The following is an excerpt from a letter Ken Bram, President/Ausco, Inc., wrote to his peer advisory board. It’s a great example of a company moving to adopt a Performance Culture by creating frequent touch points between managers and employees.
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Dear Board Members:
Last year I read the book, The Hard Thing about Hard Things, which is possibly the best business book I have ever read. The book talks about why it is hard to be an entrepreneur and build a business like ours simply because no one has done it before. All our businesses are unique and there is no cookie cutter answer to the problems we face. In the book, Horowitz talked about the best management book he had ever read, High Output Management, by Andy Grove, the CEO of Intel. Horowitz and Grove emphasized the monthly one on one conversation that a manager should have with each of his direct reports. This is consistent with advice given to me many years ago by a management consultant who helped create AUSCO’s management system.
Many large public companies are ditching their annual performance reviews for something with more frequent touches. The most famous example of this is GE, which discarded the practice of forced striation. This practice grouped employees into 3 buckets – A players (top 10%) who would get large bonuses, “B” players who got to keep their jobs, and “C” players (bottom 10%) who were fired. The intent was to prevent mediocre employees from hiding. When Microsoft tried this under Steve Ballmer, it killed their corporate culture. People no longer helped each other and, in fact, sabotaged each other’s work.
At the same time, the primary purpose of these reviews was to determine how much of the bonus pool each worker would get. Managers would fight to get larger slices for their favorite workers.
The benefit of setting performance and developmental goals was lost as the accountability (or lack thereof) was used as a club. The big companies now recognize that their performance management system had a detrimental effect on their people.
At a recent Vistage meeting I attended in NYC, the guest speaker proposed monthly touches, which could be accomplished via email. He recommended that each direct report would submit a simple email on the 5th of the month listing 5 things that were accomplished last month and 5 goals for the current month. The manager could then reply back with any comments. The 5 things should be significant. I would rather have 3 or 4 instead of 20 small items. This would give enough information to see if the worker was doing a good job, was struggling, etc. I think that understanding the accomplishments and challenges that an employee is confronting is important. I disagree that you can manage by email.
Andy Grove recommended that you go to the employee’s office for the one on one conversation. You can see the piles of work not done, the priorities that they have, etc. I prefer to have the meeting on neutral ground and usually go to lunch. Sometimes it is a nice place, sometimes it is at a pizza parlor. It doesn’t matter. You are away from the distractions that would occur in either of your offices.
The most important thing for me is reviewing last year’s goals and setting the performance and developmental goals for next year. I think that waiting for a year to revisit these items is too long a period and, in 2017, I plan to touch on these goals quarterly.
I have asked my direct reports to email a list of their 5 and 5 on the 5th of the month. After receiving and reviewing them, I schedule a lunch with them and our agenda is the following:
- What did you do?
- What are your goals?
- What challenges are you having?
- How can I help?
This is their opportunity to bring any items to my attention that they think are important. I try to take any issues that they are having and work out potential solutions together. I don’t want them to turn their problems into my problems. I publish my 5 and 5 and am considering distributing the entire management team’s to each other.
I hope this helps.
Regards,
Ken
