There have been headlines in the news lately concerning performance bonuses in the banking and finance industry.  In some cases such as that of Goldman Sachs, lower overall company performance didn’t dampen the pay raises and bonuses significantly last year.  So is there really a connection, and how is “performance” determined?

According to an article in the Society for Human Resources Management (SHRM) news, over 90% of U.S. organizations tie salary increases and bonuses to specific performance measures.  There was a study done by the Institute for Corporate Productivity (i4cp) that found high-performer organizations are more likely to use performance measures than the “low performers”. 

There is also a difference between companies saying they evaluate performance and companies doing so successfully.  Being successful depends heavily on identifying the appropriate drivers to use in the evaluation process, and clearly understanding these drivers.

The SHRM article said that high-performer companies were driven primarily by a desire to recognize and reward their best employees.  This desire also translates into needing to retain their best and brightest at a time when these folks may be a target for other organizations looking for new employees. As a secondary driver, the high-performer hoped to increase the likelihood of achieving corporate goals through their review program. 

In these times of tight budgets, very few of the companies studied identified the compensation budget as a driver for performance evaluations and raises.  During the 2009 downturn there was a general attitude among companies that if you kept your job, even if it meant a salary reduction, everyone was grateful.  Now, slowly, companies are able to give raises and bonuses, and are trying to do so effectively.

Interestingly, the i4cp study found that low-performing organizations put emphasis more on achieving corporate goals (in other words how well did the employee fit into that business vision).  While this might make sense, sometimes the best input you can receive from staff is why the goal/vision needs tweaking, and being able to provide new vision or innovation to achieve success.  Meeting corporate objectives and improving productivity are useful short term goals, but the best and brightest can see the broader picture and help the organization get there.

Tags: benefits, employee morale, performance management

Performance reviews are not fun for either the employee or the reviewer, but in the past were viewed as a necessary evil of working in an organization.  The fact is, however, that they are not a requirement except in the case of some governmental or union employees.  The other fact is that they take an enormous amount of time and create lots of stress for everyone.  So why do them?
An article in Legal Section of the Society for Human Resource Management site brings up some interesting points.  The April article by Judith Droz Keyes discusses both the reasons for and the pitfalls of performance reviews.
The formal review system was developed predominantly as a defense against discrimination lawsuits in the 50’s and 60’s, to justify terminations and disciplinary actions.  They were also supposed to serve as an honest and accurate assessment of an employee’s job performance relative to the employer’s standards and, to the performance of the team.  They were intended to motivate the employee to achieve great things and improve the morale of the company. 
The problems with these evaluations are many.  First and foremost, most supervisors are not good at reviewing their staff, and tend to avoid confrontation.  Therefore the employee may have been reprimanded in some way during the year, and at review time will get a satisfactory rating, so as not to cause waves.  In other cases, the language used in the review is not clear – saying “I would like to see” rather than “this job requires”.  In addition, most supervisors are not held accountable for the quality of their review process, so there is no consequence, until the employee is let go and a lawsuit is file.
That brings up the second problem.  Many times the review process is designed more as a career path management tool than a disciplinary tool and so problems with employees may not be accurately documented in the process.  Then, when an employee files a “wrongful termination” suit, they cite their years of positive reviews as evidence.  Sadly this means that the supervisor must now always look at the process as a potential legal pitfall rather than a helpful tool for management.
Yet another problem with the process is the lack of timeliness of the feedback.  Management should be addressing problems or achievements as they occur, rather than waiting a prescribed amount of time to give praise or criticism.  As a supervisor I had to keep careful notes during the year to avoid the “feeling of the moment” – the employee had just done something to irritate me that might affect my attitude during the review.
Finally (though there are probably more issues I haven’t thought of) there is the legal side of employment which says you need to be careful about commenting on things such as “professional attitude”, excessive absences, or cases where there is a conflict with the supervisor.  Any comments must be weighed against the protected rights of the individual employee, which tends to lead to a very bland review.  It is very difficult to deal with an employee with serious health issues when their position is vital to the organization and slows down the whole business process.  A supervisor must be very careful to comment in language that addresses the goals of the company and how they are not being met…or some other cleaver way to discuss the problem.
So if not performance reviews, what?  As mentioned earlier, timely addressing of the issue, either positive or negative, is much more useful for both employer and employee.  Record of these discussions need to be documented just as in a review, especially when compensation is tied to performance.  In place of a review, a “career plan” showing goals for the employee to work toward would be much more useful.  The goals should be developed through mutual input and allow the employee to show how they would like to grow in the business. 
Whether you are a manager or part of the staff in an organization, it is a challenge to keep dialogue open and keep everyone on the same page.  Good luck!

Tags: change management, employee feedback, employee morale, job seeker attitudes, performance management, team building

Recruiting firms and companies themselves are noticing that talent poaching, especially in the technology industry, is becoming a big issue this year and will be in the future.  Talent poaching means one company snags a competitor’s talent with the lure of hirer salaries or other perks.  Bloomberg Businessweek reported recently that poaching in tech companies is an epidemic.  Firms use email or LinkedIn to contact passive candidates.   Bottom line is this can affect YOUR company’s future plans significantly.

First let’s look at why.  The economy is reportedly recovering, and sections of the technology industry are part of that recovery.  Computer hardware and software, as well as renewable energy businesses are planning for growth.  Meanwhile, the pool of qualified talent in science, engineering and math skills is not going to be able to meet our predicted demands.  Companies also need experienced leadership to take them to the next level.  Logically hiring managers will look at the existing workforce to try to fill those gaps. 

An even bigger issue is that most organizations aren’t prepared to address this threat.  How can you prevent your top talent from leaving for what they perceive as greener pastures?  The first step is to take a good look at which of your employees might be a target for poaching.  Then look at what your company can do to avert the threat. 

In the current economic climate, giving folks a raise isn’t always an option, but money isn’t always the answer.  As long as the compensation is competitive in the industry, there are other things that might encourage loyalty to the current employer. 
It sounds like a broken record, but flexible work hours is one of the things employees really appreciate.  One candidate I know is wanting to make a change, but the thought of losing 4 weeks vacation a  year and flexible work hours holds him back. 

Another possibility is to assign your star performers to exciting and stimulating projects.  A challenging, interesting assignment can be as satisfying as a raise for some. 

There is always to option of asking employees to sign noncompete agreements or other legally binding contracts, but that’s not always a morale builder, and has to be carefully crafted.  High tech companies with a lot of research going on may be an instance where this is important. 

In the end, your successful and talented staff are an asset to protect as you plan for your own growth and success.  Include them in any strategic planning as you go!

Tags: change management, employee morale, Hiring Trends, industry news, recruiting

I find it very interesting that articles on how to retain your employees and how to hire successfully are intimately intertwined.  The overall assumption is that if you interview carefully, you and the candidate will have a long and happy life together. 
As a job applicant, the same rules apply.  For every “suggested question” the interviewer/recruiter asks, you need to ask others to find out what you need to know about the job.  
Some suggested reasons for why employees might not stay, gathered from resource Profiles International, are as follows:
* Inadequate capability
* Poor job fit
* Fuzzy goals and accountabilities
* Poor relationship with manager
* Poor relationship with co-workers
* Health and wellness issues
* Physical and environmental factors
On the other hand, Society for Human Resource Management (SHRM) has an article on its site listing the three main goals of a good interview:
* Find out as much as possible about what the candidate knows.
* Learn how their work skills have been applied and tested in work situations.
* Determine where their aptitudes lie, defining the path of future growth and development.

If you glance between the two, it appears that the interview list covers most of the “why they leave” list.  Health and wellness and environmental factors may be harder to control for, but the rest seems to fit. 
The SHRM article gives some great advice – check your interview questions (and expected answers) against the interview goals and make sure they mesh.  Also ask the questions to get the best personal insight from the interviewee. 
One sample question, asked two ways, illustrates the management part of the interview.  The general question “where do you see yourself in five years” is fairly open-ended (they might have a terminal illness!) and won’t get the best response.  Instead “Where does this position fall along your career path” provides the opportunity for a more specific response.
Again, as a job seeker, give real thought to these questions, as you want to make sure this opportunity is a fit for you.  You need to give the prospective employer a chance to know you, to avoid the “misfit” thing.
Of course the one event no one can protect against is a major change in leadership, or even in business focus.  Therefore the employer should always be looking for people who are flexible and willing to learn who can make the sudden leaps that sometime happen in the current business environment.
As usual, good luck!

Tags: candidates, employee morale, hiring process, job seeker attitudes, recruiting

As we all have heard, corporate profits dropped significantly (some sources say by 1/3) in the latest economic downturn, and companies were cutting and slashing wherever they could, including eliminating some product or service lines.  Because  of the belt tightening companies have become very efficient at delivering their product or services with fewer resources.  As a result, second-quarter 2010 profits for industrial companies in the S&P 500 stock index were $189 billion, up 38% from a year ago.  The outcome in many cases was as much a result of cost savings as revenue growth.
But..how does that affect the staff that got to keep their jobs?  And what are the long-term effects of this new way of working?
An article in the Society for Human Resource Management news (1/7/2011) highlights some of the problems in doing more with less.  Companies know they cannot continue cost-cutting to success, but for the last two years that was the major tool in the toolbox. 
Among the problems mentioned in the article are:  Diminished capacity, capability and agility, misaligned organizational structure, broken business processes and declining workforce engagement.  These issues can greatly affect future success.
Diminished capacity refers to not having enough staff, which can directly affect the company’s cost structure and ability to deliver the goods.  In well-staffed organizations there is the ability to shift people rapidly to respond to shifting business needs.  In a reduced-staff organization the employees have to focus on their immediate responsibilities, leaving little time to help in other areas.  Obviously the inability to respond will affect the company’s ability to compete.
Misaligned Org Structure can, as a result of rapid reorganization, leave an organizational chart that no longer is aligned to support the business. There are resulting gaps in roles, work process, accountabilities and information flow.  Structural gaps also occur when companies eliminate middle management positions without eliminating the work, forcing employees to take on added responsibilities.  Employees unprepared for management issues often end up “winging it” to the detriment of the company.
There are also broken business processes, partly as a result of prior reliance on long-term employees for “tribal knowledge” of the operation.  By failing to document or address the broken processes the companies can lose core efficiencies – and have to re-invent the wheel.
Eventually the workforce becomes disengaged.  In the short term everyone was glad for the job, and willing to pitch in.  It has become obvious, however, that this  situation is going to continue for quite awhile.  Not only that, but these loyal employees aren’t seeing monetary rewards for their efforts.  These employees are hunkered down until new opportunities arise, and then some organizations may lose a lot of valuable talent.
Unless companies address the problems created by the downsizing, they will start to lose the advantages gained by the initial cuts.  They need to be able to manage the new structure and reevaluate skills needed to stay competitive – and be ready for the next wave of new business!

Tags: change management, employee morale, Hiring Trends, industry news, job seeker attitudes, performance management