If you do employee performance reviews, you should review you own performance…

Until the other day I had never heard of UCLA Professor, Samuel Culbert, but I’d he is a person with a considerable amount of knowledge when it comes to managing people.   His recent Wall Street Journal article, “Get Rid of the Performance Review“  raises this old chestnut with some good reasons why this process is hokum.

Have you ever had to do an annual performance review.  At most of the companies where I have held a management position, this was an annual event for me as the giver and receiver.  This is roughly how it would go.

1.   I have a form comprising generic categories to some up the past and future priorities for the staff member – lists of performance goals, improvement priorities, learning strategies and the like.  It was prepared a year or six months ago maybe.  Sadly during that time, most of the business priorities have changed (except may financial but this is hardly concrete either)- we’ve all moved on (except for a couple of senior executives and /or the HR department.  And yes we have been measuring performance on the new priorities, but some of them are probably pretty recent.

2.  Anyway, I sit down with said form and staff member to be reviewed.  We have worked hard all year, achieved goals (mainly different from stated in said form).   I have been prodding, coaching, teaching and learning from this person all year. I know how well he/she has performed (if they’d stuffed up, they wouldn’t be sitting here!)

3.    I excuse the process on the basis that it is requirement which we must do.  I have inserted performance marks under the heading as required.  They argue if they have the need and/or courage.  We find some new stuff to put in the gaps for future performance.

4.  I send it off to the Human Resources Department to be forgotten until the next occasion.

What a lot of crap….

When I do the salary reviews,  I don’t refer to the performance review document. As Professor Culbert suggests, I have a budget and allocate this across my reporting staff on the basis of my knowledge of their contribution.

May pay rises were based on my subjective perception of the value of each of my staff. But they would have been no more objective than the ratings in the performance review form, and they were probably more relevant.  As the Professor points out, these forms generally fail the ‘flexible to adapt to individual reality’ test.

I think they do become management instruments of politics and power, but I’m not sure whether that was their original intention.  More likely, they spawned from some idiot during the great period of the 1990’s when management engineering theorists decided you could run your staff on the same principles as an IT network, with a bit of behaviorist dog salivation theory thrown in.

There’s an alternative – not necessarily simpler.  Get to know what human resources your business needs to succeed, hire the right people, get to know them and their capabilities, coach them, prod them work with them until they exceed.   Then pay them as much as you can so they don’t go and work for your competitor.

Celebrate diversity – Leverage the unique aspects of your employees.

I live in a densely multicultural city.  The benefits are too numerous – wonderful varieties of restaurants and food shops, people from different cultures norms, different ways of doing things, different religions.  It makes for a rich existence.  I can go down to my local shops and buy any herb, spice or specialty from just about anywhere in the world – Africa, Asia, India, Germany, Italy, Vietnam, the middle East, Greece or South Africa – you name it.   I feel spoiled and indulge in the wonders of the world outside may front door.  I seek recipes and talk to shop keepers to learn how to use the different ingredients and create the unique and create magnificent dishes. I go to different restaurants and marvel at the diversity.

In my  time as a manager, I could never get over the differences in the values, behaviours and attitudes of my staff.   Companies can be like little  microcosms of the wider world.  People  never seem to do what you might expect – to assimilate information, or react to situations, to understand  or see the world as you might anticipate.  It is the bane of the young manager – the multi-value workforce.  They will consistently surprise you with their human-ness, their capacity to perceive and deal with the world in a unique way.

So many young and inexperienced managers are hell-bent on achieving their goals that they  often try and prize people into conforming to rigid behaviours.  Try and enforce values on them – and if they don’t think or appreciate circumstances to their expectations, they cast them aside – start pushing them into corners where the only escape is to seek alternative employment.  So rather than letting them create a curry or masala – they force them to make steak and chips and then complain that it tastes bad.

Of course, the objective is to be well fed, and whether you achieve this by eating steak and chips or a sumptuous curry doesn’t matter.  As you mature as a manager, you learn that you can leverage the different approaches of your staff to create a more diverse competitive approach to getting the job done.

The greatest success I have had in business was founded on bringing together teams with diverse skills and perceptions about a problem.  In many cases, they were more able than I at their specialty and used different recipes – but the banquet was magnificent.

Understanding the individual value of your employees can be create enormous competitive advantages.   If you try and push them all into the same deep-fryer, your’ll be eating soggy fish and chips instead of a delicious bulgogi.

Sub-prime Observations

Amidst the sub-prime crisis its time to make some observations about the world.

First, I feel a bit sorry for the press.  Imagine having to tell the story of this disaster each day in a way which creates interest, reflects the facts, has some continuity and  sells papers or television shows. In the end I can’t recall glancing over so much reporting by so many people who have no idea about what is going on. ‘Today the markets are diving,,,,,,Today the markets are recovering……Today the markets have collapsed.’  The problem with this stuff is if you have to report it 24/7 you start to become consumed by the minutiae of the market.  But each piece of the puzzle considered individually is drivel – meaningless, unless perhaps its the company that employs you or that holds shares that your lender is calling you to sell.   Pictures show flustered Presidents and Prime Ministers, Treasury Officials and Finance Ministers looking bewildered and helpless as the financial cyclone whirls around them.   Inquiries look for someone to blame (watch out you’re not the bunny in the wrong place at the wrong time on that one) banks topple over, and innocent employee bystanders flounder in growing unemployment markets.

The problem is it becomes difficult to find some commentary of value.  As the sea of daily media reportage, washes over you, you become numb, check your own bank balance and turn off.

The second observation concerns economists.  When times get tough, it’s an opportunity to show everyone how you can make a contribution – make a stand, be heroic, come up with the the goods.   Yet here surely is a profession which, like many investment banks around the world, is taking its last gasps as it fades slowly into the murky and mysterious haze of equilbrium analysis and  mathematical equations – which don’t seem to have much to do with anything.   Since the sub-prime emigma there has been a deafening silence in the halls of economic faculties and economic departments.    What has become so apparent is the absence of any illuminating contribution on the sub-prime conundrum or better, where and how the future will evolve.

Why is this?  Economists spend a lot of time building complex models of the economic world which supposedly describe the relationships between money, production consumption and so on.  So where were the forecasts, postulations (even tea leaves).   Maybe its because they didn’t see it coming, and when they did the facts didn’t fit the models.  Maybe, because so many of the facts were hidden amidst the melee of mortgage salespersons, greedy consumers and finance magicians, they just couldn’t see the facts.   Of course there are the few who shouted that it was going to happen – but when they didn’t know when, no one listened.

The bottom line seems to be that the value added by economists to avoiding the sub-prime mess is zero.  Furthermore, they seem to have little to say in terms of the future path of the worlds economy – merely the odd vague statments about the need for growing confidence, and the off chance of a slowdown in world economic growth.  Its left to the bureaucrats (admittedly the off economist amongst them) to enact the policies to avoid a run on the banks.  But hold on there is still nothing concrete about the future.

The concept of robust is missing from the economists trade and their crude mathematical tools unjustly describe the open system (otherwise known as the real world).   And where was the theory of greed in Milton Friedmans great capitalist epistle.

Maybe, economics departments should probably be relocated to a small section at the back of the university History Department.  Here’s the perfect place for them to do what they do well – build models to describe the world as it once was (be it days, months or years ago).  Alternatively, there will be probably be a faculty that teaches creative writing in the Arts Department.

If you depend on your employees, sack the managers who don’t understand them!

Employee surveys provide a window into the thoughts and perceptions of an organisations labour force that can provide a unique opportunity to take a competitive advantage

Its can be frustrating for a manager to receive the results of a staff satisfaction or climate survey.  Often as not, the results are below their expectations.  The response is often defensive and resentful.  Behind closed doors, I’ve heard managers argue that staff are ungrateful, or suggest if their not happy they should leave the organisation.

If its a good survey with total anonymity, and poignant questions, then its likely that staff answered honestly – more honestly than they would in any open conversation with a manager and probably as honestly as they would talk to trusted friends.

The first thing is that a manager who is angered by a response below their expectations is revealing that they are out of touch with their staff.  They are perceiving their staff according to their own expectations, rather than listening too and watching them.  Consequently they feel confronted when the reality falls short of their prediction.  I have seen instances where the anger turns into recalcitrant management.  The manager digs their heels in, determined to play tough – if the staff don’t like it, then its just tough.  The consequence of this response depends  on the broader organisational context.

Most important is the status of relevant labour markets.  For example, if there is a shortage of demand for your employees across the market (ie. they are highly mobile) then chances are the good ones will leave to greener pastures.

If on the other hand, there is an oversupply of labour, then it may well matter less how well staff are treated.  This context perpetuates aggressive uncaring employee management purely on the basis that it has no opportunity cost.   This is often the case in industries where unskilled manual labour is the primary means of production (old industry and new – take for example call centers).  However, you see it also in developing economies where there labour market supply and demand is imperfect (take India for example, where there is an oversupply of IT and accounting specialists).   Again, you can even see it in unskilled employee cohorts in high tech industries – for example, those performing administrative or secretarial and other support services.

If the product market is competitive,  you may be dependent on a specific groups of employees in the organisation.  In this case recalcitrant management creates a business risk, if there is a demand for employees in the wider labour market.

Executives therefore need to understand how contextual factors effect the business risk when they are dealing with employee survey results.  While it might seem like common sense, I have seen it happen time and time again.

Recalcitrant managers in competitive product and labour environments need to change their behaviour or be shown the door when the risk is real.  The higher they get the more influence they have – the more dangerous they can be and the more damage they can cause.  At the highest level, the Board of Management needs to move on the Chief Executive who just doesn’t get it.

More often, I see problems where a business has grown rapidly and the original managers have strong entrepreneurial skills but suddenly wake up one day with 100 or more staff to whom they can’t relate.   So often the one thing they can’t do is what they have to do – let go and delegate the responsibility for employee management to someone with the skills.

As a business grows, good people become more important to the results.  They require systems, procedures and policies.   They need guidance, particpation, skills and career development and the rest.  A good employee survey will let you know what they value and how well your delivering.  If you listen hard you can create an environment that will stimulate high performance.  If you suffer from organisational deafness your’ll lose them to a smarter competitor.