As seen in page 7 of the Northern Nevada Human Resources Association Newsletter
By, Connie Johnson, SPHR Managing Director Accustaff/Talent Framework

This is the story of a major change initiative driven through the development of a performance-based culture. The story has been modified to protect the innocent as this journey was long and about as pleasant as root canal surgery. The story begins with a new President and new HR Director both hired to lead turnaround efforts for this sleepy company. The initial picture was bleak … flat and declining sales; record high costs a tired and defeated sales force; stalled product growth; and customer complaints on the rise. The local management team was blissfully unfazed. For this very tenured team, it was business as usual. Production processes had not changed in over 30 years and capital investments in the plants had been limited to repairing broken down equipment.

If there was ever a company ripe for performance improvements, this was it. Thus, the stage is set for transformation. Existing performance management processes were as empty as a martini glass at happy hour. Sure, there were stock evaluation forms and basic training materials, stored neatly in 3-ring binders, gathering dust until the annual reviews were due when they were hauled out for a quick signature. Employees received substantially equal merit increases, seniority was valued over results and as you might imagine, the quality of the performance feedback reads like Dr. Seuss’ book, “Oh the places you will go”.

Fast forward: Times were a changin! We’re setting goals, increasing the quality and frequency of performance feedback; developing managerial courage and differentiating rewards. First, the managers needed to learn how to develop meaningful, measurable goals. No more, lofty, meaningless New Year’s resolutions. For example, one of the goals for a Vice President was “read a book on Lean Manufacturing”. Now strategic planning sessions are held to establish organizational goals which cascade down to the department managers and to individual team members, all the way down the food chain. Not only were goals aligned with business priorities, they were posted and shared throughout the organization to help support cross-functional efforts and increase collaboration.

The next step in the transformation was to change evaluations and goal setting from a once-a-year process to quarterly sessions designed to link tangible results and accountability to outcomes. To accomplish this objective, each employee had a formal “mini-review” at the end of every quarter to track progress against goals. If the goal had changed based upon the business needs, revisions were made and progress could continue. In the meantime we encouraged regular feedback and monthly one-on-one meetings to discuss progress, identify and remove roadblocks and provide support.

Developing managerial courage within the leadership team was probably the most difficult aspect of our transformation process. At every opportunity we coached team members on how to become more effective leaders; how to increase transparency in communication; and to provide balanced feedback to changing performance expectations for both the leaders and their teams.

Information plays a key role in implementing change. Historically, company revenue and sales information had been shared with only a few people at the top of the organization. We began to share company performance results at all levels of the organization to build a case for continuing change. This required educating employees about the business and helping them understand performance compared to budget. In addition, the President began to integrate “real” stories into his quarterly presentations to the employees. These were stories about real customers, real quality or delivery concerns and information about how the business was impacted when they had unhappy customers.

The proverbial dam was broken! Production employees started asking questions and offering ideas and suggestions for improving processes, quality and safety. From there, teams were formed to map processes, to identify and reduce defects and eliminate unnecessary steps. Productivity improvement initiatives owned by the production team were developed and posted so that progress could be monitored, measured and celebrated!

Finally, it was time to implement a true pay-for-performance system where rewards are aligned with results instead of tenure. When all employees get the same merit increase regardless of their performance level, a climate is created that encourages mediocrity. To motivate top performers, a reward system must provide significantly higher rewards to employees who contribute at a high level. Think Michael Jordan, in his rookie year the entire Chicago Bulls team was bought for less than $20 million dollars, in 1997 his personal salary was $33.1 million. Granted, most superstars don’t command that type of incentive but you get the point. Great performance deserves compensation beyond those who are doing the minimum required. This was a hard sell to managers who were comfortable giving the same merit increase to everyone. Superstars only perform to a standing ovation, if you’re not acknowledging their performance they’ll go play for another team.

The story doesn’t end here. The company has evolved into a completely different organization. Employees are eager to participate in continuous improvement efforts and look forward to further developing their knowledge and skills. Ownership of results, innovation and engagement has gone through the roof! The challenges we faced traveling that rocky road were substantial, however the outcomes have wildly exceeded our expectations. Performance management is integrated into the day-to-day activities and core values for the entire company. New products have been developed, the sales team is re-engaged, new processes and upgraded equipment allow the business to compete effectively resulting in sales revenues higher than they have been in years. Customer retention has improved and employees have complete buy-in to safety, quality and productivity goals. We’ve come a long way baby.