Wednesday, April 29, 2009

Fact or Myth: Cascading Goals align work with company goals

Used wisely, goals can effectively align the workforce with company strategy. For example, a company that clearly communicates several clear and attainable objectives (like three) for a quarter or fiscal year has given the workforce some useful high-level guidelines about how to focus their efforts.

But cascading goals, while they can work well, also offer several pitfalls if they are too numerous or only communicated in the context of an annual focal review:

1. Without strict boundaries, they can create a lot of work. As part of each review cycle, someone or some committee needs to formulate the goals and then managers need to translate them into digestible chunks for their teams, these have to be discussed, approved, communicated, understood and reviewed. To be sure, many companies that have implemented cascading goals with measurable performance improvements. But cascading goals can also take on a life of their own and become an end in themselves rather than the means to an end. Come on guys, we have to get these goals defined by tomorrow - who wants pizza?

2. People have short attention spans. After three or four clearly articulated goals, it’s easy to lose track of what one is supposed to be focused on. An extreme example of this was offered in a recent AMR report 'When Performance Management Worlds Collide, Business Will Benefit', which included a case study of a company that ended up with over 1000 goals. How aligned do you supposed employees felt with corporate strategy at that company? Um. . . was that 83% more customer satisfaction and 16% less spending or . . . ?

3. Rarely does a purely top-down approach ensure anyone’s loyalty or buy in and there is evidence to suggest that this is truer than ever. Each day a larger percentage of the workforce embraces Web 2.0 social networking applications that provide real time interaction, and expectations have evolved. Especially among twenty-somethings who grew up using social networking applications as casually as the rest of us used to pass hand written notes in class, we see that employees increasingly prefer an ongoing dialog to a complicated once-a-year edict from on high. Thou shalt sell more. Now go away until next year.

4. A thought-provoking article from the Wharton School* warns against the indiscriminate use of goals, citing evidence that employees with overly-ambitious goals ‘will ignore sound business practices, risk the company's reputation and violate ethical standards.’ Moreover, too often goals are set with inappropriate time lines, which can result in managers ignoring long-term strategic problems in favor of short-term quarterly results. And finally, indiscriminate goal-setting can cause employees to develop a very narrow perspective of their work, which can have a negative impact on quality. Sure we can deliver a system that predicts stock prices to the nearest sixth of a cent up to five years in the future by the end of the year. Just sign right here.

This is not to say that setting goals is bad but they are most effective when they provide clear, attainable direction, have an appropriate scope and time horizon and aren’t used as a substitute for employee manager communication.

*‘Goals Gone Wild: The Systemic Side Effects of Over-Prescribing Goal-Setting,’ Ordonez, Lisa D., Galinsky, Adam D. and Bazerman, Max H., Academy of Management Perspectives, February 2009.

Friday, April 17, 2009

Fact or Myth: One Size Fits All

To be fair, I don’t think too many people actually believe that one size fits all when it comes to employee rewards so it’s not a myth per se. However as we look around we don’t find many companies behaving as if they realize that different demographic groups may respond best to different types of rewards.

An insightful Watson Wyatt report offered a simple graphical representation of the rewards ‘sweet spot’, which includes not only cost to the company and alignment with company strategy but also perceived value to the employee.* This report discussed how different types of rewards are interesting to different worker demographics. To give a rough example, workers in their twenties may place the most value on mentoring and career opportunities; workers in their thirties may be more interested in work life balance; workers in their forties may care about salary and/or span of control; and older workers may have more interest in comprehensive benefits packages.

Within these demographic groupings there may also be special interests: for example, women in their late forties or fifties may be available for and interested in additional responsibility once their children are grown.

I don’t want to imply that all workers will fit neatly into their assigned demographic group when it comes to rewards, nor does this mean that just because someone wants to work at home once a week they don’t care how much they earn. Nonetheless, it is possible to analyze trends and get better at offering the right mix of rewards.

An interesting talent management use case described how the AlliedBarton Security Services' human capital department used various performance measurements to discover that managers were leaving just as they started to get productive. This case study offers an excellent example of how a company analyzed a specific employee cross-section and discovered something worth knowing. The same principal could be applied to different demographic groups to assess whether there is an attraction or retention problem within a particular group, which might point to an uncompetitive rewards package.

Conversely, rewards packages can be tailored to target and attract particular demographic groups once you better understand their priorities.

A thoughtful gift should consider the taste of the receiver and the same is true of rewards. And the bottom line benefit of offering creative rewards is that it can help companies achieve their workforce planning objectives without spending more. For example, in another case study, PepsiCo invited employees to identify one thing that would help them each achieve better work/life balance. Once agreed upon, managers shared responsibility for making sure the employee could put their ideas into action and that work performance didn’t suffer. Since many of the ideas involved different work hours or less physical time at the office, employees were motivated to ‘work smarter’ in order to have a better work/life balance.

The takeaway here is that smart talent management strategies don’t focus exclusively on the twin holy grails of salary costs down and rewarding ‘top performers’, which seem to be the prevalent themes. Instead the focus should be on the broader view of delivering more compelling and cost-effective rewards packages to attract, retain and motivate different employee groups.

*“A Successful Total Rewards Strategy: Delivering a Compelling Employment Deal at the Right Cost”, Jamie Hale and John Coskey.

Thursday, April 2, 2009

Fact of Myth: There are two kinds of employees - top talent and everyone else

Companies are continually advised to invest in their top talent and this is not bad advice. But the almost exclusive focus of talent management authorities on ‘top talent’ seems a bit myopic and may be an overly simplified version of the full picture.

In reality, a lot of people contribute to the success or failure of a company and even ‘top talent’ depends on the performance of these people. And all too often, people identified as top talent are those who are involved in high profile projects rather than the unsung heroes quietly pulling their weight in less visible areas. To say that only ‘top talent’ should be retained, rewarded, mentored and promoted is misleading to say the least and borderline irresponsible.

Recently, Pay for Performance strategies have come under fire for failing to achieve their objectives or even appropriately recognize top performers. It seems that quite a few managers are either afraid of being disliked and give everyone a raise, or else inflate their performance figures to increase their own budget allocations, so that the average delta between high and low performers is too small to motivate top performers.

There is also some question of whether monitary rewards motivate at all in companies where the entire talent management strategy begins and ends with pay. According to Jeffrey Pfeffer, Organizational Behavior Professor at Stanford’s Graduate School of Business in Workforce Management : “Typical pay increases are not enough to motivate employees, but they are enough to irritate them."

I love that. I wish I had said it. I mean, first.

These are legitimate concerns. Certainly it makes no sense to throw ‘top performer’ rewards at poor or mediocre performance and effective talent management involves more than just a paycheck.

But whatever shape talent management takes in your company, a successful talent management strategy should focus on both top performers and the people who enable them.

Think of it this way: If you only recognize and reward ten people, why should people who are not in the winner’s circle go the extra mile to be #11?

Wednesday, April 1, 2009

Fact or Myth: Employee surveys and honest employee feedback

Employee surveys can provide some useful information about employee attitudes and aptitudes but are a poor substitute for engaging face to face with people. For one thing, not everyone believes that employee surveys are anonymous. Unless people are so dissatisfied they are ready to run the risk of repercussions they probably won’t be totally truthful, at least not in writing.

This means that companies that conduct employee surveys may get plenty of innocuous feedback on what kind of soft drinks people would prefer at the next company meeting and maybe even the odd toned down criticism or suggestion. Surveys may also be a useful tool for analyzing general skills or preferred types of compensation or benefits by demographic group. However, they probably won't result in full disclosure about poor management practices, inefficient processes or slacking coworkers.

Talent management is a human problem first and a software problem second. A company of any size generally needs some sort of technical solution to support performance and compensation processes and employee surveys may be part of a comprehensive talent management solution landscape. But regardless of company size, also important is the good old-fashioned, non-technical art of conversation.

It’s only natural: people will share more with another person who is really interested and listening than with an online survey tool. And potentially, it’s the information that people hesitate to document in a survey that may be used against them that you really want to know.

Another point to consider is that people who are not in the direct communication path of decision makers may have great ideas worth tapping into. A case study that demonstrates this point was recently presented by the editors of HR Executive Online, in which a company invited employees to form teams and come up with a 10-minute, three-slide presentation for a new product idea and its marketability. Two finalist teams were chosen and given six months to prototype their ideas with paid time off from their regular work. Today, one of the products stands an 80% chance of going into full production, while the other holds a 50% chance.

Not a bad result just for listening to people who don’t normally get a chance to share their thoughts and ideas with executives.

Some people may prefer the possibly anonymous, in-your-own-time format of online surveys. And there may be some generational differences in preferred approach. But generally speaking, companies that want to connect with people and create a team culture won’t get very far without talking with people.
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