Fixing Performance Evaluations Part I: The Problem

One of the most important jobs you have as a manager is to evaluate your employees' performance. Ideally, you are providing regular feedback, and so the evaluation process is merely an affirmation of a status you both already recognize.

But, to be sure, it's not easy to deliver an evaluation to an employee whose performance is less than optimal. And, generally, as that employee's compensation – or even continued employment – rests in part on your assessment of his or her performance, you may be even more reluctant to provide negative feedback. And, of course, to give a negative review, there's all that paperwork that's likely to result: improvement plans, additional meetings to review progress, and so forth. Call this the problem of manager self-preservation: no manager really wants to make his or her own life more miserable by assigning negative ratings.

Companies recognize this dilemma, and most enterprises respond as they usually do: by overcompensating and making the problem worse. More than one company I know of publishes “guidelines” for their managers regarding the distribution of ratings to be assigned to employees. HR and senior leadership will deny it all day long, but their message is pretty plain: grade on the curve.

The curve itself is a familiar one. Companies seem to anticipate through their published guidelines that their own employees perform only slightly better than the normal distribution. Thus, one guideline suggests that on a scale of 1-5 (5 being best), 15% of employees should receive a 1 or a 2, 35% of employees a 4 or a 5, and the remainder (50%) a 3.

Think about that. On a team of 30 people, four or five would receive an unsatisfactory rating, each and every time reviews are performed!

Such guidelines are laughably flawed. They provide vastly insufficient support for the idea that we:

1. Hire for excellence
2. Coach poor performers (who actually improve as a result)
3. Rid ourselves of perennial poor performers (who didn't improve).

If I do award 15% of my employees an unsatisfactory rating this year, I certainly hope I've done enough work as a leader by the following year that that number will have been substantially reduced. But corporate policy has no room for such a concept.

Well, then: perhaps the answer is to keep raising the bar. Challenge my employees to do more and more each year, until some inevitably fall by the wayside.

While there may be reasons for a version of that approach on a sales team, in most other fields of endeavor, it just doesn't make sense. If I lead a team of programmers, and they are divining clever, efficient solutions to problems and producing solid code, then what exactly would be my plan for “raising the bar” the following year? Less bugs? More lines of code? I don't think so – diminishing returns will rapidly set in. At some point, they will be working at the highest level one can reasonably expect. Am I still to assign 15% of them a failing grade?

So, put simply, the problem is this: how do I ensure that ratings are assigned fairly, while avoiding the problem of manager self-preservation?

Tune in for Part II. :)

What I Learned About Unemployment From Somebody I Once Laid Off

One cannot predict the future for certain, but I can, with little fear of contradiction, forecast that I will no longer be working at my current employer beyond May 31, 2008.

The way it has all come down is thus: many in the back office will lose their jobs as of January 31. Some are being “asked” to work right up until the end, while others are permitted to work from home, or simply stop working altogether. Those departing on 1/31 will leave with a token severance and a don't-let-the-door-hit-you sincere thank-you from their employer.

The branch and sales staff, by and large, will continue as employees.

The remaining group are being asked to stay through a transition period. Fortunately, this group includes me and the substantial majority of my team. In consideration for signing a one-sided, waive-everything-and-ask-no-questions release form, we will be eligible for a bit of an incentive package if we can stick it out until the end.

Termination dates vary for the members of this group; as I mentioned, mine is 5/31.

If an employee were to ask me what they should do with a planned Memorial Day job transition, I'd tell them, finances permitting, to take the summer off and spend it with their kids.

And that is what I hope to do. There are still six months between now and my pending independence, but if things all go as planned, I will take a month or two to spend with my kids. A real summer! Who can even remember what such a thing is like!? With my kids getting older, I know it's unlikely I'll get another opportunity like this.

A while back, when I was running my own small business, I was forced to lay off a good employee and good friend. Jim decided to take advantage of the unplanned career recess to follow a dream, and hike the Appalachian Trail from bottom to top. And that's what he did.

Jim died recently of an illness that robbed him of his ability to stand, much less hike, for years before his death. Damn, he was happy he took that opportunity when he had it. If I really manage to take a chunk of the summer off, it will be in part due to the example that Jim set for me.

More on Lifelong Innovation

A quick followup to my earlier post: a short piece by Clive Thompson in the October issue of WIRED (16.10) also touches on the question of innovation among the, er, mature set.

Thompson raises an important point. I'm one of those people who feel that Google, for example, has measurably improved my quality of life. Perhaps one day LinkedIn will, too. And without the mysterious, magical Shazam, I would never have learned that "Feelin' Alright" was a Traffic tune before Joe Cocker recorded the version that unfailingly has me turning the volume to 11.

But what will really have an impact on my existence? What will change the world (and not just the printed map industry) in our lifetime? It will be the creation of cheap, renewable, pollution-free energy. Or a cure for diabetes, or autism. And in those categories, it's the older, more experienced entrepreneurs who will be more likely to be able to raise funds, lobby, and generally put together the expensive, resource-intensive, government-subsidized, multi-discipline efforts required to get the job done.

PS I was going to offer extra credit for spotting the bug in the snippet of BASIC code at the top of the article, but some other aging geek already commented on it. See if you can figure it out without sneaking a peek at the reader feedback on the bottom.

Free-Fall Leadership

I'm hoping to post here once a week or so, but once in a while, a small thing gets in the way. This month the small thing was the ongoing meltdown of the American economy, the looming end of our entitled lifestyle, and the collapse and resurrection of the company that (for the time being, at least) employs me.

To lay it out plainly: most of my back-office colleagues will not keep their jobs. I will not keep my job. If we're lucky, our new employer will keep us on for a bit as they transition customers, systems, and processes, but we won't know if that will be the case for a few weeks. Thus, in the near to very-near future, hundreds of my colleagues and I will be thrust into the job market at its lowest point in five years.

All in all, it's a bit distracting. On the other hand, it's given me an opportunity to view first hand how senior and mid-tier leaders, as well as rank-and-file employees, deal with crisis, uncertainty, and fear (and to see how I deal with it as well, but I'll save that for some future introspective blog).

And so it goes, that each day I work with colleagues, employees, and bosses who are uncertain about their own futures. Common themes emerge, and not to put too fine a point on it, they tend to mirror the famous stages of grief. (Best example of "denial": in spite of almost certain imminent unemployment, I went out and bought myself an iPhone yesterday. Also known as "shop therapy".)

One thing about leadership — at every level — is this: most things at work, as in life, are not under your control. You take measures to prepare for predictable risk, and when things go wrong, you take steps to fix the problem. In this situation, however, the enabling power of response and correction is unavailable. The game is over, and what has been decided, has been decided. In such a case, is there still an opportunity for leadership to make a difference?

Absolutely, right up through the bitter end. Call it "free fall leadership":

1. Listen. An oldie but a goodie. I am discovering, though, that it's a lot harder to listen with all the noise going on between my ears: What will I do next? How long will it take to find work in this economy? What if I have to relocate? So listening, even for somebody with good listening habits, gets a lot tougher in times like this.
   
   
2. Demand excellence. In this situation, it can be very hard for an employee to see why his or her contribution matters. And let's be honest: in some case, it doesn't matter as much as it used to. If I'm working on a product that I am pretty sure is headed for the dustbin as soon as the new bosses get around to noticing it, I'm feeling pretty demoralized. Remind your people (and yourself) that work quality is a matter of integrity. The new guys are still coming through with paychecks, and you owe them your best work. What they decide to do tomorrow is outside your control, but your personal integrity is not. In my time, I've written a lot of code and overseen any number of projects that never saw the light of day: I'm no less proud of my accomplishments, regardless of what others chose to do with them.
   
   
3. Have fun. Uncertainty is uncomfortable for most people, and extended uncertainty, as my team is now experiencing, is downright painful. We have to work to get beyond that. We're having more group meetings featuring food, and we're proceeding with as much training and morale lifting activities as our your-guess-is-as-good-as-mine budgets will permit. And we don't discourage gallows humor: people need the release of laughter, and there's no use pretending things aren't as they are.
   
   
4. Be honest, but stick to the facts. My team ask me often what I think will happen. I don't know. I'm pretty sure my boss doesn't know, and I'm pretty sure his boss doesn't know. On the other hand, I've been around for a while, and it's awfully tempting to share what I think is likely to happen. But there's just no upside to speculating: if I'm too optimistic, the outcome will be that much more crushing for the team; if I'm too pessimistic, I will kill morale and demolish productivity, creating a self-fulfilling prophecy. "I don't know" is a perfectly good answer, as is, "well, in the worst case, X, and in the best case, Y, and of course it could be something in between."
   

Leadership in free fall is challenging because we all know how the story is going to end. The question is: can we have fun, maintain our dignity and integrity, and focus on what we can control in the mean time? If so, whatever the outcome, the trip won't have been so bad.

Empowerment at Every Level

A very accomplished and smart friend of mine tells this story: at the age of 19, he was working at a leading national department store as a stock assistant. Although he was hired into the position with little training, he worked hard to figure out the best way to stock hundreds of items in such a way that they would be organized and easily retrievable. Unfortunately, regardless of how hard he worked, his boss was never satisfied. The boss criticized him frequently for taking too long to do his job – never mind that there were no established guidelines for how the job should be done or how long it should take. In his performance review, the boss noted that my friend had been recommended by another department, and that therefore the boss would henceforth view that department's recommendations with skepticism.

Without even hearing the rest of the story, I knew where it had to be going. My friend is extremely intelligent and self-aware, and even in his 30s has accomplished things that others spend their whole lives trying to achieve.

Eventually, my friend got a new boss. The new boss encouraged him and gave him room to figure out the best way to handle his responsibilities. And what happened? My friend developed a system that the chain ended up deploying in several Orange County stores, realizing a savings of about a million dollars.

Now, dear reader, this may seem like an obvious lesson, particularly if you currently manage, say, a team of programmers. But remember – he was just a stock assistant, and a teenager at that. As yourself how much latitude you'd offer such an employee.

Give your people an opportunity to innovate – give them time to learn and room to fail – and the most amazing things will happen.

Lifelong Innovation

It can't be denied: I'm not as young as I used to be. But, in spite of the shoulder ache that keeps me up at night, and the various other reminders of the onward march of time, I do not believe that my best years are behind me – quite the opposite, in fact.

That's why it was refreshing to read this piece in the Wall Street Journal, written by George Anders. Leading companies are looking for ways to support creativity in employees well beyond the traditional age for epiphanetic experience. Indeed, according to the article, over the course of the last 75 years or so, the average age for breakthrough discoveries has risen about 10%, to 40.

Is it reasonable to expect our more experienced staff to contribute at the same level as energetic, recently matriculated newcomers? Much has been made of the simple fact that employees produce according to what is expected of them. (If you have a citation for me on this point, please send it along - I couldn't come up with one quickly enough to make it into this entry.) If we expect creativity and innovation from our employees – all of them – a few interesting things will happen:

• We will set goals according to that expectation.
• We will reinforce creative behavior among all our employees, young and not-so-young.
• We will see breakthrough thinking coming from unexpected quarters.

Accepting less from more mature employees amounts to simple disrespect. I am pretty sure that my bosses expect me to supply, directly or through my team, a more-or-less ongoing series of innovations and creative solutions, in spite of my graying (remaining) hair. I wouldn't insult any of my own staff by expecting less from any of them. As the article suggests, finding ways to support that level of productivity among employees of all ages is an important characteristic of people centered leadership.

Empowerment and Innovation

Today I happened to be speaking to one of my team about empowerment and innovation. Probably I was influenced by an article I had picked up in the doctor's office earlier in the day*. The piece, written by management power-duo Jack and Suzy Welch, addresses the culture at Google (and, I hope, many other places), which “freely permits employees to work off-site and encourages them to use one day a week to explore any kind of ‘what-if’ project that interests them.”

Jack Welch, of course, is famous for his tenure at the head of GE, the nice folks who bring you so many Sunday morning talk shows. I've always thought of GE as a stereotypical, big, conservative, stodgy American corporation. But, when I focus on their core business, I realize that they are essentially a giant technology innovation engine (literally – if you don't believe me, check out their cool tutorial on jet engines.) Even their motto – “Imagination at Work” – sounds like it belongs to Disney... or perhaps Google. So it probably shouldn't have surprised me that Jack and Suzy had some interesting insights into empowerment and innovation.

“Empowerment,” they note, “is less likely to happen in bigger companies, which is the opposite of how it should be... Big companies do tend to be risk-averse, keeping decisions near the top, while small ones, and in particular startups—short on resources, formality, and time—tend to unleash every brain.” (Emphasis mine.) They go on to point out that big companies can afford the risk that empowerment represents, while smaller companies can often go under due to a single erroneous decision.

It's fairly obvious that real empowerment – and, frankly, real innovation – is more common in smaller companies. What is new is the recognition by a Fortune 10 CEO that this isn't the way it should be. The challenge for Google is to keep alive the spirit of innovation that got it to where it is now, a challenge shared by any big company that wants to avoid getting pantsed by a couple of PhDs in a garage in Palo Alto, Pasadena, or Cambridge.

Have I seen any evidence that big companies are getting this message? Outside of a few technology firms, no. Instead, thanks in part to Sarbanes-Oxley, individual empowerment is at a nadir. There is little room for creativity when all business problems are supposed to be addressed in the same, regimented manner, using the same, tired techniques, and requiring the same, groupthink approach. Requirements. Development. Unit testing. Integration testing. User acceptance testing. Migration. Celebratory lunch. Repeat.

Small, private firms are exempt from SOX, and have not yet developed the culture of risk avoidance shared by so many large public companies. Employees are less likely to have HR-prescribed, set-in-stone job descriptions, and auditors are unlikely to drop by to ask for copies of approved change controls. As a result, individuals have much more room to innovate; indeed, they are generally strongly incented to do so by stock options whose value they can thereby impact directly.

Until big companies can find a way to create space within their latticework of regulations, policies, and procedures for employees to innovate, they will continue to earn their reputation as places where cool ideas go to die.

*) Quick question: if you have an 8am appointment, and the office opens at 8am, shouldn't you actually see the doctor well before 8:30? Because that's when I saw him. Sheesh.

More Staff, Fewer Managers?

When I saw the title of the Wall Street Journal article, "Overseeing More Employees With Fewer Managers," I was sure I'd hate it. To me, more employees and fewer managers means less time spent with each employee — less time to:

• Mentor
• Provide and receive feedback
• Identify strengths and find a way to leverage them
• Work with a struggling employee to return him to productivity and success

To my mind, those are key reference points in any decision concerning team size. But is there an upside to this philosophy? Are managers able to increase their "span of control" (more on that phrase in a future posting) and still end up with perfectly acceptable, people-centered results?

The article describes a Pepsi subsidiary in which "workers have been briefed on company goals and processes so that they do more themselves to keep production running smoothly." The piece goes on to explain that "[n]ew pay systems reward productivity, quality, service and teamwork while penalizing underperformance."

So, do empowered employees require less personal attention? Empowerment is certainly compatible with — even a requirement of — people-centered leadership. But does empowerment dilute the role of the leader, as the snack-food company would have us believe?

Maybe, but I'm skeptical. Deprived of individual guidance, we will expect employees to use their knowledge of "company goals and processes" to grow, thrive, and make good decisions. Well, I'm in favor of keeping your employees up to speed on those things; I'm just not sure that, in and of itself, acquainting your employees with the corporate mission statement constitutes leadership.

Of course, if the staff aren't as productive as we'd like, there's still no need to resort to manager intervention: the "pay systems" will make things right. That will sure save a lot of time on mentoring, intervention, and personal support.

In technology, we look to our teams to offer creative, practical, and innovative solutions to business problems. Leadership is critical to making that dynamic work. The WSJ article notes that Sun Microsystems - certainly a major technology innovator, notwithstanding its current precarious financial position - prefers to keep teams on the small side.

As long as we, as leaders, have something to offer our employees — as long as we can help them overcome challenges, meet their goals, and realize success in their professional lives — we owe it to them, and to the companies that employ us, to ensure that we have sufficient capacity to do so. Ultimately, employee empowerment, however laudable a goal that may be, is no substitute for the individual support and attention of an effective and dedicated leader.