BABM May/June 2009
Counting on Accountability
Aligning Your Human Capital
By John Lankford
A Performance Management System is the glue that bonds employee performance to a companyâ€™s mission. When fully leveraged, it aligns employees at every level with the organizationâ€™s key business goals. The sad reality is less than five percent of todayâ€™s business leaders understand the value and business implications of using their Performance Management System the way it was designed. Iâ€™ve come to that conclusion after 26 years with three Fortune 500 companies, dozens of benchmarking trips to well-run companies, and working closely with entrepreneurs over the past three years as the number-one-rated business coach of an internationally acclaimed coaching / consulting company.
In 2008, I coached seventeen CEOs who saw improvements between 39 and 640 percent across various measures. These levels of performance would delight any business leader in the best of times. So how are results like these possible in todayâ€™s trying economy? Five key factors led to my clientsâ€™ off-the-chart performance. One of these key components is accountability, an integral part of any successful Performance Management System.
So just how should a Performance Management System be used? Letâ€™s break down a companyâ€™s annual cycle into three major sections that together provide the framework to gain employee commitment, align them with the company mission, and measure both individual and bottom-line results.
STEP 1: Setting Expectations
The first step involves clearly defining and communicating the companyâ€™s goals for the coming year to employees at every level as follows:
- The CEO and/or board finalizes the strategic direction and goals for the coming year.
- The CEO communicates the organizational goals to all direct reports.
- The CEO meets one-on-one with all direct reports to reach agreement on their department or division goals and priorities for the coming year.
- The division or department manager meets one-on-one with all direct reports.
- Each front line manager meets with all direct reports to discuss and finalize their individual goals for the coming year.
The mistake that most companies make in step one is that too often the goals are communicated as a mandate rather than engaging employees in dialogue to reach consensus and gain 100 percent commitment. Compliant head nodding does not translate into true commitment. Conducting this first series of conversations correctly is critical to aligning every human resource to the annual business goals. Failure to truly align individuals, teams and divisions substantially reduces a companyâ€™s ability to hit or exceed performance goals. The planning that goes into effectively completing step one is the second of the five keys. Far too many organizations are so busy they donâ€™t strategically plan for success, leaving the outcome to pure luck. When it comes to business, and life, thereâ€™s no such thing as luck. Strategic planning that incorporates accountability is one of the main criteria for becoming an Employer of Choice.
STEP 2: Coaching and Feedback
There are many important competencies that leaders at all levels must possess. Few have such an impact on the effectiveness of every employee as a leaderâ€™s ability to provide effective coaching and feedback to their direct reports in a timely manner. To assist managers, most organizations conduct a mid-year review after six months where employees discuss how their first-half performance measures up to the agreement made at the beginning of the year. In school this would be referred to as a mid-term report card.
STEP 3: Year-End Review
Letâ€™s face it. Managers dread giving year-end reviews. Employees hate receiving them. Input Iâ€™ve gathered from more than 50,000 employees over 29 years has revealed the number one reasonâ€”too often employees are broadsided by surprise feedback. The good news is this anxiety can and should be avoided with regular coaching and feedback during the ten months between January and December.
Once all year-end conversations and performance reviews are completed, itâ€™s critical that each team or divisionâ€™s actual performance mirrors the individual team membersâ€™ collective ratings. In other words, the sum of the parts must equal the whole. Keeping the Performance Management System simple makes it much more likely to be used effectively. Implementing a Performance Management System that really works not only contributes to long-term viability and profitability, but also impacts a companyâ€™s ability to thrive in any economy.
John Lankford was recognized as the 2007 Associate Business Coach of the Year in North America for ActionCOACH, the Entrepreneur Magazineâ€™s 2009 #1 Business Coaching franchise in the World for the seventh straight year. John was also recognized as the 2008 Global Associate Coach of the Year. His business expertise as a partner of ActionCOACH Pinellas has been tapped by prominent business media such as the New York Times and CBS. He is the author of Superstar for life…Career Transitions. Johnâ€™s keynote speaking has landed him on the elite team that trains and certifies the new Executive Coaches joining the worldwide ActionCOACH community. John has just been named the Chief Executive Officer for the Innisbrook Leadership Institute.