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Can we trust our workers to perform?

Not only do we need to set up a system where the employee knows what is expected of them, we need them to understand and provide feedback on the results. They need to be empowered.

Progressive organizations are embedding the performance measures into the position descriptions using an outcome-based approach. The quantitative performance measures empower employees to manage their own performance and report back to the manager/supervisor- obviously with the necessary checks and balances. It applies from the CEO or even Board right down through the organization e.g. delivery driver which can be by shift or 6 weeks whatever.

This human capital management approach provides the definition of expectations in a quantitative way, empowers the employee, encourages motivation & innovation and rewards the employee for effort above and beyond the normal expectations (position target performance measures). The organization also knows they are getting a positive return on the performance pay – this is a win win situation.

With the performance envelopes in place the employees can interpret the data as quickly as the supervisor. As an example, in 1990’s this was introduced at Kellogg Australia and, just taking the Cooking Team, they could not only tell you whether the cook was in specification, they could also tell the supervisor why it was in spec. or tending towards the “out” and what needed doing to fix it. The supervisors moved to another site where they receiving feedback but more importantly spent time focusing on their own performance measures (which included an accumulation of the teams at the plant).

This empowerment was a new concept in the 1990’s but today it must be the approach we adopt if we are to become a progressive organization. We have to utilize and [...]

Making 2015 a year for moving forward in a structured way

The world is and will continue to be an ever changing place bringing with it the uncertainties and risk which can cause us to bunker down and remain in our normal comfort zone. This cautious and sometimes defeatist approach is reflected in a number of the electronic discussions that featured in 2014 and focussed largely on dealing with the negatives in a largely reactive way.

Maxumise believes that we are missing opportunities and that in 2015 we should be taking a more proactive and progressive approach. While the uncertainties will not go away, at least we will be taking more control of our organisations destiny.

The proactive approach will need to be strategically driven with a clear and common understanding of where we want to be in say 3 to 5 years as an organisation and identify the corporate risks that need to be monitored. In the current global climate of “what’s going to happen next” and governments struggling to take control and drive their countries forward it is easy for an organisation to lose focus and start to pull in different directions. We had the opportunity to ask 6 Directors and a CEO to write down what they saw as the organisations one “core business”. We ended up with 7 different answers and while 2 were similar the answers were largely quite different. This meant that every time a decision was to be made around the Board table each member’s decision was based on a different “business” – no wonder decisions could not be reached or took a long time to be reached. Each Board member was “rowing” in a different direction. It was not surprising that this confusion was also reflected the operations and [...]

Behaviour versus Competence

As we come to the close of another calendar year it is a good time to reflect on our organisations performance and whether we have the right people in the right positions.  Once we know we have designed the positions correctly and have the right competence in the employees then we will have the “people power” we need.   The obvious next question is: “are we paying our people correctly?”  – this role sizing and position evaluation will be the subject of another blog.

You will probably have noticed the global trend of focussing on “behaviour” of the employees including a recent AHRI LinkedIn “… Dealing with Employees Defensive Behavior”.

Maxumise has found that in most cases the “behaviour” issues are a result of a lack of competence.  The lack of competence often comes from, firstly a poorly designed position and therefore not recruiting the “right position”.  Then once the ideal position is designed properly we can recruit the right person or assess the incumbent to see if we have the right person in the right position.  If gaps exist (and they often do) then we provide and/or arrange for the competency development.

The defensive or other behavioural issues is usually directly associated with a lack of competence and the employee compensating for this lack of competence.  We recently completed an assessment and development program for potential “CEO’s” in an organisation (sponsored by the Board) and when the assessment results came out one Manager was written-off due to the gap in competence but more for the low attribute score – aggressive.   It was decided to continue with phase 1 of the development (largely competence development).  As we developed the competence in this manager the attitude changed dramatically to the extent CEO, Board, customers and even family members commented on the change over [...]

Job, Position and Role Descriptions

What do these terms mean in modern Human Capital Management?

The term “Job” description is an old terminology and needs to change as “Job” refers to a piece of work.  This was OK in the days of narrow focussed task based activities rather than the broader outcome based work specifications.  The terms that seem to be emerging is “role” as the generic definition and “position” as the specific role in a structure i.e. location specific.  Take the installation of a Water Heater;  it used to involve a plumber, electrician, gas fitter (if gas) and even a brickie to put in the base.  Today it is installed by a “Water Heater Installer” or as we came across “Appliance Installation Technician”.  The outcome is in broad terms “hot water supplied”.

With an outcome based approach (which Maxumise recommends) the performance measures are integrated into role and position description (defined in role description and quantified in position description).  This then provides the link to the competence which again should be part of the position description i.e. the competence required to produce the outcomes at the standard set by the performance measure.

As described above, the outcome is what is produced for the “customer” but could involve a number of “jobs” (as discusses above).  The outcome is easier to measure and put into a Position Description.  If this position description incorporates the measures then it is both informing the position holder of the expectations as well as empowering them to produce the outcomes at or better than the standard set in the performance measures.  This leads to continuous improvement and therefore the position descriptions need to be updated at least annually or if there is a new recruitment.

We recommend that the terms that [...]

Performance Management and role of Balanced Score Card

Performance Management

The Balanced Score Cards has been around a long time and seems to go through resurgences and corresponding declines over time. There is nothing wrong with the balanced score card approach as a tool but in the modern world of human capital management it is no longer the end program. Today organizations need modern quantitative and integrated programs that recognizes the value of the human resources at all levels i.e. traditional employee relations through to business market capitalization.
A kit-bag of separate non-integrated tools is not going to deliver the human capital management solutions we are seeking. When balanced score card was developed we had a host of personnel programs that were anything but integrated and supportive; these included the performance appraisal (which was enhanced when BSC was introduced), old “job” evaluation that reinforced the incremental system, numerous instant recruitment and selection tools, incentive programs and the list goes on. Other than the fact that this were separate and sometimes conflicting tools, the key drawbacks were that firstly they focused more on what was being done rather than adequately defining what is needed as an ideal contribution or need. Secondly they were not strategically driven, outcome based i.e. they were focused on achieving the activities rather than producing an outcome that contributed to the organization in a defined way. The integrated HCM is often missing and therefore we do not get the alignment between the organizational needs and the people, whether new recruits or existing employees developing along with the changing needs of the organization.
Performance management is about defining the outcomes and then identifying the controllable measures against those outcomes which applies whether we are looking at the strategic direction over the [...]

Operational Audits

What are operational Audits and what role do they play in your organisation?

There are generally 2 types of audits the compliance audits which are often reactive and after the event.  The operational audit are pro-active and consider both compliance and criticality of the situation.

The compliance audits that should be applied and in some organisations this comes under the “financial” audit – these are general “pass” or “fail”.  These are a requirement for generally the financial related control of the organisation/business.  However the critical audits from a management of the operations perspective are the audits that  include both manager and employees in conducting and analysing the results and referred to as operational audits – some accounting firms object to this name so you may find them referred to as Operational Inspections.

The operational audits are the proactive audits that provides the assurance that the organisation is doing what it says it should be doing.  If there is no documentation on what “should be” then it is difficult to audit.  A good organisation will have a Monitoring and Controlling framework and is like a tripod – “stable and can carry a good load”: a) Policy and Procedure framework, b) Service Level standards (Internal and External) and c) Operational audits.  These audits consider both the compliance and the criticality.  They probably exist in some form for say H&S and maintenance.

This should not only be for HR but across the organisation – a good Monitoring and Controlling framework will support a performance management system that empowers the employees and ensures an efficient organisation. If we find that there is no real P&P framework or what we have is a mix of P&P then the Service Level Standards (SLS’s) or Service [...]

Chief Executive Officer Assessments

If we are not empowering our CEO’s to manage their own performance then why are we employing them?

The organisations Strategic Plan (rollover) should establish both the short term and long term quantitative performance criteria both financial and non-financial. If these measures are established as envelopes then the Board can empower the CEO to manage their own performance and report performance against these measures at each Board meeting. If the measures are within the envelope then great work, if trending out then what is being done to fix the trend and if outside the envelope “where is the board paper to escalate the issue”.

If the CEO has to wait to be informed of their performance then the performance framework is not adequate and the companies “good governance” may be in question as this framework will incorporate the corporate risk. The CEO must have both short term (annual) and long term measures as this is why we employee a CEO to shape the organisation long term as well as manage and lead it for today.

Maxumise is highly experiences in developing CEO competency profiles, recruiting CEO’s and assessing both the performance and the competence of the CEO’s and executive teams.

We recently assessed a CEO that the Board had appointed just over 12 months before and was not meeting the Boards expectations. When we reviewed the position description that was used to recruit the CEO the competence levels were well below what we expected for that organisation and Board expectations. The HR Sub committee chairperson who developed the position competency profile and facilitated the recruitment was themselves well below the competence of the CEO and clearly demonstrated that they did not understand the requirement’s – we refer to this [...]

Performance Management & role of BSC

The Balanced Score Cards has been around a long time and seems to go through resurgences and corresponding declines over time. There is nothing wrong with the balanced score card approach as a tool but in the modern world of human capital management it is no longer the end program. Today organizations need modern quantitative and integrated programs that recognizes the value of the human resources at all levels i.e. traditional employee relations through to business market capitalization.

A kit-bag of separate non-integrated tools is not going to deliver the human capital management solutions we are seeking. When balanced score card was developed we had a host of personnel programs that were anything but integrated and supportive; these included the performance appraisal (which was enhanced when BSC was introduced), old “job” evaluation that reinforced the incremental system, numerous instant recruitment and selection tools, incentive programs and the list goes on. Other than the fact that this were separate and sometimes conflicting tools, the key drawbacks were that firstly they focused more on what was being done rather than adequately defining what is needed as an ideal contribution or need. Secondly they were not strategically driven, outcome based i.e. they were focused on achieving the activities rather than producing an outcome that contributed to the organization in a defined way. The integrated HCM is often missing and therefore we do not get the alignment between the organizational needs and the people, whether new recruits or existing employees developing along with the changing needs of the organization.

Performance management is about defining the outcomes and then identifying the controllable measures against those outcomes which applies whether we are looking at the strategic direction over the next 5 years [...]

Competent Managers Key to Business Success

Case Study – Business will only succeed if we have competent managers and employees.
The performance management system will fall down if we do not have competent managers and employees. It is essential that the organisation develops the position specification, based on the organisation strategic objectives, before we consider the employees or applicants. If not the organisation could just be reinforcing the past behaviours and practices.
Understanding both the Position first then the Employee
A quantitative performance management system, when integrated into an outcome-based competency approach, is certainly a means of identifying competency shortfalls of employees at all levels including managers, CEO and Board. It is the organisations that are prepared to address these shortfalls that will develop and grow. We have recently been commissioned to undertake the assessment of senior managers in a medium sized organisation one of its subsidiaries.
The commission was to design 17 ideal positions based on the organisations strategic direction for the next 3 years.
Assessing the Competence of the Incumbents against the Ideal Position
The next step was to assess the 19 incumbents against the ideal competency profiles using an outcome based competency approach. The findings were frightening (see the graph below):
1. 17 of the 19 assessments failed to reach the required level i.e. only 2 incumbents were fully competent against the positions they held and were being paid to do.
2. Five (5) incumbents were more than 10% under the required competency level and the most incompetent was 18% under capacity.
3. The average gap was 8.6% i.e. the organisation had managers that were on average 8.6% “under power” but some managers nearly 20% under power/under competent.
4. Performance of the functional areas broadly reflected the competence of [...]

Human Resources are True Assets

The value of the HR asset can be calculated and an increasing number of organisations are putting the HR assets onto the balance sheet, although currently only as a balance sheet note, but it is still used and reported on. In the valuation of our company the HR assets explains the gap between book value and market capitalisation, and that gap is made up of human capital and other intellectual capital.

This places the focus on increasing the value of our people and to do this we need to define the structures and positions correctly incorporating a performance management system that empowers the employees; letting them produce the outcomes using initiative and innovation. This will progressively increase the competence and therefore increase productivity i.e. an increase in HR asset value.

To be in a position to allow the organisation to place the HR on the balance sheet (Note) the organisation must have a clear strategic direction/focus, be outcome focussed and the key HR programs must be integrated:

  1. Strategic Planning – current and future capability and performance frameworks;
  2. Structure Management;
  3. Role design (size) and position evaluation – a precise form of the old outdated “job” evaluation e.g. point-factor
  4. Employee Management; management of an incumbent’s performance achieved against the performance set in the role description
  5. Performance Management system;
    • The performance measurement envelope – target, high stretch and danger
    • Performance achievement management – predictive modelling and performance reward calculations
  6. Recruitment and Assessment – acquiring and matching people against role design;
  7. Learning and development based on competency gap
  8. Strategic Reporting including HR asset value as a “balance sheet” note.

Maxumise is a consulting company with over 20 year history of Assisting Organisations Improve their Performance through the better management of resources, particularly human resources.

Maxumise provides a Human Capital Management methodology as well [...]