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?

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?

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?


Competition in the Workplace Done Right

Recognize This! – Sometimes the opportunity cost for relationship building across functions is worth it.

Do you encourage competition in the office? Typically, I advocate against direct competition among team members as too often unintended consequences occur along the lines of the good of the greater group being sacrificed for so the individual can “win.”

Instead, I prefer positive reinforcement through recognition – of individuals and teams – in which all who are successful at demonstrating desired behaviors “win.”

That doesn’t mean there is zero room for competition in the workplace, however. A member of my consulting team is an avowed US college basketball fan. She was telling me about March Madness how this spurs office competitions based on brackets. I understand our US-based colleagues are running one of these bracket competitions starting this week.

This kind of competition is healthy and actually serves to build camaraderie between people who may not usually interact with each other. As I chatted about this with my teammate, she mentioned research showing worker productivity drops, especially during the first week of March Madness.

In this end-of-a-busy-week post, I’m wondering – is that temporary drop in productivity worth the trade off in increased cross-functional employee interaction and possible boost in morale?

How to Stop Killing Employee Ability and Desire to Do the Work

Recognize This! – Years of detailed study prove managers have tremendous influence over employee productivity and engagement, simply by impeding progress.

Are you killing your employees’ desire to work? I don’t mean, are you giving them too much work? Often, that’s a challenge employees can rise to. No, I mean are you actively killing their desire – no, strike that – their ability – to do the work you need them to do?

Teresa Amabile and Steven Kramer have been justly receiving a good deal of press during the last many months for their book The Progress Principle.  For the book, published by Harvard Business Press, Amabile and Kramer “collected confidential electronic diaries from 238 professionals in seven companies, each day for several months. All told, those diaries described nearly 12,000 days – how people felt, and the events that stood out in their minds.”

From that, they learned (as reported in The Washington Post) “How to Completely, Utterly Destroy an Employee’s Work Life,” finding:

“In fact, on one-third of those 12,000 days, the person writing the diary was either unhappy at work, demotivated by the work, or both. That’s pretty efficient work-life demolition, but it leaves room for improvement.

Step 1: Never allow pride of accomplishment. …

Step 2: Miss no opportunity to block progress on employees’ projects. …

Step 3: Give yourself some credit. …

Step 4: Kill the messengers. …”

Then, in the McKinsey Quarterly, Amabile and Kramer discussed, “How Leaders Kill Meaning at Work,” highlighting four traps:

“To better understand the role of upper-level managers, we recently dug back into our data: nearly 12,000 daily electronic diaries from dozens of professionals working on important innovation projects at seven North American companies. We selected those entries in which diarists mentioned upper- or top-level managers—868 narratives in all. … In short, our survey showed that most executives don’t understand the power of progress in meaningful work.5 And the traps revealed by the diaries suggest that most executives don’t act as though progress matters.

Trap 1: Mediocrity signals

Trap 2: Strategic ‘attention deficit disorder’

Trap 3: Corporate Keystone Kops

Trap 4: Misbegotten ‘big, hairy, audacious goals’”

The Importance of Meaningful Work

Between the two articles, Amabile and Kramer speak well to advice I and several others have given time and again – the importance of meaningful work. The closing statement from the McKinsey Quarterly says it all:

“As an executive, you are in a better position than anyone to identify and articulate the higher purpose of what people do within your organization. Make that purpose real, support its achievement through consistent everyday actions, and you will create the meaning that motivates people toward greatness. Along the way, you may find greater meaning in your own work as a leader.”

I would add one bit of clarity on the “consistent everyday actions” – recognize, praise and appreciate people for their efforts and actions that support your organization’s purpose. That makes it real to employees, giving them the sense of meaning they need.

Have you ever been caught in one of the four traps? Have you ever felt your boss following any of the four steps to make you miserable at work?

Employee Engagement = Employees Believing What You Want Them to Believe

Recognize This! – Giving people a reason to believe is far more effective than telling them what to do or how to think.

It’s seems lately I’ve written about the weekly New York Times “Corner Office” column, well, weekly. The featured chief officers have lately been truly inspirational leaders with sound advice.

As it turns out, I’m not the only one enamoured of these columns. John Hollon in TLNT beat me to it this week with his feature on the column about Jim Whitehurst, president and CEO of Red Hat.

So, why am I calling out John Hollon’s column instead of the original? Because John cut straight to the main point, identifying “the best definition of employee engagement you’ll see anywhere.” John rightly pointed to this comment from Mr. Whitehurst as that great definition of engagement:

“Somebody once told me — and this is some of the best advice I ever got — that for any business there are three levels of leadership. One is getting somebody to do what you want them to do. The second is getting people to think what you want them to think; then you don’t have to tell them what to do because they will figure it out.

“But the best is getting people to believe what you want them to believe, and if people really fundamentally believe what you want them to believe, they will walk through walls. They will do anything.”

Do you spend more time telling people what to do, how to think, or why they should believe?

If you can get them to believe – to buy into what “it” is that you as an organization are trying to accomplish – you don’t need to spend near the effort on telling them what to do or how to think. They’re already there, likely one step ahead of you.

How do you get them to believe? How do you convey to them what matters most to your organization and, critically, why they should care about it as you do? I firmly believe the foundation of this kind of belief is reliant on the employee knowing that what they do contributes to making that vision a reality. If you don’t think you play a role in creating that success, why would you ever “believe?”

Recognize your employees for efforts, contributions and behaviors that help you achieve your organizational vision and mission. Give them a reason to believe.