(and even more important how are YOU doing?)
Comparative performance is an interesting phenomenon, if your hedge fund lost your clients £1billion last year it is doing better than a competitor that lost £2billion right? Crazy, you lost your clients a fortune!! Yet we see competitive performance everywhere, politicians who compare themselves with the last lot and companies who focus on competitors rather than themselves. In fact I recently heard of a business convening a sales meeting specifically to discuss what a competitor might become.... Strange, why would you do that? I can't think of a better way to take your eye of your strategy, have people copy the competitor and focus on the wrong things. If we play well then we'll get the results, it's pointless to focus on how well the opposition play.
Managers too have a tendency compare their team members with each other rather than with their potential and against the goals that they have agreed and that is just as unproductive. You are not trying to make your team member the least worst, you are trying to get them to do their best work every day and achieve the goals, it's one of the factors that leads managers to tolerate underperformance...... 'it's the best we can do with what we've got'.
One significant management tool that is greatly underused and abused is the appraisal system. Very few businesses have a meaningful and effective way of measuring and coaching their employees, getting them to deliver the potential they hired them for. That's terrible if you think about it, the company gets less than it needs wants and is paying for, the employee does not develop or do their best work, what a depressing scenario but look around it's what happens to one degree or another in most businesses. There are studies galore (ask the resident psychologist!) that tell you that the single biggest motivator for people at work is making progress....doing a good job, progressing in status, being respected by their peers, it's NOT money, although you do have to pay what we call a 'market clearing' wage paying more won't deliver better performance.
A great appraisal system is not a meeting forced on both parties by HR or the Managing Director that Managers don't prepare for and don't execute or follow up correctly. It's not a pay negotiation and it's not an ar*e kicking contest! It's a coaching tool and are some golden rules for appraisals :-
They should be clear simple and un-bureaucratic -if they take more than a side of A4, require hours to prepare and evaluate they won't get used, handwritten notes work, two things they do well, two things they can improve on and some notes on progress.
They should measure people against the things that matter and that relate directly to their own performance. Empirical measurements on certain goals (have you met your sales target? For example) but also qualitative assessment against Behaviour, how do they go about what they do.
They should set goals for personal development just exhorting someone to do better is pointless, sportspeople get better because they train, musicians get better because they practice and business is just the same, increasing your employees skills leads to better performance, sound obvious but honestly how often do you see it done?
They should be structured - informally we appraise people all the time but sitting down, face to face with time to devote sets a different tone. Appraisals should be regular, once a year is too infrequent, at least every six months and preferably more, if you can't devote time to your team's development then I'd suggest a good hard look at how you mange and what is important to you.
They must be honest and brave, no one I've ever had to let go was surprised when we had the last conversation, you owe it to people to let them know how they are doing and help them to do their best for you. Candid, consistent feedback given with integrity throughout.
Like all processes the process of people development needs to be evaluated, you audit the accounts to make sure they are giving you a true view of the financial performance right? You should also audit the appraisal system to make sure it's telling you the truth about something far more important than money, the people who generate that money.
Knowing your people better than they know themselves and then getting them to do their best work every day.... To pinch one of Daniel Pink's thoughts "we are purpose maximisers not just profit maximisers"
© Chris Ball April 2012