‘I ought to be doing that, too.’ As a result, others will look for that behavior, think about that behavior, and seek that behavior both in their fellow workers and, most important, in themselves.”

That’s what we refer to as “amplifying recognition” in which every recognition moment impacts at least 3 people –the giver, the receiver, and a manger – and likely many more, especially if Social Recognition® is enabled to allow anyone the ability to congratulate a recognition recipient and extend that praise even further.

Have you attempted to change your organization culture? What methodology did you use? Was it successful?

3 Company Culture Lessons from Greg Smith's NYT Resignation Letter

Recognize This! – Your company culture can withstand a multitude of shocks – but should it?

I’m guessing most people in the world of HR, management or leadership have read Greg Smith’s resignation letter from Goldman Sachs – which appeared in the New York Times.

Personally, I was more interested in the reaction from management, leadership and HR bloggers and editors I respect. Just a few lessons offered by these thought leaders:

1) Proactively manage your culture, or it will manage you.

From Ron Thomas, Principal at StrategyFocusedHR, as reported in TLNT:

“What happens when the culture that you bought into changes? … Culture, in so many companies, has shifted during these tough economic times, and the stress for survival has caused fault lines to appear in the cultural framework. These fault lines,  if not examined and repaired, will eventually produce a level of discontent with the talent pool that is a breeding ground for this type of behavior.”

Some believe organization culture “just happens.” And that is unfortunately true in many cases. But wise leaders work to proactively manipulate and manage their culture as Ron describes. Doing so leads to culture changes over time that leaders often never intended or desired.

2) Take your values off the wall and put them to work to manage your culture.

From the HR Capitalist, Kris Dunn:

“How do you prevent that type of culture decay and the behavior that follows?  Start by repeating after me: ‘Your corporate/company values that you have on the wall don’t mean anything unless they become operational in how performance is measured.’ … If you want to really drive a culture and not let it slip over time, you’ve got to identify the DNA it takes for people to be successful in your company.  You’ll use the factors across all employees in your company. Then you ruthlessly use the potential factors to HIRE, PROMOTE/REWARD and FIRE.”

Kris suggests the best way to manage your culture – put your values to work. If you are not willing to take the hard actions – removing those who violate the values for whatever reasons (even if they are “producing”) – as well as the easier (or at least more enjoyable) actions of recognizing and rewarding those who do live the values, then those values are nothing more than art on the wall. You must be willing to make those values real in the daily work of every employee.

3) Create a culture that can withstand one-off employee actions or adapt to employee needs.

From John Zappe, also reported in TLNT:

“The other issue raised by Smith’s public resignation is the more familiar one of burning bridges. Smith is ‘toast’ as far as Wall Street is concerned, says Blooomberg columnist William Cohan, author of Money and Power: How Goldman Sachs Came to Rule the World. … But I have to believe there are times when a larger  service is performed by going public in the way Greg Smith did.”

Sure, Mr. Smith took a drastic measure regarding a failed organizational culture as he saw it. But he offers a clear lesson for leaders – can your culture withstand an employee action that may be out of line? Equally as important, if employee responses to a negative culture environment are legitimate and presented in a way that can be addressed, are you prepared to do so?