How many of you can take your performance appraisal form in your left hand, and your mission statement in your right hand, and walk up to one of your employees and say, ‘Harry, look! Do you see where the words in the performance appraisal and the words in the mission statement are the same words?

Halfway through my speech I asked the group three questions. I told them to raise their hands high and then look around the Waldorf’s ballroom to see how many of their colleagues responded the same way they had. First question: “How many of your companies have a formal performance appraisal system?” At least 95 per cent of the 600 hands went up. “Second question,” I said. “How many of your companies have a formal, written-down-on-paper, vision and values or mission statement?” All but perhaps a dozen hands rose in the air.“Final question,” I said. “How many of you can take your performance appraisal form your left hand, and your mission statement in your right hand, and walk up to one of your employees and say, ‘Harry, look! Do you see where the words in the performance appraisal and the words in the mission statement are the same words?’ If you can, raise your hand!” Maybe nine hands went up. The point is obvious. If employees see no connection between what the organization trumpets as its mission and what they’re held accountable for in their performance appraisal, they will become cynical about the importance of the stated mission. Executives expend enormous intellectual and emotional energy developing a sincere statement of the company’s mission or values that fully captures and accurately expresses what these top dogs consider to be truly important. But too often the only result is that these noble words are engraved on a brass plaque that decorates the lobby. Employees then see the mission statement as merely another feel-good corporate exercise with little impact on day-to-day business. But a good performance appraisal system can tightly link corporate strategy — mission and vision and values — with every individual’s day-to day performance. Here’s the most straightforward way to link your mission statement and your performance appraisal. Add one more final section to your existing form. This final section has one question: “In the space below, identify the three things this individual did over the past 12 months to ______________write your mission statement here___________:”

Then provide space for the manager to write down exactly three things that the employee did that helped further the organization’s mission. Putting that at the end of every appraisal will focus everyone’s attention on what is genuinely important. And it will force managers and employees alike to reflect on what they’re doing day-to-day helps further the overall mission.

About the Author
Dick Grote is one of America’s most successful and best-known authors, consultants, and business keynote speakers on employee performance management consulting. He is the Chairman and CEO of Grote Consulting Corporation - http://www.groteconsulting.com

Be Passionate. Everybody will look to you for their marching orders. Be uncompromising in sending a consistent message: Change is a fact of life, it’s not going to go away, and efforts to resist change and maintain things the way they used to be is not only futile but disloyal.

Tell the Truth. Change frequently means that some people won’t work here any more. It means that everybody’s job will change and we’ll all face doing even more with even less. Don’t sugarcoat reality. If there will be downsizings and rightsizings, tell people that. (And when the layoffs are done, tell them that, too.)

Keep your Keepers. There’s not one manager in your whole company who can’t tell you who her genuine whizzes and virtuosos are. They are the people that you most need to keep. They’re also the ones who can effortlessly find new opportunities. Don’t let them get away! Make sure that everyone in this small group knows the organization sees them as part of the future and the company is committed to keeping them.

Accelerate the Process. Culture change can’t proceed at a snail’s pace and succeed. High-velocity change is mandatory. Decide what needs to be done and do it all at once. Successful change efforts make people’s necks snap; it leaves skid marks. Remember — if you’re going to dock a dog’s tail, it’s no kindness to the dog to do it an inch at a time.

About the Author
Dick Grote is one of America’s most successful and best-known authors, employee performance management consultants, and business keynote speakers. He is the Chairman and CEO of Grote Consulting Corporation - http://www.groteconsulting.com

If your employee performance management system is not effective – in other words, your managers aren’t meeting their responsibility of getting their employee performance appraisals written, approved and delivered on time - here’s the first question to ask: What happens to the manager who doesn’t turn in all of his appraisals on time?

Too often it turns out that the answer is “Nothing,” or at least nothing sufficiently disagreeable to get the manager to act. Managers often discover that it’s easier to put up with toothless gripes from the personnel department about not getting employee performance appraisals done than actually evaluating subordinates. As a result, appraisals get pushed aside so that “real work” can be done, and your employee performance management structure is broken.

Initiating Hardball Consequences
Make sure that there are some real consequences for not getting employee performance appraisals in on time. For example, withholding salary increases until paperwork is up-to-date creates a powerful incentive for getting them done on time. This is particularly true if the human resources department has the clout to refuse making salary increases retroactive to rescue managers who just didn’t get around to submitting them on time.

No manager wants to be in the position of explaining a subordinate’s delayed salary increase to them – especially if the boost in pay is being held up simply because the manager failed to submit their employee performance appraisal on time. This strategy is called “building accountability.” It’s a tough-minded approach, but all you’re doing is insisting that managers play by the rules.

Establishing Deadlines
A gentler measure is simply to make sure that managers know exactly what they’re supposed to do, and when they’re supposed to do it with a checklist that provides key dates of the employee performance management cycle. And make it easy for them to do what you want – make sure forms and procedural instructions are readily available, and there’s someone on hand to answer the inevitable questions that arise.

Both approaches establish shared responsibilities. Not only are line managers required to get their employee performance appraisals written, but HR must make sure the employee performance management process is models for best practices. Forms should reflect the reality of people’s jobs; managers must be able to assess all of the subtle elements of both results and behaviors; training and other support must be available in a just-in-time basis; and what is expected should be made crystal clear. Without all of these elements, HR bears the lion’s share of the responsibility for not creating a system that encourages employee performance management excellence.

Sharing the Honey
But consequences aren’t the only area where HR drops the ball. We’ve talked about arranging negative consequences for those managers who don’t do what’s expected. But remember — honey influences behavior better than vinegar does. How often does HR provide positive consequences to managers who are doing a good job of meeting their employee performance appraisal responsibilities?

A simple email from an HR rep to a supervisor saying that in reviewing the employee performance appraisals she wrote, he was impressed by how seriously she took the responsibility and the fact that they were all submitted before the deadline. Copy her boss on the email, too.

Providing Gentle Reminders
It’s important to have some mechanism to remind managers when key dates are approaching. That’s one of the great advantages of online systems. Well-designed online systems greatly complement employee performance management efforts, providing managers with at-a-glance information about tasks to be completed.

For example, a dashboard screen can let them know which employee performance appraisals need to be written and when they’re due, which appraisals written by subordinate managers have been submitted and are awaiting their review and approval, and which subordinates need to submit self-appraisals or sign off after an evaluation has been written and discussed.

An online system can be set up to automatically send managers (and their subordinates) regular reminders every time an action date is approaching and email red-flag notifications if a deadline is ever missed. Finally, a good online system can track the current status of employee performance appraisal completions for different organizational units. Having this information will allow you to let the head of the sales department know that the completion percentage in his department is only 84 percent, while manufacturing and accounting are at the 100 percent level.

Lighting A Little Fire
Though HR’s role in creating an effective employee performance management system. Senior managers also own some responsibility to make sure the company’s expectations for employee performance appraisal quality and timeliness are followed.

Every senior manager should review each appraisal written by a subordinate manager before that manager reviews it with the employee. This one-over-one review procedure will ensure a level playing field, since the senior manager can make sure that all of his juniors are applying similar standards and expectations to their subordinates. He also will learn who’s taking the responsibilities of employee talent management seriously as he reviews the appraisals and sees how honestly they’re written.

Remembering the Power of Shame
Shame is a powerful motivator that is often overlooked. There’s nothing wrong with shaming managers into doing what they’re supposed to do. ]

How do you do it? The easiest way to make shame work for you is to ask a senior executive if he’d like to be updated on the status of employee performance appraisal completions – he will invariably say yes. (Senior executives always want to know the status of everything). That’s your license to report on exactly who has their employee performance appraisals in on time and who’s not performing.

Provide a short report beginning, “As you requested, I have listed below the current status of appraisal completions,” followed by nothing but two columns of names — one labeled “On time” and the other labeled “Overdue.” Send copies of your report to everyone on both lists. You can probably count on an immediate reaction from those managers on the overdue list to finish their appraisals and move to the list of good guys.

Again, an online system can provide executives with up-to-the-minute information about the status of all employee performance management activities without HR having to feed it to them. And senior managers can have a powerful influence of creating the environment where one hundred percent appraisal completions is the norm.

Creating Fool-Proof Accountability
At one major oil company, the CEO and his VP of HR developed an employee performance appraisal procedure that was a model of simplicity: a requirement that each manager discuss 13 open-ended questions about performance with each subordinate in March of each year.

The only writing the system required was a memo from each manager to the CEO every year no later than March 31. The memo indicates whether or not the manager had conducted all his discussions – if the discussions had not been conducted, the memo needed to explain why. And the reason had better be good, the VP-HR explained, because on April 1 the CEO picks up the phone and starts calling. “Why didn’t you do what I asked you to do?” he asks each manager who didn’t complete the performance-discussion assignment. As the VP-HR explained with a sly smile, “You don’t ever want to get that call from Roy.”

Employee performance management is a necessary tool in making sure your company’s employees are putting their best foot forward. Your managers are the catalyst for this, and they need both incentives and consequences to make sure the job’s getting done. Having a checks and balances system in place helps keep the process focused and effective.

About Dick Grote
Dick Grote has been an employee performance management consultant for almost thirty years, specializing exclusively in the field of employee performance appraisal. As a consultant, he has created employee performance management systems for several hundred of the world’s best known and most respected companies, including Texas Instruments, JCPenney, Miller Brewing Company, American Airlines, Macy’s, Raytheon, Burlington Northern Santa Fe Railroad, and Herman Miller. His company, Grote Consulting, specializes in employee performance appraisal, employee improvement and talent management. For more information about Dick Grote and Grote Consulting, visit: http://www.groteconsulting.com

Performance Appraisal Rating Labels: What’s Best, What’s Worst? Part 2

Last time I talked about the survey I did of 84 HR directors asking them their feelings about what the best and worst terms for performance should be used on a performance appraisal form. Everybody agreed the Unacceptable was as bad as it gets. The problem is, “Unacceptable” is such a derogatory label that probably no manager would ever use it. My advice—save the Unacceptable term for describing the quality of Louie’s performance in the narrative section, but make Unsatisfactory the bottom rating label.

Unlike the bottom end of the scale where there was almost universal agreement on the term to use, the top end of the performance ladder presented a virtual tie. The three choices I offered for best-of-breed performance were Distinguished, Outstanding, and Superior.

The results? Outstanding garnered 29 of 84 votes to win the top position, but
Superior closely followed with 28. Distinguished, with 27 votes, came in last. A virtual dead tie. Essentially, respondents found no difference among the three contenders for the label describing genuinely exemplary performance. “We struggle with this each time we revise the system!” reported Debbie Bridge of the American College of Emergency Physicians. And Mary Stanley, Director of Human Resources for COSI Columbus, the Columbus, Ohio science museum, admitted the struggle that many respondents reported in saying that while Outstanding seemed to be the highest of the three terms, she would personally prefer to use Distinguished for performance appraisal purposes.

Don’t ignore the middle rating

While there’s universal agreement that Unacceptable is the nastiest term for the worst performance, and while it’s pay-your-money, take-your-choice for the highest performance designator, the question most organizations don’t spend enough time discussing is what to call the middle rating—the place where most people actually end up. Few of us are Distinguished; fewer still are Unacceptable. Most of us perform at the middle, fully successful level, and Fully Successful is an ideal designator for the middle position.

Here’s another jewel of a designator: Fort Worth’s Alcon Laboratories calls its middle performance appraisal position GSP—Good Solid Performer. And one of America’s largest manufacturers of large household appliances calls the middle rating in its five-point system: Strong Results. Who could object to being considered a good solid performer or complain about being seen as producing strong results?

No one likes to be considered mediocre, but most designators used for the middle position give that lackluster impression: Competent or Acceptable or Meets Expectations.

Abolish these mediocrities! I remember clearly the pain in a client CEO’s voice as he described how 19 years before he had received a performance appraisal rating of, “Wholly Adequate.” No one wants to be labeled as merely adequate or average, but too often the term used to designate the middle position gives that impression. Find a rating label that connotes real success, and you’ll give the majority of appraisees something to feel proud of.

About the Author
Dick Grote is one of America’s most successful and best-known authors, consultants, and business keynote speakers on employee performance improvement. He is the Chairman and CEO of Grote Consulting Corporation - http://www.groteconsulting.com

What’s the worst that performance can be? What is the absolute bottom of the barrel?

Would you label performance that is just totally atrocious Unsatisfactory or is it Unacceptable? Is there something even lower on the scale? What about Marginal? Is that better or worse than Needs Improvement? (Sorry — “Stinky” just can’t be used on a corporate performance evaluation form, as accurate as the term may be.)

And what should absolutely terrific performance be labeled? Is Distinguished a better label than Outstanding, or is Superior actually superior?

Whenever a company constructs a new employee performance appraisal system, those questions have to be answered. And there is no issue that provokes more hot debates than the one about the rating labels that should be used on the performance appraisal form for various levels of performance.

So I conducted a national survey of 151 HR executives in public and private organizations across the country. I got 84 usable responses.

I asked them to give me their reactions about the best and the worst designator to be used on a performance appraisal form. For the best or highest level of performance, I gave them three alternatives to choose among: Distinguished, Outstanding, and Superior. For the lowest level of performance, the choices were Unacceptable, Unsatisfactory, and Marginal.

In each case, respondents were asked: “Of the following three descriptions of excellent performance, which term strikes you as the best or highest level? And of these three, which is the worst or lowest level?”

A clear winner among losers
There was no question among the HR execs surveyed about what the best term for the worst performance was. Unacceptable ran away with the vote, with 60 out of 84 respondents—just over 70%—agreeing that performance can’t get any worse than unacceptable. But several respondents cringed in choosing the term unacceptable as the lowest level to put on a performance appraisal form. Karen Watney, a manager with the State of Kansas, put it bluntly: “Unacceptable. That’s really bad. The person should be terminated if their work is unacceptable.”

Unsatisfactory was a distant runner-up in the poor-performance sweepstakes, gathering 21 votes or exactly a quarter of the responses. And Marginal just barely managed to get three votes. When it comes to labeling bad performance, Unacceptable is the clear choice.

But here’s the problem. “Unacceptable” is so bad that it’s likely that no manager would ever use it to describe the performance of anyone other than a corporate Charles Manson. Therefore, my feeling is to save the “unacceptable” term for the narrative, and use Unsatisfactory as the bottom anchor for the appraisal scale.

And what’s the best? Stay tuned—the results of the survey will be in the next blog entry.

You can view Part 2 of the this article now.

About the Author
Dick Grote is one of America’s most successful and best-known authors, consultants, and business keynote speakers on performance management. He is the Chairman and CEO of Grote Consulting Corporation - http://www.groteconsulting.com

For seventy-five years, American organizations have used a fairly standardized procedure to handle familiar personnel problems such as absenteeism, poor performance, and other misconduct. This approach, usually called “progressive discipline,” provides for an increasingly serious series of penalties — reprimands, warnings, suspensions without pay — when employees fall out of step with the organization’s expectations. When problems arise, the job of the manager is to find the punishment that fits the crime.

But today, a growing number of companies are moving away from using a criminal-justice mentality for employee performance improvement through corrective action. They are abandoning traditional approaches that focus exclusively on punishment. Instead, they are adopting an approach of accountability - employees with unfavorable performance, conduct or attendance issues are required to take personal responsibility for their choice of behavior.

Discipline and Recognition One immediate difference is that traditional, punishment-based discipline systems ignore the great majority of people who never create disciplinary problems. In a non-punitive, “Discipline Without Punishment” approach, there’s a new step added to the process — a positive contact. Just as the policy is expected to resolve employee problems when they arise, it also makes clear that supervisors are expected to recognize employees when they perform well.

Recognizing good performance is no longer just good advice handed out in a management training class. Now it’s a formal policy requirement, a step of the organization’s overall discipline procedure.

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In America’s best-run and most-admired organizations, employee performance appraisal is a vital and vigorous management tool. No other management process has as much influence on individuals’ careers and work lives.

Used well, employee performance appraisal is the most powerful instrument that organizations have to mobilize the energy of every employee in the enterprise toward the achievement of strategic goals. Employee performance appraisal can focus each person’s attention on the company’s mission, vision and values. And ideally, the process can answer the two fundamental questions that every single person in the organization wants the answers to: What do you expect of me? And How am I doing?

But most folks scoff at the idea that there might be a perfect system for doing employee performance appraisal. They think that since their organization is “unique,” then their system for analyzing employee performance must be unique, too. How foolish.

Don’t scoff — there is an ideal method for the assessment process. In organizations that take employee performance appraisal seriously and use the process well, the system functions as an on-going process – not merely an annual event – by following a four-phase model.

Phase 1 — Employee Performance Planning
At the beginning of the year, the manager meets with each person for discussion on the planning piece of the employee performance appraisal process. In this hour-long session they discuss the “how” and the “what” of the job:

How the person will do the job (the behaviors and competencies expected of the company’s members), and

What results the person will achieve over the next twelve months (the key responsibilities of the person’s job and the goals and projects the person will work on).

They also discuss the individual’s development plans. This discussion immediately generates improved employee performance because people know exactly what’s expected of them. And as the manager, you have just earned the right to hold people accountable at the end of the year by making your expectations of them clear from the start.

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First objection—it’s arbitrary. Well certainly using a predetermined distribution (like top 20 percent, vital 70 percent, and bottom 10 percent) is arbitrary—and that’s its great value. Using fixed and arbitrary percentages forces managers to make tough decisions about who’s an A player, who’s not, and why not. Otherwise, as happens in too many performance-appraisal systems, everyone gets rated superior, managers never have to have tough conversations about performance, and the organization slowly slouches toward mediocrity. Restricting the number that can fall into the A category, and demanding that managers identify a bottom 10 percent who, relative to their peers, are weaker performers, ensures that top talent is recognized and that those bringing up the rear have no false sense of security.

Of course, if you ranked a hundred people using a 20-70-10 process, #21 would be much closer in performance to #20 than she is to #90. That’s why companies that use the forced-ranking process tailor the actions they take with individuals to the individuals themselves, not just to which ranking bucket the person ended up. When I write scripts for managers to use in letting people know how they came out in their company’s A, B, and C player analysis, I develop five scripts, not just three: for the solid A player, the B+ (the #21 guy and his counterparts), the genuine B, the B- (the ones who barely avoided falling into the C category), and finally the true C level performer.

But it is important to use buckets in making relative comparisons (e.g., top 20, vital 70, bottom 10; or quartiling, or some similar scheme). Never ask managers to precisely rank their people in exact performance order. It’s impossible to distinguish between #20 and #21, and the totem-pole approach (who’s #1, who’s #2, and so on down until the last and worst performer is fingered) generates highly valid concerns about accuracy.

Yes, forced ranking is an imperfect process, as is any process in which fallible human beings must make tough decisions in an arena where solid, unarguable, quantitative data don’t exist. The forced-ranking process requires the exercise of honed, objective managerial judgment in a situation where information is always incomplete and the facts are sometimes contradictory. But managers make decisions based on limited data all the time—which projects to fund, which to shelve; when to react swiftly to a competitor’s move, when to let time take its course. Just because a decision isn’t based on countable units doesn’t mean it isn’t objective. Employee ranking is not the same as solving an algebra problem—it can’t be reduced to a mathematical formula.

First, we need to forget about 360-degree feedback, at least for performance-appraisal purposes. Certainly, 360-degree feedback may have a place—a minor place—in helping people get a better understanding of their development needs. But it has no place in conventional performance appraisal. To allow anonymous employee assessments into part of the formal evaluation tool does more than just encourage biased and self-serving responses—it poisons the entire well in terms of the original objective. It is particularly inappropriate to tie pay, promotions, development opportunities, and terminations—the things that a strong appraisal system controls—to anonymously provided assessments. The issue is not whether underlings and co-workers can provide relevant information. They can. The issue is whether they should be allowed to do so in a context where they cannot be held accountable.

What we need to do is add some element of forced ranking to our performance-management processes. Forced ranking requires senior managers to look over the organizational talent pool and, based on their performance and potential, identify the organization’s top talent (the A players), the solid-performing middle (the B players), and those bringing up the rear (the C players). Forced ranking can drive the truth into performance management, since not only does it force managers to identify the organization’s most and least talented members (and in the process provide the organization with useful data on managers’ ability to spot and champion talent), it offers independent verification of performance-appraisal data, something everyone agrees is important.

Conventional performance appraisal involves an absolute comparison — how well did the individual perform against the goals and key job responsibilities and competencies that were agreed at the start of the year? Forced ranking requires a relative comparison—how well did this individual perform compared with how well other people in similar jobs performed? Both questions are important to ask to get a complete view of a person’s performance.

Sure, there are challenges involved in implementing a forced-ranking system. Some employees and some managers, particularly those with low standards, don’t like it. And it’s inevitable that some mistakes will arise—you’re bound to miss a few late bloomers and overrate a few glib duds.

But combining a forced-ranking system with a conventional performance-appraisal system, with senior managers holding their juniors accountable for excellence in performance management (just as they hold them accountable for excellence in all the other parts of their jobs), will produce an organizational climate in which people know what’s expected of them, are held to high standards, and know exactly how well they’re doing. Sounds like a great place to work!

Dick Grote is one of America’s most successful and best-known authors, consultants, and business keynote speakers on performance management. He is the Chairman and CEO of Grote Consulting Corporation.

Here are some ways we can mend it. First, companies must raise their expectations about the quality of appraisal execution, setting their minimum standard for getting appraisals done at 100 percent uncomplaining compliance. If a manager’s sluggishness in completing an appraisal means that a subordinate’s merit increase is delayed, HR shouldn’t let him off the hook by automatically making the increase retroactive. I feel he should take the heat of explaining to Sally why her slothfulness in getting his appraisal written caused her to miss out on a salary increase for a pay period or two. That’ll cause appraisals to be delivered on time!

Second, top executives must threaten significant consequences if managers don’t take the process seriously. Hunt Oil’s performance-appraisal process, for example, requires every manager to discuss thirteen open-ended performance-related questions with each subordinate every March. The only writing the system requires is a memo each manager has to send to CEO Ray Hunt by March 31, saying either that he has conducted all her discussions, or that he hadn’t done so along with an explanation of the reason why. And that explanation had better be good, since on April 1 Hunt picks up the phone and starts calling. As Hunt’s VP of HR explained, “You don’t want to get that call from Ray Hunt.”

Another great way to build accountability is to insist that senior managers review and sign off on all performance appraisals before the supervisor who wrote them can sit down and discuss them with her subordinates. This review requirement not only helps assure timely completions—it boosts inter-rater reliability by making sure that people who perform at the same level of quality will get the same appraisal rating, whether the appraisal is written by manager A, manager B, or manager C.

Most important, the reviewer—the senior manager—can guarantee that tough-minded, demanding performance standards are set. Some managers (like some college professors) are more lenient than others. The reviewer can make sure that the standards of the department’s toughest appraiser set the bar for everybody else. That’s the best way to counteract the Lake Wobegon effect, in which everyone is rated as Exceeds Expectations.