I had a prospect recently ask me an important question, and indeed the right question. He asked, if I'd invested in an expensive HR leader a few years' ago, how would my organization be better off today? The reason this is the right question is that if investments in HR don't yield a positive return on investment (ROI), should they be made at all? My MBA training says, no, they shouldn't be.
The research shows that, on average, high performing small and mid-sized companies spend more on HR than their lower-performing competitors (i4cp study). So what is HR doing to make those companies more profitable?
The answer falls into several categories:
1. Opportunity Costs - when one small company waits longer than its competitors to invest in a HR resources, it probably doesn't mean the company has no HR function. It likely means the work that is being done is being done by committee. The committee often consists of the owner or operational leader, the administrative leader and the financial leader. If those leaders could be more effective at their jobs if not constrained by HR related tasks and issues, then the company might be better off. Examples might include a business owner investing many hours creating a performance review platform or a controller researching an HR compliance issue when a trained HR professional could do either much faster.
2. Targeted Expertise - another prospect once told me he didn't need HR help because his controller was a CPA. That's like saying I don't need a dentist because I have a doctor. If my tooth is hurting, my doctor may be able to help, but a dentist has more specialized knowledge - and vice versa for a cold or flu. A trained, experienced HR professional can help reduce the time it takes to arrive at a correct organizational diagnosis and develop an appropriate prescription for organizational aches and pains.
3. Priorities - when key HR initiatives are dependent on individuals in the organization whose primary roles are in other functional areas, HR initiatives often go unfinished. Frequently when I speak with companies who don't have a true HR function, they tell me lots of good ideas they've had but haven't had time to implement. A dedicated HR professional can help push those initiatives to the finish line. If they were worth putting on the list to begin with, they are perceived to have value by the leadership team (improved retention, improved engagement, quicker ramp-up in productivity, avoiding bad hires, etc.)
4. Risk Avoidance - this is the most tenuous argument, but it's not illegitimate - how many work comp claims/EEOC claims/unemployment claims, etc. might you have had if not for the programs initiated and managed by your skilled HR leader? Car insurance only has a positive ROI if you wreck your car. For those who have never wrecked, it's easy to feel that buying that insurance was not a good investment. But those who have wrecked know its value.
At the end of the day, if your organization could benefit from having a stronger, more capable, better trained workforce with a more efficient and user-friendly platform for finding, selecting, on-boarding, retaining, managing, evaluating and inspiring those workers, an HR professional can probably help. But feel free to measure that HR professional's performance against those standards.
Wednesday, October 12, 2016
Communicating Overtime Changes
So you have finalized your strategy for being in compliance with the new overtime changes on December 1. You have, haven't you? If not, you better get on with it. While there is some activity in congress that might delay or modify the new rules, it appears the chances of that happening are slim, so you better have a plan.
Assuming you have a plan, how are you going to break the news to those affected? Telling someone they're getting a raise to the new minimum is pretty easy - but it can demotivate those similarly situated who happen to already be over the limit. If Jane has spent 10 years getting to the $48,000 level, she's not going to be thrilled that Ann, 8 years her junior with 8 years less experience, gets automatically bumped from $39,000 to $47,500 in one day. Explaining the change to Ann is easy, but don't forget to have a conversation with Jane.
But how do you tell someone who is currently salaried that they are going back to hourly? Keep in mind that employees may react differently to the news. Some may be thrilled that they are going to be eligible for overtime compensation going forward (assuming that they will be making more money). On a side note: If Bob routinely worked 55 hours a week while he was salaried, calculating a break-even wage rate so that Bob must continue to work 55 hours to retain his total compensation is a sure loser. Before, Bob's 55 hours were discretionary, but now you've made them essentially mandatory. He's likely going to feel differently about those hours now.
However, others may see it as a demotion and a career killer. How do you assure them that neither is true? Here are some tips:
1. Tell them early - your employees watch the news and are likely waiting to hear how they're going to be affected. I understand delaying the conversation a while to see if congress intervenes, but some states require a notice before wages are reduced (7 days in SC, 24 hours in NC, before the hours are worked in VA). So don't let that deadline pass, especially if your plan is a "net zero" plan that accounts for hours-worked as an exempt employee.
2. Be honest - this has nothing to do with their performance and if not for a government mandate you wouldn't be having this conversation. If it's good for them (they're going to earn more), tell them. If you're having to modify (reduce) their hourly rate from a straight salary-to-hourly conversion in order to account for overtime, explain why you're having to do it that way. If they are being reclassified from exempt to non-exempt, they'll need to start keeping a timesheet of some sort. This can also be demotivating, but explain that it's not that the company doesn't trust them, it's required. And also explain how it affects their career ambitions. If their goal is to move up, make sure they understand that this change does not alter their ability to do that (assuming that is true).
3. Don't forget any benefits impacts - some organizations offer different benefits to exempt and non-exempt employees. While the government defines overtime compensation rules, they don't define your vacation policy, so give some thought as to how you're going to handle the things you can control.
4. Train supervisors - if Stan is now non-exempt, he can't work through his lunch anymore or work off the clock (including answering excessive emails or texts after hours). Praise his loyalty, but explain that he's putting the company at risk. Stan may also need training in the company's time-keeping system. Whether it's manual, a time clock, or an electronic system, don't assume he knows how to use it.
5. Tell them who to go to with questions - it may be better to have someone like your HR leader or your finance leader be the pressure valve for these conversations so the workers' supervisors and managers can focus on getting the work done and serving your customers rather than getting mired up in this transition.
Assuming you have a plan, how are you going to break the news to those affected? Telling someone they're getting a raise to the new minimum is pretty easy - but it can demotivate those similarly situated who happen to already be over the limit. If Jane has spent 10 years getting to the $48,000 level, she's not going to be thrilled that Ann, 8 years her junior with 8 years less experience, gets automatically bumped from $39,000 to $47,500 in one day. Explaining the change to Ann is easy, but don't forget to have a conversation with Jane.
But how do you tell someone who is currently salaried that they are going back to hourly? Keep in mind that employees may react differently to the news. Some may be thrilled that they are going to be eligible for overtime compensation going forward (assuming that they will be making more money). On a side note: If Bob routinely worked 55 hours a week while he was salaried, calculating a break-even wage rate so that Bob must continue to work 55 hours to retain his total compensation is a sure loser. Before, Bob's 55 hours were discretionary, but now you've made them essentially mandatory. He's likely going to feel differently about those hours now.
However, others may see it as a demotion and a career killer. How do you assure them that neither is true? Here are some tips:
1. Tell them early - your employees watch the news and are likely waiting to hear how they're going to be affected. I understand delaying the conversation a while to see if congress intervenes, but some states require a notice before wages are reduced (7 days in SC, 24 hours in NC, before the hours are worked in VA). So don't let that deadline pass, especially if your plan is a "net zero" plan that accounts for hours-worked as an exempt employee.
2. Be honest - this has nothing to do with their performance and if not for a government mandate you wouldn't be having this conversation. If it's good for them (they're going to earn more), tell them. If you're having to modify (reduce) their hourly rate from a straight salary-to-hourly conversion in order to account for overtime, explain why you're having to do it that way. If they are being reclassified from exempt to non-exempt, they'll need to start keeping a timesheet of some sort. This can also be demotivating, but explain that it's not that the company doesn't trust them, it's required. And also explain how it affects their career ambitions. If their goal is to move up, make sure they understand that this change does not alter their ability to do that (assuming that is true).
3. Don't forget any benefits impacts - some organizations offer different benefits to exempt and non-exempt employees. While the government defines overtime compensation rules, they don't define your vacation policy, so give some thought as to how you're going to handle the things you can control.
4. Train supervisors - if Stan is now non-exempt, he can't work through his lunch anymore or work off the clock (including answering excessive emails or texts after hours). Praise his loyalty, but explain that he's putting the company at risk. Stan may also need training in the company's time-keeping system. Whether it's manual, a time clock, or an electronic system, don't assume he knows how to use it.
5. Tell them who to go to with questions - it may be better to have someone like your HR leader or your finance leader be the pressure valve for these conversations so the workers' supervisors and managers can focus on getting the work done and serving your customers rather than getting mired up in this transition.
Monday, September 19, 2016
Performance Management for Millennials
I'm on record saying that much of what is written about how different millennials are than we baby boomers and Gen Xers is a bunch of baloney (click here for more). I believe it is the workplace that is evolving, not the people. Millennials simply have different stimuli than we had. But their responses to those stimuli are the same as ours would have been. Plus, I don't like stereotypes of any kind, including stereotypes based on the year someone was born. Not every millennial meets those stereotypes any more than any individual meets the stereotypes associated with their race, color, gender, etc.
But we have learned some things from millennials that we can apply in the workplace. Some of the more important come from video games. While not every millennial is a gamer, a higher percentage of them game than previous generations did. So one might ask, why are those games so addictive and so much fun?
When I ask my college students why they enjoy gaming, the answers are pretty obvious. The games engage multiple senses, they are challenging, and they provide immediate feedback about performance.
Two stereotypes about millennials that I have found to be unfair are: 1) they want the corner office but don't want to have to work for it and 2) they are so fragile they can't handle constructive feedback. In my experience, millennial gamers don't mind their character getting blown up in level 7. Their egos aren't crushed when they fail to advance. It just makes them determined to master that level more quickly in order to move up to level 8, even if it takes multiple attempts. But they will get frustrated if mastering level 7 is perceived to be unattainable or if the standard for advancement is unknown or keeps changing.
In other words, it was the parents who wanted every kid to get a trophy and for organizations to stop keeping score in youth sports, not the millennials themselves. They are as competitive as we were.
What many organizations can do much better is learning to explain what it takes to earn that corner office. Some version of you must be a level 15 to get that office; you're a level 4 right now - but here's what it takes to complete levels 5, 6, 7, 8 ... is the piece that is missing. Sometimes boomers just want millennials to be patient and wait their turn. But it's a myth that we were so patient when we were in our 20s. I clearly remember undervaluing experience when I didn't have any (like many millennials do now). But perhaps I overvalue experience now that I have a bunch.
When organizations have cultures based on if you don't hear from me, assume you're doing a good job, those organizations are not going to appeal to millennials (or Gen Xers or boomers either for that matter). Workers of all ages never were happy and are no longer going to tolerate organizations that give lukewarm feedback once per year when those workers have the option of going to another organization that has learned to build systems that provide immediate or at least more frequent (and relevant) performance feedback and have more clearly defined the roadmap options to help them achieve their career objectives.
But we have learned some things from millennials that we can apply in the workplace. Some of the more important come from video games. While not every millennial is a gamer, a higher percentage of them game than previous generations did. So one might ask, why are those games so addictive and so much fun?
When I ask my college students why they enjoy gaming, the answers are pretty obvious. The games engage multiple senses, they are challenging, and they provide immediate feedback about performance.
Two stereotypes about millennials that I have found to be unfair are: 1) they want the corner office but don't want to have to work for it and 2) they are so fragile they can't handle constructive feedback. In my experience, millennial gamers don't mind their character getting blown up in level 7. Their egos aren't crushed when they fail to advance. It just makes them determined to master that level more quickly in order to move up to level 8, even if it takes multiple attempts. But they will get frustrated if mastering level 7 is perceived to be unattainable or if the standard for advancement is unknown or keeps changing.
In other words, it was the parents who wanted every kid to get a trophy and for organizations to stop keeping score in youth sports, not the millennials themselves. They are as competitive as we were.
What many organizations can do much better is learning to explain what it takes to earn that corner office. Some version of you must be a level 15 to get that office; you're a level 4 right now - but here's what it takes to complete levels 5, 6, 7, 8 ... is the piece that is missing. Sometimes boomers just want millennials to be patient and wait their turn. But it's a myth that we were so patient when we were in our 20s. I clearly remember undervaluing experience when I didn't have any (like many millennials do now). But perhaps I overvalue experience now that I have a bunch.
When organizations have cultures based on if you don't hear from me, assume you're doing a good job, those organizations are not going to appeal to millennials (or Gen Xers or boomers either for that matter). Workers of all ages never were happy and are no longer going to tolerate organizations that give lukewarm feedback once per year when those workers have the option of going to another organization that has learned to build systems that provide immediate or at least more frequent (and relevant) performance feedback and have more clearly defined the roadmap options to help them achieve their career objectives.
Leadership, Growth and Hedging
I work with a lot of small and mid-sized businesses. Some call me because they've grown very quickly and need help. Others I speak with seem to have stayed the same size into their second and third generations of ownership. When I was the GM of a start-up pest management operation, we grew our region from four techs to a dozen in just over two years. When I started marketing HR and management services to pest management firms (as well as construction and trades organizations) in 2013, I was surprised at how many 40+ year old companies still operate with only five or six workers.
Does this mean those stable, smaller companies are not as good as the fast-growing, constantly-changing companies? Of course not. Those owners have generally settled into a size that they are comfortable with, earn a living they are satisfied with, and don't want the headaches associated with growing any larger. I get it!
But I worked for an organization with a clear vision of what we were trying to become, a solid infrastructure to support a growing operation, and systems that enabled us to meet our goals. The companies I work with that say they want to grow but are having difficulty doing so sometimes struggle because the owner/leader has difficulty creating momentum. One behavior that I observe from those leaders that can't seem to get the organization to bust through to the next level is what I call hedging. Here's an example of hedging:
In one of my corporate roles, a division leader asked me to help him roll out a CRM. He had already picked-out the one he wanted - he just needed me to handle the logistics. I did all the set-up with the vendor, communicated with the sales team, and coordinated the implementation and training. Shortly after the roll-out, he stuck his head in my door and said, Your CRM ain't working. He'd overheard a sales rep complaining about it in the hall. That's when I realized he had been sitting in the shadows waiting to see if his initiative was going to be popular. Once he heard the first complaint, it became my CRM. That's hedging.
Another version of hedging is when a productive employee threatens to quit and the owner makes all kinds of concessions and promises to that employee to keep from being inconvenienced. Once the storm passes, the owner often regrets the concessions and forgets about the promises. The employee never forgets about the promises and remains a lukewarm contributor - a victim of hedging.
Hedging can be intentional - like in the first example where the leader chose to stick a surrogate out front as a human shield to take the arrows in case things go wrong rather than own the initiative. Another example of intentional hedging is when the leader is reluctant to commit to a plan or a direction. As an old professor of mine used to say, If we aim at nothing, we hit it 100% of the time! Perhaps fear of missing goals makes some leaders hesitant to define any.
Hedging can also derive from panic - like the second example. Owners convince themselves if a particular event comes to pass, they're screwed. In my experience those fears are often overstated.
Former NFL football coach Bum Phillips said about hall of fame coach, Don Shula, He can take his'n and beat your'n and he can take your'n and beat his'n. When I look back at the best CEOs and COOs I had the pleasure of working with, they never allowed themselves to believe that their organization depended exclusively on one or two people and wouldn't survive if those people went away. They were confident in the vision they had for the organization and they were confident they could surround themselves with people who shared the vision, even if other talented individuals decided to leave. Those panic-driven owners would often be better off if the under-committed but perceived-to-be-irreplaceable employee left and a fully committed replacement was identified, even if the replacement is less talented.
My favorite definition of leadership is, A leader is someone who has followers. Leaders have lots of styles - some are extroverted, some are introverted, some are charismatic, others not so much, etc. But one thing all leaders seem to have in common is that they know where they are going and they are able to communicate that vision to people who are happy to follow them toward that desired state.
It's fine to struggle creating the vision (or the next vision) - that's what strategic planning is all about. But once a set of goals and a path to achieve them is established, a leader is fully committed to the plan and enthusiastically promotes it. Or to put it the way a teacher at my middle school put it, This train don't go but one way, and it don't supply pencils.
Does this mean those stable, smaller companies are not as good as the fast-growing, constantly-changing companies? Of course not. Those owners have generally settled into a size that they are comfortable with, earn a living they are satisfied with, and don't want the headaches associated with growing any larger. I get it!
But I worked for an organization with a clear vision of what we were trying to become, a solid infrastructure to support a growing operation, and systems that enabled us to meet our goals. The companies I work with that say they want to grow but are having difficulty doing so sometimes struggle because the owner/leader has difficulty creating momentum. One behavior that I observe from those leaders that can't seem to get the organization to bust through to the next level is what I call hedging. Here's an example of hedging:
In one of my corporate roles, a division leader asked me to help him roll out a CRM. He had already picked-out the one he wanted - he just needed me to handle the logistics. I did all the set-up with the vendor, communicated with the sales team, and coordinated the implementation and training. Shortly after the roll-out, he stuck his head in my door and said, Your CRM ain't working. He'd overheard a sales rep complaining about it in the hall. That's when I realized he had been sitting in the shadows waiting to see if his initiative was going to be popular. Once he heard the first complaint, it became my CRM. That's hedging.
Another version of hedging is when a productive employee threatens to quit and the owner makes all kinds of concessions and promises to that employee to keep from being inconvenienced. Once the storm passes, the owner often regrets the concessions and forgets about the promises. The employee never forgets about the promises and remains a lukewarm contributor - a victim of hedging.
Hedging can be intentional - like in the first example where the leader chose to stick a surrogate out front as a human shield to take the arrows in case things go wrong rather than own the initiative. Another example of intentional hedging is when the leader is reluctant to commit to a plan or a direction. As an old professor of mine used to say, If we aim at nothing, we hit it 100% of the time! Perhaps fear of missing goals makes some leaders hesitant to define any.
Hedging can also derive from panic - like the second example. Owners convince themselves if a particular event comes to pass, they're screwed. In my experience those fears are often overstated.
Former NFL football coach Bum Phillips said about hall of fame coach, Don Shula, He can take his'n and beat your'n and he can take your'n and beat his'n. When I look back at the best CEOs and COOs I had the pleasure of working with, they never allowed themselves to believe that their organization depended exclusively on one or two people and wouldn't survive if those people went away. They were confident in the vision they had for the organization and they were confident they could surround themselves with people who shared the vision, even if other talented individuals decided to leave. Those panic-driven owners would often be better off if the under-committed but perceived-to-be-irreplaceable employee left and a fully committed replacement was identified, even if the replacement is less talented.
My favorite definition of leadership is, A leader is someone who has followers. Leaders have lots of styles - some are extroverted, some are introverted, some are charismatic, others not so much, etc. But one thing all leaders seem to have in common is that they know where they are going and they are able to communicate that vision to people who are happy to follow them toward that desired state.
It's fine to struggle creating the vision (or the next vision) - that's what strategic planning is all about. But once a set of goals and a path to achieve them is established, a leader is fully committed to the plan and enthusiastically promotes it. Or to put it the way a teacher at my middle school put it, This train don't go but one way, and it don't supply pencils.
Wednesday, August 3, 2016
Clock is Ticking on OT Compliance
Frequent readers of my blogs are aware that the Department of Labor recently issued new rules governing overtime that take effect December 1, 2016. Summer is flying by and by the time we get to Labor Day (September 5), you'll have less than 90 days to be compliant with these rules.
Here's a quick review. The salary test for most of the Fair Labor Standards Act exemptions has essentially doubled from $455 per week to $913 ($23,660 to $47,476 annually). This means unless your salaried employees spend most of their time in outside sales or meet one of the other rare exemptions, they are no longer eligible to be treated as exempt if their weekly salary is below $913 week, no matter what their duties are.
I've gotten quite a few calls asking for opinions about specific jobs in recent months, and have written a few opinion letters (each with the appropriate disclaimer that I am providing the opinion of an HR professional only and I am not an attorney nor pretending to be one). The interesting thing I find is that many of those jobs were improperly classified to begin with. They met the old salary test but failed the duties test.
It's the salary test that's been in the news this summer, but each job must also meet the standards of the duties test. And this seems to be the forgotten piece of the equation and has put many organizations at risk and they may not have known it.
So between now and December 1 make sure you've reviewed all the exempt positions in your organization to consider both the new salary test and the duties tests to make sure that you are compliant. That's the easy part. Converting everyone who needs to be reclassified to non-exempt - that's the hard part. So develop a strategy for what you're going to tell them and what is expected of them regarding the maintaining of time records, managing their hours, etc. going forward.
If you need some assistance from a third party to conduct the analysis or to communicate the message, feel free to call The Davidson Group.
Here's a quick review. The salary test for most of the Fair Labor Standards Act exemptions has essentially doubled from $455 per week to $913 ($23,660 to $47,476 annually). This means unless your salaried employees spend most of their time in outside sales or meet one of the other rare exemptions, they are no longer eligible to be treated as exempt if their weekly salary is below $913 week, no matter what their duties are.
I've gotten quite a few calls asking for opinions about specific jobs in recent months, and have written a few opinion letters (each with the appropriate disclaimer that I am providing the opinion of an HR professional only and I am not an attorney nor pretending to be one). The interesting thing I find is that many of those jobs were improperly classified to begin with. They met the old salary test but failed the duties test.
It's the salary test that's been in the news this summer, but each job must also meet the standards of the duties test. And this seems to be the forgotten piece of the equation and has put many organizations at risk and they may not have known it.
So between now and December 1 make sure you've reviewed all the exempt positions in your organization to consider both the new salary test and the duties tests to make sure that you are compliant. That's the easy part. Converting everyone who needs to be reclassified to non-exempt - that's the hard part. So develop a strategy for what you're going to tell them and what is expected of them regarding the maintaining of time records, managing their hours, etc. going forward.
If you need some assistance from a third party to conduct the analysis or to communicate the message, feel free to call The Davidson Group.
I've Told 'em a Thousand Times!
I was sitting in a conference room waiting on an executive meeting to get started when the CEO casually mentioned to a division manager that he'd noticed something at one of the jobs. The division manager said, I've told those guys a thousand times not to do that... The CEO replied, Have you ever actually done anything about it?
Company culture is 100% based on what behaviors the organization, through its leaders and its most engaged employees, rewards, condemns and condones. I once heard a speaker say that organizations will spit out a person who doesn't belong like sour milk. Management's challenge is to make sure that good workers are spitting out bad and not vice-versa!
If a company has built a solid safety culture, for example, it will self-police unsafe work practices. I was hanging lights in a warehouse facility when one of my co-workers climbed on a short stack of pallets. We hadn't really noticed any warehouse workers back there, but before he was able to stand up, there were five of that company's workers circling the pallets yelling at him to get down immediately and go get a ladder! In that organization, safe work practices were a way of life and anyone who risked their safety record, safety bonus, whatever, was held accountable and potentially spit out.
Contrast that with the culture at an organization that constantly struggles with its workers comp mod rate and can't seem to get its employees to wear their PPE. The owner at that organization probably tells his insurance company, I've told them a thousand times..
If there are no consequences to off-brand behavior (behavior you don't want) and no rewards for on-brand behavior (behavior you do want), then your culture is going to be what the front line workers want it be. Rewards can be tangible (cash, bonuses, gift cards, promotions, etc.) or they can be intangible (recognition, public or private words of thanks, pats on the back, etc.). Consequences can also be formal (write-ups, verbal warnings, etc.) or informal (the other workers get the bonuses, the preferred shifts, public recognition, etc.).
When I was an operations manager in a service industry, I knew that terminating a worker for consistently ignoring our standards would be inconvenient and I might end up having to run a route or cover a shift myself. But I was taught and have always believed that the decision to let that worker slide just so that I will not be inconvenienced is the fork in the trail that leads to mediocrity.
The real win occurs when your front line workers begin to self-police off-brand behaviors rather than waiting for management to do it. This happens when your organization has the right mix of rewards and consequences in place, the first and second tier leaders know you are committed to the brand, and build they their teams with people that are also committed to the brand. Do that and you'll find that you don't have to tell them a thousand times anymore.
Or, you could do try it the easy way and just say it for the one thousand and first time. Maybe if you say it a little louder this time.
Company culture is 100% based on what behaviors the organization, through its leaders and its most engaged employees, rewards, condemns and condones. I once heard a speaker say that organizations will spit out a person who doesn't belong like sour milk. Management's challenge is to make sure that good workers are spitting out bad and not vice-versa!
If a company has built a solid safety culture, for example, it will self-police unsafe work practices. I was hanging lights in a warehouse facility when one of my co-workers climbed on a short stack of pallets. We hadn't really noticed any warehouse workers back there, but before he was able to stand up, there were five of that company's workers circling the pallets yelling at him to get down immediately and go get a ladder! In that organization, safe work practices were a way of life and anyone who risked their safety record, safety bonus, whatever, was held accountable and potentially spit out.
Contrast that with the culture at an organization that constantly struggles with its workers comp mod rate and can't seem to get its employees to wear their PPE. The owner at that organization probably tells his insurance company, I've told them a thousand times..
If there are no consequences to off-brand behavior (behavior you don't want) and no rewards for on-brand behavior (behavior you do want), then your culture is going to be what the front line workers want it be. Rewards can be tangible (cash, bonuses, gift cards, promotions, etc.) or they can be intangible (recognition, public or private words of thanks, pats on the back, etc.). Consequences can also be formal (write-ups, verbal warnings, etc.) or informal (the other workers get the bonuses, the preferred shifts, public recognition, etc.).
When I was an operations manager in a service industry, I knew that terminating a worker for consistently ignoring our standards would be inconvenient and I might end up having to run a route or cover a shift myself. But I was taught and have always believed that the decision to let that worker slide just so that I will not be inconvenienced is the fork in the trail that leads to mediocrity.
The real win occurs when your front line workers begin to self-police off-brand behaviors rather than waiting for management to do it. This happens when your organization has the right mix of rewards and consequences in place, the first and second tier leaders know you are committed to the brand, and build they their teams with people that are also committed to the brand. Do that and you'll find that you don't have to tell them a thousand times anymore.
Or, you could do try it the easy way and just say it for the one thousand and first time. Maybe if you say it a little louder this time.
Wednesday, July 13, 2016
What Scale is Best for Performance Reviews?
Dr. Ed Cornelius, one of my business school professors, was adamant that a traditional performance review form should have an even-numbered scale. He said it didn't matter if you chose a 4-point, a 6-point, an 8-point or a 10-point scale. He felt a mid-point - like a 3 on a 5-point scale - was a magnet for managers, and an easy way for them to cop out. An even-numbered scale has no mid-point.
I experienced this cop out once when I received a 3 out of possible 5 for Profitability when my business unit had literally tripled its budgeted profit. When I asked my VP what it would take to earn a 4, he just laughed, but didn't change the rating. Dr. Cornelius was right - mid-points really are a magnet for managers who don't take the time to properly prepare a review.
Another problem with Likert Scales like these is that the ratings seem to always be grouped around the top 3 numbers. So if an organization uses a 10 point scale, there will be a few 8s, a lot of 9s and a few 10s. If they use a 6 point scale, the ratings will distribute across 4, 5 and 6 in the same way. Most people get a B, and B is generally the number right below the top number on the scale.
So which scale is best?
If the goal of your performance management program is to provide meaningful feedback that leads to performance improvement, links to compensation and supports career development and succession initiatives, then my answer is, None of the Above!
More and more organizations have decided that rating attributes or behaviors on a Likert Scale has little impact on performance and can even be demotivating when poorly executed. I never really took my review seriously with that company after the 3 for Profitability incident. Plus there were no obvious links between my ratings and my compensation, anyway. The review devolved into an exercise that I tolerated each year so my boss could check the box. That's why organizations are abandoning their traditional Likert Scale reviews and either replacing them with something better or not replacing them at all.
But if forced to use a Likert Scale, I'll defer to a 4-point scale - that way, when the scores are distributed across 2, 3 and 4, the lowest rating will be below the mid-point of the possible ratings. But I'll be kicking and screaming that there is a better way!
If you would like to discuss alternatives to the traditional review, contact me for a free consultation.
I experienced this cop out once when I received a 3 out of possible 5 for Profitability when my business unit had literally tripled its budgeted profit. When I asked my VP what it would take to earn a 4, he just laughed, but didn't change the rating. Dr. Cornelius was right - mid-points really are a magnet for managers who don't take the time to properly prepare a review.
Another problem with Likert Scales like these is that the ratings seem to always be grouped around the top 3 numbers. So if an organization uses a 10 point scale, there will be a few 8s, a lot of 9s and a few 10s. If they use a 6 point scale, the ratings will distribute across 4, 5 and 6 in the same way. Most people get a B, and B is generally the number right below the top number on the scale.
So which scale is best?
If the goal of your performance management program is to provide meaningful feedback that leads to performance improvement, links to compensation and supports career development and succession initiatives, then my answer is, None of the Above!
More and more organizations have decided that rating attributes or behaviors on a Likert Scale has little impact on performance and can even be demotivating when poorly executed. I never really took my review seriously with that company after the 3 for Profitability incident. Plus there were no obvious links between my ratings and my compensation, anyway. The review devolved into an exercise that I tolerated each year so my boss could check the box. That's why organizations are abandoning their traditional Likert Scale reviews and either replacing them with something better or not replacing them at all.
But if forced to use a Likert Scale, I'll defer to a 4-point scale - that way, when the scores are distributed across 2, 3 and 4, the lowest rating will be below the mid-point of the possible ratings. But I'll be kicking and screaming that there is a better way!
If you would like to discuss alternatives to the traditional review, contact me for a free consultation.
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