The most extensive expense line on the income statement is compensation and benefits, and this expense must be maximized and leveraged. To get the most from your comp and benefits expenses, starts with performance management. Unfortunately, performance management has become an annual or semi-annual exercise in futility for too many organizations. When performance management becomes a rehashing of past mistakes, it is demoralizing and ineffective. Performance management anchors these events with annual pay reviews, and it becomes stressful and counterproductive.
When performance management becomes this annual event, it feels like being four years old and anticipating Christmas. As the big 24th day of December gets closer, we are much more careful about our behavior. On the 25th, we expect our wish list has been fulfilled, or we find a lump of coal. How often does that 3% raise feel like a lump of coal? I’ll let you answer that question.
What do we need to do to correct performance concerns?
It starts with investing the time to teach managers and supervisors coaching skills and providing them with coaching tools. Performance management is not a calendared event, and it is a continual process of practicing the following skills designed to make work expectations clear:
- Clearly and frequently reinforce the person’s job and its purpose. They should never have a doubt why their job is important to the credit union, their peers, and the member.
- Set clear expectations on what results (daily, weekly, monthly, annually, or by project task) are expected.
- Be very precise on when the work is to be completed.
- Set consistent times when they are expected to review update their progress – follow-up.
- Clarify the employee’s responsibility to report mistakes or the potential of missing any deadlines.
- Explain the consequences if mistakes are made or deadlines are missed if there has been no attempt to identify these occurrences immediately upon discovery.
I have always had a mantra with those who reported to me.
“You and I have a covenant. If you make a mistake or anticipate missing a deadline, I need to hear it from you first. When I make a mistake or miss a deadline, I promise you that I will own up to it, and I expect the same honesty from you.”
This management discipline of being consistently present with your staff is necessary to create a high-performing business unit. We spend too much time in minutiae at the expense of coaching our staff. A supervisor or manager’s number one job is supervising and managing, and these two activities should make up the bulk of your workday.
But what about annual reviews, don’t we still need them?
Everyone deserves to have time to have a frank and open dialogue on their job performance at least once per year. Unfortunately, these annual reviews are done to make HR’s job easier. Instead of rewarding employees with raises and even bonuses when they are earned, they have channeled this effort into their compensation planning. But when the above coaching process is used effectively, an outstanding employee can be recognized and rewarded when they have reached a job and task milestone. The annual review time should ideally be a time for the employee and the manager to reflect on the wins, losses, strengths, weaknesses, opportunities, and threats to their role and career. It should be focused on learning what the employee needs to become more expert in their role. It should be a time to discover the employee’s job and career aspirations. It should be a time to understand the unique, professional, and personal challenges the employee is enduring today.
An organization can achieve and sustain a high-performing team by effectively managing staff. When this happens, the employees will take pride in what they are doing, the members will notice a unique difference in how they are being engaged, and the compensation and benefits costs will be maximized.