Chapter 4, Performance Management: Developing Your Human Assets
"The best indicator of the depth and quality of talent in your organization is whether you can grow your own stars from within – not whether you can buy talented outsiders in a crisis. The latter may provide brilliance, but not for long since they typically move on to greener pastures. The best sign of a company with great human assets was the ease with which any executive it lost to competition could be replaced from the company’s backup staffers and understudies."
- Robert Bluett, Founder, People Plus
The story: From bureaucracy to performance-based culture.
In the early nineties, I joined a team charged with taking over and reorganizing a factory in Tanzania, on the east coast of Africa. The president of Tanzania since 1985, Ali Hassan Mwinyi, had invited global investors to come in and help redevelop the country’s crumbling infrastructure to the same standard as their more modern neighbor, Kenya.
At that time, the electricity supply in Tanzania was very unpredictable and our lodgings had no running water. All our food and drinking water were imported from Kenya, and taking a shower meant heading up to the roof when it started raining to take advantage of what nature provided!
The factory itself was in a very sorry state. Because of the sporadic electricity supply, production equipment was only able to function in short bursts. The reason for the unreliable power supply was that the country’s dams – their source of hydroelectric power – were so silted up that the water flow was not strong enough to drive the turbines. The only predictable supply of electricity came during the rainy season when the volume of water was sufficient to keep the turbines going.
To add to all this local color, the factory’s Maintenance department was the home of an 18-foot African python, whose daily habits included sunning itself just around a corner, where I was sure to almost trip over it during my morning inspections.
The factory’s new owners planned to solve the electricity problem by ordering two huge generators, which had to travel to Tanzania by ship. We should perhaps have realized that the solution wouldn’t be quite that straightforward: when the ship arrived, our generators couldn’t be unloaded because none of the port’s hoisting equipment was working. When that was finally solved, there were no vehicles big enough to transport them to the factory.
But these issues, however serious, were peripheral to my team’s mandate, which was to improve the performance of the workforce, and put in place systems that would help them achieve their goals. The factory already had policies and procedures but these focused narrowly on standardized processes while ignoring the reasons for their existence.
For example, a worker might have instructions to carry out a startup check every time a production machine was switched on, but if the machine made strange noises or suffered malfunctions, the worker would simply ignore them because the checklist was just a checklist. (Whoever wrote it had assumed the operator would know what to do if a machine malfunctioned.)
The employees knew they were expected to follow the checklist to the letter, and that as long as they did so, their managers could not accuse them of doing a poor job. The idea behind procedures like the startup checklist – which in this case was to keep the equipment running smoothly by spotting small problems as they arose, and doing preventive maintenance before the whole thing came to an expensive halt – had somehow not made its way into the factory’s collective value system.
It was clear that we were going to have to take a good look at the systems according to which the factory was being run. The employees needed to know not only what tasks to carry out, but how well they were expected to do them. And before this could be demanded of them, they needed to understand clearly what the factory was trying to achieve.
We started by familiarizing ourselves with the factory’s Organization Chart and trying to understand, department by department, what exactly lay behind the job titles. Understanding what each job was about enabled us to start replacing the job descriptions with job profiles and action plans.
This meant setting up a training program to explain what the new systems were for, how they had to be created, and how everyone involved would be accountable for the results they had agreed to achieve.
To judge by the reactions of the staff, this was the first training program of its kind the factory had ever seen!
The results gap
Once we knew what the employees were supposed to be doing (at least on paper) we started evaluating what each of them was actually contributing to the success of the factory. This was not so that we could rap them over the knuckles for failing to achieve their goals, but to find out what exactly was getting in their way. This was the gap between the results we expected and the results we were actually getting, and for every job, in the factory, we needed to know what was causing it.
Oddly enough, there was no shortage of rules and procedures to control the factory’s day-to-day administration, but at the same time, nothing was stopping the mysterious disappearance of goods and materials vital to the factory’s survival.
For example, in December of the first visit I had put in a request for a stack of flip charts to be used in our training sessions. These were only delivered in May – five months later – with their accompanying twenty-three forms, which had required signatures from every person in three different departments.
At the same time, dynamite from the factory’s warehouses was finding its way out of the gates and into the hands of local fishermen, who used it to blast fish out of the sea for an easy catch. (Dynamite was essential to the core business of this company, being necessary for the extraction of limestone from quarries.)
Facts, not assumptions
The top managers appeared to understand the principles of performance management, but the way they applied them did not include performance appraisals. As a result, most of the information they had about how things were being done by their employees consisted of assumptions. To find out what was really happening in any department or team we needed to implement regular performance appraisals. These are the basis for any employee development system.
The first hurdle was to get our managers to understand that a worker’s failure to achieve a certain target did not automatically mean they needed more training. Where people were falling short of what was expected of them, the situation needed to be analyzed and the exact cause identified.
The seven questions
For every failure to meet expectations there might be more than one cause. We used practical examples to demonstrate this to the managers. In the end, we identified seven possible causes, of which five were completely beyond the reach of any form of training:
Is communication from the manager clear and unambiguous? (If not, the manager needs to improve the way s/he communicates.)
Does the employee have all the adequate tools and equipment s/he needs? (In Tanzania at that time, malfunctioning or non-existent equipment was a very common problem.)
Is there peer pressure from other employees not to achieve the results expected by management? (There could be many reasons for this, including private employee goals that are in direct conflict with those of the company.)
Are there historical reasons for failing to meet goals? For example, a process that used to be considered important has been reevaluated and is now considered unnecessary. But employees will still tend to want to stick to the out-of-date procedure because they used to be praised for doing so!
Does the individual have personal problems that prevent him from focusing on his work? (In such cases, counseling may help, but training won’t.)
Does the person lack the knowledge required to do a good job? – this is a training need.
Does the person lack the skill required? – this too is a training need.
These became known as the Seven questions to ask when trying to find out whether or not further training was needed.
Once the reasons for poor performance had been examined, most managers understood that a gap between a person’s targeted and actual performance did not automatically mean “This employee needs more training”.
Learning from our employees
We learned a few surprising things during this period, for example, that the level of formal education a worker had achieved was not one of the critical success factors. Some of the employees had been too poor to afford more than a basic education, yet they were able to pick up concepts quickly and apply them to their work in practical ways.
This discovery led to many discussions about the role of natural intelligence versus the acquisition of advanced knowledge and skills.
We agreed that for some positions (like an engineer), the right educational background was essential, while for many others a formal education was not in itself a useful indicator of the person’s value to the company.
The company relaunch under the new management went off extremely well, and everyone settled into a daily routine. Members of the various teams were cooperating and collaborating well. The work was getting done!
Crafting a performance management system
As a member of the HR team in Tanzania, I already had my own job profile, as well as my personal action plan, which now contained things like:
For every employee, find out if there is a knowledge or development gap to fill, and what exactly it consists of.
Devise the best ways of dealing with each gap.
The HR team set out to visit every department and sub-section to introduce the new performance management system, explaining how the company goals, in the form of Key Performance Indicators, had to be linked to each person’s job profile and action plan.
The final version of our performance management system was the result of a collaborative effort, taking in ideas from all the line managers, which were then approved or rejected by the executive committee.
The final product was made up of three sub-systems:
the performance appraisal, aimed at learning and development (takes place monthly)
the performance evaluation, aimed at reward and recognition (takes place quarterly)
the annual development review. This is the longer-term strategy for aligning personal development with company development (takes place once a year, before the setting of the company budget)
In this chapter, we are homing in on the first of these, the performance appraisal.
How you get from action plan to monthly report
You may recall from Chapter 2 (Click to review the chapter in our blog) that each job holder has an action plan based on their job profile.
The action plan is an ongoing, constantly evolving document covering 12 weeks at a time, and containing specific tasks the job holder has agreed to carry out during this period.
The action plan is updated once a month at the performance appraisal meeting. At this meeting, the tasks in the action plan must be agreed on by both the manager and the employee.
The action plan
Each task in the action plan has a target (the desired result) and a deadline, which is its due date. A task that is complex and/or takes a long time will be divided into several sub-tasks. The deadline by which any sub-task must be achieved is called a milestone.
Each month’s action plan is submitted to the boss as a monthly report (I explain how the action plan becomes a monthly report on the next page), which is used as a basis for discussion at the monthly performance appraisal meeting between the employee and the manager. After all the appraisals have been completed, the manager needs to make a note of those items that the entire team needs to know about, so that they can be presented at the monthly team meeting.
Summary of what needs to happen every month
At month-end, the employee notes the status of each task (activity) in his/her action plan for that month. This is quick and easy to do because it simply consists of highlighting each activity on the action plan in one of three colors:
Green – means the task has been completed, in other words, the standard of work has been met and the deadline has not been exceeded.
Yellow – means work on that task is in progress, and that so far it’s on time to meet its deadline.
Red – means one or more of the task’s requirements have not been met: standards, milestones, or deadline.
The employee sends this annotated action plan to their immediate manager. The annotated action plan is now called the monthly report.
The manager calls the employee to her/his monthly, one-on-one performance appraisal meeting.
At the performance appraisal meeting, the monthly report is reviewed by both of them.
At this meeting, the employee removes the past 4-week period (the one that has just been
reviewed) from his/her action plan and adds to it another 4-week period. If tasks for the new
12-week action plan have changed, the employee updates them too. The employee is now all set with an action plan for the new month ahead.
After having a performance appraisal meeting with each member of her/his team, the manager draws up an agenda of items the team as a whole needs to collaborate on, drawing on what s/he has learned from each team member’s one-on-one appraisal meeting, and calls the monthly team meeting.
At the monthly team meeting, each item that needs action is presented by the team member who is dealing with it. During the meeting, these items are discussed. A decision is agreed on by all present about any action to be taken and who should take it. The team member designated as note-taker has a copy of the meeting agenda, and s/he annotates it with these new decisions, specifying who is to carry out any actions required. In this way, the meeting agenda becomes the minutes of the monthly team meeting.
Figure 1: From action plan to monthly report to monthly appraisal to team meeting
The monthly report and performance appraisal meeting
focus on whether the performance targets for the past month have been met;
enable both job holder and boss to see at a glance whether each task on the action plan is on course to completion within the time prescribed, and to the required standard – or not;
are a record of what actually happened, to compare with what was expected (ideally) to happen;
may indicate a need for development (more information or training for this employee);
helps to confirm or disprove the validity of the KPIs attached to this person’s job profile. (Click to review what job profile is in our previous blog).
Finding out that an existing KPI is no good is not a problem! Often, when a KPI is established, it is based on purely theoretical assumptions. Tracking the output of a real employee in real time is therefore very useful in helping management to make a KPI more realistic.
The team manager has to maintain a big picture of the KPIs of the team members. In the early months, the manager needs to be able to spot overlapping KPIs (two people with the same KPI) or gaps (a KPI for which no team member is responsible). During this period, the manager should be able to tighten up team members’ areas of responsibility and solve any problems of overlapping or gaps.
How we implemented the new systems in Tanzania
The very first monthly report had to be created in an informal way:
The manager of the team and each direct report (team member) first agreed on the contents of each team member’s action plan;
At the end of the first month they had a one-on-one meeting together to discuss how it should be applied in the real-world work situation. At this meeting, the direct report was asked to make notes of the points being discussed. These became the meeting minutes, and they in turn became the first monthly report, setting the reporting process in motion.
By the end of the second month each team member was able to submit his/her first real monthly report.
By the end of the third month most of the managers had decided that the monthly reports had to be no more than one page long, and had standardized the format to be used for them.
In the first month we had to remind everyone to send in their monthly reports, which we had expected. But this continued into the second and third months too. Apart from the team members in Finance and Accounting (who were used to producing figures regularly) and the managers, no one else wanted to report on monthly progress in their team.
To kick-start the entire thing, the CEO got involved, and managers had to go back to basics. To do this, HR borrowed an old Learning and Development Policy Statement document from another company, sent it out to all the managers, and invited them to comment on it. After that, each manager and her/his team had to take part in a half-day workshop where the principles behind the policy were explained and questions were answered.
Once agreed on, the Learning and Development (L&D) policy and the systems that would implement it were put up on all the company noticeboards.
These steps enabled every employee to understand the rules of the L&D game, and to see how they would benefit from playing it. The performance appraisal process finally took off, with reports arriving on time, meetings well attended, and figures starting to emerge that showed how employees were contributing to the company’s success.
Copyright © 2018 Robert Bluett
All rights reserved. No part of this book or publication may be reproduced in any form or by any electronic or mechanical means including information storage and retrieval systems, without permission in writing from the author.
Publisher: People Plus (peopleplusco.com)
Third Edition: 2020
To get a copy of the book, please contact us here. You can learn more about our management consultation services and workshops by clicking on: Management Consultation. Assertive Communication Suites.