In recent years I have come across some poor examples of objective setting and performance management. This article is based on treating employees as responsible grown-ups and is focussed on excellence. If you would like to discuss any aspect further please get in touch.
We have added some footnotes to expand on some of the points in this brief article.
Garry Ridge, CEO of WD-40 Company, still remembers the first time he heard Ken Blanchard talk about how, as a college professor, he would hand out the final examination paper on the first day of class and then he would teach everybody the answers throughout the course of the year.
It made Ridge ask himself, “Why don’t we do that in business?”
After all, in business we aren’t really testing people to sort them into a normal distribution curve. But that is what you might think if you took a look at the performance review process in most organisations.
Ridge turned the idea over in his mind and wrote the 2009 best-selling business book, Helping People Win at Work: A Business Philosophy Called “Don’t Mark My Paper, Help Me Get an A”.
In addition to writing about the subject, Ridge put the concepts into practice with the employees at his company, WD-40. He would give each employee a copy of the final exam at the beginning of the year—in the form of annual goals—and then have managers and supervisors partner with their employees to help them get an “A”.
It would be a radical departure from the way that most companies conduct their performance management system—and it would generate radical results, including a 93% engagement score and, in 2010, the best performance in the company’s 57-year history.
Putting the System in Place
The WD-40 system starts with setting clear goals because, as the late Stephen Covey said, “Nearly all conflict comes from differences in expectations.”
As Ridge explains, “Our team members sit down with their leaders and look at their job specifications and their goals and then line them up with the organisational goals. Then they look at what an ‘A’ level performance looks like, focusing on four to six goals that are aligned with our tactics.”
Once team leaders and team members are clear on the goals, the next step is execution. This is where day-to-day coaching comes into play.
“This is a major part of the ‘Don’t mark my paper, help me get an A philosophy,’” explains Ridge. “In most organisations, after goals are set, managers file the goals away and don’t think much about the people’s performance until they realise they have to do their annual performance reviews. The only other time they think about their people’s performance is when something goes wrong. These managers tend to manage by exception. When a red flag goes up, they go to work and start managing.”
At WD-40 Company, the agreed-on final exam is just the beginning. Now comes the key step: the leader has to keep up his or her end of the partnership relationship on a day-to-day basis, by helping in coaching and supporting the individual to get an “A”.
Leaders and direct reports get together to analyse the employee’s development level on each of his or her goals and determines the leadership style that is a match. This process helps employees ask for the help they need from their managers as they move toward their “A” in each of their agreed-upon goal areas. It provides the basis for the day-to-day coaching of team members.
The next step in the process is a more formal quarterly review where managers sit down with team members and discuss where they think they are at with each of their goals.
As Ridge explains, “You’ll hear people say, ‘I think I’m getting an “A” here, but I think I’m getting a “B” here.’ And then we want to talk about the B’s. We will ask, ‘What is getting in the way of you doing great work? Is it something within the company? Do we need to get some help? Are things just crappy out there? Do we need to adjust a little bit?’
“And so we have these check-in meetings four times a year. And there are no surprises. You know exactly where you are. And the other thing that it does is that it is rewarding to the employee because it forces the leader to have a conversation with the employee and actually talk about the good things that they are doing.”
Create an Organisation Where Everybody Wins
When you help people win at work, both the organisation and the employees benefit.
As Ridge explains, “When employees have clear expectations, and day-to-day support, it impacts their level of engagement. At WD-40, our engagement number is 93%, which means that 93% of our people globally get up every day and go to work doing meaningful work, which is work that they find is adding value to them and the company on a daily basis.”
In addition to that, Ridge can also point to great bottom-line results as the organisation just had the best year in the company’s 57-year history—an especially amazing feat in these tough economic times.
“And that is fantastic,” says Ridge. “It means that people come to work doing things that mean something to them, that they feel is making a difference in the world today, and that is developing them internally as well.”
- Instead of asking direct reports to write their own objectives for the coming year, ask them to frame them as outcomes or results or achievements of the year.
- Excellent relationships are key to business success and happiness. So ask direct reports to include desired outcomes for two or three key relationships – their direct reports, peers, bosses, key clients etc.
- Also ask direct reports to include desired outcomes for their own continuous learning or becoming more entrepreneurial or creative or innovative.
- Here is a six question framework for having valuable face to face progress discussions with each direct report each month or once a quarter:
- Where are we going? First of you outline where you think the organisation and team is heading then ask the direct report ‘Where do you see the organisation/team heading?
- Where are you going?
- What are you doing well? Add your own specific points.
- (i) Here are some suggestions for improvement. (ii) Ask ‘If you were the coach for you, what suggestions would you have for you? Then agree a consensus around (i) and (ii)
- How can I help you better?
- What suggestions do you have for me?
Source: Marshall Goldsmith
Asking direct reports to write their own objectives is not a new idea. For example, see ‘Giving an A’ in chapter 3 of the excellent book ‘The Art of Possibility’ by Rosamund Stone Zander and Benjamin Zander, published by Harvard School Press in 2000.
Richard Fox and Ray Lamb are leadership coaches. For some of our resources on coaching please see www.coachingknowhow.com