nAuthor: Roger Ferguson
Format: Paperback
Subject: Performance Management
Rating: 7/10
Summary:
My boss recently had the chance to listen to a presentation on performance reviews by the author. He liked what he heard. So, he asked me to review this book and determine if the process might be useful in our organization. The book is a very easy read; and does a good job summarizing the challenges with existing review processes. It also does an ample job of outlining a simplified version that should produce better results with significantly less effort. The premise is that traditional review systems are driven from top-down. They are not done on a timely basis to have any real meaning on performance. They take a ton of time and effort (high cost.) And, they provide very little value for the company or its employees.
Ferguson’s proposed solution is that each employee records their 5 most important accomplishments from the prior month along with their 5 biggest priorities for the next month on a single sheet of paper that is then reviewed by their supervisor. The supervisor should provide timely feedback on whether they agree or disagree with the priorities. They should also provide any other necessary coaching to help ensure the employee is properly focused. The remainder of the book covers tying these monthly check-ins to the annual review system. It also discusses the pros and cons of using this tool as part compensation management.
Ferguson also recommends that companies simplify their compensation system. He recommends giving all employees an x% unless the employee is on probation or some other sort of improvement plan. He also recommends allotting a bonus compensation pool that allows managers to give their best employees an additional percentage increase. His argument is that most managers are only allowed a certain % increase for their area anyway regardless of how great or bad their team is. Don’t waste managers or employees time trying to justify giving employee A a 5% increase, employee B a 4.5% increase and employee C and employee D a 2% increase.
What I liked Most About the Book: This is a very easy and quick read, and Ferguson’s system makes sense.
TLDR:
The “Dirty Dozen” Challenges of Traditional Performance Systems
- Tying individual goals to corporate goals is difficult if not impossible.
- Goals are seldom reliable for an entire year. – The business world changes quickly and the best companies change course quickly.
- Metrics do not always tell the entire story. – I am a HUGE proponent of metrics, but tying every employee to a meaningful metric is very difficult. What metric should be used for the executive assistant? What about the janitor?
- Even the best metrics can be manipulated by the employee. – I am aware that people often figure out a way to “game” a number, often at the cost of the company’s mission and overarching goals.
- Metrics are also subject to manipulation by management. – By now it should be apparent that Ferguson is somewhat skeptical of metrics.
- This is not an employee driven process. – The entire process often occurs with little involvement or value to the very employees it is designed to help.
- Annual Feedback is a very dated concept. – It is useless to provide feedback about activities that my have occurred months ago. Employees need timely feedback.
- Managers spend too much time on the process. – This cost companies a lot of money and detracts from time that could be spent on issues that provide more value.
- Employees are skeptical of the process. – Regardless of how hard I try, most of my employees think I don’t understand their work. To be fair, as I have progressed from a specialized manager to more of a general manager this has become more and more true. At least for the 80% of the things that my team does that provide 20% of their results. I almost always have a pretty good understanding of the most important 20% of their work, but it is difficult getting employees to understand that concept.
- At some point in the management hierarchy, the process breaks down. – This has been the case more often than not as I have climbed through the ranks. At some level in the organization, the process just doesn’t happen any more. – This causes any employee who goes through the review process to have that much distrust for the system.
- The process can create corporate liability. – Yes, I have personally read a lot of comments on reviews that made shake my head in bewilderment.
- It is difficult to tie performance to compensation. – This gets exponentially harder the more people you have involved.
Why the number 5? Experience shows that it is a good number. Some companies may find that some people/teams might make due with more or less.
The importance of 1 page: Some employees will want to list all of their accomplishments. It is important to teach them to list only the most important 5. An other accomplishments section can be included last on the monthly report, but each items should be very brief. The entire report should still fit on one page.
Big 5 Challenges:
- Monitoring Monthly Report Completion. – The program is only effective if it actually gets done. Email seems to be the easiest way to administer the program, but that makes tracking and archiving at least somewhat difficult.
- Avoiding Creep. – Unless the process is easy, people won’t do it. Don’t let people tack anything additional to the process.
- HR & Legal Approval. – I tend to be directly responsible for these areas, so I don’t see them as being too much of a road block.
- Quality of the Managers Response – This isn’t any bigger of a challenge than it is for a traditional review system, however, it can still only be effective if the managers give a meaningful review/response.
Other Notes: Do not try to use this system for formal corrective actions. Stick with the tried and true processes that you are already using.
