On Monday the Club’s Managing Director, Ian Ayre stated that he wanted Suarez to stay at Liverpool because he has a four-year contract and he’s a good striker/goal scorer blah blah…

By Tuesday radio phone-in programmes were busy handling calls from Liverpool fans saying that Suarez should go, he was bringing the good name of Liverpool FC into disrepute.

But this situation isn’t so unusual. A few years ago I was counselled by an HR Director who was wrestling with the problem of a senior executive who produced excellent financial results but who had the highest staff attrition rate in the company. The bottom line was that he simply wasn’t living the espoused company values and people had difficulty working with him.

I suggested, and the HR Director agreed that they should negotiate a compromise agreement to let him go. When that went to the Board, the non-executives voted it down. They wanted the financial performance but couldn’t or didn’t want to see the greater damage done in the invisible cost of attrition and low morale.

Companies often wrestle with this type of issue but it’s not difficult. Values have to have real meaning and influence behavior. That feeds alignment and commitment from their stakeholders and ultimately reputation. The cost of not acting appropriately is too high.

They go on to identify five priorities within Human Capital:

-          growing internal talent

-          providing training and development

-          raising employee engagement

-          improving performance management processes

-          increasing efforts to retain critical talent

We feel that there are two critical imperatives missing from their priorities that could improve all five: Communication and Leadership. The way the organisation communicates on its business, process and policies; coupled with leadership role-modelling the desired   behaviours in line with focused, congruent policies are the biggest determinants of employee engagement. Someone should let them know…

There is no silver bullet; there is no box to tick. The fundamentals of the employer: employee relationship have to be properly aligned with business strategy: focused, congruent, and mutually supportive. This is a systemic issue. Here are some tips:*

1. Be clear about what you mean by engagement.

2. Ensure senior executives are fully invested in it.

3. Clarify how you will measure engagement and identify the contributing factors.

4. Ensure that everything you do supports your core purpose and values.

5. Where action is required, acknowledge that a single intervention is unlikely to be successful. It will have to be supported elsewhere in the system.

6. Keep the lines of communication and consultation open.

7. Wherever you sit in the organisation, collaborate with your colleagues. They may have more useful levers to pull than you do (see No. 5).

8. Engagement is not an event; it is an ongoing journey.

9. Look for and measure the impact of engagement in your business results and link them to objectives.

10. Recognise, reward, celebrate and reinforce what you are doing well—and keep doing it.

*From ‘The Engagement Manifesto – a systemic approach to organisational success’

In it he describes ‘engagement’ as a philosophy rather than a strategy; and significantly that it is a systemic issue rather than a tactical intervention.

You can access the full article here (from page 15):

http://edition.pagesuite-professional.co.uk/Launch.aspx?EID=1fc55036-9b4e-4963-86f6-a1b47c185b11

Alan has been working with the Government’s Task Force on Employee Engagement as part of their Guru Group and published his book, ‘The Engagement Manifesto’ just over a year ago.

Is the Chancellor really that far out of touch?

The Government has opened a consultation on its proposed "employee-owner" status, designed to "give businesses greater choice about the contracts they can offer individuals", while ensuring that "appropriate levels of protection" are maintained. 

Under the proposals, the Employment Rights Act 1996 would be amended to create a third tier of employment status: employee owners, who would receive shares of between £2,000 and £50,000, exempt from capital gains tax, in return for giving up specified employment rights. It is unclear how the share issue is to be funded.

Employee owners would not have the "ordinary" unfair dismissal protection after two years' continuous service. However, they would be protected from being dismissed for nearly all of the automatically unfair reasons, such as making a protected disclosure. Employee owners would also retain protection against discrimination, including in relation to dismissal. 

Employee owners would be unable to make statutory requests to work flexibly or in relation to study or training, and would not be protected against dismissal for making either of these statutory requests, except in relation to a flexible working request on return from parental leave, in accordance with the minimum EU requirement. The relevant EU Directive is silent on how long parents should have after returning from parental leave to make a flexible working request, and the Government proposes to restrict this to four weeks. 

Employee owners would not be eligible for statutory redundancy pay, and would also have to give 16 weeks' notice to return early from maternity or adoption leave, as compared with eight weeks for employees. 

This is all too real…

Imagine a situation where employees take advantage of this scheme next year and receive shares in their company. All goes well for a time but then the company hits a sticky patch caused by increased price competition from Eastern Europe. The company executives have to make the tough decision on redundancies.

How do they select for redundancy? Do they protect ‘employee-owners’ and dismiss ordinary employees?

What happens if they have to let go some ‘employee-owners’ who are no longer entitled to redundancy payments and whose shares are no doubt under water? It is financially disastrous for these people. And can you imagine the wrangling over share value?

It is sometimes hard to continue to motivate employees who participate in existing share schemes when their shares are worth less than they paid for them, but at least they have some employment protection and if the worst happens, a redundancy payment.

And of course there are better, more practical and pragmatic ways to ensure your workforce is properly aligned with business objectives and committed to making things happen.

Somehow I don’t think this is going to fly, George.

Over the last week or so, I’ve highlighted some key ways in which companies can improve performance management. I hope they’ve made you pause and think about how effective or otherwise your own arrangements are.

My final tip in my 5 ways to improve performance management is…………..  

Performance manage all year long

Engage with your employees all year round. Managing the performance of your people should be a continuous process not something that takes place annually just to complete an appraisal form.

Discuss with people how their contribution supports company objectives. Take time to give regular feedback and support to help people deliver their contribution. Talk to them about their development and how you can support them, both in the short-term to deliver their objectives and in the longer-term to help their career development.

In the majority of cases, not only will this help improve performance, it will also help improve levels of engagement. And an increase in engagement will lead to a positive impact on business results which, at the end of the day, is what performance management should be all about J

Over recent posts I’ve summarised ways to help improve performance management, including aligning your outcomes to business performance, checking your results are consistent and rewarding performance.  Here is number 4 of my 5 ways to improve performance management.

Deal with underperformance

There will be occasions when you need to move an employee on (either internally or externally) in order for them to find a role where they can make a positive contribution. That’s life, just deal with it.

However for the vast majority of those who may be underperforming, the solution is not likely to involve moving them on. There may be a hundred and one reasons why someone is underperforming and some of those reasons may be personal rather than business related. Take the time to find out. Most people want to do a good job so invest the time to find out what’s going on with the aim of creating an improvement plan that will help individuals focus on the right things for success.

Give people a clear understanding of what is required and how it supports company objectives. Provide regular feedback. Encourage the right development and support in order to help people achieve their objectives. Engage with people. Most will respond positively and will help deliver the outcomes you need for a successful business.

I’ll post my final way to improve performance management in the next few days.

Last week I provided a couple of ways to improve performance management that are not widely used by companies. My third way to improve performance management is much more common.

Reward performance

This isn’t new. Many organisations (particularly those in the private sector) already use their performance management outcomes to distribute salary and/or bonus awards. However, many companies fail to reward performance effectively.  

As a starting point, make sure no performance related reward is paid to those who underperform! It may be stating the obvious but even small amounts will send some curious messages to your employees about how serious you are when it comes to paying for performance.

If your reward strategy is to pay for performance, then be bold! By allocating a large proportion of available monies to high performers, you’ll send some powerful messages about how you value high performance and you should also be able to offer real differentiation in your reward payments. If you have the right level of consistency in your rating allocation and checking process, what are you worried about?

In my next post, I’ll talk about underperformance and how addressing this effectively can help improve performance management.

Last time I discussed the importance of aligning performance management outcomes to business performance. Number 2 in my 5 ways to improve performance management is about the reliability of results.

Check your results are consistent

People are human. Different managers will differ in how they rate relative performance. And, shock horror, some will play the system in an attempt to gain a bigger share of the salary or bonus pot if that is distributed according to performance ratings.

So, set an expected distribution of scores (not a quota) based on research and your business results over the period. Check your results by gender, age and seniority to ensure no sign of bias. Challenge your managers by getting them to “comply or explain” – if there is no objective reason for their scores to be different from your expected distribution, get them to change them until they are. If you don’t, the results will have little credibility.  

Report your results to your executive committee. They should be interested in the relative performance of different business areas and how results align with overall business performance. If they aren’t, then you’ve got bigger problems….

Next time, I’ll discuss reward and how this can improve performance management.

For too many organisations, performance management is one of those things that gets done once (or twice) a year. Amongst other things, the results might be used to distribute reward or help in the talent management process. But for most organisations, the process has little or no relationship to key business performance. That is a serious flaw. Over the next few days I’m going to lay out 5 ways to improve performance management. Here’s number 1.

Align your outcomes to business performance

If your company is doing well then one of the factors must be that your people are performing at a high level. You should expect to see that reflected in your performance management outcomes.

The converse should also be true. If your company is doing badly, then a factor must be the relative performance of your people. That doesn’t mean that all your employees will be underperforming. Far from it. An organisation will likely have high performing people even when results are poor. But they should be fewer in number than when things are going well.

You’d be surprised how many organisations fail to even consider this issue. Some are even unaware of how their performance management scores relate to their key measures of business performance.  If that sounds like your organisation, then think about how valid or credible your performance management outcomes are with your business leaders and how much stronger they would be if they were aligned with business results.

In my next post, I’ll talk about the importance of consistency in performance management.