How do you measure up?

It can be difficult to assess which employees under-perform and the reasons
why they are not meeting their expected targets. But a guideline developed by
senior partner at Personnel Works Paul Kearns should help you pinpoint problem
areas

If you or your organisation really want to take performance measurement
seriously then there needs to be an agreed framework installed so that everyone
is working to the same blueprint.

But I am not talking about common appraisal forms or the need for job
evaluation. The framework needs to encapsulate the company’s philosophy on performance,
adhere to the principles of performance measurement and management and
simultaneously offer a practical basis for implementation.

You might wonder what wonderfully sophisticated system could possibly fulfil
all of these requirements. It is a framework that has been around for a long
time, and it is usually referred to as a frequency distribution curve. For the
time being I will refer to it as a normal, performance distribution curve, otherwise
known as a bell shaped curve. One is shown overleaf.

The performance measurement curve

But how do you construct a frequency distribution curve and what does it
tell us? If you asked everyone in your organisation for their shoe size the
theory of probability suggests that they will range from very small to very
large. If you actually charted the range of shoe sizes on the X-axis and the
number of employees, of each size, on the Y-axis, there is a very good chance
that the curve would look like the one on page 22. Most employees would have
average sized feet and there would be a smaller number, at each extreme with
very small or very large shoe sizes. That is all a distribution curve does.

I could go further and suggest that, whatever you measure, there is likely
to be a similar distribution curve – height and weight for instance. So, if
this is a fundamental law, would it hold true for measuring the performance of
employees?

I asked one group of managers to score their staff on a simple one to 10 basis,
just to see if it produced this curve. This was after having already given them
guidelines that scores of less than three are indicating that an employee’s
performance is unacceptable and more than eight is a superior performance.

An HR director, present at the time, was horrified that this was being
suggested in a rather cavalier manner without using more sophisticated
measures. I was just about to suggest that there was no real harm in this
exercise when a senior manager sitting next to her smiled and said, "We do
this already, Paul is just asking us to put some actual figures on the
subjective assessments we have already made".

So it looks like the normal distribution assumption is sound. Consequently,
the curve would suggest that, in any particular organisation, there are a
majority of employees who come to work every day and do a reasonable, or at
least acceptable, job. A smaller number at the right of the curve are the
superior performers and potential high-fliers and at the opposite end are those
who do not even fulfil the minimum requirements of their job. This seems to be
a reasonable reflection of reality.

The performance management proposition

First you have to find some measures which will enable you to produce this
curve; secondly, regardless of the actual shape of this curve, what you need to
do is shift it. This is represented in the diagram by the move from the
continuous to the dotted line. All you then need do is work out how to shift
it.

There is nothing new in this idea but its practical application is, for most
organisations, revolutionary. Furthermore, performance deficiencies may not
rest with the individual employee, but could equally be the result of poor
process or simply bad management.

Within every section of this curve there are a multitude of human resource
issues.

Managing under-performance

My usual advice, to anyone using the performance curve for the first time is
to tackle the under-performers first. This does not mean that an organisation
has to become a brutal, hire- and-fire employer. But, by the same token, you
should not shy away from the whole issue of under performance either.

If the desired outcome is a shift in performance then you need to work on
the causes of under-performance. First, identify the under-performers and then
put some effort into analysing the causes of under performance.

Also, try to distinguish between lack of capability and lack of effort. This
is the antidote to broad-brush, scattergun, organisational change initiatives.

As with many things in organisational life, though, what appears to be
obvious on paper is less so in practice. No organisation would want to admit
that it tolerates under-performance – especially if the shareholders were
asking. Yet, in reality, every organisation does accept a certain level of
under-performance. So why is this apparent paradox so prevalent?

One reason is operational pressure. Recruitment can be a very time-consuming
activity and, once a new employee is recruited, there is a reluctance to go through
the whole palaver again, so soon.

Hard-pressed managers, who need every pair of hands available, will put up
with under-performance simply because any extra pair of hands is better than
none. Some managers also follow the principle, "Better the devil you
know", but this never was a brilliant management maxim.

Obviously, when the operational pressures relax at a later date, the damage
is already done. Not only will the employee now have some rights regarding
termination of employment, but there is also a build-up of emotional pressure
that tends to make the manager prevaricate about getting rid of them.

Few managers actually relish the possibility of firing someone. Moreover, if
this under-performer happens to work for an ineffectual manager then they may
well choose to transfer them to another team rather than become involved in
dismissal proceedings.

Not all "under-performers" are bad employees though.
Under-performance may be an issue simply because training is inadequate.

There can even be a culture that accepts under-performance. Some
organisations believe employees are always worth another chance or do not want
to admit failure. They may also feel that they are sending the wrong signals to
their workforce.

Companies such as IBM used to go even further and had a "no
redundancy" policy for many years. But this led to such organisational
atrophy that their policy had to change.

The most startling example of how simply and effectively this curve can be
used was demonstrated when I received a call from someone who had been on one
of my public seminars. He introduced himself as the sales training manager for
a large life insurance business. I had not spoken to him at the time of the
workshop, or since, but he told me that he had constructed the performance
curve and acted on my advice. He did this simply by asking the sales director
for the current sales commission figures for the sales force, producing the
distribution curve, and then agreeing with the director where the lower
(unacceptable) and upper (superior) cut-off points would be.

He was ebullient on the phone and the reason for this was that he was
ringing to tell me what a success it had been. In fact he quoted me sales
improvement figures of up to 24 per cent.

I was intrigued to find out more, so he told me that he had listened, in
particular, to my advice to always focus attention on the lowest end of the
curve first. To this end he had designed a new training programme called the
"under-performers initiative". He sensed my shocked reaction to the
notion of stigmatising the under-performers and assured me that most of them
were quite willing participants in the programme. They wanted to continue
working for the company and had an obvious vested interest in improving their
sales and the commission they earned.

Even more interesting was that once the successful figures were publicised
he began to get inquiries from the superior performers on the curve. They were
so well motivated that they, too, thought they could learn something to their
advantage from the under-performers programme. So much for the stigmatism of
under-performance.

There are no perfect answers in performance management but there are some
very good reasons why under-performance should be dealt with effectively, if an
organisation wants to aspire to become high-performing.

I gave the advice to the sales training manager, to focus on the
under-performers first, because dealing with under-performers is likely to
achieve the biggest, immediate payback. Also, under-performers are damaging to
the business. This may be through inefficiency, poor customer service or even
exposing the business to risk. Either way, eliminating poor performance is
bound to have an immediately beneficial effect, so it is worth continuing.

Probably the most serious consequence of failing to manage under-performance
effectively, though, is that it undermines any attempt to encourage outstanding
or superior performance. How can you expect performance improvement from
acceptable or superior performing employees when they can see the issue of
under performance being side-stepped?

Acceptable performers

As Napoleon said, when asked why he had executed some of his own generals,
it was "pour encourager les autres". This is the other, beneficial
by-product of dealing with under-performance.

When the organisation starts to send clear signals about what is an
acceptable level of performance it has two simultaneous effects on the bulk of
the employees. They can now see that they do not have to carry passengers any
longer and, by definition, their own performance has openly been recognised as
being of an acceptable standard. This is desirable as both of these are
morale-boosting.

Similarly, those who are on the borderline of acceptable performance will be
in no doubt as to where the organisation is heading and what it might mean for
them if they do not start to improve.

Superior performers

Superior performers are a very different proposition. They are already
highly self-motivated. They are more likely to be ambitious.

If their performance is to be managed maybe they are just waiting for an
opportunity to excel. This could simply be a case of giving them more of a free
rein or an opportunity to shine.

In this group there may be reward issues or the re-designing of roles.
Perhaps the high performers can mentor or coach the under-performers.

Despite my normal suggestion of starting with under-performance there are
also compelling arguments for focusing on superior performers. If these are the
brightest, most innovative stars they could be the source of enormous added
value as long as their potential is tapped.

Perhaps the biggest question for the largest organisations is are you
getting the full potential out of these people?

Starting to produce the performance distribution curve

Without actual performance measurements, though, all of this is just an
academic debate – it’s great in theory but question- able in practice. If you
cannot measure performance you cannot manage performance. This was one of our
founding principles. So you need to start measuring now.

The best way to start measuring performance is not to be too much of a
purist. Sir John Harvey-Jones was absolutely right when he said that "best
is the enemy of good". If this is a new technology then you have to try
walking before you start to run. A simple measurement system is all you need to
get moving.

By Paul Kearns

This is an edited extract from Measuring and Managing Employee Performance:
A Practical Manual to Maximise Organisational Performance Through People, by
Paul Kearns, Financial Times/Prentice Hall. ISBN 0 2736 4998 1. Price: £49

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