Performance Evaluations in a Changing World

Friday, February 28, 2014

We are all familiar with the ubiquitous employee performance evaluation.  Virtually every organization has one or more, sometimes associated with the employee’s job classification.  Every human resource vendor has several for sale.  Some are purchased and some are developed in-house.  Furthermore, no one likes them or thinks they are very good at measuring “true performance”.  Thus many question an attempt to measure employee performance with a tool that is perceived as less than accurate, valid or reliable, especially when organizations are changing at light speed?

Organizations need some method of how well an employee, and by proxy, how well mangers and business units are performing in the human resource sphere.  Otherwise, how else is an employer going to support employee and job actions?  Likewise employees want to know how they are performing and employees also want to be rewarded.  This cycle of behavior-reward has been programmed into us from birth.  We are rewarded with parental praise as a child and with recognition and advancement in school.  And lastly, we expect to be rewarded and advanced in the workplace.  Essentially, this paradigm is the foundation of much of human behavior.

At issue is how do we evaluate performance when job expectations are consistently changing?  How do we, as managers, set expectations when neither we nor our organizations may know the next major direction the organization is going to take?  How do we coach and direct an employee on what skills are needed for the next project in the pipeline?

First, none of us may ever be able to foresee the next big change in our organizations.  We need to learn to accept the fact change is going to occur and occur at an ever increasing rate, aka, Moore’s Law.  Dealing positively with change becomes a skill in our toolbox as well as in our employee’s toolbox.  Coaching employees to see change as a challenge and an opportunity for the employee to shine is one approach.

Second, the mental model with we approach change is going to telegraph to everyone around us.  If we are positive, they are more likely to see the change as positive.  Since our success as leaders is closely correlated to the success of those we lead, it really is in our self interest for them to rise to the occasion. 

Lastly, it is important to communicate with everyone.  This means asking those who lead us to explain the business reason(s) behind the change.  Once we understand the driving force of the change we can better communicate to others, such as those we lead.  Our complete understanding of what change is occurring is going to help us positively communicate with your management, peers, and those we lead.

RoseFass, CEO of the consulting company fassforward was quoted in an 11/05/2013 article by Dorie Clark in Fobes as saying,” The best kind of change comes when you envision, initiate and control it. That type of change creates opportunities, transforms companies and ignites growth.”

Organizations are Dissatisfied with Pay for Performance

Friday, February 21, 2014

 

Pay for Performance, simple, employees are rewarded for their level of job performance.  The better the employee’s job performance the better the employee’s reward.  Those who perform are rewarded, those who do not perform, are not rewarded.  How could any organization be unhappy with such as arrangement?  As reported in Mercer's 2013 Pay for Performance Survey, 45%, of employers reported that Pay for Performance was not performing as expected in their organization and needed to be repaired.

 

According to the survey, there is a disconnection between Pay for Performance as a reward philosophy and measuring the results of that performance and its alignment with organizational needs.  Thus while the majority of employers support and believe in Pay for Performance less than half measure the effectiveness of their programs.  This begs the question, if organizations are not measuring the efficiency of their programs, how do they know they are working?  And the answer is, of course, they do not know if Pay for Performance is driving the desired organizational outcomes.  Bob is a great sales manager and we reward Bob for his performance, we just do not know for a fact that Bob’s efforts are in alignment with the organization’s desired sales goals and objectives.

 

TowersWatson reported in “How to Drive Sustainable Employee Engagement”, on April 3, 2013 that organizations are only limited by those behaviors which they can “observe, measure, and communicate.”  Thus it goes to reason that employers whose objective is to increase sales must observe that behavior which leads to higher sales, measure those sales which are desirable, i.e., profitable, and communicate the desired behaviors to its sales force.  Then, when those behaviors yield the desired results, the organization must reward the employee.

 

In an effort to obtain higher levels of performance, most employers want to engage their employee’s “discretionary effort” level of performance.  Engaging employees to go the extra mile is of no value and may even be counter-productive unless that effort is consistent with the desired direction(s) of the organization.  Increased sales may even be harmful to an organization’s success unless those sales are to the right customers.  Customers, who fail to pay, pay late, have credit issues or return otherwise perfectly good product, may not be the “right” or profitable customers for an organization.  Without some measure or measures of sales, revenue, net income, account balances, account aging, returns, and other measures, employers lack the information to know if their sales force is selling the right products to the right customers at the right price.

 

As organizations continue recover from the Great Recession, greater importance is placed on measuring both organizational and employee performance at all levels.  With employers still reluctant to rehire scores of workers, businesses look for ways to maximum the productivity of existing employees.  Thus measurement of employee performance becomes critical to determine if and when new workers are needed.

Top Ten HR Issues for 2013-2014

Friday, February 14, 2014

 

Bi-annually, the Society for Human Resource Management (SHRM) publishes a “Workplace Forecast” in which a sample of SHRM members voice their concerns and issues for the current and coming year.  The last Workplace Forecast was released as of May 2013.  Prior versions of the “Workplace Forecast” were released in 2011, 2009, 2007, 2005, and 2003.  Since 2005, the # 1 issue and concern for SHRM members has been the cost of employee health care.(Table 1)  And, the # 1 issue and concern for SHRM members looking at 2013 and beyond, is the cost of employee health care.(Table 2)  When questioned about the key factors in recruiting and retaining workers, SHRM members again cited the cost of employee health care as # 1.(Fig. 16 & Fig. 17)

 

Of the myriad issues and concerns facing HR professionals and their businesses what makes the cost of employee health care the # 1 problem for so many organizations?

 

Health care is expensive for both employers and their employees!  As an increasing number of employers move to high deductible plan designs, employees see the cost of health care with every office visit or trip to the pharmacy.

 

The Kaiser Family Foundation reported in its 2013 Employee Health Benefits survey, the cost of a PPO style plan was:
 

                                        Typical PPO Style Plan Costs

                Employee   Percent      Employer   Percent          Total

Single        $1,024         17%         $  5,008        83%         $  6,032

Family       $4,587         28%         $12,084        72%          $16,671

E X H I B I T B

Average Annual Firm and Worker Premium Contributions and Total Premiums for
Covered Workers for Single and Family Coverage, by Plan Type, 2013.

 

Health care is at the center of most employees’ focus!  Unlike benefits such as retirement, health care is something even a healthily person will experience several times a year.  For those employees with chronic illnesses, it could be weekly.

 

It becomes clear that for many candidates, given equal choices, the employer with the less costly and better managed health care plan is likely to win out in the bidding for that talent.  If health care is so important in recruiting and retaining talent, that organization which better manages the cost and delivery of health care will have a comparative advantage in the effort to acquire and retain talent.

 

As noted above, health care is expensive!  Managing that cost is not simple; witness the thousands of pages of laws, rules, and regulations promulgated by the Federal government and its agencies aimed at just that effort.  Educating and informing employees on the costs of health care procedures can go a long way to helping employees understand the value they are getting out of their health care plan.

 

The same approach when used with potential candidates can build an employer’s brand in the eye of job seekers.  Candidates who can appreciate the efforts of an organization to manage health care are more likely to be an engaged employee.  And a talented, skilled, and engaged employee is what most employers seek.

The Return of US Manufacturing

Friday, February 03, 2014

Ask the average citizen on the street about where most manufacturing takes place and you are liable to be told, “not in the US”.  But is that really true?  In the last year, the Washington Post, Bloomberg-Businessweek, Forbes, CNBC, NBC News, CNET, Time, Tampa Bay Times, and others have all reported on the return of manufacturing to the US.  Both domestic and foreign manufacturers are building facilities in the US and employing US workers in them.  This reversal of “off-shoring” or “re-shoring” is occurring as the cost to manufacture in foreign countries is rising while the cost of manufacturing in the US is declining, relative to each other.  In addition to labor cost, transportation and inventory costs are lower for US based manufacturing compared to goods shipped from Europe and China.  However, re-shoring may not bring with it the numbers or types of jobs lost when manufacturing was off-shored years ago.  Increased automation is demanding fewer but higher skilled workers.

One barrier to re-shoring lost manufacturing is the reported lack of skilled workers available to design, build, run, and maintain the highly automated manufacturing equipment used in many of the high tech processes employed in today’s factories.  A. Gary Shilling writing for the Bloomberg View points out that 4% of degrees in the US are in engineering, versus 17% in Asia and 34% in China.  Shilling believes that increased use of robotics and technologies such as 3-D printing and cold spraying will add to the competitive position of US manufacturing by 2020.  But these and other advances in manufacturing technologies require highly trained and talented individuals in engineering, science, math, computer and the biological sciences.

We have heard it before; the US is not producing enough graduates in the Science, Technology, Engineering, and Math fields or the so-called STEM degrees.  Yes, employers are seeking workers with STEM degrees and backgrounds; however, the most talented engineer is of little value if they lack the communication skills to convey their thoughts lucidly via the written or spoken word.  Employers want and need well-rounded workers who know and understand technology and how that technology can be effectively applied to their business to make that business more competitive and produce products and services consumers wants to buy.

While many public and private primary, secondary, and post-secondary schools are developing programs to teach STEM and to train teachers to teach STEM courses, many businesses can not afford to wait for students to move through the educational system.  Many employers, including the US military, are offering apprentice programs in an effort to build a pipeline of current and future STEM candidates.

As with any other talent pool, STEM candidates must be sourced, recruited, and managed.  There has to be a “goodness of fit” match between the organization and the worker to ensure the goals of both are in alignment.  Many of the same motivational factors apply to STEM and non- STEM talent.  Are there opportunities to advance within the organization?  Are there opportunities to learn new technologies?  Are there opportunities for peer recognition within and outside of the organization?