“Evaluations Give Workers Little Information, Survey Finds,” says the headline (1) in a report on a survey of 1,190 US workers conducted by Watson Wyatt, a human resources consulting firm. “Only 30 percent of workers say their company’s appraisal process helps them improve their performance, and less than 40 percent say the process provides clear objectives or feedback… It’s an exercise that can have a Negative effect on company bottom line In a previous study, Watson Wyatt found that companies that clearly establish worker responsibilities and their connection to broader company goals…perform better overall. .. ‘four times the total shareholder return'”.
This study confirms what great managers know: people need clear direction linked to organizational goals to perform well. Too often, companies, driven by legal imperatives, resort to putting everything in a “job description” that becomes outdated by the time it hits paper. Many assessment systems try to quantify non-quantifiable ‘attitudes’ or create hopelessly confusing descriptions of ‘competencies’.
The solution starts with a solid strategic plan for the business, government, or non-profit organization. The plan should be based on the long-term vision AND the most immediate mission of the company. The strategic plan links each employee to that mission:
* The company sets its high-level goals and concrete objectives.
* Objectives describe the results that advance the mission.
* Departments create aligned plans to achieve a part of the overall plan.
* Cascading, this process continues until it reaches the individual employee.
Each manager and work group creates a very practical plan linked directly to the objectives. Each manager discusses with each team member how their specific job and assignments help accomplish the mission. When the process is complete, each individual has explicit knowledge of how their work contributes to the success of the organization. The manager and employee develop a Individual Performance Plan with measurable results in two areas, continued accountability and growth. The manager and employee then discuss progress against this plan (at appropriate regular intervals) so that feedback is rapid enough to reinforce desired behavior and take action on unwanted performance.
In his groundbreaking study, First break all the rules, (2) Marcus Buckingham and Curt Coffman found that great managers do a formal performance review on a quarterly basis. In effect, the “annual” review becomes just another quarterly review. This approach provides:
* continuous feedback
* concrete performance and improvement
* results integrated with the needs of the company
* Individual awareness of what must be done at all times to accomplish the mission.
When examiners for the US Malcolm Baldrige National Quality Award interview companies, they ask almost everyone, “What is your company’s mission and what is your role in achieving it?” World-class companies invariably have a workforce that can answer this question specifically. People know what the company is trying to achieve and what it contributes.
The link between individual performance and mission is NOT just a ‘nice to have.’ The Gallup Organization published its latest study in 2006 based on survey responses from millions of employees and analysis of business results observed in hundreds of companies around the world. When they asked people to rate how much they identified with the statement, ‘My company’s mission makes me feel important,’ they found that “the top quartile…average 5 to 15 percent higher profitability than the top quartiles.” Bottom quartile units. Mission worker-driven workgroups suffer 30 to 50 percent fewer accidents and have 15 to 30 percent lower staff turnover.” They concluded that it was “as if the employee couldn’t energize himself to do as much as he could without knowing how his job fits into the grand scheme of things… For reasons that go beyond the physical needs met in earning a living, [the employee] seek their contribution to a higher purpose.”(3)
Leaders who want their organizations to succeed are turning static job descriptions and worthless annual performance reviews into dynamic Individual Performance Plans and continuous review and improvement. Everyone is tied to the mission and is clear about what they need to do to achieve the ultimate goals. Not surprisingly, the data shows a quadruple return for shareholders and improved morale and productivity among mission-focused workers. (1) Any company can achieve these results by starting with a strong, mission-driven strategic plan and passing it on to everyone to execute. The plan is only as good as its execution, and execution occurs at the individual level where people are fully committed to the mission.
(1) the miami heraldBusiness Monday, page 16, Workplace column, Andrea Coombes, May 10, 2004
(2) Marcus Buckingham and Curt Coffman, Break All the Rules First: What the World’s Best Managers Do DifferentlySimon and Schuster, 1999
(3) 12: The Elements of Great ManagementRodd Wagner and James Harter, Gallup Press, 2006