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| Improving Employee Performance - 5 Steps That Work for Every Employee |
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“At the present time, employee costs generally account for approximately 70% of business operating expenses and are responsible for 85% of the organization’s ability to execute against the strategy.” People are the greatest lever for performance and productivity today. Yet, less than 12% of organizations globally have performance management systems that are viewed as effective. It is no wonder the Harvard Business Review studies report organizational performance to be 63% of potential at best. This is the new imperative – the greatest potential for increased execution, productivity, and ultimately financial performance is with how your people perform. Without people performance, a brilliant strategy is just an idea – it is your people that make it real. The real question is how to close the people performance gap to build organizational results. The world has changed dramatically in the past twenty-five years. The source of business performance is soundly in the realm of intangible assets (as shown in the graph below). Figure 1: Value Creation in the US Market  The study (Bersin &Associate 2003) outlined that the greatest value creation (financially and otherwise) has switched from physical assets to intangible assets. Under intangible assets are innovation, technologies, and organization design – and people. The catch is that people are needed to drive any of the other intangible asset value creation. The simple fact is that organizations (regardless of size or industry) need people to perform.Recent studies show that only 12% of organizations globally (McKinsey & Company) have effectively working performance management systems. In research by the Center for Creative Leadership, employees report that the lack of performance feedback is their single greatest criticism of their managers and leaders. Recently in our work, employees in a national organization (that is “focused on improving engagement and productivity”) report that most have not had a performance evaluation in at least four years. Such comments are not unusual to hear. Interestingly, regular feedback on performance is one of the top three drivers of employee engagement. Execution is the key determinant of organizational success and, arguably, the single most important component of execution is the performance of people. With productivity sliding and our competitive advantage being walloped in the global market, the only real way we can improve our positioning is to do a better job at people performance management. We can and need to do better as leaders and organizations to support our people to perform at their best. Our philosophy is based on the premise that most people want to contribute in a meaningful way to their organization’s success. A Towers Watson engagement study in 2010 showed that only about 7% of Canadian employees were actively disengaged and a significant 70% can – and want – to perform at higher levels. Only about 3% of employees are top performers and these few contribute (based on the complexity of their job) anywhere from 50% to 1000% more than their lower performing counterparts. As leaders, we need to look internally to how we can support our people work and perform at their best. The greatest likelihood for increases to GDP and overall citizen prosperity lies in our ability to improve productivity through better people performance. What’s more enticing is that jobs (again, depending upon the complexity of the role) can show improvements of 15% to 46% in output. So, where do you start? Rather than making it difficult, we looked at starting with making a difference at the grassroots level – one employee at a time. At this level, businesses with as few as 5 employees to large firms with more than 1000 employees can make a real difference. We have to come to grips first with the reason performance management is not working. First and foremost, supervisors are simply not investing the time in providing the feedback. As an employee, how can I perform better when I am never provided a baseline or perspective in terms of my current performance? Managers and supervisors (who deliver this integral link between strategy and execution) say they do not have time – they realize the importance but are bogged down in paperwork, meetings, and doing more actual project work due to downsizing. The second issue with performance management is that we presently measure performance based on scales that make no sense against criteria outlined in our job description. Job descriptions are great for providing clarity as to what people need to do – they do little for indicating the actions and behaviors as to how to perform well in the job (what really matters). Finally, even when managers and supervisors provide performance feedback the scores are often flawed subject to recentness bias (how someone performed in the two months preceding the review), rushed (with many reviews left to the last minute, managers often just go through the motions), and incremental expectations (if a performance was rated as superior last year – a stupid rating – the expectation is that the rating needs to be superior again this year or the review meeting will become a defensive confrontation). So, for our single most critical business driver (people performance) our approach now is to not do it, rush it through, based it on criteria that don’t really matter for improvement, or are not actually true. No wonder we are miring in continually declining engagement and organizational performance. There have been some improvements with goal-based assessment and KPI (key performance indicators) linkage but still the connection is not made completely with the strategy of the organization so no real improvement is seen. There is a better way and here are five simply steps we encourage to make a distinct investment in improving employee performance:
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