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Archive for January, 2012

Why Forced Ranking Performance Management Should Die

2012 31 Jan

Recognize This! – Forced ranking is a failed performance management approach.

Many organizations are in the final stages of their annual performance review process. According to an article in today’s Wall Street Journal, up to 60% of Fortune 500 companies use a forced ranking system in that review process (though only 14% of all companies do).

Simply put, forced ranking requires employee performance to be categorized into exceeds expectations, meets expectations, or needs improvement, with only a set percentage of employees allowed in each category. The WSJ article describes forced ranking this way:

“Critics of forced ranking say that it demoralizes workers and fosters backstabbing and favoritism. … Proponents of forced ranking say that it fosters meritocracy. And because employees are generally told where they stand during performance reviews, layoffs and dismissals bring few surprises…”

What does forced ranking look like in reality? A member of my team related this story to me last week of her husband’s performance review (I’ll call him Jim). Jim filled out the self appraisal form, only to have his words returned to him verbatim in his manager’s “appraisal” of his performance. But that’s not the real story here. This Fortune 100 firm conducted several rounds of layoffs in the last year, resulting in Jim’s team being diminished by about half with only the true stars remaining.

Jim was informed by his manager that, since the team was so much smaller now, there could only be 1 “exceeds expectations” employee on the team. All the rest would be marked “meets expectations” because senior management was also not allowing any “needs improvement” out of fear even more employees would walk out. Even worse, the lack of managerial skills on this team results in each employee simply keeping his or her same ranking designation year after year.

So, despite the fact that every member of the remaining team is a true star in the organization, each pulling double the work after the rounds of layoffs, only one could be marked as exceeding expectations for the year. How is that an accurate assessment of performance, much less fair?

Even GE doesn’t practice forced ranking anymore (again from the WSJ article):

“GE has since dropped forced ranking, according to spokesman Andrew Williams. He says the company continues to ‘embrace differentiation,’ though he declined to give details on the current process. The company phased out forced ranking during the mid-2000s.”

Should employees be differentiated based on their performance? Should managers have the opportunity to consider employee performance based on the exceeds/meets/needs improvement paradigm? Yes, of course. The failure of the forced ranking model lies in requiring percentages of employees in each category.

Perhaps the Fortune 500 should start observing the management practices of the vast majority of organizations of all sizes.

Does your organization practice forced ranking? Do you think it’s fair?

2 Ways to Fix Mistakes at Work

2012 30 Jan

Recognize This! – We all make mistakes. What we do to fix them has far reaching effects on more than just the error.

What do you do when you mess up at work? The gamut of responses runs from “lie and hide” to “sweep it under the rug and hope no one notices” to “confess and fix.”

That’s always been my motto – in work and life. If you mess up, ‘fess up. Then offer first a clean-up plan, and then ideas to make sure it never happens again.

We’re all human. We will all make mistakes at work. Sometimes, those “mistakes” turn into a highly profitable innovation, but often mistakes are just that – errors in judgment or execution requiring rectification. It’s how we deal with the mistakes – as both the perpetrator and the person in charge – that contributes to the tone of your organizational culture.

I was honoured to participate in a recent Investor’s Business Daily article on just this topic, “Turn A Workplace Blunder Into A Moment To Shine,” in which I offered these two points of advice (quoting):

• Strike a balance. Want to add insult to injury? “Only provide feedback on the negative things.”

So says Derek Irvine, vice president of employee recognition firm Globoforce.

Focusing solely on snafus sucks the wind out of workers’ sails.

“It’s demotivating and it’s disengaging,” Irvine said.

• Seize the moment. The best time to address employee behavior — good or bad?

“Shortly after the fact, after the mistake or the item of celebration,” Irvine said.

Don’t wait for the yearly performance review. Workers need direction in private on areas to improve, and public props when they’re getting it right.

Globoforce taps social media and mobile tools to help clients create a steady stream of internal applause.

Be sure to read the full IBD article for more tips including “take responsibility” and “get in front.” Then come back and share in comments how you best deal with mistakes at work.

10 Myths of Employee Recognition & Rewards

2012 27 Jan

Recognize This! -Recognition done right advances your business objectives.

I’m honoured to have an article included in the December issue of Candian HR Reporter in which I debunk 10 recognition and reward myths.

  1. Employee recognition is best given at an annual awards show.
  2. Cash is the best reward.
  3. Employee salaries should be reward enough.
  4. Determining “how” to recognize is the first step of appreciation.
  5. Appreciation and recognition are the exclusive territory of HR.
  6. Appreciation and recognition are only for the elite.
  7. Recognition takes time and energy.
  8. Recognition is expensive.
  9. Appreciation requires tight controls.
  10. Appreciation is a soft skill with no measurable business metrics.

Be sure to click through to the article to learn the reality behind these myths.

The bottom line: Recognition done right is a powerful, strategic method for advancing the business objectives most critical to your organization’s success. Overcoming these myths to arrive at the truth about the role employee recognition can and should play in your talent management practices will help you get there faster.

What other myths do you see in recognition practices?

HR Is Not Responsible for Your Culture – You Are

2012 26 Jan

Recognize This! –Everyone is responsible for creating the culture you want to work in every day.

Who is responsible for people and culture in your organization? Is that considered the purview of HR? Or is it more correctly viewed as the responsibility of all people managers?

Ron Ashkenas tells the story of Harris Corporation, which has figured this out as it evolves HR to help all managers  take accountability for their colleagues and the overall culture of the organization:

“So HR’s evolution … does not just concern changing HR. It’s also about helping managers take more accountability for people and culture, and eventually blurring the rigid distinction between ‘HR’ and ‘management.’ In fact one of the key contributors to success at Harris was much greater rotation of people between HR and the line organizations. This has created an environment where there is less ‘HR-talk’ since managers and HR people have common perspectives and language.”

This blurring of lines is critical not only for everyone taking responsibility for creating the culture they live and work in every day, but also for taking advantage of the unique talents and influences each person brings. Bill Kling, founder and president emeritus of the American Public Media Group, recently explained how in a New York Times “Corner Office” column:

“I don’t think that there is one formula for leadership. There are cheerleaders who are really good at motivating people. There are innovative leaders who are really good at conceiving of products or spotting talent and who have a great vision for the company. There are leaders who are strong on personality, leaders who are strong on creativity. Some of the most effective leaders don’t fit a mold.”

Who do you look to to lead the culture in your organization?

2 Reasons Why Google Repeatedly Tops the Best Companies Work For

2012 25 Jan

Recognize This! – Your company culture underpins every success and every failure.

Bob Sutton, Stanford professor and author of No Asshole Rule and Good Boss, Bad Boss is on the top of my list of must-read blogs and books. Last week he recounted his assessment of why Google is regularly at the top of the Best Companies to Work For list.

1) Respect and equality is required at all levels.

“The first reason is that Google does not unduly emphasize status differences among people at different levels or within in the same level.  If you watch how people interact there — receptionists and executives, young engineers and senior executives, and people from less prestigious versus more prestigious parts of the company — the more powerful people treat the less powerful people with an unusually large amount of respect, even deference, and the less powerful people don’t cower or kiss-up nearly as much as I see in most places.”

That’s the beauty of strategic recognition – every employee is encouraged to recognize any colleague (up or down the chain of command) for demonstrating core values and contributing to success. When you reach a max level of recognition program adoption across an entire organization, you can find your hidden power player s – the go-to people who are often deliver far beyond the roles they are currently in. But that takes respect for every employee and every role in the organization, from front desk, to head office.

2) Be nice, or fail.

“The second reason, as senior executive Shona Brown told me in 2006 or so, is that Google appears to be a place where it simply isn’t efficient to act like an asshole.  … This woman [another Google employee] admitted that she really  wasn’t a very nice person. But after a few months at Google, she learned that she had to be nice to everyone, because otherwise, she couldn’t get anything done!  Now that is a sign that an organizational norm is working.”

What’s the culture in your organization? While I advocate hiring for culture, that’s not always possible or, frankly, people slip through the cracks. So, is your culture strong enough to bring those people in line? At Google, if you don’t work and play well with others, you won’t get your job done. It’s as simple as that.

How Employee Stress Affects Risk Factors & Financial Results

2012 24 Jan

Recognize This! –If employee retention is important enough to list as  a substantial risk factor to meeting financial expectations, then it should be important enough to find ways  to reduce employee stress.

I just read an interesting story in Forbes, which noted that a common phrase included in the risk factors on 10-Q forms for public:

“If we are unable to retain our existing senior management and key personnel and hire new highly skilled personnel, we may not be able to execute our business plan.”

Employee retention is a big enough issue, public companies list it as a significant risk factor that could prevent the organization from reaching financial targets. Yet, organization leaders do not see the primary problem behind retention issues.

There’s some evidence that companies are starting to pay attention to the dangers of overworking employees. But many organizations, it seems, fail to recognize the risks. “Work-related stress” was the reason top-performing employees in the U.S. most frequently cited for why they would leave their organization, according to a recent report by consulting firm Towers Watson & Co. and professional association WorldatWork. However, when employers were asked about reasons high performers would jump ship, stress didn’t even rank among their top five most frequent responses, according to The 2011/2012 Talent Management and Rewards Study, North America.

That disconnect helps explain why more organizations are struggling to hold on to key talent. The percentage of U.S. companies that are having difficulty retaining critical-skill employees has risen from 16 percent in 2009 to 31 percent in 2010 to 36 percent in 2011, according to Towers Watson’s report.

That mirrors results of our own Workforce Mood Tracker survey from September 2011 showing 38% of US employees are actively looking for work (up from 36% in January 2011).

Employees are clearly stressed and clearly communicating that up through the ranks, mostly through disengaging from the work simply because they can’t keep up any more. But leaders aren’t listening. And that puts your organization at risk.

What can you do about it? Star t listening. Read the tips I offered a few weeks ago on Compensation Café.

Are your employees visibly stressed? What are you doing about it?

A Formula for Employee Engagement?

2012 23 Jan

Recognize This! – Know your people. Lead them well. Thank them for their work. That’s the formula for engagement.

Is employee engagement formulaic? It is according to Gallup, which offers the equation below (and recently featured in Forbes):

Per-person productivity =
Talent x (Relationship +Right Expectation + Recognition/Reward)

Let’s break that formula down.

Talent – Some would argue this is the easiest element in this equation. The ability of your talent – top performers, high potentials on down – is measurable and reportable (though, of course, some always slip through the cracks).

Relationship – This is much harder to factor, due to the sheer vagaries of human nature. Some people hit it off; some don’t. But organization leadership is responsible for ensuring the right managers are in place, with the right skills to manage, as well as the right employees with the right skills in the right positions.

Right Expectations – It’s easy to get expectations wrong. The story from one of our clients comes to mind in which they noticed their employees in R&D were being recognized far more for “achieving results” than for “taking risks” – precisely the wrong expectations for the R&D department of a company renowned for innovation.

Recognition/reward – And that’s why getting recognition and reward right is critical. If you structure a truly strategic recognition program around your core values, as our client did, then track when and how employees across the organization are recognized based on those values – you can not only target employee productivity but also change your culture.

Do you think there’s a formula for employee engagement?

5 Strategies to Motivate Employees (Hat-tip: Eric Chester)

2012 20 Jan

Recognize This! – Motivating employees requires work and effort, not wishes and hopes.

I never tire of learning more about the power of a strong company culture and how to foster such a culture in organizations today. Following on my post from yesterday about “3 Lessons for Core Company Values Done Right,” I couldn’t help but share with you a new book by Eric Chester: Reviving Work Ethic: A Leader’s Guide to Ending Entitlement and Restoring Pride in the Emerging Workforce.

Though I disagree with Chester on his points regarding the degraded work ethic of those new in the workforce, he does offer five solid strategies to employers who ask, “How can I motivate employees?” (quoting):

  1. Carefully examine the core values that you demand from every employee. Create a definitive list of no more than ten, starting with the non-negotiables of honesty, reliability, respect, and professionalism.
  2. Revisit your hiring process to see how you’re evaluating job candidates based upon these values. Make certain you’re asking questions that get them to describe in detail how their past work-related performance demonstrates the values you hold sacred (e.g. “Tell me about a time when you overcame a significant challenge to finish a project on schedule.” “Give me an example of a rule or policy in a previous job you found stupid. Did you comply with it?”)
  3. Examine your training program to see how you can integrate these concepts into your present skills training. Remember: it’s not enough to simply mention values or provide a warning to those who do not exhibit them. For the values to be internalized, they must be integrated into training and daily mentorship.
  4. Take significant measures to foster a workplace culture that is centered around your nonnegotiable core work ethic values. Begin meetings by allowing employees to share personal examples of how they went out of their way for a customer, overcame a challenge to arrive at work on time, chose to do “the difficult right” as opposed to “the easy wrong.” Share your own stories as well.
  5. Celebrate work ethic. Talk about people (employees, associates, even celebrities) who you believe exhibit great work ethic and provide examples. When you see great work ethic exemplified by your employees, recognize and reward it with praise, awards, impromptu celebrations, or even incentives. Remember that what gets rewarded gets repeated

That last point in particular is of note. I don’t recommend incentives for something you expect (like a good work ethic), but rather “after/that” rewards that are a surprise and encouragement to keep doing more of the same.

What would you add to this list of ways to motivate employees?

 

3 Lessons for Core Company Values Done Right

2012 19 Jan

Recognize This! – A values-based company culture requires far more than hanging a plaque on a wall.

Do CEOs – other than Tony Hsieh of Zappos, of course – actually think about the company’s culture and core values to the extent of using the values as means to hire, fire, promote and reward employees?

Yes, they do. Christine Fruechte, president and chief executive of Colle + McVoy, was recently featured discussing just that in the New York Times “Corner Office” column. Ms. Fruechte draws three clear lessons we should all learn when considering core values for our own organizations.

Are your values realistic?

“[To develop our core values] there was a core group of about 12 individuals, but we vetted the ideas with the people who would be living them every day as well. It’s not just about the words, but it’s also about defining what the words mean, because if you say ‘creativity’ or if you say ‘collaboration,’ you can define them a lot of different ways.”

Your core values are useless unless every employee understands what they mean. But it’s not enough to be able to define what the word “creativity” means. Your employees must know what creativity looks like in their daily work. The best way to make that clear is through strategic recognition in which employees are explicitly (and frequently in a timely way) recognized for demonstrating a value, along with a detailed message explaining precisely how they did so.

Are your values universal to all?

“‘Creative’ is not a department at our agency. We expect it from everyone within the organization.… We’re all defined by really trying to create standout ideas. And we also expect insightful thinking. And that means always having a point of view. I don’t care if you’re the receptionist, or if you are a new copywriter, you have to have a point of view about anything.

Not only should your values be clearly understood by everyone, they should be applicable to everyone as well. Of course, some companies have “risk taking” as a core value, which is important indeed in R&D departments – but perhaps not as much in Accounting. There is always a balance, but if your core values aren’t broadly applicable to all employees, how can they be core to your organization?

Do you (and all employees) truly live by your values?

“An effective culture is grounded in having a collective purpose. And a culture also is deeply rooted in core values.… You have to live by the core values, and reinforce them constantly. We remind people what the core values are anytime we have agency meetings, and they’re built into our performance reviews. If you’re not living by the core values of the organization, you’re not going to be allowed to advance.

“One [value] is integrity. I have a very short fuse for anyone who is not going to operate with high integrity. …  And yes, I have terminated people very, very quickly, and it’s a very easy decision to make for me because I’m not willing to compromise when it comes to that.”

You cannot claim to live by your values as an organization if you are unwilling to hire, fire, evaluate performance, and promote based on your values. It’s far too easy, for example, to sweep bullying behavior by high-performers under the rug. But if such behavior violates your values for “integrity” and “respect,” then you must be willing to take appropriate action, even by removing the person from your organization. Otherwise, you clearly communicate to employees the opposite of what you intend – that, in fact, integrity and respect are not important as important to you as results.

Does your organization have realistic, universal values that all employees live by and are held accountable to?

HR Happy Hour: Culture v Strategy – Jan 19, 8:00pm ET

2012 18 Jan

Recognize This! – Culture trumps strategy every time. Join the discussion on HR Happy Hour, 19 January, 8:00pm ET.

You know how passionate I am about the importance of company culture – in driving employee engagement, retention, productivity, and ultimately bottom-line results. Over the years, I’ve written several posts on the topic, dissecting research and reports on the critical role of company culture. (And it’s the topic of our book Winning with a Culture of Recognition.)

Tomorrow night I’m honored to join HR Happy Hour (guest hosted by Paul Hebert of i2i) for “Culture vs. Strategy” to discuss how culture impacts organizational performance.

  • Thursday January 19, 2012 – 8:00 PM ET
    Call in 646-378-1086
    Follow the backchannel on Twitter – hashtag #HRHappyHour

Culture and culture management have gained increased attention in the last few years as an important driver of employee engagement and company performance. Paul and I will take a closer look at culture and discuss topics around:

  • What is company culture?
  • Can company culture be defined and managed?
  • What is proactive culture management?
  • Does culture really ‘beat’ strategy as we often hear?
  • What companies really understand this and are doing a great job with culture management?

I hope you can join the discussion and share your passion for the value and importance of company culture.