If there is anything the recession should have taught us, it’s that employers need to accurately measure employee performance and effectively communicate with employees on where they stand. In the years prior to 2009, companies may have been able to ignore waste or subpar performance. Today, waste is not an option, and any company that has employees needs to recognize the importance of performance management.
Reviews are important for employees, as they let them know how they are performing and what they need to do to both stay in the seat and grow in their career. Performance management provides a ‘snapshot’ of overall employee capability and measures critical competencies, which are crucial for developing workforce strategies that support business and employee growth.
Recently, I had a discussion with a colleague, Mark Fiala, the founder and president of Organizational Architecture. Mark has served as a strategic leader and organizational development expert for more than 15 years in senior-level Human Resources functions with both privately-held and public companies prior to founding his business in 2007.
Q: Why is it important to do performance reviews, even in smaller companies?
A: Most people know that providing feedback to employees is important. People want to know how they are doing. Performance reviews are good tools to ensure the activities of the staff are driving the business strategies, and they communicate to employee if they are meeting expectations or need to improve. Most companies are pretty good about providing feedback in some form at some point during the year that helps the employee know how they are doing.
Q: We know that performance feedback is important for employees. What is the value to the company?
A: It allows the company to manage talent more effectively because it enables management to see collectively who is a top performer, a low performer and in between. It is critical for helping management know if the activities of the staff are driving the business strategies. Additionally, if deficits in certain important areas are found, such as leadership or strategic thinking, the company can then prioritize and devise training and development activities to remedy this. It provides a basis for the company to remove or redeploy employees from the organization based on lack of desire or ability to perform job duties.
Q: How can the company use performance reviews to improve the organization?
A: Too many companies simply have managers deliver reviews, collect a signature, and then file the documents in the employees’ personnel files. Rather than filing the completed reviews, roll-up the ratings by department and performance indicators so that review and analysis can be done on a company-wide scale. Look for trends in achievement or lack thereof, and assess whether training or development can solve some of the deficiencies. Most importantly, identify employees with potential to be future leaders and give them opportunities to learn and grow. Doing this across departments and the business is the most effective way to take an “inventory” of your talent and manage it effectively.
Q: What other components are critical elements in an effective performance management system?
A: The first piece is to ensure you have current and accurate position descriptions because these describe in specific detail what the expectations of the job are, as well as the competencies or attributes needed to do the job effectively. The next piece is the performance review that is anchored to that position description. Develop an ongoing talent review process, whereby performance reviews are rolled-up and analyzed on a macro-level, to see who is a future leader and who is struggling. Finally, the proper training and development to give people the skills they need to be more effective or develop their capabilities to be better is the natural outgrowth of your performance management system.
Even if you have completed your annual review cycle, don’t miss the opportunity to use the data to do some analysis on employee performance and capabilities. This will help to make sure you have the talent you need to drive your business strategies. For more information on Organizational Architecture and Mark Fiala, please visit their website at www.oahumanresources.com.
This article was brought to you by Chris Carmon, president of The Carmon Group. You can find out more about The Carmon Group at www.carmongroup.com.
When Marty Field purchased a money-leaking Chicago packaging company about a decade ago, he didn’t want excuses. In early production meetings, he learned the company, which was operating at 42 percent efficiency, was late delivering to more than half of its customers — because that’s the way it’d always been.
That wasn’t going to cut it.
“If we could create a manufacturing facility that would always be on time and if we were to meet every customer’s request, that would be a wonderful way to create sales,” says Field, the president of what is now Field Packaging Group LLC. “We couldn’t do that because we didn’t have an efficient manufacturing facility. That’s when we created our efficiency bonus program.”
He told his 80 employees they could receive monthly performance bonuses for hitting certain ranges of labor cost and efficiency, as well as delivering on time at least 98 percent of the time. They’d earn $50 for reaching 70 percent efficiency and an extra $10 for every percent over that — minus any deductions for quality incidents.
But first, Field had to define efficiency.
“The key was to find a way to accurately measure efficiencies and then determine what reasonable industry standard is,” says Field, who purchased industry-specific software loaded with standard machine setup times and run speeds. “Then communicate to your employees what’s expected of them, monitor their performance and then, at the end of the month, communicate to them how they performed.”
For transparency, Field installed chalkboards on each machine to track efficiency. Now, if the previous day’s numbers aren’t posted by noon, employees come looking for reports.
Sure, that breeds some peer pressure, but Field sees it as motivation.
“An awful lot of the increased efficiency is created internally by [employees] themselves,” he says. “If a crew is waiting for the paper, the guy in charge of the paper has a lot of pressure on him through his fellow employees. Peer pressure has caused people to act as a team. They’re able to perform together and to perform a lot better.”
Field brings employees together once a month to recap performance and other influencing factors, like the economy and competition. They also go over quality issues, discussing improvement opportunities.
All employees — from the receptionist to the customer service rep — attend those meetings and participate in the incentive program. Employees need to understand the connectivity of how each role must seamlessly set up the next to achieve overall success.
“Without teamwork from everybody, we won’t be able to get the efficiency,” Field says. “If the order goes out to the factory and all the information is accurate and provided, that saves time from a crew having to try to figure out what they’re supposed to do. If the people who are supposed to provide the tooling are not efficient in what they do, then the crew is waiting for the tooling.
“Everybody in the whole company affects efficiency, and everybody in the whole company should be rewarded for it.”
The reward itself is motivation enough — with some employees earning monthly bonuses of $220 — but it’s also the concept. Employees know they have a hand in controlling not just their bonus but the company’s overall success. Employees took the reins and led Field Packaging to 2009 revenue of $40 million and are still improving efficiency.
“They really are self-motivated, and it’s not only for the bonus,” Field says. “They need to see that the company is successful, especially these days where there’s so much unemployment.
“They have a greater desire to perform better because we’re creating more business. The more business we have means more work for everybody. People have really bought in to it, because it’s good for the company and it’s good for them.”
How to reach: Field Packaging Group LLC, (708) 594-5260 or www.fieldpackaginggroup.com
Never say no again
There’s one word Marty Field doesn’t want to hear.
“If a customer calls and has an unreasonable request for a delivery, a customer service person is not allowed to say no,” says Field, president of Field Packaging Group LLC. “We have to find a way to get it done.”
It was bad enough that late deliveries were the norm when Field bought the company. He envisioned the other extreme where they’d not only be on time but meet any request.
There are a few exceptions, of course — like acts of God or unavailable tooling. Aside from those, Field never wants to be in a position where he has to say no.
“The more efficient we are, the more capacity we have,” he says. “The more capacity we have, the more flexibility we have to be able to take care of customers’ requests. The more customer requests we have, the more successful we’re going to be.”
One machine used to take a half-hour to set up and another hour to run. Now, because Field’s employees understand efficiency goals and use teamwork to achieve them, they’ve cut out dead time. They can set up the machine in five minutes and run it in 20.
“We have put ourselves in a position where we always will have more capacity than we have business,” Field says. “We should never be in a spot where we can’t say yes.”