Eye on the Workforce

 Compensation looks to be going up in 2011 and you may need to keep an eye on your best people.

First, how do we know compensation is going up? Multiple surveys (Towers Watson & Co, Mercer, Hay Group and the Conference Board) have determined that median/average increases will be somewhere between 2.7 and 3 percent. That’s more than the last couple of years. A special report in Workforce Magazine, describes this as a “thaw” in compensation.

What does this mean? Is it good news for your project? The answer depends on what employers and employees think of the change. When employers are surveyed,

• 83% say that increased compensation affects retention
• 48% say that greater job security affects retention
• 56% say that more flexible hours affects retention

 Do employees agree? How far off (in percentage terms) do you think employers are from their employees?  When employees are surveyed

• 10% more employees than employers said that increased compensation affect retention
• 39% more employees than employers said that greater job security affects retention
• 24% more employees than employers thought that more flexible hours affected retention

Employers generally underestimate the impact of these factors. That means employers can be surprised by an exodus of workers when the stars align correctly.

US companies froze pay and reduced workforces more than other countries have over the last couple of years. In the near future, US companies are likely to maintain an emphasis on paying more for the highest performers, but they will also restrict salary increases for everyone else.

 So how will this affect your project? When other companies start raising salaries, your project workers are going to be interested. When other companies stop layoffs and start hiring, your project workers are going to be checking into job postings. When other companies start promoting their new flexible hours to attract the best performers, your best people will have a hard time rationalizing why they should stay put.

 It will take a while for the economy to start humming again, but this in no reason to become complacent about your workforce. Industries that have already started growing will be looking to poach your high performers - and your organization may be underestimating what it will take to keep them home.

The results of Fast Company's Influence Project have been available for a while now. In a nutshell, the Influence Project asked people to enter themselves on the project site, and more importantly, asked everyone to get others to do the same. Those who were able to get the most people to enter were denoted as the Most Influential.

The project leaders were not exactly sure what would happen - or what it would mean when something did happen - but were able to describe the results and discuss them briefly here. They even named some New Influencials here (that some commenters felt were old influencials).

Even though social media has been used in organizations for years now, a growing comfort with newer, more robust technologies among all workforce generations allows us a chance to consider new possibilities for a moment. Rather than "settle for" using these technologies to improve internal communications in general, what if we concentrated our efforts to improve specific roles for social media to improving performance within organizations?

We need more best practices to support these organizational influencials :

Project Managers . . . Social media should be used as a tool for the project managers' influence to penetrate deeply into even the largest projects, to create a climate that propels performance.

Organizational Leaders . . . More effective leadership communications can be achieved using social media with an eye toward success of projects. For example, social media can be used to initially communicate the business justification and priority of projects. Later, it can support timely decision-making to resolve complex escalated issues.

Organizational Change Champions . . . These individuals can use social media to influence larger groups more effectively so that change is easier and faster.

Experts . . . Many organizations now have centers of excellence, project management offices and other groups that would be able to use social media to get their best practices to be used faster and more completely.

Project Discussion Moderators . . . If best practices are used for the above influencials, discussion managers (we'll probably need a new title for this role) will need to employ skills to keep discussions "moving".  They will have to organize and promote discussions for project workers so that workers want to contribute rather than just read or ignore.

You can probably think of other potential "influencials" that can help project and workforce performance. But do you have experience using social media in this way? 

How do we design a supplement to performance reviews which, as noted in my last post, do more harm than good?

First, we managers have to abandon the "Manager as Omniscient" philosophy. Assume you do not know exactly everything about every employee's day. Assume you can easily make more than one of these performance evaluation errors that you yourself have been a victim of:

• Focus on a small number of incidents you just happen to hear about, for example a great review provided by someone who gained greatly from something that employee did
• Focus on small number of pieces of info provided by the employee, e.g. problems you had to solve, which you interpret as inadequate performance
• Apply obsolete initial assessment of employee which has never been objectively updated
• Misinterpret behavior of the employee or the motivations of the employee
• Misinterpret the results of employee actions
• Confuse subjective characteristic definitions like "shows initiative" with "doesn't take direction"
• Fail to recognize where the environment or culture keeps employees from doing their best, then blaming them for the problem.

Because of this ineffectiveness of the manager's understanding and interpretation, Allan Polak recommends "feedforward" rather than feedback. A performance "preview" rather than "review." Polak says the manager should help the employee with development needs and providing perspective for the future success instead of focusing on the past.

But you have to also actively pass more control to the employee. The employee has no control over the conversation and cannot have if the "event" is controlled by the manager and especially when the meeting involves salary discussions. A great way to give the employee control is to remove critical performance discussions from any major annual event. It must be the opposite of an event:  more timely, more common, targeted to employee need, developmental, casual, informal, positive, interactive, with mutual understanding. It is a continuing conversation. A conversation that benefits both the manager and the employee.

What You Said

• Elizabeth reminded us in this economy that we are often conducting evaluations for no material/financial benefit to the employee. She says we should use performance reviews to motivate employees. Wouldn't it be motivating if your manager switched to an approach like the continuing conversation?
• Which organization, which team, which individual today can wait a year for performance feedback meetings? None! That's why SFControl said that the year-long meeting should be a rubber-stamp, certainly not a surprise. That is exactly what happens when you have the continuing conversation. By the time the awful "annual review" comes around, both parties have effectively discussed performance, responded and discussed the results in several iterations.

More Thoughts

• Even during the continuing conversation, get away from behind the desk - that just sends the wrong signal. Talk in a neutral, comfortable spot.
• Managers aren't often allowed enough time to perform employee development duties . There's usually a fraction of the management week sliced off to meet employee needs, which is not enough. Perhaps this continuing conversation will be easier to fit into the busy manager-week.

Readers of this blog and elsewhere on gantthead have expressed strong feelings when it comes to managers, leadership and promotions. It is that important a topic for project managers. Managers may be project stakeholders, functional managers in the business, or actual dedicated project supervisors. Their skills scan make or break a project.

It is high time one particular related topic be aired out: annual performance reviews.

Is there anyone out there anymore who actually supports annual performance reviews? 

There has been a growing expert chorus against these reviews  recently and this has generated a serious response in agreement. Back in 2008, Samuel Culbert wrote this Wall Street Journal article to bash performance reviews. It got such a strong reaction, he wrote a book about the subject that came out this year. It is meekly titled Get Rid of the Performance Review!, and makes a very strong case. 

An excerpt: 

"Don't get me wrong: Reviewing performance is good; it should happen every day. But employees need evaluations they can believe, not the fraudulent ones they receive. They need evaluations that are dictated by need, not a date on the calendar. They need evaluations that make them strive to improve, not pretend they are perfect.

In fact, if firms did nothing else but just kill off this process they'd immediately be better off. When it comes to performance reviews, there's no question that nothing is better than something. That's how bad they are."

NPR interviews with the author appear here (where, I think, the phrase "total baloney" is used) and here.

Another example:  An article appeared in the Hartford Business Review Performance Reviews: Hate To Give Them, Hate To Get Them.

Some of my take-aways from these articles and interviews:

• Annual performance reviews do not have a foundation in excellent performance management techniques.
• One historical driver for annual performance reviews is to create a paper trail to support any needed terminations. (Not a very positive/constructive foundation, is it?)
• Among the major results of these reviews are intimidation by boss and "destruction of workforce morale."
• Tactics used to make these reviews more objective do not work. The fact that they are "marketed" as objective simply adds to the employee frustration.
• The connection between performance and pay is in reality firm as taffy
• Research shows that bosses do not like to give them, employees don't like to get them and productivity goes down in the weeks before and the weeks after the event.

In my experience, there have been "better" performance review programs and very bad programs. When my managers have not been supported in their duties as a manager of people and when they have not provided "feedback" more often than a few times a year, frankly the reviews were a joke and I lost respect in the company's ability to manage its own affairs.

Next week, we'll look at alternatives or supplements to the beloved annual performance review. Until then…

• What do you think of annual (or periodic) performance reviews?
• What has been inneffective or damaging in your experiences (on either side of the review program)?
• Do you support annual performance review programs?

More evidence comes in related to worker dissatisfaction - and now the recession is a clear contributor. Spherion reports (pdf) that 45% of workers who responded said their relationship with their boss has been weakened and 74% of those said that the recession was to blame.

When the details are checked, it presents a rather ugly picture.

Here's what respondents said bosses were doing:

• Bosses were not helping workers with their career development
• Bosses were not open about job security

Those behaviors were balanced (toward evil) by what the bosses were doing:

• Taking credit for workers' work
• Throwing workers under the bus to save themselves

Needless to say, this is yet another reason why workers are unhappy. A third say they are somewhat or very unsatisfied with their relationship with their boss. A little less than half do not feel safe enough to discuss sensitive issues with their bosses.

None of this is good news. Managers should be extending an extra effort to maintain a positive atmosphere in this recessionary environment.

You, as a manager, must have engaged workers to meet business or project objectives. Much has been written about how to increase engagement within this blog (very much actually), but worker dissatisfaction is being pumped up from many sources and now is a time for you to  press hard to maintain a culture where workers will give their best effort. Consider the results of this survey to be on your "Don’t Do list."

What do you think?
Are bosses having to "dig in" in these tough times to keep their positions? Is this affecting their relationship with employees?
Are bosses  trying to save themselves in this tough environment at the expense of their employees?
What have you experienced?