2006 is well into its first week as I start this issue. Have you made any resolutions for the coming year? Have you already broken them? I was listening to the radio on January 2nd and this was the topic of the day - What resolution have you already broken?
Also of interest was a newscast yesterday where the latest unemployment figures were presented. Currently, according to that report, the unemployment rate is 4.9%. Even more interesting, from my point of view, is the fact that the reporter went on to state that we were now at full employment - that the 5% of the workforce who are not currently working are not unemployed; rather they simply refuse to be employed or to seek employment. This is not a shocking revelation, as it has been stated many times in the past, but certainly interesting and something that should be considered as we plan for the coming year.
What are the ramifications of full employment? Here are some issues (albeit not all) that we will be forced to address as long as a state of "full employment" exists:
- Will turnover increase as it becomes easier for our current employees to find other job opportunities?
- Will salaries increase as we look for ways to keep good people?
- Will we lower our standards, fearing that a replacement might be worse than a current employee?
- Will recruiting times be lengthened as we are forced to search longer and harder for that new employee?
- Will recruiting costs and the associated cost of turnover also increase?
- Will we relax our performance standards so we don´t alienate any employee and cause them to leave?
- Do we run the risk of granting bonuses for less than needed performance because we fear that if the employee doesn´t get the bonus they will leave?
- Do we run the risk of the inmates taking over the asylum?
Scary thoughts, but conditions that I believe should be considered as we move forward particularly in light of the world flattening phenomenon that we talked about a couple of months ago.
These two conditions, zero unemployment and the flat world, are realities that we must come to grips with if we are to continue to grow and prosper. So, how might we continue? I would like to suggest that rather than cower in fear of an employee revolt we take a very positive and proactive approach to our management processes.
First, I really believe you need a strategy and an associated tactical plan. How many times have you been part of that great management exercise called a "planning retreat?" You know the one, those three days to a week where the senior management team sequesters themselves at some remote resort or conference center to develop next years strategic plan.
How many times have those plans, dutifully bound in 5-inch binders, returned from the "retreat" only to be relegated to the bookshelf until next years planning session? This behavior will no longer suffice. There must be a direct connection between that plan and day-to-day operations.
So, it is back to the SWOT (Strength, Weakness, Opportunity, Threat) analysis and then the development of a strategic plan that is realistic, challenging, and motivational.
Next, the strategic plan goals must be cascaded down to all levels of management. I think that many organizations still use a Management By Objectives approach at these senior levels so why not establish those objectives so that they are directly aligned with and supportive of one or more of the strategic goals?
I believe that a CEO should be able to look at each goal for his or her direct reports and easily and clearly identify which strategic objective that goal is supporting and is designed to accomplish. Likewise, the performance standard of each objective should be large (or challenging) enough to insure that the strategic goal will be met or exceeded.
Each Vice President should also be able to do the same MBO analysis for each of his or her direct reports. Over time, this direct cause and effect relationship should be in place throughout the organization.
OK, now that my objectives tie directly to the goals of the strategic plan, what´s next? From my perspective it is the bonus plan or reward system that must also be linked directly to those goals and objectives. Each individual´s bonus reward should be directly proportional to the increase in corporate performance and profits that the attainment of that objective contributes.
What´s left - constant reinforcement is the remaining part of a successful strategy implementation. One thing that the flattening process has provided is a mechanism or vehicle for improving these linkages and the overall strategic implementation.
One approach, that I believe has merit, is to develop an interactive website to track both goal development and goal achievement. I envision a site that will initially be for use by the CEO and his or her direct reports. The site will have a section for goal establishment that will track progress toward the development, by the VPs, of a performance objective and the associated acceptance by the CEO of that objective and measure. Obviously, once established and accepted, performance to that goal could easily be tracked on the same site. Finally, by including some formulas the site could also generate a bonus calculation based on strategic goal achievement or other associated measures.
I see several advantages to this type of approach:
First, by adding dates a tickler file can be created to alert the VPs and CEO via their email when pending actions are due.
Next, everyone knows when concurrence has been reached, when the CEO and VP really signed off on that objective?
By making the site more interactive and allowing everyone to view their peer´s progress everyone´s performance should improve.
The performance appraisal process becomes much more friendly and motivational (as it was originally conceived) and not the contentious process that it has evolved in to. If everyone can see their progress toward the goals, the measure is no longer in question and the appraisal meeting becomes a recording and goal-setting session.
If the bonus award calculation is included in the program, this too becomes a factual event, rather than the guessing game I have seen in some organizations.
Finally, it helps insure that the strategic plan is kept in the forefront of the daily planning and actions of key managers. If it was worth a week sequestered at some remote location, isn´t that plan worth following?
As the talent market gets tighter it becomes more important that we maximize our employees. One belief I have had for a long time and a condition that has been proven to contribute to improved company operations and profitability is employee involvement. What better way to get employee involvement than to tell those employees where we want the company to go - how their function contributes to the attainment of those goals - and, what the reward will be for the achievement of those objectives.
So, I would like to suggest that we all resolve to improve employee involvement in 2006. The results will really surprise and please you.
Copyright 2006 J.E. Mittler & Company. All rights reserved.
