Building a Firm Foundation by Kevin McManus
First published in Industrial Engineer magazine September 2003
People that know me are aware of the business system hot buttons that I have. Just the mention of things like suggestion systems, employee of the month awards, performance appraisal systems, or sales commissions can send me off on a lengthy rant. Why do I have such a reaction to business approaches that seem to be so prevalent in today's business world? The answer is simple – these types of systems do more damage than good, and there are better alternatives.
From my perspective, installing bad systems in an organization is just like building a house without using rebar in the foundation or tarpaper on the roof. The house will look okay on the outside, but over time, the corners that were cut will come back to haunt the home owner. There are a lot of ways to lay a foundation, erect a frame, or assemble a roof, but there are also best practices that help ensure that your home improvement efforts deliver the results that were desired, over an extended period of time.
Suggestion systems are better than not asking for employee input at all, but they can also result in raised, but unsatisfied, expectations, a back log of work for some poor engineer, and dissatisfaction with the responses that management provides as they process those ideas that “are good, but not currently aligned with our desired business directions.” It is my belief that if you have a well-deployed annual planning process that involves all employees to some degree and regular process teams meetings where ideas arfe solicited and entered into a key project database, you do not need a suggestion system.
One might argue that in a similar sense, having an employee of the month program is better than not recognizing people at all. Because my distaste for ‘one winner' systems is so great, I really struggle with accepting this argument. One winner systems send the message that everyone else is a loser, whether we want to accept that logic or not. Instead, we should regularly recognize any employee or team that meets or exceeds certain performance standards.
Performance appraisal systems do their own type of damage when they are executed in the traditional fashion. Employees become dissatisfied when they are presented with negative feedback that they had not previously been made aware of, and in many cases, the employee's manager has not spent enough quality time with that employee to even begin to accurately assess their performance over time. I favor personal development plans instead, as I believe that all negative feedback should be delivered at the time when it is detected, and that the potential for negative feedback should diminish over time as the employee improves on the job.
I struggle to find the positive in compensation systems that include an individual commission dimension as well (I guess that tells you that I am not in Sales). I have yet to work in an organization where a team effort is not required to deliver a product or service. Sales cannot succeed without support from the production staff or the customer service group. As an alternative, I naturally favor profit sharing as a compensation approach.
These are just four examples of what I feel are dangerous systems to use in any organization. I am also aware of the fact that there are other people who believe in these approaches as much as I dislike them. Perhaps I have been fortunate to see both the negatives of these systems and the positives that come from replacing them. You might also want to argue however that I am simply opinionated.
Through the national Baldrige quality award process, I have had the chance to read about and visit high performing workplaces. I have also had the chance to talk with both front line employees and leaders in those companies that participate in this process, and I have learned about how they progressed from less effective systems to more effective ones. The challenge comes in convincing those who still utilize those less effective approaches that there is something better out there.
When you build a deck for the house using untreated lumber, you will see the results of your efforts to save money within a few years. Using a thinner carpet pad to cut costs will result in years of customer dissatisfaction if you have the chance to walk on a carpet that has a nice, plush pad underneath it. In organizations however, the impact of the low cost or quick fix systems that we choose to use is much less tangible, especially if the listening posts we use to stay in touch with our internal and external customers are not very well developed.
The systems we choose to use in our organizations, both large and small, lead to the shaping of perceptions and feelings in our people. As they do their job each day, these feelings and perceptions affect the quality of their work and the efficiency of their efforts. Our systems also encourage or discourage creativity, ownership, and long-term thinking. While we might want to believe that it's the people that cause our daily challenges or hold back our efforts to 'make things better', it is the systems that we use that really affect performance, attitudes, and effort. If you want to change behaviors, change the systems!!!!
I believe that the majority of the workforce comes to work each day wanting to do a good job, just as I believe that management causes most of the problems in organizations - they design the systems and choose which ones to use. You may consider these beliefs to be merely opinions, but I feel that there are facts out there to support them. These facts can be found in the great results that high performing Baldrige winners have realized and in the attitudes of your own workforce.
If you doubt what I am saying, take a poll of your people. Ask them what they think about your suggestion system, your sales commission structure, your performance appraisal process, or your employee of the month program. If these systems (or others) have not damaged the intrinsic motivation of your people too much or tarnished their attitudes towards management to a great degree, you might get some honest answers. If you believe what you hear and actually start using higher quality materials to build a better organization, you might start getting the kinds of results that you have been wanting all along. Keep improving!
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“The only thing I know is that I do not know it all.” -- Socrates