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THE STRATEGIC ADVANTAGE OF BEING AN AGILE ORGANIZATION

Chapter 5, Performance Management: Motivating Your Human Assets


Our experience has shown that there is no simple formula for motivating people because you are dealing with human beings – each one a complex creature with his/her own history. But we have uncovered several factors that are very effective in creating a motivated workforce.

- Robert Bluett, Founder, People Plus

Bringing the Reward and Recognition to a Region with Nothing


Let us take you back to 1997. The military power of the Khmer Rouge had not been completely broken, although they had been officially excluded from the government since 1994. Different factions still roamed large areas of the Cambodian countryside, carrying out guerilla attacks and looting.


In April of the following year, I arrived in Phnom Penh carrying the wages for all the factory staff – a few million Cambodian riels in cash.


The work environment: External Factors and Moral Issues

The factory in Kampot had been built in 1960 by Chinese engineers, but unfortunately, the technology used was outdated from the 1940s. They were able to manage it for the next 36 years, hiring local people to perform only but the most menial work. As a result, the local workers knew next to nothing about the factory’s structure and functioning. When the engineers left, all the blueprints and diagrams went back to China with them. There was not proper documentation, but then, many of the local workers were illiterate.


One of the aims of the company that had bought this factory was to hire and train local people to take over all aspects of production. Unfortunately, the policies of the then Pol Pot regime had ensured that around 95% of people in the area were completely illiterate and spoke only one language – Khmer. The experts we usually brought in to advise and train new workers did not speak Khmer, and getting factory manuals translated into Khmer was not a solution because of the illiteracy problem. On top of all that, the factory workers union opposed – on principle – everything the new management tried to do, which, given their prior experience with the decision-makers, was perfectly understandable.


Khmer Rouge guerillas were still very active in this area. Their leader was Ta Mok, also known as "Brother Number Five", and more tellingly, "The Butcher". At nightfall, guerilla bands would emerge from the forests and caves where they hid during the day, to take control of the road between the factory and the town of Kampot, terrorizing the inhabitants of small villages and hamlets. We were strongly advised to pack up before sunset and head for Kampot town, leaving our local workers to the mercy of the bandits. We could only return to the factory in relative safety after sunrise the next morning.


How were we going to motivate people faced with so many difficulties of every possible kind?

Developing Trust

It was clear that we needed to develop a better relationship with the local people, not only those in the villages near the factory but further afield, in the town of Kampot.


Step one would be to enable all decision-makers to become involved in the running of the factory, in such a way that everyone would directly benefit from this approach. And we had to get the workers’ union involved.


On my first day on-site, I walked into our HR Manager’s office, to discuss the most urgent issues that needed our attention.


We both agreed that the top priority was security, not only for the factory site but also for the people who worked there. There was no fence around the site so everything from children and people not employed there and even animals of all kinds could – and did – wander through the grounds at all times of the day and night. On the plus side, we had a Vietnam veteran in charge of our security team, and he was training up local people to take over the protection of both the factory and the village outside it. But the security team still had some way to go before they could gain the confidence of the locals.


The constant threat of guerilla attacks made it very difficult to find people to fill leadership positions at the factory. Most of the HR manager’s time was taken up with recruitment, but because of the near-zero literacy rate, the only suitable candidates for roles like foreman, supervisor and manager had to come from Phnom Penh. And it hadn’t been easy to convince these people to move to an area under constant attack from leftover bands of Khmer Rouge!


Despite the difficulties, our HR Manager was achieving a decent success rate when it came to recruiting new employees. He had plenty of experience and had worked with many of the potential candidates earlier in his career, so he could vouch for their competence. (Not too surprisingly, it later emerged that he may have helped motivate some of them with off-the-record financial arrangements – which made them particularly keen to succeed.)

Taking the Agile Management point of view, we wanted to get the workers’ union involved because this was a group of people with status and credibility in the local community. Step one would be to get them involved in the recruitment process. Initially, they showed very little interest in our selection process, as they had come to expect that only people from the capital city had any chance. But when we started recruiting from the local population, their interest increased dramatically.


We got together with the union representatives and explained that whereas education and training were usually important factors in selecting new employees, we were aware that this approach disadvantaged many – if not all – the local people. We told them that to solve this problem, we had decided to create a Learning and Development Center, where new hires would be taught the knowledge and skills required to do a job competently, along with English literacy. The union liked this idea.


When the English teacher arrived and started teaching, we were definitely on a roll. He had lived in Cambodia for a few years and spoke reasonable Khmer.


But we had definitely taken a step in the right direction. Daily meetings between our management and the union were becoming less argumentative. We were now actually having discussions.


Creating a Fair and Transparent System of Compensation


We faced another daunting problem: how much should we pay the people we hired locally? And what about those in leadership positions, who had come to us from the city? The people we had brought in from Phnom Penh had been recruited primarily for their literacy and English language skills, but not for their knowledge of the cement industry.


Under normal circumstances, they would have been placed in what we called development roles (in other words "trainee" or "intern"), and offered a salary to match. But the dire situation in the Kampot region required them to perform at a level above "trainee" from their first day. This and other atypical problems forced us to find creative new solutions based on our key principles and systems.


Presenting the idea of a job grading system


At a meeting with the local HR team I explained that the factory’s new management had a core principle:

We grade the job, not the person doing it.

For this to work, each job in the organization needed to be graded according to the relative complexity of the work the job holder will be required to do compared with the complexity of work to be done in any other job at the same company. This is based on the principle that a job demanding highly complex skills and knowledge should have a higher skill grade than one demanding less complex abilities.


Setting up this new skill and salary structure for the factory in Kampot took two and a half weeks (see Defining the job grading system for details), after which we felt sufficiently confident to present it to the company’s top executives. Most of them were familiar with the idea of job grading, so it did not take long for them to agree to it – give or take a few minor changes.


Then came the big challenge: presenting the job grading system to the workers’ union – not only because we needed their approval but also because we wanted them to get involved in the next step, which would be the job grading process. I was sure we would meet with strong opposition to this idea, as workers in this area had only ever known the seniority system, whereby employees were paid more according to their length of service in the company. In anticipation of this problem, we created a Long Service Award so that long-term loyalty would also be recognized.


Anticipating serious resistance from the union representatives, we had set aside an entire afternoon for our meeting with them. To our astonishment, they took to our job grading system like ducks to water. The new system was agreed on and the meeting was over in under 30 minutes!


Establishing a standard for everyday work

Even before we had created the job-grading system, we realized we needed to set a standard for how we were going to get things done daily. This meant we had to create, and put into written form, certain policies and procedures.


There was an extended debate about why or whether we would need these. Because of the pervasive illiteracy in this area, there was a strong feeling that establishing these basic building blocks of a functional organization would be going too far, too fast. But in the end, we agreed to try. We took the standard policies and procedures from cement factories in neighbouring countries, printed them, had them translated into Khmer and then handed them to the workers’ union representatives and all the managers – so at least now we had them, should we ever be asked why we were doing what we were doing.

You may recall that in Chapter 4 (Performance Management: Developing Your Human Assets), we talked about performance management, which is composed of three sub-systems:

  1. The performance appraisal, aimed at learning and development,

  2. The performance evaluation, aimed at reward and recognition,

  3. The annual development review, a longer-term strategy for aligning personal development with company development.

Grading every job according to its complexity was the very first building block in setting up such a system at the factory in Kampot province, but first, we had to get everyone working toward targets. (This is an essential basis for any performance management system.)


Establishing targets must have seemed absurd given that most of the factory was barely functional, but we had to start somewhere. So we started with maintenance and repair.

Our first target was: "Get this factory to the point where it is able to start producing cement again". 

The shock of participative management

For the production line employees, we had hired locally in Kampot province, the existence of documents stating our policies and procedures was irrelevant. Until now they had always been kept in the dark, completely unaware of how important their work was – and certainly not being rewarded for it.


It was clear that for these people, the very idea of knowing what senior managers were trying to achieve was unheard of! Even more strange to them was the idea that we now required them to ask themselves regularly: "In our attempt to achieve our target, how well are we doing at this point?"


Making each person aware of their importance to our success

We needed to convince staff hired locally to align their usual attitudes and behaviours with our corporate culture, which was based on our core values (aka "collective beliefs"). In other words, we needed all our staff to behave in a way that supported and reinforced these core values.


A good example of usual attitudes and behaviours that needed to change was time-keeping. We had already explained that whenever one person did not arrive at his work station, a whole section of the factory could not start working – but this alone had not been enough.


However, once they started seeing how their daily efforts contributed to the revival of the factory, they had a compelling reason to get it right. For the first time, they knew they were part of a team that was getting things done, and that they were meeting their targets! The factory had once again started to produce cement for its customers.

This is what motivated them to change old behaviors so that their team would continue to succeed.

Needless to say, our systems depended on managers who would "walk the talk" – in other words, they had to lead by example. (You can read more about the importance of leadership in Chapter 9.)


Defining the Job Grading System


As this system would apply to every job in the company, it was essential when grading each job to use the same criteria for all. This is to ensure that – as far as humanly possible – all employees are playing on an even playing field. (The criteria we used were The nine concepts, as described below.)

For every job you are analyzing, adding up the total of points for all nine concepts will indicate the skill grade to which that job belongs. The diagram shows how you take each job profile, apply the nine concepts to it, then match the score to one of the skill grades.


The nine concepts

These are the concepts we used when assessing the level of complexity of each job.

  1. Problem-solving

  2. The gravity of consequences when errors in decision-making are made

  3. Range of influence of a decision taken – both inside and outside the company

  4. Practical knowledge (experience and skill)

  5. The extent of communication a) with other jobs and b) with actors outside the organization

  6. The pressure of work (how many tasks have to be performed or monitored at the same time)

  7. Theoretical knowledge (deep understanding)

And where applicable:

  1. Physical effort

  2. Physical working conditions

The statements of complexity

Each concept comes with a list of statements about the degree of complexity the job holder will have to deal with concerning that concept. These statements are of a general nature, so they can and should be used for all the jobs to be graded in any organization. The list starts at the "straightforward" end of the spectrum, gradually increasing to the most complex job that exists.


How we graded jobs in Kampot

We set up a committee of three people who would meet every day for the next two weeks. It was composed of the HR manager, a senior representative from the workers’ union, and the manager of the department to which the job belonged.


For each job, we followed a five-step process:

  1. The department manager read out the job’s objective, its key areas of accountability, and the targets that had to be achieved.

  2. Taking each of the nine concepts, in turn, the HR manager would start reading out the list of statements applicable to that concept, with a pause at the end of each statement so that the other committee members had a chance to comment on whether it applied to the job being examined. At the point where a statement no longer applied, the previous level would be used. The total number of points was then recorded on the score sheet.

  3. This process generated in-depth discussions about questions like whether a given task was an everyday occurrence or merely a one-off. We used these discussions to gain consensus on what each statement meant, as well as whether it applied to the job under discussion. When we had all agreed on the meaning, we would move on.

  4. Once all the statements considered relevant to a job had been covered, the total points for that job were calculated.

  5. The total was compared to the points alongside each skill grade on the skill grading chart and the grade matching the number of points became the official skill grade for that job.

Once again, the job grading process went surprisingly smoothly: within two weeks all the jobs had been graded!


Setting Up a compensation system based on competence


Once all the skill grades had been established, we approached the task of setting up the system we would use to evaluate how well each job holder was performing.


Each skill grade had to have a salary range based on how well the person is doing their job. This enabled us to choose a salary that matched the job holder’s current level of competence.

Let's say you have a new hire starting in a job at entry-level. (This means that during the hiring process the candidate showed sufficient knowledge and skill to perform at least 50% of the work competently. The person will therefore receive a salary at the bottom end of the range for that grade of job.)


When the job holder improves their knowledge and skill – the proof being visible in improved performance and behaviour – they become eligible to be considered for an increase in salary and benefits.


The Kampot factory’s executive committee had decided that each job grade would contain three salary bands (or levels): entry-level, competent and excellent. (See on the previous page.) Every employee would receive an entry-level salary for the first month. After that, those who met the required standards in performance and behaviour would receive a pay increase.


This would continue until the person reached the highest salary possible for the position. It was a start, but experience soon showed us that the system needed nuancing.


Rewarding good work

The people of Kampot province had had to endure unimaginable suffering over a very long period of time. Under the Pol Pot regime, they had been obliged to work very hard just to survive, and no one had ever been rewarded for doing so. Consequently, they had no understanding of the "rewards for good work" concept.


Right from the start the question of compensation (salaries) had been a problem for us. When the new factory management had first arrived, and the local people saw huge amounts of money being invested in office equipment and vehicles, and in fixing up dilapidated buildings, they began to have high hopes.


But our priority had been to get the factory functioning again, for which we needed people in key positions who were – at the very least – literate and had English comprehension skills.


As I mentioned earlier in this chapter (Creating a fair and transparent system of compensation), candidates for leadership positions had to be hired from Phnom Penh. And the difference in remuneration between the local people and the big city hires was too big to go unnoticed.


Our monthly performance appraisal system was already up and running, so we were already receiving a constant flow of information on individual and team performance. Most employees now had a good idea of how well they were performing, both as a team and individually.


But as our local hires became more competent in their work, their expectations of our reward and recognition program increased. At first, only a few people were approaching the HR Manager every month to enquire about possible salary increases. When this became a steady flow of people in any one department or section, we decided to introduce another facet of performance management, a performance evaluation system. This required each section manager to evaluate employees’ work once per quarter.


We hoped to use the outputs of this system to prove to the executive committee that there had been measurable improvements in employee performance, and to persuade them to consider salary increases for high performers. Unfortunately, the senior executives rejected our request because "most of these point-score systems are subjective", and "they create more problems than they are worth".


Then one of the managers approached us with the idea of non-financial rewards. In an area characterized by extreme poverty and lack of opportunity, this was a brilliant idea. We suggested it to the executive committee, and it turned out to be a solution they could work with. So from then on, we offered the local workers who improved their performance at work benefits like clothing, food, education and so on.


Nuancing the rules

Every month-end we made a point of congratulating those who had shown a marked improvement in performance since the previous month. We explicitly thanked them for their contribution to the company’s success.


This, however, did not address those who consistently did an excellent job. It was simply not possible for these employees to perform any better! For example, the Accounts department already delivered on time and was absolutely accurate, and Maintenance was doing a great job across all categories: preventative maintenance, breakdown maintenance and creative maintenance.


Thanks to the high standard of performance in these departments, nothing had gone wrong. But because the reward system only focused on problems with below-standard performance, the consistently high performers were not being noticed or rewarded.


A new category had to be added to our reward and recognition system – a reward for consistent excellence.


Making sure the performance evaluation system is fair

An essential feature of performance evaluation is fairness. Two things have to be seen as fair – the evaluation system itself and the interpretation used (rules and procedures) when carrying it out.


In other words, to make each person feel they had been treated fairly, their reward had to be matched to their contribution to their team, and the team’s targets.


In addition to our commitment to fair treatment for the employees, we needed to prevent the employees from "gaming the system". For example, we knew that whenever the time to announce salary increases drew near, some people’s performance at work tended to improve noticeably. We all agreed that adding value was about more than a sudden spurt of great performance close to increasing time! Good work had to be maintained over an extended time period, as well as being of real value, in other words contributing to the bottom line: the company’s profits.


This was most easily done through trend analysis: in other words, we assessed each person’s contribution over a period of time (anything from three to six months).

During our six months on-site at the Kampot factory, we had set up a performance appraisal routine (with obligatory monthly meetings and monthly reports) – but with mixed results. Teams had started to meet their targets, but individual personal improvement among the employees was uneven.


Our failings were caused largely by the language and illiteracy problems. When asking the employees to agree on performance targets we set for them, everything had to be verbal, so later we had no written records to prove who had agreed to what. We also had trouble getting them to understand the importance of mastering the small tasks that were crucial to the success of our product.


Our performance evaluations were more successful because they were based on numerical results: x tons of cement going out of the gate meant y Cambodian riel in money.

Our team may have been illiterate, but they understood figures!

So we could see that it was going to take much longer to get the learning and development systems working as intended. Nevertheless, when we saw the improvements made since our starting point six months earlier, we could be proud of what we had achieved.


Conclusion: Keeping the Big Picture in Mind

Motivation is about far more than adjusting salaries to local conditions and matching them to your organization’s strategic targets.

  • Employees need to be able to align their key behaviours with your company’s core values.

  • You must be willing to invest in the development of individual employees and their teams. This includes helping them to find out what their strengths are, and work to these strengths. This approach has been shown time and again to create a strong sense of engagement and loyalty.

Performance is a result of behaviour, and behaviour comes from attitudes, which to a large extent come from values.
  • You must have systems in place to measure actual performance against targeted performance. This is valuable information you cannot do without.

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

ISBN: 978-1-387-74575-3

To get a copy of the book, please contact us here.  You can learn more about our management consulting services and workshops by clicking on: Management Consultation. Assertive Communication Suites. 

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