“Evaluations offer little insight to workers, survey finds,” reads the headline (1) in a report on a survey of 1190 US workers by Watson Wyatt, a human resources consulting firm. “Only 30 percent of workers say their company’s evaluation process helps them improve their performance, and less than 40 percent say the process provides clear goals or feedback…It’s an exercise that may have a negative effect on companies’ bottom lines. In a previous study, Watson Wyatt found that firms that clearly lay out workers’ responsibilities and their connection to larger company goals…perform better overall…’four times the total return to shareholders.'”
This study confirms what great managers know: People need clear direction tied to the organizational goals to perform well. Too often companies, driven by legal imperatives, resort to putting everything into a “job description” that becomes obsolete the moment it hits paper. Many evaluation systems try to quantify un-quantifiable ‘attitudes’ or create hopelessly muddled descriptions of ‘competencies.’
The solution begins with a robust strategic plan for the business, government or nonprofit organization. The plan should be based on the long-term vision AND the more immediate mission of the company. The strategic plan links each employee to that mission:
* The company sets its high level goals and concrete objectives.
* Objectives describe results that move the mission forward.
* Departments create aligned plans to achieve a portion of the overall plan.
* Cascading this process continues until it reaches the individual employee.
Each manager and work group creates a very actionable plan tied directly to the objectives. Each manager discusses with each team member how his or her specific job and assignments help fulfill the mission. By the time the process is complete, every individual has an explicit knowledge of how his or her work contributes to organizational success. The manager and employee develop an Individual Performance Plan with measurable results in two areas, ongoing responsibility and growth. Then the manager and employee discuss progress against this plan (at appropriate, regular intervals) so feedback is quick enough to reinforce desired behavior and take action on undesirable performance.
In their breakthrough study, First Break all the Rules, (2) Marcus Buckingham and Curt Coffman found that great managers do a formal performance review quarterly. In fact, the “annual” evaluation becomes just another quarterly review. This approach provides:
* continuous feedback
* concrete performance and improvement
* results integrated with the company’s needs
* individual awareness of what he or she should be doing at any moment to accomplish the mission.
When examiners for the US Malcolm Baldrige National Quality Award interview companies, they ask almost everyone “What is your company’s mission and what is your role in fulfilling it?” World-class companies invariably have a workforce that can answer this question specifically. People know what the company is trying to accomplish and what they contribute.
The tie between individual performance and mission is NOT just a ‘nice to have.’ The Gallup Organization published their latest study in 2006 based on millions of employees’ survey answers and analysis of observed business results in hundreds of companies around the world. When they asked people to rate how much they identified with the statement, ‘The mission of my company makes me feel important’ they found that “the top quartile…average from 5 to 15 percent higher profitability than bottom-quartile units. Mission-driven workgroups suffer 30 to 50 percent fewer accidents, and have 15 to 30 percent lower turnover.” They concluded that it was “as if the employee can’t energize himself to do all he could without knowing how his job fits into the grand scheme of things…For reasons that transcend the physical needs fulfilled by earning a living, [the employee] looks for her contribution to a higher purpose.”(3)
Leaders who want their organizations to be successful are converting static job descriptions and valueless annual performance evaluations into dynamic Individual Performance Plans and continuous review and improvement. Everyone is tied to the mission and clear about what they need to do to accomplish bottom line goals. It’s no wonder the data show quadrupled return to the shareholders and better morale and productivity among the workers who focus on the mission. (1) Any company can get these results if they begin with a strong, mission-driven strategic plan and cascade it to everyone to execute. The plan is only as good as its execution and execution happens at the individual level where people are fully engaged with the mission.
(1) The Miami Herald, Business Monday, page 16, Workplace column, Andrea Coombes, May 10, 2004
(2) Marcus Buckingham and Curt Coffman, First Break all the Rules: What the World’s Greatest Managers Do Differently, Simon and Schuster, 1999
(3) 12: The Elements of Great Managing, Rodd Wagner and James Harter, Gallup Press, 2006